Magurianu Eduard Luminare Radu

PepsiCo

1. Company Mission

PepsiCo’s mission statement is “to provide consumers around the world with delicious, affordable,
convenient and complementary foods and beverages from wholesome breakfasts to healthy and
fun daytime snacks and beverages to evening treats.” This statement reflects the company’s
determination to have the best impact on everyone, including the immediate consumers, through
differentiated products.

2. Corporate objectives

Ranking at #48 in the Fortune 500 as of 2019 and boasting 267,000 employees, we can gather that
PepsiCo’s essential need is to remain financially sustainable, with the main objectives of the
company being asserting and retaining the position of market leaders while ensuring that the
company continues to be profitable. Their official objectives, as presented on their website, very
much reflect that assessment:

Market oriented objectives:

- Broaden their portfolios to win over local convenient beverages market

- Accelerate international expansion, with disciplined focus on 'right-to-win' markets

Internally oriented objectives:

- Drive savings through comprehensive cost management in order to effectively reinvest in

the marketplace
- Develop and scale core capabilities globally through technology
- Build differentiated talent and culture

Socially oriented objectives:

- Leveraging their scale, reach and expertise across the areas where it can have the greatest
impact – agriculture, water, packaging, products, climate and people – to help build a more
sustainable food system.
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From that set of objectives it is safe to conclude that PepsiCo is determined to win internationally,
but not at any cost. Due to the sheer size of the company, introspection must always be carried out
in order to discover what internal practices can be performed in more effective manners both
economically, and socially.

3. Marketing Audit

Microenvironment

Suppliers

PepsiCo allows their suppliers to comply with their own standards of integrity. Unethical or illegal
behavior of suppliers may undermine the reputation of PepsiCo as a world-class company and lead
to a loss to their communities. Therefore, all suppliers should abide by PepsiCo Supplier Code of
Conduct and related policies and commitments as a condition for doing business with PepsiCo.

Intermediaries

The intermediaries are wholesalers and retailers that buy from PepsiCo to resell the products at a
slightly higher price. Bulk companies such as Metro, Sellgros and other retailers, such as Cora,
Carrefour, and even neighborhood stores and supermarkets.

Customers

Pepsi-Cola’s customers include wholesale and other distributors, food service customers, grocery
stores, hypermarkets, supermarkets, convenience store, discount stores e-commerce retailers.
These arrangements give the right to charge independent bottlers.

Competitors

In PepsiCo's case, the competitors are the companies that produce soft or natural soft drinks and
the ones that produce snacks. PepsiCo's most famous competitor in Romania is Coca-Cola HBC
Romania, but also companies such as European Drinks, Romaqua and Parmalat.

Regarding the division of snacks, the main competitors of PepsiCo are Intersnaϲk, Standard
Nutrition, European Foods and Best Foods.

Macroenvironment
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The demographic environment

The number of inhabitants in Romania pursues the maturing pattern as the other European nations,
but still, the average age of the population is lower than in the other EU states, which arrived at
the midpoint of 42.8 years in 2017. According to the data from the Romanian National Institute of
Statistics, the demographic environment does not represent a real threat to PepsiCo, even if the
population of Romania has decreased every year since 2014. It is important to note that the largest
share of the Romanian population is in the age interval 20-54, which is in line with the age of the
segment market targeted by the company.

The Economic Environment

A study conducted by the European Commission states that Romania's economic growth model,
based on consumer spending, affects the country's ability to achieve the EU's living standards on
a sustainable basis. Reducing GDP growth by almost half in 2018, largely due to a slowdown in
consumers expenditure, has highlighted the limits of Romania's economic growth model. Strong
wage increases, falling labor and lack of qualified staff risk undermining Romania's ability to
compete internationally. Also, the European Commission concluded that despite the significant
slowdown in 2018, growth remains robust. After rising to 7% in 2017, the real GDP that was
adjusted for the inflation slowed down to 20% in 2018, reaching an estimated 4%. Higher inflation
has affected disposable income and consumer spending, which is the main driver of economic
growth. The fact that the GDP growth is based on the consumer spending is a very good news for
PepsiCo. People are more willing to go out and spend money than before, which result in higher
profits for the economic agents, including PepsiCo.

