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 drink industry in Pakistan and worldwide. The soft

drinks set to become world's leading beverage sector. Global consumption of soft drinks

is rising by 5% a year.

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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.

History of Pepsi Cola

It was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb Bradham, who made it at his pharmacy where the drink was sold. It was later named Pepsi Cola, possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy.

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race". The advertising theme "Delicious and Healthful" was then used over the next two decades. In 1926, Pepsi received its first logo redesign since the original design of 1905. In the year 1929, the logo was changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy - in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula.

During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five cents, sales increased substantially. With a radio advertising campaign featuring the jingle "Pepsi-Cola hits the spot / Twelve full ounces, that's a lot /

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twice as much for a nickel, too / Pepsi-Cola is the drink for you," arranged in such a way that the jingle never ends. Pepsi encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard of six ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting Pepsi's status. In 1937 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-Cola's profits doubled.

Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v. Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a loss for Guth.

Pepsi Cola Pakistan

The market in Pakistan is surely dominated by Pepsi. It has proven 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 there 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.

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SITUATION ANALYSIS

COMPANY ANALYSIS

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.”

Market Share

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.”

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MARKETING ENVIRONMENT

MARKETING MIX

1) 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 cannot survive in the long 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.　

Product L ine

Beverages Water Snacks Juices

Pepsi Aquafina Kurkure Tropicana

Teem Cheetos

Mirinda Lays

7-UP

Mountain Dew

Diet Pepsi

2) Packaging

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“Packaging is a part of product planning in which a firm researchers, designs, and produces its packaging.”

The physical container may be a cardboard, metal, plastic or wooden box; a cellophane, wax paper, or cloth wrapper; a glass, aluminum, or plastic jar or can; a paper bag; styro foam; some other material; or a combination of these products frequently have more than one physical container. But packaging depends upon the product nature as well as structure means either it is liquid, semi liquid or solid.

In case of Pepsi Cola, they take the packaging designs by considering what is better for company and what is better or convenient for the transportation. For protecting the syrup, Pepsi Cola uses the glass as well as plastic bottles of different quantity.

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

i. 250 ml Regular Bottleii. 300 ml Tin

iii. 1000 ml Regular Liter Bottleiv. 1500 ml Disposable Bottlev. 2000 ml Jumbo Bottle

3) Price

The amounts 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.

i. Price should be set according to the product demand of public. ii. Price should be that which gives the company maximum revenue.

iii. Price should not be too low or too high than the price competitor is charging.iv. Price must be keeping the view of your target market.v. The price of Pepsi Cola, despite being market leader is the same as that of its

competitor Coca cola.vi. Sometimes, 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.

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Prices of Different Bottles

i. Regular bottle e= rupees 18ii. Non Returnable/disposable= rupees 45

iii. Liter Bottle=rupees 70iv. 1.5 Liter Bottle= rupees 90v. 2 Liter Bottle= rupees 105

D iscounts

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

Quality Discount

Following are discounts offered by Pepsi.

1/10 Discount

For Instance one case of Pepsi is free on buying 10 cases of Pepsi at one time.

2/20 Discount

For Instance two cases of Pepsi are free on buying 20 cases of Pepsi at one time.

Seasonal Discount

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

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4) Placement/Distribution Channel

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

i. Indirect Distribution

Indirect distribution involves agency holders and distribution companies e.g. Riaz Bottlers Pvt. Ltd. Lahore franchise has divided its region.

ii. Direct Distribution

The factory vehicles operate on 45 direct routes in Lahore selling non-returnable bottles Litter, Pet and Can.

5) Promotions

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 everyone can afford them. Also Pepsi Company has introduced other soft drinks including Mountain Dew, Seven Up and Mirinda. 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, RC Cola offered at lower prices but none of these drinks have been able replace it.

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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.

OTHER FACTORS

1) Economic Effect Analysis

i. 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.

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

iii. 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.

iv. 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.

v. Employment Opportunities As employment opportunities increase the living standard of the people increase and the people consume more.

vi. 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.

vii. Aggregate Supply In summer season to cope up with the increasing demand they have to increase the aggregate supply of their product.

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viii. 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 effect 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.

2) Political Effect Analysis

i. 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.

ii. 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.　

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iii. 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.

3) Technological Factors

i. 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.

4) Social and Cultural Analysis

i. 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.

ii. Social Status

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

iii. 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 boost up sales to a great extent.

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CONSUMER DECISION PROCESS

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

i. Need Identification

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

ii. Information Search

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

iii. 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.

iv. Selection

After evaluating the product he will select a product.

v. Purchase

The consumer will buy the selected product.

vi. 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 product and he feel satisfies so that he retains the use of that product.

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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.

i. Strengths

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.

ii. 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.

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iii. 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.

iv. 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 increasing which is a big threat to the company.

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MARKET 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:

i. 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.

ii. 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.

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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.

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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.

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