STRATEGIC MARKETING

(Pepsi)

Presented to:

Sir Jawad Saleem

Presented by:

Hassan Askari 072118

Haris Farooq 072116

Saima Razzaq 072124

Qura-Tul-Ain 072109

　
 　

Date: 28-11-2008

ACKNOWLEDGEMENT

We owe our gratitude to Allah Almighty whose shower of blessings and kindness has
been on us through out the working on these pages. It is His help that we finally able to
compile this document.

We are indebted to our respected teacher Mr. Jawad Saleem who’s indispensable and
intricate comments on various aspects conjoined with motivation made us come forth
holding such as project.

Executive Summary

Purpose of this project is to study the strategies which Pepsi

is doing in Pakistani market for its product Pepsi cola.
Pepsi International is a world renowned brand. It is a very
well organized multinational company, which operates
almost all over the world. In Pakistan It also has proved
itself to be the No.1 soft drink.

Now days Pepsi is recognized as Pakistanis National drink

Pepsi's greatest rival is Coca Cola. Coca Cola has an
international recognized brand. Coke’s basic strength is its
brand name. But Pepsi with its aggressive marketing
planning and quick diversification in creating and
promoting new ideas and product packaging, is
successfully maintaining is No.1 position in Pakistan. Pepsi
is operating in Pakistan, through its 12 bottlers all over
Pakistan. These bottlers are Pepsi's strength. Pepsi has
given franchise to these bottlers. Bottlers, produce,
distribute and help in promoting the brand. Pepsi also
launched its fast food chain KFC i.e. "Kentucky Fried
Chicken.”
 We also did analysis of the soft dink industry in Pakistan
and world wide. The soft drinks set to become world's
leading beverage sector. Global consumption of soft drinks
is rising by 5% a year.

Table of Contents

Titles Page #

1. Introduction 01

2. Mission and vision statement 01

3. Facts about company 02

4. Pepsi in Pakistan 04

5. Product in spot light 09

6. Market analysis of soft drink 10

7. Pakistani soft drink industry 13

8. Industrial SWOT analysis 14

9. External Environmental factors 16

10. Internal Environmental factors 21

11. Pre-marketing Mix 25

12. Marketing Mix strategies 27

13. Conclusion 39

14. Suggestions 40

INTRODUCTION TO THE COMPANY

Pepsi International is a world renowned brand. It is a very well organized
multinational company, which operates almost all over the world. They
produce, one of best carbonated drinks in the world. Pepsi is a symbol of
hygiene, quality and service, all over the world. Pepsi is producing Cola
for more than 100 years and it has dominated the world market for a long
time. Its head office is in New York.

MISSION STATEMENT

“To be the world's premier consumer Products Company focused on

convenient foods and beverages. We seek to produce healthy 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.”

VISION STATEMENT

“To be the world's best beverage company”. Being the best means
providing outstanding quality, service, cleanliness and value, so that their
every customer is contented and happy with their products.”

“To increase the value of their shareholder’s investment through sales

growth, cost control and wise investment of resources.”

FACTS ABOUT THE COMPANY

1. Pepsi is a USA based public company whose stocks are available in

New York.

2. Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising

and package graphics room hillbillies to action-oriented scenes.
 3. The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo
in Your Life."

4. PepsiCo acquired Pizza Hut, Inc. Pizza Hut was founded in 1958 by
Dan and Frank Carney.

5. Taco Bell is was acquired by Pepsi. Taco Bell was established in the
mid 1960s by Glen Bell.

6. PepsiCo purchased Kentucky Fried Chicken, the leader in the quick

service chicken market. KFC was founded by Colonel Harland Sanders.
Colonel Sanders began franchising the company in 1952. KFC was spun
off along with Pizza Hut and Taco Bell businesses as Tricon Global
Restaurants, Inc. in 1997.

7. PepsiCo purchases Seven-Up International, the third largest franchise

soft drink operation outside the United States

EXECUTIVES

Ms.Indra K.Nooyi
Chairwoman, Chief Exec. Officer and Pres

Mr. Richard Goodman

Chief Financial Officer

Mr. John Compton

Chief Exec. Officer of North America and Member of Liquid Refreshment Beverage
Oversight Council

Ms. Cynthia M. Trudell

Chief Personnel Officer and Sr. VP

Mr. Donald M. Kendall

Co-Founder

HEAD OFFICE

PepsiCo, Inc.
700 Anderson Hill Road
Purchase, NY 10577
United States.
Phone: 914-253-2000
Fax: 914-253-2070
Web Site: http://www.Pepsico.com

PEPSI PAKISTAN

The market in Pakistan is surely dominated by Pepsi. It has proves itself to be the No.1
soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In
1971, first plant of Pepsi was constructed in Multan, and from their after Pepsi is going
higher and higher. Pepsi is the choice soft drink of every one. It is consumed by all age
groups because of its distinctive taste. Compared with other Cola in the market, it is a bit
sweeter and it contributes greatly to its liking by all. Consumer’s survey results explain
the same outcome and Pepsi has been declared as the most wanted soft drink of Pakistan.

Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand.
Coke’s basic strength is its brand name. But Pepsi with its aggressive marketing planning
and quick diversification in creating and promoting new ideas and product packaging, is
successfully maintaining is No.1 position in Pakistan. In coming future Pepsi is also
planning to enter into the field of fruit drinks. For this purpose it has test marketed its
mango juice in Karachi for the first time.

When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and
lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon
and lime, "Teem" to compete with 7up. It successfully, after some years, took over 7up,
and this enhanced Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys
70% of the market share where as the coke just has 20% markets share.

Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are
Pepsi's strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute
and help in promoting the brand. Pepsi also launched its fast food chain KFC i.e.
"Kentucky Fried Chicken.”

FOUNDERS OF THE COMPANY

The company was initially owned by late Nawab Saddiq Hussain Qureshi & family till
1989. The Pepsi International franchise declared the management incompetent, thus, the
company was handed over to a new set of personnel. The factory set up was reorganized
& re-established with expansion in various sectors. The Pepsi International did this by
offering it to Mr. Jehangir Tareen, who formed up his new team. Mr. Jehangir Tareen is
Nephew of General (late) Akhtar Abd-ur-Rehman.

EXECUTIVES

Board of Directors:

Mr. Akbar Akhtar Khan (Chairman)

Mr. Haroon Akhtar Khan (Chief Executive)

Mr. Gazi Akhtar Khan

Mst. Rasheeda Begum

Mrs. Mudina Akbar Khar

Mr. Saifullah Khan Paracha

Mr. Saeedullah Khan Paracha

Company Secretary

Mr. Amjad Jhanzeb Khan

Bankers

Allied Bank of Pakistan Ltd.

Citibank N.A.

MCB

NDFC

The Bank of Punjab

UBL

Legal Advisor

Cornehus, Lane & Mufti,

 Nawa-i-Waqat Building,

4-Shahrah-e-Fatima Jinnah, LHR.

Auditor

Taseer Hadi Khalid & Co.

Chartered Accountants.

Mill

Kanjawani, Tehsil Samundri, District Faisalabad.

REGISTERED OFFICE

31 – N,

Gulberg II,

Lahore,

Pakistan.

UAN: 111-724-725

VARIOUS PRODUCTS IN PAKISTANI MARKET

PEPSI COLA, MIRINDA, TEEM, 7UP, MOUNTAIN DEW, DIET 7UP, DIET PEPSI,
LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA
JUICES(introduced in Karachi only).

FINANCIAL SUMMARY OF THE COMPANY AND PRODUCT In Karachi

The Finance Manager was hesitant to supply any of the data as the company is private
limited and the competitor Coca Cola is sniffing every inch of information of Pepsi Cola.
With the help of the dealers and the retailers directly supplied by the Pepsi Cola and some
rough figure given by the finance manager we became able to make the product cost of
the Pepsi Cola and Estimated Income Statement for the month which comes into market
as 9 rupees after going through many hands.

Precisely the exact figures were not given so an estimated income statement and price
profit is made under given facts.

• 15,000,000 (15 million) crates of all the soft drinks are sold per year all
over Karachi.

• 250ml regular bottle is taken as standard, 1 bottle of 1 Liter is taken as 4

bottles of 250ml. (250ml*4 = 1 Liter)

• 15,000,000/12 = 1,250,000 crates sold per month.

• 1,250,000*24 = 30,000,000 bottles sold per month.

• PEPSI share is approximately 65%.

• 30,000,000*65% = 19,500,000 PEPSI Share.

kurkuray

Pepsi twist

Pepsi

Mountain dew

PRODUCT IN SPOTLIGHT: PEPSI

Type:
Pepsi Cola

Manufacturer:

PepsiCo

Country of origin:

USA

Introduced:

1902

Ingredients:
Amount per 100mL
Energy 196.5 kJ
Fat 0 g
Sodium 0.98 mg
Carbohydrates 11.74 g
Sugar 11.04 g
Protein 0 g
Caffeine 10 mg

Market Analysis of Soft drinks

Soft drinks set to become world's leading beverage sector Global consumption of soft
drinks is rising by 5% a year, well ahead of all other beverage categories, according to the
new 2003 Global Soft Drinks Report from leading drinks consultancy Zenith
International. Now challenging hot drinks to become the largest overall sector, soft drinks
volume is projected to reach 467 billion liters in 2003, equivalent to 75 liters per person.

"Economic and climate variations around the world present complications for all soft
drinks companies, but many have succeeded at weathering the elements," commented
Zenith Research Director Gary Roethenbaugh. "As a combined category, soft drinks offer
a powerful growth proposition. The unrelenting advance of bottled water and still drinks,
coupled with the scale of carbonates, help place soft drinks on track to become the
number one beverage sector in 2005.

Market share of soft drinks in beverage industry

Concern over diet has persuaded many consumers to scale down their consumption of
sugary drinks, instead choosing ‘healthy’ products such as fruit juice and bottled water.
Despite this shift in attitude, the majority of consumers around the world still favor
carbonated soft drinks over these alternatives, according to latest data from TGI. In 11
out of 15 countries analyzed, it is revealed that consumption of carbonated soft drinks is
higher than consumption of fruit juice or bottled mineral water.

Age factor affecting the sales

Despite the fact that people in the majority of countries still appear to favor carbonated
drinks over the perceived healthy alternatives such as fruit juice and mineral water, some
interesting behavioral shifts underlie these figures. In many markets, an increase in the
number of people choosing diet or low calorie alternatives has contributed to the overall
sustained popularity of fizzy drinks.

