Major: Marketing

S. No. 13

Role of Corporate Social Responsibility (CSR) PepsiCo

Pakistan on Customer’s Loyalty

By:

Kamran Ahmed Bangash (01-222151-008)

Basharat Hayat (01-122151-001)

Supervisor:
(Dr. Qazi A. Subhan)

DEPARTMENT OF MANAGEMENT SCIENCES

Bahria Institute of Management and Computer

Sciences

BAHRIA UNIVERSITY ISLAMABAD

2016
 Acknowledgment

First of all, we are grateful to Almighty Allah for awarding us the courage to
confront every challenge in life with greater success and complete the whole
project.

We would also like to express our sincere gratitude to Dr. Qazi A. Subhan for the
overall support and help required in project. We are extremely thankful to him for
his expert guidance and all the necessary facilities to complete our project.

Last but not the least; we would also like to acknowledge with much appreciation
the crucial role of our friends and fellows for their unceasing encouragement and
support.

1
 Abstract

The purpose of this project is to study the role of corporate social responsibility of
PepsiCo Pakistan on customer’s loyalty and identify their problems by collecting data
through interviewing regional head of PepsiCo Pakistan. The project identifies the
problem that PepsiCo Pakistan is not doing any corporate social responsibility (CSR)
activities in Pakistan. While interviewing the regional head of Pepsi Pakistan he told us
that Pepsi Pakistan is not participating in corporate social activities they actually did by
PepsiCO international. The data was gathered from a sample of 100 participants
through a questionnaire. The findings revealed that, role of corporate social
responsibility has positive impact on customer loyalty in PepsiCo Pakistan.

2
 Table of Contents

Acknowledgment............................................................................................................................1
Abstract..........................................................................................................................................2
Chapter 1........................................................................................................................................4
1. INTRODUCTION:.....................................................................................................................5
1.1 PepsiCo Pakistan:................................................................................................................8
Chapter 2......................................................................................................................................10
2. PROBLEM DEFINITION AND REQUIREMENT ANALYSIS.............................................11
2.1 Problem Statement..............................................................................................................11
2.2 Objective:...........................................................................................................................11
2.3 Scope of the Project:...........................................................................................................12
2.3.1 Academic Perspective:.................................................................................................12
2.3.2 Practitioner Perspective:.............................................................................................12
2.4 Dimensions of CSR:............................................................................................................13
2.4.1 Environmental Responsibility:...................................................................................13
2.4.2 Economic Responsibility:............................................................................................13
2.4.3 Ethical Responsibility:................................................................................................14
2.4.4 Philanthropic Responsibility:.....................................................................................14
2.5 Dimension of Customer’s Loyalty:......................................................................................14
2.5.1 Attitudinal Loyalty:.....................................................................................................14
2.5.2 Behavioral Loyalty:.....................................................................................................14
3. DESIGN AND IMPLEMENTATION:.....................................................................................15
3.1 Identify Problems:..............................................................................................................15
3.2 Describe goal and objective:..............................................................................................15
3.3 Stakeholder Engagement:...................................................................................................15
3.3.1 Community..................................................................................................................16
3.3.2 Employees:..................................................................................................................16
3.3.3 Customers:...................................................................................................................16
3.3.4 Suppliers......................................................................................................................17
3.3.5 Government.................................................................................................................17
3.4 Project Outcomes:..............................................................................................................17
4. TESTING AND DEPLOYMENT:...........................................................................................19
4.1 Questionnaire with detail Answers:........................................................................................20

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5. FUTURE ENHANCEMENTS/ACTION PLAN:.....................................................................35
6. CONCLUSION & RECOMMENDATIONS:..........................................................................37
6.1 Future Recommendations:......................................................................................................37
6.2 Directions for Managers:.......................................................................................................38
REFRENCES:..............................................................................................................................40
APPENDIX:.................................................................................................................................44

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 Chapter 1

1. INTRODUCTION:

The benefits of corporate social responsibility (CSR) for companies, including

increased profits, customer loyalty, trust and positive brand attitude. The project is
intended to investigate the relation among corporate social responsibility (CSR) and
customer loyalty in Pepsi Pakistan. Success and failure of companies also depends
upon corporate social responsibility. In order to achieve long term growth in 21st
century, companies face the challenge of sustainability in competitive environment.
Around 80% of the fortune 500 organizations addresses the issue of corporate social duty
CSR on their sites, reflecting conviction among pioneer that today corporate social
obligation CSR is moral essential as well as monetary one. With the developing worry of
corporate social duty, organizations are roused by quickening or step up with regards to
show their corporate social responsibility CSR.
Corporate social responsibility (CSR) is a business approach that contributes to
sustainable development by delivering social and environmental benefits for all
stakeholders. Corporate social responsibility (CSR) refers to business practices involving
initiatives that benefit society. A business's CSR can encompass a wide variety of tactics,
from giving away a portion of a company's proceeds to charity, to implementing
"greener" business operations. Corporate social responsibility CSR is becoming more
mainstream as forward-thinking companies embed sustainability into the core of their
business operations to create shared value for business and society.

