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Danielle Berasi – Marc Boylan - Adam Ghiloni
Bridget McGlone – Ashley Riccardi
12-3-07
Table of Contents
Executive Summary ................................................................................ 3-4
History of PepsiCo .................................................................................. 5-6
Mission and Vision .................................................................................. 7
Core Competencies ................................................................................ 7-8
Core Values ............................................................................................ 8-9
Products Provided by PepsiCo ...............................................................
Locations ................................................................................................
Positioning ..............................................................................................
Product Strategy .....................................................................................
Recommendations .................................................................................. 11
Works Cited ............................................................................................ 17
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Executive Summary
The core Competencies of PepsiCo include the “Smart Spot” campaign,
the diversity of employees, and the five billion-dollar product names. PepsiCo is
a company built on strong values. They define their values through a
commitment statement and live up to it through guiding principles, which are,
sustained growth, empowerment of the people, and truth and candor.
The five billion-dollar products are Pepsi Soft Drinks, Frito-Lay, Gatorade,
Tropicana, and Quaker Oats. PepsiCo currently operates or sells products on six
continents.
Three major marketing strategies that PepsiCo uses is “The Choice of a
New Generation,” “Pepsi Challenge,” and “Drink Pepsi, Get Stuff.” This
positioning Strategy led to major break throws in gaining market share over
Coca-Cola. The sustainable competitive advantage that PepsiCo has is in its
big, muscular brands, strong brand image, innovative products, leaders in
differentiating their products, and powerful go-to-market systems.
PepsiCo uses a multinational strategy offering unique products in different
parts of the world by the way that they alter their promotions to suit the tastes of
consumers in those different countries.
PepsiCo searches for employees that are “Smart. Passionate. Committed.
Creative. Industry experts. Risk-takers. We have world-class people at every
level, in every division, in every country, contributing to our success every day.”
The global markets that Pepsi focuses on are The United States, China
and India, and Eastern European Countries.
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Recommendations include the development of a new Diet Pepsi, with
healthy additives, that will be able to compete with Diet Coke Plus. Continuing to
keep a strong foothold in the US market, while using new marketing campaigns
to increase their sales in the global market. Expanding on the healthy “Smart
Spot” advertising campaign. And finally bring back Pepsi points that uses a
consistent promotional program.
History and Development of PepsiCo
PepsiCo, Inc. is a global beverage and snack company that ranks 63 on
the Fortune 500 List. It is one of the world’s top consumer product companies
and has some of the most important and valuable trademarks. PepsiCo markets,
manufactures, and sells a variety of carbonated and non-carbonated beverages,
as well as salty, sweet, and grain-based snacks.
The company originated in 1893 when pharmacist Caleb Bradham
experimented with a soda fountain in his drug store. He began to make
carbonated drinks with sugar, vanilla, pepsin, and cola nuts. This popular drink
was originally called “Brad’s Drink” but was later changed to Pepsi-Cola after the
pepsin and cola nuts used to produce the drink. After seventeen years of
success, Caleb Bradham lost Pepsi Cola. He had gambled on the fluctuations of
sugar prices during W.W.I, believing that sugar prices would continue to rise but
they fell instead leaving Caleb Bradham with an overpriced sugar inventory.
Pepsi Cola went bankrupt in 1923. Pepsi Cola then merged with Frito Lay in
1965 and became PepsiCo. This merge paved the way for success of PepsiCo.
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Aside from Pepsi-Cola soft drinks, they produce Quaker Oats, Frito-Lay,
SoBe, Gatorade, and Tropicana. The soft drink division (Pepsi-Cola) is the
second largest soft drink business in the world (second to Coca-Cola), with a 21
percent share of the carbonated soft drink market worldwide and 29 percent in
the United States. Pepsi-Cola, Mountain Dew, Dr. Pepper and Diet Pepsi (three
of its brands) are among the top ten soft drinks in the U.S. market. The Frito-Lay
division is the world leader in salty snacks. They hold a 40 percent market share
and a 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 grocery stores, 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.
Overall, PepsiCo earns 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
added the brands of the Quaker Oats Company, which include Gatorade sports
drink, Quaker oatmeal, and Cap'n Crunch, Life, and other cereals.
