Pepsi-Cola Competitive Analysis

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Pepsi-Cola Competitive Analysis

  1. 1. OLIDIX CONSULTANTS <ul><li>The Pepsi-Cola Company </li></ul><ul><li>Competitive Analysis </li></ul>OLIDIX CONSULTANTS
  2. 2. Our Task... <ul><li>Phase 1 </li></ul><ul><li>Analyse the Market. </li></ul><ul><li>Phase 2 </li></ul><ul><li>Suggest Recommendations. </li></ul>OLIDIX CONSULTANTS
  3. 3. CONTENTS <ul><li>1. Our Industry </li></ul><ul><li>2. Competitive Analysis </li></ul><ul><li>3. Market Research </li></ul><ul><li>4. Issues </li></ul><ul><li>5. Competitive Aids (Theories) </li></ul><ul><li>6. Recommendations </li></ul><ul><li>7. Bibliography </li></ul>OLIDIX CONSULTANTS
  4. 4. 1. Our Industry <ul><li>Pepsi operate as producer in the </li></ul><ul><li>Fast Moving Consumer Goods (FMCG) Industry . </li></ul><ul><li>Other FMCG industry producers could include: Toiletries, groceries, magazines, Newspapers, even in this day and age mobile phones. </li></ul><ul><li>“ Fast Moving Consumer Goods are products that have a quick turnover, and at a relatively low cost.” </li></ul><ul><li>( Mingrong, L. 2007) </li></ul>OLIDIX CONSULTANTS
  5. 5. Current Position <ul><li> Oligopoly </li></ul><ul><li>Few Market Leaders </li></ul><ul><li>High Barriers of Entry </li></ul>OLIDIX CONSULTANTS
  6. 6. <ul><li>Typology (Consumer Classification) </li></ul><ul><li>Millennial’s (Television Week, 2007) </li></ul><ul><li>Advertising and Promotion </li></ul><ul><li>Check out the Pepsi Refresh Anthem </li></ul><ul><li>Targeting </li></ul><ul><li>Multi-Segmented marketing approach. </li></ul><ul><li>Audience Motivation </li></ul><ul><li>Taflinger, in his book, ‘Taking Advantage’, argued that audience motivation is a visual or aural influence on one’s subconscious mind and emotions. </li></ul>Current Audience OLIDIX CONSULTANTS
  7. 7. Market Analysis <ul><li>Important to consider: </li></ul><ul><li>Demographics : The global market </li></ul><ul><li>Elasticity : The relative effects of changes in price to demand. </li></ul><ul><li>Market trends : </li></ul><ul><li>The decline of sales in carbonated drinks (Mintel, 2009) </li></ul><ul><li>The rise of functional soft drinks: Juices, enriched vitamin water and nutraceuticals. (NutraIngredients.com, 2003). </li></ul><ul><li>Streamlining of production lines (Sidel.com, 2009) </li></ul>OLIDIX CONSULTANTS
  8. 8. 2. Competitive Analysis <ul><li>Direct and indirect competitors </li></ul><ul><li>Direct: Cola producers: </li></ul><ul><li>Supermarket own brands </li></ul><ul><li>Coca-Cola </li></ul><ul><li>Indirect : Producers of all beverage types. </li></ul><ul><li>Tea/Coffee </li></ul><ul><li>Water </li></ul><ul><li>Juices etc. </li></ul><ul><li>Brand differentiations </li></ul><ul><li>Modernity vs. Tradition </li></ul>OLIDIX CONSULTANTS
  9. 9. Company Analysis <ul><li>Combined revenue of $18 Billion . </li></ul><ul><li>Earnings per share grew 13% </li></ul><ul><li>Net revenue growth of 12% (three times industry growth) </li></ul><ul><li>Retained profits of $6.9 Billion </li></ul><ul><li>“ To be the worlds premiere consumer product company focused on convenient foods and beverages. we seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do we strive for honesty fairness and integrity&quot; </li></ul><ul><li>- Source: Pepsi. Co. 2007 annual report. </li></ul>OLIDIX CONSULTANTS
  10. 10. <ul><li>For our primary market research to be of use to our competitive analysis, we had various questions we needed answering and therefore split our survey into three parts. </li></ul><ul><li>Branding... </li></ul><ul><li>Promotion / Advertising </li></ul><ul><li>Taste test </li></ul>OLIDIX CONSULTANTS 3. Market Research
