strategic marketing pepsi cola

Strategic Marketing of Pepsi 2010

ACKNOWLEDGEMENT

We owe our gratitude to Allah Almighty whose shower of

blessings and kindness has been on us through out the working

on these pages. It is His help that we finally able to compile this

document.

We are indebted to our respected teacher Mr. Shahid Yaqoob

who’s indispensable and intricate comments on various aspects

conjoined with motivation made us come forth holding such as

project. This little effort is dedicated to our parents and teachers.

TEHSEEN ARSHAD

BBA (MBA) Morning

Department of Management Sciences

The Islamia University of Bahawalpur,

1 The Islamia University of Bahawalpur, Rahim Yar Khan Campus


Executive Summary

Purpose of this project is to study the strategies which Pepsi is

doing in Pakistani market for its product Pepsi cola. Pepsi

International is a world renowned brand. It is a very well

organized multinational company, which operates almost all over

the world. In Pakistan It also has proved itself to be the No.1 soft

drink.

Now days Pepsi is recognized as Pakistanis National drink Pepsi's

greatest rival is Coca Cola. Coca Cola has an international

recognized brand. Coke’s basic strength is its brand name. But

Pepsi with its aggressive marketing planning and quick

diversification in creating and promoting new ideas and product

packaging, is successfully maintaining is No.1 position in Pakistan.

Pepsi is operating in Pakistan, through its 12 bottlers all over

Pakistan. These bottlers are Pepsi's strength. Pepsi has given

franchise to these bottlers. Bottlers, produce, distribute and help

in promoting the brand. Pepsi also launched its fast food chain

KFC i.e. "Kentucky Fried Chicken.”

We also did analysis of the soft dink industry in Pakistan and

world wide. The soft drinks set to become world's leading



beverage sector. Global consumption of soft drinks is rising by 5%

a year.

　

Table of Contents

Titles Page #

1. Introduction 01

2. Mission and vision statement 01

3. Facts about company 02

4. Pepsi in Pakistan 04

5. Product in spot light 09

6. Market analysis of soft drinks 10

7. Pakistani soft drink industry 13

8. Industrial SWOT analysis 14

9. External Environmental factors 16

10. Internal Environmental factors 21

11. Pre-marketing Mix 25

12. Marketing Mix strategies 27

13. Conclusion 39



14. Suggestions 40

　

　

INTRODUCTION TO THE COMPANY

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

MISSION STATEMENT

“To be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.”　

VISION STATEMENT

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

“To increase the value of their shareholder’s investment through sales growth, cost control and wise investment of resources.”



FACTS ABOUT THE COMPANY1) Pepsi is a USA based public company whose stocks are available in

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

and package graphics room hillbillies to action-oriented scenes.

3) The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life."

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

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

6) PepsiCo purchased Kentucky Fried Chicken, the leader in the quick service chicken market. KFC was founded by Colonel Harland Sanders. Colonel Sanders began franchising the company in 1952. KFC was spun off along with Pizza Hut and Taco Bell businesses as Tricon Global Restaurants, Inc. in 1997.

7) PepsiCo purchases Seven-Up International, the third largest franchise soft drink operation outside the United States

EXECUTIVES

Ms.Indra K.NooyiChairwoman, Chief Exec. Officer and Pres

Mr. Richard Goodman Chief Financial Officer

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

Ms. Cynthia M. Trudell Chief Personnel Officer and Sr. VP



Mr. Donald M. Kendall Co-Founder

HEAD OFFICE

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

PEPSI PAKISTAN

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

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

When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and lime, "Teem" to compete with 7up. It successfully,


http://www.pepsico.com/


after some years, took over 7up, and this enhanced Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys 70% of the market share where as the coke just has 20% markets share.

