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					PEPSI

ABSTRACT
While many different categories make up the Pakistani beverage product picture, carbonated soft drinks (CSDs) paint the broadest strokes. As the “granddaddy of them all,” carbonated soft drinks (CSD) s occupy a unique place in the hearts, minds and palates of the Pakistani consumer. The following report describes the marketing mix of Pepsi in the carbonated soft drink (CSD) industry of Pakistan. The industry is a tight oligopoly with Pepsi and its chief competitor, Coca Cola, comprising 70% of the total market. Global beverage sales for PepsiCo in 2000 were $7.6 billion; however, sales growth has averaged only three to four percent in mature markets such as North America. Pakistan is a thriving market with many opportunities yet to exploit by these corporate giants. This report will focus on the current strategies of Pepsi and its ongoing rivalry with its major competitors.

Product:
Pepsi - the bold, robust, effervescent magic cola. That‟s how Pepsi cola defines its carbonated soft drink called Pepsi. Pepsi-Cola is a carbonated beverage that is produced and manufactured by Pepsi Co. It is sold in stores, restaurants and from vending machines. Pharmacist Caleb in New Berlin, North California, first made the drink in the 1890s. The brand was trademarked on June 16, 1903. Its ingredients are carbonated water, glucose-fructose and/or sugar, caramel color, phosphoric acid, caffeine, citric acid, flavor. Some of its most popular slogans in Pakistan are: 1998: "Yeh Dil Mange More" with Shahid Afridi and other cricketers in it. 2008: "Pepsify karo gai!" Commercial (in Urdu meaning "Wanna Pepsify!") (Pakistan) (Featuring. Adnan Sami and Annie (Pakistani singer)) Caffeine (mg) Potassium (mg) Phosphorous (mg) Acesulfame Potassium (mg) Aspartame (mg) Promotional strategies: 25 10 36 0 0

PEPSI Perhaps the most important of all the elements of marketing mix is promotion. Promotion can be defined as designing a message that is designated to induce others and sell a product, a service, or an idea. Promotion involves careful planning. Importance of effective promotion in today‟s corporate world cannot be overemphasized. It‟s imperative for firms to realize that the consumer today is smarter then ever. Promotional mix contains four elements:     Sales promotion Advertising Personal selling Publicity/public relations.

The largest companies in world can demonstrate the best promotion strategies, which are worth learning and following if one wishes to get success in the world trade and production. One such big company whose success can be attributed to ideal promotion strategies implementation is Pepsi Cola. Pepsi promotes its products by personal selling, advertising, and sales promotion.

Advertisements:
Advertising reaches people through varied types of mass communication. Pepsi understands that advertisements play a key role in its popularity. According to our survey 90% of people said that they found Pepsi‟s ad campaigns quite attractive and a decrease or sudden stop in them would affect their consumption of Pepsi. For advertising, and sales promotion Pepsi uses printed and electronic media. Every newspaper and magazine carries Pepsi advertisements. Advertisement of Pepsi are eye catching and attractive. Through advertising it informs the consumer about new brands and flavors. In addition to that Pepsi keeps on advertising to retain its already loyal customer base. People all over the globe and within Pakistan are aware of Pepsi and know it‟s a powerful brand, but to reinforce this image advertising campaigns are imperative. Pepsi‟s ads are on every channel; it‟s on a massive scale that Pepsi launches its every ad campaign. Hiring the most famous celebrities, making use of latest technology, funky music, and lots of energy, youth and a great theme is what characterizes a typical Pepsi commercial. Initially Pepsi promoted itself by having famous cricketers endorse its brand; cricketers like Imran Khan, Waseem Akram, Shoaib Akhter & Shahid Afridi who are „youth icons‟ were all endorsing Pepsi. This campaign contributed immensely in the fame of Pepsi. Pepsi has been always catching the trends of society. People in Pakistan are very patriotic and attach a lot of importance to brands, which manipulate this thing. So Pepsi made National songs by bands like “Vital Signs”, “Awaaz”, “Junoon” and “Strings”. Unique selling proposition (USP): The unique selling point of Pepsi in Pakistan is its exclusive advertisement campaigns. Infact, the major reason for Pepsi‟s large market share is its fervent promotional campaigning. Pepsi has an edge because of its strong brand image, and if you have a

