Comprehensive Appraisal of Marketing Strategies of PepsiCo

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Comprehensive Appraisal of Marketing Strategies of PepsiCo

Market Segmentation

As we know that Pepsi is provided among a huge population which is called market. To distribute it and increasing the revenue the market should be segregated, Pepsi has segmented their market keeping four major segmentation variables in their mind which are:

Geographic
Demographic
Psychographic
Behavioral

Geographic Segmentation:

Geographic segmentation means dividing the market into different geographical units such as nations, regions, states, countries, cities of even neighborhood, Pepsi has put little emphasis to segment their market geographically. They are doing business almost in maximum places around the world.

Demographic Segmentation:

Despite the large customer base in the Soft Drink industry, Pepsi prefers to segment itself as the beverage choice of the “New Generation”, Generation Next, or just as the “Pepsi Generation”. These s advertising campaigns are what marketers’ terms adopted in Peps refer to as Generation X, which are presented to be between the ages of 18 to 29. In addition, Pepsi shifted its focus to the growing American teenage market in the 1990s by forming exclusive contracts with American schools and developing advertising campaigns such as “The Next Generation and the Joy of Pepsi’, featuring Britney Spears. Pepsi believes that if they can get this market to adopt their product, they could establish a loyal customer in a long run.

Psychographic segmentation:

Psychographic segmentation divides buyers into different groups based on social class, lifestyle or personality characteristics. People from same demographic group can have very different psychographic makeups Pepsi ‘s segmentation has also been emphasized psycho graphically. Their beverages are very much focusing towards lower and upper middle class as they can afford to drink Pepsi. They have a product like Mountain Dew a particular drink which is focused especially who has adventurous personality. Their campaign of this drink totally focuses adventurous young people.

Behavioral segmentation:

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. In this segment, Pepsi company has been concentrating carefully. Because they offer in every Special occasions, for the people who seek for benefits off products, to their loyal customer base. Occasional cases like religious festivals; special days like mothers’ day , valentine’s day, friendship day, any individual’s birthday, marriage ceremony or anniversary in a Word in every special occasions there are people to whom buying Pepsi for celebration is a must.

Market Targeting:

Market Targeting can be carried out at several different levels, companies can target very broadly through “Undifferentiated Marketing”, very narrowly through “Micromarketing” or somewhere between “Differentiated Marketing” and “Concentrated or Niche Marketing”. There are four strategies of market targeting. Pepsi follows the strategy of “Concentrated or Niche Marketing”. In niche marketing Companies goes after a large share of one or a few segments or niches. Through concentrated marketing, the firm achieves a strong market position because of its greater knowledge of customer it serves in the niches it serves and the special reputation in acquires. Pepsi customers are mostly Teenagers and Young Adults between the ages of 14 to 30. It also targets at Schools, Colleges, Universities, Homes, Restaurants Hotels, and Stores. They focused on varietal differentiation since 1990 by introducing a string of niche products. To increase volume in order to counter flat Coca-Cola sales, Pepsi introduced Sierra Mist in 2002-2003 to take the place of 7Up and go head-to-head with Sprite. Pepsi has also tried to boost volume by introducing products that appeal to Specific target markets that it currently is not reaching. Pepsi has introduced Code Red and Live Wire, extensions of Mountain Dew, Pepsi One, and Pepsi Blue. Finally, Pepsi is countering declining sales of Carbonated drinks through the marketing and distribution of Starbucks ready to drink products, and the acquisition of SOBE and Gator ad. The success of Pepsi’s Mountain Dew Code Red launched in 2001 was the most successful soft drink innovation in 20 years and has spurred even more niche product introductions for PepsiCo as well as other competitors. In some sense Pepsi also follows the idea of “Micromarketing”. As they are they are promoting their brands to the local customer groups. They are sponsoring the signboards for the little or big shopkeepers in town. They are also providing refrigerator logoed “Pepsi”. All these they are doing to attract their target customers.

Market Positioning:

PepsiCo plans to further Create positions that will give products the Greatest advantage in their target markets. Pepsi has been positioned based on the process of positioning by direct comparison and have positioned their products to benefit their target market. Positioning Strategies of Pepsi: To find points of differentiation, Pepsi have followed some strategies which have differentiated themselves from others. Pepsi have differentiated themselves in the field of Product Differentiation, Channel Differentiation and image Differentiation. The unique characteristic of their product and their brand image has differentiated themselves from the other beverages in market.

Promotion Decisions:

Integrated Marketing Communications

Coordination of promotion and other marketing efforts for maximum informational and persuasive impact. Pepsi has popularity among the population. Therefore, it is quite a challenge for Pepsi Cola to maintain and increase this popularity. Integrated Marketing Communications (IMC) is one of the effective strategies that a researcher believe it will solve the existing problem in the business area. Nowadays, competition in the market tend to increase, the customer also change their lifestyle becoming incrementally changed, then using only one tool for marketing communication is not enough. It is because many senders of organization try to reach the same receivers or customers. So, using many of strategies and communication tools will help their brand to become well known. Integrated Marketing Communication (IMC) is a tool that suitable for encouraging the customer buying behaviors.

