...During the 1960s and 1970s, India’s economy faced many challenges, growing only an average of 3–3.5 percent per year. Numerous obstacles hindered foreign companies from investing in India, and many restrictions on eco- nomic activity caused huge difficulties for Indian firms and a lack of interest among foreign investors. For many years the government had problems with implementing reform and overcoming bureaucratic and political divi- sions. Business activity has traditionally been undervalued in India; leisure is typically given more value than work. Stemming from India’s colonial legacy, Indians are highly suspicious of foreign investors. Indeed, there have been a few well-publicized disputes between the Indian govern- ment and foreign investors. 3 More recently, however, many Western companies are finding an easier time doing business in India. 4 In 1991, political conditions had changed, many restrictions were eased, and economic reforms came into force. With more than 1 billion consumers, India has become an increas- ingly attractive market. 5 From 2003–2006, foreign invest- ment doubled to $6 billion. Imported goods have become a status symbol for the burgeoning middle class. 6 In 2008/09 FDI in India stood at $27.31 billion. 7 In 2009, India was the third highest recipient of FDI and was likely to continue to remain among the top five attractive destinations for international investors during the following two years, according...
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...Coca-Cola India On August 20, 2003 Sanjiv Gupta, President and CEO of Coca-Cola India, sat in his office contemplating the events of the last two weeks and debating his next move. Sales had dropped by 30-40%1 in only two weeks on the heels of a 75% five-year growth trajectory and 25-30%2 year-to-date growth. Many leading clubs, retailers, restaurants, and college campuses across the country had stopped selling Coca-Cola3 and only six weeks into his new role as CEO, Gupta was embroiled in a crisis that threatened the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. On August 5th, The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues (specifically the effects of industrialization and economic growth) issued a press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" (See Exhibit 1). According to tests conducted by the Pollution Monitoring Laboratory (PML) of the CSE from April to August, three samples of twelve PepsiCo and Coca-Cola brands from across the city were found to contain pesticide residues surpassing global standards by 30-36 times including lindane, DDT, malathion and chlorpyrifos (See Exhibit 2). These four pesticides were known to cause cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system.4 In reaction...
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...Coca-Cola India Analysis In the Coca-Cola India case, President and CEO of Coca-Cola India (Coke India) Sanjiv Gupta is faced with this question: Should he act further on the Center for Science and Environment’s (CSE) allegations that cold drinks contain too much pesticides or should he remain silent and let the information fade from public view? Section 1: Assumptions and Stakeholder Analysis The first assumption taken in this case is Coke India is not breaking any laws and telling the truth when it comes to the level of pesticides in its products and its routine testing for chemicals. This case is not about concealing illegal activity or lying to the public, rather, it discusses the question whether or not corporations have a right to influence government to regulate various systems. If the analysis takes lying and cheating into consideration, this interesting discussion would appear convoluted. The second assumption taken in this case is the definition of “acting further” means for Coke India. Because Coke India and Pepsi already called the study “baseless” in a press conference launched independent marketing campaigns and published open letters referring to fact/myth websites, this analysis assumes acting further means more than public relations (Coke India, 12). Pepsi has already “filed a petition with the high court questioning the credibility of the CSE’s claims” and Coke India has threatened legal recourse meaning acting further means more than legal recourse against...
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...business activities. Politics and leisure are gained more value than work. While in U.S., American dream emphasis on working hard for personal value, business and politics gain the same social respect. （2）India has many political and legal issues with foreign investors. Indian law to some extent is ambiguous when handling the lawsuits with foreign investors,which may have been the reason causing problems for Coke’s operations in India。 （3) Both countries may have different ways of doing businesses. Foreign investors should consider the fact that every culture is different and they need their own practices (polycentric), if Coke still thinks its American style of business operation is better and practices it in India(ethnocentric), the consumers in India will regard those practices as wrong and inappropriate. This could also have been the reason why India blame on the water contamination and shortage caused by Coke. As the Indian people interpret silence as guilt, thus the representatives of Coke should response quickly: firstly, to apologize for the destroying of water resources in India, and then do some compensation for the local people. secondly,find ways independently or Corporate with authoritative NGOS to solve the problem.It is very important for Coke to built good reputation and consumer loyalty in international market. thirdly, learn from what Pepsi does: doing CSR such as digging village wells, trying best to reduce water waste,etc.these measures could...
