Pepsi Business Strategy

8/12/2019 Pepsi Business Strategy

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Project Report on Pepsi Cola International

Executive Summary

Purpose of this project is to study the strategies which Pepsi is doing in Pakistani market

for its product Pepsi cola. Pepsi International is a world renowned brand. It is a very well

organized multinational company, which operates almost all over the world. In Pakistan

It also has proved itself to be the No.1 soft drink.

Now days Pepsi is recognized as Pakistanis National drink Pepsi's greatest rival is Coca

Cola. Coca Cola has an international recognized brand. Coke's basic strength is its brand

name. But Pepsi with its aggressive marketing planning and quick diversification in

creating and promoting new ideas and product packaging, is successfully maintaining is

No.1 position in Pakistan. Pepsi is operating in Pakistan, through its 12 bottlers all over

Pakistan. These bottlers are Pepsi's strength. Pepsi has given franchise to these bottlers.

Bottlers, produce, distribute and help in promoting the brand. Pepsi also launched its fast

food chain KFC i.e. "Kentucky Fried Chicken."

We also did analysis of the soft dink industry in Pakistan and world wide. The soft drinksset to become world's leading beverage sector. Global consumption of soft drinks is

rising by 5% a year.

Table of Contents

Titles Page #

1. Introduction 01

2. Mission and vision statement 01

3. Facts about company 02

4. Pepsi in Pakistan 04

5. Product in spot light 09

http://commerceplus.blogspot.com/2010/07/project-report-on-pepsi-cola.html





6. Market analysis of soft drink 10

7. Pakistani soft drink industry 13

8. Industrial SWOT analysis 14

9. External Environmental factors 16 10. Internal Environmental factors 21

11. Pre-marketing Mix 25

12. Marketing Mix strategies 27

13. Conclusion 39

14. Suggestions 40

INTRODUCTION TO THE COMPANY

Pepsi International is a world renowned brand. It is a very well organized multinational

company, which operates almost all over the world. They produce, one of best carbonated

drinks in the world. Pepsi is a symbol of hygiene, quality and service, all over the world.

Pepsi is producing Cola for more than 100 years and it has dominated the world market

for a long time. Its head office is in New York.

MISSION STATEMENT

"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 provideopportunities for growth and enrichment to our employees, our business partners and the

communities in which we operate. And in everything we do, we strive for honesty,

fairness and integrity."



VISION STATEMENT

"To be the world's best beverage company". Being the best means providing

outstanding quality, service, cleanliness and value, so that their every customer is

contented and happy with their products."

"To increase the value of their shareholder's investment through sales growth, cost

control and wise investment of resources."

FACTS ABOUT THE COMPANY

1. Pepsi is a USA based public company whose stocks are available in New York.

2. Mountain Dew, acquired by Pepsi-Cola in 1964, switches its advertising and package

graphics room hillbillies to action-oriented scenes.

3. The third Mountain Dew slogan appeared in 1973 "Put A Little Yahoo in Your Life."

4. PepsiCo acquired Pizza Hut, Inc. Pizza Hut was founded in 1958 by Dan and Frank

Carney.

5. Taco Bell is was acquired by Pepsi. Taco Bell was established in the mid 1960s by

Glen Bell.

6. PepsiCo purchased Kentucky Fried Chicken, the leader in the quick service chicken

market. KFC was founded by Colonel Harland Sanders. Colonel Sanders began

franchising the company in 1952. KFC was spun off along with Pizza Hut and Taco Bell businesses as Tricon Global Restaurants, Inc. in 1997.

7. PepsiCo purchases Seven-Up International, the third largest franchise soft drink

operation outside the United States



EXECUTIVES

Ms.Indra K.Nooyi

Chairwoman, Chief Exec. Officer and Pres

Mr. Richard Goodman

Chief Financial Officer

Mr. John Compton

Chief Exec. Officer of North America and Member of Liquid Refreshment Beverage

Oversight Council

Ms. Cynthia M. Trudell

Chief Personnel Officer and Sr. VP

Mr. Donald M. Kendall

Co-Founder

HEAD OFFICE

PepsiCo, Inc.

700 Anderson Hill Road

Purchase, NY 10577

United States.

Phone: 914-253-2000

Fax: 914-253-2070



Website: http://www.Pepsico.com

PEPSI PAKISTAN

The market in Pakistan is surely dominated by Pepsi. It has proves itself to be the No.1

soft drink in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In

1971, first plant of Pepsi was constructed in Multan, and from their after Pepsi is going

higher and higher. Pepsi is the choice soft drink of every one. It is consumed by all age

groups because of its distinctive taste. Compared with other Cola in the market, it is a bit

sweeter and it contributes greatly to its liking by all. Consumer's survey results explain

the same outcome and Pepsi has been declared as the most wanted soft drink of Pakistan.

Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand.

Coke's basic strength is its brand name. But Pepsi with its aggressive marketing planning

and quick diversification in creating and promoting new ideas and product packaging, is

successfully maintaining is No.1 position in Pakistan. In coming future Pepsi is also

planning to enter into the field of fruit drinks. For this purpose it has test marketed its

mango juice in Karachi for the first time.

When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and

lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon

and lime, "Teem" to compete with 7up. It successfully, after some years, took over 7up,

and this enhanced Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys

70% of the market share where as the coke just has 20% markets share.

Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are

Pepsi's strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute

and help in promoting the brand. Pepsi also launched its fast food chain KFC i.e.

