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Project report on pepsi by divyanshu
 

Project report on pepsi by divyanshu

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I am just uploading the Project report of Pepsi co about how to expand the business and how to create more profit in the market in comparison of other brands. ...

I am just uploading the Project report of Pepsi co about how to expand the business and how to create more profit in the market in comparison of other brands.
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    Project report on pepsi by divyanshu Project report on pepsi by divyanshu Document Transcript

    • 1 | P a g e qwertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklzxcvb nmqwertyuiopasdfghjklzxcvbnmqwer tyuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklzx cvbnmqwertyuiopasdfghjklzxcvbnmq wertyuiopasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiopasdfghj klzxcvbnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmrty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc FUTURE PLANNING OF PEPSICO IN INDIA pepsico 12/6/2012 Divyanshu shekhar jha
    • 2 | P a g e FUTURE PLANNING OF PEPSICO AND THE MARKETING STRATEGY OF PEPSICO IN NEXT 5 YEARS IN INDIA PROJECT REPORT (MBA) (SESSION 2011-2013) SUBMITTED BY: DIVYANSHU SHEKHAR JHA (Fm3|ISBEPGPF11-13) divyanshujha8@gmail.com (8285506452,9654436684) Area of research-Marketing SUBMITTED TO : PROF. PANKAJ UPADHYAY
    • 3 | P a g e TABLE OF CONTENT  INTRODUCTION (4-6)  COMPANY PROFILE (7-8)  HISTORY OF PEPSI CO (9-19)  RISE OF PEPSI CO (20)  MISSION (21)  VISION (22)  COMPANY LEADER (23)  ROLE OF INDIRA NOOYI (24-28)  PEPSI CO IN INDIA (29-30)  PRODUCT PORTFOLIO (31)  MARKET ANALYSIS OF SOFT DRINK IN INDIA (32-41)  COMPETITIVE ANALYSIS (42-43)  COMPETITIVE ANALYSIS BY USING PORTER MODEL (44-45)  BCG GROWTH MATRIX OF PEPSI CO (46)  FUTURE PLANNING OF PEPSI CO AND MARKET ANALYSIS IN INDIA (47-56)  FIVE COUNTRIES CASE STUDIES WITH REGARD TO PEPSI (57- 71)  CONCLUSION (72)  RECOMMENDATION (73-75)
    • 4 | P a g e INTRODUCTION Type Public Traded as NYSE: PEP S&P 500 Component Industry Beverages Founded North Carolina, U.S. (1965) Founder(s) Donald Kendall Herman Lay Headquarters Purchase, New York, U.S. Area served Worldwide Key people Indra Nooyi (Chairman & CEO)[1] Products See list of PepsiCo products Revenue US$ 66.504 billion (2011)[2] Operating income US$ 9.633 billion (2011)[2] Net income US$ 6.462 billion (2011)[2]
    • 5 | P a g e Total assets US$ 72.882 billion (2011)[2] Total equity US$ 20.899 billion (2011)[2] Employees 297,000 (2011)[2] Subsidiaries List of subsidiaries Website PepsiCo.com At the 20's and 30's in the 20 century, Coca-Cola was the absolute leader of soft drink market. Pepsi-Cola was just a new brand at that time. Pepsi-Cola was thought of just a copy of Coca-Cola and its flavor is similar to Coca-Cola. So the Coca- Cola did not take any importance for it. But later Pepsi-Cola developed fast and became the strongest competitor to the Coca-Cola and now Pepsi shared 40% of the market. It is a big threat to the Coca-Cola. PepsiCo, Inc. is one of the world's top consumer product companies with many of the world's most important and valuable trademarks. Its Pepsi-Cola Company division is the second largest soft drink business in the world, with a 21 percent share of the carbonated soft drink market worldwide and 29 percent in the United States. Three of its brands--Pepsi-Cola, Mountain Dew, and Diet Pepsi--are among the top ten soft drinks in the U.S. market. The Frito-Lay Company division is by far the world leader in salty snacks, holding a 40 percent market share and an even more staggering 56 percent share of the U.S. market. In the United States, Frito- Lay is nine times the size of its nearest competitor and sells nine of the top ten snack chip brands in the supermarket channel, including Lay's, Doritos, Tostitos, Ruffles, Fritos, and Chee-tos. Frito-Lay generates more than 60 percent of PepsiCo's net sales and more than two-thirds of the parent company's operating profits. The company's third division, Tropicana Products, Inc., is the world leader in juice sales and holds a dominant 41 percent of the U.S. chilled orange juice market. The competitor of Pepsi in the Pakistani market is coca-cola and some local beverages are also disturbing Pepsi’s share in the market. E.g.: macca cola, amrat cola and some others. Pepsi is the leading cola in the world doing business in
    • 6 | P a g e more than 190 countries and because of this it is very famous in every country. As Pepsi is a very rich brand so the advertises for its popularity are also very costly because Pepsi hire’s most famous stars from show biz or from the world of sports means cricket, football, car racing and tennis e.t.c. all the famous stars from the world have worked in the Pepsi advertise. Pepsi is one of the most well known brands in the world today available in over 200 countries. The company has an extremely positive outlook for India. This reflects that India holds a central position in Pepsi's corporate strategy. India is a key market for Pepsi co, and at the same time the company has added value to Indian agriculture and industry. PepsiCo entered India in 1989 and is concentrating in three focus areas - Soft drink concentrate, snack foods and vegetable and food processing. Faced with the existing policy framework at the time, the company entered the Indian market through a joint venture with Volta’s and Punjab Agro Industries. With the introduction of the liberalization policies since 1991, Pepsi took complete control of its operations. The government has approved more than US$ 400 million worth of investments of which over US$ 330 million have already flown in. One of PepsiCo's key strategies was to develop a completely local management team. Pepsi has 19 company owned factories while their Indian bottling partners own 21. The company has set up 8 Greenfield sites in backward regions of different states. PepsiCo intends to expand its operations and is planning an investment of approximately US$ 150 million in the next two-three years.
    • 7 | P a g e PROFILE OF THE COMPANY International Pepsi Company is a large conglomerate with interests in manufacturing, marketing and selling a wide variety of carbonated and non carbonated beverages, as well as salty, sweet and grain based snacks, and other foods.PepsiCo is a world leader in convenient snacks, foods and beverages, with revenues of more than $39 billion and over 185,000 employees. PepsiCo International (PI)PI includes all PepsiCo businesses in the United Kingdom, Europe, Asia, Middle East and Africa. Shareholders PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the Chicago and Swiss stock exchanges. PepsiCo has consistently paid cash dividends since the corporation was founded.
    • 8 | P a g e Corporate Citizenship At PepsiCo, we believe that as a corporate citizen, we have aresponsibility to contribute to the quality of life in our communities. This philosophy is expressed in our sustainability vision which states:“PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic creating a better tomorrow than today.”Our vision is put into action through programs and a focus onenvironmental stewardship, activities to benefit society, and acommitment to build shareholder va lue by making PepsiCo a Truly sustainable company. PepsiCo Headquarters PepsiCo World Headquarters is located in Purchase, New York,approximately 45 minutes from New York City. The seven-building headquarters complex was designed by Edward Durrell Stone, one of America's foremost architects. The building occupies 10 acres of a 144-acre complex that includes the Donald M. Kendall Sculpture Gardens, a world- acclaimed sculpture collection in a garden setting
    • 9 | P a g e The History Of Pepsi Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the invention of Caleb Bradham (left), a pharmacist and drugstore owner in New Bern, North Carolina. The summer of 1898, as usual, was hot and humid in New Bern, North Carolina. So a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices, and syrups trying to create a refreshing new drink to serve his customers. He succeeded beyond all expectations because he invented the beverage known around the world as Pepsi-Cola. Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn it into a gathering place. He did so by concocting his own special beverage, a soft drink. His creation, a unique mixture of kola nut extract, vanilla and rare oils, became so popular his customers named it "Brad's Drink." Caleb decided to rename it "Pepsi-Cola," and advertised his new soft drink. People responded, and sales of Pepsi-Cola started to grow, convincing him that he should form a company to market the new beverage. In 1902, he launched the Pepsi-Cola Company in the back room of his pharmacy, and applied to the U.S. Patent Office for a trademark. At first, he mixed the syrup himself and sold it exclusively through soda fountains. But soon Caleb recognized that a greater opportunity existed to bottle Pepsi so that people could drink it anywhere. The business began to grow, and on June 16, 1903, "Pepsi-Cola" was officially registered with the U.S. Patent Office. That year, Caleb sold 7,968 gallons of syrup, using the theme line "Exhilarating, Invigorating, Aids Digestion." He also began awarding franchises to bottle Pepsi to independent investors, whose number grew from just two in 1905, in the cities of Charlotte and Durham, North Carolina, to 15 the following year, and 40 by 1907. By the end of 1910, there were Pepsi- Cola franchises in 24 states. Pepsi-Cola's first bottling line resulted from some less-than-sophisticated engineering in the back room of Caleb's pharmacy. Building a strong franchise
    • 10 | P a g e system was one of Caleb's greatest achievements. Local Pepsi-Cola bottlers, entrepreneurial in spirit and dedicated to the product's success, provided a sturdy foundation. They were the cornerstone of the Pepsi-Cola enterprise. By 1907, the new company was selling more than 100,000 gallons of syrup per year. Growth was phenomenal, and in 1909 Caleb erected a headquarters so spectacular that the town of New Bern pictured it on a postcard. Famous racing car driver Barney Oldfield endorsed Pepsi in newspaper ads as "A bully drink...refreshing, invigorating, a fine bracer before a race." The previous year, Pepsi had been one of the first companies in the United States to switch from horse-drawn transport to motor vehicles, and Caleb's business expertise captured widespread attention. He was even mentioned as a possible candidate for Governor. A 1913 editorial in the Greensboro Patriot praised him for his "keen and energetic business sense." Pepsi-Cola enjoyed 17 unbroken years of success. Caleb now promoted Pepsi sales with the slogan, "Drink Pepsi-Cola. It will satisfy you." Then came World War I, and the cost of doing business increased drastically. Sugar prices see sawed between record highs and disastrous lows, and so did the price of producing Pepsi- Cola. Caleb was forced into a series of business gambles just to survive, until finally, after three exhausting years, his luck ran out and he was bankrupted. By 1921, only two plants remained open. It wasn't until a successful candy manufacturer, Charles G. Guth, appeared on the scene that the future of Pepsi-Cola was assured. Guth was president of Loft Incorporated, a large chain of candy stores and soda fountains along the eastern seaboard. He saw Pepsi-Cola as an opportunity to discontinue an unsatisfactory business relationship with the Coca- Cola Company, and at the same time to add an attractive drawing card to Loft's soda fountains. He was right. After five owners and 15 unprofitable years, Pepsi- Cola was once again a thriving national brand. One oddity of the time, for a number of years, all of Pepsi-Cola's sales were actually administered from a Baltimore building apparently owned by Coca-Cola, and named for its president. Within two years, Pepsi would earn $1 million for its new owner. With the resurgence came new confidence, a rarity in those days because the nation was in the early stages of a severe economic decline that came to be known as the Great Depression.
