GLOBAL MARKETING

Presented By- Faisal Numan

GLOBAL MARKETING
Few

generations ago, it took months to ship

products to a market in another country.
This was such a difficult undertaking that only huge
trading companies were able to take the risk.
Developments in transportation technology made it
possible for people and products to move much
more quickly, and the first push towards
globalization began.
More
recently,
information
technologyand
particularly the Internethas shrunk the world
even further.
A business might have partners and employees
half a world away, and consumers can get products
from those locations in a matter of days.

What is Global Marketing

Global marketing is more than simply selling a product

internationally.
Rather, it includes the whole process of planning,
producing, placing, and promoting a companys products in
a worldwide market.
Large businesses often have offices in the foreign
countries they market to; but with the expansion of the
Internet, even small companies can reach customers
throughout the world
Even if a company chooses not to expand globally, it may
well face domestic competition from foreign companies
that are. This competition has made it nearly a necessity
for most businesses to establish an international presence.

Ethnocentric-Domestic
Domestic expansion only

I dont care Junior.

We are staying
at home.

Ethnocentric-International
Foreign expansion viewed as an appendage to domestic operations; same strategies are utilized in all countries.

HQ
You seeour
way
works best around
the world.

Polycentrism
Activities and functions are planned and managed, often by local nationals, on a
country-by-country basis (e.g., HRM is decentralized by country)

Would you
look HQ
at this? The
GMs
do
understand
the
local markets

Regiocentrism
Operations are geared towards a particular continental region with similar
economies and cultures

HQ

Alphaland

Betaminor

Betaland

Geocentrism
Products are functional, reliable, and standardized low-cost products (e.g., HRM
managed on a global basis)

I can see the

whole world
from here.

HQ

Ethnocentric Attitude

Regiocentric Attitude

Polycentric Attitude

Geocentric Attitude

HQs Orientation toward subsidiaries

(source : adapta tion libre de He ena n D.A., Per lmutter H.W., Multinational Organization
Development, Addison Wesley Publishing, 1979)

PepsiCo (Regiocentric)
PepsiCo is an examples of international company which is

successfully using the Regiocentric approach.

In this approach segmentation of the markets is fulfilled on
the basis of similarities in terms of regions.
A company finds economic, cultural or political similarities
among regions in order to cover the similar needs of
potential consumers.
For example, countries of former USSR can form one
group as needs and tastes of consumers of these
countries are very similar as they were representatives of
one nation not so long ago.
The same products and strategies can be used in such set
of countries like Denmark, Norway, Finland and Sweden or
Pakistan, Bangladesh and India as they possess a strong
regional identity and belong to the same cultural

WHO IS PEPSICO?
FRITO-LAY salty snack foods
Lays, Doritos, Cheetos, Tostitos, Fritos, Ruffles, Santitas, Sabra,
Walkers
QUAKER cereals, rice, pasta
Oatmeal, Granola Bars, Aunt Jemima, Captn Crunch, Life, Rice-aRoni
BEVERAGES -- carbonated drinks, sports drinks, fruit juices, tea,
waters
Pepsi, Gatorade, Mountain Dew, Aquafina, Tropicana, Sierra Mist,
Mug
Has joint ventures with Unilever (Lipton) and Starbucks (coffee),
and has a licensing agreement with Dr. Pepper Snapple Group (Dr.
Pepper, Snapple, Crush, Schweppes), Dole (pineapple), and Ocean
Spray (cranberries).

Convenience Food Competitors in North

America
Manufacturer

Market Share

PepsiCo
25 %
Kraft Foods
12
Hershey
9
Kellogg
6
Master Foods
5
General Mills
2
Proctor & Gamble
1
Private Label
7
Others
33
100

Soft Beverages Market in North America

Category

Gallons (in millions)

Volume Share

Carbonated Soft Drinks 14,707.4

48.1 %
Bottled Water
8,822.4
28.9
Fruit Beverages
3,899.5
12.8
Isotonic Sports Drinks 1.355.1
4.4
Ready-to-drink Tea
875.1
2.9
Flavored/enhanced water
546.5
1.8
Energy drinks
302.6
1.0
Ready-to-drink Coffee
45.1
0.1
TOTAL