Corporate social responsibility (CSR) is a form of corporate self-regulation integrated

into a business model. Most consumers agree that while achieving business targets,
companies should do CSR at the same time. Most consumers believe companies doing
charity will receive a positive response. It also found that consumers are loyal and willing
to spend more on retailers that support charity. Smith (2013) shares the belief that
marketing local products will gain consumer trust. However, environmental efforts are
receiving negative views given the belief that this would affect customer service.
Corporate social responsibility is frequently viewed as a source of economic,
environmental, social and cultural benefits through its support of job creation,

5
improvements to infrastructures and cultural understanding (Bohdanowicz and Zientara,
2009). Therefore, a corporate social responsibility (CSR) orientation is a strategy for
companies to minimize the negative impacts of their activities on natural, cultural and
social environments (Chan, 2011). CSR means that organizations take on responsibility
toward others in society, not only on their shareholders and customers (Holloway, 2008).
CSR influence consumer loyalty at a time when companies are facing an extremely
business competitive environment and ever growing customer expectations (Han et al,
2011).

Corporate social responsibility, understood in a broad sense, generates trust among users
and these actions can influence consumers when evaluating the service that the firm
provides to them. If a consumer perceives that other people are of the opinion that the
company behind a brand is known for its CSR, that consumer may feel more secure in
acquiring and using the company’s brand. Consumer support for corporate social
responsibility (CSR) is well established, and companies are now expected to engage in
some form of CSR (Rundle-Thiele et al., 2008). Bhattacharya and Sen (2011) find that
CSR contributes to a consumer’s sense of well-being and that this benefit is “rewarded”
by consumers in the market. Outcomes from CSR include positive company evaluations
(Brown and Dacin, 2010).

Customer loyalty encourages consumers to shop more consistently, feel positive about a
shopping experience, helping attract consumers to familiar brands in the face of a
competitive environment. Customer loyalty is both an attitudinal and behavioral tendency
to favor one brand over all others, whether due to satisfaction with the product or service,
its convenience or performance, or simply familiarity and comfort with the brand.
Customers make decisions about where to spend their time, money, and effort every day.
They might be business buyers between 9 to 5, but consumers the rest of the time. In
either case, the scenario is always the same for the seller to make their product or service
offering the preferred choice. They do this by building offers that will differentiate them
from competitors, generate significant demand by customers, demonstrate superior value
and build customer loyalty. Evidence has revealed that high levels of customer
satisfaction have two main consequences for a firm including reputation and competitive
advantage (Anderson & Sullivan, 2008; Matzler & Hinterhuber, 2011; Walsh, Dinnie, &
Wiedmann, 2012). Therefore, customer satisfaction, reputation, and competitive

6
advantage should be included together in studies on the relationship between CSR and
firm performance.

To position the corporate responsibility to respect the rules of the game is to increase
profits include the actions (Friedman’s, 2009). Because consumers are increasingly a firm
role in society is based on the purchase (Forte's & Lamont's, 2011). Therefore, companies
and customer loyalty benefits to achieve a goal using (Sen, 2012). Customers corporate
social responsibility are becoming more concerned with the firms that responsibility
(Benezra, 2010) and that consumer perceptions of a company about the new products
manufactured by them looking beliefs and attitudes influence (Brown and Dacin, 2012).

The corporate social responsibility means firm’s responsibility for improvement and
protection of welfare of society as well as for organization in future sustainable benefits
for all stakeholders and also corporate social responsibility as ‘corporate social
responsibility as well as the organization improvements and the welfare of society's
responsibility to protect means the firm (Angelidis & Ibrahim, 2009). Social
responsibility plays a central role in the business environment and as companies have
attempted to become more responsible in terms of the economic, environmental and
social well-being of the societies in which they operate. As a result, the concept of social
responsibility has grown and spread dramatically during the recent decade in the business
world (Nilanthi Ratnayake, 2013).

Without cantering on the content of corporate social behavior, stakeholder theory defines
its field of application sustaining the idea that firms do not have responsibilities towards
society in general, but rather they should only be concerned about individuals or groups
that may be directly or indirectly affected by their activity (Clarkson, 2012). Specifically,
employees, shareholders or investors, customers, suppliers, government and firms are the
main stakeholders in the group, which operates in the community; the firm's survival are
not necessary for the communications, media and interest groups, are regarded as
secondary stakeholders while (Clarkson, 2012) taking both these theories into account,
and from an integrative perspective, (Maignan, 2014) propose to define social
responsibility as the degree to which firms assume economic, legal, ethical and
discretionary responsibilities towards their stakeholders.

7
The basis for loyalty segmentation should be sufficiently flexible in that it recognizes and
accounts for the uniqueness and special challenges of any one business or organization as
well as the environment in which it competes. And yet must also be based on sound,
well-tested research principles and validated modeling. Business success means having
desirable customers who are strongly tied to your organization. Monitoring the
number/percent of your customers in the loyal segment and doing what it takes to
increase loyal customers while decreasing those who are vulnerable should provide the
focus of any organization.

Customer loyalty is attitude or behavior of customer toward company product, brand, and
service. The competitive environment within the company's commitment to purchase
goods. Customer always finds some benefit to the company. Therefore, corporate social
responsibility programs have a positive impact on customer purchase (Maignan & Ferrell,
2013). Consumers are becoming more concerned with corporate social responsibility
(Benezra, 2011) and consumers’ perceptions of this responsibility influence their beliefs
and attitudes about new products manufactured by a company (Brown & Dacin, 2014). A
company which is socially responsible, research told the 88 percent of consumers are
more likely to buy from that company (Smith, 2009). Company image come from the
combination of a person’s trust, feelings and impressions about a company (Van Rekom,
2008). Researchers (Jacoby & Olson, 2007) have emphasized the difference between
objective and perceived quality. Conceptual meaning distinguishes between mechanical
and human quality: "mechanistic (quality) or an objective aspect of an object or event
feature is included, the (quality) objects that require subjective response and therefore
judges a highly relativistic phenomenon that differs between "(Holbrook and general Corf
man, 2012).

