Case Study : Pepsi Marketing Strategy in India

One of the most iconic marketing wars is that between Pepsi and Coke.

Two global giants with similar offerings and recognition, they are bound to have intense rivalry.

But we’re not gonna talk about the cola war today.

In this edition, we’ll cover the marketing strategies of Pepsi!

Founded in 1893 by Caleb Bradham, Pepsi started as “Brad’s Drink” in North Carolina.

Source: Wikipedia

Today, PepsiCo’s portfolio extends beyond just cola, encompassing a wide range of beverages and snacks, including Mountain Dew, Tropicana, Lay’s, and Quaker. Pepsi’s ability to maintain relevance across generations and geographies offers a masterclass in marketing agility, innovation, and resilience.

Let’s look at the marketing strategies they used to grow in India.

Market Entry in India

The restrictive policies of pre-liberalized India meant that Pepsi had to navigate a labyrinth of regulations and local competition. In 1988, amid restrictive trade policies in India, Pepsi created a joint venture with Punjab Agro Industrial Corporation and Voltas India Limited.

Through this, they sold Lehar Pepsi and created flavors and products that catered to Indian tastes and preferences.

This went on until the economic liberalization of 1991. In 1994, PepsiCo took full control of its Indian operations, dropping “Lehar” from its branding by buying out the partners. Since then, it has employed and evolved various strategies to establish a solid brand image in India.

STP Analysis

Segmentation:

• Demographic Segmentation: 
  Targeting based on age, gender, income, and family life cycle.
  For instance, Pepsi targets millennials and Gen Z with its vibrant and youthful branding.

• Psychographic Segmentation: 
  Focusing on lifestyle and personality traits.
  Pepsi’s campaigns often resonate with adventurous and socially active individuals.

• Geographic Segmentation: 
  Tailoring products and campaigns based on regional preferences and consumption patterns.
  Pepsi adapts flavors and marketing messages to suit local tastes across different global markets.

• Behavioral Segmentation: 
  Targeting based on consumer behavior, such as frequent cola drinkers.

Targeting:

Pepsi identifies primary and secondary target markets through detailed market research and analytics.

• Primary Target Market: 
  Young adults and teenagers who value taste, style, and social experiences.

• Secondary Target Market: 
  Families and older adults seeking refreshing beverage options with a brand they trust.

Positioning:

Pepsi strategically positions itself as a fun, youthful alternative to its competitors. It is positioned as a trendsetter and innovator in the beverage industry, appealing to consumers seeking excitement and self-expression. It emphasizes enjoyment and experience over mere refreshment, promoting a lifestyle associated with fun and spontaneity.

SWOT Analysis

Strengths:

• Strong Brand Equity and Global Presence: 
  Recognized worldwide with a loyal customer base.

• Wide Product Portfolio: 
  Diverse range catering to varied tastes and preferences.

• Effective Marketing and Sponsorship Deals: 
  Strategic partnerships enhancing brand visibility and engagement.

Weaknesses:

• Health Concerns Related to Sugary Drinks: 
  Facing scrutiny over the health impacts of sugary beverages.

• High Dependency on the North American Market: 
  Reliance on a mature market with slower growth rates.

Opportunities:

• Growth in Emerging Markets: 
  Expansion opportunities in developing regions with rising disposable incomes.

• Expansion into Healthier Beverage Options: 
  Meeting growing consumer demand for healthier alternatives.

Threats:

• Intense Competition from Coca-Cola and Other Brands: 
  Continuous battle for market share in the beverage industry.

• Changing Consumer Preferences Towards Healthier Drinks: 
  Shift towards health-conscious choices impacting sales of sugary beverages.

• Competitors’ Strengths and Weaknesses: 
  Coca-Cola’s strong brand loyalty and extensive distribution network versus local brands’ agility and cultural relevance.

With this analysis, Pepsi still has a competitive edge. It is constantly introducing new flavors and packaging innovations along with strategies to keep up their brand image and penetrate different markets.

