Presentation on

A business plan for PepsiCo.

Submitted by:
Md. Sakib Hossain. Reg.no: 15202007

Program: Bachelor of Business Administration

Course name: International Business

Course code: IBS 301

Submitted to:
Barnali Nandi
Course instructor, BBA department.
University of Asia Pacific.
 Overview of the company :
• PepsiCo, Inc. is an American multinational food, snack, and beverage corporation headquartered in Purchase,
New York.
• PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages,
and other products.
• PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc.
• Pepsi-Cola was founded in the late 1890s by pharmacist Caleb Bradham, while Frito-Lay, was established in 1961
by way of a merger between the Frito Company, founded by Elmer Doolin in 1932, and the H W Lay Company,
founded by Herman Lay, also in 1932.
• Both Pepsi-Cola and Frito-Lay became established consumer goods companies in the 20th Century, Pepsi-Cola on
the back of its popular cola recipe, and Frito-Lay as a result of its brand of corn chips and potato chips.
• As of January 26, 2012, 22 of PepsiCo's brands generated retail sales of more than $1 billion apiece, and the
company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3
billion.
• Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Within North
America, PepsiCo is the largest food and beverage business by net revenue.
• Indra Nooyi has been the chief executive of PepsiCo since 2006.
• The company's beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in
certain regions.
• The Coca-Cola Company has historically been considered PepsiCo's primary competitor in the beverage market
Main competitors:

• The Coca-Cola Company

• Dr Pepper Snapple Group
• Mondelez International
• Hansen Natural Corporation
• National Beverage Corporation
• Kraft Foods Incorporation
• The Kellogg Company
• ConAgra Food
• Nestlé S.A.
• many other companies.
Strategy:

Key to PepsiCo's growth strategy is to drive sales for its

retail customers by introducing new products and
enhancing existing products through more focus on global
research and development.
Marketing mix
Product :

• PepsiCo's product mix as of 2015 consists of 53 percent foods, and 47

percent beverages. (based on worldwide net revenue)
• The primary identifier of a food and beverage industry main brand is
annual sales over $1 billion.
• As of 2015, 22 PepsiCo brands met that mark, including:
Pepsi, Diet Pepsi, Mountain Dew, Lay's, Gatorade, Tropicana, 7
Up, Doritos, Brisk, Quaker Foods, Cheetos, Mirinda, Ruffles,
Aquafina, Naked, Kevita, Propel, Sobe, H2oh, Sabra, Starbucks
(ready to Drink Beverages), Pepsi Max, Tostitos, Mist Twst,
Fritos, and Walkers.
Place:
• PepsiCo uses a global network for distributing its products to consumers. Venues
for distribution and sale are considered in this element of the marketing mix.
• PepsiCo’s places for distribution are as follows:
1.Retailers
2.Online merchandisers
• Most PepsiCo products are available at retailers, such as
supermarkets, grocery stores, and convenience stores.

• However, customers can access PepsiCo-licensed merchandise like

tumblers and t-shirts through retailers and their websites.
Based on this element of the marketing mix, PepsiCo’s
places for distributing its products are mostly non-online retailers.
Promotion:

• PepsiCo promotes its products to attract target customers. This element of

the marketing mix covers the marketing communications strategies and
tactics that the company uses to reach its customers.
•The following are the tactics in PepsiCo’s promotional mix,
arranged according to significance:
1.Advertising
2.Sales promotion
3.Direct marketing
4.Public relations
• Advertising is PepsiCo’s primary tactic for marketing
communications. For example, the company is popularly
known for using celebrity endorsers to promote its products
on TV, radio, print media, and online media.
• The firm also advertises through business signs it sponsors or gives to stores and
other establishments.
• PepsiCo occasionally applies sales promotions, such as package deals or
discounts.
• Also, the company’s local offices sometimes implement direct marketing through
agreements to provide products to organizations at wholesale prices.

