I.

PEPSICO
1) Company Overview
Established in 1965, PepsiCo is a multinational food, snack, and beverage company which is based in
the US. Today, numerous globally famous brand names such as Pepsi, Lays, Lipton, Doritos,
Tropicana, Walkers, Miranda, Cheetos, and others all belong to PepsiCo.
As their mission statement, PepsiCo is committed “to provide consumers around the world with
delicious, affordable, convenient and complementary foods and beverages from wholesome
breakfasts to healthy and fun daytime snacks and beverages to evening treats”

2) Market segmentation
The company promotes young energy as the main theme in its advertising and marketing campaigns
as its targeted customers are teenagers and youth with a modern and fast-moving lifestyle, aging
from 13 to 35 years old.

Besides, maintained an affordable pricing strategy to reach customer from all income segments is
also among the focuses of PepsiCo.

3) PepsiCo’s Core Marketing Strategy

Marketing has always been drawing the company attention as well as investment to push sales and
market growth.

 Product and Packaging Innovation:

Product quality and packaging has never been out of the company’s focuses on its path to become
customers’ first choice. At the same time, PepsiCo also invest in their product innovation to bring
new, healthier and more nutritious choices for its customers. Attractive packages can also drive sales
higher and it is why Pepsi has continued to innovate the packaging style and sizes based on
consumer demand and expectations. Product quality and packaging are of primary importance when
it comes to Pepsi’s marketing strategy.

However, apart from investing in product quality and design, it is equally important to invest in
marketing and Pepsi promotes its brand through both digital and traditional channels.

 Digital Marketing Campaigns:

Along with technology innovasion arises the era of digital marketing. From Facebook, Instagram,
Twitter and other social media as well as digital channels, running digital campaigns has helped
PepsiCo reaches a larger amount of customer than ever.is also an important determinant of its sales
and profits. Digital marketing, hence, has become the central focus of Pepsi in order to push sales
and increase market share. (Remarable campaigns are ones such as Bring Home Happiness or Made
for This)

 Sports Marketing and sponsorships:

Apart from these promotional campaigns, sponsorships and partnerships in which sport marketing is
a central part are also emphasized and employed by PepsiCo. This type of marketing strategy helps
 contribute to raising customer awareness and loyalty to the brand. (partnership with UEFA
champions’ league, partnership with the National Basketball Association, partnership with the Board
of Control for Cricket in India)

II. INDIA MARKET ANALYSIS:

1) Consumer Market
 Market size

Globally, the Indian retail market is the fifth largest in the world. The International Monetary Fund
has projected that India’s GDP will grow by 7.4 percent for 2016–2017 which makes India become
the world’s fastest-growing large economy. India will also be seen as potential market for emerging.

 Indian Consumers & Government Initiatives

Most of major carbonated beverage consumers in India are young with 50% of the consumer base is
below the age of 30 years.

Thesedays, Indian consumers have their income earning raised and their consumption patterns
changed due to rising dual income groups. Besides, the development of technology, especially
internet savvy, has led to Indian customers prefering shopping online for convenience and discounts.

These phenomena has led to changing consumption pattern in Indian consumer in which quality
(freshness of product), variety (range of products) and convenience (access to product), health and
hygiene consciousness, protein rich and organic factors are gaining dominance.

In term of government policy, not only the percentage of FDI into single brand retail has been
increased from 51 percent to 100 percent but also government is also planning to hike FDI limit in
multi-brand retail to 51 percent.

 Market Segmentation:

The beverage market in India is separated mainly into alcoholic and non – alcoholic beverage. The
segmentation of non – alcoholic beverage in India is specified as carbonated and non – carbonated
beverage. The main product line that are observed in the non- carbonated non – alcoholic
segmentation which has mainly shifted to healthier options are juices, bottled water, energy drinks,
ready to drink tea and coffee, flavored milk, malted drinks and other drinks that are available. The
carbonated drinks are segmented into cola flavored drinks, lime- lemon flavored drinks, orange
flavored drinks and others.

On the geographic views, the beverage market in India is separated into urban and rural markets,
and semi-urban market and climatic conditions which means the demand for cold drink in the hotter
places will be higher. For instance, hot tea is the popular beverage in northern, western and eastern
India.
 In term of demographic, different religion, community, language, and age may result in different
consumer tastes and need for different product lines. For example, for age segmentation, Amul has
segmented his products in different age group of customers or the way Adidas targets women in
India to avoid the issue of sexism.

