Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Project On
Strategic Marketing Management
Presented To: Presented By: Class: Group Members:
Sir Imran Qureshi SlinkyCity MBA-4 (1 year) Jamil Ahmed Shakir Mehmood 4553 4552

INTERNATIONAL ISLAMIC UNIVERSITY
ISLAMABAD

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Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

DEDICATION
Our beloved teachers & parents, whose blessings And concentration bring us to this stage And who trample their inclination and longing For up holding our studies

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Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

ACKNOWLEDGEMENT

A

ll the praises and thanks are to ALLAH the most beneficent, ever merciful and kind of day of judgment. We offer our humblest thanks to our parents and special praise to the HOLY PROPHET MUHAMMAD (PBUH) whose moral and spiritual teaching a forever source of guidance and knowledge for humanity as a whole enlightened. I flourished out thoughts toward achieving high ideas of life.

I feel out first and foremost duty to express my grateful appreciation and thanks to my teacher Sir Imran Qureshi. His illustrious advice, keen interest, encouragement and constructive criticism were the real source of inspiration during the completion of the project

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Table of Content
Introduction Mission and Vision SWOT ANALYSIS TOWS MATRIX Five Forces analysis CONSUMER ANALYSIS BCG Matrix Marketing Ratios Customer s Buying Behavior Market Prospective of Competition Aims and Objectives of Company Strategic focus in terms of competition Consumer Profiling Based on Shopping Habits GE Strategies Scorpio Technique 7 10 12 16 20 24 26 31 32 40 43 43 45 49 52

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PepsiCo
PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American multinational corporation headquartered in Purchase, NY with interests in manufacturing and marketing a wide variety of carbonated and non-carbonated beverages, as well as salty, sweet and cereal-based snacks, and other foods. Their main product, Pepsi Cola, sells over 100 trillion cans a year.[citation needed] Besides the Pepsi brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7 Up (outside the USA).

Type Industry Founded Founder(s) Headquarters Area served Key people Products Pepsi

Public (NYSE: PEP) Food Non-alcoholic beverage New Bern N.C, U.S. (1890) Caleb Bradham, Donald M. Kendall and Herman W. Lay Purchase, New York, U.S. Worldwide Indra Nooyi
(Chairperson and CEO)

Diet Pepsi Mountain Dew AMP Energy Aquafina Sierra Mist SoBe Starbucks Frappuccino Lipton Iced Tea 7up Mirinda Izze Tropicana Products Copella Naked Juice Gatorade Propel Fitness Water Quaker Oats Company Lay's Doritos

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Cheetos Kurkure Fritos Rold Gold Ruffles Tostitos Slice

Revenue Operating income Net income Total assets Total equity Employees Divisions Website

US$44.3 billion US$7.3 billion US$6.24 billion US$39.8 Billion (FY 2009)[2] US$16.8 Billion (FY 2009)[2] 203,000 (2010) PepsiCo Americas (PepsiCo Ameri Food, PepsiCo Americas Beverages), PepsiCo International PepsiCo.com

Pepsi International
Pepsi is a carbonated soft drink produced and manufactured by PepsiCo. The drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern, North Carolina. The brand was trademarked on June 16, 1903. There have been many Pepsi variants produced over the years since 1898.

Indra Nooyi- CEO of PepsiCo
Type Manufacturer Country of origin Introduced Cola PepsiCo. United States 1898 (as Brad's Drink) June 16, 1903 (as Pepsi-Cola) 1961 (as Pepsi) Coca-Cola Fanta Dr Pepper 7 Up Irn Bru

Related products

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Website

Cola Turka Big Cola http://pepsi.com/

Board of Directors

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Our Mission and Vision
"To be the world's premier consumer products company focussed on convenience food 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." Our Vision "To build Pakistan leading total beverage company, delighting consumers by best meeting their everyday beverage needs, and stakeholders, by delivering performance with purpose, through our talented people." PepsiCo Sustainability Vision

"PepsiCo¶s responsibility is to continually improve all aspects of the world in which we operate ± environment, social, economic ± creating a better tomorrow than today" Tomorrow better than Today 

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 shareholder¶s investment through sales growth, cost control and wise investment of resources. Objectives The objectives that the pepsi company wishes to achieve are that it wants to remain and continue to be the best or number one beverage company in Pakistan. As pepsi is already the numberone beverage company in Pakistan but it has to maintain its position power and status to in order to achieve their target market.

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Pepsi¶s Brand Pepsi¶s brand is basically is basically ³ME´ branded. They use the temperament of ³ME´. In contrast to Coke they believe on individual struggle.

