Introduction to Marketing Assignment | PepsiCo

RUNNING HEAD: Introduction to Marketing
Introduction to Marketing
PepsiCo Limited

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Contents
Executive Summary...............................................................................................................................2
Introduction and Background of PepsiCo..............................................................................................2
Analysis of the Marketing Environment................................................................................................3
External Environment........................................................................................................................4
Internal Environment.........................................................................................................................4
SWOT of PepsiCo.............................................................................................................................6
Recommendations.................................................................................................................................8
Target Market....................................................................................................................................8
New Product and New Service Description.......................................................................................8
Marketing Mix Strategies..................................................................................................................9
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10

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Executive Summary
The purpose of this report is to find, understand and analyse the marketing activities,
operations and strategies. It also considers how PepsiCo products are marketed and
distributed in global business settings. This report includes a comprehensive study of
marketing environment, SWOT analysis, marketing mix and target market of PepsiCo.
Introduction and Background of PepsiCo
PepsiCo is global Food, Beverage and Snack Company. It is headquartered in Purchase, New
York in USA. It was founded in 1898. It has gone through over 100 years of journey and
emerged as a global market leader in Beverage Industry. PepsiCo uses its own operations,
manufacturing units, authorised bottlers, contract manufactures and other third parties to
manufacture, market, distribute and sell carbonated and non-carbonated beverages, foods and
grain-based snacks. It is considered to be one of the global leaders in consumer products
industry. The current PepsiCo Company was established through a merger in 1965 between
PepsiCola Company and Frito-Lay, Inc. With this merger PepsiCo has expanded its product
offering and in market it has offered a broad range of beverage and food brands. In 1966, it
has entered into Asian Market through entering into Japan, and at the same it has entered into
eastern European Market (PepsiCo 2017). Their Doritos brand was introduced and became
one of the most popular brands in USA. In 1970, PepsiCo has moved to new headquarter
from New York to Purchase and positively responded with respect to consumer preference of
recyclable plastic bottles. In 1971, it redesigned its old traditional logo. In 1974, PepsiCo
became the first American Company to produce and sale consumer products in Soviet Union.
Then PepsiCo started to acquire businesses. In 1977 and 1978, it has acquired Pizza Hut and
Taco Bell. In 1982, it has taken a great move to enter into China market. Also it has
introduced caffeine free colas such as Pepsi Free and Diet Pepsi Free. In 1984, it launched
most famous advertising campaigns of its history with Michael Jackson and Usher and it
became the “The Choice of New Generation”. In 1986, PepsiCo listed on Tokyo stock
exchange and also acquired Mug Root Beer and purchased Kentucky Fried Chicken (KFC).
In continuation, PepsiCo acquired Walkers Crisps and Smith Crisps; the two leading snack
food company of United Kingdom (PepsiCo, 2017). Most importantly it entered into top 25
of fortune 500 companies. In, 1990, it acquired Mexico's largest cookie company Gamesa.
Then in 1991, it joined hands with Unilever to enter into tea market. In 1994, it became the