    • 11 | P a g e  1898 Caleb Bradham, a New Bern, North Carolina, pharmacist, renames "Brad's Drink," a carbonated soft drink he created to serve his drugstore's fountain customers. The new name, Pepsi-Cola, is derived from two of the principal ingredients, pepsin and kola nuts. It is first used on August 28.  1902 Bradham applies to the U.S. Patent Office for a trademark for the Pepsi-Cola name.  1903 In keeping with its origin as a pharmacist's concoction, Bradham's advertising praises his drink as "Exhilarating, invigorating, aids digestion."  1905 A new logo appears, the first change from the original created in 1898.  1906 The logo is redesigned and a new slogan added: "The original pure food drink." The trademark is registered in Canada.  1907 The Pepsi trademark was registered in Mexico.  1909 Automobile racing pioneer Barney Oldfield becomes Pepsi's first celebrity endorser when he appears in newspaper ads describing Pepsi-Cola as "A bully drink...refreshing, invigorating, a fine bracer before a race." The theme "Delicious and Healthful" appears, and will be used intermittently over the next two decades.  1920 Pepsi appeals to consumers with, "Drink Pepsi-Cola. It will satisfy you."  1932 The trademark is registered in Argentina.  1934 Pepsi begins selling a 12-ounce bottle for five cents, the same price charged by its competitors for six ounces.  1938 The trademark is registered in the Soviet Union.
    • 12 | P a g e  1939 A newspaper cartoon strip, "Pepsi & Pete," introduces the theme "Twice as Much for a Nickel" to increase consumer awareness of Pepsi's value advantage.  1940 Pepsi makes advertising history with the first advertising jingle ever broadcast nationwide. "Nickel, Nickel" will eventually become a hit record and will be translated into 55 languages. A new, more modern logo is adopted.  1941 In support of America's war effort, Pepsi changes the color of its bottle crowns to red, white and blue. A Pepsi canteen in Times Square, New York, operates throughout the war, enabling more than a million families to record messages for armed services personnel overseas.  1943 The "Twice as Much" advertising strategy expands to include the theme, "Bigger Drink, Better Taste."  1949 "Why take less when Pepsi's best?" is added to "Twice as Much" advertising.  1950 "More Bounce to the Ounce" becomes Pepsi's new theme as changing soft drink economics force Pepsi to raise prices to competitive levels. The logo is again updated.  1953 Americans become more weight conscious, and a new strategy based on Pepsi's lower caloric content is implemented with "The Light Refreshment" campaign.  1954 "The Light Refreshment" evolves to incorporate "Refreshing without Filling."  1958 Pepsi struggles to enhance its brand image. Sometimes referred to as "the kitchen cola," as a consequence of its long-time positioning as a bargain brand, Pepsi now identifies itself with young, fashionable
    • 13 | P a g e consumers with the "Be Sociable, Have a Pepsi" theme. A distinctive "swirl" bottle replaces Pepsi's earlier straight-sided bottle.  1959 Soviet Premier Nikita Khrushchev and U.S. Vice-President Richard Nixon meet in the soon-to-be-famous "kitchen debate" at an international trade fair. The meeting, over Pepsi, is photo-captioned in the U.S. as "Khrushchev Gets Sociable."  1961 Pepsi further refines its target audience, recognizing the increasing importance of the younger, post-war generation. "Now it's Pepsi, for Those who think Young" defines youth as a state of mind as much as a chronological age, maintaining the brand's appeal to all market segments.  1963 In one of the most significant demographic events in commercial history, the post-war baby boom emerges as a social and marketplace phenomenon. Pepsi recognizes the change, and positions Pepsi as the brand belonging to the new generation-The Pepsi Generation. "Come alive! You're in the Pepsi Generation" makes advertising history. It is the first time a product is identified, not so much by its attributes, as by its consumers' lifestyles and attitudes.  1964 A new product, Diet Pepsi, is introduced into Pepsi-Cola advertising.  1966 Diet Pepsi's first independent campaign, "Girl watchers," focuses on the cosmetic benefits of the low-calorie cola. The "Girl watchers" musical theme becomes a Top 40 hit. Advertising for another new product, Mountain Dew, a regional brand acquired in 1964, airs for the first time, built around the instantly recognizable tag line, "Ya-Hoo, Mountain Dew!"
    • 14 | P a g e  1967 When research indicates that consumers place a premium on Pepsi's superior taste when chilled, "Taste that beats the others cold. Pepsi pours it on" emphasizes Pepsi's product superiority. The campaign, while product- oriented, adheres closely to the energetic, youthful, lifestyle imagery established in the initial Pepsi Generation campaign.  1969 "You've got a lot to live. Pepsi's got a lot to give" marks a shift in Pepsi Generation advertising strategy. Youth and lifestyle are still the campaign's driving forces, but with "Live/Give," a new awareness and a reflection of contemporary events and mood become integral parts of the advertising's texture.  1973 Pepsi Generation advertising continues to evolve. "Join the Pepsi People, Feelin' Free" captures the mood of a nation involved in massive social and political change. It pictures us the way we are-one people, but many personalities.  1975 The Pepsi Challenge, a landmark marketing strategy, convinces millions of consumers that Pepsi's taste is superior.  1976 "Have a Pepsi Day" is the Pepsi Generation's upbeat reflection of an improving national mood. "Puppies," a 30-second snapshot of an encounter between a very small boy and some even smaller dogs, becomes an instant commercial classic.  1979 With the end of the '70s comes the end of a national malaise. Patriotism has been restored by an exuberant celebration of the U.S. bicentennial, and Americans are looking to the future with renewed optimism. "Catch that Pepsi Spirit!" catches the mood and the Pepsi Generation carries it forward into the '80s.
    • 15 | P a g e  1982 With all the evidence showing that Pepsi's taste is superior, the only question remaining is how to add that message to Pepsi Generation advertising. The answer? "Pepsi's got your Taste for Life!," a triumphant celebration of great times and great taste.  1983 The soft drink market grows more competitive, but for Pepsi drinkers, the battle is won. The time is right and so is their soft drink. It's got to be "Pepsi Now!"  1984 A new generation has emerged-in the United States, around the world and in Pepsi advertising, too. "Pepsi. The Choice of a New Generation" announces the change, and the most popular entertainer of the time, Michael Jackson, stars in the first two commercials of the new campaign. The two spots quickly become "the most eagerly awaited advertising of all time."  1985 Lionel Richie leads a star-studded parade into "New Generation" advertising followed by pop music icons Tina Turner and Gloria Estefan. Sports heroes Joe Montana and Dan Marino are part of it, as are film and television stars Teri Garr and Billy Crystal. Geraldine Ferraro, the first woman nominated to be vice president of the U.S., stars in a Diet Pepsi spot. And the irrepressible Michael J. Fox brings a special talent, style and spirit to a series of Pepsi and Diet Pepsi commercials, including a classic, "Apartment 10G."  1987 After an absence of 27 years, Pepsi returns to Times Square, New York, with a spectacular 850-square foot electronic display billboard declaring Pepsi to be "America's Choice."
