A PROJECT REPORT On

DEVELOPMENT OF PEPSI
Master of Business Administration (Affiliated to Punjabi University, Patiala) (2011-12)

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PROJECT REPORT ON NEW PRODUCT DEVELOPMENT

MASTER OF BUSINESS ADMINISTRATION

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HISTORY OF PEPSI :The pharmacy of Caleb Bradham, with a Pepsi dispenser, as portrayed in a New Bern exhibition in the Historical Museum of Bern Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb Bradham, who made it at his home where the drink was sold. It was later named Pepsi Cola, possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. 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 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. 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 wildly fluctuating sugar prices as a result

of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then 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 Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula.

MARKETING :Pepsi logo (1970-87). In 1987, the font was modified slightly to a more rounded version which was used until 1991. This logo was used for Pepsi Throwback in 2010. Pepsi logo (2003-2008). Pepsi Wild Cherry and Pepsi ONE continued to use this design through March 2010. It was outside of the U.S. until 2010. The original version had the Pepsi wording on the top left of the Pepsi Globe. In 2007, the Pepsi wording was moved to the bottom of the globe.Photo of a Pepsi can with the current logo and labeling (2008 present.)Pepsi bottle in Mexico. This logo was still in use in Mexico and most countries through early 2010. This Pepsi logo was last used in Canada in May 2009. In 2007, PepsiCo redesigned their cans for the fourteenth time, and for the first time, included more than thirty different backgrounds on each can, introducing a new background every three weeks. One of their background designs includes a string of repetitive numbers,

"73774". This is a numerical expression from a telephone keypad of the word "Pepsi." In late 2008, Pepsi overhauled their entire brand, simultaneously introducing a new logo and a minimalist label design. The redesign was comparable to Coca-Cola's earlier simplification of their can and bottle designs. Also in 2008 Pepsi teamed up with Google/YouTube to produce the first daily entertainment show on Youtube, Poptub. This daily show deals with pop culture, internet viral videos, and celebrity gossip. Poptub is updated daily from Pepsi. In 2009, "Bring Home the Cup," changed to "Team Up and Bring Home the Cup." The new installment of the campaign asks for team involvement and an advocate to submit content on behalf of their team for the chance to have the Stanley Cup delivered to the team's hometown by Mark Messier. Pepsi has official sponsorship deals with three of the four major North American professional sports leagues: the National Football League, National Hockey League and Major League Baseball. Pepsi also sponsors Major League Soccer. It also has the naming rights to

the Pepsi Center, an indoor sports facility in Denver, Colorado.Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team is one of the teams that the brand sponsors. The team wears the Pepsi logo on the front of their test and ODI test match clothing.On July 6, 2009, Pepsi announced it would make a $1 billion investment in Russia over three years, bringing the total Pepsi investment in the country to $4 billion. In July 2009, Pepsi started marketing itself as Pepsi in Argentina in response to its name being mispronounced by 25% of the population and as a way to connect more with all of the population. Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the new Pepsi Logo. The word Pepsi and the logo are in the new style, while the word "Max" is still in the previous style. Pepsi Wild Cherry finally received the 2008 Pepsi design in March 2010.

SLOGANS :1989-1990: "Diet Pepsi. The Right One" 1989-1992: "Diet Pepsi. The Taste That Beats Diet Coke" 1990 1991: "You got the right one Baby UH HUH" (sung by Ray Charles for Diet Pepsi) 1999-2006: "Yeh Dil Maange More!" (Hindi - meaning "This heart asks for more") (India) 2003: "It's the Cola"/"Dare for More" (Pepsi Commercial) 2006 2007: "Why You Doggin' Me"/"Taste the one that's forever young" (Mary J. Blige) 2007 2008: "More Happy"/"Taste the once that's forever young" (Michael Alexander) 2008 present: "pepsi ye pyaas heh bari" ((Urdu) meaning "it killed my thirst" (Pakistan) 2009 present: "Refresh Everything"/"Every Generation Refreshes the World" 2009 present: "My Pepsi My Way"(India) 2010 present: "Every Pepsi Refreshes The World" 2010 present "Pepsi. Sarap Magbago." (Philippines - meaning "It's nice to change") 2011 present: "Change the game" (India, for the 2011 Cricket World Cup)

