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Company Profile

PepsiCo, Inc. operates as a global snack and beverage


company. It manufactures, markets, and sells
carbonated and non carbonated beverages; various
salty, sweet, and grain-based snacks; and food
products worldwide. Its beverage product suite
includes beverage concentrates, fountain syrups, and
finished goods under various beverage brands,
including Pepsi, Mountain Dew, Gatorade, Tropicana
Pure Premium, Sierra Mist, 7up, Tropicana Juice
Drinks, Propel, SoBe, Slice, Dole, Tropicana Twister,
and Tropicana Season’s Best. It also manufactures,
markets, and sells ready-to-drink tea and coffee
products through joint ventures with Lipton and
Starbucks. PepsiCo’s snack product suite includes
Lay’s potato chips, Doritos flavored tortilla chips,
Cheetos cheese flavored snacks, Tostitos tortilla chips,
Fritos corn chips, Ruffles potato chips, Rold Gold
pretzels, Sunchips multigrain snacks, Munchies snack
mix, Grandma’s cookies, Quaker Quakes corn and rice
snacks, and Cracker Jack candy coated popcorn. In
addition, the company licenses the Aquafina water
brand to its bottlers and markets this brand. PepsiCo
also offers cereals, rice, pasta, and other products,
including Crunch and Life ready-to-eat cereals, Rice-A-
Roni, Pasta Roni, and east side dishes. The company
distributes its products through direct store delivery,
broker warehouse, and food service and vending
distribution networks to its customers, including
franchise bottlers, distributors, and retailers. PepsiCo
was founded in 1898 and is headquartered in
Purchase, New York.

Shareholders

PepsiCo (symbol: PEP) shares are traded principally


on the New York Stock Exchange in the United
States. The company is also listed on the
Amsterdam, Chicago, Swiss and Tokyo stock
exchanges. PepsiCo has consistently paid cash
dividends since the corporation was founded.

Corporate Citizenship

At PepsiCo, we believe that as a corporate citizen, we


have a responsibility to contribute to the quality of
life in our communities. This philosophy is expressed
in our sustainability vision which states: “PepsiCo’s
responsibility is to continually improve all aspects of
the world in which we operate – environment, social,
economic -- creating a better tomorrow than today.”

Our vision is put into action through programs and a


focus on environmental stewardship, activities to
benefit society, and a commitment to build
shareholder value by making PepsiCo a truly
sustainable company.

PepsiCo Headquarters

PepsiCo World Headquarters is located in Purchase,


New York, approximately 45 minutes from New York
City. Edward Durrell Stone, one of America’s
foremost architects, designed the seven-building
headquarters complex. The building occupies 10
acres of a 144-acre complex that includes the Donald
M. Kendall Sculpture Gardens, a world- acclaimed
sculpture collection in a garden setting.

Masters such as Auguste Rodin, Henri Laurens,


Henry Moore, Alexander Calder, Alberto Giacometti,
Arnaldo Pomodoro and Claes Oldenberg focus the
collection of works on major twentieth century art,
and features works. The gardens originally were
designed by the world famous garden planner,
Russell Page, and have been extended by François
Goffinet. The grounds are open to the public, and a
visitor's booth is in operation during the spring and
summer.

Current Market Scenario


The soft drinks market is perhaps the most hard
fought product categories in India in every respect -
media, events, distribution, pricing, communication,
endorsements and so on.
Pepsi has a market share of 46% in the Indian market,
second only to Coca-cola (48%) currently. There is cut-
throat competition between the two cola giants.
However, sales figures over the past few years have
shown that Pepsi has grown at a faster rate as
compared to Coca-cola. This bodes well for Pepsi in
India as trade analysts have forecasted that Pepsi will
emerge as a market leader by the year 2025.
Unique Selling Proposition (USP)

“Convenience at a Pop”

The USP of 7up Pop is that it is the only insta-soda


pop available in the market today. Its size greatly
increases its portability. It has an extended shelf
life which helps make it the ideal accompaniment
to food and fun. 7up Pop is a revolution that
redefines the limitations of consumables
worldwide.

