A

DISSERTATION PROJECT REPORT

ON
MARKET ANALYSIS OF PEPSI CORPORATION

A proposal for dissertation submitted in partial fulfillment of the

requirements for the degree of Bachelor of Business Administration

Submitted By
RITESH K VARMA
PRN no:- 07108004078

Study Center
Ramdhar Maheshwari Lions Business School.
SV ROAD, Sunder Nagar, Malad (W), Mumbai:-400064.
Guided by
Prof Swati Dixit
Faculty (Marketing)

SUBMITTED TO
Tilak Maharashtra Vidyapeeth
Gultekadi,pune:-37
Phone no:24403000/24264644
Year
2010-2011
 A
DISSERTATION PROJECT REPORT
ON
MARKET ANALYSIS OF PEPSI CORPORATION

Guided by
Prof Swati
Faculty (Marketing)

Submitted By
Ritesh K Varma
PRN no:-07108004078
 ACKNOWLEDGEMENT

It is indeed of great moment to pleasure to express my senses of per found gratitude

& indebtness to all the people who have been instrumental in making my tanning a

rich experience. I got the opportunity to do a challenging project on Pepsi

Corporation. The project is the important part of our study and gives us a real

practical exposure to the corporate world and it is almost impossible to do the same

without the guidance of peoples in and around us. Similarly while doing the topic

“Market Survey on Pepsi Corporation” as a dissertation trainee I took many my

projects in help.

It gives me immense pleasure to acknowledge Pepsi

Corporation, which has been nice enough to give me a chance to do my dissertation

project providing me wonderful support throughout my training period and

afterward.
 DECLARATION

I will take pleasure in declaring that the dissertation project work that
is undertaken by me is an original and authentic work done by me.
This dissertation project is being submitted by me for the partial
fulfillment for award of Bachelor of Business Administration from
Tilak Maharashtra Vidyapeeth, Pune

Ritesh K Varma
PRN no: 07108004078
 TABLE OF CONTENTS
Title Pg. No.
 EXECUTIVE SUMMARY 6

 OBJECTIVE OF THE STUDY 7

 SCOPE OF THE STUDY 8-9
 INTRODUCTION 10-12
 BRAND IN CONSUMER ELECTRONICS SECTOR 13-14
 HISTORY OF THE COMPANY 15-19
 GLOBAL OPERATION 20-21
 BUSINESS AREA & MAIN PRODUCTS 22-23
 COMPANY LOGO 24-25
 LG BRAND IDENTITY 26
 INTERNAL CULTURE OF LG 27-28
 QUALITY INNOVATION 29
 CODE OF CONDUCT OF LG 30
 LG INDIA 31-32
 INDIA CHALLENGES 33-34
 MAJOR KEY SUCCESS FACTOR 35
 STARTEGIES ADOPTED 36
 LG MARKET SHARE OF CONSUMER APP 37-40
 DISTRIBUTION & MARKETING 41
 CUSTOMER SERVICE 42-43
 RESEARCH METHODOLOGY 45-46
 DATA COLLECTION METHODS 47-48
 ANALYSIS 49-55
 RECOMMENDATION & SUGGESTION 56
 LIMITATION 57
 BIBLIOGRAPHY 58
 CONSUMER SURVEY QUESTIONNAIRE 59-60

Executive Summary

PepsiCo.Inc operates three major businesses: Snack Foods, Bevarages, and Quaker oats. The
company's snack-food products include Fritos, Doritos, and Tostitos corn chips; Lay's and
Ruffles potato chips; Cheetos cheese-flavored snacks; Rold Gold pretzels; and Cracker Jack
candy-coated popcorn. Fifty four percent of 2001 sales and Fifty Six percent of operating profits
for PepsiCo came from its Snack Food business. The Company’s Beverage Business makes soft
drinks, including Pepsi-Cola, Diet Pepsi, Pepsi One, Mountain Dew, Slice, and Mug, which it
distributes to independent and company-owned bottlers. PepsiCo also produces Tropicana juice
products and Aquafina bottled water products. It’s Beverage Business in 2001 brought in 39%
of PepsiCo’s sales, and 35% of operating profits. PepsiCo acquired Quaker Oats in 2001.
Quaker Oats makes the Gatorade sports drink, Breakfast Cereals, Oatmeals, grits, pancakes, rice,
and pasta. Quaker Oats brought in 7% of PepsiCo total sales and 9% of operating profit.
PepsiCo international business is 29% of sales. Many of PepsiCo's brand names are over 100-
years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the
merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with
The Quaker Oats Company, including Gatorade, in 2001. PepsiCo’s success is the result of
superior products, high standards of performance, distinctive competitive strategies and the high
integrity of there people.

PepsiCo’s main competitor is Coca Cola. We feel that PepsiCo has a better growth potential
then Coca Coal. We also like the fact that PepsiCo is also in the Snack Foods Business; this adds
diversity to the companies’ product range. PepsiCo recently sign some big contracts with Burger
King and Applebee's, this will help PepsiCo gain market share over Coca-Cola. Although
PepsiCo is involved in three major businesses we feel that this business fit in with each other and
together give PepsiCo a competitive advantage especially since they use similar distribution
channel through out there businesses. This could give them bargaining power in the future once
there brand name products become necessities in most stores.

OBJECTIVE OF THE PROJECT

 The Objective was to find out that how far the exhibitions are helpful in branding,

 The project aims at studying and analyzing the advertisement, which creates consumer
attentiveness towards Pepsi products.
 The main aim of the project is to understand that how much consumer is aware to the
Pepsi product with the help of advertisements.
  This also includes the positive and negative points of advertising which creates the
impact on consumer minds towards the Pepsi products.

 While purchasing the consumer durables which parameter is most important for the
consumer?

 Do the consumers prefer the financial facility for buying consumer durable?

 How frequently consumers change the consumer durable?

 To enhances the knowledge of consumer durable market.

 To find out the major competitor of pepsico company.

 To find out the changes needs to be brought in Pepsico.

 Reasons and the need for this change.

 Brand logo is known by how many consumers.

 To enhances the knowledge about the marketing and branding activity.

SCOPE OF PROJECT

“ANALYSIS OF MARKETING DYNAMICS OF PEPSI COLA DRINKS WHICH CREATES

CONSUMER ATTENTIVENESS”

This project gives me great exposure to the consumer durable market because it includes product
knowledge and the filed job in which I have visited the unit Malad Area. During this project I also
took part in the exhibition of PEPSICO which held for the purpose branding and awareness of
PEPSICO product. This project helps me to know the market practically. My job was during this
project to see the market share and also the display share of the PEPSICO product in the store. The
tagline of PEPSICO is self explanatory and defines the company “PERFORMANCE WITH PURPOSE”.

