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Background

Discuss about the Provides the Background of Pepsico Company?

This is a report on PepsiCo food and Beverage Company. The report provides the background of PepsiCo Company and discusses the nature of its operation and its products portfolio. The report also includes SWOT analysis and PESTLE analysis of the company. The market segment, situation, and market share of the company are also discussed in detail. The report also identifies the growth opportunities that are relevant and appropriate to the company using Ansoff’s matrix and finally the marketing the report has included the market plan of the company.

PepsiCo, Inc is among the world’s largest food and beverage companies. The company is based in America with its headquarters in New York. It markets its products in more than 200 countries. The company started using the name Pepsi- Cola Company in 1965 after merging with Frito-Lay, Inc (The Editors of Encyclopedia Britannica, 2017). .According to (Bellis, 2010), Caleb D Bradham a pharmacist in Bern, North Carolina was the first person to create Pepsi-Cola. In 1898 Bradham named his brand Pepsi-Cola with an aim to emulate the success of Coca-Cola .Pepsi Cola became so popular and in 1902 Bradham established the Pepsi-Cola Company. The company faced hard times after World War 1 which made the company be sometimes reincorporated in 1920’s. Charles G. Guth took over the company in 1931 and the founder on the new Pepsi-Cola. Charles made several changes in the company; he came up with a better chemist formulae for the drink and started new operation of bottling the product. Charles was also the president of Loft Incorporated and in lost the control of Pepsi-Cola Company to a new management in legal battles between 1936 and 1935. The new management merged Pepsi-Cola Company with Loft and assumed the name Pepsi- Cola Company (The Editors of Encyclopedia Britannica, 2017)

In 1950 Pepsi-cola got a boost when Alfred Steele a former vice president of Coca-Cola joined the company as the Chief Executive Officer. Steele established strong campaigns and sales promotion which increased the net income of Pepsi-Cola Company. In 1965 Pepsi-Cola Company and Frito-Lay, Inc merged and diversified its products and changed the name to PepsiCo. In an effort to add more brands to its market, PepsiCo acquired several other companies among them, Tropicana and Dole juice brands from Seagram Company in 1998. The following are the most popular brands of PepsiCo Inc; Pepsi-Cola, Frito-Lay snack products, Lipton Tea, Tropicana juices, Gatorade sports drinks and Rold Gold pretzels (PepsiCo, Inc. Forum, 2016)

According to (Pandey, 2016), PESTLE Analysis is a framework used by organizations to understand the impact of external factors on the organization’s operations. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors affecting the organizations.

  • Political factors that impact the operations of an organization are the formal and informal rules and regulations that guide the operations of a business such regulations include political stability, businesses policies, trade restrictions among other regulations.
  • Economic factors that impact organizations include economic growth, inflation, and economic stability of a country.
  • Cultural and demographic aspects are the social factors that affect the operations of an organization. They determine the demand for the organization’s products.
  • Technological factors are the factors that determine the productivity quality the of the product of a company they also determine the efficiency of production in a company.
  • Legal factor refers to the laws that govern the operations of the company they influence the cost and demand of its products. They include health and safety laws, discriminations laws among other business-related laws.
  • Environmental factors are the ecological and environmental factors that affect the operation of the organization. They include weather, climate and climatic changing.

According to (Meyer, 2017), PepsiCo has the second largest market in the food and beverage market industry in the world, to keep this position it is essential for the company to maintain this position to make decisions based on PESTEL factors influencing the organization. According to (Pratap, 2017), there has been a decline in the soda industry in the recent years. This has affected PepsiCo as well as its competitors. This has been attributed to by social and economic factors. There has been an economic recession in the majority of the countries in the world.

PESTLE analysis of PepsiCo Inc.

PepsiCo operates in many countries with different governmental regulation on food and beverage products. Government actions affect the company both at the micro and the macro levels. Political factors affecting the company can either provide opportunities or threats for instance; political stability and better intergovernmental cooperation provide opportunities for the company while government initiatives against carbonated drinks are threats to the company (Meyer, 2017). Political stability in the major economies of the world such as America and Canada provide growth opportunities to the company while in countries with political instability the company experiences a decline in the demand for its products thus reducing its profits (Pandey, 2016). When there are strong intergovernmental relationships, the company gets a good opportunity to expand its market globally.

According to (Pandey, 2016), businesses are affected directly by any economic fluctuations in the global and local economies. Economic performance of particular nations determines the purchasing power of the consumers. Many countries have not recovered from the current economic recession which has affected many international companies such as Pepsi. This is because economic performance of a country determines the performance of products in the market. Improved economic performance in the world boosts the performance of the company’s products not only in the local markets but also in the foreign markets.

The following are the social- cultural factors that affect PepsiCo, higher health consciousness among the consumers this is both an opportunity and threat to the company. The increasing concerns about sugar, salt and fats contents in its products may threaten the consumption of its products (Meyer, 2017). While the change of lifestyles and conscious about the quality of products provides opportunities for the growth of the company’s market.