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SWOT ANALYSIS OF PEPSI

STRENTH 1. Company Image: It also is a reputable org. and is well known all over the world. Perception of producing a high quality product. 2. Quality Conscious: They maintain a high quality as Pepsi Cola International collect sample from its different production facilities and send them for lab test in Tokyo. 3. Good Relation with Franchise: Throughout its history it has a good relation with franchisers working in different areas of the world where they have the production facilities. 4. Production Capacity: It has the highest production capacity i.e. 60,000 cases per day is not only in Pakistan but also in South Asia. 5. Market Share: It has a highest market share i.e. 62% in Pakistan and leading a far step head from its competitors. 6. Large No. of diversity businesses: This is also its main strength as it ahs diversity in many businesses such as i. Pepsi beverages ii. Pepsi foods iii. Pepsi Restaurants. 7. High Tech Culture:

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The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database an they use computers as business tools for analysis and quick decision making. 8. Sponsorships: They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim Akram, and Waqar Younas etc. Also sponsor social activates programs like music etc. Management Experienced, broad base of interests and knowledge Large size may lead to conflicting interests

Product Line Unique, tastes good, competitive price, and convenient New one calorie products have no existing customer base, generic brands can make similar drinks ± cheaper

WEAKNESS 1. Decline in taste: During the last years, it was published in Financial post that there has been big complaints from the customers with regard to the bad taste that they experienced during the span of six months. 2. Political Franchises: Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political support from a political party which is in opposition. In; their era in government less taxes are imposed on them but relation increases as they come in opposition. So the selection is not appropriate as this thing is harmful to their image as well as the strategies. 3. Short term Approach: They have a lack of emphasis on this in their advertising such as currently when they losses the bid for official drink in the 96 cricket world cup. They started a campaign in which they highlight the factor such as ³nothing official about it´. 4. Weak Distribution: They lack behind in catering the rural areas and just concentrating in the urban areas. 5. Low consumer knowledge: Unable to maximize local consumer knowledge. 6. Lack of soft drink:
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Lack of soft drink ³know-how´ as a result of diversified business units and generalist managers

y y

Marketing Diverse & global awareness May lose focus, may not be segmented enough Research& Development Continuous efforts to research trends and reinforce creativity. May concentrate too much on existing products, intrapreneuralship may not be welcomed.

OPPORTUNITIES 1. Increase Population: As almost in all over the world growth rate is increasing which in turn increases the demand of products and necessities and especially in Asia the market is growing at a faster rate as compare to other continents. So they have to attract new entrants. 2. Changing social trend: As in all over the world people are rushing towards fast food and beverage because of life which has become much faster, it provide the company a favor to capture this fast moving market with its take away product. 3. Diversification: They may enter in garments business in order to promote their brand mane, by making sports cloths fro players which represent their name by wearing their clothes. 4. Distribution of snack foods: Opportunity to distribute Pepsi snack foods in the future. y Competitive Distinctive name, product and packaging in with regards to its markets. Not entirely patentable, constant attack by competitors.

THREATS 1. Imitators: They also have a problem of imitators as receives complaints from customers that they find take product in disguised of Pepsi¶s product. 2. Government Regulation: They face problem if government employ taxes on them which force them to raise the price of their product.
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3. Corporation¶s shortage problem: Again this is also a serious threat from it suppliers as if supplier is unhappy with the company. He may reduce the supply and exploit the company. This action will surely affect the production process. 4. Non-carbonated substitutes: Non-carbonated substitutes, such as juices and tea brands are maintaining a strong foothold in the market. 5. Political instability: The big threat to Pepsi in Pakistan is Political instability and civil unrest. 6. Threat of labor strikes: External threat of labor strikes and power outages in Pakistan. Economic Consumer income is moderate, more tend to eat out, convenience is important to consumers. Very elastic demand, almost pure competition. Legal/ Regulatory Opportunity to win hearts through social responsibility Opposite is also possible SWOT MATRIX (TOWS MATRIX)

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What is a SWOT Matrix (TOWS Matrix)? The SWOT Matrix illustrates how management can match the opportunity by facing your institution with its own strength and weekness to yield four sets of possible strategic alternatives. The SWOT Matrix framework lends itself to brainstorming to create alternative strategies that you might not otherwise consider. How to Perform a SWOT Matrix (TOWS Matrix)? A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below: SWOT / TOWS Matrix Strengths Weaknesses

Opportunities S-O strategies W-O strategies

Threats S-T strategies W-T strategies

Basically four main strategies are proposed:
y y

S-O strategies pursue opportunities that are a good fit to the companies¶ strengths. These strategies are based on institutional strengths to take advantage of market opportunities. W-O strategies overcome weaknesses to pursue opportunities. These strategies are based on overcoming institutional weaknesses to take advantage of market opportunities.