30,553.7

100.0

PEPSI Soft Drinks Market Shares

Country/Region

Beverage Market Shares

Middle East 75 %
India 49
Thailand 49
Egypt 47
Venezuela 42
United States 39
Nigeria 38
China 36
Russia 24

PEPSI Salty Snacks International Market

Shares
Country/Region

Snacks Market Shares

Mexico
75 %
Holland
59
South Africa
57
Australia
55
Brazil
46
India
46
United Kingdom
44
Russia
43
Spain
41
China
16

PEPSICO 22 Top Brands ( > $ billion

revenue)
Pepsi Cola

$ 22.0

Lipton RTD Teas

$ 3.05

Lays
9.0
Mountain Dew7.5
Gatorade 7.3
Tropicana 6.1
Diet Pepsi 5.65

Ruffles
Tostitos
Aquafina
Pepsi MAX
Brisk

2.75

7 Up
4.8
Doritos
4.4
Quaker Foods 3.5
Cheetos
3.25
Mirinda
3.2

Sierra Mist
1.4
Fritos
1.4
Diet Mountain Dew 1.4
Starbucks RTD Bevs 1.1
Walkers
1.1

2.55
2.1
1.75
1.4

Macro/Societal Environment (PEST)

POLITICAL
- Government regulations regarding greenhouse gas emissions, mergers, etc.

Pending regulations on food snacks & sugar content in childrens food, etc.

Anti-American sentiment; deliberate attempts to limit trade

ECONOMIC
+ Emerging consumer markets with disposable income in China and India

Stagnant/sluggish economic growth worldwide

Financial instability in some international markets; causing runaway inflation

Currency fluctuations and a very strong US Dollar hurt overseas profits/trade

SOCIO-CULTURAL
+ US residents eat snacks 2-3 times each day
+ Societal interest in health, exercise, and organic foods

Consumer interest in reducing intake of sugary drinks and salty snacks

Decline in demand for carbonated beverages in USA

TECHNOLOGICAL
+

Development of better artificial sweeteners (Stevia/Monk Fruit)

Wearable fitbit devices to monitor sweating, need for electrolytes, calories

Competitive Environment
RIVALRY Intense worldwide completion primarily with Coca-Cola, DPSG,

Kellogg, Kraft-Heinz, Mondelez, Monster, Nestle, Red Bull, and SnydersLance.

SUBSTITUTES water, coffee, tea, bread, competitor products (Coke, etc)
BARRIERS TO ENTRY/EXIT government regulation of beverages and food

products; access to emerging markets and distribution channels; high

capital investment in food processing factories and bottling plants.
CUSTOMER POWER Very large supermarket chains and Wal-Mart have

significant bargaining power.

SUPPLIER POWER Well-integrated supply chain; many suppliers are

dependent/captive.

MARKET STRENGTHS/WEAKNESSES
STRENGTHS
Well-diversified, large focused brand portfolio; over 100 brands, 22 over $ billion/yr
Concentric diversification enables synergy in marketing activities & distribution channels
Number 1 in salty snacks worldwide, with a 25% market share in USA
Number 1 in beverages in USA (39%) [Note: Coke is # 1 worldwide]
Is the number 2 food and beverage company in the world (Nestle is # 1)
Has a well-integrated supply chain and distribution network
Using solar panels, alternative energy sources, compressed gas vehicles in facilities to
curb carbon emissions/footprint
Recent acquisitions to enter new markets: Russias leading juice companyLebedyunsky
VW Water and True North Nut snacks in UK; Lipton Teas agreement with Unilever
Investment in international markets 2016 > $1 billion in China; > $500 million in India
WEAKNESSES
Too dependent on the US market; over 12% of all sales are with WalMart
Hurt by bad publicity over Aquafina scandal, Aunt Jemima and Tropicana recalls
International markets have been difficult to develop some acquisitions have been poor.
International profits are badly hurt by currency exchange rates and strong US dollar
Some stockholders are pressuring PepsiCo to spin off the food divisions from beverages