Promotion:

Communication to build and maintain favorable relationships by informing and persuading one or more audiences to view an organization positively and to accept its products.

Promotion Mix of Pepsi:

The promotional mix element used for the Pepsi Refresh campaign theme centered on social responsibility and delivered with a heavy dose of social media. They took it deeper than any other campaign, targeting the millennial generation ages 14 to 29 by utilizing social media as an additional source along with traditional media to launch the Pepsi Refresh campaign. The campaign aired on paid search and display ads on Yahoo and Google to traffic their viewer to a link on YouTube and Face book too included other channel like e-mail marketing and mobile sites which drive visitors to the site.

Promotion strategy of PEPSI:

Advertising:

For advertising, it used printed and electronic media. Every newspaper and magazine carries Pepsi advertisements that make the people interested towards it, Advertisement of Pepsi are eye catching and attractive, Through advertising it informs the consumer about new brands and flavors. Pepsi designs their advertising campaign focusing on the target markets. They research for the need of people before make the ads. Pepsi has used a variety of sales promotions over the years. They have used celebrity such as Michael Jackson, Beyonce for endorsements. This has been shown with the use of Beyonce AX. They have also had essay Contest to promotions through schools. They have giveaways in stores and coupon advertisement in newspapers:

A paid non-personal communication about an organization and its products transmitted to a target audience through mass media
Advertising is changing as mass media consumption habits are changing
The Internet and digital media aim at smaller, more targeted audiences
Advertising is highly flexible and can reach large or small audiences depending on need

Pepsi invests heavily in marketing like Coca Cola. The brand invested 4.1 billion dollars in marketing in 2017. Out of it 2.4 billion dollars were spent on advertising solely. This was however a bit less than its 2016 expenditure when it spent 4.2 Billion dollars on marketing out of which 2.5 billion dollars went to advertising. Marketing innovation is a key driver of demand in the soda industry and since the competition in the industry is very high, brands also compete in the area of marketing. The two leading brands Coca Cola and Pepsi invest billions in marketing to promote their products and brands. Pepsi has 20 Billion dollar brands in its portfolio that generate revenue in billions. It has run several iconic promotional campaigns and targets the young people mainly through its advertising campaigns. Digital engagement has become an important focus for PepsiCo and the brand is investing in engaging digital video ads and creating exciting advertising campaigns. Its “Bring Happiness Home” happiness campaign including a 20 minute long video has seen very high level of success in Greater China generating more than 1 billion views. The brand is focused on creating effective advertising and marketing campaigns for its sales and success to a large extent depends upon the success and effectiveness of its marketing campaigns. Apart from these campaigns Pepsi also depends on sponsorship for marketing of its brand and products. Pepsi also promotes its each brand individually like Gatorade a sports drink for the athletes is promoted through a separate campaign. Its “Made for This” campaign featured High School athletes. The campaign underscored that Gatorade is fuel for the athletes and their success. These marketing and advertising campaigns are made to draw new customers as well as to inspire brand recall.

Public relation:

A broad set of communication efforts used to create/maintain favorable relationships between organization and stakeholders. Pepsi is the first product to respond to consumer preference with lightweight, recyclable, plastic bottles. In addition, different approaches of promotional campaigns such as press releases have been imposed so as to make the product more appealing to the target market and to make these product marketable.

Personal selling:

A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation,Pepsi use pull strategy for selling the product. In every occasion Pepsi offers special offers. Like, they reduce the price; give extra quantity of drinks in the same price.

Publicity:

For publicity Pepsi use social media such as Facebook. Not only that Pepsi use YouTube to promote its product. It drives public attention toward the product. Pepsi also use brand ambassador and sponsor cricket team and world cup for publicity.

Direct Marketing:

Pepsi Uses its direct marketing to distribute their product through PIZZA HUT, KFC etc. More than that, they use e-commerce Such as “Refreshments Services Pepsi.com’ to market the product.

Create Awareness

Awareness is crucial to initiating the product adoption process for new products, encourage Product Trial. If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to product adoption. When Pepsi-Cola North America decided to design a promotion to increase awareness and sales this summer, they looked to their agency, TLP, and SCA Promotions. Together, SCA, TLP, and Pepsi designed a summer-long promotion that would offer one lucky consumer the opportunity to become the world’s next billionaire. Only SCA, could make it happen: coverage for $1 billion.

Objectives:

Boost Pepsi product sales and increase brand awareness with consumers. Capture consumers’ interest by offering the largest cash prize in promotion history for a national brand – $1 billion. Gain sponsor support by partnering with the WB Network, Marriott Hotels, and United Airlines.