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y

[PEPSI STRATEGIC MANAGEMENT]

y

S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. These strategies are based on institutional strengths to avoid market threats. W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats. These strategies are based on overcoming/minimizing institutional weaknesses to avoid market threats.

TOWS MATRIX OF PEPSI We have discussed SWOT analysis of Pepsi-Co in our previous topic now here we are going to discuss the TOWS Matrix of Pepsi-Co, keeping in mind its SWOT analysis. Following is the detailed analysis of Pepsi-Cola TOWS matrix: µWT¶ ANALYSIS
y

One weakness that Pepsi posses is that it has very strong taste it really feels that something highly toxic going inside the body, where as the same product of the coke is not much strong. They also have a problem of imitators as receives complaints from customers that they find take product in disguised of Pepsi¶s product. During the last years, it was published in financial post that there has been big complaints from the customers with regard to the bad taste that they experienced during the span of six months. If they soon pay no attention towards that this will create a big problem for them. Large size may lead to conflicting interests. New one calorie products have no existing customer base; generic brands can make similar drinks ± cheaper. It is also big threat for any company people may like or dislike new launching product. Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political support from a political party which is in opposition. In; their era in government less taxes are imposed on them but relation increases as they come in opposition. So the selection is not appropriate as this thing is harmful to their image as well as the strategies. So this may become a big threat for the Pepsi.

y

y y

y

µWO¶ ANALYSIS
y

They have a lack of emphasis on this in their advertising such as currently when they losses the bid for official drink in the 96 cricket world cup. They started a campaign in which they highlight the factor such as ³nothing official about it´. If they don¶t focus on sudden changing¶s in their advertising then they can convert this weakness into opportunity.

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y

[PEPSI STRATEGIC MANAGEMENT]

They lack behind in catering the rural areas and just concentrating in the urban areas. They should try to increase their distributions and also focus on capturing rural areas; this will become a big opportunity for them. The other big weakness on Pepsi is that they don¶t pay any attention towards garments. They may enter in garments business in order to promote their brand name, by making sports cloths fro players which represent their name by wearing their clothes. That must increase the customer and income of the Pepsi. High expenses may have trouble balancing cash-flows of such a large operation. The staff may show dishonesty. They should try to pay much attention towards their cash flow, and audit there statements on regular basis.

y

y

µST¶ ANALYSIS
y

In many countries Pepsi had more expensive products than Coke; such a high price may limit a lower income family from buying a Pepsi product, therefore which is a big threat for Pepsi that may Pepsi have to face in the future. In foreign countries Pepsi have many branches with different flavors as compare to Pakistan, which has only 2 or 3 Pepsi products. Non-carbonated substitutes, such as juices and tea brands are maintaining a strong foothold in the market. Pepsi has a big threat from COKE, which are its main competitor from about 100 years. Pepsi is a foreign company therefore they have a big threat every time on them of Political instability and civil unrest. The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database and they use computers as business tools for analysis and quick decision making. Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced. Continuous efforts to research trends an reinforce creativity, if they fail in their efforts then there is a big threat for the company. The competitors may get benefit by their plans.

y

y

y

y

µSO¶ ANALYSIS
y

The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database and they use computers as business tools for analysis and quick decision making. Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency and that will become such a big opportunity for Pepsi. It has the highest production capacity i.e. 60,000 cases per day is not only in Pakistan but also in South Asia. Established network of 45 distributors each supplying 1,100 retailers.
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[PEPSI STRATEGIC MANAGEMENT]

High per capita soft drink consumption ± average of 22 servings compared to 5 for Pakistan. At will become such a big opportunity. Due to large production the product of Pepsi is always available in the market and that will become useful to attract taste lovers customers.
y

Large No. of diversity businesses is also its main strength as it ahs diversity in many businesses such as Pepsi beverages, Pepsi foods, Pepsi Restaurants, and due to large number of diversity they can capture more customer, therefore it will become such a big opportunity for Pepsi. Pepsi is also a reputable organization, and is well known all over the world. Perception of producing a high quality product and strength can become a big opportunity for Pepsi if they use it in well arranged manner, such as advertising more and also by conducting concerts to attract more customers. They maintain a high quality as Pepsi Cola International collect sample from its different production facilities and send them for lab test in Tokyo, if they show test reports on label of there products this will also attract customers. They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim Akram, and Waqar Younas etc. Also sponsor social activates programmed like music etc. this will become such a big opportunity to build such a large number of customers. So we can say that it is one of the big strength that may become a big opportunity for Pepsi.

y

y

y

Pepsi-cola are to keep advertising as much as possible, and keep coming up with diversified range of products so as to penetrate more and more in the industry. Keep their business to franchise system only so as to save as much taxes as possible and use the saved money on advertisements.

