UNIVERSITY OF FINANCE AND ADMINISTRATION Faculty of Economic Studies Field of Study: Marketing Communication

Follow-up master´s study programme in the full-time form

Shawky Gamal Shawky Hassan Rezk

Sales Promotion as a tool of the Integrated Marketing Communication in the selected company (FMCG)

DIPLOMA THESIS

Prague 2020

Final Thesis Supervisor: PhDr. Karel Eliáš, CSc

Acknowledgment

I would like to thank my parents and my girlfriend Krista for the absolute support they gave me in my life generally and during this year specifically.

Also, I would like to thank my supervisor PhDr. Karel Eliáš, CSc. for guiding me to the right way with this diploma thesis and helping me to attain the best outcomes out of this research.

Declaration

I hereby declare that I have compiled this final thesis on my own and all the quoted literature as well as other sources used in the thesis are listed in the bibliography. The electronic copy of the thesis is identical with the hard-bound copy. I approve that this diploma thesis is published pursuant to Section 47b Act No.111/1998 Coll., on Higher Education and on the amendment and modification of other acts (the Higher Education Act), as amended.

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Abstracts

This diploma thesis is devoted to the topic sales promotion as a tool of integrated marketing communications and the main goal of this research was to investigate the sales promotion tools and campaigns of selected FMCG and perhaps to recommend methods to enhance the sales promotion in the company.

The diploma thesis is divided into two crucial parts: theoretical and practical parts. In the theoretical part, its main aim was to collect the required information and data through cited books, journals, magazines, websites, and online resources.

On the other hand, the practical section’s mission was to apply the outlines set in the theoretical part and to state and evaluate the sales promotion campaigns and activities used by PepsiCo.

Integrated marketing communication is a method that numerous businesses and companies are using in their marketing strategies and one of the most crucial tools is sales promotion. In addition to that, the IMC practice will be defined, there will be a description of how the methods are employed and how sales promotion has been deployed throughout the marketing strategy. The defined FMCG company-PepsiCo will be examined through the effectiveness of their marketing strategies. Also, the effectiveness of the sales promotion strategies will be examined by explaining the tools they used to promote their products. And eventually, concluding how well these strategies are and whether they will be recommended or not.

Keywords

Integrated Marketing Communication, Sales Promotion, Fast moving consumer goods, FMCG,

PepsiCo, 4P’s, SWAT analysis, Coupons, Discounts, Samples, Advertising

Table of Contents

1 Introduction ...... 1 1.1 Objective ...... 1 1.2 Integrated Marketing Communication (IMC) ...... 2 1.3 Overview ...... 5

2 Theoretical Section ...... 7 2.1 Sales Promotion Types ...... 7 2.2 Goals & Benefits ...... 14 2.3 Choosing the right tool ...... 23 2.4 Criticism & Response ...... 24

3 Practical Section ...... 27 3.1 The company’s background ...... 27 3.2 PepsiCo Marketing Mix Analysis (4P’s) ...... 31 3.3 PepsiCo SWOT Analysis ...... 37 3.4 Sales Promotion strategies of PepsiCo ...... 43 3.5 Sales Promotion Strategies Towards the Consumer ...... 56

4 The effects of PepsiCo Inc. sales promotion campaigns ...... 78

5 Findings and Recommendations ...... 86

6 Conclusion ...... 89

7 Bibliography ...... 92

1 Introduction

1.1 Objective

The first objective of this diploma thesis is to define what is the sales promotion, list and define the tools used, find out the ideal tools of sales promotion that could be used by FMCG brand, and to find out which one of the tools do consumer prefer and interact the most. In addition to that there are major questions that will be answered during the thesis, what were the problems that other companies faced in using sales promotion as a marketing communication tool in the past? How the use of Sales

Promotion helped companies to enhance their communication with their customers?

How the use of Sales Promotion helped companies to enhance their profitability?

The most important and critical part is to determine what are the new obstacles and the challenges that a company/brand could face throughout the time of the application of sales promotion plans because there are challenges appearing due to the social media and online shopping.

In addition to that, I am significantly interested in this topic because, I believe, sales promotion is one of the crucial tools used to promote your product and make it easier not only by reaching as many customers as you can but also by selling the old and new products that you have. Additionally, sales promotion is executed to entice new consumers, to hold present clients, to batter competition, and to take advantage of chances that are exposed by market research. It is made up of actions, both outside and inside actions, to improve company sales.

There would be a testing for the hypotheses for this research that will be either confirmed or disproved, the hypotheses are:

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Hypothesis 1: Sales promotion does influence the decision-making of the consumers to buy the product of the company.

Hypothesis 2: Sales promotion does generate a higher impact on the consumers’ decision-making to conduct repeated purchases of the company’s product.

1.2 Integrated Marketing Communication (IMC)

Integrated marketing communication is the process of managing all activities across different communication methods. Successful marketing communication is goal- directed, and it is associated with a company’s marketing plan. It aims to provide a clear message to a certain audience with a targeted purpose of shifting perceptions and behaviour. Integrated marketing communication (IMC) makes this marketing action more well-organized and successful because it relies on numerous communication approaches and purchaser touch points to bring a reliable message in more ways and in more persuasive ways.

The basic goals of these marketing communication methods are, firstly, to communicate, secondly, to compete, and thirdly, to convince. In order to be operative, organizations should confirm that whatever information they communicate is accurate, clear, convenient, and truthful to the stakeholders involved. In fact, being truthful and accurate in marketing communications is more than a matter of integrity; it’s also a matter of validity, since deceitful marketing communications can end in lawsuits and even the criminal justice system.

Preferably, marketing communication is convincing: it should extend product, ideas, or services in such a persuasive way that target segments are directed to take a

2 looked-for action. The ability to persuade and influence is essential to winning new business, but it may also be crucial to reconvince various consumers and customers.

Just because a customer buys a particular brand once or multiple times, or even for numerous years, there is no promise that the customer will stick with the original product. For that reason, marketers want to make sure that the customer is continuously reminded of the product’s matchless features and benefits.

Marketing communication is a key to competing successfully, especially in markets where competitors sell basically the same product at the similar price in the same stores.

Only within marketing communications can an organization discover ways to appeal to certain divisions and segments, distinguish its product, and form continuing brand loyalty. Enduring more tempting or substantial than competitors’ messages is a continuing challenge.

Sales promotions are marketing actions that target to temporarily increase sales of a good or service by adding to the basic value presented, such as “buy one get one free” offers to consumers or “buy twelve cases and get a 10 percent discount” to distributors, retailers, or wholesalers. Sales promotions is a marketing communication tool for energising revenue or providing incentives or additional value to distributers, sales team, or clients throughout a short time period. Sales promotion activities cover demonstrations, displays, special offers, and other nonrecurring selling powers that are not part of the regular routine. As a supplementary encouragement to buy, these tools could be directed at consumers, retailers and other distribution associates, or the producer's own sales force.

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Companies use numerous different methods of media to talk about sales promotions, such as printed materials like direct posters, mail, billboards and coupons; digital media like social media, websites, emails and text messages; radio and television ads and so forth (Muller, 2017).

Companies use sales promotions to upsurge demand for their services and products, organise advertising, public relations, and selling; and to increase product availability among distribution channel patterns.

A successful sales promotion attempts to swift a targeted segment to illustrate an interest in the service or product, try it, and preferably purchase it and become loyal clients.

There are two forms of sales promotions: consumer and trade.

A trade promotion spotlights on organisational customers that can stimulate instant sales, while a consumer sales promotion aims the end-user or consumer purchasing the good/service. Defining which marketing communication tools and approaches to use and how best to syndicate them is a challenge for any marketer planning a promotional strategy. To support the planning process, marketing directors often use a campaign approach.

A campaign is a coordinated and synchronised sequence of marketing communication efforts fabricated around a particular theme or idea and intended to reach a certain objective.

For years, the expression “campaign” has been used in relation with propogation, and this expression applies likewise well to the whole IMC program.

Organizations can conduct numerous types of IMC campaigns, and numerous may be run simultaneously (Muller, 2017).

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Geographically, an organization might have a local, regional, or nation-wide campaign, reliant upon the vacant funds, market scope, and goals. Some campaigns could be intended at consumers and another at wholesalers and retailers. On the other hand, different marketing campaigns may aim different segments instantaneously, providing messages and using communication tools personalised to each segment.

Marketers use a marketing strategy to track and implement a set of strategies over a particular period of time.

1.3 Overview

Sales promotion is one of the main essentials of the promotional mix. The key essentials in the promotional mix are direct marketing, personal selling, advertising and publicity/public relations. Sales promotion uses both media and non-media marketing communications for a pre-determined, limited time to rise consumer demand, stimulate market demand or enhance product accessibility. For instance, freebies, rebates, contests, loss leaders, product samples, premiums, prizes, point of purchase displays, and coupons.

Sales promotions can be guided at either the distribution channel members (such as retailers), sales staff, or even customers. Sales promotions targeted at retailers and wholesale are named trade sales promotions. Also, sales promotions targeted at the customer are named consumer sales promotions.

Sales promotion contains numerous communications actions that try to deliver additional value or enticements to customers, retailers, wholesalers, or other organizational customers to stimulate instant sales. These efforts can attempt to motivate product attention, trial, or buying. Instances of strategies used in sales

5 promotion include coupons, sweepstakes, contests, point-of-purchase (POP) displays, premiums, rebates, and samples.

Sales promotion is executed to entice new consumers, to hold present clients, to batter competition, and to take advantage of chances that are exposed by market research. It is made up of actions, both outside and inside actions, to improve company sales. Outside sales promotion behaviours include events, special sales advertising, PR activities, and publicity. Inside sales promotion activities include window displays, promotional and product material display and promotional programs such as contests and premium awards.

Sale promotions frequently arise in the form of discounts. Discounts influence the manner customers contemplate and behave when shopping. The kind of savings and its location can influence the way customers see a product and influence their buying decision. The two most common discounts are bonus packs (“bulk items”) and price discounts (“on sale items”). Price discounts are the decrease of an original sale by a specific percentage while bonus packs are deals in which the customer obtains more for the original price. Many businesses display diverse forms of discounts in advertisements, expecting to encourage customers to purchase their products.

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2 Theoretical Section

Definition

Sales promotion is the process of encouraging a potential customer to purchase the product. Sales promotion is intended to be used as a short-term method to enhance sales.

Researchers Farhangmehr and Brito (2015) identified a set of features and characteristics of sales promotions, including:

1. It influences at the last stage of purchase.

2. Short-term effect and duration to push the customer to buy.

3. Rarely suitable as a way of building long-term customer loyalty.

4. It performs an accessory role not one of the product’s core benefits.

5. It is a set of techniques used for many purposes, rather than one technique

only.

