Consumer Behaviour- Soft Drink Industry Essay

Introduction The soft drink industry in India is one of the most competitive with many international and domestic players operating in the market. Initially domestic players like Parle group dominated the Indian soft drink market with brands like Thums up, Limca, Goldspot etc. However with the re-entry of MNC players like Pepsi in 1991 and Coca-Cola in 1993, the market took a decisive shift in favour of these MNCs and over the years Coca-Cola and Pepsi have become the prominent players in the market. Soft drinks can be principally classified into carbonated and non-carbonated. Carbonated drinks include cola, lemon and orange flavors while non carbonated drinks principally comprise of mango flavor. The carbonated cola products constitute 60% of the soft drink market and three prominent brands in this category are Pepsi, Coca-Cola and Thums up. Thums up was a brand from Parle until Coca-Cola bought it in 1993 and tried to kill it to push its own brand. But the loyal customers of Thums up never let it die and the brand still is the leading brand in the Indian soft drink market. Company profile: The Coca-Cola Company The Coca-Cola Company is the world’s largest beverage company. The company’s best known product Coca-Cola was invented by John Stith Pemberton in 1886. The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated the Coca-Cola Company in 1892. Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1. 5 billion servings each day. The Coca-Cola Company is headquartered in Atlanta, Georgia. Its current chairman and CEO is Muhtar Kent. Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveal its formula to the government and reduce its equity stake as required under the Foreign Exchange Regulation Act (FERA) which governed the operations of foreign companies in India. After a 16-year absence, Coca-Cola returned to India in 1993, cementing its presence with a deal that gave Coca-Cola ownership of the nation’s top soft-drink brands and bottling network. Coke’s acquisition of local popular Indian brands including Thums. Up (the most trusted brand in India), Limca, Maaza, Citra and Gold Spot provided not only physical manufacturing, bottling, and distribution assets but also strong consumer preference. This combination of local and global brands enabled Coca-Cola to exploit the benefits of global branding and global trends in tastes while also tapping into traditional domestic markets. From 1993 to 2003, Coca-Cola invested more than US$1 billion in India, making it one of the country’s top international investors. By 2003, Coca-Cola India had won the prestigious Woodruf Cup from among 22 divisions of the Company based on three broad parameters of volume, profitability, and quality. Coca-Cola India achieved 39% volume growth in 2002 while the industry grew 23% nationally and the Company reached breakeven profitability in the region for the first time. Encouraged by its 2002 performance, Coca-Cola India announced plans to double its capacity at an investment of $125 million (Rs.750 crore) between September 2002 and March 2003. Coca-Cola India produced its beverages with 7,000 local employees at its twenty-seven wholly-owned bottling operations supplemented by seventeen franchisee-owned bottling operations and a network of twenty-nine contract-packers to manufacture a range of products for the company. The complete manufacturing process had a documented quality control and assurance program including over 400 tests performed throughout the process. The complexity of the consumer soft drink market demanded a distribution process to support 700,000 retail outlets serviced by a fleet that includes 10-ton trucks, open-bay three wheelers, and trademarked tricycles and pushcarts that were used to navigate the narrow alleyways of the cities. In addition to its own employees, Coke indirectly created employment for another 125,000 Indians through its procurement, supply, and distribution networks. Sanjiv Gupta, President and CEO of Coca-Cola India, joined Coke in 1997 as Vice President, Marketing and was instrumental to the company’s success in developing a brand relevant to the Indian consumer and in tapping India’s vast rural market potential. Following his marketing responsibilities, Gupta served as Head of Operations for Company-owned bottling operations and then as Deputy President. Product Range The product range of Coca-Cola includes beverages like: * Coca-Cola The parent brand of Coca-Cola Company, Coca-Cola has a truly remarkable heritage. The world’s favourite drink. * Thums Up Strong Cola taste. Thums Up is a leading sparkling soft drink and most trusted brand in Indian soft drink market. * Sprite A global leader in the lemon lime