Coca-Cola – Anthony Capone

One of the fundamental concepts of corporate finance is that “… the purpose of the firm is to create value for you, the owner. The firm must generate more cash flow than it uses. ” (Ross, 2005, p. 18) The Coca-Cola Company is similar to Lester Electronics, Inc. , of our classroom scenario, in that it must weigh an enormous spending venture against the future increase in cash flow that spending venture may or may not bring. Ultimately, it is a vital decision for the executives to make when considering potential on a global scale.

For Lester, the decision is whether to acquire Shang-wa, or risk losing 45% of their revenue by allowing Shang-wa to dissipate. Coca-Cola’s situation revolves around the Beijing Olympic Games. “Estimated at between $75 million and $90 million, the sponsorships underscore Coke’s heavy bet on China. ” (www. ajc. com) China already is Coke’s fourth-largest market, with consumer spending on soft drinks more than doubling since 2001. Executives expect China eventually will surpass the United States as the company’s top market.

The spending blitz, and heavy marketing, in China specifically for these games comes at a time when resources are scarce and expensive. “Coca-Cola Bottling (COKE) the No. 2 Coke distributor says it plans to cut 5%, or 350 workers, to help offset the rising costs of sweetener and diesel fuel. ” (fortune. cnn. com) Yet, among the millions of dollars spent, the company remains profitable. “Coca-Cola Company (KO) posted earnings of $1. 01 per share, vs. 80 cents a year ago, as revenue rose 17%. The company is planning $400 to $500 million in annual savings from productivity initiatives by 2011.

” (businessweek. com) This direct translation of growth, profit, and earnings, is returned to the shareholders of Coca-Cola as seen in the increase of stock price. The history of good decision making has proven beneficial for Coca-Cola, which would also stand with good reason that the marketing risk in China, for the Beijing Olympics, is with good reason. Eli Lily – Karen Green Normally a firm takes extra cash to pay out dividends or invest in a project and use the future extra cash as dividends. This all depends on the stockholders desire.

Stockholders intentions are to make money off of their investments. If reinvesting the dividends would produce higher return at the same rate, undoubtedly, the stockholder is going to reinvest (Ross, Westerfield ; Jaffe, 2004, p. 318). Eli Lilly practices this concept. Eli Lilly and Company is a leading pharmaceutical developer that produces products treat depression, schizophrenia, attention-deficit hyperactivity disorder, diabetes, osteoporosis and many other conditions (Eli Lilly and Company Limited, July, 2008) Eli Lilly and Company has been in collaboration with SGX Pharmaceuticals since 2003.

SGX Pharmaceuticals is a biotechnology company that focuses on drug discovery and development in the area of oncology. The agreement states that Lilly will acquire all the outstanding shares of SGX common stock. The purchase price is approximately $64. 0 million (Lilly to acquire SGX Pharmaceuticals, July 2008). The expected rate of return on the stock that Lilly purchased and the cost of capital to purchase SGX Pharmaceuticals have risks involved. Eli Lilly will pay $3 per share for SGX Pharmaceuticals, marking a premium of more than double SGX’s closing price of $1. 37. Shares of Eli Lilly rose 4.9 percent, to close at $48. 46.

Shares of SGX quickly jumped to within range of the buyout price in after hours trading to $2. 87 (Eli Lilly to Acquire SGX Pharmaceuticals For $64 Million in Cash, 2008) Lowering the cost of capital through liquidation of stock is one suggestion offered by scholars to reduce risk. Stocks that are too expensive are less liquid than stocks that are traded at a cheaper price. Stocks that are not easily liquidated will reduce to return the stockholder receives. Stockholders demand a high expected return for their investment (Ross, Westerfield & Jaffe, 2004, p.335).

The factors to ascertain the liquidity of stocks vary. Corporations lower the trading cost of their stocks in order to lower the cost of capital. Michael Grey, the chief executive at Lilly says for companies like Eli Lilly and SGX Pharmaceuticals, to find investors is an arduous task and the acquisition was the best option for both companies (Somers, 2008). India Finance – Eduard Hristache The volatility in global currency markets has led several Indian companies to sue their banks for losses on foreign-exchange derivatives.

April is results season for corporate India, and as the numbers for the past fiscal year trickle in, so do revelations about losses on foreign-exchange (forex) products. Due to forex, some Indian companies may end up with notional, marked-to-market losses of around Rs120bn-200bn (US$3bn-5bn) on forex derivatives. India’s largest lender, the State Bank of India, said on April 22nd that its clients alone are likely to show marked-to-market losses of between Rs6bn and Rs7bn on such derivatives for the 2007/08 financial year.

The first warning came in late November 2007, when software company Hexaware Technologies announced that it would suffer some actual losses on forex derivative deals. However, as more companies have subsequently revealed their own forex derivative woes, it has become clear that the problem is widespread. Over the past two years, the Indian rupee has appreciated against the US dollar on the back of strong forex inflows and the weakness of the dollar, appreciating about 12% in fiscal 2007/08.

At first, the rise of the rupee caught many companies unawares: many IT companies, for example, were badly hit by the sharp depreciation in the dollar, due to inadequate hedging. Companies wanted to minimize the risks of currency fluctuations and make it easier to predict revenues and incomes. They therefore began actively to use forex hedging products. While hedging is a prudent risk-management strategy, the problem began when companies began expanding into exotic derivatives, which are complex and difficult to understand.

Most treasuries, particularly at small and medium-sized companies, may be ill-equipped to understand their intricacies and implications. In early 2007, for example, the rupee was appreciating against the dollar and seemed likely to continue to do so. Therefore banks sold contracts that gave exporters the right to sell their future dollar export earnings at a large premium to the then-prevailing spot rate. However, the banks also sold them exotic cross-currency derivatives that swapped dollar liabilities into low-interest-rate currencies such as the Swiss franc and the Japanese yen, chosen for their stability against the dollar.

These contracts exposed the companies to risk and gave them exposures that were much larger than their original export exposures. Companies were unconcerned, since they were actually making money on these instruments as long as the dollar remained relatively stable against these currencies. The real trouble began when revelations about the US sub-prime crisis and the resulting turmoil began to emerge and the dollar depreciated against previously stable currencies like the yen as well.

The volatility in the global currency markets left Indian companies with large marked-to-market losses on their derivative contracts. For smaller companies, the losses are large in relation to their own size. For example, in the quarter ended December 2007, Hexaware Technologies took actual losses of about Rs1bn on its forex contracts, reporting a net loss of Rs810m. That was a big hit for the company, considering that its total net profit for the previous fiscal year 2006/07 was about Rs1. 1bn. Omnicare – Karen Green Shareholders receive dividends at year end as a return on an investment.

The total dollar return on the shareholders investment is the sum of the dividend income and the capital gain or loss on the investment (Ross, Westerfield ; Jaffe, 2004). Omnicare, Inc. , is among the nation’s leading providers of professional pharmacy, data management services for skilled nursing, assisted living and other institutional healthcare providers. They also offer services for hospice patients in homecare and other settings for the elderly. According to (FinancialWire), February 15, 2008, the board of directors at Omnicare, Inc.

declared a quarterly cash dividend of 2. 25 cents per share on its common stock. The dividend is payable March 21 to stockholders of record on March 6 (Omnicare Declares 2. 25 Cent Dividend, 2008). “Cash flow from operations for the quarter ended March 31, 2008 was $142. 3 million versus $174. 8 million in the comparable prior year quarter. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first quarter of 2008, including the special items, was $113. 8 million versus $138. 4 million in the first quarter of 2007.

