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.
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.
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.
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.
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.
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.
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
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
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,"
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.