Wajeeha Shoaib

Subject: Service Marketing PepsiCo. International Submitted By Ibrahim Mushtaq Supervised By Dr. Ali Raza Janjua 1 1 Table of Contents Executive Summary............................................................................................................................... 3 Introduction: ......................................................................................................................................... 4 1. Marketing Audit. ........................................................................................................................... 6 1.1 Situational Analysis: .............................................................................................................. 6 1.2 Target Audience ...................................................................................................................10 1.3 Market Needs: ......................................................................................................................11 1.4 SWOT Analysis: ...................................................................................................................12 1.5 Ansoff Matrix .......................................................................................................................14 1.6 BCG Matrix..........................................................................................................................14 1.7 McKinsey 7Ss Review ..........................................................................................................17 1.8 STP (Segmentation, Targeting, and Positioning) ................................................................19 1.9 Competitive Analysis: ..........................................................................................................20 1.10 Marketing Mix Review.........................................................................................................22 1.11 Microenvironment................................................................................................................28 1.11.1 How PepsiCo, Inc. can tackle the Treat of Substitute Products / Services: ................29 1.11.2 How PepsiCo, Inc. can tackle Intense Rivalry among the Existing Competitors? .....30 1.12 2 Macro Environment .............................................................................................................31 Marketing Analysis ......................................................................................................................34 2.1 Industry development and outlook ......................................................................................34 2.2 Target Market ......................................................................................................................36 2.3 Competitive Analysis............................................................................................................38 2.3.1 Direct Competitors: ......................................................................................................38 2.3.2 Indirect Competitors ....................................................................................................38 2.4 Projections ............................................................................................................................40 2.5 Regulations ...........................................................................................................................40 Appendix..............................................................................................................................................41 Bibliography ........................................................................................................................................46 2 Executive Summary The basic purpose of this project is to conduct a Marketing Audit, and a Marketing Analysis on a world-renowned brand, PepsiCo. Intl. This project will consist of a detailed marketing audit, consisting of the different aspects of a market, an insight into the different market trends, size and growth of the market. The target audience of Pepsi, along with looking at what is the market needs and wants. And this project will tell is Pepsi has placed itself on the right needs and wants of consumers. The strengths, weaknesses, opportunities, and threats of PepsiCo will be highlighted in this project, as they will give a more defined insight. The detail of the different matrixes, along with the 7Ss McKinsey Review, the STP, PepsiCo’s competitors, the marketing mix, and the micro and the macro environment of Pepsi. Moreover, the marketing Analysis is the next step in this project which would include the industry and development outlook of PepsiCo. Also, a detailed outlook into the target market analysis, the competitive analysis, the projections, and the regulations of PepsiCo. 3 Introduction: The underlying foundations of PepsiCo Beverages North America (PBNA) return to 1898, when Caleb Bradham, a business visionary from New Bern, North Carolina made Pepsi-Cola and started offering it to his drug store clients. Pepsi is a carbonated soft drink beverage introduced and manufactured under the name of PepsiCo. It was created and developed initially as a for medical purpose, known as, “Brad’s Drink”. Which later was named as “Pepsi Cola” on June 16th, 1903, and then later to Pepsi in 1961. PepsiCo things are valued by clients more than one billion times every day more than 200 countries and areas around the world. PepsiCo made more than $67 billion in total compensation in 2019, driven by a comparing food and drink portfolio that consolidates Frito-Lay, Gatorade, Pepsi-Cola, Quaker, and Tropicana. PepsiCo's thing portfolio fuses a wide extent of beguiling sustenance and rewards, including 23 brands that produce more than $1 billion each in surveyed yearly retail bargains. Pepsi Cola is one of the largest soft drink beverage industry which operates globally. The brand has many sub brands under its name, which function in many different product lines. For instance, Pepsi has brands operating in health brands like Quaker, and juices like Tropicana etc. the different cola drinks that PepsiCo offers is Pepsi Light, Pepsi max, 7UP, Diet 7UP, Caffeine Free Pepsi Light, and Mountain Dew. It has placed itself as a world leader in convenient snacks, food, and beverage industry with revenues of more than $60 Billion, and over 285 employees. 4 PepsiCo has a very known rivalry with coke, which is known around the world and will be mentioned in detail later in this project. (About PepsiCO, 2020) 5 1. Marketing Audit. 1.1 Situational Analysis: Market Trends: Technological Trends: The realization of any company in this era, when they finally come to realize that using Artificial intelligence, that is AI, has become a need of any and every business. It can no longer be taken as a competitive advantage since it is a need now. And that need is identified by PepsiCo. Delivering: PepsiCo has incorporated artificial intelligence and machine learning very smartly throughout their organization. Starting with robots to machine learning, PepsiCo has managed to stand out and look different in many ways. PepsiCo has made itself successful in developing a “Snack Robot”, a mobile vending machine having six wheels, strolling across campuses delivering goods. Students can just order any good from the associated app “Snackbot”, and have the robot deliver them the respective goods, without any delivery charges. Manufacturing: Secondly, on the list is manufacturing with the help of robots. Frito lay, a very well-known brand and subsidiary of PepsiCo has its own manufacturing plant. And that plant is benefitting from machine learning. How dies it work? One segment of this is when the laser hits the chips, and the sound which comes off, that determines the texture of the chips. When doing this, the algorithms will then process the sound coming off, and by doing that it determines the texture of the chips, which then automates the quality check for Frito lay’s processing systems. This makes it a lot easier for them to actually know how well the product is without any human intervention. And has done wonders when it comes to saving money. This solely leads to an immense amount of savings for the company, as the manual work is not done anymore, and everything is automated. The other segment of this department is when another project assesses the “Percent peel” of a potato once the potato goes through the entire peeling process. Once this data is understood, it helps the researchers and the staff at Frito lay to enhance their potato peeling system, along with other systems. The net worth savings that this project alone gives to the company is around $1 Million every year, in only US. Recruitment: Next on the line is, since they have already made use of artificial intelligence in the context of delivering and manufacturing, then PepsiCo tried its luck in recruitment as well. By using the robot “Vera”. PepsiCo when used this robot for the first time, to call and interview candidates to 6 hire them for open positions in sales. Vera could interview, a total of 1500 candidates within a time frame of 9 hours, while it will take humans to interview the same number of candidates in a time frame of 9 weeks. Moreover, other features like speech recognition software and other tools helps Vera to conduct calls and also screen the candidates for other positions. Furthermore, the software allows them to scan CVs, and can also determine if a specific candidate has the right potential and is the best for the job. This entire concept of having a robot to do all this, in itself is an innovation which seems unbelievable. But, so far, all the responses which have come through are positive, and show promising features in the coming years too. The only hurdle faced right now, is the fact that humans are still not accepting the fact that a robot might be capable to do all that mentioned above. New Products: PepsiCo as a brand believes in key innovation and believes in performance with purpose and that is the idea behind their every new product formation. PepsiCo centers around reasonable, long haul development while leaving a positive engraving on society and the earth. The fact that PepsiCo already has many globally recognized brands under its name, is not of surprise. Brands like Lays, Lipton, Cheetos, Mount and Dew, Tropicana, etc. Every new product formation has an agenda behind which leads to the formation of that product. For instance: • Guilt free products: as the name states, products which would consist of low sodium and saturated fat targeting a more diet conscious or healthy-eating audience. The agenda behind is to reshape its products, or develop new products, to profit by purchaser's expanding enthusiasm for wellbeing and health. This itself makes practically 45% of PepsiCo's portfolio by income. 