Wedpepsico Presentation Fnal

PEPSICO CASE STUDY PRESENTATION Group Name: NEXT GENERATION

Members: Jeremaia Volavola – S98006250 Livai Serevi – S02000770 Michael Delanimati – S11051589 Unise Cawaru – S85010500

Presentation Outline:  Company

Overview  Products and Services  Marketing Mix  Competition & Strategy  SWOT analysis (International & Fiji)  Problem Statement & Solutions  Recommendations

Company Overview       

International company – offers convenient snacks, foods and beverages Market >500 varieties of food & beverage products in > 200 countries (retail sales >US$98bn) Growth experienced through - product development and acquisitions Solely a soft drink company in 1960 to being the 3rd largest food and beverage company Revenues >US$39bn Over 185,000 employees Company consists of: PepsiCo Americas Food  PepsiCo Americas Beverages and  PepsiCo International Mission Statement “To be the world’s premium consumer products company focused on convenience foods and beverage.” 



Products and Services  Products

offered (brands)  Markets –Geographical spread & Divisions  Product Analysis & Information   

PepsiCo sales by Country Net Revenue by Division Beverage Product by Category

Products Offered (Brands) 

Frito Lay Brands - snacks, potato & corn chips, salsa and dips etc

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Pepsi-Cola brands - carbonated drinks, water, coffee

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Gatorade brands – drinks for sports professionals

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Tropicana brands - juices

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Quaker Brands - cereals, oatmeal bars

Markets – Geographical Spread

Markets – Geographical Spread & Divisions 



PepsiCo products are manufactured and distributed by PepsiCo, its partners and franchised bottlers.

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

PepsiCo Americas Food (PAF) includes:  

Frito-Lay Nth America Quaker Foods Nth America & all Latin America food and snack businesses (up to Mexico)

PepsiCo Americas Beverages (PAB) – includes: 



PepsiCo Beverages Nth America All Latin American beverage businesses

PepsiCo International (PI): 

UK, Europe, Asia, Middle East and Africa.

Product Analysis – PepsiCo Sales by Country PepsiCo Sales by Country All other countries 18% Canada 4% United Kingdom 6% United States 63%

Mexico 9%

United States Source – Annual Report 2004

Mexico

United Kingdom

Canada

All other countries

Product Analysis – Net Revenue by Division Net Revenue By Disivion - 3 yr com parative

Net Revenue by Division - 2007

18,000 16,000 14,000

5%

12,959

12,000

US$m

QFNA

15,798

11,376 10,322 9,146

10,000

FLNA 11,586

10,844 9,565

29%

10,230

8,000

PI

6,000

40%

4,000 2,000

1,718

1,860

1,769

2005

2006

2007

PBNA 26%

Frito Lay - Nth America

P epsiCo Beverages - Nth Am

P epsiCo International

Quaker Foods - Nth America

Source – Annual Report 2007 (p61)

Beverage Product by Category Category

PepsiCo Product

Coca-Cola Product

Soft Drinks

Pepsi

Coca-Cola

Diet Soft Drinks

Diet Pepsi

Diet Coke

Non-cola

Mountain Dew

Sprite

Root Beer

Mug

Barq’s

Ready-to-drink tea

Lipton

Nestea

Sports Drink

Gatorade, Propel

Powerade

Bottled Water

Aquafina

Dannon, Dasani, Evian

Orange Juice

Tropicana

Minute Maid

Marketing Mix-PepsiCo  Some

of PepsiCo's brand names are more than 100-years-old, but the corporation is relatively young.  PepsiCo is best known for Pepsi, the world’s second most popular soft drink after CocaCola Classic.  It is also the market leader in snack foods and noncarbonated beverages (tea, bottles water, chilled juices, and sports drinks).

Pricing:  The

US beverage market is mature. The industry sales growth is largely driven by population growth, amount of advertising and product innovation taking place in the industry.  Given the mature nature of the market, both Pepsi and Coca Cola have resorted to pricing discrimination strategies to maximize the value of consumer demand.

Pricing- cont’d……. 

Direct Price Discrimination –charging customers with different prices based on their location and purchasing power. 



E.g. - in the international operations of both Pepsi and Coca Cola. Cola prices in Mexico, Brazil and Eastern Europe are lower than prices in the U.S

Domestically, direct price discrimination is based on distribution channel segmentation. 

Restaurant fountain drinks, single drinks at gas stations and take-home packs at supermarkets have all different prices on a per-unit basis.

Pricing- cont’d…….  Indirect

Price Discrimination – Quantity discounts along with price coupons used  Brand name - the most effective indirect price discrimination tool.

Distribution Models 

– – –

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Restaurants V&FS

Various distribution models Direct Store Delivery (DSD), Broker Warehouse Distribution (BWD) and Vending & Food Service (V&FS) system

Advanced logistics systems to manage its distribution systems effectively,

PepsiCo

Retailers (DSD)

Distributors (BWD)

Distribution Models – cont’d……… 

Use of the most modern technology: –



PepsiCo and its bottlers were able to improve their distribution and logistics management operations significantly.

