Memorandum
To:
Professor Christopher Thacker
From: The Marketing Magnates Team
Date: 3/24/2016
Re:
Pepsi Situation Analysis Report Proposal
Based upon strong production and distribution techniques as well as the company’s
recent acquisitions, Pepsi has positioned itself to increase company value and
maximize profit. Pepsi has taken great strides to improve the overall health of the
company and has ultimately placed itself strategically and effectively to become the
leading company in the soft drink industry.
The purpose of this proposal is to request that we, the Marketing Magnates, are able
to research the situation of the Pepsi Company. Pepsi is a good company to research
because it has shown incredible growth and perseverance in the face of adversity. It
has expanded into a widely international company and shows no signs of stopping.
Its recent acquisitions have unified the company as well, and product diversification
ensures that Pepsi can reach a variety of different markets. Pepsi has never been in a
better position than it currently is and the company value and profits are at an all
time high.
The Pepsi Company provides for an incredible marketing opportunity. Its growth
strategies are undeniably successful and the strength of the company is quite
apparent. Ultimately, it is a positive marketing investment to get involved with the
Pepsi Company
Audience Analysis
We, the Marketing Magnates, are a consulting firm. You, Christopher Thacker, are
our client and have hired us to converse with you regarding the current situation of a
company, in which we have chosen Pepsi. You are a representative of a marketing
firm and are considered to be an inside technician of the field. As a result, you
require knowing how things work and focus solely on observations and factual data
and analysis. You do not need to know excessive background information and are
well versed on the jargon and basic fundamentals of marketing. Mainly, you are
CONFIDENTIAL
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interested in the proof we provide and the hard numbers and statistics regarding
Pepsi as a company.
We have selected a variety of criteria that we will base our research on. These
criteria will help us determine what exactly needs to be collected in order to deliver
the most effective and important information to you, our client.
Company and Industry Analysis
1. What brands does Pepsi own?
This represents product diversity and the overall place of Pepsi products. Knowing
what Pepsi owns can help us determine where the company stands and who it has
the ability to reach.
2. What are Pepsi’s current sales and projected growth?
This is the most apparent means of measuring profits. Understanding the current
sales Pepsi has can help us determine where it is headed as a company in future.
3. Where are Pepsi’s beverage manufacturers located?
Location determines the factors of production and where products can be developed
and sold.
4. How many employees does Pepsi have?
The size of a company is always something that should be considered. By measuring
how many employees Pepsi has, we can figure out how large the company is as a
whole and how effective it is in delegating tasks.
5. What is the current management structure and how does that impact sales?
This helps gauge the reliability, efficiency and chain of command. A strong
management team will ultimately lead the company to success financially.
6. What is Pepsi’s mission statement and goals?
A mission statement is vital to a successful business model. Pepsi’s mission
statement will indicate what the company is all about and how it plans on achieving
its goals. It is the strategy for success.
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7. How long has Pepsi been around?
This question helps represent longevity and perseverance. If a company proves that it
has been successful over the years and can adapt to changing times, it is a good sign
that it is run successfully and will be a good investment.
8. What major changes has Pepsi gone through as a company?
This shows how a company can make necessary changes in order to grow and prosper
with changing times. All companies need to be able to adapt to change in order to
thrive.
9. How is the industry portrayed publicly?
Public portrayal plays a major role on customer satisfaction and the target market.
How the industry as a whole is seen will have a major impact on sales and profit. It
determines how the customer views the beverage manufacturing industry.
10. How does the industry deal with government regulations?
This particular industry has had to deal with certain hardships and government
regulations. It would be beneficial to know how those companies in the industry
deal with what is thrown at them in a health conscious society. It is also important
to know how an industry deals with extra costs due to taxes as well.
11. How does the industry deal with new technologies?
Innovation and adapting to growing technologies is essential to a successful company.
Knowing how the industry has changed with changing technological times will
provide a good resource for industry strategies and tactics.
12. What is the relative size of the industry?
If an industry is small, a company will have less competition and be able to rise to
the top, with the right strategies of course. If the industry is rather large, a company
will have deal with others and take greater strides to being the best there is.
