A study on Market analysis on Tropicana with reference to Chennai, Tamilnadu

Introduction

According to the marketing strategies used by Pepsi, Customers will have diverse experiences

and preferences, given their individual references and location. The Pepsi Company is modifying

its approach so that it can strike into these distinctions and provide the fitting marketing

activities, pricing strategies and beverages to be connected with current and potential customers.

Its "think local, act local" strategy to marketing permissible adopting communications to suit

local and global situations. It wants to offer consumers with beverages to be adaptable with their

different life styles and life stages.

Pepsi is placing more liability and answerability in the hands of its managers who are closest to

the target market, to create good channels of communication, and gain its loyalty, and achieve

the company marketing and overall goals.

Pepsi thrives when people are permitted to utilize their insight to construct the business in ways

best suitable to their culture and business conditions. Efforts were made to give flexibility to

managers to be adaptable with the market shocks, and try to make the significant modifications.

Moreover P& G used to utilize a flexible pricing strategy to avoid any loss in market share to

other rivals. it depends in certain scenarios to price its products low and obtain maximum profit

on spare parts, in addition it uses different prices and different price lists for different markets to

extract the fitting one .In other scenarios, it sets price for selected products at 10% below market

leader to maximize sales, and to allow increased production and reduce unit production cost.

In recent years a rapid health growth was witnessed in the Indian food sector, along with a few of

the local companies reporting massive growth. The food and beverage industry is being

reinforced by the Saudi government by offering financings and grants on designated equipment,

and through the burden of high prices on imports that competes with local products.

Important sub segments in the India’s food and beverage processing industry, comprising meat,

dairy, and juice business, which has established to a degree in current years to the point where

they are meeting most of the local demand.

Industry profile

Around 1984 the first branded soft drink came in the Indian market. This soft drink was named

as gold spot. Before Coca-Cola entered the country to dominant the scene in 1950’s, Parley

exports Pvt. Ltd were the first Indian company to introduce a lemon soft drink, this drink was

known as Limca and it was introduce in 1970’s. However, before this they had introduced cola

piping, which was withdrawn in face of tough competition from coca-cola.

In the year 1977 coca-cola left Indian market and this brought in an opportunity for various

Indian companies to show their caliber, at this time a new soft drink was introduced by parley

product and this was named thrums up.

This was Coca-cola drink, which had a burnt sugar color. This drink was introduced with a

mighty “happy days are here again”. As if happy days went away with coca-cola .There was

another company named pure drinks, which introduced the soft drink named campa-cola along

with orange and lemon flavors.

Just after this many more companies entered the Indian soft drink market. A soft drink named

double-7 had been introduced by a company modern baker. Another company, Mohan meckins

also came with a softy drink named marry & puck up. Mcdowell came with thrill, rush and sprit.

Previously there was no competition in the Indian soft drink market but with all these companies

coming in the Indian market a huge competition was a place with high voltage advertisement.

But in the year 1988 Pepsi was given permission to sell its soft drinks in the Indian market by the

government of India. Coca-cola also co history of soft drink come back 1993.

Soft Drink Market Indian Scenario

Indian soft drink industry is witnessing a boom time. Its growth rate is around 20% with such a

high growth rate, volume could reach billion crates with 10 years .Three major multinational

companies are fighting to grab a major chunk of business from Indian markets. These three

major multinational companies are fighting to grab a major chunk of business from Indian

markets. These three coca-cola, Pepsi, Cadbury. All of these companies have seen an enormous

potential in this country .Consequently, by world standard India per capita consumption of soft

drinks is still very low. Therefore these soft drinks grants feel that fire capita consumption can

only grow up. Soft drinks industries has already seen and estimated sale of around 240 million

crates higher than last year’s sale of 204 million in 1998. The main reason for such a high

growth rate heightened competition between Coca-cola and Pepsi, Cadbury, being a new entrant

is for behind. India is actually more vivid in taste and preference than any other country market.

Delhi jar instance, accounts for about 20% of total soft consumption in terms of sales.

There are about 4, 80,000 soft drinks retailers in India and their numbers are increasing day by

day. This actually means that there is just one soft drink retailer on a population of 37,600,

which is far below the international standard. Where as Philippines has one soft drink retail

counter over a population of 150 people i.e. 4, 00,000 outlets on population of 60 million.

