pepsico diversification strategy case study

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Pepsi Marketing Strategy 2024: A Case Study

PepsiCo, one of the leading players in the food and beverage industry, has consistently showcased its prowess in marketing with innovative and strategic approaches. In this case study, we delve into PepsiCo’s marketing strategy, exploring the key components and tactics that have contributed to its success.

PepsiCo’s marketing strategy is centered around understanding and catering to its diverse consumer base, ensuring that its products and marketing initiatives resonate with individuals from different backgrounds and regions. By prioritizing customer-centricity, PepsiCo has been able to establish itself as a trusted and beloved brand.

• PepsiCo’s marketing strategy emphasizes innovation and customer-centricity.
• The company conducts extensive market research to identify emerging trends and preferences.
• PepsiCo utilizes digital marketing and social media engagement to connect with its audience.
• Expert opinions and case studies highlight PepsiCo’s success in adapting to evolving consumer preferences.
• PepsiCo’s marketing tactics can serve as a blueprint for businesses seeking to drive sales and engage with their target market .

PepsiCo Marketing Strategy: An Overview

PepsiCo, a global leader in the food and beverage industry, adopts a marketing strategy characterized by innovation, customer-centricity, and a truly global reach. The company consistently strives to understand the diverse needs of its consumers worldwide and tailors its products and marketing initiatives accordingly.

Key aspects of PepsiCo’s marketing approach include:

• Innovation: PepsiCo focuses on developing new and exciting products that resonate with consumers. The company continuously explores innovative flavors, formats, and packaging to captivate its target audience.
• Customer-Centricity: PepsiCo places great emphasis on understanding consumer preferences, trends, and behaviors. This customer-centric approach enables the company to create products that fulfill the desires and needs of its diverse global customer base.
• Global Reach: With an extensive distribution network and market presence in over 200 countries, PepsiCo effectively reaches consumers around the world. The company leverages its global footprint to adapt its marketing strategies to suit various cultural nuances and preferences.

Understanding Consumer Needs

PepsiCo recognizes the importance of understanding consumers’ evolving needs and desires. Through extensive market research and analysis, the company gathers valuable insights into consumer trends, preferences, and behaviors. These insights enable PepsiCo to develop products and marketing campaigns that resonate with its target audience.

Tailoring Products and Marketing Initiatives

PepsiCo’s diverse product portfolio allows the company to cater to a wide range of consumer segments. From iconic carbonated beverages like Pepsi and Mountain Dew to healthier options like Tropicana juices and Quaker oatmeal, PepsiCo offers something for everyone.

Moreover, PepsiCo’s marketing initiatives are carefully tailored to engage and connect with specific target audiences. The company leverages various channels, including traditional advertising, digital marketing, social media, and influencer collaborations, to effectively reach and resonate with consumers.

By adopting a customer-centric and globally aligned marketing strategy, PepsiCo continues to connect with consumers, drive brand loyalty, and remain a leader in the highly competitive food and beverage industry.

Key Components of PepsiCo Marketing Strategy

PepsiCo employs a comprehensive marketing strategy that encompasses several key components, enabling the company to effectively engage its target audience and position its brand in the market. Let’s explore these components in detail:

1. Consumer-Centric Product Development

PepsiCo’s marketing success is rooted in its commitment to understanding and fulfilling consumer needs. The company conducts extensive market research to identify emerging trends and preferences, allowing them to develop products that resonate with their target audience. By continually adapting and innovating, PepsiCo stays at the forefront of consumer demands and preferences.

2. Brand Diversification and Portfolio Management

PepsiCo recognizes the importance of catering to diverse consumer segments and managing a diverse product portfolio. The company has successfully extended its brand beyond soft drinks, offering a wide range of beverages, snacks, and food products. This diversification allows PepsiCo to reach different consumer segments and increase brand loyalty.

3. Emphasis on Health and Sustainability

Another significant component of PepsiCo’s marketing strategy is its commitment to health and sustainability. The company has made efforts to promote healthier choices and reduce its environmental impact. By incorporating health-conscious options into its product portfolio and implementing sustainable practices, PepsiCo appeals to an increasingly conscious target audience.

By integrating these key components into its marketing strategy, PepsiCo effectively positions its brand in the market, engages its target audience, and maintains its market leadership.

Continuing on the success of PepsiCo’s marketing strategy, the next section will delve into the specific tactics the company employs to execute its marketing initiatives and capture the attention of consumers. Stay tuned to discover PepsiCo’s powerful advertising campaigns and digital marketing techniques.

Tactics Used in PepsiCo Marketing Strategy

PepsiCo’s marketing strategy incorporates various tactics to effectively connect with its target audience and achieve brand success. Two key tactics employed by PepsiCo are Pepsi advertising campaigns and Pepsi digital marketing .

Pepsi Advertising Campaigns

PepsiCo is renowned for its impactful and creative advertising campaigns that leave a lasting impression on consumers. These campaigns leverage persuasive messaging, captivating visuals, and memorable storytelling to engage and resonate with the target audience. By investing in high-profile advertising initiatives, PepsiCo enhances brand visibility and cultivates a sense of excitement around its products.

One notable example is the Pepsi Super Bowl commercials, which have become highly anticipated every year. These commercials feature popular celebrities, engaging storylines, and a touch of humor, making them a topic of conversation both on and offline. The use of celebrity endorsements and partnerships further amplifies the reach and impact of PepsiCo’s advertising campaigns.

Pepsi Digital Marketing

As digital platforms continue to dominate the marketing landscape, PepsiCo recognizes the importance of a strong online presence. The company harnesses the power of digital marketing to connect with consumers, build brand loyalty, and drive sales. PepsiCo’s digital marketing efforts include:

• Social Media Engagement: PepsiCo maintains active social media profiles across platforms such as Facebook, Instagram, Twitter, and YouTube. Through regular updates, interactive content, and engaging conversations, the company forms a direct connection with its target audience, fostering brand loyalty and generating buzz.
• Influencer Collaborations and Endorsements: PepsiCo strategically partners with influencers and celebrities who align with its brand values and target demographic. By leveraging the influencers’ established fan base and credibility, PepsiCo extends its reach and improves brand perception among the influencer’s followers.
• Data-driven Decision Making: PepsiCo embraces data analytics to drive decision-making across its marketing initiatives. By analyzing consumer behavior, market trends, and campaign performance, PepsiCo gains valuable insights that inform strategic marketing decisions, allowing for targeted and personalized messaging.

Through a dynamic blend of Pepsi advertising campaigns and Pepsi digital marketing , PepsiCo successfully connects with its audience, reinforces brand loyalty, and remains at the forefront of the ever-evolving marketing landscape.

Expert Opinions and Case Studies

Industry experts and case studies have extensively analyzed and praised PepsiCo’s marketing approach, recognizing its remarkable success in adapting to evolving consumer preferences while staying true to its brand identity. One particularly notable case study delved into the impact of PepsiCo’s digital marketing strategies, revealing a significant increase in online engagement and brand loyalty among consumers.

PepsiCo’s marketing success is a result of its ability to understand and respond to changing market trends, effectively reaching its target audience, and consistently delivering innovative and captivating campaigns. By leveraging digital platforms and employing data-driven decision making, PepsiCo has maintained a dynamic marketing presence that resonates with consumers on a global scale.

Industry experts have also identified several significant marketing trends that PepsiCo has successfully incorporated into its strategies. These trends include personalization, experiential marketing, sustainability, and influencer partnerships. PepsiCo’s relentless pursuit of these trends has positioned the brand as a trailblazer in the food and beverage industry, captivating consumers in an ever-evolving market.

Overall, PepsiCo’s marketing success and adherence to current trends are a testament to the brand’s ability to adapt and deliver captivating campaigns that resonate with its target audience. Through expert opinions and case studies, PepsiCo’s marketing strategies continue to inspire marketers globally, setting the bar for excellence and innovation in the industry.

Decoding PepsiCo’s Digital Domination: A Deep Dive into Social Media, Email, and SEO Strategies

This section provides an extensive analysis of PepsiCo’s digital marketing strategies, with a specific focus on social media, email marketing , and SEO techniques. PepsiCo, a global leader in the food and beverage industry, has successfully leveraged these channels to engage with its audience, personalize marketing campaigns, and optimize online visibility.

Social Media:

PepsiCo recognizes the power of social media platforms in reaching and connecting with their target audience. With an active presence on popular platforms such as Facebook, Instagram, and Twitter, the company fosters engagement, builds brand awareness, and promotes its products to a wide range of consumers. By utilizing compelling visual content, interactive campaigns, and collaborations with influencers, PepsiCo has successfully created a strong social media presence that resonates with its audience.

Email Marketing:

Email marketing stands as one of PepsiCo’s effective strategies to communicate directly with its consumers. Through targeted email campaigns, PepsiCo delivers personalized messages, special offers, and exclusive content to its audience, further enhancing brand loyalty and customer engagement. By leveraging consumer data and segmentation, PepsiCo ensures that its emails provide relevant and valuable information, strengthening the relationship with its customers.

