PEPSI

MARKETING REPORT

Submitted by
SAAD
NIMRA ABID
ABDUL WAHAB
ISHFAQUE ALI SHAH

DATE: 27/4/2015
 TABLE OF CONTENT

TOPIC PAGE

Executive Summary 2

Introduction 3

Mission & Vision statements 4

Marketing mix 4

SWOT Analysis 7

PESTLE Analysis 9

Porter’s Five Forces Model 11

HOFSTEDE cultural dimension Model 12

Recommendations 14

Conclusion 15

References 16

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 EXECUTIVE SUMMARY

Pepsi is top leading beverage brand of Pakistan, and Purpose of this project
is to study the Marketing strategies and issues which Pepsi is following and facing
in Pakistani market. Pepsi is a very well organized multinational company, which is
operating almost all over the world.

Pepsi is now recognized as Pakistani’s National drink. Pepsi's greatest rival is

Coca Cola. Coke’s basic strength is its brand name, campaigns and packaging. But
Pepsi with its aggressive marketing planning and quick diversification in creating
and promoting new marketing idea is successfully maintaining is No.1 position in
Pakistan. In this report we analyzed some factors and Models related to Pepsi
marketing strategies including five forces Model, PESTEL analyzes, SWOT and
hostage model. Besides beverage products Pepsi is also producing SNACKS, purified
Water and KFC fast foods chain but in this report our main focus remain on
Beverage Products of Pepsi.

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 Introduction

Pepsi is a carbonated soft drink, invented by a pharmacist named as Caleb Brad in 1893 and
named as “Brad’s Drink”. It is initially offered in the markets of New Bern, United States and
North Carolina. “Brad’s Drink” was renamed as “Pepsi Cola” in 1898.

In 1979 Pepsi franchise was offered to Pakistan Beverage Limited by Pepsi Cola international in
different flavors. Nowadays Pepsi is the leading brand in the Pakistani market and known as the
National Drink of Pakistan. One of the most competitive consumer industries is the soft drink
industry and according to the recent survey, Pepsi has been declared as the most wanted soft
drink in Pakistan.

In the world, the major competitor of the PepsiCo is Coca Cola, Pepsi maintained its No 1 position
in Pakistan by generating new ideas, Strong Distribution network and aggressive promotional
activities. Around 15% share of Pepsi Cola Pak budget is allocated for the advertising and
promoting purpose. And there are more than 12 bottlers who are filling Pepsi bottles and
supplying around the country. When Pepsi entered in Pakistan it faces a strong competition by
the 7up, lemon and lime drinks. Before the acquisition of 7up by PepsiCo, the main products of
Pepsi Pak includes Marinda, Pepsi Cola, and Teem. Initially they develop Teem for the sake of
completion of their product line but after they acquired 7up.The competing products of Coca
Cola against Pepsi Marinda and Teem were Fanta and Sprite. But despite of this Pepsi 7up was
able to get the 70% market share while Coca-Cola only serves the 20%market share. From the
last decade Pepsi started producing snacks, Aquafina the purified water and world renowned
famous Fast Food chain KFC in Pakistan. And these all businesses are giving tough time to
competitors.

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 Mission Statement
“To be the world's premier consumer Products 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.”

Vision Statement
“To be the world's best beverage company”, Being the best means providing outstanding
quality, service, cleanliness and value, so that their every customer is contented and happy with
their products.”

“To increase the value of their shareholder’s investment through sales growth, cost
control and wise investment of resources.”

Marketing MIX

PRODUCT:

The beverages market in Pakistan is rapidly growing in volume and value terms. Carbonated
drinks have become part of the culture in Pakistan and multinational companies have maintained
standards over the years to provide the nation with high-quality drinks. Beside beverages Pepsi
is hitting hard Nestle with their purified water Aquafina. Snacks products have captured the main
portion of snacks and they are giving tough time to Kolsan and Kurleez.

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PRODUCTS

Beverages Water Snacks Juices

Pepsi Aquafina Kurkure Tropicana

Sting Cheetos
Mirinda Lays
7-UP wavy
Mountain Dew

PACKAGING:

“Bad packaging shouts at you, Good Packing is silent seller.” Shane Meendeing

Pepsi products are available in different packaging and designs in market because
Packaging is another important factor which plays an important role in attracting
customer. Pepsi is famous because of its unique packaging, in beverages besides tins all
products produced in Pakistan. In snacks lays faced some critics for extra air packets, but
they came after a reasonable excuse to satisfy the critics.

PRICE:
Pepsi charges reasonable and affordable price on its products because of strong
competition from COCA COLA and other local brand, they come up with different
discounts on different events and seasons like RAMAZAN, Cricket world cup and national
and religious events. They also change pricing because of season and demand factors in
winter they use different pricing and discount policy and in summer they use different
one.

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PLACEMENT

For distribution Pepsi uses following channels for the products.

 Indirect Distribution

Indirect distribution involves agency holders and distribution networks in

cities the work as franchisee in the given area

 Direct Distribution
The factory vehicles operate on different direct routes in cities selling non-
returnable bottles Litter and tins.

