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Running Head: MKTG 430: Integrated Marketing Strategy Capstone

Research Marketing Approaches

Enrique Ramirez

Colorado Technical University

MKTG 430: Integrated Marketing Strategy Capstone

Introduction

PepsiCo is a company in the food and beverages industry. The company serves across the world and it has its headquarters in the United States. It employs approximately 297,000 people. The company faces stiff competition from companies such as coca cola and pepper Snapple group in its cola brand. It is currently second after co cola in the market share. The company has some strengths, weaknesses, threats, and opportunities that affect its internal operations. From a questionnaire sent to the target market of this industry, it was evident that the company faces stiff competition. There are some product positioning strategies that the company needs to adopt to enable it compete in this industry.

SWOT Analysis

The SWOT analysis is a very popular strategic analytical method that can help us categorize Pepsi’s information regarding strengths, opportunities, weaknesses and threats in its business. This can then be used to make important decisions of the company (Muzumdar, 2014).

Strengths

Pepsi has very many different brands which include water, carbonated drinks, savory, snacks and non-carbonated drinks. The diversity in its products strengthens the company since it does not have to depend on few products and customer tastes changes may not affect the company. The company also has a very extensive distribution channel. The company products are present in not less than 200 countries and are served by not less than 10 million stores each week. The firm has also a good CSR, it recognizes that it has a role in the society and it engages in activities such as education, recycling, obesity fighting, water conservation and many other projects through its Pepsi company foundation. This increases its customer loyalty and brand awareness.

The company also has strength in its competency in acquisitions or mergers. This is a key to the growth of this company where by it can successfully merge or acquire bottling, beverage and snacks companies. The company has acquired brands like Tropicana, Gatorade, Quaker oats and Doritos. The company also has 2 brands that significantly contribute to its revenue and income. It does not have to rely on two or three brands for its major incomes. The company also has a strong and successful marketing and advertising team. The company spends a lot of money in its advertisements and this has contributed to the growth of the products market share. Pepsi also offers complementary products. Studies indicate that 30% of the consumers who buy its beverages also buy its snacks. This diversity gives the company a competitive advantage. Finally, the company is one of the most progressive and proactive food company (Muzumdar, 2014).

Weaknesses

The company depends more on Wal-Mart. 13% of revenues for this company come from the store chains of Wal-Mart (Muzumdar, 2014). Wal-Mart’s buyer power is very significant and it can dictate the prices of Pepsi products leaving small margins for it. This also means that incase the company loses Wal-Mart, it would also lose 13% of its income.

Pepsi Company has the weakness of low pricing. The company sets its prices at a lower price compared to those of its competitors. This makes customers to perceive it as a low quality producer. The company has also been involved in questionable practices. For example, the company was criticized in India that it uses water that contains more pesticides than the allowed amount. It has also been said to use and sell tap water while it uses the view of mountains to deceive people that the water comes from mountain springs. The company also has weak brand awareness. The main competitor, Coca Cola Company has a very much stronger brand awareness compared to that of Pepsi. This places Pepsi at a competitive disadvantage. The company also has a low net-profit margin of 9.7% compared to coca colas 18.55% and 11% of nestle.

Opportunities

There exists various opportunities for this company. First the company can grow snacks and beverages consumption in the emerging markets. Pepsi Company has invested heavily in counties with fast growing beverages and food markets in order to expand its market share in the world. If it succeeds in this, the company will increase its income and also attain a greater market share in the world. This will also enable it to rely less on United States market.

There is also an increasing demand for foods and beverages that healthy. There have been increasing programs that are fighting obesity and demanding for healthy foods. Pepsi has the opportunity to expand its range of products with snacks and beverages having low levels of calories and sugar. The company can also expand through acquisition. This will enable it to grow its portfolio of brands. There is also an expected growth in bottled water consumption. There is also an expected growth in savory snacks consumption.

The threats facing Pepsi include the changes in consumer tastes whereby consumers are becoming more health conscious and they are reducing on their consumption of drinks that are carbonated and those with large amounts of calories, fats and sugars (Muzumdar, 2014). There is also water scarcity around the world. This is increasing the company’s costs. They are also facing a decreasing gross-profit margin, increased competition and many unfavorable legal requirements.

Research on Pepsis current customer satisfaction

Research Questions

1. Which is your age group?

10 OR BELOW - 0

11-26 – 66%

26-35 – 14%

36 OR ABOVE – 20%

2. Which brand do you prefer more?

Pepsi – 25%

Coca-cola – 75%

3. Why do you prefer this brand?

Taste – 58%

Price – 3%

Habit – 27%

Promotion – 7%

Appearance – 5%

4. Which color do u prefer?

Blue- 67%

Red – 37%

5. Which brand do you thick has the greatest awareness in the market

Pepsi – 25%

Coke – 75%

From the results above, it is evident that most of the people will prefer coke to Pepsi. The various reasons observed form the survey include taste and low brand awareness. The appearance of the product is however stronger. The company therefore needs to position itself better in the market to increase its brand awareness.

How to position the product in the market

Pepsi will need to position its brand relative to the leading brand in the industry. This is also known as position-driven, marketing. The two main brand positioning include brand awareness and differentiating. Differentiation will enable consumers to remember the brand while awareness will increase the level at which the brand is known by the target market in the industry ( Dev, 2014). The company should have a forward thinking attitude. This will make it strong in the area of points of difference. Its image of differentiation will show that it is action oriented and the target market will be willing to associate them with the brand. Pepsi will need to position itself against major competitors such as coke. This will enable the company to compare its brands attribute and features against those of the competitors. Currently the company enjoys a good taste test results and this will further build the brand of Pepsi.

References:

Muzumdar, P. (2014). A Study of Business Process: Case Study Approach to PepsiCo. Available at SSRN.

Dev, C. S., & Keller, K. L. (2014). Brand Revitalization. Cornell Hospitality Quarterly, 1938965514525681.