In 2006, PepsiCo promoted their female CFO to CEO. This made
PepsiCo one of the first companies to have a female CEO and the 12th woman
CEO of all Fortune 500 companies. The odd thing about Indra Nooyi, is that she
is both female and foreign-born. Most companies decide to outsource much of
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their business for cheap labor, but in Pepsi’s case, they hired a foreign born for
their top position. Nooyi took over after previous CEO Steve Reinemund retired
to spend more time with this family.
Mission and Vision
Mission
“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.”
Vision
“PepsiCo’s responsibility is to continually improve all aspects of the world
in which we operate – environment, social, economic – creating a better
tomorrow than today.”
Core Competencies
PepsiCo has several core competencies. One of PepsiCo’s premier
attributes is its “Smart Spot” campaign. In an obesity epidemic which America is
facing right now, healthy convenient foods and beverages are a positive means
to substitute for unhealthy ones. PepsiCo has placed the green Smart Spot
emblem on all of it products that meet specific nutritional guidelines. In a world of
growing concerns with health and wellness PepsiCo has become a front-running
company because of this campaign.
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Another core competency is PepsiCo’s diversity of employees. This is
something that the company as a whole prides themselves on. PepsiCo offers a
working environment where diversity is valued. It aids them in building a top of
the line workforce. This has been proven to be crucial to their success. PepsiCo
attracts and retains great employees from a wide spectrum of backgrounds.
PepsiCo also is committed to marketing all of their brands to groups of various
backgrounds. They produce products that are attractive to a wide range of
international markets.
The third and most important competency is the five billion-dollar brands
that PepsiCo employs. These brands include Pepsi, Frito-Lay, Quaker Oats and
Gatorade. By having these five brands, it allows for PepsiCo’s annual revenue to
increase tremendously. Also, these brands have created an image for PepsiCo.
Core Values
PepsiCo is a company built on strong values. They define their values
through a commitment statement and live up to it through guiding principles. The
commitment statement for PepsiCo is as follows: “Our commitment is to deliver
sustained growth, through empowered people, acting with responsibility and
building trust.” The following will discuss this commitment statement and how
PepsiCo enforces it through their daily activities.
The first part of the commitment statement of PepsiCo deals with
sustained growth. This is defined as a way of motivating individuals and
measuring success. The importance of this factor in PepsiCo’s everyday
activities is that it allows for them to focus on the value of results and determining
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whether the decisions they are making today will benefit them in the future. In
order to allow for this objective to be reached, the company must focus on the
growth of their employees and stress company performance. The second
segment of the commitment statement is the empowerment of people. By
placing value on this, it shows that PepsiCo allows for employees to have
freedom in actions and ideas. As long as they are being mindful of other
individuals in the company and the company’s needs, people at PepsiCo have
the ability to think freely and creatively in order to get the job done.
The last portion of the commitment statement is responsibility and building
trust. These are very important values a company should uphold. PepsiCo
believes that these two factors allow for healthy growth. It is important to allow
people to have confidence in a company, and they also believe that it is their
corporate and personal duty to take responsibility for all actions, regardless if
they are seen as good or bad to individuals. They strive to be committed as a
team and work together, which allows them to build trust within the organization.
Just having a commitment statement is not enough for a company. It is
important to have set goals that will enable them to live up to the values they put
forth. PepsiCo has six guiding principals that allow them to carry out their
commitment. The first principle is to care for the customers, consumers, and the
world we live in. Basically, PepsiCo believes that in a competitive marketplace, it
is important to find ways to beat the competition, but in order to do this they need
to be mindful of both the consumers and the environment. To accomplish this,
they must care about each of those components and understand how to meet
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their needs. The second principle of PepsiCo is to sell products they are proud
of. They only want to put products on the shelves that they are confident in and
most importantly would consume themselves.
A third guiding principle for the company is to speak with truth and candor.
This principle speaks for itself and is self explanatory. Balancing short and long
term is the fourth principle. This allows the company to set aside risks and
benefits that enable them to think of the present and make decisions that will
affect their future. The diversity of their workforce is also a standard they live up
to. They pride themselves in employing individuals from different backgrounds
with different ways of thinking. This allows them to be more innovative and
enforces the value of empowerment of people. Lastly, respecting others and
succeeding together is very important to PepsiCo. They feel that it is extremely
important to be built on the excellence of the individual people and holding each
employee accountable for their actions. Everyone is given equal respect, both
within the organization and outside of it. They also incorporate an enjoyable
atmosphere in their work environment. By following their six guiding principles,
PepsiCo have been successful in achieving their commitment statement and the
values set for the company.