SEO Techniques:

Recognizing the importance of search engine optimization (SEO) in attracting online users, PepsiCo strategically implements SEO techniques to increase its online visibility. By optimizing website content, incorporating relevant keywords, and ensuring mobile-friendliness, PepsiCo improves its rankings on search engine results pages. This enables the company to generate organic traffic, attract new consumers, and maintain a competitive edge in the digital landscape.

Overall, PepsiCo’s digital marketing strategies encompass a comprehensive approach, covering social media, email marketing, and SEO techniques. Through these channels, PepsiCo effectively engages with its audience, delivers personalized experiences, and enhances its brand visibility in the digital realm.

PepsiCo’s Winning Selling Strategy: A Blueprint for Business Success

In order to drive sales and achieve business success, PepsiCo has implemented a winning selling strategy that sets a strong foundation for its continued growth and market dominance. By understanding the key tactics used by PepsiCo, businesses of all sizes can apply these strategies to enhance their own selling approach and capitalize on market trends.

The Key Target Market

PepsiCo’s selling strategy focuses on capturing the attention and loyalty of its key target market – the young and vibrant consumer segment. By understanding the preferences and values of this demographic, PepsiCo tailors its marketing campaigns and product offerings to meet their needs effectively. This targeted approach ensures that PepsiCo remains at the forefront of consumer trends and maximizes its sales opportunities.

Tactics Utilized

PepsiCo’s selling strategy incorporates several tactics that have proven to be highly effective in driving sales:

• Strategic Branding: PepsiCo effectively uses its brand identity to engage with consumers and build brand loyalty. Through consistent messaging, compelling storytelling, and memorable advertising campaigns, PepsiCo has established itself as a brand that resonates with its target market.
• Innovative Product Offerings: PepsiCo continuously introduces new and innovative products to cater to evolving consumer preferences. By staying at the forefront of taste trends and health-conscious initiatives, PepsiCo offers consumers a wide range of choices that keep them coming back for more.
• Collaborations and Partnerships: PepsiCo strategically collaborates with popular influencers, celebrities, and other brands to amplify its reach and appeal. Through targeted partnerships, PepsiCo leverages the influence and credibility of these collaborations to generate increased interest and drive sales.
• Data-Driven Decision Making: PepsiCo relies on data analytics and insights to make informed decisions about product development, marketing strategies, and sales optimization. By analyzing consumer behavior and market trends, PepsiCo can adapt its selling approach for maximum effectiveness.

PepsiCo’s Key Selling Tactics and Impact

Implementing similar selling tactics can empower businesses to connect with their target market, increase sales, and achieve long-term success. By taking cues from PepsiCo’s winning selling strategy, businesses can position themselves for growth and adapt to the ever-evolving market trends.

How to Apply These Tactics for Your Business: A Practical Guide

Now that you have gained valuable insights into PepsiCo’s successful marketing tactics, it’s time to apply them to your own business strategy. By implementing these proven methods, you can enhance your marketing initiatives and achieve increased brand awareness, customer engagement, and overall business success.

1. Conduct Market Research

Prioritize market research to gain a deep understanding of your target audience’s preferences, needs, and behaviors. This knowledge will guide your marketing decisions and ensure that your initiatives resonate with your customers. Analyze market trends, competitor strategies, and consumer insights to identify gaps and opportunities for your business.

2. Develop a Consumer-Centric Approach

Take a cue from PepsiCo’s consumer-centric approach by aligning your products, services, and messaging with the desires and expectations of your target audience. Tailor your offerings to meet their needs and create personalized experiences that foster brand loyalty and engagement.

3. Embrace Digital Marketing

Follow PepsiCo’s lead and leverage digital marketing channels to reach and engage your audience effectively. Develop a comprehensive online presence by creating engaging social media campaigns, optimizing your website for search engines, and utilizing email marketing strategies to nurture customer relationships.

4. Incorporate Health and Sustainability

Similar to PepsiCo, prioritize health and sustainability in your marketing efforts. Today’s consumers value companies that demonstrate a commitment to their well-being and environmental responsibility. Incorporate these values into your brand story and initiatives to connect with conscious consumers.

5. Utilize Influencer Marketing

Tap into the power of influencer marketing to expand your reach and connect with your target audience. Identify relevant influencers in your industry or niche and collaborate with them to promote your brand and offerings. Their endorsement can significantly impact consumer trust and purchase decisions.

6. Leverage Data-Driven Decision Making

Make data-driven decisions by analyzing the metrics and insights provided by various marketing channels. Measure the performance of your campaigns, test different strategies, and refine your approach based on the data. This approach will enable you to optimize your marketing efforts and maximize results.

7. Stay Abreast of Marketing Trends

Continuous learning is essential in the rapidly evolving marketing landscape. Stay updated with the latest marketing trends, technologies, and consumer behaviors. Attend industry conferences, participate in webinars, and follow marketing thought leaders to stay ahead of the curve and ensure the effectiveness of your marketing initiatives.

By adapting and applying these tactics to your business, you can elevate your marketing strategy and drive impressive results. Remember, success is achieved through continuous improvement and a willingness to test and refine your approach based on the ever-changing needs and expectations of your target audience.

PepsiCo’s marketing strategy has proven to be a powerful force in the food and beverage industry. With a focus on innovation, consumer-centricity, and sustainability, Pepsi has consistently adapted to changing consumer preferences while maintaining its brand identity. The company’s success can be attributed to its ability to embrace digital marketing, incorporate expert insights, and develop effective selling strategies.

One of the key factors in PepsiCo’s marketing success is its ability to leverage digital platforms to engage with its audience. By utilizing social media and influencers, Pepsi has been able to amplify its advertising campaigns and increase brand loyalty. Additionally, data-driven decision making has played a crucial role in PepsiCo’s marketing tactics, allowing the company to make informed choices and optimize its marketing initiatives.

Looking ahead, PepsiCo continues to shape the future of marketing with its innovative approaches. By staying true to its commitment to consumer-centricity and sustainability, PepsiCo sets industry standards for other brands to follow. The company’s marketing strategies serve as a blueprint for businesses of all sizes, offering valuable insights and actionable tips for success.

In conclusion, Pepsi’s marketing strategy, built on innovation, consumer-centricity, and sustainability, has propelled the company to new heights in the food and beverage industry. Through its digital marketing efforts, expert insights, and effective selling strategies, PepsiCo continues to differentiate itself, setting a standard for marketing excellence.

What is PepsiCo’s marketing strategy?

PepsiCo’s marketing strategy is characterized by innovation, customer-centricity, and global reach. The company prioritizes understanding the diverse needs of its consumers worldwide and tailoring its products and marketing initiatives accordingly.

What are the key components of PepsiCo’s marketing strategy?

The key components of PepsiCo’s marketing strategy include consumer-centric product development, brand diversification and portfolio management, and a strong emphasis on health and sustainability. The company conducts extensive market research to identify emerging trends and preferences, manages a diverse product portfolio to reach different consumer segments, and incorporates health and sustainability values into its marketing efforts.

How does PepsiCo use digital marketing?

PepsiCo utilizes digital marketing and social media engagement as key tactics to connect with its audience. The company maintains active social media profiles and engages in influencer collaborations and endorsements to amplify its marketing efforts. Data-driven decision making also plays a significant role in PepsiCo’s marketing strategy.

What is PepsiCo’s target audience?

PepsiCo’s target audience is diverse, including consumers of various ages, lifestyles, and preferences. The company’s marketing initiatives cater to a wide range of consumer segments, allowing it to reach a broader customer base.

What are some examples of PepsiCo’s successful advertising campaigns?

PepsiCo has a history of successful advertising campaigns, such as the memorable Pepsi vs. Coca-Cola rivalry ads, celebrity endorsements featuring popular figures like Beyoncé and Michael Jackson, and the Pepsi Refresh Project, focusing on social good and community impact.

How does PepsiCo incorporate sustainability into its marketing efforts?

PepsiCo places a strong emphasis on sustainability and integrates it into its marketing initiatives. The company promotes eco-friendly packaging, supports initiatives for water conservation, and partners with organizations dedicated to environmental stewardship, showcasing its commitment to sustainability to appeal to conscious consumers.

What are the key success factors of PepsiCo’s marketing strategy?

PepsiCo’s success factors include its ability to adapt to evolving consumer preferences while staying true to its brand identity, its focus on innovation, consumer-centricity, and sustainability, and its utilization of digital marketing strategies and data-driven decision making.

How can businesses apply PepsiCo’s marketing tactics to their own strategies?

Businesses can apply PepsiCo’s marketing tactics by conducting market research and gaining consumer insights into their target audience. They can develop diverse product portfolios to cater to different consumer segments, engage in digital marketing and social media strategies, and integrate sustainability and innovation into their marketing initiatives.

What sets PepsiCo’s marketing strategy apart from its competitors?