2.1 Sales Promotion Types

Yin Xu and Jin-Song Huang (2014), the authors of Effects of Price Discounts and

Bonus Packs on Online Impulse Buying, they have stated various types of sales promotion, including:

2.1.1 Buy More, Save More

This promotion deal is quite preferred by the customers because it immediate, therefore, the customer does not feel they need to go through a long process to get the promotion. On the contrary, it is a very simple promotion which makes many customers go for this promotion. Moreover, it is a pushing tool for those customers

7 who are feeling guilty to buy a specific product because of its high price because once they see there is an additional/free product they obtain, they just go for it.

On the other side, as a store or marketing team you do not need to offer a huge deal, but to just make sure it is attractive enough to grab the attention.

Example: buy three and get one for free.

2.1.2 Coupons

A coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.

2.1.2.1 Role

Coupons can be used to explore the price sensitivity of different groups of customers

(by sending out coupons with different dollar values to different groups).

Additionally, it is commonly presumed that customers who take the effort to collect and use coupons are more price-sensitive than those who do not. Thus, the posted price paid by price-insensitive customers can be increased, while using coupon discounts to maintain the price for price-sensitive customers (who would not buy at a higher price).

2.1.2.2 Delivery Methods

There are different ways to deliver coupons. Now, the customers can get them through various sources in-store, newspapers, or the internet.

Currently, coupons are not only tangible coupons that you can hold, due to the fast- paced technology, there have appeared additional faces for the coupons, including:

1. Print Media: usually collected from stores or newspapers and it has

verification method such as, coupon ID number or barcode.

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2. Internet Coupons: promotional coupon which the customer gets when they

go on the website.

3. Mobile Coupons: electronic ticket that the customer may receive on the

phone through SMS or MMS.

4. Mobile Application Coupon: usually a QR code that customer might receive

when they download the application.

2.1.3 Discounted Products

Discounts are the decrease of an original sale by a specific fraction. $ or % discounts offered to grab the attention of the customers to buy products at a lower price. This tool is one of the easiest tools to change the customers’ buying decisions. As a business, you should always know the difference between offering a seducing tool to a customer to change their buying decisions and offering many discounts that will affect the product negatively and will make the customers believe that discounts are the norm of this product.

2.1.4 Free Shipping/Return

This tool gives the customer the security needed to not only order the product but also, in case they did not like the product they can send it back without losing anything. According to this Walker Sands infographic (2014), 80% of consumers would be more tempted to buy from Amazon if they were offered free shipping. 66% would buy if they were offered next-day delivery and 64% said they would buy if they were offered free returns.

And the good thing, it is a pure marketing tool because as a business will not bear any costs, the business can just add the shipping costs to the product price.

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2.1.5 Holiday Promotions

Customers always like to spend more on holidays and businesses know that, therefore, to stand out, there is no need to plan much because the customers have the motivation already to buy. There is a need to offer a decent promotion that can help to make customers prefer the offered product instead of the competitor’s product.

Enticing customers with slight discounts will always be in the smart businesses’ favour. In addition, the perfect time to become creative with the promotion and use the theme of the holiday, to sell products.

Example: Christmas and black Friday promotions.

2.1.6 Loss Leader

A strategy where a product is being sold at a price lower than its market cost in order to stimulate other sales of more profitable goods.

In other words, it takes an element either a product or a service that triggers the sales of other more value-added products or services. The idea of it, is to have a gatekeeper into your transformational process or your customer’s value chain and get them into the process of purchasing other product or service that are necessarily into the transaction.

It is very important to understand that using this marketing strategy to your advantage, it is significantly important to understand the purchasing and transformational process of your clients in your company. Therefore, it is important to understand which product that will be your gatekeeper that you will make as loss leader and what product that you will want customers to go for.

Example: According to the Forbes (2010), many toy stores chains and online retailers sell diapers or nappies as a loss leader in order to tempt parents into the store

10 in the hopes that the children will spot toys, bottles or other items that the family needs.

2.1.7 Loyalty Reward Plan

Customers can collect points or credits for buys and exchange them for prizes. The point of Loyalty Reward Plan is to increase the customers’ engagement and drive the customers’ loyalty. If loyalty programs are used effectively, it can generate as much as 20% of a company’s profits.

Sales promotion tools are characterized that they are short-term, and its effect does not last on long run. As a result, this tool is trying to solve the ingrained defect that sales promotion tools have.

2.1.8 Product Giveaways

Product giveaways are structured to increase brand awareness and increase the follower base based on the targeted users.

When a customer buys a product, they are usually given a gift which could be a new product for they are launching, and they want to introduce to customers or an existing product that not many people are actively buying it. Therefore, the engagement on it can be increased this way by making customers trying it and maybe consider buying it.

2.1.9 Samples

It is a consumer product that is given to a consumer free of cost so he or she might try the product before committing to purchase it. A free sample or "freebie" is a portion of food or other product (for example beauty products) given to consumers in shopping malls, supermarkets, retail stores, or through other channels (such as via the

Internet). Sometimes samples of non-perishable items are included in direct

11 marketing mailings. The purpose of a free sample is to acquaint the consumer with a new product and is similar to the concept of a test drive, in that a customer is able to try out a product before purchasing it. Although an expensive method of targeting customers, conversions to sales can be as high as 90% making it one of the main marketing strategies for certain markets. With effective sampling, marketers can create brand loyalty and assist in the launch of a product through the word of mouth.

Many consumer product companies now offer free samples through their websites, to encourage consumers to use the products regularly, and to gather data for mailing lists of potentially interested customers. Paint chips are samples of paint colors that are sometimes offered as free samples.

Companies such as C&A., Costco, Sam's Club, Food Courts and Grocery Stores give out free samples to customers to persuade a customer to buy the product.

The expansion of online marketing with regards to promotional giveaways has facilitated the rise of "Freebie sites" that seek to aggregate all promotional free sample offers in one place. These sites will often compile free product samples from all over the World Wide Web and categorize them by type. Some product sample offers may require consumers to complete a survey or refer a friend in order to qualify for the freebies. When all requirements are fulfilled, the product samples are shipped to the consumer. Some sample products might be digital goods, where sample might be closely related to a product trial.

It is also possible to purchase products in small "trial size" containers. This is common with toiletries such as shampoo, which are useful for vacations or other travel, where large bottles or other containers would be impractical (or more recently, not permitted for air travel). These are also often provided in hotel and motel rooms for the guests. Samples may also be loaned to the customer if they are

12 too valuable to be given for free, such as samples of a countertop or of carpet to be used for remodelling. Sometimes companies in B2B market will offer sample of data or service for free before engaging business relationship. Other type of samples may include industrial samples, such as in the plastic industry, provided to companies for trial moulding to see if the selected material is suitable for manufacturing the application (testing). Such samples may or may not be free of charge.

Advantages & Disadvantages

Advantages Disadvantages

• Effective at achieving quick • Sales effect may only be short- boost to sales term • Encourages customers to trial • Customers may come to expect a product or anticipate further promotions • The customer has the • It may damage the brand image flexibility to try different products in the company • Upselling and cross-selling • Limits the revenue when discounting

Why companies should adopt Sales Promotion tools

Increasing the awareness of the company’s brand is what every company should seek. The best way to reach as many consumers is through promoting the product and that happens by grabbing the attention towards the product. But reaching as many consumers is not a specific goal, on the contrary, it is completely vague.

Therefore, the company should draw and come up with the promotional objectives to figure out what kind of promotion they need.

For instance, if you have a product that is not selling well, then packaging it together a product that sells and successful in a “2 for the price of 1.” Another example, if you want to build brand awareness then a big event that can grab the eyes could be

13 effective as well. Another example, if you have a product launch and you want to encourage consumers to try your new product, then maybe a complete refund if you are not satisfied campaign or samples testing campaigns can be influential.

2.2 Goals & Benefits

Usually, the goals of sales promotions derived from marketing goals of the given product. Sales promotion goals varies based on the market situation where sales promotion is realized. Regarding sales promotion to consumers, it includes persuading the consumer from time to another to make bigger and more often purchases. Also, it includes attracting new customers to try the new goods, drag over customers from the competition and the remuneration of loyal customers.

In terms of sales promotion of mediators, the goals include the effort to gain a suitable distribution of their goods. It regards both numbers of retailers that sell the goods and spaces on shelves that the retailer can provide to the brand. The second goal is the control of the stock. The producers should make sure that their retailers have a sufficient stock of their brand; so, they can avoid in shortage in their brand during the planning time of the implementation of their new product, when they are preparing for the advertising campaign for the producer, or when they are doing sales promotion to consumers (Altschuler, 2016).

The third goal is to stimulate retail sales promotion and it is due to the motivation to decrease retail prices, support of retail advertisement, displays of products in the store or next types of retail sales promotion. In terms of retail sales promotion, the goal of product displays is usually to attract customers by new products or their new features or reduced price. A further objective is to remind consumers of known products and their features. The aim of the next tools of retail sales promotion,

14 providing discounts, is price differentiation among informed and uninformed consumers or among loyal and disloyal customers. Another goal of price discount is an effort to make consumers create own stock of a given brand which has its big advantages. Partly, provided consumers to create stock can make retailers restrict their stock and thus lower costs. On the other hand, in case consumers make stocks of a given brand, it is obvious they won’t buy competing brands. Retailers also provide price discounts in order to get rid of goods that is damaged or that is over- supplied (Baer, 2016).

The goals of sales promotion can be divided into three categories, short-term tactic goals, mid-term strategic goals, and long-term goals.

Among the tactic goals, for instance, there can be noticed that there are some products which are either no longer in demand by consumers, they are not being sold in a right way, they are partly damaged, or they are over-supplied. The strategic goals are, for instance, dragging off from competing on a brand to other promoted one, motivating consumers to be loyal, or motivating distributors to support the brand among consumers. Among the main goals, for instance, the attempt to increase total profit, market share, or sales of goods (Baer, 2016).

Sales promotions can offer many benefits for the consumers. Many previous studies focused on that monetary saving is the key benefit for the consumers. However, there are many indications that suggest that consumers are more motivated by numerous other benefits such as, quality, savings, value expression, entertainment, convenience and exploration.

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These benefits are considered as either hedonic1 or utilitarian2. Utilitarian benefits are considered functional and more tangible. They enable consumers to maximize their shopping efficiency and economy. In general, savings, convenience and quality benefits can be categorized as utilitarian benefits. On the other hand, hedonic benefits are more intangible and experiential. They can provide consumers with intrinsic pleasure, stimulation and fun. In addition to that, the benefits of exploration, entertainment and value expression can be considered as hedonic benefits.

