BEVERAGE INDUSTRY

Authors: Jurgea Gabriela

Tigan Larisa

Coke is it -- it being the #1 nonalcoholic beverage company, as well as one of the world's most recognizable brands. The Coca-Cola

Company is home to 20 billion-dollar-brands, including four of the top five soft drinks: Coca-Cola, Diet Coke, Fanta, and Sprite. Other top

brands include Minute Maid, PowerAde, and vitamin water. All told, the company owns or licenses and markets more than 500 beverage brands, mainly sparkling drinks but also waters, juice drinks, energy

and sports drinks, and ready-to-drink teas and coffees. With the world's largest beverage distribution system, The Coca-Cola Company reaches

thirsty consumers in more than 200 countries.

Coca-Cola is recognized by 94% of the world’s population.

Coca cola owns more than ½ of the world’s beverages. Coke is affordable in all the countries. It was not out of

the price range for an afternoon snack. Coke comes in a variety of sizes worldwide so you can

use it for a crowd or as a personal snack drink .

Coca-ColaIntroduction• As we all know, the Coca is today’s one of the biggest corporation that offers different refreshment in form of a soft-drink. These carbonated drinks are consumed at the rate of more than one billion drinks per day. But aside from their historical success, the Coca Cola Company is still a typical business that is affected and at the same time affecting the different type of communities.

HISTORY► Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr.

John S. Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains. He created a flavored syrup, took it to his neighborhood pharmacy (JACOBS’PHARMACY), where it was mixed with carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca‑Cola” as well as designing the trademarked, distinct script, still used today.

Type: Cola

Manufacturer: The Coca-Cola Company

Country of origin: United States

Introduced: 1886

Color: Caramel E-150d

Flavor: Cola

Variants: Diet Coke, Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Zero, Coca-Cola Cherry, Coca-Cola with Lemon, Coca-Cola Vanilla, Coca-Cola with Lime, Coca-Cola Raspberry, Coca-Cola Black Cherry Vanilla, Coca-Cola Blāk, Coca-Cola Citra, Coca-Cola Orange, Coca-Cola Life

Prior to his death in 1888, just two years after creating what was to become the world’s #1-selling sparkling beverage, Dr. Pemberton sold portions of his business to various parties, with the majority of the interest sold to Atlanta businessman, Asa G. Candler. Under Mr. Candler’s leadership, distribution of Coca‑Cola expanded to soda fountains beyond Atlanta.

In 1894, impressed by the growing demand for Coca‑Cola and the desire to make the beverage portable, Joseph Biedenharn installed bottling machinery in the rear of his Mississippi soda fountain, becoming the first to put Coca‑Cola in bottles.

Large scale bottling was made possible just five years later, when in 1899, three enterprising businessmen in Chattanooga, Tennessee secured exclusive rights to bottle and sell

Coca‑Cola. The three entrepreneurs purchased the bottling rights from Asa

Candler for just $1. Benjamin Thomas, Joseph Whitehead and John Lupton developed what became the

Coca‑Cola worldwide bottling system.

The new beverage packaging is aimed at the Diet coke range of Coca-Colas product portfolio. It is a refillable bottle aesthetically styled to appeal to sports/fitness audience. The new beverage container is made from sustainable sourced materials and production methods. The beverage container is unique in the way the consumer is encouraged to re-use/refill it. Being the first to offer a new product feature is a proven competitive strategy. Future improvements to the product create the impression the company cares about satisfying its customers, material technology improvements in the future would further the design.

Product Description

SLOGANS

"Dill Hai To Mango Aur" (“If you have a heart ask for more")

"Khulein Khushian" (“Open Happiness")

"Kha Le Pee Le Jee Le" (“Eat Drink Live")

EVOLUTION OF THE COCA-COLA BOTTLE

In 2009, the “Open Happiness” campaign was unveiled globally. The central message of “Open Happiness” is an invitation to billions around the world to pause, refresh with a