category, it is second largest sparkling beverage Brand in India. Sprite with it’s cut-thru perspective has managed to be a true teen icon. Sprite’s all about being true to yourself and living by the simple and honest code of your own instincts. No more†¦. no less. * Fanta Over the years Fanta has occupied a strong market place and is identified as â€Å"The Fun Catalyst†. Perceived as a fun youth brand, Fanta stands for its vibrant color, tempting taste and tingling bubbles. * Limca Lime ‘n’ lemoni Limca can cast a tangy refreshing spell on anyone, anywhere. Born in 1971, Limca has remained unchallenged as the No. 1 Sparkling drink in the Cloudy lemon segment. * Minute Maid Pulpy Orange One of world’s largest juice drink brands. Eliminated 80% of the water in orange juice, forming a frozen concentrate that when reconstituted created orange juice. * Maaza Imagine the delicious fruit, Mango bottled. This is what Maaza is all about. Universally loved for its taste, color, thickness, Maaza is the mango lover’s first choice. * Kinley Mineral water, a thirst quencher that refreshes, a life giving force that washes all the toxins away. * Georgia Introduced in 2004, the GEORGIA Gold range of Tea and Coffee beverages is the perfect solution for your office and restaurant needs. Product Information: Thums Up Background Thums Up is a carbonated soft drink (cola) popular and largest selling brand in India where its bold, red thumbs up logo is common. During the late 1970s, the American cola giant Coca-Cola abandoned operations in India rather than make a forced sale of 60% of their equity to an Indian company. Following this, the Parle brothers, Ramesh Chauhan and Prakash Chauhan, along with then CEO Bhanu Vakil, launched Thums Up as their flagship drink, adding to their portfolio of older brands Limca (lime flavor) and Gold Spot (orange flavor). Thums Up was basically a cola drink, but the company never claimed it as such. The formula was just as closely guarded as the famous Coke formula. Thums Up enjoyed a near monopoly with a much stronger market share often overshadowing its other rivals like Coca-Cola’s Campa cola, Double seven and Dukes, but there were many small regional players who had their own market. It even withstood liquor giant United Breweries Group (makers of Kingfisher Beer) Mcdowell’s Crush, which was another Cola drink, and Double Cola. In 1990, when the Indian government opened the market to multinationals, Pepsi was the first to come in. Thums Up went up against the international giant for an intense onslaught with neither side giving any quarter. With Pepsi roping in major Indian movie stars like Juhi Chawla, to thwart the Indian brand, Thums Up increased its spending on Cricket sponsorship. Then the capacity went from 250ml to 300ml, aptly named MahaCola. This nickname gained popularity in smaller towns where people would ask for â€Å"Maha Cola† instead of Thums Up. The consumers were divided where some felt Pepsi’s mild taste was rather bland. In 1993 Coca-Cola re-entered India after a prolonged absence from 1977 to 1993. But Coca-Cola’s entry made things even more complicated and the fight became a three-way battle. That same year, in a move that baffled many, Parle sold out to Coke for a meager US$ 60 million (considering the market share it had). Now Coca-Cola’s, and Coke has a habit of killing brands in its portfolio that might overshadow it. Coca-Cola soon introduced its cola in cans which was all the rage in India, with Thums Up introduced alongside, albeit in minuscule numbers. Later Coca-Cola started pulling out the Thums Up brand which at that time still had more than 30% market share. Despite its strong overall equity, the brand Thums Up was losing its popularity among the core cola drinking age group of 12 to 25 year olds, partly due to nil advertising. Coca-Cola apparently did try to kill Thums Up, but soon realized that Pepsi would benefit more than Coke if Thums Up was withdrawn from the market. Instead, Coke decided to use Thums Up to attack Pepsi. The Coca-Cola Company by this time had about 60. 5% share of the Indian soft-drink market but much to its dismay found out that if it took out Thums Up, it would remain with only 28. 