According to Chandon, Pierre, Brian Wansink and Gilles Laurent (2000), based on the differentiation between the types of sales promotion tools and benefits, monetary promotions deliver more utilitarian benefits. On the other hand, non- monetary promotions deliver more hedonic benefits. However, these relationships are not absolutes, they are a matter of degree; for instance, coupon promotions are a monetary promotion which still can provide some hedonic benefits like the enjoyment in redemption, although its main benefit of saving is utilitarian (Mittal,

1994).

It used to be referred to sales promotion as a secondary tool, which was considered less significant than promoting and personal sales as part of marketing communications mix. Currently this way of thinking is considered old-fashioned, invalid and outdated. Sales promotion can help and add up additional means of marketing communications or act individually as the main way.

Sales promotion is a crucial component of the marketing operation and the aim is to practise a range of short-term, incentive funds to quicken and accelerate the sale of

1 Hedonic goods are consumed for luxury purposes, which are desirable objects that allow the consumer to feel pleasure, fun, and enjoyment from buying the product. 2 Utilitarian goods are purchased for their practical uses and are based on the consumer's needs.

16 particular goods or services to consumers or sellers. While advertising provides a source for the buying of goods, sales promotion supports it. Sales promotion includes numerous ways of encouraging consumers - spreading of samples, price discounts, free samples, coupons, bonuses, awards, customer rewards, offers of compensation, under certain conditions, sale, warranty, the cross (joint) promotion, demonstration at the point of sale; trade promotion - price reductions, promotional and demonstration discounts, free goods; inducements for business partners and staff commercial service conferences and events, trade shows and special sales representatives advertising.

Sales promotion is frequently used to reinforce a short-term push in sales. To clarify, it can be perceived as a strategic temporary weapon. A push in sales is perceived only through the application of actions to supply sales. This push/surge follows a small decline in sales measurements lower than the usual level, as many consumers have stocked the corresponding goods in the course of stimulating their sale. The effect of sales promotion in the long term can be progressive, neutral and negative. If through the sales promotion, the company succeeded in attracting new customers, which enjoyed the promoted products, recurred purchases completed by these customers can lead to an optimistic long-term result. Meanwhile, if the actions applied have devalued the promoted product in the eyes of customers, the consequence might be adverse. In those circumstances where sales promotion pushed the customers to purchase goods only because of, for instance, price discounts, without inspiring their profound preferences, the long-term result may be somewhat undesirable.3

3 MULLIN, Roddy. Sales promotion: how to create, implement. p.25-47. 5th ed.Philadelphia: Kogan Page Limited, 2010, xviii, 262 p. ISBN 07-494-6005-9.

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It is significantly crucial to refer to that sales promotion campaigns should be attractive not only for existing customers already using the product, but also, it should attract as many new customers as possible. Additionally, it must contain any kind of privileges or contribution that would represent a specific worth to the customer.

Commonly, the company starts its sales promotion campaign in these situations when it desires to attain a stronger and appropriate response. Ways of sales promotion are commonly used when it is essential to recover the reduced demand of new products. Nevertheless, sales promotion is of a short-term approach and technique and these methods are not appropriate for the progress of a long-lasting preference for a product, brand or company. The key methods of stimulation are PR, advertising, personal sales and directly sales promotion. They can be used without reliance from one another, but the highest result is touched at their interaction. Also, it is essential to outline the communication aims of the company as wisely as possible.4

There are also events that do not emphasis on elevating sales in a certain shop or any store, but on developing or cultivating the company's image. Such events, indeed, accelerate the demand for products, but indirectly. Likewise, to personal sales, the efficiency of a set of actions to encourage sales is determined by not only a cautiously organised advertising campaign and capably developed incentive processes, but also by the quality of the work of all sales personnel, since the necessities for its processes are alike to those for personal sales.

4 DAYAN, Arman. TROADEC, Annie. TROADEC, Loic. “Promotion des ventes et P.L.V. “– Sales Promotion. p.89-97. 9th ed. Neva. 2003. ISBN 5-7654-2378-7

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The company should not essentially execute a sales promotion campaign since the measures are of a short-term approach, it would be more convenient to attract experts who have the needed experiences and knowledge of managing similar events. It can be several promoting and marketing agencies or independent specialists, who will find the right decision sooner, and the positive influence will be definitely higher.

Nevertheless, to conduct any sales promotion, it is essential to classify a multiple of issues5:

1. To define the interval of sales promotion.

2. To select a targeted group of people on which the campaign will be focusing on.

3. To define ways of sales promotion.

4. To decide the extent and length of the campaign.

5. To control the time.

6. To provide the sufficient budget for the campaign.

7. To examine the sales promotion campaign before executing.

8. To implement a sales promotion campaign.

9. To evaluate its results.

According to that, the next goals of the sales promotion campaign can be outlined:

1. To present a new brand.

2. To elevate sales levels.

3. To convert new customers and retain existing customers.

4. To increase up-selling and cross-selling.

5. To increase the brand’s market share in the market.

6. To improve the company and brand’s image.

5 CHANDON, P., WANSINK, B. & LAURENT, G. A Benefit Congruency Framework of Sales Promotion Effectiveness. Journal of Marketing, p.65-81. 2000

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Meanwhile, sales promotion goals should be:

- Precise.

- Commensurable.

- Attainable.

- Simply accessible understanding.

- Practical and accurate.

- Well-matched.

- Well-defined, not stating a double interpretation.

- Comply with the financial and material abilities of the company.

The goals of sales promotion frequently rely on the present phase of the product life cycle. At the phase of introduction of the brand - sales promotion has a significant position.

On balance, it has vast possible to affect a customer to purchase the first trial. The take-over of more and more new consumers is the main goal in the growth stage. The sales promotion campaign can be viewed as an operative at this stage if more than fifty percent of the target audience have tried the new product.

Instead, when the company’s competitor arrives to the market, it might require the company to upsell the existing customers, get them to buy many of the company’s products so as to defend them from external stimulus, crafting them insensitive to it.

At the growth stage, the sales promotion is vital simply when the market is presented with the product similarity.

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Therefore, the key challenge or aim will be attracting customers from competitors.

However, at the growth stage converting new leads into customers should be continued.6

At the maturity phase, when a loyal customer to the product and the brand is formed, it will be significantly important here to strengthen the competitive positions in the market and to protect it from aggressive competitors’ campaigns.

Commonly, at this point, organizations start initiating their "brand loyalty" campaigns.

At the stage of decline, it retreats the sales promotion to the first place in regard to the traditional advertising. The chief goal at this phase is enhancing sales volumes after that stimulating the demand.

To keep the accumulated consumer audience for the specific product, in case if it is leaving the market, its understandable to transfer the attention of those customers to a different product, which is in the growth stage.

This transmission can save the accrued potential consumption.7

Reliant on the practise of activities, sales promotion benefits can be:

- Application of communication with potential customers.

- Formulating a supplementary enthusiasm of customers towards more purchasing.

- Probable elevation of impulse buying.

- Time reduction of decision made by potential customers

- Acceleration of the investment turnover into advertising.

6 CHANDON, P., WANSINK, B. & LAURENT, G. A Benefit Congruency Framework of Sales Promotion Effectiveness. Journal of Marketing, p.65-81. 2000

7 BLATTBERG, R. C., & NESLIN, S. A. Sales promotion - concepts, methods, and strategies. p.27- 58. 2nd ed. Englewood Cliffs, N.J: Prentice Hall. 1990.

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Instead, it should be perceived that sales promotion has clear problems:

- Sales promotion results are short term only.

- Without advertising support, it will be impossible to achieve sales promotion.

- The wrong application of sales promotion will negatively affect the brand’s image and that will most likely last for a long time.

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2.3 Choosing the right tool

Choosing sales promotion tools does not happen randomly, it should be based on significant analyses and studies because not all the tools serve the same purpose.

Therefore, there should be a significant planning to determine which tool can be implemented and which one will serve the set goals on the long or the short run.

It is vital to assign the right tool to a given goal since some techniques are more or less suitable.

Here are some instances of assigned tools to specific given goals:

Goal Promotion tool

Bigger purchase of products Free-gift, discount on a big purchase,

valuable packaging.

Experimental purchase/product launch Samples testing

Repeated experimental purchase Discount coupons in case of another

purchase

Formatting an image to the public Charity, donations, sponsorships

New possibilities of usage Promotion actions on another mutually sold

product

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Factors determining efficiency of sales promotion

Positive and negative results of sales promotion are based on many changing factors.

For instance, the factors that are connected with the brand and the product, customer characteristics and marketing strategies of companies.

Sales promotions have a bigger influence on those products that consumers are able to have a stock of them than the products that consumers can buy in a bigger amount and on such products that are promoted by advertising and sales promotion on the place of sale. However, sales promotion has a less influence in the markets with a significant competition (Salz, 2018).

2.4 Criticism & Response

According to Seth Godin (2018), the author of This is Marketing book, many people believe that promotion tools are deceptive. They claim that promotion tools manipulate consumers by persuading them to buy products they do not need.

Therefore, it creates an artificial need.

In addition to that, they believe that promotion tools helped the harmful products to be promoted more and more over the years, such as, those products associated with unhealthy activities and products like cigarettes and liquor. And they suggest that these harmful products should not be promoted at all.

In addition to that, many believe that sales promotion forces people to buy goods they do not need which led to making people spendthrifts, therefore, it does not allow people to save their hard-earned money.

Also, many believe that sales promotion gave the scope for marketers to make false claims and representations about their products.

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And one of the critical points that critics referred to, is that sales promotion costs will hike the product price and it is only the consumer who will be burdened. It also does not represent the real value or quality of the product because there are many goods with a very good quality whose manufacturers cannot afford the promotional and campaigns expenses, such as village industries’ products.

Response

Promotion is used to inform consumers about the organizations and their new and existing products in order to create a public awareness. In addition to that, promotion tools educate consumers about product features. For many manufacturers, promotion is the medium to reach the consumers. Even more, it helps to sustain interest in products that have been available for decades (Scott, 2017).

Also, promotion helps to build a good business image for the organization, and it can also set your product in a place higher or lower than the company placed it.

Moreover, it provides employment opportunities for many nowadays; there are many who are employed as public relations officers, salesmen, marketers and copywriters

Indeed, false advertising or deceptive advertising is completely wrong but that should not ban the whole cycle of promoting. However, many governments around the world use regulations to control misleading, false and deceptive advertising.

The ultimate purpose of promotion is to stimulate demand and to know what the consumers do like. If it does, the business should be able to produce in larger quantities, thus, reduce per-unit production and marketing, which can result in lower prices (Webb, 2017).