Excluding the special items, adjusted EBITDA in the 2008 quarter was $143. 7 million versus $160. 3 million in the 2007 quarter. ” (Omnicare Reports First Quarter Results, 2008). On Thursday, March 27, 2008, Omnicare, Inc. opened up on the NYSE at $0. 35, a below average volume during early trading. The Board of Directors at Omnicare, Inc. authorized a new repurchase program to repurchase shares of Omnicare’s outstanding common stock. As of February 29, 2008, is has been reported, Omnicare had 121. 7 million shares of common stock outstanding.

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Brand Potency of Soft Drink in India

Table of contents

Introduction

Research Objective

The sole objective of making of this research report is to know about the present BRAND potency of PEPSI in comparison to other brands of soft drinks competing in the Indian market and by the help of a research to know that which soft drink brand has a highest brand potency. This report will further put a spotlight on the various soft drinks competitors in the Indian Market and the attitude and choice of the customers about their preferred soft drinks.

Industry/Company Background

Soft drink market size for FY00 was around 270 million cases (6480mn bottles). The market witnessed 5- 6% growth in the early‘90s. Presently the market growth has growth rate of 7- 8% per annum compared to 22% growth rate in the previous year. The market size for FY01 is expected to be 7000 million bottles. Soft Drink Production area The market preference is highly regional based. While cola drinks have main markets in metro cities and northern states of UP, Punjab, Haryana etc. Orange flavored drinks are popular in southern states.

Sodas too are sold largely in southern states besides sale through bars. Western markets have preference towards mango flavored drinks. Diet coke presently constitutes just 0. 7% of the total carbonated beverage market. Growth promotional activities The government has adopted liberalized policies for the soft drink trade to give the industry a boast and promote the Indian brands internationally. Although the import and manufacture of international brands like Pepsi and Coke is enhanced in India the local brands are being stabilized by advertisements, good quality and low cost.

The soft drinks market till early 1990s was in hands of domestic players like campa, thumps up, Limca etc but with opening up of economy and coming of MNC players Pepsi and Coke the market has come totally under their control. The distribution network of Coca cola had 6. 5 lakhs outlets across the country in FY00, which the company is planning to increase to 8 lakhs by FY01. On the other hand Pepsi Co’s distribution network had 6 lakh outlets across the country during FY00 which it is planning to increase to 7. 5 Lakh by FY01.

Types

Soft drinks are available in glass bottles, aluminum cans and PET bottles for home consumption. Fountains also dispense them in disposable containers Non-alcoholic soft drink beverage market can be divided into fruit drinks and soft drinks. Soft drinks can be further divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated drinks while mango drinks come under non carbonated category. The market can also be segmented on the basis of types of products into cola products and non-cola products. Cola products account for nearly 61-62% of the total soft drinks market.

The brands that fall in this category are Pepsi, Coca- Cola, Thumps Up, diet coke, Diet Pepsi etc. Non-cola segment which constitutes 36% can be divided into 4 categories based on the types of flavors available, namely: Orange, Cloudy Lime, Clear Lime and Mango.

About Pepsico & Its Products

PepsiCo Mission

“To be the world’s premier consumer products company focused on convenience foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity”.

Corporate Profile PepsiCo

In India PepsiCo entered India in 1989 and has grown to become one of the country’s leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India. PepsiCo India and its partners have invested more than U. S. $1 billion since the company was established in the country. PepsiCo provides direct and indirect employment to 150,000 people including suppliers and distributors.

PepsiCo nourishes consumers with a range of products from treats to healthy eats, that deliver joy as well as nutrition and always, good taste. PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks – Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana Twister and Slice. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands.

PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands. The company’s high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to consumers. Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets.

The group has built an expansive beverage and foods business. To support its operations, PepsiCo has 43 bottling plants in India, of which 15 are company owned and 28 are franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-the-art plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better than today. PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers. Performance With Purpose

Performance with Purpose articulates PepsiCo India’s belief that its businesses are intrinsically connected to the communities and world that surrounds it. Performance with Purpose means delivering superior financial performance at the same time as we improve the world. To deliver on this commitment, PepsiCo India will build on the incredibly strong foundation of achievement and scale up its initiatives while focusing on the following 4 critical areas that have a business link and where we believe that we can have the most impact.

Human Sustainability reflects PepsiCo’s goal of nourishing consumers with products that range from treats to healthy eats. PepsiCo’s products have always offered consumers nutrition as well as great taste. The progress that PepsiCo has made under the Human Sustainability pillar includes reformulating some of its products to improve their nutritional profile while launching products that reflect consumer demand for healthier nutritious snacks and beverages. PepsiCo partners with Governments, health officials and Non Governmental Organisations to help address obesity concerns and it continues to provide consumers with new product choices and innovations.

Environmental Sustainability is based on PepsiCo’s commitment to strive to replenish the resources used where possible, and minimize the impact on the environment. PepsiCo continues to work to further reduce its water and electricity consumption and improve its packaging sustainability. Across the world, PepsiCo has re-used water from its processing plants and has worked with local communities to provide access to clean water, while supporting farmers to deliver “more crop per drop. ” Talent Sustainability is founded on PepsiCo’s belief that cherishing its extraordinary group of people is crucial to building an empowered workforce. PepsiCo pursues diversity and creates an inclusive environment which encourages associates to bring their whole selves to work.

PepsiCo has increased female and minority representation in the management ranks and has encouraged employees to participate in community service activities while continuing to create rewarding job opportunities for people with different abilities. Together, PepsiCo associates across the world are building on the platform of Human, Environment and Talent Sustainability, while delivering great financial results. PepsiCo India’s Performance With Purpose To deliver on the commitment of Performance With Purpose, PepsiCo India continues to build on its strong foundation of achievements and scale up its initiatives while focusing on the following 4 critical areas that are linked to its business and where it can have the most impact.

There have been many Pepsi variants produced over the years since 1898, including Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Free, Pepsi AM, Pepsi Samba, Pepsi Blue, Pepsi Gold, Pepsi Holiday Spice, Pepsi Jazz, Vanilla Pepsi, Pepsi X (available in Finland and Brazil), Pepsi Next (available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, Pepsi Ice Cucumber and Pepsi White in Japan. In October 2008, Pepsi announced they would be redesigning its logo and re-branding many of its products by early 2009. In 2009, Pepsi, Diet Pepsi and Pepsi Max began using all lower-case fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand’s blue and red globe trademark became a series of “smiles,” with the central white band arcing at different angles depending on the product. As of January 2009, Pepsi’s newer logos have only been adopted in the United States. Currently, Pepsi Wild Cherry and Pepsi ONE are the only two products that still use their previous design.

Diet Pepsi Wild Cherry, Diet Pepsi Lime, and Diet Pepsi Vanilla received the redesign. Origins Pepsi was originally named “Brad’s Drink”, after its creator, a pharmicist in New Bern, North Carolina. It was created in the summer of 1893 and was later renamed Pepsi Cola in 1898, possibly due the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. Another theory is that Bradham and his customers simply thought the name “Pepsi” sounded good and reflected the fact that the drink had some kind of “pep” in it because it was a carbonated drink.

And another theory is that the word Pepsi was chosen because it reflected phonetically the sound of a can being opened, the sound “pop” “schi”, was condensed and simplified in the name “Pepsi”. This theory can be considered folklore only, since at the time of the naming of the drink, Pepsi was sold in glass bottles and not metal cans; and the pop top lid producing Pepsi’s oddly phonetic sound wouldn’t be invented for another forty years. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1929, Pepsi received its first logo redesign since the original design of 1905. In 1926, the logo was changed again.

