Pepsico’s Diversification Strategy in 2008

PEPSICO’S DIVERSIFICATION STRATEGY IN 2008

(A CASE ANALYSIS)

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An entry for 10th Agui-Po Awards

Theme:” Isang Dekada: Mindanao’s Evolution Through New Generation Marketing”

Members:

Cabilao, Julie Marie

Gabriel, Jyam Mark

Galanida, Tomamina

Gerodias, Naomi

Labor, Charlene

February 15, 2018

I.    Title Page                                                                                       1

II.   Table of Contents                                                                                2

III.  Situational Analysis (use Porter’s 5 Forces)

1. The Environment                                                                                                  3
2. The Industry                                                                                  5
3. The organization                                                                                  6
4. The current marketing strategy                                                                  7

IV.   Marketing Strategy

1. TOWS Matrix                                                                                   8
2. Analysis of target market                                                                          9
3. Analysis of marketing variables                                                                   9

V.  Problem found in the situational analysis

1. Statement of the main problem (evidence of the problem and its effect)         10
2. Statement of the secondary problem (if ever there will be)                                           10

VI.  Strategic Alternatives                                                                            10-11                                                                

VII. Selection of strategic alternative and implementation

1. Statement of selected strategy                                                              11
2. Justification for selected strategy                                                      12
3. Description of implementation of selected strategy                                      12

VIII. Summary                                                                                      13

III. Situational Analysis

1. Environmental Analysis

The Federal Trade Commission (FTC) demanded that Gatorade can only be jointly distributed with PepsiCo’s soft drinks in 10 years. The distribution strategy of the company is diversified since both products can’t be sold on same stores. In connection with Economy, these healthier lifestyles promote an opportunities and different pattern of consumption.

        In Political environment, the government is an external factor that impose requirements for PepsiCo which would affect the operation of their business because company should comply with the requirements of the government. Since PepsiCo operates into worldwide, it can be difficult for the company because there are different policies and requirements of the government in every country. One of which is the protected tariff that usually applied to imported goods can imply an artificially inflated price and can protect domestic industries from foreign competition. These were the factors that considers to be a barrier to entry in a business. Improving governmental cooperation would make each company updated about governmental requirements and updates as to country’s standard. Example of which is the government initiatives against carbonated drinks that will be a threat to PepsiCo. Hence, they should make an action plan to produce products that has good impact to the health of the consumers. The company has to follow rules and regulations of tax policy. Company has to face civil disturbance in the market which occurred due to different political situation of the country.

The PepsiCo performance is directly linked to the economy. The influence of the economic conditions will greatly affect the operations and performance of the business. The economic stability of most major markets become an opportunity for the company. One of which is the rapid growth of developing economies which is good for the PepsiCo because they have an opportunity to develop their product and expand their leadership internationally. But such move will tantamount to some risks and face threats as economy might slowdown in the country. The company must ensure the market diversification to achieve stable international growth. Diverse distribution strategy could be costly and inefficient henceforth, they need to do thorough research and development as to what strategy, branding, and distribution management might be applicable.

Many consumers follow the social-cultural trends. One of which stated in the case is the new demand for healthy foods and beverages. New generations prefer healthy foods as well as non-carbonated beverages. These consumers started to devise sodas and sugar that addresses their aesthetics. There are some factors in social-cultural that are relevant to the PepsiCo’s business such as, the higher health consciousness of the customer which is a threat to the company because it concerns about the sugar, salt and fat content of its product since the product of the PepsiCo’s are soft drink and junk foods. However, these external factors also present the opportunity for the PepsiCo that they might improve their products to address the concerns, and if it would be a successful campaign, would comprise large amount of revenue for the market on the developed countries who are more health conscious. It can also advantage of the busy lifestyle of consumers because they are likely to purchase ready-to-eat food products like the PepsiCo. A big opportunity also imposes by promising superpower country of China that prefers tea over carbonated drinks as per socio-cultural practices which comprises of billions of potential drinkers.