INTRODUCTION

Pepsi-Cola Pepsi's beverage business was founded by a pharmacist named Caleb Bradham who
created a special beverage, a soft drink, in the back room of his drug store in New Bern, North
Carolina (Pepsi Co, 2004). It has become one of todays leading soft drink with nearly $20 billion
in worldwide retail sales (PepsiCo Inc., 2003), and like what coke has, Pepsi also has a variety of
products in the world, such as Pepsi-Cola, diet Pepsi, Pepsi max, mountain dew and so forth.
In this report, we will specifically focus on Pepsi-Cola, and the aim of this report is to summarize
and analyse Pepsis growth strategy as well as its marketing strategies.
Firstly, the background of Pepsi Company and their products will be summarized.
Secondly, four elements or components will be analysed in this report, which are based on:
* Product

* Price

* Place

* Promotion

Finally, some recommendations relative to Pepsis marketing strategy will be suggested.

In order to make the information of this report accurate and forceful, several valuable sources
were used to analyse. Those sources including:
* Marketing textbook

* Academic paper * Internet

* Online business magazines

BACKGROUND
Pepsi Co. is a Multinational corporation, which extends over many countries; Pepsi and Frito-Lay
merged in 1960, which named the new company Pepsi Co. Besides, Pepsi Co. has merged with
some other companies such as Gatorade, which became the worlds fifth-largest food and
beverage company with 15 brands.
The company operates in a monopolistically competitive market, where its biggest competitor is
Coca-Cola. Pepsi brand name and its strategic message its the cola have already penetrated
the world market. In this case the brand name Pepsi is very effective in differentiating its
product from the others. Within the soft drink industry Pepsi is considered to be a middle class
drink and Pepsi offers quality product that provides assurance to the public.
Pepsi is undertaking both advertising and marketing campaigns around the world, its advertising
campaign include TV, magazines, in-stores, outdoors and on the Internet. The marketing
campaigns it undertook include lucky draw and promotions. For example in Singapore there is a
promotion done by Pepsi that for every 6-pack of Pepsi you purchase you can have a turn on the
fortune wheel to win prizes such as Pepsi t-shirt, more Pepsi drinks and cash prizes. This is done
when the economy is in recession and Pepsi is trying to boost up its company and product
image.
Pepsis target market has usually been the middle-income family, as Pepsi is not as expensive as
Coke and not as cheap as the other brands. Pepsi around the world usually target toward young
people early teens to late twenties, however this is still based on location and in China the target
market are usually people from early teen to their late thirties.
Pepsi-Cola has been around for more than a hundred years. It is first produced in 1898 and in the
earlier times, Pepsi is target against African Americans and it is not until later that Pepsi started
to target the younger population for all races.
PRODUCT
Pepsi, one of the most famous brands, can be identified easily as it is been on various finest soft
drinks available almost all over the world for over 100 years. The Pepsi logo has become a
remarkable feature in United Stated of America indicating an ice blue background synonymous
with Pepsi products. The Pepsi-Cola website points out that at Pepsi-Cola, quality taste and
consumer satisfactions are the highest priorities ([Link], 2004).
Kotler (Kotler, 2004, p110) identified the meaning of products is the branded goods and service
offers to the target market. For classic Pepsi-cola, which is the widely sold Pepsi soft drink, price

sensitive segment becomes one of the most important factors for target marketing. Moreover,
for the target customers, Kotler (Kolter, 2004, p111) identified the product elements that attract
them as shown below:
Variety
Warranties

