Pepsi

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CASE STUDIES

PepsiCo Case Study
Taking advantage of changing market conditions
Reference Code: CSCM0119 Publication Date: March 2007

DATAMONITOR VIEW CATALYST
In modern day society consumers are becoming more health orientated, fuelled by increased media channels constantly reminding about the dangers of unhealthy eating. As a result many food and drink manufacturers are reinventing both their product portfolios and their marketing activities. However companies are also realizing that customers view ethical conduct as important in all business operations. This case study focuses on PepsiCo's operational and marketing activities both domestically and internationally, exploring how the company is at the forefront of initiating change whilst maintaining core competencies.

SUMMARY
• PepsiCo’s previous history of environmental adaptation and restructure will be beneficial for it to both respond and initiate change in an increasingly health orientated market, capitalizing on the negative conceptions associated with competitors. PepsiCo should also exploit tacit knowledge and competencies, where possible, of companies acquired, both in domestic and global markets. • PepsiCo aims to overcome gatekeepers associated with certain target audiences by working with recognized associations, both in domestic and global markets, to portray the brand image in a positive manner. PepsiCo is also responding to the challenges associated with a teenage audience through social affiliation and brand loyalty. • The challenge associated with PepsiCo is maintaining a positive image in a market where numerous influential groups may view the company negatively. The company needs to keep track of a new joint venture, to make sure any associated controversy doesn’t damage the previous good practice it has carried out.

PepsiCo Case Study
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CSCM0119/ Published 03/2007 Page 1

PepsiCo case study

ANALYSIS PepsiCo formulates a structure that will embrace change PepsiCo’s inconsistent start is a different memory as company now finds itself in strong position In 2006 PepsiCo estimated that its annual retail sales had reached $92 billion, offering over 100 brands around the globe. The main cash cow of PepsiCo of course being the Pepsi carbonated drink that owned 10% of the US beverage market in 2006, but this hasn’t always been the case. Pepsi and its main competitor, Coca-Cola, were only released four years apartin 1890 and 1886 respectively. But whilst the success of Coca-Cola occurred almost automatically, Pepsi remained an unsteady brand for half a century, with sales suffering dramatically as a result of two world wars and a massive overestimation on sugar inflation. It wasn’t until the 1960s that the brand began to grow, after constantly having to adapt itself to changing environmental conditions. However, when Indra Nooyi replaced current CEO Steve Reinemund, PepsiCo became fronted by a woman whose focus on constant innovation has seen its strategy branch out to a more health conscious audience and grow its portfolio of products.

Indra Nooyi is already influential in diversifying away from core competency Nooyi, who has been at PepsiCo since 1994 and was credited as one of the key players in the transactions of Tropicana and Quaker, didn’t come to power on the back of a political conflict that sometimes occurs with multinationals. In fact Nooyi has stated that any strategies she implements will not be radically different from the man who was responsible for PepsiCo passing its arch rivals for the first time in history (in terms of market capitalization) in 2005. What this means is that PepsiCo will prolong a strategy of diversifying into new markets without moving away from its core competencies, maintaining brand loyalty in its home market whilst developing into emerging markets. This will continue to be done in a manner that takes into account...
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