PepsiCo Business Strategy and Competitive Advantage

Posted on May 1, 2016 by John Dudovskiy

PepsiCo mission statement has been worded by CEO Indra

Nooyi as Performance with Purpose and this principle is closely integrated with
the strategic direction chosen for the company. The most prominent aspects of
PepsiCo business strategy are based on the following six principles:
First, achieving growth through mergers and acquisitions
(M&A). M&A can offer the advantages of gaining access to competencies and
infrastructure, reducing direct costs and overheads and achieving organic growth.
Recently, PepsiCo has completed as a set of important acquisitions such as
acquisition of juice and diary businesses Lebedyansky and Wimm-Bill-Dann in
Russia, Lucky snacks and Mabel cookies in Brazil, and Dilexis cookies in
Argentina. M&A can be specified as one of the cornerstones of PepsiCo business
strategy. As a result of an aggressive pursuit of this strategy, today PepsiCo
portfolio comprises 22 brands and each of these brands have generated at least
one billion USD in retail sales in 2015.[1]
Second, forming strategic alliances in the global scale. Specifically,
strategic partnerships have been formed with Tingyi in China in order to claim a
share in growing beverage market in China. Moreover, formation of a jointventure with Tata in India to enhance drinking water manufacturing capabilities,
and initiation of strategic partnership with Almarai in Saudi Arabia can be
mentioned to illustrate PepsiCos adoption of strategic alliances as an integral
part of the corporate strategy. Important strategic alliances are formed by
PepsiCo at home markets as well. Specifically, by forming a strategic alliance with
Starbucks a global coffee house chain, PepsiCo has been able to claim its share
from increasing energy drink market segment.
Third, focusing on emerging markets. An aggressive pursuit of this
strategy has had positive impact on the bottom line. The year of 2015 witnessed a
double-digit growth in the sales of snacks in China and Pakistan[2] and PepsiCo
is also strengthening its position in the Middle East. The company has been able
to more than double its e-commerce business in China in 2015.[3] Moreover,

PepsiCo CEO Indra Nooyi has publicly expressed commitments to further

increase the level of presence of the company in emerging markets.
Fourth, focusing on organizational culture. Organizational culture can be
defined as the collection of words, actions, thoughts, and stuff that clarifies
and reinforces what a company truly values[4] and the nature of organizational
culture directly impacts its performance in short-term and long-term
perspectives. PepsiCo CEO Indra Nooyi is widely believed to be an
unconventional corporate leader for a good reason. It has been noted that shes
been known to walk the halls at Pepsi barefoot, sometimes even singing along the
way[5] and this fact communicates her willingness to embrace her differences
with positive implications on employee morale and organizational culture.
The same message is effectively communicated to organizational stakeholders
and integrated into Pepsi Brand as well in a way that the brand marketing
message is associated with making the most of the moment, and embracing own
individuality. Being listed among the top 25 Worlds Best Multinational
Workplaces by the Great Place to Work Institute in 2012 and PepsiCo Canada
being recognized as one of Canadas Top 100 Employers for 2014 by Mediacorp
Canada Inc[6] can be interpreted as an indication of effective working culture
within PepsiCo.
Fifth, developing and promoting the idea of One PepsiCo. Specifically,
Indra Nooyi has been striving to increase the level of association of individual
brands with PepsiCo company values and philosophy through promoting the idea
of One PepsiCo. This is meant to be facilitated through sharing supply-chain
management and infrastructure, operational costs for many brands within
PepsiCo portfolio have been decreased.
Sixth, innovation in marketing initiatives. A wide range of innovative
marketing initiatives developed by PepsiCo marketing team include Do Us a
Flavor campaign that involved consumers in 17 countries submitting flavor
ideas, development of Lipton Brisk Star Wars game application for mobile
phones, and using celebrity endorsement in an innovative manner by attracting a
popular singer amongst Pepsi brand target customer segment Beyonce Knowles.
Importantly, cross-cultural differences in various markets are taken into account
when developing and delivering PepsiCo marketing messages. For example, the
marketing tagline of Live for Now associated with Pepsi brand has been
modified as Yalla Now and Oh Yes Abhi for Middle East and Indian markets
respectively taking into account cross-cultural differences associated with these
markets.

