Type of ownership 7. Examining the Strategic Plans for Growth PepsiCo. contact: [email protected], [email protected], Acquainted With the Night – Summary and Analysis. On Instagram, it has more than a million followers. PepsiCo has adopted effective growth strategies in the context of global food and beverages industry. Its snacks and beverages are popular in more than 200 countries. Regularly updating the package design also helps retain customers and attract new ones. This aspect of the SWOT analysis framework outlines internal strategic factors that enable firms to fulfill their business goals. PepsiCo uses a very simple marketing strategy that not only cuts down its cost of advertising and marketing but also makes the branding of its products much easier. It leveraged the power of social media to run the campaign. The brand added several health friendly and nutritious products to its customers. It also presents new challenges and risks. However, it also has separate accounts for separate products. Global Sweet and Salty Snacks Market (2021-2026) with Top Growth Companies: General Mills, Unichips SpA, Pepsi, Kraft Foods Group, Walkers Crisps Advanced Persistent Threat Protection Market Set to Grow Massively by 2021-2027 with Profiling Players – Broadcom (US), McAfee (US), Kaspersky (Russia), Fortinet (US) It sold more than 40,000 Hello Goodness vending machines, coolers and racks across US. A strategic objective linked to this intensive growth strategy is to boost R&D investments for product innovation. The company here try to find more market segments and new markets to introduce its current products. One of PepsiCo’s growth strategies is to proactively adapt to emerging market trends for natural, healthy, and nutritious beverages. Moreover, consumers’ tastes and expectations have kept changing which also require change in business strategy for remaining competitive and for continuous growth. To retain its popularity and strong image, Pepsi invests in CSR and sustainability. Notwithstandin… Digitalization has helped Pepsi respond faster and better to the customer demand. Is that part of what you’re trying to do? Product innovation becomes essential because of continuously evolving tastes of the consumers and there are other factors too that necessitate continuous changes across the product spectrum. It has positioned itself as a snacks and beverages brand that include nutritious and low calorie choices apart from normal soda products. A strategic objective linked to this intensive growth strategy is to minimize costs and prices to attract more consumers despite market saturation. PepsiCo acquired such brands as Gatorade, Tropicana, Doritos, Quaker Oats … All these things are essential for business growth from reducing production costs to increasing the efficiency of business processes. Each one invests heavily in marketing and product innovation for growth.Pepsi along with its consolidated subsidiaries employs 263,000 people out of which 113,000 were employed in US alone[1]. Product quality and packaging are very important elements of Pepsi’s marketing strategy where it has continued to innovate whether in terms of product quality, variety as well as packaging. It promotes its products as well as sponsorships and events, all through its Facebook accounts. The global Beverage Market size was valued at USD 1020 billion at the end of 2021. The company also sometimes has special promotional offers with discounted prices. On the one hand, social media has helped the brands with marketing to allow them to connect with millions of customers globally in an instant and without any financial investment. This mix of e-commerce, digitization and data analytics has enabled Pepsi to improve the consumer experience which can be the driver of business growth in the long and the short term. Intensive growth strategies: A closer examination. 2017 was an year of healthy growth for the brand when Pepsico achieved a co… Pepsi’s main Twitter account has more than 3.1 million followers. The relationship between Pepsi and Sports is old. Pepsico’s success and growth can partly be attributed to their marketing strategies. 2.1. Pepsi owned Gatorade already had a partnership with NBA. PepsiCo aims to ‘capture growth opportunities’ with leadership shuffle. PepsiCo’s generic strategy for competitive advantage matches its intensive strategy to ensure long-term growth. In relation, PepsiCo’s strategic objective for the broad differentiation generic strategy is to innovate products to address concerns about their health effects. Big Data is also helping understand and cater to customer demand for food products in North America. However, Pepsi shares both videos and pictures on Instagram since the social media channel has both the features. Any form of damage to reputation or brand image due to any reason or loss of consumer confidence can cause a fall in demand for Pepsi’s products. A firms generic strategy (based on Porters model) defines th… He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. PepsiCo's Grounded Growth Strategy. Unfortunately, these plans were eventually scuttled by the resolution of a Federal Trade Commission antitrust suit brought against Frito-Lay in 1963. It has divided its products into three categories based on the level of nutrition called Fun for You, Good for You and Better for You. Consumers want more healthy and nutritious beverages that suit their health. It was formed after the merger of Pepsi and Frito lay in 1965. Though the US economic recovery is now well and truly under way, we believe that demand in soft drinks will follow a general