Marketing Strategy Analysis 1 - Assignment Example

Cover Page Marketing Analysis Pepsicola Submitted by Marketing Strategy Analysis I Marketing November 20, Study focuses on the international strategies implemented by Pepsicola Company in conducting its worldwide operations. These strategies drive the growth of the company to being one of the top multi-national companies in the world. Company has employed regional segmentation, concentrated and differential marketing and various business structures to have a stronghold of customers. They have also tried universality of brands so that their products will have an international identity.

In terms of advertising, they fall short to its fiercest competitor in the “cola-war”, Coca-Cola. Pepsi showed a competitive advantage in technology as it was first to respond to customers need for lightweight packaging, and healthy drinks. Its advertisements focus on the younger generation which is its target market. Lessons learned are that marketing strategies are significant moves in entering a new market. AN ANALYSIS OF PEPSICOLA’S INTERNATIONAL MARKETING STRATEGIES Introduction Globalization has led multi-nationals to look for positive growths in foreign countries.

In order to be successful, they have to employ several marketing strategies that will drive their companies to success. Study focuses on marketing strategies used by Pepsi-cola Company in operating in various regions worldwide. Overview Pepsi has been in operation for over 100 years. From a simple formulation of a druggist many years ago, Pepsi Cola Company has been transformed into a multinational company that is now one of the top companies in the world (Fortune 500, 2013). Over the years, Pepsico, aside from beverages, has developed into diverse fields such as snacks and restaurants.

Pepsico produces, markets, and sells beverages and snacks foods to over 190 countries and territories which generates over 18 billion dollars in 2012 (Reuters 2013). It is organized into four divisions: Pepsico America’s foods (PAF), Pepsico America beverage (PAB), Pepsico Europe, and Pepsico Asia, Middle East, and Africa (AMEA). Business units has six segments comprised of FLNA, QFNA, LAF, PAB, Europe and AMEA. These business units manufacture and sell a range of snack foods, carbonated and non carbonated beverages, and other foods.

Mergers, joint ventures with companies, licensing, and company owned outlets afforded this system of distribution. For instance, merger with Quaker and Frito Lays, joint venture with Unilever (for Lipton tea) and licensing in the region are strategies to reach customers. FLNA that stands for Frito-Lay North America, makes, sells, and distributes branded snack foods like Lays Potato chips, Fritos corn chips, Doritos tortilla chips, and others. FLNA brands are sold to independent distributors and retailers.

In 2012, FLNA contributed 21% of Pepsico’s net revenue. QFNA - Quaker Foods North America is the business unit that produces, sells, and distributor cereals, rice, pasta and other products. Its flagship product is Quaker oatmeal. It also produces cereals, pasta, and other side dishes. Products are sold to independent producers and retailers. In 2012, 4% of Pepsicos total revenue came from QFNA. LAF or Latin American Foods is a business unit that manufactures, sells and distributes a number of snack foods of its own brads as well as distributes Quaker brands.

Products are sold to independent distributors and retailers. This unit has contributed 11% of Pepsico’s total revenues in 2012. PAB PepsiCo Americas Beverages PAB makes, markets, sells and distributes beverage concentrates, fountain syrups and finished goods, under various beverage brands including Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, 7UP (outside the United States), Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist and Mirinda. PAB also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea, coffee and water products through joint ventures with Unilever (under the Lipton brand name) and Starbucks.

PAB manufactures and distributes certain brands licensed from Dr Pepper Snapple Group, Inc. (DPSG), including Dr Pepper and Crush. PAB operates its own bottling plants and distribution facilities. PAB sells concentrate and finished goods for its brands to authorized bottlers and some of these branded finished goods are sold directly by the Company to independent distributors and retailers. During fiscal 2012, PAB’s net revenue was approximated 33%, of its net revenues. Europe The Europe unit is another maker, seller, and distributor of snack foods in Europe.

Aside from its own brands, it carries Quaker brands, and distributes through independent distributors. Pepsi Europe makes, markets, sells and distributes a number of snack foods, including Lay’s, Walkers, Doritos, Chudo, Cheetos and Ruffles, as well as many Quaker-brand cereals and snacks, through consolidated businesses, as well as through non-controlled affiliates. Europe also, either independently or through contract manufacturers, makes, markets, sells and distributes beverage concentrates, fountain syrups and finished goods under various beverage brands including Pepsi, Pepsi Max, 7UP, Diet Pepsi and Tropicana.

These branded products are sold to authorized bottlers, independent distributors and retailers. In certain markets, however, Europe operates its own bottling plants and distribution facilities. In addition, Europe licenses the Aquafina water brand to certain of its authorized bottlers and markets this brand. Europe also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea products through an international joint venture with Unilever (under the Lipton brand name).