PEPSI brand you have an immediate advantage because you have a backbone, or a framework, on which to hang your products. Pepsi‟s ads reflect the social, cultural values of Pakistan, whereas the ads of coca cola (its major competitor) mostly have western or a Turkish theme. There current slogan „pepsify kero gay‟ has been highly successful. The mainstream Celebrities of Pakistan are used for Pepsi‟s promotions thus having them to endorse a brand is a guaranteed success in itself.
In your opinion what makes pepsi a strong brand?

5%

35%

15% Price Product Quality Availability 20% Company Reputation Promotion

25%

Publicity: Pepsi has always been active in sponsoring major events such as concerts, charity functions, and inaugurals for example they have been sponsoring major cricket series for quite some time. A crucial part of maintaining good public relations in time of crisis when the image of company is at stake is to show that a perceived crisis does not actually exist, it is important to communicate with the public and show them that no crisis actually exists. A crisis, whether real or perceived, requires the implementation of a crisis public relations plan. Other than that Pepsi donated generously for the victims of the catastrophic earthquake in Pakistan.

Direct selling:
Website: Pepsi has a very comprehensive and detail-oriented website. It starts with peppy music and the whole outlook is phenomenal. They have a „false rumor alert‟, which clarifies any false rumor; it also offers free mp3 downloads of different singers. It has an icon labeled „cause‟ which has information on Pepsi recycling, Pepsi eco challenge, youth empowerment and live earth. By this they are engaging in to phenomena called „social-

PEPSI responsibility marketing‟. They also have a „design your own can‟ option which encourages involvement of end consumers.

Sales promotion:
Keeping in view that the market for Pepsi is already mature and there is intense competition in the soft drinks market; relying on advertising alone to increase profits is not adequate. This is where the need for sales promotion arises. Lowering prices can do sales promotion, or offering packages like buying one and getting one free for a limited time period. Before Ramadan or on other special occasions like Eid; Pepsi lowers its price below that of its competitors. The major objective behind this is to increase the intake of Pepsi and in the process of doing so, give incentive to existing or potential customers to buy more of Pepsi.
Do pepsi commercials have a positive influence on your buyin behaviour?
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes No No Yes

Brand promotional strategies: Pepsi has adopted this pragmatic strategic planning process that defines it‟s positioning, brand‟s character, and the club appeal for brand distinctively in the minds of consumers. But what is a brand? A brand is the set of values, ideals, strengths and weaknesses that become tied to your business. Pepsi has shaped the image of a lifestyle brand, rather than a luxury product just for the elites. A good business is one that stands out from the herd i.e it is better, stronger and more adaptable than its competitors. The image of Pepsi soft drink can be best described as eye-catching, fresh and hard to pass by. It‟s lively, funky, fun and at the same time is offered to the wealthy as well as the less fortunate ones.

How a category is defined impacts both volume potential and the degree of appeal for example Pepsi has been positioned as a brand for masses, the category it relates itself to stretches to a entire country or a region, so it is priced low, promoted and produced high.

PEPSI But on the other hand „mountain dew‟ is projected in a way that attempts to attract „men‟ and even those fortunate men.