Marketing Mix for Pepsi in India

Product:

Pepsi’s main offering is Pepsi Cola. Along with that, it offers other beverages like Moutain Dew, 7up, and Mirinda. It also has Aquafina and Tropicana in its portfolio.

A major advantage Pepsi has over its competitors is that it also offers snacks through Kurkure, Quacker Oats, and Lays. This helps it to cater to a wider segment of audience.

Price:

In the price-sensitive market of India, Pepsi’s pricing is competitive with other brands. The product portfolio employs different pricing methods.

For instance, Pepsi Cola is economical whereas Tropicana is priced slightly on the expensive side. This helps different brands maintain their individual images rather than being perceived as sub-brands of Pepsi.

Place:

PepsiCo has a strong distribution network with an omnichannel presence to ensure product accessibility across urban and rural areas. This includes supermarkets, convenience stores, and traditional kirana stores which are the backbone of Indian retail and play a vital role in beverage sales.

This strategy helps them to penetrate with a hyperlocal focus, making Pepsi available in both urban and rural areas. For ease of consumer access, the brand is also available on e-commerce and quick-commerce sites like Amazon and Dunzo.

Emotional Connection is Key: Pepsi’s success highlights the importance of forging emotional connections with consumers. Storytelling and relatable themes can create a lasting brand impression.

Localization Pays Off: Using regional languages demonstrates Pepsi’s commitment to the Indian market and resonates with local audiences, fostering brand loyalty.

Evolution of Ad Campaigns

Since the brand entered India, it has used traditional channels for widespread brand awareness. For instance, this is one of the earlier ads that the brand distributed in its initial days:

Source: The Hindu Business Line

By sponsoring the Indian Cricket team in 1996, they tapped into the cricket craze in India. They combined it with the reach and appeal of Bollywood in this ad film:

Celebrity endorsements, when chosen strategically, can significantly boost brand recognition, especially in a competitive market. Moving away from endorsements, Nothing Official About Itcelebrated the informality and spontaneity of life with young people enjoying Pepsi in everyday situations.

This relatable approach solidified Pepsi’s association with youth culture. It helped to create a strong emotional connection with the target audience. Integrating cultural elements like dance and music can create a powerful and memorable brand experience. They also launched a campaign called Dil Maange More which was successful. Building on it, they created this ad film:

It featured vibrant dance sequences with Aishwarya Rai Bachchan and other celebrities. It tapped into India’s love for dance and music, further solidifying the brand’s youthful and energetic image. The Change the Game campaign featured cricket captain MS Dhoni and other sports stars, encouraging viewers to embrace challenges and strive for excellence.

This helped the brand to adapt to a new generation of sports fans by addressing changing interests and demographics. The interests changed further and Pepsi also inculcated pop culture references in its campaigns.

The Har Ghoont Mein Swag Hai campaign was more focused towards newer generations who colloquially use words like ‘Swag’.

This makes the brand image relevant to current times and relatable. In 2022, they also partnered with Badshah and Jacqueline Fernandes to create the Pepsi Summer Anthem

With groovy beats and moves, this video has over 104 million views on YouTube! The campaign also positioned Pepsi as the go-to beverage to beat the scorching summer heat. Pepsi’s ad campaign journey in India is a testament to the brand’s ability to adapt and evolve.

In a Nutshell

Pepsi’s marketing success in India is a masterclass in adaptability, innovation, and forging emotional connections with consumers. They’ve leveraged a strong understanding of the Indian market, from its diverse tastes to its cultural love of cricket and Bollywood.

By constantly evolving their approach, Pepsi has stayed relevant with generations of Indian consumers.

Key Takeaways from Pepsi’s Marketing

• Understand your market:
  Pepsi’s success hinges on catering to local tastes and cultural nuances.

• Build emotional connections:
  Storytelling and relatable themes create lasting brand impressions.

• Embrace adaptability:
  Pepsi constantly evolves its marketing mix to stay relevant with changing demographics.

• Utilize a multimedia approach:
  Leverage traditional and digital channels for maximum brand awareness.

• Target strategically:
  Segment your audience and tailor messaging to resonate with each group.