Marketing Factors In Pepsi Cola Organisation

Marketing Factors In Pepsi Cola Organisation club BackgroundPepsi Co is a world leader in convenient snacks, foods, and beverages, with revenues of $60 billion and over 285,000 employees. PepsiCo takes some of the worlds intimately popular stigmas, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lays, Doritos, Tropicana, Gatorade, and Quaker. Our brands are acquirable worldwide undone a variety of go-to- commercialize systems, including direct store delivery (DSD), broker-warehouse, and food service and hawk.PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001.Divisions shroud operations results as follows, by six segmentsPepsiCo Americas Beverages (PAB)Frito-Lay North America (FLNA)Quaker Foods North America (QFNA)Latin America Foods (LAF)EuropeAsia, Middle East Africa(Investors/Corporate-Profile.html, 2010)I have selected the change drinks indu stry for this report and discuss relative to the Pepsi under their industry conditions.external Business of change Drinks IndustryCarbonated Drinks Market is growingHigh profitability and lack of barriers to entry led to the emergence of many new players in the food securities industry of carbonated drinks. Competition in the commercialise is change magnitude and as a result profitability has been decreased by 15% in 2 years in the UK market. Company held the strategic analysis and discrete to begin expansion to the new market. Companies are doing merchandising researches in all geographical locations and try to find fracture new market for entry. Despite the social movement of several competitors in the market the companies having chance to enter in to new locations and try to find grab predominant market share. The drinks market is attractive for the Pepsi Company because of its lowly belligerent and having huge target audience throughout the UK. Company hopes to built t here strong brand that will defend chosen market from penetration of new players and give the company profits at the higher level. The companys strategy involves building a strong distribution net subject in weakened satellite cities in addition to the urban areas. uncollectible condition of the piddle from the municipal rudimentary pee supply system and lack of prospects for their repair and modernizationUnsuitable for imbibition and cooking weewee supplied from municipal central supply system greats a high demand for pure drinking peeing purified populations. This mooring is general for the whole country and its solution requires great financial hail. According to the current economic situation in the country the current situation is improbable to be rectified in the next 10 years. The marker of pure drinking peeing is very coarse. Every resident should to consume every twenty-four hours about 2 liters of water, so the company considers a promising modernizement of its activities in this market in the next 10 years. Therefore sight self-reliance the pureness of bottled carbonated drinks and avoid the bad effects of them.Growth by 15 times the tax on the ingatheringion of drinking water / Carbonated Drinks in bottles from 1 may 2010Carbonated drinks in bottles are substitute of water sold in the consumer packaging. Despite of its high damage it has a vulgar of advantages such as Accessibility in every grocery in a city and Presented by famous brands. This drinks came directly as a reaction to public demand for pure drinking water and during that time became very popular in spite of price that 2-4 times higher than for drinking water sold in the consumer packaging. The introduction of the rule of this law will lead to the transition of guests to the consumption of water sold in the consumer packaging and persuade people to drink carbonated drinks due to the follow advantage. utility of technologies of individual water purging system and reducing of their costThis substitute is very popular in the market. Advantage of individual water purification systems is a possibility of their using directly at a consumer home by using water from the municipal central supply system. Cost of purification of 1 liter of water with the use such system is approximately equal of price of drinks sold in the customer packaging. However such systems have a number of weaknesses. Cheap models that cost about 10 USD purify water with a middle calibre that significantly inferior to the quality of water purified by professional systems. It can be also dangerous for health to use such systems because delays in the reversal of filters can cause the user to use water with bacteria and viruses. valuable individual purification water systems that give higher water quality comparable to(predicate) in quality with given by professional systems have high initial cost about 100-300 USD, that for considerable cost of UK populations in a periodical income. excessively they dont purify water from bacteria and viruses. However cheap individual purification water systems are becoming more