Coke And Pepsi Learn To Compete In India

The case of Coke and Pepsi in India is a lesson that all marketers can observe, analyze and learn from, since it involves so many marketing aspects that are essential for all marketers to take into consideration.

Both companies had many difficulties, especially Coca-Cola, and it's useful to observe how it dealt with the different aspects, stating from the political environment of the Indian market and the trade barriers it faced, going through the market entry and penetration strategies considered and the flexible marketing mix used and how it was placed to increase consumption and market share, ending with the change in the environment and market due to boycott campaigns for different reasons.

Discussion

Political environment and trade barriers:

Until the early 1990s, India was considered unfriendly to foreign investors, especially in consumer goods sector. If an item could be obtained within the country, imports of similar items were forbidden.

Due to this environment, Coca-Cola had withdrawn from the Indian market in 1977.

Looking back at Coca-Cola's withdrawal we can notice:

 Coke's refusal to give the formula and withdraw from the market wasn't a clever decision, because as a big company, coke must expect to face many challenges. It should have believed in it marketing capabilities and its ability to position its brand as a unique one, different from others even if they claim they are the same. And using the huge resources it has worldwide, it could have planned a strategy to overcome this problem and stay in the market and even gain market share as the only unique multinational brand.

 If coke had stayed in the market, it could have too advantage of the BVO warning crisis that the local companies faced after it appeared to be carcinogenic.

 And if coke had stayed in the market, it could have took advantage of 1991 economic crisis and increased its equity stakes and profit, like other foreign companies that pioneered entry into the Indian market like Pfizer, Philips etc.

Market entry and penetration:

The political environment also played the major role in coke's market reentry, since it lead to the turning down of the first proposed joint venture that was made as an attempt to reenter the market, until the second joint venture made it possible to enter.

It was after the 1991 economic crisis that made it possible for Coca-Cola to file a 100% owned company "Coca-Cola India" in the year 1993. And in that year Coke bought the market leader's "Parle" bottling plant and leading brands.

It was obvious how the political environment affected both the market entry and penetration.

Marketing mix:

Over the years, it was the understanding of the social and cultural