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...WORKING PAPER No.186 KARMA COLA - COKE IN INDIA By Y.L.R. Moorthi Kevin Lane Keller April 2002 Please address all correspondence to: Y.L.R. Moorthi (Assoc. Prof. (Marketing) Visiting Professor (Tuck School) Indian Institute of Management Bangalore - 560076, India Email: YLR.Moorthi@.Dartmouth.edu (tUl June 1,2002) or ylrm@iimb.ernet.in Kevin Lane Keller E.B. Osborn Professor of Marketing Amos Tuck School of Business Dartmouth College 100 Tuck Hall Hanover, NH 03755-9011 Ph: 603-646-0393 (o) 603-646-1308 (f) Email: KARMA COLA - COKE IN INDIA ABSTRACT This article is an application of the customer-based brand equity (CBBE) model (Keller, 2001) to Coke in the United States and India, It shows that Coke, the brand, is interpreted differently in US and India. In US, Coke's awareness stretches beyond its immediate consumers. It is usedfunctionally as a substitute for water. Its home consumption is high. It is seen as a brand with heritage ami many customers and non-customers relate to it Hence there is greater bonding between the brand and the customer. In India, by contrast Coke's knowledge and appeal is limited to the urban elite and youth. It is consumed more for aspirational than functional reasons. Home consumption is not as high as it is in the United States, It is a brand to which a limited number of people relate. Loyalty is more to the cola flavor them Coke. In short, Coke is viewed very differently in India as compared to tin United States. This paper examines...
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...Case Study – Coke in India Adapted by Lesley Fleischman from: Hills, Jonathan and Welford, Richard. Corporate Social Responsibility and Environmental Management. 12, 168–177 (2005) August 2003 • • • • • October 2003 • • Coke has 44 wholly owned and franchise owned bottling plants in India Indian NGO finds that Coke and Pepsi products bottled in India contain pesticides. Immediate impact on Coke stock price. Coke threatened legal action over allegations. Indian government tests confirm findings. Coke hires PR firm, develops strategy to deflect media attention away Escalating community protests at bottling plants, demonstrations, hunger strikes, etc. December 2003 February 2004 March 2004 • • • • • • • • June 2004 • • • September 2004 • • October 2004 • • • February 2005 • • April 2005 • • May 2005 • • Ordered by Indian court to stop drawing groundwater for its bottling plant in Plachimada, Kerala Judge ruled that no power to allow a private party to extract such a huge quantity of groundwater Protesters claim that Coke water use was reducing agricultural yields Coke cited lack of rainfall, not their operations, as cause of crop declines Parliamentary committee finds high amounts of pesticide residue in Coke and Pepsi products bottled in India Not illegal, Indian safety standards weak Coke application for new bottling plant in Plachimada denied by local authorities because...
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...Case 1-3 Coke and Pepsi Learn to Compete in India Tyler McBee MKT 3450- 01 17 September 2013 3. Both Pepsi and Coca-Cola have effectively attempted to accommodate their products to the tastes and preferences of India. As an advertisement and sponsorship method, both companies have partnered with cricket, movies, and music. These three entertainment industries are very popular in India. Something that has set Pepsi and Coca-Cola apart from other companies in the food industry is partnering with religious and other festivities. Serving or sponsoring events like Navratri makes a huge impact on society’s eyes causing them to see Coca-Cola and Pepsi as socially responsible companies. Pricing policies in India is difficult to work with, because of the restrictions by the government. Pepsi has had a leg up on Coca-Cola because of their early entry into the industry. Obviously they have had better reactions from consumers because Pepsi seems to care, simply because it reached to smaller villages and different communities than Coca-Cola; in consumers’ eyes this appears that Pepsi just cares more. 5. An idea to help with their water issues within each company’s plants is to recycle water. If water is needed to run a machine or make a certain ingredient for the finished product and the water isn’t contaminated or altered by any way, why not reuse it? I believe that Coca-Cola approached the retalaliation of the water issue with a bad attitude. A foreign company such...