 Growing Opportunities

The transformation of India’s urban creates a huge opportunity for domestic and international
businesses that can provide capital, technology, as well as the goods and services to meet the
growing demand of urban consumer. Moreover, the market offers low-cost labor for foreign
investors who wish to tap into the large and growing local market.

 Competition Landscape

The main beverage market is changing its definition from alcoholic and non–alcoholic beverage to
carbonated and non–carbonated beverage. In the beverage market of India, PepsiCo has its position
as the main players together with its biggest competitor Coca Cola. The 2 companies account for
90% market share in total, with a Coca-Cola taking the lead with market share of more than 48% in
2015.

2) Possible challenges of the market:

- Corruption in India increases the cost of business operations and often affects FDI. It may
lead to problems with taxation, no trust in authorities, and makes people poorer which
followed by allow down the economic growth.
- Major climate changes occurring due to global warming and greater environmental
awareness this external factor are becoming significant issues for firms to consider. When a
foreign company enter in India, they may meet a lot of challenges regarding environmental
pollution. Air pollution in India is one of the worst in the world which caused mainly by
transportation. Water pollution is mainly caused by industrial wastes, agricultural waste and
chemicals pumped to the ocean and rivers, and lack of water resources. Also, the lack of
rubbish bins causes damage to the environment in India.

III. PEPSICO STRATEGY IN INDIA

1) Marketing Strategy
 Products

The Company has expanded into snacks and healthy breakfast to dominate its rival. In snacks,
Cheetos, Lays and Kurkure are consumer preferences. In healthy breakfast, Quaker oats is also
gaining popularity.

 Pricing strategy

Due to the level of saturation in the non-alcoholic beverages industry, the price competition is
intense. Coca Cola and Pepsi competed with each other in product’s price.
By keeping the accessibility for the larger customer segmentation and acceptable price, Pepsi’s
pricing strategy aimed to capture customer loyalty at an affordable price without making a low
quality product image in customer’s mind. Moreover, the larger the size of the purchase, the lower is
the price. A customer can get a larger discount if he purchases in bulk.

 Place:

Pepsi has a vast extensive distribution network all over the world that ensures the availability of
Pepsi product in each and every locality where the target market of Pepsi is located

1) Company > Distributor > Small retailers / Small buyers > End customer

2) Company > Bulk buyers > End customer

 Promotion:

Since its target customer is the youth, PepsiCo promotions campaings aim mainly at creating a
feeling of refreshment by relying on advertisements featuring films stars, popstars, and cricket
players.

Some exemple of the company promotion campaings may include:

- Mountain dew has a message of “Darr ke age jeet hai” which is again focused on adventure
sports thereby targeting youngsters.
- Kurkure targeted household snacks and middle aged group whereas Lays targets youngsters
and the party mood

Beside store promotion, Pepsi also spends heavily on marketing and advertisement of its products.
In 2016, its total marketing expenses were higher than $2.5 billion, mostly focus on digital
marketing, using internet, social media and television to advertise the brand. They also adapted the
traditional advertising and marketing channels to keep the customer engagement.

 SWOT Analysis

STRENGTH

1. Brand equity: Pepsi is one of the popular and famous brands in food and beverage sector
with the youngsters. It has a high brand recognition and reputation. It has a brand valuation
of $19.4 billion and it is ranked 29 in the Forbes most valuable brands list.

2. Massive portfolio: Pepsi accounted for two products in the top 5 beverages sold in the
country. Even if Pepsi is second rank in the volume of distribution compared to Coca Cola, it
also has a sustainable competitive advantage.

3. Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been doing really well.
It is stated that Pepsi occupied the second position in the F&B sector behind Nestle.
 4. Strong Customer Base: PepsiCo has an extremely loyal customer base. They have emerged
as a very strong brand when it comes to juices and bottled water category.

5. Strong distribution: Pepsi has a global presence in more than 200 countries providing them
with a very good distribution network.

6. Clear target customer: Pepsi, unlike Coca Cola, has always had a clear target audience – the
young crowd. It always targets youngsters through its ads and generally the youngsters are
shown to be smarter then the old ones. The message is clear – Pepsi is the in thing.

WEAKNESSES

1. Competition: PepsiCo, as always, suffers heavy competition from Coca-Cola in their soft
drinks category.

2. Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as
unhealthy.

3. Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts the brand image of
the PepsiCo and thereby giving room to the competitors to grow.