INTRODUCTION
Pepsi Corporation

PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American global corporation

headquartered in Purchase, Harrison, New York, with interests in the manufacturing, marketing
and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed
in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since
expanded from its namesake product Pepsi to a broader range of food and beverage brands, the
 largest of which include an acquisition of Tropicana in 1998 and a merger with Quaker Oats in
2001 - which added the Gatorade brand to its portfolio as well.

As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion each, and
the company’s products were distributed across more than 200 countries, resulting in annual net
revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food & beverage
business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest
food and beverage business.

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the
company employed approximately 285,000 people worldwide as of 2010. The company’s
beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in
certain regions. PepsiCo is a SIC 2080 (beverage) company.

SWOT Analysis PepsiCo

Strengths
 Branding - One of PepsiCo’s top brands is of course Pepsi, one of the most
recognized brands of the world, ranked according to Interbrand. As of 2008 it ranked
26th amongst top 100 global brands. Pepsi generates more than $15,000 million of annual
sales. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi,
 Gatorade Mountain Dew, Thirst Quencher, Lay’s Potato Chips, Lipton Teas
(PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla
Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks,
Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and
Sierra Mist.
 The strength of these brands is evident in PepsiCo’s presence in over 200 countries. The
company has the largest market share in the US beverage at 39%, and snack food market
at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to
over $15 million in annual sales for the company

 Diversification - PepsiCo’s diversification is obvious in that the fact that each of its
top 18 brands generates annual sales of over $1,000 million. PepsiCo’s arsenal also
includes ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals,
cakes and cake mixes. This broad product base plus a multi-channel distribution system
serve to help insulate PepsiCo from shifting business climates.
 Distribution  - The Company delivers its products directly from manufacturing
plants and warehouses to customer warehouses and retail stores. This is part of a three
pronged approach which also includes employees making direct store deliveries of snacks
and beverages and the use of third party distribution services.

Weaknesses
 Overdependence on Wal-Mart  - Sales to Wal-Mart represent
approximately 12% of PepsiCo’s total net revenue. Wal-Mart is PepsiCo’s largest
customer. As a result PepsiCo’s fortunes are influenced by the business strategy of Wal-
Mart specifically its emphasis on private-label sales which produce a higher profit margin
than national brands. Wal-Mart’s low price themes put pressure on PepsiCo to hold down
prices.
  Overdependence on US Markets - Despite its international presence, 52%
of its revenues originate in the US. This concentration does leave PepsiCo somewhat
vulnerable to the impact of changing economic conditions, and labor strikes. Large US
customers could exploit PepsiCo’s lack of bargaining power and negatively impact its
revenues
 Low Productivity - In 2008 PepsiCo had approximately 198,000 employees. Its
revenue per employee was $219,439, which was lower that its competitors. This may
indicate comparatively low productivity on the part of PepsiCo employees.
 Image Damage Due to Product Recall  - Recently (2008) salmonella
contamination forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail
shelves. This followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences
damage company image and reduce consumer confidence in PepsiCo products.

Opportunities
 Broadening of Product Base - PepsiCo is seeking to address one of its
potential weaknesses; dependency on US markets by acquiring Russia’s leading Juice
Company, Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden
its product base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea
venture with Unilever. These recent initiatives will enable PepsiCo to adjust to the
changing lifestyles of its consumers.

 International Expansion - PepsiCo is in the midst of making a $1, 000 million

investment in China, and a $500 million investment in India. Both initiatives are part of
its expansion into international markets and a lessening of its dependence on US sales. In
addition the company plans on major capital initiatives in Brazil and Mexico.

 Growing Savory Snack and Bottled Water market in US  -

PepsiCo is positioned well to capitalize on the growing bottle water market which is
projected to be worth over $24 million by 2012. Products such as Aquafina, and Propel
are well established products and in a position to ride the upward crest.PepsiCo products
 such as, Doritos tortilla chips, Cheetos cheese flavored snacks, Tostitos tortilla chips,
Fritos corn chips, Ruffles potato chips, Sun Chips multigrain snacks, Rold Gold pretzels,
Santitas are also benefiting from a growing savory snack market which is projected to
grow as much as 27% by 2013, representing an increase of $28 million.

Threats
 Decline in Carbonated Drink Sales - Soft drink sales are projected to
decline by as much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the
process of diversification, but is likely to feel the impact of the projected decline.
 Potential Negative Impact of Government Regulations - It is
anticipated that government initiatives related to environmental, health and safety may
have the potential to negatively impact PepsiCo. For example, manufacturing, marketing,
and distribution of food products may be altered as a result of state, federal or local
dictates. Preliminary studies on acrylamide seem to suggest that it may cause cancer in
laboratory animals when consumed in significant amounts. If the company has to comply
with a related regulation and add warning labels or place warnings in certain locations
where its products are sold, a negative impact may result for PepsiCo.
 Intense Competition - The Coca-Cola Company is PepsiCo’s primary
competitors. But others include Nestlé, Groupe Danone and Kraft Foods. Intense
competition may influence pricing, advertising, sales promotion initiatives undertaken by
PepsiCo. Resently Coca-Cola passed PepsiCo in Juice sales.
 Potential Disruption Due to Labor Unrest  - Based upon recent
history, PepsiCo may be vulnerable to strikes and other labor disputes.

COMPETITION

The Coca-Cola Company has historically been considered PepsiCo’s primary competitor in the
beverage market,[28] and in December 2005, PepsiCo surpassed The Coca-Cola Company in
market value for the first time in 112 years since both companies began to compete. In 2009, the
Coca-Cola Company held a higher market share in carbonated soft drink sales within the U.S.[5]
In the same year, PepsiCo maintained a higher share of the U.S. refreshment beverage market,
however, reflecting the differences in product lines between the two companies.[5] As a result of
mergers, acquisitions and partnerships pursued by PepsiCo in the 1990s and 2000s, its business
has shifted to include a broader product base, including foods, snacks and beverages. The
majority of PepsiCo's revenues no longer come from the production and sale of carbonated soft
drinks.[29] Beverages accounted for less than 50 percent of its total revenue in 2009. In the same
year, slightly more than 60 percent of PepsiCo's beverage sales came from its primary non-
carbonated brands, namely Gatorade and Tropicana.[5]

PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack food
market, accounting for approximately 39 percent of U.S. snack food sales in 2009.[5] One of
PepsiCo's primary competitors in the snack food market overall is Kraft Foods, which in the
same year held 11 percent of the U.S. snack market share
 ORIGINS

