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Submitted by:

Sneha Shetiya

Salian Vijetha Rohan

Vinayak V D

The Company History and Related Companies 1

PepsiCo (Parent Company) was founded in 1965 via the merger of two major

corporations, Pepsi-Cola and Frito Lay. Subsequently in 1998, Tropicana was acquired to

add the family of brands under PepsiCo. In 2001, the Parent Company made yet another

bold step in the merger with The Quaker Oats Company, which also then included the

Gatorade Company. Notwithstanding the Parent Company being relatively young, several

of the brand names under the PepsiCo umbrella have been in existence for over 100

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years. Through the multiple brand acquisitions and developments PepsiCo is now a

leading conglomerate owning significant market control and brand equity in consumer

convenience foods and beverages. PepsiCo brands are available in nearly 200 countries

and territories and generate sales at the retail level of about $92 billion (PepsiCo, 2007).

The current headquarters are located in New York.

The multiple corporations within the PepsiCo Family are Frito-Lay North America,

PepsiCo Beverages North America, PepsiCo International, and Quaker Foods North

America.

The various beverage products span through carbonated soft drinks, juices, readymade

teas, isotonic sports drinks, bottled water, and enhanced waters. Several established

brands include Diet Pepsi, Mountain Dew, Gatorade, Tropicana products, Aquafina

Water, Sierra Mist, Mug, Propel, Sobe, and Dole.

The Company has also established strategic partnerships with Lipton and Starbucks to

create, market, and sell ready to drink Lipton tea brands and bottled ready to drink

Starbucks Frappuccino drinks. These are two very powerful example of a co-branding

strategic partnership.

Industry Analysis of the Beverages Market 4

Soft drinks can be divided into carbonated and non-carbonated drinks. Cola, lemon and

oranges are carbonated drinks category. The carbonated soft drink market has been

challenged by a health consciousness movement within American consumers. Within the last

five years ending in 2006, the soft drink market in the United States has experienced 0.0%

growth due to this factor. Since 1975 the overall growth rate of soft drink market has been

slowing. (Figure_1)Given Pepsis position in terms of product placement within

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demographics, it holds the youth market when compared with Coke.

Figure 1

The subject proposal is targeted to use a pull strategy through the distribution channels,

and is therefore focused on the end user, or consumer segment of the market. The

industry overall does not only sell directly to consumers. A very prevalent distribution

channel is through licensed bottlers and restaurant chains.

Competitor Analysis:

The table below displays the various brands of PepsiCo. and Coca-Cola Company. It

appears that for every product on the market from one company, the other company has a

similar product to match it. This demonstrates the intense competitive nature of bothcompany to outwit the competition.

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The Coca-Cola Company has the distinct advantage of being the most recognized brand

in the world. It is considered the classic beverage in the United States as well as in other

countries. Revered as the classic beverage, Coke enjoys the stature of being the market

leader. Coke appeals to a wide global audience in terms of demographics and popularity.PepsiCo. appeals to younger consumers with a sweeter taste compared to Coke. Pepsi

presents itself as the hip and cool alternative choice over Coke. Self-proclaimed as The

Choice of a New Generation, Pepsi devised television commercials of younger

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consumers participating in blind taste tests. The participants frequently preferred Pepsi

over Coke.

Analysis of the Target Market Consumers 3

Who are they? Teenagers between age of 12 and 18 inU.S.

What do they buy? Teens want to buy something real,something from corporations that remindthem of themselves10. They dont wantthings that they are thought to like. Thesomething that pushes the boundary,different than what they had before.

When do they buy it? When teens find something they canidentify with and have the need that mustbe satisfied immediately.

How do they choose? They quickly dismiss the products that looklike some 45-year-old guy trying to sellthem. They can tell whats being fakeand whats being real10

Why they prefer a product? They pick a product because they believethat product can express themselves13. Theycan relate to someone like themselvesthrough this product.

How they respond to a marketing program? They respond to something catchy. For

example those ads in magazine are brightlycolorful10, the flashy graphics suggest thatteens respond well to that type of adcampaign.

The target consumer market to stimulate demand within is the young teen market

between the ages 12 through 18 years old, geographically located within the United

States. This segment is compiled of the Tween market and the older high school

teenagers. According to finding, these teens and Tweens are constantly searching for

identities at their age. So no matter what the product is, as long as it possesses

characteristic of the identity the teens and Tweens are searching for, they will make the

purchase.

According to the finding, these target consumers prefer products that are real.

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By real they mean the manufacture genuinely create this product specifically for them.

Since Pepsi Cola is basically for everyone, making it appears to be special to teens and

Tweens is very important. The last thing these consumers wants is pressure or

stereotype that sometimes appears on the commercial and magazine ads.

SWOT ANALYSIS

Strength

Branding and packaging

Appealing to young generation

Superior Taste (in Blind Tests)

Many distributions

Weakness

Hard to enter markets occupied by

Coca-Cola

Lack of novelty in advertising

Opportunities

Global markets

Additional Youth Consumers entering

the market

Threats

Health Conscious Consumer Trends

More substitutes

Manifesting brand essence through packaging is powerful at retail, declares Ron Pence,

Pepsi Senior Marketing Manager for packaging innovation. Youth and vitality is the main

idea that the Pepsi brand tries to express, and the bottle design helps the brand associate

with teens at the age between 12 to 18 year old. Pepsi restyles its cans with a series of 35

new designs and different themes such as car culture, sport or fashion. On Pepsi website,

each theme has its own video clips which can be downloaded for free and other features

to attract consumers. In addition, Pepsi products are distributed to many outlets.

Pepsi is now sold in more than 160 countries around the globe, but it still has a weakness

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in the international beverage market because it entered later into this area than Coke.

Additionally, when marketing its products, Pepsi utilize celebrity endorsement mostly

which bored some consumers due to lack of novelty. Conversely, the success of fresh and

creative advertise has consistently helped Coco-Cola attract and retain customers.

The world is becoming a smaller place with investors thinking in terms of sectors rather

than geographic boundaries. Broad global markets, like China, India, can provide lots of

opportunities for Pepsi. We may conclude from the tables on the right that in 2004, 63%

PepsiCos profits come from the United

States 8, and in the same year, the U.S. holds 30.90% of the global market share under

Europe (showed in the table below), which means Pepsi still has opportunities to compete

globally. Moreover, as Pepsi targets young generation, additional youth consumers enter

the market every year, which provides Pepsi adequate consumer base.

For these decades, changing societal concerns, attitudes, and lifestyles become important

trends that force the soft drink industrys business environment to change. Growing health concerns

for caffeine and sugar consumption threatens the carbonated industry.

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