In 1929, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as “A bully drink… refreshing, invigorating, a fine bracer before a race” In 1931, the Pepsi-Cola Company went bankrupt during the Great Depression- in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi’s assets were then purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores’ fountains after Coke refused to give him a discount on syrup.

Guth then had Loft’s chemists reformulate the Pepsi-Cola syrup formula. Rise During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle “Pepsi cola hits the spot / Twelve full ounces, that’s a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you,” Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of six ounces a bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price.

Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi’s status. In 1936 alone 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola’s profits doubled. Pepsi’s success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft’s finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth.

Marketing

This Pepsi logo is still used with Pepsi Wild Cherry, Pepsi ONE, and in many countries. In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great advantage of the campaign with television commercials reporting the test results to the public. In 1976 Pepsi, RKO Bottlers in Toledo, Ohio hired the first female Pepsi salesperson, Denise Muck, to coincide with the United States bicentennial celebration. In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy.

By 2002, the strategy was cited by Promo Magazine as one of 16 “Ageless Wonders” that “helped redefine promotion marketing. ” In 2007, PepsiCo redesigned their cans for the fourteenth time, and for the first time, included more than thirty different backgrounds on each can, introducing a new background every three weeks. One of their background designs includes a string of repetitive numbers 73774. This is a numerical expression from a telephone keypad of the word “Pepsi. ” In late 2008, Pepsi overhauled their entire brand, simultaneously introducing a new logo and a minimalist label design. The redesign was comparable to Coca-Cola’s earlier simplification of their can and bottle designs.

Due to the timing of the new logo release, some have criticised the logo change, as the new logo looked strikingly similar to the logo used for Barack Obama’s successful presidential campaign, implicating a bias towards the President. Also in 4th quarter of 2008 Pepsi teamed up with Google/Youtube to produce the first daily entertainment show on Youtube for Youtube. This daily show deals with pop culture, internet viral videos, and celebrity gossip. Poptub is refreshed daily from Pepsi. Since 2007, Pepsi, Lay’s, and Gatorade have had a “Bring Home the Cup,” contest for Canada’s biggest hockey fans. Hockey fans were asked to submit content (videos, pictures or essays) for a chance at winning a party in their hometown with The Stanley Cup and Mark Messier. In 2009, “Bring Home the Cup,” changed to “Team Up and Bring Home the Cup. The new installment of the campaign asks for team involvement and an advocate to submit content on behalf of their team for the chance to have the Stanley Cup delivered to the team’s hometown by Mark Messier. Bans in India Pepsi arrived on the black market in India in 1988. In 2003 and again in 2006, the Centre for Science and Environment (CSE), a non-governmental organization in New Delhi, claimed that soda drinks produced by manufacturers in India, including both Pepsi and Coca-Cola, had dangerously high levels of pesticides in their drinks. Both PepsiCo and The Coca-Cola Company maintain that their drinks are safe for consumption and have published newspaper advertisements that say pesticide levels in their products are less than those in other foods such as tea, fruit and dairy products.

In the Indian state of Kerala, sale and production of Pepsi-Cola, along with other soft drinks, were banned in 2006 following partial bans on the drinks in schools, colleges and hospitals in five other Indian states. On September 22, 2006, the High Court in Kerala overturned the Kerala ban ruling that only the central government can ban food products.

Rivalry with Coca-Cola

Cola Wars According to Consumer Reports, in the 1970s, the rivalry continued to heat up the market. Pepsi conducted blind taste tests in stores, in what was called the “Pepsi Challenge”. These tests suggested that more consumers preferred the taste of Pepsi (which is believed to have more lemon oil, less orange oil, and uses vanillin rather than vanilla) to Coke.

The sales of Pepsi started to climb, and Pepsi kicked off the “Challenge” across the nation. This became known as the “Cola Wars. ” In 1985, The Coca-Cola Company, amid much publicity, changed its formula. The theory has been advanced that New Coke, as the reformulated drink came to be known, was invented specifically in response to the Pepsi Challenge. However, a consumer backlash led to Coca-Cola quickly introducing a modified version of the original formula (removing the expensive Haitian lime oil and changing the sweetener to corn syrup) as Coke “Classic”. In the U. S., Pepsi’s total market share was about 31. 7 percent in 2004, while Coke’s was about 43. 1 percent.

Overall, Coca-Cola continues to outsell Pepsi in almost all areas of the world. However, exceptions include Saudi Arabia; Pakistan (Pepsi has been a dominant sponsor of the Pakistan cricket team since the 1990s); the Dominican Republic; the Canadian provinces of Quebec, Newfoundland and Labrador and Prince Edward Island; and Guatemala.. Pepsi had long been the drink of Canadian Francophones and it continues to hold its dominance by relying on local Quebecois celebrities (especially Claude Meunier, of La Petite Vie fame) to sell its product. PepsiCo use the slogan “here, it’s Pepsi” (Ici, c’est Pepsi) to answer to Coca-cola publicity “Everywhere in the world, it’s Coke” (Partout dans le monde, c’est Coke).

By most accounts, Coca-Cola was India’s leading soft drink until 1977 when it left India after a new government ordered The Coca-Cola Company to turn over its secret formula for Coke and dilute its stake in its Indian unit as required by the Foreign Exchange Regulation Act (FERA). In 1988, PepsiCo gained entry to India by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991 when the use of foreign brands was allowed; PepsiCo bought out its partners and ended the joint venture in 1994. In 1993, The Coca-Cola Company returned in pursuance of India’s Liberalization policy.

In 2005, The Coca-Cola Company and PepsiCo together held 95% market share of soft-drink sales in India. Coca-Cola India’s market share was 52. 5%. A sticker from a USSR-produced Pepsi bottle. The logo shown is a version used from 1973-91. In Russia, Pepsi initially had a larger market share than Coke but it was undercut once the Cold War ended. In 1972, Pepsico company struck a barter agreement with the then government of the Soviet Union, in which Pepsico was granted exportation and Western marketing rights to Stolichnaya vodka in exchange for importation and Soviet marketing of Pepsi-Cola. This exchange led to Pepsi-Cola being the first foreign product sanctioned for sale in the U. S. S. R.

Reminiscent of the way that Coca-Cola became a cultural icon and its global spread spawned words like “coca colonization”, Pepsi-Cola and its relation to the Soviet system turned it into an icon. In the early 1990s, the term “Pepsi-stroika” began appearing as a pun on “perestroika”, the reform policy of the Soviet Union under Mikhail Gorbachev. Critics viewed the policy as a lot of fizz without substance and as an attempt to usher in Western products in deals there with the old elites. Pepsi, as one of the first American products in the Soviet Union, became a symbol of that relationship and the Soviet policy. This was reflected in Russian author Victor Pelevin’s book “Generation P”. In 1989, Billy Joel mentions the rivalry between the two companies in the song We Didn’t Start The Fire.

