Soft Drink Market in India: It Just Beginning

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Thereafter, both Coke and Pepsi slowly increased their market shares with multiple marketing approaches, but in different ways. Pepsi’s marketing approaches are more gear towards sport events. According to Vanessa Ratten, The advantage of obtaining sponsorship of major sports is that the company can enhance their image by supporting sports and interact with enormous number of viewers at the same time (617). Pepsi was able to sponsor cricket, and lucky India won in the cricket series final. It gave a chance to Pepsi to launch their new advertisement which was collaborated with famous cricket players, and furthermore they introduced the new product, Pepsi Blue, as limited edition. Pepsi took advantages not only from cricket but also from soccer. They sponsored World Cup in India, and used soccer celebrities in their advertisement campaign. On the other hand, in case of Coke, they had different values. They want their product melt into Indian’s lifestyle. If we say Pepsi’s strategy was short-term perspective, the Coke’s strategy would be long-term perspective. Once consumer accepts the products as part of their life, it represents that the brand loyalty has been established between the product and consumer, and it is very difficult for other products to break into unless the consumer’s perception changes. Additionally, Coke especially targeted youth generation so called “India A” from age range from 18 – 24. Coke used celebrities in their advertisement such as singers, talents, and movie stars who are mostly famous and admired by “India A”. As a result, sales increased by 50% and succeeded in increasing the number of loyal consumers within the demographic of “India A”. As I mentioned earlier, Coke was more focusing on long-term value, in other words, invested on future consumers. For example, like “India A”, Coke categorized rural youth generation as “India B” and tried to build strong bond with them. Coke knew that few years later, and if their living circumstances get better, “India B” would be another great sources of profits. With same perspective, Coke established red lounge where young people can hang out with drinking Coke’s products. By giving experiences and memories to youth, it makes Coke easier to obtain brand preferences for Coke within young generations. Therefore, to sum it up, the similarities between the strategy of Coke and Pepsi is that they both used media efficiently, and both of them expand their brand recognition by sponsoring national events and festivals. On the other hand, the differences between Coke and Pepsi was whether their focus was on short-term profits or long-term profits. Pepsi focused on short-term profit, and thus they needed to minimize the cost but reach as many people as they can. That is reason why Pepsi chose to use sport event. However, the problem of Pepsi’s strategy is that their advertisement might reach to enormous number of people, but it is hard to convert those viewers to actual buyers. To simply saying, Pepsi spread their brand advertisement all over the nation, and hope those viewers to buy their products. In case of Coke, they invested for long-term profit. Establishing a red lounge or targeting a very young age people does not make high marginal revenue or sometimes no revenues at all. However, aligning with Coke’s goal which is about Coke being part of people’s lifestyle, it will contribute to generate high profits in long-term. After few years later, those people who experienced Coke’s red lounge, and watched all celebrities drinking Coke products who they admired, they will buy Coke products every time when they want to buy drinks.

Now, both Coke and Pepsi succeeded in increasing their market shares and turning their business to make profits. It was tough journey since 1991, but that was just beginning. Nowadays, the demands for carbonated soft drinks are keep decreasing. Due to the social movement that more and more people want healthier foods and drinks than ever before, well-being or organic products became a new trend. People start to look at the nutrition chart at the back of the food package, social network spread all information about which foods are healthy and which foods are not. As a result, people start to turn their back from carbonated drink and fast-food. Since carbonated drink is prime product for both Coke and Pepsi, this phenomenon is a huge damage to them because this requires them fundamental internal changes and also need large external works to change people’s perception towards the name Coke and Pepsi which is about unhealthy carbonated drinks. Additionally, to make the situation worse, environmental organization claimed that Coke and Pepsi products produced in India contains pesticide residue which is harmful to human body. Both Coke and Pepsi learned lessons from this accident because they were too positive about the situation because anyway products were still safe under the health standards. As a result, some states in India partially banned their products and some of their manufacturing plants had to close until the problem solved. Additionally, both companies had to suffer domestic problems as well. Environment organizations launched anti-Coke campaign in California accusing them using India’s precious water to produce harmful products.

Going back to the social trend that people want their diet to be healthier, how can Coke and Pepsi overcome these trends? My personal recommendation for Coke and Pepsi is to change their business paradigm. It is fact that less and less people would buy carbonated drinks and both companies are not able to stop them. Therefore, it is better for them to jump into healthier drink business such as tea and coffee. This might be sound bold but actually Coke and Pepsi have a lot of advantages than others. As I mentioned earlier India is the largest producer of tea in world which means that it is easy for them to buy great quality of raw materials without any tariffs or additional taxes. They also have excellent distribution channels and facilities for massive producing. In geological aspect, India has advantage for tea business at the same time. China is well-known number one tea consumers around the world, and it is easier for Coke and Pepsi to produce tea drinks in India to reduce the cost of transport compare to the cost of producing products in United States. Moreover, yet, there is no leading company in tea industry. There are many domestic small tea producers, but globally, there is no company that comes up in our mind when we think of tea. Another recommendation is to increase their sustainable image in India which means that conducting sustainability initiatives can be another recommendation. For large firms like Coke and Pepsi, it is almost mandatory to conduct sustainability initiatives towards social matters and issues. Sustainability