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 brandsPepsiCo 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 andobjectively.• Avoid any unfair or deceptive practice and alwayspresent our services and products in an honest andforthright manner.• Never comment on a competitor’s product without a good basisor need for such statements.• Make clear to all suppliers that we expect them to compete fairly andvigorously for our business, and endorse the principles in our Code ofConduct. We will select our suppliers strictly on merit.• Comply with all laws prohibiting agreements with competitors to: fix

prices orother sales terms; divide or assign sales territories, customers or

product lines; orcoordinate bids and agreements with customers to fix their resale

prices. Thesetypes 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 familyinterest would include any interests of your spouse, parent, child,sibling or domestic partner.• Having more than a nominal individual or family interest in acompetitor, 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 organizationthat does, or seeks to do, business with the Company.• Acquiring an individual or family interest in property (such as realestate, patent rights, securities or other properties) or a businesswhere you believe the Company has, or might have, an interest.• Having outside business interests or activities that affect jobperformance 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.

 Internal Factors

Strengths Weaknesses

Management Experienced, broad base of interests and knowledge

Large size may lead to conflicting interests

Product Line Unique, tastes good, competitive price, and convenient

New one calorie products have no existing customer base, generic brands can make similar drinks - cheaper

Marketing Diverse, and global awareness

May lose focus, may not be segmented enough

Personnel International, diverse positions

Possible conflicts due to so many people, possible trouble staying focused

Finance High sales revenue, high sale growth, large capital base

High expenses, may have trouble balancing cash-flows of such a large operation

Manufacturing Low costs and liabilities due to outsourcing of bottling

Lose control and quality standards

Research & Development

Continuous efforts to research trends an reinforce creativity

May concentrate too much on existing products, entrepreneuralship may not be welcomed

External Factors Opportunities Threats Consumer/Social Huge market in the healthy

products and growing market for specialized foods for ethnic groups

More expensive products than Coke, such a high price may limit lower income families from buying a Pepsi product

Competitive Distinctive name, product and packaging in with regards to its markets

Not entirely patentable, constant replicability by competitors

Technological Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency

Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced

Economic Consumer income is high, more tend to eat out, convenience is important to U.S.

Very elastic demand, almost pure competition

Legal/Regulatory High U.S. Food & Drug Administration standards eliminate overnight competitors

 

 

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-

lime Mountain Dew

Sierra Mist

Slice

Sprite

Fresca

7-Up

Generic Diet Diet Pepsi

Pepsi ONE

Diet Caffeine Free Pepsi

Diet Mt. Dew

Diet Coke

Diet Caffeine Free Coke

Diet Dr. Pepper

Diet Sprite

Diet 7-Up

Tab

Generic Other Mr. Pibb

Mug Rootbeer

Wild Cherry Pepsi

Dr. Pepper

A&W Rootbeer

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

segment Need to attract men

and a younger audience without excluding females

Target the each specific market with products and advertising designed 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 market

The younger generation is the prime target for healthier soft drinks, a key reason for this is that many younger consumers do not drink coffee but prefer drinks such as Pepsi or Mountain Dew to give them a boost

African Americans (who represent 1 of 7 soft drink customers) and Hispanic Americans (who's population is growing and consists of one of the largest growing markets)

How to market these products

Show how they benefit the customer, give full nutritional information

Keep the advertising relevant, but don't try to hard

Factors leading to the rise of this trend

Less consumption of alcohol: 4 out of 10 people do not drink alcoholic beverages, even drinkers do not drink all the time (ex. Designated drivers, pregnant women, those who cut down for health reasons)

Marketing research has shown that not all American's prefer the same soft drinks, the population growth of minorities in America has created a growth in their related market size

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 -

healthier than other diet drinks

Caffeine-Free

Unique taste - tastes like regular Pepsi

Fresher, cleaner, less syrupy sweet taste

No use of aspartame - no taste of the artificial sweetener

Less harsh tasting than any other lemon-lime product

 

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.

Pepsi ONE

Sierra Mist

Silver Green New logo New logo Says one-

calorie Says new on

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 Purchased

Convenience Store

or Gas Station

Vending Machine

Fountain drink or

Restaurant

Warehouse or club

Store

Super Market or

Retail Store

12 oz. Serving

$0.69 $0.50 - $0.80

(depending on

convenience of location)

$0.30 - $0.90

$0.30 $0.50

 

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

al Year1 Year2 Year3 Year4 Year5

Financial Elements

Units 1999 2000 2001 2002 2003 2004

Net Sales

$1,000,000

20,367

21,689.02

22,884.36

24,257.42

25,712.87

27,255.64

Gross Profit

$1,000,000

11,986

12,465.44

12,964.06

13,482.62

14021.92

14,582.80

Operating Profit(Loss)

$1,000,000

2,883

2894.53 2906.11 2917.73 2929.41 2941.12

 

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

Roanoke, VA

Cleveland, OH

St. Paul, MN

Chicago, IL

Pittsburgh, PA

San Diego, CA

National distribution

 

 

November 1, 2000

November 8, 2000

November 15, 2000

November 22, 2000

November 29, 2000

December 6, 2000

December 13, 2000

January 1, 2001

 

 

June 5, 1999

June 12, 1999

June 19, 1999

June 26, 1999

July 3, 1999

July 10, 1999

July 17, 1999

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

distribution October 19, 2002 December 1, 2001

 

 

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.