Pepsico Swot Analysis

The Pepsi Corporation has a strong focus on corporate growth and brand name domination. PepsiCo produces beverages, snacks, and foods. The company consists of PepsiCo Americas Beverages (PAB), PepsiCo Americas Foods (PAF), and PepsiCo International (PI).

PepsiCo was marketed first as a bargain brand. In the first part of the 20th century, PepsiCo changed chief four times and declared bankruptcy twice. PepsiCo modified its focus from bargain brand promotions to advertising toward young people, creating the “Pepsi Generation” marketing plan. After this change in marketing strategies, PepsiCo has become one of the leading food and beverage companies in the world, even though PepsiCo constantly strives with their leading competitor Coca-Cola.

PepsiCo depends on strong marketing tactics by maintaining its advantage in the market. They have recognized that marketing strategies differ between countries and have expanded and improved its brands to satisfy their customer needs. Segmentation is extremely vital to the success of PepsiCo. Finally, domination of the market and excellent reputation for being a strong, quality brand name has accredited PepsiCo’s long-term success.

History:

PepsiCo Inc. is an American multinational company headquartered in Purchase, New York. Caleb Bradham invented Pepsi as a digestive aid in the late 1800’s; called “Brad’s Drink”. In 1898, Bradham changed the name to Pepsi-Cola. Herman W. Lay (Frito-Lay Company) and Donald Kendall (Pepsi-Cola) created PepsiCo in 1965. PepsiCo Worldwide Foods and PepsiCo Worldwide Beverages combined operations in 1986. PepsiCo has expanded from its product Pepsi to a wider range of food and beverage brands, the biggest of which include an addition of Tropicana in 1998 and a partnership with Quaker Oats to make a $25 billion business in 2001, adding the Gatorade line to its portfolio.

PepsiCo restructured in 2007 dividing the company into three units’ food in the United States: Drinks concentrated in the United States and Food and Drinks marketed abroad. PepsiCo now manufactures and sells approximately 200 refreshment drinks in more than 200 countries around the world. As of January 2012, 22 of PepsiCo’s product lines generated sales of more than $1 billion each, resulting in annual net revenues of $43.3 billion. PepsiCo is the second largest food and beverage company in the world and the largest Food and Beverage Company in North America. Mission:

PepsiCo mission is to “be the world’s premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.”

Vision:

“PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate – environment, social, economic – creating a better tomorrow than today.” “Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.”

Market Situation:

Pepsi has turn into the largest selling soft beverage in the world. A recent study shows about 90% of the world population when asked which soft drinks do they prefer replied Pepsi. When asked for the reason of this preference, people replied that Pepsi not only gives them higher quality, but also gives a wide variety of other flavors and new drinks.

PepsiCo advertises itself as the option of the “New Generation”. Pepsi gains this advantage by executing marketing plans like “Project Globe”, which Pepsi spent 637 million dollars over five years, this marketing plan was to present the new rich blue coloring of its packaging. The deep blue coloring symbolizes endless youthfulness as well as openness. Marketing projects like that made Pepsi one of the coolest brands identified among teens among the first five and the only drink product in this category. Pepsi has another competitive advantage in their product Mountain Dew. Mountain Dew has a 6.3% market share and has recently become the #4 soft drink in America. Pepsi also has an advantage as an innovator in their field. PepsiCo has been a strong competitor against Coke, and it has become one of the world’s largest companies. As far as market share Pepsi stands strongly.

Competition:

The Coca-Cola Company has historically been recognized PepsiCo’s main rival in the beverage market, and in December 2005, PepsiCo exceeded The Coca-Cola Company in market value since both companies start competing for the first time in 112 years. The Coca-Cola Company possessed a bigger market share in carbonated soft drink sales and PepsiCo maintained a higher share of the United States refreshment beverage market in 2009. PepsiCo has shifted to incorporate an extended product base, including foods, snacks and drinks.

The majority of PepsiCo’s earnings no longer come from the manufacture and sale of carbonated soft drinks. Beverages estimated for less than 50 percent of its total revenue, and a little more than 60 percent of PepsiCo’s beverage sales originated from its primary non-carbonated brands, particularly Gatorade and Tropicana.

PepsiCo’s Frito-Lay and Quaker Oats brands hold a significant share of the United States snack food market, accounting for approximately 39 percent of United States snack food sales in 2009. One of PepsiCo’s primary competitors in the snack food market overall is Kraft Foods, which in the same year held 11 percent of the United States. snack market share.

SWOT Analysis

SWOT Analysis, which is based on a thorough review of the business identities and evaluates the internal strengths and weakness of the companies well as its external threats and opportunities.

Strengths:

* PepsiCo has a well-established name and a good reputation. * PepsiCo is the world’s second largest beverage and food company based on net revenue and the first largest beverage and Food Company in North America. * PepsiCo is a multinational Corporation.