than popular in the market. Companies should to develop response strategy for these substitutes.Because of all above factors the carbonated drinks market is still growing with huge industrial rivalry.The international melodic line surround2.1 Micro / big factors affecting to Pepsi in GloballySWOT AnalysisStrengthsS1 Experience in developing distribution drawing string in the industryS2 Experience in conducting packaging in the industryS3 Company provides strong control of servicing customersS4 Competitive and flexible pricingS5 High quality of water which is ideal for food that sustain by certificatesWeaknessesW1 Lack of natural drinks in the range of the company and specialized in carbonated drinks.W2 Company doesnt have service of delivering drinks to customers homeW3 Difficulties in stigmatization in the industry to heavy competition and should maintain promotions dailyOpportunitiesO1 Growth by 15 times the tax on the production of drinking water in bottles from 1 may 2010O2 Low prices for the rental of retail position and down wages, that allow company to crop costO3 The market has a big potential of growth and now it is completed adept for 30%O5 There is low competition in the chosen marketO6 Bad condition of the water from the municipal central water supply system and lack of prospects for their repair and modernizationO7 Growing chafe of the population about their healthO8 Development of vending technologies for selling pure drinking waterO9 Severe pollution of water alternatives in the regionOur strength S4 and S5 will help us to grab probability O1 and take some customers from segments of water in the bottlesOur strengths S1 with opportunity O2, O3, O8 will help us to develop distribution kitchen range in the city very right awayOur strengths S2, S3, S4, S5 with opportunities O3, O5, O6, O7, O9 wo uld contribute to great sales of the company in the chosen marketWeaknesses W1, W2 prevents us to fully utilize opportunities O3, O5, O6TreatsT1 Improvement of technologies of an individual water purification systems and reducing of their costT2 The absent of barriers in the industry and low initiate investments attract new playersT3 Expected growth prices by 10% for water from the municipal central water supply system that used by company for purification drinking waterOur strengths S1 , S2 and S4, S5 will help us to minimize impact on the market The treat T1Our strengths S1, S3, S4 will help us to minimize chances of new entrances to the marketOpportunity O2 will eliminates treat T4Weakness W2 with treat T1 can cut share of the industry in the market of pure drinking water. We need to develop promotion program that will stimulate population to use just quality water purred by professional systemsWeakness W1 with treat T3 great opportunity for other companies to entry the market wi th offer of natural drinking water sold in the customer packaging and grab segment of the market. So company should initiate project of sales natural drinking water from own distribution chain for the segment of the market that want to drink just natural water2.2 PESTELVariableFactorsPolitical and LegalGrowth by 15 times the tax on the production of drinking water in bottles from 1 may 2010Total corruption in the controlling state bodiesBad condition of the water from the municipal central water supply system and lack of prospects for their repair and modernizationEconomicLow prices for the rental of retail space caused by economic recession in 2009Down wages, high level of unemploymentExpected growth prices by 10% for water from the municipal central water supply system that used by company for purification drinking waterReduction in purchasing power of the populationSocio-culturalGrowing concern of the population about their healthNegative attitude of population toward quality of water from municipal central water supply systemTechnologicalImprovement of technologies of an individual water purification systems and reducing of their costDevelopment of vending technologies for selling pure drinking waterEcologicalSevere pollution of water resources in all around the world2.3 Porters 5 Forces AnalysisBuyer Power is moderate Bottling companies and retailers constitute the main buyers in the carbonated soft drinks market. The last mentioned represents the most significant force yet despite their large size and concentration, it is the public that drives the market (heavy market campaigns and brand consciousness are a guarantee that popular products must be stocked, reducing the power of buyers). Although Pepsi does not do any bottling, the company owns about 36% of Pepsi Enterprises which is the largest Pepsi bottler in the world (Murray, 2006a). Since Pepsi owns the majority of the bottler, that event supplier does not hold much bargaining power.Suppliers Po wer is moderate Pepsi is dependent on suppliers for various ingredients and vulnerable to certain commodities price fluctuations. However, the availability of substitutes reduces