INTRODUCTION

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

* Price

* Place

* Promotion

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

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

* Academic paper

* Internet

* Online business magazines

BACKGROUND
Pepsi Co. is a Multinational corporation, which extends over many countries; Pepsi and Frito-Lay merged in 1960, which
named the new company Pepsi Co. Besides, Pepsi Co. has merged with some other companies such as Gatorade, which
became the worlds fifth-largest food and beverage company with 15 brands.
The company operates in a monopolistically competitive market, where its biggest competitor is Coca-Cola. Pepsi brand
name and its strategic message its the cola have already penetrated the world market. In this case the brand name
Pepsi is very effective in differentiating its product from the others. Within the soft drink industry Pepsi is considered
to be a middle class drink and Pepsi offers quality product that provides assurance to the public.
Pepsi is undertaking both advertising and marketing campaigns around the world, its advertising campaign include TV,
magazines, in-stores, outdoors and on the Internet. The marketing campaigns it undertook include lucky draw and
promotions. For example in Singapore there is a promotion done by Pepsi that for every 6-pack of Pepsi you purchase
you can have a turn on the fortune wheel to win prizes such as Pepsi t-shirt, more Pepsi drinks and cash prizes. This is
done when the economy is in recession and Pepsi is trying to boost up its company and product image.
Pepsis target market has usually been the middle-income family, as Pepsi is not as expensive as Coke and not as cheap
as the other brands. Pepsi around the world usually target toward young people early teens to late twenties, however
this is still based on location and in China the target market are usually people from early teen to their late thirties.
Pepsi-Cola has been around for more than a hundred years. It is first produced in 1898 and in the earlier times, Pepsi is
target against African Americans and it is not until later that Pepsi started to target the younger population for all races.
PRODUCT
Pepsi, one of the most famous brands, can be identified easily as it is been on various finest soft drinks available almost
all over the world for over 100 years. The Pepsi logo has become a remarkable feature in United Stated of America
indicating an ice blue background synonymous with Pepsi products. The Pepsi-Cola website points out that at PepsiCola, quality taste and consumer satisfactions are the highest priorities (pepsi.com, 2004).
Kotler (Kotler, 2004, p110) identified the meaning of products is the branded goods and service offers to the target
market. For classic Pepsi-cola, which is the widely sold Pepsi soft drink, price sensitive segment becomes one of the
most important factors for target marketing. Moreover, for the target customers, Kotler (Kolter, 2004, p111) identified
the product elements that attract them as shown below:
Variety

