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Pepsi CO. Executive Summary
The purpose of this marketing plan is to develop an understanding about how
PEPSI is marketed and distributed in the market (Product, Price, Promotion and
Distribution). In this project different analysis are performed such as,
Companyimage, mission statement, goals & objectives, core business areas, SW
OTAnalysis, Industry Analysis, Marketing Program, target markets, MarketingStr
ategy, Marketing Environment, Point of Differences& Positioning
At the end it was discussed that what are the core marketing strategies that make PEPSI the
morepowerfulbrand.
Company History
PepsiCo Inc. is an American multinational food and beverage corporation headquartered
in Purchase, New York, United States, with interests in the manufacturing, marketing and
distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed
in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since
expanded from its namesake product Pepsi to a broader range of food and beverage
brands, the largest of which includes an acquisition of Tropicana in 1998 and a merger
with Quaker Oats in 2001—which added the Gatorade brand to its portfolio.
As of January 22, 2012 PepsiCo's product lines generated retail sales of more than $1 billion
each, and the company's products were distributed across more than 200 countries,
resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the
second largest food and beverage business in the world. Within North America, PepsiCo is
ranked (by net revenue) as the largest food and beverage business.
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the
company employed approximately 274,000 people worldwide as of 2013. The company's
beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in
certain regions. PepsiCo is a SIC 2080 (beverage) company.
Headquartered in Purchase, New York, with research and development headquarters
in Valhalla, New York, PepsiCo's Chairman and CEO is Indra Nooyi. The board of directors
is composed of eleven outside directors as of 2010, including Ray Lee Hunt, Shona
Brown, Victor Dzau, Arthur C. Martinez, Sharon Percy Rockefeller, Daniel Vasella,Dina
Dublon, Ian M. Cook, Alberto Ibargüen, James J. Schiro and Lloyd G. Trotter. Former top
executives at PepsiCo include Steven Reinemund, Roger Enrico, D. Wayne Calloway, John
Sculley, Michael H. Jordan, Donald M. Kendall, Christopher A. Sinclair and Alfred Steele.
On October 1, 2006, former Chief Financial Officer and President Indra
Nooyi replaced Steve Reinemund as Chief Executive Officer. Nooyi remained as the
corporation's president, and became Chairman of the Board in May 2007, later (in 2010)
being named No.1 on Fortune's list of the "50 Most Powerful Women" and No.6 on Forbes'
list of the "World's 100 Most Powerful Women". PepsiCo received a 100 percent rating on
the Corporate Equality Index released by the LGBT-advocate group Human Rights
Campaign starting in 2004, the third year of the report.
Company background
Name PepsiCo Inc.
Industries served Beverages, Food
Geographic areas served Worldwide
Headquarters U.S.
Current CEO Indra Nooyi
Revenue $ 65.492 billion (2012)
Profit $ 6.178 billion (2012)
Employees 297,000
Main Competitors
The Coca-Cola Company, Dr Pepper Snapple Group, Inc.,
Mondelez International, Inc., Hansen Natural Corporation,
National Beverage Corp., Kraft Foods Inc., The Kellogg
Company, ConAgra Foods, Inc., Nestlé S.A. and others.
PepsiCo is a world leader in convenient snacks, foods and beverages.
Industry Analysis of the Beverages Market
Soft drinks can be divided into carbonated and non-carbonated drinks. Cola, lemon and oranges
are carbonated drinks category. The carbonated soft drink market has been challenged by a
health consciousness movement within American consumers. Health consciousness is a very
strong growing trend in America, and has created an organic movement within the drink and
food industries. Within the last five years ending in 2006, the soft drink market in the United
States has experienced 0.0% growth due to this factor.
Since 1975 the overall growth rate of soft drink market has been slowing. (Figure_1) As this
provides a constraint on new market opportunities, it does not constrict maintaining a similar
level of revenue or slightly improving it. As the current consumer market continues to age, it is
expected there exists a certain level of retention to Pepsi consumption until a specific age when
it is recommended by a doctor not to consume a soft drink. Given Pepsi’s position in terms of
product placement within demographics, it holds the youth market when compared with Coke.
As growth slows, the youth markets must continually be targeted to maintain the consumption
level of Pepsi as new consumers enter the market of soft drink consumption, and other age out
of it. This strategy will over a long period of time prove to gain market share of domestic soft
drink consumption over Coke, while being offset by a slowing of the overall consumption.
Figure 1
The subject proposal is targeted to use a pull
strategy through the distribution channels,
and is therefore focused on the end user, or
consumer segment of the market.
Notwithstanding, the industry overall
(primarily Pepsi and Coke as outlined herein
below) does not only sell directly to
consumers. A very prevalent distribution
channel is through licensed bottlers and
restaurant chains. A very strong business to business transactional distribution channel
exists in the soft drink industry, and in fact 22.6% of all soft drink volumes are sold in a syrup
for fountain soda. This is 100% business to business within the scope of these transactions.
The remaining 77.4% of packaged soft drink volume comprises primarily of business to
business transactions to retailer and bottling companies. (Figure_2) While PepsiCo
Beverages North America does not directly sell to consumers primarily, the subject proposal
will stimulate demand for the product at the end user level, and therefore result in more
business to business sales in order to meet that demand.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
U.S. Soft Drink Market
Compounded Annual Growth
Figure 2
PepsiCo Inc. and Coke-cola Co. have dominated the
carbonated soft drink industry in North America since
they first entered this market. They continue to compete
with each other for market share for centuries. Therefore,
some experts conclude that the soft drink market is an
oligopoly or even a duopoly between Pepsi and Coke.5
By the year of 2006, PepsiCo has the leading share
(26%) of U.S. liquid refreshment beverage market,
followed by Coca-Cola which has taken 23% of market share as indicated in the left chart.
