Pepsi: 50 Years of Quality Snacks and Cola - Essay Sample

Introduction

Pepsi is a company that delivers quality salty snacks that are served with the best cola in the planet. In 1965, Herman Lay (the CEO of Frito-Lay) and Donald Kendall (the CEO of Pepsi-Cola) made this possible and referred to it as "a marriage made in heaven." The visions they set ensured that PepsiCo became the leading food and beverage company in the world.

Pepsi Company has evolved for more than 50 years with the changes in trends, tastes, and lifestyles (Annual Report of Pepsi Company, 2018). The willingness to grow and adapt to the changes made the company's snack and soda into different brands which include, Tropicana and Gatorade, Pepsi and Quaker, Frito-Lay, and beyond. Pepsi Company is one of the most respected companies in the world and with the products sold in more than 200 countries. The 22 brands generate approximately more than $1 billion, each with annual retail sales (Annual Report of Pepsi Company, 2018).

The commitment to doing business the right way and integration of purpose into their Business Strategy by PepsiCo is highly celebrated. In 2019, they adopted a new vision: to Be the Global Leader in Convenient Foods and Beverages by Winning with Purpose (Annual Report of Pepsi Company, 2018). A win with purpose is always their next purpose plan which clearly shows their belief that sustainability can always lead to greater success in the market place.

The company is comprised of six divisions, which include: Frito-Lay North America; Quaker Foods North America; Latin America; Europe Sub-Saharan Africa; and Asia, Middle East, and North Africa; PepsiCo Beverages North America. All the divisions have their unique history and the way of doing business since they are located in different environments (Annual Report of Pepsi Company, 2018).

Analysis

Political Analysis for PepsiCo

FDA has regulation regarding non-alcoholic beverages which fall within the food category. The government is responsible in the operation and manufacturing of these products in ensuring the regulations have been followed. Fines are set by the government if they do not meet the standard laws. Some of the factors that can cause PepsiCo company results to differ from the expected results set by the company are as follows:

Political structure and legal considerations impinged on PepsiCo strategies. Some of the governments in Arab countries rejected PepsiCo products due to the disputes with the company in maintaining the distributors in Israel.

Political conditions where International markets are affected by changes made by government and restrictions due to the mobility in the transfer of products across borders.

Changes in laws and regulations, tax requirements (tax rate changes, new tax laws, and revised tax interpretations) and environmental laws in both foreign and domestic jurisdictions.

Changes in the non-alcoholic business environment. There are constant changes in the business environment and should be without limitation. Products are competitive due to variations in prices in the global market due to competition.

Economic Analysis of PepsiCo

PepsiCo win with Purpose strategy has enabled them to make changes to ensure satisfaction to the consumers' needs. PepsiCo has exploited the economies of scale by its global marketing and making sure the products are exquisite hence earning the company massive profits quarterly. PepsiCo has grown over the years due to the benefits of various cultural backgrounds across the world. Business is all about the numbers. The company is still committed to local markets since they have different cultures. They have remained competitive and develop new drinks to satisfy their markets.

Technological Analysis

Some of the technological factors that cause the company's actual results to vary from the expected are as follows: The company's advertising, marketing, and promotional programs. With the development of technology of the internet and television that use special effects for advertisements through media. Small products seem more attractive, and this helps in sales. The technology is used in media to sell the products.

The introduction of plastic bottles and cans has led to a rise in sales for PepsiCo beverages because they are easy to carry and bin once they are used.

Technological advancements has led to the introduction of types of machinery used in production pf PepsiCo beverages, which in the end lead to a tremendous increase in the products. PepsiCo has made more sales leading to more profits than a few years back.

Legal Analysis

The national and world legislation play a major effect on the legal aspect. The PepsiCo Company obtains the necessary rights that affect their business and evert inventions, and the product they develop is given to the innovators.

Environmental Analysis

The analysis takes into account the national and world environmental issues. The PepsiCo data obtained indicate that the facilities are observing the environmental laws that are set by the government.

Methodology

Objective

The objective of this study is to analyze and understand the market share of PepsiCo India in beverages and to determine consumer preferences by monitoring the buying behavior.

Sample Design and Sample Size

The research is an exploratory one that considered both primary and secondary data gatherings. The researcher has a time frame and limited resources to collect information. A simple random sampling method was used, and A sample size of 100 correspondents was given the questionnaires where every respondent was given equal opportunity to fill the questionnaire.

Data Collection and Analysis

Primary and secondary data collection methods were used in obtaining the necessary information to be used in the PepsiCo market research. Primary data included the administering of questionnaires and interviews to the consumers and customers. Secondary data collection was obtained from data provided by the company, books, and the internet.

The assumptions made are: the questionnaires were filled with PepsiCo consumers and the respondents' response to the products was genuine.

