Executive Summary for Marketing 304

08 Jul Executive Summary for Marketing 304

PepsiCo Situation Analysis

Team: C10

Table of Contents

Executive Summary…………………………………………………………………………….1

Company Description…………………………………………………………………………..2

Mission and Goals…………………………………………………………………….2-3

PepsiCo SWOT Analysis………………………………………………………………………3

PepsiCo’s Strengths……………………………………………………………………4

PepsiCo’s Weaknesses………………………………………………………………..5

PepsiCo’s Opportunities……………………………………………………………….5

PepsiCo’s Threats………………………………………………………………………6 Coca Cola SWOT Analysis…………………………………………………………………….

Coca Cola’s Strengths…………………………………………………………………..

Coca Cola’s Weakness…………………………………………………………………

Coca Cola’s Opportunities……………………………………………………………..

Coca Cola’s Threats……………………………………………………………………. Dr Pepper Snapple Group SWOT Analysis……………………………………………………..

Competitor’s Strengths………………………………………………………………….

Competitor’s Weakness…………………………………………………………………

Competitor’s Opportunities…………………………………………………………….

Competitor’s Threats……………………………………………………………………

Customer Analysis………………………………………………………………………………. Market & Product Objectives……………………………………………………………………

New Product……………………………………………………………………………..

Perceptual Map…………………………………………………………………………..

Appendix…………………………………………………………………………………………..

Works Cited……………………………………………………………………………………….

EXECUTIVE SUMMARY

Company Description

PepsiCo has been around about 85 years. The merger of two companies, Pepsi-Cola and Frito-Lay, created PepsiCo. This allowed PepsiCo to expand outside of the beverage market and into snack brands with chips like the original Frito-lays and additions like the Cheetos brand in 1948. As well, as the creation of the Doritos brand in 1966 which was estimated to become the most popular snack chip in the United States (PepsiCo, Our History 2016). In later years PepsiCo continued expanding by acquiring different chip and snack manufacturers as well as merging or partnering with other beverage companies to help expand both nationally and globally. PepsiCo is now a multi-billion dollar company listed on the stock exchange.

Mission and Goals

PepsiCo mission statement :

“As one of the largest food and beverage companies in the world, our mission is to provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats. We are committed to investing in our people, our company and the communities where we operate to help position the company for long-term, sustainable growth” (PepsiCo,Our Goals 2016).

PepsiCo has redefined their mission over the years as they expect to continue to grow and expand to different markets. They reinforce their mission statement with their goals. Their goals are to create a healthier relationship with food while continuing to grow the business (PepsiCo, Our Goals 2016). They plan to do this by renewing their goals in the focus areas of products, planet, and people. They have set a number of goals for each of their focus areas like the plan to reduce added sugars, reduce saturated fats, reduce salt, and increase positive nutrition in their products. They also have planned to do things like reduce carbon emissions, achieve zero waste to landfill, and advance respect for human rights which affect the planet and people. This shows us that PepsiCo is not only focusing on doing what they can within their industry but also that they are taking their social responsibility seriously.

Another important thing is that PepsiCo is not trying to completely change their products to the point where they don’t taste the same or you cannot get a salty tasty snack when you want but by adding healthier snacks they are trying to enter into a different market and allow people to have options. This way you will know that PepsiCo has whatever you want or need. Taste is a big factor in a snack purchase, according to 66% of baby boomers and 53% millennials in a survey by consultancy Alixpartners (PepsiCo, Our Goals 2016). This still has not stopped the CEO of PepsiCo Indra Nooyi to turn the company into a health juggernaut which is why pepsi has aligned their goals and their vision to improving their products, planet, and people.

PEPSICO SWOT ANALYSIS

	Pros	Cons
Internal	Strengths -Strong market position -Well known brands and variety of products -Strong presence in many markets	Weaknesses · Consumer confidence
External	Opportunities -Increasing local-focus -Creating healthier choices for consumers	Threats -Rising competition -Water quality and shortage -Rising labor wages in the United States

Strengths:

PepsiCo is one of the best known brands globally and this is a strength for the company because it allows the company to dominate their market with their brand. PepsiCo has a variety of products that are sold throughout the United states along with other countries that set PepsiCo ahead of their competitors. Some of the company’s products are top products in their respective markets such as the Lays and Doritos brands (PepsiCo, Inc. 2015). The amount of variety that the company has and the status of the brand help PepsiCo to be a strong competitor in the industry and help make its future profitable.

