Pepsi-Cola Competitive Analysis

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OLIDIX CONSULTANTS The Pepsi-Cola Company Competitive Analysis OLIDIX CONSULTANTS

Transcript of Pepsi-Cola Competitive Analysis

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The Pepsi-Cola Company

Competitive Analysis

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Our Task... Phase 1 Analyse the Market.

Phase 2 Suggest Recommendations.

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CONTENTS1. Our Industry

2. Competitive Analysis

3. Market Research

4. Issues

5. Competitive Aids (Theories)

6. Recommendations

7. Bibliography

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1. Our Industry

Pepsi operate as producer in the

Fast Moving Consumer Goods (FMCG) Industry.

Other FMCG industry producers could include: Toiletries, groceries, magazines, Newspapers, even in this day and age mobile phones.

“Fast Moving Consumer Goods are products that have a quick turnover, and at a relatively low cost.”

(Mingrong, L. 2007)

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Current Position

Oligopoly

Few Market Leaders

High Barriers of Entry

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Typology (Consumer Classification)

Millennial’s (Television Week, 2007)

Advertising and Promotion

Check out the Pepsi Refresh Anthem

Targeting

Multi-Segmented marketing approach.

Audience Motivation

Taflinger, in his book, ‘Taking Advantage’, argued that audience motivation is a visual or aural influence on one’s subconscious mind and emotions.

Current AudienceOLIDIX CONSULTANTS

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Market AnalysisImportant to consider:

Demographics: The global market

Elasticity: The relative effects of changes in price to demand.

Market trends:

The decline of sales in carbonated drinks (Mintel, 2009)

The rise of functional soft drinks: Juices, enriched vitamin water and nutraceuticals. (NutraIngredients.com, 2003).

Streamlining of production lines (Sidel.com, 2009)

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2. Competitive Analysis

Direct and indirect competitors

Direct: Cola producers:

Supermarket own brands

Coca-Cola

Indirect: Producers of all beverage types.

Tea/Coffee

Water

Juices etc.

Brand differentiations

Modernity vs. Tradition

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Company Analysis Combined revenue of $18 Billion.

Earnings per share grew 13%

Net revenue growth of 12% (three times industry growth)

Retained profits of $6.9 Billion

“To be the worlds premiere consumer product 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 for honesty fairness and integrity"

- Source: Pepsi. Co. 2007 annual report.

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• For our primary market research to be of use to our competitive analysis, we had various questions we needed answering and therefore split our survey into three parts.

Branding...

Promotion / Advertising

Taste test

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3.Market Research

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Results…

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5. Issues…

Hard to differentiate product in terms of taste as product variety is very limited within cola based beverages.

Coca-Cola has such a strong base of loyal customers, who identify with the cola brand.

Consumer tastes are changing, away from carbonated drinks towards functional soft drinks. (Mintel, et al. 2009)

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5. Competitive Aids Porter’s 5 Forces

S.W.O.T Analysis

Porter’s strategies for Competitive Environments:

Cost-Leadership

Product-Differentiation

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Porters 5 Forces

Competitive Rivalry

Threat of New Entrants

Power of Suppliers

Power of Customers

Threat of Substitutes

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SWOT Analysis Strengths: Large market share,

purchasing economies of scale, customer loyalty, world wide brand recognition, huge distribution network

Weaknesses: Smaller market share than main rival Coca-cola, inability to substantially product differentiate, hard to compete with Coca-Cola’s strong brand identity and customer loyalty.

Opportunities: Adapting to market trends (Pepsi health drink) could create an advantage, opportunity to be known as a socially responsible producer however this incurs costs which may not be met with the current economic climate,

Threats: High levels of competition from main rival. Pepsi will lose market share if other companies adapt to market trends faster.

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Porter’s Strategy “While strategy may be about competing and surviving as a firm, it

is products, not corporations that compete, and products are developed by business units”. (Porter, 1980)

Business Unit Level Strategy:

Porters Two Strategies

Cost-Leadership

Product-Differentiation

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Porter’s Strategy Continued…

Cost-Leadership

Industry’s lowest cost producer

Price setting over price following

Benefit from higher profit margins

Product-Differentiation

The differences in one product from another

Unique customer perception

Packaging and Promotional activities

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6. RecommendationsWe believe that there are two main areas that The Pepsi Cola Company could improve on in order to maintain a competitive advantage over its rivals.