Products Provided by PepsiCo
PepsiCo’s products are divided into five separate companies that are sold
globally. Each of these brand names are owned by PepsiCo. The products sold
are as follows:
Pepsi Soft Drinks
 Pepsi-Cola
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Caffeine Free Pepsi
Diet Pepsi
Caffeine Free Diet Pepsi
Pepsi Twist (regular & diet)
Wild Cherry Pepsi
Pepsi Blue
Pepsi ONE
Pepsi Vanilla
Diet Mountain Dew
Mountain Dew Code Red
Diet Mountain Dew Code Red
Mountain Dew LiveWire
Mountain Dew Blueshock
Mountain Dew AMP energy drink
Mug
Sierra Mist (Regular & Diet)
Slice
Lipton Brisk
Lipton Iced Tea
Dole juices and juice drinks
FruitWorks juice drinks
Aquafina purified drinking water
Frappuccino ready-to-drink coffee
Starbucks DoubleShot
SoBe juice drinks, dairy, and teas
SoBe energy drinks (No Fear and Adrenaline Rush)
Frito Lay
 Lay's potato chips
 Lays Kettle Cooked potato chips
 Wavy Lay's potato chips
 Baked Lay's potato crisps
 Maui Style potato chips
 Ruffles potato chips
 Baked Ruffles potato crisps
 Doritos tortilla chips
 Baked Doritos tortilla chips
 3D's snacks
 Tostitos tortilla chips
 Baked Tostitos tortilla chips
 Fritos corn chips
 Cheetos cheese flavored snacks
 Rold Gold pretzels & snack mix
 Funyuns onion flavored rings
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Sunchips multigrain snacks
Cracker Jack candy coated popcorn
Grandma's cookies
Munchos potato crisps
Smartfood popcorn
Oberto meat snacks
Natural Lays
Natural Ruffles
Natural Cheetos
Natural Tostitos
Munchies snack mix
Gatorade
 Gatorade Thirst Quencher
 Gatorade Frost Thirst Quencher
 Gatorade Ice Thirst Quencher
 Gatorade Xtremo Thirst Quencher
 Gatorade X-Factor Thirst Quencher
 Gatorade Fierce Thirst Quencher
 Propel Fitness Water
Tropicana
 Tropicana Pure Premium juices
 Tropicana Twister juice drinks
 Tropicana Smoothies
 Tropicana Pure Tropics juices
 Dole juices (License)
 Tropicana 100 juices
 Naked Juice
Quaker Oats
 Quaker Oatmeal
 Quaker Instant Oatmeal
 Quaker Oatmeal Breakfast Squares
 Cap'n Crunch cereal
 Life cereal
 Quaker 100% Natural cereal
 Quaker Squares cereal
 Quaker grits
 Aunt Jemima mixes & syrups
 Quaker rice cakes
 Quaker Chewy granola bars
 Rice-A-Roni side dishes
 Pasta Roni side dishes
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Quaker Baking Mixes
Quaker Fruit & Oatmeal bars
Quaker Fruit & Oatmeal Bites
Locations
PepsiCo currently has operations in many countries across the globe. All
products are manufactured and distributed by PepsiCo, their partners, and their
franchised bottlers. The following countries have products of PepsiCo present in
their marketplace:
US & Canada
United States, Canada, and Puerto Rico
Latin America
Argentina, Uruguay, Brazil, Venezuela, Mexico, and Latin America
Europe & Northern Asia
Austria, Belgium, Czech Republic, Italy, Latvia, Netherlands, Norway, Poland,
Slovak Republic, Spain, Sweden, and United Kingdom
Middle East
Saudi Arabia
Asia
China, Japan, and India
Australia & Asia Pacific
Australia
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Positioning
PepsiCo and Coca-Cola have been competing with each other for years
over the market share of the soft drink industry. Pepsi ads often focused on
regular people, particularly to teenagers and young adults. They have tailored
their marketing to encourage consumers to choose Pepsi over Coke. Pepsi has
implemented a positioning strategy of "The Choice of a New Generation." Pepsi
began showing people that Pepsi is better than Coke by doing blind taste tests
called the “Pepsi Challenge”. This strategy encouraged consumers to prefer one
product over the other, and then they began hiring more and more popular
spokespersons (such as Britney Spears) to promote their products.