their power. N.B the advertizement and market agencies represent key suppliers (very concentrated) but their power is moderate.New Entrants threat is weak they face important barriers such as strong brand obedience and substantial fixed costs. The nature of the market also demands an intensive marketing campaign in order to create and maintain a successful brand awareness and image. The difficulty in dislodging the main players of the market is linked to the importance of economy of scale which inevitably benefits current mass manufacturers.Substitutes threat is moderate there are various substitutes such as alcoholic beverages, tea, coffee and non-carbonated soft drinks. But the diversity of public demand ensures that a wide range of products offered by Pepsi will be stocked by retailers. For many consu mers, such products represent alternatives and not substitutes.Industry competition is a moderate force with only a limited number of players, competition is lessened as from each one established competitor secures an important segment of the market thanks to strong branding and product differentiation. Coca Cola and Pepsi Co dominate the industry with strong brand names and great distribution channels.ForcesFactorsThreat of substitutesThe individual water purification systems. The cost of water with the use of the individual water purification systems is approximately equal to the cost of water sold in the customer packaging. Cost of cheap purification systems sold at the supermarkets is low (about 10 USD), so its the easiest way for customer to have pure water directly at home.Drinking water in bottles. This water is available in any store in the city. Its price higher by 3-4 times than drinking water sold in the customer packaging. Small part of customers uses this water every d ay for drinking and cooking. Some companies specialize in supplying the offices of drinking pure water in bottles. This market is strong competitive.Threats of new entersLicences or any other special permission arent needed to entry the market. Initial investment to start business in this market is about 20000 USD, so it is some voiced to entry in the market.It is easy to organize distribution chain by setting up chain of outlets in a chosen area.It is low chances for new outlets to be opened near existing one, because owners understand that there much area is free in the market and strong competition will kill profits.Density of rivalryIndustry is growing by 20-30% every yearIn the chosen market competition is low, existing sellers are getting super profitsBrands arent developed at all. The companies havent differentiated their products in the minds of buyers because of low competition and havent provide any marketing eventsThe market has a big potential of growth and now it is co mpleted just for 30%The most important competitive advantage is a irksome distribution chainBargaining power of buyersBuyers are individual and amount of purchase is small, so buyers dont have significantly impact on prices.Buyers can easy switch on substitute products or on purchasing water from a competitor outlet if it is available in the nearest area.Product cost isnt significant for buyers, so their sensitivity to price isnt very bigBuyers are sensitive to quality of product and to tuition about itBargain of suppliersProducer of drinking pure water distribute it by own distribution chains and use water for purification from municipal water supply systemInternational strategies of the companyStrategiesAs for the growth strategy, I choose the Product Development strategy because decided to create a new product for existing customers and because it is a medium risk strategy. And for the competitive strategy, I choose the differentiation strategy because Pepsi is a very innovativ e company, the unique selling point being having a great Energy drink with the amazing thwack of ampere-second Zero. It is costly but Coca is a multinational company and the leader in its market.s.t.p.Segmentation criteria Market Size UK, Males, Age 15-35, Wage , Students, Professionals, Sports People, Urban people.Targeting criteria Influence, Strategic Fit, Disposable Income, and Reachable, likely to buy.Targets Professionals and Sports People.Positioning Sporty, Cool, Young, Adventure, Personality, Unique.TacticsProductCore Product NRJ Coke Zero, satisfy the need of thirst and vitaminsSecond Product (first added value) taste, form, quality, brand, innovation,Third After sales, cool personality, differentiation,Why innovation Rationale for my product developmentStay competitive in the energy drinks marketRetain market shareTrendsNPD (New Product Development)Idea Generation and screeningBusiness AnalysisMarket Testing alterPricePrice Elasticity Perfect Elasticity Intermediate pr icingPlace / Distribution ChannelsIndirect distribution because it allows more market reach, maximum availability of products, minimum costs of ownership and infrastructure. As a matter of fact, the