Cadbury Schweppes, another big rival on the bottled soft drink shelves, obtained 10% by
acquiring key brands in the US, namely Dr. Pepper, Seven Up, and Canada Dry. Throughout
2012, soft drinks in Malaysia continued to experience healthy growth in terms of value and
volume sales. The country’s climate contributes heavily to the strong demand for soft drinks
as the constant hot weather leads to higher consumption of these drinks for the purpose of
quenching thirst. Soft drinks, such as carbonates and RTD tea, are also purchased during
festive seasons and are served to guests. Lastly, soft drinks, such as carbonates, RTD tea
and Asian specialty drinks, are also sold across major on-trade channels, including mamak
stalls, hawker centers and food courts. In line with the growing health consciousness in the
country, non-carbonate soft drinks perceived as “healthy”, such as fruit/vegetable juice and
RTD tea, are being embraced by consumers over carbonates, including Coca-Cola and
Sprite. Unfrozen nectars are available in many varieties, some even with a super fruit
content or no added sugar. Hence, consumers often perceive these to be a healthier choice
compared to carbonates, which often contain a lot of sugar. Thus, in 2012 consumers began
slowly switching to non-carbonated soft drinks, including RTD tea as well as no added sugar
fruit/vegetable juice products. F&N Beverages maintained its leading position within soft
drinks during 2012 supported by the strong performance of its brands in Malaysia, such as
100 Plus Isotonic drinks, F&N Fun Flavours carbonated drinks, Sunkist fruit/vegetable juice,
as well as Seasons Ice Lemon Tea. Moreover, its consistent marketing and promotional
activities also helped the company to establish a significant level of brand awareness. For
instance, the 100 Plus brand was the sponsor of the Ipoh Star Walk sporting event
organized in Malaysia during 2012, where free 100 Plus drinks were given out to participants
throughout the event. Modern distribution channels, such as supermarkets, hypermarkets,
forecourt retailers and convenience stores, combined, dominated sales of soft drinks in
2012. A large number of supermarkets and hypermarkets, such as Giant, Tesco and
Carrefour, organized promotional campaigns for soft drinks, particularly carbonates, which
helped to attract a large number of customers. Moreover, smaller PET bottles, cans as well
as Tetra Pak packaging demonstrated a stronger sales performance via smaller distribution
channels, such as convenience stores and forecourt retailers, as consumers often purchase
a soft drink in bottles or cans from these outlets for convenience purposes.
SWOT analysis
Strengths Weaknesses
 Branding and packaging
 Appealing to young generation
 Superior Taste (in Blind Tests)
 Many distributions
 Hard to enter markets occupied by
Coca-Cola
 Lack of novelty in advertising
Opportunities Threats
 Global markets
 Additional Youth Consumers entering
the market
 Health Conscious Consumer Trends
 More substitutes
“Manifesting brand essence through packaging is powerful at retail,” declares Ron Pence,
Pepsi Senior Marketing Manager for packaging innovation. Youth and vitality is the main
idea that the Pepsi brand tries to express, and the bottle design helps the brand associate
with teens at the age between 12 to 18 year old. Pepsi restyles its cans with a series of 35
new designs and different themes such as car culture, sport or fashion. On Pepsi website,
each theme has its own video clips which can be downloaded for free and other features to
attract consumers with the purpose of representing the “fun, optimistic and youthful spirit “of
Pepsi. The natural tendency of young generation is to rival with old generations. Pepsi also
use “music, which was traditional weapon of teenager to show their rebellion approach”.
Besides, a blind test conducted by Pepsi was performed in shopping malls, grocery stores
and other public locations, in which consumers were asked to pick the soft drink they liked
better, without knowing whether the cola they tasted was Coke or Pepsi. As results came in,
57% of testers chose Pepsi and only 43% chose Coke. It became apparent that Pepsi tastes
better than Coke. In addition, Pepsi products are distributed to many outlets. For example,
supermarkets where Pepsi buys large shelf area and display areas so the customer can find
them easier, Convenience stores, gas stations, restaurants, movie theaters and almost and
other conceivable spot.
Pepsi is now sold in more than 160 countries around the globe, but it still has a weakness in
the international beverage market because it entered later into this arena than Coke. Pepsi
has tried to enter this market by trying to do in three years what took Coke 50 years to do.
Nevertheless, Pepsi has to spend years “to mature simply due to Coke’s dominance in the
international market and the strong ties that Coke has developed with these markets and
their governments.” Additionally, when marketing its products, Pepsi utilize celebrity
endorsement mostly which bored some consumers due to lack of novelty. Conversely, the
success of fresh and creative advertise has consistently helped Coco-Cola attract and retain
customers.
The world is becoming a smaller place with investors thinking in terms of sectors rather than
geographic boundaries. Broad global markets, like China, India, can provide lots of
opportunities for Pepsi. We may conclude from the tables on the right that in 2004, 63%
PepsiCo’s profits come from
the United States 8, and in the
same year, the U.S. holds
30.90% of the global market
share under Europe (showed in
the table below), which means
Pepsi still has opportunities to compete globally. Moreover, as Pepsi targets young
generation, additional youth
consumers enter the market
every year, which provides
Pepsi adequate consumer
base. For these decades,
changing societal concerns,
attitudes, and lifestyles
become important trends that
force the soft drink industry’s business environment to change. Growing health concerns for
caffeine and sugar consumption threatens the carbonated industry. The large amounts of
sugar, fat, and acid contained in cola will lead to heart disease, vascular diseases,
osteoporosis or tooth decay. On the other hand, many other companies have tried to enter
the carbonated industry, but they face high barriers, such as lawsuits and tough competition.
Some of these companies end with searching for entering the noncarbonated soft drink
industry for growth. Consequently, some consumers will turn to noncarbonated soft drink,
such as bottled water, teas, instead of soda.
Environmental Scan of today's carbonated beverage marketplace
A quick glance at today’s beverage marketplace indicates an increasing amount of beverage
alternatives in the market. As such, these beverage companies must understand the various
factors that can help them succeed or fail. For instance, the increased awareness of the
importance of health has significant influence on soft drink industry. Since most soft
beverages comprises of unhealthy ingredients including High Fructose Corn Syrup, the
beverage industry faces an incredible threat to their reputation and sales. Therefore,
developing consumer-preferred products that can become an integral element in consumers’
daily lives has become an essential issue for beverage industry.
Possible environmental factors are as follows:
 Social environment
 In 2004, 28 percent of all beverages consumed in the U.S. were carbonated soft
drinks. In the United States, 450 different types are sold and more than 2.5 million
vending machines dispense them around the clock, including in elementary and
high schools.
 As consumers focus more on health and nutritional benefits of food items, it has
sparked a key new driver in trends throughout the beverage industry. The result is
the decrease in sales of carbonated beverages.
 Competitive environment
 Monopolistic competition: PepsiCo., The Coca-Cola Company, Cadbury Schweppes
 The entire beverage industry, including but not limited to bottled water, juice, other
carbonated beverages, and ready-to-drink tea.
 Recent growth and demand of sports and energy drinks.
 Regulatory environment
 In response to weight gaining and health concerns, the nation’s largest beverage
makers -- including Cadbury Schweppes, PepsiCo. and The Coca-Cola Company--
agreed in May 2006 to halt nearly all soda sales in public schools. Beginning in 2009,
elementary and middle schools will sell only water and juice (with no added
sweeteners), plus fat-free and low-fat milk. High schools will sell water, juice, sports
drinks and diet soda. Diet sodas use artificial sweeteners, which add little or no
calories, though some, such as aspartame, have been embroiled in controversy for
years over their questionable health benefits and even possible links to cancer.