Weaknesses:

On the other hand PepsiCo has faced a lot of struggles due to cutting corners or making unethical decisions. The company has faced a number of lawsuits globally starting since the 2000s. Some of the lawsuits were less serious than others but nonetheless they can affect the company’s future growth especially when implementing new products. Two of the more serious lawsuits were due to additives in Pepsi Beverages that could cause harm to the human body including cancer. The company also had a lawsuit filed against them because they decided to put labels like “all natural” on their Naked juices. The purpose of this was so PepsiCo could get into the growing natural foods market (PepsiCo, Inc. 2015). This can affect the future of PepsiCo as it leads to its goals in making healthier foods and entering new healthy food markets because it can and has reduced consumer confidence.

Opportunities:

PepsiCo has already planned ahead aligning their goals with opportunities in the market along with looking at the social and business aspects of the company. Being a global company makes it hard for a company to rely on one source of raw materials. PepsiCo plans to increase its local sourcing to help both facilitate their production process but also to help adapt their products to each local market. For example if a country like Japan likes sushi flavored Lays chips then they make the product for that segment. Another reason for increasing their local focus is to help keep the materials fresh and maintain the quality of their products.(PepsiCo, Inc. 2015) PepsiCo has also seen a chance to expand to a new healthy food market by creating new healthier products as well as lowering the “bad stuff” like high amounts of salts and saturated fats in their current products.

Threats:

In recent years the greatest threats to the company have been rising wages for employees in the United States, rising competition, and the lack of water supply and quality. As in any company the increase in labor cost decreases funds in other categories such as in marketing or R&D for PepsiCo to develop new methods to make their products healthier and safer. Which in turn also affects the competition aspect of the company because other companies who solely produce natural products does not have to worry about distributing their funds evenly to create growth for the company. Lastly the drought in countries throughout the US like in California and the quality of water in Michigan affect the company because it makes them be more aware of how much water they are using to make their products. PepsiCo has been good about this so much that they made it part of their goals to have a positive impact on the water issue by doing things like reusing as much water as possible.

COCA-COLA SWOT ANALYSIS

	Pros	Cons
Internal	Strengths · Brand Value $77,839 billion · World’s Largest Beverage company · Strong marketing and advertising	Weaknesses · Focus on carbonated drinks · Lack of diversification Negative publicity
External	Opportunities · Growth beverage consumption in emerging markets. · Increasing bottles water demand Healthy diversification	Threats · Scarcity of water · Changes in consumer preferences

Coca Cola Strengths: In 2011 Coca Cola was awarded with the “Highest Brand Equity Award” because of its vast global presence and unique brand identity. This makes Coca Cola one of the costliest brands with the highest brand value. In the beverage industry there are only 2 big competitors, Pepsi and Coca Cola. Out of these 2 Coca Cola is the clear winner as its presence stretches to more than 200 countries around the world. Coca Cola’s presence is also due to its strong marketing and advertising strategies, unlike Pepsi where it is constantly changing its image to target the younger age group. Coca Cola on the other hand targets all age groups. They also do a good job of targeting well-known celebrities to help market their brand. Coca Cola Weaknesses: Coca Cola’s biggest competitor is Pepsi however, Pepsi had moved away from the soda only model of revenue. Pepsi has developed other types of revenue such as lays chips and other foods. Coca Cola has yet to develop any of these. People have also becomes extremely concerned with the link between carbonates drinks and obesity and diabetes. These drinks create a negative view in the public eye as they contribute the obesity epidemic and haven’t suggested a healthier solution yet. Coca Cola Opportunities: Developing countries such as India have extremely hot summers, which results in the doubling in consumption of cold drinks. Also, within these developing countries hygiene has become a major factor and has led to the increase in packaged drinking water. Coca Cola can also improve and produce healthy beverages and good in the future which will obviously boost its revenue. Coca Cola Threats: Water is Coca Cola’s biggest threat as they were recently suspected of using pesticides however; even greater is that the scarcity of water is on the rise. With the growing concern over climate change people are beginning to blame beverage companies for its vast consumption of water. If water were to be regulated in anyway they could experience a serious decrease in their revenue. Coca Cola is constantly facing threats from indirect competitors such as Starbucks, and other chains that offer a healthy alternative. These alternatives are not big competition for Coke but they do enough to put a dent in the beverage market. Energy drinks such as Red Bull and Gatorade are also indirectly stealing some of the market share.

DR PEPPER SNAPPLE GROUP SWOT ANALYSIS

	Pros	Cons
Internal	Strengths Largest independent bottler in the United States.	Weaknesses Invest most heavily in key brands rather than new products.
External	Opportunities Producing products that are targeted towards healthier consumers.	Threats Most products are not as internationally known.