72% of the market (according to a report by NGO Finance&Trade in India), hence it once again dusted out the Thums Up brand and re-launched it targeting the 30 to 45 year olds. The brand was re-positioned as a â€Å"manly† drink, drawing on its strong taste qualities. Known to be a strong drink with more power packed into it than other colas, Thums Up kick-started an aggressive campaign directly attacking Pepsi’s TV ads, focusing on the strength of the drink hoping that the depiction of an â€Å"adult† drink would appeal to young consumers. â€Å"Grow up to Thums Up† was a successful campaign. The brand’s market share and equity soared. The brand was unshakeable and Coca-Cola’s declaration that Thums Up was India’s premier cola brand in terms of market share did not surprise many. Other campaigns from Thums Up build on its â€Å"strength† and its perception as a macho drink. Ads showing the Thums Up man, riding through the desert in search of a cantina that sells Thums Up rather than drink another cola, stuck in the minds of many Indians and caught the imagination of youngsters who want to be seen as men. 4 P’s of Marketing Mix for Thums Up. Product: Thums Up is known for its strong, fizzy taste and its confident, mature and uniquely masculine attitude. This brand clearly seeks to separate the men from the boys. Beverage offered by the company in the size of: * SSRB (Standard size returnable bottle) * PET (600 ml, 1. 5 liter plastic bottle) * CANS (tin pack 330 ml) Price: Thums Up has adopted competition based pricing and so the prices are similar to that of other cola drinks. 1. Glass Bottles – 200ml, 300ml – Rs 12. 00 onwards 2. PET Bottles – 600ml, 1500ml, 2 ltrs, 2. 25 ltrs. – Rs 25. 00 onwards 3. Can – 330ml – Rs 35. 00 – 45. 00 4. Fountain – Customized – Rs 15. 00-35. 00 can go upto Rs 60. 00 in movie halls Company offers discount on prices or extra quantity of cold drink during festive seasons and winter seasons. Place: Thums Up has a strong distribution channel to make the product available in the market any time, and maintain optimum level of stock in the market. It covers the rural part also to increase the customer reach. The soft drink is made available at all the possible convenient locations to the customers – local area grocery shops, hotels, restaurants, movie halls, multiplexes, shopping malls, supermarkets vending machines, fountain outlets. Promotion: Thums Up has consistently built its sales promotion through various techniques like, blind taste tests, sponsoring exciting events and sports, conducting various contests (win a motor bike contest), etc. Also its ads are designed to create excitement and to communicate the macho personality of the brand. An ad campaign of Thums Up where Akshay Kumar (its brand ambassador since 2003) performs the extreme sport of ‘parkour’ to grab his bottle of Thums Up from a suggestively attractive lady. â€Å"Taste the Thunder† has been the most breakthrough communication campaign for the brand. It stands for masculinity that has constantly been redefined over the years. Competition Thums Up went from being the only cola in the cantina to facing competition from both Coca-Cola and Pepsi. Twenty-six years later it’s still a top cola in India and is one of the strongest brands in the country across categories. The brand name’s positive associations of victory, achievement and celebration are apparently merited as it continues to do well despite a challenging landscape. | | | | | Thums Up’s first competition came in the form of Campa Cola. There were allegations of aggressive exchanges between the two brands at street level but Thums Up (owned by Parle at the time) apparently won the battle both on the ground and in the consumer’s mind. Campa Cola discontinued in 2000 (only to re-emerge as less of a challenger in 2002 from Pure Drinks New Delhi). For a short while Thums Up’s strong taste enjoyed success across the country with scarcely any competition; the brand reigned supreme in the cola market. Currently Thums Up is facing competition from lots of brands coming in the soft drink industry and still it has maintained its top position in the minds of Indian consumers. Today, an Indian consumer sees Thums Up as a unique brand personality which no other brand has acquired in the soft drink industry. | | Conclusion| Thums Up is amongst the oldest domestic brands in soft drinks industry in India and it is the most popular and trusted brands in India. Thums Up enjoyed a near monopoly in India with a much stronger market share till 1990s. But with the advent of Pepsi (1992) and Coca Cola (1993), Thums Up started facing stiff competition. In 1993, Parle sold out to Coke and Thums Up became the brand of Coca-Cola Company. Though Coca-Cola tried to kill Thums-Up to build its own brand, it sooner realized the importance of Thums Up to survive in the Indian market to beat its core competitor Pepsi. Today Thums Up has grown its image from just a soft drink to a lot more for Indian consumers. It has established itself as a distinguished brand with strong taste and which communicates maturity, daring and excitement to its consumers. Thums Up has consistently maintained honesty and trust with its consumers and that’s why it is still the number one cola brand in the country.