Coca-Cola, which sold 10 billion cases of soft drinks in 1992, now

Question

Coca-Cola, which sold 10 billion cases of soft drinks in 1992, now finds itself asking, where will sales of the next 10 billion cases come from? The answer lies overseas, where income levels and appetites for Western products are at an all time high.

Often, the company that gets into a foreign market earliest dominates that country's market. Coke patriarch Robert Woodruff realized this and unleashed a brilliant ploy to make Coke the early bird in many of the major foreign markets. At the height of World War II, Woodruff proclaimed, “Wherever American boys were fighting, they'd be able to get a Coke.” By the time Pepsi tried to make its first international pitch in the 1950s, Coke had established its brand name along with a powerful distribution network.

During the last 40 years, many new markets have emerged. In order to tap into these opportunities, both coke and Pepsi have attempted to find ways to cut through the red tape that thwarts their efforts to conduct business in these new regions.

One key maneuver in the soda wars occurred in 1972, when Pepsi signed an agreement with the Soviet Union that made it the first Western product to be sold to consumers in Russia. This landmark agreement gave Pepsi the upper hand. At present, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. It outsells Coca-Cola by a ratio of 6 to 1 and is seen there as a local brand, similar to Coke’s homegrown reputation in Japan. However, Pepsi has also encountered some obstacles. An expected increase in brand loyalty for Pepsi subsequent to its advertising blitz in Russia has not materialized, even though Pepsi produced commercials tailored to the Russian market and sponsored televised concerts.

Some analysts believe that Pepsi’s domination of the Russian market has more to do with pricing. While Pepsi sells for 250 Rubles (about 25 cents) a bottle, Coca-Cola sells for 450 Rubles. Likewise, Pepsi sells their 2 liter economy bottle for 1,300 Rubles, while Coca-Cola’s 1.5 liters is marketed at 1,800 rubles. On the other hand, Coca-Cola only made its first inroads into Russia 2 years ago. What's more, although Coca-Cola's bottle and label give it a high-class image, Russians do not perceive Coca-Cola as a premium brand in the Russian market. Consequently, it has so far been unable to capture a market share.    1 
 1. According to the passage, all of the following have been used to attract customers to buy a one of the two brands of soft drink mentioned in the passage EXCEPT

A. Offering soft drinks for a limited time at specially reduced prices
B. Sponsoring televised concerts
C. Designing a bottle and label to create a high-class image
D. Staging an advertising blitz including commercials tailored to the local market
E. Being the first country to enter a foreign market

2 
 2. The passage suggests which of the following about the Russian soft drink market?

A. Price is an unimportant factor in the Russian soft drink market
B. Two liter economy bottles are more marketable than 1.5-liter economy bottles, especially those sporting a high-class image.
C. One and a half liter economy bottles are more marketable than two liter economy bottles, if sold at a lower price.
D. Russian consumers are more likely to purchase a product if the perceive it to be a local brand
E. The Russian soft drink market is saturated with local brands.

3 
 3. The primary purpose of the passage is to

A. Review the marketing history of two soft drink giants
B. Contrast two different approaches to marketing soft drinks in the global market
C. Refute the traditional explanation for Pepsi’s success in the Russian soft drink market
D. Compare how well two soft drink companies have succeeded in a new foreign market
E. Explain why two soft drink companies have succeeded in a new foreign market

100mitra · Accepted Answer

RC # 10 - long passage {13 mins 3/3 correct} 
  Paraphrasing  
  Para 1:   Introduction to opportunities for western products like coco-cola in Overseas market
  Para 2:   Coke had established its brand name along with a powerful distribution network, before Pepsi 
  Para 3:   Competition between coco-cola and Pepsi to rank their position in emerging new markets
  Para 4:   Pepsi successful move, gain competition edge over coco-cola in Russia, similar to coco-cola in Japan.
  Para 5:   Pepsi costs less than coco-cola, when compared by price/volume, and coco-cola failing not only in gaining as a premium brand, but also in losing market share in Russia.