4. Advertising: The limitation of Pepsi’s advertising in the past is that they just focused more on
the youth. Pepsi can gain more profit if they broaden their vision to reach wider customers
and attract more customers to buy their products

OPPORTUNITIES

1. Healthy Options: Nowadays, many scientists found that carbonated and sugary beverages
can be one of the risk factors for heart diseases and diabetes. Therefore, there are
opportunities for Pepsi innovates and develops more products such as non sugar drinks, diet
drinks and non carbonated drinks. It should work more on improving the health implications
of their products and marketing strategies make the customer aware of the same.

2. Diversification: Pepsi has talent, resources and strong financial capabilities.

Therefore, business diversification into different market segments is a huge opportunity for
Pepsi to adapt consumers’ need in India. This can also be done by acquisitions in order to
eliminate competitors or develop different flavors to meet demand. For example, Paperboat
is a brand which is growing strongly in India in recent years. Paperboat is popular for various
flavors such as watermelon, raw mango etc. Therefore, Bringing in such flavors even in
carbonated beverage form can help Pepsi attract a larger market.

3. CSR activities: They can do more CSR activities to hide the negative remarks that hurt the
brand image of Pepsi and bring benefits to local people

4. R&D: Recently PepsiCo came out with healthier options in a soft drink. To make 7Up by
using the substitute of sugar called Stevia. This can prove to be a game changer. More such
research needs to be done. Focus more on the diet drinks category. They have recently
released a variant of their cola sweetened with Stevia and sugar called Pepsi Next.
 5. Flavors:

THREATS

1. Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods, Nestle, Dr Peppers
Snapple Group and Mondelez.

2. Health Factor: The unhealthy factor associated with its products can take a toll on the health
conscious customers and might lose them. This can be clearly seen by the fall of soft drinks
sale.

3. Social norms: Different norms in India might prove difficult to handle and compliance with it
as well.

4. Government regulations

5. Changing in consumer preferences and taste: Many researchers proposed that carbonated
drinks are bad for people’s health, so Indians’ preference shift to healthier options such as
non-sugar and non-carbonated drink, fruit juices, etc.
External Opportunities External Threats

(O) (T)

1.Healthy options 1. Competitive pressure from many

competitors (Coca-Cola, Kraft foods,
2.Diversification into different Nestle, Dr Peppers Snapple Group and
market segments Mondelez)

3. Improve brand’s image by do 2. It is difficult to handle well with

more CSR’s activities different norms in Indida

4. Invest in R&D to develop new 3. The fluctuation from foreign exchange

products rate

5. Produce products with various 4. Health issue

flavors can attract larger market
5. Change in consumers reference and
taste
Internal Strengths SO(Using strengths to capitalize ST ( Use strengths to avoid threats)
on available opportunities)
(S) To minimize the competitive threat,
Based on the capabilities of Pepsi must focus specifically on
1.Strong brand image strong image and the financial marketing of its brand, product
strength. Apart from them it also innovation and of using its digital
2.Massive portfolio
has stronger marketing capabilities better. This will reduce the
in F&B industry
capabilities which can help it competitive pressure on the brand.
3.High level of grow faster in India.
Moreover, based on financial capabilities
Customer loyalty
Having talents, resources and and strong distribution network, they can
4.Strong leadership financial conditions to diversify compete to their competitors easily by
into different market segments taking advantage of strong financial
5. Have a strong and growth by acquisition position
distribution network
with global presence Based on the popular of brand Forming partnerships with other related
in 200 countries image, developing in new businesses as well as acquiring smaller
market segments may bring businesses will minimize the threat from
6. Have clear target Pepsi a chance to growth a stronger dollar and currency conversion
audiences - young rates.
customers
Using strong brand image to reduce or
7.Strong supply chain hide health issues

Internal Weaknesses WO( Overcome weaknesses to WT( Reduce weaknesses to avoid

(W) capitalize on opportunities) threats)

1. Heavy Partnerships and acquisitions  Decrease the huge expenditure

competition from and extending its ecommerce on advertising and invest in non
Coca Cola will also help the brand to grow carbonated drinks to increase the
faster and reduce the losses that demand of
2.Products perceived happen due to currency
as unhealthy fluctuations  Investing more on health
department to handle the health
3.No presence issue
outside F&B industry

4. Failed product
(Crystal Pepsi) hurts
the brand image and
give rooms for
competitors develop
Using more brand/product
5. Marketing share
less than Coke diversification in division wise
it

can minimize the expenditure

on adv and will increase the

product portfolio.