Strategies:

Offer the billion dollar prize on a bottle cap promotion that culminates with a live game show on the WB. Invite consumers to visit www.billionsweeps.com and enter a unique sweepstakes entry code found on specially-marked products. Randomly select 1,000 contestants to play a game of chance on the WB’s live show for a guaranteed one-million dollars and a chance to take home one billion dollars.

Each of the 1,000 selected contestants would choose a six-digit number on the day of the game show. The 10 contestants whose number was closest to or exactly matched the one selected by the chimpanzee, Kendall (A.K.A. “Mr. Moneybags”), advanced to the elimination round. Play a suspenseful game of elimination to determine the final player. In return for forfeiting their chance at the billion dollars, players were offered an increasing cash prize during each round. Award other great prizes during the game show to continue the excitement. Coordinate additional coverage for the one million $15 instant win bottle caps. SCA’s coverage protected Pepsi from an unexpectedly high rate of redemption. SCA estimated the redemption rate and covered the cost of redemption over that amount, keeping Pepsi on budget and risk free.

Results:

Four million consumers submitted more than 20 million game entries. Pepsi captured important demographic information for future marketing efforts.
Richard Bay, a graphic design teacher from Princeton, WV, was the final contestant and won the guaranteed $1 million. To win the billion, his six-digit number would have had to exactly match Kendall’s. He was only two digits away from an exact match.
United Airlines presented two around-the-world trips, Marriott gave a life-long time share membership, and three Mitsubishi cars were awarded.

Distribution Channel of Pepsi:

Marketing channels are sets of interdependent organization involves in the process of making a product or service available for Use of Consumption. By channel distribution of Pepsi means the intermediaries of the process through which Pepsi is transferred from the producer to the ultimate users. There are a lot of intermediaries between Pepsi producers and consumers. Some intermediaries like wholesalers and retailers buy and resale the product. They are known as merchant middle men, Intensive Distribution: PepsiCo follows an intensive distribution strategy to distribute Pepsi, To support their universal feature that they want to place their product in as many outlets as possible, Distribution Model of Pepsi: Pepsi uses two types of distribution model to distribute the product among the consumers. They are Direct Distribution System and Indirect Distribution System.

Direct Distribution System:

Pepsi Uses its direct distribution system to deliver suppliers. It Supplies the product directly with: PIZZA HUT, KFC. According to the marketing channel Pepsi uses zero level of marketing. We can see there are no intermediaries between manufacturer and consumer. This single type of marketing channel is maintained by Pepsi.

Indirect Distribution System:

In this system, there are a lot of intermediaries such as distributors retailers, Wholesaler etc. To make the product available at the right places at the right time in the market, the sales department of PepsiCo Company pays major attention on controlling the channel of distribution. So according to the marketing channel Pepsi uses 2-level marketing channel.

Number of Intermediaries:

Pepsi Provides direct and employed employment of 1,500,000 people (including suppliers and distributors). Distributors Distributors frequently have a business relationship with manufactures that they represent. The distributors of Pepsi maintain exclusive buying agreements that limit the number of participants. The distributor becomes the company’s direct point of contact. Distributors do not sell the product directly to consumers. At first PepsiCo supplies Pepsi to the distributors, then they resale the product to wholesaler of retailer, according to http://www. exporters. sg/, there are 70 distributors of Pepsi. Some of them are: OTC GLOBAL LTD, INDIA (Exporting and importing Pepsi in 500 ML pet Bottles), SUNRISE FOODSTUFF JSC, VIETNAM (Exporting Famous Brand Pepsi Soft Drinks 330 ml).

Wholesalers:

The wholesalers of Pepsi generally buy a large quantity of products directly from distributors of the company. Then they resale the product to the retailers, according to http://www. exporters.sg/ there are 70 wholesalers of Pepsi. Some of them are: FAR WAY GENERAL TRADING LLC (Exporting and importing Pepsi), Brand Distribution Poland LTD, POLAND (Exporting Pepsi 0, 33 l, 24 Case).

Retailers:

Retailers consist of small and large for – profit businesses that sell products directly to consumers. The retailers buy small quantities of an item from a distributor or a wholesaler. Then resale them consumers. According to http://www.exporters.sg/ there retailers of Pepsi, Some of the retailers are Akin Enterprise, BANGLADESH, ANSii Computers, BANGLADESH. The channel of distribution is a structure which presents among alternative channels of distribution of the different marketing situation faced by retailers, wholesaler and producers within the structure. To bearing maximum profits of all institutions channel of distribution should be treated as a unit of total system of action.

References

https://www.scapromotions.com/case-study/pepsi/
https://www.slideshare.net/FatemaTuzZzohora/a-marketing-plan-for-pepsi-assaignment