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first company to enter into Vietnam market. In 1995, it introduced the most chips brand Lay’s
throughout 20 countries. PepsiCo became the first company to film its commercial in space in
1996. In 1998, it has acquired Tropicana products from Seagram Company Ltd and interred
into Indian Market. In 2001, it completed its one of the major merge with The Quaker Oats
Company (PepsiCo, 2017). In 2006, the present Chief Executive Officer of PepsiCo Indra
Nooyi was named as CEO of PepsiCo. PepsiCo had taken a major step in realisation of
interdependence of society and business organisations through their campaign “Performance
with Purpose”. In 2008, it had announced its most visionary plan to invest $1Bilion in China
to expand its product portfolio in emerging markets. Their product innovation took a next big
step by introducing Pepsi Next, a reduced calorie coal in 2012. In 2014, Pepsi Spire, an
innovative fountain beverage dispenser which enabled consumers to customised beverages.
Through above described background of PepsiCo, it can be said that PepsiCo has developed
as brand of consumer’s choice through its innovative product offering, smart advertising and
responsible initiatives for society. Now a global leader in its industry, this company has its
presence in 200 countries with 22 popular brands such as Pepsi, Lay’s, Gatorade's, Quaker
and Tropicana. It is also generating more $1 Billion retail annual sales. As a company in
beverage industry it has established its strong presence through well planned timely mergers
and acquisitions (PepsiCo, 2017).
Analysis of the Marketing Environment
Marketing Environment of PepsiCo broadly includes all internal and external factors which
impacts the marketing operations of PepsiCo. Some these factors are controllable and some
of these are uncontrollable. Being a true global company, PepsiCo is surrounded by dynamic,
complex and multi-dimensional marketing environment. PepsiCo must be well-aware of its
marketing environment locally, nationally and globally. Some environmental factors provide
opportunities and some creates threats. Comprehensively, internal factors include employees,
suppliers, distributors, retails, customers, competitors, government, general public and
shareholders. Sometimes these factors altogether referred as microenvironment. External
factors include political, economic, legal, social and technological factors. All these factors
impact the long term planning, operational aspect and performance in terms of top line and
bottom line (Dawson, 2014).

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External Environment
Being a true global company, PepsiCo has a diversified multi-cultured and multi-faceted
external environment.
Manufacturing and distribution process of PepsiCo is subject to different countries’ state law
and political group’s influences. The concern of state government, central government of
different countries is different. In such situation PepsiCo has clearly define its manufacturing
process and distribution process in accordance with state law.
Regarding economic factors, PepsiCo face multi-currency and multi-country issues. It has to
decide and design the pricing of it products according to the economic aspect of the country
in consideration. Global fluctuations in fuel prices, increasing foreign exchange
differentiations and global economic regression are somehow impacting policies of PepsiCo
(Belch and Belch, 2014).
Through differentiated social environment, PepsiCo has an opportunity to serve a broad range
of customer group. Different cultures, sub-cultures are guiding PepsiCo in developing their
marketing strategies. These factors impact the advertising policies and campaigns. Also,
concerns to environmental issues are increasing in global context. Thus PepsiCo has to
consider different country specific environmental issues.
Increasing focus on social media, digital content are given the opportunity to reach targeted
customers in a more cost effective manner. The targeted audience can be reached in a better
way through use of technology in marketing adoption (Ritter, 2014).
Internal Environment
The internal environment of PepsiCo is giving the core competencies to serve its customers
globally in a better way. PepsiCo employees through-out their value chain are well trained to
serve customers in a better manner. Increased customer satisfaction of PepsiCo is due its
well-trained employees. The multi-cultured employees bring a sense of diversity in serving
clients for PepsiCo. PepsiCo has near about 264000 employees globally and employing

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11300 employees in USA only. The employment level is subject to seasonality of the
business (PepsiCo, 2016).
It has a variety of customer groups such as wholesalers, distributers, drug stores, foodservice
customers, grocery stores, mass merchandisers, convenience stores, discount/dollar stores,
membership stores, e-commerce retailers and authorized independent bottlers. PepsiCo
provides financial assistance to its customers to support in their selling, distribution and
promotion activities. It certainly enables the company to achieve more revenue targets (Ritter,
2014).
Their marketing support activities like retailer incentive plan, product placement support
activities, vending and cooler equipment support to retailer and distributor, market place
support and point of purchase material support has helped its unique marketing operations to
grow its supply chain.
PepsiCo deal in a highly competitive business environment globally. The Coca-Coal
company is their primary competitor in business operations from customer point of view.
Also in beverage section their competition is with different industry player such as Kellogg
Company, DPSG, Mondelez International, Inc., Monster Beverage Corporation, Nestlé S.A.,
The Kraft Heinz Company, Red Bull GmbH and Snyder’s-Lance, Inc. PepsiCo hold a
leadership position in its different product category in USA and globally. Their unique
marketing activities have provided them with better customer loyalty and brand recognition
(Belch and Belch, 2014).
PepsiCo has its own research and development activities in global context. Their most
product innovations are mostly consumer focused and safe for health and wellness aspect.
PepsiCo has its different research centres located in different countries like the United Arab
Emirates, China, India, Brazil, Mexico, Russia, the United Kingdom and the United States.
Their unique research and development activities are a better combination of food science,
nutrition science, and engineering and consumer insights. They have more focused future
plan to develop nutritious and convenient beverages, foods and snacks products for their
customer group globally through their state of the art research and development (Kozlenkova,
Samaha and Palmatier, 2014).