Obviously, Pepsi is facing not only the transition of customer perception but also the
regulation stress. Besides, it always has it big and powerful competitor, The Coca-Cola
Company. Under this circumstance, strategy and innovation become the top issue of Pepsi.
Competitor Analysis
The table below displays the various brands between PepsiCo. and The Coca-Cola
Company. It appears that for every product on the market from one company, the other
company has an similar product to match it. This demonstrates the intense competitive
nature of both companies to keep up or outwit the competition.
Differential Advantage
The Coca-Cola Company has the distinct advantage of being the most recognized brand in
the world. It is considered the classic beverage in the United States as well as in other
countries. In fact, when Coca-Cola decided to change its formula dubbed “New Coke” in
response to Pepsi’s emergence, public outraged roared throughout the nation. Fearing
mass boycott, the original Coke formula was quickly reinstated to satisfy the demands of the
public under the name “Coca-Cola Classic”.
Revered as the classic beverage, Coke enjoys the stature of being the market leader. Coke
appeals to a wide global audience in terms of demographics and popularity. One side effect
of being the “classic” choice leads to a larger share of older consumers.
PepsiCo. appeals to younger consumers with a more sweeter taste compared to Coke.
Pepsi presents itself as the hip and cool alternative choice over Coke. This is evident in the
deep blue hues and patterns that Pepsi takes advantage of in its marketing campaigns.
Pepsi’s younger image is also aided by celebrities endorsement touted by the teen market
including Britney Spears, ‘NSync, along with popular rappers.
Self-proclaimed as “The Choice of a New Generation”, Pepsi devised television commercials
of younger consumers participating in blind taste tests. The participants frequently preferred
Pepsi over Coke. Eventually, PepsiCo. began hiring popular celebrities to promote their
products.
Resource Analysis
The Coca-Cola Company
The Coca-Cola Company’s flagship product, Coke, is sold in stores, restaurants and vending
machines in more than 200 countries. Originally developed as a medicine in the late 19th
century by John Pemberton, it has evolved into a dominating figure in the soft drink market
throughout the 20th century.
The Coca-Cola Company licenses worldwide bottlers who hold territorially exclusive
contracts with the company. Cola concentrate is sold to these bottlers who them produce
the finished cola in cans and glass bottles while using filtered water and various sweeteners.
The finished product is then sold, distributed, and merchandised to retail stores and vending
machines. Coca-Cola Enterprises is currently the single largest Coca-Cola bottler in North
America, Australia, Asia, and Europe. In addition to licensing to bottlers, the company sells
the concentrate to major restaurants and food service distributors for use in fountain drinks.
The Coca-Cola Company envision a world in which…They improve the lives in every
community that they touch. They replenish each drop of water that they use. Their packaging
is no longer seen as waste, but as a valuable resource for future use. Workplace rights are
protected and all people are respected. They work in partnership with others to provide good
jobs, world class quality beverages and a healthy environment.
PepsiCo
The Pepsi Cola Company started in 1898 in Purchase, New York. It became known as
PepsiCo when it merged with Frito Lay in 1965. PepsiCo owned Kentucky Fried Chicken,
Pizza Hut, and Taco Bell up until 1997 when they were spun off into Tricon Global
Restaurants – which eventually became Yum! Brands, Inc. In 1998 and 2001, PepsiCo
purchased Tropicana and Quaker Oats, respectively.
PepsiCo, a global American beverage and snack company, manufactures, markets, and
sells a variety of carbonated and non-carbonated beverages, as well as salty, sweet and
grain-based snacks, and other foods. PepsiCo also manufactures Quaker Oats, Gatorade,
Frito-Lay, SoBe, and Tropicana.(Figure_3) In several ways, PepsiCo differs from its
competitor, The Coca-Cola Company, having almost three times as many employees. The
Pepsi Bottling Group was formed for distribution and bottling.
Figure 3
Mission Statement:
We aspire to make PepsiCo 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, openness, fairness and integrity.
Values:
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 actions today 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.
Based on the pie chart above, PepsiCo and Coca-Cola have roughly the same market share
in the United States.
Finacial Analysis Brief Overview
Overall, PepsiCo trumps The Coca-Cola Company in many financial categories – largly in
part from PepsiCo’s wide array of products throughout 4 divisions:
 PepsiCo International
 Frito-Lay North America
 PepsiCo Beverages North America
 Quaker Foods North America
Egg Diagram
Analysis of the Target Market Consumers
Who are they? Teenagers between age of 12 and 18 in
U.S.
What do they buy? Teens want to buy something real,
something from “corporations that remind
them of themselves”. They don’t want
things that they are thought to like. They
something that pushes the boundary,
different than what they had before.
When do they buy it? When teens find something they can
identify with and have the need that must
be satisfied immediately.
How do they choose? They quickly dismiss the products that look
like some 45-year-old guy trying to sell
them something. They easily recognize the
old product that was yesterday’s news.
They can tell what’s being “fake” and
what’s being “real”
Why they prefer a product? They pick a product because they believe
that product can express themselves. They
can relate to someone like themselves
through this product.
How they respond to a marketing
program?
They respond to something catchy. For
example those ads in magazine are
brightly colorful, the flashy graphics
suggest that teens respond well to that
type of ad campaign; in cyberspace they
respond to a space created uniquely for
them. They also respond well to products
on sales.
The target consumer market to stimulate demand within is the young teen market
between the ages 12 through 18 years old, geographically located within the United States.
This segment is compiled of the “Tween” market and the older high school teenagers.
“Tweens develop sophisticated tastes beyond their years, with boys gravitating toward
electronic, Internet, and video games, and girls preferring fashion and social interaction
components” (Abernathy, 2004). With the technology age with computers and increasing
demanding academic environment, tweens and teens have less disposable time, and
therefore product advertising attention is often tuned out. “Tweens spend their own money
today: on average, $9 a week. Some experts estimate tweens have close to $80 a week in
disposable income available to them… Overall, the tween market is valued at $43 billion”
(Abernathy, 2004). Beyond the tween market, the teenage high school student will
sometimes hold a part time job, and have more independent tendencies. All in all, the 2000
U.S. Census estimates the U.S. population between the ages of 10 through 19 years old to
be approximately 40.6 million individuals.
