PEPSI CO .

- Performance With Purpose…..

Executive Summary

This marketing plan provides a written analysis of the trends, consumer demands and markets in
the soft drink industry and the implementation strategy PepsiCo plans to put into action when
launching a new product line of "New Age" products. The key success factors of this marketing
plan are:

- Growing market for healthier soft drinks:

- the market for diet drinks is not new, yet has limited choices and is therefore open
for expansion of new products

- the largest segment of the U.S. population is aging (the baby boomers) causing a
rise in health concerns and adding to demand for healthier soft drinks

- Younger generation drinks less coffee and more soft drinks with caffeine

- Unique new product:

- Introduction of a new artificial sweetener

 - Tastes as good as a non-diet soft drink

- Only one calorie

- Comparable competition does not yet exist

- Exciting promotional campaign strategy:

- Sports lounges in malls with free drinks provided and sports on TV

- Free giveaways at college and professional football and basketball games

- Free t-shirts displaying product to college students given away on central campus
locations

- Lucrative Sales forecasts:

The introduction of a new line of products including an entirely new product and ingredient will
increase sales revenue for PepsiCo. The sales revenue will in turn create an incremental growth
during the introductory phase for the new products as shown during the projections for the next
five years.
 In
conclusion, the promotion and launch of the new product line will help meet the needs of
customers, provide a new niche in the soft drink industry and become a profitable venture for
PepsiCo.

History:

Head quartered in Purchase , New York , the Pepsi Cola Company

Began in 1898 , but it only became known as Pepsi Co when it merged
with Frito Lay in 1965. Until 1997 , it also owned KFC , Pizza Hut , and
Taco bell , but these fast – food restaurants were spun off into Tricon
Global Restaurants , now Yum! Brands , inc . Pepsi Co purchased
Tropicana in 1998 and Quaker Oats in 2001 .
 Corporate governance:
Current members of the board of directors of PepsiCo are Indra Nooyi
C.E.O. , Robert E. Allen , Dina dublon , Victor dzau, ray hunt , Alberto
Ibarguen , Arthur Martinez , Steven Reinemund , Sharon Rockfeller ,
James schiro , Franklin Thomas , Cynthia trudell , and River King.

Since becoming CEO , indra Nooyi has reorganized PepsiCO to

make it less fixated on the U.S. and broadened the power structure by
doubling her executive team to 29. She has installed an Italian native
m Massimo d’Amore, atop the division that includes the troublesome
U.S. soft drink business , and recruited a former Mayo Clinic
endocrinologist to head up R&D

QUOTATION FROM C.E.O

 "I want people to look at PepsiCo and think of it as a model of how to

conduct business. We call it "Performance with Purpose" and it means

we bring together what is good for business and good for the world..."

Company profile
PepsiCo, Inc. is among the most successful large conglomerate with interests in manufacturing,

marketing and selling a wide variety of carbonated and non-carbonated beverages, as well as salty,

sweet and grain-based snacks, and other foods.PepsiCois consumer products company in the world,

with 1999 revenues of over $20 billion and 116,000 employees. And now The company consists of: Frito-

Lay Company, the largest manufacturer and distributor of snack chips; Pepsi-Cola Company(including

Mountain Dew),, the second largest soft drink business and Tropicana Products, the largest

marketer and producer of branded juice. PepsiCo brands are among the best known and

most respected in the world and are available in about 190 countries and territories.
 Some of PepsiCo's brand names are 100 years old, but the corporation is relatively

young. PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-

Lay. Tropicana was acquired in 1998.

PepsiCo's success is the result of superior products, high standards of performance,

distinctive competitive strategies and the high integrity of their people. Their overriding

objective is to increase the value of their shareholders' investment through integrated

operating, investing and financing activities. Their strategy is to concentrate their

resources on growing their businesses, both through internal growth and carefully selected

acquisitions. Their strategy is continually fine-tuned to address the opportunities and risks

of the global marketplace. The corporation's success reflects their continuing commitment

to growth and a focus on those businesses where they can drive their own growth and

create opportunities.

MULTI BRANDING:
PepsiCo believes Multi branding is the key to the future of the QSR
business. Owning more than one brand allows you to “eliminate the veto
vote “ and dive your consumers a “WOW” experience. Research shows
that consumers prefer Multi Brand companies six to one over single
brands.
 PepsiCo brands
PepsiCo owns five different billion-dollar brands. These are Pepsi, Tropicana, Frito-Lay,
Quaker, and Gatorade. The company owns many other brands as well.

 PEPSI : Pepsi, Caffeine-Free Pepsi, Diet Pepsi/Pepsi Light, Caffeine-Free Diet

Pepsi, Caffeine-Free Pepsi Light, Wild Cherry Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist
and Pepsi ONE.


