MARKETING PLAN OF PEPSI

Assignment Submitted To:

Sir Zia Ur Rehman

Subject:
Marketing Plan of Pepsi

Group Members:
M. Arsalan Khalid (M16BBA031)
Ghulam Mustafa (M16BBA068)
M. Saad Basharat (M16BBA056)
Nabeel Badar (M16BBA059)

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MARKETING PLAN OF PEPSI

Contents

 Introduction ……………………………………….. Page 3

 Current Marketing Situation……………………… Page 4
 SWOT Analysis ……………………………………Page 6
 Objectives……………………………………….… Page 8
 Marketing Strategy ………………………………..Page 9
 Action Program…………………………………… Page 14
 Controls………………………………………….... Page 15

Introduction to Pepsi

Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and

cf renamed as Pepsi-Cola on August 28, 1898,[1] and then as Pepsi in 1961.
epsi was first introduced as "Brad's Drink"[2] in New Bern, North Carolina, United
States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink

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was sold. It was renamed Pepsi-Cola in 1898 after the root of the word
"dyspepsia" and the kola nuts used in the recipe. The original recipe also included
sugar and vanilla.[1] Bradham sought to create a fountain drink that was
appealing and would aid in digestion and boost energy.[2]

The original stylized Pepsi-Cola wordmark used from 1898 until 1905.
In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented
warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi
was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909,
automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-
Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a
race." The advertising theme "Delicious and Healthful" was then used over the
next two decades.
In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered
bankruptcy—in large part due to financial losses incurred by speculating on the
wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy
C. Megargel bought the Pepsi trademark.[1] Megargel was unsuccessful, and soon
Pepsi's assets were purchased by Charles Guth, the President of Loft, Inc. Loft was
a candy manufacturer with retail stores that contained soda fountains. He sought
to replace Coca-Cola at his stores' fountains after The Coca-Cola Company refused
to give him a discount on syrup. Guth then had Loft's chemists reformulate the
Pepsi-Cola syrup formula.

On three separate occasions between 1922 and 1933, The Coca-Cola Company
was offered the opportunity to purchase the Pepsi-Cola company, and it declined
on each occasion.

Current Marketing Situation

According to Consumer Reports, in the 1970s, the rivalry continued to heat up the
market. Pepsi conducted blind taste tests in stores, in what was called the "Pepsi
Challenge". These tests suggested that more consumers preferred the taste of

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Pepsi (which is believed to have more lemon oil, and less orange oil, and uses
vanillin rather than vanilla) to Coke. The sales of Pepsi started to climb, and Pepsi
kicked off the "Challenge" across the nation. This became known as the "Cola
Wars".

In 1985, The Coca-Cola Company, amid much publicity, changed its formula. The
theory has been advanced that New Coke, as the reformulated drink came to be
known, was invented specifically in response to the Pepsi Challenge. However, a
consumer backlash led to Coca-Cola quickly reintroducing the original formula as
"Coca-Cola Classic".

In 1989, Billy Joel mentioned the rivalry between the two companies in the song
"We Didn't Start the Fire". The line "Rock & Roller Cola Wars" refers to Pepsi and
Coke's usage of various musicians in advertising campaigns. Coke used Paula
Abdul, while Pepsi used Michael Jackson. Both companies then competed to get
other musicians to advertise its beverages.

According to Beverage Digest's 2008 report on carbonated soft drinks, PepsiCo's

U.S. market share is 30.8 percent, while The Coca-Cola Company's is 42.7 percent.
[33] Coca-Cola outsells Pepsi in most parts of the U.S., notable exceptions being
central Appalachia, North Dakota, and Utah. In the city of Buffalo, New York, Pepsi
outsells Coca-Cola by a two-to-one margin.[34]

Overall, Coca-Cola continues to outsell Pepsi in almost all areas of the world.
However, exceptions include: Oman, India, Saudi Arabia, Pakistan, the Dominican
Republic, Guatemala, the Canadian provinces of Quebec, Newfoundland and
Labrador, Nova Scotia, and Prince Edward Island, and Northern Ontario.[35]

Pepsi had long been the drink of French-Canadians, and it continues to hold its
dominance by relying on local Québécois celebrities (especially Claude Meunier,
of La Petite Vie fame) to sell its product.[36] PepsiCo introduced the Quebec
slogan "here, it's Pepsi" (Ici, c'est Pepsi'm) in response to Coca-Cola ads
proclaiming "Around the world, it's Coke" (Partout dans le monde, c'est Coke).