The goal of researching the target consumer is to accurately pinpoint the consumer
behavior in regards to our product. According to our finding, these teens and “Tweens” are
constantly searching for identities at their age. The most effective way of appealing our
product to them is to find a common ground. For example, there are various reasons why
teens and “Tweens” idolize certain celebrity. One of them is that they can find bit and pieces
of themselves in their celebrity idol. After all, who doesn’t like to see himself/herself being a
celebrity? So no matter what the product is, as long as it possesses characteristic of the
identity the teens and “Tweens” are searching for, they will make the purchase. The teens
and “Tweens” are still very young. They have very vivid imagination and are highly visual.
Therefore they are attracted to colorful pictures in the magazines. It is usual for them to just
look at the pretty pictures in the magazine without reading the articles that supplement
pictures.
According to the finding, these target consumers prefer products that are “real”. By
“real” they mean the manufacture genuinely create this product specifically for them, at least
it should appears to be. Since Pepsi Cola is basically for everyone, making it appears to be
special to teens and “tweens” are very important. These consumers prefer individuality. Such
preference is reflected in the finding that they are constantly in search for a product that
expresses themselves. The last thing these consumers wants is pressure or stereotype that
sometimes appears on the commercial and magazine ads.
Strategic Action Plan
The strategic alliance with Walt Disney will initially consist of (i) concert support of and
promotions at several of Hannah Montana’s concerts throughout the United States, (ii) Pepsi
promotion via seamless advertisement within the Hannah Montana aired shows by having
characters refresh themselves with Pepsi and also have Pepsi signs in the background, and
(iii) a sparingly aired Pepsi commercial endorsed by Hannah Montana to be promoted via
the ABC channel network (a Disney owned network). A future alliance holds the possibility
of future benefits through Disney media networks and consumption at theme parks and
resorts. The concert support will come with signs at the live shows and events, Pepsi sales
at the concerts, and Pepsi commercial promotions on the concert screens at intermission.
There will also be a special promotional event of Pepsi Challenge tasting at the Pepsi center,
which was previously near sell out for Hannah Montana. The seamless advertisement on
the Hannah Montana show will consist of the characters drinking Pepsi as refreshment in a
natural environment along with Pepsi signs in the background of the sets. This will continue
for two (2) years during the strategic partnership, and be maintained on a very subtle level in
the productions. Twice a year over the two (2) year period ABC (A Disney owned network)
will air a Pepsi commercial of a music video of Hannah Montana singing the Pepsi Theme
song. As part of the strategic alliance, Disney is giving a low market rate for airing over the
network. ABC has been topping the charts with hit series and has been expanding viewer
base considerably over the past decade. The Denver Post summarized the market impact
this pop idol holds as:
“When an episode of "Hannah Montana" followed the debut of "High School
Musical 2" this fall, the movie sequel got all the buzz, but the episode of "Hannah
Montana" averaged 10.7 million viewers - the highest ratings for a regular series in
the history of basic cable. The Disney Channel's 90 million subscribers can watch
"Hannah Montana" daily, sometimes as often as seven times a day. An average
2.2 million viewers see each episode. The show also airs weekly on ABC's
Saturday morning block, and is licensed in 177 countries. Of course "HM" is
available around the clock as streaming video on computers and on iTunes.
Compared to the ratings of all shows on U.S. television, "Hannah Montana" is
second only to "American Idol" among kids 6-11 and tweens” (Ostrow, 2007).
Utilizing Walt Disney’s ‘tween’ star Hannah Montana for endorsement will provide
awareness and positive associations with the Pepsi brand of carbonated soft drink. This pop
star idle will build significant brand equity within the demographics of young females
between the applicable ages of 12 through 15 years old. This will predictably improve
vending machine sales at middle schools and high schools, as well as sales at grocery
stores for their respective homes. It will also build repertoire with the respective mothers
who also attend the concerts and watch the shows. The mothers of the daughters are in fact
the ultimate purchasers (and also partially the ultimate consumers in some cases) of the
product, while their daughters are the influencers and ultimate consumers. The daughters of
families will typically have a greater influence over the parents as purchasers in American
families more so than comparable aged boys. This is primarily due to the value system of
the parents to typically spend more attention and money on the daughters of the family, as
young females are seen to need more care. This depicts why Hannah Montana is a highly
effective endorsement for Pepsi within this demographic. This strategic relationship with
Walt Disney will provide the future potential for a stronger partnership with Walt Disney,
thereby opening the possibility of Pepsi consumption within the theme parks and resorts,
while opening a powerful media network to younger audiences for future promotion
channels.
Kanye West will build brand equity in the male teen market between the applicable
ages of 14 through 18 years old. A male target of the upper teen years is deemed more
effective, due to males in their teens practicing habits of independence and having
allowances for spending. His aired TV commercial will be on ABC similar to Hannah
Montana, however it will be aired three times a year over the two (2) year period. The
commercial content will be his version of a Pepsi theme.
References
 Overview: Company History (2007). PepsiCo Corporate Website. Retrieved October
28, 2007 from http://www.pepsico.com/PEP_Company/Overview/index.cfm.
 Ostrow, Joanne (Oct. 19, 2007). ‘Disney Wields Its Marketing Magic.’ Denver Post.
Retrieved October 29, 2007 from
http://www.commercialfreechildhood.org/news/disneyweilds.htm.
 Abernathy, R.W. (November, 2004). Tween Market 101. TD Monthly. Retrieved
October 29, 2007 from http://www.toydirectory.com/monthly/article.asp?id=918.
 The Beverage Marketing Corporation (August, 2007). 2007 Carbonated Soft Drinks
in the U.S. Retrieved October 29, 2007 from
http://www.beveragemarketing.com/reportcatalog3f.html.
 Industry Analysis: Soft Drinks. Meghan Deichert, Meghan Ellenbecker, Emily Klehr,
Leslie Pesarchick, & Kelly Ziegler. Strategic Management in a Global Context
 February 22, 2006 from
 https://www.csbsju.edu/library/local/5thYear/zeigler_paper.pdf
 PepsiCo. Performance with Purpose (2006).PepsiCo Corporate Website. From
http://www.pepsico.com/PEP_Investors/AnnualReports/06/PepsiCo2006Annual.pdf
 Kumar, Arvind. Finding weakness in the competitor strength. From
http://business.articlesarchive.net/finding-weakness-in-the-competitor-strength.html
 Murray, Barbara. (2006b). Pepsi Co. Hoovers. Retrieved February 13, 2006, from
 http://premium.hoovers.com/subscribe/co/profile.xhtml?ID=11166
 Datamonitor (2005, May). Global Soft Drinks: Industry Profile. New York. Reference
Code: 0199-0802.
 http://www.inc.com/magazine/20001201/21117_pagen_3.html
 http://www.clickz.com/3334641
 www.ala.org/ala/pla/plaevents/nationalconf/program/thursdayprograms/mrbibliograph
y.doc
 www.marketingprofs.com/2/kewl.asp
 Sampson Lee (Nov 21, 2007) Coke or Pepsi? From
 http://www.gccrm.com/eng/content_details.jsp?contentid=2073&subjectid=101
 Pepsi cola from http://www.freeessays.cc/db/11/bmu315.shtml
 Larry West, What is the Problem with Soft Drinks? About.Com website, from
http://environment.about.com/od/health/a/soft_drinks.htm

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Report pepsi co.

