pepsico-140122114432-phpapp01.pdf

P r e p a r e d B y : G r o u p 1

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Pepsi was first introduced as "Brad's Drink", in New Bern, North Carolina, United States, In

1893 the pharmacy of Caleb Bradham, who made it at his drugstore where the drink was sold. It

was later labeled Pepsi Cola, named after 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. (Pepsistore.com)

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 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. Mega gel bought the Pepsi trademark.

(Soda Museum)

Mega gel was unsuccessful, and soon Pepsi's assets were 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.

On three separate occasions between 1922 and 1933, The Coca-Cola Company was offered the

opportunity to purchase the Pepsi-Cola company, and it declined on each occasion.

( Mark Pendergrast 2000).

From the 1930s through the late 1950s, "Pepsi-Cola Hits the Spot" was the most commonly used

slogan in the days of old radio, classic motion pictures, and later television. Its jingle (conceived

History


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in the days when Pepsi cost only five cents) was used in many different forms with different

lyrics. With the rise of radio, Pepsi utilized the services of a young, up-and-coming actress

named Polly Bergen to promote products, oftentimes lending her singing talents to the classic

"...Hits The Spot" jingle.

Film actress Joan Crawford, after marrying then Pepsi-Cola President Alfred N. Steele became a

spokesperson for Pepsi, appearing in commercials, television specials and televised beauty

pageants on behalf of the company. Crawford also had images of the soft drink placed

prominently in several of her later films. When Steele died in 1959 Crawford was appointed to

the Board of Directors of Pepsi-Cola, a position she held until 1973, although she was not a

board member of the larger PepsiCo, created in 1965.

(Crawford,J 1959-05-07).

The Buffalo Bisons, an American Hockey League team, were sponsored by Pepsi-Cola in its

later years; the team adopted the beverage's red, white and blue color scheme along with a

modification of the Pepsi logo (with the word "Buffalo" in place of the Pepsi-Cola wordmark).

The Bisons ceased operations in 1970 (making way for the Buffalo Sabres).

Through the intervening decades, there have been many different Pepsi theme songs sung on

television by a variety of artists, from Joanie Summers tothe Jacksons to Britney Spears.

(See Slogans)

In 1975, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a blind

tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of

participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great

advantage of the campaign with television commercials reporting the results to the public.

(SODAmuseum.com)

In 1996, PepsiCo launched the highly successful Pepsi Stuff marketing strategy. By 2002, the

strategy was cited by Promo Magazine as one of 16 "Ageless Wonders" that "helped redefine

promotion marketing"

In 2007, PepsiCo redesigned its cans for the fourteenth time, and for the first time, included more

than thirty different backgrounds on each can, introducing a new background every three weeks.


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(Pepsigallery.com).

One of its background designs includes a string of repetitive numbers, "73774". This is a

numerical expression from a telephone keypad of the word "Pepsi".

In late 2008, Pepsi overhauled its entire brand, simultaneously introducing a new logo and

a minimalist label design. The redesign was comparable to Coca-Cola's earlier simplification of

its can and bottle designs. Pepsi also teamed up with YouTube to produce its first daily

entertainment show called Pop tub. This show deals with pop culture, internet viral videos, and

celebrity gossip.

In 2009, "Bring Home the Cup" changed to "Team Up and Bring Home the Cup". The new

installment of the campaign asks for team involvement and an advocate to submit content on

behalf of their team for the chance to have the Stanley Cup delivered to the team's hometown

by Mark Messier.

Pepsi has official sponsorship deals with three of the four major North American professional

sports leagues: the National Football League, National Hockey League and Major League

Baseball. Pepsi also sponsors Major League Soccer. It also has the naming rights to Pepsi Center,

an indoor sports facility in Denver, Colorado. In 1997, after his sponsorship with Coca-Cola

ended, NASCAR driver Jeff Gordon signed a long term contract with Pepsi, and he drives with

the Pepsi logos on his car with various paint schemes for about 2 races each year, usually a

darker paint scheme during nighttime races. Pepsi has remained as one of his sponsors ever

since. Pepsi has also sponsored the NFL Rookie of the Year award since 2002.

(Prnewswire.com)

Pepsi also has sponsorship deals in international cricket teams. The Pakistan cricket team is one

of the teams that the brand sponsors. The team wears the Pepsi logo on the front of their test and

ODI test match clothing.

In July 2009, Pepsi started marketing itself as Pepsi in Argentina in response to its name being

mispronounced by 25% of the population and as a way to connect more with all of the

population. (Valentina.V July 15, 2009).


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In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of

its products by early 2009. In 2009, Pepsi, Pepsi and Pepsi Max began using all lower-case fonts

for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand's blue and red

globe trademark became a series of "smiles", with the central white band arcing at different

angles depending on the product until 2010. Pepsi released this logo in U.S. in late 2008, and

later it was released in 2009 in Canada (the first country outside of the United States for Pepsi's

new logo), Brazil, Bolivia, Guatemala, Nicaragua, Honduras, El Salvador, Colombia, Argentina,

Puerto Rico, Costa Rica, Panama, Chile, Dominican Republic, the Philippines and Australia. In

the rest of the world the new logo has been released in 2010. The old logo is still used in several

markets internationally, and has been phased out most recently in France and Mexico. The UK

started to use the new Pepsi logo on cans in an order different from the US can. Starting in mid-

2010, all Pepsi variants, regular, diet, and Pepsi Max, have started using only the medium-sized

"smile" Pepsi Globe.

Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the new

Pepsi Logo. The word Pepsi and the logo are in the new style, while the word "Max" is still in

the previous style. Pepsi Wild Cherry finally received the 2008 Pepsi design in March 2010.

In 2011, for New York Fashion Week, Diet Pepsi introduced a "skinny" can that is taller and has

been described as a "sassier" version of the traditional can that Pepsi says was made in

"celebration of beautiful, confident women". The company's equating of "skinny" and "beautiful"

and "confident" is drawing criticism from brand critics, consumers who do not back the "skinny

is better" ethos, and the National Eating Disorders Association, which said that it takes offense to

the can and the company's "thoughtless and irresponsible" comments. PepsiCo Inc. is a Fashion

Week sponsor. This new can was made available to consumers nationwide in March.

In April 2011, Pepsi announced that customers will be able to buy a complete stranger a soda at a

new "social" vending machine, and even record a video that the stranger would see when they

pick up the gift.

In March 2012, Pepsi introduced Pepsi Next, a cola with half the calories of regular Pepsi.

( Candice.C 2012-02-23)

In March 2013, Pepsi for the first time in 17 years reshaped its 20-ounce bottle,


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In November 2013, Pepsi issued an apology on their official Swedish Facebook page for using

pictures of Cristiano Ronaldo as a voodoo doll in various scenes before the Sweden v

Portugal 2014 FIFA World Cup playoff game. (Yahoo. 2013-11-21). (Facebook. 2013-11-21).

PepsiCo announces plans to invest US $1 billion in China over the next four years as part of the

strategy to expand in emerging markets and broaden the portfolio of locally relevant products.

The original trademark application for Pepsi-Cola was filed on September 23, 1902 with

registration approved on June 16, 1903. In the application's statement, Caleb Bradham describes

the trademark as an "arbitrary hyphenated word "PEPSI-COLA", and indicated that the mark was

in continuous use for his business since August 1, 1901. The Pepsi-Cola's description is a

flavoring-syrup for soda water. The trademark expired on April 15, 1904.

A second Pepsi-Cola trademark is on record with the USPTO. The application date submitted by

Caleb Bradham for the second trademark is Saturday, April 15, 1905 with the successful

registration date of April 15, 1906, over three years after the original date. Curiously, in this

application, Caleb Bradham states that the trademark had been continuously used in his business

"and those from whom title is derived since in the 1905 application the description submitted to

the USPTO was for a tonic beverage. The federal status for the 1905 trademark is registered and

renewed and is owned by PepsiCo, Inc. of Purchase, New York.(Wikipediapepsico,com)


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The PepsiCo headquarters are located in the neighborhood of Purchase New York, in the town

of Harrison, New York. It was one of the last architectural works by Edward Durell Stone. It

consists of seven three-story buildings. Each building is connected to its neighbor through a

corner. The property includes the Donald M. Kendall Sculpture Gardens with 45 contemporary

sculptures open to the public. Works include those of Alexander Calder, Henry Moore,

and Auguste Rodin. Westchester Magazine stated "The buildings square blocks rise from the

ground into low, inverted ziggurats, with each of the three floors having strips of dark windows;

patterned pre-cast concrete panels add texture to the exterior surfaces." In 2010 the magazine

ranked the building as one of the ten most beautiful buildings in Westchester County.

At one time PepsiCo had its headquarters in 500 Park Avenue in Midtown Manhattan, New York

City. In 1956 Pepsico paid $2 million for the original building. PepsiCo built the new 500 Park

Avenue in 1960.[54]

In 1966, Mayor of New York City John Lindsay started a private campaign

to convince PepsiCo to remain in New York City. Six months later, the company announced that

it was moving to 112 acres (45 ha) of the Blind Brook Polo Club in Westchester County. After

PepsiCo left the Manhattan building, it became known as the Olivetti

Building.(wikipediapepsico)

PepsiCo Headquarters


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Organizational Chart


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Aquafina

Aquafina bottled water goes through a state-of-the-art purification process so that you get the

refreshment your body craves in its purest form.

Brisk

The original iced tea with tons of attitude. The one with the bold lemon flavor that kicked iced

tea off the back porch and gave it some street cred. Now that's Brisk, baby!

Cheetos

CHEETOS Snacks are the playfully mischievous cheesy crunch that add a little lighten-up

moment to any day. Proof positive, you simply cant eat a Cheetos Snack without smiling. The

CHEETOS brand strives to provide consumers with fun times every step of the way.

Diet Mountain Dew

All the great taste and intensity of DEW without the calories!

Diet Pepsi

With its light, crisp taste, Diet Pepsi gives you all the refreshment you need - with zero sugar,

zero calories and zero carbs. Light. Crisp. Refreshing. Diet Pepsi. Nothing refreshes like a Diet

Pepsi.