S.T.P
SEGMENTATION

Market Segmentation is an effort to increase a


company’s precision marketing. A market consists of a
large identifiable group within a market with similar
wants, purchasing power, geographical location,
buying attitude, or buying habits.
We have done the segmentation on the basis of the
following variables:

 DEMOGRAPHIC SEGMENTATION: Age, Income,


Social Class & Occupation

 PSYCHOGRAPHIC SEGMENTATION: Lifestyle and


Personality

 BEHAVIORAL SEGMENTATION: Occasions,


Benefits, Usage Rate & Attitude

 GEOGRAPHICAL SEGMENTATION: Region & city

TARGETING
After segmenting the market we are targeting the
following segments:

 INCOME GROUPS: We will be targeting all


income groups. 7up, being an established brand
with mass appeal and cost effective pricing, it will
not discriminate between income groups.

 YOUTH: A huge potential market for 7up Pop lies


with youth whom we will be specifically targeting
through ‘Pop Culture’ and road shows to be held
as part of the ‘Add Colour’ campaign.

 TRAVELLERS: Due to its mini-form factor, 7up


Pop is highly convenient to carry along during
journeys or trips. This is why it will be targeted at
travellers as well.

POSITIONING

“We don’t serve markets, we create them.”


We will position 7up Pop as a lifestyle drink for the
masses. Through extensive advertising we will be able
to establish 7up as a way of life. 7up will represent
vibrance and seek to promote a new zest for life, a
break from the routine, excitement and exhilaration.

COMPREHENSIVE MARKETING MIX (4P’s)


Product
New 7up Pop is a revolution in the soft drink market.
It will be available in a capsule which on contact with
the requisite quantity of water will give rise to 7up
Pop.
The capsule will provide the consumer easy access to
the 7up Pop at all times, greater portability and an
extended shelf-life. An instant drink, 7up Pop’s
uniqueness lies in the fact that it is the only soft drink
which can be made ready-to-drink in a matter of
seconds. 7up Pop deviates from the traditional
colourless 7up in that it contains multi-coloured
granules. One will be able to make out at least 7
shades of colour in the drink. The drink will contain
‘Pop’, micro-granules with a bittersweet tang to it.
These granules on contact with the taste buds will
create a tingling sensation. The drink now has a more
‘icy’ feel and is a source of instant energy. The use of
these granules and other additives in 7up Pop has
been approved by the FDA (Food & Drugs Authority).
The drink will also contain a greater amount of froth
than any other existing drink in the market.
7up Pop will also be available in attractive Tetra Packs
(300 ml) and pet bottles for its 500ml and 1.5 litre
variants.
We will be setting up “Pop Culture”, 7up theme stores
based on the ‘Add Colour’ campaign. These stores will
feature a Pub-7, serving an extensive variety of
mocktails, smoothies with a 7up base. The pubs will
also other soft drink brands of our parent company
Pepsi. They will also feature Grub-7, a ‘filling station’
serving a wide range of snacks and appetizers. These
stores will also be ‘Wi-Fi’ hotspots. “Pop Culture” will
become the ideal hangout for young and old alike.
With happening music, an assortment of magazines,
quality ambience and a vibrant feel, we will capture
the imagination of everyone looking for an ideal spot to
unwind with friends or spend some fun-time with
family.

PRICE
Having the 1st mover advantage, PepsiCo has the
complete say in determining its own price. PepsiCo’s
pricing has always been competitive and with the
launch of 7up Pop, it aims at capturing a much larger
share in the market.

Assuming the change in the future trends in the


market and taking into consideration the inflation
rates with respect to 2005, PepsiCo has decided to
launch 7up Pop at an initial launch price of Rs. 20
(per capsule). One capsule would be equivalent to 250
ml of 7up when dissolved in water. A strip of 5
capsules would cost Rs. 90.

PLACE
7up Pop will be launched in Delhi, Mumbai, Kolkata,
Chennai, Bangalore, Ahmedabad and Hyderabad
initially. These cities have been chosen for the launch
as our surveys have shown that people in these cities
are looking for a drink with a difference. We will be
moving towards semi-urban and rural market phasing
our activities in the basis of initial and subsequent
consumer response.
PROMOTION & ADVERTISEMENT

Marketing Objective:

“Massification” -
The task ahead is to concentrate on making the cake
bigger rather than fighting for a bigger piece of the
existing cake.

7up Pop will balance its communication expenditure


by using the following communication vehicles:

NEWSPAPERS and E-BOOKS:


We plan to advertise in the English national dailies
such as The Hindu and Times of India as their reach is
widespread within the country. The advertisements
would cover a full page in the initial stages and half a
page thereafter. They would appear once in three days
initially and then take on a bi-weekly schedule.
RADIO:
Radio is the order of the day. From, sky-buses to
metro rails, Satellite radio has wider reach than one
could possibly imagine at the start of the century. We
plan to advertise our launch in all major radio stations
like Radio City 91 FM, Radio Mirchi, and World Space
etc. in all areas. There will be no definite time slots.
We will advertise on randomly selected slots in order to
reach out to a wider section of society.