The line “Rock & Roller Cola Wars” refers to Pepsi and Coke’s usage of various musicians in their advertising campaigns. Coke used Paula Abdul,while Pepsi used Michael Jackson. They then continued to try to get other musicians to advertise their beverages. Whilst filming the Pepsi advert Michael Jackson burned his hair. In 1992, following the Soviet collapse, Coca-Cola was introduced to the Russian market. As it came to be associated with the new system, and Pepsi to the old, Coca-Cola rapidly captured a significant market share that might otherwise have required years to achieve. By July 2005, Coca-Cola enjoyed a market share of 19. 4 percent, followed by Pepsi with 13 percent. Ingredients

Pepsi-Cola contains basic ingredients found in most other similar drinks including carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric acid, and natural flavors. The caffeine-free Pepsi-Cola contains the same ingredients minus the caffeine. The original Pepsi-Cola recipe was available from documents filed with the court at the time that the Pepsi-Cola Company went bankrupt in 1929. The original formula contained neither cola nor caffeine. Competitors • Coca-Cola • R. C. Cola Brands Under Pepsico (used in research) 1. Miranda 2. Slice 3. Mountain Dew 4. 7 Up About Miranda Mirinda is a brand of soft drink available in fruit varieties including orange.

A “citrus” flavour is also available in certain areas of the Middle East. It is part of a beverage area often referred to as the flavor segment, comprising carbonated and non-carbonated fruit-flavored beverages. The orange flavor of Mirinda represents the majority of Mirinda sales worldwide. Mirinda is owned by PepsiCo and is primarily commercialized outside of North America. It competes with Coca-Cola’s Fanta and Cadbury-Schweppes’s Orange Crush brand, with flavor brands local to individual countries. As with most soft drinks, Mirinda is available in multiple formulations depending on the taste of individual markets.

History

Mirinda was originally produced in Spain. It became available in the United States in late 2003 in bilingual packaging, and initially sold at a reduced price, presumably to become a competitor against Coca-Cola’s Fanta brand. Since 2005, Mirinda flavors have largely been sold under the Tropicana Twister Soda brand in the United States except in Guam, where Pepsi began selling it under the Mirinda brand in 2007 (replacing Chamorro Punch Orange). Pepsico also tried to sell Mirinda in Brazil in late 1996, but the brand was discontinued in 1997 after weak sales, keeping the local brand Sukita under production. Recent events Mirinda campaigns over the years have included the Mirinda Woman campaign in the 1970s and a campaign in the 1994-1996 time frame with a campaign using the tag-line ‘The Taste is in Mirinda’ with the Blue Man Group.

In some markets, including Mexico, the Blue Man Group campaign re-launched Mirinda away from a multi-flavor positioning to a brand solely focused on the orange flavor. The Blue Man Group campaign showed the Blue Man Group competing to drink orange Mirinda and celebrating a successful drink with an open-mouth exclamation of ‘Mirindaaaa’. Also in this same country Mirinda launch a campaign with the Pokemon anime series to the children with a promotion of many gadgets with the characters of the manga series. A recent, highly successful advertising campaign was launched in India featuring a handsome young gentleman, Stefan Persson, gallivanting about town in hunt of his sweet sweet Mirinda.

Stefan’s credible portrayal of the Mirinda-obsessed youth earned the campaign accolades in Brand Equity, the advertising section of a leading financial newspaper. Mirinda advertising campaigns over the last fifteen years have been handled by Pepsi’s stable of creative agencies, including BBDO and J Walter Thompson. Mirinda also regularly introduces special movie-themed editions in Asia. Recent ones included Batman (Blueberry) and Superman (Fruit punch). Mirinda has also recently released a new flavour of drinks called Mirinda Sorbet. They come in two flavours: Raspberry and Lime.

  • It is also in the Middle Eastern markets, but the name is commonly mispronounced as “Miranda” due to its Arabic spelling.
  • The name “Mirinda” means “amazing” in Esperanto. There is a claim that the original manufacturer of Mirinda, which later sold the brand to PepsiCo, was an Esperanto-speaking individual.
  • Spanish-speaking consumers may also associate it with merienda or afternoon (teatime) snack.
  • Mirinda’s primary formulation is as an artificially flavored beverage; however, it has been produced in the past with a percentage of fruit juice, usually due to local tax benefits tied to non-artificial juice ingredients.
  • Mirinda was sold in a distinctive ribbed glass bottle in Australia and parts of Southeast Asia, when originally released there.

Mirindas asesinas (“Killer Mirindas”) was the first short film of the Spanish filmmaker Alex de la Iglesia About Slice Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and introduced in 1984, with the lemon-lime flavor replacing Teem. Varieties of Slice have included Apple, Fruit Punch, Grape, Passionfruit, Peach, Mandarin Orange, Pineapple, Strawberry, Cherry Cola, “Red”, Cherry-Lime, and Dr Slice. Originally, the drink was known for containing 10% fruit juice, but that was discontinued by 1994. The original design of the can was a solid color, related to the flavor of the drink. These were replaced around 1994 with black cans, with a colorful burst (once again, related to the flavor of the drink), along with slicker graphics.

Around 1997, the cans became blue with color-coordinated swirls. The original orange flavor was reformulated at this time with an infiltration marketing campaign led by Danieli. The new flavor’s slogan was “it’s orange, only twisted. ” Orange Slice has since been changed back to its original flavor. Lemon Lime Slice was replaced by Sierra Mist in most markets in the summer of 2000. Sierra Mist became a national brand in 2003. The rest of the Slice line was replaced in most markets by Tropicana Twister Soda in the summer of 2005, although the Dr Slice variety can still be found in some fountains. It has been discontinued in more and more markets though.

In early 2006, the Slice name was resurrected for a new line of diet sodas from Pepsi, called Slice ONE. Initially, Slice ONE was available exclusively at Wal-Mart stores, in orange, grape, and berry flavors. All three flavors are sweetened with Splenda. In 2009 Slice (Orange, Diet Orange, Grape, Strawberry, Peach) will be sold only in Wal-Mart Stores.

About Mountain Dew

Mountain Dew (also known as Mtn Dew as of late 2008) is a soft drink distributed and manufactured by PepsiCo. The main formula was invented in Knoxville, Tennessee, named and first marketed in Knoxville and Johnson City, TN in the 1940s, then by Barney and Ally Hartman, in Fayetteville, North Carolina and across the United States in 1964.

When removed from its characteristic green bottle, Mountain Dew is bright yellow-green and translucent. As of 2007, Mountain Dew was the fourth-best-selling carbonated soft drink in the United States, behind only Coca-Cola Classic, Pepsi-Cola, and Diet Coke. Diet Mountain Dew ranked ninth in sales in the same year. On October 15, 2008, it was announced that Pepsi would be redesigning their logos and re-branding many of their core products by the end of 2008. At the same time they registered the name “mtn dew” and a related logo with the United States Patent and Trademark Office. This also announced the re-launch of Mountain Dew in the UK, which was released by Pepsi in 1996 but was dropped in 1998 due to low sales. As of April 2009, the flavors “Code Red” and “Live Wire” continue to use the previous Mountain Dew design.

Ingredients

Mountain Dew lists its ingredients as:

  • Carbonated water
  • Sugar (replaced by High fructose corn syrup (HFCS) in much of the United States)
  • Concentrated orange juice
  • Citric acid
  • Natural flavors
  • Sodium benzoate (preserves freshness)
  • Caffeine (54 mg per 12 US fluid ounces (350 ml))
  • Sodium citrate
  • Erythorbic acid (preserves freshness)
  • Gum arabic
  • Calcium disodium EDTA (to protect flavor)
  • Brominated vegetable oil
  • Thiamin hydrochloride About 7 UP

The rights to the brand are held by Dr Pepper Snapple Group in the United States, and PepsiCo (or its licensees) in the rest of the world. The 7 Up logo includes a red spot between the ‘7’ and ‘Up’; this red spot has been animated and used as a mascot for the brand as Cool Spot. Name According to Professor Donald Sadoway (MIT) the name is derived from the atomic mass of Lithium, 7, which was originally one of the key ingredients of the drink (as lithium citrate). However, there are numerous myths explaining the name. One popular myth is that its creator named the soft drink after seeing a cattle brand with the number 7 and the letter U. Other theories suggest that the drink was formulated with seven flavors plus the bubbles from the drink’s carbonation (the bubbles go up).

