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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."
To be the world's premier consumer products company focused on convenient foods and beverages.
Seek to produce financial rewards to investors
Provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate.
Strive for honesty, fairness and integrity
HISTORY OF PEPSI COLA
In 1893 Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins experimenting with many different soft drinks. In 1898, one of Caleb's formulations, known as "Brad's Drink" a combination of carbonated water, sugar, vanilla, rare oils and cola nuts, is renamed "Pepsi-Cola". On August 28, 1898, Pepsi-Cola received its first logo.
In 1902, he applied for a trademark with the U.S. Patent Office, Washington D.C., and formed the first Pepsi-Cola Company. 1905, Pepsi-Cola's first bottling franchises were established in Charlotte and Durham, North Carolina. In 1906, Pepsi gets another logo change, the third in eight years. The modified script logo is created with the slogan, "The Original Pure Food Drink". In 1920, Pepsi theme line speaks to the consumer with "Drink Pepsi-Cola, it will satisfy you". In 1923, Pepsi-Cola Company was declared bankrupt and its assets were sold to a North Carolina concern, Craven Holding Corporation, for $30,000.
FORMATION OF PEPSI COLA CORPORATION
Roy C. Megargel, a Wall Street broker, bought the Pepsi trademark, business and good will from Craven Holding Corporation for $35,000, forming the Pepsi-Cola Corporation. In 1928, after five continuous losing years, Megargel reorganized his company as the National Pepsi-Cola Company. In 1931, U.S. District Court for Eastern District Virginia declared the National Pepsi-Cola Company bankrupt, the second bankruptcy in Pepsi-Cola history.
REFORMULATION OF PEPSI COLA’S SYRUP FORMULA
The Loft candy company acquired the National Pepsi-Cola Company. Charles G. Guth, president of Loft, commanded the reformulation of Pepsi-Cola syrup formula. 1934 was a landmark year for Pepsi-Cola. The drink was a hit and to attract even more sales, the company began selling its 12-ounce drink for five cents (the same cost as six ounces of competitive colas). The 12-ounce bottle debuted, where it was an instant success. The cost savings proved irresistible to Depression-worn Americans and sales skyrocket nationally. In 1941, The New York Stock Exchange traded Pepsi's stock for the first time. In 1964, Diet Pepsi, America's first national diet soft drink, debuted. Pepsi-Cola acquired Mountain Dew from the Tip Corporation in 1964.
FORMATION OF PEPSI COLA INCORPORATION
In 1965, Expansion outside the soft drink industry began. Frito-Lay of Dallas, Texas, and Pepsi-Cola merged, forming PepsiCo, Inc. Pepsi Cola Company operates in beverages industry. Pepsi Cola international is well reputed multinational company which is doing its business in almost every country of the world. The company is registered in New York stock exchange U.S.A. to make a better control over the business the company has given the manufacturing rights to different companies. Now these companies are producing the products on the behalf of the company by using company’s trademark. To maintain their goodwill in the market the company has a strict policy of granting manufacturing rights. Pepsi Cola have standardized products all over the world (e.g. same in size, shape and quality). The franchises have to follow all the standards given by the company.
SETUP OF PEPSI COLA
The head office is situated in New York (USA) with units operating in different regions of the world. These are called Business Units and Pakistan is in MENAPak (Middle East, North America and Pakistan). The head office of MENAPak is situated in Dubai (UAE). The local head offices for each country are situated in the respective capitals.
PepsiCo Values & Philosophy
Our Values & Philosophy are a reflection of the socially and environmentally responsible company we aspire to be. They are the foundation for every business decision we make.
Performance with Purpose
We understand that companies succeed when society succeeds, and what’s good for the world is good for business. Performance with Purpose ensures that this powerful idea is woven into everything we do at PepsiCo. But equally important, it is proving to be a driver of financial performance for their shareholders today and into the future. We continue to strike the balance between the short term and the long term through investments in acquisitions, research and development and emerging markets.
Core total operating profit(c) $ 9,773 $ 7,856 24%
Core earnings per share
attributable to PepsiCo(d) $ 4.13 $ 3.71 12% 12%
SWOT MEN- Strength
It has a very strong Top management people with fully experienced as their leadership- Strong corporate strategies
Has full capacity to train the young and their work force to be well equipped
Relationship with the local community is an added advantage , as they look into the development for their people as stated in their mission
Human Sustainability – promise to encourage people to live a healthier life
SWOT MONEY - Strength
Net revenue grew 33% , 57.9 billion on year 2010
Core division operating profit rose 23%
Operating cash flow up 23%
Annual dividend was raised 7%
8 billion was returned to share holder through share holder repurchases and dividend
Core EPS grew 12% on a constant currency basis
Invest more in research and development for more affordable and nutritional products
Reduction the use of water by recycling purification system, reuse 75% of water used in production
Incorporate use 10% of polyethylene (rPET) in soft drink containers.
Acquired many popular brand name product.
Offered extensive variety of product lines.
Different flavours were created tailor to the country they are sold in.
