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Page 1 of 136
International School of Business & Media
Nande, Pune
A Project Report On Marketing Strategy of PepsiCo
Defining New Strategy to Revive Market Share
Submitted to:
Prof: Sanjay Kumar
Marketing Management - I
Submitted by:
Prateek Singh Parihar
(Section – B)
Page 2 of 136
Acknowledgement
“It is not possible to prepare a project report without the assistance & encouragement of other people. This one is certainly no exception”
On the every outset of this report, we would like to extend our sincere & heartfelt
obligation towards all the personages who have helped us in this endeavor. Without
their active guidance, help, cooperation & encouragement, we would not have made
headway in the project.
We are extremely thankful and pay our gratitude to our faculty Prof: Sanjay Kumar for
his valuable guidance and support on completion of this project in its presently.
We extend our gratitude to ISB&M for giving us this opportunity.
We also acknowledge with a deep sense of reverence, our gratitude towards our
parents and members of family. Who has supported us morally as well as economically.
As last but not the least gratitude goes to all of our friends who directly or indirectly
helped us to complete this project report.
Any omission in this brief acknowledgement does not mean lack of gratitude.
Thanking you,
Team Pepsi
Page 3 of 136
Table of ContentsMarketing Mix of Pepsi Cola......................................................................................................................10
Product:.................................................................................................................................................10
Beverages..............................................................................................................................................10
7UP........................................................................................................................................................10
Brand History.........................................................................................................................................10
Brand Advantage...................................................................................................................................11
Did You Know?.......................................................................................................................................11
However, there are numerous other myths explaining the name:........................................................11
Quick Brand Facts..................................................................................................................................12
Aquafina................................................................................................................................................12
Brand History.........................................................................................................................................12
Brand Advantage...................................................................................................................................12
Duke's....................................................................................................................................................13
Duke’s Legacy........................................................................................................................................13
Duke’s – Refreshing Mumbai!!..............................................................................................................13
Brand Facts............................................................................................................................................13
Gatorade................................................................................................................................................14
Brand Advantage...................................................................................................................................14
What is Gatorade?.................................................................................................................................14
Did You Know?.......................................................................................................................................14
Quick Brand Facts..................................................................................................................................14
Mirinda..................................................................................................................................................15
2012 Brand Campaign...........................................................................................................................15
Brand History.........................................................................................................................................15
Quick Brand Facts..................................................................................................................................15
Mountain Dew.......................................................................................................................................16
Brand History.........................................................................................................................................16
Brand Advantage...................................................................................................................................16
Did You Know?.......................................................................................................................................16
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‘Darr Ke Aage Jeet Hai’..........................................................................................................................16
Quick Brand Facts..................................................................................................................................16
Nimbooz................................................................................................................................................17
Brand History.........................................................................................................................................17
Locally Relevant Taste...........................................................................................................................17
Convenience and Great Value...............................................................................................................17
Accessibility...........................................................................................................................................17
Hygienic.................................................................................................................................................17
Quick Brand Facts..................................................................................................................................17
Pepsi......................................................................................................................................................18
Brand History.........................................................................................................................................18
Brand Advantage...................................................................................................................................18
Quick Brand Facts..................................................................................................................................19
Brand History.........................................................................................................................................19
Brand Advantage...................................................................................................................................19
Quick Brand Facts..................................................................................................................................20
Brand History.........................................................................................................................................20
Brand Advantage...................................................................................................................................20
Quick Brand Facts..................................................................................................................................21
Price:......................................................................................................................................................21
PRICES OF DIFFERENT BOTTLES.............................................................................................................22
Place (Distribution):...............................................................................................................................23
Promotion Strategy...............................................................................................................................24
Brand Identity........................................................................................................................................24
PepsiCo’s Campaign...............................................................................................................................25
Pepsi......................................................................................................................................................25
7 UP.......................................................................................................................................................25
Mountain Dew.......................................................................................................................................26
DISTRIBUTION STRATEGY - PEPSI...............................................................................................................27
• Company (PepsiCo)...................................................................................................................28
Pepsico Distribution Channel.................................................................................................................29
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FACTORS FOR CHANNEL DESIGN...........................................................................................................29
CHANNEL MEMBERS AND ROLES..........................................................................................................30
GENERIC CHANNEL OUTPUTS................................................................................................................31
Marketing Research...................................................................................................................................32
THERE ARE TWO TYPE OF DATA-...........................................................................................................32
1. Primary data collection:-................................................................................................................32
Questionaire ( Retailers )...........................................................................................................................33
Questionaire ( Customers )........................................................................................................................35
Sampling Plan:...................................................................................................................................36
Sampling plan consists of:-................................................................................................................36
DATA ANALYSIS.........................................................................................................................................37
ANALYSIS OF DATA.....................................................................................................................37
Interpretation :...................................................................................................................................38
Types of Outlet..................................................................................................................................38
Creates Sales Per Day........................................................................................................................40
Brand Value Proposition............................................................................................................................45
Main business........................................................................................................................................45
Product offered by PepsiCo...................................................................................................................45
History...................................................................................................................................................45
BRAND VALUE PROPOSITION........................................................................................................46
Emotional benefits can help anchor your brand to success...................................................................46
So, what are emotional benefits?...........................................................................................................46
Emotional benefits can help anchor your brand to success...................................................................47
How Do I Decide Which Emotional Benefit To Reinforce?..................................................................48
FUNCTIONAL BENEFITS..................................................................................................................48
Brand History........................................................................................................................................49
Brand Advantage...................................................................................................................................50
Brand History........................................................................................................................................51
Brand Advantage...................................................................................................................................51
Brand History........................................................................................................................................52
Brand Advantage...................................................................................................................................52
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Brand History........................................................................................................................................53
About the Brand....................................................................................................................................53
Brand Promise.......................................................................................................................................53
Brand Advantage...................................................................................................................................53
Tropicana...............................................................................................................................................54
Brand History........................................................................................................................................54
Brand Advantage...................................................................................................................................55
Mountain Dew.......................................................................................................................................55
Brand History........................................................................................................................................55
Brand Advantage...................................................................................................................................55
Gatorade................................................................................................................................................56
Brand History........................................................................................................................................56
Brand History........................................................................................................................................56
What is their value proposition?............................................................................................................60
CUSTOMER RELATIONSHIP MANAGEMENT..............................................................................................63
What is CRM (customer relationship management)?............................................................................63
According to one industry view, CRM consists of:...............................................................................63
CRM IN PEPSICO................................................................................................................................64
PepsiCo Drinks Up My SAP.................................................................................................................65
MISSION..............................................................................................................................................68
SEGMENTATION- TARGETING- POSITIONING of PepsiCo..........................................................................70
Segmentation, Targeting, Positioning:...................................................................................................71
Which segment(s) to target?..................................................................................................................72
Positioning.............................................................................................................................................72
Position along many dimensions.......................................................................................................72
Pepsico Market Segmentation...............................................................................................................74
Soft Drink –.......................................................................................................................................74
Concentrated Marketing....................................................................................................................76
Niche Marketing................................................................................................................................76
Bases of Segmentation:.........................................................................................................................77
Demographic.....................................................................................................................................77
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Demographic.....................................................................................................................................78
Market Targeting...................................................................................................................................79
Market Positioning................................................................................................................................79
PepsiCo targeting mass marketing, will cater to different segments of consumers............................80
CHEAPER PRICE POINTS..................................................................................................................82
Company overview and market analysis for Pepsico.............................................................................82
Macro Environment:..............................................................................................................................83
Social:....................................................................................................................................................84
Technological:...................................................................................................................................84
Micro Environment:..........................................................................................................................85
Competitive Analysis:.......................................................................................................................85
Geo-demographic:.............................................................................................................................85
Psycho-graphic segmentation:...........................................................................................................85
Target Markets:.................................................................................................................................86
Positioning:........................................................................................................................................86
Marketing Mix:......................................................................................................................................86
Product:.............................................................................................................................................86
Place:.................................................................................................................................................87
Promotion:.........................................................................................................................................88
Push Strategies:.................................................................................................................................88
Pull Strategies:...................................................................................................................................88
Recommendation:..............................................................................................................................89
What is the market segmentation for Pepsi?..........................................................................................90
Segmentation of Pepsi.......................................................................................................................90
Target Market for Pepsi.........................................................................................................................91
Who is Pepsi cola's target market?.....................................................................................................92
Who is the specific target audience of pepsi cola?.............................................................................92
What is target market?.......................................................................................................................92
Purchasing behavior of the average Pepsi drinker:................................................................................92
STUDY OF DISTRIBUTION CHANNEL STRATEGY OF PEPSICO FOR THE POSITIONING OF THE PRODUCT....................................................................................................................................93
Objectives:.........................................................................................................................................94
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The Pepsi Challenge: Brand Positioning against the Brand Category Leader........................................96
The Pepsi Challenge..........................................................................................................................96
Taste Tests: Brand Position in Brand Marketing...............................................................................96
PepsiCo India Launches ‘Pepsi Atom’..................................................................................................97
- Stronger, Fizzier Cola with a Sharp Hit...........................................................................................97
- Biggest India centric beverage innovation from PepsiCo................................................................97
- Ropes in Sushant Singh Rajput as the Brand Ambassador..............................................................97
Market Segmentation Of Pepsi At An International Level:...................................................................98
The Emergence of a Global Company...................................................................................................98
Observations throughout History...........................................................................................................99
Core Competencies..........................................................................................................................100
STRATEGY USED BY PEPSI...........................................................................................................100
Marketing and Customer Responsiveness.......................................................................................100
Branding Equity...............................................................................................................................101
Reducing Costs................................................................................................................................101
Cyclical Corporate Strategy.............................................................................................................102
Key Factors for Success......................................................................................................................103
General Influences...........................................................................................................................103
Political Environment......................................................................................................................103
Economic Environment...................................................................................................................104
Socio-cultural Environment.............................................................................................................104
Technological Environment.............................................................................................................104
Pepsi’s Corporate and Business-level Strategies.................................................................................104
Responding to Conflicting Demands: The Environmental Challenge..............................................104
Business-level Strategy....................................................................................................................105
PepsiCo Beverage Industry..................................................................................................................105
Customer needs, Responsiveness and Product Differentiation of Pepsi-Cola..................................105
Distinctive Competencies................................................................................................................105
Customer Group..............................................................................................................................106
Corporate-level Strategy..................................................................................................................106
PepsiCo Bottling Group Strategy.....................................................................................................107
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PESTLE ANALYSIS BY PEPSICO..................................................................................................................110
Political:..............................................................................................................................................110
Economic:............................................................................................................................................110
Social:..................................................................................................................................................111
Technological:.....................................................................................................................................111
Legal:...................................................................................................................................................111
Environmental:....................................................................................................................................112
Competition Analysis...............................................................................................................................118
Competitors of Pepsi...........................................................................................................................118
Globally:..........................................................................................................................................118
Indian Market:.................................................................................................................................118
Problem’s to be addressed:..................................................................................................................119
“The president's departure and underwhelming market share numbers were just two of the crushing blows.”.............................................................................................................................................119
Why did Manu Anand really leave Pepsi?.......................................................................................119
A new twist:.....................................................................................................................................119
Pepsi & Coca cola:..........................................................................................................................120
Take away:......................................................................................................................................121
The strong, direct rival/competitor, The Coca Cola:............................................................................122
How Pepsi Went From Coke's Greatest Rival To An Also-Ran In The Cola Wars?.......................123
Take away:......................................................................................................................................124
Differentiating two giants:...................................................................................................................125
Portfolio Diversification..................................................................................................................125
‘Better For You’ Products:..............................................................................................................125
Coca-Cola’s Leadership:.................................................................................................................126
Takeaway:.......................................................................................................................................126
SWOT Analysis:..................................................................................................................................128
Strengths:.........................................................................................................................................128
Weakness:........................................................................................................................................129
Opportunities:..................................................................................................................................129
Threats:............................................................................................................................................130
Product Development:.....................................................................................................................133
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Market Development:......................................................................................................................133
Diversification:................................................................................................................................133
PepsiCo rush to woo price-wary buyers:.........................................................................................134
Marketing Mix of Pepsi Cola
In 1965 Herman W. Lay of the Frito-Lay Company and Donald Kendall of Pepsi-Cola formed
PepsiCo. In 1986 operations were combined under PepsiCo Worldwide Foods and PepsiCo
Worldwide Beverages. In 2001 PepsiCo merged with Quaker Oats to form a $25 billion
company. PepsiCo restructured in 2007 dividing the company into three units’ food in the US,
Drinks concentrated in the US and Food and Drinks marketed abroad.
Product:The main product of Pepsi Cola Company is Pepsi and its sub brands are Dew, Miranda, 7up,
Pepsi Max. It also diversified into Lays.
Providing their consumers with easy-to-use, convenient and innovative containers are one of
their top priorities. Package introductions they have made over the years include the industry's
first 1 ½ liter bottle; Regular, Disposable; Can. Pepsi Co. was the first company to respond to
consumer preference with lightweight, recyclable, plastic bottles. These bottles are made of
polyethylene terephthalate or "PET plastic," which is a form of polyester used to make strong,
lightweight, shatter-resistant bottles.
Beverages
PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7UP,
Nimbooz, Mirinda, Slice and Mountain Dew, in addition to low-calorie options such as Diet
Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drink
Gatorade and fruit juices such as Tropicana and Tropicana 100%.
Page 11 of 136
7UP
Brand History
7UP, the refreshing clear drink with a natural lemon and lime flavour was created in 1929. 7UP
was launched in India in 1990 and its international mascot Fido Dido was used for advertising in
1992 to position the brand as a cool drink for youngsters. Fido became an instant hit with his
trendy look, laid-back attitude and unconventional take on life. During the brand’s early years in
India, 7UP gained market leader status in the lemon lime category by being one of the first to be
nationally distributed besides being marketed as a healthier alternative to other soft drinks.
Brand Advantage
For the past two years, 7UP’s ambition as a brand has been to capture and own the lemon
refreshment territory within the clear lime category. ‘Lemon’ has proven to be a clear and
relevant differentiator for the brand. Further, the emotional connect with the idea of upliftment
through refreshment has led to an impressive payoff for the brand.
After establishing itself as ‘The Lemon Drink’ in January 2009, 7UP has continued to build on
the theme of mood upliftment with its new tagline ‘Mood Ko Do Lemon Ka Lift’.
Did You Know?
There are many theories for the origin of the 7UP name.
According to Professor Gary Yu (UCSB) and researchers for the popular Uncle John’s Bathroom
Reader the name is derived from the atomic mass of Lithium, 7, which was originally one of the
key ingredients of the drink (lithium citrate).
However, there are numerous other myths explaining the name:
Its creator named the soft drink after winning at a casino with three rolls of 7 and the letter U.
The drink was formulated with seven flavours plus the bubbles from the drink’s carbonation (the
bubbles go up).
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The original bottle contained seven ounces; its creator came up with the name while playing
dice.
7UP was the seventh large commercial lemonade brand that tasted the same.
Before the formula changed in 2006, a can of 7UP 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.
The name ‘7UP’ was a reference to the Esoteric concept of the Seven Planes, made famous by
the Internet series The Arrivals.
The name came from the seventh-inning stretch ‘7UP’ in baseball tradition.
Quick Brand Facts
7UP was created in 1929
7UP was launched in India in 1990
Aquafina
Brand History
Aquafina was first launched in the US in 1994. With its unique purification system and great
taste, Aquafina soon became the bestselling brand in the country.
In India, Aquafina’s journey began with its launch in Bombay in 1999 and it was rolled out
nationally by 2000. On the strength of its brand appeal and distribution, Aquafina has become
one of India’s leading brands of bottled water in a relatively short span of time.
Brand Advantage
Aquafina goes through a five step state-of-the-art purification process to give consumers pure
water and perfect taste.
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Aquafina has been built through refreshing and sharp advertising. The ‘What a Body’ campaign
has helped the brand to drive premium, modern and youthful imagery in an otherwise
undifferentiated category.
Bottled across India in 19 plants, Aquafina is available across more than half a million outlets.
Catering to diverse consumer needs and occasions, it is available in various pack sizes like
300ml, 500ml, 1 ltr and 2 ltr bottles and in bulk water jars of 25 ltrs.
Aquafina is the face of PepsiCo’s water conservation initiatives and builds awareness about
Pepsico’s efforts to replenish and restore the water table through its pack labels.
Duke's
Duke’s Legacy
Founded in 1889 by Dinshwaji Pandole, Duke’s is a brand that is seeped in Mumbai’s rich
history. It was in many ways the country’s first aerated soft drink and a pioneer on many fronts.
Many a generations have grown up enjoying the refreshing taste of Duke’s. Thus when PepsiCo
India brought this brand in 1994, it also inherited Duke’s rich Mumbai legacy. While
the Lemonade flavour has refreshed the consumers ever since, in September 2011 some more
flavours of Duke’s , the delicious Raspberry and the sugary sweet Ice-cream soda were
relaunched. And with it was launched Duke’s Masala Soda, with its strong local flavour that has
the consumers wanting for more..
Duke’s – Refreshing Mumbai!!
Just a year into its re-launch Duke’s is being loved by all Mumbaikars. While the old drink is for
nostalgia, the young are attracted to the unique flavours that Duke’s offers. Be it morning, after
meal or in the evening breeze Duke’s flavours refresh you every time. As Duke’s consumers say
Duke’s is an ‘Anytime Drink’!!! The sweet Raspberry loved by the Parsi community in Mumbai
is getting many new connoisseurs. The Mumbai Masala Soda appeals to all with a very unique
Indian taste. What’s more the new party mixers launched under the Duke’s name have taken the
young in city by storm. No party is complete without the Classic Mojito or theExotic Blue
Lagoon!!!
Page 14 of 136
Brand Facts
Founded in 1889 by Dinshwaji Pandole a Parsi gentleman
Bought by PepsiCo in 1994
Relaunched in 2011
Gatorade
Brand Advantage
What is Gatorade?
Gatorade is an optimal mix of water, carbohydrates and essential mineral salts that get absorbed
instantly to rehydrate, replenish and refuel like no other beverage can.
Gatorade is unlike any other Beverage or Energy Drink!
Gatorade quickly restores what the body loses through sweat. Its scientific formulation instantly
helps the body restore essential minerals, salts, water and energy lost through action and
exercise. Gatorade thus helps one to stay ‘Stronger for Longer’. It contains less than half of the
sugar that is normally found in energy drinks or soft drinks and even juices.
Did You Know?
Water helps, Gatorade transforms.
Gatorade is meant for consumption in active, sporty, hot and sweaty conditions.
Gatorade is scientifically formulated and athletically proven to quench thirst.
Quick Brand Facts
World’s No. 1 Sports Drink
Launched in India in 2004
Page 15 of 136
Available in 3 flavours
Mirinda
2012 Brand Campaign
Mirinda has always stood for great bold taste that unleashes uninhibited fun. Taking the promise
forward, Mirinda launched two new exciting flavors- Orange Mango and Orange Masala which
appeal to the Indian palette. While Orange Mango is the perfect mix of the sweet candy taste of
mango flavor and the tanginess of original Mirinda Orange; Orange Masala tickles the taste buds
with a hint of fruit masala flavor added to Mirinda Orange. The launch was supported by a
robust 360-degree campaign including outdoor, online and a consumer engagement programme
to bring alive the taste experience.
Brand History
Mirinda is an international soft drink brand from Spain that was launched in India in 1991. The
irresistible taste of Mirinda was communicated through our 1996 ‘Mirinda Men’ campaign, the
2000 ‘Taste Pe Atka, Mirindaaaa’ campaign and the ‘Taste Aisa Chaye Character Fisla Jaye’
campaign of 2003.
In 2008, the brand decided to up the ante and deliver a brand philosophy that would resonate
strongly with consumers. Consequently, Mirinda adopted a bold and vibrant colour, great
orangey taste and sparkling bubbles that encouraged one to be more carefree, spontaneous and
playful and occasionally give in to an impulse of uninhibited fun. This was conveyed through the
‘Pagalpanti Bhi Zaroori Hai’ campaign with Asin in 2008. In 2009, Mirinda established orange
as the core of the brand with ‘Orange Dikha Toh Mooh Bola Mirindaaaa’.
Quick Brand Facts
1991: Mirinda Orange launched in India.
1998: Mirinda Lemon launched in India
Page 16 of 136
Mountain Dew
Brand History
The main formula of Mountain Dew was invented in Virginia. The drink was named and first
marketed in Johnson City, Tennessee and Knoxville, Tennessee in 1948.
In India, Mountain Dew set the soft drink category ablaze in 2003 with its iconic launch
campaign ‘Cheetah Bhi Peeta Hai’.
Brand Advantage
It is a soft drink that exhilarates like no other because of its active, high-energy, extreme citrus
taste. The idea of daring, challenges, a ‘can do’ attitude, adventure and exhilaration are deeply
entrenched in its brand DNA. The brand has always celebrated the bold, adventurous and
rebellious spirit of youth. This is reflected in the high-adrenaline advertising of the brand and its
connection to outdoor adventure.
Did You Know?
‘Darr Ke Aage Jeet Hai’
In 2007, the brand was re-launched with a completely new, punchier formulation.
Communication aimed at forging a strong emotional connect with the audience. Thus began the
‘Darr Ke Aage Jeet Hai’ campaign, which acknowledged that fear was a very real aspect of the
world of adventure and Mountain Dewwanted young people to believe in themselves in their
moment of fear. For beyond fear lay victory.