Moreover, the senior management focuses on the framework known as 5Cs to

guide PepsiCo business strategy and long-term planning. 5Cs stand for the
following:
1.

Commercial agenda

2.

Building new capabilities

3.

Increasing focus on costs

4.

Fostering a culture of collaboration

5.

Exercise discipline when it comes to capital returns

Om

4. Location Strategy. PepsiCo has many company-owned facilities and partner-owned facilities
in strategic locations. Such an operations management approach is based on this strategic
decision areas objective of maximal reach to target markets. In PepsiCos case, such facilities
are located in key areas near most retailers. PepsiCo is especially interested in large retail
outlets and food service establishments with high sales volume.

, consumers can purchase Pepsi-cola from

supermarkets, restaurant, KFC and Pizza Hut, which have partnership
with Pepsi. Pepsi-cola brand is already been brought into the mind of
the consumers as an invisible image. As the good reputation and image
was created, Pepsi-cola almost exist anywhere and can be easily
purchased by customers.

5. Layout Design and Strategy. Efficient movement of people, materials and information is the
operations management concern in this strategic decision area. In PepsiCos case, spaces are
designed with efficiency and productivity in mind. For example, layout design in PepsiCo
production facilities is centered on the principles of assembly line production and total quality
management (TQM).

7. Supply Chain Management. This strategic decision area focuses on operations

management practices that optimize the supply chain to match demand for materials and
intermediary products. PepsiCos approach is to diversify and distribute its supply chain hubs.
For example, the company operates supply chain hubs for each regional market. In this way,
PepsiCo optimizes response times to fluctuations in demand.

8. Inventory Management. PepsiCos inventory management emphasizes automation.

Adequacy, scheduling, and cost minimization are the key objectives in this strategic area of
operations management. PepsiCo does so through computerized monitoring of inventory.
Inventory managers can access real-time data to help them make decisions.

10. Maintenance. PepsiCos maintenance concerns are widely varied, considering the
companys wide array of products and markets. This strategic decision area of operations
management focuses on adequate workforce and other resources that grow with the business.
PepsiCo continues to hire individuals and promotes from within the organization to grow its
workforce. Facilities are expanded, constructed or acquired to support PepsiCos growth.

PepsiCo Business Strategy and Competitive Advantage

Posted on May 1, 2016 by John Dudovskiy

PepsiCo mission statement has been worded by CEO Indra

Nooyi as Performance with Purpose and this principle is closely integrated with
the strategic direction chosen for the company. The most prominent aspects of
PepsiCo business strategy are based on the following six principles:
First, achieving growth through mergers and acquisitions
(M&A). M&A can offer the advantages of gaining access to competencies and
infrastructure, reducing direct costs and overheads and achieving organic growth.
Recently, PepsiCo has completed as a set of important acquisitions such as
acquisition of juice and diary businesses Lebedyansky and Wimm-Bill-Dann in
Russia, Lucky snacks and Mabel cookies in Brazil, and Dilexis cookies in
Argentina. M&A can be specified as one of the cornerstones of PepsiCo business
strategy. As a result of an aggressive pursuit of this strategy, today PepsiCo
portfolio comprises 22 brands and each of these brands have generated at least
one billion USD in retail sales in 2015.[1]
Second, forming strategic alliances in the global scale. Specifically,
strategic partnerships have been formed with Tingyi in China in order to claim a
share in growing beverage market in China. Moreover, formation of a jointventure with Tata in India to enhance drinking water manufacturing capabilities,
and initiation of strategic partnership with Almarai in Saudi Arabia can be
mentioned to illustrate PepsiCos adoption of strategic alliances as an integral
part of the corporate strategy. Important strategic alliances are formed by
PepsiCo at home markets as well. Specifically, by forming a strategic alliance with