1.1 PepsiCo Pakistan:

PepsiCo is an American carbonated soft drink produced and manufactured by PepsiCo.

Originally created and developed in 1893 and introduced as "Brad's Drink", it was
renamed as Pepsi-Cola on August 28, 1898, and then as Pepsi in 1961. It is currently
known in North America alternatively as Pepsi-Cola as of 2014

8
Pepsi Cola was introduced in Pakistan in 1959 but due to lack of awareness it was
unsuccessful therefore the headquarters decided to windup their business in Pakistan.
In 1963 Pepsi Cola come again with much revised Strategy, facing a lot of difficulties in
promoting their products and competing against other brands like Coca Cola which was a
well-established brand here in Pakistan and for that reason Pepsi once again went back.
In 1979 Pepsi had secretly promoted its diversified products and carter to all
demographic groups of Pakistan there for in within 5 years they emerged as a market
leader, having 62% of market share while Coca Cola had only 32% share.

PepsiCo did a lots of CSR activities here in Pakistan. Pepsi Co. collaborated with ‘Litre
of Lite’ in Pakistan to launch a unique CSR campaign which has already been executed
in a remote area called Jalozai IDP camp situated 35 km from Peshawar. With a
population of 36000 people, this place still did not have any adequate form of lighting.
Pepsi visited the location and with the aid of these solar-powered lights managed to end
the darkness at the camp.

According to PepsiCo. “The project will enable installation of safe, environment-friendly

and sustainable Pepsi bottled solar lights in these communities.” Take a look at this heart-
touching video made by Sharmeen Obaid Chinoy which depicts how many problems at
this camp have been solved due to the availability of these solar-powered lights. Pepsi
Pakistan has as of late won a corporate social obligation CSR grant for the forward time
from Shaukat Khanum Memorial Cancer Hospital which has joined forces with Liter of
Light Pakistan to dispatch that battle.

PepsiCo Pakistan launched the 2016 ‘Lighting Up Lives’ campaign in the holy month of

Ramazan with commitment and dedication towards community betterment. The ‘Lighting
Up Lives’ is PepsiCo Pakistan’s flagship CSR program which provides solar lights inside
Pepsi bottles to communities in need. This initiative has helped install hundreds of lights
in refugee camps and other under privileged areas across Pakistan impacting the lives of
thousands of community members. PepsiCo aims to increase the project’s reach and light
up hundreds of thousands of Pakistani lives in years to come.

This volunteering activity was arranged in collaboration with Buksh Foundation and

Roshni Welfare Association. Volunteers from PepsiCo helped to install hundreds of
lights at the Roshni village for special persons. The beneficiaries were thrilled with this

9
‘gift of light’ as they called it while also taking part in the installation of the lights
activity.

The lighting solution provided is simple but sustainable. It comprises of a battery, solar

panel and a Pepsi bottle with an LED light in it. The light automatically switches on as
the sun sets.

The event was attended by the senior management of PepsiCo, Buksh Foundation and
Roshni Welfare Association along with members of the media. Jahanzeb Khan, Vice
President and General Manager PepsiCo Pakistan, hailed the volunteers’ passion towards
community service and remarked on the occasion. The spirit of social responsibility has
always been an integral part of the way PepsiCo operates. This support help those fellow
Pakistanis living in the dark to carry on with their lives and continue to earn their
respective livelihood with this gift of light.

PepsiCo Pakistan have as of late declared their accomplishments and activities towards
environmental change. Large number of customers are inspired and prone to buy
environment benevolent items. Both organizations are fighting for making top spot in
customers mind by making Eco-accommodating environment.

PepsiCo helps privilege area of Pindi and Islamabad. They help poor people to get
continue their studies, they also provide funds of health and care. Both beverage
companies had more focus on plantation to keep society and environment clean. They
planted a huge amount of trees to reduce pollution and to reduce the threat of global
warming. Pepsi starts campaign of lighting in almost all over the Pakistan and in twin
city as well.

PepsiCo is the main sponsor of cricket, they use to start talent hunt program under the
trained coaches each year in big cities of Pakistan. Talented sportsman of pindi and
Islamabad participate in talent hunt program and get the opportunity to select in
national team of Pakistan. PepsiCo was also the main sponsor of Pakistan Idol.

10
 Chapter 2

2. PROBLEM DEFINITION AND REQUIREMENT ANALYSIS

2.1 Problem Statement

The project identifies the problem that PepsiCo Pakistan is not doing any corporate social
responsibility (CSR) activities in Pakistan. The PepsiCo international brand is doing these
kind of activities in Pakistan. While interviewing the regional head of Pepsi Pakistan he
told us that Pepsi Pakistan is not participating in corporate social activities. All the
activities which are being highlighted in Pakistan is actually doing by PepsiCo
international. The activities like litre of lights, lighting up lives, sponsoring Pakistan
cricket team, doing talent hunt programs and providing the platform for talented singers
(Pakistan Idol) all are doing by PepsiCO international.

Regional head told us that Pepsi Pakistan did not have any assigned budget for corporate
social responsibility (CSR) activities. If so than Pepsi would have invest more in CSR
activities to increase customers loyalty. He said all the data is confidential so we did not
allow to provide any sort of data on letter head of PepsiCo.