Other ideas include the original bottle contained seven ounces; its creator came up with the name while playing dice; that it was the 7th large commercial lemonade brand that tasted the same. Another rumor has it that the name was created because the company had previously failed six times, hence the name “7 Up”. Before the formula change in 2006, a can of 7 Up included seven ingredients. The “Up” in the drink’s name might refer to the original inclusion of lithium citrate, when it was marketed as a patent medicine to cure hangovers. Some people mistakenly believe that the name 7 Up comes from the belief that its pH is 7. 0 and therefore neutral. This is not the case at all: the pH of 7 Up is comparable to many other soft drinks. At a pH of 3. 67, Diet 7 Up is less acidic than lemon juice (pH 2. ), vinegar (pH 2. 9) or wine (pH 3. 5). History 7 Up was created by Charles Leiper Grigg who launched his St. Louis-based company The Howdy Corporation in 1920. Grigg came up with the formula for a lemon-lime soft drink in 1929. The product, originally named “Bib-Label Lithiated Lemon-Lime Soda”, was launched two weeks before the Wall Street Crash of 1929. It contained lithium citrate, a mood-stabilizing drug. It was one of a number of patent medicine products popular in the late-19th and early-20th centuries; they made claims similar to today’s health foods. Specifically it was marketed as a hangover cure. The product’s name was soon changed to 7 Up.

The Great Depression was just the beginning of the business challenges the product would face. In its early years, there were around 600 lemon-lime beverage brands being sold in the US. 7 Up was able to survive and become the market leader in the category by being one of the first to be nationally distributed as well as being marketed as more healthy than other soft drinks. The success of 7 Up led Grigg to rename his company to “The Seven Up Company” in 1936. Lithium citrate was removed from 7 Up’s formula in 1950. Expanding the brand beyond a niche market, major competitors began to set their sights on it such as The Coca-Cola Company with its Sprite brand introduced in 1961.

Sprite would not challenge 7 Up’s position seriously until the 1980s when Coke forced its major bottlers, then distributing 7 Up, to drop the beverage in deference to Sprite. 7 Up challenged Coke’s actions in court as “anti-competitive”, a challenge they eventually lost. Formula 7 Up has been reformulated several times since its launch in 1929. In 2006, the version of the product sold in the U. S. was re-formulated so that it could be marketed as being “100% Natural”. This was achieved by eliminating the preservative calcium disodium EDTA, and replacing sodium citrate with potassium citrate in order to reduce the beverage’s sodium content. This re-formulation contains no fruit juice and is still sweetened with high fructose corn syrup (HFCS).

The manufacturing process used in the production of HFCS has led some public health and special interest groups to challenge the ad campaign’s “natural” claims. In 2007, after the Center for Science in the Public Interest threatened to sue 7 Up, it was announced that 7 Up would stop being marketed as “100% natural”. Instead, It is now promoted as having “100% Natural Flavors”. The controversy does not extend to other countries, such as the United Kingdom, where high fructose corn syrup is not generally used in foods, including 7 Up. Methods used during my research:

  • Interview method

During the research I used the personal interview method. I asked the questions generally face to face. sometime only for the appointment I used the telephonic method.

  • Questionnaire method

Mostly I used the proper sequencing of the questions I used rating scale method

  • Open ended

this type of question I also used in the form of personal interview. Research Design The design that is used in this project is exploratory design. The reason for choosing this design was to get clear response from the customers. I also used descriptive research design.

Research Instrument used

In this research I used mainly the structured questionnaire for getting the different type of information. My sample size for this research report was of 100 individuals. Fieldwork It includes giving out in the field to collect required information and data from the concerned person. I used to visit major educational institutes, localities, markets, shops, malls usually area wise conducting short interviews & giving awareness and for the promotion about the. Under this survey my main objective was to have an interaction with its users and to find out their preferences.

About the Research

Particularly about the project, this research was carried to know the Brand potency about the various brands of soft drinks in Indian Market on the basis of calculations of several values of each brand namely:

  • Value Of Memorization (VM): this is value of a brand which states the degree of remembrance of a particular brand. It tells that how much does one individual remember about the brand.
  • Value Of Association (VA): this is the value of the brand which tells the degree of association of a brand for an individual to his personal life experiences.
  • Value Of Description (VD): this is the value of the brand which tells the degree of a brand, that how much does it describes its features according to its brand name.
  • Value Of Motivation (VMo): this tells the value of the brand in the terms of the degree of motivation which the brand gives to the user to buy it.
  • Value Of Reurchase (VR): this tells the value of a brand according to which it can be calculated and stated that an individual will repurchase the brand.

Though I tried my level best to make this report most accurate, some of the limitations are as follows :

  • This study is valid for Lucknow city only.
  • Due to certain unavoidable reasons, it was not possible to cover each and every outlet such as holidays, absenteeism, working closed etc.
  • There may be some biased response.
  • Some of the customers didn’t provide dull data.
  • Most of the customers were too busy to meet.
  • Too much time consumed on some calls because of appointments and waiting.

Conclusion

Soft drink market whether on micro or macro scale, it is vast and full with great opportunities. It is one of the industry which is not adversely affected by the recession process.

Demand for soft drink is still at large, which is resulting in the launch of new and more soft drink variants. Due to which also the companies are adopting aggressive market strategies. Although consumers are going for and liking every soft drink brand but definitely some brands have more value and demand in the market than compared to others. This research was carried out for knowing the brand having maximum market potency, which is Thums Up hence objective achieved. At the end of this report we can clearly conclude that Coke had been greatly got success in the local Lucknow market of soft drinks as the first two positions of maximum potency Brands are held by Thums Up (22%) and Coca cola (16%).

This tells us that coke’s marketing strategy is far more clear cut and accurate than its competitors Pepsico, Coke is very well understanding the mind of the local Lucknow Consumer’s, which is making coke and its other brands more preferred and desired by the consumers in Lucknow market than compared to Pepsico’s Brands.

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Coca Cola Share A Coke This Summer

However, in reality the Coca Cola Company has a wider target market because the product is addressed to everyone and everywhere. Usually the consumers (both males and females)who use the product are between 12 and 32 years old. Second, in the video we can see that the consumers are buying the product, this shows the reputation of the trademark in the mind of the consumers and a few seconds later we can see more people buying Coca-Cola in massive amounts which reflects the power, the preference and the loyalty that the consumers have to the Coca-Cola brand.

In the video, after the consumers brought the product we can see them having fun, having barbecues, having arties and playing on the street with their friends, in that moment Coca-Cola is telling us the viewers that the purpose of this video is not only to show the popularity of the brand but also that the company is not just about selling goods to the consumers but also selling events ( Examples: World cup and the Olympics) and experiences ( Examples: Walt Disney magic kingdom and music/sports camps) to the consumers.

Coca-Cola is the number one company of soft drinks around the world, the margin between it and its is competitors is huge, so the reason that Coca-Cola peps doing the advertising is not to increase their sales, but to remind people that Coca-Cola is here, is number one and the consumers should drink Coke once in a while(Hardball Peter, 2014) . Like this advertising and many others, Coca-Cola focus on the principle of sharing; not only sharing with families and friends but also sharing happiness, moments and experience. This attitude of sharing IS key competitive advantage against their competitors which only focus on sales.