Quality

Features

Brand name

Packaging

Sizes

Add-ons

Warranties

Returns

Using the above methodology, Pepsi World shows how Pepsi is made to introduce the quality and features of classical
cola (pepsi.com, 2004). At the same time, the website indicates that each ingredient of producing Pepsi-Cola must pass
high standard, rigorous quality control tests and strict bottling procedures all over the world. It can be proved that both
the high quality and famous global brand make Pepsi-cola so successful to compete with Coke-cola. Currently, Keiley
mentioned that Pepsi-Cola sales are up in America compared with the Coke-cola, which was particularly disappointing
because the careful balance of pricing and marketing (Kiley, Coke leaves a bad taste on the street, internet, 9/15/2004).
Targeting a suitable marketing is essential for the success and Pepsi-Cola sets lower prices as the key at high quality.
Pepsi-Cola can be a warranty as its famous brand.
It is known that consumers prefer lightweight, recyclable, plastic bottles. In order to meet customers needs and make
them easy-to-use, the packagings of Pepsi-cola had tried many different industries but it always follows Environmental
Support and Recycling of USA. Now, it is reported that the cube as a new innovative 24-can Pepsi multipack is used by
a small test market population to give the company feedback before the introduction (pepsi.com, 2004).
There are also many sizes of bottle to satisfy different kinds of consumers. Smaller bottles are easy for consumers to
carry and larger ones with lower price are suitable for families.
When buying Pepsi-Cola, consumers get chances to take add-ons back home. It is really a good idea to set add-ons
because it is not only advertising the new product among the consumers, but also stimulating customers to get more.
For the package, the symbol of brand is quite clear and obvious. However, the design of bottles is very similar as other
brands of cola. It is not easy for consumer to recognize and be interested in it. The appearance of bottles can improve
(to be) more fashionable or lovely to attract younger consumers and make loyal customers enjoy new style of Pepsi
classical cola. Moreover, in the market, there are always few drink packages designed for particular groups of people,
such as the kids. Kids are quite important consumers in the market. It is believed that it is better to design a package
with some popular cartoon stars for children to choose. For examples, the bottle of Pepsi classical cola can be with the
shape of Nemo or Winney the Pooh. Moreover, the bottles for children could be smaller than the usual size for them to
carry to school. The children can also collect different kinds of cartoon bottles for fun. In this way, it can raise the sales
of classical coke and attracts loyal consumers in a young age.
PRICE
Providing quality products at the lowest possible price has always been one of the main concerns of Pepsi. For example,
in some parts of the country a two-litre bottle of Pepsi cost 99 cents a decade ago and still does today. One of the ways
they have been able to assist this effort is by expanding their use of inexpensive and recyclable plastic bottles. (Pepsi
World, 2004) Another ways is to reduce the cost of the bottles. The soft drink industry sold their drink to customers;
they must have a container to carry. So bottles in the soft drink industry are a very important part of the whole
processes. The company manufactures and sells soft drink relies on Pepsi bottlers. PepsiCo takes over the bottling
operations from its franchisee. It does propose is to shift its franchisee operations from Coca-Cola to Pepsi.
As the bottlers shifted to Pepsi, Coca-Cola had to struggle hard to counter Pepsi's aggressive marketing strategies. They
were getting bottles from neighbouring states incurring heavy expenditure on transportation and storage. What is
more, they had to offer a lot of incentives, like Pepsi, without increasing the price. Coca-Cola is still having an upper
hand with 56 per cent market share. But with the bottling operations shifting over to Pepsi in November 1997 -- which
had forced Coca-Cola to import its bottles from outside till recently Pepsi managed to increase its share to almost 44
per cent from a mere 30 per cent three years ago. (Sandesh, 2000) This takes over the bottling operations not just make
Pepsis competitors to shift up their manufacturing cost on purchase the bottling, but also reduce its own risk on the
bottles inflation and has a steady supply of bottle.
The soft drink industry today is confronted with a bewildering array of price increases. Pepsi expenditures for labour,
ingredients, transportation and more rise continuously. The cost of aluminium alone has increased dramatically since
last year. Across their entire system, however, have been cutting overhead and re-engineering our manufacturing
process in order to keep our prices competitive. It is their policy to limit any price increases to the retail trade to the
lowest possible extent.
Reducing and maintaining the cost is not the only marketing strategic used by Pepsi. Sometimes Pepsi use cutthroat
competition to war with its main competitor Coca-Cola. One of the price war, triggered by Pepsi, follows an earlier
onslaught when both the companies reduced prices by about 20 per cent across the board. Just before the Union
Budget for 2003-04, Pepsi had to slash prices of its 300 ml returnable glass bottles to $0.6 and this price cut to make its
brands more affordable in April 2003. The Pepsi management thinks in a high-consumption market, aggressive price