  • 1. Pepsi CO. Executive Summary The purpose of this marketing plan is to develop an understanding about how PEPSI is marketed and distributed in the market (Product, Price, Promotion and Distribution). In this project different analysis are performed such as, Companyimage, mission statement, goals & objectives, core business areas, SW OTAnalysis, Industry Analysis, Marketing Program, target markets, MarketingStr ategy, Marketing Environment, Point of Differences& Positioning At the end it was discussed that what are the core marketing strategies that make PEPSI the morepowerfulbrand. Company History PepsiCo Inc. is an American multinational food and beverage corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which includes an acquisition of Tropicana in 1998 and a merger with Quaker Oats in 2001—which added the Gatorade brand to its portfolio. As of January 22, 2012 PepsiCo's product lines generated retail sales of more than $1 billion each, and the company's products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food and beverage business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest food and beverage business. Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the company employed approximately 274,000 people worldwide as of 2013. The company's beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain regions. PepsiCo is a SIC 2080 (beverage) company. Headquartered in Purchase, New York, with research and development headquarters in Valhalla, New York, PepsiCo's Chairman and CEO is Indra Nooyi. The board of directors is composed of eleven outside directors as of 2010, including Ray Lee Hunt, Shona Brown, Victor Dzau, Arthur C. Martinez, Sharon Percy Rockefeller, Daniel Vasella,Dina Dublon, Ian M. Cook, Alberto Ibargüen, James J. Schiro and Lloyd G. Trotter. Former top executives at PepsiCo include Steven Reinemund, Roger Enrico, D. Wayne Calloway, John Sculley, Michael H. Jordan, Donald M. Kendall, Christopher A. Sinclair and Alfred Steele. On October 1, 2006, former Chief Financial Officer and President Indra Nooyi replaced Steve Reinemund as Chief Executive Officer. Nooyi remained as the corporation's president, and became Chairman of the Board in May 2007, later (in 2010) being named No.1 on Fortune's list of the "50 Most Powerful Women" and No.6 on Forbes' list of the "World's 100 Most Powerful Women". PepsiCo received a 100 percent rating on the Corporate Equality Index released by the LGBT-advocate group Human Rights Campaign starting in 2004, the third year of the report.
  • 2. Company background Name PepsiCo Inc. Industries served Beverages, Food Geographic areas served Worldwide Headquarters U.S. Current CEO Indra Nooyi Revenue $ 65.492 billion (2012) Profit $ 6.178 billion (2012) Employees 297,000 Main Competitors The Coca-Cola Company, Dr Pepper Snapple Group, Inc., Mondelez International, Inc., Hansen Natural Corporation, National Beverage Corp., Kraft Foods Inc., The Kellogg Company, ConAgra Foods, Inc., Nestlé S.A. and others. PepsiCo is a world leader in convenient snacks, foods and beverages. Industry Analysis of the Beverages Market Soft drinks can be divided into carbonated and non-carbonated drinks. Cola, lemon and oranges are carbonated drinks category. The carbonated soft drink market has been challenged by a health consciousness movement within American consumers. Health consciousness is a very strong growing trend in America, and has created an organic movement within the drink and food industries. Within the last five years ending in 2006, the soft drink market in the United States has experienced 0.0% growth due to this factor. Since 1975 the overall growth rate of soft drink market has been slowing. (Figure_1) As this provides a constraint on new market opportunities, it does not constrict maintaining a similar level of revenue or slightly improving it. As the current consumer market continues to age, it is expected there exists a certain level of retention to Pepsi consumption until a specific age when it is recommended by a doctor not to consume a soft drink. Given Pepsi’s position in terms of product placement within demographics, it holds the youth market when compared with Coke. As growth slows, the youth markets must continually be targeted to maintain the consumption level of Pepsi as new consumers enter the market of soft drink consumption, and other age out of it. This strategy will over a long period of time prove to gain market share of domestic soft drink consumption over Coke, while being offset by a slowing of the overall consumption.
  • 3. Figure 1 The subject proposal is targeted to use a pull strategy through the distribution channels, and is therefore focused on the end user, or consumer segment of the market. Notwithstanding, the industry overall (primarily Pepsi and Coke as outlined herein below) does not only sell directly to consumers. A very prevalent distribution channel is through licensed bottlers and restaurant chains. A very strong business to business transactional distribution channel exists in the soft drink industry, and in fact 22.6% of all soft drink volumes are sold in a syrup for fountain soda. This is 100% business to business within the scope of these transactions. The remaining 77.4% of packaged soft drink volume comprises primarily of business to business transactions to retailer and bottling companies. (Figure_2) While PepsiCo Beverages North America does not directly sell to consumers primarily, the subject proposal will stimulate demand for the product at the end user level, and therefore result in more business to business sales in order to meet that demand. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% U.S. Soft Drink Market Compounded Annual Growth Figure 2
  • 4. PepsiCo Inc. and Coke-cola Co. have dominated the carbonated soft drink industry in North America since they first entered this market. They continue to compete with each other for market share for centuries. Therefore, some experts conclude that the soft drink market is an oligopoly or even a duopoly between Pepsi and Coke.5 By the year of 2006, PepsiCo has the leading share (26%) of U.S. liquid refreshment beverage market, followed by Coca-Cola which has taken 23% of market share as indicated in the left chart. Cadbury Schweppes, another big rival on the bottled soft drink shelves, obtained 10% by acquiring key brands in the US, namely Dr. Pepper, Seven Up, and Canada Dry. Throughout 2012, soft drinks in Malaysia continued to experience healthy growth in terms of value and volume sales. The country’s climate contributes heavily to the strong demand for soft drinks as the constant hot weather leads to higher consumption of these drinks for the purpose of quenching thirst. Soft drinks, such as carbonates and RTD tea, are also purchased during festive seasons and are served to guests. Lastly, soft drinks, such as carbonates, RTD tea and Asian specialty drinks, are also sold across major on-trade channels, including mamak stalls, hawker centers and food courts. In line with the growing health consciousness in the country, non-carbonate soft drinks perceived as “healthy”, such as fruit/vegetable juice and RTD tea, are being embraced by consumers over carbonates, including Coca-Cola and Sprite. Unfrozen nectars are available in many varieties, some even with a super fruit content or no added sugar. Hence, consumers often perceive these to be a healthier choice compared to carbonates, which often contain a lot of sugar. Thus, in 2012 consumers began slowly switching to non-carbonated soft drinks, including RTD tea as well as no added sugar fruit/vegetable juice products. F&N Beverages maintained its leading position within soft drinks during 2012 supported by the strong performance of its brands in Malaysia, such as 100 Plus Isotonic drinks, F&N Fun Flavours carbonated drinks, Sunkist fruit/vegetable juice, as well as Seasons Ice Lemon Tea. Moreover, its consistent marketing and promotional activities also helped the company to establish a significant level of brand awareness. For instance, the 100 Plus brand was the sponsor of the Ipoh Star Walk sporting event organized in Malaysia during 2012, where free 100 Plus drinks were given out to participants throughout the event. Modern distribution channels, such as supermarkets, hypermarkets, forecourt retailers and convenience stores, combined, dominated sales of soft drinks in 2012. A large number of supermarkets and hypermarkets, such as Giant, Tesco and Carrefour, organized promotional campaigns for soft drinks, particularly carbonates, which
