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Compatibility of marketing strategies to environment

The beverage industry is highly taken up by the “Cola-War” between the two giant rivals, Coca Cola and PepsiCo. However, Coca-Cola holds the major share world-wide, the case is reverse for the Pakistani market, where, Pakistan Beverage Ltd. had been and is a major player in the beverage industry. PEPSI is under PBL and is a market leader with over 70 percent market share of the ‘soft-drink industry’ in Pakistan. (Indian Pakistani trade unit website). The current marketing plan is aimed at analysing, the scenario of the company with respect to it’s marketing activities and proposing/recommending, any changes required.

This marketing plan aims to identify the compatibity of the company’s basic marketing strategies to its marketing environment, its competitors, its customers keeping in lieu it’s over all strengths, weaknesses, threats and opportunities. This plan then aims to analyse the company’s mission statement with respect to its goals and objectives followed by the analyses of the current marketing strategies and marketing mix. Lastly, this report proposes recommendations the company should look into adopting.

COMPANY INTRODUCTION AND BACKGROUND INFORMATION:

According to the official website of Pepsi Co, “PepsiCo is a world leader in convenient foods and beverages, with 2005 revenues of more than $32 billion and more than 157,000 employees”.

“Pepsi co, Inc is founded by Donald M. Kendall, and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of two companies”(official website of Pepsi). However, Pepsi-cola was formed by the end of 1890s. With brands that are almost 100 years old, Pepsi® Co.

PepsiCo is organized in six divisions: Frito-Lay North America, Frito-Lay International, Pepsi-Cola North America, Gatorade/Tropicana North America, PepsiCo Beverages International and Quaker Foods North America. The Company's North American divisions operate in the United States and Canada and accounts for seventy percent of its sales. Its international divisions operate in over 175 countries, with PepsiCo's largest operations in Mexico and the United Kingdom. PepsiCo is working hard to build its presence in emerging markets like India, China and Russia. PepsiCo World Headquarters is located in Purchase, New York. PepsiCo is traded as PEP on NYSE.

In the year 2006 Pepsi was ranked among “Top 100 Brands” by Business Week, ranks 18th PepsiCo ranks 18 out of “Top 50 Companies for Diversity” list by DiversityInc's. However according to the annual report of 2005, the growth in the carbonated sector, had slowed down and due to that, the company is now ahead into diversification in organic products. (Official website of PepsiCo)

PepsiCo is a leader in innovation (three of top ten new food and beverage products are Pepsi-Cola brands). Consumers consider PepsiCo’s Quaker and Tropicana brands the healthiest among all brands. PepsiCo’s success is the results of superior products, high standards of performance, distinctive competitive strategies and the high integrity of its people.

(Source: official website of Pepsi Co, www.pepsico.com)

BRANDS AND COMPANIES

PepsiCo has hundreds of brands. These are some of the best known: Frito-Lay Brands, Pepsi Cola Brands, Gatorade Brands, Tropicana Brand, and Quaker Brands (Official website of Pepsi Co.).

(Source: www.pepsico.com)

MARKETING ENVIRONMENT:

According to Dibb et.al, (2006), the marketing environment consists of the political, legal, regulatory, societal/Green, technological and economic and competitive forces (also known as PESTLE), that surrounds the buyer and the company. Marketing environmental forces are an important element because; they influence the customer by affecting their life style, standard of living, preferences and needs of a product as well as also alter opportunities that the marketer may want to take advantage of. It helps plan how marketing activities should be planned. The company has to keep a close view of the changes taking place in the marketing environment.

To study how Pepsi Co, operates in Pakistan, it is an essential to view the macro environment. It consists of the factors and forces that directly affect the microenvironment of a company.

MACRO ENVIORNMENT:

The macro environment of Pepsi Co. Pakistan is as follows:

ECONOMIC:

Inflation:

Inflation is basically a rise in the price of goods and services. But with respect to Pepsi, there is a very insignificant price change in the product and consumers drink Pepsi habitually so it does not create an impact on the demand of the product.

Price Sensitivity:

Because of the nature of the products there are some industries in Pakistan that are highly sensitive to the price. The Beverage industry is one of those sensitive industries because of its nature and competition in the market. The competition between the Pepsi® and Coca Cola plays a very important role in determining the prices of the drinks. A decrease in the price by one competitor forces the other competitor to reduce the prices as well.

Pepsi® offers various discounts and cutting off the prices, time to time, in order to capture the market and give benefits to the people.