Starbucks a global coffee house chain, PepsiCo has been able to claim its share
from increasing energy drink market segment.
Third, focusing on emerging markets. An aggressive pursuit of this
strategy has had positive impact on the bottom line. The year of 2015 witnessed a
double-digit growth in the sales of snacks in China and Pakistan[2] and PepsiCo
is also strengthening its position in the Middle East. The company has been able
to more than double its e-commerce business in China in 2015.[3] Moreover,
PepsiCo CEO Indra Nooyi has publicly expressed commitments to further
increase the level of presence of the company in emerging markets.
Fourth, focusing on organizational culture. Organizational culture can be
defined as the collection of words, actions, thoughts, and stuff that clarifies
and reinforces what a company truly values[4] and the nature of organizational
culture directly impacts its performance in short-term and long-term
perspectives. PepsiCo CEO Indra Nooyi is widely believed to be an
unconventional corporate leader for a good reason. It has been noted that shes
been known to walk the halls at Pepsi barefoot, sometimes even singing along the
way[5] and this fact communicates her willingness to embrace her differences
with positive implications on employee morale and organizational culture.
The same message is effectively communicated to organizational stakeholders
and integrated into Pepsi Brand as well in a way that the brand marketing
message is associated with making the most of the moment, and embracing own
individuality. Being listed among the top 25 Worlds Best Multinational
Workplaces by the Great Place to Work Institute in 2012 and PepsiCo Canada
being recognized as one of Canadas Top 100 Employers for 2014 by Mediacorp
Canada Inc[6] can be interpreted as an indication of effective working culture
within PepsiCo.
Fifth, developing and promoting the idea of One PepsiCo. Specifically,
Indra Nooyi has been striving to increase the level of association of individual
brands with PepsiCo company values and philosophy through promoting the idea
of One PepsiCo. This is meant to be facilitated through sharing supply-chain
management and infrastructure, operational costs for many brands within
PepsiCo portfolio have been decreased.
Sixth, innovation in marketing initiatives. A wide range of innovative
marketing initiatives developed by PepsiCo marketing team include Do Us a
Flavor campaign that involved consumers in 17 countries submitting flavor
ideas, development of Lipton Brisk Star Wars game application for mobile
phones, and using celebrity endorsement in an innovative manner by attracting a
popular singer amongst Pepsi brand target customer segment Beyonce Knowles.
Importantly, cross-cultural differences in various markets are taken into account

when developing and delivering PepsiCo marketing messages. For example, the
marketing tagline of Live for Now associated with Pepsi brand has been
modified as Yalla Now and Oh Yes Abhi for Middle East and Indian markets
respectively taking into account cross-cultural differences associated with these
markets.
Moreover, the senior management focuses on the framework known as 5Cs to
guide PepsiCo business strategy and long-term planning. 5Cs stand for the
following:
1.

Commercial agenda

2.

Building new capabilities

3.

Increasing focus on costs

4.

Fostering a culture of collaboration

5.

Exercise discipline when it comes to capital returns

INTRODUCTION
Pepsi-Cola Pepsi's beverage business was founded by a pharmacist named
Caleb Bradham who created a special beverage, a soft drink, in the
back room of his drug store in New Bern, North Carolina (Pepsi Co,
2004). It has become one of todays leading soft drink with nearly $20
billion in worldwide retail sales (PepsiCo Inc., 2003), and like what
coke has, Pepsi also has a variety of products in the world, such as
Pepsi-Cola, diet Pepsi, Pepsi max, mountain dew and so forth.
In this report, we will specifically focus on Pepsi-Cola, and the aim
of this report is to summarize and analyse Pepsis growth strategy as
well as its marketing strategies.
Firstly, the background of Pepsi Company and their products will be
summarized.
Secondly, four elements or components will be analysed in this report,
which are based on:
* Product
* Price
* Place
* Promotion
Finally, some recommendations relative to Pepsis marketing strategy
will be suggested.
In order to make the information of this report accurate and forceful,
several valuable sources were used to analyse. Those sources
including:
* Marketing textbook
* Academic paper
* Internet
* Online business magazines
BACKGROUND
Pepsi Co. is a Multinational corporation, which extends over many