Quick Brand Facts
Mountain Dew was invented in Virginia in 1948.
It was launched in India in 2003.
Page 17 of 136
Nimbooz
Brand History
Nimbooz was launched in India on the 28th of February 2009. It is the latest addition to the
Pepsi beverages portfolio.
Brand Advantage
The brand delivers very strongly on certain expectations. These are:
Locally Relevant Taste
Nimbooz is a great tasting product. It has capitalized on the existing familiarity with and high
consumption of unpackaged / home-made nimbu pani. It has remained true to its authentic
Indian Identity by using the traditional Matka (Earthen Pot) and Squeezer in the manufacturing
process.
Convenience and Great Value
The product is available in three convenient formats, 350ml PET, 200ml RGB and 500ml PET at
the remarkable price points of Rs 18, Rs 10 and Rs 25 respectively.
Accessibility
Nimbooz is India’s first nationally available packaged Nimbu Pani.
Hygienic
It is just like home-made nimbu pani. You can enjoy its natural and delicious lemony
refreshment anywhere you go.
Quick Brand Facts
India’s first nationally available packaged Nimbu Pani.
It was launched in India in 2009.
Page 18 of 136
Pepsi
Brand History
Pepsi is a hundred-year-old brand loved by over 200 million people worldwide. The largest
single selling soft drink brand in India, Pepsi is ubiquitous on just about every social occasion.
Youngistaan loves it. 200 million people worldwide love it. But what has made Pepsi the single
largest selling soft drink brand in India is actually a formula concocted a century ago in a
faraway continent.
1886, the US. Caleb Bradman, a man with a plan formulated a blockbuster of a digestive drink
and decided to call it Brad’s drink. The potion was to become Pepsi Cola in 1898, and
eventually, Pepsi in 1903.
Since its inception, Pepsi has always been at the forefront of the beverage industry and has come
up with revolutionary concepts such as Diet Pepsi, 2l bottles, recyclable plastic cola bottles and
the enviable My Can.
Brand Advantage
Pepsi has become a friend to youth and youth culture. Over generations, youngsters have grown
up with Pepsi and have shared an emotional connect with it unlike with any other cola brand. Be
it parties, hangouts with friends, or just another day at home, a day is never complete without the
fizz of Pepsi!
Pepsi has always fuelled youth passions like cricket, Bollywood, music and now football. Youth
icons like MS Dhoni, Ranbir Kapoor, Didier Drogba, Virendar Sehwag, Sachin Tendulkar,
Priyanka Chopra and Deepika Padukone have endorsed Pepsi since its launch in India.
Pepsi Changed the Game during the 2011 cricket world cup by challenging convention,
celebrating the unorthodox and by becoming the official sponsor of everything that was
unofficial about the sport! Change the Game even as a thought has gained enormous popularity
and generated tremendous buzz.
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Taking the same theme forward in 2012, Pepsi changed the game yet again by taking the lead in
celebrating the exciting new platform of football. Having brought the biggest international
football stars and pitching them against the mighty Indian cricketers in a classic faceoff for Pepsi
– is something which only a brand like Pepsi can deliver.
Quick Brand Facts
Flagship brand of PepsiCo.
100 year old brand loved by over 200 million people worldwide.
An iconic youth brand in India.
The single largest selling soft drink brand in India.
Slice
Brand History
Slice was launched in India in 1993 as a refreshing mango drink and quickly went on to become
a leading player in the category.
In 2008, Slice was relaunched with a winning product formulation that made consumers fall in
love with its taste. With new pack graphics and clutter-breaking advertising, Slice has built a
powerful appeal.
Brand Advantage
With the launch of the ‘Aamsutra’ campaign in 2008, its winning taste and appealing pack
graphics, Slice created a great deal of excitement in its category and celebrated the indulgence in
mangoes like no other brand had done before.
While other players have portrayed the mango as a simple and innocent fruit, Slice celebrates the
sheer indulgence and sensuality involved in consuming a mango. The creative ‘Aamsutra’ idea
communicates the experience of extreme sensuous pleasure through the act of drinking Slice.
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Slice was the first brand ever in the Juice and Juice Drinks category to sign on Bollywood diva
Katrina Kaif as the brand ambassador for Slice.
In 2009, Slice took the notion of indulgence to a whole new level with the launch of the ‘Slice
Pure Pleasure Holidays’, giving its consumers a chance to win luxurious all-expenses-paid
holidays to dream European destinations like Paris, Vienna, Greece and Venice.
Quick Brand Facts
Slice was launched in India in 1993
Slice Mangola was introduced in 1994
Tropicana
Brand History
Tropicana was founded in Bradenton, Florida, USA, in 1947. It is now enjoyed almost
everywhere in the world. Carefully nurtured for over 50 years, Tropicana has matured into one
of the most respected beverage brands. Tropicana is the #1 brand in packaged 100% Juice* in
the world in 2011 in off-trade volume. It is today available in 63 countries. Since 1998,
Tropicana has been owned by PepsiCo, Inc. Tropicana Premium Gold was re-launched as
Tropicana 100% in 2008.
Brand Advantage
Tropicana continues to select the best fruit to manufacture high-quality juices and original
products, pioneer innovative processes and explore new markets for its products. It is committed
to fostering healthy lifestyles by ensuring that its products are naturally nutritious and provide
the daily benefits that one needs.
In India, Tropicana comes in two categories: 100% Juices (sold as Tropicana 100%) and Juice
Beverages (sold as Tropicana).
Page 21 of 136
Quick Brand Facts
Launched in India in 2004.
Available in two categories - 100 percent juice and juice-based drinks.
Price:
Pepsi prices its products similar to those of Coca-Cola in order to keep profits high. Competition
in the is based mainly on marketing skill rather than price to help avoid costly price wars and
keep profits stable. Since neither of the major manufacturers would win a price war, it is
unwritten rule that the companies will follow the pricing structure of the market leader. While
this amount to price fixing, there has not been any major government actions to curtail the
practice so it should continue in the future.
PepsiCo’s current retail prices range depending on the convenience of the location in which they
are located and depending on the size of the soft drink container.
Factors responsible for pricing of PepsiCo
Expenses related to transportation, ingredients and labor continue to pressure the beverage
industry toward price increases.
PepsiCo’s drink pricing strategies may be heavily influenced by its working relationship with
Wal-Mart whose low price themes put pressure on PepsiCo to hold down prices.
The company strives to cut or maintain current prices by cutting overhead and re-engineering the
manufacturing process.
PepsiCo is expanding its use of inexpensive and recyclable plastic bottles; nevertheless the
company has instituted some price increases in recent years, specifically in its overseas markets
such as New Delhi and Duba.
Page 22 of 136
PRICES OF DIFFERENT BOTTLES Prices of Pepsico, Mirinda, 7up, Mountain Dew.
200 ml = Rs 20
400 ml = Rs 40
600 ml = 30
1.5 ltr = Rs 50
Aquafina
500 ml Bottle - Rs. 10
1 lt Bottle - Rs. 20
2 lt Bottle - Rs. 32
Gatorade
500 ml = Rs. 35
Nimbooz
200 ml = Rs. 10
350 ml = Rs. 18
500 ml = Rs.30
Slice
200 ml = Rs. 14
1.2 lt = Rs. 60
Tropicana
1 lt = Rs. 85 – 99 (depending on flavours)
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Place (Distribution):
Manufacture -------------- Wholesaler---------------Retailer
Manufacturer -------- Company Warehouse-------------- Retailer
Distribution is an important aspect of success in the beverage industry. Since the cola companies
want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is
especially the case in foreign markets where the cola companies fiercely battle for good bottlers.
The building of bottlers through joint ventures and the increased maintenance of current bottler
relationship should be the main focus of Pepsi’s international marketing. Coca-Cola is very
methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting
its bottlers. This is one area that Pepsi must improve if it is going to take market share away
from Coca-Cola.
Product is distributed through PepsiCo distribution centers. The distributor delivers it
To the grocery retailers, vending companies, restaurants, and warehouse/club stores.
The distribution segments can be broken down into the following:
• Convenience Stores and Gas Stations: 12% of the market
• Restaurants: 25% of the market
• Warehouse/Club Stores: 6% of the market
• Super Markets and Retail Stores: 57% of the market.
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Promotion Strategy
Pepsi promotes its products in a many ways, but focuses mainly on getting products associated
with entertainment icons that appeal to youth. The first major use of this technique was the
signing of Pakistan cricket team as celebrities.
Two other areas of entertainment that have been used by Pepsi to promote its brands are sports
and movies. Sports are a popular source of entertainment throughout the world and is a using it
to promote the brand is a main focus of Pepsi. Since sporting events are seen many times by
fans, it provides a good opportunity to increase brand recognition. Movie stars are also popular
throughout the world and are greatly admired by people, so using them in advertising has a
positive effect brand image.
Pepsico focuses on
Brand Identity
The first step in understanding Image Advertising is to understand the image being created, i.e.
Brand Image. Brand Image is consumers’ perception of the brand in question. This perception
might actually be different from what the brand actually embodies – the Brand Identity.
Advertising bridges the gap between Brand Image and Brand Image.
There are a number of tools available to explore the identity of a brand. One such tool is
Kapferer’s Prism (Exhibit 1). As shown in the exhibit above, there are many facets to a brand.
Kapferer identifies six key characteristics that together define the brand:
Physique – the physical attributes of the brand
Personality – the personification of the brand
Relationship – the relationship between the consumer and the brand
Culture – the core values of the brand
Reflection – the way consumers want to be perceived when using the brand
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Self-Image – the image that consumers have of themselves when associated with the brand
A combination of these characteristics can be used to identify what the brand ultimately stands
for.
PepsiCo’s Campaign
The analysis of Pepsi, 7 UP and Mountain Dew from the portfolio of PepsiCo puts forth some
interesting aspects about the evolution of these brands. Pepsi was one of the first products to
Indian markets after the economic reforms of 1991.
Pepsi
Pepsi began with the Yehi hai Right Choice Baby campaign, which has been one of the most
memorable campaigns of the brand, featuring celebrity endorsers such as Shah Rukh Khan
among others. The focus, as is clearly evident, is on the product with the youth as its target
segment. Yeh Dil Mange More and Yeh Pyaas Hai Badi were some of the later campaigns.
Yeh Dil Mange More campaign was again a great success, having balanced the emotional as
well as the functional appeal of the product. Featuring Sachin Tendulkar and many other leading
stars at that point of time, this was also one of the longest campaigns carried out by Pepsi. The
company however failed to maintain the trend and leverage it. Instead of moving on to a
complete emotional appeal platform, the company decided on a product based promotion
campaign. Though there is still some amount of emotional appeal to its campaigns, the principal
focus is on the product - it being a preferred thirst quencher.
7 UPIn its early days, 7 UP inherited the global Fido-Dido campaign for promotion in India as well.
However, with changing times and a contextual difference in India, a much more focused
campaign was required. This led to the Keep It Coolcampaign, which was targeted primarily at
the youth and the teenager segment. Hence the appeal was at a more subtle, emotional level,
which was meant to convey a potential lifestyle statement. The recent campaign
of BhejaFryessentially leverages on the same emotional appeal where the Keep It Cool campaign
has been somewhat tweaked to have a local appeal.
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Mountain DewMountain Dew is the latest entrant in the product portfolio. This product too has the appeal of
being the drink of a daredevil or the No Fear personality. The campaigns launched include Do
the Dew and Dar Ke Aagey Jeet Hai. The initial campaign was unclear in terms of its appeal and
the target segment, as a result of which the brand suffered some jolts in the beginning. However,
the latest campaign captures the No Fear or the Macho Man image. In this sense, the brand
directly competes with Thums Up from the Coca Cola Stable
Some of the ways in which Pepsi attract consumers are:
¨ Free Samples ( New product – DEW)
¨ Discounts ( RAMDAN Offers)
¨ In-Store Displays – Signs, banners etc.
¨ Entertainment – Games with free T-shirts, Pepsi points under the cap etc.
..Celebrity endorsement.
..Sports like Cricket sponsoring.
..Online surveys
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DISTRIBUTION STRATEGY - PEPSI
•
COMPANY COBO FOBO WAREHOUSE C&F DISTRIBUTOR
SALESMEN SALESMENWHOLESALER SLUMS RETAILER CUSTOMER
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• Company (PepsiCo)
PepsiCo India provides the salt to all the bottling plants in the Country that carry out the bottling
operations. COBO: These are Company owned bottling operations operating directly under the
Company. Out of 32 bottling plants, PepsiCo owns FOBO: These are Franchise owned bottling
operations. R K Jaipuria group does all the franchisee-bottling operations for PepsiCo India;
currently R K J Group has 17 bottling plants for Pepsi.
• Warehouses:
These are Company or franchisee owned warehouses spread over various locations that cover the
respective territories and come under the purview of their respective Area or Territory Offices.
Stocks are sent from the bottling plants to these warehouses, from where they are sent to the C &
F centers and Distributor Points. C & F Centers: These are the biggest centers in the
distribution network and receive proper assistance from the Company (either COBO or FOBO).
The C & F center is owned by a private player and not by the Company. The vehicles (Delivery
Vans) are owned by the Company, and the Salesmen at the C & F points are on the Company
Payroll.
• Distributors
These are small, compared to C & F centers. Everything at the Distributor point owned and
managed by the distributor, even the salespersons are on the Distributors payroll. Wholesalers:
These are smaller than C & F centers and Distributor points and get the stock directly from the
Company or Franchisee. They get their stock directly from the Company and thus get special
rates and extra discounts from the Company.
• Slums:
They are generally smaller than the Wholesalers are. However, they get special discounts from
the C & F centers and Distributor points. Retailer: Retailers are the most important chain in the
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distribution channel of Pepsi as they are the only point of contact with the customers. Retailers
get their stock from all the other channel members in the distribution channel.
Pepsico Distribution Channel
ManufacturerSponsoredRetailFranchisee
Pepsi Co licenses bottlers in various markets that buy its syrup concentrate.
These bottlers then carbonate and bottle thesyrup to sell them to distributors or retailer
FACTORS FOR CHANNEL DESIGN
Customer needs :
Assortment of Goods: Pepsi has a wide assortment of goods. In beverages some very famous are
Pepsi Mirinda, 7up, Slice etc Aquafina, Lehar Soda also.
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Ubiquitous: Restaurant, Pan shops, Kirana Stores, Confectionaries, Pepsi on wheels, all these are
some examples of the fact that the product Pepsi’s ubiquitous.
Number Of Intermediaries
Intensive Distribution:
Pepsi Co follows an intensive distribution strategy. To support their ubiquitous feature they want
to place their product in as many outlets as possible.
Increases market coverage
Competing against Coca Cola and other local companies.
Terms And Responsibilities
Price Policy: Distributors: 3 to 5 % is the profit margin Retailers: 10 % to 16 % is
the profit margin
Territorial Rights: Distributors are given territorial rights and are not allowed to work
beyond their territories.
Conditions of Sale: Payment done through bank or cash. Option of credit sales remains at
the lower part of the chain. Guarantee of damaged goods provided.
CHANNEL MEMBERS AND ROLES
PepsiCo
Assigns a territory to the distributor.
Assigns sales target acc to region and seasons.
Evaluates performance against predefined parameters.
Sales incentives
Promotional offers.
Distributors
Wholesalers
Retailers
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GENERIC CHANNEL OUTPUTS
Spatial convenience
High availability
Strong presence
Shorter delivery span (time)
CHANNEL MANAGEMENT
PepsiCo has lot of control over the channel
In case of Pepsi to authorized distributor to retail shops (defined territory of distributor)
Pepsi assigns a particular territory to the distributor under an agreement.
No intervention into others territory without company’s knowledge.
Retailers accountable to the authorized distributors
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Marketing Research
This research involved a study, which was descriptive as well as explorative in nature, it
basically aims at gathering data about how the Pepsi scheme plays in mind of shop keepers as
well as consumers.
METHOD OF DATA COLLECTION
THERE ARE TWO TYPE OF DATA-
1. Primary data
2. Secondary data
1. Primary data collection:-
Primary data can be collected by three methods.
(a) Observation
(b) experiment
(c) Survey
But there, only surveys method of data collection is preferred which is very suitable to reach the
researcher motto.
Research instrument: Printed Questionnaire was used as the research instrument to collect the
required information.
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Questionaire ( Retailers )
Name of the shop/outlet :- _____________________-
Address/Location :-__________________________
Type of Outlet :-
a) Convenience Store –b) Groceries Shopc) Eateries
Q1. Which brand of Soft-drink you deal with ?
a) Pepsib) Coca-Colac) Otherd) Mix
Q2. Which Brand of Soft drink provides you better facility?
a) Pepsib) Coca-Colac) Both
Q3. How many Crates of Pepsi you sell per Day?
a) 1 Crateb) 2 Cratesc) 3 Cratesd) More than 3
Q4.Which group of customers prefer Pepsi more?
a) Childrenb) Youngstersc) Adultsd) Senior citizens
Q5. Which company’s cooler do you have in your outlet?
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a) Pepsib) Coca-Colac) Bothd) Owne) Mixed
Q6.Which medium effects the sales most?
a) Televisionb) Magazines/Newspaperc) Displayd) Wall paintings/hoardings
Q7. Do you think that advertising helps in increase the sales volume of Pepsi?
a) Yesb) No
Q8. What kind of promotional activities effect the sales most?
a) Discount Rateb) Free Bottle Schemec) Other
Q9. Any Suggestions to increase for further sales mostly.
____________________________________________________________
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Questionaire ( Customers )f) Name :- ______________g) Occupation :- _____________________h) Q1. How often you consume soft drinks?i) Everydayj) Once in a weekk) Every 15 daysl) Occasionallym) Q2.Which Brand you like most ?n) Pepsio) Coca Colap) Othersq) Q3. If Pepsi, Why?r) ____________________________________s) Q4. If Coca Cola, Why?t) _____________________________________u) Q5.DO you Switch your Brand if product unavailable? If yes, How often ?v) ____________________________________w) Q6. Any Suggestion for Pepsi ?x) _______________________________________
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Area of surveys:
The survey was conducted in different location of Pune.
Sampling Plan:
Sampling plan consists of:-
Sampling unit: The retailer of grocery shop, general store was selected from different place.
Sampling size: 10 0utlet.
Sampling procedure: Simple random sampling procedure was followed
Sampling method: Data were collect by retailer survey. The retailer is directly contacted and
interviewed at there retail counter.
(2) Secondary data collection:As secondary data were not available with shopkeepers as wall as stockiest, so these were collected from Internet, Magazine and newspaper.
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DATA ANALYSISANALYSIS OF DATA
DATA ARE COLLECTED FROM DIFFERENT LOCATION:
1:Pashan
2:Sus Road
3: Sai Chowk
Survey Analysis
THE SURVEY ANALYSIS WAS CODUCTED IN DIFFERENT LOCATIONS AND TOTAL
SURVEY OF 10 OUTLETS WAS CONDUCTED.
Sr. No. Sales No. Of Outlet1 Only Pepsi Products 22 Only Coca-cola products 43 Mixed 4
Total 10
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No. of Outlet
Only Pepsi Products
Only Coca-cola products
Mixed
Interpretation :
The exclusive stores of Coca-Cola is Comparatively much higher in comparision to the exclusive
stores of Pepsi. The market composition of the area under survey can be easily understood by the
above graph.
DATA ANALYSIS & FINDINGS
Types of Outlet
Sr. No. Sales No. Of Outlet1 Convenience store 52 Grocery Store 33 Eaters 2
Total 10
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No. of Outlet
Convenience storeGrocery StoreEaters
Interpretation :The maximum number of Outlets in the region surveyed is of convenienc eshops which includes kirana shops, departmental stores etc. it is followed by Groceries and then by eateries. The most striking features is that there is a great lag between the numbers of different kinds of outlets.
Market Share
Product % Share
Pepsi 34.1
Coca-Cola 56.7
Others 9.2
Total 100
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% Share
PepsiCoca-ColaOthers
Interpretation :There is dominancy of Coca-Cola in the soft drinks market. Pepsi is its chief competitor.
Creates Sales Per Day
Sales Per Day % Share
One Crate 11
Two Crate 12
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Three Crate 19
More than three crate 58
Total 100
% Share
One CrateTwo CrateThree CrateMore than three crate
Interpretation :Huge amount of retailers sale 1 crate per day and goes on decreasing with increasing number of crates sales per day, which is clearly depicted by above graph.
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Sales Effecting Media
Media
TelevisionNewspaper/MagazinesDisplay BoardHoardings
INTERPRETATION :A NUMBER OF RETAILERS AGREED THAT TELEVISIONIS AN EFFECTIVE TOOL FOR ADVERTISEMENT OF THE PRODUCTS FOLLCWED BY DISPLAY BOARDS ETC. AS IS CLEARLY DEPICTED BY ABOVE GRAPH.
CONCLUSION
Media Percentage
Television 60
Newspaper/Magazines 10
Display Board 20
Hoardings 10
Total 100
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EVERY THING IN THIS WORLD IS MADE TO UTILIZE PROPERLY BUT IT SHOULD
BE REACH AT THEPROPER PERSON OR TO THE PROPER UTILIZED AREAS.
OTHERWISE THE VALUE ADDED TO THOSE THINGH BECAME IN VEIN.