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MARKETING PLAN OF PEPSI

As of 2012, Pepsi is the third most popular carbonated drink in India, with a 15%
market share, behind Sprite and Thums Up. In comparison, Coca-Cola is the fourth
most popular carbonated drink, occupying a mere 8.8% of the Indian market
share.[37] By most accounts, Coca-Cola was India's leading soft drink until 1977,
when it left India because of the new foreign exchange laws which mandated
majority shareholding in companies to be held by Indian shareholders. The Coca-
Cola Company was unwilling to dilute its stake in its Indian unit as required by the
Foreign Exchange Regulation Act (FERA), thus sharing its formula with an entity in
which it did not have majority shareholding. In 1988, PepsiCo gained entry to India
by creating a joint venture with the Punjab government-owned Punjab Agro
Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed
and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed;
PepsiCo bought out its partners and ended the joint venture in 1994. In 1993, The
Coca-Cola Company returned in pursuance of India's Liberalization policy.
SWOT Analysis

Strengths:

 Strong brand image:

A strong brand image is one of the biggest strengths of Pepsico. The brand is famous
all over the world and its products are popular in more than 200 countries. Currently,
Pepsi has only one major rival in the world, Coca Cola. However, its strong image and
reputation have helped it manage the competitive pressure very well. Moreover, the
brand invests a lot in marketing as well as reputation management. Apart from
advertising and marketing, it also invests in CSR and sustainability to retain its
popularity and trust.

 Strong financial performance –

Strong financial performance is also a key strength of Pepsi. In 2017, its net organic
revenue grew by more than 2%. This performance was based on the last five years of
efforts and investments it made into marketing, digitization and other areas. Its net
revenue grew to $63.5 billion dollars. It was a growth of around 725 million dollars over
the previous year. High level of net revenue and income allows the brand to spend more
on marketing as well as Research and Development.

o Global presence supported by a strong supply chain and distribution network –

Another major strength of Pepsi is its well managed global supply chain and
distribution network. In 2017, it further extended its foodservice partnerships that

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allowed it to extend its distribution and market share. The brand brings its products
to the market mainly through direct store delivery, customer warehouses and
distributor networks. Depending upon the customer needs as well as local trade
practices and product characteristics, the company decides which distributor
network to use. It has a large list of suppliers that are spread throughout the world
in various countries which allows it to source raw materials efficiently as well as at
low prices.

o Strong marketing capabilities – Strong marketing capabilities of the brand are

also one of its major strengths. Pepsi invests a very large sum in marketing. In
2017, it spent more than 4 billion dollars on marketing out of which 2.4 billion dollars
were spent solely on advertising. It has spent a lot on improving its digital
capabilities over the last 4 years. Its digital campaigns have been very successful in
the recent years. The ‘Bring Home Happiness’ campaign launched in Greater China
was highly successful and garnered more than 1 billion views for its 20 minute long
video. Similar, digital and other marketing campaigns run by the brand have also
been highly successful.

o Large and varied product portfolio – Another key strength of the brand is its large
and varied product portfolio. The brand has 22 billion dollar brands in its product
portfolio each of which fetches more than a billion dollar per year in revenue. During
the recent years, the brand has innovated its product portfolio a lot adding more of
nutritious and healthy products in both snacks and beverages categories. It is
continuously investing in making its production and supply chain more agile as well
as research and development to make its supply chain more sustainable as well as
products healthier.

#Weaknesses –

 Overdependence on the US market:

Despite everything the brand still depends on the US market for a major part of its
revenue. In 2017, Pepsi earned more than 58% of its revenue from US and only 42%
from outside US. To reduce its dependence on the US market, it would need to release
more suitable products into the local markets internationally and particularly Asia.
However, the brand has also felt the bite from a stronger dollar.

