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PepsiCo in 2007 - Case Study Example

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PepsiCo is a leading food and beverage company operating on a global scale. Generally, the firm that increases its market share in an industry can earn more profits than a firm that has a low market share. This observation applies to both domestic and global markets…
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PepsiCo in 2007
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Download file to see previous pages Natural resources essentially drop out of the competitive equation. Being born rich becomes much less an advantage than it used to be. Technology gets turned upside down. New product technologies become secondary; new process technologies become primary.
PepsoCo obtains better terms from distributors and suppliers and promotes their products and services to consumers better than foreign firms because of common cultural heritage, ties, and language should be used for their greatest advantage. The main strength is new product development and product reformulation. Customers accept, reject, or alter propositions, perhaps through on-the-spot negotiations. Also, PepsiCo establishes close relations with distributors and follows aggressive acquisition strategy. The company relies on innovations and Product One strategy and strong leadership (Thompson et al 2008). For PepsiCo, Power One strategy is both a component and a determinant of the marketing mix. The company considers the life-style factors influencing product development. Urbanization, leisure, competition, discretionary income, travel, styles, tastes, automobiles, informality, and convenience have led to the emphasis on product form, readiness, packaging, combination, and selection convenience. For PepsiCo, product development refers to the conversion of ideas into successfully marketed products. It combines technical and marketing competence, and is concerned with strategies of programmed introduction of new products to markets as replacements for decaying ones. Since it carries out an important mission directed at corporate growth and advancement, product development should report to top management (Thompson et al 2008). Strong leadership and positive corporate culture support development and strategic growth of the company.
In implementing the product mix concept, companies are shifting away from being producing units, with set production capacities that merely broaden their line by adding similar items. They are becoming units that assess market opportunities against such criteria as rate of return on investment, and that change their facilities when the opportunities warrant it. This orientation demands a change from product rigidity to product flexibility. International expansion proposes great opportunities for PepsiCo (Thompson et al 2008). The idea is to establish effective management in multi-brand companies by developing a series of profit centers in which product executives assume responsibility for the total marketing effort for a line. This approach grows out of the inability of one executive to master the intricacies and details of marketing several dozens or hundreds of products. Product managers develop product ideas, nurture their brands, compete effectively within and outside the company, prepare budgets, work with marketing-research and advertising agencies, influence salesmen, wholesalers, and retailers, and generate sales, profits, and larger market shares. They understand and represent markets, customers, and consumers. "PepsiCo management believed international markets offered the company's greatest opportunity for growth since per capita consumption of snacks in the United States averaged 13.9 servings per month" (Gambler 2008).
Both PepsiCo and distribution-channel members are faced with the problem of deciding the best combination ...Download file to see next pagesRead More
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