Doritos

Products Details


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DORITOS brand tortilla chips deliver a powerful crunch that unlocks the bold and unique

flavors you crave. The DORITOS brand is constantly creating new ways to give

you immersive and memorable experiences, to put you in control of the things you love most.

Fritos

The popularity of FRITOS Corn Chips has put the snack in a class of its own. From small

towns and family barbecues to parties in the big city, this classic snack is a true icon. The hearty

chip even inspired the creation of another American classic, FRITOS Chili Pie.

Gatorade

Available in over 80 countries, Gatorade's line of performance drinks adds over 40 years of

rehydration and sports nutrition research to the PepsiCo portfolio. Born in the lab In early

summer of 1965, a University of Florida assistant coach sat down with a team of university

physicians and asked...

Lay's

Wherever smiles happen and happiness is celebrated, youll find LAY'S potato chips. From

backyard BBQs and birthday parties to 4th of July picnics, LAY'S chips are there to share the

moment. Its no wonder these deliciously fresh-tasting and perfectly crispy potato chips have

been Americas...

Lipton

Made with natural ingredients, new 100% Natural Lipton Iced Tea unlocks the natural goodness

of tea, blending it with delicious flavors to hydrate and refresh you.

Mirinda

Mirinda is here to be your carefree laugh out loud partner. The bold fruity taste and the vibrant

fizz will remind everyone; dont take life too seriously. Enjoy the sensorial fruity Mirinda

experience with Orange, Citrus, Green Apple, Strawberry, Tangerine and Pomegranate flavors.

Release Mirinda....

Mountain Dew

Mountain Dew exhilarates and quenches with its one of a kind great taste.

Pepsi

Pepsi - the bold, refreshing, robust cola.


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Pepsi MAX

Pepsi MAX is the only soda with zero calories and maximum Pepsi taste!

Quaker

Quaker's family of brands includes household names you know and love. These consumer brands

which deliver great taste, nutrition, quality and variety, have been around for as long as 130

years. Ninety-two percent of our U.S. brands hold the number-one or number-two position in

their respective...

Ruffles

Chip lovers have come to know that R Ruffles Have Ridges! The thick ridges of RUFFLES

Potato Chips help hold more great potato chip flavors and stand up to the thickest dips.

Sierra Mist

Sierra Mist Natural is made with real sugar and nothing artificial - just natural ingredients so the

crisp, clean lemon-lime flavor shines through. It's simple, delicious, and refreshing - naturally!

Tostitos

TOSTITOS tortilla chips are made for dipping. Whether its a couple of friends gathered to

watch the game or a giant backyard barbecue, TOSTITOS are the must-have chipsthe

ultimate salsa and dip delivery system. With their perfect shape, texture and taste, TOSTITOS

chips are a reminder that the...

Tropicana

Tropicana, the strongest name in juices, extends the PepsiCo portfolio of brands with plenty of

nutritious, high-quality flavors. Tropicana Products, Inc. is the leading producer and marketer of

branded fruit juices. Its products are marketed in the U.S. under a variety of brand names,

including...

Walkers

Walkers is the UK's favourite crisps brand. Founded in 1948, butcher Henry Walker began

making crisps in his Leicester Plant to keep his workers busy, as meat was scarce in post-war

Britain. The Walkers brand offers a range of popular snacks, including Walkers potato crisps,

Walkers Extra Crunchy, And some other products are below.


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Largest PepsiCo Brands (based On 2012 retail sales)

Total

(Slideshar.com)


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STRATEGY

Inside PepsiCos One For All, All For One Sponsorship Strategy

PepsiCo activates the New York Giants across Pepsi, Tostitos and other brands. The company

this year rolled out Tostitos-branded Mexican food

carts in MetLife Stadium.

Food and beverage giant gains economies of scale

by activating ties across multiple brands.

October 21, 2013

With a portfolio that includes the NFL, MLB, the

International Cricket Council and other domestic and

international properties, PepsiCo, Inc. is one of the worlds top sponsors in terms of annual

spending.

And the food and beverage giant is placing more focus on leveraging its vast sponsorship

portfolio across multiple brands.

PepsiCo in 2011 added the Quaker and Tropicana brands as part of its ten-year renewal with the

National Football League. The company this year added Sabra hummus and Aquafina water to

the decades-old partnership.

In addition, PepsiCo for the first time is activating the NFL across its full line of Pepsi products:

Pepsi, Diet Pepsi, Pepsi Max and Pepsi Next.

PepsiCo is applying the strategy to other properties as well. The company last year added Quaker

Oats and the breakfast food category to its partnership with Major League Soccer.

The multi-brand strategy supports the organic role that PepsiCo brands play in the sports

experience--whether on the field of play or the fan experience. That includes Gatorades long-

Marketing Strategy


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running support of athletes, Quakers involvement with youth sports and Pepsi and Frito-Lay

enhancing the fan experience through sweepstakes and other promotions that bring consumers

closer to the game.

We want to maximize our partnerships to the fullest, and the best way to do that is to bring our

brands more closely together in the sports space, said Jennifer Storms, PepsiCos senior vice

president of global sports marketing.

As part of the strategy, PepsiCo looks to leverage sponsorship with activation programs that

support its own marketing objectives as well as those of its partners.

