Malik Javaid BBA SP 08 26 Omer Mehboob BBA SP 08 74 Mian Arslan Tariq BBA SP 08 32 Naveed Amjad BBA SP 08 52 Muhammad Waqas BBA SP 08 50
Contents Page no.
Company description Company in Pakistan 4 4
Vision 5 Mission Mountain dew SWOT Analysis 5 5 6
SWOT Profile Internal Analysis External analysis Strengths Weaknesses Opportunities Threats Division of CSD Communication Target Target market Distinctive capabilities PLC Introduction Growth
6 7 7 8 8 8 8 9 9 9 10 10 10 10
Maturity Decline Organizational structure Porter Competitive Analysis Barriers to entry Barriers to exit Bargaining power of suppliers Threat of Substitute Problem Identification Recommendations Conclusion References Annexes
10 10 11 12 12 12 12 12 13 13 14 14 15
Introduction: Company Description
PepsiCo, Inc. is among the most successful consumer products companies in the world, with 1999 revenues of over $20 billion and 116,000 employees. The company consists of: Frito-Lay Company, the largest manufacturer and distributor of snack chips; Pepsi-Cola Company, the second largest soft drink business and Tropicana Products, the largest marketer and producer of branded juice. PepsiCo brands are among the best known and most respected in the world and are available in about 190 countries and territories. Some of PepsiCo's brand names are 100 years old, but the corporation is relatively young. PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998.
Company in Pakistan
The production plants of Pepsi are installed in ten different areas in order to fulfill the increasing demand for the drink. These areas include Islamabad, Peshawar, Gujranwala, Lahore, Faisalabad, Multan, Sukkur, Karachi, Quetta, and Gadoon. The most successful of these plants are of Gujranwala and Faisalabad that sold 15 million cases in the year 2000. In the area of Rawalpindi and Islamabad, Pepsi has been able to capture the maximum market share, which is 90 percent, and the company, Haidri Beverages, has a market share of 85 percent. The biggest competitor of the product, Coca-Cola, has failed to make a significant impression in the market and has been able to capture a market share of only 10 percent. The Shahi Beverages, the franchisers of Coca-Cola, has a market share of only 15 percent. Haidri Beverages Private Limited is one of the companies that are working under the license of Pepsi Cola International. It was established in 1982 and is located in Capital Development Authority's industrial triangle on Kahuta road. In the beginning of their operations, franchise rights were given in the areas of Kashmir, Hazara, Northern Areas, Rawalpindi District and the Attock District.
The company started its operations by initially launching Pepsi and Mirinda in bottles of 250 milliliters then to increase their product line, the company introduced Teem for the first time in 1984 in the authorized area of franchise. In 1986, the company also took initiative by introducing one-liter glass bottles in the area of Rawalpindi and Islamabad. Till the 1990s, Coca-Cola dominated the market but then Pepsi was able to capture a greater percentage of the market share. The reason behind this success was the company's highly professional sales force, brilliant marketing strategies, and the excellent standards of quality. In the year 1991, the areas of North Western Frontier Province (NWFP) established their own separate plant in Peshawar, by the name of Northern Bottling Company (NBP). Non-returnable glass bottles (NRPT) were launched in 1992 to give as wide range of options to its target customers. The company started its Post Mix operations in 1996 and the company now has 182 Post Mix machines in the entire franchise area.
“To be the world's premier consumer “Products Company” focused on convenient foods and beverages.
Their vision depends upon offering quality and value to their consumers and customers; providing products that are safe, wholesome, economically efficient They want to grow their shares up to 30 percent in the future
Mountain Dew is a drink distributed and manufactured by PepsiCo. The main formula was invented in Knoxville, Tennessee, named and first marketed in Knoxville and Johnson City, TN in the 40s, then by the Minge family in Fayetteville, North Carolina and across the United States in 1964.When removed from its characteristic green bottle, Mountain Dew is bright yellow-green and semi-opaque. As of 2007, Mountain Dew was the fourth-best-selling carbonated soft drink in the United States, behind only Coca-Cola Classic, Pepsi-Cola, and Diet Coke. Diet Mountain Dew ranked ninth in sales in the same year. In October 2008, it was announced that Pepsi would be redesigning their logo and re-branding many of their products.