TELEVISION:
We would put our advertisements on all major
television channels like, Sony T.V, MTV, Zoom and
ESPN-STAR. The reason we have chosen these
particular channels to broadcast our ads is because
they enjoy the highest viewer-ship in their respective
domains. Media like Internet TV, Mobile TV etc. will
also be prominent advertising avenues.

BILLBOARDS:
We are planning to put up advertisements on
billboards on busy streets, shopping malls and
highways so that our message can be delivered to
pedestrians and traveling public. Advertisements on
billboards would be electronic and would be similar to
videos. This will attract the attention of numerous
people and have a wider appeal.

ROAD SHOWS and PARTIES:


Road shows and 7up Pop theme parties will be held in
our initial target cities. The road shows will provide
expression platforms called ‘shout-boxes’. We will also
conduct games and other fun-filled activities for
onlookers. The road shows will also feature live
performances by popular regional artists. Our theme
parties will feature a host of celebrities, pulsating
music and their own makeshift Pub-7s. We plan on
making these events spectacular, which will make
them eagerly anticipated in coming years and will re-
define the party scene in Urban India.

LAUNCH PARTY:
7up Pop would hold a launch party to celebrate its
arrival, where the top celebrities and the who’s who of
the city will be invited to celebrate the arrival of the
lifestyle drink. There will be press coverage of the
party.

TIE-UP WITH HUTCH:


We will be tying-up with Hutch, leading cellular service
providers in India. Hutch will promote our drink via
sms. We will also enable Hutch a ‘Hutch Zone’ at every
‘Pop Culture’. This will enable consumers to pay their
bills with greater convenience while they enjoy a sip of
7up Pop. Hutch will also feature our Mascot, ‘Fido
Dido’ and promote our drink on their recharge and
tariff cards.

Internet 2
With the emergence of the sequel to the Internet,
communication and advertising has undergone a
complete face-lift. Internet 2 has a larger user network
and higher bandwidth capabilities than the previous
version of the Internet, which makes it the most
accessible and preferred medium for the promotion of
7up Pop.

5 M’S OF ADVERTISING
SETTING UP THE SYSTEM
(For marketing)

We intend to design a “Competitive Intelligence


System”.

 Identifying vital competitive information:


The first step calls for identifying vital types of
competitive information and consumer preferences,
identifying the best sources of this information, and
assigning people who will manage the system and is
services.

 Collecting the data:


The data is collected on a continuous basis from the
field, from people who do business with competitors,
from observing competitors and from published data.
 Evaluating and analyzing the data:
The data is checked for validity and reliability,
interpreted and organized.

 Disseminating information and responding:


Key information is sent to relevant decision makers,
and managers’ inquiries are answered. With a well-
designed system, company managers receive timely
information about competitors via e-mail, phone calls,
bulletins, newsletters, and reports.
COMPETITIVE INTELLIGENCE SYSTEM

Identifying vital competitive 
information

Collecting the data

Evaluating and analyzing

Disseminating 
             & responding

MARKETING STRATEGY
PLANNING AND COMMUNICATION PROCESS

CORE MARKETING STRATEGIES

Concrete marketing strategies were developed by us in


order to achieve its marketing objectives which are as
follows:
 Creating brand awareness
 Increasing the market size
 Change customer attitude
 Increased customer traffics
 Pursue purchase actions
 Increase turnover

The marketing strategies have been developed after


studying the product life-cycle. The various stages
were:

Stage 1
Market research:

We conduct a market survey and analyze various


aspects of the industry. This is done by studying all
the three aspects of the industry which are mainly the
consumers and competitors.

Stage 2
A complete attacking strategy:

In order to launch the product we use extensive


advertising and promotional strategies already
mentioned in the marketing mix.

Stage 3
Maturity stage:
Once the brand image is created, the advertising and
the promotional campaigns will be slowed down
according to the market needs. Sudden reminders
would appear and seasonal push strategy will be
followed.