The Natural Environment

The natural environment in Romania, could be both an opportunity and a threat. The opportunity
consists in the diversity of geographical areas that allow the company’s suppliers to grow the
potatoes needed for the production process. But also, Romania is susceptible to floods,
earthquakes, and other natural disasters. According to a study developed by the World Risk Report,
Romania situates itself on the 102nd place, out of 172 countries in 2018. This could pose a serios
threat to PepsiCo’s suppliers, since most of the supplies used in the production of potatoes chips
are not imported.
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The Technological Environment

As in any other business that wants to develop its activities in 2019, the technological environment
has a strong impact on the company. The technological environment is maybe the most drastic
actor presently molding our fate, says Kotler and Armstrong (2018, p.106), since the powers that
make new innovations, are also making new products and services and finally, market
opportunities. PepsiCo is investing huge amounts of money in order to improve, automatize and
optimize their production lines.

The political and legal environment

The political environment is of significance for the activity of any enterprise and alludes to the
structures of the society, the political powers and the relations between them, the cohesion of the
internal and international political climate, and the degree of engagement of the state in the
economy. According to Marsh Political Risk map of 2019, Romania is likely to maintain the
situation of political instability. And as the European Commission stated in one of their study, that
due to the uncertainty and unpredictability of the political environment, the investors will refuse
to involve in long-term economic decisions. As a result, 85% of the Romanian companies stated
that their investment and business plans have been afflicted by the legislative and fiscal volatility
that takes place inside the country. PepsiCo is feeling the repercussions of the current situation in
Romania, regarding the political and legal factors, and taking into consideration that the lack of
political and legal stability can pose a real threat to their business.

The cultural environment

The cultural environment comprises of organization and different authorities that can influence the
general public's fundamental beliefs, impressions, inclinations, and demeanors as Kotler and
Armstrong (2018, p. 111) state. By studying closely these elements, PepsiCo can determine the
buying and consumption behavior, as well as the delimitation of the customer segments. A study
done by Nielsen shows that 55% of the population of Romania is overweight, but even though it
is placed under the East European average. Still, the incidence of obesity is growing more rapidly
than in the other countries in that area. Another Nielsen study shows that up to 81% of people in
Central and Eastern Europe are trying to lose weight and, to achieve that goal, they are making
changes in their daily diet. In this group, 65% choose to buy low-sugar and low-fat products and
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61% are more willing to consume fresh and natural products. Apparently, Romanians seem to be
more active than the European average - 74% say they do sport-activities to lose weight and 81%
say that they apply diets to prevent certain diseases such as obesity, diabetes, and hypertension.

The Company

PepsiCo entered the Romanian market in 2004, acquiring the leader in the market for potato chips,
the Star Foods company, present in Romania since 1993. Thus, PepsiCo has become one of the
main players in the Romanian Snacks market. Pepsi-Cola, a very important brand for PepsiCo, has
been present on the domestic market since the communist period, the drink starting to be
manufactured in Romania in 1965. In 1991, PepsiCo's carbonated beverage portfolio began to be
produced and distributed through a new franchise system, involving Quadrant Amroq Beverages
(QAB) as a bottler. QAB produced and distributed the soft drinks under PepsiCo license, together
with its own products, until 2006, when it was purchased by PepsiAmericas, the second largest
bottler in the world of PepsiCo products

Trends
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4. SWOT analysis

Strengths

 Strict Code of Conduct, which ensures integration across the entirety of the company’s
internal environment
 Incredibly strong and recognizable brands
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 Products are either market leaders or in contention of being market leaders in their
respective markets
 Strong relations with retailers, restaurants

Weaknesses

 Operations are carried out on an extremely large scale, therefore it becomes easy to lose
control
 As far as Romania is concerned, PepsiCo is at times constricted because of global decision-
making if it’s in the interest of the global brand, even if it damages the brand nationally

Opportunities

 Consumers are likely to be receptive towards new products due to them being associated
with the PepsiCo brand name
 Their products have relatively few flavors for the most part, which creates an opportunity
for creating new flavors in order to attract new consumers