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[PEPSI STRATEGIC MANAGEMENT]

PepsiCo s Five Forces analysis

Food and beverage industries are saturated which means that the barriers to entry are low. There are usually only two ways to compete in these industries. One is by being low cost and the other is by being high quality. This makes profit margins incredibly thin. So naturally when barriers to entry are low there will be a lot of competitors. I would also say that substitutes would also be high around the board for food and beverage industry. When there are lots of competitors customers can easily switch to another product. however if one product is superior and maybe even a little addictive then customers may demand that product and their power will be less. Suppliers in food and beverage is a dime a dozen. This is because they are supplying commodities, very general unspecialized goods that can be found locally and internationally very easily. So switching suppliers is very easy. However if the ingredient in one of the industries was rare bohemian shrimp that could only be found in the baltic sea which was monopolized by a single company then suddenly the supplier has much more power. Something else to consider is complements, Michael Porter allegedly added this force years later. Something like Cheetos and Pepsi go well together, when someone buys cheetos they buy pepsi. Things like this can give a specific product in an industry a competitive edge over the competition. Especially when the industry can only compete on price and quality rather than differentiation.
Competitors Substitutes Barriers to entry Customer power Supplier power lots tons Easy to enter, hard to compete strong low

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CONSUMER ANALYSIS
CONSUMER BUYING PROCESS

MARKETING STIMULI

PRODUCT: bottles,juices,lays etc PRICE: Competitive pricing for its products. PLACE: Franchises are placed in all major cities. 23

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PROMOTION: Focus on promotion of its products and meals regularly.

P: Political factors in country e.g. pressure groups. E: Economic infrastructure S: Socio cultural impact T: use of technology in developing innovative products and process.

CONSUMER PSYCHOLOGY

Perception: How consumer perceive the products offered by Pepsi Learning: what its customers learn from previous experience or by the experience of other customers. Motivation: It means how customers are motivated. From time to time Pepsi changes it motivational slogans for customers. Characteristic such as cultural, social, psychological and physiological plays a vital role in this regard.

BUYING DECISION PROCESS
Problem recognition In this case process starts when a consumer feel the hunger and want some kind of fast food. Information search Old users will skip this step, where as new users will search about what products are offered by which fast food chain. Evaluation of alternatives Consumer then evaluate the alternatives may be on basis of price or quality or availability. Purchase decision Finally he will decide and make a purchase decision.

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RESULT
PURCHASE DECISION Product choice
Consumer will choose product.

Dealer choice. Purchase timings
Means at which time consumer will go to purchase morning evening ,depend upon the time he feel hunger. Purchase amount It is also a key factor in choosing the product if consumer having few money he will mostly go for the happy menu.

BCG MATRIX OF PEPSI
Beverages
11261  10961 =2.66% 10961
2008 Coke Pepsi Amrat 2009 Growth Rate

