Situational Analysis
Industry and Company Overview
PepsiCo competes in what is known as the soft drink or carbonated drink industry. This is an industry that has been present and growing since the 19th century. The big names in this industry include
PepsiCo, The Coca-Cola Company, and Dr. Pepper Snapple.
Soft drink consumers typically have a brand that they are loyal to, so these companies have been striving to reach new audiences as a way to increase revenues. Since it is generally known that soft drinks tend to be high in sugar and fat, companies are manufacturing products that are perceived as healthy soft drinks. New ideas include sugar-free drinks, low-calorie drinks, drinks infused with green tea, drinks with added fiber, or drinks with added antioxidants.
A pharmacist named Caleb Bradham invented Pepsi in the 1890s in North Carolina. PepsiCo was incorporated in Delaware in the year 1919, and was later reincorporated in 1986 in North Carolina. The company expanded in the 1960s with the invention of diet Pepsi and Mountain Dew. Also in the 1960s,
PepsiCo merged with Frito-Lay, thus expanding to the snack food industry. (Thomas). The headquarters are currently located in Purchase, New York (Company Profile edition 2). Today PepsiCo has a market share of 31% in the U.S. carbonated drink market. About one-third of PepsiCo’s revenue is brought in by soft drinks; the remaining two-thirds is brought in by its various snack foods (Thomas).
PepsiCo is one of the leading companies in the soft drink and snack food industries. Some if its most popular brands include Gatorade, Cheetos, Doritos, Frito-Lay, Mountain Dew, Rold Gold, 7UP,
SunChips, Tostitos, Tropicana, Aquafina, Quaker, Ruffles, and Sierra Mist (PepsiCo Inc).
Product Review
Pepsi is the most popular item produced by PepsiCo. The soft drink brings in the most revenue of all PepsiCo products. It is one of the leading soft drinks consumed by people in over 200 countries around the world, only after Coca-Cola. Pepsi generates annual revenue of $20 billion (Thomas).
As previously stated, Caleb Bradham invented the drink in 1890s. It was originally called
“Brad’s drink.” Bradham sold the drink from his pharmacy, but after the popularity of the drink started to grow, he moved into a manufacturing warehouse. World War I and the Depression took a toll on the company because of the rations on sugar at the time, but after the war, radio campaigns and lowered prices helped Pepsi regain its popularity in America.
Over the years, Pepsi has used different marketing strategies and slogans to grab the attention of consumers. Some of these include “You’ve got a lot to live, Pepsi’s got a lot to give,” “Have a Pepsi day,” “The choice of a new generation,” and “The joy of cola.” Pepsi has used numerous celebrities in its advertisements. Some of these include Michael Jackson, Britney Spears, Beyonce, David Bowie, Michael
J. Fox, Tina Turner, Cindy Crawford, and Ray Charles.
Pepsi has also made some effective promotional campaigns over the years. A few years back
Pepsi teamed up with Apple and gave away free songs on iTunes. 1 in 3 bottles of Pepsi had a free song under its cap. Pepsi also joined with Yahoo! to give Pepsi drinkers “points” to buy online prizes.
More recently, the Pepsi Refresh Project has given $20 million in grants to people who submitted new ideas of how to make a positive impact locally or globally. Grants have been awarded to organizations that have helped hurricane Katrina victims and to those that were involved in cleaning up the Deep
Horizon oil spill.
Competitive Review and Competitive Advantage
Pepsi competes with many other carbonated soft drinks on the market. Its direct competitors are
The Coca-Cola Company (TCCC) and Dr. Pepper Snapple.
TCCC produces over 400 brands. Over 1.6 billion of its beverages are consumed every day.
Coca-Cola leads in the U.S. carbonated soft drink industry with a market share of 43%. Other popular products from TCCC include Diet Coke, Coke Zero, Sprite, Fanta, Barq’s, Powerade, Full Throttle, and
Monster. This company is striving to make its products healthier and to be more informative about the nutritional facts of its products. TCCC is also environmentally conscious when it comes to packaging its products, for by 2015 they would like to produce lighter containers (Thomas).
The 1970s brought the heated competition between Pepsi and Coca-Cola to what is referred to as the “cola wars.” Blind taste tests were taken all over the country to find out which drink consumers preferred. Pepsi conducted taste tests called the “Pepsi Challenge,” in which Pepsi was found to be the preferred drink; although Coca-Cola still outsells Pepsi all over the world (The Pepsi-Cola Story).
TCCC’s website is colorful and fairly simple to navigate. It gives visitors options to look at the numerous products of the company and see what is new within the company. An impressive feature on the homepage is located at the very bottom; it is a counter that gives the number of how many people have “enjoyed” a TCCC beverage today. The numbers are scrolling up so fast that it’s impossible to keep up with. The number easily reaches 10 digits by 3:00 in the afternoon.
Dr Pepper Snapple was established in 2008, however many of its brands have been around for over 200 years. This company was formed when Cadbury Schweppes merged with the former Dr
Pepper/Seven Up, Snapple Beverage Group, Mott’s and Bebidas Mexico. Dr Pepper Snapple accounts for 15% of the U.S. carbonated soft drink industry. The main brands produced by this company include
Dr Pepper, 7UP, Sunkist, Canada Dry ginger ale, Crush, A&W root beer, and Schweppes ginger ale
(Thomas). Like the TCCC website, Dr Pepper Snapple’s website is organized and colorful. It gives visitors options to look at what’s new in the company, stock information, and a crafty picture list of its popular products that enlarge when the mouse scrolls over it.
An indirect competitor to Pepsi is the energy drink Red Bull. This company represents the world’s leading energy drink brand. It has a U.S. market share of 40% in the energy drink industry. It is consumed in over 160 countries in the world. Red Bull places a very strong emphasis on its marketing and promotional techniques. It sponsors various sporting events and sports teams. Red Bull also produces a magazine titled “Red Bulletin” in which readers learn about developments and happenings in the company. Along with other companies in the soft drink industry, Red Bull is making a push for healthier products for its consumers, such as its Red Bull Sugar Free (Thomas). Red Bull’s website is centered around sports and the teams it sponsors. It features calendars of events, videos of extreme sports, but very little about the actual drink itself.
Pepsi’s website in fresh and colorful. The blue background with bubbles floating along the edges reminds visitors of the bubbly drink itself. The website offers links to watch it’s advertisements, read about the Pepsi Refresh Project, and connect with Pepsi throughout various social media outlets.
Advantages of Pepsi would include its already huge prevalence in society today and the marketing strategies it has used over the years.