We are living in a world surrounded with numerous problems related to environment and
society. Corporate Social Responsibility (CSR) is a means to sort out these problems to
some extent because business is a part of society. Earning more and more profits is a
natural phenomenon of every business unit but social responsibility is an obligation to the
people living inside and outside the business organizations. Business comes in contact
with various groups of society such as owners, employees, customers, suppliers etc. The
responsibility of business, which includes satisfaction of these parties along with the
owner, is called social responsibility of business. PepsiCo in Pakistan mainly concerned
to earn more and more profit and did not participated in social activities. Therefore the
project investigate:

 How corporate social responsibility (CSR) activities diverts the customer’s mind
towards PepsiCo Pakistan.

11
  How CSR activities create value for Pepsi Pakistan.

2.2 Objective:

 The objective of project is to find the extent of relationship between CSR and
loyalty.
 The objective of this project is to identify the dimensions of social responsibility
from the consumer’s point of view, as well as the weight of each dimension
within the Pepsi Pakistan.
 To understand the concept of CSR
 To find out the scope of CSR
 To know how the PepsiCo Pakistan has fulfilled its responsibility towards all
stakeholders.

2.3 Scope of the Project:

The project is helpful from two perspectives:

2.3.1 Academic Perspective:

Project is helpful from academic perspective because it will be beneficial for students,
teachers and individuals. It will add a significant portion in literature regarding the role of
CSR on customer loyalty which will be helpful for the researchers. The CSR activity we
pursue is in line with our core values dedicated towards education, focused not just only
on spreading knowledge, but also in helping people to achieve something more and better
in their livelihood. 
Promotion of education especially among children, students, employers, and open house
participants, supporting other educational institutions, improving various educational
facilities in general, supporting students for higher education.

2.3.2 Practitioner Perspective:

The project is helpful for practitioner as well because it will help the manager in taking
decisions regarding the consumer behavior because it will have an ultimate effect on

12
loyalty including in areas like sales, customer service, time management, professional
selling skills, Team work, negotiation, presentation skills, communication skills, active
listening, goal setting, sales process management, sales funnel management, objection
handling, and livelihood enhancement projects.

Carroll's (2008) definition is the clearest conceptualization of CSR because, in addition to

identifying the firm's obligations toward society, it systematically differentiates the firms'
responsibilities from mere profit making and from the social responsibilities of
governments (Chen, Chang, & Lin, 2012; Lozano, 2008; Wood, 2010). Proof of the
strength of this claim is the variety of scholars who have used this definition in their
studies (Galbreath, 2008; Galbreath & Shum, 2012; Sheth & Babiak, 2010; Shum &
Yam, 2011).

This study considers the economic and ethical dimensions of CSR as presented by Carroll
(2008). It is also argued by Turker (2009) that while economic responsibility should be
distinguished from other responsibilities, they should be considered together in
addressing CSR because financial interests are the fundamental reason for establishing a
business, and corporate ethical behaviors, which are something beyond mere financial
issues, are the main factor influencing an organization's survival (Nejati & Ghasemi,
2012).

2.4 Dimensions of CSR:

2.4.1 Environmental Responsibility:

The environmental dimension of corporate social responsibility refers to your business's

impact on the environment. The goal, as a socially responsible company, is to engage in
business practices that benefit the environment. For example, you might choose to use
recycled materials in your packaging or ad renewable energy sources like solar power to
your factory.

2.4.2 Economic Responsibility:

The economic dimension refers to the effect that corporate social responsibility has on
the finances of your company. In an ideal world, where corporate social responsibility
had no costs, there would be no reason to limit it. But in the real world it is important to
recognize the financial impact that these actions have and to balance being a good

13
corporate citizen with making a profit.

2.4.3 Ethical Responsibility:

These responsibilities refer to obligations which are right, just, and fair to be met by
corporations. Just abiding by law, procedure, and rule and regulations does not make
business conduct always as ethical or good. The conduct of corporations that go beyond
law and contribute to social wellbeing is called ethical.

2.4.4 Philanthropic Responsibility:

The Greek word ‘philanthropy’ means literally ‘the love of the fellow human.’ The use of
this idea in business context incorporates activities that are, of course, within the
corporation’s discretion to improve the quality of life of employees, local communities,
and ultimately society at large.

Making donations to charitable institutions, building of recreational facilities for

employees and their families, support for educational institutions, supporting art and
support activities, etc. are the examples of philanthropic responsibilities discharged by
the corporations. It is important to note that the philanthropic activities are desires of
corporations, not expected by the society.

2.5 Dimension of Customer’s Loyalty:

2.5.1 Attitudinal Loyalty:

Attitudinal loyalty is investigated in term of attitudes, preferences, commitment and

intentions. It is defined as a consumer’s desire to continue his relationship with the
company in spite of the lower prices of competing companies and to recommend the
products or services to friends.

2.5.2 Behavioral Loyalty:

The behavioral perspective fits with the concept of retention, under the assumption that
no matter what the sources of loyalty are, this means an unspecified number of repeated
acquisitions from the same supplier in a specific period of time. The behavioral loyalty
involves elements such as the frequency of calls, the level of cross-selling and the length
of relationship.

