You are on page 1of 20

(Pepsi) Table of Contents 1. Introduction 2. Mission and vision statement 3. Facts about company 4. Pepsi in Pakistan 6.

Market analysis of soft drink 7. Pakistani soft drink industry 8. Industrial SWOT analysis 9. External Environmental factors 10. Internal Environmental factors 11. Pre-marketing Mix 12strategy formulation

INTRODUCTION TO THE COMPANY Pepsi International is a world renowned brand. It is a very well organized multinational company, which operates almost all over the world. They produce, one of best carbonated drinks in the world. Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York. 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 shareholders investment through sales growth, cost control and wise investment of resources. FACTS ABOUT THE COMPANY 1. Pepsi is a USA based public company whose stocks are available in New York. 2. Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package graphics room hillbillies to action-oriented scenes. 3. The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life." 4. PepsiCo acquired Pizza Hut, Inc. Pizza Hut was founded in 1958 by Dan and Frank Carney.

5. Taco Bell is was acquired by Pepsi. Taco Bell was established in the mid 1960s by Glen Bell. 6. PepsiCo purchased Kentucky Fried Chicken, the leader in the quick service chicken market. KFC was founded by Colonel Harland Sanders. Colonel Sanders began franchising the company in 1952. KFC was spun off along with Pizza Hut and Taco Bell businesses as Tricon Global Restaurants, Inc. in 1997. 7. PepsiCo purchases Seven-Up International, the third largest franchise soft drink operation outside the United States

PEPSI PAKISTAN The market in Pakistan is surely dominated by Pepsi. It has proves itself to be the No.1 soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of Pepsi was constructed in Multan, and from their after Pepsi is going higher and higher. Pepsi is the choice soft drink of every one. It is consumed by all age groups because of its distinctive taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to its liking by all. Consumers survey results explain the same outcome and Pepsi has been declared as the most wanted soft drink of Pakistan. Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand. Cokes basic strength is its brand name. But Pepsi with its aggressive marketing planning and quick diversification in creating and promoting new ideas and product packaging, is successfully maintaining is No.1 position in Pakistan. In coming future Pepsi is also planning to enter into the field of fruit drinks. For this purpose it has test marketed its mango juice in Karachi for the first time. When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and lime, "Teem" to compete with 7up. It successfully, after some years, took over 7up, and this enhanced Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys 70% of the market share where as the coke just has 20% markets share. Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are Pepsi's strength. Pepsi has given franchise to these bottlers. Bottlers,

produce, distribute and help in promoting the brand. Pepsi also launched its fast food chain KFC i.e. "Kentucky Fried Chicken.

VARIOUS PRODUCTS IN PAKISTANI MARKET PEPSI COLA, MIRINDA, TEEM, 7UP, MOUNTAIN DEW, DIET 7UP, DIET PEPSI, LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA JUICES(introduced in Karachi only). Market Analysis of Soft drinks Soft drinks set to become world's leading beverage sector Global consumption of soft drinks is rising by 5% a year, well ahead of all other beverage categories, according to the new 2003 Global Soft Drinks Report from leading drinks consultancy Zenith International. Now challenging hot drinks to become the largest overall sector, soft drinks volume is projected to reach 467 billion liters in 2003, equivalent to 75 liters per person. "Economic and climate variations around the world present complications for all soft drinks companies, but many have succeeded at weathering the elements," commented Zenith Research Director Gary Roethenbaugh. "As a combined category, soft drinks offer a powerful growth proposition. The unrelenting advance of bottled water and still drinks, coupled with the scale of carbonates, help place soft drinks on track to become the number one beverage sector in 2005. Market share of soft drinks in beverage industry

Concern over diet has persuaded many consumers to scale down their consumption of sugary drinks, instead choosing healthy products such as fruit juice and bottled water. Despite this shift in attitude, the majority of consumers around the world still favor carbonated soft drinks over these alternatives, according to latest data from TGI. In 11 out of 15 countries analyzed, it is revealed that consumption of carbonated soft drinks is higher than consumption of fruit juice or bottled mineral water. Age factor affecting the sales

Despite the fact that people in the majority of countries still appear to favor carbonated drinks over the perceived healthy alternatives such as fruit juice and mineral water, some interesting behavioral shifts underlie these figures. In many markets, an increase in the number of people choosing diet or low calorie alternatives has contributed to the overall sustained popularity of fizzy drinks.