5465 =48.53 11261 4893 =43.45 11261 903 =8.01 11261

5324 =48.57 10961 4805 =43.83 10961 832 =7.59 10961

5465  5324 =2.64 5324 4893  4805 =1.83 4805 903  832 =8.53 832

Relative Market share 25

Sir Imran qureshi 2008 Coke/ Pepsi Pepsi/ Coke

[PEPSI STRATEGIC MANAGEMENT]
2009 2008 Coke/Amrat 2009

48.57 =1.10 43.83 43.45 =0.89 48.53

48.53 =1.11 43.45 43.83 =0.90 48.57

48.53 8.01
=6.05

48.57 7.59
=6.39

Amrat/Coke

7.59 48.57
=0.15

8.01 48.53
=0.16 8.53%

coke

2.64%

Pepsi

Growth Rates 1.83%

Amrat

Water
18729  17914 =4.54% 17914
2008 Aquafina nestle 2009 Growth Rate

563 =3.14 17914 13769 =76.85 17914 3194 =17.82 17914 390 =2.17 17914
2008

490 =2.61 18729 14756 =78.78 18729 3099 =16.54 18729 384 =2.05 18729

490  563 =-12.9 563 14756  13767 13767
=7.18

Kinley Abe-hyat

3099  3194 =-2.97 3194 384  390 =-1.53 390
2008 2009

Nestle/kinley

76.85 =4.31 17.82 17.82 =0.23 76.85
0.04 -12.95% -1.53%

16.54

Relative Market share 2009 Nestle/Abe-hyat 78.78 =4.76 Abe-hyat / Nestle

76.85 =35.41 2.17 2.17 =0.02 76.85

78.78 2.05
=38.42

Kinley/Nestle aquafina Aquafina Abehyat

16.54 =0.20 78.78
0.03

2.05 =0.02 78.78

Growth Rates 7.18% Nestle

kinley

-2.97%

Juices(Tropican)
3453  2770 =24.65% 2770
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2008 Pepsi nestle

2009

Growth Rate

Relative Market share 2008 2009

510 =18.41 2770 2260 =81.5 2770
17.64%

600 =17.37 3453 2853 =82.62 3453
Nestle(juices)

600  510 =17.64 510 2853  2260 =26.23 2260
Growth Rates 26.23

18.41 =0.22 81.51 81.51 =4.42 18.41

17 .37 =0.21 82 .62 82 .62 =4.75 17 .37

Pepsi(Tro picana)

Industry growth Rate
33443  31645 =5.68% 31645
2008 31645 2009 33443

Sales
pepsi Coke Amratcola Total Baverages 2008 4805 5324 832 10961 Water 2008 563 13767 3194 390 17914 2009 4893 5465 903 11261 2009 490 14756 3099 384 384 pepsi Nestle Total juices 2008 510 2260 2770 2009 600 2853 3453

Aquafina Nestle Kinley Abehyat Total

All sales are in millions and guessed near to original data

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MARKETING RATIOS OF PEPSI
1)

operating profit asset employed
2008=

4)

Production cost Avg daily sale
2008=

6959 =19.3 35994
30

15941 =134.52 118.5

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[PEPSI STRATEGIC MANAGEMENT]

2009=

8044 =20.2 39848

2009=

15089 =127.40 118.43

Best performance=2009 2)

Best performance=2009

operating pro it ales revenue
2008=

5)

6959 =1608 43251 8044 =0.186 43232

istribution o marketing cost vg daily sale
2008=

15877 =133.98 1185 15026 =126.87 118.43

2009=

Best performance=2008

2009=

Best performance=2009 3)

sset employed vg daily sale
6) 2008=

35994 =134.52 118.5 39848 =127.40 118.43

Current Asset Avg daily sale
2008=

10806 =9118 1185 12571 =106.14 118438

2009=

Best performance=2008

2009=

Best performance=2008

Customer s Buying Behavior for PEPSI
Pepsi Co. a world leader in convenient snacks, foods, and beverages is a $35 billion company. Some of the popular brands like Pepsi-Cola, Mountain Dew, Diet Pepsi, Lays, Doritos, Tropicana, Gatorade, and Quaker Oats are owned by the company. The company saw a change of preference in it's consumers in the 1990's apart from this the beverage industry also observed a rise in functional drinks in the mid 2000s. The case focuses on the Pepsi's strategy to address this change in the consumer behaviour.

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It is possible to identify several types of buying decision and hence several types of buying behavior. The most obvious distinction to make is based on the expense, complexity, risk and opportunity cost of the purchase decision.

We would basically be judging the customer loyalty towards a particular brand by having availability as a factor. For this we have different types of consumer products they are mainly three those are

1. Convenience goods 2. Shopping goods 3. Specialty goods

Pepsi has divided its market in many ways 32

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demographically, geographically, psycho graphically behaviorally 

Geographic Region Climate Target area Country City Asia Hot and dry Domestic users, Restaurants, Bars, School and College canteens Pakistan All Major city of Pakistan 

Demographic Age Gender Family size

14 to 30 Male and Female no bar

Family lifecycle Unmarried, married Income Education Occupation Nationality 5000+ School, College, universities For Middle class to Upper Class Pakistani 

Psychographic Social class

Middle Class and Upper Class

Pepsi attempts to capture the youth of today by focusing on their personality, lifestyle and attitude of youth through advertisement 

Behavioral

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Sir Imran qureshi Occasions Benefits Loyalty status Strong Readiness stage

[PEPSI STRATEGIC MANAGEMENT]
Parties, Birthdays, Sports and regular occasions Quality and taste

Aware, Interested.

In case of Pakistan before going into the detail we must need to have a look about the social classes as well because with the income levels and purchasing powers of the people here also causes variations among the types of products.