long-term declining trend, while industry snacks growth will be subdued. Improve water-use efficiency by 15% in our agricultural supply chain (focused on corn and potatoes) in high water-risk areas by 2025 3. In the case of PepsiCo, the Company has revenue of $13.88 billion in the first quarter of 2020.. PepsiCo has a 7.7% increase in Net sales. On Facebook, Pepsi has more than 37 million followers. This generic strategy enables business competitive advantage by attracting consumers to some unique features of the firm’s products. Some of its digital campaigns have enjoyed immense popularity like the ‘Bring Home Happiness’ campaign containing a 20 minutes long video [1]. The brand is using digital technology in other aspects of business too but in the area of marketing, the role of digital technology and that of social media is especially very important. Even after the recession, the soda brands have continued to face difficulties because of the sweeping changes globally throughout the industry. [. For global brands like Pepsi whose portfolio includes several respectable names, it is critical to maintain a good image and reputation. Improving and modernizing manufacturing processes for cost reduction. PepsiCo is constantly spreading itself globally, and at present, it has its operations going on over 200 countries! The company has operated continuously for over 40 years offering a range of quality products Pepsi, Diet Pepsi, Miranda, 7UP, Diet 7UP, Mountain Dew. Strong brand image 2. Market Penetration. Growing e-commerce in US and China was one of the primary factors driving business growth in 2017 in these markets. Identifying opportunities to grow, transform and broaden its product portfolio. PepsiCo is global snacks leader of the world, with No. Table 1: Financial Performance of the PepsiCo. Nature of business 6. INCLUDES! Its customers include the teenagers and youth with a modern and fast moving lifestyle. Moreover, the Facebook and Twitter accounts can be used to keep fans and followers updated. The brand continued to perform well even during the economic recession. It has uploaded more than 140 videos to its ‘YouTube’ account including advertisement and educational videos promoting its brand and products. Publisher. Attractive packages can also drive sales higher and it is why Pepsi has continued to innovate the packaging style and sizes based on consumer demand and expectations. In other words you can say, it is a brand for the millenials. Pepsi has maintained a pricing strategy that has made it an affordable brand. Let’s have a look over how Pepsi has connected with its fans and followers through social media. It expanded its selection of low and zero calorie beverages as well as Aqua Minerale water + juice along with new flavours of Kevita Master Brew Kambocha. The brand continued to perform well even during the economic recession. Apart from these promotional campaigns, the brand has also relied heavily on sponsorships and partnerships to grow brand awareness as well as for building customer loyalty. However, market development is only a supporting intensive growth strategy because PepsiCo already has significant presence in all regional markets worldwide. Published. For example, PepsiCo uses aggressive marketing to attract more consumers. Pepsi has entered similar partnerships in cricket too for the promotion of its brand and products. Mar 21, 2019 12:40PM EDT. A large part of Pepsi’s marketing budget goes to digital marketing and advertising. It is not only about the social media campaigns but it also promotes its TV ads and other promotional events on Facebook. It shares a very large number of pictures for promotions, many of which are same as its advertisements. Key players Pepsi Cola in Pakistan Pepsi-Cola is one of the best soft drink in the world. In 2015, 2016 and 2017, Pepsi invested $754, $760 and $737 millions in Research and development [1]. This video grew so popular that people watched it more than one billion times. Its e-commerce is already supported with big data and predictive analytics that are used to create real time marketing messages. The company offers a diverse array of products. Case Analysis Purpose To analyze how the PepsiCo’s diversification strategy has maximized the shareholders value. Metrics. Segmentation is the important strategy which helps the brand in targeting the specific group of customers with differentiated offerings.. Pepsi is the mass market product which uses … Mountain Dew has more than 8.5 million followers and Pepsi Max also more than 1 million [4]. A strategic objective for the cost leadership generic strategy is to automate production processes to minimize PepsiCo’s operating costs. Pepsi spent 2.4 billion dollars solely on advertising [1]. Extensive global distribution networkAs a successful global comp… Feb 25, 2015 Feb 24, 2015 by Brandon Gaille. Read full article. To cut  down on fuel emissions and fuel costs Pepsi placed one of the largest orders for Tesla’s new electric semi trucks for its distribution network. The current CEO of Pepsico is Indra Nooyi under whose leadership, the brand has continued to expand its business and transform its product portfolio. This strategy supports the growth by increasing the sales and market share. The Motley Fool. Just like Facebook, videos of promotional events are also shared on Twitter which helps it reach its millions of followers. In the food category, the brand introduced Three Minutos which is an affordable whole grain oat based food product meant to deliver daily nutrition to the Latin American consumers. Continuous product and process