International Marketing of PepsiCo: A Comprehensive Analysis

Desklib provides past papers and solved assignments for students. This report analyzes PepsiCo's international marketing strategies.

INTERNATIONAL MARKETING
Of Pepsi Co

Table of Contents
INTRODUCTION............................................................................................................................. 3
LO 1................................................................................................................................................ 4
P1 ANALYSE THE SCOPE AND KEY CONCEPTS OF INTERNATIONAL MARKETING.......................4
SCOPE OF INTERNATIONAL MARKETING...............................................................................5
P2 EXPLAIN THE RATIONALE FOR AN ORGANIZATION TO WANT TO MARKET
INTERNATIONALLY AND DESCRIBE THE VARIOUS ROUTES TO MARKET THEY CAN ADOPT.......7
M1 CHALLENGES AND OPPORTUNITIES OF IM TO PEPSI...........................................................9
LO 2.............................................................................................................................................. 11
P3 & M2 EVALUATE THE KEY CRITERIA AND SELECTION PROCESS TO USE WHEN
CONSIDERING WHICH INTERNATIONAL MARKET TO ENTER...................................................11
P4 EXPLAIN, USING EXAMPLES, THE DIFFERENT MARKET ENTRY STRATEGIES, INCLUDING THE
ADVANTAGES AND DISADVANTAGES OF EACH.......................................................................12
LO 3.............................................................................................................................................. 14
P5 PRESENT AN OVERVIEW OF THE KEY ARGUMENTS IN THE GLOBAL VS LOCAL DEBATE......14
P6 & M4 INVESTIGATE HOW THE PRODUCT, PRICING, PROMOTIONAL AND DISTRIBUTION
APPROACH DIFFERS IN A VARIETY OF INTERNATIONAL CONTEXTS.........................................15
M3 EVALUATE THE CONTEXT AND CIRCUMSTANCES IN WHICH AN ORGANIZATION SHOULD
ADOPT A GLOBAL OR LOCAL APPROACH, HIGHLIGHTING THE IMPLICATIONS OF DOING SO..17
LO 4.............................................................................................................................................. 18
CONCLUSION............................................................................................................................... 26
REFERENCES.................................................................................................................................27

INTRODUCTION
International marketing referees to the term when the business expands its marketing ventures
across borders where there is a possibility of selling the brand well. International marketing has
become increasingly popular these days as more and more companies are taking their business
forward and attracting the international market where the brand gets an edge and the brand
also gives tough competition to the local brands of the host country.
In this study, the scope and key concepts of international marketing are discussed along with
the various routes that the company can choose for marketing its products. The opportunities
and challenges faced by the firm while dealing with the pressure of international marketing are
also covered in the study. The choice of selection of the international market based on the key
criteria and characteristics of the market types are discussed in the study. The entry strategies
used by the company are made use of and includes a critical evaluation of the international
market context (Terpstra et al., 2012).

LO 1
P1 ANALYSE THE SCOPE AND KEY CONCEPTS OF INTERNATIONAL MARKETING
Overview of Pepsi Co
PepsiCo is an American multinational food, snack and beverages industry which has its
headquarters in Harrison, NY. PepsiCo engages in the manufacturing, marketing and
distribution activities of grain-based snack foods and beverages. It has acquired Tropicana
Products and Quaker Oats Company which has increased the brand portfolio of the company.
The company’s retail sales as of 2012 were $43.3 billion.
The concept of International Marketing
International Marketing refers to the marketing of the company executed by transatlantic
companies or by local companies expanding across national borders. According to the American
Marketing Association, international marketing is a process of planning and executing the
conception, price, promotion and distribution of goods. The aim is to satisfy the individual and
organizational goals of gaining popularity and acknowledgement of the company's products.
Simply put, international marketing is the application of marketing principles applied across
borders (Papadopoulos and Heslop, 2014).
The reasons for companies to get international are as follows-
Increased Economies of Scale- The increased economies of scale is when the firms get
an added advantage as their scale of production is very high. These firms when
producing extra and their economies are reaching high then the firms plan to expand
internationally. The channels of international marketing expand with the increase in the
economies of scale for the companies (Gordon, 2012).
High-profit opportunities in the International Market than the domestic market- This is
also one of the reasons why the companies choose to go international. The international
markets are appealing and offer greater opportunities for profit.