Soft drinks shows strong double-digit growth

In 2011, soft drinks registered a higher off-trade value growth rate than the review period

average. This growth was attributable to strong double-digit performances in sectors such as

sports and energy drinks, bottled water and fruit/vegetable juice, which had a good year due to

rising mercury levels. Long summers and higher disposable incomes are the main growth drivers

for the soft drinks category.

Fruit/vegetable juice outshines carbonates in terms of growth

Fruit/vegetable juice showed considerably stronger growth than carbonates, being viewed as a

healthier alternative. Soft drinks giants Coca-Cola India Pvt Ltd and pepsico India Holdings Pvt

Ltd have recognised this trend and are strengthening their product offerings in fruit/vegetable

juice. With a focus on healthy diets, consumers in urban areas are slowly shifting from

carbonates to fruit/vegetable juice, which also received a major growth boost from on-the-go

consumption.

Coca-Cola and PepsiCo compete through lemonade/lime carbonates

Lemonade/lime carbonates was among the stronger performers in the carbonates category in

2011. Coca-Cola India Pvt Ltd and PepsiCo India Holdings Pvt Ltd continue to compete

aggressively in this category by increasing the visibility of their brands Sprite, Limca and 7-Up

respectively. Catchy taglines were used by manufacturers to generate consumer interest,

alongside aggressive campaigns using Bolly wood actors.

Modern retail shows steady growth

Leading chained retailers are on a major expansion drive, which has led to an increase in soft

drinks volume sales. Manufacturers have leveraged this to showcase their new variants in a bid

to broaden their consumer base. The modern retailing channel is helping to facilitate the growth

of soft drinks. Modern retail offers a unique experience for consumers, where they can touch and

feel the product before buying. Tier two and three cities have also seen the robust growth of

modern retail outlets.

Indians will continue to consume more soft drinks

Dynamic products such as sports and energy drinks, bottled water and fruit/vegetable juice will

drive strong growth in soft drinks during the forecast period. Soft drinks giants pepsico India

Holdings Pvt Ltd and Coca-Cola India Pvt Ltd are targeting the rural segment to enhance their

presence. The outlook for soft drinks looks very positive in the forecast period due to strong

marketing activities and product innovations by manufacturers.

Company profile

One of the dynamic industries in our country is the soft drink industry. Soft drinks are a non-

alcoholic beverage made with carbonated water. Such drinks are called soft to distinguish them

from Alcoholic or hard drinks. Soft drinks are also called pop because the type of bottle caps

used before 1890’s made a popping noise when removed. People in various areas call soft drinks

as soda. Most soft drinks are sweetened and flavored with specially prepared syrup, the

flavoring are usually made from various plant part such as root, bark and seeds of cola tree.

Most brands of soft drinks were manufactured through franchised bottle with a security

formulated beverage syrup or flavor base.

Mr. Joseph Priestly, an English Chemist, produced the first artificially carbonated water in the

year 1772. At that time mineral water was a popular remedy for certain diseases. Previously

artificial mineral water was also called as soda water. In 1806 bottled soft water was produced

and sold by Mr. Benjamin Sill man, a Chemistry Professor at Yale College. The number of soft

drink bottling company in the United States increased approximately from 65 to 2000, during

1970’s increased in the price of soft drinks. Many people switched to less expensive non-

carbonated soft drinks, produced using powdered mixes which became an important part of an

industry

Corporate Overview

Pepsico was incorporated in the year 1919 and was re-incorporated in North Carolina in 1986.

Pepsi is engaged in beverage and snack food business. Pepsico is a multinational company and it

is most successful consumer product company in the world with annual revenue of $ 20 billion

and about 1, 43,000 employees. Some of pepsico’s brand names are nearly 100 years old.

Pepsico has achieved a leadership position in each of the two major packaged good business i.e.

Beverage and snack chips. Pepsico the conglomerate king of soft drink has its wide range of soft

drinks products available in every book & corner of the world.

The Indian Story

Pepsi & Co came to India as food processing unit, Punjab during the year 1986-87 head office

Pepsi food unit situated in Delhi, employees are more than 2500 people. Pepsi co today is the

leader in the cola and orange segments of beverages in India and enjoys leadership in soft drinks

in many parts of the country.