targeted segments are very large (FMCG product).Unfortunately, there are some disadvantages such as the brand is diluted the competitors can have a stronger power on retailers which might lead to less availability or lack of presentation and merchandising. Also commissions The power of retailers may have adverse impacts on the companys margins and profits.Intensity of DistributionIntensive Distribution Prelaunch exclusive then intensive starting from the introduction stage.integration of DistributionBackward Vertical IntegrationB2B Upstream relationship (with suppliers contracts, acquisition of suppliers and bottlers, mergers, joint ventures, strategic alliances).Forward Vertical IntegrationB2B with retailers Downstream.B2C CRM, Mass Media, Loyalty cards, research. Pepsi collects inform ation from the retailers,Promotion / CommunicationObjectivesD Differentiate 40%R Reinforce the message 0%I Inform 40%P Persuade (call to action) 20%In the introduction stage, my main objectives are to inform and differentiate.Then develop a COMMUNICATION STRATEGYPUSH Pepsi Retailer ( trade magazines, promotion, incentives)(25%)PULL Pepsi client ( TV advertizement..)(25%)PROFILE Pepsi Retailers and Customers ( brand image, sponsor events, celebrity endorsement).(50%) because main CSF is strong brand imageDevelop BrandUmbrella branding NRJ Pepsi Zeropromotional MixABOVE THE field ( Mass reach, not customised)TV teaser, TV adverts, Radio, Press, BillboardsBELOW THE LINE (Customised)Direct Marketing, Personal Selling, Sales PromotionTHROUGH THE LINE (Cinema, fashion magazine, event sponsor,)SponsorshipSamplesExhibitionsPR/ Publicity2012 London Olympic Games04. Effectiveness of the companys international strategies4.1 Value twine AnalysisIn Bound Logistics Some of Pepsis most n otable suppliers include Spherion, Jones Lang LaSalle, IBM, Ogilvy and Mather, IMI Cornelius, and Prudential. These companies provide Pepsi with materials such as ingredients, packaging and machinery. In order to ensure that these materials are in satisfactory condition, Pepsi -cola has put certain standards in place which these suppliers must adhere to (The Supplier Guiding Principles). These include compliance with laws and standards, laws and regulations, freedom of association and collective bargaining, forced and child labor, abuse of labor, discrimination, wages and benefits, work hours and overtime, health and safety, environment, and demonstration of compliance (Pepsi Cola 2006).Process Pepsi purchases its own ingredients through use of future contracts (to avoid market volatility) and produces its concentrate from its own facilities. Once this is done, these companies delight their concentrate out to bottlers upon approval of contract for bottling company.Outbound Logistic s Once the bottling company receives the shipment of concentration, it is diluted to the correct concentration by adding the correct amount of carbonated water, and sugar, and bottled for sale. This is done for two reasons. One reason is so that Pepsi can maintain its exact mix of ingredients as a well-kept secret, and not let the bottling companies lie with what exactly goes into its product. This affects the image of the product, and preserves it as something of higher value, and actually applies a sense of prestige to the Pepsi products that are kept such excellent secrets. Pepsi operates by displace concentrate to bottlers, who then take the necessary actions, and ship out its products to consumers and vendors.Automation in technology in cash registers allows Pepsi and the bottling companies who bottle and ship the contents of each bottle to know exactly how much of their product the merchant is carrying. This allows for a quick delivery of more products for the merchant to se ll in a keen and timely procedure. (Source article VCA)JDA Software Group has announced that Pepsi Bottling Co. amalgamate, with 6,000 employees and $1.4 billion in annual revenue, has upgraded its JDA Software supply chain management solutions to Version 7.4, including JDA Demand, JDA Fulfillment and JDA deportation Planning, all powered by Manugistics. Pepsi Consolidated expects to further improve forecast accuracy, customer service levels, order fill rates and on-time deliveries with the support of JDA Software. JDA Softwares Supply Chain Optimisation and Transportation Logistics Management solutions allow companies to respond rapidly to shifts in consumer demand, as well as manage, optimise and execute the strategic, operational and tactical business processes that transform the supply chain into a strategic differentiator. (Source Forecasting Demand Planning).Sales Marketing Marketing and Sales for Pepsi e is huge. Pepsi relies extensively on advertising and sales promoti on in marketing its products. Pepsi Enterprises and TCCC have established a Global Marketing Fund, under which TCCC pays Pepsi Enterprises $ 61.5 million annually through December 31, 2014, as support for marketing activities. (Source