• Furthermore, PepsiCo uses public relations through financial

assistance and sponsorships, such as in sports events.
This element of the marketing mix indicates that advertisements are the main
determinant of PepsiCo’s ability to communicate with target customers and
promote its products.
Price:
PepsiCo’s main pricing strategies are as follows:
1.Market-oriented pricing strategy
2.Hybrid Everyday Value pricing strategy
• Most of PepsiCo’s products are priced based on the market-
oriented pricing strategy. The company’s objective in using this
strategy is to ensure that its prices are competitive, based on
other firms’ prices and prevailing market conditions.
• On the other hand, Hybrid Everyday Value is PepsiCo’s pricing strategy for some of its
products, especially soft drinks. The company’s objective in using this pricing strategy
is to close the gap between regular/everyday prices and discounted holiday prices.
 Business model:
Customer Segments:
PepsiCo produces, markets and sells a broad portfolio of consumer-focused food
and drink products. The Company, however, is not directly consumer-facing, instead
serving a range of commercial customers. PepsiCo’s customers include:
• Food and Beverage Distributors, including independent distributors and
wholesalers
• Foodservice Businesses, including restaurant chains, cafes and coffee houses,
and eateries;
• Retailers, including grocery stores, drug stores, convenience stores, discount
stores, mass merchandisers, online retailers, and membership stores; and
• Independent Bottlers, to which the Company sells branded beverages.
• PepsiCo serves a global customer base. While the Company’s principal market is
its native US, it also serves customers across Europe, Asia Pacific, the Middle
East, Latin America, and Africa.
Value Propositions:
PepsiCo provides value to its customers in the following ways:
• Its industry standing and reputation, with the Company established as one of
the largest and most recognisable names in the consumer goods industry, with a
track record for providing efficient and reliable services;
• The efficiency and sustainability of its production and distribution
infrastructure, with the Company utilising state-of-the-art facilities to make and
deliver products for customers in a sustainable way;
• The size and quality of its brand portfolio, with the Company producing and
marketing a broad range of brands, including some of the world’s most popular
food and beverage products, including Pepsi, Mountain Dew, Doritos, and Lay’s;
and
• Its international sales and marketing reach, with the Company providing
consumer goods to a global customer base, and operating dedicated
geographically focused units for operations across Latin America, Europe Sub-
Saharan Africa, and Asia, Middle East and North Africa.
Channels:
• PepsiCo operates a website at www.pepsico.com - as well as a number of
regional and branded websites – through which it provides information on
its various brands, services, and operating locations. The Company does
not operate an online sales channel for its core business. It does, however,
operate an online store at www.shop.pepsi.com, through which it sells
Pepsi-branded merchandise.
• PepsiCo serves its customers directly through its in-house sales and
marketing teams, which are organised by operating segment and
geographic regions. The Company’s products are brought to market
through direct-store-delivery, customer warehouse, and distributor
networks.
• Some of PepsiCo’s products are delivered directly from its our
manufacturing plants and warehouses to customer warehouses, with some
beverages being distributed by the Company’s independent bottlers
customers through their own direct distribution channels to retail stores.
Customer Relationships:
• PepsiCo makes some sales of merchandise on a self-service basis, with
customers able to purchase and organise delivery of certain Pepsi-branded
products without interacting with members of PepsiCo’s sales personnel.
• PepsiCo sales are principally made through its direct sales teams, which
work closely with customers to establish the details of sales agreements.
The Company seeks to establish longstanding relationships with its
customers, providing financial incentives to assist in the distribution and
promotion of its products, including incentives include volume-based
rebates, product placement fees, promotions, and displays. PepsiCo
typically grants independent bottlers exclusive contracts to sell and
manufacture certain beverage products within a specific geographic area.
• Customers can contact PepsiCo – as well as specific PepsiCo brands – with
support queries, over the phone or via online contact forms. The Company
also operates social media accounts with Facebook, Twitter, Pinterest,
Instagram, and LinkedIn, through which it can interact directly with
customers.
Key Partners:
• PepsiCo collaborates with a range of partners throughout the production
and distribution of its products, and across its six operating divisions.
These partners include:
• Supplier and Vendor Partners, including suppliers of materials,
ingredients, tools, and services, which support the Company’s production,
marketing, and distribution operations;
• Channel Partners, including a range of independent sales agents and
foodservice distributors that assist in extending the Company’s marketing
and sales reach in certain jurisdictions;
• Strategic and Alliance Partners, including companies and organisations
across multiple sectors with which the Company shares tools and
resources and collaborates on joint projects; and
• Joint Venture Partners, comprising a range of companies with which the
Company jointly markets products through mutually-owned entities.
As noted above, PepsiCo has joint venture distribution partnerships with
Unilever and Tingyi.
Key Resources:
• PepsiCo’s key resources are its intellectual properties and brands, its
manufacturing and logistics infrastructure, its sales and marketing
channels, its partnerships, and its personnel.

