Its growth strategy is based on attractive pricing, attractive packaging and an attractive product strategy that includes healthy and nutritious products. In this article, a detailed discussion of how Pepsi obtains a competitive advantage by adopting generic and intensive growth strategies is made. The brand has invested in digital technology down the supply chain to find greater agility and efficiency which has led to higher productivity. International business strategies have become very important in the wake of increasing globalization, as well as, internationalization of established local companies as they attempt to increase their values in the market. Firstly, the background of Pepsi Company and their products will be summarized. As such, PepsiCo’s generic competitive strategy of cost leadership supports this intensive strategy for growth. PepsiCo makes up 7% of the portfolio holdings of the Vanguard Consumer Staples ETF and 0.7% of the iShares S&P 500 Value Index . Corporations are adopting various strategies such as product standardization and differentiation, adapt… Not so much in the U.S., but China and Japan are lead horses for that process—test, prove, launch. When I picture design thinking, I think about rapid prototyping and testing. Global strategies of Pepsi. PepsiCo’s Vision Statement & Mission Statement Analysis, PepsiCo’s Organizational Structure Analysis, PepsiCo Five Forces Analysis (Porter’s Model), PepsiCo’s Organizational Culture Characteristics: An Analysis, PepsiCo PESTEL/PESTLE Analysis & Recommendations, PepsiCo’s Operations Management, 10 Decisions, Productivity, McDonald’s Generic Strategy & Intensive Growth Strategies, Burger King’s Generic & Intensive Growth Strategies, Starbucks’s Generic Strategy & Intensive Growth Strategies, Wendy’s Generic Strategy & Intensive Growth Strategies, Home Depot’s Generic Strategy, Intensive Growth Strategies, Ford Motor Company: Generic & Intensive Growth Strategies, Nike Inc. Generic Strategy & Intensive Growth Strategies, McDonald’s Mission Statement & Vision Statement (An Analysis), Starbucks Corporation’s Marketing Mix (4Ps) Analysis, Whole Foods Market’s Marketing Mix (4Ps) Analysis, PepsiCo Announces Strategic Investments to Drive Growth, Generic Strategy (Porter's Model) & Intensive Growth Strategies. Market development is the supporting intensive strategy for growth in PepsiCo. Video campaigns can be run through YouTube as well as Facebook and Twitter. Dess, G. G., & Davis, P. S. (1984). ‘Sports marketing’ is a key part of the brand’s marketing strategy. Read full article. Pepsi announced that they closed its $3.85 billion deal to buy Rockstar Energy and decided to offer the distribution deals with other energy drink producers.Also, they signed a distribution contract with Vital Pharmaceuticals. 2018. PepsiCo is the second biggest player in the global food and beverage industry. Even after the recession, the soda brands have continued to face difficulties because of the sweeping changes globally throughout the industry. In the food category, the brand introduced Three Minutos which is an affordable whole grain oat based food product meant to deliver daily nutrition to the Latin American consumers. Pepsico has traditionally relied heavily on marketing for driving sales and market growth. Mar 21, 2019 12:40PM EDT. For example, PepsiCo’s Lay’s potato chips are marketed as a healthful snack product because of reduced saturated fat content. It does not just increase its reach but has helped maintain a large and loyal customer base globally. This intensive strategy requires offering new products to capture more consumers. This strategy supports existing products of the company in new markets. It is because a very large segment of the world population has grown highly health conscious. A third force was the perceived synergy between salty snacks and soft drinks. In this way, it uses a large mix of traditional and innovative channels for the promotion of its brands and products. Moreover, consumers’ tastes and expectations have kept changing which also require change in business strategy for remaining competitive and for continuous growth. However, it also has separate accounts for separate products. Its Pepsi zero sugar or Pepsi max also continued to gain throughout the world. Effectiveness of Pepsi’s digital campaigns is also an important determinant of its sales and profits. It was formed after the merger of Pepsi and Frito lay in 1965. Its income from food products has kept growing and in 2017 the brand earned 53% of its revenue from food products and only 47% from the beverages products. Intensive growth strategies outline how firms support their growth. Merchant, H. (2014). Marketing is one of the primary drivers of business growth for Pepsi. As the biggest player in the sports drink market, the future of Gatorade and its organic growth may lie in how PepsiCo can position it in their “better for you” market strategy. A firms generic strategy (based on Porters model) defines th… It is already using big data to understand customer demand and consumption patterns based on which it can serve better products as well as marketing campaigns. 