Coca‑Cola, and continue to enjoy one of life’s simple pleasures. The “Open Happiness” message was seen in stores, on billboards, in TV spots and printed advertising along with digital and music components — including a single featuring Janelle Monae covering the 1980 song, “Are You Getting Enough Happiness?” The happiness theme continued with “Open the Games. Open Happiness” featured during the 2010 Winter Olympic Games in Vancouver, followed by a 2010 social media extension, “Expedition 206″ — an initiative

whereby three happiness ambassadors travel to 206 countries in 365 days with one mission: determining what makes people happy. The inspirational year-long journey is being

recorded and communicated via blog posts, tweets, videos and pictures.

campaign

A Healthy Growth to The Indian Economy

Ever since, Coca-Cola India has made significant investments to build and continually consolidate its business in the country, including

new production facilities, waste water treatment plants, distribution systems, and marketing channels.

Coca-Cola India is among the country’s top international investors, having invested more than US$ 1 billion in India in the first decade, and

further pledged another US$ 100 million in 2003for its operations.

STRENGTHS• The best global brand in the world in terms of value $77,839 billion

• World’s largest market share in beverage

• Strong marketing and advertising

• Most extensive beverage distribution channel

• Costumer loyalty

• Bargaining power over suppliers

• Corporate social responsibility

WEAKNESSES• Significant focus on carbonated drinks

• Undiversified product portfolio

• High debt level due to acquisitions

• Negative publicity

• Brand failures or many brands with insignificant amount of revenues

OPPORTUNITIES• Bottled water consumption growth

• Increasing demand for health food and beverage

• Growing beverages consumption in emerging markets (especially BRIC - Brazil, Russia, India and China)

• Growth through aquisitions

THREATS• Change in consumer preferences

• Water scarcity

• Strong dollar

• Legal requirements to disclose negative information on product labels

• Decreasing gross profit and net profit margins

• Competition from PepsiCo

• Saturated carbonated drinks market

Political analysis examines the current and potential influences from political pressures. The non-alcoholic beverages falls in the category under the FDA and the government plays a role within the operation of manufacturing these

products. In terms of regulations, the government has the power to set potential fines for the companies that did not meet their standard law

requirement. The political conditions of the country are also basis of the study, especially in internal markets and other governmental changes that affects their ability to penetrate the developing and emerging markets that involves the political and economic conditions. However, Coca Cola continuously monitoring the

policies and regulations set by the government.

MARKETING AUDIT

POLITICAL ANALYSIS

Economic analysis examines the local, national and world economy impact which is also includes the issue of recession and inflation rates. The non-alcoholic beverage industry has high sales in countries outside the U.S. According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in

many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry.

There is a low growth in the market for carbonated drinks, especially in Coca Cola’s main market, North America. The market growth recorded

at only 1% in 2004 for North America.

MARKETING AUDITECONOMIC ANALYSIS

This analyzes the ways in which changes in society affect the organization such as changing in lifestyles and attitudes of the

market.  Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an

older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the

healthier beverages. The demand for carbonated drinks decreases and this pulled down the revenues of Coca Cola.

MARKETING AUDIT

SOCIOLOGICAL ANALYSIS

TECHNOLOGICAL ANALYSIS

Technology is the main focus of the analysis where the introduction and the emerging technological techniques are

valued. This creates opportunities for new products and product improvements in terms of marketing and production. As the technology advances, new products are introduced into

the market. The advancement in technology has led to the creation of cherry coke in 1985 but consumers still prefers the

traditional taste of the original coke.

MARKETING AUDIT

These are related to the legal environment in which firms operate. In recent years in UK there have been many significant

legal changes that have affected organizations behaviour. The introduction of age discrimination and disability discrimination le

gislation,an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organization’s actions. Legal changes can affect

a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of

customers buying the good or using the service).

MARKETING AUDIT

LEGAL ANALYSIS

ENVIRONMENTAL ANALYSIS

Environmental analysis examines the local, national and world environmental issues.

According to the data of the Coca Cola Company, all of the facilities are strictly monitored according

to the environmental laws imposed by the government.

MARKETING AUDIT

MARKETING STRATEGY

The first marketing efforts in Coca‑Cola history were executed through coupons promoting free samples of the beverage. Considered an innovative tactic back in 1887,

couponing was followed by newspaper advertising and the distribution of promotional items bearing the Coca‑Cola

script to participating pharmacies.