Pepsi is cheaper for every class peoples because everyone can afford its price so Pepsi is Convenience goods for all. Peoples drink pepsi every day because it is Convenience good and also children·s take lays mostly. Adults and children play an important role in the buying process. Reasons such as cleanliness, convenience, family outings and celebration of special occasions are considered important in buying fast foods.

In this step we will also the social factors as well while making decisions about customers· behaviors.

For Upper Class:

We will put Pepsi into habitual buying behavior quadrant because this class doesn·t usually think much about drinking Pepsi because the involvement in terms of resources low they put very few time to think about drinking Pepsi. They drink Pepsi on may be daily basis or on alternate days.

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For Middle Class:

We will put Pepsi into habitual buying behavior quadrant because this class doesn·t usually think much about drinking Pepsi because the involvement in terms of resources low they put very few time to think about drinking Pepsi. They drink Pepsi on may be daily basis or on alternate days.

For Lower Class:

Pepsi customers are mostly young group between the age of 14-30 and also targeted at school, colleges, universities, homes, restaurants, hotel and stores.

pepsiCo's target market can be people of all ages because of their wide range of products: they include gatorade, lays, tropicana, and quacker, and their products are classified under many catagories. Their target market is very diverse.

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C0mpetitive stance: Major competitor is Coca-Cola and subway: Coca-Cola has strong competitive stance in the market when we talk about the capabilities competencies, they have very good brand image along with the strong supply side with the latest technology. Price level is almost same for Coca-Cola and Pepsi but Subway charge more prices then these two Pepsi prices its products similar to those of Coca-Cola in order to keep profits high.

ANALYSIS OF COMPETITION
Comparative assessment Rating scale 1 = very weak 10 =very strong Products Product design

coca cola 8 36

Amrat 7

Pepsi 8

subways 6

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8 8 8 7 5 6 8 7 7 7 7 7 7 8 9 8 8 8 8 9 8 9 8 9 8 8 8 5 7 7 4 8 8 7 7 5 7 7 8

Product quality 9 Product performance 8 Breath of product line 7 Depth of product line 7 Advertising 7 Image and reputation 8 Price 8 Selling and distribution Sales force calibr 8 Sales force experience/knowledge 8 Geographical coverage 9 Home delivery 8

Service
Customer service level Performance against promise 7 8

COMPARISON OF PRICES
PEPSICO C S PRO Pepsi 250ml Pepsi 500ml Pepsi 1 liter Pepsi 1.5 liter Pepsi jumbo PRICE RS) 14 28/30 30 55 70 COMPE I ORS PRO C S PRICE RS) Coke 250ml Coke 500ml Coke 1 liter Coke 1.5 liter Coke jumbo 14 28/30 30 55 70

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[PEPSI STRATEGIC MANAGEMENT]

Coke vs. Pepsi: Battle of the Brands

Coca Cola has a larger market share compare to Pepsi. Pepsi is losing out, that is the reason why they created a diversified portfolio of brands such as Ocean Spray, Mountain Dew, Tropicana and others.

Brand recognition:
Brand recognition of Pepsi & Subway is as good as coca cola is in the international market but it also varies from country to country but in Pakistan coca cola is the stronger among the three. Hence it also leads somehow to pure oligopoly.

Distribution network, Promotion and Public relations, Financial stability, Technological skills
All the above factors of competitors are strong in nature, and all these also lead towards the category of pure competition.

Strategic Focus:
Here strategic focus of the competitors of the Pepsi does vary from it. Pepsi long term strategy is to capture as much market and also increase the market growth as it can in the coming years in order to enhance the number of its customers but the strategic focus of the coca cola is mainly to increase the market growth.

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Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Market Prospective of Competition
Coke is the market challenger while Pepsi is the market leader However other international and local brands which includes imported energy drinks, syrups, juices and Pakola whole family which contributes to just 12% of the total beverage industry. We can easily measure the impact of changing in the strategy of KFC on others e.g. Mc Donald·s & Subway. Pepsi have to struggled hard because it comes in the follower in the market we did not include subway as the competitor of these both because it lies in the different category.

Market perspective of Competition:

A pure oligopoly, in which a few firms produce broadly the same commodity Their best outcome is to cooperate and agree to restrict output to the monopoly quantity, where price is greater than margical cost, and profit is maximized. A great example of a duopoly is Coca-Cola and Pepsi Co. Pepsi is in pure oligopoly 39

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Identifying and evaluating competitors strengths and weaknesses
The keys to Pepsi reaching its goals are to concentrate its resources on growing its current businesses and acquiring related companies to broaden its product line. An ongoing battle for market share has existed for over 75 years. Company has tried a number of strategies to gain a sustainable competitive advantage. These strategies included: Introducing new soft drink products Diversification Aggressive advertising campaigns Pepsi must identify and implement the strategy best suited to gain the competitive advantage in the soft drink industry on a world-wide basis.