14
 Chapter 3

3. DESIGN AND IMPLEMENTATION:

IDENTIFY THE DESCRIBE STAKEHOLDER PROJECT

PROBLEM GOAL AND ENGAGEMENT OUTCOMES
OBJECTIVE

3.1 Identify Problems:

The project identifies the problem that PepsiCo Pakistan is not doing any corporate social
responsibility (CSR) activities in Pakistan. The PepsiCo international brand is doing these
kind of activities in Pakistan. While interviewing the regional director of Pepsi Pakistan
he told us that Pepsi Pakistan is not participating in corporate social activities. All the
activities which are being highlighted in Pakistan is actually doing by PepsiCo
international. The activities like litre of lights, lighting up lives, sponsoring Pakistan
cricket team, doing talent hunt programs and providing the platform for talented singers
(Pakistan Idol) all are doing by PepsiCO international.

3.2 Describe goal and objective:

Goal and objective of project is to find the extent of relationship between CSR and
loyalty. PepsiCo Pakistan have to identify the dimensions of social responsibility from
the consumer’s point of view, as well as the weight of each dimension within the Pepsi
Pakistan. We subsequently study its implications, project reaches at point that if PepsiCo
Pakistan invest in CSR activities than company will increase the customer loyalty.

3.3 Stakeholder Engagement:

15
There are five of stakeholders in PepsiCo which are community, employees, customers,
suppliers and government.
3.3.1 Community

These are organizations that affect PepsiCo due to their abilities to influence the
production process. CSR strives to be responsible and ethical, providing good returns for
shareholders, and a safe and satisfying workplace for its people. But have an equally
strong responsibility to the broader community, by being a good corporate citizen, and
helping to make our world a better place.
Good community relations benefit both CSR and the communities. The way people
manage their safety, health, and environmental and community responsibilities is a good
indication of how well they manage their businesses as a whole. Business cannot be a
high performing organization unless people get this right.

3.3.2 Employees:

A company with a strong corporate social responsibility has more engaged employees. A
good CSR program must consider the needs of its employees. Most employees want to
work for a company that cares about them as individuals.
Corporate social responsibility (CSR) may have once been regarded as a corporate
philanthropy. As consumers are ever more concerned with where products come from,
employees now want more from their employer than a paycheck. They want a sense of
pride and fulfillment from their work, a purpose and importantly a company’s whose
values match their own. If PepsiCo Pakistan provides benefits to their employees than the
performance will automatically be increased.

3.3.3 Customers:

There are organizations that do not bother to touch base with their customers the whole
month but are active only when they fall short of their targets and they have an appraisal
in the coming month. Understand that a customer buys your products or services only
when he/she trusts your brand and most importantly believes in you. Understand the
needs and requirements of your clients. Find out as to why they need a particular product
and how your product would benefit them. You need to build a strong relationship with

16
your customers for them not only to remain your loyal clients but also bring more people
along with them. It is the responsibility of the organization to give correct suggestions
and feedbacks to customers. Avoid making fake promises and commitments which you
yourself know are difficult to fulfil.

3.3.4 Suppliers

Supplier through the quality and time of delivery of their product affect the company
somehow such as feedbacks from distribution channels, suppliers of minor resources,
human resource sector and etc. Without those many of suppliers, PepsiCo Pakistan
cannot maintain producing their products properly. PepsiCo Pakistan aims to build solid
partnerships with its suppliers and maintain a Win-Win relationship that benefits both.
PepsiCo Pakistan partnership purchasing also emphasizes the crucial importance of close
collaboration with their suppliers to product quality and raising customer satisfaction.

3.3.5 Government

Rules and regulations of the government affect the policy of PepsiCo not only directly
but also in a roundabout way. Being present in almost all the countries in the world,
PepsiCo has to deal with lot of rules and regulations for each case. Thus, PepsiCo needs
to work and take care of on those rules and regulations to produce in legally for each
country. PepsiCo Pakistan should also follow those rule.

3.4 Project Outcomes:

Corporate social responsibility (CSR) is a broad term used to describe a company’s

efforts to improve society in some way. These efforts can range from donating money to
nonprofits to implementing environmentally-friendly policies in the workplace.
CSR is important for companies, nonprofits, and employees alike. CSR carefully
implemented policies can help organizations:

 Increase customer retention

 Develop and enhance relationships with customers, suppliers and networks
 Attract, retain and maintain a happy workforce and be an Employer of Choice

17
  Save money on energy and operating costs and manage risk
 Differentiate yourself from your competitors
 Generate innovation and learning and enhance your influence
 Improve your business reputation and standing
 Provide access to investment and funding opportunities
 Generate positive publicity and media opportunities due to media interest in
ethical business activities

PepsiCo Pakistan can get competitive edge and increase their customer loyalty by
implementing CSR activities. PepsiCo can also increase their target market by create
value to their customer and get favorable response from the customers.

18
 Chapter 4

4. TESTING AND DEPLOYMENT:

This project has found that corporate social responsibility of PepsiCo Pakistan current
situation is not efficiently managed because they are not allocating any budget on that
through which they are not getting customer’s loyalty on their demand. Corporate social
responsibility is now very vital for industry. Sales of PepsiCo is low as compare to
competitors. So, through this project by analysis the Pakistani market corporate social
responsibility is mandatory for the firm like Pepsi. PepsiCo introduced corporate social
responsibility they have to spend a lot of money and allocate a budget annually to make
Pepsi on top of the mind. So, by considering all these points questionnaire were filled by
respondents and reached on this point that PepsiCo have to move towards corporate
social responsibility (CSR).

One hundred respondents were chosen to fill out one hundred questionnaires, which ask
about their basic backgrounds and their possible behavior towards CSR related issues.
The questionnaire included sixteen questions. The first three questions were about the
demography of the respondent’s. The remaining questions went deeper into whether
CSR related activities is important for customer’s loyalty. Sixteen items were used in
questionnaire. The items in questionnaire were generated in the form of 5-point Likert
scale ranging from strongly disagree to strongly agree. The data was collected by using
convenient sampling technique. The collected data was tested by ratio analysis and the
result is shown below.

