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Strategic Marketing Analysis of PepsiCo Inc.

Introduction

Pepsi Co. is multinational organisation, which has its presence in numerous countries across the world. Overall aim of the essay is to address various concepts of marketing in the context of one of the leading food and beverage giants Pepsi Co. This essay on the Pepsi Co. starts with the brief overview of the company background. Further in this essay will discuss how generic strategies given by Michael Porter are being used by the food and beverage giant. Differentiation and competitive advantage is achieved by the company with the adoption of cost leadership and differentiation strategy. Distribution channels of the multinational are also strong, which is also providing strategic advantage to the company over its competitors.

Pepsi Co focuses on reducing the commoditization of its products by providing consumers with the products as per their requirements. Therefore Pepsi Co is providing wide range of portfolio to its consumers in the market. Company is also aware that it needs to do branding and position its products as beverage that is made for young people. Company is also successful in maintaining the brand image. It allows top level managers to take lead and be innovative. Whereas in the area of marketing as well Pepsi Co is creative and also spends huge amount for it.

Analysis of the 4 P’s and 4 C’s has also been done in this essay. Pepsi Co in order to remain competitive in the market is providing its consumers with extensive product portfolio and have been priced competitively. Company pays special attention in the areas of distribution and does extensive marketing of the products. Pepsi Co is catering to different types of consumers consisting of youth, people from all educational and occupational backgrounds to health conscious consumers.

Pepsi Co is following latest trends in marketing in order to amaze people and make them remember the brand with their creativeness. All the products and marketing strategies are aimed at the consumers. Company is not only following latest trends in the area of marketing only but it is also involved in application and usage of latest technology in other areas such as packaging of the beverages. Pricing and cost structure of PepsiCo is fixed by the market forces and also does competitive pricing. Consumers, local communities, employees, investors and government are the major stakeholders of the company. PepsiCo is socially responsible and therefore believes in the taking care of various needs of the society, economy and environment and sustainability is also ingrained in the company’s value.

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Company Overview

PepsiCo was established in the year 1965 in North Carolina, USA. PepsiCo is a food and beverage organisation, headquartered in New York. This food and beverage company have around 22 brands which consist of products such as Doritos, Aquafina, Pepsi, Lays, 7Up, Miranda etc. At present PepsiCo is the leader in the industry of convenient food, beverages and snacks. Revenues of PepsiCo are around $40 billion annually, in which beverages contributes around 50% of that revenue.

Mission

PepsiCo aims to be the superior FMCG Corporation, by providing the consumers with high quality convenient foods, snacks and beverages (Pepsico.com. 2017).

Vision

PepsiCo vision is the creation of better future by enhancing each side of the business consisting of environmental, economic and social aspects.

Philosophy

All the decisions and plans should be based on the organisation which is environmentally and socially responsible.

Differentiation and Competitive Advantage

Michael Porter has given Generic Strategies through which the business organisations can gain competitive advantage over the competitor in the market. Those three strategies are Cost leadership, Differentiation and Focus Strategy. PepsiCo is utilising two strategies of these Generic Strategies for achieving competitive advantage:

Differentiation - Differentiation allows the business organisation to differentiate their products from the competitors in the market. In order to achieve differentiation PepsiCo utilises broad differentiation as the strategy in order to achieve competitive advantage over the competitors in the market. Differentiation strategy allows the PepsiCo to attract more and more consumers towards the different features of the products. One of the ways in which PepsiCo is differentiating its products is by its packaging, which attracts the consumers on the basis of value that it gives to the consumers. PepsiCo brand Lays are being marketed as healthy snack, as the products have less amount of saturated fat, which differentiate it from other substitute products in the market and provides competitive advantage to the company.

Cost Leadership – PepsiCo is also utilising low cost strategy, which is focused on the reduction of cost, through which the company can enhance the financial performance which will further enhance the competitiveness of the PepsiCo in the market. In order to compete with Coca Cola, PepsiCo offers low prices to the consumers, due to the bulk production which leads to economies of scale, and also decrease the operating costs of the production facilities. Sometimes PepsiCo also provides the consumers with promotional offers which have discounted prices (Fill, C., 2005).

Distribution channels – Besides the application of low cost leadership and differentiation strategy, other factor that is contributing towards the competitive advantage of the PepsiCo is distribution channels utilised by the company. PepsiCo provides free fridges, and products at low prices to the restaurants for stocking up Pepsi and when consumers come to eat both the restaurant and PepsiCo will be benefited by the sale. Besides this PepsiCo owns fast food chains like Taco bell, KFC and Pizza Hut and there also they keep the products, which provides high reach to the consumers and thus is competitive advantage for the company.

