Pepsico Marketing In India Report.docx

I.

PEPSICO

1) Company Overview Established in 1965, PepsiCo is a multinational food, snack, and beverage company which is based in the US. Today, numerous globally famous brand names such as Pepsi, Lays, Lipton, Doritos, Tropicana, Walkers, Miranda, Cheetos, and others all belong to PepsiCo. As their mission statement, PepsiCo is committed “to provide consumers around the world with delicious, affordable, convenient and complementary foods and beverages from wholesome breakfasts to healthy and fun daytime snacks and beverages to evening treats”

2) Market segmentation The company promotes young energy as the main theme in its advertising and marketing campaigns as its targeted customers are teenagers and youth with a modern and fast-moving lifestyle, aging from 13 to 35 years old. Besides, maintained an affordable pricing strategy to reach customer from all income segments is also among the focuses of PepsiCo.

3) PepsiCo’s Core Marketing Strategy Marketing has always been drawing the company attention as well as investment to push sales and market growth.



Product and Packaging Innovation:

Product quality and packaging has never been out of the company’s focuses on its path to become customers’ first choice. At the same time, PepsiCo also invest in their product innovation to bring new, healthier and more nutritious choices for its 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. Product quality and packaging are of primary importance when it comes to Pepsi’s marketing strategy. 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: Along with technology innovasion arises the era of digital marketing. From Facebook, Instagram, Twitter and other social media as well as digital channels, running digital campaigns has helped PepsiCo reaches a larger amount of customer than ever.is also an important determinant of its sales and profits. Digital marketing, hence, has become the central focus of Pepsi in order to push sales and increase market share. (Remarable campaigns are ones such as Bring Home Happiness or Made for This)

 Sports Marketing and sponsorships: Apart from these promotional campaigns, sponsorships and partnerships in which sport marketing is a central part are also emphasized and employed by PepsiCo. This type of marketing strategy helps

contribute to raising customer awareness and loyalty to the brand. (partnership with UEFA champions’ league, partnership with the National Basketball Association, partnership with the Board of Control for Cricket in India)

II. INDIA MARKET ANALYSIS: 1) Consumer Market  Market size Globally, the Indian retail market is the fifth largest in the world. The International Monetary Fund has projected that India’s GDP will grow by 7.4 percent for 2016–2017 which makes India become the world’s fastest-growing large economy. India will also be seen as potential market for emerging.  Indian Consumers & Government Initiatives Most of major carbonated beverage consumers in India are young with 50% of the consumer base is below the age of 30 years. Thesedays, Indian consumers have their income earning raised and their consumption patterns changed due to rising dual income groups. Besides, the development of technology, especially internet savvy, has led to Indian customers prefering shopping online for convenience and discounts. These phenomena has led to changing consumption pattern in Indian consumer in which quality (freshness of product), variety (range of products) and convenience (access to product), health and hygiene consciousness, protein rich and organic factors are gaining dominance. In term of government policy, not only the percentage of FDI into single brand retail has been increased from 51 percent to 100 percent but also government is also planning to hike FDI limit in multi-brand retail to 51 percent.  Market Segmentation: The beverage market in India is separated mainly into alcoholic and non – alcoholic beverage. The segmentation of non – alcoholic beverage in India is specified as carbonated and non – carbonated beverage. The main product line that are observed in the non- carbonated non – alcoholic segmentation which has mainly shifted to healthier options are juices, bottled water, energy drinks, ready to drink tea and coffee, flavored milk, malted drinks and other drinks that are available. The carbonated drinks are segmented into cola flavored drinks, lime- lemon flavored drinks, orange flavored drinks and others. On the geographic views, the beverage market in India is separated into urban and rural markets, and semi-urban market and climatic conditions which means the demand for cold drink in the hotter places will be higher. For instance, hot tea is the popular beverage in northern, western and eastern India.

In term of demographic, different religion, community, language, and age may result in different consumer tastes and need for different product lines. For example, for age segmentation, Amul has segmented his products in different age group of customers or the way Adidas targets women in India to avoid the issue of sexism.  Growing Opportunities The transformation of India’s urban creates a huge opportunity for domestic and international businesses that can provide capital, technology, as well as the goods and services to meet the growing demand of urban consumer. Moreover, the market offers low-cost labor for foreign investors who wish to tap into the large and growing local market.  Competition Landscape The main beverage market is changing its definition from alcoholic and non–alcoholic beverage to carbonated and non–carbonated beverage. In the beverage market of India, PepsiCo has its position as the main players together with its biggest competitor Coca Cola. The 2 companies account for 90% market share in total, with a Coca-Cola taking the lead with market share of more than 48% in 2015.