Pakistani soft drink industry

About 75 million cases a year for Pepsi alone; the total beverage market is about 120
million cases of which 65% per cent are Pepsi products; about 20 to 22 per cent are Coca-
Cola products and Zum Zum cola and Mecca Cola, Amrit Cola and Muslim Cola... there
are so many colas; there is RC and Double Cola which are franchised products.
Altogether they have around 5 per cent of the market. Due to the Afghan and Iraq wars,
they did get a little footing especially in the frontier and Islamabad area but still they are
not hugely popular

Total annual sale of soft drink in Pakistan 120 million cases

Pepsi annual sales in Pakistan 75 million

Market share of Pepsi 65%

Consumption growth 1.7 % per year

Industrial SWOT analysis

Strengths:

The soft drinks market in Pakistan enjoyed dynamic growth over the review period in
both volume and current value terms. Carbonates dominate the market in both the on-
trade and off-trade with the lion's share of sales. Carbonates have become part of the
culture in Pakistan and multinational companies have maintained their standards over the
years to provide consumers with high-quality carbonated drinks. Off-trade sales of
carbonates are higher than those of the on-trade but both achieved strong growth over the
review period

Weaknesses:
Liquid concentrates and powder concentrates are both seasonal categories in the market
and their sales peak in the summer in Pakistan. Both Rooh Afza and Jam-e-Shirin are
traditional sandalwood drinks in Pakistan which are highly regarded by consumers. These
drinks can be found in every home in Pakistan, especially in rural areas, throughout the
summer and are the mainstay of liquid concentrates

Opportunities:

The government of Pakistan has reduced excise taxes to encourage soft drinks
manufacturers and importers. The government also reduced other applicable taxes to
promise more profits not only for soft drinks manufacturers already in the market but also
to attract potential soft drinks manufacturers to invest in Pakistan. Tax reductions proved
extremely beneficial to the soft drinks market in Pakistan and certainly encouraged and
attracted multinational companies to invest in the country's soft drinks industry. The
government also decided to tax the beverage industry on capacity of production rather
than on actual production and that brave move encouraged soft drinks manufacturers to
maximize production and reduce prices

Threats:

Increasing health and hygiene awareness among Pakistanis has greatly increased sales of
fruit/vegetable juice products. Both the government and the media have started health
awareness campaigns to make Pakistanis realize that consumption of fruit/vegetable juice
is as essential as eating food. Fruit/vegetable juices are doing very well in both urban and
rural areas. On the other hand, health and hygiene awareness has also led to increased
sales of bottled water in Pakistan. Previously bottled water was targeted only at major
cities where consumers are more health-conscious and aware of the difference between
bottled water and tap water. Nowadays, health-conscious rural inhabitants also drink
bottled water due to health concerns.

SWOT Analysis of PEPSI

SWOT Analysis, which is based on thorough review of the business (corporation, product
category competition, customers and products), identities and evaluates the internal
strengths and weakness of the companies well as its external threats and opportunities.
The marketing mix is driven by the results of the SWOT analysis.

STRENGTH

Demand of Pepsi is more than its competitors.

Company has a very established name and a good reputation.

 Pepsi has large market share than its competitors.

As the target customers of Pepsi is young generation, so Pepsi has more

brand loyal customers.

Most of the customers are satisfied with the price of the Pepsi.

Pepsi is an international company and it has a very strong position

internationally.

The environment of factory is very good and attractive.

Pepsi spends a lot of budget on its advertising.

Pepsi has a very vast distribution channel and it is easily available

everywhere.

Employees are also motivated.

Pepsi offers many discount schemes for customers time to time.

Pepsi Cola is sponsoring sports, musical concerts, walks.

The location of the Pepsi plant is utilized that all major markets of Lahore
are within the reach of the Pepsi plant within 30-45 minutes.

WEAKNESSES

Pepsi does not offer any sort of incentive or discount to its retailers.

Pepsi target only young customers in their promotions.

Crown of the disposable bottle is not good.

Demand of disposal bottle is declining.

Pepsi tin pack is not available in far off rural areas.

Pepsi is not considering many potential outlets like hotels, college

canteens etc.

OPPORTUNITIES
 Company may start entering rural areas also.

The company may also diversify its business in some other potential
business.

Increased interest of people in musical groups, cultural shows and sports

has provided an opportunity for Pepsi to increase its sales through them.

THREATS

The main competitor of the company is the Coca Cola.

At the international level, Pepsi has a very strong competition with Coke.
Coke has started its advertisements more effectively to increase their
demand and it is a very strong threat for Pepsi.

Cola drinks are not good for the health so the awareness level of the
people is in creasing which is a big threat to the company.

HOW Internal and External factors affecting the strategies

Marketers need to be good at building relationships with customers, others in the

company and external links. To do this effectively, they must understand the major
environmental forces that surround all of these relationships. A company’s environment
consists of forces outside marketing that affect marketing management’s ability to build
and maintain successful relationship with the target customers. Every company should
know the vital importance of constantly watching and adapting to the changing
environment. As the world is moving fast today, no one can be certain about the future.
The environment continues to change rapidly. By carefully studying the environment,
marketers can adapt their strategies to meet new marketplace challenges and
opportunities.

Some of the external and internal environmental factors that affect the marketing trend of
the company are as follows:

EXTERNAL ENVIRONMENT

The macro environment consists of the larger societal forces that affect the
microenvironment. The external factors are not under the control of the marketers; they
can just observe them and make strategies in light of these factors. Some of these factors
are given below:

Demographic Factors:
 • Age

The requirements of different age groups are different. Pepsi should target
that age group that consumes it the most and make promotional strategies
according to their behavior. So their main target is the young generation.

• Education

A company has to make promotional strategies keeping in view the

customer level. If the percentage of education is high in a country then
through advertisements people can be made well aware of their product
and can convey their message easily. Promotion and education has a direct
relationship.

• Population Distribution

Population distribution means how much [population lives I urban areas

and rural areas. In Pakistan 35 % population resides in urban areas and
65% population lives in rural areas. Pepsi is focusing on urban areas as
people there are more inclined towards such beverage while people in
rural areas are more inclined drinking lassi and desi drinks.