GENERAL ATTACK STRATEGY TO


WITHSTAND THE COMPETITION

Today’s soft drink providing industry is known for its


competition hence it was not sufficient to study the
market by just analyzing the consumer behaviors and
about their wants. Understanding the competition and
its strengths was also very essential. As the
competition is established we not only have to attack
the competition but also be ready to face their
retaliation.
In order to overcome the above problem we studied our
competition and all its moves and try to stand in front
of our competition. The following attack strategies were
undergone:

 FRONTAL ATTACK
In pure frontal attack, the attacker matches its
opponent’s product, advertising, prices and
distribution. Hence in the initial stage we used the
Frontal Attack strategy by standing in front of the
completion and ready to face it.

 FLANK ATTACK
The competitor’s weak points become our targets.
Hence by targeting the weak points of the competitor
we would grab a huge share.

 ENCIRCLEMENT ATTACK
It involves launching a grand offensive on several
fronts. This would not be followed until forced by the
competition.
 BYPASS ATTACK
By bypassing the enemy and attacking easier markets
to broaden our service. This would be followed only
after a reasonable amount of time keeping in mind
competitor’s retaliation.

 GUERRILLA WARFARE
By offering special promotional offers, intense
advertising blitzes and legally studying all competitor’s
move. This will be taken once I.Q establishes a
significant space in the market.

ATTACKING STRATEGIES
BYPASS ATTACK

FLANK ATTACK

FRONTAL
ATTACK COMPETITORS

7UP POP
ENCIRCLEMENT 
ATTACK

GUERRILLA ATTACK

THE MARKETING STRATEGY


The marketing strategy to be followed in giving a hyper
mileage to 7up Pop is the application of the DELTA
MODEL.

The Delta Model is a fresh approach to business


strategy development and strategic management in
today’s increasingly networked economy.

Economic networks have altered the nature of


competition, amplifying the relationships between
customers and suppliers, enabling the development of
new business models for competitors and fostering the
role of new participants as complementers.

The underlying theme of the Delta Model is that


strategy – in both the new and old economy – maybe
and in many cases should be, formulated on the basis
of bonding as opposed to rivalry. It expands a strategic
tableau to include customers, suppliers, competitors,
substitutes and complements. It recognizes and
describes how customer and complements
relationships can create strong bonds to the customer
– independent of the product or service that the
company sells. It explicitly links strategy with
execution – the necessary processes, metrics and
adaptations that constitute the day-to-day actions of
the business. It acknowledges the fact that more
businesses fail due to the gaps in execution that in
strategy.

The Delta Model is a practical framework for


competing in the new economy of processors. It is
integrated from strategy to execution:
 It captures three essential forms of competitive
positions viz. product, customers and
complements (distributors and retailers).
 It explains how these positions are translated into
a strategic agenda
 It describes how processes and tasks are aligned
to that agenda
 It defines the metrics to track progress
 It shows how to adapt inevitable uncertainties in
the market

Delta: a brief overview


Competition based on system economics
Complements Lock In (distributors and retailers)
Competitor lock out,
System Lock In

Total Customer Solution Best Product


 Reducing customer costs Low cost
 Increasing their profits

We believe that the total model constitutes a new


approach and a new discipline for strategic
management.

Our foremost concern in defining the strategy is to


decide on the relevant strategic positioning. This
should capture the essence of how our service
competes and serves customers in its relevant market
place.
There are three distinct strategic options, which offer
very different approaches to achieve customer
bonding. They are depicted graphically through a
triangle. We have chosen the Triangle to display the
strategic positions not simply because it is a visual
icon that is easy to remember, but also because it
represents the letter Delta, which means
transformation.

The Best Product (B.P) positioning builds upon the


classical form of competition. The customer is
attracted by the inherent characteristics of the product
itself, either due to its Low Cost, which provides a
price advantage to the customer which introduces
unique features that the customers value and for
which they are willing to pay a premium. The product
tends to be standardized and unbundled. The
customers are generic, numerous and faceless. The
central focus of attention is the competitor, who is
trying to equal or surpass. Competitive advantage
rests upon product economics and the internal supply
chain, which provide engine for efficient product
production. Innovation is centered on the internal
product development process. The liability of this
approach it generates a minimum amount of customer
bonding, hence making the incumbent firms most
vulnerable to the new entrants. Its obsessive concern
with competitors often leads to imitation and prince
war, resulting in rivalry and convergence; the worst of
all situations.