7 • PepsiCo always comes off as a beverage company, of carbonated drinks like Pepsi, Mount and dew, etc. but what we don’t know is that PepsiCo has broadened their beverage portfolio to decrease their reliance on colas, and is now the leading uncarbonated beverage portfolio in the United States. Below are the few products of their uncarbonated beverage portfolio. • PepsiCo has endowed in Research and Development, in order to manufacture sweet solutions and products of low calorie, where their main focus is to produce products where the calorie intake will be low. They have managed to increase their nutritional profile, where they have successfully produced a variety of products like smart food delights, showing amazing reviews; reduced fat Doritos, showing great sales; and gluten free Quaker Oats, and many more. 8 Market Segments: What is market segmentation? Market division is characterized as the way toward isolating a whole market of expected clients into specific gatherings, or small segments, depending on the different categories that they fall in. The segments that they have created are based on similar interests, locations, and needs. Market Segmentation of PepsiCo. Intel PepsiCo has segmented itself quite smartly, through the best possible ways to segment a market. PepsiCo has managed to divide heterogeneous, and enormous markets into small segments. The advantage of this would be that thee segments can reach a larger audience, and that too at a faster pace, plus with more efficiency. PepsiCo has produced many unique products to match the extra ordinary needs of its customers. And can be available for everyone, leading to an increase in revenue. Below is the market segmentation that Pepsi has used: • • Geographic Segmentation: Pepsi has used geographic segmentation to a great extent, as they have located themselves around the world, in different geographical units, such as nations, regions, areas etc. They have done enough research, to make themselves available in areas where there can be a need. For instance, hot climate areas, or urban areas. Demographic Segmentation: Pepsi uses demographic segmentation, to market their product into different categories like age, gender, education. According to the market research that they have done so far, they consider their main focus to be the young population. They have concluded the fact that Pepsi is consumed by people, from the age 9 • • of 5 to 45. People elder than 45, do not wish to consume this cola, because of high sugar levels or other health problems. Regardless of the gender, targets both young males and females. Pepsi tends to locate themselves in areas where they can find more youngsters, for e.g. “School, films, cafés, inns, where the quality of youngsters is more noteworthy. The organization additionally centers towards understudies of universities and schools.” Psychographic Segmentation: The Company has successfully segmented itself according to the different lifestyles, social classes, and personalities that exist. The different classes that they have targeted so far, is the working class, upper class, and middle class. Not just that, they have targeted different personalities too, as mentioned above and produced the beverage ‘Mount and Dew’ for adventurous personalities of youngsters. Moreover, they follow social trends as well, for example the trend of being ‘health conscious’, and introducing products like ‘diet Pepsi’ etc. Behavioral Segmentation: This particular segmentation divides the customers into different groups, based on their responses, attitudes, and knowledge of the product. Some customers here become regular users, and show intensive brand loyalty, where some are light users and just buy the product occasionally. Pepsi looks into this branch thoroughly and finds ways to deliver their product on special occasions, like religious festivals, or weddings, and even birthday parties. This way they market themselves into functions, and reach a larger audience, and find new users who might become loyal customers later. Market share of PepsiCo. Intel. According to a report published on Statista, says that PepsiCo’s United States market share was said to be 24.9% back in 2018. Moreover, PepsiCo managed to establish itself as the second best high ranked popular soft drink company in the US with a net revenue of 21.07 billion dollars. Not just this, in 2020 PepsiCo has a market share cap of $188.6 billion, whereas Coca Cola has a market cap of $185.8 billion, corresponding to a recent report published on Investopedia. PepsiCo stands as the second biggest carbonated beverage industry, after Coca-Cola. (Bedford, 2020) 1.2 Target Audience • PepsiCo’s current customers: PepsiCo has a number of customer segments where, its primary customers consists of wholesale distributors, foodservice customers, different drug stores, grocery stores, mass merchandisers, and many authorized independent bottlers. Pepsi is not interested in selling directly to their customers, instead they depend on and supply financial inducement to their respective clients to help in the conveyance and advancement of their items. 10 • For instance, they use the means of direct marketing, to market their product, like using KFC and McDonalds. (Sherry, 2019) Target buyers, end users: Targeting is basically known as choosing the particular groups recognized as a result of how the segmentation is done and how the products are being sold. PepsiCo has a vast target audience, of different age groups, but their moto remains targeting young people. The fundamental objective gathering of PepsiCo for its cola drink line are individuals who fall in the age gathering of 13-34, or some studies say 18 to 35 years old’s. Pepsi has many ways of marketing, and its unusual form of marketing like social media, or any other means. It is always an effort to improve and work on the brand loyalty of the youth target market, which they emphasize on strongly, to get a better feedback from the youth. Pepsi also manufactures products that aim for various cultural and regional aspects of a particular country. It creates ads specifically keeping in mind the different cultures, and the festivities of countries where the ads would be aired. It even has products, like 7UP India invented Nimbooz, which is a bestselling product there because of its popularity in that region and their emphasize on lemon drinks. And not just that, adding diet coke or any diet conscious product to your country means, targeting a specific audience. (Johnson, 2016) 1.3 Market Needs: • • • • • Current client’s need can be defined as to what a consumer’s desire is for any specific service or a product, and a client’s want can be defined as a desire for a product or a service which may not be necessary. The four basic needs of a market are: Price, Quality, Choice, and convenience. A customer when buying any product looks for these 4 qualities in that product, and if these qualities fulfill the requirements, then only does the customer actually buy that product. (Customer Needs, n.d.) The five basic wants of a customer, when buying a product: Identification of a Need Searching and processing of Information. Identifying and evaluating the alternatives The final purchase decision Post-Purchase Decision or feedback. (James, 2018) 11 Pepsi has very well taken care of its customer’s needs and wants, and successfully places itself on the utmost quality fulfilling needs and wants. Moreover, according to the market needs and wants, Pepsi has emerged with different brands, emerging with new solutions, all under one roof. Therefore, when it comes under the market needs, Pepsi is doing its best. 1.4 SWOT Analysis: SWOT Analysis help us see the external opportunities, and threats of the company along with internal strengths, and weaknesses. Looking at the SWOT Analysis is a very good way to get an insight into the company and know more about it. Let us look into the SWOT of PepsiCo: • Strengths: ▪ ▪ ▪ ▪ ▪ ▪ Brand Equity: is defined as what that brand is around the world. PepsiCo has managed to position itself as one of the most prominent, recognized, notable and one of the most famous brands globally. Moreover, whenever the food and beverage sector are talked about Pepsi as a brand is always mentioned. Pepsi