Knowing this will help determine necessary strategies for the marketing campaign.
This also helps determine how much money is spent on an industry.
13. Does the industry experience any obvious or distinct cycles?
Certain products tend to sell more so in specific times of the year, seasons, and the
like. It would be helpful to know if the industry booms at one particular point at
time. This would help determine where to focus marketing efforts.
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14. Is the industry growing, shrinking, or stagnant?
No marketing campaign can be conducted without knowing the current situation of
the company’s industry. It would be interesting to see if the industry is thriving or is
it ultimately on a downward spiral.
Competitive Analysis
1. What are Coke and Sam’s Choice’s weaknesses in production?
Exploiting weaknesses will make for a more impactful marketing campaign.
Weaknesses for them provide opportunities for Pepsi.
2. Where in the world do Coke and Sam’s Choice sell the most of their products?
Knowing where each competitor is selling the most will tell us where Pepsi needs to
increase marketing strategies.
3. How do Coke and Sam’s Choice compare to Pepsi in terms of sales?
Comparing the sales of competitors will enable Pepsi to capitalize on potential
markets and consumers.
4. What types of marketing strategies have Coke and Sam’s Choice chosen to use?
If a competitor is successful in a certain marketing channel, it might be beneficial to
try a similar technique as well.
5. How do Coke and Sam’s Choice’s expected growth compare to that of Pepsi?
If a competitor is viewed to be growing faster or more efficiently, further measures
must be taken to ensure Pepsi does not fall behind.
6. How stable are Coke and Sam’s Choice in terms of management?
Stable management can lead to happy workers and a stronger view of the company by
potential consumers. By determining how strong a management team has been, it
will allow Pepsi to gain inner knowledge of how a competitor’s company is run.
7. How do Coke and Sam’s Choice compare with Pepsi in terms of product
diversification?
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Diversification can play a major role in stabilizing profits in a down economy. It is
beneficial to know where competitor’s rest in terms of their product selections.
8. Have the recent acquisitions of competitors helped or harmed them?
Recent acquisitions by both Pepsi and competitors have altered the size and function
of companies. Finding out how this has affected competitors will tell which company
has more potential for growth over the next few years.
9.
What are Coke and Sam’s Choice’s market shares in comparison to Pepsi?
The size of a market share says a lot about a company’s consumer base and will be a
good means of comparison for Pepsi.
10. How have Coke and Sam’s Choice dealt with rising sugar costs?
How they have dealt will show how effective management has been at handling
unavoidable problems and concerns.
SWOT Analysis
Strengths
1. Global Brand
Pepsi products are sold worldwide so it always remains in the public eye of
beverages.
2. Diverse Product Range
Pepsi sells more than just sodas including water, juices, snack foods, and baking
products. Therefore, it reaches a wide range of customers.
3. Strong Production and Distribution Network
Pepsi has over 650 manufacturing and distribution facilities and is able to serve
various market segments.
4. Strong Brand Name
Pepsi has been around over 100 years and is a trusted company. It also ranks as one
of the top soda manufacturers.
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Weaknesses
1. Overdependence on Single Companies
Wal-Mart accounts for 12% of revenue and as they strive to keep prices low, it results
in Pepsi making a smaller profit.
2. Negative Publicity
Product recalls in pancake mixes and of chemicals added to sodas have given
consumers a bad impression of Pepsi.
3. No Plan for Competition
Pepsi has no specific plan for competing with Coke, the leader in the beverage
industry. Pepsi cannot lead the industry without plans of how to outperform the
competition.
4. Business Concentration
Even though Pepsi is a worldwide company, most of its revenues are from North
America. If sales in this region were to slip, it would be detrimental to the business as
a whole.
Opportunities
1. Growing Market for Bottled Water
Bottled water sales have grown rapidly in current years. Therefore, Pepsi’s Aquafina
and SoBe Life Water products are very profitable.
2. Growing Food Service Sector
The company sells a lot of products through food service. Pepsi can position itself to
grow as food service does.
3. International Expansion
Pepsi is on the verge of obtaining manufacturing plants in India and Russia, and thus
revenue in Asia is expected to grow.