PepsiCo’s marketing strategy stands out due to its focus on innovation, consumer-centricity, and sustainability. By adapting to changing consumer preferences while maintaining its brand identity, PepsiCo has established itself as a leader in the food and beverage industry.

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Pepsi Co’s Diversification Strategy in 2008 Harvard Case Solution & Analysis

Home >> Management Case Studies >> Pepsi Co’s Diversification Strategy in 2008

• 1.     What is PepsiCo’s corporate strategy?

In 2008, PepsiCo’s corporate strategy was a blend of few strategies which helped the company to increase its profitability and to control the decline in its monthly stock performance. PepsiCo used product innovation and diversification strategy to expand its product portfolio in beverage and snack industry, the strategy worked well for the brand. The company had a strong product portfolio in different categories of the food and beverages market however, due to a continuous change in the demands and behavior of customers it was important for Pepsi to revise its products. The business portfolio of PepsiCo in 2008 was comprised of Quaker Chewy granola bars, Frito-Lay salty snacks, Propel, Pepsi soft tea, Gatorade, Quaker Oatmeal, SoBe, Cap’n Crunch, Rice-A-Roni, Aquafina, Aunt Jemima Pancake mix and many other products that were consumed by customers on a regular basis. To further diversify these products and to expand its product portfolio, PepsiCo introduced two new products Funyuns and Doritos, it was gradually expanding its product line to capture a huge market share in different categories of beverages and snacks. For existing products, PepsiCo introduced new flavors and healthy versions of its products because of the increasing health concerns of people in developed countries.

PepsiCo used acquisition strategy for international expansion and it had acquired several businesses in the categories of beverages and snacks to strengthen its product portfolio. It had acquired Quaker Oat in 2001 which is its largest acquisition that made PepsiCo the number one brand of Oatmeal in the United States. Other well-known acquisitions included Duyvis Nuts (Netherlands), Izze carbonated beverages, Penelopa nuts and seeds (Bulgaria), Bluebird snacks (New Zealand), Star Foods (Poland), Stacy’s bagel and pita chips, Naked Juice fruit beverages, Sandora juices (Ukraine) and Lucky snacks (Brazil). Overall, PepsiCo used different strategies at different times to strengthen its position in the market and most of them were based on innovation, distribution allies, strategic acquisition, customer care and international expansion.

• 2.     What is your assessment of the long-term attractiveness of the industries represented in PepsiCo’s business portfolio?

To assess the long-term attractiveness of the industries represented in PepsiCo’s business portfolio we will take help of the following table.

On the basis of the information displayed in the table, my assessment of long-term attractiveness is very good for all the business portfolios whereas the strongest SBU’s for PepsiCo are Frito-Lay (both North America and International), Quakers and some types of soft drinks included ready to drink beverages, bottled water and energy drinks. These business units have more growth opportunities because people across the globe are increasingly opting for healthy snacks and soft drinks. The double and triple digit growth of international soft drink industry and salty snacks industry is representing strong growth opportunities because people in developing countries are also becoming increasingly health conscious and they are trying to increase the intake of healthy products to reduce health hazards and obesity.

• 3.     What is your assessment of the competitive strength of PepsiCo’s different business units?

PepsiCo has six major business units to cater its diverse product portfolio. The key business units are Frito-Lay North America, PepsiCo Beverages North America, PepsiCo Carbonated Soft Drinks, PepsiCo International, Quaker Oats Products and Quaker Food North America. To assess the competitive strength of these major business units, we will use Porter’s Five Forces Model.

In most of the categories, PepsiCo has..........

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PepsiCo: The Challenge of Growth Through Innovation

By: Mary Summers, S. Venkataraman

This corporate strategy case shows how Pepsico stopped worrying about competing with Coca-Cola, figured out what its real business was, and decided how to build its future. Redefining itself as a…

• Length: 25 page(s)
• Publication Date: Mar 17, 2005
• Discipline: General Management
• Product #: UV3910-PDF-ENG

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This corporate strategy case shows how Pepsico stopped worrying about competing with Coca-Cola, figured out what its real business was, and decided how to build its future. Redefining itself as a beverage and snack business, PepsiCo sheds its restaurant business and acquires Quaker and Tropicana. By rethinking the synergistic relationship between the complementary, combined strengths of the merged companies, it strategizes to develop innovative products that will compete in a changing demographic, cultural, and geographical world. Will this strategy work in an increasingly competitive environment?

Mar 17, 2005 (Revised: May 17, 2016)

Discipline:

General Management

Industries:

Beverage industry, Food industry

Darden School of Business

UV3910-PDF-ENG

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How Pepsi Leveraged Flexibility For Strategic Growth

Table of contents.

PepsiCo, Inc. is an American food and beverage corporation that ranks as one of the largest in the world. PepsiCo's products have penetrated over 200 countries since its inception. The company’s headquarters can be found in Purchase, New York. 

PepsiCo had humble beginnings. The company now increased its global net revenue to more than 70 billion U.S. dollars in the year 2020. It owns a variety of remarkable brands with 60% dedicated to food items and 40% to beverages. Some notable brands include Pepsi and Mountain Dew. 

A quick look at these statistics show why Pepsi’s such a powerful player in the international market: 

• Company Revenue: 70.37 billion U.S. dollars
• Number of employees worldwide: 291,000 people
• Share of the food and beverage industry: 24.1%
• Number of brands that PepsiCo owns: 23 brands

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Pepsi or Brad’s Drink? 

The roots of PepsiCo can be traced back to 1880 when Caleb Bradham first developed the recipe. He was a pharmacist turned entrepreneur from New Bern, North Carolina. The recent success of Coca-Cola spurred something in him. He wanted to create a similar sweet carbonated drink. 

The results were, of course, the sweet cola-flavored Pepsi-Cola. The famous drink was actually named Brad’s Drink. He started selling it to his pharmaceutical customers in 1893. The product rose in popularity in the 1900s. Soon it was no longer called Brad’s Drink but Pepsi Cola instead. 

The name was inspired by the ingredients used. Kola nuts, vanilla, and sugar were some of the notable few. The drink was meant to help with digestion and rejuvenate the consumers. Bradham then established the Pepsi-Cola company to capture the market. 

Initially, only the syrup was sold commercially. Bradham managed to sell 7,968 gallons of syrup in the first year alone. He changed tactics the following year and sold the drink in six-ounce bottles instead. This was an ingenious tactic as he sold 19,848 gallons of the drink! 

Pepsi-Cola was first endorsed by a celebrity in 1909. The automobile racer, Barney Oldfield, claimed it was a great drink to consume before an event. After prospering for several years, the company fell hard after the first World War. 

The start of something new 

The company rose and fell numerous times in the 1920s. Nothing remained consistent. Charles G. Guth took over the company’s assets in 1931 and revamped the existing strategies. 

Charles G. Guth is known as the founder of modern Pepsi-Cola. He hired a chemist to formulate a better drink. Guth then set up different bottling operations and started merchandising. The 12-ounce bottle that could be bought for five cents became a huge success.

He wasn’t in control for too long though. Guth was also the president of a candy and soda-fountain chain company called Loft. By losing legal battles that took place in the late 1930s, Pepsi-Cola was then run by the new management of Loft. In 1941, the two companies merged and became Pepsi-Cola Company. 

Tapping into new markets

Alfred N. Steel became the chief executive officer of Pepsi Company in 1950. He was formerly the Vice President of Coca-Cola Company. Steel emphasized sales promotions and unique advertising strategies. This increased Pepsi's net earnings exponentially and Pepsi became Coca-Cola’s primary competitor. 

Pepsi merged with Frito Lay, Inc. in 1965. Frito Lay was known for its popular snacks such as Fritos, Doritos, and Lay’s potato chips. The company further diversified itself by conquering three restaurant chains. 

It purchased Pizza Hut, Inc. in 1977, Taco Bell Inc. in 1978, and Kentucky Fried Chicken in 1986. They were later separated into a different company called Tricon Global Restaurants, Inc.

It was time to introduce some healthier brands under the company. That’s why PepsiCo secured Tropicana and Dole juice companies in 1998. After merging with Quaker Oats in 2001, PepsiCo created a new division called Quaker Foods and Beverages. 

PepsiCo focused on expanding its operations in the early 21st century. The company invested in JSC Lebedyansky, Russia’s biggest juice manufacturer, in 2008. It acquired Wimm-Bill-Dann Foods three years later. These investments made PepsiCo the largest food and beverage corporation in Russia. 

The perfect harmony 

PepsiCo’s vision was to deliver the perfect snack with a complementary cola drink. This aspiration led it to become one of the world’s most successful food and beverage companies. The company’s products are enjoyed by consumers in over 200 countries. 

This product portfolio managed to generate over $70 billion in net revenue in 2020 alone. PepsiCo’s brands provide a multitude of refreshing drinks and scrumptious snacks. Each generates approximately over $1 billion in annual retail sales. 