countries; Pepsi and Frito-Lay merged in 1960, which named the new
company Pepsi Co. Besides, Pepsi Co. has merged with some other
companies such as Gatorade, which became the worlds fifth-largest
food and beverage company with 15 brands.
The company operates in a monopolistically competitive market, where
its biggest competitor is Coca-Cola. Pepsi brand name and its
strategic message its the cola have already penetrated the world
market. In this case the brand name Pepsi is very effective in
differentiating its product from the others. Within the soft drink
industry Pepsi is considered to be a middle class drink and Pepsi
offers quality product that provides assurance to the public.
Pepsi is undertaking both advertising and marketing campaigns around
the world, its advertising campaign include TV, magazines, in-stores,
outdoors and on the Internet. The marketing campaigns it undertook
include lucky draw and promotions. For example in Singapore there is a
promotion done by Pepsi that for every 6-pack of Pepsi you purchase
you can have a turn on the fortune wheel to win prizes such as Pepsi
t-shirt, more Pepsi drinks and cash prizes. This is done when the
economy is in recession and Pepsi is trying to boost up its company
and product image.
Pepsis target market has usually been the middle-income family, as
Pepsi is not as expensive as Coke and not as cheap as the other
brands. Pepsi around the world usually target toward young people
early teens to late twenties, however this is still based on location
and in China the target market are usually people from early teen to
their late thirties.
Pepsi-Cola has been around for more than a hundred years. It is first
produced in 1898 and in the earlier times, Pepsi is target against
African Americans and it is not until later that Pepsi started to
target the younger population for all races.
PRODUCT
Pepsi, one of the most famous brands, can be identified easily as it
is been on various finest soft drinks available almost all over the
world for over 100 years. The Pepsi logo has become a remarkable
feature in United Stated of America indicating an ice blue
background synonymous with Pepsi products. The Pepsi-Cola website

points out that at Pepsi-Cola, quality taste and consumer

satisfactions are the highest priorities (pepsi.com, 2004).
Kotler (Kotler, 2004, p110) identified the meaning of products is the
branded goods and service offers to the target market. For classic
Pepsi cola, which is the widely sold Pepsi soft drink, price sensitive
segment becomes one of the most important factors for target
marketing. Moreover, for the target customers, Kotler (Kolter, 2004,
p111) identified the product elements that attract them as shown
below:
Variety
Quality
Features
Brand name
Packaging
Sizes
Add-ons
Warranties
Returns
Using the above methodology, Pepsi World shows how Pepsi is made to
introduce the quality and features of classical cola (pepsi.com,
2004). At the same time, the website indicates that each ingredient of
producing Pepsi-Cola must pass high standard, rigorous quality control
tests and strict bottling procedures all over the world. It can be
proved that both the high quality and famous global brand make
Pepsi-cola so successful to compete with Coke-cola. Currently, Keiley
mentioned that Pepsi-Cola sales are up in America compared with the
Coke-cola, which was particularly disappointing because the careful
balance of pricing and marketing (Kiley, Coke leaves a bad taste on
the street, internet, 9/15/2004). Targeting a suitable marketing is
essential for the success and Pepsi-Cola sets lower prices as the key
at high quality. Pepsi-Cola can be a warranty as its famous brand.
It is known that consumers prefer lightweight, recyclable, plastic
bottles. In order to meet customers needs and make them easy-to-use,
the packagings of Pepsi-cola had tried many different industries but
it always follows Environmental Support and Recycling of USA. Now, it
is reported that the cube as a new innovative 24-can Pepsi multipack
is used by a small test market population to give the company feedback
before the introduction (pepsi.com, 2004).