1. According to the passage, all of the following have been used to attract customers to buy a one of the two brands of soft drink mentioned in the passage  EXCEPT   
A. Offering soft drinks for a limited time at specially reduced prices   – Not mentioned in passage  
B. Sponsoring televised concerts  – Done by Pepsi in Russia for promotion 
C. Designing a bottle and label to create a high-class image  – Done by coco-cola in Russia to gain premium label  
D. Staging an advertising blitz including commercials tailored to the local market  – Done by Pepsi for increasing loyalty in Russia  
E. Being the first country to enter a foreign market  – War between both coco-cola and Pepsi, mentioned in passage

2. The passage suggests which of the following about the Russian soft drink market?  
A. Price is an unimportant factor in the Russian soft drink market
  Wrong:   Trap! as mentioned in para 4, 1st line, its only perception, “Some analysts believe that Pepsi’s domination of the Russian market has more to do with pricing”

B. 2 lit economy bottles are more marketable than 1.5-liter economy bottles, especially those sporting a high-class image.
  Wrong:   as mentioned in passage para 4, attempt of coco-cola to be a premium brand, “What's more, although Coca-Cola's bottle and label give it a high-class image, Russians do not perceive Coca-Cola as a premium brand in the Russian market”

C. 1.5 lit economy bottles are more marketable than 2 lit economy bottles, if sold at a lower price.
  Wrong:   The consequence of above assumption, no details are mentioned in passage

D. Russian consumers are more likely to purchase a product if the perceive it to be a local brand
  Correct: as mentioned in passage, “At present, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. It outsells Coca-Cola by a ratio of 6 to 1 and is seen there as a local brand, similar to Coke’s homegrown reputation in Japan”

E. The Russian soft drink market is saturated with local brands
  Wrong:   No details mentioned about Russian local brands getting saturated in Russian market

3. The primary purpose of the passage is to  
A. Review the marketing history of two soft drink giants
  Wrong:   there is no historical data, mentioned in passage, passage is about comparison between Pepsi and coco-cola & their performance in foreign market.

B. Contrast two different approaches to marketing soft drinks in the global market
  Wrong:   marketing track- tricks are not mentioned in passage

C. Refute the traditional explanation for Pepsi’s success in the Russian soft drink market
  Wrong:   No traditional explanation only for Pepsi success in Russia market is mentioned, in passage, its about the, one who spread their wings in better way to conquer foreign market, as compared between Pepsi in Russia and coco-cola in Japan.

D. Compare how well two soft drink companies have succeeded in a new foreign market
  Correct: as mentioned in passage, para 3, can be refer “In order to tap into these opportunities, both coke and Pepsi have attempted to find ways to cut through the red tape that thwarts their efforts to conduct business in these new regions”, passage does mentioned comparison about Price gap, Foreign market entrance, Brand preference reason – local vs premium etc  .

E. Explain why two soft drink companies have succeeded in a new foreign market
  Wrong:   Trap! Almost fallen in the this! “Why??” makes E lose the battle and D makes the winner,
Contrast statement like, Pepsi gained market share in Russia, so do coco-cola in Japan – succeeded, but Pepsi didn’t gain in Japan, neither coco-cola did gain in Russia, and as mentioned in passage last line “Consequently, it has so far been unable to capture a market share” about coco-cola, makes its failure in some foreign market.
Above are only quoted statements but their explanation is not mentioned in the passage.

RonTargetTestPrep · Answer

You have a very interesting username.

One thing to keep in mind about " primary  purpose" and " main  idea" questions is that  the answer not only doesn't have to, but actually SHOULDN'T, cover every single bit of content in the entire passage.

This isn't arbitrary—it's inherent in a literal reading of the words "primary", "main", etc.
The word  primary  makes no sense unless there are also secondary purposes, which in the case of questions about "primary purpose" we ignore.
There cannot be a "main point" unless there are side points.
And so on.

As mentioned above, a "main idea" or "primary purpose" doesn't need to (and in fact shouldn't) cover every word written in the passage.
Like the correct answer to any other RC question, though, a correct "primary purpose" must  literally describe something that the passage actually covers .

Choice D definitely satisfies this requirement. The "new foreign market" in question is the Russian market. (It's true that the former Soviet Union encompasses much, much more than just Russia, but the former Soviet government is only mentioned because it was the decision maker for Russia—along with all the other satellite Soviet states—at the time.)