PepsiCo has seven divisions and each is inspired by the motto “Winning with Purpose.” This reflects the company’s ambitions to overtake the marketplace. Despite the common goal, each division has its unique stories and modes of operation. 

Key takeaway #1

PepsiCo’s rise to fame is defined by its diversified strategies. The founder may not have been an expert, but he had the right idea. The company took chances with variety. Acquiring a plethora of brands helped PepsiCo stand out as an inclusive company. 

The Product that Changed It All

Caleb Bradham was a man who wanted to find new ways to improve people’s health. He initially enrolled in the University of North Carolina but withdrew due to financial troubles. After teaching for a short time, he joined the University of Maryland. He opened Bradham’s Pharmacy after graduation. 

It was in this pharmacy where he first concocted Brad’s Drink. The beverage was a mix of water, lemon oil, caramel, sugar, nutmeg, and cola nuts. This healthy cola drink supposedly helped with digestion. In 1898, he called it Pepsi from the Pepsin enzyme. 

The new drink rose to fame shortly after it was introduced. The Food and Drug Act banned dangerous chemicals from food and drinks, but Pepsi stood strong. Since it was made from natural ingredients, people flocked to purchase this drink. It was considered to be a safer substitute. 

The shift in tides

The cost of sugar rose monumentally during World War I causing Bradham to go bankrupt. The price increased from 3 cents to 28 cents per pound! The company was bought by Craven Holding Corporation but faced bankruptcy once again. In 1931, it was taken over by Loft Candy Company. 

Pepsi had significant sales compared to its competitors during the Great Depression. The company sold 12-ounce bottles for 5 cents each. Guth moved the headquarters to Long Island City and initiated a franchising system. The first-ever jingle was made in 1940 to advertise Pepsi. 

Pepsi’s unique flavor 

While many people can’t detect the differences, Pepsi is sweeter than Coke. That always gives it an edge during sip tests. Pepsi is said to have a burst of citrusy flavor, unlike Coca-Cola. Coke is characterized by its slightly vanilla flavor. However, it dissipates over the course of a drink.

This is where Pepsi shines. Pepsi also contains more sugar, calories, and caffeine compared to Coke. Coca-Cola has more sodium in it. At the end of the day, both drinks have similar compositions. What really helps them stand out is branding and advertising.

Reducing sugar and calorie intake

The company produces beverages that have less than 100 calories from added sugar. Consumers demand more nutritious choices. PepsiCo responded with new products that have low or no calories. They reintroduced some of their iconic global brands this way. Pepsi Black recently made an appearance. 

Bubly sparkling water has no artificial flavor or sweeteners. It also has no calories! KeVita, a probiotic-based product, now has Master Brew Kombucha flavors. The company’s brand Drinkfinity has a unique take. Consumers can make their own tasty beverages. This will be done without adding any artificial flavors or sweeteners. 

Key takeaway #2

It’s okay to do things differently. To stand out in the crowd, it’s important to incorporate unique elements into your product. It doesn’t matter whether it’s in terms of product construction or advertisement. Stay true to your brand and see how it skyrockets to success. 

The New Generation of Pepsi

Many industries took a hit during World War. However, Pepsi was resourceful. The company ensured it had a steady supply of sugar. The drink was a common sight to the military all over the world. The war came and left but the brand remained. The company embraced the postwar years. 

Alfred Steele, the CEO of Pepsi-Cola, married Joan Crawford. The actress lauded the drink in corporate and social gatherings in the 1950s. By the 1960s, the company targeted the Baby Boomers. The ads dubbed them as “the Pepsi Generation.”

The youth was further appealed after the introduction of the first diet soda. The company acquired Mountain Dew in 1964 and has been seen to expand quickly since. The once failing brand was now at the pinnacle of success. Especially when it made international headlines in 1974.

The start of a new generation 

Pepsi Generation ads popped up throughout the 1970s and 1980s. This undoubtedly attracted the younger crowds. To appeal to the older generations, the Pepsi Challenge was introduced. Potential consumers were enticed by in-store tastings. 

The company did something different and reaped the benefits. PepsiCo hired Michael Jackson to be the spokesperson of the company. Pepsi was placed in the limelight with all the attention he was getting from “Thriller.”

The television commercials were also a huge hit. Pepsi hired several well-known celebrities and musicians to showcase their product. Some notable characters include Michael J. Fox, Geraldine Ferraro, and Tina Turner. 

Pepsi was riding the train of success when Coca-Cola changed its signature formula. The “New Coke” was disastrous. The company had to reintroduce its classic formula to recapture the market. 

Where Pepsi stands today

Caleb Bradham will be pleased to see how far Pepsi has come. The brand has evolved from the syrup it produced back in the day. Consumers can now enjoy Diet Pepsi along with classic Pepsi Cola. 

Several varieties eliminate caffeine or incorporate fruity flavors. The company branched out to the sports drink market with Gatorade too. Some other acquisitions include Aquafina water, Amp energy drinks, and Starbucks beverages.

Key takeaway #3

Don’t be afraid to make use of your resources. PepsiCo used unconventional methods to rise to fame. Lauding the beverage in meetings and using flashy advertising paid off in the long term. It’s important to understand what catches the market’s eye. Pay attention to see where the benefits lie. 

Understanding Pepsi’s Market

PepsiCo Inc. is one of the two behemoths of the beverage industry. The other company is Coca-Cola. Pepsi has a strong beverage portfolio. There are a plethora of beverages including carbonated drinks, water, juices, and non-carbonated items. 

PepsiCo holds a 24.1% share of the food and beverage industry. Pepsi Cola, Mountain Dew, and Mirinda are the leading brands in terms of carbonated drinks. Tropicana is a crowd favorite in the juice category while Aquafina is in the bottled water category. 

PepsiCo’s Naked Juice brand produces premium juices and smoothies as well. Through a joint venture with Unilever, the company also produces Lipton tea. Coffee products are also available thanks to merging with Starbucks. Let’s not forget the Gatorade energy drinks brand either. 

Rising health awareness

Pepsi noticed a decline in sales with carbonated drinks. With rising health concerns, Pepsi decided to tap into different ventures. Namely, healthier ventures. Hence, PepsiCo’s Tropicana branch introduced three new flavors of juice. The ratio for which was a serving of one fruit and one vegetable every 8 ounces. 

Naked Juice also introduced new flavors including Chia Sweet Peach and Chia Cherry Lime. These drinks came with chia seeds which are known to be rich in protein, fiber, and antioxidants. It’s also filled with Omega-3 oils. Another flavor called Kale Blazer was produced with green vegetables. 

Why branding mattered

In this highly competitive industry, branding and advertising make or break a company. PepsiCo is no different. The company categorizes its brands into three sectors. They are Fun for You, Good for You, and Better for You.

The Fun for You brands feature the most popular PepsiCo products. These include Pepsi, Lays, Cheetos, Mountain Dew, and more. To ride the changing tides, Pepsi is slowly incorporating more products that are “good for you.”

Focusing on healthier options helped Pepsi grow in this volatile market. The Good for You brands focus on nutrition. These products include fruits, vegetables, whole grains, seeds, and nuts. They minimize the use of sodium, sugar, and fat. Notable brands include Tropicana, Quaker, and Aquafina. 

Finally, the Better for You products feature snacks with minimal fat content. These include Baked Lays or whole grains snacks. There are even certain beverages that promise low or zero calories. 

The great cola wars 

The battle for dominance between PepsiCo and Coca-Cola can be traced back to the 1980s. The “New Coke,” although disastrous, had actually helped increase the company’s sales. Coca-Cola had to reintroduce its classic formula in the market. 

This is what sparked the ferocious rivalry between the two companies. However, in 1992, Pepsi faced a similar product failure. The spin-off Crystal Pepsi didn’t impress the buyers as they expected. The generation X buyers were left unimpressed and the product was soon discontinued.

For decades to come, Coca-Cola remained the undisputed leader in the multi-billion industry. However, PepsiCo has always been on the brink of stealing that title. The high point of this feud may have been in the 1980s but it’s still being fought today. The companies simply shifted their attention elsewhere. 

Both PepsiCo and Coca-Cola are responding to the shifting industry demands. The demand for carbonated drinks has significantly decreased. So the companies are expanding their business outside the beverage market.

Key takeaway #4

It’s important to identify new audiences and follow the consumption behavior. With this data at hand, you can enable your company’s growth. Don’t be afraid to do things differently. Follow market trends and see what the audience craves. Meet that demand and rise above your competitors.

PepsiCo Masters Marketing

The beverage industry is defined by its intense competition. This is why different companies spend so much on marketing and advertising. Innovating the product isn’t enough. Selling it on the right channels is. PepsiCo has created several exciting campaigns throughout the years. 

This industry behemoth invests billions in promotions and sales. The battle of sodas has been ongoing for decades. Coca-Cola comes up with an intriguing marketing strategy which is topped by PepsiCo. This has been going back and forth for ages. Pepsi is smarter in terms of product placement. 