Further improve the market penetration of its products globally, –

PepsiCo launched two new distribution methods in the initial years of the new millennium. These were the chilled DSD system and the hybrid system.

Distribution Channels  various –

distribution channels –

supermarkets/retail stores, fountain/restaurant, convenience stores, vending machines and others for distributing beverages and snack foods.

 PepsiCo's

distribution system- aimed at making available all or most of the products in its portfolio within a reachable distance to their consumers.

Advertising & Promotions:  Sports

& Celebrity  Packaging –

in cans and bottles-young consumers (Generation Y)

 Televisions

Ads  Contributions to Charity

Customer Services: –

In all of its business dealings with suppliers, customers and competitors, PepsiCo will: � Compete vigorously and with integrity. � Treat all customers and suppliers honestly, fairly and objectively. � Avoid any unfair or deceptive practice and always present our services and products in an honest and forthright manner. � Never comment on a competitors product without a good basis or need for such statements. � Make clear to all suppliers that we expect them to compete fairly and vigorously for our business, and endorse the principles in our Code of Conducts .

Competition – Beverage & Snacks Food Industry RANK

COMPANIES

MARKET SHARE %

SHARE CHANGE

1

Coca-Cola

43.1

-0.9

2

PepsiCO Inco.

31.7

-0.1

3

Cadbury Schweppes

14.5%

+0.2

4

Cott Corp

5.5

+0.8

5

National Beverage Corporation

2.4

RANK

COMPANIES

MARKET SHARE

1

PepsiCo Frito Lay

15%

2

Kraft Food

12%

3

Hershey

6%

flat

(Source:Adapted from Beverage Digest Press Release, March 4, 2005)

Competition.. 

Three major sustainable advantages give PepsiCo a competitive edge as they operate in the global marketplace.

Competitive Strategy  Diversification –

the chief reason for their outstanding performance. Though started as a beverage company, Pepsi now held No.1 position in snack food business with its Frito-Lay division and ranked No.3 in overall food & beverage industry.

Competitive Strategy  Securing

alliance deals with other big corporations (Merger-like strategy) –

For example, Pepsi has closed an alliance with Warner Brothers International Theaters and with Major League Baseball.

Competitive Strategy 

Lowering their prices; –



it is clear that Pepsi has made several right choices. Able to acquire market share through lower pricing compared to Coke

Before it entered the international market, it first familiarized its customers with its product thoroughly in its home base. –

By the time Pepsi was ready to enter the international market, it had a good grasp of what its target audience really is.

Competitive Strategy  Most

of Pepsi’s strategies were designed to compete with Coke.

Coke came first, and it is still the leading soft drink brand. But Pepsi is keeping up with Coca Cola.

SWOT ANALYSIS- International STRENGTHS  Outstanding Reputation.  Broader Product line-creates synergy across the board.  Large free cash flow- New Acquisition  Great brands, strong distribution, innovative capabilities  Global market leader in snack foods & noncarbonated beverages.

CONT’….  PepsiCo

sells three products through the same distribution channel.  Huge Advertising Budget.  Strong Marketing Intelligence.

WEAKNESSES:      

Difficult to inspire Vision and Direction for Large Global Company. Non Uniform Company name for some PepsiCo products. PepsiCo Lags leader Coca-cola in the international market Highly Elastic Demand. Big Health Issues for Pepsi Drink - Fat and Sugar. Falling Behind in International Markets, namely Russia, Venezuela, and South America. Health Issue in the Indian market with water - contained pesticides.

OPPORTUNITIES

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Expanding Food Division in the international market. Investment into more non carbonated products in the US market and regional. Innovative Customized products technology

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Concentration on healthy alternative products as per the

 

customers needs.

THREATS    

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Bottled Water Market Faces Competition. Comply with International & Domestic Standards. Environmental concern PET Bottles Continuously increases in the price of crude oil and raw materials- affects the cost of finished products Terrorism-Anti-American Advocates

Presence in the Pacific (FIJI) 

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Pepsi drinks is distributed byTapoos Fiji Limited Carbonated drinks are bottled in Lautoka Plant(Eddie Hin Ltd) Products are handled by distributors in the Pacific Islands. Fast Food outlets-KFC& Pizza Hut

SWOT ANALYSIS (PACIFIC MARKET) STRENGTHS: -2nd in the market(30%) -competitive pricing (carbonated drinks) -distributed by reputable organization-Tappoos

WEAKNESSES: -lack popularity in the local community -more emphasis on the distributors rather than the products

OPPORTUNITIES: -potential to expand-expanding the Lautoka plant -to increase market share in the region.

THREATS: -Regulations on Imported goods.

- Strong influential of CocaCola into the community

Problem Statement & Solutions-(Pacific) “Lack of Representations in the Region” Solutions:  More aggressive marketing strategy  Stronger involvement in community activities  More cultured oriented advertisement

Recommendations: “Stronger involvement in community activities”  Offer sponsorship: – –

–

Educational (Primary-Tertiary level) Sports (eg: Pepsi Games instead of Coca-Cola games-target market (tertiary students-future income earners Village projects

Thank You Questions ? ??? or a can of Pepsi?