Taxation:

Taxes are imposed by the governments; it is one of the main reasons for an increase in the prices. Pakistan Beverages Pvt. Ltd. always tries to retain the prices but sometimes it is essential for them to make an upward change

Currently the “soft drink industry” is under double taxation. The current tax rate is 25% at the retail price. According to Senator Ahmed Ali, Chairman, Senate Standing Committee, after the tax reduction, can not only benefit the companies but also result in a three fold benefit to the country.

(Source: www.brecorder.com)

TECHNOLOGICAL ENVIRONMENT:

The technological environment, perhaps, is the most dramatic force now shaping our destiny. Technology has a tremendous impact on lifestyles, consumption patterns and our economic well-being. (Kotler, 2003) Although Pakistan is not a very technologically advanced country, it has always remained up to date with technology.

POLITICAL ENVIRONMENT:

The political environment includes the laws, government agencies and pressure groups that influence the overall running of the company (Kotler, 2003).The uncertain and unstable political environment in Pakistan causes many hindrances to each and every industry likewise the other industries; the beverage industry suffers a lot. Pepsi had also suffered a lot of boycotts for being an international brand.

PORTER’S FIVE FORCE ANALYSIS:

According to Dibb et al, (2006), Michael Porter defined a model for competitive advantage, which consists of five competitive forces. This report will make use of the Porter’s five forces, to

COMPETITOR ANALYSIS:

All beverages available in the market are competitors of Pepsi®, directly or indirectly. These competitors include Coca Cola, RC Cola, Pakola, Double Cola, Amrat cola, Makah Cola. Pepsi's direct competitor is Coca-Cola. The non-soft drink competitors are tea, coffee, water, energy drinks, sports drinks, milks, etc which are all consumed on beverage occasions. Pepsi aims to gain a greater share of these occasions.

Although Pepsi® has captured over 70% of the market share in Pakistan (ipbu.co.uk) there is much rivalry between the two cola giants. They have to observe each others strategies for setting prices and executing promotional ideas.

Pepsi and Coca-Cola had/have different brands of soda competing with each other:

Brand

Pepsi

Coke

Dark Cola

PEPSI

COCA COLA

Diet

DIET PEPSI

DIET COLA

Low calorie

PEPSI ONE

PEPSI EDGE

PEPSI MAX(outside the US)

COCA COLA 2

COCA COLA ZERO

Lemon Lime Soda

SIERRA MIST

7 UP(outside the US)

SPRITE

Cherry Soda

WILD CHERRY PEPSI

CHERRY COKE

Orange juice

TROPICANA

MINUTE MAID

Iced Tea

BRISK

NESTEA

Root Beer

MUG

BARQ’S

Sports Drink

GATORADE

POWERADE

Citrus Soda

MOUNTAIN DEW

Mello Yello

Surge

Vault

Vanilla-Flavored

Pepsi Vanilla

Vanilla Coke

Lime-Flavored

Pepsi Lime

Coca-Cola with Lime

(Source: website of Wikipedia for cola wars)

STRENGTHS AND WEAKNESSES OF COCA-COLA:

STRENGTH

WEAKNESS

Operating System

Low market share

Financial Strength

Less Promotion

Weaker Distribution Network

(Please refer Appendices 1(a) for the explanation on the Strengths and weaknesses of Coca Cola

COMPANY ANALYSIS:

In Pakistan PEPSI Co. is operated under Pakistan Beverage Ltd, which is a major player in the beverage industry. It has been the market leader since 1988; still there is a healthy competition between these two major players, Coca-Cola and Pepsi. Over all, Pepsi Co holds a share of over 70% in the industry and the beverage industry of Pakistan has shown an enormous growth of 30% in the year 2006.

(Source: www.iptu.co.uk, pepsico.com, brecorder.com)

PRODUCTS OFFERS BY PAKISTAN BEVERAGE Ltd.

Flavor

Brand

Color

Cola

Pepsi®

Orange

Marinda

Lime

7 Up

Mango

Slice

Lime

Mountain Dew

Lemon

Teem

SWOT ANALYSIS:

SWOT analysis is a framework, for generating alternatives. It refers to strengths, weaknesses, opportunities and threats. Strengths and weaknesses are internal factors whereas, opportunities and threats and external. (Dibb et al. 2006)

The SWOT analysis of PEPSI is as follows:

SWOT ANALYSIS OF PEPSI:

STRENGTH

WEAKNESS

OPPORTUNITY

THREAT

Intensive Distribution Network

Lacks Worldwide Acceptance

Natural Environment

Brand Image

Sweeter Taste

Operating System

Population

Financial Backup

Promotion

Financial Assistance

Diversification

Awareness

Target Market

Food division should expand internationally

Social, cultural, economic, political and governmental constrains

Quality Standard

Target health conscious customer base

National Image

Focus on most important customer trend- “Convenience”

(Please refer Appendix 1(b) for an explanation of the points mentioned above).

