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MARKETING MANAGEMENT ASSIGNMENT ACCOUNTING DEPARTMENT ANDALAS UNIVERSITY

PepsiCo, Inc. is founded by Donald M. Kendall, President and CEO of Pepsi-Cola and Herman W. Lay, Chairman and CEO of Frito-Lay, through the merger: 1. Pepsi-Cola In 1898: Caleb Bradham, a New Bern, North Carolina, pharmacist, created "Brad's Drink," a carbonated soft drink he created to serve his drugstore's fountain customers. 2. Frito Company 3. H. W. Lay Company The Major products of the companies are: Pepsi-Cola Company Fritos brand corn chips, Lay's brand potato chips, Cheetos brand cheese flavored snacks, Ruffles brand potato chips, Rold Gold brand pretzels. Mountain Dew

1965

1966: Doritos is introduced Pepsi enters Japan and Eastern Europe. 1970: PepsiCo moves from New York City to new world headquarters in Purchase, N.Y Pepsi is the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. 1977: PepsiCo acquires Pizza Hut, Inc 1978: Taco Bell 1980: PepsiCo Food Service International (PFSI) is formed to focus on overseas development of restaurants.

Growth Cont.
1982: Pepsi Free and Diet Pepsi Free, the first major brand caffeine-free colas, are introduced. Inauguration of the first Pepsi-Cola operation in China. 1985: PepsiCo is now the largest company in the beverage industry. The company has revenues of more than $7.5 billion, more than 137,000 employees. Pepsi-Cola products are available in nearly 150 countries and territories around the world. Snack food operations are in 10 international markets. 1986: PepsiCo purchases 7Up International, the third largest franchise soft drink operation outside the United States. 1993: Pepsi-Cola introduces Aquafina bottled water into test market. 1996: Pepsi-Cola launches Pepsi World at www.pepsiworld.com

Global
Pepsi products are in almost 200 countries throughout

the world There are 22 different brand lines that account for at least $1 billion per year per brand

2009
Was on the Best Food for Women list in Womens

Health magazine Began a partnership with the NFL Won U.S. EPA SmartWay Environmental Excellence award Became official beverage of Norwegian Cruise Lines

Pepsi mission is to be the world's premier consumer products company focused on convenient foods and beverages. pepsi seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, pepsi business partners and the communities in which pepsi operate. And in everything pepsi do, pepsi strive for honesty, fairness and integrity.

PepsiCo's responsibility is to continually improve all aspects of the world in which pepsi operate environment, social, economic - creating a better tomorrow than today." Pepsi Co. vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

External Assessment

1. Opening in market for less costly products 2. Growth opportunities in developed countries as well as international nonestablished countries 3. Pepsi recently reacquired ownership of its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) 4. Compete in more than one industry (non-alcoholic beverage industry, the salty or savory snack food industry, and the breakfast food industry) 5. Growth in the carbonated drink market is the largest in Asia and Europe 6. The world's demand is experiencing a growth with the sports drinks, bottled water, and energy drinks

1. Fierce competition from Coca-Cola, which owns the largest piece of the market share 2. The downturn in economy, which lead customers to shift away from bottles of water to tap water. 3. Because of the recession, customers are finding cheaper alternatives to the national brands. 4. Customers are getting more conscious and concerned about their eating habits and general health. 5. Campaign against plastic containers has impacted the sale of bottled beverages 6. Highly dependent on supplies of clean water, to prevent contamination

Pepsi Co.
Critical Success factors

Coca Cola

Dr. Pepper Snapple Group


Weighted Score 0 0.36 0.22 0.3 0.2 0.36 0.36 0.18 0.32 0.27 0.21 2.78

Advertising Price Competitiveness Product Diversity Market Share Company Image Customer Loyalty Financial Position Sales Distrubution Product Quality Global Expansion Totals

Weights Rating Weighted Score Rating Weighted Score Rating 0.0 to 1.0 1 to 4 1 to 4 1 to 4 0 0 0.12 4 0.48 4 0.48 3 0.11 3 0.33 3 0.33 2 0.1 4 0.4 4 0.4 3 0.1 3 0.3 4 0.4 2 0.12 3 0.36 4 0.48 3 0.12 4 0.48 4 0.48 3 0.09 3 0.27 3 0.27 2 0.08 2 0.16 4 0.32 4 0.09 4 0.36 4 0.36 3 0.07 3 0.21 4 0.28 3 1 3.35 3.8

