PepsiCo was founded by a man named Caleb Bradham in 1898 in New Bern, North Carolina. Bradham originally wanted to become a doctor, but due to unfortunate circumstances, was forced out of medical school. After teaching for a short time span, he opened a small corner store which soon became the birthplace of the Pepsi drink. In 1893, “Brad's Drink” was invented as a concoction of sugar, water, nutmeg, lemon oil, and nutmeg that grew exponentially. After this explosion of popularity, it quickly changed names to the household name of Pepsi-Cola. As of 2016, PepsiCo employs a staggering 264,000 people, with almost half of those (110,000 employees) working in the United States alone. Throughout the years, Pepsi has been able to diversify and acquire many brands, making them widespread and present in many industries. For example, they own Gatorade, which is a forerunner in the sports industry. They also own Frito-Lay, North America Beverages, and merged with Quaker Oats in 2001 to name a few. Their current CEO and chairman is Indian American business executive Indra Nooyi, who has been in power since 2006. Early history would not have predicted their current success as they went bankrupt after the WWI, but they now sit at number forty-four on the Fortune 500 top companies. Although they have a huge presence in the food industry, they earn most of their revenue from their original roots in the beverage industry, particularly with Pepsi in soft drinks. They lock down a staggering 25.9% market share holding, and have become the second highest market share in this industry. However, their success has not stayed constant. In the past five years, consumer taste has shifted away from sugary beverages and into healthier lifestyles. Pepsi has unfortunately not been able to hold down their customers, and have been on a decline. From 2011 to 2013, Pepsi has suffered a difficult blow as a 9.9% revenue shifted into a troublesome -6.2% change. However, the company has quickly caught on to these trends and have made necessary adjustments. With the introduction of lower calorie drinks and effective marketing 2014 to 2016 saw better news. They increased from 0.4% to 1.7%, and according to IBISWorld, are expecting to continuously increase their revenue.
5 Year Financial Overview
End of Year 2011 2012 2013 2014 2015
Stock Price 66.35 68.43 82.94 94.56 99.92
Revenue (In Billions) 66,504.00 B 65,492.00 B 66,415.00 B 66,683.00B 63,056.00 B
Profits (In Billions) 6,443 6,178 6,740 6,513 5,452
Prof. Margin % 9.69% 9.43% 10.15% 9.77% 8.65%
Growth Rate 14.97% -1.52% 1.40% 0.40% -5.43%
Current Market Situation
As stated early, PepsiCo is a powerhouse in the beverage industry and captures the second largest market share of it. They take a particular interest in the younger generation (the “Pepsi Generation”) and specifically target their products towards kids from early teens to about 22 years old. Their marketing strategy usually is not targeted towards the older generation because as you become older, you become more aware of what you eat and put into your body. Kids don't necessarily care and have quick metabolisms so they don't see effects for a while. PepsiCo also heavily targets low to middle income class people because they have a cheap, available, and easily recognizable product. Pepsi has also been able to make their product available for any past time – you can drink it at a baseball game, fancy dinner, or just hanging out. They have also marketed themselves extremely well during sports games and advertisements. They make sure their brand is behind the best, and that everyone sees it. Before Beyoncé performed at the Superbowl, Pepsi was flashing right before her performance. Moments and product placement like this helps to build brand loyalty and recognition that attracts the younger crowd. However, even though Pepsi has had incredible success, they still are bested by Coca-Cola. Coca-Cola is currently number one in terms of capturing the soft drink industry with a 32.4% holding, beating Pepsi by precisely 6.5%. This is due to the fact that just like Pepsi, Coca-Cola has a plethora of fiercely loyal customers who won't even think about switching to the other product.
Pepsi-Cola comes in a variety of different sizes, ranging from a 7.5 fl oz. all the way to a 67 fl oz. They come in individual plastic bottles, cans, glass bottles, and large family/party size bottles. They are readily available from vending machines, all the way to nice restaurants. For a product review, lets take an average individual 7.5 fl oz. of Pepsi. In one can, it has 100 calories, 26g of Carbs, 20 mg of sodium, 24 mg of caffeine, 0g of fat, and 26 g of sugar.
Competitor Brand Features
Coca-Cola Company Coke Size, variety, brand
Dr. Pepper Snapple Group Inc. Dr. Pepper A unique flavor
5 P's of Coca-Cola
Coca-Cola currently sits at #1, holding the top spot in the beverage industry. Its most popular flavor is the original Coke. Coke and Pepsi are very similar in the fact that they are both cheap, ranging from about $0.50 to $1.50. They also focus on the lower to middle class income people, specifically targeting young adults. They are found internationally in grocery stores, gas stations, and in restaurants. They have also branded themselves to be consumed for any occasion, big or small. Coke has also marketed aggressively in TV, endorsements with popular celebrities, and billboards. Everyone knows them for their iconic polar bear, and they have a die-hard fan base. For positioning, they are found everywhere, specifically focused on restaurants and food venues.
5 P's of Dr. Pepper
Dr. Pepper Snapple Group Inc. trails the group, coming in third in the beverage industry with their famous Dr. Pepper. They are not as popular as Pepsi or Coke, but they differentiate themselves with a unique flavor and affordable price. They stay competitive in this aggressive market by pricing themselves almost equal to Coke and Pepsi, at $0.50 to $1.50 a can, heavily promoting to the lower to middle class society. Dr. Pepper is an international brand found almost everywhere; however, they are not as accessible as Coke and Pepsi. Although they advertise strongly, they do not have the presence that Coca-Cola and Pepsi have for example. They have a very similar positioning stance as their competitors, but they just are not as strong as locations vary on which ones have the product.
Channels and Logistics Review
Pepsi is mostly found in large and small physical establishments ranging from grocery stores and restaurants to gas stations and vending machines. They are available and easy to find in most places because if their cheap prices and undeniable brand loyalty. However, they do not sell online. Pepsi is such a cheap project, that their analysis finds that it is easier and more efficient to people to go in store to buy the product rather than sell online. If you go to their website, it lets you order from Amazon.com and Walmart.com, but they do not have a direct line from them.
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