is also recognized as the brand of youth and has a very high ranked brand appreciation as well as status. According to Forbes, PepsiCo has a brand value of around 19.4 billion dollars and a ranked at 29. Product portfolio performance: As we all know, the world is getting more health conscious day by day, and people are choosing a healthier life style, and changing their daily routines accordingly. PepsiCo has successfully set its mark in not only the Cola industry, but also healthier option like juices. Therefore, it gives a wider range to customers to choose from because of its product portfolio. Customer Loyalty: PepsiCo has managed to have an exceptionally loyal customer audience in every segment. When we talk about only the beverage category, we would say that all the drinks that fall under PepsiCo company is that each soft drink that Pepsi represents has its own iconic taste. This is one reason their brand loyalty is very strong, and their customers do not wish to have alternative brands. Moreover, their other products have also taken up their own place in the market. Strong distribution: PepsiCo is present globally with over 200 countries, due to which their distribution network has become very vast. Supply Chain: A good supply chain network means, supplying their products worldwide, and that is something that PepsiCo is best at and therefore they have supplied their products throughout markets. Tie-Ups: As mentioned earlier, PepsiCo believes in taking up opportunities like concerts, weddings, sport events to stay in the limelight. Moreover, 12 they do sponsorships for sports events, standing with for what the brand is known for, youth; so, they send out a strong message out. • • • Weaknesses: ▪ Competitors: PepsiCo has their biggest competitor as Coca Cola, and they are always neck to neck n competition, due to which it results in a weak customer base, and they tend to switch brands quickly. ▪ Health Conscious Audience: Since Pepsi is known for its cola, it still takes time for people to perceive the healthy products that it has made. ▪ Product Dependence: PepsiCo has set a bar, no doubt. However, that imprint is just present in the food and drink industry, and they have not expended themselves to other product segments. ▪ Value addition: PepsiCo has their advertisements focusing on youngsters, and do not have any good moral attached to their advertisements, unlike Coca Cola. They should add more value to their ads. Opportunities: ▪ Diversification: PepsiCo as a brand should move, and test different market segments, as they might be able to stand out somewhere. ▪ CSR: PepsiCo should involve itself into more CSR activities, just to balance or overpower the negative remarks given by the society. ▪ R&D: Recently PepsiCo has been changing their products, by doing the necessary research and development. They freshly introduced a product that can be used in 7UP as a substitute of sugar. That product is called Stevia. By focusing more on the diet drinks category, a lot of other opportunities can be taken up. ▪ Flavors: Pepsi does not have much varieties of flavors, it is just the basic coke that they have as their basic product. Bringing in innovation into their Cola products is also a very good way of setting a mark in the market. Bringing in different flavors like watermelon or peach even in beverage form which can help Pepsi to attract a larger audience. Threats: ▪ Competitors: “The Coca-Cola Company, DPSG, Mondelēz International, Monster Beverage Corporation, Hansen Natural Corporation, National Beverage Corp, Kraft Foods Group, The Kellogg Company, ConAgra Foods, Nestlé S.A., Snyder’s-Lance”, and other beverage, food and snack companies, all these are major threats, ad all these brands are very well known. ▪ Health conscious: The people with healthy lifestyles tend to leave this brand, as they feel the brand might take a toll on their health. This effect has been depicted by the fall in the soft drink sales. 13 ▪ Government Norms: Every country has different norms and companies are told to follow those norms, which might be difficult to follow, but are to be followed. (Bhasin, SWOT Analysis of Pepsi – PepsiCo SWOT analysis, 2019) 1.5 Ansoff Matrix • • • • Market Penetration: ▪ Pepsi should be sold in current market. ▪ Create more local flavor in the regional market. ▪ Brand endorsement by a famous, international celeb. ▪ Bring in more flavors, innovative products. Product Development: ▪ PepsiCo has developed new products, like natural juices. Also partnered with “Starbucks, and Unilever Lipton” to introduce new types of coffee and tea. ▪ “Isotonic Drinks” and “Mineral water”. Market Development: ▪ Introducing existing products of the company into new markets. ▪ PepsiCo has managed to expand their business according to the different areas, or regions. For instance, they have labels named Pepsi Euro, Pepsi Africa, Pepsi Middle East etc. ▪ Market Development has helped Pepsi Co to have a significant presence worldwide. Market Diversification: ▪ PepsiCo was initially known as only a beverage industry, but later it started operating in food, and snack industry. ▪ Initially they only targeted a certain audience, but with this diversification strategy, PepsiCo has managed to target almost all sort of audiences. ▪ They have introduced names like, Tropicana, Frito-Lay, and Quaker Oats, etc. (Khasi, 2020) 1.6 BCG Matrix • Stars: Any products or any business unit that is giving the company a high revenue and has a very high rank of the global industry in a high expansion industry, are known to be the STARS of that association. PepsiCo’s Stars according to many researches are: 14 ▪ • • Pepsi: Although Pepsi’s share has been reduced to 8.4%, but still Pepsi has managed to remain the STAR of it brand. ▪ Aquafina: It is known to be the best-selling mineral water brand, due to the quality water. ▪ Tropicana: As the world becomes more health conscious over the years, and people move towards healthier drinks. PepsiCo is planning to multiply its business by two by the end of 2020. ▪ Gatorade: Has been the best for Pepsi in sports drink showcase with a mammoth 77% offer. As people tend to move towards a healthier lifestyle over years, Gatorade has managed to position itself in the market as Stars. Question: Products falling under his category are known to be under a formulation stage, are still in the development stage, and the organization has not yet given them a significant position in their industry. The products in this category have a small share, therefore their future outcome in uncertain. The products falling under this category for PepsiCo are: ▪ Diet Pepsi, Pepsi Max, Quaker, etc.: The sudden shift of Pepsi from making carbonated drinks to health-conscious products, has left the future of these products completely uncertain. If PepsiCo’s products will find their place or not. ▪ Cash Cows: Money cows are supposed to be those items that have high part of the global industry, in such a market, that has a low development. Frito Lays: Even though Frito Lays dominates the snack industry’s market share with a 58.8% market share in US. Frito lays stands to be the best cash cow for PepsiCo at the moment. Dogs: As for now, there is no product which could be categorized to fall under this category. Nevertheless, seasonal, and experimental products can be incorporated into this section. (UPADHYAY, 2020) 15 B.C.G Matrix of PepsiCo 16 1.7 McKinsey 7Ss Review McKinsey 7 S framework elaborates as to how the different and significant business elements can be aligned in the right manner, and in return increase the effectiveness. Rendering to the McKinsey 7S framework, it denotes that the hard elements are said to be Strategy, Structure, and system. While, the soft elements can be shared values, skills, staff, and style. McKinsey 7S Framework The above graph depicts that all the elements are interconnected with one another, and a change in one causes a change in the other. The detail of each will be provided below: i. Strategy: PepsiCo business strategy integrates the following six principles: ▪ Growth achievement should be done through acquisitions and mergers. Also known as the M&A. ▪ Formation of strategic alliances on a global scale. ▪ Emerging markets are focused. ▪ Organizational structure is the prime focus. ▪ Building and promoting on the idea of a single brand, PepsiCo. ▪ Marketing initiatives would and should have innovation. Since some years, the sales of carbonated beverages are declining, and the same decline rate is seen for the near future. Hence, PepsiCo’s marketing strategy is a reflection of this strategy, and consequently the company has started increasing its portfolio to add in food and snack products to its product line. This way the dependency will not completely be on the soda and beverage industry. So, it is a very good strategy to hold on to. And because of their amazing strategies they have won numerous awards. ii. Structure: Talking about the structure of PepsiCo, it consists of a Divisional organizational structure, where the entire business is separated into a total of six 17 divisions. Individually every division has a CEO in charge, who has to report to the head CEO, for now it is said to be Indra K. Nooyi. The company encompasses the following divisions: iii. • “Frito-Lay North America (FLNA) • Quaker Foods North America (QFNA) • Latin America • Asia, Middle East & North America (AMENA) • Europe & Sub-Saharian Africa (ESSA) • North America Beverages (NAB)” Systems: In order to run a big organization like PepsiCo, everything has to be systematic. If things are not