There are also many sizes of bottle to satisfy different kinds of

consumers. Smaller bottles are easy for consumers to carry and larger
ones with lower price are suitable for families.
When buying Pepsi-Cola, consumers get chances to take add-ons back
home. It is really a good idea to set add-ons because it is not only
advertising the new product among the consumers, but also stimulating
customers to get more.
For the package, the symbol of brand is quite clear and obvious.
However, the design of bottles is very similar as other brands of
cola. It is not easy for consumer to recognize and be interested in
it. The appearance of bottles can improve (to be) more fashionable or
lovely to attract younger consumers and make loyal customers enjoy new
style of Pepsi classical cola. Moreover, in the market, there are
always few drink packages designed for particular groups of people,
such as the kids. Kids are quite important consumers in the market. It
is believed that it is better to design a package with some popular
cartoon stars for children to choose. For examples, the bottle of
Pepsi classical cola can be with the shape of Nemo or Winney the Pooh.
Moreover, the bottles for children could be smaller than the usual
size for them to carry to school. The children can also collect
different kinds of cartoon bottles for fun. In this way, it can raise
the sales of classical coke and attracts loyal consumers in a young
age.
PRICE
Providing quality products at the lowest possible price has always
been one of the main concerns of Pepsi. For example, in some parts of
the country a two-litre bottle of Pepsi cost 99 cents a decade ago and
still does today. One of the ways they have been able to assist this
effort is by expanding their use of inexpensive and recyclable plastic
bottles. (Pepsi World, 2004) Another ways is to reduce the cost of the
bottles. The soft drink industry sold their drink to customers; they
must have a container to carry. So bottles in the soft drink industry
are a very important part of the whole processes. The company
manufactures and sells soft drink relies on Pepsi bottlers. PepsiCo
takes over the bottling operations from its franchisee. It does
propose is to shift its franchisee operations from Coca-Cola to Pepsi.

As the bottlers shifted to Pepsi, Coca-Cola had to struggle hard to

counter Pepsi's aggressive marketing strategies. They were getting
bottles from neighbouring states incurring heavy expenditure on
transportation and storage. What is more, they had to offer a lot of
incentives, like Pepsi, without increasing the price. Coca-Cola is
still having an upper hand with 56 per cent market share. But with the
bottling operations shifting over to Pepsi in November 1997 -- which
had forced Coca-Cola to import its bottles from outside till recently
Pepsi managed to increase its share to almost 44 per cent from a mere
30 per cent three years ago. (Sandesh, 2000) This takes over the
bottling operations not just make Pepsis competitors to shift up
their manufacturing cost on purchase the bottling, but also reduce its
own risk on the bottles inflation and has a steady supply of bottle.
The soft drink industry today is confronted with a bewildering array
of price increases. Pepsi expenditures for labour, ingredients,
transportation and more rise continuously. The cost of aluminium alone
has increased dramatically since last year. Across their entire system,
however, have been cutting overhead and re-engineering our
manufacturing process in order to keep our prices competitive. It is
their policy to limit any price increases to the retail trade to the
lowest possible extent.
Reducing and maintaining the cost is not the only marketing strategic
used by Pepsi. Sometimes Pepsi use cutthroat competition to war with
its main competitor Coca-cola. One of the price war, triggered by
Pepsi, follows an earlier onslaught when both the companies reduced
prices by about 20 per cent across the board. Just before the Union
Budget for 2003-04, Pepsi had to slash prices of its 300 ml returnable
glass bottles to $0.6 and this price cut to make its brands more
affordable in April 2003. The Pepsi management thinks in a
high-consumption market, aggressive price points devolving from the
300-ml segment will work much better. As a consequence, 200-ml bottles
are priced at $0.5. The new price points are 300 ml at $0.6, and 200
ml at $0.5. According to industry sources, this sector is heavily
dependent on returnable glass bottles and Pepsi's latest price
reduction strategy is critical to drive volumes. In the
home-consumption segment too, Coca-Cola took the lead earlier in 2003
by slashing prices of its 1.5-litre and 2-litre PET bottles. Pepsi yet
to follow suit too reduced prices of its 1.5-litre and 2-litre PET
bottles, to 1.5 and 2.0 respectively, against the earlier price of
$1.2 and $1.6. So that Pepsi sometimes takes non-profitable turns with