Choice A does not satisfy this requirement. The passage comes nowhere close to tracing the whole history of marketing for Coca-Cola and Pepsi.
Both companies were founded before World War I and are still preeminent multinational businesses today, so, to satisfy choice A the passage would have to at least  attempt  to trace their marketing strategies over that whole timeline.

ddtDDT · Answer

1. According to the passage, all of the following have been used to attract customers to buy a one of the two brands of soft drink mentioned in the passage EXCEPT

A. Offering soft drinks for a limited time at specially reduced prices   
 Not mentioned.
 
B. Sponsoring televised concerts
 An expected increase in brand loyalty for Pepsi subsequent to its advertising blitz in Russia has not materialized, even though Pepsi produced commercials tailored to the Russian market and  sponsored televised concerts .

C. Designing a bottle and label to create a high-class image
 What's more, although Coca-Cola's bottle and  label give it a high-class image , Russians do not perceive Coca-Cola as a premium brand in the Russian market.

D. Staging an advertising blitz including commercials tailored to the local market
 An expected increase in brand loyalty for Pepsi subsequent to its advertising blitz in Russia has not materialized, even though Pepsi produced  commercials tailored to the Russian market  and sponsored televised concerts.

E. Being the first country to enter a foreign market
 One key maneuver in the soda wars occurred in 1972, when Pepsi signed an agreement with the Soviet Union that made it  the first Western product to be sold to consumers in Russia . This landmark agreement gave Pepsi the upper hand. 
___________________________________________________________________________________________________________________
  
2. The passage suggests which of the following about the Russian soft drink market?

A. Price is an unimportant factor in the Russian soft drink market
 Some analysts believe that Pepsi’s domination of the Russian market  has more to do with pricing.

B. Two liter economy bottles are more marketable than 1.5-liter economy bottles, especially those sporting a high-class image.
 1. "more marketable": It is not about size.
2. high-class image:  
 What's more, although Coca-Cola's bottle and label give it a high-class image, Russians  do not perceive Coca-Cola as a premium brand  in the Russian market. Consequently, it has so far been unable to capture a market share.

C. One and a half liter economy bottles are more marketable than two liter economy bottles, if sold at a lower price.
 1. "more marketable": It is not about size.
2. Cause&Effect relationship: Wrong.

D. Russian consumers are more likely to purchase a product if the perceive it to be a local brand   
 At present, Pepsi has 23 plants in the former Soviet Union and is the leader in the soft-drink industry in Russia. It  outsells  Coca-Cola by a ratio of 6 to 1 and  is seen there as a local brand , similar to Coke’s homegrown reputation in Japan.
 
E. The Russian soft drink market is saturated with local brands.
 No Information of market saturation. 
___________________________________________________________________________________________________________________
 3. The primary purpose of the passage is to

A. Review the marketing history of two soft drink giants
 "marketing history"?: No

B. Contrast two different approaches to marketing soft drinks in the global market
 "different approaches" + "global market": What is different?

C. Refute the traditional explanation for Pepsi’s success in the Russian soft drink market
 1. "has more to do with": it does not replace/ refute the traditional explanation.
2. It is not just about Pepsi

D. Compare how well two soft drink companies have succeeded in a new foreign market

E. Explain why two soft drink companies have succeeded in a new foreign market
 Consequently, it (Coca) has so far been  unable to capture  a market share. 
 Succeeded?: No.

pm47388292 · Answer

I still don't understand why D is better than E for Q3.

The passage does explain, why they succeeded. cola became a local brand in Japan that's why it succeeded and Pepsi was priced low and seemed like a local brand that's why it succeeded. we know the "WHYS" from the context...

100mitra · Answer

Hello  pm47388292

The reason, why I took option D was, the difference between the intended meaning of words like - "compare" vs "explain", and "how" vs "why?"

Compare meaning : estimate, measure, or note the similarity or dissimilarity between.
And
 Explain meaning : make (an idea/situation) clear to someone by describing it in more detail or revealing relevant facts.
And 
" How ” and “ why ” are both interrogative words, but they answer different questions. 
- “How” answers questions like “by what method?” “to what degree?” “in what condition?” and many more. Whereas,
- “why” answers questions like “for what purpose or reason?”