TOWS MATRIX:

TOWS matrix makes use of the SWOT analysis to provide strategic options:

STRENGTHS – S

Intensive Distribution Network

Sweeter Taste

Promotion

Target Market

Quality Standard

National Image

WEAKNESSES – W

Lacks Worldwide Acceptance

Operating System

Financial Assistance

OPORTUNITIES – O

Natural Environment

Population

Diversification

Food division should expand internationally

Target health conscious customer base

Focus on most important customer trend- “Convenience”

SO Strategies

Intensive distribution network to reach a wider population

Expand into healthier products by its quality standards

Target health conscious customers through its promotion and new product launches as it has a national image

WO Strategies:

Gain advantage through expanding into food based products as it has a name for that

THREATS - T

Brand Image

Financial Backup

Awareness

Social, cultural, economic, political and governmental constrains

ST Strategies

It has a strong national image to overcome the brand image.

It can improve on quality to overcome issues such as pesticides in Pepsi

Make use of the national image to overcome, social, economic pressures

WT Strategies

Slowly build up it’s image in different countries and avoid unnecessary businesses

Give financial backup, to franchises in other countries

Should be responsive to the needs of customers around the world rather than just the western market

STRATEGIC OPTIONS AND EVALUATION:

After analyzing, the TOWS matrix, we can evaluate strategic options for PEPSI as mentioned below:

OPTION 1: MAKE USE OF THE STRONG DISTRIBUTION SYSTEM TO EXPAND IN THE UNREACHED MARKETS

OPTION 2: PEPSI’S NATIONAL IMAGE IS VERY STRONG; IT CAN ALSO EXPAND INTO HEALTHIER PRODUCTS AND TARGET HEALTH CONCIOUS CUSTOMERS.

OPTION 3: EMPHASIE ON PRODUCT ATTRIBUTES MORE, SUCH AS, QUALITY THAN THE BRAND IMAGE

OPTION 4: DIVERFIY INTO OTHER PRODUCTS SUCH AS FOOD AS ALREADY LAUNCHED IN OTHER COUNTRIES AS IT HAS A STRONG PROMOTION BASE

OPTION 5: ADOPT SCHOOLS OR CHARIBLE INSTITUTIONS TO MAKE A FAIR IMAGE OF THE BRAND IN PAKISTAN DUE TO BRAND ISSUES

OPTION 6: LAUNCH NEW FLAVOURS OF PEPSI, SUCH AS DECAFFINATED DRINKS.

OPTION 7: MAINTAIN THE CURRENT POSITION

MARKETING STRATEGY AUDIT:

According to Dibb et al. (2006) Marketing strategy articulates the best way for a company to use its business resources and tactics to achieve its marketing objectives. It consists of the specific strategies for the target markets and positioning, the marketing mix and marketing expenditure levels. In marketing strategic audit, a company defines its mission statement and marketing objectives and analyzes whether the marketing strategy responds to the threats and opportunities in achieving those goals.

BUSINESS MISSION:

In the first step of the strategic planning, the company defines its mission statement. A mission statement drives the goals that are to be attained. It also defines the core area of activity of the company as well as, gives everyone a clear view of what the company wants to achieve. (Dibb et al. 2006) Following is the mission statement of Pakistan Beverages Pvt. Ltd. and the analysis of its strength and weaknesses.

"Pepsi® Co's overall mission is to increase the value of our shareholder's investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers, providing products that are safe, wholesome, economically efficient and environmentally sound, and providing a fair return to our investors while adhering to the highest standards of quality".

(Source: www.evablue.com)

The mission statement of Pepsi® Cola International is no doubt a customer and environment oriented mission statement. It identifies the objective of the business that is to increase the profit through customer satisfaction by not compromising on the quality of the product.

(Please refer Appendix 3(a) for the strengths and weaknesses of the mission statement)

MARKETING OBJECTIVES:

The mission of the company leads to a hierarchy of objectives, including the business objectives and marketing objectives. Marketing strategies must be developed in order to support those marketing objectives. The marketing objectives of the company should be clear and specific. (Dibb et al, 2006 and Kotler, 2002). The following are the marketing objectives of Pakistan Beverages Pvt. Ltd.

To have the sales figure that is better than the last year

The awareness of the product

Availability of product to all segment of the consumers

(Please refer Appendices 2(b) for an explanation of the points mentioned above.)

MARKETING STRATEGY:

Strategies direct the opportunities to follow, it leads to the target market that should be captures, the basis for competing and differential or competitive advantage to attain for the desired product. (Dibb et al. 2006)

The marketing strategy of Pakistan Beverages Pvt. Ltd. is,

To provide the customer the best beverage of the country

To create awareness among the customers about the best soft drink available in the country.