the sole aim of retaining market shares. (PTI, 2003) However this
cutthroat competition should not too often war with its main
competitor. The consequence not just affects the Pepsi Co. net profit.
Also it affects the normal price market. It will affect as the
customer adapt and get use to the cheaper price. After the price war,
price shift back to the normal price. The customers will change their
taste to Coca-Cola more elastically.
PLACE
Pepsi-cola as a famous brand is welcomed almost everywhere in the
world and is well supported by millions of people.. Its beverage
business contains North America and international. According to the
statistics from the Australia Pepsi website, currently there are more
than 400 Pepsi-cola bottlers in the US and more than 600
internationally. The Pepsi-cola product is sold approximately about
195 countries and Territories (PepsiCo Inc, 2004). The Pepsi Company
manufactures and sells their products to the company they owned, and
the independent bottlers that are franchised operating facilities
through out the United States and Canada. Meanwhile, the PepsiCo also
sell Pepsi-cola through the cooperation with other partners (PepsiCo
Inc., 2004). The Pepsi website states that in 1992, a partnership
agreement was formed by Pepsi-cola with Thomas J. Lipton Co, owner of
the number one tea trademark in the US, and a distribution agreement
was also entered with Ocean Spray, the number one non-refrigerated
juice trademark in supermarkets (PepsiCo Inc., 2004). Other partners
such as Pizza Hut, KFC and Hard Rock CAF have partner relationship
with Pepsi -cola. They receive support from PepsiCo and sell the
product. The incentive for the PepsiCo is to extend their brand
reputation in the whole world through those businesses, resulted in
great sales. Normally, consumers can purchase Pepsi-cola from
supermarkets, restaurant, KFC and Pizza Hut, which have partnership
with Pepsi. Pepsi-cola brand is already been brought into the mind of
the consumers as an invisible image. As the good reputation and image
was created, Pepsi-cola almost exist anywhere and can be easily
purchased by customers.
In contrast, Pepsi-cola still need improvement for their market
strategy in order to have an increase in their product sales. For
instance, localization of Pepsi-cola in the limited area would limit
the product sales volume and lower its profit. Pepsi-cola may try to
establish better relationships with other fast food businesses such as

MacDonald. Pepsi -cola could possibly sign the contract with MacDonald
competing with their competitor. Due to the same reputation as KFC,
the permission of sale for Pepsi-cola in the MacDonald would be
helpful to raise its reputation and profit. The more places the
Pepsi-cola can be sold, the more reputation and revenue the company
would have.
PROMOTION
Pepsi-cola has an extensive integrated marketing communication by
coordinating promotional efforts. It uses advertising, public
relations, personal selling and sales promotion to continuously
reinforce consumers attitudes and perception of the product.
In advertising strategies, Pepsi-cola attracts consumers attention by
the new campaign Pepsi, It is the cola, associating with the
food-friendly strategy (PepsiCo. Inc, 2004). In the new released
television commercial, it spreads the food-friendly message strategy
by identifying customers benefit consumes Pepsi with popular
American food like hot dogs and tacos is an enjoyment, fun and
satisfaction. This commercial released during the Super Bowl XXXVIII
as an in-game advertisement. Pepsi-cola also used outdoor advertising
in billboards and at bus stops all over America. The campaign
persuades and reminds consumers the product brand images spirited,
spontaneous, contemporary and exciting, and adding a new hero image
to the product. These strategies also put into the features of new
radio, prints and on line adverting. (PepsiCo Inc., 2004)
Another advertising tool frequently used by Pepsi-cola is sponsorship.
It sponsors various sports teams and events including soccer,
football, baseball and car racing (PepsiCo. Inc, 2004). Different
sports stars, movie stars and famous singers are used as a
representative of the product to attract consumers attention and
affect the liking of the product. A sponsorship deal was signed with
Magna Entertainment Corp. in September as an extension of this
strategy (The Blood-Horse Inc, 2004). Besides, the automatic vending
machines are placed all over the country, targeting the self-selecting
target market.
For public relations, Pepsi-cola makes an effort on building a
responsible image on both environment and the well-being of consumers
(Wong & Takamune, 1997). In the annual report 2003, Pepsi declares its