  11. 11. OLIDIX CONSULTANTS Results…
  12. 12. 5. Issues… <ul><li>Hard to differentiate product in terms of taste as product variety is very limited within cola based beverages. </li></ul><ul><li>Coca-Cola has such a strong base of loyal customers, who identify with the cola brand. </li></ul><ul><li>Consumer tastes are changing, away from carbonated drinks towards functional soft drinks. (Mintel, et al. 2009) </li></ul>OLIDIX CONSULTANTS
  13. 13. 5. Competitive Aids <ul><li>Porter’s 5 Forces </li></ul><ul><li>S.W.O.T Analysis </li></ul><ul><li>Porter’s strategies for Competitive Environments : </li></ul><ul><li>Cost-Leadership </li></ul><ul><li>Product-Differentiation </li></ul>OLIDIX CONSULTANTS
  14. 14. Porters 5 Forces <ul><li>Competitive Rivalry </li></ul><ul><li>Threat of New Entrants </li></ul><ul><li>Power of Suppliers </li></ul><ul><li>Power of Customers </li></ul><ul><li>Threat of Substitutes </li></ul>OLIDIX CONSULTANTS
  15. 15. SWOT Analysis <ul><li>Strengths: Large market share, purchasing economies of scale, customer loyalty, world wide brand recognition, huge distribution network </li></ul><ul><li>Weaknesses: Smaller market share than main rival Coca-cola, inability to substantially product differentiate, hard to compete with Coca-Cola’s strong brand identity and customer loyalty. </li></ul><ul><li>Opportunities: Adapting to market trends (Pepsi health drink) could create an advantage, opportunity to be known as a socially responsible producer however this incurs costs which may not be met with the current economic climate, </li></ul><ul><li>Threats: High levels of competition from main rival. Pepsi will lose market share if other companies adapt to market trends faster. </li></ul>OLIDIX CONSULTANTS
  16. 16. Porter’s Strategy <ul><li>“ While strategy may be about competing and surviving as a firm, it is products, not corporations that compete, and products are developed by business units”. (Porter, 1980) </li></ul><ul><li>Business Unit Level Strategy: </li></ul><ul><li>Porters Two Strategies </li></ul><ul><li>Cost-Leadership </li></ul><ul><li>Product-Differentiation </li></ul>OLIDIX CONSULTANTS
  17. 17. Porter’s Strategy Continued… <ul><li>Cost-Leadership </li></ul><ul><li>Industry’s lowest cost producer </li></ul><ul><li>Price setting over price following </li></ul><ul><li>Benefit from higher profit margins </li></ul><ul><li>Product-Differentiation </li></ul><ul><li>The differences in one product from another </li></ul><ul><li>Unique customer perception </li></ul><ul><li>Packaging and Promotional activities </li></ul>OLIDIX CONSULTANTS
  18. 18. 6. Recommendations <ul><li>We believe that there are two main areas that The Pepsi Cola Company could improve on in order to maintain a competitive advantage over its rivals. </li></ul><ul><li>Adopting a Cost-Leadership Strategy </li></ul><ul><li>New Product Development </li></ul>OLIDIX CONSULTANTS
  19. 19. Cost-Leadership Strategy <ul><li>Advertising and innovative promotion. </li></ul><ul><li>Optimal outsourcing for production and vertical integration. </li></ul><ul><li>Improving production efficiencies through Kaizen. </li></ul>OLIDIX CONSULTANTS
  20. 20. New Product Development <ul><li>Produce a range of ‘healthy’ alternatives under the brand name ‘Pepsi Fresh’. </li></ul><ul><li>Our suggestion would be a range of Vitamin enriched waters under the name ‘Pepsi Fresh’. </li></ul>OLIDIX CONSULTANTS