What you have quoted below, according to me is ,"a comparison stem between Pepsi and coco-cola" (though I might be wrong), but for "Explain" many details needs have to be mention in passage, which are not their, to make option E stronger than D.

More open for your view too...

Posted from my mobile device

masakiyada · Answer

In Q3, I was torn between Choice D and Choice E. I feel that Choice D as the correct answer is poorly phrased, or perhaps deliberately made tricky. I agree with  100mitra  on the line of logic pertaining to “how” vs “why”, but the issue in Q3 is that Choice D says “how well”, not “how”.

There is a huge semantic difference between “how well” and “how”. 
For example, when you are asked, “how well did you do the exam yesterday?”, you may answer, “not so well” or “very well”, referring to a degree of how well you performed in the exam.

Meanwhile, if you are asked, “how do you get to school?”, you might say, “by bus” or “by bike”, referring to a means, a way, a method, by which you get to school.

Back to the passage. In my opinion, the primary purpose of the passage encompasses at least two points.

One is about ‘how’ Coke and Pepsi succeeded or not succeeded in foreign markets. For example: 
1. Be the first to get into a particular foreign market. 
2. Be perceived as a local brand
3. Pricing, & so on 
The other is about ‘how well’ those brands did so in those strategic categories.

One thing for sure is that the passage dedicates a great deal to explaining different strategic approaches employed by Coke and Pepsi and how successful or not successful they were in deploying those strategies.

Now, when I look at Choice D in Q3, “compare how well” refers to only the “how well” part, but not the “how” part. Choice E seems to me to touch on the “how” part a bit, but not quite. Neither made me fully satisfied. That’s why I was torn between Choice D and Choice E.

If Choice D were written “explain ‘how’ and compare ‘how well’ two soft drink companies have succeeded in new foreign markets”, then I wouldn’t have hesitated a second to pick Choice D.

AnirudhaS · Answer

I agree. Just to throw in yet another curve ball, I think A is also very tempting. Not sure why this is not also not the main idea of the passage.

A. Review the marketing history of two soft drink giants

The passage goes to review in great lengths the history of what these soda companies did in the past. This was done to answer the question in the first paragraph - "where will sales of the next 10 billion cases come from?" Hence, in my opinion the passage reviews the marketing history of these companies with a view to answer that very question.

Sajjad1994 · Answer

I see no connection between answer choice  E  and this main purpose question. The main purpose question is a global question that keeps hold of the whole passage. I agree that the second-best answer choice is  (A) . But  A  is wrong because of its narrow scope; the word "marketing history" squeezes its scope to keep it from being an ideal choice.

hientranzx · Answer

Content:
1. Where is 10M from? -> Oversea market
2. Get into foreign market early
3. 40 years: new regions
4. Soda: 1972: Soviet.
Pepsi: Not loyal
5. Pricing: Coca: High image

1. According to the passage, all of the following have been used to attract customers to buy a one of the two brands of soft drink mentioned in the passage EXCEPT
A. Offering soft drinks for a limited time at specially reduced prices
CORRECT ANSWER
B. Sponsoring televised concerts
An expected increase in brand loyalty for Pepsi subsequent to its advertising blitz in Russia has not materialized, even though Pepsi produced commercials tailored to the Russian market and sponsored televised concerts.
C. Designing a bottle and label to create a high-class image
although Coca-Cola's bottle and label give it a high-class image,
D. Staging an advertising blitz including commercials tailored to the local market
Pepsi subsequent to its advertising blitz
E. Being the first country to enter a foreign market
the company that gets into a foreign market earliest dominates that country's market

Question 2
2. The passage suggests which of the following about the Russian soft drink market?
A. Price is an unimportant factor in the Russian soft drink market
B. Two liter economy bottles are more marketable than 1.5-liter economy bottles, especially those sporting a high-class image.
C. One and a half liter economy bottles are more marketable than two liter economy bottles, if sold at a lower price.
D. Russian consumers are more likely to purchase a product if the perceive it to be a local brand
CORRECT ANSWER: It outsells Coca-Cola by a ratio of 6 to 1 and is seen there as a local brand
E. The Russian soft drink market is saturated with local brands.

