External Factors Affecting To The Pepsico Marketing Essay

External Factors Affecting To The Pepsico Marketing Essay Books, articles, journals and periodicals were reviewed; internet sources were also visited, to elicit information. The major threat identified were more of environmental, arising majorly from its sludge which was alleged to contain a high level of toxic chemicals, including cadmium and lead, both of which can be harmful to human and plants. The case of coca-cola plant in Perumatti in the southern state of Kerala in India was used as a case study Not only is PepsiCo the worlds largest beverage company, but in 200 nations ( with consumers enjoying an average of 1.6 billion servings a day), sells about 500 sparkling brands, including 4 of the top sellers (coca- cola, diet coke, sprite and fanta), sparkling beverages, juices, and ready to drink teas among others. In this assignment we focused on the activities regarding the external factors which affect the PepsiCo, needs and expectations of stakeholders of PepsiCo, major changes taking place in the external environment in PepsiCo, modeling tools develop strategic options, basis of future PepsiCo strategy, comparative understanding of competitor activity from others. External factors affecting to the PepsiCo. PEST analysis is concerned with the key external environmental influences on a business. POLITICAL ECONOMICAL SOCIAL TECHNOLOGICAL PepsiCo product are subject to various federal laws New opportunities in other countries Replenishing water Operates in almost all the countries Land acquisition for new factories Fuel price Replenishing water Introduction of cans and plastic Bottles Govt. focusing on stricter water pollution norms Availability of labor Partnership with farmers Newer and attractive Designs Raw Material prices A great worry. Have a global economic perspective Solid waste management program State-of-the-Art plants Needs and expectations of stakeholders of PepsiCo Consumers PepsiCo are proud to offer PepsiCo consumers a wide range of products that deliver great taste, nutritional value, convenience and affordability. PepsiCo are committed to playing a responsible role in health and PepsiCo are finding innovative ways to reduce the use of energy, water and packaging, and to better serve consumer wants and needs through new products and packaging And PepsiCo work relentlessly to improve productivity so PepsiCo can offer affordable products to a broad range of consumers. Consumer Privacy Consumer privacy is important to PepsiCo, and PepsiCo make every effort to make sure consumers are provided with PepsiCo policies, terms and conditions. PepsiCo business divisions and many markets maintain corporate and brand PepsiCo sites, fully accessible to all interested parties. Communities PepsiCo support PepsiCo communities through PepsiCo businesses by contributing to not-for-profit groups and by working with organizations dedicated to improving the lives of people. PepsiCo have advisory groups that focus on health and issues of concern to the African American, Asian and Latino/Hispanic communities, among others. Investors PepsiCo strive to provide investors with a reasonable return on their investment, based on consistent financial growth in the marketplace and consistent financial results. PepsiCo take a long-term view and make appropriate investments to strengthen PepsiCo brands, develop PepsiCo capabilities and pursue new opportunities. Partners PepsiCo did not control these bottlers, PepsiCo did not consolidate their results. Instead, PepsiCo included PepsiCo share of their net income based on PepsiCo percentage of economic ownership in PepsiCo income statement as bottling equity income. Suppliers PepsiCo suppliers provide us with the goods and services needed in PepsiCo business. PepsiCo buy goods and services at competitive prices with the goal of allowing both PepsiCo suppliers and PepsiCo to make a reasonable profit. Major changes affect strategy. PepsiCo intend to continue to focus our efforts on, among other initiatives, the following. These changes of the external factors changes the Strategy of PepsiCo PepsiCo Company to develop a business model to continue exploring and participating in new lines of beverages, extending existing product lines and effectively advertising and marketing our products; implementing selective packaging strategies designed to increase consumer demand for our products and to build a strong returnable base for the PepsiCo brand; replicating our best practices throughout the value chain; Adapting organizational and asset structure in order to be in a better position to respond to a changing competitive environment; to build a multi-cultural collaborative team, from top to bottom; and broadening our geographic footprint through organic growth and strategic acquisitions. SWOT analysis of PepsiCo SWOT Analysis of PepsiCo Strengths Weaknesses Opportunity Threat one of the most recognized brands of the world Low Productivity In 2008 PepsiCo had approximately 198,000 employees. International Expansion PepsiCo is in the