THUS MARKETING ROLE PLAYS A VERY IMPORTANT ROLE IN ACHIEVING
THEOBJECTIVE OF A COMPANY. UNDOUBTLY, VALUE UTILITY IS CREATED BY
THE MANUFACTURE OF PRODUCT OR SERVICE BUT TIME AND PLACE UTILITIES
ARECREATED BY MARKETING ROLE. ACCORDING TO DRUCKER, “BOTH THE
MARKETAND THE DISTRIBUTION CHANNELS ARE OFTEN MORE CRUCIAL THAN
THEPRODUCT”. THEY ARE PRIMARY: THE PRODUCT IS SECONDRY. IN AN
ECONOMYLIKE THAT OF INDIA, WHERE MARGINAL SHORTAGES CAN LEAD
TODISPROPORTATION DISTRIBUTION IN PRICES, A DEPENDABLE AND EFFICIENT
DISTRIBUTION SYSTEM IS VERY MUCH ESSENTIAL.THE DISTRIBUTION SYSTEM
CREATES A VALUE ADDED TO ALL MOST ALL PRODUCTS.
ALL FROM THE ABOVE STUDY NOT WITHSTANDING ITS RESTRUCTING EFFORTS
PEPSI IS STILL FAR AWAY WITH ITS GREAT COMPETITOR LIKE COCA-COLA.
FINDING
THE MOST POPULAR FLAVOURIN THE MARKET IS COCA-COLA.
COCA-COAL IS MARKET LEADER AND PEPSI IS THE MARKET CHALLENGER IN
THE WHOLE MARKET WHERE I HAVE SURVEYED.
FROM THE PEPSICO PRODUCTS PEPSI AND THE COCA-COLA PRODUCTS THUMS
UP IS THE HIGHEST SELLING IN THE MARKET.
IN SOME AREAS LIKE PASHAN THE SUPPLY OF COCA-COLA IS BETTER THAN
PEPSI.
IN THE CASE OF MINERAL KINLEY IS SELLING MORE THAN AQUAFINA.
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I HAVE FOUND THAT A RETAILER GIVES MORE PREFENCE TO THE PEPSICO
PRODUCTS LIKE PEPSI, MOUNTAIN DEW, SLICE, MIRINDA, TROPICANA, 7UP.
THE NEW PRODUCT OF PEPSI, MINUTE MAID HAS A AVERAGE IN THE SURVEYED
CITY.
THE COMPANY HAS INTRODUCED A 1.25 LTR PACK FOR THE LOWER CLASS
FAMILY.
IN THE CASE OF THE SCHEME PEPSI IS PROVIDING MORE SCHEMES THAN THE
COCA-COLA.
DISTRIBUTORS HAVE NOT MAINTAINED PROPER STOCK SO THAT RETAILERS DO
NOT GET ALL THE PRODUCTS BY WHICH SALE, DISCOUNTING & TRADE
SCHEMES ARE EFFECTED.
Suggestions
1. As the most of the dealers have complaints that the salesman does not tell them about
schemes. For this before launching any scheme company should advertise it by distributing
pamphlets to the dealers mentioning the period of the scheme & time-to-time proper check is
required.
2. Exclusive outlets are loosing because of irresponsible salesmen and their improper behavior.
3. A healthy relationship should be developed by the company’s executives with the dealers.
4. Company should develop policy, so that the soft drinks are made available at all the outlets
during the peak seasons & not let the opportunity pass by.
5. Company Should make fridge available at maximum outlets, so the chilled soft drinks could
be provided to the customers, because in the soft drink market brand loyalty fails if chilled soft
drink is not made available to the customers in spite the customer goes in for any other brand,
which is chilled.
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6. New policy of the company should be introduced before the competitors launch those policies.
7. Hoardings should be display in the inner part of urban areas has more growth potential in
terms of sales.
Brand Value Proposition
PepsiCo is a global food and beverage leader with net revenues of more than $65 billion and a
product portfolio that includes 22 brands that generates more than $1 billion each in annual retail
sales.
Main business
(i) Quaker, (ii) Tropicana, (iii) Gatorade, (iv) Frito-Lay and (v) Pepsi-Cola – make hundreds of
enjoyable foods and beverages that are loved throughout the world.
Product offered by PepsiCo
It recognized the need to understand and respect local cultures, rituals, patterns and intake gaps
when developing delicious-tasting convenient and affordable products for consumers in that
market.
Examples of products adapted to local tastes include:
• India – A grain-based product called Kurkure, a tea-time snack called Aliva and a high-
nutrition snack made from lentils called Masala Munch;
• Mexico – A quesadilla-shaped and -flavored tortilla chip called Fritos Dobladitas;
• Russia – Locally relevant flavors of Lay's potato chips, such as crab and mushroom;
• China – Blueberry and cucumber varieties of Lay's chips/Congee.
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History
PepsiCo, Inc. was established through the merger of Pepsi-Cola and Frito-Lay. Pepsi-Cola was
created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was
formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H.
W. Lay Company, founded by Herman W. Lay, also in 1932. Herman Lay, former chairman and
CEO of Frito-Lay, was chairman of the board of directors of the new company; Donald M.
Kendall, former president and CEO of Pepsi-Cola, was president and chief executive officer.
The new company reports sales of $510 million and has 19,000 employees. Major products of
the new companies are:
Pepsi-Cola Company: Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew
(introduced by Tip Corporation in 1948).
Frito-Lay, Inc.: Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato
chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavoured snacks (1948),
Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961).
To support its operations, PepsiCo has 36 bottling plants in India, of which 13 are company
owned and 23 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.
BRAND VALUE PROPOSITION
The functional, emotional, and self-expressive benefits delivered by the brand that combined
provide value to the customer.
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Emotional benefits can help anchor your brand to success...
Emotional benefits and emotional branding have become hot topics over the past few years. A
lot of research has been conducted and the association of emotion in marketing promotions has
been shown to have a significant impact on peoples purchasing decisions.
So, what are emotional benefits?
Emotional benefits are the positive emotions the consumer experiences because they use a
particular product or service or brand.In other words, emotional benefits support the consumers
self-esteem. "I use product Z, therefore I am a creative person". "I use service X, therefore I am a
relaxed person". "I drive brand Y, therefore I am an innovative person". These are all statements
that evoke emotional benefits in the consumer and help drive their purchasing decision because
of the emotional association they make with the product or brand. Just about every business,
product, and service can be associated with an emotional benefit.
Emotions Drive Purchasing Decisions!
People buy products because of how the brand or features make the person feel about
themselves. Most consumers want to believe that they make purchasing decisions based on logic
and price, but most purchasing decisions are driven by emotion and how the consumer will feel
as a result of their purchase.
How Do I Decide Which Emotional Benefit To Reinforce?
When trying to link emotions to your brand for your custom magnets, you must first answer the
following questions: What matters most to my target market? What will my product or service
do for them? Keep asking what's great about your brand or product or service until you get down
to the specific emotional benefit. By linking emotion to your marketing promotions, you greatly
reinforce your marketing message and the positive association that brand has with the consumer.
Why do you think brands like Pepsi, Gatorade, and Nike spend millions of advertising dollars on
famous athletes, entertainers, and singers? Because people can link feeling good with these
famous people and that helps them associate those feelings with their products.
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Emotional benefits can help anchor your brand to success...
Emotional benefits and emotional branding have become hot topics over the past few years. A
lot of research has been conducted and the association of emotion in marketing promotions has
been shown to have a significant impact on peoples purchasing decisions.
So, what are emotional benefits?
Emotional benefits are the positive emotions the consumer experiences because they use a
particular product or service or brand.
In other words, emotional benefits support the consumer’s self-esteem. "I use product Z,
therefore I am a creative person". "I use service X, therefore I am a relaxed person". "I drive
brand Y, therefore I am an innovative person". These are all statements that evoke emotional
benefits in the consumer and help drive their purchasing decision because of the emotional
association they make with the product or brand. Just about every business, product, and service
can be associated with an emotional benefit.
Emotions Drive Purchasing Decisions!
People buy products because of how the brand or features make the person feel about
themselves. Most consumers want to believe that they make purchasing decisions based on logic
and price, but most purchasing decisions are driven by emotion and how the consumer will feel
as a result of their purchase.
How Do I Decide Which Emotional Benefit To Reinforce?
When trying to link emotions to your brand for your custom magnets, you must first answer the
following questions: What matters most to my target market? What will my product or service
do for them? Keep asking what's great about your brand or product or service until you get down
to the specific emotional benefit. By linking emotion to your marketing promotions, you greatly
reinforce your marketing message and the positive association that brand has with the consumer.
Why do you think brands like Pepsi and Gatorade spend millions of advertising dollars on
Page 49 of 136
famous athletes, entertainers, and singers? Because people can link feeling good with these
famous people and that helps them associate those feelings with their products.
FUNCTIONAL BENEFITS
PepsiCo has been experimenting with ingredients from unpeeled heat-treated green bananas and
plantains to serve as everything from a gluten substitute to a sugar replacer in products from
oatmeal to smoothies, crackers, bars and cookies, a recent patent application reveals.
Difference between Brands – Emotional Benefits and Self-expressive Benefits
There is a big difference between feeling rugged when wearing Levi’s jeans and expressing the
strong, rugged side of you by wearing them. The differences between the two can be important.
Brands essentially deal with different kinds of benefits. An identity that is based on intangible
associations or brand personalities provides the brand with more strategic scope and gives you
more liberty to extend the brand.
On the other hand, a brand that relies on the superior performance of a key attribute will
eventually get beaten by competition, because the attribute is a fixed target for competitors. The
result can be a loss of differentiation, or worse an inferior position on an attribute that is
associated with the brand.
PepsiCo
uses Facebook to link the information that they post on their website to their Facebook Profile.
This partnership strengthens PepsiCo’s ability to get women involved and to be inspired by
powerful women who act as role models. In February 2010, Pepsi We Inspire was awarded the
NAACP award for its leadership in promoting multicultural images and role models in the
media.
Product details
Leher
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Brand History
Lehar was launched in 1996, with innovative small packs and traditional flavours. The brand
positioned itself by emphasizing its irresistible taste and using modern imagery.
Lehar was re-launched in 2006 and positioned itself using the plank ‘Taste zyaada kyunki oil
taza’. It promised to deliver good taste through the use of fresh oil in the manufacturing process.
Brand Advantage
With the tag line ‘The Joy of Sharing- Khao Khilao Khushiyan Badhao.’, the brand promises to
deliver irresistible namkeens to consumers.
Lehar : 'Quality in Every Bite'
Lehar - Nutritional Facts & Ingredient Details
• Lehar Dal Mixture
• Lehar Masala Puffs
• Lehar Bikaneri Bhujia (Large)
• Lehar Chatpata Mix
• Lehar Iron Chusti
• Lehar Khatta Meetha
• Lehar Moong Dal
• Lehar Navratan Mix
• Lehar Ribbon Pakoda
• Lehar Shahi Mix
• Lehar South Masala Mix
• Lehar Tangy Starz
• Lehar Tomato Twist
• Lehar Masala Pori Mix
• Lehar Aloo Bhujia
• Lehar Bikaneri Bhujia (Small)
• Lehar Chatpateet Chatka
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• Lehar Karare Peanuts
• Lehar Matar Masti
• Lehar Murukku Bites
• Lehar Ratlami Sev
• Lehar Salted Wafers
• Lehar Simply Salted
• Lehar Spicy Masala
• Lehar Tasty Tomato
Slice
Brand History
Slice was launched in India in 1993 as a refreshing mango drink and quickly went on to become
a leading player in the category.
In 2008, Slice was relaunched with a winning product formulation that made consumers fall in
love with its taste. With new pack graphics and clutter-breaking advertising, Slice has built a
powerful appeal.
Brand Advantage
With the launch of the ‘Aamsutra’ campaign in 2008, its winning taste and appealing pack
graphics, Slice created a great deal of excitement in its category and celebrated the indulgence in
mangoes like no other brand had done before.
While other players have portrayed the mango as a simple and innocent fruit, Slice celebrates the
sheer indulgence and sensuality involved in consuming a mango. The creative ‘Aamsutra’ idea
communicates the experience of extreme sensuous pleasure through the act of drinking Slice.
Slice was the first brand ever in the Juice and Juice Drinks category to sign on Bollywood diva
Katrina Kaif as the brand ambassador for Slice.
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In 2009, Slice took the notion of indulgence to a whole new level with the launch of the ‘Slice
Pure Pleasure Holidays’, giving its consumers a chance to win luxurious all-expenses-paid
holidays to dream European destinations like Paris, Vienna, Greece and Venice.
Slice - Nutritional Facts & Ingredient Details
• Slice
Juice Drink
NUTRITIONAL INFORMATION (Approx.)
Per 100ml
Energykcal 73
Carbohydrate g 18.1
Sugars* g 17.3
Proteing 0
Fat g 0
Pepsi
Brand History
Pepsi is a hundred-year-old brand loved by over 200 million people worldwide. The largest
single selling soft drink brand in India, Pepsi is ubiquitous on just about every social occasion.
• Youngistaan loves it. 200 million people worldwide love it. But what has made Pepsi the
single largest selling soft drink brand in India is actually a formula concocted a century ago in a
faraway continent.
• 1886, the US. Caleb Bradman, a man with a plan formulated a blockbuster of a digestive
drink and decided to call it Brad’s drink. The potion was to become Pepsi Cola in 1898, and
eventually, Pepsi in 1903.
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Brand Advantage
• Pepsi has become a friend to youth and youth culture. Over generations, youngsters have
grown up with Pepsi and have shared an emotional connect with it unlike with any other cola
brand. Be it parties, hangouts with friends, or just another day at home, a day is never complete
without the fizz of Pepsi!
• Pepsi has always fuelled youth passions like cricket, Bollywood, music and now football.
Youth icons like MS Dhoni, Ranbir Kapoor, Didier Drogba, Virendar Sehwag, Sachin
Tendulkar, Priyanka Chopra and Deepika Padukone have endorsed Pepsi since its launch in
India.
• Pepsi Changed the Game during the 2011 cricket world cup by challenging convention,
celebrating the unorthodox and by becoming the official sponsor of everything that was
unofficial about the sport! Change the Game even as a thought has gained enormous popularity
and generated tremendous buzz.
Kurkure
Brand History
Launched in 1999, this perfect ‘namkeen’ snack, developed entirely in India, has come to be
identified with fun and lovable human quirks. It developed an even stronger identity through
associations with celebrities like Juhi Chawla (2003) and Kareena Kapoor (2008), well-known
Indian actors.
About the Brand
Brand Promise
Kurkure is a crunchy new-age namkeen snack brand which symbolizes light-hearted fun.
Embodying the spirit of India, Kurkure has found a home in millions of hearts and minds and
enjoys the position of a strong Lovemark brand in India.
Juhi’s vibrant and fun-loving personality complements and embodies the essence of Kurkure.
Over the years, Kurkure has journeyed effortlessly from being a snack with a twist to becoming
an integral part of India’s teatime menu and an embodiment of endearing human ‘imperfections’
or ‘tedhapan’.
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Brand Advantage
• Made with trusted kitchen ingredients: 100% vegetarian
• All the raw materials used in Kurkure comply with the Prevention of Food Adulteration
Act and rules that govern the manufacture, distribution and sale of Kurkure.
• All Kurkure ingredients are used daily in households for the preparation of various edible
items.
Innovations
Kurkure has constantly re-invented itself to sustain its relevance to Indian culture and the Indian
ethos. Not only does Kurkure provide an inimitable taste and superior quality, it has also brought
fame and happiness to many through its ‘Chai-time-achievers’ face on pack initiative.
Quality Standards
Kurkure is made in automated plants at three locations – Channo (Punjab), Kolkata and Pune.
These plants are audited and certified by various external agencies. The certifications include:
1. HACCP (Hazard Analysis and Critical Control Point).
2. Certification by TQCSI (Australia), which confirms that products are manufactured in a
food safety environment and the manufacturing process has adequate controls to track products.
3. American Institute of Baking (USA), one of the best auditing bodies for confirming
process and product safety.
4. Our Plants are ISO 14000 certified, which confirms that the manufacturing process
ensures environmental safety.
5. Our plants are also certified to ensure that the safety of products, processes, environment
and people is maintained at a very high level. This certification is issued by OHSAS 18001
(Occupational Health and Safety Assessment Series), USA.
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Tropicana
Brand History
Tropicana was founded in Bradenton, Florida, USA, in 1947. It is now enjoyed almost
everywhere in the world. Carefully nurtured for over 50 years, Tropicana has matured into one
of the most respected beverage brands. Tropicana is the #1 brand in packaged 100% Juice* in
the world in 2011 in off-trade volume. It is today available in 63 countries. Since 1998,
Tropicana has been owned by PepsiCo, Inc. Tropicana Premium Gold was re-launched as
Tropicana 100% in 2008.
Brand Advantage
Tropicana continues to healthy lifestyles by ensuring that its products are naturally nutritious and
provide the daily benefits that one needs.
In India, Tropicana comes in two categories: 100% Juices (sold as Tropicana 100%) and Juice
Beverages (sold as Tropicana).
select the best fruit to manufacture high-quality juices and original products, pioneer innovative
processes and explore new markets for its products. It is committed to fostering
Mountain Dew
Brand History
The main formula of Mountain Dew was invented in Virginia. The drink was named and first
marketed in Johnson City, Tennessee and Knoxville, Tennessee in 1948.
In India, Mountain Dew set the soft drink category ablaze in 2003 with its iconic launch
campaign ‘Cheetah Bhi Peeta Hai’.
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Brand Advantage
It is a soft drink that exhilarates like no other because of its active, high-energy, extreme citrus
taste. The idea of daring, challenges, a ‘can do’ attitude, adventure and exhilaration are deeply
entrenched in its brand DNA. The brand has always celebrated the bold, adventurous and
rebellious spirit of youth. This is reflected in the high-adrenaline advertising of the brand and its
connection to outdoor adventure.
‘Darr Ke Aage Jeet Hai’
In 2007, the brand was re-launched with a completely new, punchier formulation.
Communication aimed at forging a strong emotional connect with the audience. Thus began the
‘Darr Ke Aage Jeet Hai’ campaign
Gatorade
Brand History
Gatorade, the World’s No.1 Sports Drink, was born on the field of sport! Gatorade was launched
in India in 2004 and over the years, has become an integral part of the kitbags of many leading
sportspersons. Gatorade has been tried and endorsed in India by the top sports stars and
professionals, including Sachin Tendulkar, Irfan Pathan, Md. Kaif, S. Sreesanth Ramji
Srinivasan and Javagal Srinath.
Lay's
All PepsiCo India food products and their ingredients are 100% vegetarian
Brand History
Lay’s, the world’s largest and favourite snack food brand, has steadily established itself as an
indispensable part of India’s snacking culture since its launch in 1995.
With its irresistible taste, international and Indian flavours and youth-centric imagery, Lay’s has
established itself as a youth brand and continues to grow in the hearts and mind of its consumers.
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Over the years, Lay’s has become known for its engaging and innovative promotions and
campaigns. The brand known for its ‘No one can eat just one’ campaign has moved its
positioning to ‘What’s the programme?’ making Lay’s ‘the main food of every programme‘!
Saif Ali Khan has been the face of the brand for over five years, and has recently been joined by
the captain of the Indian cricket team M.S. Dhoni. Both embody the youthful energy and appeal
of the brand.
In 2008, Lay’s launched the never-before ‘Fight for Your Flavour’ allowing consumers to vote
for the flavour of their choice. The flavour with the maximum votes would continue in the
market. The flavours have been selected by the Lay’s brand ambassadors Saif Ali Khan and
M.S. Dhoni with each celebrity rooting for the flavour of their choice.
In November 2008, Lay’s made yet another innovative breakthrough – the Chip-n-Sauce pack.
This first-to-market pack has been launched for cricket lovers as they settle in their seats to
savour the best sporting action of the season. The Lay’s Chip-n-Sauce large pack comes in two
unique flavours – Chilli Chinese with a Schezwan Sauce sachet and Chatpata Indian with a
Tamarind Sauce sachet inside the pack.
In June 2009, Lay’s launched its new positioning platform: ‘Lay’s – Be a Little Dillogical’. The
new Dillogical concept makes an instant connect with youth caught between the desire to
succeed and the desire to remain engaged with certain moments that offer a deep emotional
fulfilment. This friction is like a game between the heart and the head, a struggle between what
you want to do and what you have to do. It’s all about making things that matter to the heart,
happen.
The new platform has been launched with a series of ads built around the universal consumer
struggle between what the mind asks one to do and what the heart desires. A powerful 360
degree approach supports the new TVC, and has indeed prompted consumers to be a little
Dillogical.
• Cook – the slices are cooked to a crispy crunch in edible vegetable oil.
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• Season – finally, the chips are topped off with a mouthwatering sprinkle of salt or
seasoning.
The potatoes have now become delicious chips and are packed and delivered to a store near you.
How the product/service offered by company is different?
PepsiCo took a risky move for the 2010 Super Bowl. The company has been running super bowl
ads since 1987, but after 23 years PepsiCo decided to sit out on the Super Bowl ads for 2010.
The Super Bowl is known as one of the highlights of many companies’ advertising budgets, and
PepsiCo is no different. It was the biggest advertiser during the 2009 Super Bowl and has made
the Super Bowl into a major part of its marketing strategy. PepsiCo has used its Super Bowl ads
to promote new products, often using celebrities such as Britney Spears and Ozzy Osbourne.