We are the ultimate partner for a league, team or athlete. They have a need for partners that can

help enhance the fan experience, support youth programs and other initiatives, and we can do all

of that.

The key to the success: collaborative relationships. PepsiCo looks for properties that take a

vested interest in a partnerships success by keeping the company up to speed on new marketing

initiatives and other programs where there may be a brand fit.

Its about sitting down with our partners, talking about where our brands authentically align and

figuring out how we can create the best engagement platforms that align with each others

goals, said Storms.

Brian Rolapp, COO of NFL Media, echoes that sentiment.

As we work together we organically look to expand the relationship and bring in additional

brands. Thats how sponsorship should workyou need to go in with the view of how to

accomplish each others goals.

Rolapp points to Pepsis sponsorship of the Super Bowl half time show as an example. The

sponsorship supports Pepsis music platform while helping the NFL extend the reach of the

show.

The half time show use to be a big platform for 12 minutes in the middle of the Super Bowl.

Pepsi has made it a bigger platform that begins in September and goes past the Super Bowl.


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PepsiCo leverages the NFL and other partnerships across three primary platforms:

360-degree consumer touch points. PepsiCo is placing more focus on engaging consumers

through multiple touch points. That includes the field of play, in-stadium messaging and in-store

promotions.

A visual of how PepsiCo activates the NFL at retail.

We want to reach more consumers in more places at

more times than anyone else, said Storms.

Local market activation. Whether its a national,

regional or local property, the ultimate goal for

PepsiCo is to gain local activation platforms. That

includes retail promotions and other programs tailored to the local market.

We want to work with our retailers to create uber local programs that bring our partnerships to

life and drive purchase decisions.

Sustainable activation platforms. PepsiCo looks for partnerships that can be activated

throughout the year or season across multiple brands.

For example, the company activates the NFL across the combine, draft, training camp, kickoff,

playoffs and Super Bowl.

Were not in the business of partnering with one-time sporting events. We partner with sports

leagues, teams and athletes to drive sales every day of the year.


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The Pepsi Are You Fan Enough? Lounge

Where The Rubber Meets The Road: Local Market Activation

PepsiCo uses 20-plus team deals to support national NFL marketing campaigns at the local level.

For example, the beverage giant is leveraging the NFL New York Giants to support Pepsis new

Are You Fan Enough? national campaign.

The company today will roll out the Are You Fan Enough? mobile trailer at the Giants home

game against the Minnesota Vikings. The trailer features interactive games (Pepsi pong,


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cornhole, etc.), a photo booth, product sampling and a TV area where fans can watch other

games throughout the season.

The trailer will remain at MetLife Stadium through the 2014 Super Bowl.

PepsiCo also activates league and team deals with localized in-store promotions. The promotions

can be sizable in terms of size and scope: PepsiCo last year activated the Giants with a multi-

brand promotion that spanned an entire supermarket wall.

Like its league partnership, PepsiCo has broadened its Giants sponsorship over the past few

years. The company this year rolled out a Tostitos-branded Mexican food cart in MetLife

Stadium.

PepsiCo has worked with us on the customer experience from upper deck concessions down to

a premium spaces and clubs. They have worked with us not just on the experience but the

product presentation as part of that experience, said Mike Stevens, SVP and CMO with the New

York Giants.

Pepsi is one of MetLife Stadiums four cornerstone partners.

In Boston, PepsiCo is supporting the Are You Fan Enough national promotion with a localized

campaign around the NFL New England Patriots.

The Wicked Good campaign includes the Get A Wicked Good View sweeps that dangles the

chance to watch player introductions from the tunnel in Gillette Stadium. PepsiCo promotes the

sweeps through in-store displays.

PepsiCo also touts the campaign and team affiliation on delivery trucks throughout the

Northeastern U.S.

PepsiCo understands the importance of local activation under the NFL platform better than any

other partner we work with, said Jonathan Kraft, president of the New England Patriots.

PepsiCo also uses Gillette Stadium for meetings with trade partners. For example, the company

recently hosted executives from BJs Wholesale Club for a 2014 planning meeting.


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PepsiCo, Inc. Competition

The PepsiCo challenge (to archrival Coca-Cola) never loses its fizz for the world's #2 carbonated

soft drink maker. Its soft drink brands include Pepsi, Mountain Dew, and their diet

alternatives. Cola is not the company's only beverage: Pepsi sells Tropicana orange

juice, Gatorade sports drink, SoBe tea, and Aquafina water. The company also owns Frito-Lay,

the world's #1 snack maker with offerings such as Lay's, Ruffles, Doritos, and Cheetos. The

Quaker Foods unit makes breakfast cereals (Life, Quaker oatmeal), Rice-A-Roni rice, and Near

East side dishes. Pepsi products are available in 200-plus countries; the US generates 50% of

sales. The company operates its own bottling plants and distribution facilities.

Top Competitors for PepsiCo, Inc.

Get a clear understanding of a companys competitive landscape.