Other carbonated water:

Frawg, Mountain Dew, Mug Root Beer, Sierra Mist and Tropicana Twister Soda
 7 Up (international distribution)

Other U.S. beverages, including Aquafina (Flavor Splash, Alive, and Twist/Burst),
Tava, Dole, Gatorade, Izze, Mountain Dew AMP, Propel Fitness Water, SoBe, Quaker Milk
Chillers, Ben & Jerry's MilkShakes, and Tropicana

Beverages marketed outside the U.S.: Alvalle, Concordia, Copella, Evervess,

Fiesta, Frui'Vita, Fruko, Junkanoo, Kas, Loóza, Manzana Corona, Manzanita Sol, Mirinda,
Paso de los Toros, Radical Fruit, San Carlos, Schwip Schwap, Shani, Teem, Triple Kola, and
Yedigun

Frito-Lay brands: Baken-ets, Barcel, Bocabits, Cheese Tris, Cheetos, Chester's,

Chizitos, Churrumais, Cracker Jack, Crujitos, Doritos, Fandangos, Fritos, Funyuns, Gamesa,
Go Snacks, James' Grandma's Cookies, Hamka's, Lay's, Miss Vickie's, Munchies, Munchos,
Nik Naks, Ollie's Meat Snacks, Quavers, Rold Gold, Ruffles, Rustler's Meat Sticks, Sabritas,
Sabritones, Sandora, Santitas, Smartfood, The Smith's Snackfood Company, Sonric's, Stacy's
Pita Chips, Sun Chips, Tor-tees, Tostitos, Walkers, and Wotsits

Quaker Oats brands: Aunt Jemima, Cap'n Crunch, Coqueiro, Crisp'ums, Cruesli,
FrescAvena, King Vitaman, Life, Oatso Simple,Quake, Quisp, Rice-A-Roni, and Spudz in
2007, Nooyi spent $ 1.3 billion on healthier –alternative brands like NAKED JUICE ,
a California maker of soy drinks and organic juice.

PEPSI :
FRITO – LAY :
QUAKER :
 Corporate Citizenship
At PepsiCo, we believe that as a corporate citizen, we have a
responsibility to contribute to the quality of life in our communities. This
philosophy is expressed in our sustainability vision which states:
“PepsiCo’s responsibility is to continually improve all aspects of the world
in which we operate – environment, social, economic -- creating a better
tomorrow than today.”

Our 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.

PepsiCo Headquarters
PepsiCo World Headquarters is located in Purchase, New York,
approximately 45 minutes from New York City. The seven-building
headquarters complex was designed by Edward Durrell Stone, one of
America's foremost architects. The building occupies 10 acres of a 144-
acre complex that includes the Donald M. Kendall Sculpture Gardens, a
world- acclaimed sculpture collection in a garden setting.

The collection of works is focused on major twentieth century art, and

features works by masters such as Auguste Rodin, Henri Laurens, Henry
Moore, Alexander Calder, Alberto Giacometti, Arnaldo Pomodoro and
Claes Oldenberg. The gardens originally were designed by the world
famous garden planner, Russell Page, and have been extended by
François Goffinet. The grounds are open to the public, and a visitor's
booth is in operation during the spring and summer.

Strategic Focus and Plan

Mission/Vision
 Our mission is 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 to act with honesty , fairness and integrity.

Goals
Nonfinancial Goals

• Sharply focus their financial and management resources on their core

businesses: restaurant management on restaurants, packaged goods management
on beverages and snacks.

• Ruthlessly prioritize to be sure they employ their greatest sustaining efforts on

the biggest opportunities within their core businesses. In beverages, for example,
the lions share of their investment dollars and management attention will go to high-
potential markets where no company dominates like China, India and Russia and to
markets where they lead or are a strong number two.

• Build their success upon their key functional strengths:

1. day-to-day management of operationally intensive businesses;
2. manufacturing, selling and distribution infrastructure development; and
3. marketing and new product R&D.
 Our Commitment

Our commitment is to deliver sustained growth, through empowered people,

acting with responsibility and building trust. Here’s what this means:

Sustained Growth is fundamental to motivating and measuring our success.

Our quest for sustained growth stimulates innovation, places a value on results,
and helps us understand whether today’s actions will contribute to our future. It
is about growth of people and company performance. It prioritizes making a
difference and getting things done.

Empowered People means we have the freedom to act and think in ways that
we feel will get the job done, while being consistent with the processes that
ensure proper governance and being mindful of the rest of the company’s
needs.

Responsibility and Trust form the foundation for healthy growth. It’s about
earning the confidence that other people place in us as individuals and as a
company. Our responsibility means we take personal and corporate ownership
for all we do, to be good stewards of the resources entrusted to us. We build
trust between ourselves and others by walking the talk and being committed to
succeeding together.
 Guiding Principles

This is how we carry out our commitment.

We must always strive to:

Care for customers, consumers and the world we live in. We are driven by an
intense, competitive spirit in the marketplace, but we direct this spirit toward
solutions that achieve a win for each of our constituents as well as a win for the
corporation. Our success depends on a thorough understanding of our customers,
consumers and communities. Caring means going the extra mile. Essentially, this is a
spirit of growing rather than taking.

Sell only products we can be proud of.The test of our standards is that we must be
able to personally endorse our products without reservation and consume them
ourselves. This principle extends to every part of the business, from the purchasing of
ingredients to the point where our products reach the consumer’s hands.

Speak with truth and candor. We speak up, telling the whole picture, not just what
is convenient to achieving individual goals. In addition to being clear, honest and
accurate, we take responsibility to ensure our communications are understood.

Balance short term and long term. We make decisions that hold both short-term
and long-term risks and benefits in balance over time. Without this balance, we cannot
achieve the goal of sustainable growth.