The company with better social image tend to make more sale since the society. Producing healthy products can help the organization gain more popularity and make more profits.

According to (Pandey, 2016) technological advancement has affected the management and marketing areas of the organization. PepsiCo is relying much on social media, television among other platforms to market its products. Social media platforms enable the company to interact easily with the consumers, and thus they can easily identify consumer concerns and address them effectively.

Environmental factors affect business directly as they influence the market of their products. Ecological changes have an impact on the employees, consumers, and companies. The ability of a company to adapt production methods that promote environmental sustainability such as proper waste disposal help in attracting more customers. Other than recycling PepsiCo need to develop other strategies that will help reduce environmental risk and improve environmental impact. This will persuade more customers to consume its products as well as retain its current base of consumers.

The company needs to comply with the legal issues in different countries to market its products in the internationally. Pepsi has on a number of occasions faced legal issue over the quality of its products. Noncompliance to legal issue is a big threat to global brands such as PepsiCo and should be avoided at all costs. This is because the company is likely to lose a lot of resources due to non-compliance and also it can tarnish the image of their products in the market.

SWOT analysis of PepsiCo Inc.

Pepsi has taken an important step by engaging itself in water conservation programs. One of the programs the company has initiated is its operational water consumption which has reduced its water consumption by 20%. The governments are also focusing on environmental conservation and therefore encouraging to citizens to consume products from companies that adapt environmental conservation measures in their production processes.

 SWOT analysis is used by companies to assess their Strengths, weaknesses, opportunities and threats of a company. The following is a SWOT analysis of PepsiCo Inc.

  • PepsiCo is recognized globally for quality soft drinks.
  • The name of the brand is attractive.
  • The company has maintained a good image in the market.
  • PepsiCo has a large market globally.
  • The company uses packages its products in a unique way.
  • Strong marketing and advertisement strategies.
  • The company has diverse products in the market.
  • The company participates in corporate social activities such as supporting education, sports. Environmental conservation among others which helps in building a better reputation to the public.
  • The company has reached about 200 countries in the world.
  • The company has a strong workforce of over 300,000 workers.
  • The company mostly target young consumers in its advertisement and promotions thus neglecting the older people.
  • PepsiCo brands are not easily available in remote areas.
  • The company rarely offers discounts to its retailers.
  • The company has been involved in several legal cases about their products, which has damaged the image of their brand.
  • There have been several health issues that have been connected with products such as coke.
  • Demand for soft drinks has increased significantly.
  • The company has adequate resources to facilitate its expansion in many countries.
  • There is also a market opportunity in the remote area where Pepsi products have not reached.
  • Consistent population growth internationally.
  • The company needs to reach developing countries and market its products there.
  • High completion from other companies especially Coca-Cola.
  • Increased health awareness against cola drinks.
  • Economic inflations in many countries where it markets its products.

According to (Moore, 2013), Ansoff’s matrix also known as Product/market gird is a strategic marketing tool that is used by companies to assess its existing products in the market and also the new products that it can introduce in the market. Ansoff matrix is essential in strategizing in the growth of business. Ansoff matrix consists of growth strategies.

  • Market penetration- this involves the selling of the company’s products to existing consumers. The company needs to find ways to expand its market by reaching more consumers and maintaining their loyalty. PepsiCo does this by maintaining the quality of its products and a good reputation of its brands in the market.
  • Market development- this involves developing mechanisms that will help the company reach new customers. This can be done through expanding the geographical market, for example, marketing products in the new Using this strategy, the company can strategize on how they can reach untapped markets. PepsiCo has invested heavily in marketing its products globally.
  • Product development- the company comes up with new brands to increase the variety of choices to its customers. PepsiCo has developed many products in the market which provides a wide variety of products that consumers can choose from.
  • Diversification- this refers to selling new products in the market the strategy requires good consultation to good marketing consultant. The approach is most suitable for well-established The company has successfully managed to diversify its products through merging with international companies. This makes it easy for it to market its new products.

According to (Dudoyskiv, 2016), the marketing efforts of PepsiCo determines the segmentation, targeting and its positioning in the market. Targeting refers to identifying a specific group of consumers identified through segmentation whole positioning refers to the selection of suitable product to market in a certain market niche. According to (TrackMaven, 2017), market segmentation can be defined as a process categorizing consumers into distinct groups based on particular characteristics. The various categories of consumers respond to the market strategy depending on the similarity of their interests, needs or locations. Market segmentation is important to a company since it helps the company to save on marketing cost as it becomes easier to target a certain group of consumers that targeting an individual consumer. Market segmentation also ensures that company is able to market its products more effective since as they market they already know the target audiences. Marketers are also able to identify consumers that have the highest possibility of buying certain products and thus they can allocate more resource in reaching that category of consumers.

