Superior University

MODULE:

Principle of Marketing

GROUP ASSIGNMENT:

Report

(Scanning Environment and Marketing Research based field Activity)

COURSE INSTRUCTOR:

Mr. Imran Ejaz

SUBMITTED BY:

11338

11353

11321

11315

11316

PROGRAM:

M.com 2-A

INTRODUCTION TO PEPSI

• Pepsi-Cola, most commonly called Pepsi, is a world renowned brand. Pepsi is producing Cola for more than 100 years. It is a soft drink produced by PepsiCo which is sold worldwide in stores, restaurants and vending machines.

• The brand was trademarked on June 16, 1903, though the drink was first made on August 28, 1898, by pharmacist Caleb Bradham.

• PepsiCo divisions operate in three major US and international businesses: beverages, snack foods, and restaurants.

• The corporations increasing success has been based on high standards of performance, marketing strategies, competitiveness, determination, commitment, and the personal and professional integrity/honesty of their people, products and business practices.

FACTS ABOUT THE COMPANY

1. Pepsi is a USA based public company whose stocks are available in New York.2. Mountain Dew was acquired by Pepsi-Cola in 1964.

3. PepsiCo acquired Pizza Hut; however Pizza Hut was founded in 1958 by Dan and Frank Carney.

4. Taco Bell was established in the mid 1960s by Glen Bell and it was too acquired by Pepsi.

5. PepsiCo purchased Kentucky Fried Chicken (KFC), the leader in the quick service chicken market.

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

7. Pepsi has 12 different units in different areas of Pakistan, which make the Pepsi easily available all over the country i.e. Lahore, Sukkur, Karachi, Multan, Dera Ghazi Khan, Islamabad, Faisalabad, Quetta, Hyderabad, Sahiwal, Hattar.

8. 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.

PEPSI IN PAKISTAN

Pepsi has proven itself to be the No.1 soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of Pepsi was constructed in Multan, and from there after Pepsi is going higher and higher. It is consumed by all age groups because of its unique taste.

Compared with other Cola in the market, it is a bit sweeter. 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. 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, 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.”

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

However they have produced PEPSI COLA, MIRINDA, TEEM, 7UP, MOUNTAIN DEW, DIET 7UP, DIET PEPSI, LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA JUICES(introduced in Karachi only) Pepsi max diet Pepsi, but Pepsi Twist was the product which failed to capture market how, a brief look of Pepsi twist and causes & effects are given below:

PEPSI TWIST

• Pepsi Twist was introduced in the US in the summer of 2000.• Pepsi had previously produced a lemon-flavored diet cola in the 1970s and 1980s in the US

called Pepsi Light.• Pepsi launched Pepsi A-ha, with a lemon flavor in India, in 2002.• Pepsi Twist was marketed in Pakistan in 2006. The product failed to capture the market, but

it is still available in some supermarkets.

Environmental factors on that particular company or product

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. 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 on that particular company or product that affect the marketing trend of the company are as follows:

EXTERNAL ENVIRONMENT

The macro environment consists of the larger common 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:

1. Demographic factors.a. Aging

b. Education

c. Population Distribution

d. Population Density

DEMOGRAPHIC FACTORS

Aging

People in the majority of countries still appear to favor carbonated drinks due to health conscious such as fruit juice and mineral water; where as in the above figure it shows how aging factors contribute towards drinks.

Education

Education is a factor that affects the company / product so 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 in 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:

1. Income and Per Capita Income.2. Inflation

3. Consumption Behavior.

4. Income Distribution.

5. Aggregate Demand.

6. Aggregate Supply.

7. Economic Policies.

a. Fiscal Policy.

b. Monetary Policy.

c. Price Policy.

d. Income Policy.

Income and Per Capita Income

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.

Aggregate Demand

In case of Pepsi, collective 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 effect on its consumption.

Monetary Policy

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

Price Policy

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

Income Policy

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

PHYSICAL FACTOR:

1. Region.2. City Size.

3. Climate.

4. Infrastructure.

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 heavily 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.

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:

1. POLITICAL STABILITY:a. Mixed Economy

b. Laws Formulation

c. Social Responsibility

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:

1. Psychographic.2. Religious

3. Social Status

4. Media

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 ENVIRONMENT

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.

SWOT Analysis of Pepsi

SWOT Analysis 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 as well as its external threats and opportunities.

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 international position.

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 branch out 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 increasing which is a big threat to the company.

Reasons of failure of Pepsi Twist.

According to a survey conducted we have found following facts:

1. That just 47.62 females and 52.38 males were aware of Pepsi Twist.2. 47.62 people were loyal with Pepsi and 52.38 with Coca Cola.3. Ways through which Pepsi Twist was advertized:

39 % Electronic media, 17.1 % Print Media, 24.4 % Bill boards, 2.4 % Radio.