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

FOUNDERS OF THE COMPANY

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

EXECUTIVES

Board of Directors:

Mr. Akbar Akhtar Khan (Chairman)

Mr. Haroon Akhtar Khan (Chief Executive)

Mr. Gazi Akhtar Khan

Mst. Rasheeda Begum

Mrs. Mudina Akbar Khar

Mr. Saifullah Khan Paracha

Mr. Saeedullah Khan Paracha

　7 The Islamia University of Bahawalpur, Rahim Yar Khan

Campus


Company Secretary

Mr. Amjad Jhanzeb Khan

Bankers

Allied Bank of Pakistan Ltd.

Citibank N.A.

MCB

NDFC

The Bank of Punjab

UBL

Legal Advisor

Cornehus, Lane & Mufti,

Nawa-i-Waqat Building,

4-Shahrah-e-Fatima Jinnah, LHR.

　

Auditor

Taseer Hadi Khalid & Co.

Chartered Accountants.

Mill

Kanjawani, Tehsil Samundri, District Faisalabad.



REGISTERED OFFICE

31 – N,

Gulberg II,

Lahore,

Pakistan.

UAN: 111-724-725

　

VARIOUS PRODUCTS IN PAKISTANI MARKET

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

　

FINANCIAL SUMMARY OF THE COMPANY AND PRODUCT in Karachi

　

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

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



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

over Karachi.

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

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

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

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

PEPSI share is approximately 65%.

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

Kurkuray, Pepsi twist, Pepsi, Mountain dew

PRODUCT IN SPOTLIGHT: PEPSI

Type:

Pepsi Cola

Manufacturer:

PepsiCo

Country of origin:

USA

Introduced:

1902

Ingredients:Amount per 100mL



Energy 196.5 kJFat 0 gSodium 0.98 mgCarbohydrates 11.74 gSugar 11.04 gProtein 0 gCaffeine 10 mg　

Market Analysis of Soft drinks

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

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

Market share of soft drinks in beverage industry

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



Age factor affecting the sales

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

Pakistani soft drink industry

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

Total annual sale of soft drink in Pakistan 120 million cases Pepsi annual sales in Pakistan 75 million

Market share of Pepsi 65%

Consumption growth 1.7 % per year

Industrial SWOT analysis

Strengths:

The soft drinks market in Pakistan enjoyed dynamic growth over the review period in both volume and current value terms. Carbonates dominate the market in both the on-trade and off-trade with the lion's share of sales. Carbonates have become part of the culture in Pakistan and multinational



companies have maintained their standards over the years to provide consumers with high-quality carbonated drinks. Off-trade sales of carbonates are higher than those of the on-trade but both achieved strong growth over the review period

Weaknesses:

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

Opportunities:

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

Threats:

Increasing health and hygiene awareness among Pakistanis has greatly increased sales of fruit/vegetable juice products. Both the government and the media have started health awareness campaigns to make Pakistanis realize that consumption of fruit/vegetable juice is as essential as eating food. Fruit/vegetable juices are doing very well in both urban and rural areas. On the other hand, health and hygiene awareness has also led to increased sales of bottled water in Pakistan. Previously bottled water was targeted only



at major cities where consumers are more health-conscious and aware of the difference between bottled water and tap water. Nowadays, health-conscious rural inhabitants also drink bottled water due to health concerns.

　

SWOT Analysis of PEPSI

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

　

STRENGTH Demand of Pepsi is more than its competitors. Company has a very established name and a good

reputation.

Pepsi has large market share than its competitors.

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

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

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

The environment of factory is very good and attractive.

Pepsi spends a lot of budget on its advertising.

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

Employees are also motivated.



Pepsi offers many discount schemes for customers time to time.

Pepsi Cola is sponsoring sports, musical concerts, walks.

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

　

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

retailers. Pepsi target only young customers in their promotions.

Crown of the disposable bottle is not good.

Demand of disposal bottle is declining.

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

Pepsi is not considering many potential outlets like hotels, college canteens etc.

OPPORTUNITIES Company may start entering rural areas also. The company may also diversify its business in some other

potential business.

Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them. 　

THREATS The main competitor of the company is the Coca Cola. At the international level, Pepsi has a very strong

competition with Coke. Coke has started its advertisements



more effectively to increase their demand and it is a very strong threat for Pepsi.

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

HOW Internal and External factors affecting the strategies

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

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

EXTERNAL ENVIRONMENT

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

Demographic Factors: Age

The requirements of different age groups are different. Pepsi should target that age group that consumes it the most and



make promotional strategies according to their behavior. So their main target is the young generation.

Education

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

Population Distribution

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

Population Density

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

ECONOMIC FACTORS: Income and Income per Capita

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

Inflation

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



Consumption Behavior

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

Income Distribution

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

Payment Mod

As the use of plastic money is increasing the consumption pattern of the people are increasing. Although it will have a low affect on the consumption of Pepsi.

Employment Opportunities

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

Aggregate Demand

In case of Pepsi, aggregate demand of the product increases in the season of summer as the hot weather makes the consumers want to drink more.

Aggregate Supply

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

Economic Policies



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

Fiscal Policy

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

Monetary Policy

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

Price Policy

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

Income Policy

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

PHYSICAL FACTOR Region

Pakistan is divided into different geographical regions. Marketing and sales of Pepsi is different in different geographical regions. In hot areas its demand is more.　

City Size

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



Climate

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

Infrastructure

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

Electricity is the basic necessity for production of any product. Constant load shedding slows down the process of production which leads to less production and low market share.

TECHNOLOGICAL FACTORS Research and Development

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

POLITICAL AND LEGAL FACTORS POLITICAL STABILITY:

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



Mixed Economy

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

Laws Formulation

Government has given copy rights to Pepsi so that another company cannot sell their product by the name of Pepsi. The countries where laws are formulated, the strategies and activities of the company are different.

Social Responsibility

Pepsi’s social responsibility is to provide its customers with clean and hygienic product so to do this they have increased the use of disposable bottles.

SOCIAL AND CULTURAL FACTORS Psychographic

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

Religious

Religious factors can influence the market sales of Pepsi as it happened in 2003 when the U.S-led attack on Iraq, wide sections



of society in Pakistan have banned American multinationals Coke and Pepsi

Social Status

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

Media

It is a very important factor for marketing. Media these days is a very effective way of inspiring people to buy a specific product. A good promotion can boast up sales to a great extent.　

INTERNAL ENVIRONMENTA. CUSTOMERS:

There are three types of customers

1. Consumer

2. Business

3. Government

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



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

CONSUMER BUYING BEHAVIOUR PROCESS:

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

Need Identification

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

Information Search

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

Evaluation of Alternatives

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

Selection

After evaluating the product he will select a product.

Purchase

The consumer will buy the selected product.



Post-Purchase Experience:

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

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

B. SUPPLIER:

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

No. Material Manufacturer/ Supplier(s) Approved from

1.Pepsi Concentrate

PepsiCo Inc. Ireland & PepsiCo Factory in Hattar Estate.

Approval at the factory

2.Caps & Closures

Gatron Pakistan LimitedApproved form PepsiCo China.

3. Plastic Bottles Galtron Pakistan LimitedApproved from PepsiCo China.

4. Glass BottlesBalochistan Glass Mills

Tariq Glass Limited

Approved by PepsiCo China.



5.Carbonated Water

Pakistan Bottlers (Pvt) Ltd.Approved from PepsiCo U.A.E, Dubai.

C. COMPETITOR:

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

The marketing concept states that to be successful, a company must provide greater customer value and satisfaction than its competitors do.

Pepsi has a tough competition with Coca Cola while it faces a little competition with the local producers like RC Cola, Shandi Cola etc. The local producers hardly affect the sales of Pepsi in the market.