19
4.1 Questionnaire with detail Answers:

1. Gender: Male: ______ Female: _______

Gender

27

Male
Female

73

This was gender base question, total 100 respondents participate in questionnaire out of
which 73 were male and 27 were female

2. Age Group:

20
 Age
10 14

16 Below 20
21 - 30
31 - 40
41 - 50
Above 50

35

25

One of the purposes was to compare how people at different ages react to CSR related
activities. Therefore, five age groups were created: under 20 years old, from 21 to 30,
from 31 to 40, from 41 to 50, and over 50. As the results was collected, 14 percent of the
respondents are under the age of 20, 35 percent belong to the second age group (21-30),
25 percent are from 31 to 40 years old, 16 percent are from 41 to 50, and lastly 10 percent
of the respondents are over 50.

3. Monthly Income:

Monthly Income
8
12

17 less than 20000

21000 - 30000
31000 - 40000
41000 - 50000
more than 50000

42
21

21
Pie-Chart compare how people at different income level react to CSR related activities.
Therefore, five income groups were created: less than 20000, 21000 to 30000, 31000 to
40000, 41000 to 60000, and more than 60000. As the results was collected, 12 percent of
the respondents were less than 20000 income, 42 percent belong to the second income
level group 21000 to 30000, 21 percent were having income between 31000 to 40000, 17
percent were having income 41000 to 50000, and lastly 8 percent of the respondents had
more than 50000 income.

4. Do you trust PepsiCo Pakistan that is socially responsible:

97

Results
shows
that 97

3
YES NO

respondents said yes PepsiCo are more inclined towards social activities. Other 3
respondents were disagreed.

5. CSR is a necessary cost of doing business:

22
 60

50

40

30

20

10

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

Dis-
agree;
20

Neutral;
6

Agree;
74

In response of this question, 74% respondents agree that yes, corporate social
responsibility is necessary cost of doing business which is a very high percentage against
the sample size of 100 respondents, this means that people are more influence to buy the
product if company is providing social, ethical and environmental opportunities to the
people. 20% respondents disagree with their colleagues, as they said that CSR is not the
necessary cost for business in beverage industry. While only 6% respondent remained
neutral.

23
6. Corporate social responsibility gives a company a distinctive position in the
market:

53

22

11
9
5

Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Srongly Agree
Disagree

Disagree
16%
Neutral
9%

Agree
75%

Agree Neutral Disagree

In response of this question, 75% respondents agree that yes, corporate social
responsibility gives a company a distinctive position in the market which is a very high
percentage against the sample size of 100 respondents, this means that people are more
influence to buy the product if company is providing social, ethical and environmental
opportunities to the people. 16% respondents disagree with their colleagues, as they said
that CSR is not the necessary cost for a company a distinctive position in the market in
beverage industry. While only 9% respondent remained neutral.

7. Corporate social responsibility is a waste of time and money:

24
 50

45 43

40

35

30

25 24

20

15 13 12
10 8

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

20

13

67

Agree Neutral Disagree

Regarding waste of time and money, 67% of the respondents were disagreed and said that
corporate social responsibility is not the wastage of time and money. And they think that
PepsiCo Pakistan should spend more in social responsibilities, as they have a strong
image in market. 20% of the respondents were agree that yes, corporate social
responsibility is the wastage of time and money. Other 13% were remain neutral.

8. Being “socially responsible" means to promote equal opportunities between

women and men at all levels within the company:

25
 70

61
60

50

40

30

20 17 17

10
5
0
0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

17 1.4

78

Agree Neutral Disagree

Regarding to being social responsible to promote equal opportunities between women

and men, 78% of the respondents said that yes corporate social responsibility should
promote equal opportunities between women and men. These factors have a major impact
consumer loyalty.
1.4% of the respondents said that CSR has no impact does not involve in promoting equal
opportunities between women and men. Whereas other 17% respondents were remain
neutral.

9. Being "socially responsible" means to assume social and environmental care in

organizations activities:

26
 35
33

30
27

25

20

15
15
13
12

10

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

25

42

33

Agree Neutral Disagree

In the response of this question, 25% of the respondents agree social responsible means
to assume social and environmental care in organization activities.
While 42% of the respondents were disagree that social responsibility should not only
being for to take care of organizational activities, it should also involve in other activities
for the wellbeing of the society. While 33% respondent remained neutral and had mixed
opinion.

10. Now day customers are more capable to pay more for a product produced by a
“socially responsible" enterprise:

27
 47

21

16

9
7

Stongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

23%

9% Agree
Neutral
68% Disagree

In the response of question that customers are more capable to pay more for a product
produced by a “socially responsible" enterprise. 68% of the respondents agreed that yes
customers are willing to buy the products which are more socially responsible. Helping
others means spreading brand awareness among others and get competitive edge among
others. Company can easily create brand image in consumer mind as they get involve in
these kind of activities.
23% of the respondents were disagrees and they are against the given statement. They
think that product can be sell on the basis of quality, design and price not on the basis of
being socially responsible. While 9% remains neutral.