During fiscal 2012, Europe’s net revenue was approximated 17% of its total net revenue. Asia, Middle East & Africa AMEA makes, markets, sells and distributes a number of snack food brands, including Lay’s, Chipsy, Kurkure, Doritos, Cheetos and Smith’s through consolidated businesses, as well as through non-controlled affiliates. Further, either independently or through contract manufacturers, AMEA makes, markets and sells many Quaker-brand cereals and snacks. AMEA also makes, markets, sells and distributes beverage concentrates, fountain syrups and finished goods, under various beverage brands including Pepsi, Mirinda, 7UP, Mountain Dew, Aquafina and Tropicana.

These branded products are sold to authorized bottlers, independent distributors and retailers. However, in certain markets, AMEA operates its own bottling plants and distribution facilities. In addition, AMEA licenses the Aquafina water brand to certain of its authorized bottlers. AMEA also, either independently or through contract manufacturers, makes, markets and sells ready-to-drink tea products through an international joint venture with Unilever (under the Lipton brand name). During fiscal 2012, AMEA’s net revenue was approximated 10%, of its total net revenue.

The Company competes with The Coca-Cola Company. It is a long time competitor such that their rivalry was called a “cola-war”. Major elements that made its International marketing strategies successful. From the way Pepsico operates, it is using the Transnational Approach. Basu, Chirantan of Chron (2013) defines Transnational Approach as a “system of business operations conducted in several countries with varying degrees of coordination and integration of strategy and operations”. Accordingly, it is a strategy that combines coordination of operations that depends on the unique advantages of local markets, to drive market share, sales, and profit growth.

Transnational approach considers the business and political environment in choosing the state or country to do business. Pepsico has considered four geographical areas of operations that almost covered the entire world. It has reached Europe, Asia, Middle East, Africa, and America in its effort of globalization. The move towards reaching the local market is to use global brands and specialized local brands. As a characteristic of transnational strategy, Pepsico developed a marketing strategy around one set of brand than having separate brands for different regions in the world.

According to Basu, C (2013) brands share certain characteristics, such as to focus on a single product category and will create market positioning. In each of the regions, Pepsico sold same brand all throughout in snacks food and its beverages so that it creates universality. Pepsico does not rest in looking for opportunities for growth. Recently, Reuters (Nov. 2012) reported significant developments such as the opening of a new food and beverage innovation center in Shanghai, China. The facility, which is PepsiCo's largest research and development center outside of North America, will serve as a hub of new product, packaging and equipment innovation for PepsiCo's businesses throughout Asia.

The transnational approach strategy chosen by Pepsico vary according to the products it will handle and business structure. Pepsico uses different approaches of marketing strategies. 1. Concentrated marketing. This type of strategy calls for Pepsico to focus on four regions and specific products. It chose to develop snack foods in North America and Latin America. 2. Differential marketing is used in product approach as it has developed healthy food and drinks for health conscious people in the likes of Diet Pepsi, Quaker health foods.

It has also created differentiation by constantly coming out with new developments in packaging. Pepsi is the first company to respond to consumer preference with lightweight, recyclable, plastic bottles, and introduces the industry's first two-liter bottle (Pepsico, 2013) 3. Direct marketing through advertising in various media. Recent ads of Pepsi has been focused on youth generation. It has participated in the Super Bowl for 20 consecutive years. However in terms of advertising expenditures that has been reported as $2billion, it is behind Coke’s $3 billion.

To rule this out, Pepsi has pledged to put more money in advertisements as it admits they lacked efforts in this area. (Zmuda, N. January 2012) Conclusion Having a good product is not enough to drive success and growth to a company. It has to draw strategic plans to bring these products to the target markets. As a multi-national company who wants to play a role in the global economy, it has to translate this vision into reality by putting it into a master plan than will direct the operations of its subsidiaries in other countries.

Such are the marketing strategies that will drive into the smooth operations of the distributors, retailers and licensees of Pepsico. In our case, Pepsico did not employ a single marketing strategy, but chose concentrated and differential marketing strategy. It also used several business structures to fit its objectives. In this area, Pepsico used mergers, licensing, subsidiary, and joint venture to take advantage of location and branding positioning. This did not happen with a snap of fingers but rather 100 long years of operations.

Pepsi had its share of losses and bankruptcy in the beginning perhaps due to infancy and lack of strategies. But probably due to exactness of marketing strategies it is able to rise on its feet to become one of the most admired and top companies in the world. References Basu. Chirantan (2013) “What is Transnational Business Strategy.” Small Business. Demand Media Retrieved 19 November 2013 Reuters (2013) Pepsico Inc. Company Profile. Retrieved 18 November 2013 CNN Money.(2013) Fortune 500.

Retrieved 18 November 2013 Pepsico Annual Report (2010) Results of operations Consolidated Review .Retrieved 18 November, 2013 Zmuda, N. January 30,2012) “Pepsi Plays Catch-Up With Coke, Adds $500M in Spending. Advertising Age. Retrieved 189 November 2013