Principle of Marketing

Project Report on Pepsi

MBA 2nd Semester (E-9) Group Members Wajid Ali Amina Yawer Haris Riaz 3335 33** 3382

Submitted To: Mr. Usman M Ghauri

Submitted By: MarketRevolutioners

ACKNOWLEDGEMENT
We are very thankful to ALLAH ALMIGHTY who has given us the power and ability to think and judge the matters and then to make us of the blessed abilities. Our most respectable teacher Sir Usman M Ghauri is the only source who directed us to apply our abilities in the required direction. Thanks to our parents and friends for their encouragement and support.

THIS PROJECT IS DEDICATED TO ALL BUSINESS STUDENTS

We will like to dedicate this project to all business students who are struggling to become business professionals and plan to achieve the dreams of their parents. We hope that they would extract useful content out of this project and today we feel honored to be able to help someone. May ALLAH help all of us!

Brief History:
Pepsi is a carbonated soft drink produced and manufactured by PepsiCo. The drink was first made in the 1890s by pharmacist Caleb Davis Bradham in New Bern, North Carolina. The brand was trademarked on June 16, 1903. There have been many Pepsi Variants produced over the years.

Introduction to PepsiCo
PepsiCo serves 200 countries and is a world leader in providing food and beverage products. Its brands consist of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo International and Quaker Foods North America. Some of PepsiCo's brands are over 100 years old, however the company was only founded in 1965 when Pepsi-Cola merged with Frito-Lay. PepsiCo then attained Tropicana and Gatorade when they merged with the Quaker Oats Company. The combined retail sales average about $92 billion. The company is focused on being the premier producer in supplying the world with convenient foods. They offer a wide variety a food options as well, including healthy options. PepsiCo stands out as a company because of its sustainable advantage. It includes widely known brands, innovative products, and powerful market skills. The company also tries to benefit the community.

PEPSI IN PAKISTAN
In Pakistan the beverage industry is not as competitive as compared to the beverage industry of the developed countries. In Pakistan Pepsi and Coca-Cola are the two major shareholders of the beverage industry. To make these soft drinks highly competitive the companies use latest technology to create year round availability and ever-lasting impression on the minds of the consumers. The two companies, especially, in the soft drink industry use the latest equipment in order to maintain their quality standards and make their customers satisfied. Companies operating in the soft drink industry need to keep in mind the technology, the competition, the changing demand and supply conditions, and the rules and regulations laid down by the government. Keeping in mind these factors, Pepsi introduced a new technique of making the soft drink using the Post Mix Machine. The machine is also called Fountain Pepsi because the Pepsi produced by this method is very chilled and refreshing.

Mission and Vision

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but the right thing to do for our business. VISION:
"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

MISSION STATEMENT:
Our mission is to be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Performance with Purpose:

At PepsiCo, we're committed to achieving business and financial success while leaving a positive imprint on society - delivering what we call Performance with Purpose. Our approach to superior financial performance is straightforward - drive shareholder value. By addressing social and environmental issues, we also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability.

Pepsis Marketing mix

Product
The main product of Pepsi Cola Company is Pepsi and its sub brands are Dew, Miranda, 7up, Pepsi Max. It also diversified into Lays. Providing their consumers with easy-to-use, convenient and innovative containers are one of their top priorities. Package introductions they have made over the years include the industry's first 1 liter bottle; Regular, Disposable; Can. Pepsi Co. was the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. These bottles are made of polyethylene terephthalate or "PET plastic," which is a form of polyester used to make strong, lightweight, shatterresistant bottles.

Pepsi Products:

Pepsi 7UP Miranda Dew Slice Aquafina

(cola drink) (cola drink) (soft drinks) (cola drink) (soft drinks) (Mineral Water)

Examples of its variety of products

Price
Pepsi prices its products similar to those of Coca-Cola in order to keep profits high. Competition is based mainly on marketing skill rather than price to help avoid costly price wars and keep profits stable. Since neither of the major manufacturers would win a price war, it is unwritten rule that the companies will follow the pricing structure of the market leader. While this amount to price fixing, there has not been any major government actions to curtail the practice so it should continue in the future. PepsiCos current retail prices range depending on the convenience of the location in which they are located and depending on the size of the soft drink container. PRICES OF DIFFERENT BOTTLES

Size and Price of Pepsi (RS.)