Another positioning strategy that Pepsi has used is "Drink Pepsi, Get
Stuff" and collect Pepsi Points on billions of packages and cups. Consumers
could redeem the points for free Pepsi merchandise. After researching and
testing the program, Pepsi launched Pepsi Stuff, which was an instant success.
Tens of millions of consumers participated and Pepsi outperformed Coke during
the summer of the 1996 Atlanta Olympic Games. This was a breakthrough for
Pepsi considering Coke was a lead sponsor of the Games.
Product Strategy
PepsiCo is a strong competitor in the industries it has products on the
market. There are three factors that allow the company to compete fiercely and
stay ahead of most of the competition. PepsiCo has identified these following
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three areas as sustainable advantages for them, and the places where they
continue to excel in regards to the competition.
First of all, the company has big, muscular brands. Not only does Pepsi
sell their line of Pepsi beverage products, they also have four other companies
that have been acquired over the years. They have grown to build a strong
brand image and brand name for themselves, which have allowed the company
to create strong brands. Secondly, PepsiCo has proven to be leaders in
differentiating their products and constantly innovating and creating new ones.
This keeps them on top of the competition and encourages them to continually
find new ways to meet consumer needs. Lastly, the company has powerful goto-market systems. They have built strong relationships with investors and
suppliers and this allows them to have many ways to enter into markets. By
priding themselves on the relationships they uphold with these individuals and
their employees, it enables them to succeed and remain strong competitors.
PepsiCo has developed these three areas as their advantages over the
competition. Even though they are identified, they must constantly be worked
towards or they will lose that edge over other companies. New products must
continually be introduced into the market, other opportunities for acquisitions
should always be considered and opportunities and risks should be weighed, and
maintaining the relationships they have built with their suppliers and investors will
continue to allow them easy access to the market and introduction of new
products.
PepsiCo’s Market Strategy
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The market strategy that PepsiCo uses to address the global market is the
multi-domestic, or “multinational” strategy. This strategy is in place in companies
that utilize foreign direct investment (the location of factors of production in
different parts of the world), in PepsiCo’s case the setting up of subsidiaries in
other countries such as India and Mexico. These multinational companies
typically have FDI only in a limited number of countries, and they do not attempt
to completely homogenize their product offering throughout the countries they
operate in — instead these firms, like PepsiCo, focus much more on being
responsive to local preferences than a global company would (Hines). Today,
PepsiCo beverages are available in more than 200 countries around the world
with brands that include the likes of Aquafina, Gatorade and Tropicana
(pepsico.com). PepsiCo’s foreign direct investment is present in many parts of
the world, most notably India, China, and Mexico. Interestingly enough, PepsiCo
entered the Indian market through a joint venture with the government-owned
Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint
venture produced beverages under the name Lehar Pepsi up until 1991. In 1994,
PepsiCo bought out its partners and became a wholly owned subsidiary of
PepsiCo (bhavakuta.com). Since then the company has expanded its product
offerings and reverted back to the original name.
Most of the brands that PepsiCo offers in North America are offered
around the world with little or no change in form. What makes PepsiCo a true
multinational strategy user is their unique offerings in different parts of the world
and the way that they alter their promotions to suit the tastes of consumers in
15
different countries. The cultural differences from country to country and
differences in taste preferences are the main driving forces behind the reason
why they need to alter their advertising strategies in different parts of the world. A
good example of this is celebrity and sports advertisements. In America, Pepsi
can get away with focusing on American sports (i.e. football and baseball) and
celebrities such as Britney Spears and Beyoncé, but these tactics will not work in
other parts of the world such as Pepsi India, where the focus is squarely on
Indian celebrities and sports such as soccer and cricket. Here PepsiCo will
sponsor Indian sporting events and run advertisements featuring popular Indian
celebrities in order to appeal to the cultural differences of the Indian consumer
base. The same can be said of PepsiCo in other parts of the world such as
China, where for the 2008 Summer Olympics in Beijing, they will produce their
products in red containers to capitalize on the Chinese spirit for their Olympic
team (Chao and McKay).
As for their offerings in other parts of the world, PepsiCo International
brands include Mirinda, Seven-Up and many other local brands that would not
likely sell very well in the United States (pepsico.com). Further reinforcing their
multinational strategy, these products are typically produced in manufacturing
and bottling plants that are in or near the countries in which they are sold, hence
the reason why most American consumers are unaware that they are offered.