View Competitive Landscape Report

1. The Coca-Cola Company

2. Mondelez International, Inc. Company

3. Dr Pepper Snapple Group, Inc. Company

The Coca-Cola Company Profile

Coke is it -- it being the #1 nonalcoholic beverage company, as well as one of the world's most

recognizable brands. The Coca-Cola Company is home to 16 billion dollar brands, including four

of the top five soft drinks: Coca-Cola, Diet Coke, Fanta, and Sprite. Other top brands

include Minute Maid, Powerade, and vitaminwater. All told, the company owns or licenses and

markets more than 500 beverage brands, mainly sparkling drinks but also waters, juice drinks,

energy and sports drinks, and ready-to-drink teas and coffees. With the world's largest beverage

Competitors & Its Analysis


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distribution system, The Coca-Cola Company reaches thirsty consumers in more than 200

countries. Atlanta pharmacist John Pemberton invented Coke in 1886.

The Coca-Cola Company Rankings

#57 in FORTUNE 500 (May 2013)

S&P 500 (September 30, 2013)

Dow Jones Industrials

Dow Jones Global Titans

#26 in FT Global 500 (July 2013)


Top 3 Competitors

PepsiCo, Inc.

Nestl S.A.

Dr Pepper Snapple Group, Inc.

Mondelez International, Inc. Company Profile

Mondelez International (formerly Kraft Foods Inc.) makes what it takes to survive a global snack

attack. The company's pantry of billion-dollar brands includes: Cadbury and Milka

chocolates; LU, Nabisco, and Oreo biscuits; Trident gum; Tang powdered beverages; and Jacobs

coffees. Mondelez International comprises the global snacking and food brands of the former

Kraft Foods following the spinoff of its North America grocery operations (now Kraft Foods

Group). The two companies split in a tax-free spinoff in October 2012. Mondelez, with about

$35 billion in annual sales and operations in 165 countries, is the larger of the two businesses.

Mondelez International, Inc. Rankings


S&P 500 (September 30, 2013)

#143 in FT Global 500 (July 2013)



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Top 3 Competitors

Nestl S.A.

Kellogg U.S. Snacks Division

Frito-Lay North America, Inc.

Dr Pepper Snapple Group, Inc. Company Profile

For many consumers, it's a snap decision about which doctor to choose. Dr Pepper Snapple

Group (DPS) is the bottler and distributor of Dr Pepper soda and Snapple drinks. Serving

Canada, Mexico, and the US, the company offers a vast portfolio of non-alcoholic beverages

including flavored, carbonated soft drinks and non-carbonated soft drinks, along with ready-to-

drink non-carbonated teas, juices, juice drinks, and mixers. Among its brands are Dr Pepper and

Snapple of course, along with A&W Root Beer, Hawaiian Punch, Mott's, and Schweppes. It has

some cult favorites as well, including Vernors, Squirt, and Royal Crown Cola. DPS is the #3

soda business in North America after #1 Coke and

#2 Pepsi.

Dr Pepper Snapple Group, Inc. Rankings


S&P 500 (December 31, 2013)

#427 in FORTUNE 1000 (May 2013)

Top 3 Competitors

The Coca-Cola Company

PepsiCo, Inc.

Monster Beverage Corporation

(

PepsiCo's Strategic Focus

Todays blog post is a repost from Evaluate Market Performance Lecturer, Geoff Fripp. Geoff

has 25 years marketing experience working for organisations such as Telstra and St George

Bank. During his distinguished corporate career, he has worked hands-on in most specialty areas


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of marketing, as well as holding senior strategic roles. He has also held several adjunct teaching

appointments since 1988, with the Australian Institute of Management, the University of Sydney

Centre for Continuing Education and the Business School.

I've just finished writing a case study for the recent launch of Pepsi Next into Australia in

September 2012. No doubt you've probably been touched by some aspect of their Australian

launch, ranging from guitar-playing babies with inept parents, to taste-test challenges across 300

outdoor locations, to heavy in-store promotion and discounting.

By way of background, Pepsi Next is best described as a mid-calorie cola beverage, consisting of

a half sugar and a half artificial sweetener formula. Upon first consideration you would think that

this new product would find itself in no-man's land as it violates the first rule of modern

marketing; appeal to a target market. And at first glance, the Pepsi Next product appears to be a

good 'bad example' of how not to do this, by offering a product mid-way between the needs of

two segments and probably appealing to neither very effectively.

However, my first glance at the product wasn't quite accurate. According to PepsiCo, this new

product has a very defined target market - lapsed cola drinkers. Since 2005 in the US, the soft

drink market has been in early decline with unit volumes slightly decreasing each year. Research

has identified that sales are being predominately lost to bottled water and, to a much lesser

extent, to energy drinks, sports drinks and juices and teas.

This shift in consumer drinking preferences isn't too much of a concern for PepsiCo across the

board, being the second largest food and beverage firm in the world (behind Nestle) and boasting

22 brands that each generate over $1 billion in sales per year, including non-soft drinks brands

such as Gatorade and Tropicana.

However, the concern at PepsiCo is more related to their flagship brand, Pepsi itself. Only last

year it lost its long-term second place in the US market, with Diet Coke sales now exceeding

Pepsi. In fact, Pepsi has lost about four market share points in the last ten years in the now

declining US carbonated soft drink

market.


