Marketing Management

Contents

Executive summary.................................................................................................... 2
Mission statement & Objectives................................................................................. 2
Environmental Analysis (internal &external analysis).................................................3
Internal Analysis...................................................................................................... 3
Company Analysis................................................................................................ 3
Competitor Analysis............................................................................................. 3
Customer Analysis................................................................................................ 3
Porters 5 Forces....................................................................................................... 4
External Analysis..................................................................................................... 7
Pestle Analysis..................................................................................................... 7
SWOT Analysis..................................................................................................... 9
Marketing objectives................................................................................................ 11
Marketing strategy................................................................................................... 12
Tactical intergraded marketing plan.........................................................................13
Budget...................................................................................................................... 15
Appropriate control and evaluation mechanism.......................................................15
Conclusion................................................................................................................ 16
References................................................................................................................ 17

Marketing Management

Executive summary
In 1998 PepsiCo was among the most successful consumer product
companies in the world with over 150,000 employees and revenues
amounting to $22 billion. The company consists of Pepsi-Cola which is the
worlds second largest beverage company, Frito-Lay which is the largest
producer and manufacturer of snack chips and Tropicana products which is
known for being the largest producers of branded juices.
The company has the most respected brands in the world, some brands add
up to being over 100 years old although the corporation is made up of young
and fresh entrepreneurs. The success of the company relies on the
superiority of their products, the high standards of performance, smart
competitive strategies and a high integrity from their people.
Here we will try and introduce a new product called Pepsi 100% Calcium to
our product line. It is a milk based product with different flavors.

Mission statement & Objectives

The mission of PepsiCo is to increase the value of investments made
through shareholders. This is done by growth of sales, controls over cost and
wise investment resources. The success of the company depends of the
quality and value offered to the consumers and customers by providing the
people with a safe, economically efficient and environmentally sound
product. Here our intentions are to create a new product for our consumers
and to maintain the level of satisfaction of our products and services

Marketing Management

Environmental Analysis (internal &external analysis)

Internal Analysis
Company Analysis
PepsiCo advances with only one strategy in mind, which is to concentrate
their resources on growing their business through internal growth and
selected acquisitions. The corporations success shows their total growth as a
company and the success they have achieved through growing and creating
opportunities. It has shown great power by going head to head with another
dominant in the market.

Competitor Analysis
When we look at the main competitors of the company we only see Cocacola company. They have been rivals since the very opening of PepsiCo in
1939. It has gone head to head with the giant and has caused it lose market
share while it has slowly gain popularity with consumers worldwide.

Customer Analysis
The main customers of Pepsi are the young people of today. Pepsi aims at
helping the youth of today maintain a balanced healthy lifestyle and they
also promote education through various campaigns. We also see that many
consumers of Pepsi actually keep buying because of its low prices and this is
what gives it the competitive advantage.

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Porters 5 Forces
Threats of new entrants
When new entrants enter an industry, they bring along with them new
capacity and desire to gain market share. This will affect the price, cost and
investment for existing producers. But when we look at the soft drink market,
the threat of a new entry is considerable low because Coca-Cola is a
dominant leader of the market and after the clash between both Pepsi-Cola
and Coca-Cola there has been a huge decrease in Coca-Cola sales thus
leading them to be the two most dominant companies in the beverage
industry.

Bargaining Power of Buyers

In a market such as this one we see that the buyers have a lot of power
and this might cause many effects on PepsiCo. The effects are prices are
forced down, a better quality and more services demanded and it can also
cost the company industry profitability. Once a buyer has leverage over the
company, a certain pressure can pull prices down thus resulting in a cost for
the company. In the industry Pepsi-Cola is involved in there is proof to show
that the buyers are very strong indeed because of the vast amount of firms
producing soft drinks therefore making it easy to find a substitute supplier in
the industry.
The buyers in this industry are stronger as the main distributing channels
include Supermarkets which account for 32.9% of the buyers total. The rest
of the buyers are as follows fountain outlets 23.4% followed by vending
machines which is 14.5% to mass merchandisers with a percentage of 11.8
and convenience and other outlets with 17.4%. This clearly shows

Marketing Management
distribution of the buyer power and how different buyers will pay different
prices based on their power to negotiate as to the quantity they purchase.