Win with diversity and inclusion. We leverage a work environment that embraces
people with diverse backgrounds, traits and different ways of thinking. This leads to
innovation, the ability to identify new market opportunities, all of which helps develop
new products and drives our ability to sustain our commitments to growth through
empowered people.

Respect others and succeed together. This company is built on individual

excellence and personal accountability, but no one can achieve our goals by acting
alone. We need great people who also have the capability of working together,
whether in structured teams or informal collaboration. Mutual success is absolutely
dependent on treating everyone who touches the business with respect, inside and
outside the company. A spirit of fun, our respect for others and the value we put on
teamwork make us a company people enjoy being part of, and this enables us to
deliver world-class performance.
 SUSTAINABLE ADVANTAGE :

Three major sustainable advantages give PepsiCo a competitive edge as we

operate in the global marketplace:

1. Big, muscular brands;

2. Proven ability to innovate and create
differentiated products; and
3. Powerful go-to-market systems.

Making it all work are our extraordinarily

talented and dedicated people.

When we take these competitive advantages and

invest in them with dollars generated from top- line
growth and cost-saving initiatives, we sustain a
value cycle for our shareholders.

In essence, investing in innovation fuels the building of our brands.

This in turn drives top-line growth.

Dollars from that top-line growth are strategically reinvested back into new
products and other innovation, along with cost-savings projects.

Thus, the cycle continues.

 Respect for our employees /DI V E R S I T Y
We believe our most important strength is our employees. We seek to
provide a work environment where all employees have the opportunity to
reach their full potential and contribute to PepsiCo's success.
We are committed to equal opportunity in all aspects of employment for
all employees and applicants; to providing a workplace free from all forms
of discrimination, including sexual and other forms of harassment; and to
fostering a work environment where people feel comfortable and
respected, regardless of individual differences, talents or personal
characteristics. Our objective is for the diversity of our employees to
match the diversity of the population wherever we operate and for the
performance of all employees to be judged fairly
and based on their contribution to our results.

PepsiCo encourages an inclusive culture, which enables all employees

to
do their best. This means we:

• welcome and embrace the strengths of our differences,

• provide equal access to opportunities and information,
• treat each other with respect and dignity,
• foster an atmosphere of caring, open communications and candor.

We respect the rights of individuals to achieve professional and

personal balance in their lives. We place a great deal of emphasis on
personal integrity and believe long-term results are the best measure of
performance.

PepsiCo respects employee privacy and dignity and will acquire and
retain only that employee personal information that is required for
operation of the Company or required by law.
 PepsiCo follows all employment laws and regulations and respects
lawful customs of the countries where we operate.

CUSTOMERS, SUPPLIERS and COMPETITORS

We are committed to the continuation of free enterprise and the legal
and
regulatory frameworks that support it. Therefore, we recognize the
importance of laws that prohibit restraints of trade, predatory economic
activities and unfair or unethical business practices. In all of its business
dealings with suppliers, customers and competitors,

PepsiCo will:
• Compete vigorously and with integrity.
• Treat all customers and suppliers honestly, fairly and
objectively.
• Avoid any unfair or deceptive practice and always
present our services and products in an honest and
forthright manner.
• Never comment on a competitor’s product without a good basis
or need for such statements.
• Make clear to all suppliers that we expect them to compete fairly and
vigorously for our business, and endorse the principles in our Code of
Conduct. We will select our suppliers strictly on merit.
• Comply with all laws prohibiting agreements with competitors to: fix
prices or
other sales terms; divide or assign sales territories, customers or
product lines; or
coordinate bids and agreements with customers to fix their resale
prices. These
types of agreements are generally illegal in the United States and

many other markets where we conduct business.

 GLOBAL RELATIONS
PepsiCo firmly believes that international commerce strengthens
stability and peace by fostering economic growth, opportunity and mutual
understanding. As a global enterprise, we recognize our responsibility to
act in concert with the legitimate interests of the countries in which we do
business. We obey all laws and regulations and respect the lawful
customs of host countries. Our objective is to be a good corporate citizen
wherever we operate.

POLITICAL & COMMUNITY ACTIVITIES &

CONTRIBUTIONS

PepsiCo believes in contributing to society and encourages employees

to participate in community activities. We will continue to communicate
information and opinions on issues of public concern that may affect
PepsiCo. Decisions by our employees whether or not to contribute time,
money or resources of their own to any political or community activity are
entirely personal and voluntary.

We will obey all laws in promoting the Company’s position to

government authorities and in making political contributions.
Contributions by the Company to political candidates may be prohibited
or regulated. Any such contribution requires the approval of PepsiCo’s
Vice President of Government Affairs.
 CONFLICTS OF INTEREST

PepsiCo’s conflicts of interest policy is straight-forward: Don’t compete

with PepsiCo businesses, and never let your business dealings on behalf
of any of our businesses be influenced, or appear to be influenced, by
personal or family interests. All actual or apparent conflicts of interest
between personal and professional relationships must be handled
honestly and ethically.