Regular bottle Non returnable or disposable bottle 1 liter bottle (glass) 1.5 liter bottle 2.25 liter bottle Pepsi can 15 30 40 70 90 50

Place (Distribution)
Manufacture -------------- Wholesaler---------------Retailer Manufacturer -------- Company Warehouse-------------- Retailer

Distribution is an important aspect of success in the beverage industry. Since the cola companies want to focus on making syrup and marketing, they need to have strong, loyal bottlers. This is especially the case in foreign markets where the cola companies fiercely battle for good bottlers. The building of bottlers through joint ventures and the increased maintenance of current bottler relationship should be the main focus of Pepsis international marketing. Coca-Cola is very methodical in making sure that its bottlers are happy, while Pepsi has been known for neglecting its bottlers. This is one area that Pepsi must improve if it is going to take market share away from Coca-Cola. Product is distributed through PepsiCo distribution centers. The distributor delivers it To the grocery retailers, vending companies, restaurants, and warehouse/club stores.
The distribution segments can be broken down into the following:

Convenience Stores and Gas Stations: 12% of the market Restaurants: 25% of the market Warehouse/Club Stores: 6% of the market Super Markets and Retail Stores: 57% of the market.

Distribution Structure of Pepsi

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Promotion Strategy
Pepsi promotes its products in a many ways, but focuses mainly on getting products associated with entertainment icons that appeal to youth. The first major use of this technique was the signing of Pakistan cricket team as celebrities. Two other areas of entertainment that have been used by Pepsi to promote its brands are sports and movies. Sports are a popular source of entertainment throughout the world and is a using it to promote the brand is a main focus of Pepsi. Since sporting events are seen many times by fans, it provides a good opportunity to increase brand recognition. Movie stars are also popular throughout the world and are greatly admired by people, so using them in advertising has a positive effect brand image. Some of the ways in which Pepsi attract consumers are: Free Samples ( New product DEW) Discounts ( RAMDAN Offers) In-Store Displays Signs, banners etc. Entertainment Games with free T-shirts, Pepsi points under the cap etc.

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Methods of Promotion

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Market Segmentation
As we know that PepsiCo provides varieties of beverages such as carbonated soft drinks, sport drinks, dairy-based drinks, energy drinks, fruit flavored beverages, ready-to-drink coffees, ready-to-drink tea, mineral water and frozen beverage. These products are marketed under brand as Pepsi, Mountain Dew, Gatorade, Lipton, Starbucks, Tropicana, and so on. With these products, PepsiCo aims to attract different groups of consumers. There are two levels in which Pepsi segments its market: 1. Demographic 2. Niche marketing Concentrated Marketing: Despite the large customer base in the Soft Drink industry, Pepsi prefers to segment itself as the beverage choice of the New Generation, Generation Next, or just as the Pepsi Generation. These terms adopted in Pepsis advertising campaigns are what marketers refer to as Generation X, which are profiled to be between the ages of 18 to 29. In addition, Pepsi shifted its focus to the growing American teenage market in the 1990s by forming exclusive contracts with American schools and developing advertising campaigns such as The Next Generation and the Joy of Pepsi, featuring Britney Spears. Pepsi believes that if they can get this market to adopt their product, they could establish a loyal customer in a long run.

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1. Niche Marketing:
Pepsi focused on varietal differentiation since 1990 by introducing a string of niche products. To increase volume in order to counter flat coca sales, Pepsi introduced Sierra Mist in 2002-2003to take the place of 7-up and go head-to-head with Sprite. Pepsi has also tried to boost volume by introducing products that appeal to specific target markets that it currently is not reaching. Pepsi has introduced Code Red and Live Wire, extensions of Mountain Dew, Pepsi One, and Pepsi Blue. Finally, Pepsi is countering declining sales of carbonated drinks through the marketing and distribution of Starbucks ready to drink products, and the acquisition of SOBE and Gatorade. The success of Pepsis Mountain Dew Code Red launched in 2001 was the most successful soft drink innovation in 20 years and has spurred even more niche product introductions for PepsiCo as well as other competitors.

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2. Demographic:
In focusing on the Pepsi-Cola beverage product, PepsiCo has retained a long history of concentrating on youth as its main target market Generation Next! It has spent billions of dollars in trying to woo the young and nearly young, implying that Coca-Cola is for the older generation. The reason why Pepsi-Cola has fiercely targeted this market is because it is the largest amongst its users. Market segment profiles have shown that the majority of carbonated beverage drinkers are youth and middle age people. Also, Pepsi continually targets the college market in which they spend huge amounts of money to compete with Coca Cola in acquiring contracts with universities (i.e.: CSUF) to have sold representation of their product distribution. Pepsis use this behaviorist segmentation has been a key to the companys success.

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3. Market Targeting:
Pepsi customers are mostly Teenagers and Young Adults between the ages of 14 to 30. It also targets at Schools, Colleges, Universities, Homes, Restaurants, Hotels, and Stores.

4. Market Positioning:
PepsiCo plans to further create positions that will give products the greatest advantage in their target markets. Pepsi has been positioned based on the process of positioning by direct comparison and have positioned their products to benefit their target market.

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