Redhawks Consulting

Pepsi’s Vietnam Challenge

“It’s important to remember that results count. If you can’t get the results over the goal line, are you really a leader?”

-Steven Reinemund, Chairman & CEO of Pepsi

Overview

• Key Concern• SWOT Analysis• Identification of Alternatives• Key Success Factors• Recommendation• Phases of Implementation• Timeline• Summary

Key Concern

• To advise the executives of Pepsi in Vietnam on the future strategic direction of the company.

SWOT AnalysisStrengths

Brand recognition

Market leader and producer of soft drinks

Initial market entry

Cover all regions of Vietnam

Snack food industry

Improvement of distribution channels

Offer environmentally friendly products

Product development

Weaknesses Lack of health benefits

Low consumption of soft drinks in Vietnam

200 product variations per year

Size of company prevents government funding

Opportunities Soft drinks popular for special occasions

1994 trade embargo

Increased consumption in rural areas

Technological advancements

Increased brand exposure in fast food restaurants

Refrigeration systems

Expansion creates jobs for Vietnamese

Threats Traveling between provinces

Coca-Cola

Domestic products

Consumer prefer healthy food items

Identification of Alternatives

1. Refrigeration System and Sanitation2. Snack Food Industry3. Youth Market Segmentation4. Exportation to Cambodia5. Maintain Current Position

Alternative 1:Refrigeration System and Sanitation

• Advantages– Health and well-being of consumer– Provide additional service– Easier to serve items

• Disadvantages– Installation costs– Maintenance costs

Alternative 2:Snack Food Industry

• Advantages– Early in product life cycle– Build upon Pepsi Brand

• Disadvantages– Research cost– Higher than average risk of failure

Alternative 3:Youth Market Segmentation

• Advantages– Half of population under age of 25– Technological advancements increase– Nostalgia and brand recognition

• Disadvantages– Vast market: 46 million people– Diversity– Rural regions

Alternative 4:Exportation to Cambodia

• Advantages– 14 million people (Median age of 22)– Annual Growth: 6.4%– Build upon current distribution channel

• Disadvantages– Very costly • Promotional• Infrastructure

– Language Barrier

Alternative 5:Maintain Current Position

• Advantages– Low cost– Customer loyalty– Maintain short-term market share

• Disadvantages– No expected growth– May lead to relative depletion of long-term

market share

Key Success Factors

Sanitation Snack Foods

Youth Market

Cambodia Same

Production Efficiency 1 1 1 2 2Supply Chain Management 2 3 2 2 2

Brand Image 3 3 3 2 2

Return of Investment 1 3 2 1 1

Total: 7 10 9 7 7

Recommendation

• Alternative 2:Snack Food Industry

Phases of Implementation

I. Establish Implementation TeamII. Market ResearchIII. Product Development IV. Infrastructure and Organizational DevelopmentV. Integrated Marketing and CommunicationsVI. Milestone ReviewVII. ExpansionVIII.Long-term Planning

Phase I:Establish Implementation Team

• Time frame: Immediately upon approval• Parties involved:– Vietnam Pepsi• Soft drinks• Snack food

– Cultural specialist (anthropologist)– Pepsi Co. of North America– Research professionals

Phase II:Market Research

• Time Frame: 0-3 Months• Analyze the following:– Market– Distribution Networks– Trends– Demographics– Psychographics

• Utilize focus groups

Phase III:Product Development

• Time Frame: 3-9 months• Select which products to introduce• Product differentiation• Ex: Aloe Vera specialty drinks in Asia

Phase IV:Infrastructure & Organizational Development

• Time Frame: 3-9 months• Distribution networks• Export and Import processes• Hire executives and management– North, Central, and Southern regions

Phase V:Integrated Marketing & Communications

• Time frame: 9 months – Ongoing• Utilize current Pepsi marketing avenues:– Television advertising– Point of sale displays– Promotional campaigns

• Market as “fast, on-the-go food”• School incentive program

Phase VI:Milestone Review

• Time frame: 12 months• Establish review criteria– Market share– Sales (net profit)

• Re-evaluate every 3-6 months

Phase VII:Expansion

• Time Frame: Upon 1st successful review• Offer other products– As directed by research

Phase VIII:Long-Term Planning

• Time Frame: 10 years +• Cambodia• Horizontal integration• Sector and distribution network

Timeline

0 3 6 9 12 15Months +Phase I: Establish Implementation TeamPhase II: Market Research

Phase III: Product DevelopmentPhase IV: Infrastructure & Organizational DevelopmentPhase V: IMC Campaign

Phase VI: Milestone Review

Phase VII: Expansion

Phase VIII: Long-term Planning

Redhawks Consulting

Pepsi’s Vietnam Challenge

“It’s important to remember that results count. If you can’t get the results over the goal line, are you really a leader?”

-Steven Reinemund, Chairman & CEO of Pepsi