systemized, things will keep felling out of place over and over again. PepsiCo’s business processes depend on a variety of operations, which are very vital for the smooth functioning of the organization. These processes for example are: Representative Recruitment, choice framework, examination framework, quality control framework, grumbling taking care of framework along with many more. Not just this, the company has many other operations too for the better running of the system. (Dudovskiy, PepsiCo McKinsey 7S Model, 2016) iv. v. vi. Style: This basically points at the corporate culture and the informal rules that run in an organization. Style refers to the way in which managers interact with their employees. The corporate culture is diversely changing every day, where they actively interact with employees and make them feel valued. Their main way of working has always been bringing diversity into their work environment. Staff: Staff points at the employee base, the recruiting process and the how the talent is managed within an organization. As mentioned earlier, in order to have a good culture at PepsiCo, it was very important to recruit employees and have a mind set to have a diverse work force, as it will keep the company at a competitive edge. Thomas successfully invented a score card, which would track as to how the recruiting is done for a diverse work force and make up to the retention rate. With Nooyi as the CEO, the diverse recruitment was given a lot of importance. Recruitment as well as hiring was continued, by appointing staff with various different backgrounds, where the result will eventually expand PepsiCo’s activities in the developing markets. Their main mantra is having a diverse corporate staff. Skills: This refers to a company’s ability to work and perform well. This mainly points at the employees of that company, and what skills do they have. Since PepsiCo’s main mantra is to have a diverse work force, the skills of their people are also seen in or measured in the same way. A diverse workforce helps the workers in mirroring the varied purchaser base of PepsiCo, which eventually plays a major part in helping the company to build a better self-image and fill in the basic consumer needs. Creativity 18 vii. along with innovation are two skills which are positively influenced by diversity and in turn strengthen the PepsiCo’s competitive position. There are a number of sources along with skills that the company relies on, and their minority groups such as a women ratio of 45%, and the ethnic percentage to be 19% enables PepsiCo to have multitude of sources. This in turn allows them to perform actively in 200 countries and more. Shared Values: basically, means stating the essential ideas of what that organization represents, and the core reasons as to why it was created. PepsiCo’s values are connected to social and environmental responsibility which is said to be the base of every company decision. This idea itself was portrayed in vision” Performance with Purpose” established by Nooyi, the chairman of PepsiCo. Both the PepsiCo´s guiding principles and shared values consist of consumers and their diversity strategy. Diversity is said to be one of the basic fundamentals of shared values at PepsiCo. To conclude the analysis, any organizational change that was felt in PepsiCo had been effectively recognized and later implemented. This was done by the help of these seven factors which are always in place at PepsiCo. (HANKE, 2015) 1.8 STP (Segmentation, Targeting, and Positioning) ➢ Segmentation: Segmentation plays a very important role, and the three of them together are specified as they are the most important and hold the in-depth marketing efforts within them. Segmentation alone involves dividing the entire population into groups according to specific characteristics. In the meanwhile, targeting refers to choosing those specific groups accordingly and sell products to them. Positioning can be defined as selecting the correct marketing mix for the segment of target customers ➢ Bases for Segmentation: PepsiCo uses not only one but, a different type of positioning that is multi segment. In this way, it targets more than one client portion, with an assortment of items or administration bundles. And that is from where PepsiCo gets its bases for segmentation. Following are the few segments on the basis of which PepsiCo has done its targeting and positioning: • “Region • Density • Age • Gender • Life-Cycle Stage • Income • Occupation • Degree of Loyalty • Benefits Sought • Personality • User Status • Social Class • Lifestyle” 19 How PepsiCo has managed to do its targeting along with its positioning based on this segmentation is given in the Appendix section. ➢ As already mentioned earlier in the project, that PepsiCo competes in four market segments: Geographic, Demographic, Behavioral, and Psychographic. The importance of each has been described as well as explained initially. But for a shorter idea, the table has been attached. The table briefly explains the segmentation, targeting, and positioning of PepsiCo. ➢ Potential and commercial attractiveness of each segment: • • • • Geographic: This aims in the Region and the density of the segment. For instance, in region the target segment would be domestic or international market. The potential seen in the domestic or international market is quite a lot. As PepsiCo is a globally winning product, so there is a huge international as well as domestic market to explore. Commercially PepsiCo is attracting a huge ton of customers, by its unique promoting techniques. It has done some enormous work with its promotional techniques in the international and domestic market. Demographic: This is a segment where age plays a factor and even the gender of a person. PepsiCo has successfully targeted people regardless the gender. They have made specific ads targeting particular age groups, for example, newlywed couples, bachelor stage, and etc. This segment has great potential and commercial attractiveness as there are enormous amount of ideas that PepsiCo can take upon and execute. Plus, PepsiCo is known for its unique ideas in which it targets people from all ages. Behavioral: This segment is rather a tough one as it involves the habits of people which can only be developed overtime. It tends to focus on personalities, user statuses, Degree of loyalty etc. There is not much potential and consumer attractiveness in this segment. As people have already made their choices, and they will not get influenced by ads or billboards. Therefore, the success in this can only be seen if the customers are already buying from PepsiCo. Psychographic: This segment again targets all types of classes in an economy. There is great potential and consumer attractiveness in this segment. As Tv appliance is used in every household and attracting a consumer through tv ads is the best way to attract audience. (Dudovskiy, PepsiCo Segmentation, Targeting and Positioning, 2016) 1.9 Competitive Analysis: PepsiCo functions in a highly cutthroat market, where they not only have one competitor but many. It competes against global, regional, local as well as private labelled manufacturers. There are many factors that they compete in, for example price, quantity, product variety, and distribution. Having said all this, the leading competitor for PepsiCo is Coca-Cola. 20 Who is Coca-Cola? The Coca Cola company was found in 1882, location of its head quarters is in Atlanta, Georgia, in the USA. The company is interested to manufacture, retail as well as marketing of the nonalcoholic beverages and syrups. The Coca Cola company was founded in 1882 and has its headquarters in Atlanta, Georgia in the USA. The Coca-Cola Company has interests in the manufacturing, retailing, and marketing of nonalcoholic beverage concentrates and syrups. It is known to be a global company, who’s current CEO and chairperson is Muktar Kent. It has a vast variety of products other than its main brand, Coca Cola. Other carbonated soft drinks, bottled water, packaged juices have set their places. That is not it, as Coca Cola is one of the leading brands of the world, it has also placed itself as a major brand in the industry of soft drinks. Two of its major products occupying the first two positions are Coke and Diet coke. Coca-Cola’s major products include Fanta, Sprite, Minute Maid, Powerade, Nestea, Fruitopre, Dasani water amongst others and these products closely match with those of Pepsis products. The biggest competitor of Pepsi is Coca cola, as the entire world knows. There are other smaller competitors too but are insignificant compared to this global competitor. Coca-Cola stands out to be the most important competitor amongst all. The reasons to say this are a lot, as because of its massive asset base, dealers and wholesalers’ networks, product collection, innovativeness and global product recognition that is very similar to that of Pepsi makes it the foremost amongst all competitors. Statistically, the global soft drink industry is defined by the activities of these two multinationals. (Student, 2017) Coca-Cola’s Positioning: As already mentioned, Coca Cola is the biggest rival of PepsiCo, as a brand. The way Coca Cola has positioned itself in the market id the point of differentiation for both the multinationals. Coca cola has successfully and strategically positioned itself within the world beverage industry. The brand goes with the logo, “Think global, act local”. This principle points at how Coca cola has one core product, which is said to be coke, and how it geographically adapts itself to fulfill the local needs. What Coke uses is Strategic Positioning, to achieve the same image all around the world, which has managed to be delivered successfully as people around the world perceive coke as a daily use product. Moreover, it has a very unique selling preposition, “Live the coke side of life”, which is connected to joy and happiness. Coke is depicted as happiness in the bottle. People tend to connect themselves emotionally to coke, as the first thing that crosses their mind after hearing the word coke is fun and entertainment. (Amjad, 2017) Coke also has its own branded content, like Coke Studio. This gives them a competitive edge, as consumers can connect with them more through entertainment and media too. The presence of the brand is important, and Coca Cola is doing that very creatively. 