Coca Cola Swot India

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  • Topic: Coca-Cola, Pepsi, The Coca-Cola Company
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  • Published : December 5, 2012
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Coca Cola -India|
Environmental Analysis|
IMI, New Delhi|

ENVIRONMENTAL ANALYSIS
TRENDS AND FORCES
* Post the Global economic recession, the overall demand is expected to increase * New aversion to Soda threatens the main business
* Integrated bottler strategy increases the Flexibility
* Dollar affects the International Performance, depreciation of the rupee * Commodity cost fluctuations affect the margins
Spending Pattern
An increase is spending pattern has been witnessed in Indian FMCG market. There is an upward trend in urban as well as rural market and also an increase in spending in organized retail sector. An increase in disposable income, of household mainly because of increase in nuclear family where both the husband and wife are earning, has lead to growth rate in demand of FMCG goods. As shown by the data below the penetration of washing powders has been increasing over the years and thus it is expected to grow further. The retail sector has an expected growth of 13% on a year on year basis i.e. it will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014. Also the Number of shopping malls—CAGR--more than 18.9 per cent from 2007 to 2015. Organized Sector Retail Industry

Year| Percent of Total Retail| Absolute Value|
2008| 5| |
2015E| 14-18| $450|

Source: www.ibef.org

The graph shows that the size of Indian market has been increasing over the years and is expected to grow even more. This means that the need for FMCG products will rise further. Changing Profile and Mind Set of Consumer

People are becoming conscious about health and hygienic. There is a change in the mind set of the Consumer and now looking at ―Money for Value‖ rather than ―Value for Money‖. We have seen willingness in consumers to move to evolved products/ brands, because of changing lifestyles, rising disposable income etc. Consumers are switching from economy to premium product which is directly responsible for demand for better quality and safer products. Vast Rural Market

Rural India accounts for more than 700 Million consumers, or 70 per cent of the Indian population and accounts for ~50 per cent of the total FMCG market. The working rural population is approximately 400 Millions. And an average citizen in rural India has less then half of the purchasing power as compare to his urban counterpart. Still there is an untapped market and most of the FMCG Companies are taking different steps to capture rural market share. The market for FMCG products in rural India is estimated 52 per cent and is projected to touch 60 per cent within a year. Rural market share in the total market of india expected to increase to more than 50% by 2012. Source: www.ibef.org

Rural demand
1995-96| 2001-02| 2009-10|
50.4| 50.8| 54.9|
Source: .ncaer

PORTER’S FIVE FORCES MODEL

The threat of the entry of new competitors (Low)
Advertising and Marketing
Soft drink industry needs huge amount of money to spend on advertisement and marketing. Pepsi, Coke and their bottler’s have invested approximately $12.58 billion. Also the average advertisement expenditure per is million dollars. This makes it exceptionally hard for a new competitor to struggle with the current market and expand visibility. The market is essentially shared by Pepsi and Coca Cola, with a combined market share of 80 percent. The fact is Coca Cola owns two of the three soft beverages in the market, has few competitors and constantly striving for international presence. Customer Loyalty/ Brand Image

Pepsi and Coke have been investing huge amount on advertisement and marketing throughout their existence. This has resulted in higher brand equity and strong loyal customers’ base all over the globe. Therefore, it becomes nearly unfeasible for a new comer to counterpart this level in soft drink industry. Retail Distribution

This industry provides significant margins to retailers. For example, some retailers...
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