Finally, the video is showing a strategy to put their consumers names on the tootles. The purpose of this idea is to create an individualized or personalized product for the customers for the summer of 2014 because in summer, is the perfect time to be with other people and share moments of happiness with everyone. According to the senior vice president Stuart Kerosene the message of this advertising is to drink a coke with your name on it and offering the event to another person makes these minutes much more “extraordinary” (Money Jay, 2014).

Another strategy for the development of this commercial was the flexibility to low the consumers to promote the brand across social media. Jennifer Whelan group director of Coca Cola North America says “It’s about statement toward oneself, individual narrating and staying associated with companions. ‘Share a Coke’ takes advantage of those passions”. She also adds that “At the point when teenagers see that the iconic.

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Define Marketing Paper

Surveys are an integrated method to achieve exceptional results in the marketplace. Professional researchers use these six modes – advertising, direct marketing, events and experience, personal selling, Public Relations and publicity, and sales promotion. Each segment covers different ground within any given environment placing a mix on the variety of student attractions are available. In marketing to students, these are essential needs to build clientele and sales for a program or organization.

The motive behind each concept blends into a story or ‘brand’ that leverages competition between industry leaders. Coca Cola – Quality Speaks Volumes in Marketing For example, Coca-Cola uses events and experience as well as advertising and personal selling (Santa Clause ad) to keep its consumers satisfied (CocaCola, 2007). The Coca-Cola may have lacked the strength it holds without these marketing modes. Although these are the same, the dynamics behind each marketing tool heightens the sensitivity of students.

For instance, events and experience puts a company in an interactive setting to provide personal selling as well. It is very important for a company to practice personal selling and publicity methods while hosting an event (CocaCola, 2007). All of these mechanics play a fine tune in gathering loyal consumers or prospecting new ones. The program directors must take time to plan their marketing strategies carefully so funding is not wasted. Each method brings more to the table in success, but implementing the plan means so much more to investors.

Affiliation Marketing – Social Networking Affiliation marketing techniques involve referrals as well as small businesses with little or no clientele. The formation of a database will wastes their time if the company does not have a system in place to arrange leads. This leads into the mobile vendors such as lunch trucks that visit from area to area without a known list of consumers (Meskauskas, 2006, p. 1). These businesses run off good faith and building a customer database is not worthwhile to increase their profits.

Also, small companies with a small or no inventory offering will have no use of a database because their products are not sold extensively. Companies must address other issues such as a lack of marketing capabilities to associate referrals made by consumers or providing information indirectly to prospects (Meskauskas, 2006, p. 2). Gal Trifon’s 2007 Online Marketing Predictions – Case In Gal Trifon’s article 2007 Online Marketing Predictions, he addresses seven core issues arising within the online marketplace. Businesses and marketers must acknowledge this new advancements if they plan to stay in competition for prospects.

Trifon’s list includes rich media, search and display advertising, in-game and mobile advertising, content explosions, global marketing, and ad-supported applications (Trifon, p. 1). These ingredients create indisputable abilities to remove all barriers placed before a company’s advancement in online marketing. Online Marketing Takes Over This article is very informative and intriguing for an aspiring marketer of the new millennium. We can use this information in designing cutting edge advertisements for our online businesses (if we decide to open an online business) and learn the best practices of gathering an audience’s attention.

Search engines have changed the way we find the information we need on the internet; with Trifon’s (2007) advantages, we can integrate search ad placements by using Google Adsense or Adwords to lure in prospects (p. 1). I agree with his perspectives on integrating rich media in all online advertisements because the ‘normal’ advertisements are no longer intriguing to browsers. Rich Media in Marketing Rich media includes online video advertisements (because LonelyGirl15’s revolution) and user-generated communities give marketers an advantage.

We must understand how important this can be in a successful marketing campaign in the virtual marketing place. According to research and Trifon (2007), online spending will increase this year (p. 1). His predictions correlate with my interest in developing a small marketing campaign of my writing abilities online. Maybe his options are a way for me to gain leverage on present market leaders. YouTube – End of Television Marketing As a novice, I have learned a great deal of information from Trifon’s article on online marketing because I knew nothing of this.

His detailed outlines make it easy for new or curious internet marketers to digest the technical jargon of marketing. For example, in his article, Trifon (2006) breaks down the sources of rich media for laymen such as me and my friends (p. 1). He addresses the technical aspects of online video components and interactivity. In a sense, I considered the online video advertisements an interesting component of online marketing. We have read many reviews on the uses of YouTube and it seems to drive traffic faster to your sites.

Conclusion

I will use this information to help establish a media plan for my personal marketing project. The article’s layout was very helpful in distinguishing one technique from another without confusion. I can digest the components without dizziness and it fits into my project. With Trifon’s new predictions on hand, I can search for more articles or tutorials of how to integrate these techniques into my own project. Now that I have a little ground on what the hottest trends are, I will be informed of any techniques arising from my competitors online.

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Coca-Cola Blak: Evaluation of its Marketing and Promotions

In 2006, Coca-Cola, with a vision to extend its beverage portfolio away for carbonated softdrinks and to increase its affinity towards the adult market, launched Coca-Cola Black in some countries in Europe and in the United States. Coca-Cola Blak provides its market with a feel of froth similar to coffee and cappuccino and competes head-on with Pepsi Max Cino. It was suppose to be an innovative product which will trigger interest and excitement in a very fragmented and developed beverage market. However, the product was discontinued in the United States in 2007 for several reasons. This paper will attempt to evaluate the promotional and marketing activities supporting the introduction of Coca-Cola Blak in the U.S. market and what should have been done to improve these.

            In a review written by Lori Hutson (2006), a number of people were asked to try the new product. Most of them revealed that they could not tell what the beverage is. Apart from being undefineable, some said that the product had too much sugar, unpleasant taste, odd taste, among others. Hence, given this, it can be deduced that Coca-Cola Blak has a problem with its formulation, particularly taste.

            It is difficult to increase affinity towards a product, however appealing or vast a brand’s promotional and marketing campaigns be, if the product’s problem is taste. An advertiser cannot promise good taste to a consumer if the product will not give this to the market. Hence, a worth investment should have been put into market research, particularly concept test coupled with a product test. Market research is a worth investment especially for products which have high risk of failure in the market. Apparently, the concept of cola being mixed with coffee was one of the craze of softdrink companies but they learned after a while that this concept doesn’t work. Read also IFE matrix of Coca-Cola

Another factor that lead to the failure of Coca-Cola Blak was price.

According to one of the respondents in Hutson’s (2006) article, it was priced too high at $1.99 per 8-ounce bottle. Price was also believed to be a problem by one of Coke’s marketing executive during the time it was discontinued (Steve 2007). If taste was a problem, this product will not be able to defend its price premium. If taste was excellent, then there should have been a bigger chance for the product to be worth $1.99 per bottle investment.

            Another factor that contributed to its failure was the name (Blak) and its tagline (“carbonated fusion beverage”). Both do not convey to the consumers what drink it is exactly hence, there was a confusion on its flavor. Coffee was placed somewhere in the small prints in the bottle. Coca-Cola could have come up with a better name than Blak or a better tagline than “carbonated fusion beverage”. The brand should have ensured that the consumers would determine right away what the beverage was. This is very important especially in a market where choices were so many and consumers do not have all the time to think about all the beverages that they meet in the grocery shelves.