Adopting a Cost-Leadership Strategy

New Product Development

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Cost-Leadership Strategy

Advertising and innovative promotion.

Optimal outsourcing for production and vertical integration.

Improving production efficiencies through Kaizen.

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New Product Development

Produce a range of ‘healthy’ alternatives under the brand name ‘Pepsi Fresh’.

Our suggestion would be a range of Vitamin enriched waters under the name ‘Pepsi Fresh’.

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7. BibliographyWebsites:

FMCG Definition:

http://www.shentrepreneur.org/html/oldnewsroom.html

<last accessed 12/02/09>

Modularisation

http://cavehill.uwi.edu/fpas/cmp/online/cs11k/revision/problem%20solving/modularisation.htm

<last accessed 12/02/09>

Consumer Trends

http://www.nutraingredients.com/Consumer-Trends/Functionality-set-to-shape-soft-drinks-sector

<last accessed 12/02/09>

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Oligopoly definition 

http://moneyterms.co.uk/oligopoly/ 

<last accessed 13/02/2009>

Porters Strategy

http://www.quickmba.com/strategy/porter.shtml

<Last accessed 14/02/2009> 

Books: 

Krugman, P. Wells, R. Graddy, K. (2007).Economics: European edition 2007. USA: Worth Publishers Inc.

 Haig, M. (2004). Brand Royalty: how the worlds top 100 brands thrive and survive. London: Kogan Page ltd.

Online Reports: 

Sicher, J. (2008).Beverage Digest: Top 10 CSD Results for 2007. [online] Available from: http://www.beverage-digest.com/pdf/top-10_2008.pdf [Accessed: 20/02/2009].

 

Sidel. (2006/9). CSD Market Trends. [online] Available from: http://www.sidel.com/products/what-do-you-package/csd/csd-market [Accessed: 20/02/2009].

Mintel. 2009, Carbonated Soft Drinks - UK - February 2009 [online], (p. 1), Available from: http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393871 [Accessed: 02/03/2009].

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  Mintel. (2009), Fruit Juice and Juice Drinks - UK - November 2008 [online], (p. 1), Available from:

http://academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=393871/display/id=227778 [Accessed: 21/02/2009].

Nexis UK. (2008), Drink Makers' Optimism Not Dry; Coke, Pepsi sales down; Plans Up. [online], (p. 1), Available from: http://www.lexisnexis.com:80/uk/nexis/results/docview/docview.do?docLinkInd=true&risb=21_T5917131287&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T5917131290&cisb=22_T5917131289&treeMax=true&treeWidth=0&selRCNodeID=13&nodeStateId=411en_GB,1,2&docsInCategory=41&csi=8379&docNo=1 [Accessed: 21/02/2009].

   

Nexis UK. (2008), Pepsi Sales are Flat, but Bottler's Profit Edges Up. [online], (p. 1), Available from: http://www.lexisnexis.com:80/uk/nexis/results/docview/docview.do?docLinkInd=true&risb=21_T5917131287&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T5917131290&cisb=22_T5917131289&treeMax=true&treeWidth=0&csi=6742&docNo=2 [Accessed: 21/02/2009].

Pepsico. (2008) 2007 Annual Report. [online] Available from: http://www.pepsico.com/Investors/Annual-Reports/2007-Annual-Report.aspx [Accessed: 02/03/2009].

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Online Journals:

Sharp, B. & Dawes, J (2001), 'What is Differentiation and How Doeas it Work?', Journal of Marketing Management, Argyll, Vol. 17, pp. 739-59.

Imai, M. (1986), Kaizen: The Key to Japan's Competitive Success., Random House, New York.

Images:Excelsia. (2009). SWOT analysis. [online] Available from: http://www.excelsia.ch/htmlgb/blog/images/swot-analysis-image.png <last accessed 02/03/2009>

Dublin City University. (2009). Porters 5 Forces. [online] Available from: http://student.dcu.ie/~hillc3/Pmodel.gif <last accessed 02/02/2009>

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