It focuses on execution excellence, strengthen, bottle network, reach and penetration in rural and

semi-urban areas and customer focused marketing areas.

Pepsico is a global food and beverage leader with net revenues of more than $65 billion and a

product portfolio that includes 22 brands that generate more than $1 billion each in annual retail

sales. Our main businesses – Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola – make

hundreds of enjoyable foods and beverages that are loved throughout the world. Pepsico’s people

are united by our unique commitment to sustainable growth by investing in a healthier future for

people and our planet, which Pepsi believe also means a more successful future for pepsico.

Pepsi call this commitment Performance with Purpose: pepsico’s promise to provide a wide

range of foods and beverages for local tastes; to find innovative ways to minimize our impact on

the environment by conserving energy and water and reducing packaging volume; to provide a

great workplace for our associates; and to respect, support and invest in the local communities

where Pepsi operate

Mission

We have absolute clarity about what we do ‘WE SELL HIGH QUALITY FOOD AND

BEVERAGE PRODUCTS’. Our success will ensure: customers will build their business,

employees build their futures, and shareholders build their wealth.

Vision

Pepsico's responsibility is to continually improve all aspects of the world in which we operate

social, economic - creating a better tomorrow than today.

Products in India

1. 7UP

2. Aliva

3. Aquafina

4. Cheetos

5. Duke’s

6. Gatorade

7. Kurkure

8. Lay’s

9. Lehar

10. Mirinda

11. Tropicana

12. Nimbooz

13. Pepsi

14. Quker oats

15. Slice

16. Tropicana

17. Uncle chipps

Brand History

Tropicana was founded in Bradenton, Florida, USA, in 1947. It is now enjoyed almost

everywhere in the world. Carefully nurtured for over 50 years, Tropicana has matured into one of

the most respected beverage brands. Tropicana is the #1 brand in packaged 100% Juice in the

world in 2011 in off-trade volume. It is today available in 63 countries. Since 1998, Tropicana

has been owned by pepsico, Inc. Tropicana Premium Gold was re-launched as Tropicana 100%

in 2008.

Brand Advantage

Tropicana continues to select the best fruit to manufacture high-quality juices and original

products, pioneer innovative processes and explore new markets for its products. It is committed

to fostering healthy lifestyles by ensuring that its products are naturally nutritious and provide

the daily benefits that one needs.

In India, Tropicana comes in two categories: 100% Juices (sold as Tropicana 100%) and Juice

Beverages (sold as Tropicana).

Quick Brand Facts

1. Launched in India in 2004.

2. Available in two categories - 100 percent juice and juice-based drinks.

Literature review

The soft drink industry is very competitive for all corporations involved, with the greatest

competition being that from rival sellers within the industry. All soft drink companies have

to think about the pressures; that from rival sellers within the industry, new entrants to the

industry, substitute products, suppliers, and buyers.

The competitive pressure from rival sellers is the greatest competition that Coca-Cola faces

in the soft drink industry. Coca-Cola, Pepsi Co., and Cadbury Schweppes are the largest

competitors in this industry, and they are all globally established which creates a great

amount of competition. Though Coca-Cola owns four of the top five soft drink brands

(Coca-Cola, Diet Coke, Fanta, and Sprite), it had lower sales in 2005 than did PepsiCo

(Murray, 2006c). However, Coca-Cola has higher sales in the global market than PepsiCo.

In 2004, PepsiCo dominated North America with sales of $22 billion, whereas Coca-Cola

only had about $6.6 billion, with more of their sales coming from overseas. PepsiCo is the

main competitor for Coca-Cola and these two brands have been in a power struggle for years

(Murray, 2006c).

Brand name loyalty is another competitive pressure. The Brand Keys’ Customer Loyalty

Leaders Survey (2004) shows the brands with the greatest customer loyalty in all industries.

Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most loyal customers to

their brands. The new competition between rival sellers is to create new varieties of soft

drinks, such as vanilla and cherry, in order to keep increasing sales and enticing new

customers (Murray, 2006c).