PROMOTION

“The company who stops advertising to save the money is a MAN who stops the clock to
save the time” -UNKNOWN-

Pepsi spends a major portion of its budget on promotion and Adverting a major portion
of their promotion budget goes to sponsorship they are leading sponsors of Pakistan
cricket team beside this many TV programs like “Pakistan IDOL” and “LIVE ON EDGE”.
They also telecast many attractive TV ads and print ads.

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 SWOT Analysis

Strengths

 Brand Name:
The biggest strength of Pepsi is its brand name because it is known all over the world for
its excellence and has the great history.
 Maintain Excellent quality
By using latest equipment, and by delivering more hygienic food, Pepsi maintain its
position in the market and in the heart of its consumers as well.
 Easy availability:
Pepsi has the largest distribution network which results in the easy availability of this
product.
 Market Share
Pepsi has the 62% market share in beverage industry in Pakistan.
 Huge distribution channel
Pepsi has the both direct and indirect distribution channel which serves more in its
success.
 Diversification
Pepsi has the most diversified portfolio having beverages, snacks, juices, and purified
water as well.
 Competency in mergers and acquisitions
Pepsi great business growth depends on its successful mergers and acquisitions of
beverage, bottling, and snacks companies.
 Official sponsor of PCB
Although cricket isn’t the Pakistan’s national game but despite of that Pakistani people
love it the most. Pepsi is the major sponsor of it so it has a huge impact on the cricket
lovers.

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Weakness:

 Low pricing
Pepsi often set prices below their competitors and low prices is associated to the low
quality which is its weakness.
 Lack of innovation in advertising
Pepsi is known for its innovative and attractive advertisements but nowadays Pepsi
ads are not as much attractive.
 Too low net margins
Pepsi has too net low margins like nestle has 11%, Coca Cola has 18.55% but Pepsi has
only 9.7% net margins.

Opportunities

 Increased Population
According to Pakistan Economic Survey 2013-14, Pakistan is the 6th most populous
country in the world, so there is huge potential for Pepsi to serve.
 Innovative products
People nowadays are more focused on the innovative products. They want
innovation in every step, Pepsi has the quality standards so it can avail this
opportunity easily.
 Growing beverage and snacks consumption
Nowadays beverage and snacks consumption trend is increasing very rapidly
because there is a conversion of nutrition’s with convenience and taste.
 Increasing demand for healthy items
Nowadays Pakistani people are more health conscious and Pepsi CEO “Indra
Nooyi” recently declares that Pepsi hasn’t much obesity issue.

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Threats

 Coca Cola (strong competitor)

Coca cola is the major competitor of Pepsi, and its market share is increasing day
by day in Pakistan.
 Other competitors (Mecca, Gourmet, Amrat Cola)
There are many new local competitors emerging in beverage industry.
 Changes in consumer taste
Nowadays many companies are coming with different flavors, so people has many
choices available.
 Political instability
Due to political instability, companies are facing more vandalism. So this is biggest
threat for Pepsi as well.
 Pepsi as Jewish product (Religious issue)
As Pakistan is a Muslim country so people avoid it because of its ownership issue.

PESTLE ANALYSIS

There are some factors from external environment which affects Pepsi and their strategies
for marketing and other functions in Pakistan their external environment functions includes
political, economic, social technological, legal and environmental.

Political:

 Pepsi produce nonalcoholic beverage so it regulates standards set by FDA in Pakistan.

 Political instability in country also provide instability in laws of country so it stops Pepsi
for further investment in country.
 Mostly Government organization are sponsored by Pepsi like PCB so this is positive move
from Pepsi to remain in collaboration with GOVT organizations.

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Economic:

 Fiscal policy effects on company’s decision regarding pricing of products because the tax
rate changes every year in policy.
 Inflation rate increase with high rate every year so Pepsi move according to changes in
inflation rate in country.
 INCOME changes also affects the buying behavior of the customer so as income of people
grow it is more likely to that they will increase their consumption of Pepsi.

Social:

 Pepsi produces nonalcoholic beverages and it doesn’t demolish any norm of Pakistani
Society.
 Consumer behavior also effects the demand of Pepsi products because as they live happy
cherish their lives the will consume more Pepsi on those cherish events.
 Growing Western culture in country also have a positive effect on demand of Pepsi.

Technological:

 Pepsi believe in evolution of technology so it always try to adopt latest technology for
their production units.
 Pepsi uses now more social media networking websites for their promotion purpose.
 Pepsi owns a well-developed and interactive network in country to with its distributions.

Legal:

 Pepsi is registered and well-known brand it follow all legal regulation and documentation
for their products and activates.

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Environmental:

 Pepsi beverages Pakistan is ISO 14001 certified which implies different environmental
safety steps in their process.
 Pepsi use recyclable bottles and tins in their products.

PORTERS FIVE FORCES MODEL

Barriers to entry:

The soft drinks industry requires a huge investment if one aims to gain a considerable market
share. For the setup of manufacturing plants, bottling plants and as advertising budget the
investment must be in huge quantity.

