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Introduction

1.1 Background of The Report
Soft drinks, more popularly known as sodas, are not exactly referred to as items of necessity. People can live without sodas. In fact, people might be safer if they don t drink soft drinks so much. And yet, soft drinks somehow make it to the top of the list of items most bought by the average consumer. Why is this, exactly? Well, for one thing, sodas are delicious. They stand between liquor and juice. Those who are too young to drink beer but think fruit juice is too juvenile can order sodas. Those too old and are putting their health at risk by drinking hard drinks can enjoy soft drinks and no one would think any less of them. In short, sodas have a mass appeal. They carry an image with them; an image of a person with a comfortable lifestyle. This term paper will take a look at the company Pepsi Cola, its strategies to get into the international market and how they deal with competitions. For a better understanding of the subject company, this paper will delve into a brief history of the Pepsi Company s growth over the years and the effects of competition on Pepsi s strategies in the international and domestic market.

1.2 Objectives of The Report
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To learn the various competitive strategies of PepsiCo. To learn the various market entry strategies of PepsiCo.

1.3 Scope of The Report
This report is prepared on the taken actions of PepsiCo for competitive and market entry purpose. This report does not cover any future strategies of PepsiCo. All the strategic issues are taken here based on observations.

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Relevant papers and documents were not available.5 Limitations The major limitations of the study are stated below: Limitations of Disclosure of Information: The main limitation I faced in preparing this report was obstacles in finding information.4 Methodology Data is collected mainly using secondary data from various websites. 2 . various reports. Time: Time was a serious limitation. 1. More time would lead to more information gathering.1.

Pepsi-Cola (formulated in 1898). PepsiCo. But there is still a problem. founded by Herman W.1 Company History PepsiCo is a world leader in convenient snacks. Chairman and Chief Executive Officer of Frito-Lay. It had the reputation for being a food drink. was formed by the 1961 merger of the Frito Company. Pepsi cola was one of several other brands that got their start in the late 1800s. W. Pepsi was born after Coca Cola. and the year after that.000 employees. foods and beverages with revenues of more than $60 billion and over 285. in a way. 1898. also in 1932. is founded by Donald M. Lay.2 Major Products Major products of the new companies are: y Pepsi-Cola Company . About The Company 2. Caleb Bradham was a pharmacist and he claimed that his concoction aided digestion.2.Lay. Frito-Lay. Coke had already made its mark among the public and the newcomer Pepsi found it hard to find a consumer base. it was registered in Mexico. By 1908. 3 . Lay Company. Inc. President and Chief Executive Officer of Pepsi-Cola and Herman W. Pepsi seemed to be becoming successful in such a short time. By the time Pepsi Cola came out. 2. founded by Elmer Doolin in 1932. Pepsi spread to Canada in 1906. This claim. It began in North Carolina. Kendall. Inc. and the H. people were always buying medicinal aids for digestion. was already a marketing strategy. It came out for public use on August 28. or Coke. invented by a pharmacist named Caleb Bradham. through the merger of the two companies in 1965. Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948). because during those times. Pepsi had upgraded their transportation delivery services from horse-drawn carts to automobiles.

Balance short term and long term. In every decision. they are responsible for ensuring their communications are understood. Care for their customers. from the moment they purchase ingredients to the moment it reaches the consumer's hand. Sell only products they can be proud of. Without reservation. but they direct this spirit toward solutions that benefit both their company and their constituents. Maintaining this balance helps sustain their growth and ensures their ideas and solutions are relevant both now and in the future. Cheetos brand cheese flavored snacks (1948). their consumers and the world they live in. The true test of their standards is their own ability to consume and personally endorse the products they sell. Their success depends on a thorough understanding of their customers. To foster this spirit of generosity. 2. 4 . Lay in 1938). they weigh both short-term and long-term risks and benefits. 2. Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961). honest and accurate. consumers and communities. 3. they go the extra mile to show they care. not just what's convenient to their individual goals. They are driven by the intense. Their confidence helps ensure the quality of their products.y Frito-Lay. In addition to being clear. Speak with truth and candor. 1. competitive spirit of the marketplace. . They tell the whole story. Lay's brand potato chips (created by Herman W.3 Guiding Principles PepsiCo uphold their commitment with six guiding principles. 4.Fritos brand corn chips (created by Elmer Doolin in 1932). Inc.

