Coke and Pepsi in India
Coke and Pepsi in India
1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca- Cola India. What specific aspects of the political environment have played key roles? Could these effects have been anticipated prior to market entry? If not, could developments in the political arena have been handled better by each company?
The political environment in India has proven to be critical to company performance for both PepsiCo and Coco-Cola India. In Coca-Colas first entry into this market, they left after being given the ultimatum to turn over their trade secret recipe. This move by Indias government displays the corruption that is present. In 1991 a new government took office which made it easier for foreign companies to do business in India.
Not only were business practices better, the economy was made better with the practices of the new government in place. With India coming out of economic hardships, they were an emerging market that many corporations were eager to do business with. PepsiCo took advantage of early timing and entered the market as “Pepsi Foods Ltd.” as a joint venture company with two local partners; Voltas and Punjab Agro.
During the crisis with the contaminated water, Pepsi and Coca-Cola were both under fire with the consumers and government. Politicians made it exceptionally difficult for both companies to redeem themselves with the facts they had. Coca-Cola seemed to have a more difficult come-back than Pepsi.
Some of these effects may have been anticipated, especially foreseeing the corruption within Indian government. Taking that into account more proactively might have helped Coca-Cola avoid hardships in the past. As far as the contamination issues goes, that might not have been so easy to anticipate. Both companies held their own when trying to prove their products were within safe limits compared to other food products.
2. Timing of entry into the Indian market brought different results for PepsiCo and Coca- Cola India. What benefits or disadvantages accrued as a result of earlier or later market entry?
Coca-Cola reentered the market a few years after Pepsi entered. While Cokes application was being denied, Pepsis was being approved, giving them a head start in the market. It seems logical that Pepsi would benefit from this head start in the market, but they were facing competition and a market that didnt typically consume carbonated products. As Coca-Cola entered the market, one of the competitors was ready to align with Coke while Pepsi struggled.
3. The Indian market is enormous in terms of population and geography. How have the two companies responded to the sheer scale of operations in India in terms of product policies, promotional activities, pricing policies, and distribution arrangements?
Both companies produced promotional activities that aligned with sporting events and festivals in India. Doing this allowed consumers to take advantage of special sales and contests that encouraged the purchase and continued consumption of both products. Their pricing policies also were changing often. Coca-cola reduced their prices 15 percent to 25 percent in order to make their products affordable to more consumers. Coke also introduced a new size to grab more attention and gain more of the market share.
4. ” Global localization” ( glocalization) is a policy that both companies have implemented successfully. Give examples for each company from the case.
According to Investopedia (2010),
“A combination of the words ‘globalization and ‘localization used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market. This means that the product or service may be tailored to conform with local laws, customs or consumer preferences. Products or services that are effectively ‘glocalized are, by definition, going to be of much greater interest to the end user.”
Both Coca-Cola and Pepsi created brands/flavors specific to India. PepsiCo launched Lehar 7UP, their soda that falls into the “clear lemon category.” Coca-Cola bought brands from Parle, their competitor, including Thums Up, Limca, Citra, Gold Spot, and Mazaa. These products had the advantage of being already familiar to