The company positioned its products as nutritious and healthy. This sets it apart from other carbonated drinks. PepsiCo continuously reflects youthful energy in its marketing campaign. That’s the key theme. Their price strategy captures that target market as well. Anyone with a fast-moving lifestyle is bound to be enticed by this. 

Packaging innovation 

The company aims to remain the consumer’s first choice. That’s why it diversifies its portfolio by introducing new and healthier choices. Product packaging is a key element in PepsiCo’s marketing strategy. There’s variety in the design and the elements capture the buyer’s attention.

Pepsi’s design team is rewarded for its innovative packaging. By regularly updating the design, it retains old customers and attracts potential ones. Attractive packaging encourages sales too. That’s why the company changes its styles and sizes according to customer demand. 

Social media marketing

In modern-day society, marketing is futile without social media. PepsiCo has an impressive social media presence. The company knows how to drive user engagement and gain customer loyalty. Most video campaigns by PepsiCo have been a success. This is partly because it can be run in multiple channels.

PepsiCo has over 37 million followers on its Facebook page. However, it has separate accounts for different products. So the numbers add up to more. It’s easy to tell that the brand is increasingly popular due to the rising number of followers. Through this channel, all the products, events, and sponsorships are promoted.

Twitter has also been an important pitstop for the company. The company has separate accounts for different countries. The main account has more than 3 million followers. Pepsi utilizes this platform to promote its products and brands too. It uses Twitter to share photo and video advertisements. Instagram is used similarly. 

PepsiCo also has a YouTube account to promote its brand. The company uploaded over 140 attractive videos to capture its audience. These videos aren’t advertisements only. There are educational videos promoting the brand value and sharing social messages too.

Cheeky yet powerful advertising 

PepsiCo spent 1.73 billion dollars in 2019 alone. The company increased its spendings by 240 million dollars in the United States. The company always aims to strengthen its online presence for better positioning. Incorporating sustainable packaging materials only helped gain unwavering customer loyalty. 

The company’s slogan, “Live for Now,” is a clever way to skew perceptions. It shows PepsiCo embraces a fulfilling yet adventurous lifestyle. The brand subtly repositioned itself as a product “for those who think young.” It’s more forward-thinking than Coca-Cola’s current slogan “Open Happiness.” 

Pepsi’s advertising is notorious for poking fun at its all-time, rival. The vending machine ad uses emotional coercion to some extent. Imagine a parent seeing this. A child picks Pepsi over Coke. They’ll subconsciously believe it’s a better choice for kids. 

Selective advertising 

COVID-19 compelled the company to become more selective in terms of advertising. PepsiCo took a step back to see how the new market operates. The company narrowed down its activities. It removed the activities that had low returns and focused on the ones with more returns. 

Consumer habits changed significantly. This is why selective advertising became a critical strategy in these trying times. It wasn’t necessarily a bad change. PepsiCo CEO, Ramon Laguarta, claims the company became better at marketing. It’s easier to get the momentum going and reach a larger audience. 

PepsiCo now has stronger in-house capability in terms of advertising. The company wields greater efficiency and speed now. The second quarter of 2020 witnessed a push in organic sales by 6%! The sales for Quaker Oats increased by 23% as well. Most importantly, the organic sales for beverages increased by 2% . 

2021 seems to be a good year for the company. PepsiCo reports that its revenue jumped by 8.8% ! The fourth-quarter earnings surpassed the estimates thanks to increased sales. PepsiCo reported a net income of $1.85 billion, a significant jump from the $1.77 billion a year before.

The beverage and food behemoth has witnessed a significant increase in operating profits. As of today, the total revenue for the company has increased by 20.5% since last year! On top of that, PepsiCo is planning a new five-year $1 billion cost-cutting plan.

Key takeaway #5

Competition is inevitable in today’s market. It’s important to experiment with different strategies. You won’t find the one most suitable for your brand otherwise. If you want your brand to grow, you need to revamp your advertising tactics. Be aggressive and rise the ranks! 

Focus on Flexibility 

The pandemic transformed the way companies operate. PepsiCo wasn’t spared either. The beverage giant employs workers from all around the world. It’s impossible to shift back to the traditional way of working. The company is driven by its unique portfolio strategies. This paid off in these tumultuous times. 

The company is seen to outperform others in this industry, especially in the beverage one. The managers were encouraged to pinpoint which team members are required when. This way, the work was split according to projects and could be completed remotely. 

An efficient hybrid working model

The company took eight months to curate this working model. It was rolled out in different phrases across countries. The company paid close attention to employee productivity and morale. PepsiCo compared the work levels to when everyone was working in the office. 

The results showed that employees were most productive when they spent around 2.5 days at the office. Everything else could be done remotely. The company believes in value creation. Employees were encouraged to work in environments where the output was best. 

PepsiCo relies on its managers making the best decision for the company and its employees. Managers are supposed to know how their team works the best. The company wishes to eliminate proximity bias. It’s important not to reward those working in the office only. 

Leveraging this flexibility will ensure a strong working environment. PepsiCo empowers its employees to be creative. It’s important to embrace this new way of working. The company aims to create protocols that help it track and measure the success of this hybrid model. 

The post-pandemic world will witness new divisions in the workplace. This is the perfect opportunity to overhaul the rigid working structure. PepsiCo took this chance to offer more flexibility for its employees. Traditional working structures will have negative repercussions. People crave flexibility. That’s where creativity thrives.

Key takeaway #6

A company cannot survive without its employees. It’s important to ensure they remain satisfied. Employees must have room for creativity. Businesses can make the most use of the talented labor market through flexibility. People are more productive when they have control over their decisions. 

Invest in the Right Marketing Channels 

PepsiCo is a leading brand for a good reason. It managed to sustain even during recessions. It shows how powerful PepsiCo’s strategies are. The company’s sustainability can be attributed to its unique marketing strategies. PepsiCo knows how to position itself in the market well. 

The company has over 22 brands in its portfolio. It’s not limited to drinks only. Detecting market trends, the company introduced nutritious snacks and healthy drinks. PepsiCo foresaw the declining sales of carbonated drinks. That’s why it acquired Aquafina and Tropicana as soon as it was able. 

PepsiCo embodies youthful energy. This is obvious in their advertising campaigns. The company’s main consumers come from middle-class to upper-class families. The prices reflect that as millennials from different families gravitate toward these products. 

The right channels 

PepsiCo always knew how to drive more sales. By increasing their digital advertising, the company witnessed a large hike in sales. The company began interacting with its customers through online promotional campaigns. Millions of people from around the globe were connected in seconds.

The company has become more conscious about its messages too. PepsiCo’s digital marketing campaigns always hit the mark. The “Bring Home Happiness” campaign had over a billion views. This 20-minute video went viral due to its effective placement on social media.

Another campaign called “Made for This” targeted millennials as it featured high school athletes. This campaign highlighted how Gatorade fuels an athlete’s passion and energy. 

Paying attention to patterns 

PepsiCo has always been mindful of the changes in the market. The company revamped its marketing strategies to reach a more diversified clientele. There are more products for health-conscious consumers. More delicious yet nutritious choices have been introduced too. 

Increase brand awareness 

PepsiCo relies on sponsors and partners for improving brand awareness and image. The company leveraged the power that came with its campaigns. This is why it heavily invests in sports marketing. It partnered with numerous sports institutions all over the world. 

PepsiCo has a long relationship with sports. The company partnered with the National Basketball Association in 2015. This allowed the company to promote its products through the WNBA, NBA Development League, and USA Basketball. It partnered with the Board of Control for Cricket in India in 2016 too. 

PepsiCo marked its second year of partnership in 2017 with the UEFA Champions League. The company promoted its most popular global brands including Pepsi, Gatorade, and Lays. It’s important to build loyalty in today’s versatile market. What better way to promote unity than sports? 

Key takeaway #7

Marketing is constantly evolving. Brands must make use of multiple channels for effective advertising and promotion. Both digital and traditional channels must be used. Research your consumers and redesign your marketing strategies for growth. 

Why PepsiCo is a Pillar of Success 

PepsiCo’s smartest move would be not limiting itself to the beverage industry. Coca-Cola is known for its drinks. It has put all its efforts into establishing a global brand for its core product. It certainly paid off but there’s more to the story. 

The American market is slowly shifting away from sugary and carbonated drinks. Both the companies diversified their products. They now offer juices, sports drinks, and bottled water. Here, Pepsi has an edge. It has occupied a larger market thanks to Lipton, Pure Leaf, and its other organic drinks. 

It was a power move when Pepsi tapped into the snacks industry in the 1960s. Merging with Frito-Lay enabled it to produce potato chips, oatmeals, and recently hummus. This is something Coca-Cola wasn’t able to venture into at all. Pepsi faces a couple of crucial advantages here. 

