Pepsi Market Analysis Report: Internal & External Business Analysis

This report provides a comprehensive market analysis of PepsiCo, a leading player in the soft beverage industry. It begins with an introduction highlighting PepsiCo's market position and the need for in-depth research. The internal business environment section covers company information, marketing efforts, and a SWOT analysis, identifying strengths such as a diverse product portfolio and weaknesses like reliance on North American sales. The report then examines the external business environment, including industry trends, customer preferences, and legal, ethical, and sustainability considerations. It discusses projected changes, comparative market information, and opportunities presented by new technologies. The analysis concludes that while PepsiCo has a strong ROI, it faces more threats than weaknesses, emphasizing the need to adapt to market changes and leverage existing resources to maintain its market position.

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PEPSI MARKET ANALYSIS
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1PEPSI MARKET ANALYSIS
Abstract
PepsiCo is one of the leading players in the soft beverage concentrates industry.
However, it has to be noted that the main player is Coca-Cola, which it has not been able to
surpass in a long time. Therefore, this market analysis has been done for PepsiCo for the
purpose of finding out internal and external strengths and weaknesses along with possible
market threats to avoid and also possible opportunities that the future holds for the market.

2PEPSI MARKET ANALYSIS
Table of Contents
Introduction................................................................................................................................3
Internal business environment....................................................................................................3
Company information............................................................................................................3
Information relating to marketing efforts...............................................................................3
SWOT analysis.......................................................................................................................4
Current capabilities and resources.........................................................................................4
External business environment..................................................................................................4
Projected changes...................................................................................................................5
Comparative market information...........................................................................................5
Industry and customer trends.................................................................................................5
Legal, Ethical and Sustainability considerations...................................................................5
Opportunities presented by new technologies........................................................................6
Conclusion..................................................................................................................................6

3PEPSI MARKET ANALYSIS
Introduction
PepsiCo has been one of the leading players in the soft beverage concentrates
industry. It has also been one of the oldest and most reputed brands in the industry. Pepsi is
known for selling a unique taste of carbonated concentrate, which has given it a significant
edge over most of its competitors in the industry. However, it has only been able to capture a
market share of 20% worldwide, which is the reason an extensive market research has to be
conducted for its growth and market opportunities (Kayaba, Boyraz & Derdiyok, 2017).
Internal business environment
Company information
The core activities of the company includes acquisition of raw materials from the
suppliers, manufacturing the product, and distributing the products through retailers and
distributors. Core activities also include product testing and experimenting (Hafiz, 2015).
The typical customer profile of the company involves the customers who are aged
between 15-45 years. Honesty, fairness and integrity are the core business values of the
company. As per the business direction of the company, it is striving towards a change across
the company, value chain, industry and the world as a whole (Hafiz, 2015).
Information relating to marketing efforts
As of 2015, PepsiCo got a return of $34.7Bn against a marketing expenditure of
$3.9Bn (Mayureshnikam & Patil, 2015). This has been the highest return on investment for
the company in the year, which is greater than all of its competitors and the main thing that
has to be noted in this regard is the fact that the company has been making good progress in
its current marketing efforts as well. This is mainly because of the fact that it only spends

4PEPSI MARKET ANALYSIS
0.2% of its gross profits for a desired and measured marketing outcome, which is the least in
the market as of now (Mayureshnikam & Patil, 2015).
SWOT analysis
The biggest strength of the company is that it has been able to make a more diverse
portfolio than that of Coca-Cola, which is its top rival in the industry. It has also been
growing premium and sugar free product portfolio.
The weakness is that it relies too much on the North American sales for its
sustainability.
The growth of low calorie beverages has been making a trend in the market, like value
added bottle water, providing the perfect opportunity for PepsiCo to venture into it. The
threat however lies in the fact that its brand value has dropped by 4% (Oubanas et al., 2018)).
Current capabilities and resources
The main thing that has to be considered is the fact that the current technological
resources that the company has, enables it to mass manufacture effectively to meet the
customer demands. However, it does need special assistance in minimizing production costs,
which is something that Coca-Cola has been able to do effectively, which has helped it in
maximizing profits (Brick et al., 2017). This is the only thing that the company needs to
improve on, to get a top competitive edge in the market.
External business environment
The market growth of the soft beverage concentrates industry has been a sluggish 4%
in the last 4 years, which is something to worry about. This is because since the market is not
growing, the increasing competition from the new players are only affecting the market share
of the company itself. Furthermore, there is a risk that the modern generation has been