            When looking at the product’s advertisements, it shows that the product, to an extent, is confused about who its target market is.As indicated by Choueke (2005), Coca-Cola Blak was suppose to reach the adult market (i.e., 30 years old and above), but in one of its teaser advertisement, one you could hear children screaming 1-2-3 in the background. The visuals and mood of the advertisement seem to be the usual contemporary pop art used by Coca-Cola in its mainstream products which are more appealing to teenagers and young adults. If Blak was suppose to speak to consumers 30s and above and to effectively differentiate itself from the mainstream Coke products, these visuals should not have been used by Coca-Cola.

WORKS CITED

  1. Choueke, Mark. “Coke plans coffee drinks in a bid to reach adult market.” Marketing Week, 12/15, 28:50. 2005. < http://web.ebscohost.com/ehost/pdf?vid=4&hid=9&sid=c25a9930-010e-4c28-9b80-3185e88973ad@SRCSM1>
  2. Cleghorn, Danielle. “Why Coca Cola Blak Failed.” Associated Content: Business and Finance. 2008. 27 April 2009. <http://www.associatedcontent.com/article/1066360/why_coca_cola_blak_failed.html?cat=35>
  3. “Coca-Cola Blak.” The Beverage Industry’s Source for Product Reviews, News and More. 2006. 27 April 2009. <https://www.bevnet.com/reviews/coke_blak/Coca-Cola_Blak>
  4. Hutson, Lorie. “Coca-Cola Blak’s Multiple Flavors Confuse, Displease.” Spokesman – Review. 2006. 18 April 2009. <http://search.ebscohost.com/login.aspx?direct=true&db=nfh&AN=2W62W61086948394&site=ehost-live>
  5. Steve. “Discontinued: Coca-Cola Blak.” BevReview.Com. 2007. 27 April 2009. <http://www.bevreview.com/2007/08/31/discontinued-coca-cola-blak>
  6. “Coca-Cola Blak.” Online advertisement. YouTube.Com. 2006. 18 April 2009. <http://www.youtube.com/watch?v=wa81O4h5Ns0&feature=related>
  7. “Coca-Cola Blak Writer.” Online advertisement. YouTube.Com. 2008. 18 April 2009. <http://www.youtube.com/watch?v=1aVAW0zfhqw&feature=related>
  8. “Coca-Cola Blak Musician.” Online advertisement. YouTube.Com. 2008. 18 April 2009. <http://www.youtube.com/watch?v=CcZcHxAmZlo&feature=related>
  9. “BLAK COFFEE – 35mm Coke Blak Spec Spot.” Online advertisement. YouTube.Com. 2007. 18 April 2009. <http://www.youtube.com/watch?v=kFVuX6xQUQs&feature=related>
  10. “Anderson Cooper tries Coke Blak.” Online advertisement. YouTube.Com. 2006. 18 April 2009. <http://www.youtube.com/watch?v=9J-q-o6zqdY&feature=related>

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Vita Coco Beverage Company

Eager to attract venture capitalists to the negotiating table, our group decided the pitch could be an instrumental step to realizing this mission. The main challenge of the pitch was how to demonstrate a strong reputation of our company, its product and financials, while gaining our desired growth advantage. This challenge was triggered by the fact that there were other companies presenting. This forced us to deliver a pitch that was attractive enough for wining many venture capitalists as such could secure us option flexibility during negotiation.

After presenting our pitch, four companies approached has for an investment negotiation, namely; Vinfolio, Calypso, Wildfire and Glacier Bay Inc. bearing in mind of the need to qualify the financial worthy of our company during the negotiation, we agreed to set worthy of Vita Coco at $23. 976 million and its EBITDA at $3. 396 million and a factor of 6 based on the high net income growth rate our company was witnessing. We engaged Vinfolio Company in the first round of the negotiation. The company had an initial proposal of investing $2 million with our company, an amount which could only allow them to own less than ten percent of our company.

However, since we were out to search for $6 million, we continued with our search for another company which could invest the remaining $4 million with Vita Coco. Shortly before we engaged another company one of our members suggested that we should consider splitting the investment values into smaller amounts. This was based on the reasoning that such a move could increase the number of investor, while mitigating chances of providing one investor a favorable term sheet. The exit of Vinfolio Company from the negotiation table gave way for Wildlife Company.

Wildlife came with a proposal that we allow them to own 40% of our company by investing an amount worthy $5 million. They also demanded that we allow them to have an investor favorable term sheet. Their demands we too high, so we engaged them in a negotiation for the reduction of the ownership percentage. They argued to reduce the ownership and the liquidation shares dictate. However, they were too rigid with their proposed number. At this point, we requested them to put the offer on the table and give us some time to discuss the issue.

Although the figure they had proposed was not appeasing to us, it was no doubt better than the one by Vinfolio Company. After Wildlife, we were approached by Calypso who wanted us to tell them the amount we could accept from them as an investment to own a significant part of our company. Due to this reason, we decided to request them for $4 million, an amount which could be enough if combined with the offer by Vinfolio. In the process of trying to strike a balance Calypso however, they started claiming that our company financial worth values was too high. They proposed that we guarantee them 25% ownership of the company.

although we were convinced that both Calypso and Vinfolio were asking too much share ownership our company we decided to consider the two as the offer could total the $6 million we need, while they will only be owning 30% of the company. On the contrary, after finishing negotiating with Calypso, Wildlife came to us offering $5 million and demanding only 22% ownership of our company. This percentage of ownership they were too low compared to their initial demand for 4%. Despite their good however, Wildlife were still holding that they should have the investor favorable on the term sheet.

We tried to negotiate with them to allow us add some few companies favorable on the term sheet but they could not listen. At last they told us that if we wanted to take their 5%, we should make no alteration to their demands. According to my critical analysis of the behavior of Wildlife, I concluded that they might have suspected that we had overvalued our company. We lastly had the chance to negotiate with Glacier Bay Inc. for this company; they were offering us $5 million for owning only 20% of our company. On the issue of term sheet, they requested a middle of the road term sheet.

Due to this reason, we all believed that Glacier Bay Inc was offering more worth to us compared to Wildlife. However, Wildlife returned a third time offering $5 million for 18% ownership, but exclusive investor favorable term sheet. Since we did not want the idea of investor favorable term sheet by Wildlife, we opted to go for Glacier Bay Inc and Calypso as our new investors. Indeed, this negotiation made me acknowledge that patience, flexibility and interest for your company is the only way to conduct a successful business negotiation.

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Sensible business strategy

The Coca-Cola Company (Coke) is a global company with some of the world’s most widely recognized brands, its business in India is perceived as a local business (Coca Cola In Hot Water 2005). The beverages are produced locally, Indian citizens are employed, the product range and marketing reflect Indian tastes and lifestyles, and they profess that they are deeply involved in the life of the local communities wherever they operate.

However in 1993 when operations started in Mehdiganj, near the holy city of Varanasi, environmental issues started arising. Following complaints from villagers, politicians, environmentalists and scientists, that water supplies were drying up because of the massive quantities of water required by Coca-Cola and as such indicating that the firm was robbing the community of the areas most precious resource. (Srivastava 2006). This was further epitomized with the area’s farming industry being devastated and jobs, as well as the health of local people, been put at risk. This essay will look more closely on the management response to stakeholders, with regards to Clarkson’s principle number four; through which the organisation attempts a fair distribution of benefits and burdens.