Examples of conflicts that must be disclosed and resolved include:

• Having a family interest in a transaction with the Company. A family
interest would include any interests of your spouse, parent, child,
sibling or domestic partner.
• Having more than a nominal individual or family interest in a
competitor, supplier or customer of the Company (for example,
ownership of more than 1% of a supplier’s equity securities).
• Having a significant individual or family interest in an organization
that does, or seeks to do, business with the Company.
• Acquiring an individual or family interest in property (such as real
estate, patent rights, securities or other properties) or a business
where you believe the Company has, or might have, an interest.
• Having outside business interests or activities that affect job
performance because of the significant amount of time and attention

diverted from your responsibilities as a Company employee.

 RESPONISBILITY FOR COMPLIANCE

All of our employees are responsible for ensuring that our standards of
conduct are followed. Each employee has a responsibility to understand
and comply with this Code. Additionally, employees must seek guidance
when a situation is not clear, and report all known or suspected violations
of the Code to their manager, to PepsiCo’s General Counsel or General
Auditor, or through the Speak Up hotline.

Division management distributes this Code annually to all PepsiCo

employees throughout the world, and oversees the annual certification
process for its officers and key employees. Managers are responsible for
communicating the standards and assisting their employees in
understanding the Code.
Management will investigate and resolve any issues reported in relation
to this Code. Code violations and their resolutions are communicated
and/or reported to the General Auditor per established communication
and reporting guidelines.

This Code can not provide definitive answers to all questions. For that,
we must rely on each person’s judgment and integrity. You are
encouraged to seek guidance where a situation may not be clear. The
PepsiCo Law Department and the General Auditor will respond to
questions and issues of interpretation about this Code. Waivers of this
Code will be reviewed by the General Auditor and General Counsel, and
in certain circumstances by the Board of Directors, and if required, will be
appropriately disclosed.
 Core Competency and Sustainable Competitive Advantage

In terms of core competency, PepsiCo seeks to achieve a unique ability

to:

(1) provide a distinctive, high-quality one-calorie soft drink and

to provide a high-quality citrus soft drink using Pepsi Company’s
distinct ingredients to appeal and to excite contemporary tastes
for these products and

(2) Deliver these soft drinks to the customer using effective

manufacturing and distribution systems that maintain PepsiCo’s
quality standards.

To translate these core competencies into a sustainable competitive

advantage, Pepsi Co. will work closely with key suppliers and distributors
to build the relationships and alliances necessary to satisfy the high taste
standards of our customers.
 Situation Analysis

This situation analysis starts with a snapshot of the current environment in

which PepsiCo finds itself by providing a brief SWOT (strengths, weaknesses,
opportunities, and threats) analysis. After this overview, the analysis goes into
greater detail with regards to industry, competitors, company, and consumers.

SWOT Analysis

The following table shows the internal and external factors affecting the market

opportunities for PepsiCo. This SWOT analysis also shows PepsiCo's internal strengths

such as their experienced management team, a competitive product line, a global

marketing realm, and the continuous efforts by their research and development to

research trends in the industry and to be creative in exploiting those trends. Some possible

opportunities noted in the SWOT analysis are the growing markets for specialized ethnic

foods and healthier food products. Another opportunity is that the income of consumers is

high enabling them to be less price sensitive, and convenience is becoming evermore

important not only to the United States but to many countries around the world.

Although PepsiCo has many strengths, a few weaknesses lie in the fact that the
company is so large and could possibly lose focus or have internal conflict problems. A
few of the threats PepsiCo must stay aware of are the ease of replicability of its product
line, the almost pure competition in pricing for its products, and the quickness of
technological advances causing existing products to be no longer the most advanced.
 Strengths
Internal Factors
Management Experienced, broad base of
interests and knowledge
Product Line Unique, tastes good,
competitive price, and
convenient
Marketing Diverse, and global
awareness
Personnel International, diverse
positions
Finance High sales revenue, high sale
growth, large capital base
Manufacturing Low costs and liabilities due
to outsourcing of bottling
Research & Continuous efforts to
Development research trends an reinforce
creativity
External Factors Opportunities
Consumer/Social Huge market in the healthy
products and growing market
for specialized foods for ethnic
groups
Competitive Distinctive name, product and
packaging in with regards to its
markets
Technological Internet promotion such as
banner ads and keywords can
increase their sales, and more
computerized manufacturing
and ordering processes can
increase their efficiency
Economic Consumer income is high,
more tend to eat out,
convenience is important to
U.S.
Legal/Regulatory High U.S. Food & Drug
Administration standards
eliminate overnight competitors
Weaknesses
Large size may lead to
conflicting interests
New one calorie products have
no existing customer base,
generic brands can make similar
drinks - cheaper
May lose focus, may not be
segmented enough
Possible conflicts due to so
many people, possible trouble
staying focused
High expenses, may have
trouble balancing cash-flows of
such a large operation
Lose control and quality
standards
May concentrate too much on
existing products,
entrepreneuralship may not be
welcomed
Threats
More expensive products than
Coke, such a high price may
limit lower income families from
buying a Pepsi product
Not entirely patentable,
constant replicability by
competitors
Computer breakdowns,
viruses and hackers can reduce
efficiency, and must constantly
update products or other
competitors will be more
advanced
Very elastic demand, almost
pure competition
 Industry Analysis: Trends in Healthy Soft
Drinks

Within the soft drink industry, a major trend to capitalize on is healthier

soft drinks. The market for healthy soft drinks is huge and growing among
American and international consumers alike. Along with a large market,
many opportunities have arisen due to recent technological advances.
New research has brought to Pepsi a lower calorie sweetener than
aspartame allowing for an even healthier diet drink. Also technology on
the Internet has revolutionized the promotional process. By using banner
ads and keyword ads, Pepsi Co. can reach a higher number of audiences
and yet and the same time have more specific and targeted segments. A
final factor that is providing an ideal situation to introduce a new product
is that consumers are tending to eat out more often due to the fact that
economically, income is high. This will help to increase our sales of
fountain beverages to restaurants. All of these positive industry factors
combined create an exemplary context in which to launch new healthy
soft drink products.
 Competitor Analysis
The soft drink market represents $4,798,000,000 in annual sales. The products fall into four
main groups: colas, lemon-lime-flavored drinks, diet drinks, and other drinks.