Persuading people to buy does not mean forcing them to buy and take money out of their pockets because not because promoting creates a need then it means that there

25 is a force that push them unwillingly to buy a certain product. It comes from the consumer’s own will and desire; marketers assert the values are instilled in the home and the promotion does not change people into materialistic consumers. On the contrary, consumers do benefit from promotion because it informs them about the product prices, advantages, features, uses and locations where they can buy the products. Also, consumers do gain knowledge about available products and can make more intelligent buying decisions.

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3 Practical Section

The practical part will be specialized to state and analyse the sales promotion campaigns used by PepsiCo Inc., which is one of the biggest players in this industry and a leader in the fast-moving consumer goods (FMCG) industry.

This section is formulated through books, academic resources, analysis of scientific literature, online sources, and case studies.

3.1 The company’s background

PepsiCo, Inc. is an American multinational company that produces snack, food, and non-alcoholic beverages. In 1965, the company was formed with the merger of

Pepsi-Cola and Frito-Lay. Donald Kendal, the CEO of Pepsi-Cola, and Herman Lay, the CEO of Frito-Lay, merged their companies into the single company under the name PepsiCo in order to deliver perfectly salty snacks served with the best cola on earth.8

For over 50 years, the PepsiCo name is increasingly growing day after day and year after year. Even though, there were many competitors trying to exist and cut PepsiCo market share, but the company remained standing. Currently, PepsiCo is one of the world’s most-respected corporations with products sold in more than 200 countries and territories and 22 brands that generate more than $1 billion each in estimated annual retail sales.

During the later 1970s till the middle of the 1990s, the company was continuously expanding and growing because of the acquisitions of the brands they were doing.

8 https://www.pepsico.com/about/about-the-company

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According to Tom Stevenson (1997)9, the market analyst and the author in the

Independent, that the brands that were previously owned by PepsiCo include:

• Taco Bell

• KFC

• Pizza Hut

• California Pizza Chicken

• Hot ‘n Now

• D’Angelo Sandwich Shops

• Stolichnaya

• East Side Mario’s

• North America Van Lines

• Wilson Sporting Goods

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9 https://www.independent.co.uk/news/business/pepsico-to-spin-off-pizza-hut-and-kfc-1284827.html 10https://web.archive.org/web/20100331102359/http://www.pepsico.com/annual09/downloads/PEPSI CO_ANNUAL_REPORT2009_8MB.pdf

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These acquisitions motivated PepsiCo to conduct a large-scale acquisition as the company started to extend its processes beyond snacks and soft drinks only but to invest in other foods and beverages’ lines. From 1998 till 2002, PepsiCo acquired the orange juice company Tropicana Products11 and merged with Quaker Oats

Company12. In additions to that, Gatorade sports drinks line.

According to PepsiCo 2018 Annual Report13, the company’s revenue reached to $65 billion and total assets with $78 billion. PepsiCo is considered one of the largest foods and beverages corporations and for PepsiCo it is crucial to have a solid mission and vision which go along with the company’s status and its business processes and operations. Therefore, PepsiCo mission is to provide consumers with joyful moments through their unique brand experience.

PepsiCo’s global operations structure has shifted and changed multiple times in the company’s history. Due to international expansion, in 2016 PepsiCo decided to separate its market into six divisions14, as follows:

1. PepsiCo Beverages North America (PBNA): This division contributes 35% of

the net revenue of PepsiCo as of 2015. (USA-Canada-Mexico).

2. Frito-Lay North America (FLNA): It contributes 23% of the net revenue of

PepsiCo

11 https://www.nytimes.com/1998/07/26/weekinreview/july-19-25-pepsico-buys-tropicana.html

12 https://abcnews.go.com/Business/story?id=88989&page=1

13 https://www.pepsico.com/docs/album/annual-reports/2018-annual-report.pdf?sfvrsn=35d1d2bc_2 14 https://www.pepsico.com/about/about-the-company

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3. Quaker Foods North America (QFNA): It contributes 4% of PepsiCo’s net

revenues and it includes their cereal, rice, pasta and other branded food

businesses.

4. Latin America: It includes the foods and beverages within Central and South

America, and it contributes 13% of PepsiCo's net revenues.

5. Europe and Sub-Saharan Africa (ESSA): it contributed 17% of the company's

global net revenue. Unlike PepsiCo's Americas business segments, both foods

and beverages are manufactured and marketed under one umbrella division in

this region, known as PepsiCo Europe. The primary brands sold by PepsiCo

in Europe include Pepsi-Cola beverages, Frito-Lay snacks, Tropicana juices,

and Quaker food products, as well as regional brands unique to Europe such

as Walkers crisps, Copella, Paw Ridge, Snack-a-Jack, Duyvis, and others.

PepsiCo's European presence expanded in Russia which made up 5.1% of the

company’s total net revenue. PepsiCo has 3 sites in South Africa (Isando,

Parrow, and Prospecton) which produce Lay's and Simba chips.

6. Asia, Middle East, North Africa (AMENA): PepsiCo Asia, Middle East and

North Africa (AMENA) covers four regions; Asia Pacific, Greater China,

India, and the Middle East and North Africa region.

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3.2 PepsiCo Marketing Mix Analysis (4P’s)

PepsiCo’s marketing mix has progressed over time, particularly due to the consequences of mergers and acquisitions which were mentioned previously.

The marketing mix or 4Ps (Product, Place, Promotion & Price) is the mixture of plans and strategies that the company uses to implement its marketing strategy. In this regard, PepsiCo employs numerous tactics and strategies built on its collection of products and brands. The differences amongst markets additionally require differences in approaches and tactics used in the marketing mix. Nevertheless, despite these variations, PepsiCo’s marketing mix has a number of general features and characteristics that define the company’s overall corporate approaches to its marketing plan implementation. PepsiCo remains effective and globally successful in this aspect.

3.2.1 PepsiCo Products

This section of the marketing mix classifies the organizational outputs made available to customers. PepsiCo started as the Pepsi-Cola Company, afterwards, the company expanded due to the acquisition it has conducted throughout the past years.

The following are the current product lines of PepsiCo15:

1. Soft drinks

2. Cereal

3. Sports nutrition

4. Snacks

5. Energy drinks

15 https://www.pepsico.com/brands/product-information

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6. Side dishes

7. Rice snacks

8. Breakfast bars

9. Bottled water

10. Other merchandise

Many of PepsiCo’s present brands and products were added to the product mix through acquisitions. For instance, snack products were added after PepsiCo acquired

Frito-Lay. Other merchandise includes t-shirts and tumblers, which are manufactured by other companies with license from PepsiCo. This part of the marketing mix is associated with PepsiCo’s basic plan and thorough growth strategies, which highlight global growth and expansion.

The PepsiCo product portfolio for Europe includes as follow:

• Pepsi Cola: it includes the classic cola and Pepsi Max which is no added-

sugar-cola. In addition to that, there are flavoured Pepsi Cola such as Pepsi

Cherry and Pepsi Lime.

• 7Up: Lemonade with lemon-lime flavour.

• Miranda: Orange flavoured lemonade. It is supported with multiple flavours

as well, such as:

o Miranda Orange

o Miranda Pear

o Miranda Watermelon.

• Mountain Dew: Lemonade and energy drink and it contains around 20%

more caffeine than cola.

• Gatorade: Non-alcoholic flavoured drink with orange flavour.

• Toma Juice: Natural juices and it comes with different flavours, such as:

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o Orange

o Orange with flesh

o Apple

o Multivitamin

o Strawberry

o Supporting immunity

o Energy support

o Forest fruit

o Pear

o Black currant

o Pineapple

o Grapefruit

o Sour cherry

o Cherry-apple

o Tangerine

• Lipton Iced Tea: Flavoured iced tea, such as:

o Lipton Ice Tea Lemon

o Lipton Ice Tea Peach

o Lipton Ice Tea Green

o Lipton Ice Tea Green Lime & Mint

o Lipton Ice Tea Matcha Yuzu Lime

o Lipton Ice Tea Matcha Ginger Lemongrass

• Tropicana: Fruit multi-species juice made from fruit concentrates that comes

with different flavours, such as:

o Multifruit

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o Orange

o Pineapple

o Apple

o Grapefruit

o Mango

• Rockstar Energy: Flavoured non-alcoholic energy drink, pasteurized,

carbonated and it comes with different flavours, such as:

o Rockstar Guava

o Rockstar Xdurance - Blueberry, Pomegranate & Acai

o Rockstar Super Sours Green Apple

• Lay’s: Potato chips and it has 5 categories:

o Lay’s Core – it has 5 flavours, and they are:

▪ Lay’s salted

▪ Lay’s fromage

▪ Lay’s green onion

▪ Lay’s piquant paprika

▪ Lay’s grilled bacon

o Lay’s Strong – Hot Potato chips and it has 4 flavours:

▪ Lay’s Strong chili & lime

▪ Lay’s Strong cheese & jalapeno

▪ Lay’s Strong wasabi

▪ Lay’s Strong hot chicken wings

o Lay’s Maxx:

▪ Lay’s Maxx salted

▪ Lay’s Maxx cheese and onions

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▪ Lay’s Maxx peppers

▪ Lay’s Maxx bacon

o Lay’s Stix:

▪ Lay’s Stix Ketchup

▪ Lay’s Stix Salted

o Lay’s Oven Baked: 50% less fat potato chips

▪ Lay’s Oven Baked yogurt & herbs

▪ Lay’s Oven Baked salted

▪ Lay’s Oven Baked Paprika

3.2.2 PepsiCo Pricing Strategy (Price)

PepsiCo’s prices are noticeably diversed because the company has a wide product mix, which means that it has a significant number of product lines and brands.

Tactics are used to set prices that are examined and analysed in this element of the marketing mix. PepsiCo’s main pricing strategies are as follows:

1. Market-oriented pricing strategy: Market-oriented pricing compares similar

products being offered on the market. Then, the seller sets the price higher or

lower than their competitors depending on how well their own product

matches up.

2. Hybrid Everyday Value pricing strategy: Pepsi's “Hybrid Everyday Value”

strategy involves limiting the gap between soda prices on holidays and

regular days by cutting discounts on holidays.

Most of PepsiCo’s products are priced based on the market-oriented pricing strategy.

The company’s objective in using this tactic is to confirm that its prices are competitive, based on other firms’ prices and dominant market conditions. On the

35 other hand, Hybrid Everyday Value is PepsiCo’s pricing strategy for some of its products, especially soft drinks. The company’s objective in using this pricing strategy is to narrow the gap between regular/everyday prices and discounted holiday prices. In this way, PepsiCo expects buyers to buy more of its soft drinks every day and not just during the holidays.