Key External Factors

Weights 0.0 to 1.0 0.05 0.08 0.05 0.13 0.09 0.13 0.12 0.05 0.1 0.09 0.05 0.06 1

Rating 1 to 4 2 3 1 4 3 4 4 2 3 4 2 2

Weighted Score 0.1 0.24 0.05 0.52 0.27 0.52 0 0.48 0.1 0.3 0.36 0.1 0.12 3.16

Opening in market for less costly products Growth opportunities in developed countries as well as international unestablished countries Pepsi recently reacquired ownership of its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) Compete in more than one industry (non-alcoholic beverage industry, the salty or savory snack food industry, and the breakfast food industry) Growth in the carbonated drink market is the largest in Asia and Europe The world's demand is experiencing a growth with the sports drinks, bottled water, and energy drinks.
Threats

Fierce competition from Coca-Cola, which owns the largest piece of the market share The downturn in economy, which lead customers to shift away from bottles of water to tap water. Because of the recession, customers are finding cheaper alternatives to the national brands. Customers are getting more conscious and concerned about their eating habits and general health. Campaign against plastic containers has impacted the sale of bottled beverages Highly dependent on supplies of clean water, to prevent contamination
Totals

6%

14%

PepsiCo
Coca-Cola Others

80%

Internal Assessment

1. Strong brand equity 2. Well-known worldwide 3. Innovating company 4. Ethical, socially responsible, and sustainable company 5. Strong advertising company with more than 40 slogans and songs 6. PepsiCo as the largest part of the market share after CocaCola 7. PepsiCo owns a wide variety of smaller brands which able them to offer a large product range from beverages to snacks

1.PepsiCo production is really expansive because of the need to constantly develop new products to meet the changing customers demands 2. PepsiCo is experiencing a lack of focus towards Pepsi sodas 3. PepsiCo is experiencing product recalls 4. PepsiCo has a low employment productivity and a weak distribution 5. PepsiCo depends too much on the US market 6. PepsiCo is far behind Coca-Cola in the international market

Key Internal Factors Internal Strengths

Weights 0.0 to 1.0 0.12 0.06 0.08 0.08 0.05 0.07 0.06

Rating 1, 2, 3 or 4 3 or 4 4 4 4 4 3 3 4 1 or 2

Weighted Score

Strong brand equity Well known worldwide PepsiCo owns a wide variety of smaller brands which able them to offer a large product range Innovating company Ethical, socially responsible, and sustainable company Strong advertising company with more than 40 slogans and songs PepsiCo as the largest part of the market share after Coca-Cola
Internal Weaknesses

0.48 0.24 0.32 0.32 0.15 0.21 0.24

PepsiCo production is really expensive because of the need to constantly develop new products to meet the changing costumers demands PepsiCo is experiencing a lack of focus towards Pepsi PepsiCo is experiencing product recalls PepsiCo has low employment productivity and a weak distribution PepsiCo depends too much on the US market PepsiCo is far behind Coca-Cola in the international market
Totals

0.05 0.06 0.12 0.08 0.08 0.09 1

2 2 1 1 2 2

0.1 0.12 0.12 0.08 0.16 0.18 2.72

SO Strategies (O4, S1, S2, S6, S7) Continue to offer variety or product in various brands. (O5, O2, S2) Expand and focus on the carbonated drinks and beverage segment in Asia and Europe. (O6, O4, S6, S7) Respond to the growing demand of sports drinks, bottled water, and energy drinks by expanding product market.

ST Strategies (T1, S1, S2, S3, S8) Innovate Pepsi product line with something that is going to differentiate us from CocaCola. (S1, S3, O4) Innovate products by offering healthier alternatives. (T2, T3, S3) Offer more promotions or discounts to prevent sales from decreasing. (T5, S1, S2, S4) Develop more environmentally friendly containers. (T6, S6) Support environmental issues, such as pollution, which causes water contamination.

WO Strategies (W2, W5, W6, O2, O5) Expand Pepsi sodas product in Europe and Asia. (W1, O4, O6)Improve their sales in the beverage segment by responding to the increasing demand for sports drinks, bottled water, and energy drinks.

WT Strategies (W1, T2, T5) Adjust production of bottles with downturn in economy. (W1, T3) Produce bigger size of bottles and sale them at the same price as the small one. (W3, T6) Be responsible and cautious towards supplies of water. (W1, W4, T6) Increase supply chain production by monitoring cautiously employees and improving workers training. (W5, W6, T1) Increase presence in the international market.

Market development is a strategy that PepsiCo should

apply by expanding in countries that not already established Use forward integration to acquire smaller companies in foreign markets to increase their market share Product development and related diversification should also be considered while trying to produce and distribute healthier products

Recommendations
PepsiCo should acquire 3 brands per year in an international marketplace
One of these 3 brands per year must be healthy

Increase production and distribution of carbonated

drinks in Asian and European countries PepsiCo will expand into Africa to make use of the international market they are not part of

Questions?