21 Moreover, PepsiCo does have a lot of brands to its name, but Coca cola has brands, and that too many targeting geographic segments, which is according to the different locations, it has products. There is a different taste to Coca cola, where Pepsi is considered slightly sweeter, Coca cola is considered rather raisiny-vanilla. Further, Coke has many loyal customers compared to Pepsi because of its positioning. (Vendredi, 2012) 1.10 Marketing Mix Review The Marketing mix of PepsiCo has continuously shown progress overtime, especially because of the various effects of acquisitions and mergers. The marketing mix is known as a combination of the 4 Ps, which are Product, Place, Promotion, and Price, which a company incorporates into its combination of strategies and tactics to implement a well-made marketing plan. PepsiCo's publicizing mix has different general characteristics that portray the association's general corporate approaches to manage its advancing arrangement utilization. PepsiCo remains convincing and comprehensive viable in this point. Product: This segment of the showcasing blend pinpoints the finished results or the yields that are made accessible to clients. PepsiCo at first began as the Pepsi-Cola organization (ONLY), with numerous drink items under its image. However, by looking at the market needs, it later developed into a multi brand, where it not only offered beverages, but much more. The following are the current and new product lines of PepsiCo: i. ii. iii. iv. v. vi. vii. viii. ix. x. “Soft drinks Energy drinks Cereal Rice snacks Snacks Side dishes Breakfast bars Sports nutrition Bottled water Other merchandise” There are whole lot of products that PepsiCo offers under these categories. However, Pepsi cold drink is the main product of the company along with many other soft drinks like Mountain Dew, Diet Pepsi, 7Up Revive, and 7up to name among a few. Each product has its own target market. In addition, the organization has likewise given items in the regions of chips and wafers like lays, Cheetos, Kurkure which carter to the different areas of individuals. The organization has additionally wandered into the items like Lipton tea and the Tropicana squeezes too. Pepsi Co has effectively cooked and are proceeding to do as such, to a wide assortment of business sectors and are making their quality felt in practically all the sort of food and beverage sector. 22 PepsiCo follows the Generic Strategy and Intensive growth strategy which highlights international expansion. They have used these strategies in number of ways like many products are added into their line through product acquisitions. For example, nibble items were incorporated after PepsiCo picked up Frito-Lay. Other item consolidates tumblers and shirts, which are made by various associations with license from PepsiCo. Along these lines PepsiCo keeps on growing its item advertise, and furthermore get new items. The detail product list of PepsiCo is given in the appendix section. • i. ii. Price: As mentioned earlier, one of the biggest competitors that PepsiCo has in the market is Coca-Cola. So, in order to give them a tough competition, PepsiCo follows a Competitive Pricing Strategy for their products. Not just this, approaches used to set costs are broke down in this component of the promoting blend. PepsiCo's principle valuing techniques are as per the following: “Market-oriented pricing strategy” “Hybrid Everyday Value pricing strategy” PepsiCo believes in ricing its products competitively; however, neither PepsiCo not Coca Cola is interested in instigating price wars against each other. Therefore, focus of both the companies is on branding than on pricing. The basic idea is to price the products in such a way that they will be accessible to a larger audience without hampering the profit margins of the company. PepsiCo has made their products available in different sizes, for the accessibility of their customers. For instance, PepsiCo comes in 500ml, 750 ml, 1 liter, 2.5liter sized bottles, and are prices accordingly. • Place: Next important factor in the 4Ps is, “Place”. Since at the beginning it has already been told that PepsiCo operates in more than 250 countries and territories of the world. Moreover, the organization is isolated into six universally dynamic divisions, which either autonomously or related to outsiders make, showcase, disseminate and sell a wide assortment of food and drinks, prompting a broad conveyance arrange which covers each niche and corner of the globe. Following the procedure, the bottlers at that point fill the refreshment in the containers and afterward moves those jugs to various area, from where the item goes to merchants lastly retailers, from where it is made accessible to buyers. Broad conveyance organizes and simple openness of Pepsi has additionally helped it kill territorial rivalry present in various nations and areas. The three distribution channels of PepsiCo: i. Direct store delivery: In the DSD framework, PepsiCo essentially conveys the things legitimately to various retail stores. Out of the three conveyance channels, DSD empowers PepsiCo to sell items with incredible accuracy. 23 ii. Customer Warehouse: It is made for things that are less sensitive and are short-lived, have lower turnover, and are not procured carelessly. iii. Third-party distributor systems: PepsiCo takes sustenance and drink things to eateries, associations, schools, and arenas through pariah food organization and distributing dealers and administrators. All these processes help PepsiCo to place their products more widely, and conveniently. Market Leader: PepsiCo is a market leader to its own range of products. PepsiCo does not believe in following people or brands; they believe in coming up with original strategies to win their customers. • Promotion: Pepsi spends tons of money monthly and annually on the promotional activities of their brand; in order to create a top of the mind recall in the consumers; mind. 24 Coming up next are the strategies in PepsiCo's special blend, masterminded by importance: • Advertising • Sales promotion • Direct marketing • Public relations One of their strategy is to use celebrity endorsements as a part of their promotional activity as they think this way the consumers would be able to relate more. Pepsi mainly uses young celebrity endorsers to promote their products, celebrities like Sharukh khan, and Fawad khan have been brand ambassadors for Pepsi. The promotional strategies in the marketing mix of Pepsi utilizes all possible media channels like Print, Tv, outdoor, online ads etc. for a 360-degree branding, and not to leave any loopholes. Furthermore, Pepsi has also involved itself in global events like world cups of football, cricket, etc. across the world apart from sponsoring global lifestyle, as well as music events. It does not just put its core product “Pepsi” on the front, yet in addition it has high and ground-breaking limited time strategy for all the chips they have like lays and Kurkure. As a worldwide refreshment and bite brand, Pepsi principally focuses on the media to make their quality felt in the market. They have a wide assortment of items, so they can without much of a stretch objective various crowds with its various items. For example, Lipton is showcased to the higher finish of the client. The Tropicana brand is additionally focused to the wellness arranged individuals. This shows how PepsiCo has different promotional ways to promote its products, to specific target market. Their ads are unique, and very creative giving a direct message to the targeted audience. Via its ads, Pepsi for the most part focuses on the more youthful parcel, as they are the ones who can identify with the youthful, lively, enthusiastic picture of the brand; as likewise their trademark impersonates, "For the individuals who think youthful". In the course of recent years, Pepsi experienced a great deal of advances, be it the brand trademarks or the Brand logo, Pepsi has never avoided change and has adjusted well with the changing time and need. PepsiCo has made a generally excellent utilization of advertising and sponsorship of occasions throughout the years. It expanded its promoting center around its more advantageous items over the most recent couple of years as referenced before. Be that as it may, it intends to build promoting spending behind its large brands, through both significant advertisement crusades, for example, for Mountain Dew at the Super Bowl and through better instore shows. (TEAM, 2020) (Rahman, 2018) (kumar, 2018) (YOUNG, 2017) 25 Pepsi Logos throughout the years. 26 Slogans of PepsiCo throughout the years. 