The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern, North
Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898. As
the cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered a
patent for his recipe in 1903.[9] The Pepsi-Cola Company was first incorporated in the state of
Delaware in 1919.[10] Ownership of this company traded hands several times throughout the
1920s and 1930s, and in the early 1960s its product line expanded with the creation of Diet Pepsi
and Mountain Dew.[11]

Separately, the Frito Company and H.W. Lay & Company - two American potato and corn chip
snack manufacturers - began working together in 1945 with a licensing agreement allowing
H.W. Lay to distribute Fritos in the Southeastern United States. The companies merged to
become Frito-Lay, Inc. in 1961.[12]

In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the
company it is known as at present. At the time of its foundation, PepsiCo was incorporated in the
state of Delaware and headquartered in Manhattan, New York. The company's headquarters were
relocated to its still-current location of Purchase, New York in 1970,[13] and in 1986 PepsiCo was
reincorporated in the state of North Carolina.[10]

ACQUISITIONS AND DIVESTMENTS

Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of businesses
outside of its core focus of packaged food and beverage brands; however it exited these non-core
business lines largely in 1997, selling some, and spinning off others into a new company named
Tricon Global Restaurants, which later became known as Yum! Brands, Inc..[14] PepsiCo also
previously owned several other brands that it later sold, in order to allow it to return focus to its
primary snack food and beverage lines, according to investment analysts reporting on the
divestments in 1997.[15] Brands formerly (no longer) owned by PepsiCo include: Pizza Hut,[16]
Taco Bell,[16] KFC,[16] Hot 'n Now,[17] East Side Mario's,[18] D'Angelo Sandwich Shops,[19] Chevys
Fresh Mex, California Pizza Kitchen,[20] Stolichnaya[21] (via licensed agreement), Wilson
Sporting Goods[22] and North American Van Lines.[23]
The divestments concluding in 2007 were followed by multiple large-scale acquisitions, as
PepsiCo began to extend its operations beyond soft drinks and snack foods into other lines of
foods and beverages. PepsiCo purchased the orange juice company Tropicana Products in 1998,
[24]
and merged with Quaker Oats Company in 2001,[25] adding with it the Gatorade sports drink
line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, among others.
[26]

In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its
products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisition
was completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, Pepsi
Beverages Company.[8] Also in late 2010, the company made its largest international acquisition
when it purchased a majority stake in Wimm-Bill-Dann Foods - a Russian food company which
produces milk, yogurt, fruit juices and dairy products.[27]

PRODUCTS AND BRANDS

PepsiCo’s product mix as of 2009 (based on worldwide net revenue) consists of 63 percent
foods, and 37 percent beverages.[5] On a worldwide basis, the company’s current products lines
include several hundred brands that in 2009 were estimated to have generated approximately
$108 billion in cumulative annual retail sales.[30]

The primary identifier of companies' main brands within the food and beverage industry are
those which generate annual sales exceeding $1 billion, and 19 of PepsiCo's brands met this
description as of 2009: Pepsi-Cola, Mountain Dew, Lay's, Gatorade, Tropicana, 7Up, Doritos,
Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi Max, Tostitos, Sierra
Mist, Fritos, and Walker's.[6][30]

AREAS OF BUSINESS

The structure of PepsiCo's global operations has shifted multiple times in its history as a result of
international expansion, and as of 2010 it is separated into four main divisions:[31] PepsiCo
Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle
East and Africa. As of 2009, 71 percent of the company’s net revenues came from North and
South America, 16 percent from Europe and 13 percent from Asia, the Middle East and Africa.
[32]

PEPSICO AMERICAS FOODS

PepsiCo Americas Foods consists of the company’s food and snack operations in North and
South America. This operating division is further segmented into Frito-Lay North America,
Quaker Foods & Snacks, Sabritas, Gamesa and Latin America Foods. Food and snack sales in
North and South America combined contributed 48 percent of PepsiCo’s net revenue in 2009.[30]
[7][33]

Frito-Lay North America, the result of a merger in 1961 between the Frito Company and the
H.W. Lay Company, produces the top selling line of snack foods in the U.S. Its main brands in
the U.S., Canada and Mexico and include Lay's and Ruffles potato chips, Doritos tortilla chips,
Tostitos tortilla chips and dips, Cheetos cheese flavored snacks, Fritos corn chips, Rold Gold
pretzels, Sun Chips and Cracker Jack popcorn. Products made by this division are sold to
independent distributors and retailers, and are transported from Frito-Lay's manufacturing plants
to distribution centers, principally in vehicles owned and operated by the company.[34]

Quaker Foods North America, created following PepsiCo’s acquisition of the Quaker Oats
Company in 2001, manufactures, markets and sells Quaker Oatmeal, Rice-A-Roni, Cap'n Crunch
and Life cereals, as well as Near East side dishes within North America. This division also owns
and produces the Aunt Jemima brand, which as of 2009 was the top selling line of syrups and
pancake mixes within this region.[35][5]

Sabritas and Gamesa are two of PepsiCo’s food and snack business lines headquartered in
Mexico, and they were acquired by PepsiCo in 1966 and 1990, respectively. Sabritas markets
Frito-Lay products in Mexico, including local brands such as Poffets, Rancheritos, Crujitos and
Sabritones. Gamesa is the largest manufacturer of cookies in Mexico, distributing brands such as
Emperador, Arcoiris and Marías Gamesa.[36]
PepsiCo’s Latin America Foods (Spanish: Snacks América Latina) operations market and sell
primarily Quaker- and Frito-Lay-branded snack foods within Central and South America,
including Argentina, Brazil, Peru and other countries in this region.[37] Snacks América Latina
purchased Peruvian company Karinto S.A.C. including its production company Bocaditas
Nacionales (with three production facilities in Peru) from the Hayashida family of Lima in 2009,
adding the Karito brand to its product line, including Cuates, Fripapas, and Papi Frits

OUR MISSION AND VISION

At PepsiCo, we believe being a responsible corporate citizen is not only the right thing to do, but
the right thing to do for our business.

OUR MISSION
Our mission is to be the world's premier consumer products company focused on convenient
foods and beverages. We seek to produce financial rewards to investors as we provide
opportunities for growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive for honesty, fairness and
integrity.

OUR VISION

"PepsiCo's responsibility is to continually improve all aspects of the world in which we operate -
environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making PepsiCo a
truly sustainable company.

PERFORMANCE WITH PURPOSE

At PepsiCo, we're committed to achieving business and financial success while leaving a positive
imprint on society - delivering what we call PERFORMANCE WITH PURPOSE .

Our approach to superior financial performance is straightforward - drive shareholder value. By

addressing social and environmental issues, we also deliver on our purpose agenda, which
consists of human, environmental, and talent sustainability.
 PEPSICO VALUES & PHILOSOPHY

Our Values & Philosophy are a reflection of the socially and environmentally responsible
company we aspire to be. They are the foundation for every business decision we make.