"Kentucky Fried Chicken."

http://www.pepsico.com/






FOUNDERS OF THE COMPANY

The company was initially owned by late Nawab Saddiq Hussain Qureshi & family till

1989. The Pepsi International franchise declared the management incompetent, thus, thecompany was handed over to a new set of personnel. The factory set up was reorganized

& reestablished with expansion in various sectors. The Pepsi International did this by

offering it to Mr. Jehangir Tareen, who formed up his new team. Mr. Jehangir Tareen is

Nephew of General (late) Akhtar AbdurRehman.

EXECUTIVES

Board of Directors:

Mr. Akbar Akhtar Khan (Chairman)

Mr. Haroon Akhtar Khan (Chief Executive)

Mr. Gazi Akhtar Khan

Mst. Rasheeda Begum

Mrs. Mudina Akbar Khar

Mr. Saifullah Khan Paracha

Mr. Saeedullah Khan Paracha

Company Secretary

Mr. Amjad Jhanzeb Khan

Bankers

Allied Bank of Pakistan Ltd.

Citibank N.A.

MCB

NDFC

The Bank of Punjab



UBL

Legal Advisor

Cornehus, Lane & Mufti, Nawa-i-Waqat Building,

4-Shahrah-e-Fatima Jinnah, LHR.

Auditor

Taseer Hadi Khalid & Co.

Chartered Accountants.

Mill

Kanjawani, Tehsil Samundri, District Faisalabad.

REGISTERED OFFICE

31 – N,

Gulberg II,

Lahore,

Pakistan.

UAN: 111-724-725

VARIOUS PRODUCTS IN PAKISTANI MARKET

PEPSI COLA, MIRINDA, TEEM, 7UP, MOUNTAIN DEW, DIET 7UP, DIET PEPSI,

LAYS, KURKURE, AQUAFINA, PEPSI TWIST AND TROPICANA

JUICES(introduced in Karachi only).

FINANCIAL SUMMARY OF THE COMPANY AND PRODUCT In Karachi



The Finance Manager was hesitant to supply any of the data as the company is private

limited and the competitor Coca Cola is sniffing every inch of information of Pepsi Cola.

With the help of the dealers and the retailers directly supplied by the Pepsi Cola and some

rough figure given by the finance manager we became able to make the product cost ofthe Pepsi Cola and Estimated Income Statement for the month which comes into market

as 9 rupees after going through many hands.

Precisely the exact figures were not given so an estimated income statement and price

profit is made under given facts.

15,000,000 (15 million) crates of all the soft drinks are sold per year all over Karachi.

250ml regular bottle is taken as standard, 1 bottle of 1 Liter is taken as 4 bottles of

250ml. (250ml*4 = 1 Liter)

15,000,000/12 = 1,250,000 crates sold per month.

1,250,000*24 = 30,000,000 bottles sold per month.

PEPSI share is approximately 65%.

30,000,000*65% = 19,500,000 PEPSI Share.

kurkuray

Pepsi twist

Pepsi

Mountain dew

PRODUCT IN SPOTLIGHT: PEPSI



Type:

Pepsi Cola

Manufacturer:

PepsiCo

Country of origin:

USA

Introduced:

1902

Ingredients:

Amount per 100mL

Energy 196.5 kJ

Fat 0 g

Sodium 0.98 mg

Carbohydrates 11.74 g

Sugar 11.04 g

Protein 0 g

Caffeine 10 mg

Market Analysis of Soft drinks

Soft drinks set to become world's leading beverage sector Global consumption of soft

drinks is rising by 5% a year, well ahead of all other beverage categories, according to the

new 2003 Global Soft Drinks Report from leading drinks consultancy Zenith

International. Now challenging hot drinks to become the largest overall sector, soft drinksvolume is projected to reach 467 billion liters in 2003, equivalent to 75 liters per person.

"Economic and climate variations around the world present complications for all soft

drinks companies, but many have succeeded at weathering the elements," commented



Zenith Research Director Gary Roethenbaugh. "As a combined category, soft drinks offer

a powerful growth proposition. The unrelenting advance of bottled water and still drinks,

coupled with the scale of carbonates, help place soft drinks on track to become the

number one beverage sector in 2005. Market share of soft drinks in beverage industry

Concern over diet has persuaded many consumers to scale down their consumption of

sugary drinks, instead choosing 'healthy' products such as fruit juice and bottled water.

Despite this shift in attitude, the majority of consumers around the world still favor

carbonated soft drinks over these alternatives, according to latest data from TGI. In 11

out of 15 countries analyzed, it is revealed that consumption of carbonated soft drinks is

higher than consumption of fruit juice or bottled mineral water.

Age factor affecting the sales

Despite the fact that people in the majority of countries still appear to favor carbonated

drinks over the perceived healthy alternatives such as fruit juice and mineral water, some

interesting behavioral shifts underlie these figures. In many markets, an increase in the

number of people choosing diet or low calorie alternatives has contributed to the overall

sustained popularity of fizzy drinks.