points devolving from the 300-ml segment will work much better. As a consequence, 200-ml bottles are priced at $0.5.
The new price points are 300 ml at $0.6, and 200 ml at $0.5. According to industry sources, this sector is heavily
dependent on returnable glass bottles and Pepsi's latest price reduction strategy is critical to drive volumes. In the
home-consumption segment too, Coca-Cola took the lead earlier in 2003 by slashing prices of its 1.5-litre and 2-litre PET
bottles. Pepsi yet to follow suit too reduced prices of its 1.5-litre and 2-litre PET bottles, to 1.5 and 2.0 respectively,
against the earlier price of $1.2 and $1.6. So that Pepsi sometimes takes non-profitable turns with the sole aim of
retaining market shares. (PTI, 2003) However this cutthroat competition should not too often war with its main
competitor. The consequence not just affects the Pepsi Co. net profit. Also it affects the normal price market. It will
affect as the customer adapt and get use to the cheaper price. After the price war, price shift back to the normal price.
The customers will change their taste to Coca-Cola more elastically.
PLACE
Pepsi-cola as a famous brand is welcomed almost everywhere in the world and is well supported by millions of people..
Its beverage business contains North America and international. According to the statistics from the Australia Pepsi
website, currently there are more than 400 Pepsi-cola bottlers in the US and more than 600 internationally. The Pepsi cola product is sold approximately about 195 countries and Territories (PepsiCo Inc., 2004). The Pepsi Company
manufactures and sells their products to the company they owned, and the independent bottlers that are franchised
operating facilities throughout the United States and Canada. Meanwhile, the PepsiCo also sell Pepsi-cola through the
cooperation with other partners (PepsiCo Inc., 2004). The Pepsi website states that in 1992, a partnership agreement
was formed by Pepsi-cola with Thomas J. Lipton Co, owner of the number one tea trademark in the US, and a
distribution agreement was also entered with Ocean Spray, the number one non-refrigerated juice trademark in
supermarkets (PepsiCo Inc., 2004). Other partners such as Pizza Hut, KFC and Hard Rock CAF have partner relationship
with Pepsi -cola. They receive support from PepsiCo and sell the product. The incentive for the PepsiCo is to extend
their brand reputation in the whole world through those businesses, resulted in great sales. Normally, consumers can
purchase Pepsi-cola from supermarkets, restaurant, KFC and Pizza Hut, which have partnership with Pepsi. Pepsi-cola
brand is already been brought into the mind of the consumers as an invisible image. As the good reputation and image
was created, Pepsi-cola almost exist anywhere and can be easily purchased by customers.
In contrast, Pepsi-cola still need improvement for their market strategy in order to have an increase in their product
sales. For instance, localization of Pepsi-cola in the limited area would limit the product sales volume and lower its
profit. Pepsi-cola may try to establish better relationships with other fast food businesses such as MacDonald. Pepsi cola could possibly sign the contract with MacDonald competing with their competitor. Due to the same reputation as
KFC, the permission of sale for Pepsi-cola in the MacDonald would be helpful to raise its reputation and profit. The more
places the Pepsi-cola can be sold, the more reputation and revenue the company would have.
PROMOTION
Pepsi-cola has an extensive integrated marketing communication by coordinating promotional efforts. It uses
advertising, public relations, personal selling and sales promotion to continuously reinforce consumers attitudes and
perception of the product.
In advertising strategies, Pepsi-cola attracts consumers attention by the new campaign Pepsi, It is the cola,
associating with the food-friendly strategy (PepsiCo. Inc., 2004). In the new released television commercial, it spreads
the food-friendly message strategy by identifying customers benefit consumes Pepsi with popular American food like
hot dogs and tacos is an enjoyment, fun and satisfaction. This commercial released during the Super Bowl XXXVIII as an
in-game advertisement. Pepsi-cola also used outdoor advertising in billboards and at bus stops all over America. The
campaign persuades and reminds consumers the product brand images spirited, spontaneous, contemporary and
exciting, and adding a new hero image to the product. These strategies also put into the features of new radio, prints
and on line adverting. (PepsiCo Inc., 2004) Another advertising tool frequently used by Pepsi-cola is sponsorship. It
sponsors various sports teams and events including soccer, football, baseball and car racing (PepsiCo. Inc., 2004).
Different sports stars, movie stars and famous singers are used as a representative of the product to attract consumers
attention and affect the liking of the product. A sponsorship deal was signed with Magna Entertainment Corp. in
September as an extension of this strategy (The Blood-Horse Inc, 2004). Besides, the automatic vending machines are
placed all over the country, targeting the self-selecting target market.
For public relations, Pepsi-cola makes an effort on building a responsible image on both environment and the well-being
of consumers (Wong & Takamune, 1997). In the annual report 2003, Pepsi declares its action on environmental
improvement, like efficient usage of water, seeking methods that are socially responsible, such as using 10% recycled