1 savory category of the share position in the virtually each key region around the globe. Configurations of governance structure, generic strategy, and firm size. As per the latest PepsiCo Earnings , FLNA revenues increased by … Twitter is also a very important stop for the soda beverages brand where Pepsi has several different accounts for the different countries like Pepsi India and Pepsi Cambodia. It also added a new product Simply Cheddar to its Simply brand. The new partnership will promote its Mountain Dew through signage and other branding efforts during the NBA events. contact: [email protected], [email protected], Acquainted With the Night – Summary and Analysis. Continuous product and process innovation helps at reducing costs as well as improving product quality and catering to customer demand better. Apart from Facebook and Twitter, Pepsi also uses its YouTube account to promote its brand and products through attractive videos. Market performance is an important tool in conducting the market analysis of the company. The China-Japan model may have to come to the … Developing new products and ingredients as well as flavours and products. It teamed up with leading universities as well as governments and innovators in 2017 to develop biodegradable film resins that help it meet its sustainable packaging needs. For GDPR compliance, we do not use personally identifiable information to serve ads in the EU and the EEA. In order to respond to the changing preference of the consumers, the brand has released a large range of health friendly products that contain less sugar or have high nutritional value. Soda industry is marked by intense competition and the beverages brands are spending heavily on marketing as well as product innovation in order to achieve faster growth. It has divided its products into three categories based on the level of nutrition called Fun for You, Good for You and Better for You. PepsiCo’s extensive global production and distribution networks are strengths that support the company’s international growth and expansion strategies. Developing or making improvements to package design and portion sizes. Apart from them, the brand introduced Tropicana Probiotics [1]. PepsiCo’s generic strategy for competitive advantage matches its intensive strategy to ensure long-term growth. Pepsi is a global brand. Value chain automation as well as internet enabled services, big data and social media are all affecting how Pepsi connects with its consumers and finds business growth. 2012). The intensive growth strategies adopted by Pepsi to achieve growth targets include- market penetration, product development, market development and diversification. The Motley Fool. Offering more products with higher nutritional value whole grains, fruits and vegetables, dairy, protein and hydration. Marketing and media environment are changing rapidly which have made it mandatory for the brand to use new channels for advertising and promotions. Its reward winning design team has continued to innovate with package design. Before moving on to the details of Pepsico’s marketing strategy, take a look upon how it has positioned its brand and products in the market. A strategic objective for the cost leadership generic strategy is to automate production processes to minimize PepsiCo’s operating costs. Big Data is also helping understand and cater to customer demand for food products in North America. Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. It launched its ambitious Performance with Purpose Agenda 2025 which focuses on several things including sustainability. However, the world of marketing has changed a lot with the rise of the digital technology. PepsiCo adopted the strategy of offering its products affordable prices to the customers. PepsiCo plans on saving money through holistic cost … The FTC ruled in late 1968 that PepsiCo co… As Kendall succinctly related to Forbes in 1968, “Potato chips make you thirsty; Pepsi satisfies thirst.” The plan was to jointly market PepsiCo’s snacks and soft drinks, thereby giving Pepsi a potential advantage in its ongoing battle with Coke. Broad product mix 3. This aspect of the SWOT analysis framework outlines internal strategic factors that enable firms to fulfill their business goals. This generic strategy enables business competitive advantage by attracting consumers to some unique features of the firm’s products. Despite this expansion abroad, PepsiCo remains over reliant on the US. PepsiCo’s success is an indicator of the appropriateness of these strategic directions, especially how the generic strategy supports competitiveness. We use cookies for website functionality and to combat advertising fraud. Associates completed 1 million hours of training in 2017. Let’s have a look over how Pepsi has connected with its fans and followers through social media. ‘Sports Marketing’ is known to generate highly favourable results for the soda brands and the competition between Coca Cola and Pepsi is intense on the sports field too. Pepsi is positioned as a brand that reflects young energy and this is also a key theme across its advertising and marketing campaigns. On Instagram, it has more than a million followers. Its snacks and beverages are popular in more than 200 countries. This decade has seen some major changes in consumers’ preferences. Improve water-use efficiency by 15% in our agricultural supply chain (focused on corn and potatoes) in high water-risk areas by 2025 3. Nature of business 6. Pepsi Company is a multinational firm with high recognition in targeted market segments. As a part of this agenda, Pepsi has achieved some key milestones that include –. They are looking for healthier products and product innovation helps churn demand. This intensive strategy supports business growth by capturing new markets or market segments. PepsiCo is global snacks leader of the world, with No. See our Privacy Policy page to find out more about cookies or to switch them off. For example, PepsiCo continues to develop products or variants of existing ones, such as low-calorie, reduced-salt, or low-saturated-fat variants of its food and beverage products. Ultimately, Pepsi is trying to strike a balance between investing in core franchises like Doritos and Pepsi zero sugar while pushing into attractive growth … Development of products with better nutrition