Pakistani soft drink industry

About 75 million cases a year for Pepsi alone; the total beverage market is about 120

million cases of which 65% per cent are Pepsi products; about 20 to 22 per cent are Coca-

Cola products and Zum Zum cola and Mecca Cola, Amrit Cola and Muslim Cola... there

are so many colas; there is RC and Double Cola which are franchised products.Altogether they have around 5 per cent of the market. Due to the Afghan and Iraq wars,

they did get a little footing especially in the frontier and Islamabad area but still they are

not hugely popular

Total annual sale of soft drink in Pakistan 120 million cases



Pepsi annual sales in Pakistan 75 million

Market share of Pepsi 65%

Consumption growth 1.7 % per year

Industrial SWOT analysis Strengths:

The soft drinks market in Pakistan enjoyed dynamic growth over the review period in

both volume and current value terms. Carbonates dominate the market in both the on-

trade and off-trade with the lion's share of sales. Carbonates have become part of the

culture in Pakistan and multinational companies have maintained their standards over the

years to provide consumers with high-quality carbonated drinks. Off-trade sales of

carbonates are higher than those of the on-trade but both achieved strong growth over the

review period

Weaknesses:

Liquid concentrates and powder concentrates are both seasonal categories in the market

and their sales peak in the summer in Pakistan. Both Rooh Afza and Jam-e-Shirin are

traditional sandalwood drinks in Pakistan which are highly regarded by consumers. These

drinks can be found in every home in Pakistan, especially in rural areas, throughout the

summer and are the mainstay of liquid concentrates

Opportunities:

The government of Pakistan has reduced excise taxes to encourage soft drinks

manufacturers and importers. The government also reduced other applicable taxes to

promise more profits not only for soft drinks manufacturers already in the market but also

to attract potential soft drinks manufacturers to invest in Pakistan. Tax reductions proved

extremely beneficial to the soft drinks market in Pakistan and certainly encouraged and

attracted multinational companies to invest in the country's soft drinks industry. The

government also decided to tax the beverage industry on capacity of production ratherthan on actual production and that brave move encouraged soft drinks manufacturers to

maximize production and reduce prices

Threats:



Increasing health and hygiene awareness among Pakistanis has greatly increased sales of

fruit/vegetable juice products. Both the government and the media have started health

awareness campaigns to make Pakistanis realize that consumption of fruit/vegetable juice

is as essential as eating food. Fruit/vegetable juices are doing very well in both urban andrural areas. On the other hand, health and hygiene awareness has also led to increased

sales of bottled water in Pakistan. Previously bottled water was targeted only at major

cities where consumers are more health-conscious and aware of the difference between

bottled water and tap water. Nowadays, health-conscious rural inhabitants also drink

bottled water due to health concerns.

SWOT Analysis of PEPSI

SWOT Analysis, which is based on thorough review of the business (corporation, product

category competition, customers and products), identities and evaluates the internal

strengths and weakness of the companies well as its external threats and opportunities.

The marketing mix is driven by the results of the SWOT analysis.

STRENGTH

Demand of Pepsi is more than its competitors. Company has a very established name and

a good reputation. Pepsi has large market share than its competitors. As the target

customers of Pepsi is young generation, so Pepsi has more brand loyal customers. Most

of the customers are satisfied with the price of the Pepsi. Pepsi is an international

company and it has a very strong position internationally. The environment of factory is

very good and attractive. Pepsi spends a lot of budget on its advertising.

Pepsi has a very vast distribution channel and it is easily available everywhere.

Employees are also motivated. Pepsi offers many discount schemes for customers time totime. Pepsi Cola is sponsoring sports, musical concerts, walks.

The location of the Pepsi plant is utilized that all major markets of Lahore are within the

reach of the Pepsi plant within 30-45 minutes.

WEAKNESSES



Pepsi does not offer any sort of incentive or discount to its retailers. Pepsi target only

young customers in their promotions. Crown of the disposable bottle is not good. Demand

of disposal bottle is declining. Pepsi tin pack is not available in far off rural areas. Pepsi is

not considering many potential outlets like hotels, college canteens etc.

OPPORTUNITIES

Company may start entering rural areas also. The company may also diversify its

business in some other potential business. Increased interest of people in musical groups,

cultural shows and sports has provided an opportunity for Pepsi to increase its sales

through them.

THREATS

The main competitor of the company is the Coca Cola. At the international level, Pepsi

has a very strong competition with Coke. Coke has started its advertisements more

effectively to increase their demand and it is a very strong threat for Pepsi. Cola drinks

are not good for the health so the awareness level of the people is in creasing which is a

big threat to the company.

HOW Internal and External factors affecting the strategies

Marketers need to be good at building relationships with customers, others in the

company and external links. To do this effectively, they must understand the major

environmental forces that surround all of these relationships. A company's environment

consists of forces outside marketing that affect marketing management's ability to build

and maintain successful relationship with the target customers. Every company should

know the vital importance of constantly watching and adapting to the changing

environment. As the world is moving fast today, no one can be certain about the future.

The environment continues to change rapidly. By carefully studying the environment,marketers can adapt their strategies to meet new marketplace challenges and

opportunities.



Some of the external and internal environmental factors that affect the marketing trend of

the company are as follows:

EXTERNAL ENVIRONMENT

The macro environment consists of the larger societal forces that affect themicroenvironment. The external factors are not under the control of the marketers; they

can just observe them and make strategies in light of these factors. Some of these factors

are given below:

Demographic Factors:

Age

The requirements of different age groups are different. Pepsi should target that age group

that consumes it the most and make promotional strategies according to their behavior.

So their main target is the young generation.

Education

A company has to make promotional strategies keeping in view the customer level. If the

percentage of education is high in a country then through advertisements people can be

made well aware of their product and can convey their message easily. Promotion and

education has a direct relationship.

Population Distribution

Population distribution means how much [population lives I urban areas and rural areas.

In Pakistan 35 % population resides in urban areas and 65% population lives in rural

areas. Pepsi is focusing on urban areas as people there are more inclined towards such

beverage while people in rural areas are more inclined drinking lassi and desi drinks.

