Coke and Pepsi Learn To Compete 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 role? 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?

Answer The political environment have played key role as follow:

- Indian government viewed as unfriendly to foreign investors. Outside investment had been allowed only in high-tech sectors and was almost entirely prohibited in consumer goods sectors. The “Principle of indigenous available” If an item could be obtained anywhere else
How can they defuse further boycotts or demonstrations against their products? How effective are activist groups like the once that lunch the campaign in California? Should Coke Address the group directly or just let the furor subside?

Answer Many failures of both Pepsi and Coca-Cola experienced due to the unforeseen external environment, including the boycott placed on American and British Goods following the Second Gulf War in 2003.

Firstly, Pepsi and Coca-Cola should have more focused on its products. The market still hasn’t taken off so they need to penetrate harder. In 2003, India’s annual consumption rate was still a poor seven per person. Specifically, Pepsi spent very small amounts on its 7UP marketing campaigns in India due to its relatively low market size (4.5%). Advertising dollars should be pumped more freely and strategically if they want to see a return on investment. Next, they should be defined more specifically in their target markets. Coca-Cola separates its markets as “India A” and “India B”. This is too broad and lacks focus. We can differentiate demographics by gender, race, age, interests, job, and location. Then, Coca-Cola entered the market at a wrong time because they had to agree to abide by all of the Foreign Investment Laws of that year. To avoid having to sell its 49% stake though, Coca-Cola should have agreed to set up Greenfield bottling units instead, as Pepsi did. Further, Coca-Cola lost