STRATEGIC ASSESSMENT
Through acquisitions, PepsiCo grew from primarily a beverage
company into the second-largest food and beverage company in the
world. Using a concentric-diversification strategy, they acquired
businesses which were complimentary to their beverages notably
Frito-Lay (salty snacks), Taco Bell and Pizza Hut restaurants. While
they werent necessarily experts on how to make pizzas or chips,
they did know that they could sell their beverages to these same
customers, so marketing and distribution channel synergies were
achieved. Pepsi continued to acquire food and snack companies,
and built a brand portfolio of over 100 products worldwide most of
which go well with one or more of their beverages. In the 1990s it
became apparent that the fast-food restaurant business was
becoming very competitive, and with increasing stockholder
pressure, Pepsi spun off its restaurants to YUM Co. (Taco Bell, Pizza
Hut, Kentucky Fried Chicken).
Since that time, the company has continued to focus on its core
businesses beverages and snack foods. Their current portfolio of
products is so extensive that they dont worry about consumer taste
shifts or switching, because most consumers will simply switch from
one Pepsi product to another product item owned by PepsiCo.

STRATEGIC ASSESSMENT - contd

Current plans are to expand into global markets, particularly China
and India, where the company will invest $ 1 billion and $500
million, respectively in 2016. Pepsi has also recently acquired the
largest juice company in Russia, Lebedyansky, has acquired VW
Water and True North Nuts in the UK, and has a new agreement
with Unilever to distribute Lipton Tea.
This international strategy is risky, given recent problems with
currency instability and the strong US dollar. Over the last two
years, PepsiCo has lost more than $2 billion due to political
instability and the devaluation of the Bolivar in Venezuela. This
has not only hurt corporate profits, but also threatens the financial
stability of the entire firm if it continues (see Altmans Z).
Some new products soon to be introduced include a wearable
fitbit and patch which monitors sweating and lost electrolytes.
The Gatorade division will launch a smart cap bottle which
senses your seating, and flashes when you need to drink more
fluids/Gatorade. Obviously, this is something special for the
health/fitness/athletic population.

STRATEGIC ASSESSMENT - contd

Another product soon to be launched is ready to drink
cold-brewed coffee. In partnership with Starbucks, PepsiCo
will distribute in the US, and hopes to introduce it to China
by the end of the year. By adding ginseng, taurine, acai
berry, and guarana flavors to the brew, it is expected to
have particular appeal in the Chinese market.
Finally, Quaker Oats division is introducing a new product
called Breakfast Flats, which is a type of crispy breakfast
food particularly aimed at working women who are on the
run. It will come in several flavors, cranberry/almond,
banana honey-nut, and golden raisin/cinnamon. Test
market results have been quite positive.
In summary, PepsiCo continues to follow a strategy of
growth through concentration and concentric
diversification. They continue to add products that
compliment their existing brands/lines, and they are
actively trying to expand their market presence globally

COMMON SIZE INCOME STMT - PEPSICO

(in millions $)
Frito-Lay

2015

2013

2007

North America 14782 23.4

Quaker Oats N America 2543

North America Beverages
Latin America

4.0

14126 21.3
2612

20618 32.7

8228 13.0

3.9

10510 16.7

Asia/MidEast/NorthAfrica

6375 10.1

OPER REVENUE 63056 100

20083 30.2

6431

66415 100

39474

45.031243

47.018038

45.7

GROSS PROFIT

34672

55.035172

53.021436

54.3

24885

970

1.5

2.2

---

---

75

0.1

110

0.2

13.2

911

1.4

Other Income or (Expense)

59
7442

Tax

3.2 1973

NET INCOME

3.1 2104

5501

8.7

9705
224

Income Before Tax

1941

38.214208

1359

Amortization Intangible Assets

Interest

39.525357

*15798 40.0

9.7

28384

OPERATING PROFIT 8353

4.7

1023025.9

13828 20.8

Cost of Sales

Venezuela Impairment Costs

1860

9335 14.1

Europe/SubSaharaAfrica

Selling/Gen/Admin Exp

1158629.4

14.6

100

36.0
58

0.1

7170

18.2

685

1.7

0.6

0.1

97

0.1

11.8 8891 13.4 7631

19.3

5.0

6787 10.2

5658 14.3

PROFITS by DIVISION -- PEPSICO

(in millions $)