This situation analysis starts with the current environment in which Mountain Dew finds itself by providing a brief SWOT (strengths, weaknesses, opportunities, and threats) analysis. After this overview, the analysis goes into greater detail with regards to industry, competitors, company, and consumers.
SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. The following diagram shows how a SWOT analysis fits into a strategic situation analysis.
Situation Analysis / Internal Analysis / \ / Strengths Weaknesses Opportunities Threats \ \ External Analysis
The internal and external situation analysis can produce a large amount of information, much of which may not be highly relevant. The SWOT analysis can serve as an filter to reduce the information to a manageable quantity of key issues. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, grasp on golden opportunities, and delete potentially devastating threats.
The internal analysis is a evaluation of the internal environment's potential strengths and weaknesses. Factors should be evaluated across the organization in areas such as:
• • • •
Company culture Company image Organizational structure Key staff etc.
The SWOT analysis summarizes the internal factors of the firm as a list of strengths and weakness.
An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:
• • • •
Customers Competitors Suppliers Partners etc.
The SWOT analysis summarizes the external environmental factors as a list of opportunities and threats.
The primary and key strength of Mountain Dew is that it is the brand of one of the strongest and globally recognized company that is Pepsi Co. Since, the mother brand is so strong, it helped Mountain Dew a lot in creating its name in the beverage industry. It also increases the credibility of the Mountain Dew.
One of the best opportunity for mountain dew is that the people are now fed up of ordinary cola’s and other existing CSD’s, hence strongly moving their interest towards the citrus segment like mountain dew, sprite 3G etc. Another opportunity is that the income of consumers is high enabling them to be fewer prices sensitive, and convenience is becoming important to many countries around the world.
The increasing inflation rate in Pakistan may result in an upcoming weakness for Mountain Dew. Mountain Dew’s fame can hurt the credibility of the mother brand, Pepsi. Mountain Dew does not offer any sort of incentive or discount to its retailers. Mountain Dew target only young customers in their promotions. Mountain Dew tin pack is not available in far off rural areas. Mountain Dew is not considering many potential outlets like hotels, college canteens etc.
The biggest threat for mountain dew is the competition threat from Sprite 3G and other energy drinks like red bull, energy etc. Before Sprite 3G, Mountain Dew enjoyed the monopoly in the citrus segment of CSD’s industry. Now, the competition is very high between the two brands. Secondly, from the Pepsi’s perspective, Mountain Dew can be a threat for the mother brand.
Division of CSD by Pepsi
PepsiCo divides its CSD’s into 4 main segments: 1) Cola’s : Pepsi
2) Citrus : Mountain Dew
3) Lemon-lime : 7-up 4) Orange : Miranda
Mountain Dew falls into the citrus segment of PepsiCo’s CSD product mix. Its major competitor is Sprite 3G
For mountain dew every individual with a middle class status can be considered a potential consumer. Though, in order to target specific markets, mountain dew divides the target market into the following market segments:
Mountain Dew’s Target Market:
Mountain Dew targets male consumers within the age range of 16-18 years of age. This is when mountain dew is marketing to teenagers. These are the key consumers for mountain dew because they are ready to embrace excitement, adventure, fun, energy and enthusiasm. In this segment, mountain dew is trying to capture brand awareness.
The communication target is broad in nature as compared to the target market. Here, mountain dew targets the people within the age range of 16-24 or even 16-35. Communication target defines the target audience for which the company is going to advertise, people who will watch the ads.
1. Brand of PepsiCo. 2. No existing product in the market (colored bottle, green color, high caffeine) 3. Packaging in the unique beer bottle design.
Product Life Cycle:
A product's life cycle (PLC) can be divided into several stages. The life cycle concept may apply to a brand or to a category of product.
This stage includes the product which is new for the market and a ot of work is to be done to make it go at the next level. Educate the market about the product benefits and features. The product for the time being is a loss maker.
Sales rises if the new product gain acceptance,. Here, the product starts to yield profits and competitors are attracted. Firms must put more emphasis on the brand name of the product since consumers are now aware of the product’s benefits. Distribution should become more intensive. Companies should lower the prices to attract the next layer of price sensitive buyers and finally a firm must attempt to maximize market share.