Population Density

It means number of people in one square km per area. Karachi has the largest population

density and Islamabad has less population density in Pakistan. Pepsi sales are more in

Karachi as compared to the sales in Islamabad.

ECONOMIC FACTORS:

Income and Income per Capita

If the income level or per capita income of the people increases, it will have a positive

effect on the consumption of Pepsi.



Inflation

If the country faces inflationary trend in the market, the price of the Pepsi will ultimately

increase which will lower its demand.

Consumption Behavior Pakistan is a consumption oriented society. Due to demonstration effect the people are

more inclined towards consumption than saving. So the people of Pakistan spent heavily

on food items. Hence Pepsi has a good market share in the present circumstances.

Income Distribution

It means how much is in the hands of rich and poor class. In Pakistan 10% rich people

posses 93% of wealth and 90% people posses 7% of wealth. If there is balanced

distribution of income in the country, the consumption of the people will increase hence

increasing the sales of beverages as well.

Payment Mod

As the use of plastic money is increasing the consumption pattern of the people are

increasing. Although it will have a low affect on the consumption of Pepsi.

Employment Opportunities

As employment opportunities increase the living standard of the people increase and the

people consume more.

Aggregate Demand

In case of Pepsi, aggregate demand of the product increases in the season of summer as

the hot weather makes the consumers want to drink more.

Aggregate Supply

In summer season to cope up with the increasing demand they have to increase the

aggregate supply of their product.

Economic Policies

Some of the economic policies which can affect the market of Pepsi are discussed below:

Fiscal Policy

It is the policy of taxes. If heavy tax is levied on Pepsi then its price will rise having

negative affect on its consumption.



Monetary Policy

Monetary policy is made to restrict or increase the supply of money in the market. If

policies are made to restrict the flow of money in the market, inflation can be controlled

hence increasing the real income of the people which will ultimately affect theconsumption of Pepsi.

Price Policy

If price of Pepsi is increased its demand will decrease and vice versa.

Income Policy

If income of the people will increase their purchasing power will increase and hence

increasing the market share of Pepsi.

PHYSICAL FACTOR:

Region

Pakistan is divided into different geographical regions. Marketing and sales of Pepsi is

different in different geographical regions. In hot areas its demand is more.

City Size

The cities which are densely populated the consumption of Pepsi is more.

Climate

Pepsi is more suitable for humid or hot weathered countries like Pakistan. It is a source of

refreshment when a person is thirty due to the hot weather.

Infrastructure

Roads are the basic need for transportation of Pepsi from one place to another. Pepsi

cannot open factories in every city of Pakistan so it has to transport it to other cities

where Pepsi is demanded.

Electricity is the basic necessity for production of any product. Constant load shedding

slows down the process of production which leads to less production and low market

share.

TECHNOLOGICAL FACTORS:

Research and Development

Through research and development quality of the product can be improved or better

techniques or machinery can be developed which can increase the production. When



technology is advance the supply of the product increase hence the company experiences

growth in their business.

POLITICAL AND LEGAL FACTORS:

POLITICAL STABILITY: Whenever the government is considered to be stable, the business will flourish. If there is

political stability in the country the policies and strategies made by Pepsi can be

consistent to be implemented. Foreign companies are also keen to invest in those

countries which are politically stable where they have no fear of decline in their market

share or shut down due to sudden change of government.

Mixed Economy

In mixed economy government and private sector both plays their role in developing the

economy of the country. Investment by foreign companies like Pepsi is more likely to

flourish in mixed economy.

Laws Formulation

Government has given copy rights to Pepsi so that another company cannot sell their

product by the name of Pepsi. The countries where laws are formulated, the strategies and

activities of the company are different.

Social Responsibility

Pepsi's social responsibility is to provide its customers with clean and hygienic product so

to do this they have increased the use of disposable bottles.

SOCIAL AND CULTURAL FACTORS:

Psychographic

It is a combination of demographic and psychological factors. Psychological attributes

mean how you perceive things. The company will focus on the behavior of consumers

and make different changes in their product quantity or quality and in promoting their

product so that they can attract the customers. Keeping in view that the behavior ofdifferent consumers is not alike they have to make their marketing strategies in

accordance with their requirements so that they are convinced to buy the product.

Religious



Religious factors can influence the market sales of Pepsi as it happened in 2003 when the

U.S-led attack on Iraq, wide sections of society in Pakistan have banned American

multinationals Coke and Pepsi

Social Status Pepsi is a well renowned brand. People who are brand conscious will not drink beverages

of lesser known brands such as Amrat cola. They will try to show their status by drinking

Pepsi which is known to all as a quality drink.

Media

It is a very important factor for marketing. Media these days is a very effective way of

inspiring people to buy a specific product. A good promotion can boast up sales to a great

extent.

INTERNAL ENVIRONMENT

CUSTOMERS:

There are three types of customers

1. Consumer

2. Business

3. Government

Pepsi main focus is the consumers which are the end users. Pepsi has to make its

marketing strategies keeping in view the consumer buying behavior. To forecast the

behavior of the consumer is a business problem. Physical aspect of the consumer can be

satisfied but it is difficult to satisfy the consumer psychologically. Consumer buying

behavior is affected by certain factors like Cultural factors, Social factors, Personal

factors and Psychological factors. So the producer should keep these factors in Mind

while promoting their product so that they can acquire the customer and increase their

market share.

