Corporate Branding Strategies of Pepsico - Case Study Example

CORPORATE BRANDING STRATEGIES OF PEPSICO The development of branding process of a firm considers many internal and external factors. PepsiCobeing one of the largest brands in the corporate sector has created their brand value mainly by focusing on individual branding of their products. The brand development process of Pepsi is also fuelled by the diverse range of products and the large operational area. The primary concern for PepsiCo is the limited connection of their organisation with their promotional aspects. The analysis of the industry has helped in assessing the primary factors that should be included in the branding process of the firms. Table of Contents Table of Contents 3 Introduction 4 Literature Review Corporate branding and importance 4 Industry analysis 7 Brand Equity analysis of PepsiCo with recommendations 8 Brand Architecture analysis of PepsiCo with recommendations 9 Marketing objectives of PepsiCo 10 Critical success factor 10 Capabilities and competencies 11 Strategic options available                                                                11 Marketing objectives and implementation 12 Corporate social responsibility PepsiCo 12 Recommendation for the company 13 Reference List 14 Introduction The concept of branding is being utilised in the business segment as a means for gaining competitive advantage and developing better relationship with the stakeholders of the company. As observed by Leditschke (2009), branding processes have improved immensely with the growth of technology and also driven by the need of the organisations to reflect themselves to their stakeholders. However, Apéria and Georgson (2011) argued that branding is often used for over shadowing the competitors in the market rather than highlighting one’s own achievements. Considering these sentiments, the study will be framed on analysis and importance of branding processes in context of multinational American FMCG organisation PepsiCo and their corporate branding strategies. Literature Review Corporate branding and importance According to Dahlén, Lange and Smith (2010), the concept of branding generated from the process of promotional activities of the business. The concepts and theories related to the branding processes of a firm are developed based on the nature of operations, organisational objectives and the target market of the business. Sengupta (2009) stated that branding can be developed in an appropriate manner by observing the different approaches to branding such as the identity approach, the personality approach, the economic approach, cultural approach, relational approach, etc. Azoulay and Kapferer (2008) mentioned that branding strategies in the contemporary scenario are framed by considering the compatibility of the strategy with the organisational objectives. In the words of Apéria and Georgson (2011), the branding strategies of firms reflects a variety of considerations such as global sports organisation Nike have developed their brand based on their core value i.e. the love for sports and athletes whereas Japanese automobile firm Toyota have portrayed themselves as a consumers company (Chen, 2009). The key factors that are to be included in the branding processes of the firms is highly debated among the scholars. Dahlén, Lange and Smith (2010) mentioned that brand equity and brand awareness are the primary aspects which shows the efficacy of the corporate branding strategies. On the contrary, Leditschke (2009) mentioned that brand loyalty of stakeholders should be the primary aim of an organisation in context of their branding strategies. Apéria and Georgson (2011) opined that corporate branding helps an organisation in aligning their vision, culture and core values of the firm. Figure 1: Corporate Branding Factors (Source: Sengupta, 2009, p - 35) The above diagram was developed in order to highlight the factors that should be considered in developing the corporate branding strategy of a company. Chen (2009) stated that when the core values and the culture of an organisation are aligned, the branding process of a firm is justified. Azoulay and Kapferer (2008) focused on the necessity of branding for developing a positive brand perception and consumer awareness regarding the products and services of a company. The scope of branding strategies are developed focusing on the different levels of consumers and the marketing activities of a firm (Sengupta, 2009). The business employability in terms of branding processes also indulges in building a suitable brand position in consumer perception which is created with the help of the various branding levels. However, Apéria and Georgson (2011) stated that brand position differs based on the nature and type of branding being used for the target consumers. Figure 2: Scope of Branding (Source: Chen, 2009, p -442) Branding is crucial for an organisation in order to reflect itself to their stakeholders and also sustain in the competitive market, however selection of appropriate branding strategies is the complex stage in the process. Most of the brands try to align their branding techniques with their promotional process which may not work for the overall development of the organisational goodwill and brand equity (Giehl and Lepla, 2012). Thus, Leditschke (2009) highlighted that branding is effective only when it can be continuously evolved in sync with the changes in market and customer behaviour. Industry analysis The industry analysis of PespsiCo will be conducted with the help of Porter’s Five Forces model which will reflect the present situation of the industry as well as the position of PepsiCo within it. The industry analysis will also reflect the position of the competitor brands in the market and compare their growth that of PepsiCo. Figure 3: Porter’ Five Forces Model (Source: Azoulay and Kapferer, 2008, p - 43) Competitive Rivalry (High): The competition in the FMCG sector is dynamic in nature. The PepsiCo faces competition from some big firms such as Unilever, P&G in the FMCG sector and also faces competition from Coca-Cola in the beverage industry. The market share of the beverage industry is primarily shared between PepsiCo and Coca-Cola. However, PepsiCo is also creating diversification in their product base for expansion of market share (Dahlén, Lange and Smith, 2010). The Five Hour Energy helped the company to gain majority of the market share in the Energy Drinks segment (PepsiCo, 2014). Threat of new entrants (High): The