5PEPSI MARKET ANALYSIS
increasingly health conscious and has been highly eliminating caffeine and carbonated drinks
from their diets, which could significantly impact the business growth of the company
(Australia Soft Drinks Market Research Reports & Analysis page 1, 2019).
Projected changes
In terms of labour force, the employment rate in the country of Australia has been
62.6%, compared to 60.7% in 2014. This means that the labour force in the country is
growing, providing an opportunity for the company to be employing sufficient number of
workers (Roos & Cheshire, 2019).
The Australian population growth rate has been a steady 1.6%, which means in the
future, there exists an opportunity to cater to a larger segment of the market. The current
annual GDP growth rate is 2% however, which is a threat because with a sluggish economic
growth, market growth and opportunities would also be limited (Roos & Cheshire, 2019).
Comparative market information
One of the most commendable market practices that is being practiced in the industry
is that of Coca-Cola. The main thing that has to be noted about this practice is the fact that its
annual budgeting is revised from zero, and every expenditure has to be justified, rather than a
fixed allocated budget for every activity, which sometimes exceeds the budget or the money
is used in an inefficient manner (Mayureshnikam & Patil, 2015).
Industry and customer trends
The main thing that has to be considered is the fact that the rising customer issue
involves the rise of customers who are highly health conscious who happen to be consuming
more health drinks than concentrates. Furthermore, ecologically, plastic bottles have been
highly regarded as a harmful element in the environment, and manufacturers of the same
have been known to pollute the environment (Mayureshnikam & Patil, 2015).

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Legal, Ethical and Sustainability considerations
Legally, the standard 2.6.2 applies in Australia which requires soft beverage products
to have a defined composition of ingredients for the manufacture of the drink, which restricts
the company from experimenting with its taste (Rich, 2018).
Ethically, the company must make sure that it does not pose any threat with any
ingredient that the company uses, to the health of the customers. Sustainably, it has to be
noted that the market for health drinks have been growing more than that of the soft beverage
concentrates, which is something to worry about for the industry giants like PepsiCo (Rich,
2018).
Opportunities presented by new technologies
There has been no breakthrough in the technological advancement within the industry.
However, the factory equipment have been made to be more energy and cost efficient, which
provides the groundwork for the company to maximize profits by producing at the right
amount of units (Mayureshnikam & Patil, 2015).
Conclusion
Therefore, to conclude, it could be said that the main thing that has to be regarded in
this context is the fact that PepsiCo is currently playing in a market with a low growth, but
significant ROI. However, there are more threats than weaknesses that the company has to
look forward to in order to make sure that the business is sustained for the future. There are
significant opportunities in the market and with the current resources that it has, PepsiCo
could soon be the leading marketing giant in the industry.

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References
Australia Soft Drinks Market Research Reports & Analysis page 1. (2019). Retrieved 9
August 2019, from
https://www.marketresearch.com/seek/Soft-Drinks-Australia/475/1358/1.html
Brick, D. J., Fitzsimons, G. M., Chartrand, T. L., & Fitzsimons, G. J. (2017). Coke vs. Pepsi:
Brand compatibility, relationship power, and life satisfaction. Journal of Consumer
Research, 44(5), 991-1014.
Hafiz, R. (2015). Rethinking brand identity to become an iconic brand-a study on Pepsi.
Asian Business Review, 5(3), 97-102.
Kayabaº, T. D., Boyraz, G., & Derdiyok, R. (2017). Examining Coca-Cola and Pepsi Brands
under the Basis of Globalisation and Multinational Companies. International Journal
of Academic Research in Business and Social Sciences, 7(12), 351-358.
Mayureshnikam, Vishal V. Patil (2019). Retrieved 9 August 2019, from
http://www.iosrjournals.org/iosr-jbm/papers/Conf.ADMIFMS1808-2018/Volume-
1/12.%2077-85.pdf
Oubanas, H., Gejadze, I., Malaterre, P. O., & Mercier, F. (2018). River discharge estimation
under uncertainty from synthetic SWOT-type observations using variational data
assimilation. La Houille Blanche, (2), 84-89.
Rich, K. (2018). Comment on:‘The nutritional content of supermarket beverages: a cross-
sectional analysis of New Zealand, Australia, Canada and the UK’by Chepulis et al.
Public health nutrition, 21(13), 2528-2531.

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Roos, G., & Cheshire, A. (2019). Conclusions for South Australia From the Analysis. In
Harnessing Marine Macroalgae for Industrial Purposes in an Australian Context:
Emerging Research and Opportunities (pp. 171-179). IGI Global.