Pakistani soft drink industry About 75 million cases a year for Pepsi alone; the total beverage market is about 120 million cases of which 65% per cent are Pepsi products; about 20 to 22 per cent are Coca-Cola products and Zum Zum cola and Mecca Cola, Amrit Cola and Muslim Cola... there are so many colas; there is RC and Double Cola which are franchised products. Altogether they have around 5 per cent of the market. Due to the Afghan and Iraq wars, they did get a little footing especially in the frontier and Islamabad area but still they are not hugely popular Total annual sale of soft drink in Pakistan 120 million cases Pepsi annual sales in Pakistan 75 million Market share of Pepsi 65% Consumption growth 1.7 % per year Industrial SWOT analysis Strengths The soft drinks market in Pakistan enjoyed dynamic growth over the review period in both volume and current value terms. Carbonates dominate the market in both the on-trade and off-trade with the lion's share of sales. Carbonates have become part of the culture in Pakistan and multinational companies have maintained their standards over the years to provide consumers with high-quality carbonated drinks. Off-trade sales of carbonates are higher than those of the on-trade but both achieved strong growth over the review period Weaknesses

Liquid concentrates and powder concentrates are both seasonal categories in the market and their sales peak in the summer in Pakistan. Both Rooh Afza and Jam-eShirin are traditional sandalwood drinks in Pakistan which are highly regarded by consumers. These drinks can be found in every home in Pakistan, especially in rural areas, throughout the summer and are the mainstay of liquid concentrates Opportunities The government of Pakistan has reduced excise taxes to encourage soft drinks manufacturers and importers. The government also reduced other applicable taxes to promise more profits not only for soft drinks manufacturers already in the market but also to attract potential soft drinks manufacturers to invest in Pakistan. Tax reductions proved extremely beneficial to the soft drinks market in Pakistan and certainly encouraged and attracted multinational companies to invest in the country's soft drinks industry. The government also decided to tax the beverage industry on capacity of production rather than on actual production and that brave move encouraged soft drinks manufacturers to maximize production and reduce prices Threats Increasing health and hygiene awareness among Pakistanis has greatly increased sales of fruit/vegetable juice products. Both the government and the media have started health awareness campaigns to make Pakistanis realize that consumption of fruit/vegetable juice is as essential as eating food. Fruit/vegetable juices are doing very well in both urban and rural areas. On the other hand, health and hygiene awareness has also led to increased sales of bottled water in Pakistan. Previously bottled water was targeted only at major cities where consumers are more healthconscious and aware of the difference between bottled water and tap water. Nowadays, health-conscious rural inhabitants also drink bottled water due to health concerns. SWOT Analysis of PEPSI SWOT Analysis, which is based on thorough review of the business (corporation, product category competition, customers and products), identities and evaluates the internal strengths and weakness of the companies well as its external threats and opportunities. The marketing mix is driven by the results of the SWOT analysis. STRENGTH

Demand of Pepsi is more than its competitors. Company has a very established name and a good reputation. Pepsi has large market share than its competitors. As the target customers of Pepsi is young generation, so Pepsi has more brand loyal customers. Pepsi is an international company and it has a very strong position internationally. Pepsi Cola is sponsoring sports, musical concerts, walks.

WEAKNESSES Pepsi does not offer any sort of incentive or discount to its retailers. Pepsi target only young customers in their promotions. Crown of the disposable bottle is not good. Demand of disposal bottle is declining. Pepsi tin pack is not available in far off rural areas. Pepsi is not considering many potential outlets like hotels, college canteens etc. OPPORTUNITIES Company may start entering rural areas also. The company may also diversify its business in some other potential business. Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them. THREATS The main competitor of the company is the Coca Cola.

At the international level, Pepsi has a very strong competition with Coke. Coke has started its advertisements more effectively to increase their demand and it is a very strong threat for Pepsi. Cola drinks are not good for the health so the awareness level of the people is in creasing which is a big threat to the company.