11. Do you think CSR (social or environmental efforts) pay back?

28
 70 66

60

50

40

30

20
14 14
10
4
2
0
Strongle Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

18

80

Agree Neutral Disagree

In the response of that question 80% of the respondents were agreed that yes corporate
social responsibility had pay back warranty, because majority of the customers are
willing to buys those product which are more socially involve in providing funds, aids
etc. That’s why we could say that corporate social responsibility had pay back warranty.
18% of the respondents were disagree about the statement and other 2%remain neutral.

12. In your opinion, CSR is beneficial to the stakeholders of an organization?

29
 90

80 77

70

60

50

40

30

20
11
9
10
3
0
0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

12%

Agree
Disagree

88%

In the response of this question 88% of the respondents are agreed that corporate social
responsibility is helpful for stakeholder in organization. Corporate social responsibility is
the need of the society, so everyone wants these kinds of activities in organization.
12% respondents were disagreed and they are against the statement.

13. Do you think having CSR programs gives a firm any competitive advantage
over other firms in same industry?

30
 40
37

35

30

25 24

20
16
15

10 9
7

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

31

53

16

Agree Neutral Disagree

While responding to that question 53% of the respondents were agree that yes CSR is
important to compete in the market. Because people are more attracted to buy the
products of the company which are more involve in social activities.
31% respondents were disagree because they thought that corporate social responsibility
is not the only thing to compete. Company should focus on their prices and quality which
are the major factors.
While 16% respondents remained neutral.

14. Brand name influences your decision making in purchasing without doing
corporate social activities:

31
 40
36
35

30
27

25
21
20

15
12

10

5 4

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

Agree
39%
Disagree Agree
57
Neutral
57%
Disagree
Neutral
4%

Responding to the question related to brand loyalty, 39% respondents were agree that yes
Brand name influences decision making in purchasing without doing corporate social
activities. Because respondents are more influence by price and quality.
57% respondents were disagreed that brand name did not influences your decision
making in purchasing without doing corporate social activities. While 4% remained
neutral.

15. If an alternative brand is cheaper which are not doing CSR activities than that
you are using you may switch to it:

32
 35

30 29

25
23

20 19
18

15
11
10

0
Strongle Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

Sales

40 41

19

Agree Neutral Disagree

This result shows almost same percentage of agreed and disagreed respondents.
41% respondents were agreed that yes, If an alternative brand is cheaper which are not
doing CSR activities than that they are using they might have been switch to it.
40% respondents were disagree that, If an alternative brand is cheaper which are not
doing CSR activities than that they are using they will not switch to it and remain same.
While 19% respondents remain same.

16. If an alternative brand has more popular image and a larger public following
without doing corporate social activities, you may switch to it:

33
 40
36
35

30
27

25
21
20

15
12

10

5 4

0
Strongly Disagree Somewhat Disagree Neither Agree Nor Somewhat Agree Strongly Agree
Disagree

39

Agree
Neutral
57 Disagree

Responding to the question related to brand loyalty, having more public image and more
public following. 39% respondents were agree that yes Brand image influences decision
making in purchasing without doing corporate social activities.
57% respondents were disagreed that brand name did not influences you to switch
towards that brand without doing corporate social activities. While 4% remained neutral.

34
 Chapter 5

5. FUTURE ENHANCEMENTS/ACTION PLAN:

Action plan for PepsiCo Pakistan will be that they have to start CSR as explain in the
chapter of testing and deployment and questionnaire result shows strong relationship
between corporate social responsibility and customer loyalty. First PepsiCo Pakistan have
to announce annual budget for their corporate social responsibility activities. Through
this PepsiCo Pakistan will get a platform to involve themselves in more social activities
like support the victims of fluid and natural disasters, health and safety, plantation to
reduce the effect of global warming, free education to poor students, scholarships for
talented students etc. So, by doing these kind of activities it will be helpful for both the
customers and company as well. PepsiCo Pakistan will automatically promote their brand
by getting involve in those activities and will get aggressive response from customers.

Profitable organizations whose objective at some time was just to make more and more
profit are now found being involving themselves in the social and ethical acts. The
project examine that why are companies considering that social issue and considering
them as their obligations towards society. Project and literature which were conducted
proofs that it’s not in vain for the profit earning business corporations to spend their
35
amount on doing social goods or being ethically concern about their society and
customers. It helps them in the long run creating a good reputation for them in exchange
of doing good deeds. This project built a framework based on the literature that
connected the CSR activities of the organization with customer satisfaction. Project found
that it is not always the fact that a company does well and its customer got satisfy, in fact
there are some hidden mediators which are building this relationship. Project supported
that CSR needs towards building brand image or reputation in creating intension of the
customer to particular brand. More factors like need for the product, trust on the company
or product etc also effect the decision however once the product being purchased by the
customer then he or she is the want to decide whether the performance matched his or her
need and is he or she is satisfy or not. Result supports that customer of the company who
involves themselves in social responsive act get more satisfied by their respective
products produce by the particular company when they acknowledge its social wellness.

The project found that PepsiCo Pakistan CSR activities will results in a strong brand
image. It would be beneficial for the companies to gets some part of their profits invested
in some social good which would be helpful for them to build a recognized name as well
as gathering more and more customers.

36
 Chapter 6

6. CONCLUSION & RECOMMENDATIONS:

PepsiCo Pakistan is not doing any sort of corporate social responsibility activities in
Pakistan. They did not have any assigned budget to invest in corporate social activities.
The current survey result shows that customer are mostly in the favor of corporate social
responsibility. The respondents answer are more inclined toward CSR. It shows that there
is relationship between CSR and customer loyalty. The project can be concluded that
CSR activities though not readily identified in the shorter but have a lasting effect on the
customer an organization which follows the strategy under the umbrella of CSR has a
favorable impact on consumer market. In Pakistan the buying power of buying is low and
it has been seen that customer whose spend large amount on services want some amount
of social response from particular company. The current work has tried to deepen
understanding about the concept of corporate social responsibility from the consumers’
perspective, as well as its benefits as a commercial tool.

