WEDPEPSICO Presentation Fnal

PEPSICO CASE STUDY PRESENTATION

Group Name: NEXT GENERATION

Members:Jeremaia Volavola – S98006250Livai Serevi – S02000770Michael Delanimati – S11051589Unise Cawaru – S85010500

Presentation Outline:

Company Overview Products and Services Marketing Mix Competition & Strategy SWOT analysis (International & Fiji) Problem Statement & Solutions Recommendations

Company Overview

International company – offers convenient snacks, foods and beverages

Market >500 varieties of food & beverage products in > 200 countries (retail sales >US$98bn)

Growth experienced through - product development and acquisitions Solely a soft drink company in 1960 to being the 3rd largest food and

beverage company Revenues >US$39bn Over 185,000 employees Company consists of:

PepsiCo Americas Food PepsiCo Americas Beverages and PepsiCo International

Mission Statement “To be the world’s premium consumer products company focused on convenience foods and beverage.”

Products and Services

Products offered (brands) Markets –Geographical spread & Divisions Product Analysis & Information

PepsiCo sales by Country Net Revenue by Division Beverage Product by Category

Products Offered (Brands)

Frito Lay Brands- snacks, potato & corn chips, salsa and dips etc

Pepsi-Cola brands- carbonated drinks, water, coffee

Gatorade brands – drinks for sports

professionals Tropicana brands

- juices Quaker Brands

- cereals, oatmeal bars

Markets – Geographical Spread

Markets – Geographical Spread & Divisions

PepsiCo products are manufactured and distributed by PepsiCo, its partners and franchised bottlers.

PepsiCo Americas Food (PAF) includes: Frito-Lay Nth America Quaker Foods Nth America

& all Latin America food and snack businesses (up to Mexico)

PepsiCo Americas Beverages (PAB) – includes: PepsiCo Beverages Nth

America All Latin American

beverage businesses PepsiCo International

(PI): UK, Europe, Asia, Middle

East and Africa.

Product Analysis – PepsiCo Sales by Country

PepsiCo Sales by Country

United States63%

Canada4%

United Kingdom6%

Mexico9%

All other countries18%

United States Mexico United Kingdom Canada All other countries

Source – Annual Report 2004

Product Analysis – Net Revenue by Division

Net Revenue by Division - 2007

FLNA29%

PBNA26%

PI40%

QFNA5%

Net Revenue By Disivion - 3 yr comparative

10,322 10,84411,586

9,146 9,565 10,23011,376

12,959

15,798

1,718 1,769 1,860

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2005 2006 2007

US$

m

Frito Lay - Nth America PepsiCo Beverages - Nth AmPepsiCo International Quaker Foods - Nth America

Source – Annual Report 2007 (p61)

Beverage Product by Category

Category PepsiCo Product Coca-Cola ProductSoft Drinks Pepsi Coca-Cola

Diet Soft Drinks Diet Pepsi Diet Coke

Non-cola Mountain Dew Sprite

Root Beer Mug Barq’s

Ready-to-drink tea Lipton Nestea

Sports Drink Gatorade, Propel Powerade

Bottled Water Aquafina Dannon, Dasani, Evian

Orange Juice Tropicana Minute Maid

Marketing Mix-PepsiCo

Some of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young.

PepsiCo is best known for Pepsi, the world’s second most popular soft drink after Coca-Cola Classic.

It is also the market leader in snack foods and noncarbonated beverages (tea, bottles water, chilled juices, and sports drinks).

Pricing:

The US beverage market is mature. The industry sales growth is largely driven by population growth, amount of advertising and product innovation taking place in the industry.

Given the mature nature of the market, both Pepsi and Coca Cola have resorted to pricing discrimination strategies to maximize the value of consumer demand.

Pricing- cont’d…….

Direct Price Discrimination –charging customers with different prices based on their location and purchasing power. E.g. - in the international operations of both Pepsi and Coca

Cola. Cola prices in Mexico, Brazil and Eastern Europe are lower than prices in the U.S

Domestically, direct price discrimination is based on distribution channel segmentation. Restaurant fountain drinks, single drinks at gas stations and

take-home packs at supermarkets have all different prices on a per-unit basis.

Pricing- cont’d…….

Indirect Price Discrimination – Quantity discounts along with price coupons used

Brand name - the most effective indirect price discrimination tool.

Distribution Models

Various distribution models– Direct Store Delivery

(DSD), – Broker Warehouse

Distribution (BWD) – and Vending & Food

Service (V&FS) system Advanced logistics systems

to manage its distribution systems effectively,

Retailers(DSD)

Distributors(BWD)

RestaurantsV&FS

PepsiCo

Distribution Models – cont’d………

Use of the most modern technology:– PepsiCo and its bottlers were able to improve their

distribution and logistics management operations significantly.

Further improve the market penetration of its products globally,

– PepsiCo launched two new distribution methods in the initial years of the new millennium. These were the chilled DSD system and the hybrid system.