The marketing strategy for Coca-Cola’s new product will come into place in 2015, based on trends emerging now this plan has identified the

carbonated drinks market has probably peeked and likely to be overtaken by healthier drinks as the market leader in the soft drinks market.

Researching Coca-Cola’s product range has identified the Diet Coke range as the most likely, with marketing pull to still succeed in the future. The diet coke range has combats health concerns which are found in the

Coca-Cola flagship product.

Coca-Cola is all about buying into a lifestyle, and the new lifestyle in 2015 will much more health conscious. In this report I have shown reason for Coke to tie themselves up with sports sponsorship to promote a brand

image of health and fitness.

The new beverage vessel is refillable in the hope of reducing pressure on landfill and showing coke as being a global and socially responsible

company. The beverage container is styled to appear an essential for an active, fit lifestyle.

The bottlers sell, distribute and merchandise Coca-Cola in cans and bottles to different outlets such as stores and vending machines. Coca-Cola Enterprises is the largest Coca-Cola bottler in North America, Europe, Australia and Asia. The

Coca-Cola Company also sells concentrate for fountain sales to major restaurants and food service distributors such as

McDonalds.

Currently Coca-Cola is expanding its Diet Coke range, with a new "healthy soda" Diet Coke with Vitamins B6, B12,

Magnesium, Niacin, and Zinc, marketed as "Diet Coke Plus". This is to appeal to an ever increasing market for healthier drinks as oppose to soft drinks with high amounts of sugar.

The Coca-Cola Company purchased Columbia Pictures in 1982, and began inserting Coke-product images into many of its films. After a few early successes during Coca-Cola's ownership, Columbia began to under-perform, and the studio was sold to Sony in 1989.

Coca-Cola has gone through a number of different advertising slogans in its long history, including "The pause that refreshes," "I'd like to buy the world a Coke," and "Coke is it" (see Coca-Cola slogans).

In 2006, Coca-Cola introduced My Coke Rewards, a customer loyalty campaign where consumers earn points by entering codes from specially marked packages of Coca-Cola products into a website. These points can be redeemed for various prizes or sweepstakes entries.

In Australia in 2011, Coca-Cola began the "share a Coke" campaign, where the Coca-Cola logo was replaced on the bottles and replaced with first names. Coca-Cola used the 150 most popular names in Australia to print on the bottles. The campaign was paired with a website page, Facebook page and an online "share a virtual Coke". The same campaign was introduced to Coca-Cola, Diet Coke & Coke Zero bottles and cans in the UK in 2013.

Coca-Cola has also advertised its product to be consumed as a breakfast beverage, instead of coffee or tea for the morning caffeine

Coca Cola advertised on a Volkswagen in Maringa, Paraná, Brazil.

1952 Summer Olympics in Helsinki. Coca-Cola vending point.

A Freightliner Coca-Cola Christmas truck in Dresden, Germany.

Coke advertisement 2013

Coca-Cola sales booth on the Cape Verde island of Fogo in 2004.

An 1890s advertisement showing model Hilda Clark in formal 19th-century attire. The ad is titled Drink Coca-Cola 5¢. (US).

The new “one brand” strategy

Over the years consumer taste, preference and lifestyles have changed, and with that so has Coca‑Cola. They’ve innovated to include a range of

lower and no sugar and calorie alternatives, each with their own identity. But recent research has showed that not everyone understands the options available to them, and the benefits of each drink, which is

why they’re introducing a new “one brand” strategy to help make choice easier and simpler.

Jon Woods, General Manager of Coca‑Cola Great Britain & Ireland says: “With our new ‘one brand’ approach, we are uniting four distinct brands under the umbrella of Coca‑Cola. We believe our no and lower sugar variants will benefit from this closer association with Coca‑Cola

and that featuring all variants in our advertising will make clear to more consumers the full choice we offer them.”

Did you know? Five out of ten people don't know that Coca-Cola Zero is a no sugar, no calorie drink.