midst of making a $1, 000 million investment in China, and a $500 million investment in India Decline in Carbonated Drink Sales Soft drink sales are projected to decline by as much as 2.7% by 2012, PepsiCos diversification is obvious in that the fact that each of its top 18 brands Image Damage Due to Product Recall Growing Savory Snack and Bottled Water market in US PepsiCo is positioned well to capitalize on the growing bottle water market which is projected to be worth over $24 million by 2012. Intense Competition The Coca-Cola Company is PepsiCos primary competitors. But others include Nestlà ©, Groupe Danone and Kraft Foods. Intense competition may influence pricing, advertising, sales The company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores Its revenue per employee was $219,439, which was lower that its competitors. Broadening of Product Base PepsiCo is seeking to address one of its potential weaknesses; dependency Potential Negative Impact of Government Regulations Develop a comparative understanding of competitor activity from other organizations in the market. pff2.jpg Create options to form the basis of future organizational strategy. The PepsiCo reaffirmed the underlying strength of its integrated food and beverage portfolio and concluded that PepsiCo offers the most compelling value to shareholders as one company. Significantly increase investments in its iconic brands and in bringing innovation to market. Advertising and marketing spending will increase by $500-$600 million in 2012, the majority in North America. Going forward, it expects to maintain or increase that rate of support as a percentage of revenues. To drive efficiencies, it will reduce the number of agency partners and also take steps to leverage the global scale of its top brand platforms. The brand investments are expected to drive top line growth and enable greater price realization; Implement a three-year productivity program that is expected to generate over $500 million in incremental cost savings in 2012, further incremental reductions in the cost base of about $500 million in 2013, and an additional $500 million in 2014. The productivity savings will span every aspect of the business: Improve its net return on invested capital by at least 50 basis points annually beginning in 2013 through increased focus on capital spending and working capital management. As an example, in 2012 we will be reducing capital expenditures by 10% versus 2011. The emphasis is on systematically improving the efficiency of the existing asset base; (Armstrong, 1986) Strategy plan that ensures stakeholders of an organization The newest campaign slogan, introduced this year, is More Happy, which definitely coincides with one concrete example of more in the packaging of Pepsi products today-more designs. Many more. At least 35 distinct design ideas will grace the packaging of Pepsis cans and bottles this year alone, and this design strategy may continue indefinitely Pepsi actually asked their loyal consumers what brand elements would have to remain so that they would be intuitively reassured that their favorite drinks were not changing and the brand they trusted was still essentially the same. Their answer was direct and consistent. Pepsi-lovers needed to see three elements for sure-the Pepsi globe, the iconic Pepsi blue, and the familiar tilted Pepsi capital letters. Television ad campaigns are reinforcing the globe-centric approach by featuring a boulder-sized Pepsi globe in various settings careening to and fro like a pinball. In the ads and on the front of most of the new packages is the reassuring tag line: Same Pepsi inside, new look outside. Miller explains that it is customary and important to reassure consumers for at least six months in situations like this. (Renger, (2002). ) Create options for a strategy plan Hopefully you and your team will come up with several options or solutions to fix the problem you are working on. In evaluating these options or potential solutions, I have found the following criteria to be beneficial: Effectiveness: How likely is it that this solution will get me to the desired situation? Feasibility: How realistic is this solution? How likely is it that this solution can be implemented effectively? Time: How long will it take to implement this solution? How long will it take to get the desired results? Cost: How much will it cost, in money or other resources, to implement this solution? Human resources: How many people will need to be involved to implement this solution? Difficulty or ease of implementation: Overall, how easy or difficult will it be to implement this solution? Risk: How much is at risk in implementing this solution? (Armstrong S. , 1985) Strategy plan ensuring the resource implications. Intensive growth (Identifying the opportunities to achieve further growth within the current business) Product -market expansion grid is useful framework for detecting new intensive growth opportunities. (Conley, 1992, April.) Market penetration strategy (The Company first considers whether it could gain more market