    • 16 | P a g e  1988 Michael Jackson returns to "New Generation" advertising to star in a four-part "episodic" commercial named "Chase." "Chase" airs during the Grammy Awards program and is immediately hailed by the media as "the most-watched commercial in advertising history."  1989 "The Choice of a New Generation" theme expands to categorize Pepsi users as "A Generation Ahead!"  1990 Teen stars Fred Savage and Kirk Cameron join the "New Generation" campaign, and football legend Joe Montana returns in a spot challenging other celebrities to taste test their colas against Pepsi. Music legend Ray Charles stars in a new Diet Pepsi campaign, "You got the right one baby."  1991 "You got the Right one Baby" is modified to "You got the Right one Baby, Uh-Huh!" The "Uh-Huh Girls" join Ray Charles as back-up singers and a campaign soon to become the most popular advertising in America is on its way. Supermodel Cindy Crawford stars in an award-winning commercial made to introduce Pepsi's updated logo and package graphics  1992 Celebrities join consumers, declaring that they "Gotta Have It." The interim campaign supplants "Choice of a New Generation" as work proceeds on new Pepsi advertising for the '90s. Mountain Dew growth continues, supported by the antics of an outrageous new Dew Crew whose claim to fame is that, except for the unique great taste of Dew, they've "Been there, Done that, Tried that."  1993 "Be Young, Have fun, Drink Pepsi" advertising starring basketball superstar Shaquille O'Neal is rated as best in U.S.
    • 17 | P a g e  1994 New advertising introducing Diet Pepsi's freshness dating initiative features Pepsi CEO Craig Weatherup explaining the relationship between freshness and superior taste to consumers.  1995 In a new campaign, the company declares "Nothing else is a Pepsi" and takes top honors in the year's national advertising championship.  Mountain Dew sponsors the Grammy Awards. Theme line is “ Been There, Done That, Tried That.”  The Pepsi Lipton Tea Partnership debuts new ad campaign emphasizing, “There’s only one Original.”  Pepsi –Cola introduces Smooth Moos Smoothies, a line of low –fat dairy shakes. 7UP International launches 7UPIceCola, a new clear cola.  1996 Mountain Dew launches a massive beeper network called “The Mountain Dew Extreme Network.” Pepsi Co, Inc. and Lucas film Ltd. announce the largest promotional alliance in entertainment history, linking existing and future Star Wars series with PepsiCo beverages, snack foods and restaurant brands worldwide. Pepsi Cola and MTV establish a partnership to develop international programming, cross promotions, marketing tie-ins and specials events.  1997 Pepsi –Cola introduces new advertising campaign with the theme “Generation Next.”
    • 18 | P a g e Pepsi –Cola North American bottling operations become a separate unit called The Pepsi- Cola Bottling Co. National rollout of Aquafina bottled water. Pepsi –Cola celebrates 100th Anniversary with first worldwide bottlers’ conference, held in Hawaii. The event is held during the same time as first bottler’s conference.  1998 Pepsi –Cola introduce two –liter plastic bottle with built in “grip handle” that makes it easier to grip and pour.” Pepsi introduce new look called the “Globe” which prominently features a 3- dimensiponal Globe against a blue ice backdrop. PepsiCo acquires Tropicana Products from Seagram Company Ltd., the biggest acquisition ever undertaken by PepsiCo. Anthony Rossi founded Tropicana in 1947. its major brand is Tropicana Pure Premium Juices. In March, the Pepsi Bottling Group, the world’s largest Pepsi bottler, begins trading on the New York Stock Exchange. It is listed under the symbol PBG. The $ 3.2 billon public offering is among the biggest initial public offerings in stock market history.  1999 Pepsi launches “The Joy of Colas” advertising campaign.  2000 Pepsi-Cola revivers it’s “Pepsi Challenge” advertising campaign. Challenge includes Pepsi One Diet Coke as well as cola. Pepsi-Cola teams up with Yahoo Inc. the biggest web navigation company, in a multimedia marketing campaign aimed at teens and young adults. Pepsi-Cola launches” Sierra Mist” a caffeine-free, lemon/lime soda.  2001 Pepsi-Cola Company launches Dole single –server juices in vending machines, coolers and other retail outlets throughout the United States. Pepsi-Cola’s flagship brand will have NEW TAGLINE,” The Joy Of Pepsi.” Pepsi-Cola launches the bold new Mountain Dew code Red nationwide. It is Mountain Dew’s first line extension since the introduction of the Diet Mountain Dew in 1988.
    • 19 | P a g e PepsiCo introduces a new corporate logo. Diet Sierra Mist is introduced.  2002 Diet Pepsi has a new look Aquafina debuts new line of great-tasting enhanced water. Aquafina Essentials target active, health-conscious adults in four lightly sweetened varieties including B-Power, Calcium+, Daily C and Multi-Vin 20-oz bottles. Pepsi Brand Pepsi has a new look. PepsiCo publishes Health and Wellness Philosophy. (on pepsico.com) PepsiCo introduces Marathon Kids, a program that encourages kids and their families to be more physically active, the program debuts in Dallas, TX.  2003 Pepsi-Cola launches Sierra Mist nationally. Pepsi announces plans to launch Mt. Dew Livewire, an orange drink, this summer Pepsi-Cola sings an exclusive four-year sponsorship deal with the Canadian Hockey Association, making Pepsi the official soft drink. Pepsi announces four-year sponsorship agreement with the UK Football Association. “Pepsi Stuff” Campaign kicks-off in Canada. PepsiCo creates PepsiCo International, the business that will unite all international snack, beverages and food units in an effort to drive faster growth and improved profitability around the world.  2004 Pepsi-Cola to launch Pepsi Edge, the first full-flavored cola with 50% less sugar, carbohydrates and calories than regular cola.  2005 PepsiCo re lauched Mirind Lemon (ginger flavored). The story still not end---------------------------
    • 20 | P a g e During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle "Pepsi cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too / Pepsi-Cola is the drink for you," Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of six ounces a bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. In 1936 alone 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola's profits doubled. Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth.
    • 21 | P a g e
    • 22 | P a g e "PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company. Performance with Purpose At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society delivering what we call Performance with Purpose.
    • 23 | P a g e Leadership PepsiCo is a company full of strong, talented individuals starting with the company leadership. Get to know the inspiring people helping lead PepsiCo on its 'Performance with Purpose' journey. Saad Abdul-Latif Zein Abdalla President, PepsiCo Chief Executive Officer, PepsiCo Asia Middle East, Africa Albert P. Carey Brian Cornell Chief Executive Officer, Chief Executive Officer, Pepsico Americas Beverages PepsiCo Americas Foods ,
    • 24 | P a g e Indra K. Nooyi Chairman and Chief Executive Officer, PepsiCo Chief Executive Officer (CEO) Role and Responsibility Mandate The mandate of the CEO is to manage the day-to-day operations of the PCC and ensure that operations are consistent with the policies developed by the Board of Directors and are carried out in such a way that meets the requirements of the Capital Commission Act. Accountabilities The CEO is accountable to the Board for: • contributing to the development of annual goals and objectives • ensuring that Commission procedures and overall management are designed in accordance with established Board policy • keeping the Board informed of existing or impending Board policy issues Duties and Responsibilities
    • 25 | P a g e The CEO is responsible to the Board. The Board and the CEO work together to develop policies and plans consistent with the mandate as expressed by the Shareholder. The Board is responsible to ensure the CEO is not subjected to political interference. a) Operations 1. Develop and implement operational policies, strategic plans, and Annual Operating Plans to guide the PCC within the limits prescribed, delegated authority, and the framework of the strategic directions approved by the Board 2. Operate the PCC within established policies, maintain a regular policy review process, and revise or develop policies for presentation to the Board 3. Ensure the PCC operates within all regulatory requirements of a Crown Corporation 4. Ensure the PCC operates within approved budgets and operating plans 5. Keep abreast of issues which may significantly impact the PCC 6. Ensure the PCC meets audit requirements. b) Human Resources 1. Create and maintain an organizational environment that promotes positive staff morale and performance 2. Ensure effective human resources programs are developed and maintained to support the
    • 26 | P a g e strategic goals of the PCC (including recruiting, performance management, training, succession planning, employee relations, and compensation) 3. Direct, motivate and maintain a competent, well-trained, flexible and responsive staff capable of meeting current and future needs 4. Develop and recommend the overall PCC organizational structure and staffing to the Board 5. Develop and maintain an annual Board-approved plan for the development and succession management. Role The function and duties and the delegated responsibilities of the CEO (specified by the Board of Directors pursuant to Part 2 – 2, contained herein) are to: 1. develop annual planning guidelines, oversee the development of the Corporation’s annual Service Plan and recommend strategies to achieve the Corporation goals and objectives 2. develop, and recommend to the Board, the annual operating and capital budget 3. upon approval of the service plan and annual budget and with full delegated authority, implement the plan in its entirety4. inform Chair of expenditures out of CEO contingency
    • 27 | P a g e 5. monitor the Corporation’s performance against objectives and provide a quarterly performance report to the Board 6. oversee the day-to-day operations and activities of the PCC 7. upon informing the Board, exercise authority to approve: all goods and services purchases, all capital purchases under $1 million, lease commitments under $1 million, and disposition of tangible assets with a market value of less than $1 million 8. oversee the preparation of quarterly budget variance reports, the annual report and annual financial statements 9. be accountable to the Board of Directors for the activities of the PCC, carry out the functions and duties that the Board specifies and provide a highlight report featuring issues that management has or will be addressing 10. maintain overall responsibility to the Board of Directors for the implementation of Board policies and the efficient and effective operations of the Corporation 11. work to support Board members and the Chair 12. participate in an annual CEO performance evaluation (See Appendix 4) 13. provide interpretation of government policy to the Board of Directors 14. provide leadership and direction to staff of the PCC
    • 28 | P a g e 15. exercise delegated authority to appoint officers and employees necessary to carry on the business and operations of the Corporation, define their duties, determine their remuneration, evaluate their performance, take disciplinary action as required, negotiate the collective agreement and handle all union grievances 16. act as a primary spokesperson for the Corporation 17. communicate closely with the public regarding the operation of the PCC 18. perform such other duties or activities as required by the Board from time-to- time.