materials in plastic bottles; develops education programs and follows environmental legislations. The report also
declares its concern on responsibility to contribute to the well-being of consumers, support communities with direct
contribution to not-for-profit groups and working with organizations delicate to improving the life of people (PepsiCo.
Inc., 2004). Other public relation strategies like posing newsworthy information on the company website have also been
used.
Pepsi-cola contests and games promotions are one of the major tools it uses to achieve sales promotion objectives
rewarding loyal customers and lure customers away from its competitor Coca-cola. Other sales promotion like in-store
displays to attract consumers attention during shopping increases sales. Latest sales promotion featuring a collectable
Pepsi die-cast car in a commemorative vending tin on the internet and a million give away in a television show (PepsiCo.
Inc, 2004).
The Pepsi Bottling Group has about 6000 salespeople and recently invested in a Pocket PCs with customized software
Shelflink to its sales force. It helps the salespeople to reduce time spending on various calculations and getting all
sales information immediately. This new technology allows Pepsi-cola sales force achieve the sales objectives quicker by
increasing time efficiency (Microsoft Corp., 2003) Pepsi-colas promotion is highly supported by PepsiCo. Inks online
marketing plan. The Pepsi.com coordinates with the Pepsi-cola advertising strategies by combining attractive graphics
with the marketing message. It provides easy to access product information and latest promotion programs to
customers. The PepsiCo.com has constantly updated news and information on the product. (PepsiCo. Inc, 2004) The
overall performance of Pepsi-colas promotion strategies is satisfactory. It generates sales and increases demand of the
product effectively. Advertising is the action of calling something to the attention of the public, especially by paid
announcements (Webster, 1993). Pepsi-cola existing advertising strategies can achieve the attention of the public
effectively and achieve its advertising objectivesto persuade buyers to purchase the product and switch to the brand,
and remind consumers the brand image in order to maintain top-of-mind product awareness. The new message
strategy Pepsi, It is the cola communicates well to consumers the new hero image added to the product. Another
message of the new advertising campaign is Pepsi-cola is food-friendly. This message combines with related graphics
to attract attentions; however the campaigns creative message cannot relates to the food-friendly strategy. Since
creative message has a large effect on consumers memory, Pepsi-cola is recommended to increase its effectiveness of
creative messages exclusively. Besides, major media types have been use to reach and expose to the target market
effectively.
Sponsorship is one of the most important advertising tools used by Pepsi-cola. Sponsoring sport events and teams can
be very effective on spreading its brand images. Like the new in-game commercials during famous sport event Super
Bowl XXXVIII can effectively tailor to suit large amount of sport loving consumers. On the other hand, the automatic
vending machines tailor to suit the self-selecting targets. It is unquestionable that sufficient spending has been made in
these areas, and it has been successfully generates to increase sales and improve brand image (PepsiCo. Inc, 2004).
Building good relationship with various publics by building up a good product image is important for a brand. Pepsi-cola
attempted to create a healthy imageincluding declares to take responsibilities on consumers health and the
environment. As both are the new trends that increasingly concerned by the public, this strategy is able to bring positive
image to the product. Press releases of Pepsi-cola in the Pepsi Co. Ink website is also a good tool of building a positive
product image, with more credibility and a much lower cost than advertising. Pepsi-cola should increase its usage of
public relations to impact the public awareness of the product, such as making public speeches and presentations
(PRSA, 2004).
Sales promotion can push up sales in short term and building up consumers long term commitment. Using games and
contests to push up sales is one of the most effective ways of increasing consumers product awareness. Pepsi-cola is
able to create large incentive to consumers, but it needs to consider the cost effectiveness of these promotions
carefully. Increasing usage of other sales promotion tools is also recommended as alternatives, such as patronage
rewards and redeemable coupons in order to attract various consumers by different types of incentives.
Pepsi-cola salespeople should be able to make good relationships and communicating well with retailers. The new
technology improves the performances of the sales force, with access of all sales information in hand all the time. This
helps the salespeople to understand the needs of the retailers and be able to build a good connection with them.
Constant retraining should be provided to the salespeople in order to improve their performances and keep up with the
latest market trends.
Beside all the traditional marketing tools, online marketing is the latest and fastest growing trend in the global market.
Pepsi has developed the Pepsi.com and PepsiCo.comtwo major website related to Pepsi-cola. The fashionable