INGREDIENTS :In the United States, Pepsi is made with carbonated water, high fructose corn syrup, caramel color, sugar, Phosphoric acid, caffeine, citric acid and natural flavors. A can of Pepsi (12 fl ounces) has 41 grams of carbohydrates (all from sugar), 30 mg of sodium, 0 grams of fat, 0 grams of protein, 38 mg of caffeine and 150 calories.[29][30] The caffeine-free Pepsi-Cola contains the same ingredients but without the caffeine.The original Pepsi-Cola recipe was available from documents filed with the court at the time that the Pepsi-Cola Company went bankrupt in 1929. The original formula contained neither cola nor caffeine.

DISADVANTAGE OF PEPSI :Pepsi is famous soft drink which is used all over the world. There are certain elements in Pepsi which are very harmful for human body. Presence of Caffeine in Pepsi is responsible for nerve diseases, headache and hyperactivity. Other harmful effects includes eyes problems, sleeplessness, mental tension and nerve problems. Increasing use of Pepsico also responsible for many stomach diseases.

SWOT ANALYSIS :What is SWOT Analysis?

A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats and is a simple and powerful way to analyze your company's present marketing situation. The best way to understand SWOT is to look at an actual example: AMT is a computer store in a medium-sized market in the United States. Lately it has suffered through a steady business decline caused mainly by increasing competition from larger office products stores with national brand names. The following is the SWOT analysis included in its marketing plan.

 STRENGTH
Knowledge :- Our competitors are retailers, pushing boxes. We
know systems, networks, connectivity, programming, all the VARs, and data management.

Relationship selling :- We get to know our customers, one by

one. Our direct sales force maintains a relationship.

History :- We've been in our town forever. We have

loyalty of customers and vendors. We are local.

 WEAKNESSES
Costs :- The chain stores have better economics. Their per-unit
costs of selling are quite low. They aren't offering what we offer in terms of knowledgeable selling, but their cost per square foot and per dollar of sales are much lower.

Price and volume :- The major stores pushing boxes can afford to
sell for less. Their component costs are less and they have volume buying with the main vendors.

Brand power :- Take one look at their full page advertising, in

color, in the Sunday paper. We can't match that. We don't have the national name that flows into national advertising.

 OPPORTUNITIES
Local area networks :- LANs are becoming commonplace in
small business, and even in home offices. Businesses today assume LANs as part of normal office work. This is an opportunity for us because LANs are much more knowledge and service intensive than the standard off-the-shelf PC.

The Internet :- The increasing opportunities of the Internet offer

us another area of strength in comparison to the box-on-the-shelf major chain stores. Our customers want more help with the Internet, and we are in a better position to give it to them.

Training :- The major stores don't provide training, but as

systems become more complicated, with LAN and Internet usage,

training is more in demand. This is particularly true of our main target markets.

Service :- As our target market needs more service, our

competitors are less likely than ever to provide it. Their business model doesn't include service, just selling the boxes.

 THREATS
The computer as appliance :- Volume buying and selling of
computers as products in boxes, supposedly not needing support, training, connectivity services, etc. As people think of the computer in those terms, they think they need our service orientation less.

The larger price-oriented store :- When we have huge

advertisements of low prices in the newspaper, our customers think we are not giving them good value. SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans. SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT framework was described in the late 1960's by Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text and Cases (Homewood, IL: Irwin, 1969). The General Electric Growth Council used this form of analysis in the 1980's. Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.

DEVELOPMENT OF PEPSI
 SUSTAINABILITY PRACTICES
According to its 2009 annual report, PepsiCo states that it is committed to delivering sustainable growth by investing in a healthier future for people and our planet which it has defined in its mission statement since 2006 as Performance with Purpose . According to news and magazine coverage on the subject in 2010, the objective of this initiative is to increase the number and variety of healthier food and beverage products made available to its customers, employ a reduction in the company s environmental impact, and to facilitate diversity and healthy lifestyles within its employee base. Its activities in regards to the pursuit of its goals - namely environmental impacts of production and the nutritional composition of its products - have been the subject of recognition from health and environmental advocates and organizatioSns, and at times have raised concerns among its critics. As the result of a more recent focus on such efforts, critics consider (PepsiCo) to be perhaps the most proactive and progressive of the food companies", according to former New York Times food industry writer Melanie Warner in 2010.