    • 29 | P a g e PepsiCo In India PepsiCo entered India in 1989 and has grown to become one of the country’s leading food and beverage companies. One of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India. PepsiCo India and its partners have invested more than U.S.$1 billion since the company was established in the country. PepsiCo provides direct and indirect employment to 150,000 people including suppliers and distributors.
    • 30 | P a g e PepsiCo nourishes consumers with a range of products from treats to healthy eats, that deliver joy as well as nutrition and always, good taste. PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana Twister and Slice. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to the diverse range of brands. PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands. The company’s high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to consumers. Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary nutritional labeling on their packets. The group has built an expansive beverage and foods business. To support its operations, PepsiCo has 43 bottling plants in India, of which 15 are company owned and 28 are franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-the-art plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better than today. PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.
    • 31 | P a g e PRODUCTS OF PEPSI
    • 32 | P a g e Soft and Aerated Drinks The 50-bn-rupee soft drink industry is growing now at 6 to 7% annually. In India, Coke and Pepsi have a combined market share of around 95% directly or through franchisees. Campa Cola has a 1% share, and the rest is divided among local players. Industry watchers say, fake products also account for a good share of the balance. There are about 110 soft drink producing units (60% being owned by Indian bottlers) in the country, employing about 125,000 people. There are two distinct segments of the market, cola and non-cola drinks. The cola segment claims a share of 62%, while the non-cola segment includes soda, clear lime, cloudy lime and drinks with orange and mango flavours. The per capita consumption of soft drinks in India is around 5 to 6 bottles (same as Nepal's) compared to Pakistan's 17 bottles, Sri Lanka's 21, Thailand's 73, the Philippines 173 and Mexico 605. The industry contributes over Rs 12 bn to the exchequer and exports goods worth Rs 2 bn. It also supports growth of industries like glass, refrigeration, transportation, paper and sugar. The Department of Food Processing Industries had stipulated that 'contains-no-fruit-juice' labels be pasted
    • 33 | P a g e on returnable glass bottles. About 85% of the soft drinks are currently sold in returnable bottles. There was a floating stock of about 1000 mn bottles valued at Rs 6 bn. If the industry were to abide by the new guidelines, it would have to invest in new bottles, resulting in a cost outgo of Rs 5 bn. Neither Coke nor Pepsi is in a position to invest such a large amount. Around 400,000 tonnes of raw material would be required to replace the existing stock of bottles. Instead, the soft drink industry suggested that a seven-year moratorium be extended to the industry so that it can incorporate the change in a phased manner. There is no such mandatory requirement anywhere in the world to specifically label the glass surface of returnable bottles. The government has decided to extend the date for replacing the bottles to end-march 2006. In the meantime, the producers have shifted substantially to the use of PET bottles. Soft and aerated drinks were considered products for the middle class and the affluent. That segregation is no more valid. Soft and aerated drinks are consumed by all except those who cannot afford to buy any drink. An NCAER study says that 91% soft drink sales are made to the lower, middle and upper middle classes. The soft drink industry has been urging the government to categorise aerated waters (soft drinks) equitably with other consumer products of mass consumption and remove special excise duty. The industry estimates that the beverage market should grow at twice the rate of GDP growth. The Indian market should have, therefore, grown by atleast 12%. However, it has been growing at a rate of about 6%. In contrast, the Chinese
    • 34 | P a g e market grew by 16% a year, while the Russian market expanded at almost four times the rate of growth of the Indian market. It may be recalled that Coca-Cola, the world's number one player, was present in India for a long time in collaboration with an Indian producer but was thrown out in the late 1970s. It reappeared in India following the economic liberalization era - but after its rival, world's number two, had already entered in a big way following a long and tough fight against the opposition from the domestic producers. When Coca-Cola re-entered, it installed a new milestone. It acquired the well flourishing India's top player, Parle. Since then it is basically a fight between the two American giants. Others are playing a peripheral role, as adjuncts to the two MNCs. World's third biggest player, Cadbury Schweppes, had also made an entry but was gobbled up by Coca-Cola. When Coca-Cola acquired Parle brands, it was, in fact, buying the bottling facilities, the marketing network, and the established consumer preference during the market build-up. The brands were a drag on the global brand. Since Coca-Cola was not interested in brands (like Thumps Up), it did not promote them. The result, at least, in the short run was a loss of the market to the competitor. Coca-Cola decided to market more effectively the Parle brands. It had in its armoury Coke, Thumps Up, Limca and Fanta. The latest to enter market was Parle’s erstwhile Rimzim, alongside Portello, a black currant flavoured drink, very popular in Srilanka. Coca-Cola operates through 35 plants and 16 franchisees throughout the country, while PepsiCo has 20 plants, but it has 7 more franchisees at 23 to 16 of its rival. Coca-Cola claims a market share of 51%, while Pepsi has a share of 46%. The
    • 35 | P a g e claims, however, remain disputed. The other smaller players like Pure Drinks Ltd claim the rest of the market. The shares of the two lead players are consolidated figures, which include the respective bottlers. Coca-Cola had approached the government for a five year extension for divesting 49% equity in its bottling subsidiary, Hindustan Coca-Cola Holdings. It had set up the marketing subsidiary as part of its strategy to integrate all its bottling operations, both company- owned and franchisee bottlers, apparently keeping in line with its global policy. All together, it had bought initially over 38 franchisee bottlers. Kandhari Beverages, coke bottlers for north have been eyeing to lift a stake in Coca-Cola India. Coca-Cola had filed an application to offload 49% stake of its bottling operations in favour of their Indian operators. Besides Kandhari, three other bottlers, one each from Uttar Pradesh, Gujarat and Jammu, were lined up to invest in Hindustan Coca-Cola Holding. Kandhari has already invested Rs 300 mn in 1999 and 2000 to upgrade its capacity. The total investment by all the four was expected to be Rs 1000 mn. Both Coca-Cola and PepsiCo planned for the launch of lemon-flavored versions of their products. Both have been expanding their non-carbonated drink line-ups, as consumers seem to be shifting away from carbonated soft drinks. PepsiCo is deliberating whether to come out with Pepsi Twist, a cola mixed with lemon. But while both companies have juice sports drinks, bottled water and other such drinks in their line-ups, neither coke nor Pepsi has launched a new national variety of a cola-flavoured carbonated soft drink in years. PepsiCo had achieved Rs 3 bn worth of exports, which include processed foods,
    • 36 | P a g e basmati rice, guar gum and soft drinks concentrate. PepsiCo completed the second phase of its expansion and with this expansion, PepsiCo was to explore the possibility of expanding the export of concentrates to more countries in addition to the exports to Russia and other South Asian countries. Pepsi India has entered into a marketing tie up with Hindustan Lever to promote sales of soft drinks through Pepsi-HLL network of vending machines and fountains. The major soft drink brand in the Pepsi stable are Pepsi, 7UP, Mirinda, Tropicana and Acquafina. As a major strategic departure, both MNCs were expanding their brand range. Consequent to some diversifying moves, at present, the sales ratio of Coca-Cola between soft drinks and other beverages is 95.5. The company intended to change this to 80:20 in the next three years. Its juice brand, Maaza - acquired from Parle a few years ago - is being given a major thrust. It has plans to go in for canned coffee, iced tea and purified categories under expansion schemes. It has already launched its bottled water brand, Kinley, in the Indian market. Besides, it is intending to acquire domestic brands in the non-carbonated beverages segment. The global deal between Coca-Cola and P&G to form a snacks and beverages joint venture company was reported to have slipped into rough weather. The P&G brand of potato wafer, Pringles, seemed to be faced with distribution problems in India. P&G had globally tied up with Coca-Cola to form a stand-alone juice and snacks company. The new firm is focused on developing and marketing new juices, juice based beverages and snacks on a global basis. The Sharjah-based Allied Beverages was pushing its Ahlan brand in India, having entered the market in mid-2000. Its target was carbonated drinks market
    • 37 | P a g e in PET bottles. Its plans were to launch a PET bottle in the popular 300 ml category. Ahlan expected to gain a 12% share of the total PET bottle market in northern India. Of the total market, PET bottle segment is approximately 12%. Presently, Allied Beverages has a manufacturing unit at Dharuhera in Haryana. The product range includes carbonated drinks - cola, orange, lemon and soda in three pack sizes - 500 ml, 1500 ml and 2000 ml. Allied Beverages sells non- carbonated drinks in 200 ml foodgrade cups priced at Rs 7 in its portfolio, available in four different flavours. The company's future plans include pulp- based fruit drinks in flavours, which will be available in 200 ml non-returnable glass bottles. IFB Agro Industries has handed over the distribution rights of Cadbury Schweppes in favour of Coco-Cola India, following the global takeover of Schweppes beverages by Coke. The company still retains the bottling rights for the beverages. It was noticed for the first time during the summer of 2004 that soft drink companies were registering a slower growth in the sale of bottled water at 20% compared to 35% in case of drinks.
