A Marketing Plan: Pepsi Cola - Case Study Example

Pepsi Cola- A Marketing Plan Pepsi Cola- A Marketing Plan Company Profile PepsiCo is listed amongst the world’s largest food and beverages companies, which was established in 1892 under the name of Pepsi Cola by Dr. Pemberton. The company’s headquarters are based in New York and currently employees 198,000 individuals throughout its network chain. In 1893 the company was sold to Asa Candler due to health and financial constraints faced by Dr. Pemberton. In 1965, PepsiCo was formed through a merger between Pepsi Cola and Frito Lay. From that point onwards the company has grown to become one of the most recognized brands and is sold in more than 200 countries. The company operates through three business units PepsiCo operates through three business units: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), and PepsiCo International (PI). The company’s business activities include manufacturing, marketing and distribution of a variety of salty, sweet and grain-based snacks in addition to its well renowned carbonated and non-carbonated beverages (PepsiCo, 2009). The company product portfolio comprises of 18 brands and the aggregate sale of the company reached almost $43,251 million in the year ending 31 December 2008. Some of its famous brands include Pepsi-Cola, Mountain Dew, Diet Pepsi, Gatorade, Lays and Tropicana beverages. PepsiCo is headquartered in New York and employed 198,000 people as of December 31, 2008. The company’s major competitors include The Coca Cola Company, ConAgra Foods, Inc., Kellogg Company, Nestle S.A., The Procter & Gamble Company etc (Datamonitor, 2009). Micro-environment Pepsi consumers are between the age of 14 and 30 (Detlef, 2006). Pepsi faces immense competition from companies mentioned above. Pepsi offers a wide product portfolio. Pepsi makes it major sales in the US. Macro-environment Immense competition: Every year new entrants entering the market and existing companies involving Health concerns: Globally health practitioners are raising concerns amongst consumers to reduce carbonated drinks consumption. Changing habits and trends of consumers are affecting sales (Deichert & et al., 2006). Regulations: Pepsi faces tougher regulations in different countries. Selected Product The selected product for this marketing plan is the world-renowned brand Pepsi Cola or in short ‘Pepsi’. The activities of this product initiated as a one man show more than a century ago. The initial formula was altered by addition of carbonated water and so came into existence one of the most favourite tastes in the world. The brand name for the beverage was suggested by Frank Robinson who was a close friend of Dr. Pemberton and he was one who created first logo of Pepsi. When the company was sold to Asa Candler the formula of the beverage was patented in the year 1893. The product received immense boost in demand as Candler was able to succeed in the bottling of Pepsi at a huge scale in the year 1899 and promotional activities led to great awareness of the product (PepsiCo, 2009). SWOT Analysis In the following the company’s both internal and external factors analysis would be carried out to identify its strengths, weaknesses, opportunities and threats. This analysis would also include comparison with two of its main competitors including The Coca Cola Company and Nestle, SA Pepsi Co. Coca Cola Nestle, SA Strengths Extensive operations internationally mitigating business risks. Strong brands’ ability to generate revenues. Diversified product portfolio and strong distribution channel assuring business continuity. High brand recognition and high level of customer acceptance. Wide scale operations Leading positions amongst competitors. Strong operating cash flows. Strong brand placement and high levels of recognition internally. High investment in research and development capability. Adoption to local market demands. Diversified product portfolio. Weaknesses Too much concentration of the US market and Wal-Mart which is the biggest customer of the company. Weak employee productivity Cases of product recall affecting brand image badly. Company’s pension assets affected by financial market volatility. Liquidity position of the company. Numerous cases of product recall damaging brand image and company’s reputation. Opportunities Expanding product portfolio surely will allow company to penetrate into further markets. Great opportunities available in developing economies. Savory snacks market growing at a high pace in the US. Favorable market conditions for functional drinks in its major US market. Bottled water market expanding both locally and internationally. Great potential in NARTD beverage industry. High growth rates in international bottled water market. Growing global functional drinks market. Opportunities in nutritious drinks and products market. High growth opportunities in developing and emerging markets. Expanding markets for dinning out market internationally. Threats Decline in demand of carbonated soft drinks in the US Tougher regulations may impact company’s profitability and business on the whole. Immense competition from new entrants and existing companies. Difficulties in managing employee relationship could affect company’s distribution capabilities. Too much dependence on bottling partners. Fierce competition. Slowdown in demand of carbonated soft drinks in the US. Too much focus on developing and emerging markets. Involvement in compliance issues resulting in penalties by regulators. Overall global weakening