FMCG sector is highly competitive because of the competition from multinational as well as domestic firms. The number of firms entering the FMCG industry is growing mainly because of the low capital investment and the high growth opportunities. Threat of Substitute products (High): PepsiCo products are facing steep competition from domestic and external industries. For instance, substitute products for the juice and flavoured drinks are facing competition from beverage industry as well as juice and nectar industry. This has also reduced the size of the market for operations and provided more options to the customers (Azoulay and Kapferer, 2008). Bargaining Power of Suppliers (Moderate): The bargaining power of suppliers is considerably low in respect of the high brand equity of PepsiCo. On the other hand, large number of operators in the market has increased the options for the suppliers (Chen, 2009). Bargaining Power of Customers (High): The customer of the FMCG segment has large number of options for meeting their needs. The customers of the industry have domestic as well as multinational firms for selection of their brand (PepsiCo, 2014). Another crucial factor influencing the consumer decision is the growing health consciousness among them which may redirect their focus from soft drinks to health drinks. Brand Equity analysis of PepsiCo with recommendations The brand equity of PepsiCo is developed extensively on the basis of their product base and their diversification of their customer offerings. PepsiCo has focused on the individual aspects of the markets in order to design their promotional and marketing activities. For instance, the emerging nations such as India and Brazil are among the primary markets of the company but the products being sold in both the markets differ on the basis of consumer need and expectations (Fombrun, Gardberg and Sever, 2008). The overall branding approach of PepsiCo has always been to help the brand of their products and services grow in the market and thus their promotional strategy has always been precise and detailed to the nature of the products. On the contrary, their arch competitor Coca-Cola has always tried to highlight the emotions of their customers in their promotional activities which have given them better brand equity than PepsiCo (Fombrun, Gardberg and Sever, 2008). The brand equity of PepsiCo mainly relies on their ability to cater their services to a large consumer base; PepsiCo includes their marketing objectives within their branding processes so that they can improve their brand development by communicating with their consumer groups. However, limited organisational reflection in their brand positioning process has also reduced the efficacy of their system (Giehl and Lepla, 2012). In order to improve their branding process PepsiCo should focus on unifying their branding process by accumulating their product group and highlighting the core values of the organisation. Brand Architecture analysis of PepsiCo with recommendations The brand architecture of a firm differentiates the brand of the organisation from the individual segment of the company and from the competitor firms (Fombrun, Gardberg and Sever, 2008). The brand architecture of the firm will not be focused on generating consumer awareness in terms of products and services but enhances the reflection or introduces the brand in the market. In the words of Hem, de Chernatony and Iversen (2009), brand architecture is the process of brand development by interconnecting the branding options available in the competitive environment. In this context, the branding process of PepsiCo is tied up with their product base closely. They have continuously focused on increasing consumer awareness about their products rather than the brand as a whole (Apéria and Georgson, 2011). This suggests that brand architecture of PepsiCo is mainly focused on umbrella branding process. However, PepsiCo generated their brand equity and brand architecture mainly with the help of their core product Pepsi which also became a trade mark of the firm. The limitation of Pepsi in context of brand architecture is the lack of organisational reflection in their promotional processes (PepsiCo, 2014). They should try to reflect their mission and unified relation of their product base with the organisation. Marketing objectives of PepsiCo Critical success factor As far as critical success factors of PepsiCo are concerned, the first and foremost factor is the size of the company. The managers have been able to leverage the size of the company by pooling up huge amount of finances from the shareholders and investing them in business operations (Giehl and Lepla, 2012). This unrestricted flow of capital allowed the mangers to accrue huge benefits from the operations and distribute the proceeds through dividends to the shareholders thereby re-establishing their confidence within the company. The managers have also been able to extend its operations beyond the home country just out of its sheer stronghold in the beverage industry (Hem, de Chernatony and Iversen, 2009).       Brand loyalty is another critical success factor for a company of the stature of PepsiCo. The company relies heavily on the brand relationship quality that it has established with its customer base. The managers have emphasized heavily in customer relationship management in order to ensure that the customers are thoroughly satisfied with the products and services offered by the company (Hem, de Chernatony and Iversen, 2009). This satisfaction index serves as the fundamental determinant of the brand loyalty of the customers which in turn is arguably one of the most important critical success factors for the beverage manufacturing giant.    