Strengths:

Dr Pepper Snapple Group is one of the dominating beverage companies, and the largest independent bottler in the United States. The group markets over 50 kinds of refreshment, and has the longest history in the field, producing the first soft drink in 1783. The group focuses on a variety low or no calorie products that corresponds to their belief it lead to a healthy lifestyle, and is a belief many in the consumer market are leaning towards. The group also creates distribution agreements with appealing new products that allows them to enter new markets with low risk and capital investments (Dr Pepper Snapple Group, 2017).

Weaknesses:

Though the group continues to acquire many new products, and enter new markets, it focuses more on investing in its current brand products and how to alter them to correspond to changing trends in the market. Trends are changing rapidly, investing in the alteration of current brand products will eventually lead to a point where that product will not be able to fit the market’s needs. As such, new products would need to replace them (Dr Pepper Snapple Group, 2017).

Opportunities:

Trends with consumers are continuing to shift towards healthier products, especially in the soft drinks market. Maintaining their wide range of low or no calorie products such as teas, carbonated waters, and other healthy options gives the group the opportunity to expand their market presence. This opportunity is not limited to the North American market, but internationally as well (Dr Pepper Snapple Group, 2017).

Threats:

Many of the products produced, or sponsored by Dr Pepper Snapple Group are, largely, only known in the North American market, not internationally. By solely focusing their efforts on that market, the group is hindering the expansion of their products. Competitors are already ahead, taking advantage of such opportunities, and are outsourcing products internationally (Dr Pepper Snapple Group, 2017).

CONSUMER ANALYSIS

Market Segmentation

PepsiCo uses segmentation to analysis the behavior of the consumers for their products. They divide the population into groups that fit into certain characteristics that would help PepsiCo to target the audiences. An example used by PepsiCo includes the product of Diet Pepsi “which is positioned as a carbonated drink that contains less sugar among of sugar compared to Pepsi-Cola and other soft drinks.” (Dudovisky 2016) After doing multiple research, PepsiCo noticed the target audience of most of their consumers. Using the four segmentation of geographic, demographic, behavioral and psychological segmentations, the table provided below demonstrates the targeted audience that most likely will purchase a product from PepsiCo. (Dudovisky 2016)

Needs and Wants from PepsiCo

PepsiCo has done an amazing job in finding the needs and wants from its customers. An example of this includes the healthy product brands vs the well known brands the company is known for. The company has tried to sell a more healthier brand of their products to their consumers but the customers of their products have been loyal and purchased the products they have enjoyed for many years. One of the reasons that affects the PepsiCo products is based on tastes. Estrel reports that “Taste is the biggest factor in a snack purchase, according to 66% of baby boomers and 53% of millennials in a March survey by consultancy Alixpartners.” (Estrel 2016) Another example on how PepsiCo determines their products is based on the sales on whether they grow or decline. Healthy products such as the mid calorie level Pepsi Next and Quaker Yogurt have fizzled in sales while more well known brands such as Doritos and Lay’s Chips have actually increased in sales. Another factor includes the cost for the production where natural and organic products are much costlier and harder to develop. PepsiCo has been trying to earn a good reputation by offering healthier products but “The world’s biggest food companies have been trying to ramp up healthier offerings for years, but consumers haven’t given up their love for all things sweet and salty.” (Estrel 2016) While PepsiCo still offer their well known products that help them generate revenue for years, PepsiCo still try to offer new products that could provide more healthier options such as the Baked Lay’s Chips and Diet Pepsi that contain less calories and sodium.

Dudovskiy, John. “PepsiCo Segmentation, Targeting and Positioning.” Research Methodology. N.p., 9 May 2016. Web. 8 Mar. 2017.

Esterl, M. (2016, Dec 11). PepsiCo wants to sell healthy food, consumers want chips; the food and beverage giant says it wants to make more ‘good for you’ snacks, but much of its revenue growth comes from high-fat, high-salt standbys such as doritos and cheetos.Wall Street Journal (Online)

MARKETING & PRODUCT OBJECTIVES

Pepsico. is one of the leading foods and Beverages Company in the world. Its headquarters are in New York, United States. Its products are sold in more than 200 countries in the world making it the second most renowned organization in the beverage industry after Coca cola. The two compete in all market segments of the food industry. Its products range from soft drinks, snacks, bottled water, sports nutrition products and energy drinks. Other new products are reported to be in the pipeline and will be rolled out to consumers with time once complete.

The company’s current market is teenagers and young adults who have been the major consumers of its products since its launch. They consume almost 70% of its products annually and generate high profits for the company in the process. The company’s majority consumers are bases in the United States, where it is located, with the rest in countries spread all over the world. In Africa and parts of Asia, the company controls small sections of the beverages sector compared to Europe and America.