action on environmental improvement, like efficient usage of water,

seeking methods that are socially responsible, such as using 10%
recycled materials in plastic bottles; develops education programs and
follows environmental legislations. The report also declares its
concern on responsibility to contribute to the well-being of
consumers, support communities with direct contribution to
not-for-profit groups and working with organizations delicate to
improving the life of people (PepsiCo. Inc, 2004). Other public
relation strategies like posing newsworthy information on the company
website have also been used.
Pepsi-cola contests and games promotions are one of the major tools it
uses to achieve sales promotion objectivesrewarding loyal customers
and lure customers away from its competitor Coca-cola. Other sales
promotion like in-store displays to attract consumers attention
during shopping increases sales. Latest sales promotion featuring a
collectable Pepsi die-cast car in a commemorative vending tin on the
internet and a million give away in a television show (PepsiCo. Inc,
2004).
The Pepsi Bottling Group has about 6000 salespeople and recently
invested in a Pocket PCs with customized software Shelflink to its
sales force. It helps the salespeople to reduce time spending on
various calculations and getting all sales information immediately.
This new technology allows Pepsi-cola sales force achieve the sales
objectives quicker by increasing time efficiency (Microsoft Corp.,
2003)
Pepsi-colas promotion is highly supported by PepsiCo. Inks online
marketing plan. The Pepsi.com coordinates with the Pepsi-cola
advertising strategies by combining attractive graphics with the
marketing message. It provides easy to access product information and
latest promotion programs to customers. The PepsiCo.com has constantly
updated news and information on the product. (PepsiCo. Inc, 2004)
The overall performance of Pepsi-colas promotion strategies is
satisfactory. It generates sales and increases demand of the product
effectively. Advertising is the action of calling something to the
attention of the public, especially by paid announcements (Webster,
1993). Pepsi-cola existing advertising strategies can achieve the
attention of the public effectively and achieve its advertising
objectivesto persuade buyers to purchase the product and switch to

the brand, and remind consumers the brand image in order to maintain
top-of-mind product awareness. The new message strategy Pepsi, It is
the cola communicates well to consumers the new hero image added to
the product. Another message of the new advertising campaign is
Pepsi-cola is food-friendly. This message combines with related
graphics to attract attentions; however the campaigns creative
message cannot relates to the food-friendly strategy. Since creative
message has a large effect on consumers memory, Pepsi-cola is
recommended to increase its effectiveness of creative messages
exclusively. Besides, major media types have been use to reach and
expose to the target market effectively.
Sponsorship is one of the most important advertising tools used by
Pepsi-cola. Sponsoring sport events and teams can be very effective on
spreading its brand images. Like the new in-game commercials during
famous sport event Super Bowl XXXVIII can effectively tailor to suit
large amount of sport loving consumers. On the other hand, the
automatic vending machines tailor to suit the self-selecting targets.
It is unquestionable that sufficient spending has been made in these
areas, and it has been successfully generates to increase sales and
improve brand image (PepsiCo. Inc, 2004).
Building good relationship with various publics by building up a good
product image is important for a brand. Pepsi-cola attempted to create
a healthy imageincluding declares to take responsibilities on
consumers health and the environment. As both are the new trends that
increasingly concerned by the public, this strategy is able to bring
positive image to the product. Press releases of Pepsi-cola in the
Pepsi Co. Ink website is also a good tool of building a positive
product image, with more credibility and a much lower cost than
advertising. Pepsi-cola should increase its usage of public relations
to impact the public awareness of the product, such as making public
speeches and presentations (PRSA, 2004).
Sales promotion can push up sales in short term and building up
consumers long term commitment. Using games and contests to push up
sales is one of the most effective ways of increasing consumers
product awareness. Pepsi-cola is able to create large incentive to
consumers, but it needs to consider the cost effectiveness of these
promotions carefully. Increasing usage of other sales promotion tools
is also recommended as alternatives, such as patronage rewards and
redeemable coupons in order to attract various consumers by different