Huge Market Share- The huge market share of the company owned by foreign
stakeholders also gives the company an edge to expand to international marketing
approaches (Berthon et al., 2012).
Elongated life of the Product- When the life of the product elongates and it has reached
its saturation in the domestic market then the companies plan to take the product to
sell it internationally where it is perceived as a new product. Since the product gains a
name for itself in the home market, it gains popularity and the brand image increases in
the new market where the product is launched. Hence product saturation in the
domestic market is also a great initiative by the companies to retain sales and keep the
brand afloat (Terpstra et al., 2012).
These are some of the reasons why companies tend to market their product internationally.
The international marketing benefit to the firm is huge as it is a completely new market for the
company.
SCOPE OF INTERNATIONAL MARKETING
The international marketing has an abundant scope as the companies whose products are
unique, appealing, efficient, and durable and worth the value are liked and appreciated in all
parts of the world. The importance of international marketing is experienced in the global arena
in the following ways-
Better Connectivity between Nations
With the help of international marketing, there are better relations, network and connectivity
of the nations as there is an exchange of culture, value and businesses which results in cross-
national exposure of countries. For Pepsi Co, international marketing has resulted in benefit as
the company has diversified its brand in more than 200 countries. The company has maintained
great ties with its business partner countries the brand holds a great image wherever it is sold
(Lee and Carter, 2013).

Global Markets Reduce Risk and Open Opportunities
The benefit of international marketing for Pepsi is that it reduces the risk and opens up many
opportunities for the company to expand its sales. Pepsi Co has made use of its opportunities
very well to expand its brand in the global world. By expanding and tapping to the international
market, the company has been able to rake in significant revenues (Srivastava, 2017)

P2 EXPLAIN THE RATIONALE FOR AN ORGANIZATION TO WANT TO MARKET
INTERNATIONALLY AND DESCRIBE THE VARIOUS ROUTES TO MARKET THEY
CAN ADOPT
PepsiCo is originally a US-based brand which sells soft drinks like Diet Pepsi, Mountain Dew, 7
Up and other snacks items like Lays and Doritos. Till now, the company has active markets in
the UK, Europe and Asia where it sells its products and fetches great revenue from international
sales (Akaka et al., 2013).
The top reasons why Pepsi Co wants to expand to the international market are as follows-
Global Expansion as a means of Revenue Growth Driver- Many companies worldwide
earn the majority of their revenues through marketing internationally. This is because
the exchange of currency translates their sales to a higher amount and that the product,
when sold internationally, earns a brand repute s being foreign made. This benefits
Pepsi Co on a larger scale as its operations are carried out on an international scale. The
expansion to international markets also increases a company’s return on investment.
The company also remains secure and stable while functioning internationally
(Papadopoulos and Heslop, 2014).
Cultivates a Broader Customer Base- The other reason that drives companies to expand
internationally is to reach out to more customers and earn their brand loyalty so that
they become active consumers throughout their life. The company achieves this by
understanding the consumer needs of individuals in the region. After understanding the
needs and demands of the consumers, the brand makes a product that suits their taste
and preference. For example, Pepsi Co has come up with Diet Coke which is made for
those consumers who avoid sugar or are obese and want a sugar-free variant of coke.
This is how the brand Pepsi Co earns consumer base in newer regions by understanding
and studying their audience (Berthon et al., 2012).
The desire to Increase Market Share and Open New Market- This is another factor that
drives companies to expand internationally. The companies when wish to expand their
market share look for newer markets where the company can be a hit and so the shares

of the brand reach a higher level. The shares of the brand are a major source of income
and success for Pepsi Co. At present, the share value of Pepsi Co is $118.09. The value
keeps on increasing and decreasing depending on the global economic conditions.
When Pepsi Co expands to other regions, its share value gets affected for the good and
hence the millions of shares sold worldwide also gain a profit (Kluwer, 2018)
These are the top reasons for Pepsi Co to expand internationally as the markets have a lot of
untapped potential for the products the brand sells. The international marketing division of
Pepsi Co has proved beneficial and the company enjoys high sales in almost all the continents
where it operates.