OUR COMMITMENT
We are committed to delivering sustained growth through empowered people acting responsibly
and building trust.

WHAT IT MEANS

Sustained Growth is fundamental to motivating and measuring our success. Our quest for
sustained growth stimulates innovation, places a value on results, and helps us understand
whether today's actions will contribute to our future. It is about the growth of people and
company performance. It prioritizes both making a difference and getting things done.

Empowered People means we have the freedom to act and think in ways that we feel will get
the job done, while adhering to processes that ensure proper governance and being mindful of
company needs beyond our own.

Responsibility and Trust form the foundation for healthy growth. We hold ourselves both
personally and corporately accountable for everything we do. We must earn the confidence
others place in us as individuals and as a company. By acting as good stewards of the resources
entrusted to us, we strengthen that trust by walking the talk and following through on our
commitment to succeeding together.

GUIDING PRINCIPLES

We uphold our commitment with six guiding principles.

We must always strive to:

1. Care for our customers, our consumers and the world we live in.
We are driven by the intense, competitive spirit of the marketplace, but we direct this spirit
toward solutions that benefit both our company and our constituents. Our success depends
 on a thorough understanding of our customers, consumers and communities. To foster this
spirit of generosity, we go the extra mile to show we care.
2. Sell only products we can be proud of.
The true test of our standards is our own ability to consume and personally endorse the
products we sell. Without reservation. Our confidence helps ensure the quality of our
products, from the moment we purchase ingredients to the moment it reaches the
consumer's hand.
3. Speak with truth and candor.
We tell the whole story, not just what's convenient to our individual goals. In addition to
being clear, honest and accurate, we are responsible for ensuring our communications are
understood.
4. Balance short term and long term.
In every decision, we weigh both short-term and long-term risks and benefits. Maintaining
this balance helps sustain our growth and ensures our ideas and solutions are relevant both
now and in the future.
5. Win with diversity and inclusion.
We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity
brings new perspectives into the workplace and encourages innovation, as well as the
ability to identify new market opportunities.
6. Respect others and succeed together.
Our mutual success depends on mutual respect, inside and outside the company. It requires
people who are capable of working together as part of a team or informal collaboration.
While our company is built on individual excellence, we also recognize the importance and
value of teamwork in turning our goals into accomplishments.

Non-free media use rationale - non-free logo for PepsiCo Description

This is a logo for PepsiCo.

Source

The logo may be obtained from PepsiCo.

Article

PepsiCo

Portion used

The entire logo is used to convey the meaning intended and avoid tarnishing or misrepresenting
the intended image.

Low resolution?

The logo is of a size and resolution sufficient to maintain the quality intended by the company or
organization, without being unnecessarily high resolution.

Purpose of use

The image is placed in the infobox at the top of the article discussing PepsiCo, a subject of
public interest. The significance of the logo is to help the reader identify the organization, assure
the readers that they have reached the right article containing critical commentary about the
organization, and illustrate the organization's intended branding message in a way that words
alone could not convey.

Replaceable?

Because it is a logo there is almost certainly no free equivalent. Any substitute that is not a
derivative work would fail to convey the meaning intended, would tarnish or misrepresent its
image, or would fail its purpose of identification or commentary.

Other information

Use of the logo in the article complies with Wikipedia non-free content policy, logo guidelines,
and fair use under United States copyright law as described above

PEPSICO IDENTITY

The brand of LG is delightfully smart. LG strives to enhance the customer’s life and lifestyle
with intelligent features, institutive functionality and exceptional performance.
The brand platform:-

The LG brand is composed of four basic elements –

1. Value
2. Promise
3. Benefits
4. Personality

The Brands core Value that never changes.

a. Trust,
b. Innovation,
c. People
d. Passion

The benefits that are consistently delivered to the customer includes

Reliable products
Simple design
Ease of use
Extraordinary Experience

Personality describes the human characteristic that are expressed to the customer through
Trustworthy, Considerate
Practical, Friendly

OUR LEADERSHIP

PepsiCo is a company full of strong, talented individuals starting with the company leadership.
Get to know the inspiring people helping lead PepsiCo on its 'Performance with Purpose'
journey.
1.

INDRA K. NOOYI

Chairman and CEO, PepsiCo

2.

JOHN COMPTON

CEO, PepsiCo Americas Foods

3.

MASSIMO D'AMORE

CEO, PepsiCo Beverages Americas

4.

ERIC FOSS
 CEO, Pepsi Beverages Company

5.

ZEIN ABDALLA

CEO, PepsiCo Europe

6.

SAAD ABDUL-LATIF

CEO, PepsiCo Asia, Middle East, Africa

1.

A. SALMAN AMIN

Executive Vice President Sales and Marketing, PepsiCo

2.

JILL BERAUD
 Chief Marketing Officer and President, Joint Ventures, PepsiCo Beverages Americas

3.

RICH BECK

Senior Vice President, Global Supply Chain Operations, PepsiCo

4.

NEIL CAMPBELL

President, Tropicana Beverages North America

5.

ALBERT P. CAREY

President and Chief Executive Officer, Frito-Lay North America

6.

TIMOTHY P. COST

Executive Vice President,

Global Corporate Affairs, PepsiCo
7.

PAMELA CULPEPPER

Senior Vice President, Global Diversity and Inclusion Officer, PepsiCo

8.

ROBERT DIXON

Senior Vice President and Chief Information Officer

9.

RICHARD GOODMAN

Executive Vice President, PepsiCo Global Operations

10.

TOM GRECO

Executive Vice President and Chief Commercial Officer, Pepsi Beverages Company
11.

JULIE HAMP

Senior Vice President, Chief Communications Officer, PepsiCo

12.

HUGH F. JOHNSTON

Chief Financial Officer, PepsiCo

13.

MEHMOOD KHAN

Chief Executive Officer, Global Nutrition Group and Chief Scientific Officer, PepsiCo

14.

JAYA KUMAR

President, Global Nutrition Platforms, PepsiCo Global Nutrition Group

15.

LUIS MONTOYA

President, Latin America Beverages

16.

TIM MINGES

Chairman, PepsiCo China

17.

SARAH ROBB O’HAGAN

Gatorade President North America & Global Chief Marketing Officer, Sports Nutrition

18.

PEDRO PADIERNA

President, PepsiCo Foods Mexico, Central America & Caribbean

19.

JOSE LUIS PRADO

President, Quaker Foods and Snacks North America, PepsiCo

20.

GRACE PUMA

Senior Vice President and Chief Procurement Officer

21.