Type PepsiCo Products Competing

Products
Cola Pepsi Cocacola

Generic
Lemon- Mountain Dew Sprite
lime
Sierra Mist Fresca

Slice 7-Up

Generic
Diet Diet Pepsi Diet Coke

Pepsi ONE Diet Caffeine Free

Coke
Diet Caffeine Free
Pepsi Diet Dr. Pepper

Diet Mt. Dew Diet Sprite

Diet 7-Up

Tab

Generic
Other Mr. Pibb Dr. Pepper

Mug Rootbeer A&W Rootbeer

Wild Cherry Pepsi Barque's

Rootbeer

Crush

Cherry Coke

Sunkist

Generic

PepsiCo's current retail prices range depending on the convenience of the location in which
they are located and depending on the size of the soft drink container. On average, a 12 ounce
can is between $.25 - $.99, a 20 ounce plastic bottle is between $.50 and $1.29, and a 2 liter
plastic bottle is between $.50 and $1.95.

The major disadvantages regarding the competitive structure of the market lies in the fact
that there are so many other competitors and options such as water, coffee and juice to compete
for the same consumer.

Company Analysis
Currently PepsiCo competes in the soft drink segment of the global beverage market. While
PepsiCo's soft drinks can obviously compete as a stand-alone product, it can also complement
any snack or meal

At present PepsiCo, Inc. operates with over 116,000 talented and innovative employees. The
steadily increasing business with minority and women-owned firms has improved their company's
supplier base. It has also helped to strengthen the suppliers' firms as well as the minority
community infrastructure with regard to such benefits as employment, training, role modeling,
buying from other minority and women-owned businesses, and supporting community
organizations. PepsiCo's culture is informal and entrepreneurial. Their people are empowered to
make the decisions necessary to grow the business. They seek to achieve outstanding results
through innovation, long tern partnerships, and an open work environment that respects the
individual and promotes personal and professional growth.

Our strategy is to concentrate our resources on growing our businesses, both through
internal growth and carefully selected acquisitions. Our strategy is continually fine-tuned to
address the opportunities and risks of the global marketplace. The corporation's success reflects
our continuing commitment to growth and a focus on those businesses where we can drive our
own growth and create opportunities.

Customer Analysis
PepsiCo has an extremely large customer base due to the wide spread popularity of soft drinks.
It is therefore necessary to segment the market and look at particular trends in the soft drink
market. There are two key trends in the soft drink market, which are the growing demand for
healthier soft drinks and the mostly untapped market of targeting ethnic groups with specific
products regarding their interests.

Trend
Information Healthier Drinks Ethnic Marketed
Drinks
How to grow this Need to attract men Target the each specific
segment and a younger market with products and
audience without advertising designed
excluding females around their wants (ex.
Research has shown that
African Americans in
general prefer lighter
colored soft drinks such
as Mellow Yellow (99%)
and Slice (73%))
Who is the main target The younger African Americans (who
market generation is the prime represent 1 of 7 soft drink
target for healthier soft customers) and Hispanic
drinks, a key reason for Americans (who's
this is that many population is growing and
younger consumers do consists of one of the
not drink coffee but largest growing markets)
prefer drinks such as
Pepsi or Mountain Dew
to give them a boost
How to market these Show how they Keep the advertising
products benefit the customer, relevant, but don't try to
give full nutritional hard
information
Factors leading to the Less consumption of Marketing research has
rise of this trend alcohol: 4 out of 10 shown that not all
people do not drink American's prefer the
alcoholic beverages, same soft drinks, the
even drinkers do not population growth of
drink all the time (ex. minorities in America has
Designated drivers, created a growth in their
pregnant women, those related market size
who cut down for
health reasons)
 Market-Product Focus
This section describes the three year marketing and product objectives for
PepsiCo and the target markets, points of difference, and positioning of its
lines of soft drinks.

Marketing and Product Objectives

PepsiCo's marketing intent is to take advantage of its brand potential while
building a base from which revenues can be generated. These are detailed in the
three focus areas below:

· current markets - expand brand and flavor, increase customer awareness

through promotion, coupons and in store displays

· new markets - healthier soft drink market and target ethnic groups

· new products - one calorie soft drinks (Pepsi ONE) lighter colored soft
drinks (Sierra Mist). Initially these products will be introduced on college
campuses as test markets then will be distributed nationally within 2 months and
distributed globally within 2 years.