 Reduced Net revenue in Middle East :

The brand’s net revenue in the Middle East has fallen in the year 2017. The fall was due
to weakening Egyptian currency. Fluctuations in the international currency exchange
rates have a negative effect on the revenue of Pepsi from time to time.

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#Opportunities:

 Technological innovation down the distribution network: The brand has a lot of
opportunities that can help it grow its brand and businesses. Technological innovation and
digitization offer the brand growth opportunities in several areas from supply chain
management to production as well as marketing and distribution network. Both digitization
and IoT offer major opportunities of growth and can help its distribution network expand
and become more efficient. Investing in R&D as well as digital innovation offers easier
opportunities of growth and market expansion for Pepsi.

 CSR and water recycling: Investing in CSR and water recycling is also an opportunity
that the brand can very well exploit for market and business growth. While it has already
invested a lot in these two areas, there is opportunity for more. Investing in CSR
specifically is very important for the purpose of image and reputation management. It is
because in past, Pepsi has faced severe protest over being a cause of water crisis in
several regions.

 Partnerships with related businesses: The brand can also find faster growth through
partnerships with related businesses. It entered into a partnership with Starbucks some
years ago to sell ready coffee beverages. It can enter similar partnerships with other fast
food and beverages brands to increase its sales as well as revenue.

 Growth through acquisitions: The brand can also find faster growth through acquisitions
and by acquiring smaller and related brands.

#Threats:

o Legal and regulatory threats: Legal and regulatory threats pose a major risk to
big businesses like Pepsi. Compliance risks can sometimes result in major fines
and lead to losses. It is why big bands like Pepsi focus especially on compliance
and have compliance teams that take care of legal and regulatory risks.
Noncompliance can cause losses that can run into billions.

o Competitive pressures: Competitive pressures also pose major risks to the brand
and its business. Coca Cola is its biggest competitor and the two brands remain
engaged in very tight battle which keeps raging and getting intenser. Both brands
invest heavily in marketing and if any of Pepsi’s new products flops, then it can lead
to losses as well as increased competitive pressure.

o Stronger dollar and fluctuation in foreign currency exchange rates: A stronger

dollar and fluctuation in the foreign currency exchange rates causes losses for
Pepsi. For past few years, the US dollar has kept growing stronger internationally
leading to reduced revenue from Pepsi’s international business.

Objective

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MARKETING PLAN OF PEPSI

In view of intensifying competition in soft drink market, it is imperative thata

brand keeps a constant tab on dynamics of market and responds promptlyin
order to capture greater market share. In view of this fact the present
studyhas been taken for “PEPSICO” The objective of the study is to do an
EDS(Every Dealer Survey) and tohave a comparative study of the
availability of the pepsi brands as well as itscompetitor brand coke and also
keep looking up for new sources where wecan crack new markets so that
pepsi will be everywhere in the chandigarh. Iam covering all the outskirts
areas of chandigarh for this study.

Primary objective

•To know about the stock position of pepsi brand and its competitor “coke”.

•To study about the availability of the pepsi brands to the retailers andthe
supply condition in the market.

•To find out the loopholes and the dissatisfaction in the distributionnetwork

Secondary objective:

•To estimate the market share of pepsico in respect of the industry.

•To identify the retailers opinion towards pepsi products.

•To know the problems of retailers and to offer the suggestion for improving
in sales.

•To know the promotional activities of sales promotion, advertisingand public

relations.

•To know the strategy of pepsi and its competitor regarding themarketing
mix.

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MARKETING PLAN OF PEPSI

Marketing Strategy of Pespi

Market Positioning and segmentation:

Before moving on to the details of Pepsico’s marketing strategy, take a look upon how it
has positioned its brand and products in the market. It has positioned itself as a snacks
and beverages brand that include nutritious and low calorie choices apart from normal
soda products. There are 22 iconic billion dollar brands in its portfolio. Pepsi is
positioned as a brand that reflects young energy and this is also a key theme across its
advertising and marketing campaigns. The customers of Pepsi are mainly from the 13 to
35 age group. In other words you can say, it is a brand for the millenials. Pepsi has
maintained a pricing strategy that has made it an affordable brand. Its customers are
from all income segments including lower middle class to upper class. Now, it has also
released smaller options for its several soft drinks to make its products more affordable
and accessible. Its customers include the teenagers and youth with a modern and fast
moving lifestyle.