LARRY D. THOMPSON

Senior Vice President, Government Affairs, General Counsel and Secretary, PepsiCo

22.

CYNTHIA M. TRUDELL

Senior Vice President, Human Resources and Chief Personnel Officer

 23.

OLIVIER WEBER

President, South America Food

QUALITY INNOVATION

At PepsiCo, “Performance with Purpose” means delivering sustainable growth by investing in a

healthier future for people and our planet.

Specifically, we have defined three areas of influence: Human, Environmental and Talent
Sustainability.
  Human Sustainability: Encouraging people to live healthier by offering a portfolio of
both enjoyable and wholesome foods and beverages.
 Environmental Sustainability: Protecting the Earth’s natural resources through innovation
and more efficient use of land, energy, water and packaging in our operations.
 Talent Sustainability: Investing in our associates to help them succeed and develop the
skills needed to drive the company’s growth, while creating employment opportunities in
the communities we serve.

CODE OF CONDUCT

RESPECT FOR OUR EMPLOYEES

We believe our most important strength is our employees. We seek to provide a work
environment where all employees have the opportunity to reach their full potential and
contribute to PepsiCo's success. We emphasize personal integrity and believe long-term results
are the best measure of an employee’s performance.
PepsiCo respects the human rights and the dignity of all employees. We endeavor to treat our
employees fairly and honestly. We strive to maintain a safe, secure and healthy workplace and it
is against our policy to use forced or child labor. We also strive to follow all applicable
employment laws and regulations.
We are committed to equal opportunity in all aspects of employment for employees and
applicants. This means providing a workplace free from any form of discrimination or
harassment, including sexual harassment. We seek to create a work environment where people
feel comfortable and respected, regardless of individual differences, talents or personal
characteristics. Our objective is for the diversity of our employees to reflect the diversity of the
population wherever we operate and for the performance of all employees to be judged fairly
and based on their contribution to our results.
PepsiCo encourages an inclusive culture, which enables all employees to do their best. This
means we:
•
Welcome and embrace the strengths of our differences,
•
Treat each other with respect and fairness, and
•
Foster an atmosphere of trust, open communications and candor.
We recognize the needs of individuals to achieve professional and personal balance in their
lives. We also respect employee privacy and will acquire and retain only that employee personal
information that is required for operation of the Company’s business or required by law.

CONS UM E RS, CU S TOME RS , SU P PL IE RS AND COM P E TITORS

We are committed to the continuation of free enterprise and the legal and regulatory frameworks that
support it. Therefore, we recognize the importance of laws that prohibit restraints of trade, predatory
economic activities and unfair, deceptive or unethical business practices.

In all of our business dealings with consumers, customers, suppliers and competitors, we will:

•
Avoid any unfair or deceptive practice and always present our services and products in an
honest and forthright manner.
•
Treat all customers and suppliers honestly, fairly and objectively.
•
Select suppliers based on merit, and make clear to all suppliers that we expect them to compete
fairly and vigorously for our business.
•
Compete vigorously and with integrity.
•
Never comment on a competitor’s product without a good basis for such statements.
•
Comply with all competition laws, including those prohibiting agreements or understandings
with competitors to fix prices or other sales terms, coordinate bids or divide sales territories,
customers or product lines. These types of agreements with competitors are generally illegal in
the United States and many other markets where we cinduct business.

ABOUT PEPSICO INDIA

PepsiCo entered India in 1989 and has grown to become the country’s largest selling food and
Beverage Company. One of the largest multinational investors in the country, PepsiCo has
established a business which aims to serve the long term dynamic needs of consumers in India.
PepsiCo nourishes consumers with a range of products from treats to healthy eats that deliver joy
as well as nutrition and always, good taste. PepsiCo India’s expansive portfolio includes iconic
refreshment beverages Pepsi, 7 UP, Mirinda and Mountain Dew, in addition to low calorie
options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water,
isotonic sports drinks - Gatorade, Tropicana 100% fruit juices, and juice based drinks –
Tropicana Nectars, Tropicana Twister and Slice, non-carbonated beverage and a new innovation
Nimbooz by 7Up. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to
the diverse range of brands.

PepsiCo’s foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito
Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips, Cheetos
extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands and
the recently launched ‘Aliva’ savoury crackers. The company’s high fibre breakfast cereal,
Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to
consumers. Frito Lay’s core products, Lay’s, Kurkure, Uncle Chipps and Cheetos are cooked in
Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary
nutritional labeling on their packets.

The group has built an expansive beverage and foods business. To support its operations,
PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are franchisee
owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-the-art plants.
PepsiCo’s business is based on its sustainability vision of making tomorrow better than today.
PepsiCo’s commitment to living by this vision every day is visible in its contribution to the
country, consumers and farmers.

Establishment Investment Employment

PepsiCo established it's business PepsiCo India and its partners PepsiCo India provides direct
operations in India in 1989 and has have invested more than USD1 and indirect employment to
grown to become one of the billion since the company was 150,000 people including
country’s leading food and established in the country. suppliers and distributors.
beverage companies. One of the
largest multinational investors in
the country, PepsiCo has
established a business which aims
to serve the long term dynamic
needs of consumers in India.

PEPSICO BOILERPLATE
PepsiCo is one of the world’s largest food and beverage companies, with revenues of nearly $60
billion. PepsiCo offers the world’s largest portfolio of billion-dollar food and beverage brands,
including 19 different product lines that each generates more than $1 billion in annual retail
sales. Our main business - Frito-Lay, Quaker, Pepsi-Cola, Tropicana and Gatorade – also make
hundreds of other nourishing, tasty foods and drinks that bring joy to our consumers in more than
200 countries.

PepsiCo’s people are united by our unique commitment to sustainable growth, called
Performance with Purpose. By dedicating ourselves to offering a broad array of choices for
healthy, convenient and fun nourishment, reducing our environmental impact, and fostering a
diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving
back to our communities worldwide. For more information, please visit www.pepsico.com.

BRAND FACTS

PepsiCo nourishes consumers with a range of products from tasty treats to healthy eats that
deliver enjoyment, nutrition, convenience as well as affordability

BEVERAGES

PepsiCo India’s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,
Nimbooz, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi,
hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks -
Gatorade, Tropicana100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana
Twister and Slice. Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to
the diverse range of brands.

FOODS
PepsiCo’s food division, Frito-Lay, is the leader in the branded salty snack market and all Frito
Lay products are free of trans-fat and MSG. It manufactures Lay’s Potato Chips, Cheetos
extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands. The
company’s high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack options
enhance the healthful choices available to consumers. Frito Lay’s core products, Lay’s, Kurkure,
Uncle Chipps and Cheetos are cooked in Rice Bran Oil to significantly reduce saturated fats and
all of its products contain voluntary nutritional labeling on their packets.