* PepsiCo has a large market share than its competitors. * PepsiCo has an exceptionally vast distribution channel, and it is easily available everywhere. * PepsiCo is sponsoring sports, musical concerts, walks. * Diversify business units such as soft drinks, beverages, snacks. * PepsiCo has the 25 percent of the world’s and the 70 percent of the North America’s soft beverages revenue. * “Banner Sun” potato chip has gained annual retail sales of more than $10 billion; it is the world’s number one potato chip brand and biggest largest food brand. * Frito-Lay is the largest dominant global snack chip division by possessing five leading snack chip products. * PepsiCo has the larger number of restaurants than any other company; these days it has grown into one of the biggest consumer products corporations in the world with worldwide distinguished brands such as “Lay’s Potato chips, Taco Bell, Pizza Hut, Frito Lay and KFC.” * Innovative Marketing: It has leveraged its global brand-building strength to connect with consumers in notable ways and manage the development globally.

Weaknesses:

* PepsiCo does not possess its corporate name on numerous of its brands. * PepsiCo’s current products, such as regular soda and diet products, appears to be offered into markets without being aware of their demographic target. * Pepsi target only young customers in their promotions. * PepsiCo is far behind from Coca-Cola, and its products demand is highly elastic. It embraced coke’s strategy to survive in the global market.

Opportunities:

* Growth in snacks market project to reach $560 billion. * PepsiCo has high chances within global supply chain to promote and develop more sustainable practices to assist consumers and suppliers. * It is extremely difficult for the new entrants to enter in the soft drink market as a result of some factors like brand image and loyalty, bottling network, advertising cost, retail distribution and fear of retaliation. * World population will increase at 8 billion by 2025. Nearly 99% growth will take place in developing countries. * Increased interest of people in musical groups, cultural shows and sports, have provided an opportunity for PepsiCo to increase its sales through them. * Pepsi not only promotes and support sustainable agriculture because makes good business sense, it buys million tons of potatoes and fruits. * Bigger growth rate in American nonalcoholic beverage market, with rapid grow rate in fruit drinks.

Threats:

* PepsiCo has the big threat from its main competitor Coke. Coke has the world’s largest beverage distribution system; consuming in more than 200 countries an average of nearly 1.6 billion servings a day. According to Interbrand’s, Coca-cola was declared the world’s most valuable brand in 2011. * Smaller snack companies such as General Mills and ConAgra foods would try to get larger market share. * Pepsi is facing the hard competition from local brands around the world, for example, Kola Real also known as Big Cola is giving strong competition to Pepsi in Mexico. * Large amounts of substitutes are accessible in the market such as water, tea, juices, coffee etc. * PepsiCo is suffering different regulations and policies set by government in different countries. * Different studies have been conducted and found carbonated drinks harmful if consumed excessively.

Marketing Mix Analysis:

Product:

PepsiCo’s product mix as of 2012 (based on worldwide net revenue) consists of 63 percent foods, and 37 percent beverages. On a worldwide basis, the company’s current products lines include 22 brands that each generates more than $1 billion each in annual retail sales.

Price:

Costs related to transportation, ingredients and labor continue to pressure the beverage industry toward price increases. PepsiCo strives to reduce or keep current prices by cutting expenses and re-engineering the manufacturing process. PepsiCo is increasing its use of inexpensive and recyclable plastic bottles; nonetheless the company has established some price increases in recent years, particularly in its overseas markets like New Delhi and Dubai. Place:

PepsiCo is originally a United States based corporation with nearly 52% of its revenues located in the nation. PepsiCo is getting Russia’s leading Juice Company, Lebedyansky, and V Water located in the United Kingdom, also PepsiCo plans on major capital initiatives in Brazil and Mexico.

Promotion:

Pepsi promotes its products by personalized selling, advertising, and sales promotion. For advertising, and sales promotion it utilized printed and electronic media. Commercials of Pepsi are eye catching and attractive. Pepsi design their sales promotion strategies and advertisement campaign focusing on the target markets. Pepsi has been capturing the biases of society. For example, PepsiCo contracted Tiger Woods to promote a Gatorade brand called Gatorade Tiger, also PepsiCo maintains is promotional relationship with the NFL and the Super Bowl particularly the half time show and marketing Pepsi and Doritos. Sponsoring the pop industry has helped Pepsi hit right on their target market which consists of teenagers.

PepsiCo joined the International Food ; Beverage Alliance, a Swiss-based NGO, comprising multinational food and beverage companies, to adopt a universal voluntary commitment to advertise to children under the age of 12 only products that meet specific nutrition criteria. PepsiCo also adopted a global company policy that is consistent with IFBA’s policy.

Conclusion:

The marketing world is filled with surprises. Who could imagine that Coca Cola would be outdone by Pepsi? If Coke could be outdone by Pepsi, it would be no wonder that Pepsi could be overtaken by some other drink. PepsiCo needs to combine quality with ingenuity and also keep the reputation of the company strong.

Marketing experts of Pepsi can increase sales by adjusting one or more marketing mix elements. They can lower prices to attract new users and also use aggressive sales promotion to increase sales.

The key word for achieving in the Marketing World is to “remain in the spotlight” and that is what Pepsi is accomplishing.