MARKETING COMMUNICATIONS

The following areas of the marketing communications mix will all b looked at to consider the relative strengths and weaknesses and if and how they will be applied in the case of this plan.

Advertising - Any paid form of non personal presentation and promotion of ideas, goods, or services by an identified sponsor.

Personal selling - Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.

Sales promotion - Short-term incentives to encourage the purchase or sale of a product or service.

Public relations - Building good relationships with the company’s various publics by obtaining favorable publicity, building up a good "corporate image", and handling or heading off unfavorable rumors, stories, and events.

Direct marketing - Direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships.

MARKETING COMMUNICATIONS

PROMOTIONS

• Sales promotion is any initiative undertaken by an organization to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix). Sales promotions are varied.

Some examples of popular sales promotions activities:(a)Buy-One-Get-One-Free (BOGOF) - which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit - especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic;

(b)Customer Relationship Management (CRM) - incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets;

(c)New media - websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect;

(d) Merchandising - additions such as dump bins, point-of-sale materials and product demonstrations;

(e) Free gifts - e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich;

(f) Discounted prices - e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-price deals once new flights are released, or additional destinations are announced;

(g) Joint promotions - between brands owned by a company, or with another company's brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals;

(h) Free samples - (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team);

(i) Vouchers and coupons - often seen in newspapers and magazines, on packs;

(j) Competitions and prize draws - in newspapers, magazines, on the TV and radio, on The Internet, and on packs;

(k) Cause-related and fair-trade - products that raise money for charities, and the less well off farmers and producers, are becoming more popular;

(l) Finance deals - for example, 0% finance over 3 years on selected vehicles.

Uses direct marketing in many ways. It partners with various restaurants,

movie theatres, etc. to carry its product. So when a customer orders a drink, the only brand they are offered is Coca-Cola, which forces them to

consume that brand itself. Thus Coke forces out the competitors, and keeps the restaurants, or other businesses, purchasing their product over and

over again (e.g. Mc Donald's, Dominos)

According to mobilemarketingmagazine.com, Coke uses mobile graphics and texts to appeal to markets on a more personal level.Cola also sponsors various sporting events in India and around the world in events like Cricket, Football, and Motor Racing etc.

MARKETING

STRATEGIC INITIATIVES1. Coca-Cola plans to accelerate the growth in its sparkling beverage business, led by the Coca-

Cola brand. With its Share a Coke program, the company has successfully increased household penetration, increased immediate consumption volume, and improved brand loves

scores.

2. Coca-Cola will expand its $11 billion still-beverage brands portfolio. It has also been working diligently to grow its $4 billion juice and juice drink brands, and establish a scalable

formula for further value creation in new still brand categories.

3. Coca-Cola has committed to raising its media spending by $1 billion by 2016 to drive long-term profitable growth.

4. The fourth priority is to win at the point of sale by working with the company's global marketing partners to improve execution. Coca-Cola will invest more than $50 billion to enhance the company's competitive position in markets worldwide. Coca-Cola considers

2014 to be the year of execution at the point of sale, which begins with its globally famous Coca-Col brand.

5. Any great plan needs great people. Coca-Cola has inspired its next generation leaders to "hire the best, retain the best, train the best, and manage with the best." 

As already said Coke is a massive global brand with huge brand

awareness, the emphasis of advertising would be on a TV advertising

campaign which would be on the company website and virally spread

on social video sites such as YouTube. The advert should gain cult status and in theory the target market will virally

spread the advert to friends in the same market. Consumers are highly

responsive to videos they have chosen to watch on the web. Reaching the target market through more sport

sponsorship promotes cokes lifestyle image and the new healthier product

well.

Coca Cola has intense competition with neither Pepsi so its pricing can’t exceed too much nor decrease too much as

compared to the price of Pepsi Cola. If price of the Coca Cola exceed too much from the Pepsi then people will shift to the Pepsi Cola and on the other hand if the price of Coca Cola decreases people might get the impression that its quality is

also low.