    • 38 | P a g e Aerated Soft Drinks Demand: Past & Future Year mn cases 1991-92 115 1992-93 125 1993-94 135 1994-95 150 1995-96 165 1996-97 180 1997-98 194 1998-99 209 1999-00 225 2000-01 243 2001-02 262 2002-03 279 2003-04 291 2004-05 310 2005-06 330 2006-07 359 2007-08 373 2008-09 388
    • 39 | P a g e 2009-10 2014 403 Lead Players & Alliances Company Share (%) Aradhana 34 Varun Beverages 15 Devyani Beverages 9 Kandhari Beverages 7 Ludhiana Beverages 7 Sri Sarvarya Sugars 6 Pearl Drinks 5 Pearl Beverages 6
    • 40 | P a g e Leading Brands Coca Cola, Thums Up, Limca, Fanta, Gold Spot, Rim Zim, Maaza, Pepsi, Mirinda, 7'UP, Mangola, Slice, Duke's, Lemonada, Crush, Canada Dry, Campa. Market Growth Rates 1990-91 - 1996-97 9.4% 1996-97 - 2001-02 7.8% 2001-02 - 2006-07 6.5% 2004-05 - 2009-10 5.4% 2009-10 – 2014-15 3.5% Sensitivity Coefficient 5.2% Market Segmentation Segment Share (%) North 24 East 18 West 32 South 26 Rural 30 Urban 70
    • 41 | P a g e Market Structure Product Variation Company Share (%) Cola Drinks: Thums Up 29 Coca Cola 25 Pepsi 18 Non Cola Drinks: Gold Spot 2 Fanta 9 Mirinda 8 Limca 9 Overall Colas 62 Lemon: Cloudy 7 Clear 3 Orange 17 Mango 3
    • 42 | P a g e PEPSICO operates in a highly competitive market. They compete against global, regional, local, and private label manufacturers on the basis of price, quantity, product variety, and distribution. Their chief competitor is The Coca-Cola Company. Coca-Cola currently has a slightly larger share of carbonated soft drink (CSD) consumption in the U.S. and maintains a significant CDS share advantage in many markets outside North America. However, PEPSICO has a larger share of chilled juices and isotonics and PepsiCo International’s snack brands hold significant leadership positions in the snack industry worldwide. According to PepsiCo’s 2006 Annual Report, corporate management believes that the strength of their brands, innovation and marketing, coupled with the quality of their products and flexibility of their distribution network allows the corporation to compete effectively. With this said, PepsiCo is the world’s second largest food and beverage company,
    • 43 | P a g e accounting for almost $40 billion net sales. They beat out their chief competitor in the CSD market, Coca-Cola by nearly $20billion and are second only to the Nestle Corporation in net sales. PepsiCo’s many subdivisions and brands also allow the corporation to succeed in their competitive markets. PepsiCo currently owns 21 “mega-brands”, which generate sales revenues of at least $1billion each. Five of these 17 generate more than $5 billion each. Along with this massive brand equity, PepsiCo and its subdivisions also rely on their efficient distribution systems to maintain a competitive edge over other corporations.
    • 44 | P a g e COMPETITIVE ANALYSIS OF PEPSICO BY USING PORTER MODEL PepsiCo produces soft-drinks, snack foods and other beverages. Its operations are conducted through PepsiCo, Frito-lay, and Quaker brands both domestically and internationally. The competitive analysis of PepsiCo is done using Michael porter’s Five Force Model. Rivalry among existing competitors: The PepsiCo and Coca-Cola form a strong duopoly market in this industry. The desire to be the market leader or to corner a large market share leads to great rivalry between these two giants. Greater competition for market share and increased cost pressure has resulted in weaker companies losing market share to these two companies.
    • 45 | P a g e Threat of New entrants: The beverages and food industries are highly saturated, as a result of which the barriers to new entrants are generally very low. With strong presence in the market Pepsi and Coco-cola enjoys good relationship with retail channels. This has enabled them to defend their position in the market thus increasing the barriers for new entrants. Threat of Substitutes: There seems to be a perceptible threat of substitutes emerging as replacements with increasing popularity of fresh juices. This occurred due to the shift in consumption pattern of the people towards increased awareness of health consciousness. This is further enhanced by the declining prices of substitutes like Tea, Milk, Beer, Coffee, and Wine etc. Juices already enjoy high levels of penetration and frequency as a result of habitual drinking by consumers in the morning. Bargaining power of Buyers: The bargaining power of buyers is more in case of purchases made at super markets and mass merchandisers. This will reduce the profitability of PepsiCo. Whereas in case of then vending machines the buyers do not enjoy any bargaining power. Bargaining power of Suppliers: The primary suppliers are those who supply sugar and packaging materials. As both sugar and aluminium are present abundant in the market, also there exist huge competition in these two industries, the bargaining power of the suppliers is low.
    • 46 | P a g e BCG Growth Share Matrix
    • 47 | P a g e FUTURE PLANNING OF PEPSICO. IN INDIA Currently PepsiCo India buy the right to PepsiCo bagging the title sponsorship of the forthcoming Indian Premier League (IPL) for just under Rs 397 crore for the next five years starting January 1, 2013. Cricket has been a national passion in India and IPL with its easy-to-consume format, glamour and razzmatazz has made it a must-have in any mass-marketer's annual budgetary allocation. In the recently concluded bid, Pepsi-Co has gone ahead and made a hefty outlay towards the title rights, which a rival company's head, on condition of anonymity, points out is a big risk to take especially in the current unpredictable economic scenario. Plans to increase advertising and marketing support behind its global brands by $500-$600 million in 2012, with particular focus on North America; going forward, it expects to maintain or increase that rate of support as a percentage of revenues Multi-year productivity program expected to generate $1.5 billion of incremental cost savings by 2014 through optimization of operating practices and organization structure, including a reduction in force of about 8,700 employees, about 3 percent of global workforce
    • 48 | P a g e Company targets high-single-digit core constant currency* EPS growth for 2013 and beyond after a transition year in 2012, in which it expects core constant currency EPS to decrease by 5% Announces plan to increase returns to shareholders in the form of higher dividends and share repurchases in 2012 PepsiCo (NYSE: PEP) announced today a series of strategic investment and productivity initiatives to deliver top-tier, sustainable long-term growth for its shareholders. These decisions are based on a comprehensive review by the Company's management of its portfolio, brands, costs, organization and capital structure. As a result of its review, the Company reaffirmed its commitment to an integrated food and beverage portfolio through a one-company platform. "In a volatile global environment over the past five years, PepsiCo has delivered double-digit compound annual growth in core net revenue, 8% compound annual growth in core EPS, and returned about $30 billion to shareholders in the form of dividends and share repurchases," said PepsiCo Chairman and CEO Indra Nooyi. "Our goal is to continue on that earnings trajectory over the next 5 to 10 years, fully recognizing that we need to make changes in how we operate to address the challenges we identified in the review process. 2012 will be a transition year, in which we will be taking the appropriate steps to build a stronger, more successful company going forward."