conditions. Involvement in cases of unethical business activities. Source: (Datamonitor, 2009) Marketing Strategy In order to develop a marketing strategy for the selected product it is important to consider different factors affecting marketing strategy collectively referred to as a marketing mix. By establishing a marketing mix a company expects to develop tools which would help it to achieve objectives in the target market. Product The product comprises of beverage concentrates and different syrups which are combined on patented formulae. The final products however are carbonated beverages. Pepsi has more than 300 hundred sub brands globally however the most popular ones are Pepsi, Sprite, Mountain Dew and Fanta. The product is package into a variety of sizes ranging from two litres, one and a half litre, six hundred ml and three hundred ml. The company’s brand of Pepsi is recognised as one of the most popular brands globally. Price Prices for Pepsi products vary widely. The reason for this is that Pepsi operates in more than 200 countries and each country has its own set of regulations which makes the price variation. Different pricing strategies are used depending on the buyers’ status. The pricing strategy used by company’s competitors is the penetration strategy which aims at setting up a price lower levels in order to penetrate market in depth which sets out tougher market conditions for Pepsi. Furthermore, the product is often offered at discount prices through different promotional schemes and sale stage. Distribution The company uses a wide range of wholesalers and retailers to distribute Pepsi products. The arrangement with wholesalers in different regions help the company distribute the products to retailers, corner stores, gas stations, hotels, restaurants etc. Furthermore, the product is also available through vending machines installed at different locations. Promotion The company is involved in heavy promotional activities through advertisement. This form of marketing allows the company not only to maintain the general awareness but also attract new consumers both at the local level and in the global market. Company expects to address large audience through its promotional activities and it has hired team of highly professional team of sales person throughout its network. Target market At all levels of the company managers and employees are cognizant of the worth of business. The company has successful accomplished high market share and sales in different targeted markets according to overall corporate strategy and product profile. The company has high levels of understanding and knowledge of markets to penetrate and makes the best use of its resources to market its Pepsi products. These targeted markets are divided into different market segments and each segment is addressed by tailoring the marketing activities and events to attract consumers. Pepsi with its main focus on the US market expanded into Canada and later worldwide. Positioning The company has positioned itself to manage a sale over one billion units of its products every days which requires careful planning. The product has strong position amongst its competitors however due to the slowdown in carbonated drinks in the US the company needs to focus on addressing issues pertaining to this issue and should consider expanding into other geographical areas such as China, India, Russia, Afghanistan etc. Global Events The company is involved in different programs globally with prime aim of reducing impact of its operation on the environment and improvement of customer relationship. Significant events are listed below: The company has established strong industry relationships to ensure that its activities are favouring environment. An example is that the company’s packaging including cans, bottles made up of glass and plastics are recyclable (Rosen, 2005). Pepsi has invested heavily in its websites which are not limited to commercial basis but also to present an image of friendliness. Pepsi is in the process of integrating technology in its vending machines that will offer consumers more buying options. The company in collaboration of MasterCard, Pepsi is developing a technology which will enable the consumers to buy Pepsi just by tapping their Master Cards at the Pay pass system implemented in some machines (Encyclopedia, 2005). A recent development has been the curved can which has attracted younger consumers globally. Current Events PepsiCo is to acquire Amacoco Nordeste and Amacoco Sudeste which is a Brazil based Coconut Water Company (Datamonitor, 2009). PepsiCo to invest in Calbee Foods which is producing and distributing snack foods in Japan (Datamonitor, 2009). PepsiCo has established a research laboratory in New Haven, Connecticut with an aim to focus on the development of healthier food and beverage products. (Datamonitor, 2009). Reference List Datamonitor. (2009). PepsiCo, Inc. New York: DataMonitor. Deichert, M., & al., e. (2006). Industry Analysis: Soft Drinks. Minnesota: College of Saint Benedict. Detlef, V. (2006). Between Marx and Pepsi: Youth Cultures in Changing European Societies. New York: Berghahn Books. Encyclopedia. (2005, June 1). Pepsi signs card processor for cashless vending purchases. Retrieved December 14, 2009, from Encyclopedia: http://www.encyclopedia.com/doc/1G1-128019646.html PepsiCo. (2009). Company. Retrieved December 14, 2009, from PepsiCo: http://www.pepsico.com/Company.html Rosen, R. (2005). Pepsi Culture: Icons of Pop. Journal of Marketing and Management , 53-55. Read More