MARKET PENETRATION PRICING POLICY

Prices in beverage industry are determined by the consumer. In an economy like that of Pakistan, consumers tend to switch towards a low priced product. Coca Cola’s objective is to

target every consumer of the country so Coca Cola has to set its prices at such a level which no one can offer to its

consumers. That is why Coca Cola charges the same prices as are being charged by its competitors. Otherwise, consumers may go for Pepsi Cola in case of availability of Coca Cola at

relatively high price.

Change Coca-Cola’s brand image towards more global/local responsible attitude.

Inform target audience about features and benefits of the new product.

Boost sales based on the predicted overtaking of carbonated drinks by health drinks by 2015.

In brief the purpose is to market a new innovative beverage packaging for Coca-Cola. The packaging has been designed around the brief ‘consider the creation of a new concept form of beverage packaging container for

2015.’ The Coca-Cola Company is one of the largest manufacturers, distributors and marketers of

nonalcoholic beverage concentrates and syrups in the world. Coca-Cola's headquarters are in Atlanta,

Georgia, in America. It is best known for its flagship product, Coca-Cola, and is one of the largest

corporations in the United States.

Today, Coca-Cola is an internationally recognized soft drinks company with ambitious plans to further grow the brand. The company owns the majority of the soft drinks

available in coolers and in vending machines in the western world. Some of these brands include, Coca-Cola and sub

brands1 , Dr. Pepper, Fanta, Sprite, Oasis and PowerAde. A full list of Coca-Colas affiliated brands can be found on

their corporate website2 .

The 2005 Annual Report states the company sells beverage products in more than 312 countries or territories.3 The

international presence of Coca-Cola is phenomenal and its logo, advertising and colours are among the most

recognized in the world.

1. To Refresh the World...in body, mind, and spirit.

2. To Inspire Moments of Optimism...through our brands and our actions.

3. To Create Value and Make a Difference...Everywhere we engage.

Coca-Cola’s product is the concentrate; this is sold to various licensed Coca-Cola bottling companies around the world. The bottlers, who have contracts with the company, produce the

finished product as we know it, in cans and bottles, combining the concentrate with filtered water and sweeteners.

To achieve our mission, we have developed a set of goals, which we will work with our bottlers to deliver:

People: Inspiring each other to be the best we can be by providing a great place to work.

Portfolio: Offering the world a portfolio of drinks brands that anticipate and satisfy people's desires and needs.

Partners: Nurturing a winning network of partners and building mutual loyalty.

Planet: Being a responsible global citizen that makes a difference by helping to build and support sustainable communities.

Profit: Maximizing long-term return to shareholders, while being mindful of our overall responsibilities.

Productivity: Being a highly effective, lean and fast-moving organization.

The direct competitor of Coca-Cola is Pepsi there is always ongoing tough competition between these two rivals with Pepsi leading with 54% market share and Coke gradually growing and catching up 36%

market share in Pakistan. However on global level the situation is reverse.

Nestle and Shezan juices that do not pose a threat to Coke as yet but has the potential to do so as it is exploiting the natural aspect and health

issues more and more to make people conscious about physical fitness Coke has launched “Diet Coke” to counter the physical fitness demands.

Top Competitors for THE COCA-COLA COMPANY:

1. PEPSICO, INC. 2. Nestlé S.A. 3. Dr. Pepper Snapple Group, Inc.

Features

• Sports/fitness design;

• Whatever coke product has been put in the bottle by the dispensing unit the logo is present on the bottle;

• Ergonomically Designed.

Benefits

• Coke lifestyle connotations;

• Health/fitness connections;

• Fair-trade, sustainability, eco-friendly connections;

• Cheaper product in the long run.

Coca-Cola is partnering with Green Mountain Coffee Roasters to sell Coke products as part of Green Mountain’s new home beverage system

slated for a release later this year.

Green Mountain Coffee Roasters make the popular Keurig in-home single-serving coffee machine (which became a popular home and office item after Espresso's patents expired). Now they want to expand their in-

home beverage machine product line to include cold beverages.

Coca-Cola Looking to Bring Some Innovation to Your Home?

!!!It is mentioned that the system will not contain a carbon dioxide cylinder that needs to be changed periodically (something the Sodastream

system requires)!!!