Quality
Returns

Features

Brand name

Packaging

Sizes

Add-ons

Using the above methodology, Pepsi World shows how Pepsi is made to introduce the quality and
features of classical cola ([Link], 2004). At the same time, the website indicates that each
ingredient of producing Pepsi-Cola must pass high standard, rigorous quality control tests and
strict bottling procedures all over the world. It can be proved that both the high quality and
famous global brand make Pepsi-cola so successful to compete with Coke-cola. Currently, Keiley
mentioned that Pepsi-Cola sales are up in America compared with the Coke-cola, which was
particularly disappointing because the careful balance of pricing and marketing (Kiley, Coke
leaves a bad taste on the street, internet, 9/15/2004). Targeting a suitable marketing is essential
for the success and Pepsi-Cola sets lower prices as the key at high quality. Pepsi-Cola can be a
warranty as its famous brand.
It is known that consumers prefer lightweight, recyclable, plastic bottles. In order to meet
customers needs and make them easy-to-use, the packagings of Pepsi-cola had tried many
different industries but it always follows Environmental Support and Recycling of USA. Now, it is
reported that the cube as a new innovative 24-can Pepsi multipack is used by a small test
market population to give the company feedback before the introduction ([Link], 2004).
There are also many sizes of bottle to satisfy different kinds of consumers. Smaller bottles are
easy for consumers to carry and larger ones with lower price are suitable for families.
When buying Pepsi-Cola, consumers get chances to take add-ons back home. It is really a good
idea to set add-ons because it is not only advertising the new product among the consumers,
but also stimulating customers to get more.
For the package, the symbol of brand is quite clear and obvious. However, the design of bottles
is very similar as other brands of cola. It is not easy for consumer to recognize and be interested
in it. The appearance of bottles can improve (to be) more fashionable or lovely to attract
younger consumers and make loyal customers enjoy new style of Pepsi classical cola. Moreover,
in the market, there are always few drink packages designed for particular groups of people,
such as the kids. Kids are quite important consumers in the market. It is believed that it is better
to design a package with some popular cartoon stars for children to choose. For examples, the
bottle of Pepsi classical cola can be with the shape of Nemo or Winney the Pooh. Moreover, the
bottles for children could be smaller than the usual size for them to carry to school. The children
can also collect different kinds of cartoon bottles for fun. In this way, it can raise the sales of
classical coke and attracts loyal consumers in a young age.
PRICE
Providing quality products at the lowest possible price has always been one of the main concerns
of Pepsi. For example, in some parts of the country a two-litre bottle of Pepsi cost 99 cents a
decade ago and still does today. One of the ways they have been able to assist this effort is by
expanding their use of inexpensive and recyclable plastic bottles. (Pepsi World, 2004) Another
ways is to reduce the cost of the bottles. The soft drink industry sold their drink to customers;
they must have a container to carry. So bottles in the soft drink industry are a very important
part of the whole processes. The company manufactures and sells soft drink relies on Pepsi
bottlers. PepsiCo takes over the bottling operations from its franchisee. It does propose is to shift
its franchisee operations from Coca-Cola to Pepsi.
As the bottlers shifted to Pepsi, Coca-Cola had to struggle hard to counter Pepsi's aggressive
marketing strategies. They were getting bottles from neighbouring states incurring heavy
expenditure on transportation and storage. What is more, they had to offer a lot of incentives,
like Pepsi, without increasing the price. Coca-Cola is still having an upper hand with 56 per cent
market share. But with the bottling operations shifting over to Pepsi in November 1997 -- which
had forced Coca-Cola to import its bottles from outside till recently Pepsi managed to increase
its share to almost 44 per cent from a mere 30 per cent three years ago. (Sandesh, 2000) This