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

Close Vs Distant Competitor

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

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

Strong Vs Weak:

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



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

D. DISTRIBUTOR:

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

CHANNELS OF DISTRIBUTION

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

Indirect Distribution

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

Local Zone

These are 62 agencies distributing Pepsi Products (250ml Sd) only around Lahore in their respective allocated sub zones.

Out Station Zone

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

Direct Distribution

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



PRE-MARKETING MIX

SEGMENTATION

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

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

Behavioral Base

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

Cognitive Base

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

TARGET MARKET

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

CHARACTERISTICS OF TARGET MARKET

The target market should have some following features.

Accessible



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

Substantial

The target Market should be substantial. It should have a specific size where strategies can be made and implemented.

Measurable

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

　

Comparable

The producer should identify that needs of different customers are different.

Profitable

The target market should be profitable for the producer.

MARKETING STRATEGIES

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

Mass Marketing

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

POSITIONING STRATEGY



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

DIFFERENTIATION STRATEGY

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

Basis of Differentiation

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

Product Differentiation

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

Image Differentiation

Logo is used for image differentiation. Logo is what establishes a brand name in the consumer mind. It is the brands identification, signature and image. Pepsi has kept on changing its logo from time to time.

Marketing Mix Strategies

PRODUCT

The soft drinks market in Pakistan enjoys dynamic growth in both volume and value terms. Carbonated drinks have become part of the culture in Pakistan and multinational companies have maintained standards over the years to provide the nation with high-quality drinks. Rural areas of Pakistan have driven sales of carbonated drinks to new heights as more than 60 percent of the population resides in rural areas and young consumers are



more attracted to advertising. Pepsi is the most popular and leader brand in the Pakistani market and is consumed by children and adults alike. Pepsi is a responsible corporate brand of Pakistan and have contributed a lot to the economy.

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

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

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

New product development by Pepsi

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

In following ways Pepsi is doing new product development.

New product category

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

Product line extension

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

However Pepsi launch its several variants with a minor difference on frequent interval of time. There have been many Pepsi variants produced



over the years since 1903, including Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold, Pepsi Holiday Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil), Pepsi Next (available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, Pepsi Ice Cucumber and Pepsi White in Japan.

Line Filling

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

Incremental Improvement

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

PRODUCT line

SODA WATER CHIPS JUICES

Pepsi cola Aquafina Lays Tropicana

Teem Kurkure

Mirinda

7up

Dew



Pepsi twist

P | L

R | E

O | N

D | G

U | T

C | H

T |

WIDTH

Different product line,

Soda

Diet soda

Purified water

Chips

Juices

LENGTH

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



DEPTH

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

1. 175 ml Mini Bottle

2. 250 ml Regular Bottle

3. 300 ml Tin

4. 1000 ml Regular Liter Bottle

5. 1500 ml Disposable Bottle

BRANDING

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

LOGO

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

Evolution of Pepsi logo1909-1939: Delicious and Healthful 1939-1950: Twice As Much For A Nickel Too 1950-1963: The Light Refreshment 1953-1961: Be Sociable 1961-1963: Now It's Pepsi For Those Who Think Young 1963-1967: Come Alive! You're In The Pepsi Generation 1967-1969: Taste That Beats The Others Cold 1969-1973: You've Got A Lot To Live, Pepsi's Got A Lot To Give



1973-1975: Join The Pepsi People Feelin' Free 1975-1978: Have A Pepsi Day 1978-1981: Catch That Pepsi Spirit 1981-1982: Pepsi's Got Your Taste For Life! 1983-1983: Pepsi Now! 1984-now: Pepsi, The Choice Of A New Generation

2000 The choice of a new generation

2003 Zinda Dilon Ki Pehchan

2006 Generation next

PRICE

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

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

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

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

Price must be keeping the view of your target market.