This year, however, PepsiCo decided to do something innovative and different. It decided to
invest in causerelated marketing.The purpose of cause-related marketing is to get the consumer
involved in social causes. In the process, it portrays the sponsoring company in a favorable light.
Marketing strategies in the past have been focused on conveying a message to consumers,
influencing them to purchase their products by appealing to their emotions. Cause-related
marketing may do the same thing, but instead of merely getting a product, consumers receive the
added incentive of contributing to a social cause when they do business with a certain company.
Thus, PepsiCo is taking a twist on the more conventional methods of marketing and advertising
by launching a cause-related campaign. In this type of campaign, PepsiCo is getting consumers
involved, giving them a platform to have their voices and opinions heard, and propelling positive
change. So although Doritos, a PepsiCo snack food under Frito-Lay, did have various ads in
Super Bowl XLIV, the company’s title brand Pepsi did not. In its place the company launched
the Pepsi Refresh Project. The Pepsi Refresh Project is a unique social responsibility initiative
because while it donates grants for certain causes, the consumers do the work—even in deciding
who is awarded the grants. The entire process happens through social media. Basically, instead
of paying the nearly $3 million for a 30-second TV ad, Pepsi has decided to better use its funds
to inspire people to get involved in good causes. It dedicated at least $20 million, through the
end of 2010, for donations to local organizations and causes proposed by the public. The topic
areas are being classified as Health, Arts & Culture, Food & Shelter, The Planet, Neighborhoods,
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and Education. Consumers can go online to refresheverything.com, post their ideas for causes,
and/or vote for those ideas already posted.
Every month PepsiCo tallies the votes and donates grant money to those with the most votes.
Grant awards are separated into four categories: $5,000, $25,000, $50,000, and $250,000.
Recipients who have been awarded funding for their proposed causes include the Kanzius
Cancer Research Foundation, Ben-Gil Elementary Boosters, and the Waukee High School Earth
Club, among others.
The Pepsi Refresh Project challenges people, businesses, and non-profits to look around their
communities and identify things that they want to change. Many of PepsiCo’s ads include the
question: “What do you care about?” PepsiCo has been distributing ads around the country with
captivating phrases and words, all with the Pepsi logo placed in each letter “o.” These words
capture a positive ‘can do’ attitude, inspiring consumers to think about what matters and to act
on those ideas they care most about. The site is user-friendly and interactive. Other forms of
social media that PepsiCo is using include Facebook, Twitter and Hulu. Broadcast networks such
as ABC and CBS will also be involved, as well as media partners like AOL, Yahoo!, MTV
Networks, and Parade. PepsiCo will also be known as the sponsor of the first long-form series on
the online video site Hulu, with its reality show “If I Can Dream.” Hulu states that its site will be
used to strengthen PepsiCo’s cause-related advertising campaign. It is clear that in addition to its
heavy reliance on web ads and public relations, PepsiCo is utilizing the whole spectrum of social
media outlets to bring its cause to fruition. In so doing, the company hopes to reach its target
market of a younger audience. Although Pepsi’s decision to skip the Super Bowl is risky, even
skeptics admit that it has generated a positive buzz around the company. PepsiCo has been able
to differentiate itself in an innovative way, paving the way for new socially responsible and
conscious advertising. This is becoming more than just cause-related marketing used to engage
customers; it is quickly becoming a movement defining PepsiCo as a leader when it comes to
social responsibility and sustainability. On April 22, 2010 (Earth Day) PepsiCo announced its
multi-year partnership with Waste Management Inc. in support of the Dream Machine recycling
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initiative. The Dream Machine initiative recognizes that many plastic cans and bottles are
needlessly thrown away each year, particularly by busy consumers on the go. The two partners
want to see the U.S. beverage container recycling rate increase from a mere 34 percent to 50
percent by 2018. This will be encouraged with PepsiCo’s Dream Machine kiosks that act like
reverse vending machines. The Dream Machine kiosks are computerized receptacles that give
consumers points when they recycle their bottles. The process involves only a few steps. First,
the consumer registers on the kiosk. Then he or she scans the can or bottle’s barcode and puts it
in the appropriate chute. The kiosk then issues the user a receipt that contains reward points that
can be redeemed for such things as movie tickets, coupons, or other goods. PepsiCo is extending
its partnership with Entrepreneurship Bootcamp for Veterans with Disabilities (EBV) to offer
training in business management to disabled veterans. The kiosks began with fifty installed
around Southern California, with a goal to install as many as 3,000 in public areas during 2010.
Currently, only about a third of nonalcoholic plastic beverage containers are being recycled each
year, and only 12 percent of public spaces have recycling receptacles. The Dream Machines are
a way to meet the clear need for greater public access to recycling bins as well as to promote
PepsiCo’s sustainability efforts.
PepsiCo is the classic business success story, starting with one man’s invention and becoming a
multimillion dollar enterprise with operations all across the globe. Yet the company could not
avoid becoming involved in major controversies. PepsiCo is moving toward a more balanced
stakeholder orientation by identifying those stakeholders that are relevant to the firm and trying
to understand and respond to their concerns and needs. The current leadership at PepsiCo
understands the importance of stakeholders and the need to develop effective dialogues and other
communication to help PepsiCo resolve conflicts. Some issues such as the nutritional concerns
over soft drinks and snack foods create a serious dilemma in balancing the concerns of special-
interest groups and the desires of consumers for good tasting food.
What is their value proposition?
Value Proposition:
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A business or marketing statement that summarizes why a consumer should buy a product or use
a service. This statement should convince a potential consumer that one particular product or
service will add more value or better solve a problem than other similar offerings. Companies
use this statement to target customers who will benefit most from using the company's products,
and this helps maintain an economic moat. The ideal value proposition is concise and appeals to
the customer's strongest decision-making drivers. Companies pay a high price when customers
lose sight of the company's value proposition.
How an independent Pepsi within Pepsi is propelling the giant’s charge into the value snack and
beverage market is an example of its value proposition. An amorphous entity called Value
Foods Organisation (VFO) has infused a wave of excitement in PepsiCo India Holdings, the
apex company of the $66 billion PepsiCo's India business. Among PepsiCo's 6,000 employees,
some have heard about it; but most have not. Rivals and marketing professionals cannot curb
their curiosity. Analysts scratch their heads, unable to grasp the logic. Consultants give you a
"value-is-good-in-foods" spiel to avoid sounding ignorant. PepsiCo has kept VFO low-key and
its progress under wraps.
There are reasons behind VFO's UFO status. The concept has been frozen, but it goes through its
share of iterations. It is more than an experiment, but less than a full-blown launch. Its intentions
are clear, the portfolio is not. Importantly, PepsiCo is yet to make up its mind whether to call it a
success, or wait till the trend crystallises.
The entity itself encompasses PepsiCo's burgeoning value snacks and value beverages portfolio.
Value snacks include a factory-fresh range of vitamins- and minerals-enriched biscuits and salty
snacks priced at Rs 2 and the existing Lehar portfolio of namkeens and chips in the range of Rs
2-55. It offers, in total, 45 stock-keeping units. The value beverages portfolio has a few products
launched by NourishCo Beverages — PepsiCo's 50:50 joint venture with Tata Global Beverages
— set up in 2010. Though the venture is still finding its feet, NourishCo already offers four
products. That apart, Lehar will widen its portfolio of namkeens such as bhujia, nuts, wafers and
puffs in smaller sachets with lower prices to reach out farther.
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VFO is getting a disproportionate share of chairman Manu Anand's attention. That is because for
the first time in PepsiCo's 23-year stay in India, it senses it has hit upon a high-growth engine
that could cater to millions not served by its existing products. In the best case scenario, it could
be the disruptive force to fuel the growth-starved MNC's emerging-market strategy. Remember,
this is Lehar's second coming. First launched in 1996, it was relaunched in 2006.
It was a tumultuous 2011 for PepsiCo International, after all. It disappointed analysts and
shareholders as net revenue rose 15 per cent, lower than the 34 per cent in 2010. This came with
an announcement of 8,700 job cuts, representing 3 per cent of the workforce in February 2012.
PepsiCo lost share in the US carbonated beverage market to Coca-Cola from 2008 through 2010.
Pepsi vs Coke? What is a Value Proposition?
Do you ever stop and think about why you purchase one product over another? For example, do
you drink Pepsi or Coke? (Oh, the classic debate!) Do you drive a domestic car, say, Ford or a
foreign car, say, Nissan?
Well, if you actually analyze “why” you make the purchase, you might realize the factors at
play, for example, brand identity, cost, or specific features. In the end, it boils down to the
different value proposition that each company creates in their marketing strategy for you, their
target market. It is this value proposition that really influences your decision to purchase,
consciously or sub-consciously.
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CUSTOMER RELATIONSHIP MANAGEMENTWhat is CRM (customer relationship management)?
CRM (customer relationship management) is an information industry term for methodologies,
software, and usually Internet capabilities that help an enterprise manage customer relationships
in an organized way. For example, an enterprise might build a database about its customers that
described relationships in sufficient detail so that management, salespeople, people providing
service, and perhaps the customer directly could access information, match customer needs with
product plans and offerings, remind customers of service requirements, know what other
products a customer had purchased, and so forth.
According to one industry view, CRM consists of:
Helping an enterprise to enable its marketing departments to identify and target their best
customers, manage marketing campaigns and generate quality leads for the sales team.
Assisting the organization to improve telesales, account, and sales management by optimizing
information shared by multiple employees, and streamlining existing processes (for example,
taking orders using mobile devices)
Allowing the formation of individualized relationships with customers, with the aim of
improving customer satisfaction and maximizing profits; identifying the most profitable
customers and providing them the highest level of service.
Providing employees with the information and processes necessary to know their customers,
understand and identify customer needs and effectively build relationships between the
company, its customer base, and distribution partners.
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CRM IN PEPSICO
PepsiCo, Inc. is one of the world's top consumer product companies with many of the world's
most important and valuable trademarks. Its Pepsi-Cola Company division is the second largest
soft drink business in the world, with a 21 percent share of the carbonated soft drink market
worldwide and 29 percent in the United States. Three of its brands--Pepsi-Cola, Mountain Dew,
and Diet Pepsi&mdashe among the top ten soft drinks in the U.S. market. The Frito-Lay
Company division is by far the world leader in salty snacks, holding a 40 percent market share
and an even more staggering 56 percent share of the U.S. market. In the United States, Frito-Lay
is nine times the size of its nearest competitor and sells nine of the top ten snack chip brands in
the supermarket channel, including Lay's, Doritos, Tostitos, Ruffles, Fritos, and Chee-tos. Frito-
Lay generates more than 60 percent of PepsiCo's net sales and more than two-thirds of the parent
company's operating profits. The company's third division, Tropicana Products, Inc., is the world
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leader in juice sales and holds a dominant 41 percent of the U.S. chilled orange juice market. On
a worldwide basis, PepsiCo's product portfolio includes 16 brands that generate more than $500
million in sales each year, ten of which generate more than $1 billion annually. Overall, PepsiCo
garners about 35 percent of its retail sales outside the United States, with Pepsi-Cola brands
marketed in about 160 countries, Frito-Lay in more than 40, and Tropicana in approximately 50.
As 2001 began, PepsiCo was on the verge of adding to its food and drink empire the brands of
the Quaker Oats Company, which include Gatorade sports drink, Quaker oatmeal, and Cap'n
Crunch, Life, and other ready-to-eat cereals.
PepsiCo Drinks Up My SAP
SAP announced on Wednesday that global brand leader PepsiCo has selected my SAP Business
Suite as the primary business platform for unifying its operations, standardizing business
processes and increasing efficiency across its divisions. The US$27 billion convenience food and
beverage company produces Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks,
Tropicana juices and Quaker foods. SAP spokespeople declined to comment the value of the
deal in either dollars or seats. However, John Grozier, SAP's vice-president of CRM product
marketing, told CRM Buyer in an interview that PepsiCo selected my SAP tokick off of a major
business transformation for the company. "Ultimately thesis an enterprise-wide decision and the
specific plans being worked out right now," he said.
Then PepsiCo decided this year to forego the customary Super Bowl advertising for its Pepsi line
of soft drinks, many industry observers were surprised. But the real shock was what the company
pursued instead: a $20 million social media campaign that enabled people to submit and
campaign for ideas (proposals to "refresh" their communities), and then empowered the public to
vote among the submitted proposals.
Twenty million dollars may seem like a lot of five-cent deposits, but the company says
participation levels since the campaign's January 2010 launch have been tremendous:
* 7,500 submitted ideas;
* more than 46 million people have voted for a project;
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* 256 projects received Pepsi Refresh Project grants; and
* those projects are estimated to have reached over 200,000 people nationwide.
And that's just the snapshot after 9 months, according to Bonin Bough, PepsiCo's global director
of digital and social media. In his "preconference" keynote address at the Digital Marketing
Association's DMA2010 event, convening here this week, Bough announced the company's
intent to expand Pepsi Refresh to Latin America, Europe, and Asia in 2011 — and shared some
advice on how marketers can make their social media campaigns as fresh as Refresh.
Britney Spears, Cindy Crawford and Ozzy Osborne all have appeared in Pepsi Super Bowl ads.
But this year, the soft drink brand is breaking tradition, opting for a digital CRM program to
drive a two-way discussion with consumers instead of a splashy, Super Bowl spot for its flagship
soft drink.
The strategy shift means Pepsi will inject $20 million into its cause-related Refresh Project that
helps people improve their communities through a variety of projects funded by the marketer.
PepsiCo will officially launch a Web site, RefreshEverything.com, on January 13. On it,
consumers can list projects that can improve communities, such as feeding the hungry or
teaching people to read. Consumers can vote on the site beginning February 1 on projects they
think should receive a share of the money. They will be asked to contribute their e-mail
addresses for e-mail alerts on the project.
However, Nicole Bradley, spokesperson for PepsiCo, tells DMNews the primary goal is to create
a two-way dialogue with loyal and prospective customers, rather than build an e-mail database
for marketing.
"The Super Bowl broadcast can be an amazing stage for broadcasters, and [PepsiCo subsidiary]
Frito Lay will be there in a big way," she says. "But our beverage brands' marketing strategy in
2010 [is] less about a singular event and more about a movement. We are always looking to
further develop our two-way conversation with consumers."
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The CRM campaign asks consumers to suggest ways that Pepsi can get involved in social
causes. Bradley added that the company has made no decision on marketing for the 2011 Super
Bowl and beyond.
With the effort, PepsiCo is taking its marketing initiatives to where its target audience is already
spending much of its time, says Tracy Tuten, associate professor of marketing at East Carolina
University.
"Pepsi has always positioned itself as being about the youth market of America, and young
people now are inundated with social media," she says. "They are also increasingly involved in
sustainability and the greater good and all of those issues. "Pepsi is making a big statement that
they want to be about all of those things that their target [audience] is about."
Tuten adds that Pepsi's e-mail address collection could also be used to create a standalone social
networking community.
The move marks the first time in 23 years that the NFL's championship game will not have an ad
promoting Pepsi. PepsiCo spent $33 million advertising Pepsi, Gatorade and Cheetos during
2009's Super Bowl XLIII, according to an Associated Press report. TNS Media Intelligence,
which measures advertising spending, reported that PepsiCo spent $142.8 million on 10 Super
Bowl ads from 1999 to 2008 for its brands, ranking the company second only to Anheuser-
Busch during that period.
The economy is compelling other brands to take a break from Super Bowl advertising. For the
second straight year, FedEx will not advertise during the game, during which spots will
reportedly cost nearly $3 million.
For PepsiCo, the decision to shift some of its marketing spend to a digital engagement project
may have come down to measuring marketing effectiveness during the tough economy, says
Dean DiBiase, chairman of RebootPartners.com and the former CEO of TNS Media.
PepsiCo, Inc. is one of the world's top consumer product companies with many of the world's
most important and valuable trademarks. Its Pepsi-Cola Company division is the second largest
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soft drink business in the world, with a 21 percent share of the carbonated soft drink market
worldwide and 29 percent in the United States. Three of its brands--Pepsi-Cola, Mountain Dew,
and Diet Pepsi & mdashe among the top ten soft drinks in the U.S. market. The Frito-Lay
Company division is by far the world leader in salty snacks, holding a 40 percent market share
and an even more staggering 56 percent share of the U.S. market. In the United States, Frito-Lay
is nine times the size of its nearest competitor and sells nine of the top ten snack chip brands in
the supermarket channel, including Lay's, Doritos, Tostitos, Ruffles, Fritos, and Chee-tos. Frito-
Lay generates more than 60 percent of PepsiCo's net sales and more than two-thirds of the parent
company's operating profits. The company's third division, Tropicana Products, Inc., is the world
leader in juice sales and holds a dominant 41 percent of the U.S. chilled orange juice market. On
a worldwide basis, PepsiCo's product portfolio includes 16 brands that generate more than $500
million in sales each year, ten of which generate more than $1 billion annually. Overall, PepsiCo
garners about 35 percent of its retail sales outside the United States, with Pepsi-Cola brands
marketed in about 160 countries, Frito-Lay in more than 40, and Tropicana in approximately 50.
As 2001 began, PepsiCo was on the verge of adding to its food and drink empire the brands of
the Quaker Oats Company, which include Gatorade sports drink, Quaker oatmeal, and Cap'n
Crunch, Life, and other ready-to-eat cereals.
MISSION
Mission is to be the world's premier consumer products company focused on convenient 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.” Values PepsiCo Inc. reflects their values by their commitments Their committed to
Sustained Growth Empowered people Responsibility and Trust PepsiCo Inc. commitment is to
deliver sustained growth, through empowered people, acting with responsibility and trust.
Strategies
Strategies Realignment of their organization into three new business units; PepsiCo America
Foods Includes all of their Latin American food and snack business. PepsiCo America
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Beverages Includes all of our Latin American beverage business PepsiCo International Includes
all PepsiCo business in the United Kingdom, Europe, Asia, Middle East and Africa. Financial
Objectives Increase our investment in developing markets, make selective investments to
continue growing our global snacks business and accelerate our global R&D initiatives to help
secure our future innovation pipeline. Produce $1.2 billion in pre-tax savings over the next three
years (Productivity for Growth Initiative) Investing to drive additional growth in key developing
markets across the world in both Snacks and Beverages. Targeted marketplace investments
tofurther secure our competitive position in developed Snack markets.
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SEGMENTATION- TARGETING- POSITIONING of PepsiCo
• Segmentation: grouping consumers by some criteria
• Targeting: choosing which group(s) to sell to
• Positioning: select the marketing mix most appropriate for
the target segment(s).
Segmentation
Grouping consumers by some criteria, such thatthose within a group will respond similarly to a
marketingaction and those in a different group will respond differently.
Entire Market “Segment 1" “Segment 2"
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Segmentation
All dog owners Dogs are servents Dogs are servents
Potential Segmentation Variables:
Sex, age, race, income, educational level, marital status, number of children, introvert / extrovert,
zipcode, usage history.
Segmentation, Targeting, Positioning:
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Which segment(s) to target?
Positioning
1. Determine what consumers currently think about your product (with respect to
competingproducts)
2. Decide what you want consumers to think about your product.
3. Figure out how to reposition.
Position along many dimensions
1. Product Attributes (Certs, with Retsin)
2. Product effects (Rembrandt gets teeth 5X whiter)
3. Price ("Budget Gourmet frozen dinners)
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4. User (baby shampoo vs. gentle shampoo)
5. Usage (Coke in the morning)
6. Relation to other products (7 Up is the uncola)
7. Arbitrary ("Weekends are for Michelob")
Heavy
Bitter Mild
Expensive
Old Young
Cheap
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Pepsico Market Segmentation
Introduction
Pepsi-Cola was founded by a druggist, Caleb Bradham in year 1898 (Overview, 2008). He came
from New Bern, North Carolina (Overview, 2008). In year 1965, Pepsi-Cola merged with Frito-
Lay in a new company named PepsiCo (Overview, 2008). Then, PepsiCo merged with
Tropicana in year 1998 and also Quaker Oats Company in year 2001 (Overview, 2008). Those
mergers have been divided in categories such as food, beverage and snacks. Now, Pepsi Brand is
part of a group of beverage brands which consists of carbonated soft drinks, mineral water,
ready-to-drinkteas and coffees, juices as well as isotonic sport drinks.
Marketsegmentation
Market segmentation is the process of dividing markets comprising the heterogeneous needs of
many consumers into segments comprising the homogeneous needs of smaller groups (Guille
M). Segmentation is usually done by demography, geography and socioeconomic variables. The
easiest way to segment consumer market is to use demographic variables such as age, gender
and education level. Organizations that operate globally usually segment consumer market
geographically. Besides, socioeconomic variables are to segment the market regarding the
income, social class and also lifestyle.
Soft Drink –
PepsiCo
As we know that PepsiCo provides varieties of beverages such as carbonated soft drinks, sport
drinks, dairy-based drinks, energy drinks, fruit flavored beverages, ready-to-drink coffees, ready-
to-drink tea, mineral water and frozen beverage. Those products are marketed under brand as
Pepsi, Mountain Dew, Gatorade, Lipton, Starbucks, Tropicana, and so on.
Why PepsiCo have to produce so many types of products? The reason is relevant to market
segmentation. PepsiCo aims to attract different groups of consumers with difference types of
products.
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This report provides an analysis and evaluation of the Marketing Strategy of PepsiCo. Methods
of analysis include Market Segmentation, Market Targeting, Market Positioning, as well as the
Marketing Mix of PepsiCo.