PepsiCo is growing in terms of size. Especially due to the snack industry. It’s continuously changing and introducing new products. This is why Pepsi has a larger impact compared to its rivals. The company has targeted high-growth areas Coca-Cola did not. 

Another reason why PepsiCo stands out is that it has a synergistic business. A rational consumer buys products that complement each other. If someone buys Lays, there’s a likely chance they’ll buy a bottle of Pepsi to complement it. This way, Pepsi subtly encourages its customers into making double purchases. 

CSR and sustainability 

The global food system has brought forth opportunities and means of convenience. However, it has left behind negative footprints as well. These are directly linked to climate change, water scarcity, soil erosion, and more. It’s important to tackle these challenges along with the changes in market demand. 

The food system requires a transformation. PepsiCo aims to change the world by adopting more sustainable practices. This will be incorporated in terms of production, distribution, consumption, and disposal. The company aims to build a more sustainable food system. One that doesn’t strain the planet’s boundaries. 

PepsiCo has made some major investments in sustainability and social responsibility. It’s important to maintain a good image. The spotlight is often on large brands like Pepsi. PepsiCo has an ambitious plan called Performance with Purpose Agenda 2025. Since this was launched, PepsiCo managed to outperform the S&P 500. 

This agenda focuses on three things. The people, the products, and the planet. There are some key milestones that the company achieved. It assisted six million women by investing in communities all around the world. The company replenished 2.7 billion liters of water in high-risk areas.

PepsiCo has provided 11 million people with safe water since 2006. To reduce emissions, Pepsi ordered Tesla’s electric trucks for its distribution network. The company also served 260 million food and beverages to needy communities.

Key takeaway #8

Success is meant to be shared. Your brand image is closely entwined with your social activities. Make sure you send the right message. Focus on social matters that affect you. Your CSR activities will help you attract more talent too. Employees take social responsibility seriously. You should too. 

PepsiCo’s strategy involves paying attention to the market needs. The company always gravitated towards providing a healthier alternative. This was witnessed in the founder’s actions and the brands it acquired later. PepsiCo delivers innovative solutions and impactful campaigns that offer a wonderful user experience. 

Growth by the numbers

PepsiCo is a brand that helps you feel good through consumption. The tasty treats and beverages are nutritious and healthy. Its strong social responsibilities reach out to over 200 countries and territories. This is reflected in the company’s philosophy- Performance with Purpose.

The ultimate list of strategic takeaways inspired by PepsiCo 

• Stay true to your brand. 

PepsiCo wasn’t afraid to do things differently. The company saw the rising fame of Coca-Cola and decided to take a chance. Brad’s Drink wasn’t a mere soda. It was a healthy alternative. Constructed from all-natural ingredients helped Pepsi gain an edge over its biggest rival. 

• Diversity fuels growth. 

This is further witnessed when PepsiCo acquires numerous brands. The company didn’t limit itself to beverages. It merged with Frito Lay and tapped into the food industry. Pepsi detected profitable sources of income and grabbed the opportunity. This helped when there was a demand for healthy goods. 

• Pay attention to your consumers.

PepsiCo used underhanded advertising strategies at first. Discussing the beverage in corporate meetings got the word of mouth going. Alfred Nu Steele knew how the market operated. He caught the eye of his consumers that way too. Pinpoint your target market and pay attention to their behavior. See what they want and act accordingly. 

• Foster creativity in your employees. 

A company cannot sustain itself without its employees. It’s important to build a workplace environment that encourages creativity. If an employee has more freedom in choices, they will be inclined to work better. The pandemic changed the way the corporate industry functions. It’s time to embrace flexibility, encourage creativity, and stimulate growth. 

• Make use of all channels. 

Traditional marketing is powerful but digital marketing is increasing in popularity. To sustain in this competitive market, it’s important to leverage all platforms. Make sure your campaigns reach the right channels. Try to nurture a relationship with your customers. Increase your engagement and witness organic growth! 

Markets are ever-changing. Consumer behavior is too. Your success depends on how quickly you act on these changes. Adopt the right strategies, offer the best products, and progress with sustainable growth.  

Pepsi Co’s Diversification Strategy in 2008

Introduction.

Strategic management is considered to be one of the basic elements that allow a business company to achieve success in its operations in both domestic and international markets (Thompson, 2001, p. 24; Thompson, Strickland, Gamble, 2009, p. 37). However, even such giants of the global business as Pepsi Co. sometimes face diversification strategy issues in their developmental initiatives, and a comprehensive restructuring and strategy re-formulation become necessary to overcome the emerging consequences.

Pepsi Co’s Strategy

Swot analysis.

Thus, to see the roots of the issues experienced by Pepsi Co. between 2007 and 2008, it is necessary to carry out the SWOT analysis for the company:

Fig.1 Pepsi Co. SWOT Analysis.

Acquisitions and Mergers

Thus, the strategy of Pepsi Co. regarding acquisitions and mergers is one of the strengths of the company according to the SWOT analysis. The examples of successful acquisitions of Pepsi Co. include:

• 1980s Mug root beer, 7UP International, and Smartfood ready-to-eat popcorn acquisitions;
• 1990s Walker’s and Smith’s Crisps, Gamesa, and SunChips acquisitions;
• 2001 Quaker Oats acquisition;
• 2000s Sandora Juice, Lucky Juice, Star Foods acquisitions;

Industry Driving Forces and Porter’s 5 Forces Model

Further on, to better understand Pepsi Co.’s industry positions, 5 forces Porter’s model can be quite helpful (Thompson, 2001, p. 289):

Thus, one can see that the rivalry among existing firms in the industry is the central driving force, and Pepsi Co. faces this rivalry at especially severe rates as far as it tries to catch up and exceed the Coca-Cola market share, while also trying not to stay far behind losing its positions to its other competitors, i. e. Cadbury Schweppes and Nestle. Further on, Pepsi Co. tries to cope with a high power of suppliers by establishing long-term relationships with the latter.

The power of buyers is crucial for the industry with such great competition, and this factor is one of the major threats for Pepsi Co., as well as the threat of substitute products provided by its competitors. At the same time, the threat of new entrants is rather low in the beverage industry as there are quite high operating margins and capital requirements.

Recommendations

So, Pepsi Co. faces major issues in the beverage industry, i. e. the rivalry within the industry and the strong buyer power both conditioned by the fierce industry competition. To cope with these issues, it is recommended that Pepsi Co. should:

• Continue diversification of products to cope with the competition and threat of substitutes in the market;
• Monitor buyer satisfaction levels;
• Implement customer-friendly programs to increase buyer satisfaction levels.

If properly implemented, these steps are expected to strengthen Pepsi Co.’s market position and enable the company to develop competitive advantages in the beverage and snack industries.

Works Cited

Thompson, Arthur, A. J. Strickland, and John E. Gamble. Crafting and Executing Strategy: The Quest for Competitive Advantage Concepts and Cases. McGraw-Hill/Irwin, 2009. Print.

Thompson, John. Understanding corporate strategy . Cengage Learning EMEA, 2001. Print.

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PepsiCo Diversification as a Growth Strategy Case Analysis and Case Solution

Posted by Peter Williams on Aug-09-2018

Introduction of PepsiCo Diversification as a Growth Strategy Case Solution

The PepsiCo Diversification as a Growth Strategy case study is a Harvard Business Review case study, which presents a simulated practical experience to the reader allowing them to learn about real life problems in the business world. The PepsiCo Diversification as a Growth Strategy case consisted of a central issue to the organization, which had to be identified, analysed and creative solutions had to be drawn to tackle the issue. This paper presents the solved PepsiCo Diversification as a Growth Strategy case analysis and case solution. The method through which the analysis is done is mentioned, followed by the relevant tools used in finding the solution.

The case solution first identifies the central issue to the PepsiCo Diversification as a Growth Strategy case study, and the relevant stakeholders affected by this issue. This is known as the problem identification stage. After this, the relevant tools and models are used, which help in the case study analysis and case study solution. The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis. The solution consists of recommended strategies to overcome this central issue. It is a good idea to also propose alternative case study solutions, because if the main solution is not found feasible, then the alternative solutions could be implemented. Lastly, a good case study solution also includes an implementation plan for the recommendation strategies. This shows how through a step-by-step procedure as to how the central issue can be resolved.

Problem Identification of PepsiCo Diversification as a Growth Strategy Case Solution

Harvard Business Review cases involve a central problem that is being faced by the organization and these problems affect a number of stakeholders. In the problem identification stage, the problem faced by PepsiCo Diversification as a Growth Strategy is identified through reading of the case. This could be mentioned at the start of the reading, the middle or the end. At times in a case analysis, the problem may be clearly evident in the reading of the HBR case. At other times, finding the issue is the job of the person analysing the case. It is also important to understand what stakeholders are affected by the problem and how. The goals of the stakeholders and are the organization are also identified to ensure that the case study analysis are consistent with these.