OUR MISSION AND VISION

OUR MISSION

"To be the world's premier consumer products company focussed on convenience food and
beverages. We seek to produce healthy financial rewards to investors as we provide opportunities
for growth and enrichment to our employees, our business partners and the communities in which
we operate. And in everything we do, we strive for honesty, fairness and integrity."

OUR VISION

"To build India’s leading total beverage company, delighting consumers by best meeting their
everyday beverage needs, and stakeholders, by delivering performance with purpose, through our
talented people."

PEPSICO SUSTAINABILITY VISION

"PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate
– environment, social, economic – creating a better tomorrow than today"

Tomorrow better than Today

CHALLENGES IN INDIA

The challenges faced by LG when entered in Indian market

1. Low brand awareness about LG in India.
 2. One of the last MNCs entered in India (Samsung, Panasonic entered in 1995 in India).
3. High import duty
4. Compitition from local market players and other MNCs in consumer durable segment.
5. Price sensitiveness of the Indian consumer
LGEI over comes these challenges to emerge as
Innovative marketing strategy
1. Launch new technologies in consumer electronic and home appliances.
2. LG was the first brand to enter in cricket in big way a way, by sponsoring the 1999 world
cup followed it up in 2003 as well.
3. LG brought in four captains of the Indian cricket team to endorse its products. LG
invested more then US$ 8 million on advertising and marketing in this sport.
4. LG has differentiated its product using technology and health benefits. CTV has “Golden
eye technology” Air conditioner has “Health air system” and microwave ovens have
the “Health wave system”.

Local and efficient manufacturing to reduce the cost

To overcome high import duties LG manufactures TV refrigerator in India at manufacturing
facility at Noida and Pune. LGEI had already commissioned contract manufacturing at Mohali
Kolkata and Bhopal for CTVs. This has helped LGEI to reduce cost. LGEI implementing the
“Digital manufacturing system” (DMS) as the cost cutting innovation this system is follow-up to
the six sigma exercise LGEI had initiate earlier.

R&D potential
LG has the research and development facilities in Bangalore and Pune. Both the unit carry out
R&D department for the domestic as well as the parent company it also dose customize R&D for
the specific countries to which it export product.

Regional channel and wide distribution network

1. LG has adopted the regional distribution channel in India. All the distributers work
directly with the company. This has resulted in quicker rotation of the stock and better
penetration into B, C, D, class market.
2. LG also follows the stock rotation policy rather then dumping stock on channel partners.

Product localization:-
1. Product localization is the key strategy used by the LG
2. LG came out with Hindi and regional language menus on its TVs.
3. Introduced the low-priced “Cineplus” and “sampooma” for the rural market.
4. LG was the first brand to introduce gaming in TVs in continuations of its association with
cricket LG introduce cricket game in CTVs

MAJOR KEY SUCCESS FACTORS

Industry analysts are projecting that the soft drink industry will grow by almost 4%
over the next five years. The significant growth is estimated to occur within the realms
of the bottled water sector and new developments for both snacks and sodas in the U.S.,
as well as, the rest of the world.
A. What are industry analysts saying about your industry?   What are the foreseeable   
trends?   What will be the major forces that will affect the industry in the next five years?

Industry analysts are projecting that the soft drink industry will grow by almost 4% over the next
5 years. The significant growth is estimated to occur within the realms of the bottled water sector
and new developments for both snacks and sodas in the U.S., as well as, the rest of the world.
Although there are numerous substitutes and alternatives, the savory snack and soft drink
industry is going to be a large part of our economy for many more decades. Foreseeable trends
are obviously toward the healthier version of this industry. Bottled water sales and revenues have
been continually rising since 2003. By 2012 they are projected to increase another 34% in the
U.S. alone. Also, with this healthier America outlook many snacks and drinks are changing their
ingredients leaning towards diet, zero carbohydrates, caffeine free and other healthier variations
of currently popular soft drinks. However, on the opposite end of the spectrum are energy drinks,
which are unhealthier than normal sodas, are representing an ever growing percentage of the soft
drink industry.

Companies need to know these factors if they intend to operate with a competitive advantage in
this industry, especially at a time when the economy is slumping. Major forces affecting the
industry are economies of scale and barrier to entry. These forces represent the complexity and
difficulty of emerging in this market, new entrants are few and far between one another.
Additionally, oil prices could vastly affect this industry based on production costs and
transportation costs, both are major fixed costs. Furthermore, as mentioned before, growing
health concerns are going to somewhat force companies in this industry to start offering healthier
and smarter choices for their everyday snacking needs.

B. Economic forecast:   What is forecast for the industry regarding growth and the
factors that will affect it?   Existing markets?   Emerging markets?   Changes in demand
for products/service?   Global competitiveness?

According to Datamonitor the soft drink industry is projected to show an average growth rate of
around .7% for the next 5 years, culminating in a total marketplace increase of 3.6% for 2008-
2013. Production and transportation are two of the largest costs in this industry; therefore the
price of oil is going to affect the industry in numerous ways. Another significant expense is the
cost of labor, as a direct result of Pepsi currently employing about 185,000 employees
nationwide. Some of the existing markets in this industry have been around for many decades
and are common household names, these include; Coke, Kraft, Dr. Pepper, Proctor and Gamble,
Cadbury Schweppes, Nestle, and General Mills. Due to the large barriers to entry and economies
of scale new markets are hard to find in this industry. Many of the newcomers are larger
companies who have since decided to enter the savory snack or soft drink industry. Since the
companies are all well established previous market entry for a brand new company entry is near
impossible due to high fixed costs, expensive marketing requirements, and economies of scale.
Supply and demand for this industry has been constant with some despite occasional up and
downs. However, the new power sellers are the bottled water sector starting in 2000 and energy
drink sector since 2002. As with many other international companies, global competiveness is
maintained by market tests and approvals, by changing flavors and advertisements, and by
further segmenting the soft drink and savory snacks sectors.
C. Financial performance:   What is the financial profile of the industry?   What are
industry averages for the major financial ratios?   What specific ratios are used to
measure performance within your industry group?   What are these ratios predicted to
do over the next five years?

The ratios that were used to measure performance in the soft drink and processed food industries
were: ROA, ROE, EBT Margin, quick ratio, current ratio, long term debt to equity, total debt to
equity, interest coverage, days sales outstanding, days inventory, receivables turnover, inventory
turnover, fixed asset turnover and asset turnover.