profiles that reduce added sugars, sodium or saturated fat using sweetener alternatives or flavour modifiers. It sold more than 40,000 Hello Goodness vending machines, coolers and racks across US. Since Pepsi uses both pictures and promotional videos to promote its brand and products. Number of total employees 5. Improving product quality as well as safety and integrity. These activities include: Pepsi invests in R&D for continuous product innovation and for finding faster growth. PURCHASE, N.Y., Oct. 17, 2016 /PRNewswire/ -- PepsiCo, Inc. (NYSE: PEP) today announced an ambitious global sustainability agenda designed to foster continued business growth in a way that responds to changing consumer and societal needs. In 2015, 2016 and 2017, Pepsi invested $754, $760 and $737 millions in Research and development [1]. Just like Facebook, videos of promotional events are also shared on Twitter which helps it reach its millions of followers. The brand is using digital technology in other aspects of business too but in the area of marketing, the role of digital technology and that of social media is especially very important. [. The brand is also innovating its supply chain to reduce production costs and working to keep its environmental impact minimized. Most of the video campaigns run by Pepsi have become so successful because it could leverage the power of social media channels. Pepsi’s soft drinks are popular because of their diverse flavors. Reformulating existing products to improve their quality and appeal. Since the rise of social media, brands are connecting with their customers in real time with promotional campaigns. Pepsi is among leading snacks and beverages brands that has 22 iconic billion dollar brands in its product portfolio. Behind its excellent marketing strategy, there is a diverse and rich product portfolio filled with a large variety of flavours and nutritious and tasty choices. It has already won several rewards for its excellence in e-commerce. The strategy is that the result of securing many local market share would be a considerable chunk of the market share of the country as a whole. Segmentation, targeting, positioning in the Marketing strategy of Pepsi – It uses mass marketing strategy to target the groups of the customers of different demographics and geographic regions. Its customers are from all income segments including lower middle class to upper class. The market is anticipated to grow at an estimated CAGR of 7.5% Latest launched research on Global Beverage Market, it provides detailed analysis with presentable graphs, charts and tables. In this aspect of the SWOT analysis, PepsiCo’s strengths are sufficient to support its global growth strategy. In relation, PepsiCo’s strategic objective for the broad differentiation generic strategy is to innovate products to address concerns about their health effects. Apart from them, the brand also invests in reformulation of the existing products and flavors to suit the customers’ choice. The most prominent aspects of PepsiCo business strategy are based on the following six principles: First, achieving growth through mergers and acquisitions (M&A). Apart from promoting its brands separately, Pepsi also uses digital marketing for creating higher loyalty and higher customer engagement. On Facebook, Pepsi has more than 37 million followers. 2017 marked its second year of partnership with UEFA champions’ league. 3%. With time, people’s taste and choice of flavours has changed a lot. This generic strategy focuses on cost minimization as a way to improve PepsiCo’s financial performance and overall competitiveness. PepsiCo is the second biggest player in the global food and beverage industry. Case Analysis Purpose To analyze how the PepsiCo’s diversification strategy has maximized the shareholders value. Extensive global production network 4. Varadarajan, P., & Dillon, W. R. (1982). The brand added several health friendly and nutritious products to its customers. It is continuously innovating its marketing and product strategy to find faster growth globally. Marketing is not complete in the 21st century without social media. Read full article. PepsiCo’s Formation of Strategic Alliances Globally. PepsiCo’s generic competitive strategy is based on the need to address market pressure coming from its biggest rivals, including the Coca-Cola Company. Agriculture is the foundation of PepsiCo’s business—we use more than 25 crops sourced from across 60 countries to make our foods and beverages. However, apart from investing in product quality and design, it is equally important to invest in marketing and Pepsi promotes its brand through both digital and traditional channels. ... it's likely effective in distilling a more elaborate strategy into generalities the entire PepsiCo employee base can rally around. The current CEO of Pepsico is Indra Nooyi under whose leadership, the brand has continued to expand its business and transform its product portfolio. Notwithstandin… There are 22 iconic billion dollar brands in its portfolio. However, Pepsi and Coca Cola are engaged in a very tight battle and both are quite aggressive about their marketing and business growth strategies. Economictimes – Pepsi 4 years sponsorship. Extensive global distribution networkAs a successful global comp… Each one invests heavily in marketing and product innovation for growth.Pepsi along with its consolidated subsidiaries employs 263,000 people out of which 113,000 were employed in US alone[1]. Transforming agriculture to support the growth of a more sustainable food system is vital, and we’re in a position to help catalyze systemic change. Pepsi is using IoT capabilities to know when plant equipment will need maintenance as well as how to reduce energy consumption [1].