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Pepsi Vs. Coke: An analysis

The use of soft drinks has risen manifold in the recent years, from your favorite actor to your

beloved cricketer, you can see them all sporting and endorsing a soft-drink. Though we know

that soft-drinks are not that good for health, still most of us take soft-drinks without any fuss.

When we are talking of soft-drinks, how cannot Pepsi and Coke be reminded of; Pepsi and Coca

Cola are two international soft-drink giants which control most of the soft-drinks beverage

business in the world. Pepsi has the following brands under its umbrella: Pepsi, Diet - Pepsi,

Pepsi Max, Kurkure, Tropicana, Gatorade, Mountain Dew, Slice, Quaker, Aliva, Aquafina,

Nimbooz, 7Up, Lays, Uncle Chips etc. Coke on the other hand has the following brands: Coca

Cola, Coke light, Diet - coke, Kinley water, Kinley Soda,

Scheweppes, Minute Maid, Maaza, Limca, Fanta, Sprite,

Thums Up, Mountain Dew etc. Pepsi and Coke command over

95% of the soft-drink market in India. However Coke

continues to outsell Pepsi most areas of the world but in India

and Pakistan and some other countries, PepsiCo fares far

better than coke. Still, both the companies are highly

profitable in their Indian business.

PepsiCo is the second-largest beverage business in the world after Coca Cola Ltd. More than 45

percent of the revenue of PepsiCo comes from outside the United States, with approximately 30

percent coming from emerging and developing markets. Coke has around 43% US beverage

market share, PepsiCo has the figure at around 31%, Cadbury Scheweppes has a share of around

18%. .The article lays stress on the Marketing ideology of Pepsi and Coke specially in Indian

markets. Lets first have a brief look at the history of introduction of Coke and Pepsi in India:

Coke was the leading Indian soft-drink brand in 1977 when a government regulation to share the

Coke's secret formula forced Coca Cola to exit India. Coke re-entered India in 1993 after the

policies were relaxed a bit. Coke acquired local Indian brands like Thums Up, Limca, Maaza,

Citra and Gold Spot and made a strong come back into the Indian Markets.PepsiCo entered India

in 1989 with a joint venture with Parle Agro and Voltas India Ltd. In 1995, Coke had 52 % of the

Indian soft-drink market share and Pepsi had around 42% market share. Since then Pepsi has had

a really strong growth in India and has comprehensively pushed aside Coke sales in India. In

much of India, the Pepsi brand has become synonymous with cold beverages. Coke uses a


Page 23

portfolio of drinks to counter that advantage. Pepsi has had a strong Marketing campaign

targeting mainly Youngsters which has worked wonders for Pepsi. Pepsi has had alliances with

most of the popular actors, it has been the Official Sponsor of Indian cricket team for a long time

now. Pepsi's 'Change The Game' ad campaign in the 2011 Cricket World Cup was a mega

success and boosted the Sales a lot. Coke also had some

successful ad campaigns in the likes of 'Thanda matlab

Coca Cola' and Coke - 'Open Happiness', the latest Coke

ad is 'Burr' ad series. A number of Pepsi and Coke

challenges wherein participants with a blindfold are asked

to taste Coke and Pepsi in plain cups and rate the better of

the two, have been organized by these companies time

and again. Coke had also introduced a Loyalty Points

Awards program.

Coke Marketing usually focuses on:

Coca Cola - Redefining Itself, Rejuvenation, Refreshment, Health and Nutrition, Replenishment

Pepsi advertising focuses on: Slandering Coke, Youth, Market Segment

Pepsi's Distribution:

1) Exclusive contracts with franchise bottlers and independent distributors and retailers like

Walmart.

2) Agreements with its competitors like Unilever with Lipton, Starbucks for Frappuccino.

Coke's distribution:

1) Independent bottlers with exclusive contracts.

2) Coca- cola enterprises.

Moreover, PepsiCo has a number of products in the Food segment like potato chips, Quaker

oatmeal etc. as opposed to Coke which deals mainly in the Beverages, this provides PepsiCo

more range and thus a deeper penetration into the Markets.


Page 24

51% 49%

Mix of Net Revenues

Food

Beverage

10%

20%

33%

37%

Net Revenues

PepsiCo AMEA

PepsiCo Europe

PepsiCo AmericasBeverages

PepsiCo AmericasFoods

Financial Highlight


Page 25

Total Net Revenue and operating Profit

2012 2011 210

Total Net Revenue $65,492 $66504 $57,838

Operating Profit

FLNA $3,646 $3,621 $3,376

QFNA 695 797 741

LAF 1,059 1,078 1,004

PAB 2,973 3,273 2,776

EUROPE 1,330 1,210 1,054

AMEA 747 887 708


Page 26


Page 27

(Annual Report 2012)


Page 28

PepsiCo SWOT analysis 2013

Strengths Weaknesses

1. Product diversity

2. Extensive distribution channel

3. Corporate Social Responsibility (CSR)

projects

4. Competency in mergers and acquisitions

5. 22 brands earning more than $1 billion a

year

6. Successful marketing and advertising

campaigns

7. Complementary product sales

8. Proactive and progressive

1. Overdependence on Wal-Mart

2. Low pricing

3. Questionable practices (using tap water but

labeling it as mountain spring water)

