PEPSI

ABSTRACT
While many different categories make up the Pakistani beverage product picture,
carbonated soft drinks (CSDs) paint the broadest strokes. As the “granddaddy of them
all,” carbonated soft drinks (CSD) s occupy a unique place in the hearts, minds and
palates of the Pakistani consumer.

The following report describes the marketing mix of Pepsi in the carbonated soft drink
(CSD) industry of Pakistan. The industry is a tight oligopoly with Pepsi and its chief
competitor, Coca Cola, comprising 70% of the total market. Global beverage sales for
PepsiCo in 2000 were $7.6 billion; however, sales growth has averaged only three to four
percent in mature markets such as North America.

Pakistan is a thriving market with many opportunities yet to exploit by these corporate
giants. This report will focus on the current strategies of Pepsi and its ongoing rivalry
with its major competitors.

Product:

Pepsi - the bold, robust, effervescent magic cola. That’s how Pepsi cola defines its
carbonated soft drink called Pepsi. Pepsi-Cola is a carbonated beverage that is produced
and manufactured by Pepsi Co. It is sold in stores, restaurants and from vending
machines. Pharmacist Caleb in New Berlin, North California, first made the drink in the
1890s. The brand was trademarked on June 16, 1903. Its ingredients are carbonated
water, glucose-fructose and/or sugar, caramel color, phosphoric acid, caffeine, citric acid,
flavor.

Some of its most popular slogans in Pakistan are:

1998: "Yeh Dil Mange More" with Shahid Afridi and other cricketers in it.
2008: "Pepsify karo gai!" Commercial (in Urdu meaning "Wanna Pepsify!") (Pakistan)
(Featuring. Adnan Sami and Annie (Pakistani singer))

Caffeine (mg) 25
Potassium (mg) 10
Phosphorous (mg) 36
Acesulfame 0
Potassium (mg)
Aspartame (mg) 0

Promotional strategies:
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Perhaps the most important of all the elements of marketing mix is promotion. Promotion
can be defined as designing a message that is designated to induce others and sell a
product, a service, or an idea. Promotion involves careful planning. Importance of
effective promotion in today’s corporate world cannot be overemphasized. It’s imperative
for firms to realize that the consumer today is smarter then ever. Promotional mix
contains four elements:

• Sales promotion
• Advertising
• Personal selling
• Publicity/public relations.

The largest companies in world can demonstrate the best promotion strategies, which are
worth learning and following if one wishes to get success in the world trade and
production. One such big company whose success can be attributed to ideal promotion
strategies implementation is Pepsi Cola. Pepsi promotes its products by personal selling,
advertising, and sales promotion.

Advertisements:

Advertising reaches people through varied types of mass communication. Pepsi

understands that advertisements play a key role in its popularity. According to our survey
90% of people said that they found Pepsi’s ad campaigns quite attractive and a decrease
or sudden stop in them would affect their consumption of Pepsi. For advertising, and
sales promotion Pepsi uses printed and electronic media. Every newspaper and magazine
carries Pepsi advertisements. Advertisement of Pepsi are eye catching and attractive.
Through advertising it informs the consumer about new brands and flavors. In addition to
that Pepsi keeps on advertising to retain its already loyal customer base. People all over
the globe and within Pakistan are aware of Pepsi and know it’s a powerful brand, but to
reinforce this image advertising campaigns are imperative.

Pepsi’s ads are on every channel; it’s on a massive scale that Pepsi launches its every ad
campaign. Hiring the most famous celebrities, making use of latest technology, funky
music, and lots of energy, youth and a great theme is what characterizes a typical Pepsi
commercial. Initially Pepsi promoted itself by having famous cricketers endorse its
brand; cricketers like Imran Khan, Waseem Akram, Shoaib Akhter & Shahid Afridi who
are ‘youth icons’ were all endorsing Pepsi. This campaign contributed immensely in the
fame of Pepsi. Pepsi has been always catching the trends of society. People in Pakistan
are very patriotic and attach a lot of importance to brands, which manipulate this thing.
So Pepsi made National songs by bands like “Vital Signs”, “Awaaz”, “Junoon” and
“Strings”.