3.2.3 PepsiCo Promotion

PepsiCo works on the promotion of its products to attract targeted customers. This division of the marketing mix covers the marketing communications plans and strategies that the company uses to influence its customers. The following are the strategies in PepsiCo’s promotional mix, set according to importance:

1. Advertising

2. Sales promotion

3. Direct marketing

4. Public relations

Advertising is PepsiCo’s major strategy for marketing communications. For instance, the company is commonly known for using superstar endorsers to promote its products on TV, radio, print media, and online media. Furthermore, PepsiCo advertises through business signs it sponsors or gives to stores and other establishments. The company applies sales promotions, such as package deals or discounts. Also, PepsiCo’s local offices implement direct marketing through arrangements to deliver merchandises to organizations at wholesale prices.

Additionally, PepsiCo uses public relations through financial assistance and sponsorships, such as in sports events. This section of the marketing mix signifies

36 that advertisements are the main element of PepsiCo’s ability to communicate with target customers and promote its products.

3.2.4 PepsiCo Place and Distribution

PepsiCo uses a global network for distributing its products to consumers. Sites for supply and sale are considered in this section of the marketing mix. PepsiCo’s places for distribution are as follows:

1. Retailers

2. Online merchandisers

Most PepsiCo products are accessible at retailers, such as grocery stores, supermarket, and convenience stores. Though, customers can access PepsiCo- licensed merchandise like tumblers and t-shirts through retailers and their websites.

Based on this section of the marketing mix, the company’s places for distributing its products are mostly non-online retailers.

3.3 PepsiCo SWOT Analysis

3.3.1 PepsiCo Strengths

The main strength of the company lies in the capability of its global branding.

PepsiCo has been labelled as the company of the youth because of its ability to direct significant advertisements. Forbes has listed it as one of the top 30 most influential brands in the world and the company has also been arising on this chart. Currently,

PepsiCo holds 22 products and brands that span the food and beverages areas, and

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PepsiCo’s overall net worth marks it the second largest beverage brand in the world.16

These 22 brands include:

1. Sparkling Brands: Pepsi, Diet Pepsi, Pepsi Max, Mountain Dew, Diet

Mountain Dew, 7 Up, Mirinda.

2. Food Brands: Lay’s, Quaker, Walkers, Fritos, Doritos, Ruffles, Cheetos,

Tostitos.

3. Still Brands: Aquafina, Tropicana, Gatorade, Brisk, Lipton, Starbucks RTD

Beverage.

3.3.1.1 Brand Recognition and Reputation

Because of its irresistible attendance in the international market, PepsiCo can be easily recognized by almost every consumer in the market. According to

Interbrand and Forbes, the Pepsi brand is the 22nd and 30th most valuable brand in the world, worth US$20.491 billion and US$18.2 billion, respectively. Forbes also recognised Frito-Lay as the 40th most valuable brand in the world, worth US$13.6 billion. Excluding Coca-Cola and Sprite, no other non-alcoholic beverage brand likewise PepsiCo has been recognized as being one of the top 100 most valuable brands in the world.17

According to IRI data, which measured the most popular U.S. snack brands in the first half of 2017, 8 of the 10 most popular snack brands were owned by PepsiCo.

16 https://strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html 17 https://www.marketingtutor.net/pepsico-swot-analysis/

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Ranking Brand Owner

1. Lay's owned by PepsiCo

2. Doritos owned by PepsiCo

3. Cheetos owned by PepsiCo

4. Ruffles owned by PepsiCo

5. Pringles

6. Tostitos owned by PepsiCo

7. Wavy Lays owned by PepsiCo

8. Fritos owned by PepsiCo

9. Tostitos Scoops owned by PepsiCo

10. Snyder's of Hanover

Source: Bakery and Snacks

PepsiCo retails its products in more than 200 countries; therefore, consumers are

aware of PepsiCo’s brands all over the world. In addition to that, owning and selling

popular brands helps PepsiCo to cross-sell its other brands or introduce new products

to the market much more easily.

3.3.1.2 Sports Marketing

PepsiCo has been effective in branding itself together with major sports events such

as Football, Basketball, etc. It remains to fund multiple of the biggest teams.

Furthermore, PepsiCo energetically uses sports celebrities as brand ambassadors.

This is one of the major causes why it has been able to stay significant in the market

without having to differentiate its product range. In countries such as India cricket is

closely associated with the Pepsi brand.

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3.3.2 PepsiCo Weaknesses

3.3.2.1 Health Conscious Consumers

A significant share of the revenue of PepsiCo is reliant on its fizzy beverages and chips. Nevertheless, these are products that are not essentially healthy and over consumption of such products can be the reason of health problems. And since the current market is becoming visibly aware of the health factor in their foods, the selling of such products has dropped. The continuous reliance on a limited product to make large amount of the revenue is one of the chief weaknesses of the product.

3.3.2.2 Failed Products

PepsiCo has created many products that have hurt the brand image. Differences of the original Pepsi drink such as Pepsi Gold, Pepsi Blue, and Crystal Pepsi have all been considered disasters. The brand has started many such actions that have resulted in loss of revenue.

3.3.2.3 Limited Business Portfolio

Although the brand has fared quite good in terms of the market it serves, its limited business ability within the food and beverages scope could be fairly damaging in the long run. Particularly since its certain products are losing market value due to various reasons.

3.3.2.4 Single Focus on Food Industry

Product variation is the essential desire of the hour for the company and this desire to be conducted outside the food industry. If PepsiCo continues to work solely within

40 the food industry it risks losing a lot of revenue to competitor brands that produce healthy products.

3.3.3 PepsiCo Opportunities

3.3.3.1 Product Diversification

PepsiCo has a total of 22 brands under it, aiding numerous products for example sodas, beverages, chips, fruit, energy drinks, etc. Nevertheless, all these 22 brands are concentrated within a singular industry. Many a times its subsidiary brands are competing against each other. If PepsiCo was to diversify its products into additional markets such as clothing, sports equipment, etc., it will be competent to accomplish a greatly better state of market steadiness than its condition at present. It can additionally choose to diversify itself within the food and beverages market as well by introducing healthier products.

3.3.3.2 Addition of Flavours

PepsiCo has continuously attempted releasing new tastes to bring in more customers; nevertheless, many of these flavours have not favoured their endeavours. They could possibly try fruit-based flavours in their carbonated drinks section so as to attract more consumers.

3.3.3.3 Alliances and Partnerships

The brand has previously entered into a corporation with Nestle and Starbucks whereby a revenue share will allow PepsiCo to sell its products in outlets. If the brand continues such business partnerships with other brands across the world, the results may end up being highly favourable in the long run.

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3.3.4 PepsiCo Threats

3.3.4.1 Economic Downturn

The present global market is showing strong signs of recession, and consequently people are less expected to purchase luxurious products such as carbonated drinks, chips, etc. If a complete downturn was to truly hit the market, then the brand would suffer insuperable losses. And since its products are focused on a single market, they are continuously more probable to be hit by recession than ones who are in different markets.

3.3.4.2 Government Laws and Regulations

Since the product choice of PepsiCo is not closely a health conscious one, many laws and regulations may force the brand to modify the composition of the products. In addition to this, the tax factor in numerous countries due to which the price of their products may be thought higher. Also, the consequence of such a scenario is the fact that their products are less likely to be purchased in a recession scenario.

3.3.4.3 Firm Competition

The food and beverages markets are extremely competitive ones, and its main market rival, Coca Cola is a power to be reckoned with. Both the brands have matching product portfolios and likewise apply similar marketing strategies & tactics.

Consequently, PepsiCo is needed to spend a massive amount in advertising therefore their rivals do not pass them.

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3.4 Sales Promotion strategies of PepsiCo

Since the beginning for 2000s, PepsiCo started to work on creating customer loyalty in order to beat their competitor Coca Cola. It started to create particular sales promotion campaigns with a specific frequency. The frequency is dependent on the brand strategy and the intensity of the competition. PepsiCo launched many non-stop sales promotion campaigns.

Nowadays, PepsiCo started to rely on sales promotion, not only to introduce new brands to customers, but to convince them with the idea of buying the product and this product is the best and most suitable for them, also to reinforce the repeated purchases done by consumers.

One of the main reasons of the PepsiCo’ success is because of the effective marketing communication strategies. And using an integrated approach will lead to an acceleration in the implementation effectiveness. Each division and element of the communication affects the customers in different ways. Therefore, the integrated implementation can multiply the effectiveness of the process, thus, achieving the company’s goals and lowering the level of sales costs.

According to George and Michael Belch (2018), the authors of Advertising and

Promotion: An Integrated Marketing Communications Perspective, they stated that

PepsiCo gained popularity during the great depression when there was an introduction of the 10-ounce bottle. The sales of the brand were fairly slow at the price of 10 cents. However, they have increased when the price was lowered to 5 cents which is 50%. The company used radio advertisement that improved more sales. The campaign thrived and the project accomplished double profits. The company’s goal of promoting its brands is to craft the image of its products and to increase the sales of goods and revenues.

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PepsiCo has numerous techniques that it embraces to achieve the numerous drives in the promotion. To illustration, there are directors at the selling shops who present the soft drinks to the potential customers. The bottles are usually stocked in visible places, and the logos of the filled bottles are situated facing outside. PepsiCo has coolers that are used to present the products at the selling stores, gas station, highway stages, and bus stops. The Pepsi’s suppliers supply the goods at an affordable price to the outlets. The usage of bright colours in the freezers/coolers has assisted Pepsi to fascinate more customers and attract more to buy the product.18

PepsiCo’s main target group was always the young generation and it was the way to maintain its brand. Throughout the years, PepsiCo was trying to influence the young generations to favour the brand through using ambassadors who are the top celebrities whether in sports like athletes or music like singers. In addition to that,

PepsiCo was not hiring an ambassador to represent the brand to the all the countries, but it was hiring a celebrity for each society, country, or continent.19

In the United States of America, PepsiCo have had many ambassadors. For instance, in the early 1990s, Ray Charles was the ambassador of Pepsi Diet’s campaign called

"You Got the Right One, Baby," which was also known as "Uh-huh."

18 BELCH, George E., and Michael A. BELCH. Advertising and Promotion: An Integrated Marketing Communications Perspective. p. 45. Cengage, 2018. 19 https://www.marketingweek.com/pepsi-unveils-global-football-super-squad-brand-ambassador- lineup/

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20 In 2001, Britney Spears, Pink, Beyoncé Knowles, and Enrique Iglesias were Pepsi’s ambassadors for the Football World Cup commercial and this ad is significantly remarkable because it was featuring the cover of the song "We Will Rock You" by Queen arranged in a Roman gladiator arena.