• Population Density

It means number of people in one square km per area. Karachi has the
largest population density and Islamabad has less population density in
Pakistan. Pepsi sales are more in Karachi as compared to the sales in
Islamabad.

ECONOMIC FACTORS:

• Income and Income per Capita

If the income level or per capita income of the people increases, it will
have a positive effect on the consumption of Pepsi.

• Inflation

If the country faces inflationary trend in the market, the price of the Pepsi
will ultimately increase which will lower its demand.

• Consumption Behavior

Pakistan is a consumption oriented society. Due to demonstration effect

the people are more inclined towards consumption than saving. So the
people of Pakistan spent heavily on food items. Hence Pepsi has a good
market share in the present circumstances.

• Income Distribution

It means how much is in the hands of rich and poor class. In Pakistan 10%
rich people posses 93% of wealth and 90% people posses 7% of wealth. If
there is balanced distribution of income in the country, the consumption of
the people will increase hence increasing the sales of beverages as well.

• Payment Mod

As the use of plastic money is increasing the consumption pattern of the

people are increasing. Although it will have a low affect on the
consumption of Pepsi.

• Employment Opportunities

As employment opportunities increase the living standard of the people

increase and the people consume more.

• Aggregate Demand

In case of Pepsi, aggregate demand of the product increases in the season

of summer as the hot weather makes the consumers want to drink more.

• Aggregate Supply

In summer season to cope up with the increasing demand they have to

increase the aggregate supply of their product.

• Economic Policies

Some of the economic policies which can affect the market of Pepsi are
discussed below:

• Fiscal Policy

It is the policy of taxes. If heavy tax is levied on Pepsi then its price will
rise having negative affect on its consumption.

• Monetary Policy

Monetary policy is made to restrict or increase the supply of money in the

market. If policies are made to restrict the flow of money in the market,
 inflation can be controlled hence increasing the real income of the people
which will ultimately affect the consumption of Pepsi.

• Price Policy

If price of Pepsi is increased its demand will decrease and vice versa.

• Income Policy

If income of the people will increase their purchasing power will increase
and hence increasing the market share of Pepsi.

PHYSICAL FACTOR:

• Region

Pakistan is divided into different geographical regions. Marketing and

sales of Pepsi is different in different geographical regions. In hot areas its
demand is more.

• City Size

The cities which are densely populated the consumption of Pepsi is more.

• Climate

Pepsi is more suitable for humid or hot weathered countries like Pakistan.
It is a source of refreshment when a person is thirty due to the hot weather.

• Infrastructure

Roads are the basic need for transportation of Pepsi from one place to
another. Pepsi cannot open factories in every city of Pakistan so it has to
transport it to other cities where Pepsi is demanded.

Electricity is the basic necessity for production of any product. Constant

load shedding slows down the process of production which leads to less
production and low market share.

TECHNOLOGICAL FACTORS:

• Research and Development

 Through research and development quality of the product can be improved
or better techniques or machinery can be developed which can increase the
production. When technology is advance the supply of the product
increase hence the company experiences growth in their business.

POLITICAL AND LEGAL FACTORS:

• POLITICAL STABILITY:

Whenever the government is considered to be stable, the business will

flourish. If there is political stability in the country the policies and
strategies made by Pepsi can be consistent to be implemented. Foreign
companies are also keen to invest in those countries which are politically
stable where they have no fear of decline in their market share or shut
down due to sudden change of government.

• Mixed Economy

In mixed economy government and private sector both plays their role in
developing the economy of the country. Investment by foreign companies
like Pepsi is more likely to flourish in mixed economy.

• Laws Formulation

Government has given copy rights to Pepsi so that another company

cannot sell their product by the name of Pepsi. The countries where laws
are formulated, the strategies and activities of the company are different.

• Social Responsibility

Pepsi’s social responsibility is to provide its customers with clean and

hygienic product so to do this they have increased the use of disposable
bottles.

SOCIAL AND CULTURAL FACTORS:

• Psychographic

It is a combination of demographic and psychological factors.

Psychological attributes mean how you perceive things. The company will
 focus on the behavior of consumers and make different changes in their
product quantity or quality and in promoting their product so that they can
attract the customers. Keeping in view that the behavior of different
consumers is not alike they have to make their marketing strategies in
accordance with their requirements so that they are convinced to buy the
product.

• Religious

Religious factors can influence the market sales of Pepsi as it happened in

2003 when the U.S-led attack on Iraq, wide sections of society in Pakistan
have banned American multinationals Coke and Pepsi

• Social Status

Pepsi is a well renowned brand. People who are brand conscious will not
drink beverages of lesser known brands such as Amrat cola. They will try
to show their status by drinking Pepsi which is known to all as a quality
drink.

• Media

It is a very important factor for marketing. Media these days is a very

effective way of inspiring people to buy a specific product. A good
promotion can boast up sales to a great extent.

INTERNAL ENVIRONMENT

CUSTOMERS:

There are three types of customers

1. Consumer

2. Business

3. Government
Pepsi main focus is the consumers which are the end users. Pepsi has to make its
marketing strategies keeping in view the consumer buying behavior. To forecast the
behavior of the consumer is a business problem. Physical aspect of the consumer can be
satisfied but it is difficult to satisfy the consumer psychologically. Consumer buying
behavior is affected by certain factors like Cultural factors, Social factors, Personal
factors and Psychological factors. So the producer should keep these factors in Mind
while promoting their product so that they can acquire the customer and increase their
market share.