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Commoditization and Total Product and Solution Offering

Commoditization – In order to prevent the brands provided by the PepsiCo to be prevented from being commoditized, the company is tries to give products which fulfil the needs and requirement so of the consumers in the market. PepsiCo is also doing this by providing food and beverages that are different from the other similar products available in the market. The company is focused on promotion of its brand so that consumer becomes aware of the products. Besides this PepsiCo also pays attention to the packaging of the product which gives a unique appeal to the products in the eyes of consumers and thus company utilises can and plastic bottles of different volumes to cater the needs of the market.

Total Product Offering – Total products offer by PepsiCo involves 47% beverages and 57% foods items. Various products offered by the company are as follows:

Food

Brand Variations
Cheetos Cheetos Cheese Ball, Cheetos Cheese Puffs, Cheetos Krunchy, Cheetos Tangy Loops (Pepsico.com. 2017).
Lays Lays Classic Salted, Lays American Style Crème and Onion, Lays Chile Limon Flavour, Lays Hot and Sweet, Lays Barbeque Flavour
Quaker Oats Quaker Lemony Veggie, Quaker Classic Eliachi and Raisins, Quaker Strawberry with apple, Quaker mild pepper
Uncle Chips Uncle Chips Spicy Treat, Uncle Chips Plain Salted, Uncle Chips Tomato Twist

Beverages

Brand Variations
7 Up Lemony Bite, Revive
Aquafina Aquafina
Duke’s Duke’s Lemonade, Duke’s Soda
Gatorade Gatorade Blue Bolt, Gatorade Lemon Flavour, Gatorade Orange Flavour
Miranda Miranda Orange Flavour
Pepsi Pepsi Original and Diet Pepsi
Slice Slice Alphonso Fruit Drink,
Tropicana Tropicana Apple, Tropicana Mixed Fruit, Tropicana Guava, Tropicana Mango, Tropicana Orange, Tropicana Pomegranate, Tropicana Red Grape(Pepsico.com. 2017).

Branding

Brand Positioning – PepsiCo have positioned its various brands of the beverages like Miranda, Slice, and 7Up, as sugary and sweet which suit the needs of the young generation. This is how PepsiCo differentiated itself from one of the major competitor in the market.

Consistency – PepsiCo have managed to maintain its image of a brand that provides refreshing soft drinks for young people (World Finance. 2017).

Product Portfolio – All the brands of Pepsi cater to the needs of various segments, and do not eat up the sales of other brands of the company. This gives Pepsi wider market coverage due to its diversified products.

Inside Branding – PepsiCo provides the brand manager the freedom to use innovative ideas in order to capture the interest of the consumers.

Sustainable Marketing – Marketing team of Pepsi is really creative, when it is about determination of marketing strategy for the various products of the company. Expenses related to marketing are quite high.

Monitoring Programs – The Company have various monitoring programs such as intermittent brand audit, regular tracking of sales, monitoring of performance of brands. Value of the brand has been assessed around $12,800 million.

Benefits desired by the consumers – PepsiCo remained successful in capturing of interest of young consumers. Company have also come out and have catered to various consumer segments like introduction of Diet Pepsi in order to cater to the needs of health conscious consumers (Kish, P., et.al., 2001).

Pricing – On the basis of perception of the consumers regarding value in the market, the company have even entered in the price war withanother soft drink manufacturer Coca Cola, in order to maintain the brand equity.

Wide range of marketing activities – Brand elements of PepsiCo are quite distinctive and awareness of the products of the company is high. Pepsi have widespread channels of distribution. Promotional campaigns of the company also utilises social media like Twitter Facebook etc.

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REFERENCES

Forbes.com. (2017). Forbes Welcome. [online] Available at: https://www.forbes.com/sites/glennllopis/2015/02/23/pepsico-adding-breadth-to-talent-depth-with-critical-experiences/#15d368586f15 [Accessed 26 Jul. 2017].

Marketingsociety.com. (2017). Pepsi pushes augmented reality to the MAX | Marketing Society blogger Joss Davidge. [online] Available at: https://www.marketingsociety.com/the-library/pepsi-pushes-augmented-reality-max#VWbROspEHFsRUFj4.97 [Accessed 26 Jul. 2017].

Bogost, I. (2017). Pepsi's New Ad Is a Total Success. [online] The Atlantic. Available at: https://www.theatlantic.com/technology/archive/2017/04/pepsi-ad-success/522021/ [Accessed 26 Jul. 2017].

World Finance.(2017). Pepsi Branding Strategy. [online] Available at: https://finance.mapsofworld.com/brand/value/pepsi.html [Accessed 26 Jul. 2017].

Kish, P., et.al., 2001. Measurement and tracking of brand equity in the global marketplace-The PepsiCo experience. International Marketing Review, 18(1), pp.91-96.

Fill, C., 2005. Marketing communications: engagements, strategies and practice. Pearson Education.

Hassan, S.S. and Katsanis, L.P., 1994. Global market segmentation strategies and trends (pp. 47-62). New York: International Business Press.