PepsiCo also offers unique snack food lines in various parts of the country. Often
these PepsiCo snack food products are known only by their local names.
Examples include Mexico’s Gamesa and Sabritas, Walkers of the United
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Kingdom, Simths from Australia, Matutano in Spain, Brazil’s Elma Chips, and
others. The company also markets their Frito-Lay products on a global scale, and
introduces unique products for local tastes where they are desired, such as
different flavors of their popular Lay’s brand of potato chips (pepsico.com).
Sustainable Competitive Advantage at PepsiCo
PepsiCo’s sustainable competitive advantages are based on a three
interrelated factors with their people (workers) at the middle of every decision, as
detailed by the following graphic:
*source: http://www.pepsico.com/PEP_Company/
SustainedAdvantage/index.cfm
First are PepsiCo’s “big, muscular brands” that generate sales at the retail
level of about $92 billion (pepsico.com). Aside from Pepsi-Cola soft drinks, they
produce Quaker Oats, Frito-Lay, SoBe, Gatorade, and Tropicana, and myriad
brands under those umbrellas as well as strategic partnerships with other food
and beverage makers such as Lipton Tea and Starbucks. The company has five
different brands that generate revenues in the billions of dollars, those being
Pepsi, Tropicana, Frito-Lay, Quaker, and Gatorade. Many of these brands have
17
been developed in house, but Pepsi has also taken advantages of acquistions
and mergers in the past resulting in some of their most succesful brands such as
Quaker and Gatorade.
Their strategy can be seen as a very intensive use of variety based
positioning, where they produce a large subset of products from a variety of
industry subsets. This has many advantages, the first of which being the fact that
the sheer number of brands that PepsiCo offers makes it possible to cover losses
in one product or area with other products and product lines. Next, the brand
recognition and loyalty that each of PepsiCo’s brand enjoys makes it very easy to
implement line and brand extensions which customers can identify with. This
makes the new product process easier for PepsiCo. Finally, it gives them access
to a wide variety of markets by which to communicate with consumers. Some
consumers do not like soda pop but love potato chips, others may like Lipton Tea
but not like Quaker Oats. By virtue of this, it can easilay be seen that PepsiCo as
a company has a relationship with a huge range of the consumer populations in
many parts of the world, which no doubt helps with marketing research efforts
and staying on top of demographic and psychographic trends as they emerge
and change. That being said, one large downside does exist because of this.
This large number of brands necessiates very stong brand management
strategies across a wide variety of product offerings. PepsiCo must be sure to
maintain qualified employees to handle each subset of products it offers in order
to stay competitive and avoid potential catastrophes that could damage the
PepsiCo image as a whole as well as any particular brand.
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Next is PepsiCo’s Proven ability to innovate and create differentiated
products. The company is constantly developing and testing new products in
every area of its operations from snack foods to soft drinks to Quaker Oatmeal.
Innovativeness is perhaps easier at Pepsi because, as was mentioned earlier, a
new product could easily fall under the brand identity of one of their alreadyestablished and successful brands, giving them instant brand awareness and
recognition. Pepsi has proven, however, that they need not rely on established
brands, a recent example being the runaway success of the Sun Chips brand of
multigrain snacks. Dollars from their top-line growth and sales are consistently
and strategically reinvested back into research and development to produce new
products, cost-savings initiatives, and other innovations like the Sun Chips brand
(pepsico.com). Further evidence of their innovativeness is the new-found use of
their “Smart Spot” campaign designed to grab the attention of consumers who
are becoming increasingly concerned with the healthiness of their food choices.
PepsiCo has placed the green Smart Spot emblem on all of it products that meet
specific nutritional guidelines. This campaign has helped PepsiCo to become a
front-runner in a world with growing concern for health and wellness and the
problems associated with obesity.
Finally we have PepsiCo’s powerful go-to-market systems. PepsiCo relies
on an intensive distribution strategy that results in consumers being able to find
PepsiCo products at nearly every retailer, supermarket, and gas station in the
United States. Operations in other countries are quickly becoming as efficient as
those in the U.S.A., and this success is all thanks to a top-of-the-line logistics and
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transportation system coupled with up to date product stock level information
made possible by computerized product tracking information. To move product
and increase awareness PepsiCo uses its always-interesting advertising, which
often features prominent celebrities such as Britney Spears and Beyoncé
Knowles to endorse their many brands and quirky gimmicks like Pepsiman, a
Japanese Pepsi mascot known for his wild antics and creative clothing. PepsiCo
has always been known to spare no expense when it comes to advertising their
products, often being a highlight of the Super Bowl with flashy hip ads that
appeal to all ages and income levels. Equally impressive detail is placed on
advertisements in other countries, such as employing “Bollywood” stars to
endorse Pepsi in India.