The research draws attention to the Market Segmentation of PepsiCo. While the soft drink industry has
probably the widest and deepest customer base in the world, Pepsi did not use the majority fallacy to
market their product. Instead, Pepsi prefers to segment itself as the beverage choice of the “New
Generation”, Generation Next, or just as the “Pepsi Generation”. These terms adopted in Pepsi’s
advertising campaigns are what marketers refer to as Generation X, which are profiled to be between
the ages of 18 to 29. In addition, PepsiCo also focus on another market, which includes Teenagers that
are between the 12 to 18 years old. Pepsi believes that if they can get this market to adopt their
product, they could establish a loyal customer in a long run.
Despite being a strong #2 against Coca Cola, Pepsi has become the largest selling soft drink in the world
and is liked by people of all ages. A recent survey has shown that about 90% of the world population
prefers Pepsi when asked the question of which soft drinks do they prefer. The reason for their linking is
because Pepsi is able to give them a higher quality of taste and a large variety of flavors.
PepsiCo is a world leader in convenient snacks, food and beverages with revenues of more than
$39 billion and over 185,000employees. The company consists of PepsiCo Americas Foods
(PAF), PepsiCo Americas Beverages (PAB) and PepsiCo International (PI). Besides the Pepsi-
Cola brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked,
Tropicana, Copella, Mountain Dew, Mirinda and 7up (outside the USA).
PepsiCo’s products are recognized and are most respected all around the globe. Currently,
PepsiCo has divisions which operates in three major US and international businesses: beverages,
snack foods, and restaurants. In each of these businesses, PepsiCo has attained a leadership
position as being the world leader in soft drink bottling, the world largest snack chip producer,
and the world largest franchised and company operated restaurant system. The cooperation’s
increasing success has been based on high standards of performance, marketing strategies,
competitiveness, determination, commitment, and the personal and professional integrity of their
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people, products and business practices. PepsiCo’s overall mission is to increase the value of our
shareholders’ investments through sales growth, investments and financial activities. PepsiCo
believes their success depends upon the quality and value of their products by providing a safe,
whole some, economically efficient and a healthy environment for their customers; and by
providing a fair return to their investors while maintaining the highest standards of integrity.
As we know that PepsiCo provides varieties of beverages such as carbonated soft drinks, sport
drinks, dairy-based drinks, energy drinks, fruit flavored beverages, ready-to-drink coffees, ready-
to-drink tea, mineral water and frozen beverage. These products are marketed under brand as
Pepsi, Mountain Dew, Gatorade, Lipton, Starbucks, Tropicana, and so on. With these products,
PepsiCo aims to attract different groups of consumers. There are two levels in which Pepsi
segments its market:
•Demographic
•Niche marketing
Concentrated Marketing
Despite the large customer base in the Soft Drink industry, Pepsi prefers to segment itself as the
beverage choice of the “New Generation”, Generation Next, or just as the “Pepsi Generation”.
These terms adopted in Pepsi’s advertising campaigns are what marketers refer to as Generation
X, which are profiled to be between the ages of 18 to 29. In addition, Pepsi shifted its focus to
the growing American teenage market in the 1990s by forming exclusive contracts with
American schools and developing advertising campaigns such as “The Next Generation” and the
“Joy of Pepsi”, featuring Britney Spears. Pepsi believes that if they can get this market to adopt
their product, they could establish a loyal customer in a long run.
Niche Marketing
Pepsi focused on varietal differentiation since 1990 by introducing a string of niche products. To
increase volume in order to counter flat coca sales, Pepsi introduced Sierra Mist in 2002-2003to
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take the place of 7-up and go head-to-head with Sprite. Pepsi has also tried to boost volume by
introducing products that appeal to specific target markets that it currently is not reaching. Pepsi
has introduced Code Red and Live Wire, extensions of Mountain Dew, Pepsi One, and Pepsi
Blue. Finally, Pepsi is countering declining sales of carbonated drinks through the marketing and
distribution of Starbucks ready to drink products, and the acquisition of SOBE and Gatorade.
The success of Pepsi’s Mountain Dew Code Red launched in 2001 was the most successful soft
drink innovation in 20 years and has spurred even more niche product introductions for PepsiCo
as well as other competitors.
Bases of Segmentation:
Demographic
In focusing on the Pepsi-Cola beverage product, PepsiCo has retained a long history
of concentrating on youth as its main target market – “Generation Next!” It has spent billions
of dollars in trying to woo the young and nearly young, implying that Coca-Cola is for the
older generation. The reason why Pepsi-Cola has fiercely targeted this market is because it is the
largest amongst its users. Market segment profiles have shown that the majority of carbonated
beverage drinkers are youth and middle age people. Also, Pepsi continually targets the college
market in which they spend huge amounts of money to compete with Coca Cola in acquiring
contracts with universities (i.e: CSUF) to have sold representation of their product distribution
Pepsi’s use this behaviorist segmentation has been a key to the company’s success.
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Demographic
In focusing on the Pepsi-Cola beverage product, PepsiCo has retained a long history
of concentrating on youth as its main target market – “Generation Next!” It has spent billions
of dollars in trying to woo the young and nearly young, implying that Coca-Cola is for the
older generation. The reason why Pepsi-Cola has fiercely targeted this market is because it is the
largest amongst its users. Market segment profiles have shown that the majority of carbonated
beverage drinkers are youth and middle age people. Also, Pepsi continually targets the college
market in which they spend huge amounts of money to compete with Coca Cola in acquiring
contracts with universities (i.e: CSUF) to have sold representation of their product distribution.
Pepsi’s use this behaviorist segmentation has been a key to the company’s success.
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Market Targeting
Pepsi customers are mostly Teenagers and Young Adults between the ages of 14 to 30. It also
targets at Schools, Colleges, Universities, Homes, Restaurants, Hotels, and Stores.
Market Positioning
PepsiCo plans to further create positions that will give products the greatest advantage in
their target markets. Pepsi has been positioned based on the process of positioning by direct
comparison and have positioned their products to benefit their target market.
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PepsiCo targeting mass marketing, will cater to different segments of consumers
Beverage and snacks maker PepsiCo India is gunning for the bottom-of-the-pyramid consumer
for the first time in the country, as its chairman, Manu Anand, drives the New York-based $60
billion parent's target to reach the 'next one billion' consumers in the value segment.
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In his first media interaction since he succeeded Sanjeev Chadha in January this year, Anand
tells ET that PepsiCo is creating verticals to cater to different segments of consumers, across
functions like sales, operations, distribution and marketing.
PepsiCo's low-priced products will be aimed at 330 million consumers graduating from the
bottom-of-pyramid to the socio-economic B and C classes.
The move is in line with global chairman Indra Nooyi's target to generate $30 billion in revenues
from 'healthier' products-internally called better-for-you and good-for-you products-by 2020, up
from the existing $10 billion. India will be the first country in the PepsiCo system to target the
value segment with multiple products.
"It's a big transformation for us; we are targeting the next tier of consumers. We are looking at
everything differently and doing this in a very structured way. But it's not as if we are under-
investing in our core business; it's more about creating new consumption spaces," says Anand,
who has been with PepsiCo for the past 17 years.
VERTICAL MOVEMENT
NourishCo, PepsiCo's vertical in partnership with Tata Global Beverages, has just rolled out its
first product, a lemon-flavoured glucose-based drink, called Gluco Plus, in Maharashtra. It is
priced at 5.
Lehar Foods, another vertical, is a separate operating entity, which will launch value snacks
priced at 5 and lower. Its other two businesses are core aerated drinks and snacks.
An innovation vertical has launched biscuits and snacks priced at 2 under the Lehar Iron Chusti
brand in Andhra Pradesh initially. This line-up of healthy foods is targeted at women under
'Project Asha', PepsiCo's codename for Nooyi-commissioned plan to develop low-priced
nutritional foods for the poor.
Anand, back in India after '07 when he was heading the foods division, says what has changed
most at the firm in the past four years is its "sheer scale of operations".
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While separate operations, sales and marketing teams have been set up for the verticals, PepsiCo
has further split its go-to-market (distribution) model into three divisions. There's a premium arm
for distributing Tropicana juices, Gatorade sports drinks and Quaker oats; a mid-rung one for
aerated drinks like Pepsi and Slice and snacks like Kurkure and Lays; and a division catering to
mass products like Lehar Iron Chusti.
CHEAPER PRICE POINTS
Low-margin products like Iron Chusti will obviously not be profitable in the beginning, but
PepsiCo is hoping that the products will achieve scale in about 24 months.
Anand says even in PepsiCo's core business of snacks, such as Kurkure and Cheetos, the firm is
stepping up focus on 5 and 3 packs. These packs are growing the fastest among PepsiCo's foods
arm and contribute 45-50% to the division's foods sales. While in aerated drinks, selling bottles
and cartons for 5 amounts to sacrificing profitability, PepsiCo will look at products at 5 through
its joint venture with Tata Global Beverages.
Three-fourths of PepsiCo consumers are common to foods and beverages. But beverages are
more asset intensive while the foods business is more systems-driven.
This new strategy comes at a time when food inflation is running high. Anand says he's using all
global and local resources to minimise costs, including stepping up conversion efficiencies,
using cheaper sources of energy and better commodity procurement.
Company overview and market analysis for Pepsico
PepsiCo Inc. is the world’s second largest soft drink brand and the world’s largest potato chips
manufacturer. In this report, we will be analysing PepsiCo Inc.’s marketing strategies with
regards to its North American market. Where absolutely required, PepsiCo’s international efforts
are mentioned as well as some past advertising feats. I will, however, try to cover as much of
PepsiCo’s recent strategies as possible. Relevant references are cited at the end of the report,
following with a number of images in the Appendix.
Company Profile:
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In New Bern, North Carolina, USA, Caleb Bradham created a fountain drink, which contained
digestive enzymes pepsin and kola nuts. This was then known as Brad’s drink. Subsequently, it
was renamed and marketed as Pepsi-Cola (Soda Museum 2010). The Pepsi-Cola Company, in
1965, merged with Frito-Lay Inc., to become PepsiCo Inc. Pepsi is PepsiCo Inc.’s flagship
product and signature drink (PepsiCo Inc. 2010).
Advertising efforts in the early years of Pepsi-Cola mainly presented itself as a bargain brand
compared to rival Coca-Cola. However, since the later part of the 20th Century, PepsiCo’s
marketing strategy is focused towards the young people with taglines such ‘Choice of a New
Generation’ being the spotlight.
Macro Environment:
Political:PepsiCo Inc. is a multinational company. As such, it is exposed to different political
environments.
In 2006, The Centre of Science and Environment (CSE) based in India found that soda drinks
including Pepsi-Cola had high pesticide content. Following this, the state of Kerala banned the
sale and production of Pepsi-Cola, along with other soft-drinks. However, this decision was later
reversed by the Kerala High Court. Five other Indian states have partial ban on soft-drinks (BBC
2006 The Hindu 2006). As part of a major public health initiative in the US, sugar-sweetened
drinks and syrups would be levied a new tax called the soda tax (Reuters 2010).
Economic:The financial crisis of 2008-2009 has had its effects on the soft drinks sector. During
this period, the soft drinks industry lost over $55 billion (Beverage Digest 2009). Also, the
packaged food industry reduced spending on non-essential food items such as snacks.
Being a multinational corporation, PepsiCo has to take into account the fluctuations in foreign
currency rates. The financial crisis caused the Mexican peso, British pound, the Euro and the
Russian ruble to depreciate. As such, PepsiCo’s net revenue growth was reduced by 5% (Annual
Report 2010)
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In the US, interest rates have been abysmally low between zero and 0.25% since December 2008
thereby allowing companies such as PepsiCo to make use of low borrowing rates to invest in
operations and new product development (Murchie 2010). Likewise, in the UK, The Bank of
England has maintained an all-time low interest rate of 0.5% (BBC 2010).
Social:
There is a new demand for healthy foods and beverages. As a result, PepsiCo is increasingly
investing in developing healthier options to its beverages as well as promoting Heath Foods
(Annual Report 2010).
In the recent years, PepsiCo has launched Diet Pepsi, Diet Pepsi Max, Caffeine Free Pepsi,
Caffeine Free Diet Pepsi, Pepsi Natural and Pepsi One as variants of Pepsi-Cola. PepsiCo has
also added a new line of products such as Aquafina Alive, Propel Health Water, Sobe Life
Water, Dole Single Serve Juices and many more to meet this growing demand (PepsiCo 2010).
PepsiCo has developed a Blue Ribbon Advisory Board, made up of leading health and wellness
experts and third-party advisors from across the globe in order to help the corporation face these
newly strengthened consumer demands.
Furthermore, PepsiCo has recently worked alongside the Clinton Foundation, American Heart
Association, and the North American beverage industry in order to set policies regarding
placement of the correct products in the correct areas.
Technological:
PepsiCo Inc. relies heavily on technology to carry on its different operations and perform
efficiently.
Their technologically advanced distribution system, Direct Store Delivery (DSD), allows them to
supply distributors and retailers with fresh stock efficiently (PepsiCo 2010).
PepsiCo also has an extremely sound information technology infrastructure. To build and
maintain an efficient IT infrastructure is a key asset to the corporation’s operations and helps
improve the communication flow within their massive corporate framework. It also helps them
improve the effectiveness of their operations and maintain financial accuracy.
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Micro Environment:
Competitive Analysis:
The carbonated beverages industry is highly competitive. The companies have to compete
against global, regional and local manufactures on various factors including price, quantity,
variety and distribution. The prime competitor of PepsiCo Americas Beverages is The Coca-
Cola Company. In terms of carbonated soft drinks (CSD) consumption, Coca-Cola has a larger
market share in the US as well as in many markets outside North America. Also, in Interbrand’s
Best Global Brands list, Coca-Cola is ranked number 1, while Pepsi is listed much lower at
number 23 (Interbrand 2009). However, PepsiCo’s snack brands hold significant leadership in
the snack industry worldwide, with Pepsi commanding 28% of global sales. PepsiCo Inc. also
faces stiff competition from other beverage companies like Dr. Pepper Snapple Group, Nestle
Corporation and Danone as well as other food companies such as Kraft Foods and Unilever.
Geo-demographic:
A multinational corporation has to take additional factors such as geo-demography into
consideration. Trends affecting the US might not have an effect on countries such as Japan or
Russia. Also, particular ads and marketing strategies are interpreted differently in different
countries due to the difference in language and culture. For this reason, PepsiCo Inc. has adapted
to the culture, tastes and language of the countries in which they do business. For example, in
July 2009, Pepsi started marketing itself as Pecsi in Argentina after reports that its name was
incorrectly pronounced by around 25% of the population (AdAge.com 2009).
Psycho-graphic segmentation:
PepsiCo has different products to suit different needs. It has segmented its beverage department
to cope for different psycho-graphic variables such as activities, interests and opinions. For the
health-conscious, Pepsi has products such as Diet Pepsi and Diet Caffeine Free Pepsi, while for
those engaged in sports, Pepsi has its highly successful Gatorade range of isotonic drinks
(PepsiCo 2010). For naturalists, Pepsi has products such as Pepsi Natural and Aquafina Alive.
Products such as Pepsi and Pepsi Max are available for the mass market.
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Target Markets:
The primary target group of PepsiCo for its Pepsi line of products are people in the age group of
13-34. It also targets people that are athletes and overweight (PepsiCo 2010). Pepsi has a
distinctive style of portraying times in their ad campaigns. Their ‘Generation Next’ campaign
suggested that Pepsi is not just a drink for the next generation but that its drinkers are a
generation ahead of their counterparts (PepsiCo 2009). Pepsi has products that target the
different cultural and regional aspects of a particular country. It has products such as Nimbooz
by 7UP in India where it targets the huge demand for country-style lemon drinks (PepsiCo India
2009). While in Mexico, it has Manzanita Sol, an apple-flavoured beverage. Apple is Mexico’s
second most popular soft drink flavour and Manzanita Sol means ‘little apple sun’ in Spanish
(Bevnet.com 2005).
Positioning:
Pepsi has positioned its products strategically against those of The Coca-Cola Company.
Although Pepsi is second to Coca-Cola as a recognisable soft drink brand, it leads the markets of
non-carbonated beverages and potato chips (Frito Lay).
Since the acquisition of Tropicana and Gatorade and manufacturing its own brand of bottled
water, Pepsi has earned the number one spot as non-alcoholic beverage company in North
America.
Pepsi is now heavily inclined to developing healthy food alternatives. This has positioned them
strategically in a niche market that is growing fast.
Marketing Mix:
Product:
PepsiCo Inc. has four main divisions that manufacture, market and sell a variety of products
including snacks and beverages. These divisions are: (PepsiCo 2010)
PepsiCo Americas Beverages (PAB)
Frito-Lay North America (FLNA)
Quaker Foods North America (QFNA)
PepsiCo International (PI)
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PAB sells concentrates and syrups to Pepsi bottlers as well as directly sells finished goods to
distributors and retailers. PAB brands include Pepsi, Mountain Dew, Tropicana Fruit Juices,
Gatorade isotonic sports beverage, Lipton tea, Sierra Mist, Dole and SoBe (PepsiCo 2010). PAB
also has a joint venture with Unilever and Starbucks through which it sells ready to drink tea,
coffee and water products. Additional, PAB also licenses and markets the Aquafina brand of
bottled water (PepsiCo 2010).
FLNA manufactures snack foods which include brands such as Lays potato chips, Doritos
tortilla chips, Tostitos tortilla chips, Cheetos cheese flavoured snacks, Fritos corn chips, Ruffles
potato chips, SunChips and Smart Food (PepsiCo 2010).
QFNA manufactures cereals, rice pasta and other branded products such as Life cereal, Pasta
Roni, Aunt Jemima mixes and syrups and Quaker Oats (PepsiCo 2010).
PepsiCo International manages the international operations of PAB, FLNA and QFNA. PepsiCo
International licenses and markets PepsiCo’s brands in international markets. It also markets
some region-specific brands including, but not limited to, Walkers potato chips, Mirinda, 7UP,
Gamesa, Sabritas and Copella apple juices (PepsiCo 2010).
PepsiCo Inc.’s reputation and popularity gives the company the confidence to introduce new
products. Their success depends on product innovation and the effectiveness of their advertising
and marketing strategies.
Place:
Pepsi-Cola is available at almost everywhere. Pepsi has exclusive resale rights with fast food
chains such as Pizza Hut, KFC and Taco Bell. It also exclusively sells its products at many
supermarkets and malls. Pepsi’s products are also available at the leading departmental stores,
gas stations and retailers. Pepsi’s vending machines are available at many office complexes and
universities. Pepsi is also available at the White House (please check IC account for reference
TIME Magazine). Due to its Direct Store Delivery system, Pepsi can get its products in these
places and can maintain supply to a sustainable level.
FLNA and QFNA products are available in all the leading supermarkets and retailers.
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Promotion:
Pepsi-Cola has a strong promotion strategy. They use different marketing communication
strategies which include print ads, television ads and billboards, point-of-sale as well as the
Internet.
PepsiCo’s marketing strategies include both push and pull promotions. However, their pull
promotion strategies are more widely spread.
Push Strategies:
PepsiCo has several exclusive tie-ups with many fast food chains, supermarkets and malls.
PepsiCo also has Point-of-Sale (POS) agreements with leading departmental stores and retailers.
PepsiCo also provides incentives to distributors and retailers if they meet or exceed the sales
target.
Pull Strategies:
Throughout its history, The Pepsi-Cola Company has been known to create one of the finest ads.
Since it became PepsiCo Inc., Pepsi has focused most of its marketing communication towards
the young generation (PepsiCo). Pepsi is well-known for its ‘Generation Next’ ad campaign as
well as some catchy taglines such as the classic ‘Pepsi. Choice of a New Generation’ sung by
Michael Jackson to the recent ‘Refresh Everything’ and ‘Every Pepsi Refreshes the World’.
Pepsi is also known to constantly rebrand itself to boost its reputation and trust as a company
that keeps up with changing time. In 2009, Pepsi launched a new logo and rebranded most of its
products in North America (Reuters 2008).
One of the main advertising platforms over the years for Pepsi has been the Super Bowl, the
National Football League championship game. Pepsi beverages have been advertising in the
Super Bowl since 1987. However, in 2010, Pepsi opted out of advertising on this platform
focusing its marketing efforts on the internet instead, ending a 23-year run. Frito Lay, however,
continued to advertise in the Super Bowl (NBC News Associated Press 2009). In 2010, Pepsi
announced that it would again start advertising in the Super Bowl (Reuters 2010).
On an average, advertising on the Super Bowl cost Pepsi $3 million for 30 seconds of airtime in
2009. (NBC News Associated Press 2009).
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Pepsi is known to get its products endorsed by celebrities, some of which have been hugely
popular with the people. Pepsi’s endorsement deal with Michael Jackson was perhaps one of the
most expensive and popular deals of its time (Reuters 2009). However, since its overhaul in
2009, Pepsi has been including local people or amateurs in its ads to create a sense of connection
with its consumers. For example, for the 2011 Super Bowl, PepsiCo has launched a competition
wherein it is giving people a chance to make six 30-second ads for its Doritos chips and Pepsi
Max with the winner receiving up to $5million for the best ads (Reuters 2010).