Unique selling proposition (USP):

The unique selling point of Pepsi in Pakistan is its exclusive advertisement campaigns.
Infact, the major reason for Pepsi’s large market share is its fervent promotional
campaigning. Pepsi has an edge because of its strong brand image, and if you have a
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brand you have an immediate advantage because you have a backbone, or a framework,
on which to hang your products. Pepsi’s ads reflect the social, cultural values of Pakistan,
whereas the ads of coca cola (its major competitor) mostly have western or a Turkish
theme. There current slogan ‘pepsify kero gay’ has been highly successful. The
mainstream Celebrities of Pakistan are used for Pepsi’s promotions thus having them to
endorse a brand is a guaranteed success in itself.
In your opinion what makes pepsi a strong brand?

5%

15%
35%
Price
Product Quality
Availability
20% Company Reputation
Promotion

25%

Publicity:

Pepsi has always been active in sponsoring major events such as concerts, charity
functions, and inaugurals for example they have been sponsoring major cricket series for
quite some time. A crucial part of maintaining good public relations in time of crisis
when the image of company is at stake is to show that a perceived crisis does not actually
exist, it is important to communicate with the public and show them that no crisis actually
exists. A crisis, whether real or perceived, requires the implementation of a crisis public
relations plan.

Other than that Pepsi donated generously for the victims of the catastrophic earthquake in
Pakistan.

Direct selling:

Website:
Pepsi has a very comprehensive and detail-oriented website. It starts with peppy music
and the whole outlook is phenomenal. They have a ‘false rumor alert’, which clarifies any
false rumor; it also offers free mp3 downloads of different singers. It has an icon labeled
‘cause’ which has information on Pepsi recycling, Pepsi eco challenge, youth
empowerment and live earth. By this they are engaging in to phenomena called ‘social-
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responsibility marketing’. They also have a ‘design your own can’ option which
encourages involvement of end consumers.

Sales promotion:

Keeping in view that the market for Pepsi is already mature and there is intense
competition in the soft drinks market; relying on advertising alone to increase profits is
not adequate. This is where the need for sales promotion arises. Lowering prices can do
sales promotion, or offering packages like buying one and getting one free for a limited
time period. Before Ramadan or on other special occasions like Eid; Pepsi lowers its
price below that of its competitors. The major objective behind this is to increase the
intake of Pepsi and in the process of doing so, give incentive to existing or potential
customers to buy more of Pepsi.
Do pepsi commercials have a positive influence on your
buyin behaviour?

90% Yes
80%

70%

60%

50%

40%

30%
No
20%

10%

0%
Yes No

Brand promotional strategies:

Pepsi has adopted this pragmatic strategic planning process that defines it’s positioning,
brand’s character, and the club appeal for brand distinctively in the minds of consumers.
But what is a brand? A brand is the set of values, ideals, strengths and weaknesses that
become tied to your business. Pepsi has shaped the image of a lifestyle brand, rather than
a luxury product just for the elites.

A good business is one that stands out from the herd i.e it is better, stronger and more
adaptable than its competitors. The image of Pepsi soft drink can be best described as
eye-catching, fresh and hard to pass by. It’s lively, funky, fun and at the same time is
offered to the wealthy as well as the less fortunate ones.

How a category is defined impacts both volume potential and the degree of appeal for
example Pepsi has been positioned as a brand for masses, the category it relates itself to
stretches to a entire country or a region, so it is priced low, promoted and produced high.
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But on the other hand ‘mountain dew’ is projected in a way that attempts to attract ‘men’
and even those fortunate men.

Issue:

Rivalry –

There is intense rivalry between Pepsi and Coke. This rivalry leads to a downward
pressure on prices and significant investments in advertising in an attempt to build and
maintain brand loyalty. A 2000 article from the Competitive Media Reporting group
reported that soft drink advertising expenditures in 1999 were $649.8 million.
In a maturing market such as the domestic carbonated sodas, the only way to gain market
share is to steal from one’s rivals. Thus, Pepsi and Coke fight heatedly over prices,
suppliers, spokespeople, retail space and most importantly, the taste buds of consumers

COKE VS PEPSI:

Control of market share is the key issue for most firms. Pakistan’s two largest soft-drink
producers have gotten rich and lazy while controlling 80% of the Pakistani soft drinks
market. Coke and Pepsi are trying to gain market share in beverage market, which is
valued at over $30 billion a year. Just how this is done in such a competitive market is the
underlying issue. The facts are that each company is coming up with new products and
ideas in order to increase their market share. The creativity and effectiveness of each
company's marketing strategy will ultimately determine the winner with respect to sales,
profits, and customer loyalty.

