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EXECUTI VE SUMMARY

The proposed research aims to measure the PepsiCo brands consumer perception as healthy
within the North American market and to analyze the results in order to gather data to generate
recommendations on the strategic marketing of the company.

The research will survey a sample of 1,000 people in the US different by age, income, location and
personal preferences for drinks. The population will be selected randomly by a computer by using
the grocery store loyalty programs members as reference. The extent of the research is wide
enough to ensure that the survey will give us a framework of the feelings towards the healthy feature
of the PepsiCo brands. A questionnaire will be administered to the selected sample over the Internet
and the results will be collected and analyzed by a computer. The criteria under which each question
of the questionnaire has been conceived cover the main concerns for the company. For example,
does the consumer perceive PepsiCo as provider of healthy drinks or not?.

The research also highlights the main possible outcomes of the survey. For each type of result, the
research has already identified a strategic direction the company should take.
The research is extensive enough to provide a comprehensive understanding of the brand
perception. The accuracy of the research is ensured by the size of the sample, the techniques
applied, the different features of the research which covers both qualitative and quantitative
aspects. The internet survey is in fact coupled with a series of focus groups so PepsiCo can gain a
real firsthand knowledge of the opinions consumers have about the brand.

The research might suffer typical problems of any research as related to personal bias of the
surveyed population. Surveyed people in fact may have issues that can prevent them from
answering accurately to the questionnaire and this possibility has been already addressed by
designing the questionnaire in the easiest and less embarrassing possible way. The possibility of not
being able to reach a customer has also been addressed by setting the computer on the way to
select an alternative number to be selected.



Contents

1. INTRODUCTION
2. OBJECTIVES
3. RESEARCH DESIGN
3.1 Sampling Techniques: Qualitative/Quantitative
3.2 Data Collection Method
3.3 Measurement
3.4 Analysis Procedures

4. EXPECTED RESULTS
4.1 Summary of Secondary Data
4.2 Expected Findings: Primary Research
4.3 Data Organized According to Related Variables
4.4 Findings Implications & Recommendations
4.5 Statistical Significance
5. RECOMMENDATIONS
6. CONCLUSION
Appendices
Sources








1 I NTRODUCTI ON
PepsiCos corporate mission is to be the leading global consumer products company with primary
focus on convenient foods and beverages (PepsiCo Annual Report, 2010). Due to growing demand
from our customers, consumer advocacy organizations and heavy political pressure to add
healthier snack and beverage products to our portfolio. More recently, Michael Bloomberg, Mayor
of New York City, is pushing for a municipal ban on the sale of super-sized sugary drinks to help
mitigate the growing obesity rate. Other legislators, including the FDA, are looking at imposing a
soft drink tax to also help curb consumption of our primary product base. If we seek to achieve our
mission, we must consistently measure our brands perception of being healthy to target consumer
markets. If we do not, we will fail to meet the growing demand from our customers for new
innovative and healthy food and beverage products.

2 OBJECTI VES
It is the goal of this research proposal to layout a detailed plan of how to measure this perception
and reinforce the urgency of ensuring PepsiCo is responding to growing trends for healthier food
and beverage alternatives. We will primarily focus our research methods through qualitative
marketing research methods to fully divulge customers understanding, awareness and perception
of PepsiCos food and beverage product lines in relation to what they perceive as healthy. Through
this assessment and information gathering, we will be able to deduce valuable consumer insight into
new and current product offerings, the success of current marketing tactics and the true desire of
consumers health demands.