2) Possible challenges of the market: -

-

Corruption in India increases the cost of business operations and often affects FDI. It may lead to problems with taxation, no trust in authorities, and makes people poorer which followed by allow down the economic growth. Major climate changes occurring due to global warming and greater environmental awareness this external factor are becoming significant issues for firms to consider. When a foreign company enter in India, they may meet a lot of challenges regarding environmental pollution. Air pollution in India is one of the worst in the world which caused mainly by transportation. Water pollution is mainly caused by industrial wastes, agricultural waste and chemicals pumped to the ocean and rivers, and lack of water resources. Also, the lack of rubbish bins causes damage to the environment in India.

III. PEPSICO STRATEGY IN INDIA 1) Marketing Strategy  Products The Company has expanded into snacks and healthy breakfast to dominate its rival. In snacks, Cheetos, Lays and Kurkure are consumer preferences. In healthy breakfast, Quaker oats is also gaining popularity.  Pricing strategy Due to the level of saturation in the non-alcoholic beverages industry, the price competition is intense. Coca Cola and Pepsi competed with each other in product’s price.

By keeping the accessibility for the larger customer segmentation and acceptable price, Pepsi’s pricing strategy aimed to capture customer loyalty at an affordable price without making a low quality product image in customer’s mind. Moreover, the larger the size of the purchase, the lower is the price. A customer can get a larger discount if he purchases in bulk.  Place: Pepsi has a vast extensive distribution network all over the world that ensures the availability of Pepsi product in each and every locality where the target market of Pepsi is located 1) Company > Distributor > Small retailers / Small buyers > End customer 2) Company > Bulk buyers > End customer  Promotion: Since its target customer is the youth, PepsiCo promotions campaings aim mainly at creating a feeling of refreshment by relying on advertisements featuring films stars, popstars, and cricket players. Some exemple of the company promotion campaings may include: -

Mountain dew has a message of “Darr ke age jeet hai” which is again focused on adventure sports thereby targeting youngsters. Kurkure targeted household snacks and middle aged group whereas Lays targets youngsters and the party mood

Beside store promotion, Pepsi also spends heavily on marketing and advertisement of its products. In 2016, its total marketing expenses were higher than $2.5 billion, mostly focus on digital marketing, using internet, social media and television to advertise the brand. They also adapted the traditional advertising and marketing channels to keep the customer engagement.  SWOT Analysis STRENGTH 1. Brand equity: Pepsi is one of the popular and famous brands in food and beverage sector with the youngsters. It has a high brand recognition and reputation. It has a brand valuation of $19.4 billion and it is ranked 29 in the Forbes most valuable brands list. 2. Massive portfolio: Pepsi accounted for two products in the top 5 beverages sold in the country. Even if Pepsi is second rank in the volume of distribution compared to Coca Cola, it also has a sustainable competitive advantage. 3. Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been doing really well. It is stated that Pepsi occupied the second position in the F&B sector behind Nestle.