• PepsiCo owns numerous trademarks which it considers to be essential to

its worldwide operations, including various brand names, such as Pepsi,
7UP, Mountain Dew, Quaker, and Tropicana. The Company also holds a
number of patents. Searches of records published by the US Patent and
Trademark Office identified a number of patent applications filed in
PepsiCo’s name, including applications entitled ‘Display screen portion with
icon’, ‘Multi-flavor valve’ and ‘Beverage dispense valve controlled by
wireless technology’.
Cost Structure:
• PepsiCo incurs costs in relation to the development of its
products, manufacture and transport of its products, the
operation of its sales and distribution channels, the
implementation of marketing and advertising campaigns across
its multiple brands, the management of its partnerships, and the
retention of its personnel.
• PepsiCo’s largest costs in 2015 were its cost of sales, which
totaled $28.38 billion, and its selling, general and administrative
expenses, which amounted to $24.89 billion. These costs
included the payment of salaries and benefits to the Company’s
global workforce of 263,000 employees. In 2015 PepsiCo also
accrued research and development costs in the amount of $754
million.
Revenue Streams:
• PepsiCo generates revenue through the sale of various consumer
food and beverage products. The Company’s product portfolio
includes a range of high-profile brand name products, including
Pepsi, Diet Pepsi, 7UP, Gatorade, Mirinda, Doritos, Lay’s, Cheetos,
and Ruffles.
• In 2015 PepsiCo generated $63.06 billion in revenue, down on the
$66.83 billion recorded by the Company in 2014. The Company’s
largest revenue generator was its North America Beverages
segment, which generated revenue totalling $20.62 billion. This was
followed by the Company’s Frito-Lay North America segment, which
generated $14.78 billion, and the Europe Sub-Saharan Africa
segment, which generated $10.51 billion. None of the Company’s
other operating segments accounted for more than $10 billion in
revenue.
Swot analysis:
Strengths in the SWOT Analysis of PepsiCo :
• Brand equity: it is one of the most prominent and famous brands in the world in the food and beverage
sector. It is also known as the brand of youth.
•Strong Leadership: Under the leadership of Indra Nooyi PepsiCo has been doing really well. It has managed
to stay at number two position in the complete food and beverage sector only behind Nestle in that field.

•Customer Loyalty: PepsiCo has an extremely loyal customer base. In its beverage
category all its soft drinks have an iconic taste and that’s why their customers do
not prefer to shift brands.
•Strong distribution: Pepsi has a global presence in more than 200 countries
providing them with a very good distribution network.
• Supply Chain: It has one of the best supply chain networks in the world, making the products
available throughout the world.
• Tie-Ups: They have tie-ups with sports events and music concerts which keeps them in the lime
light and thereby increasing the brand recall.
Weaknesses in the SWOT analysis of Pepsi :
• Competition: It has heavy competition from Coca-Cola in their soft drinks category. They are always neck to neck with each other.
• Products perceived as unhealthy: Most of the soft drinks of the PepsiCo is perceived as unhealthy.

•Failed Products: Many failed products such as ‘Crystal Pepsi’ which hurts the
brand image of the PepsiCo and thereby giving room to the competitors to grow.
•Brand Ambassadors: Wrong remarks or ill performance by the
famous personalities/celebrities, in turn, might damage the brand
image of PepsiCo as they are the face of the organisation. Over
dependence on celebrities for endorsements is a huge risk.
•Value addition: Pepsi is known to have advertisements which are
targeted towards youngsters. However, it is not known to display
Value advertising which is a characteristic of Coca cola. Coca cola has
time and again focused on the positive values of life, something
which Pepsi can learn from them.
Opportunities in the SWOT analysis of
Pepsi :
•Healthy Options: It should work more on improving the health implications of their
products and make the customer aware of the same. Diet Pepsi is a positive move
towards that direction.
•Diversification: Business diversification into different market segments is a huge
opportunity. They have the talent, resources and financial backing to do the same. This
can also be done by acquisitions.
•R&D: Recently PepsiCo came out with healthier options in a soft drink. To make 7Up
by using the substitute of sugar called Stevia. This can prove to be a game changer.
More such research needs to be done. Focus more on the diet drinks category. They
have recently released a variant of their cola sweetened with Stevia and sugar called
Pepsi Next.
•Flavors: A brand which has risen strongly in the recent years is Paperboat. Paperboat
is known for its various flavors such as watermelon, raw mango etc. Bringing in such
flavors even in carbonated beverage form can help Pepsi attract a larger market.
Threats in the SWOT analysis of
PepsiCo:
•Competitors: PepsiCo’s main competitors are Coca-Cola, Kraft foods,
Nestle, Dr Peppers Snapple Group and Mondelez.
•Health Factor: The unhealthy factor associated with its products can take
a toll on the health conscious customers and might lose them. This can be
clearly seen by the fall of soft drinks sale.
•Economic Slowdown: With the recent reforms in the country PepsiCo
might see a drop in its sales due to a cash crunch in the economy. Other
factors such as recession and inflation may also impact sales of the
company.
•Government Norms: Different norms of different countries might prove
difficult to handle and compliance with it as well.
Global Business divisions:
•The structure of PepsiCo's global operations has shifted multiple times in
its history as a result of international expansion, and as of 2016 it is
separated into six main divisions: North America Beverages, Frito-Lay
North America, Quaker Foods North America, Latin America, Europe and
Sub-Saharan African, and Asia, Middle East and North Africa.
•As of 2015, 73 percent of the company's net revenues came from North
and South America; 17 percent from Europe and Sub-Saharan Africa; and
10 percent from Asia, the Middle East, and Africa. PepsiCo and its
combined subsidiaries employed approximately 263,000 people worldwide
as of December 2015.
Conclusion:
PepsiCo is a well renowned company and it has maintained its position
well by understanding the client psychology-

• By ensuring quality
• By introducing ingenuity in products.
• By enlarging its product base
• By keeping economic factors in view.
• By intense and jazzy advertisements.