Market Audit and Target Markets for Pepsi - Research Paper Example

Topic: Marketing Report Task: Marketing report on Pepsi in the U.S Word Count: 2382 Table of Content Company Overview……………………………………………………………………………3 Environmental Scanning……………………………………………………………..3 Market Audit and Target markets…………………...………………………………4 Competitors…………………………………………………………………………………….4 Market Mix………………………………………………………………………………4 Perceived USP…………………………………………………………………………5 Marketing Objectives, Marketing Mix and Measurement……………………………….5 Conclusion and Recommendations………………………………………………………13 Bibliography…………………………………………………………………………………..14 Company Overview Pepsi is one of the greatest food and beverage American multinational corporations of the world. It was founded in 1965 in Manhattan, New York City (Riley, 1972, p. 53-60). Pepsi Company headquarters are situated in Purchase, New York. The company manufactures and sells eighteen major brands in both the snack foods and beverages (Vranica, 2010, p. 7). These brands have a capability of generating annual retail sales of approximately ninety eight billion dollars (Kendra et.al, 2010, p. 1). Pepsi Company main brands include; Quaker, Tropicana, Gatorade, Frito-lays and Pepsi-Cola, Aquinas, 7 Ups, Mirinda, Fritas, walkers amongst others. The company sells its products to more than two hundred countries. According to Abdul et.al (2012, p. 7-9), Pepsi holds an approximately thirty six percent of the total U.S snack food market and approximately twenty five percent of the U.S beverage industry. Today, Pepsi Company is a great contributor to the American economy and has employed over 200,000 people in America and more than 300,000 people worldwide. Over the years, Pepsi Company has not only worn global awards for having the best brands worldwide and being among the best global corporations but also awards for green production and sustainable development (Kendra et. al, 2010, p. 1-2). Environmental Scanning Pepsi Company is not only known all over the world for its products and strong brands but also for being a low cost leader (Kendra et. al, 2010, p. 1-2). Pepsi Company has also made history with its strong advertising strategies. In the 1960s, the most known Pepsi slogan was ‘nickel nickel’. This Slogan largely helped the company penetrate further into new emerging markets of the world during the time. Such slogans and others such as ‘Be Sociable have a Pepsi’ and ‘Refreshing without filling’ that followed thereafter have helped the company establish the today’s brand image that is long-lasting (Kendra et. al, 2010, p.2). Pepsi’s frequent change of the advertising slogans over the centuries has helped the company adequately capitalize on the changing environments and stay relevant to its customer (Kahn et.al, 1998, p. 384-390). Nevertheless, Pepsi Company fails to have a bigger market presence as compared to other major rivals such as the Coca Cola Company (Biswas and Sen, 1999, p. 1701-1708). The company also faces a threat of competition from new emerging firms in the food industry. Despite these weaknesses and threats, Pepsi Company the potential of growing further in the emerging economies of the world. Market Audit and Target markets The birth of the Pepsi Company resulted from a merger between the Frito-Lay and the Pepsi-Cola (Biswas and Sen, 1999, p. 1701-1708). Thereafter, Pepsi Company has further expanded and acquired other firms such as the Tropicana and Quaker Oats and further adding more brands to the company’s portfolio (Tabassum, 2014, p. 1079-1086). Pepsi Company is committed to increasing its audience size and further expanding usage within the existing customers (Chan and Mills, 2015, p. 15S). In America for example, Pepsi has positioned its products in a way that they are available to all members of the society (Abdul et.al, 2012, p. 8-10). The company runs its operations by splitting its business areas in four broad categories; America, Europe, Middle East and Africa and Asia. Pepsi Company has mainly targeted the young generation. In this regard, the company has introduced music, sports and fun to their adverts. Also, Pepsi has targeted the other groups in the market by not only providing a range of products but also low-priced products (Fredrix and Emily, 2009, p. 6-10).Pepsi has further rebranded most of its products to further target the low income earners in the developing nations especially in Africa, Asia and Middle East. The company has also embarked more on online marketing and online advertising strategies to reach out to the greater market. Competitors Marketing mix Today, Pepsi faces stiff competition from Coca- Cola, Mondelez International and Dr Pepper Snapple Group. In the soft drinks’ industry, Pepsi’s main rival is Coca-Cola Company and Pepsi has only managed to defeat Coca-Cola Company only once in the last a hundred and twelve years (Mark, 2000, p. 45-47). Coca-Cola is today the largest provider of soft drinks in the world. The main elements of the Coca-Cola marketing mix in soft drinks include providing the world with quality sodas and for every one; regular and diet Coke. The diet Coke has been a major product in the American market and appreciated by both the government and the people (Kramer-Atwood, 2002, p. 1228-1233). Coca-Cola products are readily available in all supermarkets and food stores around the world packed in both