    • 49 | P a g e Key Initiatives The Company reaffirmed the underlying strength of its integrated food and beverage portfolio and concluded that PepsiCo offers the most compelling value to shareholders as one company. Beginning in 2012, PepsiCo is undertaking a number of key actions to further strengthen the Company and enhance shareholder value. The Company said it plans to: Significantly increase investments in its iconic brands and in bringing innovation to market. Advertising and marketing spending will increase by $500-$600 million in 2012, the majority in North America. Going forward, it expects to maintain or increase that rate of support as a percentage of revenues. To drive efficiencies, it will reduce the number of agency partners and also take steps to leverage the global scale of its top brand platforms. The brand investments are expected to drive topline growth and enable greater price realization; Implement a three-year productivity program that is expected to generate over $500 million in incremental cost savings in 2012, further incremental reductions in the cost base of about $500 million in 2013, and an additional $500 million in 2014. The productivity savings will span every aspect of the business: leveraging new technologies and processes across operations, go-to-market and information systems; heightened focus on best practice sharing across the globe; consolidating manufacturing, warehouse and sales facilities; and implementing simplified organization structures, with wider spans of control and fewer layers of management. This effort includes headcount reductions of about 8,700 employees across 30 countries, about 3% of the Company's global workforce. The
    • 50 | P a g e productivity programs will enhance the Company's cost-competitiveness as well as provide a source of funding for future brand-building and innovation initiatives. Improve its net return on invested capital by at least 50 basis points annually beginning in 2013 through increased focus on capital spending and working capital management. As an example, in 2012 we will be reducing capital expenditures by 10% versus 2011. The emphasis is on systematically improving the efficiency of the existing asset base; and Enhance returns to shareholders in 2012 through both a 4% increase in its annual dividend beginning with the June 2012 dividend payment, and also the execution of a share repurchase program this year of at least $3 billion. 2012: A Transition Year, with Accelerated Productivity, Stepped-Up Brand Investment, and High Commodity Costs "As we implement our strategic priorities in 2012, we've had to make some tough decisions," said Chief Financial Officer Hugh Johnston. "As a result, 2012 will be a year of transition, one in which we will make the right investments to position PepsiCo properly to achieve long-term high-single-digit core constant currency EPS growth." For 2012, the Company is targeting mid-single-digit core constant currency net revenue growth, in-line with its long-term target. It expects a decline in core constant currency EPS of approximately 5 percent from its fiscal 2011 core EPS of $4.40, reflecting a combination of strategic and macroeconomic factors, primarily: Marketplace Investments: In 2012, the Company will step-up its strategic brand investments by $500-$600 million, particularly in North American beverages and food -- the benefits from which will be increasingly seen in the second half of 2012 and into 2013. Further, the Company anticipates a larger increase in consumer-
    • 51 | P a g e facing spending through marketing efficiency initiatives. Additionally, incremental investments in routes and display racks will total about $100 million in 2012. Commodities: The Company anticipates a second consecutive year of global commodity cost inflation that is well above historic levels. In a different economic climate the Company would likely offset these additional costs through increased pricing. However, it does not anticipate that it can pass through all of the higher commodity costs to its consumers in 2012 given the continuing challenges that consumers are facing, particularly in the developed economies. Pension/Interest/Taxes: Additionally, the Company expects higher pension costs as a result of a lower discount rate, higher net interest expense as it increases indebtedness and also terms-out debt in a low interest rate environment, and a core tax rate of approximately 27%, about 50 basis points higher than in 2011. Productivity: Partially offsetting these additional costs, major productivity initiatives are expected to result in about a $500 million incremental reduction in operating expenses in 2012. Based on the current forex market consensus, foreign exchange translation would have a three percentage point unfavorable impact on the Company's full-year core EPS growth in 2012. The following table presents the key elements explaining the difference between the Company's long-term core constant currency EPS growth target and its 2012 core constant currency EPS growth target:
    • 52 | P a g e Long-Term Core EPS Growth Target (CC) HSD ~8% Increased Marketplace Investments (8) Excess Commodity Inflation (9) Higher Pension Costs (1) Higher Interest and Taxes (2) Incremental Productivity +7 2012 Core EPS Growth Target (CC) ~(5)% On a reported basis, the Company's results will reflect charges from its three-year productivity program, primarily severance costs associated with workforce reductions. In the fourth quarter of 2011, the Company incurred pre-tax non-core restructuring charges of $383 million, and it anticipates additional charges of approximately $425 million in 2012 and another $100 million from 2013 through 2015. The Company is targeting about $8 billion in cash flow from operating activities and more than $6 billion in management operating cash flow (excluding certain items) in 2012, which will include the favorable impacts of a 10% reduction in capital expenditures and incremental working capital efficiency. The Company also expects to make a pre-tax discretionary pension and retiree medical contribution of $1 billion in 2012.
    • 53 | P a g e Dividend Increase/Higher Share Repurchases Reflecting the Company's commitment to return capital to shareholders and confidence in its long-term growth targets, PepsiCo today announced that it will raise the annualized common stock dividend, effective with the dividend payable in June 2012, by 4 percent to $2.15 per share, the 40th consecutive year of dividend growth. The Company anticipates increasing share repurchases in 2012 by at least $3 billion, which will be financed by operating cash flow and additional debt. Long-Term Financial Targets PepsiCo provided its long-term target of mid-single-digit constant currency net revenue growth. It also announced that it is targeting long-term core constant currency operating profit growth of 6-7%, and long-term high-single-digit core constant currency EPS growth after a transition year in 2012, driven by positive returns from executing its strategic initiatives. About PepsiCo In its global portfolio of food and beverage brands, PepsiCo has 22 different brands that generate more than $1 billion each in annual retail sales. Our main businesses also make hundreds of other enjoyable foods and beverages that are respected household names throughout the world. With net revenues of over $65 billion, PepsiCo's people are united by our unique commitment to sustainable growth by investing in a healthier future for people and our planet, which we believe also means a more successful future for PepsiCo. We call this commitment Performance with Purpose: PepsiCo's promise to provide a wide range of foods
    • 54 | P a g e and beverages for local tastes; to find innovative ways to minimize our impact on the environment, including by conserving energy and water usage, and reducing packaging volume; to provide a great workplace for our associates; and to respect, support, and invest in the local communities where we operate. Cautionary Statement: Statements in this communication that are "forward-looking statements," including PepsiCo's 2012 guidance and long-term growth targets, are based on currently available information, operating plans and projections about future events and trends. Terminology such as "believe," "expect," "intend," "estimate," "project," "anticipate," "will" or similar statements or variations of such terms are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in demand for PepsiCo's products, as a result of changes in consumer preferences and tastes or otherwise; PepsiCo's ability to compete effectively; unfavorable economic conditions in the countries in which PepsiCo operates; damage to PepsiCo's reputation; PepsiCo's ability to grow its business in developing and emerging markets or unstable political conditions, civil unrest or other developments and risks in the countries where PepsiCo operates; trade consolidation or the loss of any key customer; changes in the legal and regulatory environment; PepsiCo's ability to build and sustain proper information technology infrastructure, successfully implement its ongoing business transformation initiative or outsource certain functions effectively; fluctuations in foreign exchange rates; increased costs, disruption of supply or shortages of raw
    • 55 | P a g e materials and other supplies; disruption of PepsiCo's supply chain; climate change, or legal, regulatory or market measures to address climate change; PepsiCo's ability to hire or retain key employees or a highly skilled and diverse workforce; failure to successfully renew collective bargaining agreements or strikes or work stoppages; failure to successfully complete or integrate acquisitions and joint ventures into PepsiCo's existing operations; failure to successfully implement PepsiCo's global operating model; failure to realize anticipated benefits from our productivity plan; any downgrade of our credit ratings; and any infringement of or challenge to PepsiCo's intellectual property rights. For additional information on these and other factors that could cause PepsiCo's actual results to materially differ from those set forth herein, please see PepsiCo's filings with the SEC, including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. PepsiCo undertakes no obligation to update any forward- looking statements, whether as a result of new information, future events or otherwise. Glossary Core: Core results are non-GAAP financial measures which exclude certain items from our historical results. In 2006, core results exclude certain tax adjustments and restructuring and impairment charges. In 2011, core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, restructuring charges, an extra week of results, as well as merger and integration costs and certain inventory fair value adjustments in connection with our acquisitions of The Pepsi Bottling Group, Inc. (PBG), PepsiAmericas, Inc. (PAS)
    • 56 | P a g e and WBD. With respect to our 2012 and longer-term guidance, our core results exclude the commodity mark-to-market net impact included in corporate unallocated expenses, merger and integration charges, restructuring and impairment charges, and the impact of certain hedging contracts in connection with our acquisitions of PBG and PAS. For more details and reconciliations of our 2011 core results and 2012 and beyond core and core constant currency guidance, see "Reconciliation of GAAP and Non-GAAP Information" in the exhibits attached hereto. Constant currency: Financial results assuming constant foreign currency exchange rates used for translation based on the rates in effect for the comparable prior-year period. In order to compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates. Management operating cash flow: Net cash provided by operating activities less capital spending plus sales of property, plant and equipment. This non-GAAP financial measure is our primary measure used to monitor cash flow performance. See the attached exhibits for a reconciliation of this measure to the most directly comparable financial measure in accordance with GAAP (operating cash flow). Management operating cash flow, excluding certain items: Management operating cash flow, excluding: (1) discretionary pension and retiree medical contributions, (2) restructuring payments, (3) merger and integration payments in connection with our PBG, PAS and WBD acquisitions, (4) capital investments related to thebottling integration, and (5) the tax impacts associated with each of these items, as applicable.
    • 57 | P a g e Country Analysis (5 COUNTRIES CASE STUDY WITH REGARD TO PEPSI) India Overview. As can be expected, India is one of the top 3 choices Central Players recommends for foreign market entry. It has the second largest population in the world and is becoming one of the most sought after markets for large corporations. Although it has the lowest per capita income, Central Players believe that the culture continues to be interested in Westernized products, PepsiCo will have a positive influence with its inexpensive products. India’s growth and density measures prove that it would be the most beneficial country to enter because of its potential market share opportunities. GDP and Inflation rates were rather dismal for India but Central Players see potential with the economy because of the increased educational levels and the global demand for Indian contractors. Central Players has identified that import tariffs and infrastructure scores were low and will need to be continuously monitored. Intellectual property rights are essential to the development of foreign markets and India scored high. Unfortunately, India scored extremely low with the political risk indicator that Central Players would have to evaluate and analyze how it could overcome the risks. Finally, India. scored the highest with the level of foreign competition and tax rates that are extremely promising for PepsiCo’s potential revenue.