Large Investment in Marketing

Pepsico has traditionally relied heavily on marketing for driving sales and market
growth. Like Coca Cola it too spends heavily on marketing and promotion. In 2017, its
marketing budget was 4.1 billion dollars and that of Coca Cola was 3.9 Billion dollars.
Pepsi spent 2.4 billion dollars solely on advertising [1]. However, the world of marketing
has changed a lot with the rise of the digital technology. A large part of Pepsi’s
marketing budget goes to digital marketing and advertising. Apart from that a large sum
is also spent on television advertising and other traditional methods of advertising. Any
leading brand is investing heavily in digital technology for marketing and better
customer experience. Since the rise of social media, brands are connecting with their
customers in real time with promotional campaigns. On the one hand, social media has
helped the brands with marketing to allow them to connect with millions of customers
globally in an instant and without any financial investment. On the other hand, it has
also made the brands more conscious regarding product quality and innovation
because any comment or news shared on social media goes viral in a second.

Product and Packaging Innovation:

Pepsi has continued to invest in product quality and packaging to stay the customers’ first choice.
However, apart from these things it has continued to diversify its product portfolio bringing new,
healthier and more nutritious choices for its customers. Behind its excellent marketing strategy there is a
diverse and rich product portfolio filled with a large variety of flavors and nutritious and tasty choices.
Product quality and packaging are very important elements of Pepsi’s marketing strategy where it has
continued to innovate whether in terms of product quality, variety as well as packaging. Its reward
winning design team has continued to innovate with package design. Package design can be a primary

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attraction making products appealing in the eyes of the customers. Attractive packages can also drive
sales higher and it is why Pepsi has continued to innovate the packaging style and sizes based on
consumer demand and expectations. With time, people’s taste and choice of flavors has changed a lot.
They are looking for healthier products and product innovation helps churn demand. However, apart
from investing in product quality and design it is equally important to invest in marketing and Pepsi
promotes its brand through both digital and traditional channels.

Digital Marketing Campaigns and Big Data:

Digital strategy is a very important part of its marketing campaigns. Effectiveness of Pepsi’s digital
campaigns is also an important determinant of its sales and profits. Popularity of these digital campaigns
affects its level of sales and profits directly. Some of its digital campaigns have enjoyed immense
popularity like the ‘Bring Home Happiness’ campaign containing a 20 minutes long video [1]. This video
grew so popular that people watched it more than one billion times. It leveraged the power of social
media to run the campaign. The brand is using digital technology in other aspects of business too but in
the area of marketing, the role of digital technology and that of social media is especially very important.
Since a very large number of customers are now found online and can be reached through social media
and other digital channels, digital marketing has become the central focus of Pepsi in terms of marketing.
Apart from promoting its brands separately Pepsi also uses digital marketing for creating higher loyalty
and higher customer engagement. Its another promotional campaign titled ‘Made for This’ targeting the
millennial generation and featuring High school athletes was also highly popular. The campaign that
featured young athletes underscored that Gatorade was made to fuel young athletes and their passion
[1]. Marketing and media environment are changing rapidly which have made it mandatory for the brand
to use new channels for advertising and promotions. Pepsi is also leveraging Big Data to create real time
marketing messages that help it market its brand more effectively. The brand also uses consumer
research for the purpose of designing marketing strategies that help it grow its reach and effectiveness.