To give the product, a substantial support to capture its place in the market.

(Please refer Appendix 2(c) for the explanation of the points mentioned above)

STRATEGIC OBJECTIVE AND STRATEGIC FOCUS:

After reviewing the overall corporate vision, mission statement, corporate goals and the SWOT analysis, ANSOFF matrix, provides an overall direction of the firm and it helps in the decision making process. (Dibb et al. 2006)

ANSOFF’S COMPETITIVE STRATEGIES

Fig: 1.1 Ansoff’s competitive strategies (source: Kotler, 2002, pg 100)

According to the Ansoff’s matrix, a company may choose one or more competitive strategies to assist strategies objectives. The three growth patterns defined are, intense growth for existing products, diversified growth for new products and new markets and integrated growth for the growth of the company. (Kotler, 2003; Dibb et al. 2006)

Currently Pepsi Co. Pakistan is following Intense Growth Strategy through market penetration.

MARKET PENETRATION:

Market penetration is a strategy for increasing sales for existing products in the existing market. (Dibb et al. 2006)

Pepsi try to achieve increased market share through aggressive advertising. Pepsi also sponsors a lot of sports activities and get into promotional offers and deals with different restaurants and educational institutions

THE DIFFERENTIATED MARKETING STRATEGY:

Selective Strategy:

Selective strategy is also known as differential strategy. The product itself may or may not be different as in many cases only the promotional message and distribution channels vary.

(Source: www.netmba.com)

The Company is very much selective in all of its effort because any slightest change can affect the company. PBL not always uses the same routine for the overall promotion of PEPSI. Since this company has to compete well and one of the business mission of Pakistan Beverages LTD is to become the number one in the Pakistani market, that’s why they don’t want to give any place to its competitor untouched to attack on the company brand.

Cue Strategy:

Having so many competitors in the market, especially Coca Cola, Pepsi® is facing difficulties in differentiating this product. Now the company is using the Cue strategy so as to perceive the customer, that this is the only brand in the market. Pepsi is made available everywhere through intensive distribution. To do this, Pepsi provides stands and refrigerators to the retailers so that PEPSI is made visible at once.

MARKET SEGMENTATION:

According to (Dibb et al. 2006) market segmentation is a process where heterogeneity can be grouped into smaller homogenous groups.

Pepsi’s market is segmented into two distinct groups:

Distribution.

Consumer.

Distribution

With regards to sale, there are three distinguished areas where Pepsi® is distributed:

Open market place, small shops and kiosks.

Institutional sales (hotel, club, restaurants etc.)

Educational institutes (school, colleges, universities etc.)

Consumers

As far as consumers are concerned, undifferentiated marketing is practiced. Company doesn’t want to confine Pepsi® to any particular segment. However, their advertising campaigns depict that Pepsi® is targeted more towards teenagers

TARGETING:

According to Dibb et al. 20066, targeting involves, decision required to cater a specific segment.

TARGET MARKET STRATEGY:

A company must keep in mind it’s capabilities and resources before following a specific targeting strategy. (Dibb et al. 2006).

Undifferentiated Strategy:

Undifferentiated strategy is, when a company designs, one market segment to cater the entire target market. (Dibb et al.2006). Although, Pepsi uses an undifferentiated Strategy, yet the main focus of Pepsi® seems towards youngsters under the age bracket of twenties. This generation is called ‘Generation X’ and constitutes a larger portion of the population. As a result all promotional schemes are targeted towards them.

MARKETING PROGRAMMES:

To make the marketing strategy a reality, it is very important to make an appropriate marketing mix (Kotler, 2003; Dibb et al. 2002).

MARKETING MIX:

Marketing Mix comprises of the 4 P’s as mentioned below:

Product

Price

Place/distribution

Promotion

These are the very essential parts, which determine the success of any corporation. Among these Product, Place, and Promotion are in the hands of the company but sometimes price may or may not be set by the company as in the case of competitive-based pricing, depends upon competitor price and the market mechanism. (Kotlet, 2003; Dibb et al. 2006).

In the case of the Pepsi®, company sets great stress on these elements, which will be discussed briefly,

THE PRODUCT VARIABLE:

Product variable involves, creating a product keeping customers wants and need in view. (Dibb et al.2006).

Pepsi® - A Consumer Product

Pepsi® is a consumer product. People buy Pepsi® for the personal consumption. So the attributes of people affect this product very much. People’s liking and disliking, people views about themselves, their views about the product, product positioning in the people's mind, their taste, preferences, habits, income are some factors, which affect the sale of the Pepsi®.