There are different consumers in a society whose behavior is not the same. Every
consumer has a different perception of different products. Some consumers are impressed
by one quality of the product which may be in the view of other consumer not that
impressive. So to deal with different consumers in a society one should know about the
consumer buying behavior process which may help in making a true picture of their
product in the mind of the consumers.

CONSUMER BUYING BEHAVIOUR PROCESS:

Consumer buying behavior process is explained in some steps which are discussed
below:

• Need Identification

The consumer is thirsty and he wants to quench his thirst.

• Information Search

He will search as to what will satisfy his thirst the most.

• Evaluation of Alternatives

He will now evaluate from the wide range of beverages available to him
that which one of them is suitable to him in terms of quality, taste and is
pocket friendly.

• Selection

After evaluating the product he will select a product.

• Purchase

The consumer will buy the selected product.

• Post-Purchase Experience:
 It is the experience that the consumer gets after using the product. He will
use the product again if he feels that his satisfaction after use is more or
equal to the price of the product.

After looking at above mentioned example, we can get an understanding that a product
should be so desirable that whenever a person identifies his need, he selects our product
among various substitute products and he feel satisfies so that he retains the use of that
product.

SUPPLIER:

He is the person who provides raw materials to the producers or sellers. Suppliers form
an important link in the company’s overall customer value delivery system. They provide
the resources needed by the company to produce its goods and services. PepsiCo
International provides raw materials to Pepsi franchises in Pakistan. Supplier problems
can seriously affect marketing. Marketing managers must watch supply availability i.e.
supply shortages or delays, labor strikes and other events can cost sales in the short run
and damage customer satisfaction in the long run. The company should monitor the price
trends of their key inputs. Rising supply costs may force price increases that can harm the
company’s sales volume.

No. Material Manufacturer/ Supplier(s) Approved from

PepsiCo Inc. Ireland & PepsiCo

1. Pepsi Concentrate Approval at the factory
Factory in Hattar Estate.

Approved form PepsiCo

2. Caps & Closures Gatron Pakistan Limited
China.

Approved from PepsiCo

3. Plastic Bottles Galtron Pakistan Limited
China.

Balochistan Glass Mills

Approved by PepsiCo
4. Glass Bottles
China.
Tariq Glass Limited

Approved from PepsiCo

5. Carbonated Water Pakistan Bottlers (Pvt) Ltd.
U.A.E, Dubai.

COMPETITOR:

He is the person who is selling the same type of product in the market.

The marketing concept states that to be successful, a company must provide greater
customer value and satisfaction than its competitors do.
Pepsi has a tough competition with Coca Cola while it faces a little competition with the
local producers like RC Cola, Shandi Cola etc. The local producers hardly affect the sales
of Pepsi in the market.

There are different types of competitor in the market. Some of them in which our product
lies are discussed below:

• Close Vs Distant Competitor

Pepsi and Coke are close competitors. It means that both have direct
competition in the market, their products are close substitutes for one
another. Both the products can influence the market share of one another
through effective strategies made to cope up with their competitors.

Pepsi cola and Nestle juice are distant competitors of one another. It means that their
products satisfy the same want but they are in indirect competition with one another.

• Strong Vs Weak:

Coca Cola and Pepsi are strong competitors. In Pakistan Pepsi is the
market leader and Coca Cola is its competitor. The Pepsi makes defense
strategies so that it can maintain its position in the market. While Coca
Cola is a challenger and it makes attack strategies so that it can become
the market leader.

Pepsi and Shandi Cola are weak competitors. Pepsi is the market leader
and Shandi Cola is the follower. Pepsi is not in direct competition with the
Shandi Cola. It means that Shandi Cola has little effect on the sales of
Pepsi.

DISTRIBUTOR:

Distributor maintains the image of the product and the sales in the market. If items are
not properly placed by the distributor, it will disperse the market.

• CHANNELS OF DISTRIBUTION

The Pepsi uses the following two channels for the distribution of their
products.

Indirect Distribution
 Indirect distribution involves agency holders e.g. Riaz
Bottlers Pvt. Ltd. Lahore franchise has divided its region
i.e. Lahore and Kasur districts in two categories.

Local Zone

These are 62 agencies distributing Pepsi

Products (250ml Sd) only around Lahore in
their respective allocated sub zones.

Out Station Zone

17 dealers have been appointed by the

bottlers for far distant places and in out
skirts of Lahore and Kasur the dealers
involved in direct distribution are only
authorized to sell 250 ml (STD) bottle of
Pepsi, Team and Marinda.

Direct Distribution

The factory vehicles operate on 45 direct routes in Lahore

selling non-returnable bottles Litter, Pet and Can.

PRE-MARKETING MIX

SEGMENTATION

It means that you divide the target market in to different groups. Market consists of
buyers and buyers differ in one or more ways. They may differ in wants, resources,
locations and buying practices. Through market segmentation companies divide large,
heterogeneous markets into smaller segments that can be reached more efficiently and
effectively with products and services that match their unique needs.

Segmentation is done on basis of the previously mentioned external factors and the
following:

• Behavioral Base
 It is how people perceive a specific product, in short psychological
analysis of a product. Pepsi all over the world is recognized as a quality
drink and therefore people drink it without any hesitation whenever they
are thirsty or otherwise. So marketers of Pepsi have made it a drink for all
people and for diabetic people they introduced diet Pepsi.

• Cognitive Base

It pushes and pulls the consumer. If the outlook of Pepsi bottle is desirable
and it attracts the consumer, he will buy it even if he isn’t thirsty.

TARGET MARKET

The market which is focused by the producer is called the target market. Targeting is to
focus on the target market to attract the customers.

CHARACTERISTICS OF TARGET MARKET

The target market should have some following features.