27 1.11 Microenvironment Porter’s Five Forces Model Porter’s five powers structure centers around the five separate powers that shape the general quality of the association. These powers are represented beneath: i. Bargaining Power of Buyers: Buyers or consumers play a very important role and are among the top priorities of PepsiCo. Buyers from the other end demand quality products and look for buying the best offerings in the market by paying the minimum price. This finally presses PepsiCo's profit as time goes on. The tinier and even more amazing the customer base is, the higher the managing power of the customers and higher their ability to search for growing cutoff points and offers. The many external factors that lead to a high bargaining power of buyers are as follows: • • • “Low switching costs (strong force)” “High access to product information (strong force)” “High availability of substitutes (strong force)” The different ways as to how PepsiCo, Inc. can tackle the Bargaining Power of Buyers: 28 • By building a gigantic base of customers. This will be valuable in two distinct manners. It will decrease the managing power of the buyers notwithstanding it will allow to the firm to streamline its arrangements and creation process. • By rapidly growing new things. Customers as often as possible search for cutoff points and commitments on developed things so if PepsiCo, Inc. keep considering new things then it can compel the managing force of buyers. • New things will in like manner decline the abandoning of existing customers of PepsiCo, Inc. to its opponents. ii. Bargaining power of Suppliers: As buyers play a very important part in PepsiCo overall brand, so does Suppliers. Because suppliers are the one from which the raw materials are delivered, and products made. Suppliers at whatever point put in an overarching position can reduce the edges PepsiCo, Inc. can win in the market. Stunning suppliers in Consumer Goods part use their orchestrating ability to remove increasingly critical costs from the associations in Beverages - Soft Drinks field. The overall impact of higher supplier trading power is that it cuts down the overall benefit of Beverages Soft Drinks. PepsiCo should in this manner keep up productive associations with providers. This is frequently viewed as a powerless power because of the accompanying outer elements: • “High overall supply (weak force)” • “Low forward integration of suppliers (weak force)” • “Moderate size of individual suppliers (moderate force)” How PepsiCo, Inc. can tackle Bargaining Power of the Suppliers • By creating affordable gracefully chain with different providers. • By testing the item structures, utilizing various materials, to be readied in the event that the costs go up of one crude material, at that point organization can move to another without any problem. iii. Threats of the substitutes: Whenever a new product enters the market, or a new service fulfills the customer needs in a different way, the previous organization suffers. For instance, services like drop box, and google drive have minimized the use of storage hardware drives. Moreover, the threat of that new product or service is high if it offers a value proposition, distinctive from the present offering of the industry. PepsiCo is a brand whose products could be substituted, depending on the needs of the customer and also the preference. The following external factors contribute to the strong threat of substitutes against PepsiCo: • • • High execution of replacements Low moving costs High accessibility of replacements 1.11.1 How PepsiCo, Inc. can tackle the Treat of Substitute Products / Services: • • By adding in more components like, offering services rather than just products. Identifying the main and core needs of customers and providing them with solutions. 29 • By making a decrease in the prices of the products which can be switched and offering them more in less. • • • • Threat of New Entrants: In any industry no one can stop threats from emerging. New contestants in refreshments like soda pops advancement, blending various flavors, better approaches for introducing things, squeezes the business. Additionally, lower assessing strategy, decreasing the costs, and giving new worth social words to the customers incorporates dynamically genuine weight. PepsiCo, Inc. needs to deal with every one of these difficulties and construct viable boundaries to shield its serious edge. PepsiCo needs to stay solid regardless of whatever opposition may come its direction. The outside factors that keep up the moderate peril of new segment against PepsiCo are according to the accompanying: “Low exchanging costs” “Moderate client dedication” “High cost of brand advancement” How can PepsiCo, Inc. tackle the Threats of New Entrants? • • • By innovating the new products and services. This can be a good way to attract new audience time to time. By structuring economies of scale so that it can lower the fixed cost per unit. Building workplaces and consuming money on creative work. New members are progressively opposed to enter a novel industry where the set-up players, for instance, PepsiCo, Inc. keep describing the rules reliably. It out and out diminishes the window of exceptional advantages for the new firms in like manner cripple new players in the business. iv. • • • Competitive Rivalry: We all know who the biggest competitor of PepsiCo is, it is Coca Cola. If the rivalry amongst the existing players is intense as it is shown, it is more likely to decrease the overall profitability of the industry. Since it is a very competitive industry, somewhere in the long run it does effect PepsiCo’s profitability. Coming up next are the most perceived outside factors that make the strong intensity of competition against PepsiCo: “High forcefulness of firms” “Low exchanging costs” “High number of firms” 1.11.2 How PepsiCo, Inc. can tackle Intense Rivalry among the Existing Competitors? • • • By constructing a sustainable difference. By setting par values so that there can be a better competition. Join forces with competitors to increase the market size rather than just competing for small market. (Peter, 2019) (SMITHSON, 2017) 30 1.12 Macro Environment PESTEL Analysis – i. Political factors: Political factors convey what the government of that country wants or is wanting. Political factors tend to have a great impact on businesses. If political instability starts to grow in any of the bigger markets of Pepsi, it can become very harmful over time. Moreover, civil unrest and disruption can lead to loss of sales, and can affect the supply chain, which can lead to a deeper loss. Various occasions, political unsteadiness legitimately goes before to a decrease in shopper buying power, prompting a misfortune in deals. Government and legislative issues both have a top to bottom effect on gainfulness of an organizations. Political solidness additionally infers monetary strength, which thusly implies thriving organizations. When there is an increased partnership with governments of other nations, would mean that there would be better market conditions for Pepsi in foreign markets. However, the fact that it’s a soda drink at the of the day cannot be forgotten, and if government launches initiatives against unhealthy products, or any unhealthy product making brand, Pepsi will be bound to face loss. In addition, changing governments can likewise realize administrative changes prompting ether gainful or unfriendly for large brands. Such changes can here and there lead to expanded creation and gracefully expenses and along these lines’ misfortunes. Guideline on move of assets to and from outside nations and constraints on remote possession as well, can affect Pepsi's business horribly. In addition to this, in 2017 Pepsi and Coca Cola, both the companies faced a new American tax, called the Soda tax. Preceding the situation, the price of a soda rose by 3 cents per ounce. The reason as to why this change was implemented, was to make people drink less soda due to health reasons. Although PepsiCo had already taken hits now and then, that the society was focusing on a healthier lifestyle, sales of sugary drinks continued to decline. However, the increase in soda prices has still not restrained Pepsi to collaborate with overseas governments. Health conscious laws are arising not only in US, but around the globe. And there is not much that Pepsi can do. Notwithstanding, they can throw millions towards their showcasing specialists to change general conclusion. However, as wellbeing associations are directed by the legislatures, they would continue to push people to make smart choices. Due to all this, Pepsi has bounced back with healthier emerging brands like, Tropicana, Quaker, and much more. (Pratap, 2018) (Frue, 2018) ii. • Economic Factors: Developed or already developing countries with a larger, younger working population provides plenty of business opportunities to PepsiCo to expand their business. Rightly, as the purchasing power of people increases, changes can be seen in an improved lifestyle, and this works in favor of companies like PepsiCo. PepsiCo has its performance directly linked with the economy. The political variables that identify with PepsiCo are as per the following: “Economic dependability of most significant markets.” 