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To confirm with global standards and policies PepsiCo is always working for the better safety
policy, employee benefits policy, providing better working environment for their employees.
It also ensures that its contractors also maintain the same standards in operations.
Shareholders of PepsiCo are always appreciated with better financial performance and
systematic dividend policies. The availability transparent financial information is providing
better confidence in investors and enabling the global investors’ confidence. Being global
company and aligned to its organisational objectives; PepsiCo’s approach to serve its
investors in a better approach provides its financial support from its trusted long term
investors (Krasnikov and Jayachandran, 2013).
The government is also a consideration part of its broad marketing aspect as they are policy
makers of market. The different government has different aspect of thinking in treating
corporate, thus having presence in diffident countries; PepsiCo has to deal with different
government in different manner (Schilke, Reimann and Thomas, 2013).
In realistic approach, PepsiCo has to motivate its retailers, wholesalers and distributors in
different way in different countries. It has to plan, design and implement different marketing
programs in different country in different manner.
Thus, PepsiCo has also a very dynamic internal environment in which it has to operate in
such a manner that it can produce and achieve the best possible outcome.
SWOT of PepsiCo
PepsiCo, being a global company and serving a global customer base; is surrounded by a
unique and diversified macro and micro environment. The environment is provided with
unique strengths, weaknesses, opportunities and threats.
PepsiCo has strong global presence and loyal global customer base. It has most appealing
branding and packaging in different countries in different manner. The product portfolio is
very much attracted to the new generation globally. Their strong supply chain network
provides the unique strengths to serve geographically scattered customers in a timely manner.
Their continuous product innovation in context with taste, preference, safety always place
PepsiCo as consumer oriented company globally. It has always shown a better cultural
respect through its advertisement campaigns globally. Their well-planned distribution

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network is a competitive advantage for their service delivery. Their product is globally well
accepted due to superior quality of taste. Their huge distributor base, retailer base through-out
geographies enabled PepsiCo become a market leader (Santos and Laczniak, 2015).
PepsiCo is facing brutal competition in the markets where Coca-Cola is the market leader. It
has found very hard to enter those markets and also after entering, achieving the sales market.
Customers are influenced by the better product serving and availability from Coca-Cola. Also
in some market PepsiCo lack novelty in their marketing campaigns. Huge competition from
established market leaders, PepsiCo found itself for cash bleed position in different
geographies. It certainly impacts the overall performance of PepsiCo globally (Pavlou and
Stewart, 2015).
PepsiCo is company which has created opportunities for itself through a globally unique
strategy. It has entered the untapped market with well-planned mergers and acquisitions.
PepsiCo is a company which has true presence in global markets and serving a broad
customer base. Also increasing youth customer base is an opportunity for PepsiCo in global
aspect. The multi-dimensional cultural factors, broad demographical factors and broad market
base are providing sea of opportunity for PepsiCo. The global market context is providing an
opportunity for PepsiCo to grow in multi-fold (Zhou, Poon and Wang, 2015).
PepsiCo is facing different threats in different markets. The different geographical, political
and governmental factors are creating certain opportunities and along with all these created
some threats also. PepsiCo has now facing different threats as in market different substitutes
are available. Also, consumers are becoming more health conscious and the market for
carbonated soft drinks are decreasing due to global impact factors. The consumers also
concerned about environmental degradation in huge water usage in soft drink production
(Gopaldas, 2015).
The demanding customer, governing governmental pressure, political influence, and social
groups’ considerations are creating sea of opportunities along with threats. It has distinct
strengths in different markets which will enable its market leadership in more solid manner.
Its weakness will guide in developing more strategic vision for serving customers.