Sports Marketing and sponsorships:

Apart from these promotional campaigns, the brand has also relied heavily on sponsorships and
partnerships to grow brand awareness as well as to create customer loyalty. 2017 marked its second year
of partnership with UEFA champions’ league. Through this partnership, it has continued to promote its
some of the biggest global brands including Lays, Gatorade and Pepsi across more than 100 markets [2].
‘Sports marketing’ is a key part of the brand’s marketing strategy. The relationship between Pepsi and
Sports is old. It has struck partnerships with several sports bodies globally to promote its brand in most
important markets. In 2015, it announced a new marketing partnership with National Basketball
Association. This partnership will also allow for the promotion of Pepsi products through the WNBA,
NBA Development League and USA Basketball [2]. The Pepsi owned Gatorade already had a partnership
with NBA. The new partnership will promote its Mountain Dew through signage and other branding
efforts during the NBA events. Pepsi has entered similar partnerships in cricket too for the promotion of
its brand and products. In 2016 it entered a partnership with the Board of Control for Cricket in India.
Pepsi has used this partnership to promote its Gatorade sports drink on the field [3]. ‘Sports Marketing’
is known to generate highly favorable results for the soda brands and the competition between Coca

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Cola and Pepsi is intense on the sports field too. The design team of Pepsi focuses on creating
meaningful experiences for the customers and consumers during major global events like Super Bowl LI
to Milan Design Week to the UEFA Champions League Final.

Pepsi Social Media Marketing:

Marketing is not complete in the 21st century without social media. Facebook to Twitter and YouTube
and even Instagram, all of these are the most favorite stops of the leading brands. Both Coca Cola and
Pepsi have maintained an impressive social media presence that works to drive user engagement high
and create higher level of customer loyalty. Most of the video campaigns run by Pepsi have become so
successful because it could leverage the power of social media channels. One of its campaigns in Greater
China garnered more than a billion views. Its other campaigns on social media have also been liked by
people. Video campaigns can be run through YouTube as well as Facebook and Twitter. Moreover, the
Facebook and Twitter accounts can be used to keep fans and followers updated. Let’s have a look over
how Pepsi has connected with its fans and followers through social media.

Pepsi Business Growth Strategy

Pepsi’s soft drinks are popular because of their diverse flavors. Its snacks and
beverages are popular in more than 200 countries. Apart from developing new
ingredients, flavors and products, the brand has continued to invest in reformulation to
improve the quality of existing products. While the brand is quite popular and sells in
more than 200 countries, it is facing intense competition from Coca Cola. Moreover,
consumers’ tastes and expectations have kept changing which also require change in
business strategy for remaining competitive and for continuous growth. This makes it
essential for brands to continuously track consumer demand and accordingly adjust its
strategic course for business performance. Pepsi has continued to innovate its
marketing and business growth strategy over time so as to retain its popularity and
increase demand.

Product Innovation for Market Growth:

This era has seen a major change in consumers’ preferences. Consumers want more
healthy and nutritious beverages that suit their health. It is because a very large
segment of the world population has grown highly health conscious. In order to respond
to the changing preference of the consumers, the brand has released a large range of
health friendly products that contain less sugar or have high nutritional value. However,
its commitment of health and excellence has served the brand well in 2017 when it
again delivered strong operating performance. The brand added several health friendly
and nutritious products to its customers. It expanded its selection of low and zero calorie
beverages as well as Aqua Minerale water + juice along with new flavors of Kevita
Master Brew Kambocha. Apart from them, the brand introduced Tropicana Probiotics
[1]. Its Pepsi zero sugar or Pepsi max also continued to gain throughout the world. The

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brand made similar innovations to its products in the food segment as well. In the food
category, the brand introduced Three Minutos which is an affordable whole grain oat
based food product meant to deliver daily nutrition to the Latin American consumers. In
US and UK, it introduced Veggie Crisps, Hummus Crisps and Sweet Potato Crisps. It
also added a new product Simply Cheddar to its Simply brand. It has divided its
products into three categories based on the level of nutrition called Fun for You, Good
for You and Better for You. Apart from them the brand also invests in reformulation of
the existing products and flavors to suit the customers’ choice. This has also helped
Pepsi unlock new opportunities for growth and grow its popularity cross the health
conscious consumer segment. Pepsi also utilized retail and food service partnerships
for competitive advantage. It sold more than 40,000 Hello Goodness vending machines,
coolers and racks across US. Since US is the most important market for Pepsi and
these machines offer more nutritious snacks and beverages, they will help the brand
expand its presence across US faster and deeper.