Threats

 The rise of health-oriented/bio drinks and snacks

 Public perception of ultra-large corporations is mostly negative; the majority of consumers
see them as greedy, money-grabbing companies
 Products are susceptible to having periods of reduced sales due to fluctuations in economic
stability as a result of being relatively price-elastic

5. Consumer Oriented Marketing Strategy

Segmentation

PepsiCo primarily segments on the basis of demographics and psychographics. PepsiCo segments
by the demographic sub-group variable of age when they choose to influence younger audiences.
The following sub-group variables don’t apply to PepsiCo’s segmentation: household size, marital
status, income, education, occupation, and income.
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PepsiCo uses psychographic segmentation when they appeal to the pop culture aspect of society.
But nonetheless, appealing to pop culture relates to the following segmentation
variables: personality and values. PepsiCo also appeals to the psychographic segmentation
variable needs since the Pepsi Max product is for consumers who consider health a need.

Targeting

PepsiCo’s target market is the 18-35 years old segment. PepsiCo’s new outreach through
unconventional forms of marketing, like social media, is an effort to strengthen the brand loyalty of
the youth target market. There is no definitive preference between males vs. female target markets.
PepsiCo embraces both.

Positioning

When it comes to soft drinks PepsiCo has positioned itself as a follower and repositions the
competition, whereas when it comes to food, Starfood is the leader in the market with brands such
as Lays and Doritos. PepsiCo tries to associate its brand with a younger, more energetic, and fun-
loving segment. Because PepsiCo and their competitors have very similar products/brands, there
are not a vast array of unique positions to carve out. Through creative advertising techniques, such
as the “Pepsi Challenge,” where consumers blindly taste both Pepsi and Coke and choose which
one they prefer, Pepsi Cola has attempted to make consumers view the competition in a different
way. Ultimately, Pepsi is a good example of a brand which relies heavily on product positioning.

6. Product portfolio

Currently, PepsiCo amassed quite an extensive portfolio on the Romanian market, which is
distributed as such:

- Pepsi
- 7up
- Mirinda
- Prigat
- Lipton
- Mountain Dew
- Evervess
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- Gatorade
- Lay’s
- Star
- Krax
- Doritos
- Rockstar Energy Drink

The primary and obvious focus of PepsiCo’s portfolio in Romania is the beverage market, where
the company presently allocates 9 brands; the other 4 brands operate solely in the snack market
but are still extremely important assets to the company.

7. References

1. Aaker, D. and McLoughlin, D. (2010) Strategic market management. Chichester: John Wiley &
Sons, pp.13-138.
2. Armstrong, G. and Kotler, P. (2016) Introducere în Marketing. Traducere din limba engleză de D.
Moise și I. Plaiaș. Bucharest: Educational Centre, pp.174-197.
3. European Commission. (2019). 2019 European Semester: Assessment of progress on structural
reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews
under Regulation (EU) No 1176/2011. [pdf] Available at:
https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-
reportromania_en.pdf [Accessed 17 Dec. 2019].
4. Google.com, (2020). [online] Available at:
https://trends.google.com/trends/explore?geo=RO&q=Pepsi [Accessed 3 Jan. 2020].
5. Insse.ro. (2019). Populaţ ia după domiciliu la 1 ianuarie 2019 | Institutul National de Statistica. [pdf]
Available at:
http://www.insse.ro/cms/sites/default/files/com_presa/com_pdf/popdom1ian2019r.pdf [Accessed
3 Jan. 2020].
6. Kotler, P. and Armstrong, G. (2018) Principles of marketing (7th ed.). Harlow: Pearson Edition
Limited.
7. Marsh (2019). Marsh Political Risk Map 2019. [online] Available at:
https://www.marsh.com/us/campaigns/political-risk-map-2019.html [Accessed 3 Jan. 2020].
8. Pepsico.ro. (2020). [online] Available at: http://www.pepsico.ro/ [Accessed 3 Jan. 2020].
9. Reliefweb.int. (2018). World Risk Report 2018. [pdf] Available at:
https://reliefweb.int/sites/reliefweb.int/files/resources/WorldRiskReport-2018.pdf [3 Jan. 2020].