Demographics

According to Sarstedt & Mooi (2014), qualitative research is based on different metrics. The research has the following merits:

Segmentation

PepsiCo has made through the market because of Geography, Demography, and customer behavior, and lifestyle.

Geography

PepsiCo has segmented the market in different geographical areas, rural, urban, and semi-urban areas. The demand for cold drinks is higher in hot areas than in cold areas. The sales in urban areas will be higher than in rural areas since the consumers are more in urban areas due to the high population (Sarstedt & Mooi, 2014).

Demography

PepsiCo has emphasized segment the market based on gender, age, family income, and groups. Demographics can be divided into different segments so that the business strategies set by PepsiCo can be achieved.

Customer Demand

Pepsi has diverse brands since different consumers have different preferences for the products. Various package sizes are introduced to cater to all consumers. Health-conscious customers have Pepsi Diet, which has low calories (Sarstedt & Mooi, 2014).

Results

Market Share

The market share obtained from the consumer survey indicated the overall market share of the PepsiCo products in soft drinks. Coca Cola covers up to 61% of the market share, whereas PepsiCo 34%. However, PepsiCo captures a better market share with Mountain Dew and 7Up as compared to its major selling product Pepsi (Sarstedt & Mooi, 2014).

Figure 1: PepsiCo market share

Figure 2: Market share percentages between Pepsi, Coca Cola, and other companies

Customer Ratings

The consumer survey concluded the average product ratings from the respondents using a scale of 1-5. A lower rating has been provided by Pepsi as opposed to Coke, which is highly appreciated.

Pepsi Co India Coca Cola Company

Average Rating Out of 5 Average Rating Out of 5

Pepsi 3.1 Coke 3.3

Mountain Dew 3.4 Thumbs Up 3.4

7 up 3 Sprite 3.2

Mirinda 2.8 Fanta 2.6

Table 1: Customer ratings between Pepsi and Coca Cola

Consumption Report

The study enabled us to understand the age and consumption parameters of the consumers. Respondents between 18-30 years consume Pepsi products as compared to those above 30 years who do consume soft drinks on rare occasions (Sarstedt & Mooi, 2014). The company should focus more on younger consumers as they are the primary consumers.

Buying Behavior

The consumer questionnaire helped us understand the consumers' buying behavior in terms of packaging and place. It is observed that many consumers prefer plastic packaging of soft drinks since these products are majorly consumed in colleges, schools, and workplaces. Glass bottles are not preferred since they are less mobile.

Figure 3: Consumer buying behavior of PepsiCo

SWOT Analysis

PepsiCo is the second largest international Food and Beverage Company in the world due to their win with a purpose strategy. As per the company Annual Report (2018), the company is growing despite the increasing market competition. According to Helms and Nixon, SWOT analysis is a strategic tool that identifies the company's position and methodologies that can improve its global performance.

Strengths

PepsiCo has built a strong brand profile in the food and beverage industry over a long period. This enables that most consumers are aware of PepsiCo products. The consumers are loyal to the brands which have been diversified. The company seeks to satisfy the customer at all times. Effective global production and distribution network in the whole world. PepsiCo products are distributed over 200 countries across all cultures (Helms & Nixon, 2010).

Weakness

PepsiCo does not consider health-conscious consumers in its products as most of their products are of high sugar content. Also, the company has not diversified its products as the primary products are food and beverage products (Helms & Nixon, 2010).

Opportunity

PepsiCo can use combined efforts with other business alliances in terms of marketing the products to increase sales. PepsiCo has a chance to diversify the business by obtaining a new firm that is not in the food and beverage industry. The company can also improve the branding of the packages to make them more appealing to the customers (Helms & Nixon, 2010).

Threats

Stiff competition from other food and beverage companies like Coca Cola, which has more customers across the world, is a major challenge that the company is facing. Competition is a threat since PepsiCo strives to dominate the market and archive the strategies set. Another factor that is affecting the company is a healthy lifestyle that is trending across the world (Helms & Nixon, 2010). The healthy lifestyle is against the usage of the product that is produced by PepsiCo as they are considered unhealthy due to the high sugar content.

Recommendations

Consumers should be offered promotions when they buy the PepsiCo products to entice them, and this will result from increases in sales, therefore, increment in market share. PepsiCo should introduce a stronger version of Pepsi in the Indian market to compete against Thumbs Up and Coke. A stronger version of the products will create a unique scenario, and this will attract more consumers to buy products. Pepsi should have new campaigns on the emerging issues to improve branding, especially on the youths since they are the major consumers. To deal with the stiff competition from the Coca-cola company, the company should promote Mirinda so that it can compete with Fanta in the market since the response to Mirinda from the survey was poor. Furthermore, Installation of vending machines free of ch...