According to (Nila, et al., 2016),  there are several ways of segmenting its markets. They mainly segment their market demographically considering factors such as age, income and the size of families. Pepsi also segments its market depending on behavior and Psychographic segmentation, Pepsi has also introduced Pepsi diets which are suitable for people living with diabetes. This is significant segmentation, as it will help the company reach a segment of the market that cannot produce consumer other products that have high sugar levels. Geographically Pepsi are marketing is marketing its products in almost all countries of the world

Pepsi has segmented the market demographically by referring itself as a beverage of choice of the “New Generation”. They use this term in a while marketing its products targeting young consumers mainly between the ages of 18 to 29 Pepsi believes that this strategy will help them capture the young generation and thus they will be able to create a loyal customer base in the future.

Psychographic market segmentation refers to categorizing consumers on the basis of social class, lifestyle or personality. Pepsi products target both lower class and upper middle-class consumers since they can afford to purchase Pepsi drinks. Other products such as Mountain Dew mainly targets people who are more adventurous.

Behavioral segmentation of the market categorizes consumer on the basis of their attitudes, knowledge, uses and response to the product. Pepsi is using this segmentation in targeting occasional invents such as religious festivals and special days such as Valentine’s Day, mother’s day among others.

According to (Duermyer, 2016), A market plan can be defined as a document which outlines the tactic or strategies of reaching the consumers. A marketing plan has a specific period on outline the goals, market-related details among other important details. A market is very essential to every business as it helps the company has a clear defined market since it identifies the target market, it also helps in developing market information they will give the desired results. The company is able to communicate effectively with the target consumers. And lastly, a business plan gives the company the direction on the best market platforms the company can use to market its products.

According to (Haseeb, 2016)Pepsi has maintained a huge market for its products for a long time. The company has a wide variety of products which are available to its customers globally. The company has over  100 products in the market which has to enable it to earn fortunes over the years. The company has established a strong marketing strategy to attract new customers as well as maintains its consumer base. Pepsi mainly targets the youths to become its major consumers. The company has been able to successfully market its products through segmentation, target marketing product differentiation and positioning.

Pepsi has been able to market its products in many countries making its products available in all leading stores, cities towns and village thus making it easy for consumers to reach their products. The company has established an efficient distribution channel for its products such that there can never be a shortage of their products in the market.

Pepsi has been able to main quite a consistent and favorable price for its products. This makes it possible for consumers in all social classes to afford its products.

 Pepsi has been sponsoring various events such as music, sports and other social events that help it gain popularity. Through event promotion and advertisements many people recognize different brands from the company. This contributes immensely to the growth of its market.

The company has a well-established marketing strategy that enables it to provide its products to a wide range of consumers. It combines its marketing strategy with an efficient distribution channel that enables its products to be available in the market whenever needed. It also invests much of advertisement through the television, the social media and through sponsoring events. The company also has marketed its products in almost every country in the world thus it is able to reach a wide market.

Pepsi invests heavily in the manufacturing of products, advertisement and through sponsoring big events. The company is able to popularize its products, therefore, making more sales and higher profits.

Conclusion

PepsiCo is an international company with the second largest market of beverages in the world. The company has developed strong marketing strategies that have enabled it to maintain its market for a long time the company also has a good reputation in the public since it participates in developmental programs and sponsor social events. The fact that PepsiCo has a variety of products enables the consumers to a wide range of products to choose from this increases the profits of the company. The company has been merging with other international companies this has enabled to access a wider market globally and has facilitated its growth over the years.

Reference

Bellis, M 2010, The History of Pepsi-Cola/Caleb Bradman. About. Co, Inventors, 14 December.

Dudoyskiv, J 2016, PepsiCo Segmentation, Targeting, and Positioning. Research methodology, 9 May.

Duermyer, R., 2016. What is marketing plan and how to create pone for your home business? Th ebalance .com, 10 October.

Haseeb, 2016, The marketing plan of Pepsi. Marketing Dawn, 10 August.

Meyer, P 2017, PepsiCo PESTEL/PESTLE Analysis & REcommedations. 6 February.

Moore, K  2013, Use the Ansoff Matrix for evaluating growth opportunities. Marketing Strategy, 14 November.

Nila, NE Nitu, MBA., Alam, MA. & Zzohora, FT 2016, A market plan. Slide share.

Pandey, A 2016, What is PESTLE Analysis?. BPMgeek.

PepsiCo Inc. Forum, 2016, PepsiCo Inc.-Company Profile, Information, Business Description, History, Background Information on PepsiCo, Inc.

Pratap, A 2017, A PEST/PESTLE/PESTEL analysis of Pepsico. Chesh Notes.

The Editors of Encyclopedia Britannica, 2017, PepsiCo, Inc. Encyclopedia Britannica.

TrackMaven, 2017, Market Segmentation. Newseum, 18 May.

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