Target Markets

For PepsiCo every individual in the United States with a middle class status can be
considered a potential consumer. Though, in order to target specific markets,
PepsiCo divides the target market into the following market segments:

Consumers under the age of 18: This is when PepsiCo is marketing to a

younger generation. These potential customers still live at home with parents.
They rely heavily on parents to purchase the product for them. In this segment,
PepsiCo is trying to capture brand awareness.
 Consumers between the ages of 18 to 24: PepsiCo is still marketing to a
younger generation, but these customers are either in college, moving away from
home, and/or starting new jobs. In this segment, Pepsi Co. is trying to capture
brand awareness and loyalty.

Consumers between the ages of 25 to 34: PepsiCo is marketing to customers

who are established in their job market and who are starting families. In this
segment, loyalty has already been established.

Consumers between the ages of 35 to 49: PepsiCo is marketing to customers

who are an established market, one in which brand loyalty has already been
sustained. These customers are loyal customers and are routine Pepsi drinkers.

Consumers age 50 and up: Again, this is a market in which customers are
established, and brand loyalty has been sustained. These customers are loyal
customers, and only drink Pepsi products.
 Points of Difference
The points of difference - or attributes that make PepsiCo's new products Pepsi ONE and Sierra
Mist unique among its competitors are:

Pepsi ONE Sierra Mist

One calorie - Caffeine-Free
healthier than other
diet drinks
Unique taste - tastes Fresher, cleaner, less
like regular Pepsi syrupy sweet taste
No use of Less harsh tasting
aspartame - no taste than any other lemon-
of the artificial lime product
sweetener

Positioning
Previously customers concentrating on health had to settle for a less appealing taste to uphold
their diet. Now the new one calorie drink that Pepsi offers (Pepsi ONE) brings a great taste but is
healthier than other diet drinks because it is only one calorie. The name Pepsi ONE also helps to
give the product positioning because the consumers can immediately relate the name to the
benefits of the product - one-calorie. Finally, the color of the product package helps position the
product. Regular colas are usually a bold color, while diet colas are often white and diet caffeine
free colas are usually gold. Pepsi One is in a silver can which tells consumers that the product is
still a diet drink, but a different diet drink.

Sierra Mist, a new lemon-lime flavored soda, has no caffeine and has been described by
consumers as fresher, cleaner and less syrupy sweet than other sodas like it. Sierra Mist is to be
positioned as a new age soda with marketing, packaging and advertising concentrating on its
refreshing taste.

Marketing Program
 Product Strategy

Product Line

PepsiCo's newest marketing program is for New Age soft drinks. This will initially include two
flavors:

· Sierra Mist - a lemon lime flavored soft drink with a fresher, cleaner, less syrupy sweet
and less harsh taste that competing lemon lime soft drinks

· Pepsi One - a one calorie cola flavored soft drink with the same taste of regular Pepsi but
only one calorie

Unique Product Quality

Pepsi ONE is the refreshing new soda for people who want it all -- great cola taste with only
one calorie. This exciting new product was launched nationwide in the fall of 1998 earning
significant consumer and media attentions for its revolutionary new product formulation; the newly
approved sweetener, Sunnett (Acesulfame potassium or Ace-K) and aspartame. The new
sweetener allows for this soda to have only one calorie per serving. This product also has
significantly less carbohydrates and sodium than most other sodas.

Sierra Mist is the new caffeine free soda with the great lemon-lime flavor that people love.
This product was released in October of 2000 nation wide and hopes to be worldwide by the end
of the year. Other than the caffeine free aspect of this soda, it has most of the same ingredients
as any other regular product.
 Packaging
Providing their consumers with easy-to-use, convenient and innovative containers are one of
their top priorities. Package introductions they've made over the years include the industry's first
two-liter bottle; The Cube, an easy-to-store 24-pack; Big Slam, the wide-mouth one-liter bottle;
and their three-liter bottle, designed to provide consumers with extra value. Pepsi Co. was the first
company to respond to consumer preference with lightweight, recyclable, plastic bottles. These
bottles are made of polyethylene terephthalate or "PET plastic," which is a form of polyester used
to make strong, lightweight, shatter-resistant bottles. PET plastics are recyclable into products
including new containers, fiberfill for sleeping bags and coats, fabric, carpets, auto parts, film and
more.

Sierra Mist

Pe
psi ONE
Silver Green
New logo New logo
Says one- Says new on
calorie the label

Price Strategy
 Market research says that 81% of soda drinkers think that it should cost $1.00 for a single 12oz
serving of soda. Pepsi is priced slightly higher than its main competitor Coca-Cola but is till in line
with the majority of the industry's prices. Pricing mainly depends on the location where the soft
drink is purchased, as shown in the following table:

Location Convenie Vending Fountain Warehous Super

Purchased nce Store Machine drink or e or club Market or
or Gas Restaurant Store Retail Store
Station
12 oz. $0.69 $0.50 - $0.30 - $0.30 $0.50
Serving $0.80 $0.90
(depending
on
convenience
of location)

Promotion Strategy

¨ Test Markets - large public colleges (ex. Virginia Tech)

¨ Free Samples - handed out at basketball or football games, pep rallies, or on central
campus areas (ex. Drill field)

¨ Coupons - on the product or tied to another product (ex. Buy a pack of Fritos get a free
12 oz. Pepsi One)

¨ In-Store Displays - Signs, banners etc.

