1

TERM PAPER

Of

Strategic Management

TOPIC:PepsiCo(use BCG matrix to analyse the product

portfolio of a given company. Based upon the analysis,
suggest suitable strategies)

Submitted to: Submitted by:

Mr Ajay Chandel Manpreet Kaur
REG. NO. 10907806
R1903A55
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ACKNOWLEDGEMENT

This is to express my heartiest gratitude towards all those who helped and inspired me to

complete my Term Paper.

I feel immense pleasure in submitting my Term Paper.

I am highly thankful to my Subject Teacher, Mr. Ajay Chandel for his support and

encouragement that he provided me during the tenure of the paper.

At the end I would like to mention about the constant motivation and help that I received from

my family, teachers, friends and batch mates for completing my Term Paper.

Manpreet Kaur

MBA 2nd year

Lovely Professional
University

Contents
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S.No Topics Pg.No.

.

Executive Summary 4
1.
Introduction 5
2.
History & Corporate Governance 6
3.
Brands 7
4.
Former Brands 8
5.
Guiding Principles 9
6.
Objective Of the study 10
7.
Literature Review 10-13
8.
SWOT Analysis 14-16
10.
BCG Matrix 17-19
11.
Pepsico Strategy 20
12.
Conclusion 21
13.
Refrences 22-23
14.
Annexure 22-28
15.

EXECUTIVE SUMMARY

The pepsi corporation has taken the world by storm with their strong focus on corporate growth
and brand name domination. With 41 brand names specific products under their belt.
PEPSICO is moving up thr ladder of success and providing a strong example for other
distribution focused companies. Although PEPSICO constantly struggles with their leading
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competitor, COCA COLA they still hold a 37.5% share in the Carbonated Soft Drinks(CSD)
market – only few percentage points lower than Coca Cola at 42.9%.
PepsiCo has risen to become one of the leading food and beverage companies in the world.
With a focus on market share growth and distribution strategies, it is no wonder PepsiCo has
risen to become the Conglomerate it is today. By acqiring new brands and products,PepsiCo has
managed to outshine, out market, and outsell nearly all other competing Corporations in the
United States and world market.
PepsiCo realize that marketing strategies differ between countries and have developed different
strategies and formulas to suit customer needs.
Segmentation is extremely important to the success of PepsiCo.

INTRODUCTION:
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PepsiCO is one of the World’s leading food and beverage company. PepsiCo started on 1965
during the time pepsi-cola’s CEO and President approached,CEO and Chairman with the
proposition of merging the two company in providing food and beverage with complementary
products that would give a lesser opportunity for cost sharing,joint merchandising,knowledge
and skill transfer.

PepsiCo, Incorporated is a Fortune 500, American multinational corporation headquartered in

Purchase, New York, with interests in manufacturing and marketing a wide variety of carbonated
and non-carbonated beverages, as well as salty, sweet and cereal-based snacks, and other foods.
Besides the Pepsi brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe,
Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7 Up (outside the USA).

Business organizations are subject to different aspects which affect the function and operations
of the firm as a whole. In this regard, there are specific ways or techniques which can be noted in
order to emerge and continue to be competitive in the market environment. The marketing
context have been noted as the key factor to achieve company objectives and the marketing
aspect rests on customer-orientation, market focus and coordinated marketing as well as
profitability. In profit making business, the firm obviously has to do their best to achieve the
level of customer satisfaction as a manner of staying ahead of the competitive position and
making a profit.

In traditional ways, marketing has been used by different firms to be able to increase the
capabilities of the company in the market. Its concept can be considered as one of the most
essential element underpinning the success of business (Hills, 1994). In the competitive market
environment, connecting with the target market is getting more complicated for different
industries (McCombs, 2003). Accordingly, it takes an effective management and approaches to
win over the skeptical target market which suggest that it is the moment to forget everything that
has been learned regarding marketing and branding (Yalstrow, 2003). It is mentioned that it is
the target market that is in control of improving the power of the products or brands. In this
regard, it is not the company who brand their target market, but the clients are the one which
brands the company and their products and services offered.

HISTORY:

Headquartered in Purchase, New York, with Research and Development Headquarters in

Valhalla, The Pepsi Cola Company began in 1898 by a NC Pharmacist and Industrialist Caleb
Bradham, but it only became known as PepsiCo when it merged with Frito Lay in 1965. Until
1997, it also owned KFC, Pizza Hut, and Taco Bell, but these fast-food restaurants were spun off
into Tricon Global Restaurants, now Yum! Brands, Inc. PepsiCo purchased Tropicana in 1998,
and Quaker Oats in 2001. In December 2005, PepsiCo surpassed Coca-Cola Company in market
value for the first time in 112 years since both companies began to compete.
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CORPORATE GOVERNANCE:

Current members of the board of directors of PepsiCo are Indra Nooyi C.E.O., Robert E. Allen,
Dina Dublon, Victor Dzau, Ray Lee Hunt, Alberto Ibargüen, Arthur Martinez, Steven
Reinemund, Sharon Rockefeller, James Schiro, Franklin Thomas, Cynthia Trudell, and River
King.

On October 1, 2006, former Chief Financial Officer and President Indra Nooyi replaced Steve
Reinemund as chief executive officer. Nooyi remains the corporation's president, and became
Chairman of the Board in May 2007.

Mike White is the President of Pepsi-Co International Division.

Former top executives at PepsiCo:

• Steven Reinemund
• Roger Enrico
• D. Wayne Calloway
• John Sculley
• Michael H. Jordan
• Donald M. Kendall
• Christopher A. Sinclair

Brands:2

Pepsi-Cola Brands:

Pepsi has been bringing fun and refreshment to consumers for over 100 years. Learn more about
our flagship brand and the broad spectrum of beverages it offers worldwide.