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...promotion and advertising strategies to hopefully win back and gain new customers. 2. How would you evaluate the crisis? On a scale from 1-10 ten being the worst I would say it’s about an 8. No company that is involved in the food and beverage industry she be able to get away with what Coca-Cola did. Findings and statistics don’t lie, so on paper it seems as though Coca-Cola was purposefully taking advantage of the less enforced rules and regulations that they had to follow in India, most likely to save a couple of bucks though it was not violating any laws. 3. How well prepared was Coke India to deal with the CSE’s allegations? In terms of the amount of time it took them to respond to the media I think they did a great job. They denied the allegations and also made a promise to show data that proves the safety of their manufacturing and products. Both Coke and Pepsi attacked the CSE by questioning their credibility. Coke India also threatened legal action against the CSE which made it look as if Coke had the upper hand. 4. What is your recommendation for Coke’s communication strategy? Who are the key constituents? If I were Gupta I would continue handling the situation as he did right from the beginning. By questioning the credibility of the CSE and showing the public findings that their products are safe and made in a...
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...Coke and Pepsi Learn to Compete In India. Summary of the case 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...
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...For their target market and any new product entering a saturated market, the pricing should be low if not the cheapest product out in the market. It should cater for customers who value pricing in choosing their products. The pricing should appeal to their target market and help create a young and hip image. This structure should accomplish the goal of attaining a sizable amount of the market share and stay profitable at the same time. It should convey the message that their product has a higher quality than the other options available in the market, and it should be priced that it is not the most expensive, so more consumers could afford it. This pricing structure will create the air about the product as being the new hip product to have which this generation wants the latest products that will make them look cool or good. The case presents 3 different options each one of these provides a unique way Virgin Mobile USA can enter the market and gain a following. However, one option stands apart from the others and fits with what Virgin Mobile is trying to convey. Q3. Virgin Mobile’s targeted market selection of 15-29, if marketed successfully, had the greatest potential for growth since it was the least penetrated. Consumers are often very brand loyal, especially with products or services that take up a larger part of their income. This meant that Virgin Mobile must promote their own products and services, and also concentrate on why they differ from the competition to avoid...
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...Summary The case traces the history of the struggles both companies encountered during the start-up phase of their business. During the 1990’s, India’s government opened its door to foreign investors and PepsiCo entered into India and Coca-Cola re-entered four years later. Both companies had many difficult situations to overcome and eventually had to recognize that India’s market was very different and a special knowledge, skills and local expertise was needed to be obtained if both companies wanted to succeed. Along with the adopting to the different culture, the two companies faced bad press over the pesticide content in its soft drinks. Overall, the case highlights the many challenges the two companies faced going overseas to India. 1. The political environment in India has proven to be critical to company performance for both PepsiCo and Coca-Cola India. In Coca-Cola's first entry into this market, they withdrew from India because of the policy of no foreign company could own a majority equity stake greater than 50% and the government wanted them to share their secret recipe. During this time, it is clear there is corruption in the India's government. In 1991 a new government took office which made it easier for foreign companies to do business in India. Coca-Cola re-enter the Indian market in the early 90’s becoming a major competitor of PepsiCo who had entered the Indian market in 1986. Because Coca-Cola had chosen to leave the market than re-enter it cost them time, energy...
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...“Coke and Pepsi learn to compete in India” case 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? A/ The Indian government was unfriendly to foreign investors, because outside investment was only allowed in high-tech sector and the remaining industries were discriminated. In addition, the “Principle of indigenous available” played a major role in the political environment by forbidding imports of items that could be produced within the country. On the other hand, Indian laws required that Pepsi entered the market under “Lehar Pepsi” name and Coca-cola had to join Parle to became into “Coca-cola India” They could foresee the level of corruption that is present in India, and reduce the difficulties that they faced after entering the market. However, the contamination issue couldn’t have been anticipated, but they shouldn’t have stayed quiet during the legal process because it is taken as a sign of guilt, according to Indian culture. 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? A/ Pepsi entered a few years before than...