There are different consumers in a society whose behavior is not the same. Every

consumer has a different perception of different products. Some consumers are impressed

by one quality of the product which may be in the view of other consumer not that

impressive. So to deal with different consumers in a society one should know about the



consumer buying behavior process which may help in making a true picture of their

product in the mind of the consumers.

CONSUMER BUYING BEHAVIOUR PROCESS:

Consumer buying behavior process is explained in some steps which are discussed below:

Need Identification

The consumer is thirsty and he wants to quench his thirst.

Information Search

He will search as to what will satisfy his thirst the most.

Evaluation of Alternatives

He will now evaluate from the wide range of beverages available to him that which one

of them is suitable to him in terms of quality, taste and is pocket friendly.

Selection

After evaluating the product he will select a product.

Purchase

The consumer will buy the selected product.

Post-Purchase Experience:

It is the experience that the consumer gets after using the product. He will use the product

again if he feels that his satisfaction after use is more or equal to the price of the product.

After looking at above mentioned example, we can get an understanding that a product

should be so desirable that whenever a person identifies his need, he selects our product

among various substitute products and he feel satisfies so that he retains the use of that

product.

SUPPLIER:

He is the person who provides raw materials to the producers or sellers. Suppliers form

an important link in the company's overall customer value delivery system. They providethe resources needed by the company to produce its goods and services. PepsiCo

International provides raw materials to Pepsi franchises in Pakistan. Supplier problems

can seriously affect marketing. Marketing managers must watch supply availability i.e.

supply shortages or delays, labor strikes and other events can cost sales in the short run



and damage customer satisfaction in the long run. The company should monitor the price

trends of their key inputs. Rising supply costs may force price increases that can harm the

company's sales volume.

No. Material Manufacturer/ Supplier(s) Approved from

1.Pepsi

Concentrate

PepsiCo Inc. Ireland & PepsiCo Factory

in Hattar Estate.Approval at the factory

2.Caps &

ClosuresGatron Pakistan Limited

Approved form PepsiCo

China.

3. Plastic Bottles Galtron Pakistan LimitedApproved from PepsiCo

China.

4. Glass BottlesBalochistan Glass Mills

Tariq Glass Limited

Approved by PepsiCo

China.

5.Carbonated

WaterPakistan Bottlers (Pvt) Ltd.

Approved from PepsiCo

U.A.E, Dubai.

COMPETITOR:

He is the person who is selling the same type of product in the market.

The marketing concept states that to be successful, a company must provide greater

customer value and satisfaction than its competitors do.

Pepsi has a tough competition with Coca Cola while it faces a little competition with the

local producers like RC Cola, Shandi Cola etc. The local producers hardly affect the sales

of Pepsi in the market. There are different types of competitor in the market. Some of

them in which our product lies are discussed below:

Close Vs Distant Competitor

Pepsi and Coke are close competitors. It means that both have direct competition in the

market, their products are close substitutes for one another. Both the products can

influence the market share of one another through effective strategies made to cope up

with their competitors.



Pepsi cola and Nestle juice are distant competitors of one another. It means that their

products satisfy the same want but they are in indirect competition with one another.

Strong Vs Weak:

Coca Cola and Pepsi are strong competitors. In Pakistan Pepsi is the market leader and

Coca Cola is its competitor. The Pepsi makes defense strategies so that it can maintain its

position in the market. While Coca Cola is a challenger and it makes attack strategies so

that it can become the market leader.

Pepsi and Shandi Cola are weak competitors. Pepsi is the market leader and Shandi Cola

is the follower. Pepsi is not in direct competition with the Shandi Cola. It means that

Shandi Cola has little effect on the sales of Pepsi.

DISTRIBUTOR:

Distributor maintains the image of the product and the sales in the market. If items are

not properly placed by the distributor, it will disperse the market.

CHANNELS OF DISTRIBUTION

The Pepsi uses the following two channels for the distribution of their products.

Indirect Distribution

Indirect distribution involves agency holders e.g. Riaz Bottlers Pvt. Ltd. Lahore franchise

has divided its region i.e. Lahore and Kasur districts in two categories.

Local Zone

These are 62 agencies distributing Pepsi Products (250ml Sd) only around Lahore in their

respective allocated sub zones.

Out Station Zone

17 dealers have been appointed by the bottlers for far distant places and in out skirts of

Lahore and Kasur the dealers involved in direct distribution are only authorized to sell

250 ml (STD) bottle of Pepsi, Team and Marinda.

Direct Distribution

The factory vehicles operate on 45 direct routes in Lahore selling non-returnable bottles

Litter, Pet and Can.



PRE-MARKETING MIX

SEGMENTATION

It means that you divide the target market in to different groups. Market consists of

buyers and buyers differ in one or more ways. They may differ in wants, resources,

locations and buying practices. Through market segmentation companies divide large,

heterogeneous markets into smaller segments that can be reached more efficiently and

effectively with products and services that match their unique needs.

Segmentation is done on basis of the previously mentioned external factors and the

following:

Behavioral Base

It is how people perceive a specific product, in short psychological analysis of a product.

Pepsi all over the world is recognized as a quality drink and therefore people drink itwithout any hesitation whenever they are thirsty or otherwise. So marketers of Pepsi have

made it a drink for all people and for diabetic people they introduced diet Pepsi.

Cognitive Base

It pushes and pulls the consumer. If the outlook of Pepsi bottle is desirable and it attracts

the consumer, he will buy it even if he isn't thirsty.

TARGET MARKET

The market which is focused by the producer is called the target market. Targeting is to

focus on the target market to attract the customers.