takes over the bottling operations not just make Pepsis competitors to shift up their
manufacturing cost on purchase the bottling, but also reduce its own risk on the bottles inflation
and has a steady supply of bottle.
The soft drink industry today is confronted with a bewildering array of price increases. Pepsi
expenditures for labour, ingredients, transportation and more rise continuously. The cost of
aluminium alone has increased dramatically since last year. Across their entire system, however,
have been cutting overhead and re-engineering our manufacturing process in order to keep our
prices competitive. It is their policy to limit any price increases to the retail trade to the lowest
possible extent.
Reducing and maintaining the cost is not the only marketing strategic used by Pepsi. Sometimes
Pepsi use cutthroat competition to war with its main competitor Coca-Cola. One of the price
war, triggered by Pepsi, follows an earlier onslaught when both the companies reduced prices by
about 20 per cent across the board. Just before the Union Budget for 2003-04, Pepsi had to slash
prices of its 300 ml returnable glass bottles to $0.6 and this price cut to make its brands more
affordable in April 2003. The Pepsi management thinks in a high-consumption market,
aggressive price points devolving from the 300-ml segment will work much better. As a
consequence, 200-ml bottles are priced at $0.5. The new price points are 300 ml at $0.6, and
200 ml at $0.5. According to industry sources, this sector is heavily dependent on returnable
glass bottles and Pepsi's latest price reduction strategy is critical to drive volumes. In the homeconsumption segment too, Coca-Cola took the lead earlier in 2003 by slashing prices of its 1.5litre and 2-litre PET bottles. Pepsi yet to follow suit too reduced prices of its 1.5-litre and 2-litre
PET bottles, to 1.5 and 2.0 respectively, against the earlier price of $1.2 and $1.6. So that Pepsi
sometimes takes non-profitable turns with the sole aim of retaining market shares. (PTI, 2003)
However this cutthroat competition should not too often war with its main competitor. The
consequence not just affects the Pepsi Co. net profit. Also it affects the normal price market. It
will affect as the customer adapt and get use to the cheaper price. After the price war, price shift
back to the normal price. The customers will change their taste to Coca-Cola more elastically.
PLACE
Pepsi-cola as a famous brand is welcomed almost everywhere in the world and is well supported
by millions of people.. Its beverage business contains North America and international. According
to the statistics from the Australia Pepsi website, currently there are more than 400 Pepsi-cola
bottlers in the US and more than 600 internationally. The Pepsi -cola product is sold
approximately about 195 countries and Territories (PepsiCo Inc., 2004). The Pepsi Company
manufactures and sells their products to the company they owned, and the independent bottlers
that are franchised operating facilities throughout the United States and Canada. Meanwhile, the
PepsiCo also sell Pepsi-cola through the cooperation with other partners (PepsiCo Inc., 2004).
The Pepsi website states that in 1992, a partnership agreement was formed by Pepsi-cola with
Thomas J. Lipton Co, owner of the number one tea trademark in the US, and a distribution
agreement was also entered with Ocean Spray, the number one non-refrigerated juice
trademark in supermarkets (PepsiCo Inc., 2004). Other partners such as Pizza Hut, KFC and Hard
Rock CAF have partner relationship with Pepsi -cola. They receive support from PepsiCo and sell
the product. The incentive for the PepsiCo is to extend their brand reputation in the whole world
through those businesses, resulted in great sales. Normally, consumers can purchase Pepsi-cola
from supermarkets, restaurant, KFC and Pizza Hut, which have partnership with Pepsi. Pepsi-cola
brand is already been brought into the mind of the consumers as an invisible image. As the good
reputation and image was created, Pepsi-cola almost exist anywhere and can be easily
purchased by customers.
In contrast, Pepsi-cola still need improvement for their market strategy in order to have an
increase in their product sales. For instance, localization of Pepsi-cola in the limited area would
limit the product sales volume and lower its profit. Pepsi-cola may try to establish better
relationships with other fast food businesses such as MacDonald. Pepsi -cola could possibly sign
the contract with MacDonald competing with their competitor. Due to the same reputation as
KFC, the permission of sale for Pepsi-cola in the MacDonald would be helpful to raise its
reputation and profit. The more places the Pepsi-cola can be sold, the more reputation and
revenue the company would have.
PROMOTION

Pepsi-cola has an extensive integrated marketing communication by coordinating promotional