Towards product reformulation – reduce salt, eliminate trans fat which diminish calories
SWOT MATERIAL- Strength
2 nd in the world as leading distributor of carbonated drink
Has the lead of more than 200 countries with a work force of more than 294000 workers
Has established its brand also by social service for example the Haiti issue , India , Africa
The largest player in the macro snack category
Strong marketing strategies ex using famous celebrity eg Tiger Wood
Supply chain inefficiencies that affect retailers were solved too slow paced
Market share was low in the soft drink industry and continued to decline
Expansion to new areas was slow
Lower sales of non carbonated beverages outside of North America
SWOT - Weakness
The acquisition of anchor bottlers in N America and Europe, enable them to drive growth , dynamic future ,more integrated supply chain.
With the use of more healthy supplements and health concern , Pepsico can look into more supplement food (Shaklee ).
With the use of recycle water , Pepsico can start planning its operations in African the contigent
SWOT - Opportunities
Demand for products was high as they were well recognized
Consumers are leaning towards healthier foods
Expand further into the international market, the opportunity for growth in developed countries is greater as per capita for consumption in the snacking industry.
Further research in innovations to make better-for-you snacks, and to produce sweeteners that would lower the calories content in drinks
SWOT - Opportunities
Declining interest in some products such as the carbonated beverages as the public is towards healthier choices
New products constantly released that compete directly with Pepsi product
Many of these products offer same benefit but lower price
Constant competition with Coca cola and other brands pose a threat to their sales and market share
SWOT - Threat
PepsiCo PEST Political PepsiCo trying to get into underdeveloped market They have to considered on government taxation policy, environmental law regulations for both side. Economic PepsiCo rely on trucks for transportation Fuel price fluctuation is one of the important aspect Economic crisis will also to labor supply and consumers’ purchasing power
PepsiCo PEST Social Population on young consumers Changes in life style Social trend and demand People want to be healthy Technology Awareness on new machine launching Advance technology automation, will effect production efficiency R & D facilities
Porter's five forces analysis
PepsiCo Porter 5-forces Threat of new entrance Low PepsiCo is well established and have Pepsi Bottling Group have brand equity, loyal customers Need huge investment for: R&D facilities, high tech machinery Must have: Lots of market experience in the same industry. Good distribution channel
PepsiCo Porter 5-forces Threat of Substitude Not a great deal for PepsiCo Consumers preference is the taste more than the cost Not many carbonated drink having the same taste as Pepsi-Colar other than Coca-Colar Loyal customrs Bargaining Power of Buyers Not so significant eventhought low switching cost Monetary cost is not the issue Consumers preference is the taste Convenience of the vending machine
PepsiCo Porter 5-forces Bargaining Power of Supplier Low Many raw material supplier like fruit and other ingredients PepsiCo partnership with farmers & community group, ensuring quality supply For Bottling and metal can, they make use 40% share of PBG. Only problem may rely on bad harvesting season due to climate change. Another aspect is on fuel oil crisis.
PepsiCo Porter 5-forces Competitive Rivalry Within An Industry Moderate to Strong Pepsi is not no.1 in Beverage market. Pepsi still need to compete with Coca-cola. Pepsi is new in Food market. Pepsi need to compete to big players like Nestle and Craf.
Boston Consulting Group Matrix Product Life Cycle Intro Growth Maturity Decline Sales Time 1 2 3 4
Product introduced by Pepsi
Good For You – where all the food & beverage are good for health (oats, fruit juices, nuts, yogurt)
Better For You – where all the foods & beverages are low fat, less salt & low calories (Pepsi Diet, Isotonic Drink
Fun For You – where all the core foods & beverage of Pepsi Co
Product Mix Width Of the Product Mix Depth of the Product Lines Beverages Foods Carbonated Orange Mineral Water snack nutrition Pepsi Tropicana Aquafina Lay’s Potato chips Quaker Oats 7-up Cheetos Mountain Dew Aliva
PRODUCTS Mix ( foods & beverages )
Fun for you portfolio ( Pepsi Cola, Diet Pepsi )
Better-for-you and Food-for-you portfolio
( Tropicana series )
Carbonated Drinks Categories
Caffeine Free Diet Pepsi
Diet Pepsi Max
Jazz Diet Pepsi
Diet Pepsi Lime
Diet Pepsi Vanilla
Pepsi Wild Cherry
Diet Pepsi Wild Cherry
Diet Mountain Dew
Non-carbonated Drinks Category
Tropicana Pure Premium juices
Tropicana Twister juice drinks
Tropicana Pure Tropics juices
Dole juices (License)
Tropicana 100 juices
Products of Frito Lay
Lay's potato chips
Baked Tostitos tortilla chips
Doritos Nacho Cheese
Products of Quaker
Quaker Oats(In 2006)
Products of Frito
PepsiCo’s snack food company, is the leader in the branded salty snack market. It manufactures :
Lay’s Potato Chips
Cheetos extruded snacks
Aliva- Tasty Crackers and
traditional namkeen snacks under the Kurkure and Lehar brands
PepsiCo Pursues :
Low Price Strategy Penentration Pricing
( ref : By Emily Fredrix, AP Food Industry Writer Manufacturing.Net - October 08, 2009 )
Chief Financial Officer Richard Goodman said PepsiCo has been offering more promotions at the end of each month, when consumers' budgets become more constrained. For instance, bags of chips may be promoted at two for $5 early in the month but fall to $2 each by the end of the month.