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Bargaining Power of Suppliers
Likewise suppliers also have a powerful influence over buyers. The less the
suppliers the more powerful they will be therefore causing for negative
effects on the buyer. These effects are charging higher prices for products,
the quality of the product and services such as delivery or payment.
In this industry we can see there are many suppliers and that the main
resources required for production are easily found such as caffeine, flavor,
sugar and water. This drives the bargaining power of the supplier down. This
is thus an advantage for PepsiCo as it will be able to control its cost of
production and suppliers will cause little or no effect on profitability. This
shows the weakness of the suppliers in this industry.
In the case of strong suppliers it would then be a threat to the company as
the suppliers would have control over the industry. In some cases the
supplier can threaten the company by moving forward in the industry. But in
the case right now the supplier would become a new entrant meaning he
would face many difficulties therefore making the threat very low.
Threats of substitute products
The threat of substitute here implies that another industry might offer the
same product or with a similar function that Pepsi-Cola offers but by using a
different method. The threat for a substitute product in this particular
industry is very high as the list piles up it varies from water, beer, wine, milk,
tea, coffee, juices and so on.
These are all available for the consumers. But Pepsi has a strong marketing
campaign and as a soft drink companies it shields itself from competition by
offering a variety of substitutes therefore causing little competition. The
main substitute for Pepsi-Cola is Coca-Cola but it is said that in a blind test,
people cannot differentiate from them both as the taste is almost the same.

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Rivalry
When it comes to rivalry we see that the main competitor of Pepsi is
Coca-Cola. There has been constant war between these two giants in the
beverage industry that it is now called The Cola Wars. They have used
various strategies over the years and this had led to both of them being very
innovative in their designs and marketing their product. Coca-Cola launched
in the 1890s whereby Pepsi was launched 40 years later in 1939. Since then
it has been a dominant force in the downstream of Coca-Colas market share
as it mainly aimed at packaging and that what created their rivalry.

Marketing Management

External Analysis
Pestle Analysis

Political
Pepsi is FDA regulated as it is not an alcoholic drink. There are strict
standards when it comes to the law applied from the FDA. Different
markets means different regulations sometimes they may be strict
regulations and sometimes not so strict ones. Therefore the company has
to stay in line with all these policies. Pepsi also uses a competitive pricing
that is a factor that they need to keep in mind. There might be civil unrest
but PepsiCo has agreed and has decided to follow set standards and
regulations. In some places there might be inflations which will cause the
decrease of sales therefore they need to be ready to adapt to different
political changes.
Economic
There has been recent economic downturn and that has deeply affected
most economies. Most companies had to restructure their marketing
campaigns and their sales tactics. There has been a lot of downsizing
internally and they have to rethink how to re penetrate the market.
Economic factors are what affect businesses the most regardless of the
sector it is in. During the economic slump of 2008 most people were
unemployed, Pepsis sales increased mainly because people would spend
more time with friends and family at home.
Social
Social factors are what have a great impact on a company as Pepsi is a
non-alcoholic beverage therefore it has to remain in strict and stark
differences of cultures around the world. The image of Pepsi is well
communicated as a global brand and it is associated with people as
something that connects the world. Different countries mean different

Marketing Management
cultures so Pepsi has to stay alerted as it is an opportunity to provide its
products to that area.

Technological
With the new technology era we have seen that companies are
continuously integrating themselves with all recent changes to have a
competitive advantage. This has become a trend that most companies
have picked up and you can see nowadays that businesses are moving to
Social media. This explosion has given Pepsi the opportunity for an
increasingly interactive engagement with the consumers so now Pepsi can
stay ahead of all developments. They can now keep view on how the
youth of today utilizes technology to benefit them and Pepsi knows how to
reach them to increase its brand awareness.

Legal

Legal implications are very important when dealing with international

companies as it might ruin the image of a company. There is an example
where Pepsi was accused of using contaminated water in India. A recall of
all the products placed on shelves was issued and that cost the company
billions of dollars. Therefore it can cause a lot of problems because it is
related to the beverage industry,
Environmental
The product will comply will international rules and regulations and it will
also be a recyclable can that will be used. Also Pepsi is known for its many
recycling campaigns which promote the environment.

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SWOT Analysis

Strength

PepsiCo has a huge variety of brands which give it product diversity.

This means it does not rely on sales revenue from only one product.
It has an extensive distribution channel as it is able to provide to 10

million stores in 200 countries around the world.

