CASE 3

PEPSI COLA PAKISTANPREPARED BY: Pankaj Jain (05) Jigar Patel (16) Mitul Patel (17) Jignesh Soni (22)

PEPSICO INC. In 1990 150 countries Soft Drinks : Pepsi Cola Company : Pepsi Cola International Snack Foods : Frito Lay Inc. : PepsiCo Foods International

Restaurants : Pizza Hut : Taco Bell : KFC

COMPETITIVE ANALYSIS In 1990, Soft Drink Market ShareINTERNATIONAL50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 46.00% 20.00% 15.00% 10.00% 15.00% 5.00% 0.00%

Coca-Cola CompanySeries1

PepsiCo

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 40.40%

UNITED STATES

Series1 31.80%

8.90%

Coca-Cola Com[pany

PepsiCo

7-Up/Dr. Pepper

In 1990 International & Domestic Soft Drink Operating Profit International & Domestic Soft Drink Revenues

$1.40 billion

Coca-Cola$10 billion

$0.767 billion

Pepsi$6.50 billion

Coca-Cola focused solely on beverages PepsiCo had diversified from the soft drink business into other food-related lines A very high-stakes struggle for brand loyalty

PEPSI COLA PAKISTAN INC.(PCI) Divided into 5 functional departments: Franchising Marketing Soliciting companies (bottlers) Sales & operations Finance

MARKET & PRODUCTS Soft drink business divided into 3 main areas Concentrate producer PepsiCo, Coca-Cola Bottlers Retailers Stages in marketing of carbonated drinks PCI manufacture concentrate Bottlers add carbonated water & sweetener and then sold product through retail stores

In 1991, the per capita consumption of soft drinks in Pakistan was 12 eight-ounce bottles/year Lowest in the world

Reason: 250 ml bottle price was PKR 4 1 liter bottle price was PKR 12 Average disposable personal income was PKR 682 Average per year spending for soft drinks =12*225 ml (1 eight-ounce bottle=225ml bottle)*12/1000 = PKR 32.4 Disposable personal income was low

PCIs line of products in Pakistan prior to 7-Up acquisition: Pepsi Cola(cola) Mirinda (orange) Teem (lemon-lime) Coca-Colas line of products in Pakistan: Coca-Cola (cola) Fanta (orange) Sprite (lemon-lime)

Market segments: On-premise Restaurants, Cinemas, Snack bars, Parks, Airlines Accounted for 85% of total Pakistani soft drinks market Take-home Accounted for 15% of total Pakistani soft drinks market

DISTRIBUTION 54000 small retail outlets sold soft drinks Key Factors Soft drinks were highly substitutable Maintaining cold chain is important PCI branded refrigerators was one way to maintain cold chain & it encouraged retail outlet loyalty

ADVERTISING & PROMOTION Advertising (Theme) For long term brand building Promotion (Scheme) mechanisms for acquiring consumers PCI allocated 15% budget for Advertising & Promotion, out of this 60% for Advertising & 40% for Promotion Objectives: To achieve volume growth & provide support to its brands

Trade promotion: point-of-purchase displays, incentives to sales force, local events, social work, government campaign-related programs Consumer promotion: price-off discounts, free items with purchase of products, collecting bottle caps to win

BOTTLERS Pepsi Cola to expand distribution with low investment began using Franchise System Franchise systems main components: Bottlers get exclusive rights to produce, bottle, price, & sell the product in a designated area. 10 years tenure with option to renew for a period of 5 year

Bottlers could distribute other beverages that didnt compete with pepsi products Bottlers didnt have to carry secondary products of producer

Mustafas top 3 priorities Acquiring 7-Up bottlers 7-Up bottlers feared that their brand could be overshadowed and neglected by Pepsi Cloudy Teem Objective was to move clear Teem consumers to 7-Up or Cloudy Teem

Brand Portfolio & Marketing Plan Pepsis advertising & promotion budget focused on maintaining market share 7-Ups advertising & promotion budget focused on building market share Mirindas advertising & promotion budget focused on hold share strategy.

Thematic Advertising Expenditures (Rs in 000)

Promotional Advertising Expenditure (Rs in 000)