Their mutual success depends on mutual respect. Win with diversity and inclusion. It requires people who are capable of working together as part of a team or informal collaboration. Respect others and succeed together.5. While their company is built on individual excellence. inside and outside the company. they also recognize the importance and value of teamwork in turning their goals into accomplishments. They embrace people with diverse backgrounds. 6. Their diversity brings new perspectives into the workplace and encourages innovation. 5 . traits and ways of thinking. as well as the ability to identify new market opportunities.

The advertising strategy worked. The company began to regain its former success. Nickel. Loft was what Pepsi was waiting for. Pepsi recognized that if their image remained as that of the Poor Man s Soda. The company sold the drink in 12 oz. However. but Pepsi still could not really dethrone Coke. their customer base would never widen. Nickel. Pepsi became bigger than Loft Company. In the 1920 s. 1936 saw the formation of Pepsi Limited of London. a giant candy company. Have a 6 . Although this strategy worked. was broadcasted by Pepsi nationwide. Soon. the Pepsi logo was trademarked in the Soviet Union. the Pepsi Company still fell into bankruptcy due to the fall of the sugar market. the company released the ad Drink Pepsi. Be Sociable. and in 1938. Pepsi has amassed millions of dollars from the international market and it moved to the Philippines and the Middle East. Pepsi devised a new marketing strategy by employing celebrities for its advertisements.3.2 Advertisements In order to improve its image. Competitive Strategies 3. and Loft changed their name to Pepsi-Cola Company. The very first advertising jingle. despite industrious efforts.. and Pepsi was seen as the poor man s cola. bottles and launched the advertising campaign of Twice as Much for a Nickel. By 1947. Pepsi began its Light Refreshment campaign in order to appeal to a newly weight-conscious America. fashionable consumers with their theme. It will satisfy you. They started selling.1 Cheaper For their first effective competitive strategy. There was more drink for less money. They added two more advertising campaigns and in 1953. The track enjoyed tremendous popularity. Pepsi continued to try and improve its image from being considered as a bargain brand and attracted the young. they put their sodas in beer bottles and sold them cheaper than Coke. It suffered several years of losses before it was sold to Loft Inc. 3.

Pepsi positioned itself as the drink for the new generation with a series of themes designed to appeal to the youth. This constant competition has been dubbed as the Cola Wars. Pepsi has broken its way into international markets. Moreover. While other brands were changing formulas to suit government standards. These youths were said to belong to the Pepsi Generation in the early 1960 s. It proudly boasted that it has already met all federal requirements. This is a customer base that other soft drink brands have previously 7 . uranium. Pepsi targeted the younger audience and those who are young at heart. and Pepsi has exploited most of them. Pepsi has gained a reputation for catering to the teenagers. and even until now. Pepsi s prevailing theme was clearly focused on the youth and their active lifestyles. Coke came first. it is quite clear that Pepsi couldn t have attained world wide fame so easily. Pepsi portrayed the social changes of the times and projected the American image of unity and individuality. In 1969 to 1973. but Pepsi did not. and what the younger company lacked in prestige when compared with Coke.Pepsi. Even from the very beginning. it made up for in ambitious advertising. At this time. By now. Now. During the baby boomer generation. there are several factors for effective international marketing strategies. Apparently. Pepsi was cutting into their market share. It is no secret that most of Pepsi s strategies were designed to compete with Coke. those in their twenties and even the young at heart. Coke and other existing soft drink brands had to change their formulas. the government had passed the Pure Food and Drug Act that prohibited the use of certain drugs such as arsenic. Pepsi s advertising strategies of celebrity endorsers is very effective. it is still the leading soft drink brand preferred by most Americans and a large number of foreign drinkers. when Pepsi was just starting in the early 1900 s. Diet Pepsi and Mountain Dew were then added to the list of products. barium and plenty of others in drinks and foods. But advertising isn t Pepsi s only strategy. Especially because it s competition happens to be the giant Coca-Cola Corporation. Pepsi was one of the first markets to use automobiles to improve their distribution system. But Pepsi is keeping up with Coca Cola.