Category __ Convenience Product

Pepsi® falls in a category of convenience product because of

Low price

Widespread distribution, convenient locations.

Mass promotion by the producer.

Product Attributes

Quality:

Normally consumer category products are very quality sensitive. Pepsi® is a drink for refreshment and thirst quenching, therefore; the company must focus on the quality level.

PRICE VARIABLE:

According to Dibb et al. (2006) Price is very a sensitive issue in the case of every product. It is also a major threat in the competitive market. Sales figures are unusually affected if the pricing for the product is not set according the considerations.

It is a common experience that Low-Price strategy is normally used to gain a high market share. This strategy is especially useful for the case of new product. (Kotler, 2003)

Also High-Price strategy is also set for the purpose to perceive the customer, a product of high value. (Kotler, 2003)

Based on the above assumption, we can say that prices affect the people perception about the product. People perception is very important in the purchase decision. Customer buys the product about which they perceived that it is the better product.

Event-Based Pricing

Pakistan Beverages Pvt. LTD also makes use of the special events in Pakistan. One of the most important events in the Pakistan is RAMADAN. The price of Pepsi in the season of Ramadan in normally less as compared to other seasons. But this special price is normally on the 1 and 1-1/2 liter bottles not on the 250ml.

Pricing Strategies:

Different pricing strategies exist for different marketing purposes. So marketing objectives plays a significant role in the determination of pricing strategy.

Market-Penetration Strategy:

Every firm can easily gain a large market share if it provides the better value that justifies the cost of the value. Pepsi’s pricing strategy is based on the marketing penetration strategy in order to become a market leader in the beverage industry.

Positioning Strategy and the Price:

It is a general practice that product price is set according to the product positioning. Product positioning gives an imagery of the product i.e. whether the product is luxurious or the convenience product. (Kotler, 2003)

Pepsi® is positioned as a consumer (convenience) product and people buy this product frequently with little involvement, comparison. Pepsi® is positioned as a drink for thirst quenching and refreshment. So it cannot charge a high price for the product because several substitutes exist in the market.

PLACE/DISTRIBUTION:

Place Utility Concept:

The product must be available at a convenient place for the customers ease (Dibb et al. 2006). One of the most important Concepts is the place utility. One of among several reasons to get a big market share in the Karachi market is the mass distribution by the company.

It has been observed that people value the availability of the product. Thus the company follows an Intensive distribution strategy to make the product available everywhere.

Distribution Strategy:

Pakistan Beverages LTD has a very strong strategy for the distribution of the product. Company knows the importance of the distribution network in this competitive environment. That’s why a proper distribution network is working under the control of Pakistan Beverages Ltd.

Intensive Distribution:

Intensive distribution is to make the product available at all possible locations (Dibb et al. 2006). Company believes in the Intensive distribution of the product. What makes the Pepsi® to adopt this strategy is the nature and category of the product because this product is consumed with little or no involvement so one of the great factors which affect the sales of this product is the availability of this product.

PROMOTION:

Promotion activities refer to the communication activities used to inform consumer about the product (Kotler, 2003).

Integrated Marketing Communication Strategy:

Pepsi® is convenience product and it falls under a category of habitual buying behavior. There are many substitutes of Pepsi® in the market. People buy this product with little involvement. So this kind of products usually requires a well-established promotion strategy. Pepsi® is also involved in the heavy promotion of this product. So in order to make its promotion and communication more effective, it uses the integrated marketing communication strategy.

Promotion Mix:

Pepsi® uses different promotion tool for the promotion of this product. The selection of the tool depends on the nature of the type of promotion

Product Life-Cycle Stage:

A company’s strategies change according to the product life cycle stage. (Kotler, 2003)

Promotions for the products in different stages require different promotion strategy.

The product, which is in the introduction strategy, requires heavy promotion strategy to create awareness about the product. In the same way, products in the different stages require some other strategy.

Since Pepsi is in the middle of the Growth and Maturity stage, the company uses a Push strategy.

.

Figure: 1.2 (source: Kotler, 2003 pg, 328)

Push Strategy:

A push strategy refers to, making use of the company’s sales force and promotional activities to create consumer demand. (www.tutor2u.net)

Company uses a push-strategy for its product Pepsi®. Company builds-up the consumer demand by different means i.e. by advertising, sales promotion and consumer promotion, so that the product can be easily pushed through its channels and outlets.

In promotion, Pepsi® focuses on two areas,

Sports

Music

In sports, Pepsi® gives adequate coverage to cricket, which is the most watched sport in Pakistan and Music, by making Leading Cricketers such as Wasim Akram and Shahid Afridi endorse for the product and as well as Pop singers such as Hadiqa Kiyani promoting Pepsi.