• Accessible

It means that the target market which is focused should be accessible or

easily approachable.

• Substantial

The target Market should be substantial. It should have a specific size

where strategies can be made and implemented.

• Measurable

One should be able to measure the demand in the market.

• Comparable

The producer should identify that needs of different customers are

different.

• Profitable

The target market should be profitable for the producer.

MARKETING STRATEGIES
There are different marketing strategies which are applied in targeting. Some of these
strategies which Pepsi follows are discussed below:

• Mass Marketing

Big firms or companies say that everyone is their buyer whether they
belong to rural or urban area, big or small country, rich or poor, adults and
small children etc. Pepsi is mostly used by the young generation but it
claims that it is moving towards mass marketing.

POSITIONING STRATEGY

It means that you try to give image to your product in the mind of the customers. To give
a true and positive picture of the product is the best positioning. The company should
promote its good points or comparative advantage which it has over its competitors

DIFFERENTIATION STRATEGY

In order to serve your target market you introduce different things to your product so that
your product can be differentiated from other products.

• Basis of Differentiation

There are many bases on which a product can be differentiated but Pepsi
has differentiated its product on the following base:

• Product Differentiation

Pepsi differentiate its product from its competitors on the basis of brand,
quality and taste.

• Image Differentiation

Logo is used for image differentiation. Logo is what establishes a brand

name in the consumer mind. It is the brands identification, signature and
image. Pepsi has kept on changing its logo from time to time.

　
 　

Marketing Mix Strategies

PRODUCT

The soft drinks market in Pakistan enjoys dynamic growth in both volume and value
terms. Carbonated drinks have become part of the culture in Pakistan and multinational
companies have maintained standards over the years to provide the nation with high-
quality drinks. Rural areas of Pakistan have driven sales of carbonated drinks to new
heights as more than 60 percent of the population resides in rural areas and young
consumers are more attracted to advertising. Pepsi is the most popular and leader brand in
the Pakistani market and is consumed by children and adults alike. Pepsi is a responsible
corporate brand of Pakistan and have contributed a lot to the economy.

In marketing, a product is anything that can be offered to a market that might satisfy a
want or need. Until unless the product of the company is not strong in the market it can
not survive in the longer run.

Pepsi has a product line comprised up of carbohydrate drinks, Lays and many other
products in Pakistan. Pepsi’s product line satisfies consumer needs because Pepsi
produces different types of soft drinks for different consumers.

The most popular product of Pepsi is Pepsi Cola. Due to its good taste Pepsi is a well-
known product. Thus Pepsi Cola satisfies the consumer’s needs efficiently by launching a
desired product.

　
New product development by Pepsi

Pepsi is doing new product development on frequent interval of times. The purpose of
which is to refresh the brand. By new products and innovative ideas consumers can easily
be attracted.

In following ways Pepsi is doing new product development.

New product category

Pepsi which is mainly a company of soft drinks After establishing a brand in Pakistan
Pepsi came into several new product category. Lays, kurkuray and aqua fina, fast food
restaurants are the examples of new product category.

Product line extension

Mountain dew is the most recent addition in the product line of soft drinks which is very
popular especially among the youngsters.

However Pepsi launch its several variants with a minor difference on frequent interval of
time. There have been many Pepsi variants produced over the years since 1903, including
Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold,
Pepsi Holiday Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil), Pepsi Next
(available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One,
Pepsi Ice Cucumber and Pepsi White in Japan.

• Line Filling

Pepsi claims that they are doing mass marketing but there was an unfilled
gap in the consumers. The diabetic patient can’t use the regular Pepsi
because of the sugar. So Pepsi had introduced diet Pepsi to fill the gap in
their drinks as of then onwards even diabetic people became their
consumers.

Incremental Improvement

Pepsi jumbo is an example of incremental improvement made by Pepsi. It was 2.25 litter
bottle introduced few years ago in Pakistan. The purpose of this packing is to offer the
Pepsi to a family for one or two time meals. Price of this pack is also kept low so that is
can be affordable easily by the consumers.

　
　

PRODUCT line

SODA WATER CHIPS JUICES

Pepsi cola Aquafina Lays Tropicana

Teem Kurkure

Mirinda

7up

Dew

Pepsi twist

P|L

R|E

O|N

D|G

U|T

C|H

T|

WIDTH

Different product line,

Soda

Diet soda

Purified water

Chips
 Juices

LENGTH

Length includes number of items produced by Pepsi under each appropriate column of
width. For example in column of soda drink marinda and team etc comes in.

DEPTH

The variants that are offered by Pepsi in terms of size and quantity,

1. 175 ml Mini Bottle

2. 250 ml Regular Bottle

3. 300 ml Tin

4. 1000 ml Regular Liter Bottle

5. 1500 ml Disposable Bottle

BRANDING:

Consumer view a brand name as an important part of the product and branding can add
value to the product. A name, term, sign, symbol or design or a combination of these
intended to identify the goods and services of one seller or group of seller and to
differentiate them from their competitors.

• LOGO
 Logo is what establishes a brand name in the consumer mind. It is the
brands identify, signature, image and more often it is a logo that makes of
breaks a product logo plays a very effective role to improve the product or
brand. Pepsi kept on changing its logo from time to time along with the
trade marks.