HOW Internal and External factors affecting the strategies Marketers need to be good at building relationships with customers, others in the company and external links. To do this effectively, they must understand the major environmental forces that surround all of these relationships. A companys environment consists of forces outside marketing that affect marketing managements ability to build and maintain successful relationship with the target customers. Every company should know the vital importance of constantly watching and adapting to the changing environment. As the world is moving fast today, no one can be certain about the future. The environment continues to change rapidly. By carefully studying the environment, marketers can adapt their strategies to meet new marketplace challenges and opportunities. Some of the external and internal environmental factors that affect the marketing trend of the company are as follows:

EXTERNAL ENVIRONMENT

The macro environment consists of the larger societal forces that affect the microenvironment. The external factors are not under the control of the marketers; they can just observe them and make strategies in light of these factors. Some of these factors are given below: Demographic Factors Age

The requirements of different age groups are different. Pepsi should target that age group that consumes it the most and make promotional strategies according to their behavior. So their main target is the young generation. Education A company has to make promotional strategies keeping in view the customer level. If the percentage of education is high in a country then through advertisements people can be made well aware of their product and can convey their message easily. Promotion and education has a direct relationship. Population Distribution Population distribution means how much [population lives I urban areas and rural areas. In Pakistan 35 % population resides in urban areas and 65% population lives in rural areas. Pepsi is focusing on urban areas as people there are more inclined towards such beverage while people in rural areas are more inclined drinking lassi and desi drinks. Population Density It means number of people in one square km per area. Karachi has the largest population density and Islamabad has less population density in Pakistan. Pepsi sales are more in Karachi as compared to the sales in Islamabad. ECONOMIC FACTORS Income and Income per Capita If the income level or per capita income of the people increases, it will have a positive effect on the consumption of Pepsi. Inflation If the country faces inflationary trend in the market, the price of the Pepsi will ultimately increase which will lower its demand. Consumption Behavior Pakistan is a consumption oriented society. Due to demonstration effect the people are more inclined towards consumption than saving. So the people of Pakistan

spent heavily on food items. Hence Pepsi has a good market share in the present circumstances.

Income Distribution It means how much is in the hands of rich and poor class. In Pakistan 10% rich people posses 93% of wealth and 90% people posses 7% of wealth. If there is balanced distribution of income in the country, the consumption of the people will increase hence increasing the sales of beverages as well.

Employment Opportunities As employment opportunities increase the living standard of the people increase and the people consume more. Aggregate Demand In case of Pepsi, aggregate demand of the product increases in the season of summer as the hot weather makes the consumers want to drink more. Aggregate Supply In summer season to cope up with the increasing demand they have to increase the aggregate supply of their product. Economic Policies Some of the economic policies which can affect the market of Pepsi are discussed below: Fiscal Policy It is the policy of taxes. If heavy tax is levied on Pepsi then its price will rise having negative affect on its consumption. Monetary Policy

Monetary policy is made to restrict or increase the supply of money in the market. If policies are made to restrict the flow of money in the market, inflation can be controlled hence increasing the real income of the people which will ultimately affect the consumption of Pepsi. Price Policy If price of Pepsi is increased its demand will decrease and vice versa. Income Policy If income of the people will increase their purchasing power will increase and hence increasing the market share of Pepsi.

PHYSICAL FACTOR Region Pakistan is divided into different geographical regions. Marketing and sales of Pepsi is different in different geographical regions. In hot areas its demand is more. City Size The cities which are densely populated the consumption of Pepsi is more. Climate Pepsi is more suitable for humid or hot weathered countries like Pakistan. It is a source of refreshment when a person is thirty due to the hot weather. Infrastructure Roads are the basic need for transportation of Pepsi from one place to another. Pepsi cannot open factories in every city of Pakistan so it has to transport it to other cities where Pepsi is demanded. Electricity is the basic necessity for production of any product. Constant load shedding slows down the process of production which leads to less production and low market share.