2015

DIVISION Profit
Frito-Lay

2013

2007___________

%/Total Profit

%/Total Profit %/Total

NA 4304

51.5

3877

39.9

2845

39.7

Quaker Oats NA 560

6.7

617

6.4

568

7.9

33.3

2580

26.6

2188

30.5

2322

32.4

NA Beverages

2785

International
Latin America

- 206

- 2.4

1617

16.7

Europe/SSAfrica

1081 12.9

1327

13.7

Asia/ME/NAfrica

941 11.3

1140

11.7

Corporate - 1112 - 13.3

Operating Profit

- 1453

8353 1009705

- 15.0 - 753
1007170

- 10.5

100

PEPSICO
(in millions $)
NET INCOME

2015
5501

2013
8.7

6787

2007
10.2

Net Income/Share

$3.71

$4.37

Dividends/Share
40.8%

$2.7625

74.4% $2.24

$3.48

Stock Price/Share
(at year end)

$99.92

$82.94

5658 14.3

$77.32

51.3%

$1.42

COMMON SIZE BALANCE SHEET PEPSICO

(in millions $) 2015 2013 2007
Cash

9096

13.19375

Invest Securities 2913

12.1 910 2.6

4.2 303

0.41571

4.5

Receivables 6437

9.26954

9.04389

12.7

Inventory

3.93409

4.42290

6.6

2720

Other Curr Assets 1865

TOT CURR ASSET

2.72162

23031

Equipment (net) 16317

33.1

23.418575

Other Property/Asset 30319

2.8 991
22203

2.9

28.7

24.011228

43.536700

47.313249

100 77478

100

Current Liabilities 17578

25.217839

23.0 7753

LT Debt+Leases 29213

41.924333

31.4

Other Liabilities

10846

15.610917

14.1 5438

15.7

TOT LIABILITIES

57637

82.753089

68.517394

50.2

12030

17.324389

TOTAL LIAB & SE

69667

100 77478

34628

38.3
100

22.4

4203

31.517234
100

29.3

32.4

TOTAL ASSETS 69667

Stockholder Equity

10151

12.1

49.8

34628

100

CASH FLOW STATEMENTS - PEPSICO

(in millions)

2015

Note: Net Income was

5501

2013
6787

2007
5658

CASH PROVIDED
FROM OPERATIONS

10580

9688

6934

CASH PROVIDED
FROM INVESTING

(3569)

(2625)

(3744)

CASH PROVIDED
FROM FINANCING

(3828)

Exchange Rate Changes

( 221)

(Decrease)Increase FY2962

(3789)

(4006)

( 196)
3078

Cash @ Beginning

6134

6297

Cash @ End of Year

9096

9375

75
( 741)
1651
910

FINANCIAL ASSESSMENT
PEPSICO

2015

2013

Current Ratio (CA/CL)

Tot Liabilities/Tot Assets

2007

1.31
.827

Tot Liabilities/SEquity

1.24

.685

1.30

.502

4.791 2.177 1.009

Inventory Turnover (COGS/Invent)

10.44

Avg Collection Period (ARx365/Sale)

9.165

7.877

37.3dys38.2dys 40.6dys

Asset Turn (Sales/TA)

.905

.857

Net Profit (NI/Sales)

.0872 .1022

ROA (NP/TA)

.0790

.0876

Altmans Z

1.76

2.05

1.140
.1433

.1634
3.20

FINANCIAL TRENDS
POSITIVE TRENDS
Cash is increasing
Revenue + profits are up for Frito-Lay and NA
Beverages
Dividends have been increased
WORRISOME TRENDS
Revenue + profits are down in all international divisions
Big problem in Venezuela impairment costs > 2
Billion/2 yrs
Operating profits and Net profit are both down
Long-term debt is up; Debt/Asset ratio is too high
Stockholder Equity is way downwhy?
Interest expense is up
Altmans Z is getting critically low