Capabilities and competencies Capability of PepsiCo lies on multiple dimensions. The company’s capability is widely evident in the leadership attributes of the organizational managers. The managers imitate an amalgamation of transformational leadership style and team leadership style. The emulation of transformational leadership style enables managers think out of the box and pave a path that leads to innovation (Knox and Bickerton, 2007). This is precisely the reason why PepsiCo has such a wide variety of product offerings throughout the world. As far as emulation of team leadership style is concerned, the managers demonstrate equal emphasis on both the productivity of the company as well as welfare of the employees. They allow more scope of self development for the employees (Lim and OCass, 2009). This in turn enhances their engagement level towards their responsibilities and to the organization as a whole. Talking about the competencies of the company this comes from the valuable inputs provided by the highly skilled and experienced workforce (Lim and OCass, 2009). This allows the company to outperform every possible benchmark, associated with products and services, in the beverage industry. PepsiCo managers have established a robust communication framework that facilities free flow of information and knowledge sharing. This has been translated in the form of a significantly improved operational efficiency (Lim and OCass, 2009). Strategic options available                                                                Managers of PepsiCo have multiple strategic options available at their disposal. Execution of these strategic options will definitely lead the company to become the market leader of the beverage industry by beating its arch rival coca cola. This first and foremost strategy is to enhance its supply chain management facilities (Hem, de Chernatony and Iversen, 2009). The company should follow lean management principles which will prevent the company from incurring excess cost of inventory holding. Effective channelization of resources will allow the company to lower its production cost by a considerable margin and this in turn will enable the managers to realize greater income (Knox and Bickerton, 2007). PepsiCo should adopt forward integration strategy in order to be able to sell its products directly in the market without having to sell it through distributors. This will enable the mangers to increase their margin of profit by a considerable margin.  Marketing objectives and implementation Marketing managers should emphasize a lot on creating emotional attachment between the brand and the customers. They should endeavour to extent their presence in the digital realm in order to connect to a large base of internet audience (Knox and Bickerton, 2007). Managers will have to promote the products and services effectively in order to increase awareness among its target market. They will have to organize events and advertise the same over the social media networks in order to grab the attention of the target market and influence them to attend these events (Giehl and Lepla, 2012). This will allow them to market their products effectively on field which in turn will also resonate in a recurring manner through word of mouth promotion. Innovative advertisements will have to be designed in order to highlight the main features of the products manufactured by the company as the efficacy of such advertisements serve as one of the fundamental determinants of consumer purchase behaviour (Reast, 2005). Corporate social responsibility PepsiCo PepsiCo also uses the notion of corporate social responsibility for promoting their brand value in the market. They have been engaged in continuous efforts for making a positive contribution in the society. The PepsiCo Refresh project was an initiative taken by the company in the year 2010 for promoting new and fresh ideas among business houses that can help in fulfilling their responsibilities towards society, state and nation (Hem, de Chernatony and Iversen, 2009). The company declared financial support for the winner of the Refresh Project and a sum of $20 million was granted by the company to run the project (PepsiCo, 2014). Another project that was developed for meeting the CSR objectives of the company is the Water Policy. The water policy was focused on the internal operations of the company whose purpose was to reduce the overall water consumption of the production and other functions. The company reported in 2014 that they have successfully reduced the overall water consumption by 20% (PepsiCo, 2014). Recommendation for the company The branding process of PepsiCo as observed in the study was mainly developed on the basis of their product line. They have also used their CSR activities for branding purposes of the company. However, the company has still not been able to create a unified affect on the customers in terms of brand architecture. They have to reflect their core values to the customers so that they can connect themselves with the organisational activities. The relationship of the firm with their stakeholders should be developed in order to improve teh results of their branding process. Reference List Apéria, T. and Georgson, M., 2011. Strategic Brand Management: A European Perspective. 5th ed. London: Chapman and Hall. Azoulay, A. and Kapferer, J. N., 2008. Do brand personality scales really measure brand personality? Journal of Brand Management, 11 (2), pp. 143–55 Chen, A. C., 2009. Using free association to examine the relationship between the characteristics of brand associations and brand equity. Journal of product and brand management, 10(7), pp. 439-451 Dahlén, M., Lange, F. and Smith, T., 2010. Marketing Communications: A Brand Narrative Approach. Page 74, 3rd ed. New York: Wiley. Fombrun, C., Gardberg, J. and Sever, J., 2008. The reputation quotient, a multi stakeholder measure of corporate reputation, Journal of Brand Management (7), pp. 241–55 Giehl, W. and Lepla, F. J., 2012. Create a Brand That Inspires: How to Sell, Organize and Sustain Internal Branding. 6th ed. London: McGraw-Hill Education. Hem, L.E., de Chernatony, L. and Iversen, N.M., 2009. Factors influencing successful brand extensions. Journal of Marketing Management, 19 (7/8), pp. 781-806. Knox, S. and Bickerton, D., 2007. The Six Conventions of Corporate Branding, European Journal of Marketing, 37(8), pp. 998-1016. Leditschke, S., 2009. Successful Branding in the Financial Sector. 7th ed. Bedford, London: Thomson Learning. Lim, K. and OCass, A., 2009. Consumer brand classifications: An assessment of culture-of-origin versus country-of-origin. Journal of Product & Brand Management, 10 (2), pp. 120-136. PepsiCo 2014. Our Mission and Values. [Online] Available at: [Accessed 12 February 2015]. PepsiCo 2014. PepsiCo’s Delivering Access to Safe Water Report. [Online] Available at: [Accessed 12 February 2015]. PepsiCo 2014. Top Global Brands. [Online] Available at: < http://www.pepsico.com/Brands/BrandExplorer#top-global> [Accessed 12 February 2015]. Reast, J. D., 2005. Brand trust and brand extension acceptance: the relationship. Journal of Product & Brand Management, 14(1), pp. 4-13. Sengupta, S., 2009. Consumer Behaviour: Dynamics of Building Brand Equity. 5th ed. New York: Leadership Press. Read More