4. It was found that Pepsi Twist was failed due to Taste, Availability, Improper advertisement, Price.

Whereas results has shown that people preference according to taste is 59.5 % people as most important, 16.7 % important,9.5 % less important,14.3 % least important.

According to availability 26.8 % people says it is most important, 12.2 % important, 24.4 % less important and 36.6 % least important and missing 2.4 %.

According to improper advertisement 16.7 % people highly agree, 38.1 % agree, 23.8 % Disagree, 21.4 % highly disagree.

Due to price 24.4 % people say highly agree, 19.5 % agree, 17.1 % Disagree, 39 % highly disagree 2.4 % Missing.

5. How often people use Pepsi Twist 4.8 % once a day, 14.3 % once a week, 21.4 % twice or thrice a month, 19 % once a month 40.5 % don’t use.

6. Peoples experience of Pepsi twist 9.5 % very pleasant, 26.2 % somewhat pleasant, 33.3 % neither pleasant nor unpleasant, 21.4 % somewhat unpleasant and 9.5 % very unpleasant.

7. Peoples satisfaction regarding Pepsi Twist 16.7 % highly dissatisfied, 21.4 % dissatisfied. 47.6 % average, 7.1 % Satisfied, 7.1 % highly satisfied.

8. Compared to "Citrus Fanta" (Coca-Cola) Pepsi Twist is 14.3 % much better, 16.7 5 somewhat better, 33.3 % somewhat worse, 7.1 % much worse.

9. If Pepsi Twist came back to market, will you use it again 14.3 5 says definitely, 52.4 % are not sure, 33.3 % says never.

CONCLUSION

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

But why Pepsi Twist Failed may be idea may be Good but company may overestimate the market size, Actual product may be poorly designed, It may incorrectly positioned, Launched at wrong time, Too High Price, Poor Advertising.

SUGGESTIONS

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

Today we live in a fast moving world where innovation and newness count a lot. One cannot rest on one’s success. And companies are 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.

However marketers of Pepsi Twist should improve sales by improving marketing strategies e.g. they can cut prices to attract new users and competitor’s customers, can also launch a better advertising campaign or use aggressive sales promotion to improve the sales.

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. Because

consumer view a brand name as an important part of the product. 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.

QUESTIONNAIRES You are kindly requested to complete this questionnaire by encircling bullets so that we can get your perspective for our knowledge. 1- NAME _______________________

2- AGE 20 to 30. 30 to 40. 40 to 50. 50 to above.

2- Gender. Male. Female.

3- What categories best describes your job? Officer/Director/Manager/Supervisor. Group Leader. Customer Services. Sales Reps. Student. Other.

4- Education. Primary/Matriculation. Intermediate. Bachelors. Master/M Phil.

Other.

5- Company benefit is a factor that plays a significant role in employee turnover. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

6- Salary is an important negotiator but by handling it wrong you can blow the Job offer or go to work at far less than you might have gotten? Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

7- Performance review is one of the factors that lowers the morale/confident or contributes to factors leading employee turnover? Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

8- Do seniors encourage and allow working to the best of our abilities? Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

9- Motivated employees always look for the better way to do job and are more quality oriented and productive/fruitful? Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

10- Self-knowledge is one common goal that will help everyone achieve personal success YES. NO.

11- Is it possible for an employee to "fast track" or find short cut to achieve promotion unofficially? YES. NO.

12- Effective employee management and leadership allow you to capitalize on the strengths of other employees and their ability to contribute to the accomplishment of work goals. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

13-

JOB CHARACTERISTICS

Impact

CRITICAL PSYCHOLOGICAL STATES

Skill Variety Task Identity & Task Significance

Experienced meaningfulness

AutonomyExperiencedResponsibity for outcomes

& Feedback Knowledge of the actual results

20% to 40% 40% to 60% 60% to 80% 80% to above.

14- Many businesses find the over 60's age group hard to reach with traditional marketing and advertising, but Seniors Business Discount Card scheme makes it easy.

Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

15- All positions and all employees are not equally key. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

16- The quality and variety of the employee training you provide is key for motivation. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

17- Teamwork involves working confidently within a group, contributing your own ideas effectively, taking a share of responsibility. Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.

18- People offering incentives are often unable to predict all of the ways that people will respond to them Agree. Strongly Agree. Neutral. Disagree. Strongly Disagree.Thank you for giving your precious time.

___________________________

CONCLUSION• So a Product may go to Decline Stage if

– Taste is not according to Customer Need– An Idea may be Good but company may overestimate / underestimate the market

size. – Actual product may be poorly designed.– It may incorrectly positioned– Launched at wrong time– Too High Price– Poor Advertising

• In Case of Pepsi Twist it was Failed due to – Poor Taste (59.5 % )– Availability (26.8 %)– Quality (Only 4.8 % out of 100)– Due to Citrus Fanta of Coke