This is the stage of fierce competition. Sales growth slows down. Most products spend most of their time in the maturity stage of the PLC. Profits are good. Improve product quality and add new product features and improved styling. Add new models (i.e. provide products of different sizes, flavours and so forth that protect the main product). Enter new market segments and defend market share. Win competitor’s customers,
In the declining stage, sales may fall rapidly. Firms should maintain the sales of the product so far it is contributing to profits or enhances the effectiveness of the product mix. Re-positioning may be conducted to extend life cycle. reduce sales force size, R&D costs, plant and investment costs, advertising expenditures and slowly pulling out of the business.
“Mountain Dew falls in between the introductory & growth stage of the Product Life Cycle. Since, Mountain Dew is a New Product Category, hence it is moving toward the growth stage. If it gains acceptance, the sales will increase more which results in the
increasing production process .This thing will may lead to the threat of more competitors in the future.
Organizational structure is the formal pattern of interactions and coordination Designed by management to link the tasks of individuals and groups in achieving Organizational goals. Haidri Beverages has a Managing Director on top and there are Three General Managers (Marketing, Administration, and Technical). These departments Are further divided into marketing, MIS, Shipping, Security and Production etc.
Porter competitive Analysis:
This analysis gives us the information about the competitor’s position and also tells us about the competing power of the product against the other product. So let’s analyze where mountain dew stands does.
First of all comes the
Threat of New Entrants:
Barriers to entry:
Barriers to entry for dew will be low because there are many companies which are producing the cold drinks and any one can manufacture the cold drink but Hence it is negative for the Pepsi co, that new entrants can enter into the competition with dew.
Barriers to exit:
Barrier to exit are really high because it is a successful product of pepsi and it is not easy for pepsi to wind up the dew unit thus it is a high barrier to exit which is positive for the company.
Bargaining power of Buyers:
Bargaining power of buyer is really very low because there is not a suitable substitute available in the market for mountain dew. So it is for positive for the company.
Bargaining power of Suppliers:
It deals with the switching cost which is the final cost which buyer face when they change the supplier so for dew the main formula was invented in Knoxville, Tennessee, And they are getting there raw materials (liquids) and they are getting their supply from knoxville and if they are going to change their supplier the switching cost would be really high which will be negative for the company.
Threat of substitute:
The competitor of Mountain Dew is Sprite 3G. Both the brands are great threats for each other. Sprite 3G is also coming up as energy drink now and they are following the same theme as that of Mountain Dew.So threat of substitute is high so it is negative for the company.
1) Due to bomb threats we couldn’t be able to do a comprehensive and efficient interview thats why we couldn’t gather the information about value chain analysis.
2) We really had a bad day there because when we were about to enter in Pepsi co, the peon said that you should have the letter of your director otherwise there is no way that you can enter in here so we had to come back from gulberg to raiwind which is really a long distance to cover.
Recommendations: 1) They should really devise a strategy on how to keep dew away from the parent company
Pepsi making sure not to hurt the share of Pepsi.
2) They should also consider lessening the amount of caffeine in their drinks so that they can attract more customers. A can of mountain dew contains 55 mg which is significantly high.
3) They should also try to cover the daring shows like they have the image of the daring drink so to improve their image and to suit their image they should try to cover that image .
4) The Mountain Dew is at its growth stage and the sales of the product are growing very fast. Company is doing a lot of promotional activities to let the product grow in the market. The company can improve it by different promotional activities.
5) Dew has targeted the young generation but now they should also try to attract the mature audience aging from 35 – 45 to increase their sales and also some how cut their prices to attract new customers.
Mountain Dew is a well renowned brand and it has maintained its position well by understanding the customer, by ensuring quality, by keeping economic factors in view and by intense advertisements. Whenever and where ever there is a spotlight event, Mountain Dew must figure in, like the one day international cricket matches or the concerts of rock bands or many other such occasions. To “remain in the spotlight” and that is what Mountain Dew should do more.
Haidri beverages Managing director
General managers marketing
General manager administration
General manager technical