efforts. It uses advertising, public relations, personal selling and sales promotion to continuously
reinforce consumers attitudes and perception of the product.
In advertising strategies, Pepsi-cola attracts consumers attention by the new campaign Pepsi,
It is the cola, associating with the food-friendly strategy (PepsiCo. Inc., 2004). In the new
released television commercial, it spreads the food-friendly message strategy by identifying
customers benefit consumes Pepsi with popular American food like hot dogs and tacos is an
enjoyment, fun and satisfaction. This commercial released during the Super Bowl XXXVIII as an
in-game advertisement. Pepsi-cola also used outdoor advertising in billboards and at bus stops
all over America. The campaign persuades and reminds consumers the product brand images
spirited, spontaneous, contemporary and exciting, and adding a new hero image to the
product. These strategies also put into the features of new radio, prints and on line adverting.
(PepsiCo Inc., 2004) Another advertising tool frequently used by Pepsi-cola is sponsorship. It
sponsors various sports teams and events including soccer, football, baseball and car racing
(PepsiCo. Inc., 2004). Different sports stars, movie stars and famous singers are used as a
representative of the product to attract consumers attention and affect the liking of the product.
A sponsorship deal was signed with Magna Entertainment Corp. in September as an extension of
this strategy (The Blood-Horse Inc, 2004). Besides, the automatic vending machines are placed
all over the country, targeting the self-selecting target market.
For public relations, Pepsi-cola makes an effort on building a responsible image on both
environment and the well-being of consumers (Wong & Takamune, 1997). In the annual report
2003, Pepsi declares its action on environmental improvement, like efficient usage of water,
seeking methods that are socially responsible, such as using 10% recycled materials in plastic
bottles; develops education programs and follows environmental legislations. The report also
declares its concern on responsibility to contribute to the well-being of consumers, support
communities with direct contribution to not-for-profit groups and working with organizations
delicate to improving the life of people (PepsiCo. Inc., 2004). Other public relation strategies like
posing newsworthy information on the company website have also been used.
Pepsi-cola contests and games promotions are one of the major tools it uses to achieve sales
promotion objectivesrewarding loyal customers and lure customers away from its competitor
Coca-cola. Other sales promotion like in-store displays to attract consumers attention during
shopping increases sales. Latest sales promotion featuring a collectable Pepsi die-cast car in a
commemorative vending tin on the internet and a million give away in a television show
(PepsiCo. Inc, 2004).
The Pepsi Bottling Group has about 6000 salespeople and recently invested in a Pocket PCs with
customized software Shelflink to its sales force. It helps the salespeople to reduce time
spending on various calculations and getting all sales information immediately. This new
technology allows Pepsi-cola sales force achieve the sales objectives quicker by increasing time
efficiency (Microsoft Corp., 2003) Pepsi-colas promotion is highly supported by PepsiCo. Inks
online marketing plan. The [Link] coordinates with the Pepsi-cola advertising strategies by
combining attractive graphics with the marketing message. It provides easy to access product
information and latest promotion programs to customers. The [Link] has constantly
updated news and information on the product. (PepsiCo. Inc, 2004) The overall performance of
Pepsi-colas promotion strategies is satisfactory. It generates sales and increases demand of the
product effectively. Advertising is the action of calling something to the attention of the public,
especially by paid announcements (Webster, 1993). Pepsi-cola existing advertising strategies
can achieve the attention of the public effectively and achieve its advertising objectivesto
persuade buyers to purchase the product and switch to the brand, and remind consumers the
brand image in order to maintain top-of-mind product awareness. The new message strategy
Pepsi, It is the cola communicates well to consumers the new hero image added to the
product. Another message of the new advertising campaign is Pepsi-cola is food-friendly. This
message combines with related graphics to attract attentions; however the campaigns creative
message cannot relates to the food-friendly strategy. Since creative message has a large effect
on consumers memory, Pepsi-cola is recommended to increase its effectiveness of creative
messages exclusively. Besides, major media types have been use to reach and expose to the
target market effectively.