  21. 21. 7. Bibliography <ul><li>Websites: </li></ul><ul><li>FMCG Definition: </li></ul><ul><li>http://www.shentrepreneur.org/html/oldnewsroom.html </li></ul><ul><li><last accessed 12/02/09> </li></ul><ul><li>Modularisation </li></ul><ul><li>http://cavehill.uwi.edu/fpas/cmp/online/cs11k/revision/problem%20solving/modularisation.htm </li></ul><ul><li><last accessed 12/02/09> </li></ul><ul><li>Consumer Trends </li></ul><ul><li>http://www.nutraingredients.com/Consumer-Trends/Functionality-set-to-shape-soft-drinks-sector </li></ul><ul><li><last accessed 12/02/09> </li></ul>OLIDIX CONSULTANTS
  22. 22. Oligopoly definition   http://moneyterms.co.uk/oligopoly/   <last accessed 13/02/2009> Porters Strategy http://www. quickmba .com/strategy/porter. shtml <Last accessed 14/02/2009>   Books :   Krugman, P. Wells, R. Graddy, K. (2007). Economics: European edition 2007 . USA: Worth Publishers Inc.   Haig, M. (2004). Brand Royalty: how the worlds top 100 brands thrive and survive . London: Kogan Page ltd. Online Reports :   Sicher, J. (2008). Beverage Digest: Top 10 CSD Results for 2007. [online] Available from: http://www.beverage-digest.com/pdf/top-10_2008.pdf [Accessed: 20/02/2009].   Sidel. (2006/9). CSD Market Trends . [online] Available from: http://www.sidel.com/products/what-do-you-package/csd/csd-market [Accessed: 20/02/2009]. Mintel. 2009, Carbonated Soft Drinks - UK - February 2009 [online], (p. 1), Available from: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393871 [Accessed: 02/03/2009]. OLIDIX CONSULTANTS
  23. 23. <ul><li>  Mintel. (2009), Fruit Juice and Juice Drinks - UK - November 2008 [online], (p. 1), Available from: </li></ul><ul><li>http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393871/display/id=227778 [ Accessed: 21/02/2009]. </li></ul><ul><li>Nexis UK. (2008), Drink Makers' Optimism Not Dry; Coke, Pepsi sales down; Plans Up. [online], (p. 1), Available from: http://www. lexisnexis .com:80/ uk / nexis /results/ docview / docview .do? docLinkInd =true& risb =21_T5917131287&format=GNBFI &sort=BOOLEAN& startDocNo =1& resultsUrlKey =29_T5917131290& cisb =22_T5917131289& treeMax =true& treeWidth =0& selRCNodeID =13& nodeStateId =411en_GB,1,2& docsInCategory =41& csi =8379& docNo =1 [Accessed: 21/02/2009]. </li></ul><ul><li>    </li></ul><ul><li>Nexis UK. (2008), Pepsi Sales are Flat, but Bottler's Profit Edges Up. [online], (p. 1), Available from: http://www. lexisnexis .com:80/ uk / nexis /results/ docview / docview .do? docLinkInd =true& risb =21_T5917131287&format=GNBFI&sort=BOOLEAN& startDocNo =1& resultsUrlKey =29_T5917131290& cisb =22_T5917131289& treeMax =true& treeWidth =0& csi =6742& docNo =2 [Accessed: 21/02/2009]. </li></ul><ul><li>Pepsico. (2008) 2007 Annual Report. [online] Available from: http://www.pepsico.com/Investors/Annual-Reports/2007-Annual-Report.aspx [Accessed: 02/03/2009]. </li></ul>OLIDIX CONSULTANTS
  24. 24. Online Journals : Sharp, B. & Dawes, J (2001), 'What is Differentiation and How Doeas it Work?', Journal of Marketing Management, Argyll, Vol. 17, pp. 739-59. Imai, M. (1986), Kaizen: The Key to Japan's Competitive Success., Random House, New York. Images: Excelsia. (2009). SWOT analysis . [online] Available from: http://www. excelsia . ch / htmlgb / blog /images/ swot -analysis-image. png <last accessed 02/03/2009> Dublin City University. (2009). Porters 5 Forces. [online] Available from: http://student. dcu . ie /~hillc3/ Pmodel .gif <last accessed 02/02/2009> OLIDIX CONSULTANTS OLIDIX CONSULTANTS

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