Question 3
3. The primary purpose of the passage is to
A. Review the marketing history of two soft drink giants
B. Contrast two different approaches to marketing soft drinks in the global market
C. Refute the traditional explanation for Pepsi’s success in the Russian soft drink market
D. Compare how well two soft drink companies have succeeded in a new foreign market
CORRECT
E. Explain why two soft drink companies have succeeded in a new foreign market

BIGDAMNGOD · Answer

GMATNinja   karishma

I am still not sure why option A is not correct. As per my analysis, option D is too narrow which does not include other key aspects of the passage mentioned in 1 & 2

bv8562 · Answer

@GMATNinja Could you please explain why option E in question 3 is incorrect?

MartyMurray · Answer

Here's choice (E) in question 3:

E. Explain why two soft drink companies have succeeded in a new foreign market

Let's see where that choice fails.

Reading the passage, we see that it does mention "two soft drink companies" and that it does, to a degree, explain how each one has succeeded, Coca Cola in "many major foreign markets," and Pepsi in "Russia."

However, looking carefully, we see that the passage does not explain "why TWO soft drink companies have succeeded in A NEW foreign market." The only market that we could possibly consider "a new" foreign market is Russia, and the passage discusses only Pepsi's success there and seems to indicate that Coca Cola has not succeeded there. So, the purpose of the passage cannot be to explain why "two" companies have succeeded in "a new" foreign market.

Thus, we can see that (E) does not accurately describe what the passage does.

In GMAT RC, we have to be so careful not to go with a choice that just has the vibe of describing the purpose of the passage and make sure that the details of the choice actually fit what the passage does.

Prob2303 · Answer

Hi Sajjad,

Can I get a summary of the passage and OE for Q1, Q2 and Q3?

Sajjad1994 · Answer

Paragraph-wise Summary

Paragraph 1: 
Coca-Cola faces the challenge of sustaining its sales growth, and the solution lies in expanding overseas markets where income levels and interest in Western products are high.

Paragraph 2: 
Coke's early entry strategy into foreign markets, led by Robert Woodruff during World War II, positioned the brand favorably with a robust distribution network, giving it an advantage over Pepsi in international markets.

Paragraph 3: 
In 1972, Pepsi secured a groundbreaking agreement with the Soviet Union, making it the first Western product available in Russia. Pepsi currently dominates the Russian soft-drink industry, outselling Coca-Cola 6 to 1, but faces challenges in building brand loyalty despite tailored advertising.

Paragraph 4: 
Some analysts attribute Pepsi's success in Russia to pricing, as Pepsi products are more affordable than Coca-Cola. Despite Coca-Cola's recent entry into Russia and its high-class image, it has not yet gained a significant market share.

Paragraph 5: 
The passage highlights the ongoing competition between Coca-Cola and Pepsi in the global market, emphasizing the importance of early market entry, distribution networks, and pricing strategies in determining success in foreign markets.

Sajjad1994 · Answer

Hello Prob2303 Here is a short summary of the passage: -Coca-Cola and Pepsi vie for global market dominance as the next growth potential lies overseas. Coke's early entry strategy in foreign markets, dating back to WWII, gave it a significant advantage. -In 1972, Pepsi secured a groundbreaking deal with the Soviet Union, making it the first Western product in Russia. Despite initial success, Pepsi's dominance is attributed to pricing rather than brand loyalty. -In Russia, it outsells Coca-Cola 6 to 1, with analysts pointing to lower prices as a key factor. Coca-Cola entered Russia more recently and struggles to establish itself as a premium brand in the market. OE is not available, but all three questions are explained: https://gmatclub.com/forum/coca-cola-wh ... l#p2939052 and here https://gmatclub.com/forum/coca-cola-wh ... l#p2938237 If you still have any specific doubt please let me know. Cheers

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Coca-Cola, which sold 10 billion cases of soft drinks in 1992, now

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Coca-Cola, which sold 10 billion cases of soft drinks in 1992, now

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