31 • • • “Rapid development of creating economies.” “Slowdown of the Chinese economy” “Foreign exchange swings” Back in 2016 dollar became very strong, which in turn put huge focus on PepsiCo's incomes received from the abroad organizations. The outside swapping scale can end up being a hit or a miss, but in case of Pepsi it was a miss. The strong dollar put plenty of pressure on Pepsi worsening the matters, for overseas ventures. Due to which Pepsi faced a great loss. On the other hand, economic crisis has their own roles to play. Such as the ongoing trade wars between the US and China, are destined to have a negative impact on the revenues of PepsiCo. Hence, any changes in international exchange rates and shifting economic conditions, can have a great impact on PepsiCo’s economic stability across the globe. (MEYER, 2017) (Farooq, 2019) (Frue, 2018) iii. Social Factors: Social factors play a vital role in effecting a brand, they can have favorable or unfavorable outcomes to known brands. Sales of such brands can easily get influenced by the change in customer demographics, aging, or anything similar. Brands are looked upon to be socially responsible since the social image of a brand is directly linked with its business. The higher the social picture of a brand, the better will be the state of the brand's deals and benefits. In addition, wellbeing awareness in the worldwide society has had its own perks. This has its own adverse impacts on soda sales worldwide. With more and more people opting for healthier lifestyles, and healthier diets, brands like PepsiCo are going under threat of becoming outmoded. Pepsi has seen a gradual decrease in its cola products, due to which they have found ways to survive in the industry. Pepsi has responded to such declining sales by producing more healthy product lines, to attract more audience and to remain in the market. Seeing all this, in can be said that social trends can come with opportunities and threats, and anything can be made out of the two if responded in a timely manner. PepsiCo successfully has responded in a timely manner and, has produced many product lines, including healthy juices, snacks, Quaker, and many more. PepsiCo has rehashed its product offering to stay applicable and in a state of harmony with the evolving times. (Pratap, 2018) (Farooq, 2019) iv. Technological factors: Technological factors have a very major impact on businesses, as technology has not left any area untouched. It is mainly because technology has become a vital part of almost every field: Supply Chain, HR, or Finance. Social media has outdone itself when it comes to using it for marketing purposes. Changing technologies thus have a very deep connection with how big brands conduct businesses. 32 v. As a brand, PepsiCo has very much positioned itself to exploit each most recent innovation. By using enormous information investigation and AI capacities, Pepsi can smooth out their R&D procedures, and end up in propelling more focused on, centered showcasing efforts for a superior future, and increment in incomes. In pretty much every zone, Pepsi has an enormous innovative foundation to deal with and utilizes new innovation to enlist and husband to be ability all inclusive. Environmental Factors: To build a better brand image, environmental factors are taken as a top priority. From squander decrease to natural impression, every one of these components legitimately sway anu business and thusly impact the approaching deals and benefits. Pepsi's attention is on accomplishing a net zero natural effect. Moreover, another factor directly impacting Pepsi’s businesses is water scarcity. The reason being is, as a beverage industry the production of beverage requires use of water in large volumes. Be that as it may, remembering all these large effects, PepsiCo has taken some huge jumps toward water protection and water stewardship. A portion of the as of now began ventures have has a positive effect and has diminished its operational water utilization proportion by a 20%. To complete this, the organization has put tremendously in both water sparing hardware and technologies, to save and conserve billions of liters of water. Moreover, another key factor in this is the sustainable agriculture area, where Pepsi has been investing heavily. Keeping both these points in mind, PepsiCo has invested and successfully made it somewhere closer to their goal. Furthermore, governments have also put rewards for businesses following the environmental protection regime. And playing a socially responsible role also is liked by consumers. Hence, being an environmentally friendly brand is a win win situation for all. (Pratab, 2018) Legal Factors: This has also become a very critical part of today, somewhere because of the health awareness, and product quality delivered to customers. Workforce health and safety is also a critical area where agreement is essential. Pepsi has faced a few health issues in the past, but now it has made ethics and compliance its main focus. Brands like Pepsi has to maintain their image, otherwise a negative effect van be seen, which in turn can decrease the sales. Notwithstanding, the issue is not compelled to just inside their assembling plants and creation workplaces, anyway they should be cautious that even down their effortlessly chain things are running fine. Whether or not a supplier is manhandling the work laws or some other huge law or rule, it can show hurting for the brand. Along these lines, the lawful elements can make both monetary misfortune and harm brand picture. It is the reason the emphasis on them must be high. (Pratab, 2018) 33 2 Marketing Analysis 2.1 Industry development and outlook PepsiCo International is known to be well renowned brand, well organized, and a multinational company, which operates almost in every corner of the world. They are mostly known for their beverage industry, and are a symbol of hygiene, quality, service, and energy all over the world. Pepsi has been in this business for over 100 years now and has more or less dominated its market for quite some time. Pepsi has successfully placed itself uniquely over the years and is continuing to do so. It seeks to achieve growth and long-term value by doing its operational activities right and making that its competitive advantage through new product innovation. PepsiCo has been going on a good pace and will be facing numerous challenges over the next five years. However, its core brands’ strengths, the deep portfolio of its secondary brands, along with its shareholder friendly strategies would make sure to lift the stock at its foremost. (Arthur, 2019) (Sun, 2019) How has COVID-19 affected PepsiCo? In this pandemic, PepsiCo’s net sales fell by 3.1% during the second quarter, however the company did successfully earn $1.32 per share. Moreover, it also reported falling organic sales for its North American beverage unit, but Frito-Lay and Quaker Oats showed some organic revenue growth. PepsiCo juices boomed as consumers invested more into boosting their immune system, and Pepsi has already taken an initiative to produce more healthy juice products, which would in turn focus on immunity. Furthermore, Quaker foods reported an organic revenue growth of 23%, as consumers headed to markets to get more oatmeal for breakfasts, and baking purposes. The organization has made a showcasing plan for the remainder of the year to hold these deals, including the dispatch of Cheetos Macintosh and cheddar. (Lucas, 2020) Product Life Cycle: PepsiCo’s product cycle consists of the following steps: 1. Pre-launch 2. Introduction 3. Growth 34 4. Maturity 5. Decline This is a brief definition of PepsiCo’s life cycle. Now we will get into the detail of each stage, to see how PepsiCo has had a successful growth, and is continuing to do so: 1) Pre-Launch: Pepsi’s pre-launch took place in 1898, where pharmacist Caleb Bradham built “Brads Drink”, which was a formula designed to help in digestion. When many consumers showed great interest, Brad renames his drink into “Pepsi Cola”, and purchased the trademark of “Pep Cola” for hundred dollars. Hence, it was initially made for medical purposes. • Introduction: Brad started selling Pepsi-Cola and accomplished deals of 7,968 gallons of syrup in the principal year. • Product: The product was initially sold through soda fountains, not even bottles, that were placed at Brad’s pharmacy. • Price: Initially had very less cost, used a skimming strategy. • Place: The only launch was done in Brad’s pharmacy initially. • Advertising: To initiate advertisement, celebrity endorsement was used. 2) Growth: PepsiCo faced bankruptcy initially, and then was acquired by Loft Inc., Consumers of PepsiCo were attracted to it due to its pricing strategy. One could get 12 ounces of Pepsi, using 5 cents, and only 6 ounces of Coca cola for that much money. 3) Maturity: since the time Pepsi was framed, it has been in its improvement period of the thing cycle, helping the parent association win pretty much 20 billion as the yearly pay. 4) Decline: Even though people have diverted towards a healthier lifestyle, Pepsi shows no indications of decelerating anytime in the future. In fact, Pepsi has introduced healthier product lines to stay in the market and compete. So declining stage is not said to be a part of PepsiCo’s product cycle. (Harshill, 2014) Projected Growth: In the year 2020, Pepsi is expecting a 4% organic revenue growth, and a 7% earnings per share growth once the currency fluctuations are stripped out. Moreover, the company is forecasted to adjust the earnings per share of $5.88 for the year, different from the analysts’ forecast of $5.95. (Lucas, 2020) 35 2.2 Target Market What is a user persona? Personas are considered to be fictional characters, which a brand creates based upon the market research that they did and suiting the product that the persona is representing. Creating personas often help in reaching a target audience more efficiently. Pepsi’s User Persona: Over the years Pepsi has often created a number of fictional characters in various regions, depending on their target market. For instance, the different products that it offers, like Pepsi black, and a regular Pepsi, they have decided characters playing the role. Following are a few examples depicting what is mentioned above: Pepsi man used as a user persona. 