CHARACTERISTICS OF TARGET MARKET



The target market should have some following features.

Accessible

It means that the target market which is focused should be accessible or easily

approachable.

Substantial

The target Market should be substantial. It should have a specific size where strategies

can be made and implemented.

Measurable

One should be able to measure the demand in the market.

Comparable

The producer should identify that needs of different customers are different.

Profitable

The target market should be profitable for the producer.

MARKETING STRATEGIES

There are different marketing strategies which are applied in targeting. Some of these

strategies which Pepsi follows are discussed below:

Mass Marketing

Big firms or companies say that everyone is their buyer whether they belong to rural or

urban area, big or small country, rich or poor, adults and small children etc. Pepsi is

mostly used by the young generation but it claims that it is moving towards mass

marketing.

POSITIONING STRATEGY

It means that you try to give image to your product in the mind of the customers. To give



a true and positive picture of the product is the best positioning. The company should

promote its good points or comparative advantage which it has over its competitors

DIFFERENTIATION STRATEGY

In order to serve your target market you introduce different things to your product so that

your product can be differentiated from other products.

Basis of Differentiation

There are many bases on which a product can be differentiated but Pepsi has

differentiated its product on the following base:

Product Differentiation

Pepsi differentiate its product from its competitors on the basis of brand, quality and

taste.

Image Differentiation

Logo is used for image differentiation. Logo is what establishes a brand name in the

consumer mind. It is the brands identification, signature and image. Pepsi has kept on

changing its logo from time to time.

Marketing Mix Strategies

PRODUCT

The soft drinks market in Pakistan enjoys dynamic growth in both volume and value

terms. Carbonated drinks have become part of the culture in Pakistan and multinational

companies have maintained standards over the years to provide the nation with high-

quality drinks. Rural areas of Pakistan have driven sales of carbonated drinks to new



heights as more than 60 percent of the population resides in rural areas and young

consumers are more attracted to advertising. Pepsi is the most popular and leader brand in

the Pakistani market and is consumed by children and adults alike. Pepsi is a responsible

corporate brand of Pakistan and have contributed a lot to the economy.

In marketing, a product is anything that can be offered to a market that might satisfy a

want or need. Until unless the product of the company is not strong in the market it can

not survive in the longer run.

Pepsi has a product line comprised up of carbohydrate drinks, Lays and many other

products in Pakistan. Pepsi's product line satisfies consumer needs because Pepsi

produces different types of soft drinks for different consumers.

The most popular product of Pepsi is Pepsi Cola. Due to its good taste Pepsi is a well-

known product. Thus Pepsi Cola satisfies the consumer's needs efficiently by launching a

desired product.

New product development by Pepsi

Pepsi is doing new product development on frequent interval of times. The purpose of

which is to refresh the brand. By new products and innovative ideas consumers can easily

be attracted.

In following ways Pepsi is doing new product development.

New product category

Pepsi which is mainly a company of soft drinks After establishing a brand in Pakistan

Pepsi came into several new product category. Lays, kurkuray and aqua fina, fast food

restaurants are the examples of new product category.



Product line extension

Mountain dew is the most recent addition in the product line of soft drinks which is very popular especially among the youngsters.

However Pepsi launch its several variants with a minor difference on frequent interval of

time. There have been many Pepsi variants produced over the years since 1903, including

Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold,

Pepsi Holiday Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil), Pepsi Next

(available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One,

Pepsi Ice Cucumber and Pepsi White in Japan.

Line Filling

Pepsi claims that they are doing mass marketing but there was an unfilled gap in the

consumers. The diabetic patient can't use the regular Pepsi because of the sugar. So Pepsi

had introduced diet Pepsi to fill the gap in their drinks as of then onwards even diabetic

people became their consumers.

Incremental Improvement

Pepsi jumbo is an example of incremental improvement made by Pepsi. It was 2.25 litter

bottle introduced few years ago in Pakistan. The purpose of this packing is to offer the

Pepsi to a family for one or two time meals. Price of this pack is also kept low so that is

can be affordable easily by the consumers.

PRODUCT line



SODA WATER CHIPS JUICES

Pepsi cola Aquafina Lays Tropicana

Teem Kurkure

Mirinda

7up

Dew

Pepsi twist

WIDTH

Different product line,

Soda

Diet soda

Purified water

Chips

Juices

LENGTH

Length includes number of items produced by Pepsi under each appropriate column of

width. For example in column of soda drink marinda and team etc comes in.

DEPTH



The variants that are offered by Pepsi in terms of size and quantity,

1. 175 ml Mini Bottle

2. 250 ml Regular Bottle

3. 300 ml Tin

4. 1000 ml Regular Liter Bottle

5. 1500 ml Disposable Bottle

BRANDING:

Consumer view a brand name as an important part of the product and branding can add

value to the product. A name, term, sign, symbol or design or a combination of these

intended to identify the goods and services of one seller or group of seller and to

differentiate them from their competitors.

LOGO

Logo is what establishes a brand name in the consumer mind. It is the brands identify,

signature, image and more often it is a logo that makes of breaks a product logo plays a

very effective role to improve the product or brand. Pepsi kept on changing its logo from

time to time along with the trade marks.

Evolution of Pepsi logo



1909-1939: Delicious and Healthful

1939-1950: Twice As Much For A Nickel Too

1950-1963: The Light Refreshment

1953-1961: Be Sociable

1961-1963: Now It's Pepsi For Those Who Think Young

1963-1967: Come Alive! You're In The Pepsi Generation

1967-1969: Taste That Beats The Others Cold

1969-1973: You've Got A Lot To Live, Pepsi's Got A Lot To Give

1973-1975: Join The Pepsi People Feelin' Free

1975-1978: Have A Pepsi Day

1978-1981: Catch That Pepsi Spirit

1981-1982: Pepsi's Got Your Taste For Life!