innovation helps at reducing costs as well as improving product quality and catering to customer demand better. Strong Corporate Social Responsibility: PepsiCo Foundation (philanthropic division) works with hundreds of international, national, and community-based organizations to enhance resource sustainability and tackle challenges facing societies across the world. ... it's likely effective in distilling a more elaborate strategy into generalities the entire PepsiCo employee base can rally around. Market performance is an important tool in conducting the market analysis of the company. PepsiCo's Grounded Growth Strategy. As a part of this agenda, Pepsi has achieved some key milestones that include –. It has 20 billion dollar brands in its portfolio. It was formed after the merger of Pepsi and Frito lay in 1965. As per the latest PepsiCo Earnings , FLNA revenues increased by … Pepsi Company is a multinational firm with high recognition in targeted market segments. Simultaneously, it has improved the packaging and portion sizes of its products like making smaller 250 ml plastic bottle sizes of various drinks available to the customers that suit both their pockets and choices. A third force was the perceived synergy between salty snacks and soft drinks. 1. 2017 was an year of healthy growth for the brand when Pepsico achieved a core organic revenue growth of 2.3% [1]. The brand also uses consumer research for the purpose of designing marketing strategies that help it grow its reach and effectiveness. For example, to compete against Coca-Cola products, PepsiCo offers low prices based on low operating costs. Through this partnership, it has continued to promote some of its biggest global brands including Lays, Gatorade and Pepsi across more than 100 markets [2]. Now, it has also released smaller options for its several soft drinks to make its products more affordable and accessible. Organizational Hierarchy 3. location of factory 4. The design team of Pepsi focuses on creating meaningful experiences for the customers and consumers during major global events like Super Bowl LI to Milan Design Week to the UEFA Champions League Final. This has also helped Pepsi unlock new opportunities for growth and grow its popularity cross the health conscious consumer segment. Being a global brand with a strong presence all over the world, Pepsi has set its competitiv… PepsiCo applies different generic competitive strategies, considering the company’s wide array of products. Pepsi also utilised retail and food service partnerships for competitive advantage. Merchant, H. (2014). Brief History 2. It also added a new product Simply Cheddar to its Simply brand. Revenue growth has been driven by continuous innovation, new products, effective pricing strategies and volume growth. PepsiCo is selling its beverage Pepsi in the current market. The customers of Pepsi are mainly from the 13 to 35 age group. The market is anticipated to grow at an estimated CAGR of 7.5% Latest launched research on Global Beverage Market, it provides detailed analysis with presentable graphs, charts and tables. Provided 11 million people with safe water access since 2006. Reformulating existing products to improve their quality and appeal. This generic strategy focuses on cost minimization as a way to improve PepsiCo’s financial performance and overall competitiveness. Development of products with better nutrition profiles that reduce added sugars, sodium or saturated fat using sweetener alternatives or flavour modifiers. Most of the video campaigns run by Pepsi have become so successful because it could leverage the power of social media channels. Abhijeet has been blogging on educational topics and business research since 2016. Digital innovation is one of the megatrends that has affected Pepsi’s business growth globally. It has struck partnerships with several sports bodies globally to promote its brand in most important markets. Dess, G. G., & Davis, P. S. (1984). This strategy supports existing products of the company in new markets. 3%. 2019. The strategy makes the company’s supply chain more global and complex. Agenda 2025 has three important focus areas that include people, products and planet. For example, PepsiCo continues to develop products or variants of existing ones, such as low-calorie, reduced-salt, or low-saturated-fat variants of its food and beverage products. In US and UK, it introduced Veggie Crisps, Hummus Crisps and Sweet Potato Crisps. The company already has a significant share of food and beverage business, but it wants to broaden its product portfolio by securing local market shares.. YouTube is the most attractive social media platform for sharing videos and several of its videos have been watched more than 4 million times which shows how YouTube can expand a brand’s reach without any major investment [4]. Economictimes – Pepsi 4 years sponsorship. PepsiCo’s success is an indicator of the appropriateness of these strategic directions, especially how the generic strategy supports competitiveness. Pepsi co diversification strategy case analysis 1. Global strategies of Pepsi. The brand is also  innovating its supply chain to reduce production costs and working to keep its environmental impact minimized. Value chain automation as well as internet enabled services, big data and social media are all affecting how Pepsi connects with its consumers and finds business growth. PepsiCo’s extensive global production and distribution networks are strengths that support the company’s international growth and expansion strategies. With time, people’s taste and choice of flavours