R&D and Packaging Innovation:

Business growth in a highly competitive industry like the soda industry depends on
several factors and it is why brands have to invest in research and development to find
faster business and market growth. In 2015, 2016 and 2017, Pepsi invested $754, $760
and $737 millions in Research and development [1]. However, this investment excludes
the cost of consumer research. Consumer research is an essential part of the brand’s
growth strategy where it studies the consumers’ expectations and preferences. Product
innovation becomes essential because of continuously evolving tastes of the consumers
and there are other factors too that necessitate continuous changes across the product
spectrum. The brand is engaged in a very wide variety of research and development
activities globally with the purpose of matching consumer demand as well as finding
sustainable growth. These activities include:

 Developing new products and ingredients as well as flavors and products.

 Reformulating existing products to improve their quality and appeal.

 Improving and modernizing manufacturing processes for cost reduction.

 Improving product quality as well as safety and integrity.

 Developing or making improvements to dispensing equipment and packaging

technology.

 Developing or making improvements to package design and portion sizes.

 Identifying opportunities to grow, transform and broaden its product portfolio.

 Development of products with better nutrition profiles that reduce added sugars, sodium
or saturated fat using sweetener alternatives or flavour modifiers.

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MARKETING PLAN OF PEPSI

 Offering more products with higher nutritional value whole grains, fruits and vegetables,
dairy, protein and hydration.

 Investing in capabilities that support global ecommerce and sustainability efforts [1]

This is how Pepsi invests in R&D for continuous product innovation and for finding
faster growth. Continuous product and process innovation helps at reducing costs as
well as improving product quality and catering to customer demand better. Its R&D
centers are located throughout the world from US and UK to Brazil, China, India and
Ireland. In terms of packaging too the brand is focusing on developing sustainable
packaging material. It teamed up with leading universities as well as governments and
innovators in 2017 to develop biodegradable film resins that help it meet its sustainable
packaging needs. All these things are essential for business growth from reducing
production costs to increasing the efficiency of business processes.

Digital technology and e-commerce for business expansion:

Pepsi is a global brand. However, to achieve superior growth and remain competitive it
is also investing in digital technology and e-commerce that does not just improve its
reach but also helps the brand create better customer experiences. It is already using
big data to understand customer demand and consumption patterns based on which it
can serve better products as well as marketing campaigns. Digital innovation is one of
the megatrends that has affected Pepsi’s business growth globally. Value chain
automation as well as internet enabled services, big data and social media are all
affecting how Pepsi connects with its consumers and finds business growth. The brand
has invested in digital technology down the supply chain to find greater agility and
efficiency which has led to higher productivity. Digitalization has helped Pepsi respond
faster and better to the customer demand. Growing e-commerce in US and China was
one of the primary factors driving business growth in 2017 in these markets. Its e-
commerce is already supported with big data and predictive analytics that are used to
create real time marketing messages. Big Data is also helping understand and cater to
customer demand for food products in North America. Higher level of digitalization in
North America led to higher RoI on advertising and marketing. In the coming years, the
brand may increase its focus on digitization which is going to be the primary
differentiator for Pepsi. It has already won several rewards for its excellence in e-
commerce. Pepsi is using IoT capabilities to know when plant equipment will need
maintenance as well as how to reduce energy consumption [1]. This mix of e-
commerce, digitization and data analytics has enabled Pepsi to improve the consumer
experience which can be the driver of business growth in the long and the short term.

Action Program
Action step of Pepsi Cola as per 2017:

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MARKETING PLAN OF PEPSI

Step 1: Do research on customer needs, wants, and demands Step 2: Create new flavors
with more design of packaging -

health

Step 3: Provides more credit facility to the new and old

wholesalers in order to expand Pepsi’s brand to rural area

Step 4: Start to build more partners with local brands to

offer our Pepsi products only

Step 5: Start to do more sponsors with government, NGOs, or other events

Controls
If the actions of pepsi are not going according to the plan than it should corrective
measures by:

 Establish performance Standards

 Evaluate actual performance and compare to standards

 Take corrective actions if necessary

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