Analysis of the PepsiCo Diversification as a Growth Strategy HBR Case Study

The objective of the case should be focused on. This is doing the PepsiCo Diversification as a Growth Strategy Case Solution. This analysis can be proceeded in a step-by-step procedure to ensure that effective solutions are found.

• In the first step, a growth path of the company can be formulated that lays down its vision, mission and strategic aims. These can usually be developed using the company history is provided in the case. Company history is helpful in a Business Case study as it helps one understand what the scope of the solutions will be for the case study.
• The next step is of understanding the company; its people, their priorities and the overall culture. This can be done by using company history. It can also be done by looking at anecdotal instances of managers or employees that are usually included in an HBR case study description to give the reader a real feel of the situation.
• Lastly, a timeline of the issues and events in the case needs to be made. Arranging events in a timeline allows one to predict the next few events that are likely to take place. It also helps one in developing the case study solutions. The timeline also helps in understanding the continuous challenges that are being faced by the organisation.

SWOT analysis of PepsiCo Diversification as a Growth Strategy

An important tool that helps in addressing the central issue of the case and coming up with PepsiCo Diversification as a Growth Strategy HBR case solution is the SWOT analysis.

• The SWOT analysis is a strategic management tool that lists down in the form of a matrix, an organisation's internal strengths and weaknesses, and external opportunities and threats. It helps in the strategic analysis of PepsiCo Diversification as a Growth Strategy.
• Once this listing has been done, a clearer picture can be developed in regards to how strategies will be formed to address the main problem. For example, strengths will be used as an advantage in solving the issue.

Therefore, the SWOT analysis is a helpful tool in coming up with the PepsiCo Diversification as a Growth Strategy Case Study answers. One does not need to remain restricted to using the traditional SWOT analysis, but the advanced TOWS matrix or weighted average SWOT analysis can also be used.

Porter Five Forces Analysis for PepsiCo Diversification as a Growth Strategy

Another helpful tool in finding the case solutions is of Porter's Five Forces analysis. This is also a strategic tool that is used to analyse the competitive environment of the industry in which PepsiCo Diversification as a Growth Strategy operates in. Analysis of the industry is important as businesses do not work in isolation in real life, but are affected by the business environment of the industry that they operate in. Harvard Business case studies represent real-life situations, and therefore, an analysis of the industry's competitive environment needs to be carried out to come up with more holistic case study solutions. In Porter's Five Forces analysis, the industry is analysed along 5 dimensions.

• These are the threats that the industry faces due to new entrants.
• It includes the threat of substitute products.
• It includes the bargaining power of buyers in the industry.
• It includes the bargaining power of suppliers in an industry.
• Lastly, the overall rivalry or competition within the industry is analysed.

This tool helps one understand the relative powers of the major players in the industry and its overall competitive dynamics. Actionable and practical solutions can then be developed by keeping these factors into perspective.

PESTEL Analysis of PepsiCo Diversification as a Growth Strategy

Another helpful tool that should be used in finding the case study solutions is the PESTEL analysis. This also looks at the external business environment of the organisation helps in finding case study Analysis to real-life business issues as in HBR cases.

• The PESTEL analysis particularly looks at the macro environmental factors that affect the industry. These are the political, environmental, social, technological, environmental and legal (regulatory) factors affecting the industry.
• Factors within each of these 6 should be listed down, and analysis should be made as to how these affect the organisation under question.
• These factors are also responsible for the future growth and challenges within the industry. Hence, they should be taken into consideration when coming up with the PepsiCo Diversification as a Growth Strategy case solution.

VRIO Analysis of PepsiCo Diversification as a Growth Strategy

This is an analysis carried out to know about the internal strengths and capabilities of PepsiCo Diversification as a Growth Strategy. Under the VRIO analysis, the following steps are carried out:

• The internal resources of PepsiCo Diversification as a Growth Strategy are listed down.
• Each of these resources are assessed in terms of the value it brings to the organization.
• Each resource is assessed in terms of how rare it is. A rare resource is one that is not commonly used by competitors.
• Each resource is assessed whether it could be imitated by competition easily or not.
• Lastly, each resource is assessed in terms of whether the organization can use it to an advantage or not.

The analysis done on the 4 dimensions; Value, Rareness, Imitability, and Organization. If a resource is high on all of these 4, then it brings long-term competitive advantage. If a resource is high on Value, Rareness, and Imitability, then it brings an unused competitive advantage. If a resource is high on Value and Rareness, then it only brings temporary competitive advantage. If a resource is only valuable, then it’s a competitive parity. If it’s none, then it can be regarded as a competitive disadvantage.

Value Chain Analysis of PepsiCo Diversification as a Growth Strategy

The Value chain analysis of PepsiCo Diversification as a Growth Strategy helps in identifying the activities of an organization, and how these add value in terms of cost reduction and differentiation. This tool is used in the case study analysis as follows:

• The firm’s primary and support activities are listed down.
• Identifying the importance of these activities in the cost of the product and the differentiation they produce.
• Lastly, differentiation or cost reduction strategies are to be used for each of these activities to increase the overall value provided by these activities.

Recognizing value creating activities and enhancing the value that they create allow PepsiCo Diversification as a Growth Strategy to increase its competitive advantage.

BCG Matrix of PepsiCo Diversification as a Growth Strategy

The BCG Matrix is an important tool in deciding whether an organization should invest or divest in its strategic business units. The matrix involves placing the strategic business units of a business in one of four categories; question marks, stars, dogs and cash cows. The placement in these categories depends on the relative market share of the organization and the market growth of these strategic business units. The steps to be followed in this analysis is as follows:

• Identify the relative market share of each strategic business unit.
• Identify the market growth of each strategic business unit.
• Place these strategic business units in one of four categories. Question Marks are those strategic business units with high market share and low market growth rate. Stars are those strategic business units with high market share and high market growth rate. Cash Cows are those strategic business units with high market share and low market growth rate. Dogs are those strategic business units with low market share and low growth rate.
• Relevant strategies should be implemented for each strategic business unit depending on its position in the matrix.

The strategies identified from the PepsiCo Diversification as a Growth Strategy BCG matrix and included in the case pdf. These are either to further develop the product, penetrate the market, develop the market, diversification, investing or divesting.

Ansoff Matrix of PepsiCo Diversification as a Growth Strategy

Ansoff Matrix is an important strategic tool to come up with future strategies for PepsiCo Diversification as a Growth Strategy in the case solution. It helps decide whether an organization should pursue future expansion in new markets and products or should it focus on existing markets and products.

• The organization can penetrate into existing markets with its existing products. This is known as market penetration strategy.
• The organization can develop new products for the existing market. This is known as product development strategy.
• The organization can enter new markets with its existing products. This is known as market development strategy.
• The organization can enter into new markets with new products. This is known as a diversification strategy.

The choice of strategy depends on the analysis of the previous tools used and the level of risk the organization is willing to take.

Marketing Mix of PepsiCo Diversification as a Growth Strategy

PepsiCo Diversification as a Growth Strategy needs to bring out certain responses from the market that it targets. To do so, it will need to use the marketing mix, which serves as a tool in helping bring out responses from the market. The 4 elements of the marketing mix are Product, Price, Place and Promotions. The following steps are required to carry out a marketing mix analysis and include this in the case study analysis.

• Analyse the company’s products and devise strategies to improve the product offering of the company.
• Analyse the company’s price points and devise strategies that could be based on competition, value or cost.
• Analyse the company’s promotion mix. This includes the advertisement, public relations, personal selling, sales promotion, and direct marketing. Strategies will be devised which makes use of a few or all of these elements.
• Analyse the company’s distribution and reach. Strategies can be devised to improve the availability of the company’s products.

PepsiCo Diversification as a Growth Strategy Blue Ocean Strategy

The strategies devised and included in the PepsiCo Diversification as a Growth Strategy case memo should have a blue ocean strategy. A blue ocean strategy is a strategy that involves firms seeking uncontested market spaces, which makes the competition of the company irrelevant. It involves coming up with new and unique products or ideas through innovation. This gives the organization a competitive advantage over other firms, unlike a red ocean strategy.

Competitors analysis of PepsiCo Diversification as a Growth Strategy

The PESTEL analysis discussed previously looked at the macro environmental factors affecting business, but not the microenvironmental factors. One of the microenvironmental factors are competitors, which are addressed by a competitor analysis. The Competitors analysis of PepsiCo Diversification as a Growth Strategy looks at the direct and indirect competitors within the industry that it operates in.

• This involves a detailed analysis of their actions and how these would affect the future strategies of PepsiCo Diversification as a Growth Strategy.
• It involves looking at the current market share of the company and its competitors.
• It should compare the marketing mix elements of competitors, their supply chain, human resources, financial strength etc.
• It also should look at the potential opportunities and threats that these competitors pose on the company.