¨ Entertainment - Games with free T-shirts, Pepsi points under the cap etc.

¨ Sponsorship - sports teams/clubs/events

Sierra Mist is broadly targeted to teens and adults, with an 18 to 29 year-old demographic
bull's-eye. Aggressive introductory marketing support includes massive sampling efforts and
outdoors-oriented point-of purchase materials asking consumers to "experience the height of
refreshment." Samples of this latest brand to join the Pepsi portfolio are available at football
games and supermarkets across the US and Pepsi intends to spend $50 million on marketing this
product.

When Pepsi ONE first came out it was targeted towards the younger, healthier crowd. This
unique one calorie drink was marketed as a healthier cola with the same great taste as regular
Pepsi. In this beginning this product was marketed in much the same fashion as Sierra Mist is
currently being distributed.

Place (Distribution) Strategy

Pepsi ONE and Sierra Mist are distributed through PepsiCo distribution centers. The distributor
delivers it to the grocery retailers, vending companies, restaurants, and warehouse/club stores.

The distribution segments can be broken down into the following:

· Convenience Stores and Gas Stations: 12% of the market

· Vending Companies: 11% of the market

· Restaurants: 20% of the market

· Warehouse/Club Stores: 6% of the market

· Super Markets and Retail Stores: 51% of the market.

In order to produce sales to increase, we plan to mass distribute Pepsi ONE and Sierra Mist to
the Virginia Tech campus. Here we will place the soft drinks in vending machines, campus-dining
halls, education facilities, and at various athletic events. We strongly believe that this will create
brand awareness and customer loyalty with the age group of 18 to 24.
 Financial Data and Projections

Past Sales Revenues

Historically, PepsiCo, Inc. has a fairly steady amount of annual sales revenue. Sales
dropped dramatically from 1995 to 1996 due to an introduction of a new product by a competitor.
The trend in sales revenue appears in Figure 4.

Figure 4.
 Five-Year Projections
Five-year financial projections for PepsiCo Inc. appear below:

Projections
Actu Year1 Year2 Year3 Year4 Year5
al
Financial Units 1999 2000 2001 2002 2003 2004
Elements
Net $1,000,0 20,3 21,689.0 22,884.3 24,257.4 25,712.8 27,255.6
00 67 2 6 2 7 4
Sales
Gross $1,000,0 11,9 12,465.4 12,964.0 13,482.6 14021.9 14,582.8
Profit 00 86 4 6 2 2 0
Operating $1,000,0 2,88 2894.53 2906.11 2917.73 2929.41 2941.12
Profit(Loss) 00 3

These projections reflect the continuing growth of PepsiCo Inc. and its products.
 Implementation Plan

PepsiCo will be introducing its two new age soft drinks through a rolling
process beginning with initial test markets in the United States. In the test markets,
the tastes of several demographic segments and target market will be carefully
analyzed and evaluated. If necessary based on these evaluations, promotional
strategies might need to be modified before national distribution. After test markets,
PepsiCo will distribute the products nationally. Next Pepsi will enter the international
markets in order of highest soft drink consumption. National distribution will occur
after two months of successful test markets, and worldwide distribution will be
completed with in two years or the product launch.

Location Sierra Mist Pepsi ONE

US:

initial test markets:

Austin, TX November 1, 2000 June 5, 1999

Roanoke, VA November 8, 2000 June 12, 1999

Cleveland, OH November 15, 2000 June 19, 1999

St. Paul, MN November 22, 2000 June 26, 1999

Chicago, IL November 29, 2000 July 3, 1999

Pittsburgh, PA December 6, 2000 July 10, 1999

San Diego, CA December 13, 2000 July 17, 1999

National distribution January 1, 2001 August 18, 1999

Mexico March 15, 2001 November 14, 1999
 Canada May 4, 2001 January 3, 2000
Spain July 31, 2001 March 19, 2000
UK September 17, 2001 June 21, 2000
Argentina November 1, 2001 September 9, 2000
Saudi Arabia January 28, 2002 December 12, 2000
Brazil March 7, 2002 February 17, 2001
Philippines April 30, 2002 April 11, 2001
Thailand July 1, 2002 June 27, 2001
China August 8, 2002 August 7, 2001
India September 30, 2002 October 13, 2001
World-wide October 19, 2002 December 1, 2001
distribution

Evaluation and Control

Monthly sales targets have been set for PepsiCo for each global economy. Actual Pepsi ONE
and Sierra Mist sales will be compared with these targets and tactical marketing programs
modified to reflect the unique sets of factors in each global market. The speed of the program will
increase, or decrease, depending on PepsiCo’s performance in the successive global markets
that Pepsi ONE and Sierra Mist enter. Similarly, as described above in the implementation plan,
PepsiCo may elect to respond to variation in global and regional tastes by changing ingredients
and/or the image of Pepsi ONE or Sierra Mist (depending on the area). This variation will
increase production cost, but it will also increase customer satisfaction, as well as sales.
In the United States, PepsiCo employees have access to these services:

• Medical plan with no pre-existing condition clauses

• Prescription Drug coverage that includes the antiretroviral (ARV) therapy.
• Assistance in finding clinical trials (testing of new drugs) for members with AIDS
• Case management which includes

• Education on the disease and its treatments

• Referral services to find doctors and other providers appropriate for the patient
• Assistance in finding community resources including financial assistance and
psychosocial support groups
• An ongoing resource for patients to call with questions or concerns

• Special services for the critically ill

• Support services to help patients to make sure the patient understands their treatment
options and to communicate their wishes to their doctors
• Assist patient in setting quality of life goals
• Assistance in arranging "end of life" provisions such as living wills and powers of
attorneys.