Issue:
Rivalry – There is intense rivalry between Pepsi and Coke. This rivalry leads to a downward pressure on prices and significant investments in advertising in an attempt to build and maintain brand loyalty. A 2000 article from the Competitive Media Reporting group reported that soft drink advertising expenditures in 1999 were $649.8 million. In a maturing market such as the domestic carbonated sodas, the only way to gain market share is to steal from one’s rivals. Thus, Pepsi and Coke fight heatedly over prices, suppliers, spokespeople, retail space and most importantly, the taste buds of consumers COKE VS PEPSI: Control of market share is the key issue for most firms. Pakistan‟s two largest soft-drink producers have gotten rich and lazy while controlling 80% of the Pakistani soft drinks market. Coke and Pepsi are trying to gain market share in beverage market, which is valued at over $30 billion a year. Just how this is done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share. The creativity and effectiveness of each company's marketing strategy will ultimately determine the winner with respect to sales, profits, and customer loyalty. Cooperation Despite sharing a number of common interests, Pepsi and Coke appear to take little Advantage of potential cooperative strategies. In fact, recent evidence suggests that both Companies have actually engaged in mutually destructive behavior despite potential benefits from tacit collusion. In the following passage we have identified areas in which opportunities for cooperation exist and should be exploited for the benefit of both Pepsi and Coke Development of Overseas Markets Both companies have engaged in ruthless advertising tactics in Asian countries, where the opportunity for growth is far more than in European countries. Perhaps most confounding are Pepsi and Coke’s recent spate of vicious attack advertisements in Pakistan. More importantly, although the per-capita consumption of soft drinks in Pakistan is A lowly fourteen bottles per year, one-third of Pakistani population is under 18, an important demographic whose consumption habits Pepsi & Coke would like to affect

PEPSI through compelling marketing However, both companies have engaged in a slew of television advertisements, which publicly ridicule the other’s product and image. Given the enormous size of the potential Pakistani soft drink market and the existing reluctance of Pakistani consumers to drink colas daily due to worsening economic conditions, it is baffling why these companies have engaged in behavior that damages both firms. Coke and Pepsi should cooperate to generate consumer goodwill toward the cola industry thereby increasing widespread acceptance of soft drinks by Pakistan’s massive emerging youth market. Distribution – Ethical issues aside, clearly both Pepsi and Coke share a common interest in generating revenues through wide distribution of their products across the country. However, Pepsi and Coke would benefit through a concerted marketing effort to Encourage distribution of soft drinks in schools and universities. For example, no direct connection has been made between soda consumption and increased obesity. This goes especially for Pepsi’s distribution in urban areas. It is not as widely available as Coke is. Pepsi and coke would stand to benefit from shifting their focus from competitive actions to obtain exclusive school, university and restaurant district contracts to create a unified marketing approach that educates consumers about their community involvement and eliminates negative Misperceptions. As a result, both companies would benefit from potential widespread Threat of New Entrants – Currently, the biggest threat of entry faced by the majors is from private label manufacturers such as Gourmet cola. The challenge to both Pepsi and Coke is to further build brand loyalty in their core cola products so that consumers will not be swayed by the cheaper, private label imitations products.

Conclusion:
Given the extreme competitive nature of the CSD industry, the slow growing market Size and the shrinking margins, a firm that is going to be successful and generate aboveAverage returns must have a sound and coherent strategy. In order for Pepsi to Protect its position, it must be wary of private label infiltration Pepsi has been successful in generating profits in this extremely rivalrous industry. What the company should do now is employ a strategy that not only addresses its own Deficiencies in an effort to grow market share, but one that will increase the overall size of the pie. This strategy, in the end, will allow Pepsi to grow and sustain above average returns.

References:

PEPSI www.Wikipedia.com www.mcafee.cc/Classes/BEM106/Papers/UTexas/2003/Pepsi.pdf+pepsi+as+a+carbonate d+soft+drinks&hl=en&ct=clnk&cd=6&gl=pk http://www.garybeene.com/pepsi/pep-hist.htm www.pepsi.com

PEPSI CSD: carbonated soft drinks Oligopoly: Control over the production and sale of a product or service by a few companies. Marketing mix: the elements of marketing that can be used by a company to influence consumers to purchase goods or services Unique selling point (USP): A unique selling point (USP) is any aspect of or characteristic of a product that differentiates it from the competition Direct selling: It is considered to be a sale that does not utilize a "middle man" such as retail outlets, distributors or brokers. It can be done, for example, by websites. Brand loyalty: the tendency of consumers to continue buying a specific brand's product or service, despite the competition Private label manufacturers: products manufactured by middle man themselves, such as retailers.


				
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posted:11/12/2009
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