3 RESEARCH
3.1 Sampling techniques
The research will be carried out over a selected sample of the population. Since our target are all
current Pepsi customers, we cannot perform a random selection. Instead we will frame a selected
population using the loyalty cards of grocery stores as reference. Those cards in fact represent a
powerful marketing tool because of the data that help gathering. We are able to realize if a customer
has ever purchased a Pepsi drink and therefore if he or she can be included in the survey population
to help Pepsi understand what the perception is among consumers of different age, gender, income
and personal preferences in terms of drinks.
Quantitative Research
Once the grocery outlets throughout the US have been decided (4 different chains that all sell Pepsi
drinks), the approach used will be the systematic sampling. The population will be represented by
10,000 customers of these 4 chains randomly selected and the sample size will be 1,000. The
selection will be performed with a probability method: every tenth person from the population of
10,000 is selected for the sample. Since the selectee will be identified by his/her email address, it will
be possible to reach him/her over the email and ask to fill a brief online questionnaire. The computer

will also randomly select a second, much smaller sample (30 people) for the conjoint analysis (see
the measurement section).
Qualitative Research
The probability method will be also used to select participants to the qualitative part of the research,
the focus groups. For the focus groups the sample size is much smaller since we need 15 people
only and the selection will be performed again using a probability method: this time the 667
th

person will be called to be part of the focus group (10,000 / 15). If he/she is not available or cannot
be reached, we will proceed with the 668
th
and the 666
th
person. See appendix 1 for Time Requirements and
Sampling Process.

3.2 Data Collection Method
Quantitative
For the quantitative part, the questionnaire will be filled out over the internet. The selected customer
will be sent a link over the email: the link will give him/her access to the questionnaire and by clicking
on submit the answers will be collected and the results processed.
Potential Issues
1) The customers email address might not be valid anymore;
2) The customer might just ignore/trash the email and not fill the questionnaire;
3) The customer might be inaccurate in filling the questionnaire due to inability to formulate a
coherent response or unwillingness to respond accurately due to such reasons as: time
pressure, fatigue, personal bias over privacy or other personal matters, lack of information,
and response style.
These issues are considered in the margin of error and therefore the computer will select another
customer in the place of the unreachable one. While the first two types of issues can be fixed by the
computer, the machine has no control over the issue no.3 where the problems are connected to the
data collection method itself: the interviewer has no interaction with the customer but also the
environment where the survey is performed can help because the customer is in front of his/her
computer in a location of his/her choice.
Qualitative
For the qualitative research, the customer will be reached over the phone and asked to participate to
a focus group on Pepsi drinks. He/she will be compensated for the participation with a gas
reimbursement and a $20 gift card.
The focus group will be executed in an ad-hoc location with a one-way mirror behind which the
researcher will sit and observe the reactions of the participants to the questions asked. The plan is
to perform all focus groups in one day, from morning to evening. The moderator will ask the
question and help frame the discussion among the participants; the moderator will also record the
answers on tape. Then the answers will be put on paper and analyzed by the experts. The focus
group should also include some real time administration of advertising techniques (showing

commercials or printed advertisement) in order to appreciate the immediate reaction from the
customers.

3.3 Measurement
The main aim of this research is to investigate on the brand awareness of Pepsi, to be specific; our
aim is to measure the perception of Pepsi drinks in relation to health. The first question we would like
to address in our research is whether Pepsi health drinks are conceived as really healthy? The main
objectives of administering this question to the respondents to measure the demand of healthy
drinks VS the various alternatives available in the market, to measure the association of Pepsi to
health concepts and finally to measure the perception of the marketing effort so far done by Pepsi.
In order to conduct the research, the questionnaire that will be directed to the respondents/focus
group would cover both qualitative as well as quantitative questions. The key elements that it would
include are: Demographic data- such as the age, gender, location and income, Behavior/ Lifestyle
questions which would cover factors like frequency of consumption, on what occasion the
consumption of the product takes place, if the respondents felt that the product was a post work
out drink or not etc. The next important part of the questionnaire is to figure out how to re-position
the Pepsi brand in the health market, its important in this part of the questionnaire to understand
what percentage of people are social media active users, whether they are actively participating in
the various social media campaigns etc.
In the entire research procedure, the focus groups are for generating hypothesis and to test them
qualitatively. In order to figure if the respondents actually like the product or not, ambiguous
questions could be asked such as if they consume Pepsi drink products, how would they rate Pepsi
products as far as heath is concerned etc. The three most important factors that can be researched
here are- age, weight and lifestyle i.e. exercise habits etc. See appendix 2 for sample questionnaire.