  • 5. helped to attract a large number of customers. Moreover, smaller PET bottles, cans as well as Tetra Pak packaging demonstrated a stronger sales performance via smaller distribution channels, such as convenience stores and forecourt retailers, as consumers often purchase a soft drink in bottles or cans from these outlets for convenience purposes. SWOT analysis Strengths Weaknesses  Branding and packaging  Appealing to young generation  Superior Taste (in Blind Tests)  Many distributions  Hard to enter markets occupied by Coca-Cola  Lack of novelty in advertising Opportunities Threats  Global markets  Additional Youth Consumers entering the market  Health Conscious Consumer Trends  More substitutes “Manifesting brand essence through packaging is powerful at retail,” declares Ron Pence, Pepsi Senior Marketing Manager for packaging innovation. Youth and vitality is the main idea that the Pepsi brand tries to express, and the bottle design helps the brand associate with teens at the age between 12 to 18 year old. Pepsi restyles its cans with a series of 35 new designs and different themes such as car culture, sport or fashion. On Pepsi website, each theme has its own video clips which can be downloaded for free and other features to attract consumers with the purpose of representing the “fun, optimistic and youthful spirit “of Pepsi. The natural tendency of young generation is to rival with old generations. Pepsi also use “music, which was traditional weapon of teenager to show their rebellion approach”. Besides, a blind test conducted by Pepsi was performed in shopping malls, grocery stores and other public locations, in which consumers were asked to pick the soft drink they liked better, without knowing whether the cola they tasted was Coke or Pepsi. As results came in, 57% of testers chose Pepsi and only 43% chose Coke. It became apparent that Pepsi tastes
  • 6. better than Coke. In addition, Pepsi products are distributed to many outlets. For example, supermarkets where Pepsi buys large shelf area and display areas so the customer can find them easier, Convenience stores, gas stations, restaurants, movie theaters and almost and other conceivable spot. Pepsi is now sold in more than 160 countries around the globe, but it still has a weakness in the international beverage market because it entered later into this arena than Coke. Pepsi has tried to enter this market by trying to do in three years what took Coke 50 years to do. Nevertheless, Pepsi has to spend years “to mature simply due to Coke’s dominance in the international market and the strong ties that Coke has developed with these markets and their governments.” Additionally, when marketing its products, Pepsi utilize celebrity endorsement mostly which bored some consumers due to lack of novelty. Conversely, the success of fresh and creative advertise has consistently helped Coco-Cola attract and retain customers. The world is becoming a smaller place with investors thinking in terms of sectors rather than geographic boundaries. Broad global markets, like China, India, can provide lots of opportunities for Pepsi. We may conclude from the tables on the right that in 2004, 63% PepsiCo’s profits come from the United States 8, and in the same year, the U.S. holds 30.90% of the global market share under Europe (showed in the table below), which means Pepsi still has opportunities to compete globally. Moreover, as Pepsi targets young generation, additional youth consumers enter the market every year, which provides Pepsi adequate consumer base. For these decades, changing societal concerns, attitudes, and lifestyles become important trends that force the soft drink industry’s business environment to change. Growing health concerns for caffeine and sugar consumption threatens the carbonated industry. The large amounts of sugar, fat, and acid contained in cola will lead to heart disease, vascular diseases, osteoporosis or tooth decay. On the other hand, many other companies have tried to enter the carbonated industry, but they face high barriers, such as lawsuits and tough competition.
  • 7. Some of these companies end with searching for entering the noncarbonated soft drink industry for growth. Consequently, some consumers will turn to noncarbonated soft drink, such as bottled water, teas, instead of soda. Environmental Scan of today's carbonated beverage marketplace A quick glance at today’s beverage marketplace indicates an increasing amount of beverage alternatives in the market. As such, these beverage companies must understand the various factors that can help them succeed or fail. For instance, the increased awareness of the importance of health has significant influence on soft drink industry. Since most soft beverages comprises of unhealthy ingredients including High Fructose Corn Syrup, the beverage industry faces an incredible threat to their reputation and sales. Therefore, developing consumer-preferred products that can become an integral element in consumers’ daily lives has become an essential issue for beverage industry. Possible environmental factors are as follows:  Social environment  In 2004, 28 percent of all beverages consumed in the U.S. were carbonated soft drinks. In the United States, 450 different types are sold and more than 2.5 million vending machines dispense them around the clock, including in elementary and high schools.  As consumers focus more on health and nutritional benefits of food items, it has sparked a key new driver in trends throughout the beverage industry. The result is the decrease in sales of carbonated beverages.  Competitive environment  Monopolistic competition: PepsiCo., The Coca-Cola Company, Cadbury Schweppes  The entire beverage industry, including but not limited to bottled water, juice, other carbonated beverages, and ready-to-drink tea.  Recent growth and demand of sports and energy drinks.  Regulatory environment  In response to weight gaining and health concerns, the nation’s largest beverage makers -- including Cadbury Schweppes, PepsiCo. and The Coca-Cola Company-- agreed in May 2006 to halt nearly all soda sales in public schools. Beginning in 2009, elementary and middle schools will sell only water and juice (with no added sweeteners), plus fat-free and low-fat milk. High schools will sell water, juice, sports drinks and diet soda. Diet sodas use artificial sweeteners, which add little or no calories, though some, such as aspartame, have been embroiled in controversy for years over their questionable health benefits and even possible links to cancer.