has changed a lot. Associates completed 1 million hours of training in 2017. PepsiCo's biggest lever in this endeavor is to increase the revenue of its largest profit driver, Frito Lay North America, or FLNA. These activities include: Pepsi invests in R&D for continuous product innovation and for finding faster growth. Pepsico Business Model and Growth Strategy. Despite this expansion abroad, PepsiCo remains over reliant on the US. Its nearest competitor is Coca Cola and both brands are engaged in an intense battle. To make this global business more successful, this brand uses the strategy of forming alliances globally. PepsiCo plans on saving money through holistic cost … The brand is engaged in a very wide variety of research and development activities globally with the purpose of matching consumer demand as well as finding sustainable growth. On the other hand, it has also made the brands more conscious regarding product quality and customer service because any comment or news shared on social media reaches millions in a few seconds.eval(ez_write_tag([[580,400],'notesmatic_com-medrectangle-4','ezslot_7',194,'0','0'])); Pepsi has continued to invest in product quality and packaging to stay the customers’ first choice. In the U.S., we tend to follow very organized processes and then launch. Not so much in the U.S., but China and Japan are lead horses for that process—test, prove, launch. FLNA's offerings run the gamut from indulgent snacks (which management likes to recast as "permissible" snacks) to healthier, … Twitter is also a very important stop for the soda beverages brand where Pepsi has several different accounts for the different countries like Pepsi India and Pepsi Cambodia. One can easily judge the popularity of the brand by its number of fans. Position yourself well. As it is, Laguarta believes the best method by which PepsiCo can enhance shareholder value is to accelerate top-line growth. The new partnership will promote its Mountain Dew through signage and other branding efforts during the NBA events. Apart from them, the brand also invests in reformulation of the existing products and flavors to suit the customers’ choice. The China-Japan model may have to come to the … Copyright by Panmore Institute - All rights reserved. The strategy is that the result of securing many local market share would be a considerable chunk of the market share of the country as a whole. There are 22 iconic  billion dollar brands in its portfolio. This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s. Pepsi has used this partnership to promote its Gatorade sports drink on the field [3]. Pepsi is also leveraging Big Data to create real time marketing messages that help it market its brands more effectively. Market development is the supporting intensive strategy for growth in PepsiCo. Its other campaigns on social media have also been liked by people. On the other hand, PepsiCo’s intensive growth strategies are a response to the evolving global food and beverage market conditions. Apart from them, the brand introduced Tropicana Probiotics [1]. However, apart from investing in product quality and design, it is equally important to invest in marketing and Pepsi promotes its brand through both digital and traditional channels. PepsiCo makes up 7% of the portfolio holdings of the Vanguard Consumer Staples ETF and 0.7% of the iShares S&P 500 Value Index . Broad product mix 3. 21st century is marked by intense competition and in this era you cannot do without continuously experimenting and innovating. Improving product quality as well as safety and integrity. This decade has seen some major changes in consumers’ preferences. He's set a rather aggressive 4% … Pepsi-Cola, diet Pepsi, Pepsi max, mountain dew and so forth. 2017 marked its second year of partnership with UEFA champions’ league. On the other hand, PepsiCo uses broad differentiation as its secondary generic competitive strategy. This makes it essential for brands to continuously track consumer demand and accordingly adjust its strategic course for business performance. We use cookies for website functionality and to combat advertising fraud. Pepsi’s soft drinks are popular because of their diverse flavors. Source: Self-generated from Yahoo finance (2013). PepsiCo’s generic competitive strategy is based on the need to address market pressure coming from its biggest rivals, including the Coca-Cola Company. Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Varadarajan, P., & Dillon, W. R. (1982). In this way, it uses a large mix of traditional and innovative channels for the promotion of its brands and products. Higher level of digitalization in North America led to higher RoI on advertising and marketing. Since Pepsi uses both pictures and promotional videos to promote its brand and products. The current CEO of Pepsico is Indra Nooyi under whose leadership, the brand has continued to expand its business and transform its product portfolio. PepsiCo’s Weaknesses (Internal Strategic Factors) Its income from food products has kept growing and in 2017 the brand earned 53% of its revenue from food products and only 47% from the beverages products. In 2015, it announced a new marketing partnership with National Basketball Association. PepsiCo’s secondary intensive growth strategy is product development. Here are five marketing strategies that we can learn from Pepsi. Corporations are adopting various strategies such as product standardization and differentiation, adapt… The brand made similar innovations to its products in the food segment as well.
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