    • 58 | P a g e Strengths. India has recently become a popular location for expansion. The economy has showed recent growth spurts of 9% annually in recent years and is projected to grow 7 to 8 percent each year for the next 5 years (Johansson, 2009, p.296). An article by the Press Trust of India (2010) stated, “In 2001-02, out of the total of 188.2 million households, the number of high income families was only 13.8 million, whereas those in the low income category stood at 65.2 million.” In the last 30 years, Indian marketing segments have seen a shift from the rural poor population to an “increasingly well-off middle class 62 percent of Indian households belong to the middle class, which is the target of most consumer goods firms” As the middle class continues to grow, they are gaining their own identity in the consumer market and making up a significant part of the market for consumer goods. This coincided with an increase in the size of cities, increases of disposable income, and families having fewer children Even with large city expansion, rural areas still present over 70% of the population in India and also present opportunity This population becomes more aware of popular brands and have started demanding consumer products and services” The fantastic education system and outsourcing of U.S. jobs to India has led to women contributing to household income Increases in expendable income as well as the emerging female segment both present opportunities for American companies looking to expand to India. “Exposure to new products and services has increased the appetite for further purchases…products that were earlier a luxury now have become necessities”
    • 59 | P a g e Indian consumers are starting to look more like the market in the United States, with inessential items becoming desired purchases as a symbol of status and success. However, the similarity to the United States market does not imply that companies will not need to localize their marketing strategy and product positioning. Several companies have overlooked this aspect, along with overestimating demand, and failed in India. Weaknesses/Threats. The emerging economy also presents some weaknesses. Per capita figures are still low due to a rapidly increasing population. In other words, there is an expanding middle class, but there is still a very large poor population in India The upside to the growing economy as a whole is balanced with high political risk due to ethnic and religious violence Expanding into India also requires that companies adapt their products to the Indian market and taste, particularly when marketing to the poorer consumer in rural areas. Potential client size. According to the CIA World FactbookA (2011), India has the second largest population in the world, estimated as 1,189,172,906 people in July of 2011. When comparing the target market to the population in our chosen market area, World FactbookA (2011) indicates 64.9% of the population falls between the ages of 15-64 years old. This is most likely the strongest market for Pepsi Products. This would place our client size in the area of If we estimate having ten percent of the market share, the size of our client will be approximately 77,200,000.
    • 60 | P a g e Proposed entry mode. The four entry modes that PepsiCo could use are exporting, licensing, joint venture, and direct investment. Using joint ventures to enter the market there are strict regulations imposed by the government . But creating a joint venture entry business agreement benefits the two parties that are equally invested and would be most beneficial for PepsiCo. After the success of entry, one of the businesses may decide to buyout the joint partnership of that other half. A joint venture allows both parties to share the burden of the project, as well as the resulting profits. Marketing strategy. The marketing strategies of PepsiCo in India should be to advertise through athletics In India, cricket celebrities have been used to advertise brands It would be valuable to use India’s famous Bollywood celebrities. Using the Bollywood stars would help create and establish product and brand acceptance, similar to how consumers in America look up to celebrities and movie stars PepsiCo should market to the globally adept college-aged and recent graduate students and that are willing to try and adapt to new products. As the Hofstede study mentioned, and like the PepsiCo brand, this market likes to stand out with their unique style (Hofstede, 2009). In our opinion, this market is one to readily adapt to new things and help push the product trend in that market. India is becoming more westernized so the PepsiCo trends may take off if marketed towards this market.
    • 61 | P a g e Adaptation strategy. As previously mentioned, adaptation will be required to enter into India, particularly into the poorer, rural parts of the country. This may include needing to lower prices by “reducing package sizes, simplifying designs, and offering less service” where failing to do so can result in a local company creating a cheaper, knock-off product If this is not possible, going into business with a local company or creating a distribution center in India can help decrease prices, but will likely require a larger overhead.
    • 62 | P a g e JAPAN Overview. Japan scored extremely well with most of the indicators provided by Central Players. It has a high per capita income that would benefit PepsiCo. Its population growth is not PEPSICO positive but it has the second largest density rate that would accommodate PepsiCo’s products quite nicely. It is tied with China for GDP that means it sees healthy growth in the economy in relation to goods and services, ideal for PepsiCo. Japan had one of the highest import tariffs score that represents lower taxes on carbonated sugary beverages. PepsiCo can easily leverage its streamlined infrastructure to deliver products to retailers effectively and efficiently. Japan’s intellectual property rights and political risks scores were not ideal for Central Players because of the intense government regulations and involvement. Its level of foreign competition and tax rates scored average amongst the countries that Central Players don’t see affecting PepsiCo’s brand awareness strategies. Strengths. Japan’s large population is centrally located and can be conveniently marketed to without having to distribute information and/or products to smaller communities. Unlike Japan, almost all of the population lives in urban locations that would allow PepsiCo products to be easily recognized amongst consumers. The close proximity of the targeted market would also allow operations to easily deliver products to retailers and other stores without traveling long distances. Japan is also known to
    • 63 | P a g e keep its highways and expressways well maintained to support the growing population and increased vehicle usage. Japan has an extensive and well- established sea transportation system that includes many ports that its merchant marine fleet of 662 ships maintains Its air transportation system comprises of over 170 airports with well-established paved runways. The telecommunication system in Japan is extremely advanced that delivers quality communication to the large population. Finally, Japan’s multi faceted power generation industry provides efficient electricity demands throughout the entire country. Utilizing all of these infrastructure designs and technology would allow PepsiCo to effectively enter into Japan while maintaining low operations costs. Weaknesses/Threats. Once PepsiCo has established an effective strategy to utilize Japan’s infrastructure strengths, Central Players would also like to emphasize some of the weaknesses and threats. According to Johansson (2009), “the Japanese [distribution] system features several layers of small, specialized units, each handling small quantities of products” This would mean that PepsiCo could potentially have to go through various levels of distribution paying fees and commissions along each level. This ineffective means of handling distribution could be extremely costly to PepsiCo but points out a significant weakness of Japan’s infrastructure. One of the largest threats that PepsiCo would have is Japan’s emphasis on packaging. The Japanese are extremely particular and demand zero defects in packaging that could once again be costly for PepsiCo. Johansson (2009) explains “Variations in label position, blemishes in the wrapping material, and unappealing color combinations are taken as signs of a poor quality product Central Players and PepsiCo will have to ensure that packaging
    • 64 | P a g e procedures are handled with the utmost care and attention to detail. Potential client size. According to the CIA World FactbookB (2011), Japan’s estimated population is 126,475,664 people in July of 2011. Central Players does not characterize everyone in the population to be in the market so we need to compare the target market to the population in our chosen market area. World FactbookB (2011) indicates 64% of the population falls between the ages of 15-64 years old. Being the strongest market for PepsiCo, the potential client size would be approximately 80,944,244 (126,475,664 X 0.64 = 80,944,244). If Central Players estimate PepsiCo having ten percent of the market share, the potential client size will be approximately 8,094,424 (80,944,244 X 0.10 = 8,094,424). Proposed entry mode. PepsiCo has a couple available options as how to enter the Japan market. The quickest way to gain a foothold in the Japanese market would be to export directly to Japan. This would establish product availability in a short timeframe. However, distribution could hinder the success of PepsiCo based on the need of middleman in the Japanese distribution system Couple this with the expenses of exporting make this less than ideal. PepsiCo needs a brand presence in Japan to gain the affection of the loyal Japanese consumer which exporting does not provide. A strategic alliance with a leading
    • 65 | P a g e brand of carbonated beverages is a possibility but opens PepsiCo up to losing proprietary information to a possible Foreign direct investment is the best option for PepsiCo to enter the Japanese market. This allows PepsiCo retain control over their distribution and how their image is perceived in the Japan market. FDI also allows for PepsiCo to avoid higher taxes as well as take advantage of the local workforce by having facilities located in the Japan market Production located in Japan allows for qualities to be monitored, which is important to the Japanese consumer as well as have a brand presence and financial commitment in the Japan market. FDI in Japan allows PepsiCo to be more flexible to the Japanese market and will increase speed to market for new products. Marketing strategy. Coca Cola is synonymous with soda in the Japanese market. PepsiCo will need to challenge Coca Cola and win over the Japanese consumers with effective marketing campaigns tailored to their local culture. Through having operations setup in Japan, PepsiCo will be able to utilize local talent to ensure communication remains open between PepsiCo and the needs of the local market Visibility of operations in Japan will reiterate the commitment PepsiCo has to the Japanese market instilling trust in the consumers that PepsiCo is committed to this market .In addition to hiring local talent, PepsiCo will need to remain attentive to listening to the local consumers needs and adjust the marketing strategy accordingly this can be achieved through ongoing market research As incomes continue to rise in Japan, brand names will continue to be important to the Japanese consumer PepsiCo, although challenging Coca Cola,
    • 66 | P a g e will need to retain their brand image through effective positioning and keep pricing centralized to the Japanese market to ensure the products are adopted. PepsiCo through educating the target consumer base in Japan will be able to avoid uncertainty of the quality of their products through effective promotions. One way for PepsiCo to remain innovative is redesigning packaging to accommodate the less than optimal storage spaces within the average Japanese consumer’s home (2009). This is an opportunity for PepsiCo to alter packaging to appeal to this consumer while remaining innovative and not tarnishing their widely accepted brand. Adaptation strategy. FDI, as mentioned above, allows for PepsiCo flexibility in adapting to the local consumers needs in a more timely fashion. PepsiCo will able to localize products based on specific cultures throughout Japan while adaptation can include different formulas for products to adapt to local taste or product preferences in specific regions Regulatory committees will differ compared to domestically and having a presence through FDI will allow PepsiCo to alter packaging, verbiage and or ingredients to abide by the regulations set forth. It is paramount that the proper market research is prepared on the Japan market as well as micro research conducted on specific regional markets prior to expansion. This research allows for proper adaptation to specific local tastes and will ensure the success of PepsiCo being adopted as a brand by the highly sensitive Japanese consumer and not shunned as a global brand with ulterior motives
    • 67 | P a g e CHINA Overview. China’s overall score fell only 2 points below Japan’s and is probably the most competitive market. It has a higher per capita income than Japan, which indicates substantial spending power. Although its population is the largest in the world, China has more than half the density rates of India and Japan. This could pose a threat for PepsiCo if it wishes to enter smaller communities in the region. China scored the same with the GDP indicator but has a higher inflation rate. By having the second highest score on import tariffs, PepsiCo will spend less on taxes and regulation fees. As mentioned previously, a significant amount of the population resides in rural parts of the country limiting PepsiCo from utilizing an efficient infrastructure. Political risks and government involvement in China is probably the biggest challenge that PepsiCo would face when entering the market. Similar to Japan, China’s level of foreign competition and tax rate scores would accommodate PepsiCo’s ability to enter the market successfully. Strengths. China became a member of the World Trade Organization in 2001. Since then, China has relaxed its tariffs and has its export based growth has grown substantially. China has the largest population in the world, with 1.3 billion people. According to Johansson (2009), “The size and potential of the Chinese market, coupled with its fast-growing purchasing power, make China a very attractive market Experts believe China is the next super power in the world because China’s foreign exchange reserves, low debt levels, high
    • 68 | P a g e savings rate, strong work ethic and growing domestic consumption make it a rising star among other nations. Those who feel this way see China’s economy as the strongest in the world with the best investment opportunities of all nations. Weaknesses/Threats. A large risk associated with doing business in China is the role the government plays. China is still a Communist nation and a main concern for most businesses is corruption of Chinese officials and a lack of integrity in the judicial system (Letcher, 2011). Additionally, China’s economic growth is unsustainable and that real estate prices are greatly over inflated, which will likely cause a real estate bust in the near future which will affect foreign investors Other challenges of doing business in China include problems with rural infrastructure, product positioning, inflated tariffs, miscommunication due to language barriers and differences in customs, and counterfeiting or piracy of products Potential client size. According to the CIA World FactbookC (2011), China has the largest population in the world, estimated as 1,336,718,015 people in July of 2011. Because not everyone in the defined market area will be a customer, we need to compare the target market to the population in our chosen market area. World FactbookC (2011) indicates 73.6% of the population falls between the ages of 15- 64 years old. This is most likely the strongest market for Pepsi Products, placing our client size in the area of 983,824,459. (1,336,718,015 X 0.736 = 983,824,459). If we estimate having ten percent of the market share, the size of our client will be approximately 98,400,000. (983,824,459 X 0.10 = 98,392,445.90).