20 https://www.youtube.com/watch?v=N4OSdKQFbzQ

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21

In 2004, David Beckham, Jennifer Lopez, and Beyoncé all starred in the famous

Pepsi ad featuring the stars are as assassin-like characters which is inspired from the well-known movie Kill Bill that was released recently back then.

22 In 2005, Pepsi signed Christina Aguilera which was the ex-ambassador of Coca Cola

“Pepsi’s main competitor.”

21 https://pitchfork.com/thepitch/1431-how-pepsi-used-pop-music-to-build-an-empire/ 22 https://www.gettyimages.com/detail/news-photo/beyonce-knowles-david-beckham-and-jennifer- lopez-as-they-news-photo/52232688

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23

In 2012, Pepsi signed Nicki Minaj for a promotional deal which was later called

“Moment 4 Life.”

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23 https://www.theplace2.ru/photos/Christina-Aguilera-md49/pic-60581.html 24 https://www.youtube.com/watch?v=QmE1Br83hfA

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In Europe it is different than in the US, because part of Pepsi’s strategy is to be close to the young generations in all the world and that will not happen unless you represent a celebrity from their culture or society.

Since 2001, Sakis Rouvas, the Greek actor and artist, has become the ambassador for

Pepsi’s campaigns in the Greek and Balkan regions.

Pepsi has signed Pavel Nedved, the Czech football star, to be the ambassador for both Czech Republic and Italy where he played for Juventus.

25 26

25 https://colnect.com/fy/bottlecaps/bottlecap/12001-Pepsi_Korea-Japan_Nedved-Pepsico_Co- Fenesuela 26 https://www.fanpop.com/clubs/pavel-nedved/images/28889701/title/pavel-nedved-photo

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27

Since the summer of 2009, Inna, Romanian singer, has become the Pepsi ambassador in Romania, Moldova, Serbia, Bulgaria, and Hungary. She promoted Pepsi through the TV and internet commercials in Romania, Bulgaria, and Moldova. Additionally, some commercials and ads were translated from Romanian into Hungarian.

27 https://www.youtube.com/watch?v=u4xBsTwJjFU

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28 http://www.romania-rumania.info/romania/romanian-culture/pepsi-inna-image-promotional- campaign-romania/

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In Latin America, Pepsi signed Colombian artists Shakira29, Juan Esteban Aristizábal

Vásquez30; Puerto Rican Daddy Yankee31, and Dominican Sammy Sosa32 to promote their brands in the continent.

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29 https://en.wikipedia.org/wiki/Shakira#/media/File:Shakira.JPG 30 https://en.wikipedia.org/wiki/Juanes 31 https://en.wikipedia.org/wiki/Daddy_Yankee#/media/File:Daddy_Yankee_2015.png 32 https://en.wikipedia.org/wiki/Sammy_Sosa 33 https://www.youtube.com/watch?v=bT7lTXkJYdA

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34 As for Asia, we can find that Pepsi has sponsored the Pakistani Cricket team and many Pakistani celebrities whether in music or filmmaking.

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In India, Pepsi also sponsored the Indian National Cricket team. In addition to that,

Pepsi has signed many Bollywood celebrities that are not only famous in India but in the whole world, such as Amitabh Bachchan, Shahrukh Khan, Kajol, Rani

34 https://www.youtube.com/watch?v=3MfdmhiTaDI 35 https://www.brandsynario.com/pepsi-kicks-off-icc-t20-world-cup-with-abhinahitohkabhinahi/

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Mukherjee, Saif Ali Khan, and many more. Also, Pepsi has signed model and ex-

Miss World Aishwariya Rai to advertise for the product.

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37

36 https://mavericktimes.in/news/tag/indian-cricket-team/ 37 https://www.youtube.com/watch?v=4BMMqN-9GiU

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38

Even though that Australians can speak English and they can promote British or

American celebrities, but the trend has become to have local ambassadors and celebrities promoting for the brand, such as Jennifer Hawkins “Miss Universe 2004,” the Aussie footballer Harry Kewell39, and Mark Anthony Philippoussis.

In addition to that, there were and several others including New Zealander Sonny

Bill Williams40, the New Zealand professional rugby league footballer.

38 https://i.pinimg.com/originals/cc/63/45/cc63459ab0018c7e1bec6d7c06af82e0.jpg 39 https://en.wikipedia.org/wiki/Harry_Kewell#/media/File:HarryKewell.jpg 40https://en.wikipedia.org/wiki/Sonny_Bill_Williams#/media/File:Sonny_Bill_Williams_August_201 4_.jpg

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41 https://www.couriermail.com.au/news/image-gallery/1fe6dcfa011f03ebb78b703b19745851 42 https://www.perthnow.com.au/news/wa/pictures-sexy-jennifer-hawkins-ng- 108e1267bd09aecfc6b53e86c248071b

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PepsiCo has used numerous marketing strategies to influence its consumers. Initially, the mass marketing approach was a technique made to influence the entire market.

Then, the segmentation and division strategy were methods implemented to place a specific product in a certain place where consumers embraced parallel desires.

Moreover, PepsiCo constructs distinctive sales relying on the different climatic circumstances. Areas experiencing winter have a lower consumption of soft drinks than the regions facing hot temperature and summer. Finally, the company has been executing a special marketing strategy even though it is targeting areas which can generate extra revenues than others. PepsiCo nevertheless sustains its sales and promotion practises to the less consuming marketplace because the company focuses mostly on marketing in the high-end regions where the consumers there favour these drinks.

3.5 Sales Promotion Strategies Towards the Consumer

One of the factors that distinguishes PepsiCo is that the company has diverse products and the majority of these products are considered one of the best compared to their competitors. For illustration, PepsiCo produces soft and non-alcoholic drinks, snacks & chips, energy drinks, cereals, sports nutrition, side dishes, bottled water, and natural juices. Most of these products and brands are retailed and placed in supermarkets, groceries, and retailers. But one of the ways that made it easier for the brand to be sold is the usage of the vending machines. It is an easy and simple way to make the brand reach the consumer because the vending machine is a self-service way. So, the consumer can simply purchase the product. Therefore, the company

56 started to place vending machines around schools, university, metro stations, yards, workplaces, stadiums, etc. And that increased the sale of the brands in a quicker and easier way.

Additionally, the company developed online retailer, so it can be ease up the process of purchasing the product. It is simpler for the company to accomplish promotions and prices using the online platform. The consumers can approach licensed merchandise like t-shirts through the website and the retailers (Robert Konikow,

2000).

According to Seana Smith (2014), the author at Fox Business, she states that PepsiCo supports brand loyalty programs by the usage of celebrities to promote PepsiCo’s brands through pubic event, TV, radio, social media, and billboards.

She adds that there are other tools the company uses to advertise its brands, such as posters, banners, painting walls and stickers. In addition to that, the company claims that their brands’ prices are competitive compared to other competitors and that can be seen by providing the brands to the consumers at wholesale prices.43

PepsiCo presents gifts, such as openers, cash free soft drinks, and additional products to its customers. There are point purchase shows and demonstrations, which PepsiCo arranged for its brands’ promotional strategies.

Advertising and public relation are organisational instruments used by PepsiCo to generate preference and effect to the company’s brands. The company arranges events like musical and sports events.

The change aids PepsiCo to seizure the publicity. It also sponsors music and dance events domestically and globally. These tools enable PepsiCo to enhance its sale in addition to constructing the brand’s image and persuading certain markets.

43 https://www.foxbusiness.com/features/pepsico-pays-big-bucks-for-powerful-brand-promotions

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In 2019, Pepsi made cash giveaway until the Christmas holiday which was considered the company’s campaign for that holiday and trying to promote new flavours like Wild Cherry Pepsi and Pepsi Vanilla. The cash giveaway is working when fans try their luck buying Pepsi Mini can 10 and 15 packs, then they will conduct a scratch-off game and scan the QR codes provided and they will have potential to win a cash prize that could reach to up to $25,000 that can be kept for themselves, gifted to a friend, or donated to a charity.44

44 https://www.pepcoin.com/home

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45 The gifts can end up in the pockets of the family, the friends, or make their way to

Pepsi's longstanding charitable partner - The United Way. It is a nationwide non- profit organisation that fights for financial stability, education and health for people across the US.

The gift promotion will be initiated at select NHL and NFL matches, where attendees will be offered the opportunity to give the gift of cash with 'Gift It Forward Cash

Cam.'

45 https://www.prnewswire.com/news-releases/pepsi-is-giving-away-cash-this-holiday-season-but- doesnt-want-you-to-keep-it-300952491.html

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Talking about the 'Gift it Forward with Pepsi' campaign, Todd Kaplan, VP of

Marketing, Pepsi stated that, “Although the holidays have constantly been celebrated as the period of giving, finding the right gift to offer has always been a fundamental stress for many people. Our ‘Gift it Forward with Pepsi’ program is all about changing the usual ways that people go about holiday gift-giving by allowing people to unashamedly give the gift of cash, adding a new dynamic to the overall holiday experience.

“Therefore, whether you gift your winnings to a family member, a friend, or someone else, Pepsi wants to make it simpler for you to get into the gifting spirit this holiday period,” he added.46

As a result of this campaign, Wild Cherry Pepsi and Pepsi Vanilla were introduced widely to the consumers and they were buying them in packs which increase the sales of the new flavours.

In addition to that, Pepsi tried to influence the consumers and connect the idea that

Pepsi brings people together through its campaigns which can be seen in many of its advertisements.

During the same year in Malaysia, Pepsi made a promotion with KFC till the

Christmas holiday that any bucket will be purchased from KFC will be supported with 1.5L Pepsi bottle.47

46 https://www.thedrum.com/news/2019/11/06/pepsi-offers-unique-scratch-cards-where-the-money- won-must-be-gifted 47 https://dinein.kfc.com.my/promotions/holiday-bucket

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48

In February 2020 in the USA, there was another scratch-off game conducted by

PepsiCo to promote Pepsi Zero Sugar and Mountain DEW Zero Sugar.

The promotion was offering cash vouchers ranging from $100 to $1000 and the mission is to find the QR code placed on the bottles and check it directly from the phones.

48 https://www.syioknya.com/DealDetail/8550-kfc-holiday-bucket

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49

Additionally, PepsiCo find that the Buy, Scan, and Cash In campaign is working so it has started to introduce them not only in Christmas holidays but out of the season as well. Therefore, this focus on this sales promotion tool made them realize that it could be an opportunity to increase brand loyalty which has happened when PepsiCo launched “Cash Back Loyalty Program with PayPal and Venmo.”