4. Online Promotion
The Internet has become an extreme presence in today’s society. Pepsi has decided to
focus most of its advertising attention to the online sector. This will be able to catch
the attention of new customers.
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Threats
1. Sluggish Growth
Health concerns are making it difficult to make a profit from sugary drinks, which
Pepsi is often criticized for.
2. Intense Competition
Coke is a huge competitor leading the soda industry, while Kraft is a large competitor
for the food products.
3. Changes in Legal and Regulatory Environment
New soda taxes and government regulations cause Pepsi to both lower their costs and
take a slight loss in profit, or raise the price and risk losing customers.
4. Distaste in Product Development
Pepsi is constantly changing their packaging designs to try to attract new customers,
but the old customers are displeased with the change and view them as a loss of
originality.
Market Analysis
1. What product does the Pepsi Company specialize in?
Product specialization ensures that a company knows who they are trying to reach
and how they will get there. It is important to know what Pepsi specializes in to
determine overall strength. By specializing in a product, a company can focus its
efforts and ultimately succeed financially.
2. What means of promotion does Pepsi use?
A company cannot succeed financially if it does not have a means of promoting its
product. Pepsi must reach as many potential consumers as possible, so it is
important that we know how the company gets its name out there and promotes its
products. It is also a good measure of how a company can remain innovative and
keep up with changing times.
3. Where can Pepsi products be purchased?
Product availability is the only way a company can obtain a profit. By knowing
where Pepsi products are sold, it can give us insight on to whether or not products
are being marketed effectively and all consumer bases are being reached.
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4. What price do Pepsi products go for?
Pepsi has wide product diversification. It is helpful to know what price its products
tend to go for as it can help determine the possibility of consumer purchases. It can
also track how different locations handle pricing for products.
5. What determines the price that Pepsi products go for?
It is crucial to know how prices are determined by the Pepsi brand. There is a
constant balancing act between frugality and wealth, and there are many factors that
can contribute to the cost of Pepsi products for the consumer. It is beneficial to
know what contributes to determining this to track the overall health of the
company.
6. Who does Pepsi compete with for market share? Are there instances of selfcompetition?
Knowing who occupies the market share allows a company to know where they
stand in terms of its competition. It is imperative to be attentive of company
surroundings to know who Pepsi shares the market place with. There may also be
cases of self competition. As Pepsi has a variety of products, it would be beneficial
to know what product is doing the best in terms of the market.
7. What percent of the market share does Pepsi hold?
Knowing what percent of the market Pepsi owns helps track profitability and
financial success. It helps to know where the company stands in terms of a
consumer base.
8. Is the market share of Pepsi products increasing, decreasing, or stagnant?
Following how a company has improved or worsened overtime can track where the
company is headed. Market share represents a crucial component to profitability
and consumers, and therefore it would be beneficial to know where Pepsi has been
and where it is going.
9. What is Pepsi’s target market?
Knowing who Pepsi is marketing to and trying to reach is vital to having a
successful marketing campaign. If a company does not know who its target
audience is, then it is impossible to reach success. All promotion, price, place and
product techniques rely on securing a target market.
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10. What is the relative size of the target market?
Along with knowing who the target market is, it is equally important to know how
large that target market is as well. The number of consumers that can potentially be
reached will help determine efficiency and the steps that will be taken to satisfy
customer wants and needs.
Roles
For this situation analysis assignment, the Marketing Magnate leader is Conor
Buckley. He was responsible for putting all of the information together into one
concise document. Conor also dealt with the Marketing Analysis criteria. Vernon
Irvin handled the Company and Industry Analysis criteria, Patrick Hoover handled
the Competitive Analysis criteria, and Aaron Bowen handled the SWOT Analysis
criteria. Editing was done as a group and planning for the final presentation and
memorandum was done as a group as well.
Where do we go from here?
Now that our proposal is complete, we request that you consider allowing our
consulting firm to research Pepsi as a viable company. Should you choose to
consider accepting our proposal, our firm would like to meet with you to discuss our
options and means for research collection. We hope that this will meet your needs
in this consulting project and we look forward to meeting with you soon.
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