Sponsorship is one of the most important advertising tools used by Pepsi-cola. Sponsoring sport
events and teams can be very effective on spreading its brand images. Like the new in-game
commercials during famous sport event Super Bowl XXXVIII can effectively tailor to suit large
amount of sport loving consumers. On the other hand, the automatic vending machines tailor to
suit the self-selecting targets. It is unquestionable that sufficient spending has been made in
these areas, and it has been successfully generates to increase sales and improve brand image
(PepsiCo. Inc, 2004).
Building good relationship with various publics by building up a good product image is important
for a brand. Pepsi-cola attempted to create a healthy imageincluding declares to take
responsibilities on consumers health and the environment. As both are the new trends that
increasingly concerned by the public, this strategy is able to bring positive image to the product.
Press releases of Pepsi-cola in the Pepsi Co. Ink website is also a good tool of building a positive
product image, with more credibility and a much lower cost than advertising. Pepsi-cola should
increase its usage of public relations to impact the public awareness of the product, such as
making public speeches and presentations (PRSA, 2004).
Sales promotion can push up sales in short term and building up consumers long term
commitment. Using games and contests to push up sales is one of the most effective ways of
increasing consumers product awareness. Pepsi-cola is able to create large incentive to
consumers, but it needs to consider the cost effectiveness of these promotions carefully.
Increasing usage of other sales promotion tools is also recommended as alternatives, such as
patronage rewards and redeemable coupons in order to attract various consumers by different
types of incentives.
Pepsi-cola salespeople should be able to make good relationships and communicating well with
retailers. The new technology improves the performances of the sales force, with access of all
sales information in hand all the time. This helps the salespeople to understand the needs of the
retailers and be able to build a good connection with them. Constant retraining should be
provided to the salespeople in order to improve their performances and keep up with the latest
market trends.
Beside all the traditional marketing tools, online marketing is the latest and fastest growing
trend in the global market. Pepsi has developed the [Link] and [Link] major
website related to Pepsi-cola. The fashionable graphics and a user-friendly menu are able to
attract many web servers attention. These websites is designed to coordinate with all of the
advertising campaigns and strategies, public relations strategies and sales promotion strategies
of Pepsi-cola. On the other hand, the websites are able to target another group of consumers in
the market.
On the whole, Pepsi-cola has well-developed promotion plan and strategies in all dimensions.
Facing its greatest competitor Coca-colathe market leader of soda, Pepsi-colas promotion
strategies helps to gain a large market during the last decade. (PepsiCo. Inc, 2004). This is a
proof to its success on promotion strategies. Nevertheless, there is some space of improvement
for Pepsi-cola. Notes that market research would be able to help the marketers to gain more
understanding of its target market, it is recommended to increase the budget spending in this
area. Moreover, since the effectiveness of promotion strategies is greatly affected by the
economy, marketers should also study the changing economic condition and trends.
CONCLUTION
In brief, Pepsi has built a good reputation around the world. In the analysis of Pepsis marketing
strategy, this report has built a clear sense through four important elements---product, price,
place and promotion. Moreover, some usual definitions relative to the analysis have been
broadened out. Furthermore, a detailed view at Pepsi Co. was also conducted. Overall, Pepsi is a
company in the soft drink market with a strong history, an impeccable image and an assurance
of quality in all aspects that explains its current success and will lead to its undeniable success
in the future.
RECOMMENDATION

On the whole, there are a few improvement can be made by Pepsi-Cola. Although Pepsi is the
fifth largest food and beverage company, its product Pepsi-Cola is still quite cheap comparing
with Coca-Cola the leading soft drink provider. Most people can link price with quality and the
low-price may actually indicates poor quality and it could cause Pepsi to lose the business in the
long run.
If an advertisement that show Pepsi only allow excellent quality product to be sold to the
consumers, it could alter the consumers perspective on Pepsi (i.e. Pepsi offer excellent quality
product only).
Pepsi currently have contract with some fast food outlets to sell Pepsi products only, for
examples, KFC, Pizza Hut and Taco Bell. These fast food restaurants are usually seen as lower to
middle class restaurants and it could affect the brand name in the minds of consumers. However
there are some small restaurants selling Pepsi when customer asks for it, it still doesnt change
consumers perspective of Pepsi. If a contract was written with smaller restaurant, such as a
restaurant beverage must include all Pepsi products and not any of Pepsi competitors products
could improve Pepsis image as a beverage provider for middle class families.
Some recommendations for Pepsi are as follows:
Pepsi should increase its price to show it has high quality product.
Advertise that all Pepsi products must pass high standard, rigorous quality control tests and
strict bottling procedures all over the world.
Pepsi should make contract with smaller restaurant as well instead of just fast food outlets.
Pepsi should sign contract with some small takeaways to buy Pepsi form Pepsi Co. directly as
this could reduce the cost of both Pepsi Co. and the take way owner.
However there are draw back for all of the recommendations, the higher price of Pepsi product
could lead people to buy more coke as the soft beverage market is a highly elastic market, which
means a small price change could lead to a large change in quantity demanded (Kotler, 2004
p.491).
The advertisement showing Pepsi products pass high quality control could have some effect on
consumers perspective of the product Pepsi; however excess advertising of this could be a
major expenditure for Pepsi with limited effects, especially in a large economy that is in
recession such as America.