Tools of Promotion

Another major decision is to determine which tool for the promotion is to use. Some of the tools for the promotion are given below.

Advertising:

This tool is quite successful for the past few years. Company uses this tool to promote its product among its customer.

Advertising Objectives – Persuasion:

The main primary objective of the advertising of the Pepsi® is to persuade the consumer to buy this brand.

Pepsi® advertises through the following media:

Magazines and newspapers.

Radio and television.

Outdoor displays (Posters, billboards, signs and skywriting).

Pepsi® conducts advertising to achieve the following benefits:

Long-term build up of the Pepsi’s image – Institutional advertising.

Long-term build of the brand name, Pepsi® – Brand advertising.

Information dissemination about a particular sale (price reduction) or event (new promotional scheme) – Classified advertising.

(Kotler, 2003)

(Please refer APPENDIX 3(A) for brand image and brand identity)

RECOMMENDATIONS AND CHOSEN MARKETING STRATEGY:

Pepsi is the leading soft-drink brand of Pakistan. Currently all the efforts done by the company, are keeping Pepsi as a market leader however, the company should adopt the following in order to maintain its share and to remain aggressive in the market.

ANSOFF’S MATRIX:

INTENSIVE STRATEGY:

The company has already adopted the strategy of Market Penetration through, advertising and pricing however, there is a very little development of Pepsi in the other two strategies:

PRODUCT DEVELOPMENT:

It is a strategy to increase sales by either developing new products or by making an extension of the current product. (Dibb et al. 2006)

Although Pepsi has been in Pakistan from a long time, it has done very little in order to launch new products as already launched in other countries.

Pepsi should think about extending the current line of Pepsi to the decaffeinated Pepsi as well as brining other flavors of Pepsi in Pakistan.

Expand into Healthier Products:

Many consumers are seeking to lead a healthier lifestyle, reducing fat and sugar in their diets. It should, launch Tropicana and energy drink products in Pakistan. Because of the increase in the consumer health awareness, the rise in sales for these markets has steadily grown over recent years.

MARKET DEVELOPMENT:

Product development is a strategy to improve sales by introducing current products in new markets. (Dibb et al. 2006).

PEPSI is right now, catering most urban and some rural areas. Pepsi should reach the old age people and rural places like those in Balochistan and NWFP which remains uncatered.

MARKETING MIX:

Although the marketing mix of Pepsi is very good, the alternatives and recommendations mentioned above can go with the same marketing mix but, however, it should improve on the following:

PROMOTION STRATEGY:

In the promotion of Diet Pepsi®, marketers have relied on posters and pamphlets. Till now, the promotion strategy is not aggressive. Marketers should focus on the advertising and promotion of Diet Pepsi® that will educate the people about the various advantages of the Diet Pepsi®.

LABELLING:

Pepsi® has its ingredients details written only on cans and not on glass bottles. Similarly the price of the bottle is not printed on the bottle. So it’s essential for the company to reveal the components used in the bottle with its quantities and also mention its retail price.

PACKAGING:

The can of Pepsi is still of the same color and design, since it was launched. The company should change the color and look of it as people will get more attracted towards it.

FEED BACK:

CUSTOMER FEEDBACK:

Pepsi needs to implement a system of customer’s feedback as that of Kellogg’s to be aware of the customers needs and wants and the quality of their product.

MAINTAIN CURRENT POSITION:

PepsiCo is number one beverage in Pakistan based on sales. The company should continue to main this position through greater product innovation and distribution

IMPLEMETING/ FEED BACK AND CONTROL:

According to Dibb et al. (2006) marketing implementation is the ‘how’ of the marketing strategy. The strategies are made at the top level but are executed at the lower level. Once the strategies are made there is a need for control and to check if they are being executed properly. There is a strong need to, communicate and coordinate marketing strategies and to compare estimated and actual performance. In case of Pepsi Co. once the strategies are made, they should, implement it properly by making sure that all the activities are well coordinated. Pepsi should also, take feed back from its sales people and customers and then again time to time, revise it’s strategies to stay in the market as the leader.