    • 69 | P a g e Proposed entry mode. Preparation is a key factor success and as with any international business venture, we must be open to differences and aware of our limitations in order to expand. Expansion into China would indeed be a great opportunity for growth, but only if done cautiously and armed with knowledge about the risk factors to the business prior to entering the market. According to Johansson (2009), the best way to enter China would likely be to follow the WTO suggestion and develop a joint venture with a Chinese partner to assist in ease of market access and to help in overcoming cultural and language barriers. Additionally, obtaining a Chinese partner would likely help the business understand inside business information necessary for success in the country. This would include insight on areas with the strongest infrastructure, most receptive customer base, and most welcoming political environment Most of all, I would take extreme caution when dealing with the local government and investing money and assets, while always having a conservative business plan in place
    • 70 | P a g e Marketing strategy. Experts believe China is the next super power in the world because China’s foreign exchange reserves, low debt levels, high savings rate, strong work ethic and growing domestic consumption make it a rising star among other nations. Those who feel this way see China’s economy as the strongest in the world with the best investment opportunities of all nations (Saxena, 2011). Thus, leading the Central Players to implement a marketing strategy of standardizing the products and centralizing the decision making process. Utilizing the macro segmentation will help PepsiCo decipher the appropriate demographics in advertising its goods, such as, population, disposable income, and even education. Coordinating the global marketing campaign will begin with the planning process as discussed by Using a planning guide for any marketing strategy whether domestic or international, mentions “it is best used in conjunction with other planning tools in corporate and marketing strategy and focuses primarily on the systematic assessment of a globally coordinated marketing strategy for a specified product or service” Adaptation strategy. The importance of designing clear and effective branding in foreign markets has shown globalization has trended all commodities of the world. The strategies of companies operating in international markets, such as, PepsiCo, focuses on the value associated with a brand name, but extending other products in the objective. PepsiCo have traditionally adopted county centered strategies, building or acquiring a mix of domestic and international brands. The organization’s strategy has been to acquire local companies in order to form a
    • 71 | P a g e group of autonomous regional managers who know more about the culture of the local markets worldwide. Adaptation is a powerful strategy if implemented and marketed effectively. As the Central Players suggests innovative techniques to produce visibility and positive foreign reception there will be an increase in investment opportunities and global adaptation of international brands. Using effective marketing and advertising will enforce the organization to adapt to foreign culture tastes, visual concepts, and needed messages. For example, PepsiCo will have Chinese consumers, preferred tasting venues, and colors/slogans that the culture will adhere to for a “new generation”.
    • 72 | P a g e Being in such a tense competition (just like the brand Coca-Cola), Pepsi-Cola should not take the direct and tough attack upon it. There is no good to either side. The best wad is to keep a peaceful relationship with it and always compare with others; we should find their disadvantages and show our advantages on this aspect. Then by and by, the people would think ours is betted Of course the most important rule is to improve ourselves to meet the consumers
    • 73 | P a g e PepsiCo is an organization that strives to be the world’s premier consumer products company. It seeks to produce healthy financial rewards for investors and provide opportunities for growth and enrichment to employees, business partners and the communities in which they operate (Annual Report, 17). In order to remain competitive in the global market, PepsiCo and its subsidiaries must be aware of new trends and preferences that arise, as well as the variety of costs that go into their products. This can be accomplished through investment in health conscious markets and continued innovation in new products. Acquiring companies with “healthy” reputations as well as participation in the Green Movement will have a positive effect on their reputation as a consumer friendly corporation. Finally, monitoring current and potential consumers, as well as constantly reviewing the effectiveness of their marketing program, will allow PepsiCo to detect arising trends and new taste preferences within their target markets. First, it is clear that carbonated soft drinks are suffering a decline in North America. Experts say the soft drink market is expected to fall one percent in 2008. In fact, “…both Coke and Pepsi, the number one and number two beverage makers, have seen their share of the North American soda market fall for two straight years, as more health conscious consumers switch to vitamin-infused energy drinks and bottled water” (Kavilanz). The carbonated soft-drink market, more specifically PBNA, is a major portion of revenue for PepsiCo. In order to avoid substantial losses due to changes in consumers purchasing habits,
    • 74 | P a g e PepsiCo must continue to invest in health conscious markets. For example, the 2001 acquisition of the Quaker Oats Company was a timely acquirement for PepsiCo. With programs such as the “Smart Heart Challenge,” as well as the idea that oatmeal gives “Brain Power,” PepsiCo captured a large portion of the shift toward future healthier living. PepsiCo must either focus its efforts on reinventing its current soft drinks, or focus on marketing itself as a more health conscious product. This can be done by highlighting the benefits one receives while drinking Pepsi in addition to the wonderful and refreshing taste it has. This requires a greater emphasis on the older generation and continued appeal to the individuals 13 to 34 years of age. Next, it is evident through the media that the issue of global climate change is important to worldwide society. This issue has created an opportunity for PepsiCo to appeal to new, environmentally friendly consumers. In order to accomplish this, PepsiCo must invest in green technologies, promote changes in their production techniques, and advertise to the world that they are doing their part to promote environmental sustainability. This can be done through mass recycling projects and engineering containers from less harmful, organic products. In addition, large amounts of money can be publicly donated to foundations that research possible solutions to “Global Warming.” By aligning themselves with a good cause and by giving back to the community PepsiCo is sure to win the approval of a new and loyal customer base. Finally, customer research is critical to any prolonged success. The information discovered can lead to the release of new products and the termination of those that were unsuccessful. In order to continue to be successful, PepsiCo must maintain
    • 75 | P a g e their investment in new groundbreaking technology. This will allow them to capture the sentiment of current customers and find new ways of convincing others that Pepsi is the best brand available. Continued investment in technology will allow PepsiCo and its subsidiaries to monitor the effectiveness of their marketing program. According to Devon Leonard of Fortune Magazine, the price of a thirty second commercial is continuing to rise at a time when the broadcast networks are steadily losing their audience” (Leonard). If Pepsi continues to pour money into traditional advertising they will see their share of the beverage market begin to decline. Also, “…by 2008 twenty percent of the nations households will have personal video recorders this enables viewers to skip ads altogether” (Leonard). It is evident that by monitoring their customer base and continuing to invest in the latest technology, PepsiCo and its subsidiaries will notice new and rising trends within the marketplace. PepsiCo has produced quality products while simultaneously creating healthy financial rewards for investors. These rewards are the result of a tireless effort to be the world’s premiere consumer products company. However, in a competitive market, PepsiCo and its subsidiaries must be aware of new trends and preferences that arise, as well as the variety of costs that go into their products. Together with these recommendations and continued focus on satisfying not only their customers, but shareholders and employees as well, PepsiCo is sure to capture more market share, earn greater returns, and become a source of refreshment and nourishment for an even larger portion of the global market.
    • 76 | P a g e