Segmentation and targeting

PepsiCo uses a multi-segment type of positioning and thus, it always targets more than one customer
segment at the same time either with different products or service packages. For example, Pepsi-Cola is
positioned as a soft drink that tastes nice and has a pleasantly refreshing impact. However, Pepsi-Cola
contains a significant amount of sugar, and thus not placed for customers that are very cautious about
the health implications of consuming carbonated soft drinks. For this specific customer segment,
PepsiCo offers Diet Pepsi, which is positioned as a carbonated soft drink that contains less among of
sugar compared to Pepsi-Cola and other soft drinks.

Type of segmentation

Segmentation criteria

PepsiCo target segment

Geographic

Region

Domestic/international

Density

Urban/rural

Demographic

Age

12-45

Gender

Males & Females

Life-cycle stage

Bachelor Stage young, single people not living at home

Newly Married Couples young, no children

Income

Average, above average and high earners

Occupation

Students, employees, professionals

Behavioral

Degree of loyalty

‘Hardcore loyal and ‘Softcore loyal

Benefits sought

Refreshment, enjoying good taste, the satisfaction of a habit, spending time

Personality

Easygoing/determined/ambitious

User status

Regular users

Psychographic

Social class

Working class, middle class, and upper class

Lifestyle

Aspirer, Explorer
Some of the key findings include-

It mainly segments its market demographically which includes age, income and family size. Pepsi's
behavioral aspect of the segmentation has been a key to the company's success. Age is one of the most
significant parts of the segmentation of Pepsi. Pepsi introduces Pepsi diet for the people who are
suffering from diabetic and for those who are likely to avoid sugar and for the aged

People especially 40 plus. Pepsi mainly produces the Pepsi Cola. The primary customer of Pepsi cola is
young people whose age is 10 to 35. On an income basis, Pepsi also segments their market by making
the little pack. They offer a competitive price range to all class of people. They consider the economic
situation in our country. So they introduce Pepsi at a different price for different the people whose
income is different. They think about the student, poor people, and middle-class people economic
condition for their pricing. Family size basis is also a base segmentation for Pepsi. In our country, there
are many families with different family size. So Pepsi is served into many size 250ml, 500ml, 1L, 1.5L, 2L
pack. People can easily choose a suitable package based on their family size. Target Marketing: The
reason why Pepsi-Cola has fiercely targeted this market is because it is the largest among its users.
Market segment profiles have shown that the majority of carbonated beverage drinkers are youth and
middle age people. Pepsi continually targets the Schools, Colleges, Universities, restaurants, hotels, and
fast food Stores. For this, they always spend vast amounts of money to compete with Coca-Cola in
acquiring contracts with universities to have sold representation of their product distribution. Pepsi
consumers are mostly teenagers and young adults between the ages of 14 to 29.

The positioning of the brand

for different target customers is different for example - starting with the youth brand has always
focused on them using taglines such as ‘Yehi Hai Right Choice Baby', ‘There is Nothing official About it',
‘Yeh Dil Maange More', ‘Yeh Hai Youngistaan Meri Jaan', ‘IPL, Na Tameez', ‘Change the Game' and with
‘Oh Yes Abhi', it again emphasizes its focus on the youth which always remained central to it.

To catch the pulse of the youth of the nation, PepsiCo has launched a new campaign that portrays the
‘impatience' of the so-called ‘youngistaan'. The new brand positioning ‘Oh Yes Abhi', in sync with the
brand philosophy of Pepsi, targets the youth.

The brand claims that it is the start of a new path and will be showcasing a series of innovative initiatives
to engage with its target audience over the year

Deepika Warrier, VP, Marketing Beverages, PepsiCo India said that the new positioning will be about
the impatient youth, who believes in making the most of the moment and therefore wants action ‘right
now!'.

"‘Oh Yes Abhi' translates into life for the present, ‘now' is the time to bring about a change; ‘now' is the
time to take action and many such sentiments synonymous to the young generation today.
Like the brand, they aggressively positioned themselves as a drink for quenching thirst, parties, and get-
togethers. Apart from them for the customers who are very health conscious, they have Pepsi diet
which has fewer calories compared to its other drinks.

Cost and differentiation drivers

PepsiCo applies different generic competitive strategies, considering the company's vast array of
products. However, the central generic plans that contribute to PepsiCo's competitive advantage are as
follows:

Cost leadership and broad differentiation

PepsiCo uses cost leadership as its primary generic competitive strategy. This generic strategy focuses
on cost minimization as a way to improve PepsiCo's financial performance and overall competitiveness.
For example, to compete against Coca-Cola products, PepsiCo offers low prices based on low operating
costs. The company also sometimes has special promotional offers with discounted prices. On the other
hand, PepsiCo uses broad differentiation as its secondary generic competitive strategy. This generic
strategy enables competitive business advantage by attracting consumers to some unique features of
the firm's products. For example, PepsiCo's Lay's potato chips are marketed as a healthful snack product
because of reduced saturated fat content. A strategic objective of the cost leadership generic strategy is
to automate production processes to minimize PepsiCo's operating costs. In relation, PepsiCo's strategic
aim for the broad differentiation generic strategy is to innovate products to address concerns about
their health effects.

To maintain the cost leadership, other strategies adopted by PepsiCo are

Market Penetration - PepsiCo implements market penetration as its primary intensive growth strategy.
This intensive strategy supports business growth through increased sales, such as from a more
significant market share. For example, PepsiCo uses aggressive marketing to attract more consumers. A
strategic objective linked to this intensive growth strategy is to minimize costs and prices to attract more
consumers despite market saturation. As such, PepsiCo's generic competitive strategy of cost leadership
supports this intensive strategy for growth.

Product Development - PepsiCo's secondary intensive growth strategy is product development. This
intensive strategy relies on providing new products for acquiring more customers. For example, PepsiCo
continues to make products or their variants, such as low-calorie, reduced-salt, or low-saturated-fat
options of its food and beverage products. The primary strategic objective associated with this intensive
growth strategy is to boost R&D investments for the innovation of new products. PepsiCo's generic
competitive strategy of broad differentiation supports this intensive strategy by offering very new and
novel products to attract more consumers and thus helps to grow the business.
Market Development - PepsiCo uses market development as its supporting intensive growth strategy.
This intensive strategy supports business growth by acquiring new markets or market segments. For
example, PepsiCo continues to expand its distribution network to reach the last remaining markets or
parts, especially in suburban and far rural regions. However, market development is only a supporting
intensive growth strategy because PepsiCo already has the significant presence in all regional markets
worldwide. A strategic objective of this intensive strategy is to expand PepsiCo's supply chain to support
the growth of its distribution network. The cost leadership generic competitive strategy enables PepsiCo
to efficiently use this intensive growth strategy through cost minimization despite additional
investments used for expansion to new markets or market segments.