Each of the aforementioned competitive advantages are all tied together
by PepsiCo’s “extraordinarily talented and dedicated people” as seen in the
middle of the diagram shown above (pepsico.com). PepsiCo prides itself on its
people and their diversity, and has received a 100% rating on the Human Rights
Campaign’s Corporate Equality Index multiple times (hrc.org). It was also the first
company to have a female member, Joan Crawford, actively contribute on a
board of directors.
Corporate Organization
Corporation reorganized as stated in a Press Release issued 11/5/07.
1. PepsiCo Americas Foods
a. Frito-Lay North America
b. Quaker
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c. Sabritas
d. Gamesa
e. Latin America Region Food & Snacks
2. PepsiCo Americas Beverages
a. PCNA
b. Gatorade
c. Tropicana
d. Latin America Beverages
3. PepsiCo International
a. PepsiCo Asia
b. PepsiCo Europe
c. PepsiCo Middle East & Africa
d. PepsiCo United Kingdom
PEPSICO
Indra
Nooyi,
Chairman
CEO
Frito-Lay
North
America
Quaker
PepsiCo
Americas
Foods
PepsiCo
Americas
Beverages
John
Compton,
CEO
Massimo
d’Amore,
CEO
Sabritas
Gamesa
Latin
America
Region
Food &
Snacks
PCNA
Gatorade
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Tropicana
PepsiCo
Internatio
nal
Mike
White,
CEO
Latin
America
Beverage
s
PepsiCo
Asia
PepsiCo
Europe
PepsiCo
Middle
East &
Africa
PepsiCo
United
Kingdom
Leadership Schema To Develop Human Resources
The company promotes teamwork in all of their employees and potential
employees through the statement, Taste the Success! “This theme captures the
excitement of being part of a dynamic, results-oriented company, with powerful
brands and world-class people.”
PepsiCo is looking for “quality people” that they define as: “Smart.
Passionate. Committed. Creative. Industry experts. Risk-takers. We have worldclass people at every level, in every division, in every country, contributing to our
success every day.”
PepsiCo is also hitting very hard on the idea of a diverse and innovative
workforce, especially in light of their reorganization earlier this month. The
corporation also has made a distinct effort to promote from within. By keeping the
employees loyal to the corporation and teamwork as described by CEO, Indra
Nooyi, PepsiCo has effectively instituted a philosophy for employees that
supports their overall organizational structure.
Political and Economic Risks
Political Risks:
Recently North American and European governments have taken notice of
the obesity problems, especially within children, and are making more strict
regulations for food and beverage providers. This is of course a price concern
within PepsiCo.
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Controversy within India regarding sweeteners and carcinogenic
substances has greatly discouraged the massive market within India to shy away
from sodas, a large portion of PepsiCo’s market.
Economic Risks:
Instability within OPEC including the War on Terror has greatly affected
fuel prices across the globe. This has made both transportation and commodity
prices greatly increase.
Currency fluctuations globally including the weakness of the US Dollar is
greatly affecting trade across borders.
Global Markets
Pepsi Co has three major global markets that it needs to focus on, The
United States, China and India, and Eastern European Countries.
Pepsi has always had a very strong foothold in the United States. They
need to continue this hold by continuing to promote Pepsi to teenagers and
college-aged students.
China and India each have the potential of over one billion customers.
These two countries give the perfect place for Pepsi to gain market share over
Coca-Cola. Coca-Cola having major global market share is a serious problem
for PepsiCo. China and India have such a large market that gaining market
share can ease the problems Pepsi has with not having enough market share.
The third market that Pepsi needs to focus on is Eastern European
Countries. Pepsi has recently acquired “Sandora”, a leading juice company in
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Ukraine. By being able to connect brand names with Sandora Pepsi will be able
to use a health-conscience marketing program.
Recommendations
Pepsi is a Global corporation but it has problems like any company has
taking their product into a global market. Pepsi concentrates a great deal on the
US market, and they should because this is where a majority of their products
are sold. Although they are a global company and they have to concentrate on
their global market. They are getting beat right now by Coke in the world market.