Marketing Strategies of Coke: The Company is guided by six strategic priorities and four principles of citizenship. Their strategic priorities outline how they seek to create value as they continue to pursue growth. Their six strategic priorities are: Accelerated soft drink growth, led by the coca cola Selectively broaden their family of beverage brand drive to profitable growth Growth system profitability and capability together with their bottling partners Serve customers with creativity and consistency to generate growth across all channels Direct investment to highest potential area across market Drive efficiency and cost effectiveness every where.

Strengths Weaknesses of Coke Management More structured/formal hierarchy Slow Decision making Product Line Unique, tastes good, competitive price Low on availability Marketing Low costs due to outsourcing Low budget for Marketing Personnel International, diverse positions Possible conflicts due to so many people Finance High sales revenue, high sale growth, large capital base. High tax payments Manufacturing Low costs and liabilities due to self supplying capability Lose control on inventory control and distribution Research& Development Continuous efforts to research trends and reinforce creativity. May concentrate too much on existing products,

Evaluating competitive relationships and analyzing how organizations compete
Competition 40

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

where two or more firms are trying to achieve the same goals and penetrate the same markets with broadly similar product offers. coca cola, Pepsi and subway lie in this category. They have same goals market growth etc. Competitor Responses The selective competitor, who chooses carefully ± and often very strategically ± how, where and with what level of aggression they will respond to any competitive move. Such an approach is generally based not just on a clear understanding of the relative value of the organization¶s markets, but also on the costs of responding and the likelihood of the response proving to be cost-effective. Pepsi is aware of its competition and know very well about its competitors potential moves in the market so, we can say that Pepsi is very much selective in choosing its right competitors and brad image and recognition is very strong.

41

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Aims and Objectives of Company:
To serve in a friendly and fun environment To be a socially responsible company To provide good returns to its shareholders To provide its customers with food of a high standard, quick service and value for money To be the world's premier consumer products company focused on convenient foods and beverages.  We seek to produce 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.  At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society - delivering what we call Performance with Purpose.     

42

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Strategic focus in terms of competition The Tiger Competitor
Being a follower in the market Pepsi always expects a tiger response from its competitors which is aggressive in nature. It is obvious that when you are a follower your market leader know that follower want to be a market leader, because it may destroy the market image and market growth of the leader by influencing from different strategies.

IDENTIFYING MARKET SEGMENTS & TARGETS
In vals we differentiate on the basis of motivation and resources because Pepsi lie in the beverages category so we can see the price and quality and these are all follow in the same category

43

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Consumer Profiling Based on Shopping Habits

Self-indulgent shoppers
These are younger professionals, with no money worries or commitments and a fondness for the exotic and unusual. They are confident, self-assured and eager to experiment with a multiplicity of foods. Unmarried people fall in this category. In order to get out from tension they go out for shopping. The people goes with friend and shop and eat burgers, etc

Frenzied Copers
Professionals without much time, or mothers juggling a career and family, they spend freely but move quickly. They return to the same supermarkets, especially if they offer crèche facilities and consistent layouts. These are the people who do not have time to shop and they are single parent family so they go for ready made solutions and go for fast food category.

44

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

TARGETING AND POSITIONING

Positioning is therefore the process of designing an image and value so that customers within the target segment understand what the company or brand stands for in relation to its competitors. Pepsi had done a lot of efforts in order to come up with one of the strongest brands in the world. It has included all the possible factors that could help making a powerful and strong brand position in the mind of its customers. It has worked over all the factors starting with its product range like Frito-Lay , Tropicana, Aquafina and Quaker. It has also made its performance standards and keeping in view its quality while even franchising its business.. Time to time ads and promotions in papers leaves always a good impression on the customers and everybody can easily knows about the promotions and advertisements. Word of mouth always plays a vital role in order to help your marketing campaign but that also needs your good service and quality of food and Pepsi is good at both and word of mouth helps increasing its customers. Pepsi Pakistan usually uses the print media and local cable channels and TV in order to support their marketing campaign and they are pretty much consistent with their marketing efforts and selection of media.

TYPES OF POSITIONING
Primary and secondary benefits
45

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Pepsi is in Primary and secondary benefit positioning because first benefit is thirst and
secondary is we use bottles for other purposes.

