June 14, 2015
Case 1-3 Coke and Pepsi Learn to Compete in India
India was considered and seen as unfriendly to foreign investors for many years. India being seen as unfriendly played a huge role in their political environment. Pepsi entered India in 1986 and became “Lehar Pepsi” and Coca-Cola soon followed in 1993 becoming “Coca-Cola India”. With the policy forbidding imports being sold in India and India’s new government that was developed in 1991, these effects couldn’t have power to the market role. In my opinion Coca- Cola should not have bought out Parle because then they wouldn’t have had to sell almost fifty percent of their equity. There were some advantages and disadvantages to Coca-Cola and Pepsi entering the Indian market when they did. Coca-Cola for example was able to buy out Parle while receiving four of their top brands which were Thums Up, Mazaa, Gold Spot, and Limca Citra. On the other hand, the disadvantage for Coca-Cola was that they were denied entry at first because Pepsi was already in the market. Pepsi had the advantage of entering the market first which was good because they gained twenty-six percent market share by the time Coca-Cola entered. The downfall to Pepsi was that they were forced to change their name to Lehar Pepsi and the fact that the government limited their soft drink sales to less than twenty five percent of total sales. Coca-Cola seemed to respond very well to India’s product policies by coming out with “Sprite”. Entering a market with there being products already similar to your own is hard. Both brands do promotional activities and advertise. Coca-Cola does giveaways and vacations and Pepsi gives away premium rice and candy. Pricing of the two products are very different. Coca-Cola cut its prices in 2003 by 15-20% while Pepsi started out with high prices. Distribution arrangements were added as the demand grew for the products. There was production plants placed in large cities all around India.
` Both Coca-Cola and Pepsi have implemented global localization successfully. Coca-Cola did this by running promotions for a free vacation to Goa, and by issuing free passes to the festival of Navrartri in each of its “Thums Up” bottles. Pepsi implemented global localization successfully by changing the name of their product to “Lehar Pepsi” to follow the collaboration rules. The issue of water use in the manufacture of Coca-Cola and Pepsi products was that pesticides were found in the groundwater in India and found their way into food products. The results of the tests were that the soft drinks produced by these two companies were safe to drink. California launched a campaign in 2006 that was directed toward U.S. college campuses, accusing Coca-Cola of India of using groundwater, lacing its drinks with pesticides,