graphics and a user-friendly menu are able to attract many web servers attention. These websites is designed to
coordinate with all of the advertising campaigns and strategies, public relations strategies and sales promotion
strategies of Pepsi-cola. On the other hand, the websites are able to target another group of consumers in the market.
On the whole, Pepsi-cola has well-developed promotion plan and strategies in all dimensions. Facing its greatest
competitor Coca-colathe market leader of soda, Pepsi-colas promotion strategies helps to gain a large market during
the last decade. (PepsiCo. Inc, 2004). This is a proof to its success on promotion strategies. Nevertheless, there is some
space of improvement for Pepsi-cola. Notes that market research would be able to help the marketers to gain more
understanding of its target market, it is recommended to increase the budget spending in this area. Moreover, since the
effectiveness of promotion strategies is greatly affected by the economy, marketers should also study the changing
economic condition and trends.
CONCLUTION
In brief, Pepsi has built a good reputation around the world. In the analysis of Pepsis marketing strategy, this report has
built a clear sense through four important elements---product, price, place and promotion. Moreover, some usual
definitions relative to the analysis have been broadened out. Furthermore, a detailed view at Pepsi Co. was also
conducted. Overall, Pepsi is a company in the soft drink market with a strong history, an impeccable image and an
assurance of quality in all aspects that explains its current success and will lead to its undeniable success in the future.
RECOMMENDATION
On the whole, there are a few improvement can be made by Pepsi-Cola. Although Pepsi is the fifth largest food and
beverage company, its product Pepsi-Cola is still quite cheap comparing with Coca-Cola the leading soft drink
provider. Most people can link price with quality and the low-price may actually indicates poor quality and it could
cause Pepsi to lose the business in the long run.
If an advertisement that show Pepsi only allow excellent quality product to be sold to the consumers, it could alter the
consumers perspective on Pepsi (i.e. Pepsi offer excellent quality product only).
Pepsi currently have contract with some fast food outlets to sell Pepsi products only, for examples, KFC, Pizza Hut and
Taco Bell. These fast food restaurants are usually seen as lower to middle class restaurants and it could affect the brand
name in the minds of consumers. However there are some small restaurants selling Pepsi when customer asks for it, it
still doesnt change consumers perspective of Pepsi. If a contract was written with smaller restaurant, such as a
restaurant beverage must include all Pepsi products and not any of Pepsi competitors products could improve Pepsis
image as a beverage provider for middle class families.
Some recommendations for Pepsi are as follows:
Pepsi should increase its price to show it has high quality product.
Advertise that all Pepsi products must pass high standard, rigorous quality control tests and strict bottling procedures
all over the world.
Pepsi should make contract with smaller restaurant as well instead of just fast food outlets.
Pepsi should sign contract with some small takeaways to buy Pepsi form Pepsi Co. directly as this could reduce the cost
of both Pepsi Co. and the take way owner.
However there are draw back for all of the recommendations, the higher price of Pepsi product could lead people to
buy more coke as the soft beverage market is a highly elastic market, which means a small price change could lead to a
large change in quantity demanded (Kotler, 2004 p.491).
The advertisement showing Pepsi products pass high quality control could have some effect on consumers perspective
of the product Pepsi; however excess advertising of this could be a major expenditure for Pepsi with limited effects,
especially in a large economy that is in recession such as America.