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Recommendations
The above discussed marketing environmental aspects, SWOT analysis provides PepsiCo a
broad aspect of recommendations in deciding about its target market, new product
development and marketing mix strategies.
Target Market
It has well diversified target market as North America, Latin America, Europe, Sub-Saharan
Africa, Middle East, North Africa and Asia depending on the broad geographical
segmentation. Also it has targeted its customer base on the basis of its product offering such
as Frito-Lay, Quaker Foods, and Beverages products. The target market is more precisely
developed by PepsiCo on the basis of age groups namely for kids, for youth, for aged and for
old age customer base. It can increase its customer base through increasing the target market
criteria. The market consideration, continuous market insights from its sales team, PepsiCo
has enabled its strategic vision to serve more customer base in such a manner so that it can
create a loyal customer base (Urde and Koch, 2014).
New Product and New Service Description
PepsiCo has a well-planned product portfolio which consists of well-known and well-
valuable brands of $1 Billion. Their highly complementary product portfolio made its
position as number one in salty snacks in worldwide market. It has also gained a strong
position globally in beverages market as global leader number two. It has ensured its
commendable 4% year on year organic growth through a well-balanced product portfolio
(Kraiczy, Hack and Kellermanns, 2014). It has extended its product portfolio through its
Tropicana essentials, Quaker products, Simply Snacks from Frito-Lay and Sabra Spreads. Its
iconic brand includes Pepsi, which broadly included three products such as Pepsi, Diet Pepsi
and Pepsi MAX. In sports nutrition product portfolio, it has Gatorade's brand. It can increase
its product portfolio with new flavours, mew and packaging styles. Also, service portfolio can
be increased through broad range offerings to retailers, distributors and wholesalers
(Blankson et al., 2013).

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Marketing Mix Strategies
PepsiCo has designed its marketing mix in a strategic manner so that it can serve its
customers in a cost effective manner. It has products category like beverage products,
Savoury Food Snacks, breakfast cereals, cakes and cake mixes and Baked Snacks. The broad
product offerings have provided PepsiCo a better opportunity of marketing serving. The
expenses regarding transportation, labour and ingredients has increased the pressure of
increased price (Sinapuelas, Wang and Bohlmann, 2015). But PepsiCo has priced its products
low with partnership with Wal-Mart. PepsiCo can reduce its overheads and expenses to
reduce its cost of products and can serve more customer base. The market which is served by
PepsiCo is global and huge in size. It has planned its placing strategies with consideration of
it supply chain. It can enter into the untapped market with its old and evergreen approach of
merger and acquisition strategy. PepsiCo has its unique stuff promotion policies, Pepsi
Throwback promotion, and promotion in different global events; made PepsiCo a well-
articulated brand image and recognition. Its website provides better physical evidence to its
customers. The trained people of PepsiCo are the strategic asset for its business operations
(van den Driest and Weed, 2014).
Conclusion
In conclusion it can be said that marketing strategy of PepsiCo is well-planed and made its
approach to become global leader as more achievable. Its marketing approach in digital age
and globalised business aspect is truly commendable (Walsh, Shiu, and Hassan, 2014).

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References
Ritter, J., 2014. " What is the role of marketing in strategic planning"?. The Business &
Management Review, 4(4), p.88.
PepsiCo 2016. Annual Report 2016 Retrieved 15 September 2017, from
http://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2016-annual-report.pdf
PepsiCo 2017. Global Brands Retrieved 15 September 2017, from
http://www.pepsico.com/company/global-brands
Dawson, J.A., 2014. The Marketing Environment (RLE Marketing)(Vol. 1). Routledge.
PepsiCo 2017. Our History Retrieved 15 September 2017, from
http://www.pepsico.com/Company/Our-History
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