Pepsi also has a huge presence on the Internet. In 2008, Google/YouTube teamed up with
Embassy Row, a production company run by the creator of ‘Who Wants to be a Millionaire’,
Michael Davies and Pepsi, to launch a new online video series called the PopTub. This daily
show deals with pop culture, internet viral videos and celebrity gossip. PopTub is updated daily
by Pepsi (Reuters 2008). PopTub and YouTube provide Pepsi a big online advertising platform.
Pepsi even has its own YouTube Channel (YouTube 2010).
Social networking is becoming an important aspect of people’s lives. As such, Pepsi has not left
this area uncovered. PepsiCo and its subdivisions are present on Facebook and Twitter social
networking sites. PepsiCo frequently updates its account on these websites, using them for
marketing purposes, announcing new products and offers as well as general gossip (Facebook
2010 Twitter 2010 PepsiCo 2010).
‘Pepsi Refresh Project’ is a new campaign launched by PepsiCo Inc. in 2009 and will run over
the course of 2010 to freshen up the image of its flagship drink, Pepsi. The project invites people
to submit their ideas on how to ‘refresh’ their communities. PepsiCo has promised to give at
least $20 million to fund these projects. This new campaign will be used by Pepsi to market its
flagship as well as Diet Pepsi and Pepsi Max. This campaign will have a huge social media
presence as people would be required to go online to submit their ideas as well as vote on
winners (NBC News Associated Press 2009).
Recommendation:
PepsiCo Inc., as a multinational organisation, strives to be the world’s premier consumer food
products company. In order to remain competitive, PepsiCo and its subdivisions need to be
aware of the changing trends of the marketplace.
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PepsiCo needs to keep innovating and investing in healthier food options. The Carbonated Soft
Drinks (CSD) market is continually declining. In 2008, the US CSD market share declined by
3% (Beverage Digest 2009). Keeping such trends in mind, Pepsi should launched healthier
variants of their carbonated beverages and gradually move towards the increasingly more
popular non-carbonated beverage sector, such as fruit juices and bottled water.
PepsiCo needs to revise its marketing strategy to include the ‘not-so-young’ group of people in
its communication as these people are often left out from its marketing material. Also, by
constantly monitoring current and potential customers, as well as reviewing the success of their
marketing strategies, PepsiCo would be in a better position to identify changing market trends
and develop better products for their target markets.
The company, in 2007, had announced a major purchase of renewable energy sources which
would help it in reducing its electricity costs as well as help improve its environmental footprint
(NBC News Associated Press 2010).
PepsiCo needs to keep investing in green resources as this would bring financial benefits in the
long term as well as increase its reputation as a Green Company.
What is the market segmentation for Pepsi?
Segmentation of Pepsi
Segmentation Variables Data
Geographic
World region Asia
Country India
Cities All major cities of India
Density Urban
Climate Hot and Dry
Demographic
Age 14-30
Gender Male, Female
Family Size 1-2, 3-4, Above 5
Family Life Cycle Married, unmarried
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Income Rs.10, 000+
Occupation Middle class – Upper Class
Education School, college, university
Religion Major religion of Hindu, Muslim, Christian,
Sikh and small percentage of others
Race Asian
Nationality Indian
Psychographic
Social Class Middle class, Upper Class
Life style Actualizes, Fulfilled, Believers, Archievers,
Strivers, Experience’s markers and strugglers
Behaviourial
Occasions Parties, birth days, sports, regular occasions
Benefits Quality, tasts
User status First time user
Loyality status Strong
Readiness stage Aware, interested
I. Position of Pepsi
Soft drinks Pepsi Cococola Local drinks Macacola Amrat cola
JuicesPulpy Nestle fruito Energy drinks Red Bull cott
Target Market for Pepsi
Target customers are mostly young group between the age of 14 – 30 yrs and also target at
school, college, institutions, universities, home, restaurant, hotel and stores.
Who is Pepsi cola's target market?
PepsiCo’s target market can be people of all ages because of their wide range of products: they
include gatorade, lays, tropicana, and quacker, and their products are classified under many
catagories. Their target market is very diverse.
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Who is the specific target audience of pepsi cola?
The target audience of pepsi would probably be people who's age is probably between 10-50
years.
What is target market?
It is mainly defined by age, gender, geography, socio-economic grouping, technographic, or any
other combination of demographics.
Purchasing behavior of the average Pepsi drinker:
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STUDY OF DISTRIBUTION CHANNEL STRATEGY OF PEPSICO FOR
THE POSITIONING OF THE PRODUCT
Soon after entering the beverage segment PepsiCo Established its dominance in the market
owing to its expertise in sales, marketing, operations and local collaboration. PepsiCo
maintained its market dominance for many more years to come. However, this advantage slipped
and PepsiCo had to concede the market leadership to Coca Cola India. Several actors were
responsible for this development. But, the most important are;
Distribution channel is having an important role in positioning of the product because we know
that distribution channel is tool by which we can make reach our product to the final consumers
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Discontinuation of slums in the distribution network by PepsiCo. This move by PepsiCo
adversely affected its position of a market leader because while PepsiCo discontinued the use of
Slums in its distribution network, Coke continued it and within one year, it was able to snatch
considerable market share from PepsiCo.
Acquisition of well-established and favored brands like Thumps Up and Limca by Coca Cola
India. These two brands still constitute a bulk of sales for Coca Cola India.
To explore the reasons behind these developments this study will analyze the marketing
initiatives and policies of PepsiCo India in detail with particular focus on its partner relationship
management.
The above-mentioned objectives can be achieved by carrying a proper and planned research
involving different types and methods. The data collected for laid the foundations for the study
and gave a platform for the analysis and findings which lead to the fulfillment of the objectives.
The data collected for research is primary and secondary. Primary data is collected by
observation, interviews and questionnaires. The data collection and analysis paves way for the
recommendation ad conclusion of the study that reveals some important findings regarding the
strategy and corporate structure and strategy of PepsiCo India.
Objectives:
To know distribution channel Strategy of PepsiCo.
To know the importance of Distribution channel strategy in Positioning of the product.
Sub Objective:
TO know the PepsiCo planning towards the distribution channel strategy.
How strong relationship PepsiCo has with the distributors and retailers.
Perception of consumer towards the PepsiCo product.
Perception of retailers towards the distribution channel of the PepsiCo.
.
After analyzing all the aspects of the data available and giving some important recommendations
a suitable conclusion which should be derived for this study. However, before starting the
conclusion part, the objective of the research must be kept in mind so that we can arrive at a
befitting conclusion for the research problem.
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The primary objective of this research was to know distribution channel Strategy of PepsiCo
and to know the importance of Distribution channel strategy in Positioning of the product.
The data collected provided a sound base for understanding the overall organizational set up of
PepsiCo in India. By analyzing the data and the literature review, following conclusion was
inferred:
The Sales and Distribution Network of Pepsi is very strong and almost flawless.
PepsiCo India had the first mover advantage when it entered the market and it capitalized on that
advantage to grab the market.
Franchisee based operations combined with the Company’s operations add strength to the
overall presence of the Company in the market.
Franchisee takes care of its operations and PepsiCo does not interfere in its operations. The
Franchisees are required to report to the Company at specific time intervals.
The Advertising Campaigns are conceived, implemented by the PepsiCo and Franchisee has no
say in that.
It is very important to develop good relationship with the retailers by providing them better
services and schemes.
Maintaining the good relationship with the distributors are very important for the company
because they are the main part of the distribution channel.
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The Pepsi Challenge: Brand Positioning against the Brand Category Leader
Pepsi is taking steps to build its brand. According to a May, 2012 Advertising Age article, Pepsi
has fallen from its place as the number 2 soda to become number 3 (behind Coke and Diet
Coke), and has seen its market share fall by 0.3% and a sales volume fall of 4.8% last year alone.
The Pepsi Challenge
One of the steps that Pepsi is taking is the return of its iconic taste test, the Pepsi Challenge. In
1976, Pepsi launched the Pepsi Challenge blind taste test pitting Pepsi against Coke. The brand
marketing genius of the taste tests was that, in blind taste tests, consumers were surprised to
learn that they preferred Pepsi over Coke.
The new Pepsi Challenge is set to launch worldwide in the summer of 2012. According to the
Globe and Mail, Pepsi is planning to have 1.5 million Canadians take the Pepsi Challenge. Pepsi
will be modernizing the Pepsi Challenge using giant tablets and social media to reveal and share
the results.
Taste Tests: Brand Position in Brand Marketing
The Pepsi Challenge is a good example of a position-driven brand marketing campaign.
Position-driven brand advertising is all about positioning a brand, relative to a leading brand in
the brand category. Two keys to brand positioning are:
brand awareness (or increasing brand awareness) in a particular brand category, and
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differentiating the brand so customers will remember it.
Coke is the current and historic leader of the cola brand category. As a result, Pepsi can reap
benefits from positioning itself against Coke, and Pepsi doesn’t need to be the hands-down
winner in the taste tests to do that. Provided Pepsi enjoys a respectable taste test results, then the
new Pepsi Challenge campaign will help build the Pepsi brand. Pepsi will be able to increase
awareness of its brand in the cola brand category and use social media to increase the reach of its
campaign.
PepsiCo India Launches ‘Pepsi Atom’
- Stronger, Fizzier Cola with a Sharp Hit
- Biggest India centric beverage innovation from PepsiCo
- Ropes in Sushant Singh Rajput as the Brand Ambassador
Pepsi Atom: Piyo Josh Mein Jiyo Hosh Mein
PepsiCo India is driven by its global commitment to sustainable growth, Performance with
Purpose, which works on four planks of replenishing water, partnering with farmers, waste to
wealth and healthy kids. In 2009, PepsiCo India achieved a significant milestone, by
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becomingthe first business to achieve ‘Positive Water Balance’ in the beverage world, a fact
verified by Deloitte Touché Tohmatsu India Pvt. Ltd.
Market Segmentation Of Pepsi At An International Level:
The history of Pepsi-Cola starts in 1896 in the town of New Bern in North Carolina, USA in a
drugstore owned by the pharmacist Caleb Bradham. He came up with many recipes of new
drinks to be served at the soda fountain of his drugstore.
Brad ham aim was to create a drink both delicious, healthy, aiding digestion and boosting
energy. It would be free of impurities and it should not contain any strong narcotics. Eventually
one of his drinks became very popular and the customers started to call it Brad’s drink. This was
the beginning of Pepsi-Cola’s story and later, Brad ham’s vision was turned into a mission for
the future company.
In 1905 Pepsi started with bottling franchises and registered its trademark in Canada and Mexico
in 1908. At the same time the U.S. government enacted the Pure Food and Drug Act prohibiting
substances such as arsenic, barium, uranium, etc. in food and beverages. Consequently, many
soft drink manufacturers, including Coca-Cola, had to change their formulas. Pepsi exploited the
situation against their main competitor Coca-Cola, by claiming that they already met federal
requirements.
Distribution was modernized with motor vehicles and started to promote its products using
famous public figures like Barney Olfield, an automobile race pioneer who endorsed Pepsi.
In the 1920’s and 1930’s the company experienced financial difficulties and went bankrupt twice
in 1923 and 1931. In 1931 the company was sold and Charles G. Guth took over the presidency
commanding a reformulation of the syrup recipe.
Few years later Walter S. Mack, Jr. was elected president and the company became a modern
marketing company by using comic strips and Hollywood movie stars to advertise its products.
In 1959 Pepsi entered the former Soviet market in Moscow and acquired Mountain Dew in 1963
making it the second best selling drink ever produced by the company.
The Emergence of a Global Company
In 1965, the company expanded and grew significantly through the merger of Pepsi-Cola,
operating in the beverage industry and Frito-Lay in the snack food sector.
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The following year, the newly formed PepsiCo entered the Japanese and Eastern European
markets. In 1974 Pepsi opened its first production plant in U.S.S.R. and was the largest soft
drink selling brand in American supermarkets.
Afterward, PepsiCo substantially diversified its portfolio by acquiring Pizza Hut, Taco Bell and
formed PepsiCo Food Service International (PFSI) to focus on overseas development of
restaurants. In 1980 PepsiCo signed a joint venture agreement with the Chinese authorities but
the project was never developed properly.
Then Pepsi became the indisputable number one in the soft drinks industry with revenues of $7,5
billion and more than 137 000 employees. The company was seen as a leader in advertising
when they used a space station for promotional events.
In 1986 the corporation was reorganized and decentralized by transferring its beverage
operations under PepsiCo Worldwide beverages and the snack food sector under PepsiCo World
wide Foods.
In 1996 Pepsi entered the Internet “boom” by creating an ambitious “worldwide” web site
surpassing all expectations and was copied in numerous ways.
Subsequently, the company converted its bottling sector into a publicly traded company, the
Pepsi Bottling Group (PDG).
In August 2000 the company was involved in one of the most significant transaction in the
beverage and food industry through its merger with Quaker Oats and the addition of top products
to its portfolio such as Gatorade beverages.
Recently, Pepsi made the headlines by signing a “skyrocketing” agreement with Britney Spears
to promote its new marketing campaign and products.
Observations throughout History
Pepsi-Cola is still second in the carbonated drinks market and remains in the shadow of Coca
Cola in terms of market share, perception and image. However, Pepsi’s insightful marketing
techniques (comic strips, television ads etc…) prevented a fall of its position in the beverage
industry.
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From 1965, by using diversification techniques and brand management, the company was able to
increase its volume of sales and get a stronger market position. Nowadays, Pepsi’s carbonated
beverages division clearly remains behind the snack division in terms of profitability and share
percentage of operation earnings. Our impression is that the profits of the snack division help
create the illusion that the beverage sector is as successful as the management wishes it to be.
We observed a definite inferiority complex towards Coke that initiated the main motor in the
company’s top management philosophy. As Roger Enrico wrote in his book about cola war,
Pepsi’s strategy was heavily focused in gaining a better position in the beverage industry by
finding new ways to differentiate from Coke and to take advantage of strategic alliances in the
market.
Core Competencies
A question is raised by acknowledging the above mentioned facts: how to beat your competitor
if you cannot offer a “better” product. For Pepsi, the answer is efficiency, innovation in
marketing techniques and customer responsiveness. Using less input in the value chain of its
primary activities, Pepsi is able to be more efficient and to attain a lower cost structure.
Moreover, PepsiCo built its competitive advantage mainly by achieving greater economies of
scale in the sectors of communication, distribution and bottling thus reducing production costs.
STRATEGY USED BY PEPSI
Marketing and Customer Responsiveness
The aim of the new marketing strategy developed by Enrico was to sharpen the image of Pepsi.
It also contained a specific message directed to young people using extensive advertising
campaigns on TV and radio. As an example, Pepsi’s innovative marketing was showed to the
world when in 1996 it first recorded a commercial in space.
Furthermore, Pepsi kept the consumer’s perception waiting by acquiring Mountain Dew, and
creating Pepsi blue. Improving the quality of the company’s product offering is consistent with
achieving customer responsiveness, as is developing new products with features that existing
products lack. Pepsi blue was in fact not as successful as hoped, yet the product aided in the
overall perception of the brand Pepsi-Cola.
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Branding Equity
Brand loyalty is a buyers’ preference for the products of incumbent company. A company can
create brand loyalty through continuous advertising of brand and company names, patent
protection of products, product innovation achieve through its research and development
programs and emphasis on high product quality and good after-sales services. It is effective
influence in the way in which people perceive the product or the company. By creating feelings
of warmth, affection and belonging to a product, a firm is able to relate brand to human
personalities.
People prefer to buy brands as they give them personal means and judgment and they offer a
quick and clear guide to a variety of competitive products.
In the beginning of the 1990’s PepsiCo management decided to create a proprietary model
applicable to all major PepsiCo brands, both domestically and globally focusing on cross-
category brand and product specificity. The goal was to have a single definition of brand equity
applicable to every product.
A second goal was to strike a balance between sensitivity (the ability to detect real equity
changes) and stability (the absence of spurious or short-term fluctuations). The marketing and
research management of PepsiCo as well as some of its consumers were interviewed to find out
the attributes that contributed to a favorable brand-consumer relationship across product
categories and make comparisons with key competitors like Coca-Cola in the soft drinks sector.
PepsiCo deployed the Equitrak brand equity model to track its major brands on a global scale in
1997, following its success in the USA. By late 1999, PepsiCo had created a brand database
consisting of over 6,000 Equitrak brand equity "scores".
Reducing Costs
One example illustrates how Pepsi is always trying to find new ways of reducing costs and
increase efficiency. Service technicians for The Pepsi Bottling Group Inc. (PBG) in the U.S.
used to generate 3 million pieces of paper per year while making routine repairs to soda
fountains and vending machines. But after a yearlong rollout of wireless handheld computers,
that paper mountain has completely disappeared.
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The new system, built around a rugged computer allows PBG to maintain a virtual inventory of
parts on each technician's truck that's linked to a database accessible by the company's eight call
centers, A dispatcher can quickly determine whether one of 700 Pepsi technicians equipped with
the Sidearm has the right kind of part needed for a pending job thus increasing customer
responsiveness and effectiveness of after-sales service.
Another way of reducing costs was by investing into the new Computer system “Generation
Net”. Following from this was the “PepNetSystem” which serves both, lower cost and customer
responsiveness. This resulted in a more efficient communication system.
In order to understand the marketing strategy of one company it is very important to analyse the
environment it is operating within. The analysis of the environment has a few very important
aspects that clearly illustrate how a company like Pepsi has managed to stay in business for such
a long time. To analyse this clearly, a general rule can be applied to PepsiCo.
Cyclical Corporate Strategy
If we look at the Pepsi-Cola Company from the outside, there has been a certain amount of
repetitiveness in its development. By following the trends and focusing on how to lower the
price as much as possible, they managed to create a successful company. By investing in the
development of the bottling and distribution sector, Pepsi found their balance in the market.
Then in 1920’s Pepsi-Cola Company failed because they didn’t concentrate enough energy on
branding. Within a few years Pepsi was declared bankrupt twice. By the end of the 1930’s the
company was reorganized from inside and the marketing policy drastically changed. Major
investment was now directed towards making people more familiar with the product.
After acquiring Mountain Dew, new sources of financing and revenue opportunities were needed
because the acquisition was not an instant success. Therefore, in 1965 Pepsi merged with Frito
Lay. In the 1980’s the decreasing sales in the beverage market induced the industry to adjust
with more aggressive marketing strategy and new products. In fact, Coke marketed a new cola
formula, whereas Pepsi persisted with promotional efforts and improved customer
responsiveness to increase sales volume.
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Key Factors for Success
To analyze the external environmental impacts, we have to look at the company as an organism
that is constantly interacting with its customers, partners, suppliers and competitors. When
Pepsi-Cola was created, the management was looking for the recipe for success that would also
be matched with the creation of a unique name and logo. Thus, the whole “cola war” story was
the driving force of every change Pepsi implemented in its business strategy.
The creators of Pepsi decided to use the same colors and lettering as Coke, simultaneously
promoting and expanding the same product. In the short run, the strategy worked and allowed
Pepsi to take advantage of Coke’s previous business innovation. However, in the long run, Pepsi
would have to build its own reputation and to differentiate itself from its rival.
Basically at that time, Pepsi focused on achieving lower cost production in its bottling and
distribution units. Therefore, the promotion of their products was put aside by the result of this
strategic choice. The financial crisis commanded important changes with regards to innovation.
From being a follower, Pepsi became the leading innovator.
Pepsi-Cola previous experience revealed that the management did not put much attention on
their external reputation. Moreover, as a leading company, Pepsi had to be consistent and
convinced about their strategy as opposed to follow the competitor’s strategy.
General Influences
In this section, we will focus on four elements: political, economical, socio-cultural and
technological environment.
Political Environment
PepsiCo is a global corporation. For the company that has substantial involvement in the world
economy, it is not surprising that PepsiCo has been implicated in many political scandals. In
1991 PepsiCo entered into a joint venture agreement with Myanmar Company that had ties with
the junta challenging the government in place in Burma. When the country was being torn apart
by internal military conflicts, the scandal erupted and Pepsi was suspected of financing the junta.
Subsequently, there was a boycott of all Pepsi products and the situation alerted the international
community because of the human rights violations perpetrated by the junta.
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Economic Environment
The economical segment is the second element to be analyzed. It is indisputable that PepsiCo is
one of the worldwide leaders in the snacks and beverage industry. All available information
made it clear that PepsiCo is a profitable corporation. The fact that they had some crises means
they are apt to change in the modern market. This segment of the company was already
explained before and will be discussed in the next chapters as well so we won’t elaborate further
here.
Socio-cultural Environment
Turning to the socio-cultural element PepsiCo was always researching new ways to approach its
customers. The involvement in the humanitarian actions is necessary for the image of
international corporations. The other aspects are much more interesting since they are more
recent. As it was already mentioned, the main consumer group for Pepsi is teenagers. It was just
a matter of time before the company entered with its policy to market them within the
educational system. Some see it as bad thing, whereas some support it. It is a fact that there are
good and bad elements, but nevertheless this progress cannot be stopped.
Technological Environment
Last, but not least, technology. What kind of technology are we talking about? Technology that
makes the drink and the one that makes the drinks containers. Externally there is a small
problem, which has the potential to develop. The problem is with plastic waste. This is already a
huge problem in the U.S. and it is becoming an issue in Europe as well. The fact that plastic
packaging is the cheapest and most practical material is not a good enough reason anymore. The
larger market is demanding new solutions.