Cooperation

Despite sharing a number of common interests, Pepsi and Coke appear to take little
Advantage of potential cooperative strategies. In fact, recent evidence suggests that both
Companies have actually engaged in mutually destructive behavior despite potential
benefits from tacit collusion. In the following passage we have identified areas in which
opportunities for cooperation exist and should be exploited for the benefit of both Pepsi
and Coke

Development of Overseas Markets

Both companies have engaged in ruthless advertising tactics in Asian countries, where
the opportunity for growth is far more than in European countries. Perhaps most
confounding are Pepsi and Coke’s recent spate of vicious attack advertisements in
Pakistan.

More importantly, although the per-capita consumption of soft drinks in Pakistan is

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A lowly fourteen bottles per year, one-third of Pakistani population is under 18, an
important demographic whose consumption habits Pepsi & Coke would like to affect
through compelling marketing However, both companies have engaged in a slew of
television advertisements, which publicly ridicule the other’s product and image.

Given the enormous size of the potential Pakistani soft drink market and the existing
reluctance of Pakistani consumers to drink colas daily due to worsening economic
conditions, it is baffling why these companies have engaged in behavior that damages
both firms.

Coke and Pepsi should cooperate to generate consumer goodwill toward the cola industry
thereby increasing widespread acceptance of soft drinks by Pakistan’s massive emerging
youth market.

Distribution – Ethical issues aside, clearly both Pepsi and Coke share a common interest
in generating revenues through wide distribution of their products across the country.
However, Pepsi and Coke would benefit through a concerted marketing effort to
Encourage distribution of soft drinks in schools and universities. For example, no direct
connection has been made between soda consumption and increased obesity.
This goes especially for Pepsi’s distribution in urban areas. It is not as widely available as
Coke is. Pepsi and coke would stand to benefit from shifting their focus from competitive
actions to obtain exclusive school, university and restaurant district contracts to create a
unified marketing approach that educates consumers about their community involvement
and eliminates negative Misperceptions. As a result, both companies would benefit from
potential widespread

Threat of New Entrants – Currently, the biggest threat of entry faced by the majors is
from private label manufacturers such as Gourmet cola. The challenge to both Pepsi and
Coke is to further build brand loyalty in their core cola products so that consumers will
not be swayed by the cheaper, private label imitations products.

Conclusion:
Given the extreme competitive nature of the CSD industry, the slow growing market
Size and the shrinking margins, a firm that is going to be successful and generate above-
Average returns must have a sound and coherent strategy. In order for Pepsi to
Protect its position, it must be wary of private label infiltration

Pepsi has been successful in generating profits in this extremely rivalrous industry.
What the company should do now is employ a strategy that not only addresses its own
Deficiencies in an effort to grow market share, but one that will increase the overall size
of the pie. This strategy, in the end, will allow Pepsi to grow and sustain above average
returns.
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References:

www.Wikipedia.com

www.mcafee.cc/Classes/BEM106/Papers/UTexas/2003/Pepsi.pdf+pepsi+as+a+carbonate
d+soft+drinks&hl=en&ct=clnk&cd=6&gl=pk

http://www.garybeene.com/pepsi/pep-hist.htm

www.pepsi.com
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CSD: carbonated soft drinks

Oligopoly: Control over the production and sale of a product or service by a few
companies.

Marketing mix: the elements of marketing that can be used by a company to influence
consumers to purchase goods or services

Unique selling point (USP): A unique selling point (USP) is any aspect of or
characteristic of a product that differentiates it from the competition

Direct selling: It is considered to be a sale that does not utilize a "middle man" such as
retail outlets, distributors or brokers. It can be done, for example, by websites.

Brand loyalty: the tendency of consumers to continue buying a specific brand's product or
service, despite the competition

Private label manufacturers: products manufactured by middle man themselves, such as

retailers.