4. Strong Customer Base: PepsiCo has an extremely loyal customer base. They have emerged as a very strong brand when it comes to juices and bottled water category. 5. Strong distribution: Pepsi has a global presence in more than 200 countries providing them with a very good distribution network. 6. Clear target customer: Pepsi, unlike Coca Cola, has always had a clear target audience – the young crowd. It always targets youngsters through its ads and generally the youngsters are shown to be smarter then the old ones. The message is clear – Pepsi is the in thing. WEAKNESSES 1. Competition: PepsiCo, as always, suffers heavy competition from Coca-Cola in their soft drinks category. 2. Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as unhealthy. 3. Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts the brand image of the PepsiCo and thereby giving room to the competitors to grow. 4. Advertising: The limitation of Pepsi’s advertising in the past is that they just focused more on the youth. Pepsi can gain more profit if they broaden their vision to reach wider customers and attract more customers to buy their products OPPORTUNITIES 1. Healthy Options: Nowadays, many scientists found that carbonated and sugary beverages can be one of the risk factors for heart diseases and diabetes. Therefore, there are opportunities for Pepsi innovates and develops more products such as non sugar drinks, diet drinks and non carbonated drinks. It should work more on improving the health implications of their products and marketing strategies make the customer aware of the same. 2. Diversification: Pepsi has talent, resources and strong financial capabilities. Therefore, business diversification into different market segments is a huge opportunity for Pepsi to adapt consumers’ need in India. This can also be done by acquisitions in order to eliminate competitors or develop different flavors to meet demand. For example, Paperboat is a brand which is growing strongly in India in recent years. Paperboat is popular for various flavors such as watermelon, raw mango etc. Therefore, Bringing in such flavors even in carbonated beverage form can help Pepsi attract a larger market. 3. CSR activities: They can do more CSR activities to hide the negative remarks that hurt the brand image of Pepsi and bring benefits to local people 4. R&D: Recently PepsiCo came out with healthier options in a soft drink. To make 7Up by using the substitute of sugar called Stevia. This can prove to be a game changer. More such research needs to be done. Focus more on the diet drinks category. They have recently released a variant of their cola sweetened with Stevia and sugar called Pepsi Next.

5. Flavors: THREATS 1. Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods, Nestle, Dr Peppers Snapple Group and Mondelez. 2. Health Factor: The unhealthy factor associated with its products can take a toll on the health conscious customers and might lose them. This can be clearly seen by the fall of soft drinks sale. 3. Social norms: Different norms in India might prove difficult to handle and compliance with it as well. 4. Government regulations 5. Changing in consumer preferences and taste: Many researchers proposed that carbonated drinks are bad for people’s health, so Indians’ preference shift to healthier options such as non-sugar and non-carbonated drink, fruit juices, etc.

External Opportunities

External Threats

(O)

(T)

1.Healthy options 2.Diversification into different market segments

1. Competitive pressure from many competitors (Coca-Cola, Kraft foods, Nestle, Dr Peppers Snapple Group and Mondelez)

3. Improve brand’s image by do more CSR’s activities

2. It is difficult to handle well with different norms in Indida

4. Invest in R&D to develop new products

3. The fluctuation from foreign exchange rate

5. Produce products with various flavors can attract larger market

4. Health issue 5. Change in consumers reference and taste

Internal Strengths

SO(Using strengths to capitalize on available opportunities)

ST ( Use strengths to avoid threats)

(S)

To minimize the competitive threat, Pepsi must focus specifically on Based on the capabilities of 1.Strong brand image strong image and the financial marketing of its brand, product strength. Apart from them it also innovation and of using its digital 2.Massive portfolio has stronger marketing capabilities better. This will reduce the in F&B industry capabilities which can help it competitive pressure on the brand. grow faster in India. 3.High level of Moreover, based on financial capabilities Customer loyalty and strong distribution network, they can Having talents, resources and financial conditions to diversify compete to their competitors easily by 4.Strong leadership into different market segments taking advantage of strong financial and growth by acquisition position 5. Have a strong distribution network Forming partnerships with other related with global presence Based on the popular of brand image, developing in new businesses as well as acquiring smaller in 200 countries market segments may bring businesses will minimize the threat from a stronger dollar and currency conversion Pepsi a chance to growth 6. Have clear target rates. audiences - young customers

Using strong brand image to reduce or hide health issues

7.Strong supply chain

Internal Weaknesses (W)

WO( Overcome weaknesses to capitalize on opportunities)

1. Heavy competition from Coca Cola

Partnerships and acquisitions and extending its ecommerce will also help the brand to grow faster and reduce the losses that happen due to currency fluctuations

2.Products perceived as unhealthy 3.No presence outside F&B industry 4. Failed product (Crystal Pepsi) hurts the brand image and give rooms for

WT( Reduce weaknesses to avoid threats) 

Decrease the huge expenditure on advertising and invest in non carbonated drinks to increase the demand of



Investing more on health department to handle the health issue

competitors develop 5. Marketing share less than Coke

Using more brand/product diversification in division wise it can minimize the expenditure on adv and will increase the product portfolio.