From the result it became clear that studies oriented towards the consumers need to be
developed even more, since the consequences of socially responsible actions in this
segment were still unclear. In this respect, structured questionnaire technique to
demonstrate the direct relation between social responsibility and the overall valuation of

37
the service, which confirms that responsible behavior has commercial benefits for firms
and the result shows that there is strong relationship between corporate social
responsibility and Loyalty.

6.1 Future Recommendations:

Although, the project was co-relational in nature, study concludes a positive relationship
between corporate social responsibility of PepsiCo Pakistan and customer loyalty. The
study provides the base for investigating relationships between corporate social
responsibility and customer loyalty. Future recommendation can be directed towards
investigating the phenomenon in different industries such as in service industries and
industries where high involvement purchase decisions are concerned.

We suggest, advancing the study of social responsibility with more research allowing us
to deepen understanding of how consumers understand social responsibility. In the same
sense, we should consider economic responsibility. We feel it is necessary to work more
in the presentation of this component to the consumers, since from their point of view it
may be explained better by other economic aspects such as the generation of wealth in
the region, value added or job creation.

Taking into account the scarcity of studies oriented towards consumers, the current work
has attempted to provide new ideas about the components of social responsibility and its
benefits for service users. At the same time, it should stimulate new research that can
deepen our understanding of the commercial implications of companies’ efforts and
investment in socially responsible behavior.

PepsiCo Pakistan should involve themselves in social event which involve people greatly
and will make the way for a much profitable future. The customer services for PepsiCo
Pakistan need to be invested in to provide a better side of services to the users. The use of
new technology being used across the globe should be incorporated to reduce the cost and
offer a true economic set of packages of to the users. PepsiCo Pakistan should introduce a
social welfare program which include trainees from well-known institution from the
respective city to manage a talent pool

38
6.2 Directions for Managers:

The results obtained in this project have allowed us to detect certain commercial
implications from investment in corporate social responsibility.
The fact is that profit making companies have economic responsibilities related to long
term success and maximization profit and share value. We can say that a company with
well-defined ethical codes and a clear philosophy of social commitment, respect for the
environment and honesty in its relationships with the stakeholders, will be able to achieve
better economic results.
The first step to improve the socially responsible activities of a PepsiCo Pakistan is to
understand the meaning and implications of this philosophy. We have to take into
account that the responsible corporate behavior has to be perceived in order to get results.
The influence on consumer’s attitudes will take effect only when the users perceive that
the firms do indeed carry out such actions. It will be important to involve all the
employees in this philosophy and to target this internal public with a responsible policy
because corporate social responsibility begins inside the company.

Furthermore, PepsiCo Pakistan should communicate intelligently its social orientation

and its environmental involvement. It can use internet and its web page in order to inform
about its activities with a social dimension. Taking into account that the mass media
reaches many people, companies can also refer to what they do in their advertising or
with publicity. Besides, it’s possible to involve users by organizing some activities that
encourage their active participation. PepsiCo Pakistan could favor recycling campaigns
of empty cans and plastic bottles.

39
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43
APPENDIX:

Impact of Corporate Social Responsibility of Coca-Cola and Pepsi on Consumers Loyalty

(5 point Likert scales: 1 Strongly Disagree; 5 Strongly Agree)

QUESTIONNAIRE

Hello Dear Sir/Madam,

Kindly fill in this questionnaire. We are students of Bahria University Islamabad and this
questionnaire is part of our research project. The information provided by you will be kept
secret.

1. Gender: Male: ______ Female: _______

2. Age Group:

a. Below 20

b. 21-30

c. 31-40

d. 41-50
44
 e. Above 50

3. Monthly Income:

a. less than 20,000

b. 21,000 – 30,000
c. 31,000 – 40,000
d. 41,000 – 50,000
e. more than 50,000
4. You trust the brand PepsiCo Pakistan that is socially responsible:

a. YES
b. No

5. Corporate social responsibility is a necessary cost of doing business:

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

6. Corporate social responsibility gives a company a distinctive position in the

market:

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

7. Corporate social responsibility is a waste of time and money:

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
45
 d. Somewhat Agree
e. Strongly Agree

8. Being “socially responsible" means to promote equal opportunities between

women and men at all levels within the company:
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree
9. Being "socially responsible" means to assume social and environmental care in
organizations activities:

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

10. Now day customers are more capable to pay more for a product produced by a
“socially responsible" enterprise:

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

11. Do you think CSR (social or environmental efforts) pay back?

a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

46
12. In your opinion, CSR is beneficial to the stakeholders of an organization?
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

13. Do you think having CSR programs gives a firm any competitive advantage
over other firms in same industry?
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

14. Brand name influences your decision making in purchasing without doing
corporate social activities:
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

15. If an alternative brand is cheaper which are not doing CSR activities than that
you are using you may switch to it:
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

47
16. If an alternative brand has more popular image and a larger public following
without doing corporate social activities, you may switch to it:
a. Strongly Disagree
b. Somewhat Disagree
c. Neither Agree Nor Disagree
d. Somewhat Agree
e. Strongly Agree

Thank you for your collaboration!

48