3.4 Analysis Procedure
The method of analysis that we opted for are MULTI DIMENSIONAL SCALING (MDS) and
CONJOINT ANALYSIS. The reason is because our client Pepsi is a multi product company so these
methods can assist us in understanding what perceptions the customers have about the products
and which is the main driver that is determining the purchase decisions. Its important to determine
how Pepsi is perceived as compared to its competition. How do people view the brand in terms of
its offering, price and quality? The most important problem here is of positioning its offerings in an
interpretable multi dimensional space, for which Multi dimensional scaling is used. Today in different
places like schools, restaurants, movie theatres etc, there is a constant battle between Pepsi, Coke
and other competitors to place their product in that place. Another research technique that we
would use is the conjoint analysis where we would administer this technique to a smaller sample size
of 20 to 30 people.



4 EXPECTED RESULTS
4.1 Summary of Secondary Data
Our secondary data research provides us with the following information:
General Information on Carbonated Drinks
! U.S. Consumption of carbonated soft drinks has steadily declined in the past decade, mainly
due to alternative beverages now offered by the market (health concerns in the US, primarily
related to obesity problems).

! Healthier drinks are growing more popular. Including bottled waters, juice drinks, teas and
sports drinks, bottled beverage sales rose 0.8 percent to 15.2 billion cases in 2011. That
represented a slowdown from 2010, when sales rose 1.7 percent.

! According to Beverage Digest, the top four sodas -- Coke, Diet Coke, Pepsi-Cola and Mt. Dew
-- all saw declining sales last year. Of those, Coke's market share was flat, while the other three
all lost share.

! There have been several studies recently proving the cardiac problems aspartame (a fake
sweetener) causes, including heart attacks and strokes. Also, certain studies prove that
aspartame is a multipotential carcinogen causing brain, kidney, breast, liver and lung cancer.

Health consciousness and trends in the US
! More and more, consumers in the US are making choices based on what helps them create
and manage optimum health. Managing health through food and drink choice is a growing
consumer trend that is already having a huge impact on purchase behavior.

! Food and beverage marketers who recognize the opportunity within this trend, by developing
and positioning their products in support of it will be the next brand leaders.

! US consumers are more aware of the fact that the consumption of sugar-sweetened beverages
is associated with weight and obesity, and that changes in consumption can help predict
changes in weight.

! The FDA strictly regulates carbonated drinks and bottled water as a food product. Bottled water
companies must adhere to the FDA's Quality Standards, Standards of Identity (Labeling
Regulations) and Good Manufacturing Practices. The FDA has recently banned certain
chemicals (sweeteners, coloring agents), on the grounds that theyve been shown to be
carcinogenic and/or toxic to the consumers, cause obesity or other diseases.

! Research suggests a statistically significant inverse relationship between consumption of
carbonated beverages and bone mineral density.

PepsiCos Strategy: The New Health Kick
! PepsiCos CEO is trying to redefine the playing field by promoting healthier drinks and food
under the good-for-you and better-for-you slogans. The company is betting big on creating
healthy foods through its Quaker Oats, Gatorade and Tropicana divisions.

! Their new group of products is part of a long-term strategy to grow their nutrition business from
about $10 billion in revenues today to $30 billion by 2020.


! Ms. Nooyi (the CEO) seeks to refocus Pepsi by stating that lifestyles have changed and that their
company has to modify its products.

PepsiCos Struggle
! In March 2010, Pepsi slipped to become the third most popular soda in America, behind Coke
and Diet Coke.

! Cokes Consistent Strategy Wins the Cola War:

! Cokes beverage volume in North America dropped only 2% last year.

! In comparison, Pepsis beverage volume in the same region plunged 8%.

! Last year, Coke brands commanded 41.9% of the total market last year compared to PepsiCos
29.9%. While both brands have been declining, Pepsi is doing so at a slightly faster rate. Coke,
among others, continues to steal market share away from Pepsi.