Expand more business &

introduce more non
carbonated products and
should increase

the productivity

 Problem

The first biggest problem of Pepsi in India market is about health issues. Science and environmental
centers studied that there is over the amount of residues of insecticides in acceptable Pepsi sample
compared to the Bureau of Indian Standards. This leads to Pepsi was banned in India for a period of
time.

The falling in sale of fruit drink- Tropicana while Tropicana focus on nutrition and healthier
beverages as consumers shift to healthier options.

There is also problem resulting from culture differences. “India is not a breakfast country,” Most of
India has early brunch: Cereals and juices for breakfast is a very urban, upper-class phenomenon

IV. PROPOSED STRATEGY

Based on SWOT analysis, we can set 4 kinds of strategies SO strategy, ST strategy, WO strategy, WT
strategy. Pepsi has many strengths, hence, SO strategies will pursue opportunities that are a good fit
to the company’s strengths, while ST strategies identify ways that the firm can use its strengths to
reduce its vulnerability to external threats. Moreover, there are some W-O strategies which can be
applied in the case, and also some W - T strategies. W - O strategies will overcome the weaknesses
to pursuit opportunities, while W - T strategies establish a defensive plan to prevent the firm’s
weaknesses from making it highly susceptible to external threats.

1) SO Strategy.

Based on effective supply chain, Setting online platform in India will not only increase the
accessibility of Pepsico’s products but also get one more business that they can earn much money.

There must be some customers who knew about the brand ‘Pepsico’ but cannot buy their products
because of absence of store selling Pepsico’s products.

If ‘Pepsico’ open the online platform that everyone can easily access, ‘Pepsico’ will get more
customers.

Furthermore, ‘Pepsico’ also can do the online platform business like Amazon.

Pepsico’s band power in India will collect the massive number of customers into online platform, and
bring a lot of other imported brands like Doritos and Tostitos tortilla chips into the platform.

Based on massive portfolio, Pepsico can produce other attractive flavor of drink. It will help Pepsico
to make larger market in India.

For example, Paperboat is a brand which is growing strongly in India in recent years. Paperboat is
popular for various flavors such as watermelon, raw mango etc. Therefore, Bringing in such flavors
even in carbonated beverage form can help Pepsi attract a larger market.

And analyzing India market and India consumer’s preference using Pepsico’s massive portfolio will
make ‘Pepsico’ to be able to identify the exact consumer preferences and further marketing to the
correct target consumer.

2. ST Strategy:

Another strategy we suggest for Pepsi in the Indian market is ST Strategy. Threats are always
dangerous to every organization, hence, Pepsi need to use their strengths in order to prevent the
threats.

Firstly, to minimize the competitive threat, Pepsi must focus specifically on marketing of its brand,
product innovation and of using its digital capabilities better. This will reduce the competitive
pressure on the brand.

Moreover, based on financial capabilities and strong distribution network, they can compete to their
competitors easily by taking advantage of strong financial position

Forming partnerships with other related businesses as well as acquiring smaller businesses will
minimize the threat from a stronger dollar and currency conversion rates.

Another strategy we suggest is to use strong brand image to reduce or hide health issues
3. W - O Strategies:

Partnerships and acquisitions and extending its ecommerce will also help the brand to grow faster
and reduce the losses that happen due to currency fluctuations

Using more brand/product diversification in division wise it can minimize the expenditure on adv
and will increase the product portfolio.

Expand more business & introduce more non carbonated products and should increase

the productivity.

4. W - T Strategies:

W - T strategy is the strategy that reduce weaknesses to avoid threats.

The healthy lifestyles trend is a threat against PepsiCo’s products, many of which are seen as
unhealthful because of their sugar, salt, or fat content. Also, environmentalism threatens the
company in how consumers negatively respond to product waste and life cycle issues. Based on that
kind of trends, I think ‘Pepsico’ has to improve product healthfulness to attract more consumers and
enhance recycling efforts to address environmentalism. To reduce negative image of Pepsico, It is
good idea to benchmark a successful case of CSR.

Corporate social responsibility (CSR) is how companies manage their business processes to produce
an overall positive impact on society. It covers sustainability, social impact and ethics, and done
correctly should be about core business - how companies make their money - not just add-on extras
such as philanthropy.

LG Electronics has set a strategy to develop products that reduce environmental impacts throughout
the life cycle of the products.

- Decrease the huge expenditure on advertising and invest in non carbonated drinks to increase the
demand

REFERENCES

https://www.cheshnotes.com/pepsi-business-growth-and-marketing-strategies/

https://www.marketing91.com/marketing-strategy-pepsi/

https://research-methodology.net/pepsico-inc-report/