  • 8. Obviously, Pepsi is facing not only the transition of customer perception but also the regulation stress. Besides, it always has it big and powerful competitor, The Coca-Cola Company. Under this circumstance, strategy and innovation become the top issue of Pepsi. Competitor Analysis The table below displays the various brands between PepsiCo. and The Coca-Cola Company. It appears that for every product on the market from one company, the other company has an similar product to match it. This demonstrates the intense competitive nature of both companies to keep up or outwit the competition.
  • 9. Differential Advantage The Coca-Cola Company has the distinct advantage of being the most recognized brand in the world. It is considered the classic beverage in the United States as well as in other countries. In fact, when Coca-Cola decided to change its formula dubbed “New Coke” in response to Pepsi’s emergence, public outraged roared throughout the nation. Fearing mass boycott, the original Coke formula was quickly reinstated to satisfy the demands of the public under the name “Coca-Cola Classic”. Revered as the classic beverage, Coke enjoys the stature of being the market leader. Coke appeals to a wide global audience in terms of demographics and popularity. One side effect of being the “classic” choice leads to a larger share of older consumers. PepsiCo. appeals to younger consumers with a more sweeter taste compared to Coke. Pepsi presents itself as the hip and cool alternative choice over Coke. This is evident in the deep blue hues and patterns that Pepsi takes advantage of in its marketing campaigns. Pepsi’s younger image is also aided by celebrities endorsement touted by the teen market including Britney Spears, ‘NSync, along with popular rappers. Self-proclaimed as “The Choice of a New Generation”, Pepsi devised television commercials of younger consumers participating in blind taste tests. The participants frequently preferred Pepsi over Coke. Eventually, PepsiCo. began hiring popular celebrities to promote their products. Resource Analysis The Coca-Cola Company The Coca-Cola Company’s flagship product, Coke, is sold in stores, restaurants and vending machines in more than 200 countries. Originally developed as a medicine in the late 19th century by John Pemberton, it has evolved into a dominating figure in the soft drink market throughout the 20th century. The Coca-Cola Company licenses worldwide bottlers who hold territorially exclusive contracts with the company. Cola concentrate is sold to these bottlers who them produce the finished cola in cans and glass bottles while using filtered water and various sweeteners. The finished product is then sold, distributed, and merchandised to retail stores and vending machines. Coca-Cola Enterprises is currently the single largest Coca-Cola bottler in North America, Australia, Asia, and Europe. In addition to licensing to bottlers, the company sells the concentrate to major restaurants and food service distributors for use in fountain drinks.
  • 10. The Coca-Cola Company envision a world in which…They improve the lives in every community that they touch. They replenish each drop of water that they use. Their packaging is no longer seen as waste, but as a valuable resource for future use. Workplace rights are protected and all people are respected. They work in partnership with others to provide good jobs, world class quality beverages and a healthy environment. PepsiCo The Pepsi Cola Company started in 1898 in Purchase, New York. It became known as PepsiCo when it merged with Frito Lay in 1965. PepsiCo owned Kentucky Fried Chicken, Pizza Hut, and Taco Bell up until 1997 when they were spun off into Tricon Global Restaurants – which eventually became Yum! Brands, Inc. In 1998 and 2001, PepsiCo purchased Tropicana and Quaker Oats, respectively. PepsiCo, a global American beverage and snack company, manufactures, markets, and sells a variety of carbonated and non-carbonated beverages, as well as salty, sweet and grain-based snacks, and other foods. PepsiCo also manufactures Quaker Oats, Gatorade, Frito-Lay, SoBe, and Tropicana.(Figure_3) In several ways, PepsiCo differs from its competitor, The Coca-Cola Company, having almost three times as many employees. The Pepsi Bottling Group was formed for distribution and bottling.
  • 11. Figure 3 Mission Statement: We aspire to make PepsiCo 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, openness, fairness and integrity. Values: 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 actions today 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
  • 12. 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. Based on the pie chart above, PepsiCo and Coca-Cola have roughly the same market share in the United States.
  • 13. Finacial Analysis Brief Overview Overall, PepsiCo trumps The Coca-Cola Company in many financial categories – largly in part from PepsiCo’s wide array of products throughout 4 divisions:  PepsiCo International  Frito-Lay North America  PepsiCo Beverages North America  Quaker Foods North America
  • 14. Egg Diagram Analysis of the Target Market Consumers Who are they? Teenagers between age of 12 and 18 in U.S. What do they buy? Teens want to buy something real, something from “corporations that remind them of themselves”. They don’t want things that they are thought to like. They something that pushes the boundary, different than what they had before. When do they buy it? When teens find something they can identify with and have the need that must be satisfied immediately. How do they choose? They quickly dismiss the products that look like some 45-year-old guy trying to sell them something. They easily recognize the
  • 15. old product that was yesterday’s news. They can tell what’s being “fake” and what’s being “real” Why they prefer a product? They pick a product because they believe that product can express themselves. They can relate to someone like themselves through this product. How they respond to a marketing program? They respond to something catchy. For example those ads in magazine are brightly colorful, the flashy graphics suggest that teens respond well to that type of ad campaign; in cyberspace they respond to a space created uniquely for them. They also respond well to products on sales. The target consumer market to stimulate demand within is the young teen market between the ages 12 through 18 years old, geographically located within the United States. This segment is compiled of the “Tween” market and the older high school teenagers. “Tweens develop sophisticated tastes beyond their years, with boys gravitating toward electronic, Internet, and video games, and girls preferring fashion and social interaction components” (Abernathy, 2004). With the technology age with computers and increasing demanding academic environment, tweens and teens have less disposable time, and therefore product advertising attention is often tuned out. “Tweens spend their own money today: on average, $9 a week. Some experts estimate tweens have close to $80 a week in disposable income available to them… Overall, the tween market is valued at $43 billion” (Abernathy, 2004). Beyond the tween market, the teenage high school student will sometimes hold a part time job, and have more independent tendencies. All in all, the 2000 U.S. Census estimates the U.S. population between the ages of 10 through 19 years old to be approximately 40.6 million individuals. The goal of researching the target consumer is to accurately pinpoint the consumer behavior in regards to our product. According to our finding, these teens and “Tweens” are constantly searching for identities at their age. The most effective way of appealing our product to them is to find a common ground. For example, there are various reasons why teens and “Tweens” idolize certain celebrity. One of them is that they can find bit and pieces of themselves in their celebrity idol. After all, who doesn’t like to see himself/herself being a