annual report).After Sales David Johnston, JDA Software senior vice president of manufacturing and wholesale distribution, said, JDAs innovative supply chain solution enabled Pepsi Consolidated to achieve substantial inventory reductions while also delivering significant improvements in customer service levels. Additionally, sales from new product introductions improved greatly. More and more companies are focusing on achieving true supply chain optimisation excellence in a quest to deliver improved market responsiveness, better lifecycle management, optimised network-wide inventory levels, increased customer service levels, and reduced logistics costs. JDA Software has continually delivered innovation that provides manufacturers, wholesale distributor s and retailers with unparalleled optimisation and visibility into the extended supply chain that enables them to delight their customers and shareholders alike. (Source Forecasting Demand Planning).4.2 7 Ps and 7 Ss7 PsSTRENGTHSWEAKNESSESPRODUCT1. Great Energy drink with the popular Pepsi Zero taste2. Carbon drink3. Enriched with vitamins4. Innovation in products and packaging5. Consumer and customer goodwill associated with the brand portfolio6. Very strong brand awareness ensures that Pepsi popular products must be stored by retailers1.Seasonality in the UK2. The energy drinks are usually considered as unhealthy and too sweet3.Competing with Red Bull which is the leader ( de loin)PRICE1. Same price as Red bull2. Affordable for Coke Zero consumers3. Price package architecture (different pricing options)1. Ingredients and packaging costs per case increase, as finished goods and increasing cost of sparkling beverage concentrate.2. Same price as Red Bull but same taste as Pepsi, so needs to justify the price by insisting on the added vitamins and quality of Stevia sweetener.PLACE1. Pepsi owns the largest beverage distribution system2. NRJ Coke Zero will be available everywhere3. Will benefit from the Pepsi existing and well established distribution channels1. Changes in the relationships with large customers may negatively impact financial results2. division among bottlers could lead to complicated negotiation with customers, suppliers3. Dilution of the Coke brand as it is sold in the retailers shelfs4. Referencing challenge as it is a question mark product for the retailers promotion1. Heavy marketing and advertising campaigns2. Heavy use of celebrity endorsement3. Effective PR4. TCCC is the official sponsor of the 2012 Summer Olympic Games in the UK1. Expensive Marketing and Advertising campaigns2. Expensive promotion as it is to inform and differentiate the productPEOPLE1.Great customer service2.Improved customer service through the writ of execution of a new selling system for smaller customers1. The customer facing staff are not part of the TCCC personnel, their customer service is not undiversified and dedicated to Pepsi2. The staff are not expert of the new product and will not be able to sell it properly or apologise its attributes to the final customersPROCESS1. Constant innovation in the equipment and in supply chain infrastructure improvement2. Very efficient supply chain, linking the retailers stocks to TCCC bottling partners directly for rank1.Long processes as it is a multinational2. Long decision making processPHYSICAL EVIDENCE1.Great vending, dispensing machines, coolers2. Great head offices3. Strong brand, trademark, Pepsi bottler, great packaging and design4. Very comprehensive and well elaborated website1. Variety of shopsRecommendations for improvementThe marketing computer program takes the corporate objectives and communicates them into measurable outcomes. Piercy (2002) states that The real strategic problem in marketing is not the strategy it is marketing the implementation and the change (p166 CIM)Lack of skills An effective organizational structure and committed leadership is needed to deliver the marketing plan (CIM p166).Improving marketing skills in the companyPresentation of operational proposal for addressing the Lack of ResourcesA lack of sufficient financial budgets and people to support the compulsory task needed to implement the plan.Time constraints can also affect the delivery of the plan.Organizational CultureThe culture of the company could hinder the development of the marketing plan across the company. The existing shared values of the organizations.The established processes and company traditions can make departments resistant to change.SystemsInternal MarketingInternal marketing and resource allocation will need to be planned to Ensuring people sell expected targets and Undertaking effective communicate brand images and ensure value ground marketingStrategy not s uitable for the businessThe strategy needs to be approved by Managing directors to determine its accuracy andTurbulent market environmentThe unpredictable changes in the market will make the marketing planThe inclusion of an contingency planning and benchmarking