This promotion did not include only Pepsi, but it has included all PepsiCo beverages and Frito-Lay snacks together.50 Therefore, when a consumer buys any product from the company’s products, they will simply need to scan the QR code placed underneath the bottle cap or the snack’s bag with their phones. And each time they win $2, the money automatically gets transferred to the consumers’ accounts with

PayPal or Venmo. The PepsiCo Senior Director of Marketing, Linda Lagos, she says that the company’s mission is always to put smiles on consumers’ faces with every

49 https://www.sweepstakesbible.com/giveaways/cashinwithzerocom 50 https://www.pymnts.com/news/loyalty-and-rewards-news/2019/pepsico-launches-first-cash-back- loyalty-program/

62 bite and sip. She also adds that PepsiCo will give them the chance to win a reward by enjoying their preferred beverage and snack combinations.51

In 2018, Pepsi launched a promotion campaign including the usage of codes and the campaign was called “Drink Pepsi. Get Stuff.”

The idea of the campaign is to promote many consumers to buy more Pepsi drinks and in return the codes that are placed underneath the bottle’s cap can help the winners to gain points which can be used on the website to purchase Pepsi merchandises like t-shirts, caps, Pepsi packs, tickets for musical events, and tickets for NFL Super Bowl games.

51 https://www.pepsico.com/news/press-release/buy-scan-cash-in-pepsico-launches-cash-back-loyalty- program-with-paypal-and-venm09122019

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52

PepsiCo kept using giveaway tool as one of the crucial tools that it has started to see results from it whether through the sales’ numbers or the brand loyalty rates.

Therefore, PepsiCo started to apply this promotional tool not only on Pepsi but on all the products no matter they are beverages or snacks.

52 http://www.ericlo.net/work/pepsi/

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In 2017, Doritos and Mountain Dew hosted Augmented Reality “AR” games with

Xbox. PepsiCo has had hundreds of the Xbox One X to give away and the players need to do is to download the application added on the Xbox website and participate in AR games.

53

In addition to that, it was not the first time that Dew and Doritos create such events specially for gamers54 and that can be found in the words of Chauncey Hamlett, the

Senior Marketing Director at Mountain Dew.

Also, he adds “Xbox fans are constantly looking for innovation and special gaming experiences. The thrilling Drop Zone experience by Dew and Doritos is a totally

53 https://www.campaignlive.co.uk/article/mountain-dew-doritos-host-ar-events-xbox- giveaways/1446685 54 a person who plays video games or participates in role-playing games

65 irreplaceable, exciting way for fans to get their hands on the most powerful gaming console today.”

In addition to that, in Canada, Pepsi created giveaways that can make the consumers to win prizes worth $10,000 that can include travelling opportunities, winning devices, etc.

55

In 2003, Pepsi ran a different type of promotion campaign, it was a contest called

“Play for a Billion.” This contest was announced by the soft drink company Pepsi

Cola and Pepsi printed one billion unique codes which can be redeemed by the consumers via the post mail or the Pepsi website.

55 https://snipon.com/sweeps-giveaways/pepsi-stuff-giveaway-enter-to-win-prizes-worth-10000/

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PepsiCo found out that using giveaways and contests were significantly effective due to the results they have driven from using these sales promotion tools.

PepsiCo did not only implement these tools on the beverage brands only but on the snack brands as well.

That helped the company not only to promote them individually but also, PepsiCo used both brands to promote each other by combining a beverage and snack brands together in one combo with its own promotion. For instance, Lay’s and Pepsi,

Doritos and Mountain Dew, Cheetos and Pepsi Diet, Ruffles and Lipton, and Doritos and Aquafina.

Although PepsiCo generated significant and effective results from the usage these sales promotion, it has used various sales promotion tools to accelerate the effect on the consumers.

PepsiCo has been always a bold and a challenging company and that can be seen throughout the brands’ portfolio and that gives the company the motive to always create something new whether a new product, flavour, or even a brand.

The problem has never been the dare or creation of something new, but the challenge was introducing it to the customers and knowing their feedbacks.

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Sampling is one of the effective ways that PepsiCo used in order to feel the results practically in the street right from the consumers and that was the key success factor in creating new flavours of an existing product or even a new product.

In 2017, Pepsi has embarked on a sampling tour around numerous universities in the

United Kingdom to promote for the new brand Pepsi Max Ginger.

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The photo booth created a part of a bigger marketing campaign for the new brand

Pepsi Max Ginger which aspires to establish awareness and influence of the new product.

In the same year, PepsiCo came up with a new product called Pepsi Max and wanted to introduce in some of the markets that did not experience this new product yet.

PepsiCo arranged a sampling campaign in Belgium and The Netherlands in order to give the opportunity to the customers to engage and try the product.

56 https://www.campaignlive.co.uk/article/pepsi-stages-photo-based-sampling-activity/1439173

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PepsiCo’s main goal from this campaign was not only making her loyal and current consumers to try the new product, but also to convert the non-users into users and customers.57

57 https://www.youtube.com/watch?v=r_OVYNPIQig

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58

58 https://www.harderbetterstronger.com/portfolio/pepsi-max-sampling/

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In the Middle East PepsiCo has a significant existence especially that this big market does not consume alcoholic drinks unlike Europe or the Americans, therefore, their focus is mostly on the non-alcoholic companies such as PepsiCo.

In 2020, Pepsi has introduced new product in the Middle East, especially Saudi

Arabia. This product is Pepsi Black and what distinguishes this product that it has no calories and comes with 3 flavors and they are Original Cola, Lime and Raspberry.

Pepsi created multiple events at AlKhobar59 city and distributed around 7000 sampled units and conducted social media competitions around the participants in the sampling events as well.60

59 Al-Khobar is a Saudi Arabian city on the Arabian Gulf. 60 https://www.youtube.com/watch?v=qKv8nN0nU5U

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In 2016, Mountain Dew made significantly massive sampling campaigns in

Colombia that took place in different cities and the campaign lasted exactly 26 days and they gave samples to 61,200 consumers.

The campaign was called “Do the Dew”61 and they were filming and the campaign and created a video to publish it on its social media platforms.

61 https://www.youtube.com/watch?v=BAr0Jx4DaAI

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Regarding the snack brands’ sampling, there were multiple campaigns especially for the globally well-known snack brand Lay’s. Lay’s introduced a new product called

Lay’s Forno that has lower fats that the classic Lay’s and that is in order to expand its targeted groups because previously many consumers were not buying Lay’s products because it is unhealthy, fried, and contains a lot of calories and fats. Through Lay’s

Forno, Lay’s now can reach many new consumers.

Lay’s created sampling camping in the Middle East to introduce the new product to the consumers, engage with them and also give them the opportunity to try the new product with its different flavors which are Labneh & mint, Original Cheese, Black

Pepper, and Lemon & Black Pepper. Additionally, the campaign was set to take place around the gyms and fitness centers to introduce it to the people who tried to avoid the classic Lay’s and to give them the chance to try the healthier and less-fats option.

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62 https://directmarketingsa.com/Brands-in-Action/Creative-Sampling/Lays#Gallery[Lays]/10/

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4 The effects of PepsiCo Inc. sales promotion

campaigns

The objective of this section is to state the effects and the impacts of sales promotion campaigns on PepsiCo Inc. as a company as well as the products and the brands that the company delivers.

In this section, there will be a demonstration of the impacts whether they were positive or negative to understand what are the best ways that can be used in order to create significantly effective sales promotion campaign.

Also, there will be a demonstration of what could be avoided. Therefore, there would be a recommendation at the end that could be used by other FMCG companies in case they are looking for sales promotion tools to implement.

Throughout this section we will be trying to evaluate the campaigns used by PepsiCo and how it did affect the customers’ decision-making in whether to purchase the brand or not.

This evaluation will not be conducted through one method only, but through multiple methods because the goal is to reach a concluding and comprehensive result that can be easily stated and understood.

There would be a testing for the hypotheses for this research that will be either confirmed or disproved, the hypotheses are:

Hypothesis 1: Sales promotion does influence the decision-making of the consumers to buy the product of the company.

Hypothesis 2: Sales promotion does generate a higher impact on the consumers’ decision-making to conduct repeated purchases of the company’s product.

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Case studies and questionnaires will be used and that will be supported with numbers such as the changes of the market share and sale of goods by PepsiCo to support whether the campaigns and the tools that were used are effective or not effective.

In the last decade, PepsiCo has become a strong competitor to Coca Cola after it was being the main competitor in the market but somehow PepsiCo has beaten Coca Cola and that triggered the Forbes63 to conduct an important research to state the points that gave the advantage to PepsiCo.

Panos Mourdoukoutas (2019), the author at the Forbes, wrote an article under the name “Pepsi beats Coke, Again.” There were surveys and questionnaires conducted to know what influence the consumer to purchase the brand and prefer it over the competitor. One of the questions that Mourdoukoutas (2019) asked to the participants was “What encourages them the most to buy Pepsi?”

What encourages consumers the most to buy Pepsi?

Advertising Sales Promotion Personal Selling Recommendation

From that question, we can see that sales promotion campaigns have the significance in terms of purchasing the brand. 42% of the participants selected sales promotions

63 https://www.forbes.com/sites/panosmourdoukoutas/2019/07/13/pepsi-beats-coke- again/#71a19b602bad

79 campaigns which states that sales promotion campaigns affected the decision-making of 40% of the participants to prefer a brand over another.

Around 30% of participants chose advertising and their decision-making was affected by that. 16% of the participants chose recommendation and product referral that can affect their decision-making to purchase the brand. And 12% of participants’ decision-making influenced by personal selling.

The survey that Mourdoukoutas (2019) conducted has had another question which was “Which aspect affects you in order to choose which brand to purchase?”

Which aspect affects you in order to choose which brand to purchase?

13%

39% 18%

30%

Quality Brand Name Offered Promotion Emotional Attachment

In this question, the participants were asked to select the feature/aspect that influence them the most and the answers came as follow:

▪ 39% of the participants are influenced by the quality of the brand.

▪ 30% of the participants are influenced by the brand’s name.

▪ 18% of the participants are influenced by the offered promotion.

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▪ And 13% of the participants chose emotional attachment as an influence to

purchase the brand.

The motive for selecting a soft drink as a product is simple, soft drink characterizes

PepsiCo’s and its competitors’ business profits. According to the outcomes from the survey - quality, brand name and offered promotion account the most ifluential preferences when choosing which soft drink brand to buy.

Regarding the sales promotion tools, he has asked a question to determine which sales promotion tool is mostly preferred by the consumers and which one influence them the most, the question was “Which PepsiCo’s sales promotion tool would influence you the most to purchase PepsiCo?” and Mourdoukoutas provided multiple choices for the participants to choose from.