The company is involved in consumer social responsibility (CSR)
engaging in education, water usage reduction and recycling therefore

increasing brand awareness.

It has acquired Gatorade, Tropicana, Doritos, Quaker Oats and many
others and this has shown its level of success when acquiring and

merging.
They have 22 brands that earn them more than $1 billion a year

therefore not relying on only one brand for revenue.

It has a very good marketing strategy as it spent $ 2 billion on
advertising in 2012 but Coca-Cola spent more but the end results
showed PepsiCos market share increase showing excellent marketing

and advertising skills.

It has a competitive advantage in the market as it has diversification.
Most consumers of its beverage also consume their snacks.

Weakness
The company depends too much on Wal-mart therefore leading to
significant buyer power. This could lead to decreasing the profit
margin.
It has a low pricing strategy therefore it sells its products at a lower
price than its competitors. This leads to a low margin of profit.
It has a low market share compared to its main competitors Coca-Cola.
Therefore showing a low brand awareness compared to its competitors.

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It has a very low net margin as it sells for a very low price. It has a
9.7% margin compared to 18.55% for Coca-Cola and 11% for Nestle.
Opportunities
It has an advantage at a growing beverage and snack consumption
market as it has made investments in BRIC countries therefore
expanding beyond the US market.
There is an increased demand for healthy foods nowadays PepsiCo
could take advantage of that an increase beverage quality.
New expansions could be formed through acquisitions as it has a
success for acquired companies.
It has a very big advantage as bottled water is becoming highly
consumed around the world and is expected to increase.

Threats

As a threat we have a change in consumer taste, as we can see there

is a demand for more healthy products in the world nowadays.

Therefore, a reduce in carbonated drinks is observed.

Water is a key ingredient to any beverage company and as time passes
it is becoming scarce and therefore it might be a threat to PepsiCo as

well as other beverage companies.

The gross profit margin is decreasing for PepsiCo therefore they need
to find a solution as water cost and other raw materials are becoming

more expensive.
Another threat would be the dollar rate as most of its income comes
from outside.

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Marketing objectives
Before setting out the marketing objectives we have to see that it measures
different factors therefore it should be specific, measurable, achievable,
realistic and timed. This is known as S.M.A.R.T and is used to set out
objectives for a business.
Here we seek to deliver the loyal consumers and potential consumers with a
new product that with be from the Pepsi-Cola branch.

It will launch in 2014 and will be a new milk flavored drink. With the
launch of this new product we expect to increase sales by 15%.

To make more campaigns to bring more brand awareness for people to

recognize our product.

To increase quality of our product giving a cost increase of 5%.

To increase our marketing budget by 20%.

To expand our product line after increasing awareness of our new

product.

To increase market share by 7% by the end of 2014.

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Marketing strategy
Here we will have to decide which strategy to go with either we go with
Ansofts matrix or porters generic. The Ansoft matrix concentrates on the
companys present and potential products. It gives them ways to grow by
extending products or creating a new product and in existing markets or new
markets.
This strategy uses market penetration, market development, product
development and diversification. Therefore here we will use development
strategy as it will focus on growth. The new product is Pepsi 100% Calcium
and will be targeting an existing market. This strategy will help the company
growth and will make Pepsi diversify even more in the beverage industry.
Pepsi already has a great portion of the beverage market therefore it will be
easier to launch the new product in an existing market. It will also help Pepsi
to give the image of a healthy drink and not only carbonated drinks. This will
help Pepsi greatly as will also generate them revenue and give them
advantage to competitors. This will help them shield their products by
increasing its original line of products
Here we will also target a certain age group as it is good to know how to
proceed. Pepsi already has a history of supporting the youth therefore the
new product Pepsi 100% Calcium will be not only a high calcium drink that
strengthens the bones but also a drink to give the youth an extra energy
boost for the day.
We will use a lot of social media to cover the new product and launch it from
the market to the consumers. This will benefit the consumers and Pepsi in
brand awareness and also product awareness.