ENVIRONMENTAL RECORD

PepsiCo s usage of water was the subject of controversy in India in the early and mid 2000s in part because of the company s alleged impact on water usage in a country where water shortages are a perennial issue. In this setting, PepsiCo was perceived by Indiabased environmental organizations as a company that diverted water to manufacture a discretionary product, making it a target for critics at the time. As a result, in 2003 PepsiCo launched a country-wide program to achieve a positive water balance in India by 2009. In 2007, PepsiCo s CEO Indra Nooyi made a trip to India to address water usage practices in the country, prompting prior critic Sunita Narain, director of the Centre for Science & Environment (CSE), to note that PepsiCo "seem(s) to be doing something serious about water now." According to the company s 2009 corporate citizenship report,[61] as well as media reports at the time, the company (in 2009) replenished nearly six billion liters of water within India, exceeding the aggregate water intake of approximately five billion liters by PepsiCo s India manufacturing facilities.Water usage concerns have arisen at times in other countries in which PepsiCo operates. In the U.S., water shortages in certain regions resulted in increased scrutiny on the company s production facilities, which were cited in media reports as being among the largest water users in cities facing drought - such as Atlanta, Georgia. In response, the company formed partnerships with

non-profit organizations such as the Earth Institute and Water.org, and in 2009 began cleaning new Gatorade bottles with purified air instead of rinsing with water, among other water conservation practices. In the United Kingdom, also in response to regional drought conditions, PepsiCo snacks brand Walkers' reduced water usage at its largest potato chip facility by 45 percent between the years 2001 and 2008. In doing so, the factory employed machinery which captured the water naturally contained in potatoes, and used that water to largely offset the need to bring in outside water to the factory.

 PESTICIDE REGULATION (INDIA)

PepsiCo s India operations were met with substantial resistance in 2003 and again in 2006, when an environmental organization in New Delhi made the claim that, based on its research, it believed that the levels of pesticides in PepsiCo (along with those from rival Coca-Cola Company), exceeded a set of proposed safety standards on soft drink ingredients that had been developed by the Bureau of Indian Standards. PepsiCo denied the allegations, and India's health ministry has also dismissed the allegations - both questioning the accuracy of the data compiled by the CSE, as it was tested by its own internal laboratories without being verified by outside peer review. The ensuing dispute prompted a short-lived ban on the sale of PepsiCo and Coca-Cola Company soft drinks within India's southwestern state

of Kerala in 2006; however this ban was reversed by the Kerala High Court one month later. In November, 2010, the Supreme Court of India invalidated a criminal complaint filed against PepsiCo India by the Kerala government, on the basis that the beverages did meet local standards at the time of the allegations. The court ruling stated that the percentage of pesticides found in the tested beverages was within the tolerance limits subsequently prescribed in respect of such product, since at the time of testing there was no provision governing pesticide adulteration in cold drinks.

 PACKAGING AND RECYCLING

Environmental advocates have raised concern over the environmental impacts surrounding the disposal of PepsiCo s bottled beverage products in particular, as bottle recycling rates for the company s products in 2009 averaged 34 percent within the U.S. The company has employed efforts to minimize these environmental impacts via packaging developments combined with recycling initiatives. In 2010, PepsiCo announced a goal to create partnerships that prompt an increase the beverage container recycling rate in the U.S. to 50 percent by 2018.

One strategy enacted to reach this goal has been the placement of interactive recycling kiosks called Dream Machines in supermarkets, convenience stores and gas stations, with the intent of increasing access to recycling receptacles. The use of resin to manufacture its plastic bottles has resulted in reduced packaging weight, which in turn reduces the volume of fossil fuels required to transport certain PepsiCo products. The weight of Aquafina bottles was reduced nearly 40 percent, to 15 grams, with a packaging redesign in 2009. Also in that year, PepsiCo brand Naked Juice began production and distribution of the first 100 percent post-consumer recycled plastic bottle.  ENERGY USAGE AND CARBON FOOTPRINT PepsiCo, along with other manufacturers in its industry, has drawn criticism from environmental advocacy groups for the production and distribution of plastic product packaging, which consumed an additional 1.5 billion gallons of petrochemicals in 2008. These critics have also expressed apprehension over the production volume of plastic