4.2 Expected Findings: Primary Research
Basing our research objectives on the information above, we are aiming to obtain the following
information from our marketing research plan:

These main findings will improve our understanding of the market place and of Pepsis opportunities.

4.3 Data Organized According to Related Variables
The questions in the questionnaire will be grouped in subsections that satisfy the same research
objective.
! The responses to questions 3,4 can be summarized in a subsection titled Customer perception
and brand awareness. Once it is obtained, this information will be useful to see the extent to
which the consumers are aware of the Pepsis focus in health products.

! The responses to questions 3,4,5,7 can be summarized in a subsection titled Healthy
Campaign Efficiency. Once it is obtained, this information will be useful to weight the firms
healthy campaign efficiency.

1 Do consumers perceive Pepsi as a provider of healthy drinks?
1b Is Pepsis better-for-you campaign effective?
2 Does peoples health consciousness include the consumption of healthy drinks?
2b If so, do they drink Pepsis healthy drinks?
2c If not, what would be the product profile they would consume? Is there a specific type of drink that
would look more attractive to them?
Are consumers engaged and reachable through social media?
3 Should Pepsi carry on with their strategy or should they change it for the sake of healthy drinks?

! The response to question 5 can be summarized in a subsection titled Healthy Consciousness
Scope. Once it is obtained, this information will be useful to evaluate how important are drinks
in peoples health-perception.

! The response to questions 6 can be summarized in a subsection titled Ideal product profile.
Once it is obtained, this information will be useful to recommend the launch of a specific product.

! The responses to questions 3,4,5,6,7 can be summarized in a subsection titled Strategy
decision. Once it is obtained, this information will be useful to customer perception and brand
awareness. See Appendix 3 for Summary Table: Customer Perception and Brand Awareness.


4.4 Findings Implications & Recommendations
After interpreting and discussing the results obtained from the research, these are the
recommendations we will be able to make depending on our findings:
I F THEN
a), c), e), h) Pepsi should carry on with their campaign
b), d), f), g) Pepsi should change their strategy and launch a
new product with a different profile.

4.5 Statistical Significance
The margin of error will be checked for all the data gathered to ensure the validity of the answers
and appropriate to make recommendations based on them. Outliers will be removed and the
systematic method will ensure the participants are randomly selected for the study.

5 RECOMMENDATI ONS
Based on the results of the survey, PepsiCo will be able to choose between keep pursuing the
current strategy or changing it in order to enhance the perception of its drinks as healthy drinks. In
case a change is recommended, the company will also be able to infer from the results of the survey
what specific features the customers want in a drink (about taste, flavors etc.). The changes can
happen in the product development line or the new product launch.
Another recommendation PepsiCo will be able to draw from the results is whether the company
should invest more in a social media campaign as adverting media for the next future and how the
social media efforts can be modified in order to guarantee a deeper penetration of PepsiCo
message. In this particular case, PepsiCos top management can gain an idea of which social media
are worth more the investment effort and which are worth less.
Even if the results will project an image of PepsiCo as already healthy, there will still be margins of
improvement that can be appreciated from the market research performed (new flavors, different
advertising). In this specific case, the focus groups will provide most of the insights.




6 CONCLUSI ON
PepsiCo needs to pursue a marketing strategy that stays current with the fast changes in the market
as far as consumer preferences, spending habits, sources of information etc. For this reason, this
market research is essential to acquire that knowledge that represents the foundation for any
strategic discussion for PepsiCos top management.
It is the intent of our marketing research team to find the true perception of PepsiCos brand image
in relation to healthy perceptions and use these findings to help steer corporate strategy for
ongoing success in an ever-changing consumer market.





















APPENDI X
Appendix 1: Time Requirements & Sample Process
Location framed: the US;
Time needs for the sampling process:
a) Time necessary to perform the selection of the population and the sample: 1 week;
b) Time necessary to send the questionnaire and allocated time for response: 1 month;
c) Time necessary to select participants, send RSVPs and schedule the focus groups: 1
month.
Whereas task b) obviously follows task a), tasks b) and c) can be performed simultaneously.