cans and bottles. Coca-Cola products are also available in the vending machines in most commercial and public buildings what has proved to be quite a significant marketing strategy. Also, Coca-Cola products are today available in most restaurants as fountain drinks. Coca-Cola Company is the leader in the soft drink industry but despite this fact, the company has maintained affordable prices on its products. It therefore continues to remain appealing in both low and middle class markets (Fredrix and Emily, 2009, p. 10). Coca-Cola Company maintained the standardized prices on the commodities even during the economic recession that was felt in the United States (Kacperczyk and Schnabl, 2010, p. 29-50). This saw the company criticized by both its shareholders and the economic analysts of the world. The Coca-Cola Company invests billions of dollars to promotion and advertising strategies so as to remain in the top position in the soft drink industry. The world statistics reveal that in the year 2011, Coca-Cola increased the television advertisement budget by thirty percent. Coca-Cola further uses the magazines and social media as it main advertising platforms. Perceived USP The most significant unique selling point (USP) of Coca-Cola is the brand recognition. Coca-Cola Company brands are very identifiable in all the countries of the world even where there are little or no Coca-Cola products. In fact, the Coca-Cola logo is identifiable by ninety four percent of the world population (Fredrix and Emily 2009, p. 16). This is quite an advantage to the Coca-Cola Company since whenever they launch a new product to the market; it always has a high peak since the customers are excited on trying the new Coca-Cola brand. Marketing Objectives, Marketing Mix and Measurement Pepsi Company is the second largest manufacturer of the soft drinks. Over the past years, this company has developed and implemented a number of key strategies to help the company improve its market share and sales revenues in relation to the soft drinks. In 2007, the Pepsi Company further declared a split of the company into three specific units; foods in the US, Beverages in the US and the beverages and drinks abroad (Govind and Kumardatt, 2011, p. 172). This strategy was aimed towards achieving an adequate market mix on its brands. 7 Ps Pepsi Company Coca-Cola Company Product The most common Pepsi soft drinks in the US market include; Diet Pepsi, Sierra Mist, Pepsi; Pepsi Lime, Pepsi Max, Pepsi-Cola and Duke’s. Pepsi are widely known for their wonderful sweet taste and the quenching ability. Pepsi are packaged in both cans and bottles of 200 and 330 and 250 and 500 milliliters respectively. Pepsi has for long maintained its position in the maturity phase in the product life cycle (Chan and Mills, 2015, p. 14-20). This is evident following the continued flow of high revenues to the Pepsi Company over the recent past. Pepsi is therefore the ‘Cash cow’ of the Pepsi Company. The market objective of the company in this case is to make as much cash as possible from the product. Coca-Cola-Coke is also in the maturity phase of the product life cycle. The brand is the company’s cash cow. Coke is packaged in bottles of 300mls, 500mls, and 1 liter and Cans of 300mls. Price Works in conjunction with Walmart Company and this has helped Pepsi Company maintain relatively low prices on their products what has further ensured that Pepsi continues to challenge its main rival in the soft drink industry- Coca-Cola. The prices of both the Pepsi cans and Pepsi bottles in America range from 0.4 dollars to 2 dollars. Pepsi is therefore a direct competitor of Coke in terms of prices. Pepsi Company has expanded the use of plastic bottles that are cheap and recyclable to help bring down the production costs. The prices of Coke cans and Coke bottles in America too range from 0.4 dollars to 2 dollars but relatively higher than Pepsi (Lasater, 2011, p. 103). Coke is packaged in both plastic and glass bottles. Also, in metallic cans. Place More than 50 percent of the Pepsi Company’s revenue is derived from the American market. Pepsi is doing well in the American market than its competitors. The market objective of the Pepsi Company in this case is to continue supplying the American market to maintain the market share. Pepsi products in America are adequately available in the leading supermarkets of the world and major food stores. Pepsi Company has also made use the vending machines situated in strategic points in major American cities and estates where it can easily be accessed by the public. Doing better in foreign markets than Pepsi. Coca-Cola has vending machines located in major public and commercial buildings in major cities. Products are available in major shops, major supermarkets and local markets. Promotion Pepsi has invested billions of dollars in promotion and advertising strategies (Golan et.al, 1999, p2-5). Its major marketing objective in regard to promotion is to do more product promotion and advertising to remain a major world manufacturer of soft drinks and further reduce the gap existing between the company and the leaders- Coca-Cola. Pepsi has capitalized on a number of advertisements; print advertisements, outdoor advertisements and broadcast advertising. The print advertisements entail magazines, brochures, flyers and newspapers. Outdoor