"We want to be able to make sure that at the beginning of the month or at the end of the month, they're buying our products,"
CHANNEL MANAGEMENT & LOGISTICS
Service the right pack size at the right price, in the right place at the right time.
Delivery of post mix cylinders & handling of key accounts: The key accounts are different wholesalers, restaurants and hotels like Pizza Hut, KFC, Metro which serve as a place for key sale.
These are known as national key accounts and are very important in terms of competition.
Through Base market distributors
Through Outstation distributors
PROMOTION Advertising Strategy of Pepsi
Pepsi’s target audience : mostly teens and young adults and their advertising reflects this in every possible way.
The company changes its advertising strategy and image to reflect the target's interests.
Pepsi makes sure that the advertisements reflect to the target audience’s interests and nostalgia.
Pepsi prefers to position itself as the beverage choice of the “New Generation”, “Generation Next”, or just as the “Pepsi Generation”.
Pepsi’s advertising campaigns are referring to the markets that marketers refer to as Generation X .
Pepsi and its associated beverages have had various celebrity endorsers and continue to use them.
1939: "Twice as Much for a Nickel"
1950: "More Bounce to the Ounce"
1950: "Any Weather is Pepsi Weather"
1957: "The Light Refreshment"
1958: "Be Sociable, Have a Pepsi"
1961: "Now It's Pepsi for Those Who Think Young"
1963: "Come Alive, You're in the Pepsi Generation ".
1967: "(Taste that beats the others cold) Pepsi Pours It On".
1969: "You've Got a Lot to Live, and Pepsi's Got a Lot to Give"
1975: "Have a Pepsi Day"
1977: "Join the Pepsi People (Feeling Free)"
1980: "Catch That Pepsi Spirit" David Lucas composer
1981: "Pepsi's got your taste for life"
1983: "Pepsi Now! Take the Challenge!"
1984: "The Choice of a New Generation"
1986: "We've Got The Taste" (Commercial with Tina Turner )
1990: "You got the right one Baby UH HUH"
1991: "Gotta Have It"/"Chill Out"
1992: "Be Young, Have Fun, Drink Pepsi"
1995: "Nothing Else is a Pepsi"
1996: "Pepsi:There's nothing official about it" (During the Wills World Cup(Cricket) held in India/Pakistan/Srilanka)
1997: "GeneratioNext"." With The Spice Girls "
1998: "Yeh Dil Mange More"(In Hindi meaning "My heart wants more")
1999: "Ask for More"/"The Joy of Pepsi-Cola" (Commercial with Britney Spears /Commercial with Mary J. Blige )
2003: "It's the Cola"/"Dare for More"
2005: "Wild Thing"/"Ask For More" (With Jennifer Lopez )
2006: "Why You Doggin' Me"/"Taste the one that's forever young" Commercial featuring Mary J. Blige
2007: "More Happy"/"Taste the one that's forever young" (Michael Alexander)
Pepsi-Cola’s “Save the Pepsi Generation’s Planet: a PR Strategy to Reinforce the Environmental Support System
The tactics will highlight the goal of Save the Pepsi Generation’s Planet campaign which is to redefine, reinforce, and rebuild Pepsi-Cola’s commitment in caring the environment.
Media :TV, Internet, Radio, Events, Sponsorship
“ Yeh hai Youngistaan Meri Jaan “
Products decisions : add in Soya drink and Ice cream to increase their product portfolio and sales revenue
Product Decision :Produce a range of Healthy, i.e. Sugar free or diet Alternatives of different brands.
Promotion their products through Effecting Marketing and Advertising strategies.
Improving production efficiencies through optimal outsourcing of production and integration
5. Market Positioning : The company should modify its advertising strategy and educate the customers about its age-old existence and enhance its brand image. This will appeal to the target customers of middle and older age groups apart from the younger generation in which PEPSI has a good hold.
6. Placing Strategy: Rural market being a very potential segment needs very quick and prompt efforts to be taken to capture this high volume market.
7. Pricing : Soft drink is still considered a treat virtually a luxury, so it possible company should cut down its price especially of cans.
8. PR: A company may create favorable impression among the youth if they sponsors small events like college festivals, university programs, school functions, fashion shows, quiz programs etc.
As a result, market segmentation is important to companies so that firms can easily enter the market and have a potential growth. If PepsiCo does not target young population in the beginning, it is hard to occupy the market and compete with its competitor which is Coca-cola. Pepsi can continue hire popular celebrities to advertise their products in different market such as David Beckham attracts sport enthusiast and Jay Chou attracts youths where this really can boom the sales. Moreover, Pepsi can come out with as many new innovative products as they can depend on countries’ cultures. With this target, Pepsi can enter many countries’ market to gain more profits.