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola

and Pepsi Co dominate the industry with their strong brand name and great distribution

channels. In addition, the soft-drink industry is fully saturated and growth is small. This

makes it very difficult for new, unknown entrants to start competing against the existing

firms. Another barrier to entry is the high fixed costs for warehouses, trucks, and labor, and

economies of scale. New entrants cannot compete in price without economies of scale.

These high capital requirements and market saturation make it extremely difficult for

companies to enter the soft drink industry; therefore new entrants are not a strong

competitive force (Murray, 2006c). Substitute products are those competitors that are not in

the soft drink industry. Such substitutes for Coca-Cola products are bottled water, sports

drinks, coffee, and tea. Bottled water and sports drinks are increasingly popular with the

trend to be a more health conscious consumer. There are progressively more varieties in the

water and sports drinks that appeal to different consumers’ tastes, but also appear healthier

than soft drinks. In addition, coffee and tea are competitive substitutes because they provide

caffeine. The consumers who purchase a lot of soft drinks may substitute coffee if they want

to keep the caffeine and lose the sugar and carbonation. Specialty blend coffees are also

becoming more popular with the increasing number of Starbucks stores that offer many

different flavors to appeal to all consumer markets. It is also very cheap for consumers to

switch to these substitutes making the threat of substitute products very strong (Datamonitor,

2005).

Suppliers for the soft drink industry do not hold much competitive pressure. Suppliers to

Coca-Cola are bottling equipment manufacturers and secondary packaging suppliers.

Although Coca-Cola does not do any bottling, the company owns about 36% of Coca-Cola

Enterprises which is the largest Coke bottler in the world (Murray, 2006a). Since Coca-Cola

owns the majority of the bottler, that particular supplier does not hold much bargaining

power. In terms of equipment manufacturers, the suppliers are generally providing the same

products. The number of equipment suppliers is not in short supply, so it is fairly easy for a

company to switch suppliers. This takes away much of suppliers’ bargaining power. The

buyers of the Coca-Cola and other soft drinks are mainly large grocers, discount stores, and

restaurants. The soft drink companies distribute the beverages to these stores, for resale to

the consumer. The bargaining power of the buyers is very evident and strong. Large grocers

and discount stores buy large volumes of the soft drinks, allowing them to buy at lower

prices. Restaurants have less bargaining power because they do not order a large volume.

However, with the number of people are drinking less soft drinks, the bargaining power of

buyers could start increasing due to decreasing buyer demand (Murray, 2006a). Porter’s Five

Forces Model identifies the five forces of competition for any company.

The recognition of the strength of these forces helps to see where Coca-Cola stands in the

industry. Of the five forces, rivalry within the soft drink industry, especially from PepsiCo,

is the greatest source of competition for Coca-Cola the soft drink industry is affected by

macro environmental factors of the industry that will lead to change. First, the entry/exit of

major firms is a trend in the industry that will likely lead to change. More specifically,

merger and consolidation has been prevalent in the soft drinks market, causing some firms to

exit the industry and then re-enter themselves. Several leading companies have been looking

to drive revenue growth and improve market share through the increased economies of scale

found through mergers and acquisitions. One specific example is how PepsiCo acquired

Quaker Oats, who bought Gatorade which will help expand PepsiCo’s energy drink sector

(Datamonitor, 2005). This trend has increased competition as firms’ diversification of

products is increasing.

A second trend in the macro environment is globalization. With the growing use of the

internet and other electronic technologies, global communication is rapidly increasing. This

is 10 allowing firms to collaborate within the country market and expand into world markets.

It has driven competition greatly as companies strive to be first-movers. Specifically, the

global soft drink market’s compound annual growth rate (CAGR) is expected to expand to

3.6% from 2004 to 2009 (Datamonitor, 2005).

Third, changing societal concerns, attitudes, and lifestyles are important trends. In the

United States and Europe, people are becoming more concerned with a healthy lifestyle.

“Consumer awareness of health problems arising from obesity and inactive lifestyles

represent a serious risk to the carbonated drinks sector” (Datamonitor, 2005, p. 15). The

trend is causing the industry’s business environment to change, as firms are differentiating

their products in order to increase sales in a stagnant market. Thus, the long-term industry

growth rate, the fourth trend, shows low growth in recent years. Since 2000, the CAGR is

1.5 per cent (Datamonitor, 2005). The low growth rates are of concern for soft drink

companies, and several are creating new strategies to combat the low rates.