Distribution Channels

various distribution channels –– supermarkets/retail stores, fountain/restaurant,

convenience stores, vending machines and others for distributing beverages and snack foods.

PepsiCo's distribution system- aimed at making available all or most of the products in its portfolio within a reachable distance to their consumers.

Advertising & Promotions:

Sports & Celebrity Packaging

– in cans and bottles-young consumers (Generation Y)

Televisions Ads Contributions to Charity

Customer Services:

– In all of its business dealings with suppliers, customers andcompetitors, PepsiCo will:

Compete vigorously and with integrity.� Treat all customers and suppliers honestly, fairly and�

objectively. Avoid any unfair or deceptive practice and always�

present our services and products in an honest andforthright manner.

Never comment on a competitors product without a good basis�or need for such statements.

Make clear to all suppliers that we expect them to compete �fairly and vigorously for our business, and endorse the principles in our Code of Conducts .

Competition – Beverage & Snacks Food Industry

RANK COMPANIES MARKET SHARE %

SHARE CHANGE

1 Coca-Cola 43.1 -0.9

2 PepsiCO Inco. 31.7 -0.1

3 Cadbury Schweppes

14.5% +0.2

4 Cott Corp 5.5 +0.8

5 National Beverage Corporation

2.4 flat

(Source:Adapted from Beverage Digest Press Release, March 4, 2005)

RANK COMPANIES MARKET SHARE

1 PepsiCo Frito Lay 15%

2 Kraft Food 12%

3 Hershey 6%

Competition..

Three major sustainable advantages give PepsiCo a competitive edge as they operate in the global marketplace.

Competitive Strategy

Diversification – the chief reason for their outstanding

performance. Though started as a beverage company, Pepsi now held No.1 position in snack food business with its Frito-Lay division and ranked No.3 in overall food & beverage industry.

Competitive Strategy

Securing alliance deals with other big corporations (Merger-like strategy) – For example, Pepsi has closed an alliance with

Warner Brothers International Theaters and with Major League Baseball.

Competitive Strategy

Lowering their prices; – it is clear that Pepsi has made several right choices. Able to

acquire market share through lower pricing compared to Coke

Before it entered the international market, it first familiarized its customers with its product thoroughly in its home base.

– By the time Pepsi was ready to enter the international market, it had a good grasp of what its target audience really is.   

Competitive Strategy

Most of Pepsi’s strategies were designed to compete with Coke.

Coke came first, and it is still the leading soft drink brand.  But Pepsi is keeping up with Coca Cola. 

SWOT ANALYSIS- International

STRENGTHS Outstanding Reputation. Broader Product line-creates synergy across the

board. Large free cash flow- New Acquisition Great brands, strong distribution, innovative

capabilities Global market leader in snack foods & non-

carbonated beverages.

CONT’….

PepsiCo sells three products through the same distribution channel.

Huge Advertising Budget. Strong Marketing Intelligence.

WEAKNESSES:

Difficult to inspire Vision and Direction for Large Global Company.

Non Uniform Company name for some PepsiCo products. PepsiCo Lags leader Coca-cola in the international market -

Highly Elastic Demand. Big Health Issues for Pepsi Drink - Fat and Sugar. Falling Behind in International Markets, namely Russia,

Venezuela, and South America. Health Issue in the Indian market with water - contained

pesticides.

OPPORTUNITIES

Expanding Food Division in the international market. Investment into more non carbonated products in the US

market and regional. Innovative Customized products technology Concentration on healthy alternative products as per the

customers needs.

THREATS

Bottled Water Market Faces Competition. Comply with International & Domestic Standards. Environmental concern PET Bottles Continuously increases in the price of crude oil and raw

materials- affects the cost of finished products Terrorism-Anti-American Advocates

Presence in the Pacific (FIJI)

Pepsi drinks is distributed byTapoos Fiji Limited

Carbonated drinks are bottled in Lautoka Plant-(Eddie Hin Ltd)

Products are handled by distributors in the Pacific Islands.

Fast Food outlets-KFC& Pizza Hut

SWOT ANALYSIS (PACIFIC MARKET)

STRENGTHS:-2nd in the market(30%)-competitive pricing (carbonated drinks)-distributed by reputable organization-Tappoos

WEAKNESSES:-lack popularity in the local community-more emphasis on the distributors rather than the products

OPPORTUNITIES:-potential to expand-expanding the Lautoka plant-to increase market share in the region.

THREATS:-Regulations on Imported goods.- Strong influential of Coca- Cola into the community

Problem Statement & Solutions-(Pacific)

“Lack of Representations in the Region”

Solutions: More aggressive marketing strategy Stronger involvement in community activities More cultured oriented advertisement

Recommendations:

“Stronger involvement in community activities”

Offer sponsorship:– Educational (Primary-Tertiary level)– Sports (eg: Pepsi Games instead of Coca-Cola

games-target market (tertiary students-future income earners

– Village projects

Thank You

Questions ????

or a can of Pepsi?