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					                                                          Business Proposal for PepsiCo   1


Running Head: Business Proposal for PepsiCo




                                    Business Proposal


                                  University of Phoenix


                                        ECO/561


                                       Paula Coletti


                                      April 16, 2011


                                        Fred Bell
                                                                    Business Proposal for PepsiCo   2


   This paper will consist of introducing a new product with an existing business, and it will be

centered regarding the development of goods to increase the Revenue. The other concepts that

will be involved in this paper are: Market Structure, profit techniques, elasticity of demand,

barrier to entry, and along with other topics that will be discussed that consist of product

differentiation, and pricing strategies. The company that I have chosen will be PepsiCo. PepsiCo

was founded in 1965, by merging with PepsiCo-Cola, and Frito-Lay. Om 2010, the PepsiCo

Bottling Group and Pepsi America’s was possessed by PepsiCo, and in, 2011, PepsiCo made the

biggest move and acquired by Wimm-Bill-Dan, which consist of the largest manufacture in

Russia.


                                 Elasticity Demand


   Elasticity Demand would consist of the percentage change in quantity is bigger than the

percentage change in price to which the sales will increase total to revenue. The PepsiCo does

have a high elasticity demand for the products, as there are many other company’s that do

provide the same service as PepsiCo. The elasticity demand has the degree to measure the

response of consumers of changes in the price by changing the quantity demand. The calculation

would consist of ED=percentage change in quantity demand/percentage change in price. The

formula consists to show that the elasticity demand always has a positive number.


                                Market Structure


   The Market Structure for the PepsiCo is that of a monopolistic competition. This occurs when

a large volume of competitions produce similar service or products. The PepsiCo products and

services are differentiated to which gives PepsiCo a downward sloping demand curve. A

monopolist would also be considered a company that would have a differentiated product, and
                                                                   Business Proposal for PepsiCo    3


this would give a negative slope demand curve. The differentiated would be consistent with the

image, quality, and price, which depend on the products in hand. These give people choices to

live healthier.


                                Increasing Revenue/Profit Max Quantity


   PepsiCo annual sales Revenue consist of over $1 billion with PepsiCo developed more than

22 billion-dollar products. The retail sales for PepsiCo are $250 million to $1 billion regarding

24 other brands. The average retail price per can of PepsiCo is about 30 cents a can. PepsiCo

cannot make the prices decrease because the product prices are competitively already. If PepsiCo

would be looking to increase the revenue, the company would need to cut the different areas in

the production and manufacturing departments. PepsiCo Company would have to take advantage

of technology to make new products, which could consist of healthier products made with

wholesome ingredients. I PepsiCo produced healthier products; this may lead to customers

trusting the company’s products with purchasing more quantities. In return this would increase

more revenue for PepsiCo. The maximum pricing of PepsiCo Company would be determined by

having the marginal setting revenue, equal to zero. This revenue equal to zero would curve the

net maximum value.


                             Pricing-non pricing Strategies


   PepsiCo’s pricing strategy for the product would consist of retail price of $5 and the

wholesale price would be $3.60 for a 12 pack of PepsiCo products. The gross margin of the

wholesale price would be 72 cents, and budget set at $1 billion. PepsiCo has pricing factors, such

as manufacturing cost, market place, and the quality of the product, which is taken into account

of the pricing factor. Nonpricing strategies would be effective advertisement. The advertisement
                                                                     Business Proposal for PepsiCo   4


for PepsiCo that may be effective to attract more customers would be to advertise in different

ways that would pull people in. This area of this would be to use stores to display the products,

and have a sample of the product for the customers to taste. Look into a bulletin service that

would use PepsiCo bulletin board, and that person would drive around advertising, give out gifts

that would track customers, have coupons that may give money off or to purchase a product by

buying one and getting one free, and placing advertisements in different magazines giving the

customers the view of such products. With no pricing strategies, it will give the customers the

option to view the services or a product to see what available out on the market is. No

advertising many not give the company the opportunity to show what the company has to offer.

People like to see what they are buying and if tasting the food is available the customers are

always willing to try the product before purchasing it, in case they are not fond of it. Companies

will be able to sell more if the give samples out for the customers to try with letting the

customers being the judge of the product. The main thing the customers do not like is to buy a

product, and take it home to discover it was not up to what it should have been This does waste

money for the customers.


                                Barrier to Entry


   There are many barriers that could make it difficult for PepsiCo to enter a market. The

barriers that may stand in the way could be the licensing, requirements, regulations set by the

government, and the economies of scale. PepsiCo does have barriers that prevent others from

matching them, and this could because of the development process. When having a business like

PepsiCo, one has to work out the barriers before ever starting the company to make sure all

avenues are worked out and can be accomplished.
                                                                   Business Proposal for PepsiCo   5


                              Product Differentiation


   PepsiCo has a new product that is differentiated and this soda has a different flavor for people

with different taste. PepsiCo has a different advertisement that gives people the information

when a new product arrives for purchase. The PepsiCo product will donate to the American

Cancer Association when a product is bought, up to 500 people.


   PepsiCo company also had different ways to minimize the costs, to which the company

believes in the strive with the 5-R’s. This 5-R’s include Reduce, Recycle, and renewable sources,

remove sensitive materials and promotes the reuse of product packaging. PepsiCo company has

a performance data that consist of PET 31%, Aluminums 12%, Glass 12%, paperboard 31%,

Flexible package 31%, and other ways would be considered would be in the ball park range of

1%.
                             Business Proposal for PepsiCo   6


       References


www.pepsistore.com/history


www.basiceconomics.info


    www.pepsiCo.com

				
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