  • 16. celebrity? So no matter what the product is, as long as it possesses characteristic of the identity the teens and “Tweens” are searching for, they will make the purchase. The teens and “Tweens” are still very young. They have very vivid imagination and are highly visual. Therefore they are attracted to colorful pictures in the magazines. It is usual for them to just look at the pretty pictures in the magazine without reading the articles that supplement pictures. According to the finding, these target consumers prefer products that are “real”. By “real” they mean the manufacture genuinely create this product specifically for them, at least it should appears to be. Since Pepsi Cola is basically for everyone, making it appears to be special to teens and “tweens” are very important. These consumers prefer individuality. Such preference is reflected in the finding that they are constantly in search for a product that expresses themselves. The last thing these consumers wants is pressure or stereotype that sometimes appears on the commercial and magazine ads. Strategic Action Plan The strategic alliance with Walt Disney will initially consist of (i) concert support of and promotions at several of Hannah Montana’s concerts throughout the United States, (ii) Pepsi promotion via seamless advertisement within the Hannah Montana aired shows by having characters refresh themselves with Pepsi and also have Pepsi signs in the background, and (iii) a sparingly aired Pepsi commercial endorsed by Hannah Montana to be promoted via the ABC channel network (a Disney owned network). A future alliance holds the possibility of future benefits through Disney media networks and consumption at theme parks and resorts. The concert support will come with signs at the live shows and events, Pepsi sales at the concerts, and Pepsi commercial promotions on the concert screens at intermission. There will also be a special promotional event of Pepsi Challenge tasting at the Pepsi center, which was previously near sell out for Hannah Montana. The seamless advertisement on the Hannah Montana show will consist of the characters drinking Pepsi as refreshment in a natural environment along with Pepsi signs in the background of the sets. This will continue for two (2) years during the strategic partnership, and be maintained on a very subtle level in the productions. Twice a year over the two (2) year period ABC (A Disney owned network) will air a Pepsi commercial of a music video of Hannah Montana singing the Pepsi Theme song. As part of the strategic alliance, Disney is giving a low market rate for airing over the network. ABC has been topping the charts with hit series and has been expanding viewer
  • 17. base considerably over the past decade. The Denver Post summarized the market impact this pop idol holds as: “When an episode of "Hannah Montana" followed the debut of "High School Musical 2" this fall, the movie sequel got all the buzz, but the episode of "Hannah Montana" averaged 10.7 million viewers - the highest ratings for a regular series in the history of basic cable. The Disney Channel's 90 million subscribers can watch "Hannah Montana" daily, sometimes as often as seven times a day. An average 2.2 million viewers see each episode. The show also airs weekly on ABC's Saturday morning block, and is licensed in 177 countries. Of course "HM" is available around the clock as streaming video on computers and on iTunes. Compared to the ratings of all shows on U.S. television, "Hannah Montana" is second only to "American Idol" among kids 6-11 and tweens” (Ostrow, 2007). Utilizing Walt Disney’s ‘tween’ star Hannah Montana for endorsement will provide awareness and positive associations with the Pepsi brand of carbonated soft drink. This pop star idle will build significant brand equity within the demographics of young females between the applicable ages of 12 through 15 years old. This will predictably improve vending machine sales at middle schools and high schools, as well as sales at grocery stores for their respective homes. It will also build repertoire with the respective mothers who also attend the concerts and watch the shows. The mothers of the daughters are in fact the ultimate purchasers (and also partially the ultimate consumers in some cases) of the product, while their daughters are the influencers and ultimate consumers. The daughters of families will typically have a greater influence over the parents as purchasers in American families more so than comparable aged boys. This is primarily due to the value system of the parents to typically spend more attention and money on the daughters of the family, as young females are seen to need more care. This depicts why Hannah Montana is a highly effective endorsement for Pepsi within this demographic. This strategic relationship with Walt Disney will provide the future potential for a stronger partnership with Walt Disney, thereby opening the possibility of Pepsi consumption within the theme parks and resorts, while opening a powerful media network to younger audiences for future promotion channels. Kanye West will build brand equity in the male teen market between the applicable ages of 14 through 18 years old. A male target of the upper teen years is deemed more effective, due to males in their teens practicing habits of independence and having allowances for spending. His aired TV commercial will be on ABC similar to Hannah
  • 18. Montana, however it will be aired three times a year over the two (2) year period. The commercial content will be his version of a Pepsi theme.
  • 19. References  Overview: Company History (2007). PepsiCo Corporate Website. Retrieved October 28, 2007 from http://www.pepsico.com/PEP_Company/Overview/index.cfm.  Ostrow, Joanne (Oct. 19, 2007). ‘Disney Wields Its Marketing Magic.’ Denver Post. Retrieved October 29, 2007 from http://www.commercialfreechildhood.org/news/disneyweilds.htm.  Abernathy, R.W. (November, 2004). Tween Market 101. TD Monthly. Retrieved October 29, 2007 from http://www.toydirectory.com/monthly/article.asp?id=918.  The Beverage Marketing Corporation (August, 2007). 2007 Carbonated Soft Drinks in the U.S. Retrieved October 29, 2007 from http://www.beveragemarketing.com/reportcatalog3f.html.  Industry Analysis: Soft Drinks. Meghan Deichert, Meghan Ellenbecker, Emily Klehr, Leslie Pesarchick, & Kelly Ziegler. Strategic Management in a Global Context  February 22, 2006 from  https://www.csbsju.edu/library/local/5thYear/zeigler_paper.pdf  PepsiCo. Performance with Purpose (2006).PepsiCo Corporate Website. From http://www.pepsico.com/PEP_Investors/AnnualReports/06/PepsiCo2006Annual.pdf  Kumar, Arvind. Finding weakness in the competitor strength. From http://business.articlesarchive.net/finding-weakness-in-the-competitor-strength.html  Murray, Barbara. (2006b). Pepsi Co. Hoovers. Retrieved February 13, 2006, from  http://premium.hoovers.com/subscribe/co/profile.xhtml?ID=11166  Datamonitor (2005, May). Global Soft Drinks: Industry Profile. New York. Reference Code: 0199-0802.  http://www.inc.com/magazine/20001201/21117_pagen_3.html  http://www.clickz.com/3334641  www.ala.org/ala/pla/plaevents/nationalconf/program/thursdayprograms/mrbibliograph y.doc  www.marketingprofs.com/2/kewl.asp  Sampson Lee (Nov 21, 2007) Coke or Pepsi? From  http://www.gccrm.com/eng/content_details.jsp?contentid=2073&subjectid=101  Pepsi cola from http://www.freeessays.cc/db/11/bmu315.shtml  Larry West, What is the Problem with Soft Drinks? About.Com website, from http://environment.about.com/od/health/a/soft_drinks.htm