• Employee Assistance Program (EAP) provides up to three free face to face

counseling sessions to all employees whether they are enrolled in PepsiCo's medical
plans or not.
• Mental Health benefits

• Referral and case management as well as benefit coverage for mental health services

Note that there are exclusions for experimental treatments.

 The PepsiCo Foundation has a long history of encouraging employee involvement in the
community through non-profit groups. The Foundation's commitment to encourage the personal
contributions and volunteer leadership of PepsiCo associates continues today through the Foundation's
Matching Gifts program, support for United Way Campaigns, and Community Service Days.

The PepsiCo Foundation matches employee gifts to nonprofit organizations through a Matching Gifts
program and United Way. In 2006, Matching Gifts totaled $4,436,795.45 and United Way $2,880,769.
Grants are made to nonprofit groups where employees volunteer.

In 2006, the PepsiCo Foundation donated $542,881 in support of the PepsiCo Employee
Community Service Days initiative. During PepsiCo's 2006 Global Week of Community Service, roughly
1,082 associates spent time serving their local communities and service organizations, making the 2006
activities the most successful to date. The turnout was the largest in the six-year history of formal employee
community engagement, where employees served more than 8000 hours and contributed an estimated
value of $200,000 to improve local community resources. Here is a snapshot of the improvement activities
led by City Year's youth service corps:

Chicago IL: Over 2 days 130 Quaker Tropicana and Gatorade associates helped improve facilities at a
Boy's and Girl's Club of America as well as in head-start and kindergarten classrooms, after-school
facilities, a senior activity center, and a safe house that supports transition programs for children.

New York NY: Over 2 days 420 PepsiCo associates in Westchester County performed indoor and
outdoor clean up and beautification proejects at the Williamsbridge Oval Park in the Bronx. The park serves
low-income residents, 35% of whom are foreign-born.

Plano TX: 124 associates performed indoor and outdoor cleaning, painting and installed a fence at the
YWCA Garland Child Care Center.

Mexico: Over 2 days 158 associates from Gatorade and Sabritas operations in Guadalajara and Mexico City
supported improvements at a Mexico City school with more than 260 children and family

members participating in the service project. In Guadalajara, essential cleaning and

improvements were made to a community shelter providing care and recreation for approximately 120
children.

South Africa: 250 associates from PepsiCo's Simba operations conducted six full days of employee
volunteerism projects in a variety of child care sites and settings in Johannesburg, Cape Town, Pretoria, Ga
Matlala.

City Year brings together young adults, ages 17-24, from diverse ethnic, cultural, and socioeconomic
backgrounds for a demanding year of full-time community service, leadership development, and civic
engagement. The young adults at City Year lead PepsiCo employees in employee community service days
to give back to the community and provide opportunities for teambuilding.

Since 1981, the PepsiCo Foundation has awarded more than $39 million in college scholarships to children
of employees around the world.
Live Life Well.

We are continually looking for ways to make PepsiCo a great place to work. One way we do this is by
offering a comprehensive benefits package that is designed to address your health care and financial needs,
both now and into retirement. It is our goal, at PepsiCo, to help our employees Live Life Well.

PepsiCo pays most of your benefits costs - and in some cases, 100% of the cost. Almost all the benefits not
covered by the company are paid for with pre-tax payroll deductions.

Health and Insurance Benefits

As an employee, you can choose the Health and Insurance Benefits that are right for you and your family.
Benefit options include:

• Basic and Enhanced Medical and Dental

• Vision
• Life Insurance
• Short and Long Term Disability
• Health Care Reimbursement Account
• Dependent Care Reimbursement Account

Wellness Benefits

While good health is its own reward, PepsiCo offers the HealthRoads Wellness Benefit to help you take
positive steps toward a healthier lifestyle. You can earn rewards, deposited into your Medical Expense
Account, by participating in the program, up to $400 dollars per family, per year.

Plan for your Future

PepsiCo is committed to giving you the tools to reach your future retirement goals through our retirement,
savings, and stock plans. The plans, designed to work together, include:

• SharePower - PepsiCo’s global stock option program (no enrollment necessary).

• Pension Plan - A 100% PepsiCo paid retirement benefit.
• 401(k) Plan: A pre-tax savings plan with matching contributions from PepsiCo.
 • Stock Purchase Program: A convenient way to buy PepsiCo stock.

Work/Life Benefits

Save time, cut costs, and reduce stress, with PepsiCo's Work/Life Benefits including:

• Employee Assistance Program (EAP)

• Adoption Assistance
• Auto and Home Insurance Program
• Family Leave

• Ford & GM Car Discount Programs

• Tuition Reimbursement/Educational Assistance
• Service Awards

Other Special Discounts

Employees can save money while spending on things like:

• Cell Phones
• Computers
• Movie Tickets

• Hotels, Casinos and Resorts

• Tickets to Broadway Shows and Concerts

With special discounts available to PepsiCo employees.