36 Noor Zafar Khan, dressed as the product itself, Pepsi Black. Expressed intention of targeting women. 37 These are a few user personas that Pepsi has used over the years, to attract its audience. (Miller, 2016) 2.3 Competitive Analysis 2.3.1 Direct Competitors: PepsiCo company, as known by the world itself has one biggest competitor, Coca Cola. They have a very similar product line, especially Cola drinks which makes them the biggest rivals of one another. Soda drinks are considered to be the most similar and competitive product for both the companies. Furthermore, they also have similar punch lines, which are ‘refreshing’ oriented, and almost both the products target the youth. Moreover, both the companies have very similar product lines, like diet drinks etc. some of its other direct competitors are mentioned below: • • • • • • • • • General Mills Red Bull Dr. Pepper Snapple Hindustan Unilever Limited Dabur Real Juice (In juice category) Mondelez (In snack category) Kellogg’s P&G Conagra Foods 2.3.2 Indirect Competitors Since Pepsi has successfully set its foot on to a number of different product lines, where it has started producing healthy products, along with different juices and many other products, apart from Pepsi itself. Some of its indirect competitors are mentioned below: • • Nestle (Coffee) Lipton (Tea) (Bhasin, Pepsi Competitors, 2018) 38 What are Pepsi’s competitors good at? • • • • • • • Coca Cola: As it also operates in cola drinks, and the marketing strategy of Coca Cola is very well sorted. The detail of which has been explained above. Dr. Pepper Snapple: a very strong position in the American market and has many brand acquisitions with other known brands. Red Bull: Since it is a lot of known the world over, and because of its solid geographic nearness, it is considered as an extremely solid Pepsi's rival. Dabur Real Juice: Due to their huge variations of items, Dabur Real squeeze is viewed as a top Pepsi contender. Kellogg’s: Due to their phenomenal advertising procedures and brand esteem, Kellogg's is viewed as one of the top Pepsi contenders. Nestle: Due to their various items in espresso and much-utilized item, Nescafe (espresso) is considered between top Pepsi's circuitous rivals. Lipton: Due to their charming bundling and brand perceivability, Lipton (Tea) is accepted as one of the top roundabout Pepsi contenders. (Bhasin, Pepsi Competitors, 2018) Barriers to Entry in a beverage industry: (Godfrey, 2019) 39 2.4 Projections The window of opportunity: Pepsi has already positioned itself into numerous markets and has received success. Pepsi does not depend on time sensitive technology, as it has a very well-known brand image and reputation. Due to this whichever product line Pepsi thinks of getting in, so far it has been successful. It is easier for Pepsi in this way, as Pepsi in known for its quality products, and various product lines. Moreover, it has gained consumers’ trust and loyalty due to this, consumers will not hesitate into buying its products. Margins: Historical and current margins, for the June of 2020 are given below: Profit Margin: Overall revenue can be characterized as the level of income that an organization holds as salary after the reasoning of costs. PepsiCo net overall revenue as of June 30, 2020 is 10.13%. Operating Margin: The current working overall revenue for PepsiCo as of June 30, 2020 is 11.18%. Gross Margin: The current gross overall revenue for PepsiCo as of June 30, 2020 is 55.28 %. (PepsiCo Gross Margin- | PEP, 2020) 2.5 Regulations There are no specific government regulations or restrictions while entering into a beverage industry. However, government does know that soda drinks or carbonated beverages are bad for health. Keeping this in mind, they have encouraged the consumers to consume less, by increasing the tax on these drinks. Raising a price of the product makes it less likely to be consumed, and therefore governments have used this strategy for the benefit of their public. As a result to this, many market giants like PepsiCo has been looking for different ways to diversify their products outside of sugary drinks, and over the years has been successful in doing so. Other than this, there are not any other regulatory measures taken by the government. (Taylor, 2016) 40 Appendix 41 How PepsiCo has managed to do its targeting along with its positioning based on this segmentation is given below: “Type of segmentation Geographic Demographic Segmentation criteria Region PepsiCo target segment Density Urban/rural Age 15-45 Gender Males & Females Life-cycle stage Income Bachelor Stage young, single people not living at home Newly Married Couples young, no children Full Nest I youngest child under six Full Nest II youngest child six or over Average, above average and high earners Occupation Students, employees, professionals Domestic/international 42 Behavioral Psychographic Degree loyalty Benefits sought of ‘Hard core loyal’ and ‘Soft core loyal’ Refreshment, enjoying good taste, satisfaction of a habit, spending time Personality Easygoing/determined/ambitious User status Regular users Social class Working class, middle class and upper class Lifestyle Aspirer, Succeeder, Explorer” Below is the product list of PepsiCo: “Breakfast Bars • • • • • • • Quaker Chewy Granola Bars Quaker Chewy Granola Cocoa Bars Quaker Chewy Smash bars Quaker Dips Granola Bars Quaker Oatmeal to Go Bars Quaker Stela Bars Quaker Yogurt Granola Bars • Energy Drinks o AMP Energy o No Fear Energy Drinks o Rockstar Energy o Starbucks Refreshers Coffee Drinks • • • • Seattle's Best Coffee Starbucks Double Shot Starbucks Frappuccino Starbucks Iced Coffee Cereal • • • 43 Cap'n Crunch Cereal King Vitamin Cereal Kretschmer Toasted Wheat Germ o • Rice Snacks o Quaker Large Rice Cakes o Quaker Mini Delights o Quaker Quakes o Quaker Tortillas Snacks • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • So Be Quaker Life Cereal Mother's Ready-to-Eat & Hot Cereals Quaker Essentials Quaker Grits Quaker Instant Oatmeal Quaker Natural Granola Cereal Quaker Old Fashioned Oats Quaker Oh’s Cereal Quaker Puffed Rice Quaker Shredded Wheat Cereal Quaker Oatmeal Squares Cereal Quips Cereal Side Dishes • • • Near East Side Dishes Pasta Roni Side Dishes Rice-A-Roni Side Dishes Soft Drinks (original Pepsi brands) • • • • • • • • • • • • • • • • • • • • • • • Baked! Cheetos Snacks Baked! Doritos Tortilla Chips Baked! Lay's Potato Crisps Baked! Ruffles Potato Chips Baked! Tostitos Tortilla Chips BACnet’s Chicharrons Cheetos Cheese Flavored Snacks Chester's Flavored Fries Chester's Popcorn Cracker Jack Candy Coated Popcorn Doritos Tortilla Chips El Ilene Plantain Chips Frito-Lay, Fritos, Lay's, and Tostitos Dips & Salsas Frito-Lay Nuts & Seeds Fritos Corn Chips Fanyu’s Onion Flavored Rings Gamesa Cookies and Wafers Grandma's Cookies Hickory Sticks Hostess Potato Chips Lay's Kettle Cooked Potato Chips Lay's Kurkure 44 Diet Mountain Dew Mountain Dew Mountain Dew Throwback Mist Twist NUTRL Vodka Soda Mist Twist Cherry Mist Twist Cranberry Diet Mist Twist Diet Mist Twist Cranberry Crush Pepsi Pepsi Atom Diet Pepsi Pepsi Zero Sugar Pepsi Twist Pepsi Blue Pepsi Pink Pepsi Gold Pepsi Green Pepsi Black Pepsi White Pepsi Salty Watermelon Pepsi Azuki • • • • • • • • • • • • • • • • • • • • • • • • • • • Sports Nutrition • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Lay's Potato Chips Lay's Sax Potato Crisps Lay's Wavy Potato Chips Maui Style Potato Chips Miss Vickie's Potato Chips Munchies Snack Crackers Munchies Snack Mix Munches Potato Crisps Natural Cheetos Natural Lay's Natural Ruffles Natural Tostitos Nut Harvest Nuts Roald Gold Pretzels Ruffles Potato Chips Sabri tones Puffed Wheat Snacks Santina’s Tortilla Chips Smartfood Popcorn Smartfood Popcorn Clusters Spitz Seeds Tesco Stacy's Pita Bagel Chips Sun Chips Multigrain Snacks Tiscali Snack Foods - in Saudi Arabia Tostito's Artisan Recipes Tortilla Chips Tostito's Tortilla Chips Pepsi Ice Cucumber Pepsi Shiro Pepsi Mont Blanc Pepsi Edge Pepsi One Pepsi Next Pepsi Wild Cherry Diet Wild Cherry Pepsi Caffeine Free Pepsi Diet Caffeine Free Pepsi Diet Pepsi Lime Caffeine Free Mountain Dew Caffeine Free Diet Mountain Dew Mountain Dew Livewire Mountain Dew Code Red Diet Mountain Dew Code Red Lipton Brisk Lemon Lipton Brisk Sweet Tea Mountain Dew Voltage Mountain Dew White Out Diet Lipton Brisk WL Lipton Brisk Fruit Punch Lipton Brisk Lemonade Pepsi Throwback Mug Diet Mug Marinda Bottled Water • • • • Gatorade G Series Prime 01 Gatorade Thirst Quencher - G Series Perform 02 Gatorade G Series Recover 03 Gatorade G2 Gatorade Natural Gatorade G2 Natural Gatorade G Series FIT Prime 01 PreWorkout Fuel Gatorade G Series FIT Perform 02 Workout Hydration Gatorade G Series FIT Recover 03 Post-Workout Recovery 45 Aquafina Aquafina Flavor Splash Propel Zero So Be Life water • • • • • • • • Gatorade G Series PRO 01 Nutrition Shake Gatorade G Series PRO 01 Nutrition Bar Gatorade G Series PRO 01 Carbohydrate Energy Formula Gatorade G Series PRO 02 Endurance Formula Gatorade G Series PRO 02 Perform Graptolites Gatorade G Series PRO 03 Protein Recovery Shake Gatorade G Series PRO Prime + Gatorade G Series PRO Recover +” Bibliography About PepsiCO. 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