The activity ratios in particular are critically important to the soft drink and processed food
industries. Efficient inventory management is crucial to the profitability of companies in these
sectors. Inventory is often the least liquid asset. It's also the one for which the book values are
least reliable measures of market value, since the quality of the inventory is not considered. The
quick ratio removes the inventory component so as to give a more accurate assessment of a firm's
ability to pay its bills in the short run. Short-term creditors prefer a high current ratio since it
reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets
are working to grow the business. Typical values for the current ratio vary by firm and industry

Market Analysis: The United States soft drinks market grew at a slow and steady rate between
2003 and 2007. This growth is set to follow a similar pattern in the forthcoming five years. The
United States soft drinks market generated total revenues of $110.1 billion in 2007, representing
a compound annual growth rate (CAGR) of 2.2% for the period spanning 2003-2007. In
comparison, the European and Asia-Pacific markets grew with CAGRs of 2.9% and 3.5%,
respectively, over the same period, to reach respective values of $117.8 billion and $69.9 billion
in 2007. Market consumption volumes increased with a CAGR of 2.7% between 2003 and 2007,
to reach a total of 113.3 billion liters in 2007. The market's volume is expected to rise to 132.8
billion liters by the end of 2012, representing a CAGR of 3.2% for the 2007-2012 period.
Carbonates' sales proved the most lucrative for the United States soft drinks marketing 2007,
generating total revenues of $63.5 billion, equivalent to 57.6% of the market's overall value. In
comparison, sales of juices generated revenues of $18.4 billion in 2007, equating to 16.7% of the
market's aggregate revenues. The performance of the market is forecast to accelerate, with an
anticipated CAGR of 3.5% for the five-year period 2007-2012, which is expected to drive the
market to a value of $130.5 billion by the end of 2012. Comparatively, the European and Asia-
Pacific markets will grow with CAGRs of 3.8% and 5.3%, respectively, over the same period, to
reach respective values of $141.9 billion and $90.4 billion in 2012.

Market Value: The United States soft drinks market grew by 2.5% in 2007 to reach a value of
$110.1 billion.

Market Value Forecast: In 2012 the market is forecast to have a value of $130.5 billion, an
increase of 18.6% since 2007. The compound annual growth rate of the market in the period
2007-2012 is predicted to be 3.5%.

Market Volume: The market grew by 2.8% in 2007 to reach a volume of 113.3 billion liters.
Market Volume Forecast: In 2012, the market is forecast to have a volume of 132.8 billion
liters, an increase of 17.2% since 2007.

Market Segmentation I: In value terms, the largest category is carbonates with 57.6% of the
market.

Market Segmentation II: The United States accounts for 33.4% of the global soft drinks
market values.

Market Share: In value terms, the largest company is The Coca-Cola Company with 30.5% of
the market.

Distribution: In volume terms, the largest channel is supermarkets/hypermarkets with 76% of

the market.

D. Driving forces:   What are the major factors that drive your industry group?   What
are the key success factors that every major competitor must have to survive in your
industry?

There are many major forces that drive an industry and numerous key success factors that
determine the survival of a competitor. PepsiCo uses strategic planning to determine the future
success of their company. The major forces that drive this industry group include customer
satisfaction and unique varieties of beverages and snacks. The food and beverage industry offers
a wide variety of options for a consumer, and the specific company must please the consumer in
order to foster their success and growth. Customer satisfaction is vital in the success of a
company and at the end of the day that is what matters most.

There are also numerous key success factors that every major competitor must have in order to
survive. To endure the crucial competitiveness within this industry companies must: be able to
compete with low prices, product diversity and meeting the consumer's wants and needs.
Location is an essential factor in order for competitors to survive in the tough nature of this
industry. PepsiCo has an exclusive agreement with the fast food giants Taco Bell, KFC and Pizza
Hut to only sell Pepsi products. PepsiCo is exploiting its unique relationship with these
restaurants to gain more recognition and popularity for its various products. Another important
aspect of surviving in the food and beverage industry is the requirement to adequately advertise
products. By doing this, companies attract the attention of their prospective consumers and
maximize brand awareness. The more the consumers visually see the product, the more likely
they are to buy and use that specific product. Brand loyalty is vital to surviving in this industry.
The companies' goal is to ultimately reach the point where their customers are consistently and
faithfully using their products.

E. Technology:   What are the dominant technologies within your industry?   What
changes in technology do you foresee in the next five years, and how will they affect
your industry?
The food and beverage industry relies primarily on two forms of technology, physical production
technology and Enterprise Resource Planning (ERP) systems. The industry's physical production
technology centers around high volume, high speed, large scale production. This form is
essential to the industry because firms must take advantage of economies of scale in order to
remain profitable in the face of small margins. Firms in the industry also have a particular
affinity for the latest and newest technology, all in hopes of gaining the slightest edge on the
competition. The food and beverage industry also requires a method to manage its vast
production systems, and this where ERP comes into play.

An ERP is an enterprise wide system that unifies all aspects of an organization.  The ERP system
spans all the functional areas of an organization, and forms them all into one seamless and
cohesive unit.  ERP systems allow organizations to manage relationships with customers and
vendors to help integrate them into the ERP system. This integration allows for the ease of value
chain management. Lastly, an ERP system allows firm managers and executives to extract and
analyze a wealth of information to make strategic decisions. This information is crucial to the
food and beverage industry because it allows the firms to quickly adapt to fickle consumer tastes.
ERP systems also have a number of advantages specific to the soft food and drink industry. Food
safety is a paramount issue to all firms within the industry and ERP systems allow specific
batches to be tracked and removed even after they have been shipped. This ability promotes
responsibility on the part of the firm which is an ever increasing factor in the minds of
consumers. ERP are also essential for maintaining flexibility in times of economic uncertainty
and fluctuations in consumer demands.

In the next five years the industry will become increasingly dependent on ERP based systems. As
ERP systems increasingly become the norm, all the major players within the industry will be
required to utilize them to remain competitive.

F. Best Case Scenario: Based on your research, for the industry what is the most
optimistic scenario you can support?

The compound annual growth rate of the carbonated soft drink market in the period 2007-2012 is
predicted to be 3.5%.

Under the best case scenario the price of the inputs, the raw materials integral to the companies,
would continue to decrease. Commodities prices (oil, corn, sugar, wheat) have steadily decreased
until recently, from their all-time peaks in mid 2008. If this trend continues the leading
companies in the industry will improve their profit margins substantially.