Appendix 2: Sample Questionnaire
Name: Age:
Gender: Location:
1) Do you consume Pepsi drink products?
Yes/ No
If yes, name some products that you consume ________________________________

2) How often do you consume these drinks?
o Everyday
o 2-3 times a week
o Only on certain occasions

3) Are you aware of Pepsis better-for-you healthy drinks offering? Can you name one?
____________________________________________

4) How would you rank Pepsi in terms of its healthy drink offerings?
1 2 3 4 5
Extremely Very health-focused moderately Barely health- Unhealthy brand
health-focused health-focused focused
Grocery store chains Population extracted Sample selected
Grocery store chain no.1 2500 250
Grocery store chain no.2 2500 250
Grocery store chain no.3 2500 250
Grocery store chain no.4 2500 250
Total 10,000 1000


5) Rank healths importance for you in your life?
High Moderate Low
If high, do your health concerns include drinking healthy drinks in a regular basis?
Yes/No
6) Describe the best healthy drink you can imagine. What attributes would make you consume
it?
________________________________

7) Are you an active social media user? If yes, what are the different social media accounts
that you have?
o Facebook
o Twitter
o LinkedIn
o Other ________________________________________________

Appendix 3: Summary Table: Customer Perception & Brand Awareness

Cust omer percept i on and brand awareness
Related questions:
N 3,4

Potential Findings:
a) Pepsi is perceived as a health-
focused brand
b) Pepsi is NOT perceived as a health-
focused brand
Heal t hy Campai gn Ef f i ci ency
Related questions:
N 3,4,5,7

Potential Findings:
c) The campaign is penetrating
d) The campaign is not penetrating
Heal t hy Consci ousness Scope
Related questions:
N 5

Potential Findings:
e) People include healthy drinks in their
understanding of healthy lifestyle
f) People dont think of healthy drinks
when it comes to living a healthy life
I deal product prof i l e
Related questions:
N 6

Potential Findings:
g) Peoples idea of healthy drinks differ
from Pepsis offering
h) Peoples description of healthy drinks
coincides with Pepsis offerings
St rat egy deci si on
Related questions:
N 3,4,5,6,7

Ul t i mat e Fi ndi ngs:
i) Pepsi should carry on with their
campaign
j) Pepsi should change their strategy

SOURCES
http://www.bbc.co.uk/news/world-us-canada-18285462
http://www.pepsico.com/Brands.html

http://finance.yahoo.com/news/pf_article_113026.html

http://www.fda.gov/Food/ResourcesForYou/Consumers/ucm046894.htm

http://www.usatoday.com/news/health/wellness/fitness-food/story/2012-02-23/Pepsis-mid-calorie-
soda-aims-to-win-back-drinkers/53220558/1

http://abcnews.go.com/blogs/health/2012/03/09/coke-pepsi-skirt-cancer-warning-label/

http://www.self.com/health/blogs/healthyself/2012/03/coke-and-pepsi-avoid-cancer-warning-5-
healthy-alternatives-to-soda.html

http://www.mpwhi.com/coke_pepsi_make_changes_to_avoid_cancer_warning.htm

http://grist.org/scary-food/2011-02-16-aspartame-soda-caramel-bpa-diet-soda-kill-you/

http://www.newyorker.com/reporting/2011/05/16/110516fa_fact_seabrook

http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/FoodLa
belingNutrition/ucm063136.htm

http://www.ehso.com/ehshome/DrWater/drwregs.php

http://beforeitsnews.com/story/1878/276/Coke,_Pepsi_Makes_Changes_to_Avoid_Cancer_Warnin
g:_with_aspartame_still_causes_cancer.html

http://www.natural-health-information-centre.com/aspartame-lawsuits.html

http://articles.marketwatch.com/2009-08-04/industries/30733041_1_pepsico-chief-executive-indra-
nooyi-pepsiamericas

http://management.fortune.cnn.com/2012/02/13/pepsi-indra-nooyi-earnings/

http://www.investmentu.com/2012/February/are-the-coke-vs-pepsi-cola-wars-over.html