Which tool influences the consumer the most?

Discounts Bonus pack Sampling Coupons Contest Events

This question is vital in order to determine which tool will affect the consumer the most especially their decision-making to purchase PepsiCo brand and prefer over another one.

▪ 38% of the participants found that discounts (i.e. 15% off) influence their

decision making to buy PepsiCo brand.

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▪ 24% of the participants were influenced by bonus packs (such as buy two get

one for free).

▪ 21% of the participants found that trying samples and free trials influence

them to purchase PepsiCo especially if it is a new brand.

▪ 13% of the participants were influenced by coupons and the points that they

can get by purchasing the brand,

▪ 8% of the participants were influenced by the events that PepsiCo makes.

▪ And only 3% of the participants were influenced by the contests the PepsiCo

makes.

Mourdoukoutas through his article “Pepsi beats Coke, again64” was wondering why

Pepsi is beating Coke and that made him ask 2 questions to the participants, the first one “If Pepsi is offered at a grocery store with a discounted price, would you buy it over Coca Cola at its original price?”

Yes, because they are the same and it is cheaper in this case. No, I would buy Coke and price does not matter None of them

64 https://www.forbes.com/sites/panosmourdoukoutas/2019/07/13/pepsi-beats-coke- again/#3fa1c77c2bad

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When the question was asked the answers of the participants were as follow:

▪ 73% of the participants said “Yes, they would buy Pepsi because the price

matters and the two brands almost the same.”

▪ 20% of the participants said “No, price does not matter, and they are loyal to

Coca Cola.”

▪ 7% of the participants will not buy any of them, they would buy something

else.

The second question that Mourdoukoutas asked was to the participants who said

“Yes, I would buy Pepsi because the price matters and both brands are almost identical” and his question is “Would you repeat purchasing Pepsi even without a discount?”

Sales

Yes, I would Maybe No, I woud look for the cheapest option

The answers were as follow:

▪ 44% of the participants said “Yes, they would repeat purchasing Pepsi again

even without a discount.”

▪ 39% of the participants said “Maybe.”

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▪ And 17% of the participants said “No, they would not purchase it and they

will look for the discounted ones.”

In 2019, PepsiCo made sales promotion campaign for Pepsi Max which I have referred to previously and it was giving samples and free trials so they can help to introduce the new brand to the people.

As a result, the product shot up and the demand for it has increased and it has been introduced to the market.

According to the PepsiCo’s financial statement for 201965, Pepsi Max skyrocketed with a 71.7% rise in volume and a $120m increase in sales.

In addition to that, PepsiCo has had a problem with its rival “Coca Cola” that

PepsiCo has a lower loyalty rate and market share for its products.

According to Glocalities Global Market Insights Programme66 (2016), Pepsi had loyalty rate with 19% compared to Coca Cola that had loyalty rate with 59% and market share for Pepsi was 20% and for Coca Cola was 51%.

PepsiCo tried to improve loyalty rewards plans and increase the volume of sales promotion campaigns for the new brands such as Pepsi Max in order increase the flow of the brands in the market to start to balance the market share parameters and to increase brand loyalty for Pepsi.

Sales promotion campaigns took place in many countries in order to introduce a set of new brands such as Pepsi Max and Flavoured Pepsi and it tried to influence the consumers through firstly samples to try the new brands and secondly through the

65 https://www.pepsico.com/docs/album/annual-reports/pepsico-inc-2019-annual- report.pdf?sfvrsn=ea470b5_2 66 https://glocalities.com

84 price off and bonus packs that help the consumers to purchase the brands in either

10% off for example or to get one for free for purchasing two for example.

We can see that Pepsi Max volume has increased by around 71% and $120m sales revenue just from the European market.

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5 Findings and Recommendations

The evaluation goal was to come out with a result whether sales promotion campaigns are effective and whether they should be recommended or not.

In addition to that, the hypotheses should be tested to decide whether to confirm them or not which is the main aim of the research.

To prepare for this section, I have used case studies conducted by the Forbes and

Glocalities Global Market Insights Programme. Also, I have used PepsiCo’s financial statements for previous years to see the effect of sales promotion campaigns on their sales revenue.

In the case study provided by the Forbes, there were survey conducted by Panos

Mourdoukoutas and throughout this survey there are many questions and data that are provided to support the goal of the hypotheses and the research. I have used this data and displayed them pie charts and used the survey results and turned it into more comprehensive numbers and date.

In the first pie chart, there is a question for participants to select what influences them the most to purchase and buy Pepsi brand and the result was that 42% of the participants selected sales promotions campaigns which states that sales promotion campaigns affected the decision-making of 40% of the participants to prefer a brand over another. Around 30% of participants chose advertising and their decision- making was affected by that. 16% of the participants chose recommendation and product referral that can affect their decision-making to purchase the brand. And

12% of participants’ decision-making influenced by personal selling.

As a result, consumers are really influenced by the sales promotion campaigns that

PepsiCo has conducted.

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I the second pie chart, the question was which aspect does affect the consumer in order to choose which brand to purchase and they had to select from the answers and their response were as follow: 39% of the participants are influenced by the quality of the brand. 30% of the participants are influenced by the brand’s name. 18% of the participants are influenced by the offered promotion. And 13% of the participants chose emotional attachment as an influence to purchase the brand.

As a result, the majority gave a priority for quality and the name over the rest of the options.

In the third pie chart, the question purpose was to demonstrate and arrange the sales promotion tools based on significance by asking the participants which sales promotion tool does influence them the most and the answers came as follow:

1. Discounts (i.e. 15% off) → 38%

2. Bonus packs (such as buy two get one for free) → 24%

3. Free trial and samples → 21%

4. Giveaway and coupons → 13%

5. Events and contests → 11%

As a result, discounts are the most significant and influential sales promotion tool that has been used to influence the decision-making of Pepsi’s consumers to purchase their goods, moreover, it is recommended to use by FMCG companies seeking sales promotion campaigns. Bonuses come second, samples come third, giveaways come fourth, and the least significant tool is events and contests.

In the fourth pie chart, Mourdoukoutas (2019) asked a critical question which was “If

Pepsi is offered at a grocery store with a discounted price, would you buy it over

Coca Cola at its original price?” the answers were as follow: 73% said YES, 20% said NO, and 7% said they will not buy any of them.

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As a result, discounted price or sales promotion tool can really influence the majority of the consumers to purchase Pepsi over Coca Cola and that confirms Hypothesis 1 which is: Sales promotion does influence the decision-making of the consumers to buy the product of the company.

The fifth pie chart, the question was whether the consumer would repeat purchasing

Pepsi even without a discount or not and the answers were as follow: 44% said Yes,

39% said Maybe, and 17% said No.

As a result, that means that there almost half of them would repeat the purchasing again and 39% are potential that can buy the product again. That means that the

Hypothesis 2 has been tested and confirmed which says: Sales promotion does generate a higher impact on the consumers’ decision-making to conduct repeated purchases of the company’s product.

On the other hand, it was proven that sales promotion campaigns have helped

PepsiCo to introduce a new product which is Pepsi Max which impacted the sales revenue that reached to $120m and increased the volume of it by %71.

Additionally, that has impacted the market share of PepsiCo against its rival Coca

Cola, and eventually, it has enhanced the brand loyalty that used to be one of

PepsiCo’s weakness.

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6 Conclusion

This diploma thesis is devoted to the topic sales promotion as a tool of integrated marketing communications and the main goal of this research was to investigate the sales promotion tools and campaigns of selected FMCG and perhaps to recommend methods to enhance the sales promotion in the company.

The importance of sales promotion in modern marketing has arisen primarily on account of its ability in promoting sales and organising the ground for future growth.

The main aim of sales promotion is to attract perspective customers toward the product and persuade them to buy the product at the point of purchase. At the dealer’s level, the drive is to sell a certain product of a producer. At the consumer’s level the main idea is to assist the consumer to buy more of a product more often and to familiarize new uses for the product. Therefore, it’s a catch-call technique and is used as an effective tool of marketing.

The diploma thesis is divided into two crucial parts: theoretical and practical parts. In the theoretical part, its main aim was to collect the required information and date through cited books, journals, magazines, websites, and online resources. This has helped in structuring the body of research and building up for the next sections like the practical section. On the other hand, the practical section’s mission was to apply the outlines set in the theoretical part and to state and evaluate the sales promotion campaigns and activities used by PepsiCo. In addition to that, it was significantly important to present the case studies, financial statements, and survey’s questions in order to demonstrate and examine the objectives and the hypotheses of the thesis.

In the theoretical part, there was a demonstration of marketing activities and sales promotion tools that companies can use especially FMCG companies. In addition to

89 that, I have stated how sales promotion tools can make the company’s products advance and excel in the market and how it can play a critical role in the buying behavior of the consumers. However, I have discussed the drawbacks that can occur when the companies implement sales promotion activities and how to potentially mitigate them.

In the practical part, there was a representation of the company’s profile and what they are selling and a demonstration of the range of the products they are selling.

Also, there was an illustration of how PepsiCo manages its marketing plans and the sales promotion campaigns and eventually to evaluate the performance, the implementation, and the outcome of these campaigns.

To summarize, the main goal of the thesis was to examine and test the hypotheses to decide whether to confirm or refute it. The hypotheses were:

Hypothesis 1: Sales promotion does influence the decision-making of the consumers to buy the product of the company.

Hypothesis 2: Sales promotion does generate a higher impact on the consumers’ decision-making to conduct repeated purchases of the company’s product.

Hypothesis 1 was totally confirmed as per results, sales promotion played a significant role in the buying behaviour of consumers and the majority of the participants were influenced by the sales promotion campaigns that led them to say

“yes” to purchase the product. The survey results assisted to recognize that when consumers have to choose between nearly identical products offered by different companies, sales promotion does not play the last role in this case and saving some cash, selecting the utmost effective offer can definitely impact the further purchase of the precise brand. PepsiCo products are not an exclusion.

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Hypothesis 2 was also confirmed as per results, the survey has shown that participants are willing to still purchase the product again even though there is not a sales promotion campaign, or a discount provided. Indeed, these results show that sales promotion will not only influence the consumers to favour Pepsi over Coca

Cola but also it can make a loyal consumer that is willing to repeat the purchasing of the brand even though there is not a discount included or any stimulation to influence them to purchase the brands.

To conclude, diverse and new tools of sales promotion can be started instead of focusing only on price cuts and discounts. Sales promotion was mainly initiated as a tool to stimulate the buying behaviour of customers, convert new prospects, motivate upselling and cross-selling, develop brand loyalty, and increase the sales volumes.

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