4. Much weaker brand awareness and market

share in the world beverage market compared

to Coca-Cola

5. Too low net profit margin

SWOT analysis


Page 29

Opportunities Threats

1. Growing beverages and snacks

consumption in emerging markets

(especially BRIC)

2. Increasing demand for healthy food and

beverages

3. Further expansion through acquisitions

4. Bottled water consumption growth

5. Savory snacks consumption growth

1. Changes in consumer tastes

2. Water scarcity

3. Decreasing gross profit margin

4. Legal requirements to disclose negative

information on product labels

5. Strong dollar

6. Increased competition from Snyders

In Detail:

Strengths

1. Product diversity. PepsiCo has several hundreds of brands, which include: carbonated and

noncarbonated drinks, water, savory and whole grain-based snacks. Product diversification

strengthens PepsiCo because it doesnt have to rely on few key products or seasonal sales and

isnt significantly affected by changes in customer tastes.

2. Extensive distribution channel. PepsiCo products are served to more than 10 million stores

per week in more than 200 countries.

3. CSR. The firm recognizes its role in a society and engages in education, recycling, water

usage reduction, obesity fighting and other projects through PepsiCo Foundation, thus

increasing its brand awareness and customer loyalty.

4. Competency in mergers and acquisitions. The key to PepsiCo business growth is its

successful mergers and acquisitions of beverage, bottling and snacks companies. PepsiCo

acquired such brands as Gatorade, Tropicana, Doritos, Quaker Oats and many others.

5. 22 brands earning more than $1 billion a year. The company doesnt have to rely on one or

two of its product to bring most of the revenues. Instead, Pepsi has 22 brands that contribute

significantly to its income, serving different industries and satisfying various consumer tastes.


Page 30

6. Successful marketing and advertising campaigns. More than $2 billion spent on

advertising over 2012 resulted in PepsiCos growing market share over its main competitors,

including Coca Cola Company, which spent even more on advertising.

7. Complementary product sales. In its annual financial report, PepsiCo revealed one of its

studies' results that about 30% of customers who buy its snacks also buy its beverages.

PepsiCos decision to diversify its product range is firms competitive advantage too.

8. Proactive and progressive. According to New York Times food industry writer Melanie

Warner, PepsiCo, by many critics, is considered to be most proactive and progressive food

company.

Weaknesses

1. Overdependence on Wal-Mart. More than 13% of PepsiCo business revenues come from

Wal-Mart store chain. Wal-Mart has a significant buyer power and can easily dictate prices

over PepsiCo leaving it with very small margins. In addition, if PepsiCo would lose Wal-Mart

it would lose 13% of its revenue and competitive advantage.

2. Low pricing. PepsiCo usually prices its products lower than its competitors. Low price is

associated with low quality and PepsiCo products are usually perceived as ones.

3. Questionable practices. PepsiCo is using and selling tap water but places view of mountains

on its water bottle labels, thus deceiving people that it is mountain spring water when it is not.

PepsiCo has also been criticized for using water in India with higher than allowed amount of

pesticides in it.

4. Weak brand awareness. The Coca Cola Company has the largest share market of beverages

in the world and much stronger brand awareness than Pepsi, placing it at competitive

disadvantage.

5. Too low net profit margin. PepsiCos net profit margin is 9.7% compared to Coca Colas

18.55% and Nestls 11%.

Opportunities


Page 31

1. Growing beverages and snacks consumption in emerging markets. PepsiCo has made

large investments in BRIC countries to expand its market share as these countries represent

the fastest growing food and beverages markets in the world. If PepsiCo is successful it will

increase its revenues and global market share significantly. In addition, it will be able to rely

less on US market.

2. Increasing demand for healthy food and beverages. Due to many programs to fight

obesity, demand for healthy food and beverages has increased drastically. PepsiCo has an

opportunity to further expand its product range with beverages and snacks that have low

amount of sugar and calories.

3. Further expansion through acquisitions. So far, PepsiCo has been successful in acquiring

other companies and adding new growing brands to its portfolio.

4. Bottled water consumption growth. Consumption of bottled water is expected to grow both

in US (PepsiCos largest bottled water market) and the rest of the world.

5. Savory snacks consumption growth. The same opportunity PepsiCo has in growing its

revenue selling snacks as this market is also expected to grow.

Threats

1. Changes in consumer tastes. Consumers around the world become more health conscious

and reduce their consumption of carbonated drinks, drinks that have large amounts of sugar,

calories and fat.

2. Water scarcity. Water is becoming scarcer around the world and increases in both cost and

criticism for PepsiCo over the large amounts of water used for production.

3. Decreasing gross profit margin. PepsiCos gross profit margin was decreasing over the past

few years and may continue to decrease due to higher water and other raw material costs.

4. Strong dollar. More than 50% of PepsiCos income is from outside US. Due to strong dollar

performance against other currencies PepsiCos income should fall.