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...Coca-Cola India On August 5th, 2003 the Center for Science and Environment (CSE) issued a press release titled “Hard Truths about Soft Drinks”. Tests conducted by CSE at the Pollution Monitoring Laboratory (PML) found concerning amounts of pesticide residue in all twelve major brands of cold beverages sold in and around Delhi. Behind Tokyo, Delhi is the second largest agglomeration in the world with 23 million inhabitants2. Immediate reaction to CSE’s report on soft drinks ranged from the Indian government banning Coke (and Pepsi) products in Parliament cafeterias to widespread mistrust of the Coca-Cola India brand. Within weeks sales dropped by 30-40% and within months Coke’s stock dipped 10 percent on the NYSE1. While CSE’s report has resulted in declining sales, employee morale issues and a negative public brand perception more importantly the insecticides CSE identified are known to cause cancer, birth defects and inflict severe damage to the nervous, immune and reproductive systems. These possible health risks linked to product consumption is the single most significant ethical issue facing Coca-Cola India today. As you requested, I present the following three strategies to assist in the successful rebuilding of the Coca-Cola India brand. The objectives of each strategy are clear; sway public opinion to identify with Coca-Cola India’s dedication to offering the highest standards of social responsibility. The first approach suggests returning to Coke-Cola...
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...popularly known in India were an Urban phenomenon and the favorites (soda based) were Campa Cola, Gold Spot, Limca and Thums Up Pepsi entered in the Indian Market as Pepsi Foods Ltd. and was known as Lehar Pepsi Coke tried to reenter* in 1990 by merging with Godrej but was denied; merged with Britannia Industries India Ltd. July 1993 Parle sold its brands and plants to Coke *Coke was present in India from 1970’s, but was banned in 1977 under FERA Overview of Indian Market- Present • • • • Today the Indian Market for Carbonated Drinks is worth more than Rs.17000 crore The present scenario of the carbonated drinks market is duopoly* situation. Although in every place there are local competitors and there is a huge unorganized flavored water market. As far as the carbonated drinks are concerned there are only two brands (as per the Market Share). – Coke (57.8%) – Pepsi (35.6%) *A duopoly is a competitive situation where there are two competitors, normally of roughly equal size. Coca-Cola BACKGROUND Coca- Cola Milestones • • • • • • • • • 1886: Founded by John Pemberton 1887: Registered as trademark. 1895: Sold in every state & territory in US. 2003: Headquartered in Atlanta with divisions & local operations in over 200 countries worldwide. 70% income outside US. 1970s: Entered Indian Market for the 1st time 1977: Exited the Indian Market 1993: Re-entry in India 1993-2003 : Invested more than US $1b in India- top international ...
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...Coca-Cola India Teaching Notes Introduction The Coca-Cola India case offers students a unique opportunity to look inside a crisis for one of the world’s most important brands as it occurs inside a developing nation. The case focuses specifically on issues related to brand, reputation, and Corporate Social Responsibility (CSR), and the intersection of all three. History reveals that companies with the strongest brands, most proactive policies of social responsibility, and deepest relationships with their consumers are the most attractive targets for NGO attacks. The very assets that define these leading companies provide the fodder NGOs are looking for to further their agendas. Global Exchange’s attacks on Starbucks over fair-trade coffee and against Nike over sweatshops in Asia, like the Center for Science and Environment’s (CSE) attack on Coca-Cola India, are all examples of NGOs using companies’ powerful reputations against them. Being an attractive target, however, need not imply vulnerability. Organizations and their leadership teams need to start thinking systematically, proactively, and strategically about their reputational risk from crises concerning CSR (corporate social responsibility) and take actions to mitigate these risks before they become reality. The CSE’s allegations of pesticide-contaminated Coke and Coca-Cola India’s response provide an important example of the world’s most important brand under attack and the steps taken in the aftermath...
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