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Tactical intergrated marketing plan

Product
The product will be an alternative from the carbonated drinks. It will be
flavored milk that will be aimed at the youth of today. It will first be available
in three different flavors chocolate, vanilla and coffee. These products are
will give the consumer the benefit of high calcium consumption as well as a
boost of energy. It is targeted at the youth of today as it suits their purpose.
The youth are the people of tomorrow therefore encouraging them to use the
product will bring benefit to the brand and also the image. It will also be
packaged in a environmental friendly way to grow a better image of the
company. The product will be suitable for the trend of today because parents
prefer a healthier lifestyle for their children and even young adults. It will be
sold per unit of one or by pack of six and will be sold only in cans to suit the
consumers and also to be recycling friendly.
Price
When it comes to price Pepsi is known for its competitive priced products
therefore it will keep the price steady as long as economic factors do not
interfere to their disadvantage. The price of one unit of Pepsi 100% Calcium
will be at 0.99 the can and at 5.49 the six pack. It will use a geographical
pricing strategy and psychological pricing strategy to attract the consumers.
It will depend on the country it is sold in and on the cost of raw materials in
the country. This will show that the product is of good quality and also attract
consumers to try it.
This will give Pepsi the advantage and it will also be low compared to its
competitors. This will push the product and increase sales. Also Pepsi has
already had a bad reputation for the water they use to produce beverages;

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this might be the chance to put in the product at a relatively normal price
according to the market to ensure to consumers of the quality instead of
leading them to doubt.

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Promotion
Here we are aiming at the youth of today as PepsiCo is already involved in
numerous campaigns for educational means. They can push the product as
samples for the youth to give their opinion on the new product. They can
also use the other campaigns such as recycling to show how their new cans
are 100% recyclable. We will also start a charity campaign in order to
promote the awareness and to show that PepsiCo also considers the society.
On the other hand we can promote the new drink through various Social
Medias as the Pepsi 100% Calcium is aimed at the youth therefore following
the trend and getting involved in the consumers likes. Also we have seen a
lot of awareness towards healthcare so we will start a campaign to show how
our product is good for the bones. Also for sport fans we will carry out a
sports event and sponsor it with our new Pepsi 100% calcium drink which is
also an energy booster.
Place
We will start selling Pepsi 100% Calcium worldwide through our different
distribution channels. Our main buyers are supermarkets therefore we will
focus on selling in bulk to them and they will bring it to the consumers. This
process is very important as the product needs to reach final consumers in
order for it to be successful. The product will also be sold to convenience
stores and small retailers. It will also be promoted in schools to attract a
wider range of people and increase the market share.
We will also provide it through vending machines in crowded places such as
malls and entertainment centers. This will give the show the consumers that
the product will be available everywhere at anytime.
People

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When it comes to people we will focus on bringing a good interaction
between the consumers and the sales staff of Pepsi. This will promote trust
and also show that Pepsi cares enough for their opinion. This can play a big
role in increasing sales revenue as it gives the person the satisfaction of
being sure they made the right choice. It also gives a better image and more
awareness of the companys brand.
Physical evidence
As we know PepsiCo is a very well known company that has been here since
1939 therefore since then is has made a big impact on society and people
are very well aware of the multinational corporation. On every can there is
the logo which is recognized worldwide. There is also sponsorship provided to
various sport sectors that acclaim the support of PepsiCo. It has factories all
over the world and is therefore a very well known brand.

Process
The process part of the strategy is very important as if the process is carried
out poorly it will kill the product leading to a loss. Therefore it has to be run
efficiently according to the plan and it will benefit PepsiCo with increasing
brand awareness and increase in sales revenue. The process should also be
supervised in order to control any further action.

Budget
2013 (
Billions)

2014 (
Billions)

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Sales
Revenue
Production
Cost
Marketing
Cost
Net Profit

3.45

2013

0.3

0.315

2014

0.7
2

0.84
2.295

Appropriate control and evaluation mechanism

The profitability control analysis shows that the company will be able to
achieve higher revenue than production cost. Operations will run efficiently
and smoothly during production and sales according to set plan. Also the
company will follow the strategy plan as there will be strategic control to
ensure there is increased product awareness.

Conclusion
To conclude if PepsiCo produces Pepsi 100% Calcium it is sure to increase its
revenues. The plan has a detailed strategic layout and a process to follow in
order to gain more brand awareness. It also includes the marketing
objectives which aim at increasing the market share for PepsiCo. Therefore
the marketing plan is complete and we hope it to be a success.

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References

Date visited 12/04/14

http://www.strategicmanagementinsight.com/swotanalyses/pepsico-swot-analysis.html
Date visited 12/04/14
http://www.pepsicobeveragefacts.com/

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