Evolution of Pepsi logo

1909-1939: Delicious and Healthful

1939-1950: Twice As Much For A Nickel Too
1950-1963: The Light Refreshment
1953-1961: Be Sociable
1961-1963: Now It's Pepsi For Those Who Think Young
1963-1967: Come Alive! You're In The Pepsi Generation
1967-1969: Taste That Beats The Others Cold
1969-1973: You've Got A Lot To Live, Pepsi's Got A Lot To Give
1973-1975: Join The Pepsi People Feelin' Free
1975-1978: Have A Pepsi Day
1978-1981: Catch That Pepsi Spirit
1981-1982: Pepsi's Got Your Taste For Life!
1983-1983: Pepsi Now!
1984-now: Pepsi, The Choice Of A New Generation

2000 The choice of a new generation.

2003 Zinda Dilon Ki Pehchan.

2006 Generation next.

PRICE
The amount of money charged for a product or service, or sum of the values that
consumers exchange for the benefits of having or using the product or services. As price
gives us the profit so this P is very important for business price of product should be that
which gives maximum benefit to the company and which gives maximum satisfaction to
the customer.

Following factors Pepsi kept in mind while determining the pricing strategy.

Price should be set according to the product demand of public.

Price should be that which gives the company maximum revenue.

Price should not be too low or too high than the price competitor is
charging from their customers otherwise nobody will buy your product.

Price must be keeping the view of your target market.

The price of Pepsi Cola, despite being market leader is the same as that of its competitor
Coca cola.

Some times, Pepsi places its customers into some psychological pricing strategies by
reducing a high priced bottle and consumers think that they save a lot of money from this.

Prices of different bottles

Regular bottle e= rupees 10

Non Returnable/disposable= rupees 17

Liter Bottle=rupees 30

1.5 Liter Bottle= rupees 50

2.25 Liter Bottle= rupees 60

Analysis of the product in Pakistani market

According to a survey conducted by brand award association availability has been

declared as the second best contributing factor in the success of Pepsi and it simply
indicates that effectiveness of its distribution network which ensures its availability in
every far off corner of the country. Affordability has been rated as the third best option
and indicates consumer’s sensitivity to prices of daily consumption items. Quality has
been considered as the lowest rated criterion and it is unusual. It indicates that counterfeit
product is getting prevalent in the market. There are more than ten COLAS in the market
and the popular acceptance of Pepsi is creating problems in its way of success. Pepsi will
have to make a strong drive to close all illegal manufacturing and packing of cola
carbonated drinks which has become common now-a-days and counterfeit cola
replacements can be seen in every market

PRICING STRATEGIES

Competition-based pricing approach

Pepsi has intense competition with the coca cola the largest soft drink company world
wide. So its pricing cant exceed too much nor decrease to much as compared to the price
of coca cola. If price of the Pepsi exceed too much from the coke peope will shift to the
coca cola and on the other hand if the price of Pepsi decreases people might get the
impression that quality of the Pepsi is also low.

Promotional Pricing Policy

Pepsi has offered promotional prices very frequently. Especially on

some occasion Pepsi reduces its rates. like in Ramazan Pepsi
reduces its rate unto 5 rs on 1.5 litter bottle.

Market Penetration Pricing Policy

Prices in beverage industry are determined by the consumer. In an

economy like that of Pakistan, consumers tend to switch towards a
low priced product. Pepsi objective is to target every consumer of
the country so Pepsi has to set its prices at such a level which no
one can offer to its consumers. That is why Pepsi Cola charges the
same prices as are being charged by its competitors. Otherwise,
consumers may go for Coca Cola in case of availability of Pepsi at
relatively high price.

• DISCOUNTS

Pepsi Cola offers various discounts to those retailers who have the
maximum sales of Pepsi products on daily, monthly and on seasonal basis.
Same of the main discounts given to the retailers are as follows:

Quality Discount

Following are discounts offered by Pepsi.

1/10 Discount
 I.e. one case of Pepsi is free on buying 10
cases of Pepsi at one time.

2/20 Discount

I.e. two cases of Pepsi are free on buying 20

cases of Pepsi at one time.

Seasonal Discount

Following are discounts offered by Pepsi.

Pepsi also offers seasonal discounts schemes

by reducing price in Ramadan and on Eid.
Pepsi also offers trade in allowance for
retailers.

3 B – F Discount

I.e. some times, especially in the off-season

duration, in order to increase the sale of
Mirinda and Teem, 3-BF discount is given
(i.e.) 3 bottles free on purchasing every case
of Teem and Mirinda.

• INCENTIVES

Mainly two types of incentives are given by the Pepsi Cola:

Incentive to Retailers

Pepsi Cola provide various incentives to retailers on the

best sales and achieving the predetermined sales targets.
These incentives are in the shape of:

Deep Freezers

Return Tickets

Free Transportation Services.

Incentive to Dealers

The best dealer of the year is awarded with a brand new

Suzuki Pickup. The second best is awarded with Motor
 Cycle. The third best is awarded with Return Ticket to
Middle East.

• Credit

There is no credit system in the beverage industry. Every single bottle is

sold on the cash basis.

• Special Offers

Pepsi Cola gives special offers to consumers on special occasions like

Ramadan and Eid days instead of decreasing the price of the products,
some special packs like Pakkora Mix, Chat Massala, or Free Drinks with
Liter Bottles are offered.

PLACEMENT

Placement is accomplished through efficient and sufficient channels of distributions.

These channels constitute systems of economic institutions through which producers
deliver goods and services into the hands of their users. There are various channels
through which Pepsi distributes its output.

• PRODUCT OUTFLOW

Pepsi Cola International has given franchises all over Pakistan. These
companies have installed their plants in different parts of Pakistan with
these specified areas and names e.g.