share with its current products in the current markets): Headquartered in Purchase, New York, with Research and Development Headquarters in Valhalla. A third force was the perceived synergy between salty snacks and soft drinks. As Kendall succinctly related to Forbes in 1968, Potato chips make you thirsty; Pepsi satisfies thirst. The plan was to jointly market PepsiCos snacks and soft drinks, thereby giving Pepsi a potential advantage in its ongoing battle with Coke. Expand the Global Leadership Position of Our Snacks Business. PepsiCo is the global snacks leader, with the No. 1 savory category share position in virtually every key region across the globe. Ensure Sustainable, Profitable Growth in Global Beverages. When combined with the actions we are taking to refresh their brands across the entire beverage category, they believe this game-changing transaction will enable them to accelerate their top-line growth and also improve their profitability. Unleash the Power of Power of One. The combination of snacks and beverages-with our high-demand global and local brands-makes PepsiCo an essential partner for large-format as well as small-format retailers. Mission, Vision, Objectives of PepsiCo Mission Mission is to be the worlds premier consumer products company focused on convenient foods and beverages. PepsiCo seek to produce financial rewards to investors as they provide opportunities for growth and enrichment to our employees, our business partners and the communities in which they operate. And in everything do, they strive for honesty, fairness and integrity. Our Vision PepsiCos responsibility is to continually improve all aspects of the world in which they operate environment, social, economic creating a better tomorrow than today. Vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company. Objectives At PepsiCo, theyre committed to achieving business and financial success while leaving a positive imprint on society delivering what they call Performance with Purpose. PepsiCo approach to superior financial performance is straightforward drive shareholder value. By addressing social and environmental issues, they also deliver on our purpose agenda, which consists of human, environmental, and talent sustainability. PepsiCos Future management objectives As a global food and beverage company with brands that stand for quality and are respected household names-Pepsi-Cola, Lays, Quaker Oats, Tropicana and Gatorade, to name a few-PepsiCo will continue to build a portfolio of enjoyable and wholesome foods and beverages; find innovative ways to reduce the use of energy, water and packaging; and provide a great workplace for our associates. The Companys operating management structure consists of five geographic groups plus the Minute Maid Company. Name of the group Country/Region The North American Group USA and Canada. The Latin America Group Central and South America The Greater Europe Group Greenland to Russias Far East. The Africa and Middle East Group Middle East and the Africa continent. The Asia Pacific Group From India through the Pacific region . Values and culture of PepsiCo PepsiCos mission is to continue to be the worlds premier consumer Products Company focused on convenient foods and beverages. They endeavor to produce financial rewards to investors while providing opportunities for growth and enrichment to their employees, their business partners and the communities in which they operate. In everything the company does, they strive for honesty, fairness and integrity. PepsiCos mission for 2008 was Performance with Purpose which the CEO of PepsiCo Indra K. Nooyi elaborates on when she says this mission combines the two things that define what we do-growing the business, and acting as ethical and responsible citizens of the world The companys values philosophy are centered on being a socially and environmentally responsible company. Therefore every policy it formulates and decision it makes is based on the following guiding principles: * Care for customers, consumers and the world they live in. * Sell only products that they can be proud of.  · Speak with truth and candor. * Balance short term and long term. * Win with diversity and inclusion. * Respect others and succeed together. Evaluation of a strategy plan The introduction stages starts when products lunched in this period sales will be very slow, must of the organization faced negative profit and high cost. There are some stages where organization has to face high risk in innovation of new product. When the coca-cola company launched power the stages are: where high risk product development stage Introduction stage Growth stage After passing these stages product will be in maturity stage where organization make more profit and try to stay in this stage after this stage is decline stage which is also risk and here need to some force/change to stay in maturity stage. (Conley, 1993, April) The action plan, basically developing a very detailed list of to do thing where PepsiCo included task, time and budget or cost framework with relating marketing mix the