Pepsi’s Corporate and Business-level Strategies
Responding to Conflicting Demands: The Environmental Challenge
Nowadays, globalization is a trend which drives the world towards a converging common
market by the force of technology. The result is a new commercial reality - the emergence of
global markets for standardized consumer products on a previously unimagined scale in
production, distribution, marketing and management. The global corporation operates with
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resolute constancy - at low relative cost - as if the entire world were a single entity: it sells the
same things everywhere.
Consider the case of Coca-Cola and Pepsi-Cola, which are globally standardized products sold
everywhere. Both successfully cross multitudes of national, regional, and ethnic taste buds
trained to a variety of deeply ingrained local preferences of taste, flavour, consistency,
effervescence, and aftertaste. In many markets, both sell well. Commercially, nothing confirms
this as much as the success of Pepsi-Cola in Moscow.
Business-level Strategy
Business strategy refers to the plan of action that strategic managers adopt to use a company’s
resources and distinctive competencies in order to gain a competitive advantage over its rivals in
a market or industry. To this extent, decisions in relation with business-level strategy should
address customer’s needs and product differentiation, customer group and market segmentation
and distinctive competencies.
PepsiCo Beverage Industry
Customer needs, Responsiveness and Product Differentiation of Pepsi-Cola
People don’t drink large quantities of soft drinks because they have to. Nowadays, they choose
more soft drinks because they want to become part of the “American way of living” and because
companies like Pepsi encourage people to do so. PepsiCo do it with print advertising, coupons in
newspaper, signs at stadiums and billboards on highways, eye-catching displays in supermarkets
and convenience stores, catchy jingles in radio advertisements. In the cola war, television
commercials have become increasingly important.
Distinctive Competencies
As was pointed out in our internal analysis, the Pepsi brand and its differentiation from other
brands (i.e. Coke) through effective marketing has been central to its business strategy. The
originality and creativity of its marketing matched with a desire to be a strong competitor in
every market place made Pepsi’s business strategy very successful. This is reflected in the
marketing costs reported in the 2001 Annual Report. Selling, general, administrative,
advertising, promotional programs and other marketing activities costs were $1.7 billion in 2001
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and 2000 and $1.6 billion in 1999 compared to Research and development costs of $206 million
in 2001, $207 million in 2000 and $187 million in 1999.
Insightful human resources management have also helped PepsiCo to gain competitive
advantage in foreign markets. European and Japanese managers are better trained than
Americans to deal with cross-cultural relationships. PepsiCo have realized the need for global
understanding and experience among their managers. To this extent, they have instituted
screening, selection and training programs geared to identify young managers, early in their
careers, for global operations.
Customer Group
Many examples emerge as we analyse the customer group that Frito-Lay are targeting. For
instance, in line with the PepsiCo strategy of market segmentation is the launch of a line of
snacks targeted specifically at Hispanics, currently the fastest growing ethnic group in the United
States. This product lineup offers distinctive flavors and textures that are both appealing and
familiar to Hispanic consumers. Frito-Lay conducted extensive consumer testing in four key
markets (Miami, New York, Los Angeles, Houston) to determine the snack flavors and textures
with the strongest appeal among Hispanics. The complete line of products will be distributed in
key urban markets including several Southwest cities. Perhaps this should also be done for the
beverage sector. Their emergence into the developing markets is hindered by the dislike for the
Pepsi-cola taste, particularly in Asia.
Corporate-level Strategy
Corporate strategy is concerned with an organization’s basic direction for the future: its purpose,
its ambition, its resources and how it interacts with the world in which it operates. This concept
refers to the resources of an organization in relation to its external environment, the prime
purpose being the value added to what supplies are brought into the organization and then
distributed among the stakeholders. The principal concern of corporate strategy is identifying the
business areas in which a company should participate in order to maximize its long-run
profitability.
Interestingly, Coca-Cola at one time pursued a diversification strategy. Coca-Cola once owned
Columbia Pictures and a wine-producing business. However, Coca-Cola came to the conclusion
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that diversification dissipated rather than created value, and, in recent years it divested its diverse
business and refocused on a single operation. They have done this because there are clear
advantages to concentrating on just one business area.
However, for Pepsi the story is a quite different. PepsiCo has adopted a policy of diversification
by structuring itself into three major divisions: beverages, snack food and restaurants. Although
in separate markets, the three operate in the same industry, namely leisure food. It seems that
PepsiCo have chosen this approach in order to allow for an overlap between the value chain of
its divisions. This is advantageous in that it can be used to bring down costs or even increase
customer loyalty across product line.
Focus on the leisure-food markets means that PepsiCo is in a position to take advantage of
similar activities across business units. Take food production, all restaurants have to produce
food from raw materials, as do the snack producers; businesses within PepsiCo’s portfolio are in
a position to create a competitive advantage by realizing greater economies of scale and cross
utilization of technologies. Consequently, when two or more business units share resources such
as manufacturing facilities, distribution channels, advertising campaigns and R & D costs, each
business unit has to invest less in the shared function. Moreover, there are opportunities for
competence leveraging through brand names and shared finance.
PepsiCo Bottling Group Strategy
PBG became an independent, publicly traded company in March 1999. PepsiCo retains an equity
interest in PBG of about 40 percent.
As an independent entity, PBG benefits from a much sharper definition of its role and is able to
execute its business strategy more effectively on a local market level. PepsiCo’s can focus on
what it does best now, which is developing its powerful brands and the world-class marketing
programs. PBG’s focus is on superior sales execution, customer service, merchandising and
operating excellence.
PepsiCo provides new product development, advertising, marketing, sales and promotional
support to PBG and other Pepsi bottlers. The company manufactures and sells soft drink
concentrate syrup to PBG and other Pepsi-Cola bottlers. Afterwards, PDG produce the final
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product by combining the concentrate syrup with other ingredients to manufacture and package
the beverages.
In fact, The Pepsi Bottling Group Sales Team works on the front line of a fiercely competitive
global battle, dealing with the most important people in their business - the customers. The team
works with customers, new and existing, to grow the highly profitable beverage business armed
with one of the most powerful trademarks in the world. Their sales approach focuses on fact-
based selling and expert advice - offering "total beverage solutions," not just successful day-to-
day transactions. PBG Sales provides a demanding, fast-paced environment in an intensely
competitive industry, where growth equals opportunity.
Is their current structure flexible enough to enable them to compete in the emerging markets?
They have a structure based on a Global Product-Group Structure, with slight variations.
PepsiCo still doesn’t market all its products internationally and thus only needs sub-divisions for
Frito-Lay and Pepsi-Cola/beverages. This is a definite weakness in Pepsi-Cola. Pepsi-Cola needs
to take a strong lead in the international market and it needs to have an international structure
that facilitates this.
Currently, Pepsi-Cola is marketed in North America through its North American division.
Internationally, Pepsi-Cola is marketed through PepsiCo Beverages International – along with all
other beverages that PepsiCo has acquired. What is needed for Pepsi-Cola to emerge as the
popular beverage in the emerging markets is separate subdivisions that concentrate on specific
areas, traditions and trends.
At present, Pepsi-Cola is being marketed through PepsiCo Beverages International with the help
of leading local marketing firms in certain countries that they wish to exploit. PepsiCo has
realised that it needs very specific strategies based on the local area. It would be ridiculous to
assume that the American marketing of a young, hip Pepsi would come across well in the new
markets of the Czech Republic, Hungary, Poland, Slovakia and Russia. Here the use of local
marketing firms is paramount to implementing a successful strategy to “fit” the lifestyles and
traditions of those countries.
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PESTLE ANALYSIS BY PEPSICO
PepsiCo is the largest selling beverage the world over, of course after its arch rival Coca Cola. It
accounts for a 37% share of the global beverage market, and therefore they need to understand
each and every country’s market in order to stay in line with their PESTLE situations.
Pepsi is a big brand, currently holds the 23rd place in the Inter-brands report of the World’s
Leading Brands. Their advertisements feature major celebrities and athletes like David
Beckham, Robbie Williams, Britney Spears, and Michael Jackson etc.
Their market reach is also very diverse, as they’re present in almost every country from the US
to New Zealand. Their PESTLE analysis is given below:
Political:
Pepsi is a non-alcoholic beverage and is therefore regulated by the FDA. So, they’re supposed to
maintain a firm standard of the laws set out by the FDA with consistency. Also, many different
markets across the world have different set of regulations that are either relaxed or are either
stringent. There is competitive pricing by Pepsi’s competitors and that is one factor that Pepsi
has to keep in mind at all times. The political scenario also matters greatly as there can be some
civil unrest in certain markets or due to inflation the sales of the product can fall. Most
importantly, cross border situations are starkly different therefore Pepsi has to stay in line with
all those policies and changes so that they can adapt to all those changes accordingly.
Economic:
As the recent economic downturn has plagued the economy, companies had to restructure their
sales and marketing campaigns greatly. Also, with diminishing profits they had to undergo
downsizing internally and re-think upon how to penetrate the market. Economic conditions have
the highest influence on a business, regardless of what trade it is in. Though, in Pepsi’s favor, the
economic downturn that started in 2008 resulted in increased sales of its beverages mainly as
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people were being laid off from jobs, they were spending time with friends and family or at
home.
Social:
Social factors greatly impact Pepsi, as it’s a non-alcoholic beverage it has to remain in line with
the strict and stark differences of cultures the world over. Also, Pepsi has to communicate its
image as a global brand so that the people can associate it with themselves as something that
connects the world together. Usually, the social implications are seen in marketing campaigns
for example certain countries have religious festivals, so Pepsi has to keep in line with all those
festivals in order to understand the psyche of their market and how they can cash upon the
opportunity.
Technological:
With the advent of the new age in technology, companies have completely integrated themselves
with all the recent changes that have taken place. To mention a recent trend that has greatly
picked up and something that almost every business is turning toward is Social Media. The
social media explosion has allowed for increasingly interactive engagement with the consumers
with real time results so Pepsi has to stay ahead of all the developments that take place with
keeping in view how the youth of today utilizes technology for their benefit and how can Pepsi
reach them in order to keep on increasing brand recall and brand engagement.
Legal:
There can be many legal implications upon the beverage industry. I would cite one very famous
incident took place in India, where Pepsi was accused of using contaminated water, given a lab
test that was done upon the water flowing into the Pepsi factory that was located nearby an
industrial estate. A massive recall was issued for the products from shelves and then the product
was tested costing the company many billions of dollars upon the tests as India is a very major
market.
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Environmental:
These factors can affect Pepsi, but not immensely alter its trade and profit generation as these
factors affect agri-businesses much more directly.
Pepsi Cola
Pepsi Cola beverage business was founded at turn of the century by Caleb Bradham a New Bern
N.C druggist who formulated Pepsi Cola. Pepsi Cola Company now produces and markets
nearly 200 refreshment beverages to retail, restaurants and food service customers in more then
190 countries and territories around the world and generates revenue of over 18 billion dollars.
Although Pepsi holdings over the years have become diverse in such fields as the snack industry
and restaurants industry this portfolio will discuss its core business and its highly successful
business of beverages. The soft drink industry customer base is probably the widest and deepest
base in a world that is flooded with some many categories. According to Beverage Digest the
customer base for soft drinks is a whopping 95% of regular users in the United States. This
represents a large field of potential customers for Pepsi Cola. Yet although Pepsi could just use
the majority fallacy to market there product, Pepsi prefers to segment itself as the beverage
choice of the “ New Generation”, Generation Next, or just as the “Pepsi Generation”. These
terms adopted in Pepsi’s advertising campaigns are referring to the markets that marketers refer
to as Generation X. The Generation X consumer is profiled to be between the ages of 18 to 29.
They have high expectations in life and are very mobile and active. They adopt a lifestyle of
living for today and not worrying about long term goals. Those Pepsi’s main emphasis on this
segment they also have a focus on the 12 to 18 year old market. Pepsi believes if they can get
this market to adopt their product then they could establish a loyal customer for life. Pepsi Cola
is situated in an industry that is dominated by two competitors, Coca-Cola and of course
themselves. Although Pepsi and Coke basically go after all consumers who purchase soft drink
beverages Coca-Cola targets its products at the head of household. This is evident in many of the
ad campaigns such as “Always Coca - Cola” which refers to the traditional beverage heritige of
its product. They also reinforce this in the name “Coca-Cola Classic” which is inferring to the
older consumer. This name reflects an image of value, reliabilty, and old time values. Pepsi Cola
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throughout its 100 years of existence has developed many strengths. One of the strengths that
has developed Pepsi into such a large corporation is a strong franchise system. The strong
franchise system was the backbone of success along with a great entraupeur spirit. Pepsi’s
franchise system and distributors is credited for bring Pepsi from a 7,968 gallons of soda sold in
1903 to nearly 5 billion gallons in the year of 1997. Pepsi also has the luxury to spend 225
million dollars in advertising a year. This enormous ad budget allows Pepsi to reinforce their
products with reminder advertising and promotions. This large budget also allows Pepsi to
introduce new products and very quickly make the consumer become aware of their new
products. Pepsi also has had the good fortune of making very wise investments. Some of the best
investments have been in their acquiring several large fast food restaurants. They have also made
wise investments in snack food companies like Frito Lay, which at present time is the largest
snack company in the world. Probably high on the list of strengths is Pepsi’s beverage line up.
Pepsi has four soft drinks in the top ten beverages in the world. These brands are Pepsi,
Mountain Dew, Diet Pepsi, and Caffeine Free Diet Pepsi. Pepsi also has the #1 tea in the United
States, Lipton Tea. Some other strong brands are All Sport, Slice, Tropicana, Starbucks,
Aquafina and a license agreement with Ocean Spray juices. Pepsi Cola like any company has
weaknesses. Ironically, the one strength that has been credited for most of its success in the past
has now become a weakness for Pepsi. This former strength is the franchise system. The
franchise system in Pepsi Corporate view has become a liability. Pepsi in today’s market must be
able to act as one instead of several separate units. The franchise system has become a hurdle to
Pepsi because many of these franchises have become very strong and will not be dictated by
PepsiCo on how to handle their operations. Some of these franchises are unwilling to support
certain Pepsi products and at times produce their own private label products that are in direct
competition with Pepsi products. Secondly the franchisees are not willing to make capital
expenditures to keep up with Coca-Cola who is a firm believer in reinvesting into their
infrastructure (Coca Cola at present time does not operate a franchise bottling system). Another
weakness that Pepsi is inferior is in the fountain soft drink division. This has always been a
problem for Pepsi because of their ownership in fast food restaurants. Coca Cola has for years
been in the top locations for fountain beverages because they simply tell the account Pepsi is
their competition because of their ownership in Taco Bell, Pizza Hut, KFC, and many others. As
mentioned earlier Pepsi has tried to eleiviate this problem by spinning off their interest in fast
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food restaurants but at present time are still guilty by association to many of the large fountain
accounts. The franchise system has also effected fountain sales due to the fact franchisees are not
willing to by expensive fountain equipment to placed in accounts mainly because the profit
margin is so low and could take years to recoup their investment. Pepsi also has a weakness in
the international beverage market. Unfortunately for Pepsi they were a “Johnny Come Lately”
into this arena. Pepsi has tried to enter this market by trying to do in three years what took Coke
50 years to do. This area will take years for Pepsi to mature simply due to Coke’s dominance in
the international market and the strong ties that Coke has developed with these markets and their
governments. Pepsi customers buy nearly five billion gallons of soft drinks per year. Pepsi
customers buy their products because of taste, price, packaging, promotional factors and of a
wide variety of brands. Pepsi customers also buy their products due to the high accessibility of
Pepsi brands. Pepsi products are distributed to many outlets. For example, supermarkets where
Pepsi buys large shelf area and display areas so the customer can find them easier, Convenience
stores, gas stations, delis, restaurants, movie theaters and almost and other conceivable spot.
Pepsi has a competitive advantage over Coke because of the image it portrays. Pepsi promotes
itself as the choice of the “New Generation”. Pepsi gets this advantage by implementing such
large marketing projects like “Project Globe”. This marketing plan, which Pepsi spent 637
million dollars over five years, is to introduce the new rich deep blue coloring of its packaging.
The rich deep blue coloring represents eternal youthfulness and openness. Marketing plans like
this made Pepsi one of the coolest brands recognized among teens in the top five and the only
beverage product in this category. Another competitive advantage that Pepsi has is in their
product Mountain Dew. Mountain Dew has grown a staggering 74.1% over the last five years.
Mountain Dew has a 6.3% market share and has recently become the #4 soft drink in America.
At this current pace Mountain Dew will be come the first non-cola to reach the 1billion gallon
mark in one year. Pepsi also has an advantage as an innovator in their field. They will be the first
soft drink makers to introduce a new one-calorie soda called Pepsi-One with, just approved by
the FDA, Ace-K. This new sweetener is slated to be a break through for diet soda in which it
limits the after taste associated with diet soda and brings a more cola taste to the product. Pepsi
has always been a strong # 2 against Coke and have become one of the worlds largest
companies. As far as market share Pepsi stands strong. Here are just a few vitals of the market:
OVERALL MARKET SHARE 1. COCA-COLA 43.9% 2. PEPSI COLA 30.9% 3. CADBURY
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SCHWEPPES 14.5% BREAKDOWN OF MARKET SHARE 1. COCA-COLA CLASSIC
20.6% 2. PEPSI COLA 14.5% 3. DIET COKE 8.5% 4. MOUNTAIN DEW 6.3% 5. SPRITE
6.2% 6. DIET PEPSI 5.9% 7. 7-UP 2.3% 8. CAFFIENE FREE DIET COKE 1.8% 9.
CAFFIENE FREE DIET PEPSI 1.0% 10. DR. PEPPER 0.6% FOUNTAIN SALES
(FOUNTAIN SALES ARE CREDITED FOR 27% OF SODA SALES) 1. COCA-COLA 65% 2.
PEPSI COLA 23% Pepsi is situated in an environment that is ever changing and dynamic. Pepsi
must be concerned of changing taste of the consumer and be able to respond to that need
immediately or risk losing market share. They also need to be financially strong to keep up with
a powerhouse like Coca-Cola and be able to strike back in the long running cola war. Pepsi must
also be able to respond to different cultures in the international environment. Pepsi also has to
deal with such envionmental issues like the supply of raw materials to produce their products. In
fact Pepsi during World War One almost went out of business because of the shortage of sugar.
The list could go to include recyclable material that is now become a main concern for both
giants, unions, laws from state to state or internationally and many others. As for changes that
Pepsi needs to address I believe they are already addressing them. First the franchise system is
currently being dismantled and being replace with one bottling unit across North America. Pepsi
Chairmen and chief executive Craig Weathrup will run this. North American President will head
up the concentrate (fountain) end for Pepsi, Philip Marineau. This restructuring will allow Pepsi
to act as one unit and eliminate competition with private labels and uncooperative franchise
bottlers. Secondly Pepsi is starting to make strides in developing foreign markets. Pepsi is
beginning to pull out of some Coke dominated markets and begin to sell in up and coming
foreign markets where Coke is not dominating like India and China. As mentioned earlier the
restaurant spin off will also give Pepsi a better chance to get in larger fountain accounts. The one
weakness that I think Pepsi is not addressing is the recent turnover in high level management.
Pepsi in the last year has seen the head of their marketing department leave and have also lost
several international managers. I am presently not sure what the internal conflict is but it must be
addressed
Pepsi recently demonstrated its commitment to reducing its environmental impacts up and down
the value chain with two rapid-fire announcements about new initiatives. The old-school
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approach to greening is to focus on operations within the proverbial “four walls.” But Pepsi, like
other leaders, is approaching sustainability more holistically, with much greater impact.
First, on the downstream side, Pepsi looked for ways to raise the recycling rate of beverage
containers from a relatively paltry 34% to 50% or higher. Working with GreenOps, a division of
Waste Management, Pepsi launched a new program called “Dream Machine.” These “reverse”
vending machines, now being placed in high-traffic areas such as gas stations and stadiums, take
back those often-abandoned and often-un-recycled empty bottles and give users points toward
rewards from sponsors or local merchants.
But Pepsi has gone beyond those relatively minor incentives to add on a social mission. The
program will also help fund Pepsi’s donation to a group called Entrepreneurship Bootcamp for
Veterans with Disabilities (EBV), which trains vets at business schools around the country. Pepsi
expects that the combined immediate points and larger mission will drive new, greener customer
behaviors — and help solve one of the beverage industry’s most intractable value chain
problems.
Second, Pepsi has embarked on a very unusual supply chain effort to reduce the carbon
emissions associated with its Tropicana orange juice. After conducting a full life-cycle analysis
of the product line, the company was relatively surprised to find that the biggest portion of the
carbon footprint was found not in manufacturing, or distribution, but actually back in the
agriculture stage — primarily the result of the heavily natural-gas dependent process of making
fertilizer (see chart).
The analysis showed Pepsi execs where the largest impacts were, and thus where they’d get the
biggest bang for their buck on carbon reductions. The company started working with suppliers
and farmers to find new ways to make and apply fertilizer. For example, instead of using natural
gas from as far away as Russia (which then requires shipping heavy fertilizer across the world),
Pepsi is using biomass from closer to home. Wood waste and agricultural by-products are two
sources, but execs are hopeful they can also use the large number of their own orange rinds left
over in manufacturing, which would fully close the loop.
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The company is also working with scientists on the root chemistry of orange trees, applying
fungi and bacteria to increase the uptake of nutrients. All that techno-speak means that the trees
will need less fertilizer in total, which means less manufacturing and shipping of that fertilizer
and, voila, a smaller footprint.