Coca-Cola is investing $1.25 Billion for 10% of Green Mountain Coffee Roasters.

In the minds of Coca-Cola executives, it is Pepsi that they are always most worried about, not someone like Sodastream, and anything that allows them to potentially steal market share from Pepsi, makes them

very happy indeed.

HISTORY

Created and developed in 1893 by a young pharmacist named Caleb Bradham who began experimenting with combinations of spices, juices and syrups,introduced as Brad's Drink. It was renamed as Pepsi-Cola on August 28, 1898, then to Pepsi in 1961. He succeeded beyond all expectations, inventing the beverage world as Pepsi-Cola.

Caleb Bradham knew that to keep people returning to his pharmacy, he would have to turn it into a gathering place. Like many pharmacists at the turn of the century, he had a

soda fountain in his drugstore, where he served his customers

refreshing drinks that he created himself.

The first Pepsi home office and bottling plant in New Bern, North Carolina, opened April 5, 1905.

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 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 the wildly fluctuating

sugar prices as a result of World War I.

Assets were sold and Roy C. Megargel bought the Pepsi trade mark. Megargel was

unsuccessful, and soon Pepsi's assets were 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.

On three separate occasions between 1922 and 1933, The Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola

company, and it declined on each occasion.

During the Great Depression, Pepsi gained popularity following the

introduction in 1936 of a 12-ounce bottle. With a radio advertising campaign featuring the jingle 

“Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as

much for a nickel, too / Pepsi-Cola is the drink for you", arranged in such a

way that the jingle never ends..

Marketing of Pepsi

From the 1930s through the late 1950s,"Pepsi-Cola Hits The Spot" was the

most commonly used slogan in the days of old radio, classic motion pictures, and later television.

Film actress Joan Crawford became a spokesperson for Pepsi, appearing in commercials, television specials and televised beauty pageants on behalf of the

company. Crawford also had images of the soft drink placed prominently in several of her later films. 

In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind tasting between

Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better

tasting of the two soft drinks. PepsiCo took great advantage of the campaign

with television commercials reporting the results to the public.

In March 2013, Pepsi for the first time in 17 years reshaped its 20-ounce bottle. Although some areas did not get the

updated bottles until early 2014.

STRENGTHS• Product diversity

• Expensive distribution channel

• Corporate Social Responsibility (CSR) projects

• Competency in mergers and acquisitions

• 22 brands earning more than $1 billion per year

• Successful marketing and advertising campaigns

• Complementary product sales

• Proactive and progressive

Weaknesses

• Over-dependence on Wal-Mart

• Low pricing

• Questionable practices (using water but labeling it as mountain spring water)

• Much weaker brand awareness and market share in the world beverage market compared to Coca-Cola

• Too low net profit margin

Opportunities

• Growing beverages and snacks consumption in emerging markets (especially BRIC – Brazil, Russia, India and China)

• Increasing demand for healthy food and beverages

• Further expansion through acquisitions

• Bottled water consumption growth

• Savory snacks consumption growth

Threats

• Changes in consumer tastes

• Water scarcity

• Decreasing gross profit margin

• Legal requirements to disclose negative information on product labels

• Strong dollar

• Increased competition from Snyder’s

POLITICAL FACTORS

Government stability in the USA and other countries selling PepsiCo products is a major political factor for the company. PepsiCo is also impacted by tax rates and tax policy initiatives in local markets, as

well as, employment-related rules and regulations. Moreover, employee health and safety rules and regulations can be specifically

mentioned due to its high level of importance.

ECONOMICAL FACTORS

Economical factors impacting PepsiCo include rise of inflation and unemployment in the USA. Rising prices of raw materials have to be

mentioned as another significant economic factor. Additionally, changes in income levels of current and perspective PepsiCo

consumers can be highlighted as a substantial economic factor that impacts the business.

SOCIAL FACTORS

Social factors can also impact PepsiCo profitability in various manners depending on the nature of each individual factor.

Specifically, increasing popularity of healthy lifestyle

and changes in consumer attitudes towards carbonated drinks are social factors with potential detrimental impacts on the level of

consumption of PepsiCo products.