“WATER is to Coca-Cola as clean energy is to BP.” So declares Jeff Seabright, Coca-Cola’s manager of environmental affairs (Coca Cola In Hot Water 2005). The analogy with oil might seem odd but it isn’t so far fetched. B.P has long been the target of activists clamouring for action on global farming. Coca-Cola has also been targeted by activists, but over the issue of water rather than energy. The firm has been hit hardest in India as it used 283 billion litres of water in 2004. First, experts from Delhi’s Centre for Science and Environment, a green think-tank, tested various soft drinks and determined that they contained high levels of pesticide (Coca-Cola’s ‘toxic’ India fertiliser 2003).

It turned out that Coca-Cola was not the cause of the problem. But its inept handling of the accusations left the firm exposed to a much more damaging allegation: that it is aggravating the growing global problem of fresh-water scarcity (Devraj 2003). As it has hugely impacted several Indian states as Coke’s unquenchable thirst for water has been blamed for exhausting scarce underground water supplies, resulting in crop failures for local farmers, Twenty villages in the vicinity of Coca-Cola’s bottling plant in Mehdiganj, in northern India, have embarked upon an indefinite vigil on March 23, demanding that the plant shut down before summer begins, when water shortages are particularly acute.

Besides the water shortages that have been of concern, another major concern is the production and sales of sub-standard drinks in India. In august 2003 the director of the Centre for Science and Environment, Sunita Narain, a government agency, announced that 12 major cold drink brands manufactured by Coca-Cola sold in and around Delhi contained a deadly cocktail of pesticide residues, including potent chemicals which can cause cancer, damage the nervous and reproductive systems and reduce bone mineral density (Clasper 2003) . Coca-Cola of course, immediately denounced the agency’s findings, but in terms of sales, the damage had already been done. The announcement however ignited outrage around the country, including on the floor of the Indian parliament and thus was a threat to the legitimacy ofCoca-Cola.

This has resulted in many protests in India, and one such example is when over a thousand community members adversely affected by Coca-Cola marched to the Coca-Cola factory premises in Mehdiganj, near the holy city of Varanasi in India demanding that the factory shut down. The march in Mehdiganj was the end of a 10 day, 250 km march from Ballia, the site of another Coca-Cola bottling facility, to Mehdiganj, bringing attention to Coca-Cola’s negative impacts on communities across India (Stecklow 2005) . “Coca-Cola is stealing our water, our land and getting away with it legally. And they are calling our struggle for our livelihoods, our existence, illegal,” said Nandlal Master, one of the organizers from Lok Samiti and the National Alliance of People’s Movements.

The spirit of corporate citizenship suggests that a company that derives profit from the community has an obligation to contribute to its development…. It is reasonable to expect the principle of mutual obligation to apply to the business sector – John Howard, Prime Minister of Australia, 1998. This quote is an example of what coca cola should be doing, and it relates to Clarkson’s principle four which states that “managers should recognize the interdependence of efforts and rewards among stakeholders” (Szwajkowski 2000). Through which the organization should distribute the benefits and burdens among the stakeholders fairly. Managers inevitably have to monitor both the primary and secondary stakeholders, making sure that they are able to identify the interdependence between the two and make sure that there burdens and risks are no greater than they are willing to bear.

In the Kerala Coca Cola plant in India, the primary stakeholders consist of almost 6000 individuals, and Coca Cola indirectly influences up to 125 000 individuals who are vulnerable to the to the effects of change and low confidence in the organization, in time of uncertainty. This principle relates to coca cola India, the managers have segregated stakeholders through unfair distribution of benefits. Selling coke that contains high levels of pesticides, as well as draining local water supplies, puts immense pressure on the consumer market, and directly affecting the primary stakeholders, which include the government, shareholders and employees.

There is a chain affect and the secondary stakeholders who are not directly involved with coca cola, however face the offsets of the organizations actions. As water is being used heavily by the organization which depletes the resource for the local farmers, as well as waste that is excreted by the organization into the water system is one the reasons for unrest in Kerala, leading to mass protests and eventually coca cola stopped production.

On a larger scale in India due to the constant protests coca cola is making an effort to regain consumer sovergnity through providing beneficial services to the people of the village they operate in. Coca colas efforts have been mainly targeted at the consumers and the secondary stakeholders, which are the occupants of the villages they operate in for example creates jobs, provides pesticides at a discounted price to farmers in their vicinity as well as partnering with NGOs, as well as the Red Cross to provide free medical facilities and information to tens of thousands of underprivileged people in seven states in India as well as several villages near Coca-Cola bottling plants.

Furthermore the Coca-Cola Company in India has been recognized for its community programs and environmental practices by prominent global organizations such as the Red Cross and has won prestigious Indian environmental awards for environmental practices. They have also responded to these allegations by “rainwater harvesting” projects at 26 plants, cutting water use by 25 per cent and shipping in drinking water to stricken villages. But Dr Sandeep Pandey, a prominent critic, is unimpressed. “The visible employment that Coke generates is smaller than the large numbers of hidden and unorganized people it puts out of business, like the vendors of traditional Indian fruit drinks and hence the farmers supplying them. Another goodwill attempt that backfired was Coca-Cola’s distribution of solid waste from its bottling plants to farmers in the area as fertilizer.

The British Broadcasting Corporation (BBC) had the waste tested and found extremely high levels of heavy metals such as lead and cadmium in the waste, effectively making the solid waste toxic (Coca-Cola’s ‘toxic’ India fertiliser 2003) . When confronted by the BBC reporter on their practice of distributing toxic waste as fertilizer, Coca-Cola’s Vice-President said, “It’s good for the farmers because most of them are poor.” The Coca-Cola company was ordered to stop the practice by the government authorities immediately

Coca cola eventually undertook an environmental impact assessment and it is understood that the sludge waste from the plant was fertiliser and said the company complied with all local environmental laws and stood for the welfare of the community. It is difficult to ascertain how successful the efforts taken by the Management would help Coca-Cola regain its positive image in India, however they have been aggressive in their drive. Coca cola should have taken these precautionary measures much earlier to avoid hefty losses as well as large protests. If coca cola set up, as they have done now, various institutions to repay the villagers, through education as well as health benefits such a catastrophe could and could have been avoided.

Identifying stakeholders is a difficult task, and even once it is done being able to determine fair distribution of benefits and burdens of corporate activity challenging (Szwajkowski 2000). Conforming to the principle is unformidable as fair distribution is unachievable. However, in some cases, projects may have consequences or risks that cannot be fully understood or appreciated by critical stakeholders. When this situation occurs, managers have responsibility to restructure projects, abolish unacceptable consequences, or if it is necessary to abandon them entirely. Coca Cola never did this, as the managers response to the situation was slow and resulted in until today the plant in Kerla having seized operationg. After all Coca cola is a public listed company with a sole motive of profit maximization at the lowest possible costs.

This would inevitable result in unfair distribution, mainly to benefit the individuals in positions of power, through which they are able to justify there actions. For example local employees are hired and fired, as and when the organization finds it acceptable, as there is such a large readily available workforce in many villages in India, there is no possible was in order to maximize production will the organization share and distribute benefits fairly.

When social responsibility in this narrow sense is conflated with social responsibility as a synonym for a business’s ethical obligations in general, it groundlessly implies that businesses do, in fact, have ethical obligations to expend business resources in ways that do not promote the business’s fundamental purposes (Donaldson and Preston 1995). Hence, taking the above into consideration, Coke has failed in its social responsibility obligation towards ensuring it preserves the environment and strengthen the confidence of the local communities.

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