Expand more business & introduce more non carbonated products and should increase the productivity

 Problem The first biggest problem of Pepsi in India market is about health issues. Science and environmental centers studied that there is over the amount of residues of insecticides in acceptable Pepsi sample compared to the Bureau of Indian Standards. This leads to Pepsi was banned in India for a period of time. The falling in sale of fruit drink- Tropicana while Tropicana focus on nutrition and healthier beverages as consumers shift to healthier options. There is also problem resulting from culture differences. “India is not a breakfast country,” Most of India has early brunch: Cereals and juices for breakfast is a very urban, upper-class phenomenon

IV. PROPOSED STRATEGY Based on SWOT analysis, we can set 4 kinds of strategies SO strategy, ST strategy, WO strategy, WT strategy. Pepsi has many strengths, hence, SO strategies will pursue opportunities that are a good fit to the company’s strengths, while ST strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. Moreover, there are some W-O strategies which can be applied in the case, and also some W - T strategies. W - O strategies will overcome the weaknesses

to pursuit opportunities, while W - T strategies establish a defensive plan to prevent the firm’s weaknesses from making it highly susceptible to external threats.

1) SO Strategy. Based on effective supply chain, Setting online platform in India will not only increase the accessibility of Pepsico’s products but also get one more business that they can earn much money. There must be some customers who knew about the brand ‘Pepsico’ but cannot buy their products because of absence of store selling Pepsico’s products. If ‘Pepsico’ open the online platform that everyone can easily access, ‘Pepsico’ will get more customers. Furthermore, ‘Pepsico’ also can do the online platform business like Amazon. Pepsico’s band power in India will collect the massive number of customers into online platform, and bring a lot of other imported brands like Doritos and Tostitos tortilla chips into the platform. Based on massive portfolio, Pepsico can produce other attractive flavor of drink. It will help Pepsico to make larger market in India. For example, Paperboat is a brand which is growing strongly in India in recent years. Paperboat is popular for various flavors such as watermelon, raw mango etc. Therefore, Bringing in such flavors even in carbonated beverage form can help Pepsi attract a larger market. And analyzing India market and India consumer’s preference using Pepsico’s massive portfolio will make ‘Pepsico’ to be able to identify the exact consumer preferences and further marketing to the correct target consumer. 2.

ST Strategy:

Another strategy we suggest for Pepsi in the Indian market is ST Strategy. Threats are always dangerous to every organization, hence, Pepsi need to use their strengths in order to prevent the threats. Firstly, to minimize the competitive threat, Pepsi must focus specifically on marketing of its brand, product innovation and of using its digital capabilities better. This will reduce the competitive pressure on the brand. Moreover, based on financial capabilities and strong distribution network, they can compete to their competitors easily by taking advantage of strong financial position Forming partnerships with other related businesses as well as acquiring smaller businesses will minimize the threat from a stronger dollar and currency conversion rates. Another strategy we suggest is to use strong brand image to reduce or hide health issues

3. W - O Strategies: Partnerships and acquisitions and extending its ecommerce will also help the brand to grow faster and reduce the losses that happen due to currency fluctuations Using more brand/product diversification in division wise it can minimize the expenditure on adv and will increase the product portfolio. Expand more business & introduce more non carbonated products and should increase the productivity. 4. W - T Strategies: W - T strategy is the strategy that reduce weaknesses to avoid threats. The healthy lifestyles trend is a threat against PepsiCo’s products, many of which are seen as unhealthful because of their sugar, salt, or fat content. Also, environmentalism threatens the company in how consumers negatively respond to product waste and life cycle issues. Based on that kind of trends, I think ‘Pepsico’ has to improve product healthfulness to attract more consumers and enhance recycling efforts to address environmentalism. To reduce negative image of Pepsico, It is good idea to benchmark a successful case of CSR. Corporate social responsibility (CSR) is how companies manage their business processes to produce an overall positive impact on society. It covers sustainability, social impact and ethics, and done correctly should be about core business - how companies make their money - not just add-on extras such as philanthropy. LG Electronics has set a strategy to develop products that reduce environmental impacts throughout the life cycle of the products. - Decrease the huge expenditure on advertising and invest in non carbonated drinks to increase the demand

REFERENCES https://www.cheshnotes.com/pepsi-business-growth-and-marketing-strategies/ https://www.marketing91.com/marketing-strategy-pepsi/ https://research-methodology.net/pepsico-inc-report/