The stock prices of the major players in the industry serve as a barometer of the companies'
financial well-being. The average five-year return for a publicly-held company in the beverage
and food manufacturing industry was -5.3% and -5.8%, respectively. The ROA of an average
company in the soft drink and food manufacturing industry ranged from 4.2% to 6.8%. By
contrast, PepsiCo and Coca-Cola both have consistently realized double-digit returns on their
ROA and ROE figures. Both of these companies are benefitting highly from economies of scale
and will benefit most from a best case scenario.
Another favorable scenario for PepsiCo would involve the acquisition of a beverage or processed
food manufacturer for book value or below. This scenario is somewhat realistic due to the fact
that many smaller snack companies incurred sizeable debt obligations in the mid ‘90s when the
U.S. economy was thriving. These same companies are experiencing smaller profit margins due
to higher commodities prices and increasing competition from giants such as Frito-Lay. All these
factors combine to make the smaller companies prime targets for acquisition for PepsiCo. Pepsi
also favors partnerships as a method of controlling risk when entering new markets.

G. Worst Case Scenario:   Based on your research, for the industry what is the worst
set of circumstances that you can envision?   What evidence do you have to support this
scenario?

All of the companies in the soft drink and food manufacturing industry are heavily dependent on
logistics management to efficiently execute their day-to-day operations. In a worst case scenario
the price of a highly integral input, in this case oil, would increase dramatically within a short
period of time. This very scenario occurred when petroleum prices began their ascent in 2005
and peaked in mid 2008. The increase in oil price would also cause a drastic rise in the price of
commodities. Both of these factors would combine to take a heavy toll on the industry. If this
scenario were to repeat in the current recessionary landscape the companies with the weaker
financial profiles would suffer most. The contributory factors would be the decrease in consumer
discretionary spending, the shortage of loan instruments, and the capitulation in the capital
markets.

Another equally dismal scenario for PepsiCo would be product contamination or product
tampering. This very scenario occurred to Tylenol and it never recovered from the bad press. It
also occurred to both PepsiCo and Coca-Cola in India. Their respective products were even
banned in some Indian states for a short while. The culprit in this instance was pesticide
contamination. On a related note, Frito-Lay, sensing the public's mistrust of genetically modified
produce, instructed its suppliers to refrain from using genetically modified corn. If it had not
done so it is highly probable that the snack food giant would have suffered a public relations
nightmare.

Read more: http://www.bukisa.com/articles/211702_industry-analysis-pepsico#ixzz1HLecd7wM

Strategy adopted by the organization

When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it may have
been the first time a brand was marketed primarily with an association to its consumers'
aspirational attitudes. A decidedly youth-oriented strategy, the campaign hoped to hook young
Baby Boomers while they were still young. In 1984 Pepsi launched another long-running
campaign, "The Choice of a New Generation," and in 1997 they debuted the "GeneratioNext"
concept.

The newest campaign slogan, introduced this year, is "More Happy," which definitely coincides
with one concrete example of "more" in the packaging of Pepsi products today—more designs.
Many more. At least 35 distinct design ideas will grace the packaging of Pepsi's cans and bottles
this year alone, and this design strategy may continue indefinitely.

Though not "generational" in word, the campaign certainly has a youth-oriented feel with
package designs, advertising, and websites that are fun and playful. PepsiCo worked closely with
Peter Arnell and Arnell Group, based in New York City, to devise a comprehensive new strategy
that would connect with Pepsi's core consumers. Arnell reinvented the Pepsi package as a
meaningful and appealing communications tool for the latest generation of youth that are not
overwhelmed by media, music, or digital distractions.

Experiental packaging

Arnell Group (a wholly-owned subsidiary of Omnicom Group) is a design and brand creation
firm specializing in experiential design and product innovation, preferring to take complete
branding and packaging projects from first concept to complete market solutions. Peter Arnell,
currently chairman and chief creative officer of Arnell Group, formed the Arnell Group
Innovation Lab in 1999 to place invention and innovation at the forefront in a collaborative
laboratory for corporations interested in designing for next generation products and experiences.
Arnell applied many of his philosophies in the Pepsi project.

"Peter has taken a classic and turned it into a modern, innovative, and relevant marketing and
communications tool," said Ron Coughlin, chief marketing officer, beverages, PepsiCo
International. The new global look launched in February with eight new package designs across
cans and bottles, and the campaign is unfolding in a similar manner overseas. The can designs
roll out one at a time approximately three weeks apart to enhance the anticipation of discovery
and to pique the interest of collectors.

"Product innovation today must be driven by deep consumer meaning and connectivity," says
Arnell. "It is less about unmet needs and more about giving people what they haven't asked for
but are dying to have. Using design to turn packaging into personal consumer-powered media
helps create the ultimate supportive and inspiring relationship between Pepsi and its youth
audience."

Thinking globally

The Pepsi can designs roll out one at a time, but the two-liter Pepsi bottles will have three
or four designs out at any given time.
Mike Doyle, creative director at Arnell Group, explains that there was a great depth of
exploration and research that was conducted before even beginning to formulate a new Pepsi
packaging strategy. PepsiCo and Arnell Group traveled extensively to emerging markets to find
key consumer product drivers for youth cultures and to learn how the Pepsi brand was perceived
in different countries.

They found, somewhat surprisingly, that there were very few differences around the world in
how consumers felt about Pepsi's fun, effervescent brand image. "The brand equity is really
consistent," says James Miller, marketing director, Pepsi-Cola North America. They also found
many consistencies in youth cultures around the world in how today's youth is preoccupied with
newness, discovery, and personalization of their possessions. Miller describes the design
campaign's goal as "sustainable discovery," where the consumer audience is constantly intrigued
and engaged.

Designers at Arnell Group created the dozens of new and vibrant designs with only a handful of
blue and gray shades. Each design tells a story of sorts and each can design has a unique website
address on the side of the can. The first one on the "Your Pepsi" can allows web users to design a
digital billboard that will appear in Times Square, and one coming shortly will allow users to
mix their own music online.

"We redefined packaging as media in the marketplace for Pepsi," says Doyle. "It speaks to youth
in their language." Doyle believes that the designs succeed because they are able to capture the
audience's mind space. "The designs are reflecting back to the culture instead of talking to the
culture or imposing on it."

Reassuringly Pepsi

Pepsi actually asked their loyal consumers what brand elements would have to remain so that
they would be intuitively reassured that their favorite drinks were not changing and the brand
they trusted was still essentially the same. Their answer was direct and consistent. Pepsi-lovers
needed to see three elements for sure—the Pepsi "globe," the iconic Pepsi blue, and the familiar
tilted Pepsi capital letters.

Arnell Group updated the primary logo substantially and cleverly without really redesigning its
key elements. The most recent logo design had the Pepsi wordmark on top of and slightly
overlapping the iconic Pepsi red-white-and-blue "globe." On the previous can design, the
wordmark wrapped halfway around the can, and the globe was off-center. The new cans and
bottles have un-bundled the word and globe, making the newly centered globe more of the hero,
and the smaller Pepsi wordmark less prominent.