coca-cola company in estimate the budget and talks in marketing about activities. Implementation of strategy plan Step One: Goal Setting This first step is a bit obvious. PepsiCo have a goal in mind. And PepsiCo see at earlier Coca cola made its goal at early of the year. Step Two: Research Start talking about goal and research what it will take to fulfill it. Step Three: Weigh Options Theres almost never just one way to do something. PepsiCo depend RD in here. Step Four: Direction Now that PepsiCo have a goal, knowledge of that goal, and options towards obtaining it, theyre now ready to decide the best course of action. Step Five: Begin Analysis Current situation Goals Target Customer Key Services Communication Strategy Evaluation Has this type of communications activity taken place before? If so, what was the result? Are PepsiCo seeking to provide new information? PepsiCo target the Customer with the market segmentation. Motivate the customer Fit with the resources PepsiCo already have. can learn how plan worked with various Customer, What are your major communications opportunities? Are PepsiCo calling the audience to action? PepsiCo focus on the Customer Keep in mind that consumer PepsiCos best assets. are the most effective communications vehicles to reach target Customer which activities had the most impact Define your communications challenge Are PepsiCo seeking to change behavior? PepsiCo develop strategy to implement this quickly. What are the Customer knowledge regarding PepsiCo. Helps to achieve goals and deliver the outcomes you wan which parts of the plan failed Many people fail at this step. It can be relatively easy to make a plan up to this point. But, heres where its time to put in the work. Step Six: Adapting The most successful people in the world are those that can adapt to current situations. Sometimes opportunities will open up and youll need to revise your plan to take advantage of them. Communications plan in a tabular format to support the roll out of the plan Monitoring and Evaluation system of PepsiCo Scenario Planning: Scenarios are realistic descriptions of the organizations possible futures that allow the scenario team to set aside its individual and organizational assumptions about how the external environment will operate and explore new ones PepsiCo is constantly aware of the link between its strategy and the changing future, thus, itself for the ifà ¢Ã¢â€š ¬Ã‚ ¦then probable future. This is exemplified it its mission statement, thus: Benchmarking is the comparison of performance in one organization or part of an organization against that in another, with a view to finding ways of improving performance. This avails the company the opportunity to take corrective measures actions. Experience to Strategy Plan A business strategist can be regarded as the leader of an expedition to find the highest elevations on a companys fitness landscape. Fog prevents the hikers from seeing more than a few feet in front of themselves. What can be done when things look so hazy? Biologists have identified key rules that evolution uses to find high peaks. Managers too can use them. The first rule is that evolutionary searches never stop. No matter how successful a strategy is at a given moment, a business must experiment constantly to find something better. Another key principle is parallelism. The entire expedition should not explore the same region. Instead, many search parties should spread out from the base camp to explore the shifting terrain and bring back news of discoveries. (Cook, 1988) Effective strategy formulation is about Building collective intuition Encouraging healthy conflict Maintaining a pace so that decisions are taken within a stipulated time Defusing political behavior. Conclusion This strategic plan articulates for the PepsiCo community and for our constituents an understanding of who we are, what we do, and the values by which we define ourselves. It articulates as well our ambitious aspiration, five key goals we believe we must meet in order to achieve that aspiration, and an assessment of where the PepsiCo stands today as we rededicate ourselves to these shared objectives. The plan does not reflect everything that the PepsiCo hopes to do over the next five years; nor does it represent an irrevocably fixed set of directives, since the planning process must be dynamic and adaptable. It will, however, serve-at the PepsiCo level and also at the collegiate, departmental, and unit levels, where so many of the important decisions of the PepsiCo are made-as the framework according to which we will make difficult decisions, focus our resources, and thereby advance the PepsiCos distinction as a leader in higher education. Company or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of the Company and its Subsidiaries or (d) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, with only such exceptions, in the case of each of clauses (b) through (d), as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent or materially impede, interfere with, hinder or delay the consummation of the Merger