Soft drinks pepsi cocacola Juices pulpy nestle Fruite

Position of pepsi local drinks Macca cola Energy Drinks Red Bull

amrat cola Cott

Target Market for Pepsi
Pepsi customers are mostly young group between the ages of 14 to 30 and also target at school, collages, universities, homes, restaurant, hotels and stores.

Portfolio Based Strategies
These are four in numbers

y Invest y Hold
46

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

y Harvest y Divest
Build & invest We cannot go for hold or divest because we are lying in the strong competitive position where market strength is very high and industry attractiveness is very high and competitive position is also very strong.

MARKET SEGMENTATION
Pepsi has divided its market in many ways  demographically,  geographically,  psycho graphically  behaviorally

4 P·s (THE MARKETTING MIX) OF PepsiCo  Products PepsiCo operates in three major US and international businesses.  Beverages: Pepsi-Cola Mountain Dew 7up Mirinda Teem  Snack Foods: Lays Cheetos Kurkure  Other Products: Dole juices and juice drinks Gatorade Aquafina drinking water

PROMOTIONS 
Spends a huge amount on promotions.  Include advertisements sponsorships of sporting events, musical shows and many more.  Build strong brand equity.
47

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT] 

Spends a huge budget on advertisements also.  Some of the entertainment celebrities for advertisements used by Pepsi are: Inzamam-ul-Haq David Beckham Maradona Jeff Gordan Ronaldenio Roberto Carlos  Slogans ´Ask For Moreµ ´Pepsify Karo Gayµ

GE Strategies:

Here we have strong competitive position and high industry attractiveness so we fall in Invest for growth category
48

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Here we have prospects for sector profitability is average and average enterprise capabilities. So we fall in Custodial Growth.

49

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Position Based Strategies

Coke is the market challenger while Pepsi is the market leader. These findings are based on the interviews conducted with the managers of the well known super stores in the region of Clifton Karachi. However other international and local brands which includes imported energy drinks, syrups, juices and Pakola whole family which contributes to just 12% of the total beverage industry. We have to compete with its strongest competitor coca cola. So we suggest following strategies: Our recommendations to Pepsi-cola are to keep advertising as much as possible, and keep coming up with diversified range of products so as to penetrate more and more in the industry. 50

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

Keep their business to franchise system only so as to save as much taxes as possible and use the saved money on advertisements.

Scorpio Technique

Industry or Market:
When we look at the beverages and Pepsi it is very easy to judge the focus and orientation of Pepsi it is more likely towards customer and the market. They are less careful about industry. As the customer has more value for them and they are constantly putting efforts in the market. They know about the competition and the competitors in the market. Pepsi is very well aware of the pure oligopoly in the Market. 51

Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

MARKET FOCUS
Pepsi has always adopted a market focus approach, come up with need analysis of customers and product analysis than accordingly it design products according to taste of the customers.

POSITIONING AND BRANDING
Pepsi has been successful in positioning its self in the mind of consumers and non consumers as well. Pepsi as a brand is well recognized that s why the biggest strength of Pepsi lies in its Brand name. In the mind of teen agers it has positioned itself as a cool place to hang out with friends where as for the kids it has positioned fun altogether.

SEGMENTATION AND TARGETING
Pepsi Pakistan has segmented itself, geographically demographically.

y Geographically
Covering almost major cities but has many cities uncovered where there is need to cater customers and has potential of growth.

y Demographically
Pepsi has also segmented demographically according to age gender of people. y

Hybrid segmentation
Pepsi use both geographical and demographical segmentation. Across the Pakistan

Targeting
Pepsi customers are mostly young group between the ages of 14 to 30 and also target at school, collages, universities, homes, restaurant, hotels and stores.

CUSTOMER RETENTION
The need of day is to retain the customer. as well as to build more customer . Customer s retention is more important for fast food chain network because switching cost is low. so, Pepsi Pakistan should use some strategies for customer retention like keep coming up with diversified range of products so as to penetrate more and more in the industry

OFFERINGS
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Sir Imran qureshi

[PEPSI STRATEGIC MANAGEMENT]

y Product
New taste or flavor bottle

y Price
Prices should be made more competitive

y Place
Pepsi should start operation in uncovered ares.

y Promotion
Pepsi should advertise its products and offering more efficiently and use effective medium like news papers, Hoardings Radios TV, .and should focus on personal selling, also determine the frequency of ads to occupy a position in customers and non customers about its products.

ORGANIZATION PROCESS AND CULTULE
Managers to efficiently review the internal process. Need finances for sake of product development and market development.

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