PepsiCo Pakistan has currently eight bottling franchises. Pepsi has over the years investment
about 1 billion dollars

That is the scale of operations creates difficulty for new entry in soft drink industry. Another
resistance for new entry is presence of coca cola. The two cola giants among themselves control
most of the market, leaving no room for anyone else.

Bargaining Power of Suppliers:.

Pepsi Pakistan have about 153 distributors, suppliers and exporters. This number does not make
suppliers to bargain at their will and they negotiate at acceptable rates taking long term relation
under consideration.

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Bargaining Power of Buyers:

PepsiCo has large number of buyers therefore buyers do not have much control over pricing and
any influence on decisions. Affordable pricing strategy of PepsiCo and big competition in market
keeps prices in check.

Rivalry:

There is a great and continuous rivalry between Pepsi and coke from the beginning till to date.
The intensity of their rivalry can be judged from every continent, country, every market and the
past experiences. The main factors are enlisted below which are responsible of their rivalry in the
market.

 High fixed costs – this factors insists both of companies to produce high quantity of
production creating fight over the market share.

 Low switching costs – no doubt both have captured big market share but the switching
cost for consumer is low, because others are also offering same prices.

 Low product differentiation – other than a few loyal consumers, most of consumers
cannot differentiate coke and Pepsi.

Threat to substitutes:

Pepsi cola has threat from many sides as it has number of substitutes. And its prices match with
its substitute products which has left low switching cost and losing market share and is under
constant threat of losing its market share. Threats outside the industry are Olper’s lassi and
limopani which are prepared for home consumption.

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HOFSTEDE CULTURAL DIMENSION MODEL
Individualism vs Collectivism:

Pakistan the country of diverse cultures and traditions, where you can find both individualism as
well as collectivism. But the high potential of collectivism is available than individualism in
Pakistan. If we define both individualism and collectivism then we come to know the society in
which individuals think about just one self and the society in which individuals thinks about family
as collectively. Now in the perspective of Pepsi, it has positioned its brands with respect to
collectivism mainly in Pakistan. Which infect will not be beneficial for Pepsi in future, because the
domestic market of Pakistan is moving towards individualism so for that Pepsi must introduce
the products for individuals not for the family.

Uncertainty Avoidance:

Pakistan mainly deals with the society that has got the high potential of risk averse. So with this
regard Pepsi Cola has got special consideration according to risk averse, just like they maintain
the beverages under sophisticated temperature so that society of risk averse could be safe. The
Pepsi take care it all operations internally as well externally. If we see in Pakistan the Pepsi
Company then we may know that it operates and is governed under structured system. The
company has got hierarchy in the Pakistan because it believes more can serve better in the
country.

Masculinity:

Pakistan with almost 50-50 scores in both high MAS and low MAS. According to this every
company must run their operations. Pepsi is operating under structured environment and they
have hired all the male directors and CEO’s because they think that men are more hardworking
than the female but currently the trend is changing, means all the work which previously done
only by men can be done by women. So with this change Pepsi must change their operating
patterns by giving equal chance to both parties.

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Power/Distance:

Pakistan has got 55 score in high power index and remaining 45 in low power index. Which shows
the authorities has got high potential than the personal will and freedom. As per this kind of
atmosphere Pepsi operates, which might be the issue infect.

Long term orientation:

In this very dimension it is all about the societies dealing with short term and long term benefits.
The Pakistan in this condition is 50-50. But mostly companies are operating of short term benefits
with their short term planning’s and predictions because they know that change in politics will
change their plans. Pepsi in Pakistan operates in such conditions. They make normally 5 years
plans according to the running government.

Recommendations

 Pepsi should focus on the improved packaging in order to meet environmental

criteria. Coca cola is famous because of their unique and attractive bottle designs
but Pepsi is using same old bottle design. Pepsi should come up with a new and
attractive packaging
 It should focus on the more healthy beverages and snacks because people are
becoming more health conscious, so it should reduce the extra carbohydrates, fat
and cholesterol. Soft drinks are main cause of obesity they should promote
awareness for these health related issues with their product. In past coke has done
some successful wok in this field.
 Pepsi should start campaigns for different social issues as Pepsi do negligible work
for CSR in Pakistan, they can promote their product by running some social
campaigns in country on education, health and other issues as well.

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 Conclusion
By the above discussion, we conclude that Pepsi is one of the leading brand in Pakistan in
beverage industry. There are products which are leading like Pepsi Cola, 7up, Mountain Dew,
Lays and KFC. But despite of this there are some products which were totally flopped like Teem,
Pepsi Max and Pepsi Twist. Besides some failures Pepsi has maintained its position well by
understanding the client psychology, by ensuring quality, by introducing ingenuity in products,
by enlarging its product base, by keeping economic factors in view and by intense and
advertisements.

Pepsi is now become our National brand and serves the masses for almost 30 years in Pakistan.
The great strengths of Pepsi are their strong distribution network which is the main reason that
they are leading on their competitors. And other reason is it always remain in the spotlight by
sponsoring different events in country, PCB and TV shows.

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