This leads to the fifth trend of growing buyer preferences for differentiated products.

Because soft drinks have been around since as early as 1798 (American Beverage

Association, 2006), buyers want innovation with the products they buy. In today’s

globalizing society, being plain is not good enough. According to Barbara Murray (2006c),

“The key for all of these beverage companies is differentiation. The giants have new

formulations and appearances. Whatever the strategy, be it a new color, flavor, or formula,

companies will strive to create the greatest brand awareness in the minds of the consumer in

the hopes of crowding out its competitors.” Thus, the last trend, product innovation, is

necessary to combat buyers need for a variety of tastes. Firms are already differentiating by

taste, with the Coca-Cola Company as an example. The firm’s product line includes regular

Coca-Cola, Diet Coke, Diet cherry Coke, 11cherry Coke, Vanilla Coke, Coca-Cola with

Lime, Coca-Cola with lemon and many more (Murray, 2006a).

Key factors for competitive success within the soft drink industry branch from the trends of

the macro environment. Primarily, constant product innovation is imperative. A company

must be able to recognize consumer wants and needs, while maintaining the ability to adjust

with the changing market. They must keep up with the changing trends (Murray, 2006c).

Another key factor is the size of the organization, especially in terms of market share. Large

distributors have the ability to negotiate with stadiums, universities and school systems.

Making them the exclusive supplier for a specified period of time. Additionally, they have

the ability to commit to mass purchases that significantly lower their costs. They must

implement effective distribution channels to remain competitive. Taste of the product is also

a key factor for success.

Furthermore, established brand loyalty is a large aspect of the soft drink industry. Many

consumers of carbonated beverages are extremely dedicated to a particular product, and

rarely purchase other varieties. This stresses the importance of developing and maintaining a

superior brand image.

Price, however, is also a key factor because consumers without a strong brand preference will

select the product with the most competitive price. Finally, global expansion is a vital factor

in the success of a company within the soft drink industry. The United States has reached

relative market saturation, requiring movement into the global industry to maintain growth

(Datamonitor, 2005).

Looking towards the future, the most important recommendation to Coca-Cola is continuing

product innovation and expansion of their product line. The soft-drinks industry is fully

saturated with competitors. Also, the industry is no longer expanding, and market share is

actually decreasing as more consumers are looking to healthier options. By continually

introducing new products, Coca-Cola will be able to increase their profits and allow the

company to continue to grow. Also, having a diverse product line will make the corporation

very stable, which is appealing to investors and creditors. A second recommendation would

be to sustain or increase the global market share.

Coca-Cola is very well-established globally, and is the global soft-drinks leader. This is very

important to sustain because it is the source of the majority of their profits. If they lose

global market share, their profits will decline dramatically. A final recommendation for

Coca-Cola is to maintain and try to increase their brand loyalty. Diet Coke has the second

highest brand loyalty of all the soft-drink competitors’ brands, and solid advertising

campaigns will help maintain the brand loyalty. They can also strive to obtain higher brand

loyalty in all other brands, not solely Diet Coke. The brand loyalty is important because it

will allow Coca-Cola to sustain profits and maintain their market share.

Objectives of the study

1. Gaining a better understanding on the market strategies and planning used by the

company for marketing the product of Tropicana.

2. Comprehending how key trend affects the industry and Tropicana as one of PepsiCo’s

products and how a consumer buying behavior affects the product.

3. To Understand and differentiate between the market segmentation, positioning and target

audience in order to develop an effective marketing plan, and achieve the overall

objectives of the company.

4. Examining the pricing plan designed for Tropicana and gives recommendations to help

increase its sales size.

5. Understanding how and what are the tactics to kill Tropicana’s strong competition is the

main reason of this report.

Research methodology

Research Design : Descriptive study

Sample Area : Chennai

Population : Pepsi Beverage consumers & retailers

Sample Size : 250

Sample Method : Simple random sampling

Research approach : Survey method

Data collected : Primary data

Sampling tool : Structured questionnaire method

Statistical package : SPSS 17.

Statistical Tools : Percentage analysis, chi square, correlation.