packaging, which results in the emission of carbon dioxide. Beginning largely in 2006, PepsiCo began development of more efficient means of producing and distributing its products using less energy, while also placing a focus on emissions reduction. In a comparison of 2009 energy usage with recorded usage in 2006, the company s per-unit use of energy was reduced by 16 percent in its beverage plants and 7 percent in snack plants. In 2009, Tropicana (owned by PepsiCo) was the first brand in the U.S. to determine the carbon footprint of its orange juice product, as certified by the Carbon Trust, an outside auditor of carbon emmisions. Also in 2009, PepsiCo began the test deployment of socalled green vending machines, which reduce energy usage by 15 percent in comparison to average models in use. It developed these machines in coordination with Greenpeace, which described the initiative as transforming the industry in a way that is going to be more climate-friendly to a great degree.

PRODUCT NUTRITION
 PRODUCT DIVERSITY
From its founding in 1965 until the early 1990s, the majority of PepsiCo s product line consisted of carbonated soft drinks and convenience snacks. PepsiCo broadened its product line substantially throughout the 1990s and 2000s with the acquisition and development of what its CEO deemed as good-for-you products, including Quaker Oats, Naked Juice and Tropicana orange juice. Sales of such healthier-oriented PepsiCo brands totaled $10 billion in 2009, representing 18 percent of the company s total revenue in that year. This movement into a broader, healthier product range has been moderately well received by nutrition advocates; though

commentators in this field have also suggested that PepsiCo market its healthier items as aggressively as less-healthy core products.In response to shifting consumer preferences and in part due to increasing governmental regulation, PepsiCo in 2010 indicated its intention to grow this segment of its business, forecasting that sales of fruit, vegetable, whole grain and fiber-based products will amount to $30 billion by 2020. To meet this intended target, the company has said that it plans to acquire additional health-oriented brands while also making changes to the composition of existing products that it sells.

INGREDIENT CHANGES
Public health advocates have suggested that there may be a link between the ingredient makeup of PepsiCo s core snack and carbonated soft drink products and rising rates of health conditions such as obesity and diabetes. The company aligns with personal responsibility advocates, who assert that food and beverages with higher proportions of sugar or salt content are fit for consumption in moderation by individuals who also exercise on a regular basis. Changes to the composition of its products with nutrition in mind have involved reducing fat content, moving away from trans-fats, and producing products in calorie-specific serving sizes to discourage overconsumption, among other changes. One of the earlier ingredient changes involved sugar and caloric reduction, with the introduction of Diet Pepsi in 1964 and Pepsi Max in 1993 - both of which are variants of their full-calorie counterpart, Pepsi. More recent changes have consisted of saturated fat reduction, which Frito-Lay reduced by 50% in Lay's and Ruffles potato chips in the U.S. between 2006 and 2009. Also in 2009, PepsiCo s Tropicana brand introduced a new variation of orange juice (Trop50) sweetened in

part by the plant Stevia , which reduced calories by half. Since 2007, the company also made available lower-calorie variants of Gatorade, which it calls G2 .

DISTRIBUTION TO CHILDREN
As public perception placed additional scrutiny on the marketing and distribution of carbonated soft drinks to children, PepsiCo announced in 2010 that by 2012, it will remove beverages with higher sugar content from primary and secondary schools worldwide. It also, under voluntary guidelines adopted in 2006, replaced full-calorie beverages in U.S. schools with lower-calorie alternatives, leading to a 95 percent reduction in the 2009 sales of full-calorie variants in these schools in comparison to the sales recorded in 2004. In 2008, in accordance with guidelines adopted by the International Council of Beverages Associations, PepsiCo eliminated the advertising and marketing of products that do not meet its nutrition standards, to children under the age of 12. In 2010, First Lady Michelle Obama initiated a campaign to end childhood obesity (entitled Let's Move!), in which she sought to encourage healthier food options in public schools, improved food nutrition labeling and increased physical activity for children. In response to this initiative, PepsiCo, along with food manufacturers Campbell Soup, Coca-Cola, General Mills and others in an alliance referred to as the "Healthy Weight Commitment Foundation", announced in 2010 that the companies will collectively cut one trillion calories from their products sold by the end of 2012 and 1.5 trillion calories by the end of 2015.