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

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

Prices of different bottles



Regular bottle e= rupees 15 Non Returnable/disposable= rupees 25

Liter Bottle=rupees 50

1.5 Liter Bottle= rupees 75

2.25 Liter Bottle= rupees 95

Analysis of the product in Pakistani market

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

PRICING STRATEGIES

Competition based pricing approach

Pepsi has intense competition with the coca cola the largest soft drink company world wide. So its pricing can’t exceed too much nor decrease too much as compared to the price of coca cola. If price of the Pepsi exceed too much from the coke people will shift to the coca cola and on the other hand if the price of Pepsi decreases people might get the impression that quality of the Pepsi is also low.

Promotional Pricing Policy



Pepsi has offered promotional prices very frequently. Especially on some occasion Pepsi reduces its rates. Like in Ramazan Pepsi reduces its rate unto 5 Rs. on 1.5 litter bottle.

Market Penetration Pricing Policy

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

DISCOUNTS

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

Quality Discount

Following are discounts offered by Pepsi.

1/10 Discount

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

2/20 Discount

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

Seasonal Discount

Following are discounts offered by Pepsi.



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

3 B – F Discount

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

INCENTIVES

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

Incentive to Retailers

Pepsi Cola provide various incentives to retailers on the best sales and achieving the predetermined sales targets. These incentives are in the shape of:

Deep Freezers

Return Tickets

Free Transportation Services.

Incentive to Dealers

The best dealer of the year is awarded with a brand new Suzuki Pickup. The second best is awarded with Motor Cycle. The third best is awarded with Return Ticket to Middle East.

Credit

There is no credit system in the beverage industry. Every single bottle is sold on the cash basis.

Special Offers



Pepsi Cola gives special offers to consumers on special occasions like Ramadan and Eid days instead of decreasing the price of the products, some special packs like Pakkora Mix, Chat Massala, or Free Drinks with Liter Bottles are offered.

PLACEMENT

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

PRODUCT OUTFLOW

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

City Name of Franchise

Karachi Pakistan Bottlers

Lahore Riaz Bottlers

Faisalabad Punjab Beverage

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

The cities in which the Pepsi units are:

Lahore

Sukkur



Karachi

Multan

Dera Ghazi Khan

Islamabad

Faisalabad

Quetta

Hyderabad

Sahiwal

Hattar

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


　

　

　

Direct Distribution

　

Indirect Distribution

　39 The Islamia University of Bahawalpur, Rahim Yar Khan

Campus


　

Local Zone

Outside Zone

Direct Routs – 45

　

　

Authorized Dealers - 17

Agencies – 62

　

　

　

　

　

　


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

1. Indirect Distribution

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



Local Zone

These are 62 agencies distributing Pepsi Products (250ml STD) only around Lahore in their respective allocated sub zones.

Out Station Zone

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

2. Direct Distribution

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

　

SPECIAL POINTS

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

Promotional Strategies

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



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

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

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

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

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

Following are the strategies:

Comparative Parity Method:

As we have already discussed Pepsi pricing strategy is determined y consideration the strategy of coca cola so in this case also Pepsi ads are telecasted with the competition in coca cola which is its direct competitor.

Objective and task methods

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

Seasonal advertisement:

Frequency of the Pepsi ads varies from time to time. When the season is on Pepsi do heavy advertisement especially in ramzan days or eid occasions but



this advertisement not remain consist. We can hardly see the ads of Pepsi now as there is winter season.

CONCLUSION

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

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

SUGGESTIONS

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

Today we live in a fast moving world where novelty and newness count a lot. One cannot rest on one’s laurels. Fresh efforts, newness of approach must remain the cardinal principles of a well orchestrated marketing strategy and the campaign must be relentless. A continuous bombardment in advertisement would convince the clients that Pepsi is a part of their lives. In order to live with style, Pepsi ought to be an essential ingredient of one’s life.

The Pepsi is at its maturity stage and the sales of company are not growing very rapidly. Company is doing a lot of promotional activities to let the product remain in the market. It holds a large share of the market and whenever the sales state declining, the company can improve it by different promotional activities.



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


strategic marketing pepsi cola

Documents