types of incentives.
Pepsi-cola salespeople should be able to make good relationships and
communicating well with retailers. The new technology improves the
performances of the sales force, with access of all sales information
in hand all the time. This helps the salespeople to understand the
needs of the retailers and be able to build a good connection with
them. Constant retraining should be provided to the salespeople in
order to improve their performances and keep up with the latest market
trends.
Beside all the traditional marketing tools, online marketing is the
latest and fastest growing trend in the global market. Pepsi has
developed the Pepsi.com and PepsiCo.comtwo major website related to
Pepsi-cola. The fashionable graphics and a user-friendly menu are able
to attract many web servers attention. These websites is designed to
coordinate with all of the advertising campaigns and strategies,
public relations strategies and sales promotion strategies of
Pepsi-cola. On the other hand, the websites are able to target another
group of consumers in the market.
On the whole, Pepsi-cola has well-developed promotion plan and
strategies in all dimensions. Facing its greatest competitor
Coca-colathe market leader of soda, Pepsi-colas promotion strategies
helps to gain a large market during the last decade. (PepsiCo. Inc,
2004). This is a proof to its success on promotion strategies.
Nevertheless, there is some space of improvement for Pepsi-cola. Notes
that market research would be able to help the marketers to gain more
understanding of its target market, it is recommended to increase the
budget spending in this area. Moreover, since the effectiveness of
promotion strategies is greatly affected by the economy, marketers
should also study the changing economic condition and trends.
CONCLUTION
In brief, Pepsi has built a good reputation around the world. In the
analysis of Pepsis marketing strategy, this report has built a clear
sense through four important elements---product, price, place and
promotion. Moreover, some usual definitions relative to the analysis
have been broadened out. Furthermore, a detailed view at Pepsi Co. was
also conducted. Overall, Pepsi is a company in the soft drink market
with a strong history, an impeccable image and an assurance of quality

in all aspects that explains its current success and will lead to its
undeniable success in the future.
RECOMMENDATION
On the whole, there are a few improvement can be made by Pepsi-Cola.
Although Pepsi is the fifth largest food and beverage company, its
product Pepsi-Cola is still quite cheap comparing with Coca-Cola the
leading soft drink provider. Most people can link price with quality
and the low-price may actually indicates poor quality and it could
cause Pepsi to lose the business in the long run.
If an advertisement that show Pepsi only allow excellent quality
product to be sold to the consumers, it could alter the consumers
perspective on Pepsi (i.e. Pepsi offer excellent quality product
only).
Pepsi currently have contract with some fast food outlets to sell
Pepsi products only, for examples, KFC, Pizza Hut and Taco Bell. These
fast food restaurants are usually seen as lower to middle class
restaurants and it could affect the brand name in the minds of
consumers. However there are some small restaurants selling Pepsi when
customer asks for it, it still doesnt change consumers perspective
of Pepsi. If a contract was written with smaller restaurant, such as a
restaurant beverage must include all Pepsi products and not any of
Pepsi competitors products could improve Pepsis image as a beverage
provider for middle class families.
Some recommendations for Pepsi are as follows:
Pepsi should increase its price to show it has high quality product.
Advertise that all Pepsi products must pass high standard, rigorous
quality control tests and strict bottling procedures all over the
world.
Pepsi should make contract with smaller restaurant as well instead
of just fast food outlets.
Pepsi should sign contract with some small takeaways to buy Pepsi
form Pepsi Co. directly as this could reduce the cost of both Pepsi
Co. and the take way owner.

However there are draw back for all of the recommendations, the higher
price of Pepsi product could lead people to buy more coke as the soft
beverage market is a highly elastic market, which means a small price
change could lead to a large change in quantity demanded (Kotler, 2004
p.491).
The advertisement showing Pepsi products pass high quality control
could have some effect on consumers perspective of the product Pepsi;
however excess advertising of this could be a major expenditure for
Pepsi with limited effects, especially in a large economy that is in
recession such as America.