CONCLUSION:

PepsiCo operates in a highly competitive environment. Its major competitors are well-established multi-billion dollar companies. Pepsi is enjoying the place as the market leader in Pakistan. It has a strong internal marketing and external marketing system; its strategies are well developed and implemented. However they need to sustain the share in the market, there is a strong need for the company to remain aggressive in the market because of the increased rivalry in the industry as already seen in the Porter’s model. PepsiCo should stay focused and compete with superior products, marketing and distinctive competitive strategies

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Kotler,P. (2003), Marketing Management, 11th Edition, Prentice Hall, Chapters 1-12

Market Segmentation, last accessed on: 12/01/2007 at http://www.netmba.com/marketing/market/segmentation/

Mission statement of Pepsi Co last accessed on: 07/01/2007 at http://www.evablue.com/eng/utilities/mission.htm

Pepsi Logo’s and time line, last accessed on: 20/01/2007 at http://www.garybeene.com/pepsi/pep-hist.htm

PEPSI Co. official website, last accessed on: 19/01/2007 at http://www.pepsico.com/

Soft Drink Industry roundtable discusses taxation, last accessed on, 18/01/2007 at : http://www.brecorder.com/index.php?id=238717&currPageNo=2&query=&search=&term=&supDate

Target marker selection, last accessed on: 12/01/2007 at http://www.netmba.com/marketing/market/target/

APPENDIX 1(A)

AUDIT SUMMARY OF COCA COLA:

Strengths of Coke

Global Acceptance

C’s share in the global market is greater than Pepsi’s. C is the world leader in the beverage industry.

Operating System

Coca cola is operated in Pakistan under COBO (Company Owned Business Operation) system. Under COBO system, Coca Cola International acquires the bottling plant it uses.

Financial Strength

Being a global market leader, Coca Cola’s financial strength is far greater than that of Pepsi®. Coca-Cola can employ its huge resources in promoting its product.

(Source: website of Wikipedia for Coca-Cola)

Weaknesses of Coke

Low market share

In Pakistan, Pepsi’s share is greater than Coca-Cola. People prefer Pepsi® because of its taste.

Less Promotion

Coca Cola has not been promoting aggressively in Pakistan. Because of this less promotional activities, Pepsi® has an edge over Coca cola.

Weaker Distribution Network

Distribution of Coca Cola is not so effective in Pakistan. Pepsi® has an added advantage of a strong distribution channel than Coca Cola.

APPENDIX: 1(B)

SWOT Analysis of Pakistan Beverage Pvt Ltd.

Strengths

Intensive Distribution Network

Pepsi’s distribution network is very effective. Pepsi® is available not only in urban areas but in rural areas as well. Even in urban areas it is available at superstores, educational institutes, pan shops, continental restaurants, and fast food chains.

Sweeter Taste

People in Pakistan like sweeter taste of Pepsi®; therefore, they prefer Pepsi over Coca cola. Pakistanis like spicy food and it tastes good with Pepsi®.

(Source: Wikipedia for coca cola)

Promotion

Pepsi® is promoted at a large scale. An advertising agency called “Interflow” shape promotional schemes for Pepsi®.

Target Market

Pepsi® is targeted towards youngsters under the age bracket of twenties. This generation is called ‘Generation X’ and constitutes a larger portion of our population. As a result all promotional schemes are targeted towards them.

(Source: http://www.garybeene.com/pepsi/pep-hist.htm)

Quality Standard

Consumers of Pepsi® are satisfied with its high quality. Pepsi® bottling plants consider hygiene and cleanliness along with quality management. Pepsi® ensures that customers experience the uniform quality and taste every time they drink Pepsi®.

(Source: official website of PepsiCo.)

National Image

Cricket is the most favorite game in Pakistan. It is played by youngsters and cricket matches are viewed by masses. Keeping that in mind, Pepsi® has been promoting Pakistani cricket team for many years. By adopting this strategy, Pepsi® has successfully built its image in the mind of its customers. On the eve of Cricket World Cup2003, Pepsi released a song having a title “hay koi hum jaisa” to boost the morale of cricket team.

Weaknesses

Lacks Worldwide Acceptance

Globally, Pepsi® does not enjoy that much acceptance as its competitor (C) enjoy. C is the most widely consumed drink in U.S and Europe, which gives it a competitive edge over Pepsi®.

(Source: http://en.wikipedia.org/wiki/Coca-Cola)

Operating System

Pepsi® is operated under FOBO system. When PCI starts any promotional campaign sometimes it happens that some bottlers accept the campaign and execute it, while some turn down the request.

Financial Assistance

As mentioned earlier Pepsi® is operated under franchising agreement. PCI just sets the rules and regulations of the operating procedure. The bottling plant has to be financed by the franchisee from its own resources. Unlike Pepsi®, C is operated under ownership system. C acquires the bottling plant and finances it with its huge financial resources.

(Source: website of answer.com for bottles and canned soft drinks and carbonated waters)

Opportunities

Natural Environment

Pakistan is located in a tropical region. Usually the climate is hot which is conducive for beverage industry. The longer hot period is an opportunity for Pepsi® to expand its sale through different promotional schemes.