TECHNOLOGICAL FACTORS Research and Development Through research and development quality of the product can be improved or better techniques or machinery can be developed which can increase the production. When technology is advance the supply of the product increase hence the company experiences growth in their business. POLITICAL AND LEGAL FACTORS POLITICAL STABILITY: Whenever the government is considered to be stable, the business will flourish. If there is political stability in the country the policies and strategies made by Pepsi can be consistent to be implemented. Foreign companies are also keen to invest in those countries which are politically stable where they have no fear of decline in their market share or shut down due to sudden change of government. Mixed Economy In mixed economy government and private sector both plays their role in developing the economy of the country. Investment by foreign companies like Pepsi is more likely to flourish in mixed economy. Laws Formulation Government has given copy rights to Pepsi so that another company cannot sell their product by the name of Pepsi. The countries where laws are formulated, the strategies and activities of the company are different. Social Responsibility Pepsis social responsibility is to provide its customers with clean and hygienic product so to do this they have increased the use of disposable bottles. SOCIAL AND CULTURAL FACTORS Psychographic It is a combination of demographic and psychological factors. Psychological attributes mean how you perceive things. The company will focus on the behavior

of consumers and make different changes in their product quantity or quality and in promoting their product so that they can attract the customers. Keeping in view that the behavior of different consumers is not alike they have to make their marketing strategies in accordance with their requirements so that they are convinced to buy the product. Religious Religious factors can influence the market sales of Pepsi as it happened in 2003 when the U.S-led attack on Iraq, wide sections of society in Pakistan have banned American multinationals Coke and Pepsi

Social Status Pepsi is a well renowned brand. People who are brand conscious will not drink beverages of lesser known brands such as Amrat cola. They will try to show their status by drinking Pepsi which is known to all as a quality drink. Media It is a very important factor for marketing. Media these days is a very effective way of inspiring people to buy a specific product. A good promotion can boast up sales to a great extent.

INTERNAL ENVIRONMENT CUSTOMERS There are three types of customers 1. Consumer 2. Business 3. Government Pepsi main focus is the consumers which are the end users. Pepsi has to make its marketing strategies keeping in view the consumer buying behavior. To forecast the behavior of the consumer is a business problem. Physical aspect of the consumer can be satisfied but it is difficult to satisfy the consumer psychologically. Consumer buying behavior is affected by certain factors like Cultural factors, Social factors, Personal factors and Psychological factors. So the producer should keep these factors in Mind while promoting their product so that they can acquire the customer and increase their market share. There are different consumers in a society whose behavior is not the same. Every consumer has a different perception of different products. Some consumers are impressed by one quality of the product which may be in the view of other consumer not that impressive. So to deal with different consumers in a society one should know about the consumer buying behavior process which may help in making a true picture of their product in the mind of the consumers. CONSUMER BUYING BEHAVIOUR PROCESS Consumer buying behavior process is explained in some steps which are discussed below: Need Identification The consumer is thirsty and he wants to quench his thirst. Information Search He will search as to what will satisfy his thirst the most. Evaluation of Alternatives

He will now evaluate from the wide range of beverages available to him that which one of them is suitable to him in terms of quality, taste and is pocket friendly. Selection After evaluating the product he will select a product. Purchase The consumer will buy the selected product. Post-Purchase Experience: It is the experience that the consumer gets after using the product. He will use the product again if he feels that his satisfaction after use is more or equal to the price of the product. After looking at above mentioned example, we can get an understanding that a product should be so desirable that whenever a person identifies his need, he selects our product among various substitute products and he feel satisfies so that he retains the use of that product. SUPPLIER He is the person who provides raw materials to the producers or sellers. Suppliers form an important link in the companys overall customer value delivery system. They provide the resources needed by the company to produce its goods and services. PepsiCo International provides raw materials to Pepsi franchises in Pakistan. Supplier problems can seriously affect marketing. Marketing managers must watch supply availability i.e. supply shortages or delays, labor strikes and other events can cost sales in the short run and damage customer satisfaction in the long run. The company should monitor the price trends of their key inputs. Rising supply costs may force price increases that can harm the companys sales volume. COMPETITOR He is the person who is selling the same type of product in the market. The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do.

Pepsi has a tough competition with Coca Cola while it faces a little competition with the local producers like RC Cola, Shandi Cola etc. The local producers hardly affect the sales of Pepsi in the market. There are different types of competitor in the market. Some of them in which our product lies are discussed below: Close Vs Distant Competitor Pepsi and Coke are close competitors. It means that both have direct competition in the market, their products are close substitutes for one another. Both the products can influence the market share of one another through effective strategies made to cope up with their competitors. Pepsi cola and Nestle juice are distant competitors of one another. It means that their products satisfy the same want but they are in indirect competition with one another. Strong Vs Weak Coca Cola and Pepsi are strong competitors. In Pakistan Pepsi is the market leader and Coca Cola is its competitor. The Pepsi makes defense strategies so that it can maintain its position in the market. While Coca Cola is a challenger and it makes attack strategies so that it can become the market leader. Pepsi and Shandi Cola are weak competitors. Pepsi is the market leader and Shandi Cola is the follower. Pepsi is not in direct competition with the Shandi Cola. It means that Shandi Cola has little effect on the sales of Pepsi. PRE-MARKETING MIX SEGMENTATION It means that you divide the target market in to different groups. Market consists of buyers and buyers differ in one or more ways. They may differ in wants, resources, locations and buying practices. Through market segmentation companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