1.5.Increased competition from Snyders. Snyders increase its US savory snacks market share

by 1.6% and almost all of it was taken from PepsiCo. (Jurevicius,O)


Page 32

PEST Analysis of PepsiCo

Political Factors

PepsiCo is non alcoholic beverage and has to follow regulated by FDA with consistency. Also, it

deals in different markets and every market has its own policies and procedures that are either

stringent or either relaxed. Specially cross border situations are very different and Pepsi has to

adapt to these changes accordingly.

PepsiCos competitors use competitive pricing strategy and Pepsi has to always keep this in

mind.

PepsiCo has to also deal with governments focus on stricter water pollution norms and land

aquisition for new factories in different countries.

Economic Factors

Usually whenever there is an economic downturn faced by the economy, companies sales are

badly affected and they have to restructure their strategies.. Also, with falling profits companies

sometimes have to undergo downsizing. Economic scenario has a great influence on any

business. But the economic in 2008 was in Pepsis favor. It resulted in increased sales of its

beverages as people were jobless and were sitting at home, spending more time with family and

friends.

Also, fuel prices greatly affect PepsiC0s transport costs as there is a lot of distribution involved.

Availability of labor is another very important economic factor .In some countries the labor is

quite expensive and if its cheap then sometimes labor is not well trained.

Social Factors

Social factors greatly affects Pepsi, as its a non-alcoholic beverage that deals worldwide it has

keep in mind stark and strict differences of cultures the world wide. Mostly, the social

PEST Analysis


Page 33

implications are seen in advertising campaigns like some countries have religious festivals, so

Pepsi has to keep in line with all these festivals and design advertising campaign accordingly to

cash upon the opportunity to the fullest.

Also the solid waste management program affects the operations at PepsiCo. PepsiCo has to be

extra careful when it comes to waste disposable in order to maintain its image of a socially

responsible firm.

PepsiCo is one of the few companies that operate almost in every country. PepsiCo has an

implementation of SAP software and wind power manufacturing in India .Also, PepsiCo

introduced plastic bottles and cans and came up with innovative and newer designs.

With the technologies coming in, companies have changed their strategies and operations

accordingly. A recent trend that has been seen and something that almost every company is

inclining toward is Social Media.

The social media outburst has led to progressively interactive engagement with the buyers with

continuous comes about so Pepsi has to be aware of all the developments that take place with

keeping in mind the increased use of technology by youth for their benefit how can PepsiCo use

this to maintain and increase its customers loyality.

PEST Analysis; by analyzing the political , social, enviromental and technical aspects, the

company or its competitors can discover new possibilities and can identify the advanced warning

of threats. It shows the possible risks that can be due to change in company environment and

allows the company to form accordingly rather than going against it. Furthermore, it gives you

purpose perspective of the new industry that the company goes into in and allows you discover

new places according to the requirement of the industry.

Lastly, it allows the business to avoid projects that have possibilities to fall short, for reasons

beyond control and finally it allows company to discover new markets.

(saraalgoe.hubpages.com)


Page 34

1. All the factors involved in pest analysis have a great impact on each and every company.

they all are interconnected with each other and also leads to a profitable business.

2. In my conclusion, i would like to point out that Pepsi and Coke have managed some

extremely successful brands; with time focus will be more and more on Emerging

markets plus there will be a lot of emphasis on healthier beverages and more innovative

products. Stress will also be laid on cleaner and more environment friendly practices

employed by these companies.

3. Being in such a tense competition ( just like the brand Coca-Cola), Pepsi-Cola should not

take the direct and tough attack upon it. There is no good to either side. The best wad is

to keep a peaceful relationship with it and always compare with others, We should find

their disadvantages and show our advantages on this aspect. Then by and by, the people

would think ours is betted Of course the most important rule is to improve ourselves to

meet the consumers.

4. Pepsi has a long-standing commitment to protecting the consumer whose trust

andconfidence in its products in the bedrock of its success. In order to ensure

thatConsumers stay inform about the global quality of all Pepsi product sold in the

world,Pepsi product carry a quality assurance seal on them. Pepsi commitment is to

deliver sustained growth, through empowered people, acting with responsibility and

buildingtrust.

5. Grievances of dealers & consumers often do not reach to the concern authority.

6. A healthy relationship should be developed by the companys executives with the

dealers.

7. The number of visicooler & signage should be increased.

8. New policy of the company should be introduced before the competitors launch those

policies. Focus on the youth of the middle-east countries.

9. More focus on sales of Gatorade.

Conclusions


Page 35

10. PepsiCo is also reformulating its Aquafina Alive water with a new sweetener blend that

has fewer calories.

11. PepsiCo has a steady growth rate and a very positive potential.

12. PepsiCo is always looking into the future, trying to make the company most profitable

and suiting to its shareholders.

13. PepsiCo has proved to have a high and continuously rising profit margin.

14. Being in such a tense competition (just like the brand Coca-Cola), Pepsi-

Cola should not take the direct and tough attack upon it. There is no good to

either side. The best wad is to keep a peaceful relationship with it and

always compare with others; we should find their disadvantages and show

our advantages on this aspect. Then by and by, the people would think ours

is betted Of course the most important rule is to improve ourselves to meet

the consumers


Page 36

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15. Yurevicius.O, (online Blogspot.com, Viewed on (11-01-2014)

References

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