This is because of problems they have had in different markets abroad. For
example India has had allegations against Pepsi regarding their high pesticide
levels in their soft drinks. Their sales dropped close to 20% in India when these
findings came out. Certain states in India have actually banned the sale of Pepsi
and Coke because of the pesticide levels in the drinks. This is a major problem
Pepsi needs to deal with. They need to get people over there to find out the
source of the problem and get rid of it. Then when the problem has been solved
they must have a press release or a PR campaign to ease everyone’s suspicion
of Pepsi. India is a huge emerging market with more than one billion citizens to
tap into. This should be at the top of their list to solve. While India’s sales drop
China’s sales continue to increase. This may be due to the fact that Pepsi is
concentrating to much on the Chinese market and neglecting the Indian. They
need to multitask and give each of these countries their focus to be successful
and outperform Coca-Cola.
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Another way to tap into the global market more is to revamp a large TV
advertising campaign using local stars and celebrities in the areas of interest.
For example using David Beckham for European soccer. There is an old
commercial on You-Tube that has Beckham in it but they need to use it as a
campaign. Marketing campaigns only work with consistency. If they take a
celebrity from a country and they have him or her staring in commercials, this
catches the eye of the audience even if they are not yet loyal to the Pepsi brand.
If they see John Terry, a soccer star from England, in Europe this might be a little
easier to convince someone to buy Pepsi rather than Britney Spears parading
around the stage half naked. These commercials should be frequent but not to
frequent that it becomes annoying. It could possibly involve a few stars from the
English Soccer leagues so it would appeal to people all over England and
Europe. The celebrities that Pepsi needs to endorse in the United States are
those who have a health conscience lifestyle and media portrayal. This will help
the obesity problem that Pepsi is facing with its unhealthy drink product.
One of the largest recommendations that we have for Pepsi is to develop
a product that is through their Diet Pepsi line to counter act the new product that
just came out by Coke called Diet Coke Plus. It is a diet cola with vitamins added
to the drink to make it healthier to drink than regular Diet Coke. There is a large
following for Diet Pepsi because it is one of the few Diet drinks that actually taste
good cold. They should use this following to their advantage. There is nothing
better than a drink that tastes good that you have been drinking for a long time
and actually get some benefit out of it through some type of vitamin inside the
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product. This is a large break through especially with the health craze that is
moving across this country. This product would sell well and it would be at the
same price point of the current Diet Pepsi. I think they should pick a target
market that is a located where they sell a lot of Diet Pepsi product. This
marketing research can show them how successful their product will be. After
they take this product and test it. Then they can counter the Diet Coke Plus in
stores everywhere. This is a second mover action which is sometimes bad and
sometimes good on Pepsi’s part. I think it is a good move because they can see
how popular Diet Coke Plus does before they actually come out with a similar
product.
Another recommendation that seems to be a very important one is to
expand their Healthy Smart Spot program. This program is designed to help
make people healthier. They mark certain products with the Healthy Smart Spot
Logo;.
They only put this logo on products that meet certain guidelines for example; on
their beverages that have no more than three grams of fat, no more than one
gram of saturated fat, and zero trans fat. That is just some of the guidelines.
They put this on their beverages, foods, and snack products. This is a great idea
for Pepsi but not that many people know about this large campaign. They need
to let more people know. They need to advertise more. Advertisements could
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come from television, actual promotions on the bottle directing to the
smartspot.com website, or even have the ads in magazines. They really need to
get this message out there. This can go hand and hand with the vitamin additive
to the diet soft drinks. By increasing their marketing for this program and
campaign they have designed it will drive up sales of certain products that do not
sell as well because some people think they are not healthy to eat until they see
the smart choice label it might change their mind.
Our last recommendation is to bring back a more consistent rewards
program. Each season they have a new rewards program on their bottles and
products. If they bring back a promotional program like Pepsi Points they will
have a consistent program that people will actually take advantage of instead of
not knowing what the new promotion is. A lot of people do not go online and type
in the codes under the cap. It should say 1 point. Or could even be the buy one
get one free campaign. They need to have consistency in their programs, this
could also make people want to buy their product in larger quantity.
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2007
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<http://online.wsj.com/public/article/SB118953841749624079.html>.
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"What Makes Smart Spot So Smart." Smartspot.Com. 30 November 2007
<http://www.smartspot.com/about/criteria/#beverages>.
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