advertisements include; billboards, wall posters, Vehicular display and banners. The integration of the print advertisements, outdoor advertisements and broadcast advertising entail the integrated marketing communication approach (Grove et.al, 2007, p. 37-54). The Pepsi Company has also continued to make use of slogans in promoting their brands in different parts of the world. Pepsi has also made use of the celebrities of the world in their advertising and promotional strategies. Coca-Cola has invested the most resources in promotion strategies than any other company in the soft drink industry. Coca-Cola Company is very popular with television advertisements, wall posters, online advertisements, newspapers, brochures and magazines. Coca-Cola spends a good proportion of its incomes on television advertisent. People There are approximately 40 million Pepsi consumers in America today. Pepsi Company in this case has a market objective of ensuring that this figure does not go down in future. Pepsi Company has over 200,000 employees. The Pepsi Company community comprises of a talented workforce working under shared company values and principles. Pepsi Company’s management is always committed towards supporting and empowering their employees. Together, the management and employees of Pepsi Company work towards improving the customer satisfaction by providing the best service and at the same time addressing the raised concerned. The company has established adequate channels through which the customers can air their grievances. The company uses the same channels to measure the level of customer satisfaction. Coke has employed 146, 200 employees. It has an able and a talented work force committed to the underling goals and objectives of the company. Process According to Mitchell (1990, p. 123), in US in 1990s, 49 gallons of soft drinks were estimated to be consumed every year, 15 gallons more than the consumption of water. Pepsi soft drinks pass through the process of water clarification, filtering, de-chlorination and sterilizing before the water is mixed with ingredients and the resulting beverage is carbonated (Mitchell 1990, p. 125). The end product is then packaged in cans and plastic bottles awaiting supply to the market. Coke too goes through a similar process the only difference is the ingredients used to make the final product (Oliver, 1986, p. 64). Physical evidence Pepsi is quite distinctive from the Coke not only in terms of the company logos but also in terms of the brand colors. The Pepsi soda cans have mixed colors blue, red and white. Coke cans on the other hand only bear a single color; red, green, blue or even orange. Coke products have the Coca-Cola Company logo that is quite recognizable and the red color. The products are quite recognizable by their looks. Conclusion and Recommendations So far, most of the applied strategies by the Pepsi Company seem to be working. According to Vranica (2010, p. 7), the number of Pepsi consumers has never decreased since the 2008. This has seen the company maintain its status as the second largest soft drink manufacturer in the world, second from Coca-Cola Company. In total, the company today enjoys gross revenue of more than ninety five billion dollars a year. It has not only grown to be one of the best multinational corporations of the world but also attracted a lot of investors. But, then what makes the company number two from Coca-Cola? Where does Pepsi Company go wrong? Xiao (2008, p. 1-3) indicates that Pepsi Company has used introduction of more new products to the market as one of their major competitive strategy. Also, according to Golan et.al, 1999, p. 6), Pepsi has capitalized on low-price strategy as a competitive strategy. Different scholars and economists of the world have differed on the application and validity of the two strategies used by the Pepsi Company. First, introduction of more products to the market means more costs to the company hence reduced revenues to the company. Secondly, low cost pricing of the products does not always work to the advantage of the company. Sometimes, instead of the customers viewing the strategy as an advantage to them and capitalize on it by buying more of the product. They instead refrain from buying the product for they associate the low prices to low value products. In this regard, the company should first evaluate its pricing strategies in respect to the different brands and also the positioning strategies. Further, the company should re-evaluate its major brands so as to ensure that the company concentrates on just a number of them to enhance product quality and further reduce the production costs. Bibliography Abdul, Munam, Jamil, Paracha, Muhammad, Waqas & Ali, Raza, Khan. 2012. Consumer Preference Coca Cola versus Pepsi. Global Journal of Management and Business Research, Volume 12, Issue 12, Version 1.0. Biswas, A., & Sen, A.1999.Coke vs Pepsi: Local & Global Strategy. Economic & political Weakly, 34(26), 1701-1708. Chan, K.C. and Mills, T.M. 2015. Modeling competition over product life cycles, Asia- Pacific , Journal of Operational Research, vol 32, no. 3, DOI: 10.1142/S0217595915500219. Fredrix, Sarah Skidmore & Emily. 2009. "Costco nixes Coke products over pricing dispute". Associated Press. Govind, Shinde and Kumardatt, Ganjre. 2011. 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