Segmentation is done on basis of the previously mentioned external factors and the following: Behavioral Base It is how people perceive a specific product, in short psychological analysis of a product. Pepsi all over the world is recognized as a quality drink and therefore people drink it without any hesitation whenever they are thirsty or otherwise. So marketers of Pepsi have made it a drink for all people and for diabetic people they introduced diet Pepsi. Cognitive Base It pushes and pulls the consumer. If the outlook of Pepsi bottle is desirable and it attracts the consumer, he will buy it even if he isnt thirsty. TARGET MARKET The market which is focused by the producer is called the target market. Targeting is to focus on the target market to attract the customers. MARKETING STRATEGIES There are different marketing strategies which are applied in targeting. Some of these strategies which Pepsi follows are discussed below: Mass Marketing Big firms or companies say that everyone is their buyer whether they belong to rural or urban area, big or small country, rich or poor, adults and small children etc. Pepsi is mostly used by the young generation but it claims that it is moving towards mass marketing. POSITIONING STRATEGY It means that you try to give image to your product in the mind of the customers. To give a true and positive picture of the product is the best positioning. The company should promote its good points or comparative advantage which it has over its competitors

DIFFERENTIATION STRATEGY In order to serve your target market you introduce different things to your product so that your product can be differentiated from other products. Basis of Differentiation There are many bases on which a product can be differentiated but Pepsi has differentiated its product on the following base: Product Differentiation Pepsi differentiate its product from its competitors on the basis of brand, quality and taste. Image Differentiation Logo is used for image differentiation. Logo is what establishes a brand name in the consumer mind. It is the brands identification, signature and image. Pepsi has kept on changing its logo from time to time.

Strategy formulation One of our goals is to maximize growth and profitability to create value for our shareholders. Our efforts to achieve this goal are based on (1) transforming our commercial models to focus on our customers value potential and using a value-based segmentation approach to capture the industrys value potential, (2) implementing multi-segmentation strategies in our major markets to target distinct market clusters divided by consumption occasion, competitive intensity and socioeconomic levels (3) implementing well-planned product, packaging and pricing strategies through different distribution channels; (4) driving product innovation along our different product categories and (5) achieving the full operating potential of our commercial models and processes to drive operational efficiencies throughout our company. To achieve these goals, we intend to continue to focus our efforts on, among other initiatives, the following: working with The PEPSI Company to develop a business model to continue exploring and participating in new lines of beverages, extending existing product lines and effectively advertising and marketing our products; developing and expanding our still beverage portfolio through innovation, strategic acquisitions and by entering into agreements to jointly acquire companies with The PEPSI Company; expanding our bottled water strategy, in conjunction with The PEPSI Company through innovation and selective acquisitions to maximize profitability across our market territories;

strengthening our selling capabilities and go-to-market strategies, including presale, conventional selling and hybrid routes, in order to get closer to our clients and help them satisfy the beverage needs of consumers; implementing selective packaging strategies designed to increase consumer demand for our products and to build a strong returnable base for the PEPSI brand;

replicating our best practices throughout the value chain; rationalizing and adapting our organizational and asset structure in order to be in a better position to respond to a changing competitive environment; committing to building a multi-cultural collaborative team, from top to bottom; and broadening our geographic footprint through organic growth and strategic acquisitions. Competitive Advantage Market Leadership Business partnerships. Strong brand portfolio. Channel Marketing. Multi-Segmentation. Client Value Management. Flexible sales and distribution models. Sustainable Development. Sustainable development is an important pillar of our Companys strategy. We continually develop programs that ensure the creation of social and economic value by fostering the quality of life of our employees, promoting a culture of health and well-being, supporting our surrounding communities and minimizing our operations environmental impact.

You might also like