SCENARIO 1 - PESSIMISTIC OUTLOOK

Over the next three to five years, the world economy remains stagnant,
with little disposable income growth. England exits the European Union,
creating more economic and financial uncertainty. Interest rates creep up
as the US Federal Reserve raises concerns about inflation. The US dollar
remains strong relative to other currencies, creating more currency
fluctuations and uncertainties for US companies. Disputes with China and
Russia continue to muddle trade growth with those countries.
The public interest in exercise and health grows, and laws are passed
banning sugar in sodas and limiting salt in snacks, especially for children.
Sales of carbonated soft drinks in the US continue to decline. Demand
remains very modest for fruit juices, energy drinks and snacks, and natural
sweeteners.
Coke overtakes Pepsi in the North American soft drink market, and Dr.
Pepper launches a snack foods division to compete with Frito-Lay.

SCENARIO 2 OPTIMISTIC OUTLOOK

Over the next three to five years, the world economy rebounds
significantly, with notable gains in income and trade. Interest rates
remain low, as a new Republican administration takes control of the US
Federal Reserve. The US dollar remains relatively strong compared to
other currencies, but currency fluctuations diminish and uncertainties in
the European Union subside as England decides to stay in the Eurozone.
China and Russia enact favorable legislation that encourages foreign
investment and trade growth.
The public interest in exercise and health continues to grow, and demand
for healthy snacks, energy drinks, fruit juices and natural sweeteners
explodes. Sales of carbonated soft drinks stabilize in the US, and show
signs of increasing growth in Brazil, China, and Russia. The RTD coffee
market in China expands rapidly, as ginseng and acai berry flavors really
catch on with the public.
Pepsi maintains its dominance in the North American soft drink market,
and Quaker Oats Breakfast Flats is a big hit with the working women in the
USA. Dr. Pepper launches a snack foods division, but only gains a 1.5%
market share.

SCENARIO 3 MOST LIKELY OUTLOOK

Over the next three to five years, the world economy rebounds gradually,
and disposable income increases modestly worldwide. Interest rates
remain relatively low, as fears of inflation ease. The US dollar remains
relatively strong compared to other currencies, but currency fluctuations
and uncertainties continue, with the departure of England from the
European Union. Trade with China continues to muddle along, as their
economy switches over from an export economy to domestic consumption.
Trade growth with Russia continues to be impaired because of ongoing
disputes over the Ukraine and Russias involvement in the Syrian conflict.
While there is public interest in exercise and health, no legislation is
enacted about sugary drinks or salty snacks. A notable segment of the
population wants healthy snacks, energy drinks, fruit juices and natural
sweeteners, so that market is expected to grow in the US. Sales of
carbonated soft drinks stabilize in the US, and soft drinks and the RTD
coffee market in China are expected to grow significantly.
Pepsi will maintain its dominance in the North American soft drink market,
but their international divisions will continue to face difficulties and market
challenges.

KEYS TO SUCCESS A Comparison

PEPSI

Coca-Cola

Broad Product Portfolio 8

New Products Introduced

Efficient Operations 8

Strong Marketing/Sales 8

Dr. Pepper/Snapple

Good Distribution Channels 8

International Market Share 6

STRATEGY For the Next 3-5 Years

Continue to find/acquire/launch new products which fit concentrically
with Pepsis existing portfolio of brands.
Launch the healthy snacks and drinks, and start using stevia and other
natural sweeteners which appeal to the health-conscious public.
Consider exiting markets where the economy is in chaos, like
Venezuela. This operation has cost the company $2 billion in lost profits
over the past few years. Maybe this is a place we dont need to be,
even if we have a 42% market share there.
Cautiously pursue the China market. Certainly it has huge potential,
but will the RTD coffee be a big hit? There is plenty of room to grow
both traditional soft drinks and salty snacks in China, where we
currently have just 36% of the soft beverages and only a 16% of the
salty snacks market.
Reduce long-term debt, which seems to be a burden the company
doesnt need right now, given the uncertainty in the international
marketplace.