M1 CHALLENGES AND OPPORTUNITIES OF IM TO PEPSI
There are a number of challenges that Pepsi Co as a company faces while going international
with its business operations. Some of the major challenges faced by companies are as follows-
The Physical Distance- The company managers and leaders cannot be present everywhere
where the company operates. The distance and time involved are too much and the
managers cannot monitor or supervise the business processes. The physical distance that
separates the main company from its various business locations is the biggest barrier as
they cannot maintain and run the company from so much distance and time differences.
Unfamiliar Cultures- The other challenge that companies face is the difference of culture in
the host country where the company has its expansion. The company before expanding to
the host country must equip itself with the cultural background of the host country. Often
the companies who fail in their international ventures are those who have not researched
well about the cultures of the host countries or have not been able to meet their
expectations. Social cultures also greatly effect if the company is going to be successful or
not. For example in the AE, selling or consuming alcohol is prohibited. Obviously, the
companies who sell alcoholic products cannot operate there. Similarly, other countries have
their own cultural and social norms when it comes to food and beverages (Papadopoulos
and Heslop, 2014).
Organizational Communication- When the company establishes a base in a foreign country,
it has to hire the personnel of the host country who will manage and handle the business
and will report developments to the headquarters. Often there is a communication barrier
between the managers and workers of the host country and the home country. The ideas or
instructions are misunderstood or the managers may not agree on a common decision. Not
frequent conversations or communication processes also leads to the fallout of the brand
with the operations in the host country (Berthon et al., 2012).
Tariffs and Export Fees- Often the companies face barrier from the government or the legal
aspects of doing business. The country where the firm is planning to expand may have very
high taxes for foreign entry businesses as a result of which, the company has to shelve a

huge amount even before it starts to do business in the host country. Along with the legal
requirements, the monthly or yearly taxes paid by them to the government of both their
host and home countries rip the company of assets. This is also one of the major reasons
why companies do not engage in the international market as they do not have the funds to
do so. Pepsi Co has expanded to other countries only when it had emerged as a leader of
the beverages industry in its home country. That gave the company huge profits and
sustainable assets along with popularity among the masses and in the international market
which made its entry to international markets easy (Dynamic Language, 2014).
These are some of the main challenges that companies face while operating internationally.
Pepsi Co as a company has tackled these challenges fairly well.
Routes to Market
The route to market is the direction through which the company enters into the market with its
products for a commercial motive to sell and make profits. The route to market is the way of
getting into the market to meet the consumers who will be purchasing the product. The various
routes of the market are opening a shop where the brand is in full display and attracts the
consumers by putting brand's products on display. Building a website is also a way to get to the
audience as most people spend time online on their phones and also prefer online shopping.
Selling the product to existing sellers and retailers who already exist in the market is also one
way to get into the market with your product (Terpstra et al., 2012).

LO 2
P3 & M2 EVALUATE THE KEY CRITERIA AND SELECTION PROCESS TO USE
WHEN CONSIDERING WHICH INTERNATIONAL MARKET TO ENTER
To consider the right international market, there are various parameters to be considered.
Some of the basic key criteria and selection process methods are as follows-
1. Research the Market- Researching the market where the company wants to expand and
penetrate the market is vital. The research about the market can be done using primary or
secondary data resources.
2. Select more than one Market- There is always more than one ways to enter the market.
Companies often try to go through the market in all possible ways. The company Pepsi Co has
also foraged its way into the international markets by creating its own marketing channels to
lead the market (Berthon et al., 2012).
3. Profit Making Capacity- While selecting which market route to choose, the companies must
always consider the profit-making capacity of the market route. Some marketing channels are
more profitable than the others so it is important to choose well.
4. Size of the Market for the Product- The size of the market where the company plans to
expand is also very important. Some markets are smaller in size so getting a hold in such a
market is relatively easy as compared to getting a foothold in the large and pre-established
markets where getting a place for oneself is quite difficult (Dearin, 2017).
These are some important considerations to take note of before expanding the business into
the international market. The routes of the market greatly determine the success of the brand
in the international market.

P4 EXPLAIN, USING EXAMPLES, THE DIFFERENT MARKET ENTRY STRATEGIES,
INCLUDING THE ADVANTAGES AND DISADVANTAGES OF EACH
There are a number of market entry strategies which companies use to sell their products in the
market. Some of these methods along with their pros, cons and examples are as follows-
Direct Exporting- With direct exporting, the companies sell their products to the host
market by directly exporting the products in bulk on order. The host country places order
then the company ships the orders.
Pros- the Company does not have to officially establish itself in the host country and can
still sell its products there (Ghauri et al., 2010).
Cons- This is a time-consuming process.
Example- Amazon exports products all over the world
Licensing- Licensing means that an authority grants permission to the company to
undertake its business activities in the selected region. A license allows a company to do
business freely.
Pros- With the help of licensing, the company gets access to the whole market.
Cons- It is a tedious process and may be unsuccessful if the market is not researched
properly.
Example- McDonald’s
Franchising- By franchising, it is meant that the company agrees to sell its products through
franchise stores which are a subset of the parent company (Papadopoulos and Heslop,
2014).
Pros- a Company can create a franchise and open up numerous stores in a region to
generate higher sales.
Cons- Only certain companies like food outlets benefit from this method
Example- Subway
Partnering- In partnering, the new company partners with an existing company which is
more experienced with the market. The products carry the brand name of the partner