 

TECHNOLOGICAL FACTORS

Technological factors impacting PepsiCo profitability and growth prospects include breakthroughs in food and beverage

manufacturing and penetration of internet-enabled technologies in manufacturing processes. Moreover, innovations in product

research and development practices represent technological factors that might have positive impacts in terms of achieving the

main objective of profit maximization.

ENVIRONMENTAL FACTORS

Revenues of PepsiCo may also be impacted by a set of environmental factors such as environmental implications of packaging practices and increasing importance of alternative

energy sources. Moreover, impacts of global warming on consumer drinking patterns might have positive implications on

PepsiCo revenues.

LEGAL FACTORS

Legal factors that have direct impact on PepsiCo include potential changes in Food Standard Agency (FSA) regulations,

as well as, federal rules and regulations specific to food and beverage sector. Furthermore, consumer data protection

regulations and patents and protection of intellectual property may impact business performance of PepsiCo.

MARKETING STRATEGY

PepsiCo Corporate Strategy

PepsiCo mission statement has been worded by CEO Indra Nooyi as ‘Performance with Purpose’ and this principle is closely integrated with the

strategic direction chosen for the company.

1.International market expansion strategy through mergers and acquisitions.

 Mergers and acquisitions can offer the advantages of gaining access to competencies and infrastructure, reducing direct costs and overheads and achieving organic growth. PepsiCo has engaged in important

mergers and acquisitions such as acquisition of juice and diary businesses Lebedyansky and Wimm-Bill-Dann in Russia, Lucky snacks and Mabel cookies in

Brazil, and Dilexis cookies in Argentina.

2.Formation of strategic alliances in global scale.

Specifically, strategic partnerships have been formed with Tingyi in China in order to claim a share in growing beverage market in China. Moreover,

formation of a joint-venture with Tata in India to enhance drinking water manufacturing capabilities,

and initiation of strategic partnership with Almarai in Saudi Arabia can be mentioned to illustrate PepsiCo’s

adoption of strategic alliances as an integral part of the corporate strategy.

3.Strategic alliances

Important strategic alliances are formed by PepsiCo at home markets as well. Specifically, by forming a strategic alliance with Starbucks – a global coffee

house chain, PepsiCo has been able to claim its share from increasing energy drink market segment.

4.Focus on emerging markets.

The share of net revenues from developing and emerging markets such as China, India, and Russia have been increased from 24% in 2006 to 35% in 2012 (Annual Report, 2012) through mergers and acquisitions as discussed above, as well as, on the

basis of formation of direct subsidiaries. Moreover, PepsiCo CEO Indra Nooyi has publicly expressed

commitments to further increase the level of presence of the company in emerging markets.

5.Focus on organizational culture

Organizational culture can be defined as “the collection of words, actions, thoughts, and “stuff” that clarifies and reinforces what a company truly values”  and the nature of organisational culture

directly impacts its performance in short-term and long-term perspectives.

6.Developing and promoting the idea of One PepsiCo.

 Specifically, Indra Nooyi has been striving to increase the level of association of individual

brands with PepsiCo company values and philosophy through promoting the idea of One PepsiCo. This is meant to be facilitated through

sharing supply-chain management and infrastructure, operational costs for many brands within PepsiCo portfolio have been decreased.

7.Innovation in marketing initiatives.

A wide range of innovative marketing initiatives developed by PepsiCo marketing team include “Do Us a Flavor” campaign that involved consumers in 17 countries submitting flavour ideas, development

of Lipton Brisk Star Wars game application for mobile phones, and using celebrity endorsement in an innovative manner by attracting a popular singer

amongst Pepsi brand target customer segment Beyonce Knowles.

8.Focus on increasing core organic revenue.

Core organic revenue can be explained as a type of revenue that is achieved through increasing the volume of production and sales. PepsiCo core organic revenues

were increased by 5% during 2012 (Annual Report, 2012) and the company strategic level management is

committed to further increase the levels of core organic revenues through maintaining high quality standards

and applying effective marketing strategy.

THANKS FOR WHACHING!

VS.