Currently the company is targeting new markets and consumers by pushing into the health sector. It has introduced Tropicana and Quaker food operations, which account for over a third of its new products segment. It has also introduced new products in China and U.S markets to compete with health food products in the two regions. China is one of the countries with the highest population growth rates in the world hence making it the main target market. It has also introduced new low-calorie fruit puree snacks set to be distributed in Tropical market regions.

The company is doing this by working with its target audience and hope the launch will be a success. They believe new health products could generate high markets and increase its market share in the world. This could increase the company’s profit that is the aim of any organization when operating. This product targets the older generations that are made up individuals over the age of 45 years who value their health and wellbeing hence do not consume most of its beverage products due to health concerns.

The company also takes up new markets by doing merging with the existing organizations in the regions that control a large portion of the market share. The organizations sell Pepsi Co.’s products and operate under its name. The owners of the acquired organizations are paid to do this by the company.

Pepsico. offers a range of products that are targeting people from all age groups and are available in almost all parts of the world. Some of the company’s revised products range from soft drinks to health foods. The soft drinks include Pepsi cola, Mountain Dew, Sierra Mist, IZZE, Naked Juice, Ocean Spray and Lipton. In internal markets, its products are Fiesta Miranda, Manzanita Sol and Kas Mas. The oldest product in this category is the Pepsi cola that was introduced when the company was starting out. Today the product is available in different varieties, which are Pepsi Wild Cherry, Caffeine-Free Diet Pepsi and Caffeine-Free Pepsi. It also has a number of energy drinks that are used by sports athletes and young people in most cases.

Some of the company’s other products include Sierra Mist, Fritos, Starbucks ready to drink beverages, Brisk, walkers, 7Up, Cheetos and Mirinda.The company is in its pilot stage of rolling out new health products in both domestic and international markets with a view of getting new consumers on board from various market segments. Some of them include Quaker foods, Gatorade and Tropicana product lines.

Pepsi Co.’s positioning in the global markets has been boosted by a number of factors in the recent years which have not only boosted its sales but also increased its market share. Some of these factors include its low-cost production costs of soft drinks which enabled it to provide drinks at a relatively lower price compared to its main competitor Coca-cola. The company’s efficient management on production and performance also boosted its profits and this has been maintained for an extended period. Its strong distribution channel target is to make sure all beverages of within reach of customers once one orders for them. They have established distribution schemes that range from direct store delivery to customer channel distributor which acts like a third party when providing products.

The company is recognized in almost every part of the world including countries such as Pakistan and Bangladesh which are hard to reach and even harder to market and sell products in due to poor governance. The company also owns products in other countries that use its trademark sign. This move has made it popular in other countries and regions where new market entrance is extremely hard.

The company’s popularity according to a recent market survey is also growing compared to its competitors in the different age groups. This is graphically shown in the perceptual map in appendix A.2.

According to the map, Pepsi products grew in popularity among the young consumers in the last five years compared to Coke whose popularity grew amongst the older generation. This shows the majority consumers preference on the beverage products from the two largest competitors in the world. ( Zameenzad, 2013)

Appendix

A.1

Segmentation Type	Criteria	PepsiCo Target
Geographic	Region Density	Domestic/International Urban/Rural
Demographic	Age Gender Life-Cycle Stages Income Occupation	15-45 Males/Females Bachelor, Single, Young Couple with no children Average to Above Average Students, Employees
Behavioral	Loyalty Degree Benefits Personality User Status	Hardcore/Softcore loyals Refreshment, good taste, spending time, satisfaction Easygoing/determined Regular users
Psychological	Social Class Lifestyle	Working Class, Middle Class Aspirer, Succeeder, Explorer

A.2 Perceptual Map

WORKS CITED

Balance. (2017, March 8). Retrieved from Dr Pepper Snapple Group:

https://www.drpeppersnapplegroup.com/company/balance

History. (2017, March 8). Retrieved from Dr Pepper Snapple Group:

https://www.drpeppersnapplegroup.com/company/history

Strategy. (2017, March 8). Retrieved from Dr Pepper Snapple Group:

https://www.drpeppersnapplegroup.com/company/strategy

PepsiCo, Inc. SWOT Analysis. (2015). PepsiCo, Inc. SWOT Analysis, 1-10.

PepsiCo Our Goals. (2016). Retrieved 03 01, 2017, from PepsiCo.com:

http://www.pepsico.com/Purpose/Performance-with-Purpose/Our-Goals

PepsiCo. (2016). Our History. Retrieved 03 01, 2017, from PepsiCo.com:

http://www.pepsico.com/Purpose/Performance-with-Purpose/Our-Goals

Zameenzad, A. (2013). Pepsi and Maria. New York: Arcadia Books.

Dudovskiy, John. “PepsiCo Segmentation, Targeting and Positioning.” Research Methodology. N.p., 9 May 2016. Web. 8 Mar. 2017.