Organisation of the Analysis into PepsiCo Diversification as a Growth Strategy Case Study Solution

Once various tools have been used to analyse the case, the findings of this analysis need to be incorporated into practical and actionable solutions. These solutions will also be the PepsiCo Diversification as a Growth Strategy case answers. These are usually in the form of strategies that the organisation can adopt. The following step-by-step procedure can be used to organise the Harvard Business case solution and recommendations:

• The first step of the solution is to come up with a corporate level strategy for the organisation. This part consists of solutions that address issues faced by the organisation on a strategic level. This could include suggestions, changes or recommendations to the company's vision, mission and its strategic objectives. It can include recommendations on how the organisation can work towards achieving these strategic objectives. Furthermore, it needs to be explained how the stated recommendations will help in solving the main issue mentioned in the case and where the company will stand in the future as a result of these.
• The second step of the solution is to come up with a business level strategy. The HBR case studies may present issues faced by a part of the organisation. For example, the issues may be stated for marketing and the role of a marketing manager needs to be assumed. So, recommendations and suggestions need to address the strategy of the marketing department in this case. Therefore, the strategic objectives of this business unit (Marketing) will be laid down in the solutions and recommendations will be made as to how to achieve these objectives. Similar would be the case for any other business unit or department such as human resources, finance, IT etc. The important thing to note here is that the business level strategy needs to be aligned with the overall corporate strategy of the organisation. For example, if one suggests the organisation to focus on differentiation for competitive advantage as a corporate level strategy, then it can't be recommended for the PepsiCo Diversification as a Growth Strategy Case Study Solution that the business unit should focus on costs.
• The third step is not compulsory but depends from case to case. In some HBR case studies, one may be required to analyse an issue at a department. This issue may be analysed for a manager or employee as well. In these cases, recommendations need to be made for these people. The solution may state that objectives that these people need to achieve and how these objectives would be achieved.

The case study analysis and solution, and PepsiCo Diversification as a Growth Strategy case answers should be written down in the PepsiCo Diversification as a Growth Strategy case memo, clearly identifying which part shows what. The PepsiCo Diversification as a Growth Strategy case should be in a professional format, presenting points clearly that are well understood by the reader.

Alternate solution to the PepsiCo Diversification as a Growth Strategy HBR case study

It is important to have more than one solution to the case study. This is the alternate solution that would be implemented if the original proposed solution is found infeasible or impossible due to a change in circumstances. The alternate solution for PepsiCo Diversification as a Growth Strategy is presented in the same way as the original solution, where it consists of a corporate level strategy, business level strategy and other recommendations.

Implementation of PepsiCo Diversification as a Growth Strategy Case Solution

The case study does not end at just providing recommendations to the issues at hand. One is also required to provide how these recommendations would be implemented. This is shown through a proper implementation framework. A detailed implementation framework helps in distinguishing between an average and an above average case study answer. A good implementation framework shows the proposed plan and how the organisations' resources would be used to achieve the objectives. It also lays down the changes needed to be made as well as the assumptions in the process.

• A proper implementation framework shows that one has clearly understood the case study and the main issue within it.
• It shows that one has been clarified with the HBR fundamentals on the topic.
• It shows that the details provided in the case have been properly analysed.
• It shows that one has developed an ability to prioritise recommendations and how these could be successfully implemented.
• The implementation framework also helps by removing out any recommendations that are not practical or actionable as these could not be implemented. Therefore, the implementation framework ensures that the solution to the PepsiCo Diversification as a Growth Strategy Harvard case is complete and properly answered.

Recommendations and Action Plan for PepsiCo Diversification as a Growth Strategy case analysis

For PepsiCo Diversification as a Growth Strategy, based on the SWOT Analysis, Porter Five Forces Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis, Ansoff Matrix analysis, and the Marketing Mix analysis, the recommendations and action plan are as follows:

• PepsiCo Diversification as a Growth Strategy should focus on making use of its strengths identified from the VRIO analysis to make the most of the opportunities identified from the PESTEL.
• PepsiCo Diversification as a Growth Strategy should enhance the value creating activities within its value chain.
• PepsiCo Diversification as a Growth Strategy should invest in its stars and cash cows, while getting rid of the dogs identified from the BCG Matrix analysis.
• To achieve its overall corporate and business level objectives, it should make use of the marketing mix tools to obtain desired results from its target market.

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Yahoo Finance

Why pepsico looks like a better dividend play than coca-cola.

PepsiCo Inc. ( NASDAQ:PEP ) and the Coca-Cola Co. ( NYSE:KO ) are among the best-known packaged food and beverage companies in the world. In addition, they share quite a bit of similarities, from their target markets to their business models to their financial profiles.

But as the saying goes, the devil is in the details. As I will argue below, a closer look at a few key operating and financial metrics suggests that PepsiCo might be the best dividend stock to own.

Dividend yield: A tie that favors PepsiCo

Warning! GuruFocus has detected 4 Warning Sign with PEP.

High Yield Dividend Stocks in Gurus' Portfolio

This Powerful Chart Made Peter Lynch 29% A Year For 13 Years

How to calculate the intrinsic value of a stock?

When it comes to dividend stock investing, the yield is considered by many to be the most important number. Yield is the ratio of the dividend per share payment, usually annualized based on the disbursements made in the last 12 months, by the share price. In other words, yield is what investors get to pocket relative to how much the stock is currently worth in the market.

As the chart below depicts, PepsiCo and Coca-Cola yield virtually the same today: 3.10%. The yield is enticing, in my view, even if not stratospheric, beating core PCE inflation by about 30 basis points.

Source: Koyfin

Notice, however, that PepsiCo has historically and consistently yielded less than Coca-Cola going back at least five years. In my view, this has been the case due to PepsiCo's higher growth and perceived better quality.

So despite PepsiCo and Coca-Cola yielding the same today, I believe this is a positive for the former. Simply put, I believe investors now have a chance to own a stock that rarely offers a yield that is better than (or even equal to) its key Atlanta-based competitor.

Dividend growth: PepsiCo wins

While some dividend investors emphasize (sometimes too much) the yield when deciding which stock to buy, other factors should be considered as well. Dividend growth is one of them.

Looking back since the peak of the Covid-19 crisis (see chart below), PepsiCo has increased its per-share dividend payments at a substantially faster pace than Coca-Cola: 10% today on a trailing 12-month basis versus Coke's 5%.

All else held equal, investors are better off owning a stock whose company tends to increase the dividend payments over time - and likely will continue to do so going forward. At the risk of oversimplifying the analysis, 10% annual growth in PepsiCo's dividend projected over the next five years suggests a dividend yield of 4.90% by 2029, assuming an unchanged share price. In the case of Coca-Cola, the projected yield would be a less enticing 3.90% assuming the current dividend growth rate of 5%.

Financial robustness: Coca-Cola (barely) wins

Of course, paying a dividend alone is not enough: the company needs to be able to sustain that dividend payment in the future, if not grow it above the inflation rate at least. This is where financial robustness comes into play.

I define financial robustness from two different angles: free cash flow generation and the strength of the balance sheet.

In 2023, PepsiCo produced $7.90 billion in free cash flow, a drastic improvement of 41% year over year and 10% annualized from the pre-pandemic levels of 2019. Last year, the FCF generated was 19% higher than the total dividend payments made. With constant-currency earnings per share projected to rise by 8% in 2024 , the dividend payments seem to be well covered.

Coca-Cola looks slightly better. While FCF has grown by only 4% per year since 2019, last year's $9.70 billion was 23% higher than the $8 billion in dividend payments made, suggesting a modestly higher dividend coverage ratio.

On the balance sheet side, PepsiCo's net debt of $37.1 billion represents a less-than-concerning 37% of total assets. Coca-Cola looks better , with $30.9 billion in net debt adding up to 32% of its total assets.

While I believe Coca-Cola wins the financial robustness battle against PepsiCo based on the above, I think it barely does so. In the end, PepsiCo's dividend coverage and balance sheet seem to be good enough to support the yield and dividend payment growth.

Stability of the business model: PepsiCo wins

Lastly, and turning to a more qualitative discussion, I think PepsiCo runs a more balanced, more stable business model.

The New York-based company generates about 27% of its revenue and 56% of its operating profits from its snack division (Frito Lay) in North America, which provides better top- and bottom-line diversification. Meanwhile, Coca-Cola is almost exclusively a beverage business that, granted, finds slightly better geographical diversification than its key peer.

In addition, PepsiCo's business is better distributed across at-home and away-from-home channels, in part due to Frito Lay and Quaker. This helps to explain why its revenues increased by 5% in the first pandemic year, while Coca-Cola saw its sales decline by a painful 11% in 2020 due to the lockdowns.

All things held equal, I would rather invest in a company whose business model is better balanced if the goal is to reliably collect dividend payments along the way.

While I believe PepsiCo and Coca-Cola are both good dividend stocks to own, I think the former is a better bet today. Supporting the argument are a historically low dividend yield premium that usually favors Coke, PepsiCo's history of increasing the dividend payments more aggressively and PepsiCo's more stable business model, despite Coca-Cola seemingly having an edge over its competitor on financial robustness.

This article first appeared on GuruFocus .