Their Generation Next campaign suggested that Pepsi is not just a drink for the next generation.overlooked in favor of the mature consumers. Another component of the new competitive strategies of Pepsi-Cola is their increasingly complex and sophisticated advertising and promotions--a major tactic in the so-called Cola Wars. They have earned generously out of this formula. The tactics of modern promotion. 3. did not exist. 8 . Pepsi has cultivated an image for itself as the drink for the modern times. It has discovered that the buying power of the youth and the marketing power of celebrities were compatible. Neither Pepsi nor Coca Cola introduced new products. New packages were introduced infrequently and advertising campaigns were long-lived relative to today. Bottlers must cooperate by arranging spot coverage and by implementing coordinated promotion and pricing policies that build on the theme of the national advertising campaign. its drinkers are also a generation ahead of their counterparts.3 Independent Bottling Systems The simple product and marketing strategies of Pepsi were critical to the efficiency of their independent bottling systems. which require constant change and close coordination of national advertising with local promotion. Pepsi also has the distinctive style of portraying the times in their campaigns. The two (Pepsi and Coca Cola) constantly strive to devise advertising campaigns that best each other. But the ultimate success of these campaigns often depends on the cooperation of the bottlers to implement the campaign in their territories.

Pepsi employed another marketing strategy which was company expansion. was a testament to the effectiveness of the Pepsi s marketing strategies. diversifying itself into PepsiCo Worldwide Foods and PepsiCo Worldwide Beverages and placing their 9 .4. Foreign Market Entry Strategies 4. The bottlers were required to place spot advertising and in-store displays.Cola to help the CM fine-tune the campaign. and this included their franchises outside of the United States. provides evidence on the importance of bottler coordination and on the difficulty of attaining such coordination. 4. In 1966.2 Mergers In 1965. They also introduced new products.3 Acquiring Business Afterwards. the Pepsi Challenge. Diet Pepsi and Mountain Dew. They merged with Frito-Lay. They bought Taco Bell and Pizza Hut and exerted effort into developing overseas restaurant ventures. After many successes.1 Franchises Pepsi was forced to change their cheaper drink image and they had to raise their prices in order to compete in the market in the 1950 s. The success of the Challenge depended crucially on bottler execution. They were now operating globally. and discuss the results in detail with Pepsi. Pepsi took care of the beverages while Frito-lay manned the snacks.S. PepsiCo settled into the Eastern European and Japanese markets. PepsiCo was formed. develop and execute effective local price promotions. 149 bottling plants operating in 61 countries outside of the U. PepsiCo dipped its marketing hands into acquiring even more business. One of the most successful advertising and promotion campaigns in history. 4. the most popular snack brand in the world. PepsiCo then underwent reorganization of the company. their advertising strategy helped make this transition easier for consumer s to accept. Once more.

closest to America. music. Most of their early consumers in Canada belonged to the middle class. Pepsi peppered their promotions. and promotions. a time when government regulations for business were less strict. It first cultivated a solid consumer base in their homeland. America. Canada was.4 Creating Solid Customer Base Before breaking into an international market. people.5 Cheaper Pepsi used their old strategy as well as a new one. and therefore was the easiest to reach and their economy and government regulations there were familiar to Americans. Their objective at the time was not simply to gain profits. games. perhaps.6 Using Bottling Network After being trademarked in Canada. but to broaden the reach of their company. All through the 1990 s. campaigns. In Canada. This website didn t just feature the Pepsi products. and economy and government regulations. but only after incredible losses to the original company. But Pepsi did not break into the international market immediately. they just concentrated on selling their cheaper but plentiful drink.beverages and food products under the separate operations respectively. they maintained their target audience through the image of Pepsi being the Poor Man s Soda. Loft Company had injected 10 . a company must familiarize itself first with the new country s culture. In the early 1900 s. it also contained attention-grabbing stuff like movie previews. 4. 4. and Pepsi is still known as the preferred drink of these people there up until now. articles. and they expanded their distribution system from carriages to cars. Canada was their first target. 4. advertisements and themes with celebrities from practically all industries. Pepsi entered a new market in Mexico and then in Argentina. Only then did the soft drink company set their sites on foreign countries. They also rode the Internet wave by creating a worldwide website that was indeed the top of the line and was imitated by other companies.

