Environmental Factors Shaping PepsiCo's Marketing Decisions

Topics: PepsiCo, Indra Nooyi, Ethics Pages: 8 (2183 words) Published: May 31, 2013
Environmental Factors Paper
University of Phoenix
Christy Holley
Environmental Factors for PepsiCo
PepsiCo, one of the leading beverage and snack companies in the United States and abroad, is affected by both global and domestic environmental factors. These factors, along with changes in technology, all impact and shape the organization and affect marketing decisions. The article “PepsiCo Pops for China,” written by Ruthie Ackerman and published by Forbes.com, reviews Pepsi’s decision to invest billions into the Chinese market audience. This paper will review the article, identify environmental factors that shape the organization and impact marketing decisions, and discuss how technology plays a role in those decisions. Alternatives to Ackerman’s view of social responsibility to the company’s marketing decisions and activities will be analyzed, along with explanations of how ethical issues can make an impact. The accuracy of the article’s forecasts will be reviewed and further supportive references to conclusions made will be gathered, if necessary. Global and Domestic Factors

Several macro-environmental factors shape the PepsiCo Corporation and impact marketing decisions. Demographics, economic climate, ecological and political issues, technology, and cultural concerns all affect where the company is headed desires and the decisions the company makes. Each issue affects the company differently, but when combined together, the environmental factors can wreak havoc on a company’s bottom line if not addressed appropriately. On the other hand, if a company has the ability to recognize these factors, can address them, and be prepared to “think on its feet,” then the factors can be used to the company’s advantage.

The Ackerman article discusses PepsiCo’s investment into the Chinese market. When it comes to the environmental factors, Pepsi must adjust its marketing strategy to fit the audience rather than trying to fit the audience to its strategy. For example, current demographics in the United States reflects an aging population as the nation’s “Baby Boomers” are now reaching retirement age with most of them having “grown up” with Pepsi and Coca-Cola. 12.5% of the U.S. population is over the age of 65, compared to China, where only 7.7% of the population is over age 65 (NationMaster, 2009). According to Ackerman (2008), Pepsi plans to invest $1.0 billion into the Chinese markets, which is significant considering that currently the world’s economy is relatively poor. The author believes that the plan to invest in the Chinese market is optimistic and that the company faces the challenge of slow growth in China, a decline in U.S. sales and “the impact of the stronger dollar on international sales” (Ackerman, 2008, para. 2). How wise is the decision to invest in a country during a period of world economic decline? Pepsi made similar ventures in the Eastern European and Russian regions that proved to be profitable. According to Jonathan Feeney, a Wachovia Capital Markets analyst, Pepsi’s strategy is to build “platforms ahead of demand to some extent and continuing to support platforms even during times of economic weakness” (Ackerman, 2008, para. 5). Success is not guaranteed in the Chinese market, but if Pepsi has been able to achieve positive demand for its products in the past in other challenging markets, the company just might be able to drive growth in this market as well. Technology

Another example that affects PepsiCo is technology. Technological advancements are happening at a faster pace than ever in the 21st century and companies must be ready to take advantage of them or be left behind. Advertising decisions must be made with technology in mind, such as making use of electronic billboards vs. the old standards, which can appeal to PepsiCo’s technologically savvy target audience in China – youth and young adults. The money that Pepsi plans to invest will also enable the company to...
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