1983-1983: Pepsi Now!

1984-now: Pepsi, The Choice Of A New Generation

2000 The choice of a new generation.

2003 Zinda Dilon Ki Pehchan.

2006 Generation next.

PRICE

The amount of money charged for a product or service, or sum of the values thatconsumers exchange for the benefits of having or using the product or services. As price

gives us the profit so this P is very important for business price of product should be that

which gives maximum benefit to the company and which gives maximum satisfaction to

the customer.



Following factors Pepsi kept in mind while determining the pricing strategy.

Price should be set according to the product demand of public.

Price should be that which gives the company maximum revenue.

Price should not be too low or too high than the price competitor is charging from their

customers otherwise nobody will buy your product.

Price must be keeping the view of your target market.

The price of Pepsi Cola, despite being market leader is the same as that of its competitor

Coca cola.

Some times, Pepsi places its customers into some psychological pricing strategies by

reducing a high priced bottle and consumers think that they save a lot of money from this.

Prices of different bottles

Regular bottle e= rupees 10

Non Returnable/disposable= rupees 17

Liter Bottle=rupees 30

1.5 Liter Bottle= rupees 50

2.25 Liter Bottle= rupees 60

Analysis of the product in Pakistani market

According to a survey conducted by brand award association availability has been

declared as the second best contributing factor in the success of Pepsi and it simply

indicates that effectiveness of its distribution network which ensures its availability in

every far off corner of the country. Affordability has been rated as the third best option

and indicates consumer's sensitivity to prices of daily consumption items. Quality has

been considered as the lowest rated criterion and it is unusual. It indicates that counterfeit

product is getting prevalent in the market. There are more than ten COLAS in the market

and the popular acceptance of Pepsi is creating problems in its way of success. Pepsi will



have to make a strong drive to close all illegal manufacturing and packing of cola

carbonated drinks which has become common now-a-days and counterfeit cola

replacements can be seen in every market

PRICING STRATEGIES

Competitionbased pricing approach

Pepsi has intense competition with the coca cola the largest soft drink company world

wide. So its pricing cant exceed too much nor decrease to much as compared to the price

of coca cola. If price of the Pepsi exceed too much from the coke peope will shift to the

coca cola and on the other hand if the price of Pepsi decreases people might get the

impression that quality of the Pepsi is also low.

Promotional Pricing Policy Pepsi has offered promotional prices very frequently. Especially on some occasion Pepsi

reduces its rates. like in Ramazan Pepsi reduces its rate unto 5 rs on 1.5 litter bottle.

Market Penetration Pricing Policy

Prices in beverage industry are determined by the consumer. In an economy like that of

Pakistan, consumers tend to switch towards a low priced product. Pepsi objective is to

target every consumer of the country so Pepsi has to set its prices at such a level which no

one can offer to its consumers. That is why Pepsi Cola charges the same prices as are

being charged by its competitors. Otherwise, consumers may go for Coca Cola in case of

availability of Pepsi at relatively high price.

DISCOUNTS



Pepsi Cola offers various discounts to those retailers who have the maximum sales of

Pepsi products on daily, monthly and on seasonal basis. Same of the main discounts

given to the retailers are as follows:

Quality Discount Following are discounts offered by Pepsi.

1/10 Discount

I.e. one case of Pepsi is free on buying 10 cases of Pepsi at one time.

2/20 Discount

I.e. two cases of Pepsi are free on buying 20 cases of Pepsi at one time.

Seasonal Discount

Following are discounts offered by Pepsi.

Pepsi also offers seasonal discounts schemes by reducing price in Ramadan and on Eid.

Pepsi also offers trade in allowance for retailers.

3 B – F Discount

I.e. some times, especially in the off-season duration, in order to increase the sale of

Mirinda and Teem, 3-BF discount is given (i.e.) 3 bottles free on purchasing every case

of Teem and Mirinda.

INCENTIVES

Mainly two types of incentives are given by the Pepsi Cola:

Incentive to Retailers

Pepsi Cola provide various incentives to retailers on the best sales and achieving the

predetermined sales targets. These incentives are in the shape of:

Deep Freezers

Return Tickets

Free Transportation Services.

Incentive to Dealers

The best dealer of the year is awarded with a brand new Suzuki Pickup. The second best

is awarded with Motor Cycle. The third best is awarded with Return Ticket to Middle

East.



Credit

There is no credit system in the beverage industry. Every single bottle is sold on the cash basis.

Special Offers

Pepsi Cola gives special offers to consumers on special occasions like Ramadan and Eid

days instead of decreasing the price of the products, some special packs like Pakkora

Mix, Chat Massala, or Free Drinks with Liter Bottles are offered.

PLACEMENT

Placement is accomplished through efficient and sufficient channels of distributions.

These channels constitute systems of economic institutions through which producers

deliver goods and services into the hands of their users. There are various channels

through which Pepsi distributes its output.

PRODUCT OUTFLOW

Pepsi Cola International has given franchises all over Pakistan. These companies have

installed their plants in different parts of Pakistan with these specified areas and names

e.g.