the company's new focus has been to allow for and adapt to market differences. endorsed by . They also introduced brand new products such as Pepsi Blue. For example. Since then. Pepsi also repeated their promotional ways with their new Pepsi Stuff promos that involved basketball superstar . This is a merger-like strategy proven to be effective in marketing. but employ standard best-practices. The promo also gave the buyer chances of earning points which they can then exchange for Pepsi prizes. which means it is the only drink served in all the Warner Brothers International Theatres. distribution and sales for nearly all of Norway. 11 . and putting new emphasis on single-serve distribution. They brought back the immensely popular Pepsi Challenge. constructing new plants.7 Alliances Pepsi is also active in securing alliance deals with other big corporations. They used their bottling networks to start marketing in foreign countries. and the new Code Red from Mountain Dew. And while the company has pulled out of some markets. and it was with new marketing strategies that Pepsi came back. Pepsi has closed an alliance with Warner Brothers International Theaters and with Major League Baseball. some of Pepsi-Cola's major moves include a new soft drink plant in Russia. For the next several years. Operationally. Pepsi is also responsible for the world s first ever commercial to be filmed in space. 4. Pepsi-Cola concentrated on markets where it could prosper alongside Coca-Cola. Pepsi resorted to their tried and proven promotions and advertisements strategies. rather than trying to defeat it. As the new millennium rolled around. an alliance with one of Brazil's largest brewer giving it tremendous access to a healthy chunk of Latin America. This ad was all part of the promotion for Pepsi s Project Blue. it's fifth in the territory thus far. Warner Brothers has granted Pepsi exclusive pouring rights. They joined up with the National Football League and became their official soft drink sponsor with Gatorade. though. it has pushed forward in a number of others. and Norway's signed an extensive franchise bottling agreement with PepsiCo for production. Pepsi employs different marketing strategies.new life into Pepsi.

which provides a valuable need and at the same time introducing their brand name where it was before unknown.5. while becoming a dominant force within the United States as well as abroad. However. Pepsi Co should make no major strategic changes to its plan. 12 . Pepsi s main competitor Coca Cola has implemented a water purification program for African Villages. it has stayed true to its mission and objectives. Expand more into social benefits. Known throughout the world for quality products and customer care. however. The healthy eating market is a demographic that will continue to grow in the future. Pepsi is a company focused on a younger market hoping to repeat the worldwide success of Coca Cola in regards to brand loyalty with the generations born after 1980. If Pepsi followed this same ideology with food products and water purification it too would significantly increase brand recognition Capture more of the aging population s market share. Some of the recommendations are as follows: Continue to expand with their Human Sustainability . Throughout its growth. Recommendation and Conclusion 5.1 Recommended Strategies Pepsi Co is currently a strong worldwide leader in the food and beverage industry. especially for those in developing nations. like in any business situation there are areas that Pepsi Co can improve upon. and will provide generous profits if Pepsi Co is able to obtain a large market share. there is still a large market with the Baby boomer demographic that they could break into.

imaginative advertising. Pepsi took advantage of their late entry into the market by lowering their prices. product. waiting for Pepsi s response. even their buyers can t help but hold their breath. So. Pepsi s strategies.5. With the existence of Coke. It is not that unique. and distribution strategies. trendy. knowing the environment of the foreign market and finding the things their target buyers had in common. it had a good grasp of what its target audience really is. it first familiarized its customers with its product thoroughly in its home base. Coca-Cola s massive fame has also rubbed off on its rival. Pepsi can never lay claim to true originality. Even Pepsi s rival. use of advanced technology. sociallyaware campaigns. it is clear that Pepsi has made several right choices. Assessing Pepsi s strategies. had a hand in Pepsi s success. In conclusion. Like Coca-Cola it advertised as heavily as finances permitted. When Coke makes a marketing move. It even isolated these two beverage companies from other soft drink brands. and was distributed through soda fountains and franchised bottlers. in effect. adding new innovations and products while improving the old products.Cola marketing. By the time Pepsi was ready to enter the international market. alliances with major corporations and expansion into other industries such as restaurants. So. assertive promotions.2 Conclusion The Pepsi-Cola drink was invented in 1898 and grew basically by following the Coca. Before it entered the international market. from past to present included: enhancing their distribution system. 13 . Coca-Cola.

http://www.pepsico.Bibliography Websites: 1. http://www.scribd.com/doc/19114298/Strategic-Management-Analysis-of-PepsiCo 14 .com 2.