A 100-acre test run of these new methods of working with new, low-carbon fertilizer is
underway. A few years from now, Pepsi and its suppliers will know what’s working and what
isn’t.
But here’s the best part: the cost of these changes to consumers and growers will be about zero.
And it had to be. Let’s face it, this kind of carbon reduction isn’t easy to convey to consumers,
so the market benefit may be small for now. So the sustainability team needed to find ways to
lower the fertilizer footprint without causing any additional cost to suppliers or farmers. How did
they do it?
By focusing its efforts on the real footprint — identified through a solid lifecycle analysis
and good data — Pepsi found the approach with the highest payback. As sustainability exec
Tim Carey put it, “It’s not unusual to spend tens of millions of dollars removing some carbon
from a manufacturing process at returns that can be 10% or less…or we can take 15% of total
carbon out in the fertilizer step without costing anything.”
The impacts of these tests — and future rollout — will not be small; Pepsi buys a fairly shocking
one-third of the Florida orange harvest. And the recycling work could shift millions of bottles
out of landfills. Pepsi’s full value chain view on sustainability is deep green stuff — this is how
you implement green thinking.
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Competition AnalysisCompetitors of Pepsi
Globally:
There are many competitors for PepsiCo globally who are/can be threat for PepsiCo in long run,
these are the selected few competitors for PepsiCo in the industries it cater to.
Non – Alcoholic Beverages:
a) The Coca-Cola Company
b) Dr Pepper Snapple Group Inc.
c) Mondelez International Inc.
d) Hansen Natural Corporation
e) National Beverage Corp.
Snack and Food manufacturing:
a) Kraft Foods Inc.
b) The Kellogg Company
c) ConAgra Foods Inc.
d) Nestlé S.A and others.
Indian Market:
Indian market is one of the emerging markets and today it stands as a hub for most of the
companies to form their bases with very few restrictions in entering into the market.
Snack division of PepsiCo, Frito-Lay holds a prominent position in the market being nine times
bigger than its near competitor. But still Balaji wafers is still giving it a tough competition in
most of the markets.
In beverage market, in spite of the presence of many local players in the market, the two legends,
i.e, PepsiCo and its mere rival Coca cola are enjoying duopoly in the market fighting among
them.
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Problem’s to be addressed:
“The president's departure and underwhelming market share numbers were just two of
the crushing blows.”
So of today’s investigation tells us these are the following reasons:
To understand the declining market share of Pepsi, we will study and analyze the key factors that
might lead to the misery for such a giant company.
Let us consider the departure of the president and take the learning from his case.
Why did Manu Anand really leave Pepsi?
When Manu Anand, the India and South Asia president of beverage and snack giant PepsiCo,
suddenly quit in June ’13 after 19 long years with the company, and cleared his table the very
next day of the announcement, there was speculation that the parting of ways had not been
amicable. Moreover, the company did not name a replacement for Anand, which is the usual
practice.
His abrupt departure caused some people to point fingers at Pepsi losing market share in the soft
drinks space to its old rival, Coca-Cola. Others attributed his exit to a string of failed product
launches, including that of a stronger cola in Pepsi Atom. There was also speculation that Anand
paid the price for splurging a hefty Rs 400 crore for the title sponsorship of the Indian Premier
League (IPL), nearly double of what the previous sponsors DLF had paid, and topping it up with
another RS. 50 Crore to become the broadcast partner for Set Max . Was this decision a disaster
because it did not increase market share and the tournament saw a sharp drop in TV ratings after
the spot-fixing scandal broke out?
A new twist:
As the story now unfolds, his exit seems to have nothing to do with the beverage giant's
performance during his tenure. Those in the know say that various third-party studies show that
IPL has given the company a boost in terms of brand recall and exposure. And the jury is still
out on Pepsi Atom which has been launched only in a few markets.
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While both PepsiCo India and Anand aren't saying much, sources say that Anand told the
PepsiCo brass just a few days before the formal announcement that he was quitting to join
chocolate and confectionery giant Mondelez. With a three-month notice period, which is the rule
in the company, PepsiCo would have got enough time to plan a smooth succession. The
company in recent years has looked for people internally for its senior Indian management, and
it is unlikely this rule would have been changed.
However, Anand's decision to join Mondelez, say sources, did not go down well with the bosses
as, according to the unwritten rule, top managers are not supposed to join a rival company. It is a
rule which many multinationals and even Indian companies follow to the hilt. Mondelez, surely,
fits that list because it also makes snacks and has brands like Tang which compete directly with
PepsiCo's recently-introduced powdered fruit juice under the Tropicana brand. Considering the
fact that he would continue to have access to the company's strategy, he was requested to leave
immediately.
Insiders say that what really did Anand in was his inability to get Ravi Jaipuria, PepsiCo India’s
largest bottler on board with some of the company’s long-term plans. “This lack of alignment
really hurt the company,” he said. According to him Jaipuria had in the last few months been
taking his grievances directly to Indra Nooyi, Pepsico’s global CEO. He cited the company’s
lack of robust defense to Coca Cola’s Rs8 per bottle price. That really hurt the company and
result in some loss in market share.
Nevertheless, Anand's exit has put the spotlight on some of his decisions which have been
panned by his critics. One of them has been that he paid too much to be involved with IPL.
Independent studies, however, show that the company's association might not be as bad as many
make it out to be.
Pepsi & Coca cola:
The battle for market share between PepsiCo and Coca-Cola is nothing new, with the pendulum
shifting in either company's favour from time to time. In 2011, Pepsi gained market share over
its rivals; in 2012, it lost marginally; and in the first quarter of this year, it has held on to its
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position. In the second quarter, those tracking the numbers expect Pepsi to maintain-if not gain-
market share.
The results are also far from conclusive on the performance of Pepsi Atom. The product was
launched as a strong cola to take on Thums Up, the number one carbonated beverage brand in
the country. Pepsi spent over 18 months to develop the beverage which has a differentiated and
an unconventional taste meant for people who want more fizz in their drink. Those associated
with the product say that the response to Pepsi Atom has so far been mixed. In places where
returnable bottles are being pushed,consumers are coming back for more. "It has only been five
months; the company believes that there is a market for this product. It's a flavor that some will
like, some will not. So, one has to give it some time," says a source associated with its
distribution.
Sources:Articles/"business - Standard" july 03 2013, “firstspot.com/business.”, “Business Insider.com/companies”
Take away:
You need to keep your partners close There is no direct impact of the president on the declining share of PepsiCo His decision to sponsor IPL-6, though it did not go well as increasing market share, it wasn’t
that bad, as media reports say, it gave the company considerable exposure and did a lot of positioning for the company.
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The strong, direct rival/competitor, The Coca Cola:
Source: “businesstoday.indiatoday.in/story/a-rough-summer-for-pepsi-in-india”
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How Pepsi Went From Coke's Greatest Rival To An Also-Ran In The Cola Wars?
Before we get into detailed findings of what competitors are doing, let us enlighten some common factors of PepsiCo global which impacted Pepsi sales in India.
Strengthening the rival:
In the 1990s, people found syringes in cans in more than 20 states:
PepsiCo announced that it would devote more of its marketing budget towards the snack business:
Pepsi and Diet Pepsi had a scare in 1993 when consumers in more than 20 states found syringes in the brand's soda cans. The reports, which quickly hit national news, created a panic among consumers.
But it wasn't Pepsi's fault. Authorities eventually found video of a woman in Colorado who had been inserting syringes into cans.
PepsiCo's snack business -- aka Frito Lay -- kept the company healthy while the flagship soda business was in decline.
But instead of investing more money into Pepsi, the company decided to devote more marketing dollars to Frito Lay, increasing its budget 35 percent.
Pepsi's marketing budget was almost halved from 2005 to 2010, as Nooyi tried to grow the healthy foods and snack businesses.
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The brand changed its recipe so it wouldn't have to put cancer warnings on its can:
As the new campaign launched, Pepsi reshuffled its management once again:
Sources: www.businessinsider.com/how-pepsi-lost-cola-war-against-coke
Take away:
Other factors effected sales, and the company was unable to take corrective actions in
time till the mystery of syringes has been uncovered.
Diversification is a good indicator, but cutting down core business to concentrate on non-
core definitely effects.
Change of composition to avoid warning label on the cans/bottles.
Shuffling of internal managers
Both Coke and Pepsi changed the way that they made the caramel coloring used in their sodas after a California law mandated that drinks containing a certain level of carcinogens have a warning label.
Pepsi has a nasty habit of shuffling its
managers between different departments and
brands. It is a habit that has hurt Pepsi's sales.
PepsiCo's Q1 2012 results showed a 2.5
percent decline in drink sales and a 4 percent
decline specifically in soda sales. It is
impossible to support a brand when no one
stays long enough on the business to build
knowledge or get the hang of running it.
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Differentiating two giants:
PepsiCo has been steadily losing market share to Coca-Cola in the carbonated soft drinks
market, but PepsiCo’s true strength lies in its diversified portfolio which partially shields it from
the woes of the CSD category. PepsiCo’s leadership in some of the fast growing beverage
categories such as bottled water, juices and sports drinks further enhances its chances to
outperform its rival in the long run. This could play out to its advantage as CSD volumes in
developed markets decline and as health concerns around CSD consumption spread to growth
markets. While PepsiCo will still want to expand its CSD volumes abroad given the growth
potential, its diversification could be a winning formula.
Portfolio Diversification
The first difference to keep in mind is that Coca-Cola is a beverage focused company and
derives more than 70% of its revenues from the sale of sparkling beverages or CSDs. On
the other hand, PepsiCo deals in both snacks as well as beverage segments and generates more
than half its revenues (~51%) from its snacks business, which according to our estimates
contributes more than 60% to the company’s value.
The biggest challenge facing the beverage industry today is the declining consumption of CSDs in developed markets. CSD consumption is known to bear a high correlation with the prevalence of obesity, diabetes and other health related issues. This is the primary reason behind the consistent decline in CSD volumes seen over the last decade in developed markets. Consumers in the developed markets are not only well-informed, but are also becoming increasingly health conscious which is keeping them away from CSDs. Annual per capita consumption of CSDs has fallen from over 50 gallons in 2005 to just over 42 gallons in 2012. Given Coca-Cola’s higher dependence on CSDs, this could be a relative advantage for PepsiCo.
‘Better For You’ Products:
PepsiCo outsells Coca-Cola brands in most of the important fast growing beverage categories such as bottled water, juices and sports drinks. Aquafina, Tropicana and Gatorade brands hold leading market shares in all of the three categories, outperforming Coca-Cola’s Dasani, Minute-Maid and Powerade brands respectively. Demand for products in these categories has been growing rapidly over the past few years, primarily driven by increasing demand for “better for you” products amid growing health consciousness. PepsiCo’s
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stronger hold in these beverage categories is another advantage the company holds over Coca-Cola.
Coca-Cola’s Leadership:
While PepsiCo continues to focus on a more diversified portfolio with leading brands in some of
the fast growing beverage categories, Coca-Cola has enhanced its global leadership in the CSD
category over the years. Across its brands Coca-Cola holds leading shares in both developed as
well as the emerging markets of the world. Just two of its brands, Coke and Diet Coke, together
command almost 27% of the U.S. CSD market. All its brands together control 42% of the CSD
volumes in the U.S. while PepsiCo holds 28% share in the U.S. Moreover, Coca-Cola has also
strengthened its grip on emerging markets such as China and India. The company holds more
than 15% and 54% of the CSD market in China and India respectively, outperforming PepsiCo
in these fast growing markets as well. This should worry PepsiCo since it cannot afford to lose
out on the huge growth potential that emerging markets hold for the CSD category by their shear
size of consumer base and rising income levels.
However, it should also be noted that the world today is far more connected than ever and
information takes much less time to reach people globally than just a decade ago so health
related CSD woes in developed markets could lead to slower volume growth in the “high-
growth” emerging markets well before per capita consumption in these markets reaches
anywhere close to its peak in the developed markets. Given PepsiCo’s more diversified business,
we believe it has an edge over Coca-Cola in terms of future cash potential primarily because its
diverse snacks segment can still take advantage of consumption growth in emerging markets
while carrying less exposure to the vulnerable CSD category.
Source:“forbes.com/sites/greatspeculations”, “articles.economictimes.indiatimes.com”,
“marketingteacher.com”
Takeaway:
PepsiCo’s diverse portfolio dives it a competitive advantage over all, but concentrating at
the issue at the hand, company is losing control over its core brand i.e., CSD
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Much better opportunities for the company in the emerging markets of bottled water and
non-carbonated, fruit juice markets.
Rival’s focused portfolio on CSD is a big time threat for PepsiCo.
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SWOT Analysis:
Strengths:
1. Product diversity:
PepsiCo has several hundreds of brands, which include: carbonated and
noncarbonated drinks, water, savory and whole grain-based snacks. Product
diversification strengthens PepsiCo because it doesn’t have to rely on few key
products or seasonal sales and isn’t significantly affected by changes in customer
tastes.
2. Distribution:
The company delivers its products directly from manufacturing plants and
warehouses to customer warehouses and retail stores. This is part of a three pronged
approach which also includes employees making direct store deliveries of snacks
and beverages and the use of third party distribution services.
3. CSR:
The firm recognizes its role in a society and engages in education, recycling, water
usage reduction, obesity fighting and other projects through PepsiCo Foundation,
thus increasing its brand awareness and customer loyalty.
4. Competency in mergers and acquisitions:
The key to PepsiCo business growth is its successful mergers and acquisitions of
beverage, bottling and snacks companies. PepsiCo acquired such brands as
Gatorade, Tropicana, Doritos, Quaker Oats and many others.
5. Successful marketing and advertising campaigns:
More than $2 billion spent on advertising over 2012 resulted in PepsiCo’s growing
market share over its main competitors, including Coca Cola Company, which spent
even more on advertising.
6. Complementary product sales:
In its annual financial report, PepsiCo revealed one of its studies' results that about
30% of customers who buy its snacks also buy its beverages. PepsiCo’s decision to
diversify its product range is firm’s competitive advantage too.
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Weakness:
1. Low pricing:
PepsiCo usually prices its products lower than its competitors. Low price is
associated with low quality and PepsiCo products are usually perceived as ones.
2. Questionable practices:
PepsiCo is using and selling tap water but places view of mountains on its water
bottle labels, thus deceiving people that it is mountain spring water when it is not.
PepsiCo has also been criticized for using water in India with higher than allowed
amount of pesticides in it.
3. Weak brand awareness:
The Coca Cola Company has the largest share market of beverages in the world and
much stronger brand awareness than Pepsi, placing it at competitive disadvantage.
4. Too low net profit margin:
PepsiCo’s net profit margin is 9.7% compared to Coca Cola’s 18.55% and Nestlé’s
11%.
5. Unplanned/Improper decision Making:
Decisions like, media planning, IPL-6 are improperly planned.
Opportunities:
1. Growing beverages and snacks consumption in emerging markets:
PepsiCo has made large investments in BRIC (Brazil, Russia, India and China)
countries to expand its market share as these countries represent the fastest growing
food and beverages markets in the world. If PepsiCo is successful it will increase its
revenues and global market share significantly. In addition, it will be able to rely
less on US market.
2. Increasing demand for healthy food and beverages:
Due to many programs to fight obesity, demand for healthy food and beverages has
increased drastically. PepsiCo has an opportunity to further expand its product range
with beverages and snacks that have low amount of sugar and calories.
3. Further expansion through acquisitions:
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So far, PepsiCo has been successful in acquiring other companies and adding new
growing brands to its portfolio.
4. Bottled water consumption growth:
Consumption of bottled water is expected to grow both in US (PepsiCo’s largest
bottled water market) and the rest of the world.
5. Savory snacks consumption growth:
The same opportunity PepsiCo has in growing its revenue selling snacks as this
market is also expected to grow.
Threats:
1. Changes in consumer tastes:
Consumers around the world become more health conscious and reduce their
consumption of carbonated drinks, drinks that have large amounts of sugar, calories
and fat.
2. Water scarcity:
Water is becoming scarcer around the world and increases in both cost and criticism
for PepsiCo over the large amounts of water used for production.
3. Decreasing gross profit margin:
PepsiCo’s gross profit margin was decreasing over the past few years and may
continue to decrease due to higher water and other raw material costs.
4. Legal requirements to disclose negative information on product labels:
Some researches show that particular ingredients, consumed in extra large
quantities, in some of PepsiCo products could cause cancer. For this reason, many
governments consider to pass legislation that requires disclosing such information
on product labels. Products containing such information may be perceived
negatively and lose its customers.
5. Strong dollar:
More than 50% of PepsiCo’s income is from outside US. Due to strong dollar
performance against other currencies PepsiCo’s income should fall.
6. Lot of substitutes:
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Traditional Indian families would still prefer a glass of lassi or nimbu pani in
summer and a cup of tea or coffee in winters when compared to Pepsi
Ansoff’s matrix for PepsiCo:
There are four aspects of Ansoff’s Matrix which can be applicable for growth analysis of any
company.
StrengthProduct diversityDistributionCSRCompetency in mergers and acquisitionsSuccessful marketing and advertising campaignsComplementary product sales
WeeknessLow pricingQuestionable practicesWeak brand awarenessToo low net profit marginUnplanned/Improper decision Making
OpportunityGrowing beverages and snacks consumption in emerging marketsIncreasing demand for healthy food and beveragesFurther expansion through acquisitionsBottled water consumption growthSavory snacks consumption growth
ThreatChanges in consumer tastesWater scarcityDecreasing gross profit marginLegal requirements to disclose negative information on product labelsStrong dollarLot of substitutes
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1. Market Penetration2. Product Development3. Market development4. Diversification
Market Penetration:
“This is the de facto strategy: change nothing and sell more of the same to existing customers.
When a business does not consciously select a growth or diversification strategy, it is doing
this". In an existing market is selling of new products much moredifficult than selling old
products. It is easier to sell old products to traditional customers then to explore new markets.
In this case, a firm can use the market penetration strategy if the company tries to increase the
share of its product in the overseas markets, which are already served byemploying several types
of tactics:
Product-line stretching: the company adds new products to its existing product line in an
already penetrated market segment with the objective of attracting new and competitor’s
customers from rivals.
Product proliferation: the firm offers many different product types
Product improvement: this involves updating and augmenting the existing products, and can
entail the application of the latest technology to improve the product’s capabilities, improving
customer services, etc.
The market penetration is the safest strategy of all because it leverages many of the company's
existing resources and capabilities. In a growing market environment, simply holding market
share is bound to result in growth. There may be chances to increase market share if competitors
approach capacity limits. Still, this marketing strategy has limits. As soon as the market reaches
a saturation point, some other marketing strategymust be chosen if the company is to continue to
grow.
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Product Development:
The second growth vector of the Ansoff’s matrix shows the product development strategy. It is
characterized by offering new products to existing markets. Marketers are well aware of the
importance of a positive customer relationship and the goodwill and trust that accompany it. If
such a relationship exists, a company is able to present for sale new products more effectively
and less expensively to existing customers than to new ones.
PepsiCo introduced many new brands/products in the same market for example Pepsi Atom,
Pepsi My-Can, Pepsi Blue etc to penetrate more in to the existing markets.
Market Development:
The third growth vector of the Ansoff’s Matrix shows the market development strategy. It is
characterized by entering new markets with their existing products. Company’s good will in the
existing markets is very important to excel or penetrate more in to new markets.
PepsiCo has been entering new markets, new countries ever since its beginning promoting and
offering its core brand cola.
Diversification:
The final growth vector of Ansoff’s growth matrix is diversification. Where the company
diversifies its product offering in to various varieties, new products and enter in to new markets.
PepsiCo is famous for its mergers and acquisitions, ever since it has started; it is broadening its
horizons by merging famous brands in to it.
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The New Strategy:
As we have understood the strengths, opportunities, weaknesses and mistakes of PepsiCo all
together piled up to its downfall.
But during the down fall tenure, there are so many important factors that came in to spot light
like the branding done for the company during IPL-6, Strengths of the company lies in its
diversification and most of all, they operate in a highly competitive market where customers are
very price sensitive.
Adding up all these, PepsiCo has come up with its new strategy for the next summer.
PepsiCo rush to woo price-wary buyers:
PepsiCo India are introducing their beverages and snack brands in new economy packs priced at
R5 and R6 to woo cost-conscious consumers. For instance, PepsiCo India has introduced two
new variants of its snack brand Lay's in mini packs (12.5 gm) at R5.
The company is betting big on Lay's economy packs called 'Mini Magic' to drive volumes both
in rural and urban markets. On the other hand, Coca -Cola India has introduced its flagship brand
Maaza (100 ml pack) at a price point R6 to reach out to rural consumers.
On Pepsi's new strategy, Vidur Vyas, marketing director-foods, PepsiCo India, said, ''Our
emphasis on R5 price point will enable us to reach out to a larger consumer base and drive more
consumption. Our aim is to create consumer connect through engagement campaigns such as our
new television campaign."
Cashing in on the popularity of the Indian Premier League Twenty20 tournament, PepsiCo has
flooded the markets with Lay's mini packs in new flavours.
To promote its new launch, PepsiCo has launched a new television campaign featuring MS
Dhoni, Gautam Gambhir, Rohit Sharma, Shikhar Dhawan, Ravi Shastri and Billy Bowden.
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