Population

Increasing population is another opportunity for Pepsi®. Increase number of individual would definitely augment the demand for Pepsi®, thus induce the company to increase its production, sale & profit.

Diversification

Pepsi® can increase its product line by introducing new and diversified products in Pakistan. This can be done either by exercising brand extension strategy or by new brand strategy. Internationally, Pepsi’s product line consists of beverages and food items.

Threats

Pepsi’s major competitor is C and therefore Pepsi® has to keep a vigilant eye on every move of C. Following is the brief analysis of the threats faced by Pakistan Beverages Pvt. Ltd.

Brand Image

Globally, brand image of C is better than that of Pepsi®. But in Pakistan Pepsi® is leading the market. In future years may be with the help of promotional schemes C may upgrade its brand image and give a tough time to Pepsi®.

(Source: Wikipedia for Coca-cola)

Financial Backup

C’s financial standing is stronger than Pepsi’s. C has the potential to execute huge budgeted promotional schemes.

Awareness

The uprising concern for health may shift the customers towards healthier products like fruit juices etc.

Pesticides found in PEPSI

PepsiCo has seen sales in India (one of their most promising emerging markets) pummeled by the accusations of a local environmental group that the level of pesticide residues in their products was too high. It was proved that the pesticide level in PepsiCo’s products meets the local standards. However, it complicated the task of winning back the consumer confidence.

(Hampton roads independent media coalition and India resource center website)

APPENDIX: 2(A)

MISSION STATEMENT:

Strengths

Market Oriented Statement

.

Realistic Mission Statement

The mission statement of PCI is realistic in terms of profitability. In its mission statement PCI determines its mission of earning profit

Market Environment

The mission statement of PCI fulfills the current market environment of the world. PCI claims in its mission statement that it will provide safe and economical product and so far this claim has been accomplished. In Pakistan, Pepsi® is available at an average price and the quality of the product is superior as well.

Motivating

PCI’s mission statement, not only, motivates its customer, but also, its investors and employees. It motivates the customer by providing the safe, economical and environmentally efficient product with a higher quality than its competitors but also promises its investors with a fair return and directs its employees.

Weaknesses

Specific

The only weakness in the mission statement of PCI is that it’s not specific. It doesn’t determine that how much superior quality would be given to its customer. It doesn’t include any specific facts and figures which give a little assurance about a better rate of return.

APPENDIX: 2(B)

MARKETING OBJECTIVES

The following are the marketing objectives of Pakistan Beverages Pvt. Ltd.

To have the sales figure that is better than the last year

The marketing objectives of the company are effective in the sense that company clearly identifies that what it wants to achieve in order to be the No. 1 soft drink company of Pakistan. The company is keen to increase its sales figure in the highly competitive market. It determines the competitive marketing strategies to retain its position in the market.

The awareness of the product

Pakistan Beverages Pvt. Ltd. also tries to create awareness of its product in the market through advertising and other promotional techniques. It also sponsors various programs and arranges the trips for the school students to visit its manufacturing plant.

Availability of product to all segment of the consumers

Pakistan Beverages Pvt. Ltd. executes every effort to distribute Pepsi® in the right time and ensures that it effective distribution to its target market. This is one of the competitive advantages of the Pakistan Beverages Pvt. Ltd. that it distributes its product effectively and efficiently.

APPENDIX 2 (C)

MARKETING STRATEGY:

The marketing strategy of Pakistan Beverages Pvt. Ltd. is,

To provide the customer the best beverage of the country

In order to achieve the customer satisfaction and deliver a greater value than its customer the company provides the best quality beverage to the consumer. The quality of the beverage is of the international quality, which is also a requirement of the PCI, and this quality is also approved by Pakistan Standard Institute and Pakistan Control Authority.

To create awareness among the customers about the best soft drink available in the country.

Pakistan Beverages Pvt. Ltd. has achieved this objective in creating awareness for its product. The success of Diet Pepsi® shows the consciousness of the people about their health. Similarly, by massive advertisement, the ‘Slice’ has been very popular among the children. In various occasions, like Ramadan, people know about the discounts offered by the Pepsi® and they are also able to compare it with the Coca cola.

To give the product, a substantial support to capture its place in the market.

One of the main strengths of Pakistan Beverages Pvt. Ltd. is its distribution channels that give a competitive advantage over Coca Cola. The strong distribution of the Pepsi® not only increases the sales of the Pepsi® but also gives a greater customer value. The promotion techniques used by the company also clear the position of the Pepsi® in the mind of its customers as in the case of Diet Pepsi®. The young generation is also fully aware with the prices of the bottles and different discounts offered by the company time to time.


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