City Name of Franchise

Karachi Pakistan Bottlers

Lahore Riaz Bottlers

Faisalabad Punjab Beverage

Pepsi Cola provides consumers place utility which is, where ever and when ever you

want it, you get it! Pepsi's channel of distribution is very aggressive according to the

consumers, manufacturers and distributors. Pepsi has 12 different units in different areas



of Pakistan, which make the Pepsi easily available all over the country.

The cities in which the Pepsi units are:

Lahore

Sukkur

Karachi

Multan

Dera Ghazi Khan

Islamabad

Faisalabad

Quetta

Hyderabad

Sahiwal

Hattar

Pepsi is an international brand so it also has other units in other countries of the world

like America, Europe, Afghanistan, Middle East and Central Asia. The big advantage for

Pepsi in Pakistan is that it distributes the product through bottlers. So bottlers' effort also

contributes in the promotion of Pepsi.


Direct Distribution

Indirect Distribution

Local Zone

Outside Zone



Direct Routs – 45

Authorized Dealers - 17

Agencies – 62


The Pepsi uses the following two channels for the distribution of their products.

1. Indirect Distribution

Indirect distribution involves agency holders e.g. Riaz Bottlers Pvt. Ltd. Lahore franchise

has divided its region i.e. Lahore and Kasur districts in two categories.

Local Zone These are 62 agencies distributing Pepsi Products (250ml STD) only around Lahore in

their respective allocated sub zones.

Out Station Zone

17 dealers have been appointed by the bottlers for far distant places and in out skirts of

Lahore and Kasur the dealers involved in direct distribution are only authorized to sell

250 ml (STD) bottle of Pepsi, Team and Marinda.

2. Direct Distribution

The factory vehicles operate on 45 direct routes in Lahore selling non-returnable bottles

Litter, Pet and Can.

SPECIAL POINTS



Other than these some special points are also being looked after by direct sales vehicles

such hotels restaurants, public parks, big and reputed super stores etc. At Avari, Pearl

continental, village, Seas magnificence etc. Pepsi Cola directly distributes the products.

Promotional Strategies

In Pakistan Pepsi is the most liked soft drink especially by young generation so the Pepsi

cola company has devised such marketing strategy which attracted them. For this reason

they started monitoring the habits of the generation. What they saw was that the students

were crazy about cricket and usually liked to idealize them so in order to increase their

sales the Pepsi cola company paid high amounts of money to the cricketers to act as their

spokes men.

Some of the most famous cricketers in the modern era have acted as spoke persons also

film stars have been acting as spoke persons.

The Pepsi cola company has after doing research also has introduced different size of

bottles offered at lower prices so that every one can afford them. Also Pepsi Company

has introduced other soft drinks including mountain dew, seven up and marinda. Pepsi

company has introduced other flavors such as Pepsi twist, Pepsi max diet Pepsi.

Pepsi Cola Company has also become official sponsors of Pakistan cricket and has

sponsored a number of series.

Also Pepsi has donated a lot to the earth quake victims and has launched a number of

prize schemes to attract new customers

As a result of this marketing strategy Pepsi has become the largest seller of soft drinks in

Pakistan and is slowly forming a monopoly in drinks market. Although many soft drinks

like Pepsi have been introduced such as Amrit Cola, Quibla Cola offered at lower prices

but none of these drinks have been able replace it.



Following are the strategies:

Comparative Parity Method:

As we have already discussed Pepsi pricing strategy is determined y consideration the

strategy of coca cola so in this case also Pepsi ads are telecasted with the competition in

coca cola which is its direct competitor.

Objective and task methods

When Pepsi introduced any new variant they have advertised it heavily. Objective of

which is to make a space for new product in the market. We have seen the heavy

advertisement of Pepsi max in previous days.

Seasonal advertisement:

Frequency of the Pepsi ads varies from time to time. When the season is on Pepsi do

heavy advertisement especially in ramzan days or eid occasions but this advertisement

not remain consist. We can hardly see the ads of Pepsi now as there is winter season.

CONCLUSION

Pepsi is a well renowned company and it has maintained its position well by

understanding the client psychology, by ensuring quality, by introducing ingenuity in

products, by enlarging its product base, by keeping economic factors in view and by

intense and jazzy advertisements.

Whenever and where ever there is a spotlight event, Pepsi must figure in, like the one day

international cricket matches between India and Pakistan many other such occasions. The

key word for success in the Marketing World is to "remain in the spotlight" and that is

what Pepsi is doing.



SUGGESTIONS

The marketing world is full of surprises. Who could imagine that Coca Cola would be

overtaken by Pepsi? If Coke could be overrun by Pepsi, it would be no wonder that Pepsi

might be overtaken by some other beverage. The need then is to combine quality withingenuity. Along with that, the reputation of the company has to be kept robust.

Today we live in a fast moving world where novelty and newness count a lot. One cannot

rest on one's laurels. Fresh efforts, newness of approach must remain the cardinal

principles of a well orchestrated marketing strategy and the campaign must be relentless.

A continuous bombardment in advertisement would convince the clients that Pepsi is a

part of their lives. In order to live with style, Pepsi ought to be an essential ingredient of

one's life.

The Pepsi is at its maturity stage and the sales of company are not growing very rapidly.

Company is doing a lot of promotional activities to let the product remain in the market.

It holds a large share of the market and whenever the sales state declining, the company

can improve it by different promotional activities.

Marketers of Pepsi can try to improve sales by improving one or more marketing mix

elements. They can cut prices to attract new users and competitor's customers. They can

also launch a better advertising campaign or use aggressive sales promotion to improve

the sales. Thus, Pepsi is at its maturity stage.

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