City Name of Franchise

Karachi Pakistan Bottlers

Lahore Riaz Bottlers

Faisalabad Punjab Beverage

Pepsi Cola provides consumers place utility which is, where ever and when ever you
want it, you get it! Pepsi’s channel of distribution is very aggressive according to the
consumers, manufacturers and distributors. Pepsi has 12 different units in different areas
of Pakistan, which make the Pepsi easily available all over the country.
The cities in which the Pepsi units are:

Lahore

Sukkur

Karachi

Multan

Dera Ghazi Khan

Islamabad

Faisalabad

Quetta

Hyderabad

Sahiwal

Hattar

Pepsi is an international brand so it also has other units in other countries of the world
like America, Europe, Afghanistan, Middle East and Central Asia. The big advantage for
Pepsi in Pakistan is that it distributes the product through bottlers. So bottlers’ effort also
contributes in the promotion of Pepsi.

CHANNELS OF DISTRIBUTION

Direct Distribution

Indirect Distribution

　
　

Local Zone

Outside Zone

Direct Routs – 45

Authorized Dealers - 17

Agencies – 62

• CHANNELS OF DISTRIBUTION

The Pepsi uses the following two channels for the distribution of their
products.

1. Indirect Distribution

Indirect distribution involves agency holders e.g. Riaz Bottlers Pvt. Ltd.
Lahore franchise has divided its region i.e. Lahore and Kasur districts in
two categories.

Local Zone

These are 62 agencies distributing Pepsi Products (250ml

STD) only around Lahore in their respective allocated sub
zones.

Out Station Zone

 17 dealers have been appointed by the bottlers for far
distant places and in out skirts of Lahore and Kasur the
dealers involved in direct distribution are only authorized to
sell 250 ml (STD) bottle of Pepsi, Team and Marinda.

2. Direct Distribution

The factory vehicles operate on 45 direct routes in Lahore selling

non-returnable bottles Litter, Pet and Can.

• SPECIAL POINTS

Other than these some special points are also being looked after by direct
sales vehicles such hotels restaurants, public parks, big and reputed super
stores etc. At Avari, Pearl continental, village, Seas magnificence etc.
Pepsi Cola directly distributes the products.

Promotional Strategies

In Pakistan Pepsi is the most liked soft drink especially by young generation so the Pepsi
cola company has devised such marketing strategy which attracted them. For this reason
they started monitoring the habits of the generation. What they saw was that the students
were crazy about cricket and usually liked to idealize them so in order to increase their
sales the Pepsi cola company paid high amounts of money to the cricketers to act as their
spokes men.

Some of the most famous cricketers in the modern era have acted as spoke persons also
film stars have been acting as spoke persons.

The Pepsi cola company has after doing research also has introduced different size of
bottles offered at lower prices so that every one can afford them. Also Pepsi Company
has introduced other soft drinks including mountain dew, seven up and marinda. Pepsi
company has introduced other flavors such as Pepsi twist, Pepsi max diet Pepsi.

Pepsi Cola Company has also become official sponsors of Pakistan cricket and has
sponsored a number of series.

Also Pepsi has donated a lot to the earth quake victims and has launched a number of
prize schemes to attract new customers

As a result of this marketing strategy Pepsi has become the largest seller of soft drinks in
Pakistan and is slowly forming a monopoly in drinks market. Although many soft drinks
like Pepsi have been introduced such as Amrit Cola, Quibla Cola offered at lower prices
but none of these drinks have been able replace it.
Following are the strategies:

Comparative Parity Method:

As we have already discussed Pepsi pricing strategy is determined y consideration the

strategy of coca cola so in this case also Pepsi ads are telecasted with the competition in
coca cola which is its direct competitor.

Objective and task methods

When Pepsi introduced any new variant they have advertised it heavily. Objective of
which is to make a space for new product in the market. We have seen the heavy
advertisement of Pepsi max in previous days.

Seasonal advertisement:

Frequency of the Pepsi ads varies from time to time. When the season is on Pepsi do
heavy advertisement especially in ramzan days or eid occasions but this advertisement
not remain consist. We can hardly see the ads of Pepsi now as there is winter season.

CONCLUSION

Pepsi is a well renowned company and it has maintained its position well by
understanding the client psychology, by ensuring quality, by introducing ingenuity in
products, by enlarging its product base, by keeping economic factors in view and by
intense and jazzy advertisements.

Whenever and where ever there is a spotlight event, Pepsi must figure in, like the one day
international cricket matches between India and Pakistan many other such occasions. The
key word for success in the Marketing World is to “remain in the spotlight” and that is
what Pepsi is doing.

SUGGESTIONS

The marketing world is full of surprises. Who could imagine that Coca Cola would be
overtaken by Pepsi? If Coke could be overrun by Pepsi, it would be no wonder that Pepsi
might be overtaken by some other beverage. The need then is to combine quality with
ingenuity. Along with that, the reputation of the company has to be kept robust.

Today we live in a fast moving world where novelty and newness count a lot. One cannot
rest on one’s laurels. Fresh efforts, newness of approach must remain the cardinal
principles of a well orchestrated marketing strategy and the campaign must be relentless.
A continuous bombardment in advertisement would convince the clients that Pepsi is a
part of their lives. In order to live with style, Pepsi ought to be an essential ingredient of
one’s life.
The Pepsi is at its maturity stage and the sales of company are not growing very rapidly.
Company is doing a lot of promotional activities to let the product remain in the market.
It holds a large share of the market and whenever the sales state declining, the company
can improve it by different promotional activities.

Marketers of Pepsi can try to improve sales by improving one or more marketing mix
elements. They can cut prices to attract new users and competitor’s customers. They can
also launch a better advertising campaign or use aggressive sales promotion to improve
the sales. Thus, Pepsi is at its maturity stage.