The Total Customer Solution (TCS) strategy is a


complete reversal from the best product approach.
Instead of commoditizing the customer we seek a deep
customer understanding and relationship that allows
us to develop value propositions that bond to each
individual customer. We also seek to develop an
integrated supply chain that links us with key
suppliers and customers. We are outwardly driven;
customer economics is our guide. Strategy is not war
with our competitors; it is a love with our customers
(customer bonding)

The System Lock –In (SLI) strategic option has the


widest scope; it includes the extended enterprise – the
firm, the customers the suppliers, and most
importantly the complements (retailers and
distributors). The key to the strategic option is to
identify, attract and nurture the complements. These
complements are rarely detected and effectively by
other players-hence this is our strength. That is why a
system lock in strategy has to start with full corporate
scope – not just for a product or business – and has to
continue with the identification and incorporation of
all the key external players that can become
complements. The customer continues to be the
central focus, but now we can extend the enterprise to
the fullest. We look a the overall system supply chain,
not just the supply chain of our product, and harness
the innovation percolating throughout the system as a
whole.

SWOT Analysis
Strengths:

1. Brand Equity
7up has a strong brand presence in India. It is a
premier soft drink brand reaching out to large section
of society. 7up has always been associated with
youthful vibrancy and a positive outlook toward life,
which has led to its surge in the Indian market.

2. Strong position of Pepsi


Pepsi, our flagship company is the market world leader
in non-alcoholic beverages worldwide. Pepsi has
constantly reinvented itself to suit the needs of the
changing consumer. Being a giant in its area of
operation, it has a strong market presence, which
enables Pepsi to provide us with essential technical
know-how and full-fledged financial backup.

3. Portability
New 7up Pop is an ultra-light capsule which can be
carried anywhere with ease. Its size is of great
advantage to the consumer as it requires minimal
storage space and is highly portable.

4. Convenience
We at 7up, offer every consumer the opportunity of
obtaining his own glass of 7up Pop at his convenience.
Easy to use, 7up Pop has a extended shelf life which
helps it to sustain its quality over long periods of time.
Therefore, 7up is instant, lasting and highly
convenient.

5. Pioneer product
7up Pop is a revolution in the soft drink market; it
solves the problems of portability, storage and offers
greater convenience to the consumer. We are
innovators who believe that it is time to give the
consumers what they are looking for.

6. Established distribution network


Pepsi has a strong brand presence all over India. It has
a comprehensive distribution network, which makes
its brands easily available to consumers anywhere in
the country. This will help us reach out to our target
markets more effectively and help us establish a
strong foothold over them.

Weaknesses:

1. Acceptance
We are still wary of the acceptance of our product. It is
however essential for us to overcome this weakness by
providing the consumer with adequate information
and by employing an effective marketing strategy.

2. Usage
Incorrect usage of the product could lead to changes in
the concentration level. This makes it important for us
to explain usage procedures and ensure proper
communication with the end consumer through proper
packaging.
Opportunities:
1. First mover advantage
We are innovators, heralding a revolution that is
slowly changing the face of beverages worldwide. We
have given rise to a complete upheaval of existing
trends. Hence, we have a first mover advantage in our
field, providing consumers with unadulterated
refreshment in a form beyond what one could barely
imagine a few years ago.

2. Untapped market
7up Pop will cater to a larger section of society owing
to its strong distribution network. We will be able to
capitalize on existing as well as untapped markets
because our product is the complete retail solution;
convenient to store and easily distributable.

3. Rise in living standards


With the boom in the Indian economy, we have
overcome all barriers to productive growth and
development. Indian standards of living have seen a
drastic makeover in the last decade. Products and
services have become increasingly affordable. People
have become conscious of the need to keep pace with
changing times. Our product will be able to reach out
to the masses more effectively and capture untapped
markets.

Threats:

1. Cut throat competition


Coca-cola and Pepsi have always been at loggerheads.
A retaliation from Coke as a counter-measure against
7up Pop is expected. However, the first mover
advantage would strengthen 7up Pop’s foothold in the
market.

2. Further innovations
Being innovators ourselves, we cannot ignore the
possibility of further innovations that may eat into our
market share.

FINANCIALS
PepsiCo has always followed aggressive promotion
strategies to capture the market. Having an excellent
financial backup the costs of advertising and other
marketing activities is reported as selling, general and
administrative expenses. Advertising expenses were
$1.7 billion in 2005, $1.6 billion in 2004 and $1.5
billion in 2003.

Considering the inflation and deflation rates of a


period of 20 years down the lane and updating itself to
the latest technologies and strategies of promotion,
PepsiCo would use extensive finance to promote 7up
Pop in 2025.