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Pepsi-Cola North America is the refreshment beverage unit of PepsiCo, Inc., in the United States
and Canada. Its U.S. brands include Pepsi, Mountain Dew, Aquafina, Sierra Mist, IZZE, SoBe,
Mug, Tropicana Twister Soda, Tropicana Juice Drinks, Dole and Ocean Spray single-serve
juices. The company also makes and markets North America's best-selling ready-to-drink iced
teas and coffees, respectively, via joint ventures with Lipton and Starbucks.

Frito-Lay Brands:
Employing over 48,000 people and bringing in over $13 billion of business, Frito-Lay
invigorates PepsiCo's portfolio of products with plenty of good food and 'good fun'.

Frito-Lay North America is the $13 billion convenient foods business unit of PepsiCo. For more
than 75 years, Frito Lay has enjoyed growing the best snacks on earth starting with simple, farm-
grown ingredients.
To continue growing the best snacks on earth, they are working to reduce their impact on the
environment by improving how they make their snacks.
Frito-Lay is also dedicated to giving consumers a wider range of healthier choices. They offer
great-tasting chips with less fat through their Baked! line and snacks made only from natural
ingredients, which contain no artificial colors, flavors or preservatives with their Natural line. All
of their snack chips contain 0 grams of trans fat.
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FORMER BRANDS:

PepsiCo owned a number of restaurant chains until it exited that business in 1997, selling some,
and spinning off others into a new company Tricon Global Restaurants, now known as Yum!
Brands, Inc.. PepsiCo also previously owned several other brands that it later sold.

• California Pizza Kitchen (bought 1992, sold back to original founders in 1997)
• Chevys Fresh Mex (bought August 1993, sold May 1997 to J. W. Childs Equity Partners)
• D'Angelo Sandwich Shops (sold August 1997 to Papa Gino's)
• East Side Mario's (United States franchises – bought December 1993, sold early 1997)
• Hot 'n Now (bought in 1990, sold in 1997)
• Jollibee (bought in 1994,sold in 1997)
• KFC (bought October 1986 from RJR Nabisco, spun off October 1997 to form TriCon,
later Yum! Brands)
• North American Van Lines
• Pizza Hut (bought in 1977, spun off October 1997 to form TriCon, later Yum! Brands)

GUIDING PRINCIPLE:3
PEPSICO uphold commitment with six guiding principles.
They must always strive to:
• Care for our customers, our consumers and the world we live in.
We are driven by the intense, competitive spirit of the marketplace, but we direct this
spirit toward solutions that benefit both our company and our constituents. Our success

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depends on a thorough understanding of our customers, consumers and communities. To

foster this spirit of generosity, we go the extra mile to show we care.
• Sell only products we can be proud of.
The true test of our standards is our own ability to consume and personally endorse the
products we sell. Without reservation. Our confidence helps ensure the quality of our
products, from the moment we purchase ingredients to the moment it reaches the
consumer's hand.
• Speak with truth and candor.
We tell the whole story, not just what's convenient to our individual goals. In addition to
being clear, honest and accurate, we are responsible for ensuring our communications are
understood.
• Balance short term and long term.
In every decision, we weigh both short-term and long-term risks and benefits.
Maintaining this balance helps sustain our growth and ensures our ideas and solutions are
relevant both now and in the future.
• Win with diversity and inclusion.
We embrace people with diverse backgrounds, traits and ways of thinking. Our diversity
brings new perspectives into the workplace and encourages innovation, as well as the
ability to identify new market opportunities.
• Respect others and succeed together.
Our mutual success depends on mutual respect, inside and outside the company. It
requires people who are capable of working together as part of a team or informal
collaboration. While our company is built on individual excellence, we also recognize the
importance and value of teamwork in turning our goals into accomplishments.

OBJECTIVE OF THE STUDY:

1. To know the market strategies adopted by PepsiCo in the establishment or

expansion of their business for their growth.
2. To know the various techniques adopted by the Pepsico including Swot analysis
and BCG matrix.
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LITERATURE REVIEW:

Gemmas,Mar 31, 2010. :- Pepsico using its 10 yrs strategy to make its brand which includes
pepsi & walkers crisps healthier. Which followed a pledge to cut fat,salt and sugar. David
Goudge, managing director of branding agency Brand Development, says there can be some
'terrific tensions' between pursuing health goals and satisfying shareholders, pointing to the
rejection of traffic-light labelling by the food industry as an example. While companies may
wish to be good corporate citizens, the idea of having 'red lights' on their products was seen as
too commercially harmful to countenance.Food brands have a key role to play in the fight against
obesity, but finding the balance between their commercial interests, acting responsibly and
communicating this to consumers is bound to become more difficult.

Alarcon, 13, 2008:-

Tropicana is a Florida based company selling fruit gift boxes, as under the ownership of
PepsiCo, Tropicana pure premium as become the biggest selling fruit juice in the UK. "PepsiCo
assumed it could develop the business in the way it usually does. For PepsiCo, it's not about developing the
brand personality, but much more about trading and distribution." PJ Smoothies was known as Pete &
Johnny when it launched in 1994, led by founders Harry Cragoe and Patrick Folkes. PJ claimed
it was still the number one smoothie brand by volume when PepsiCo bought it 11 years later. But
its performance has since dived - outplayed by Innocent. To focus on Tropicana smoothies is a
part of PepsiCo strategy to exploit the heritage of the Tropicana brand name. With the launch of
tropicana smoothies,PepsiCo sidelined the PJ brand as its ‘Value Offering’.In 2005, Coca-Cola
relaunched its Minute Maid juice brand backed by a pound 5m ad campaign, but despite major
investment it has yet to make a serious dent on Tropicana's sales - and not for the first time.
Initially, Minute Maid was distributed exclusively by McDonald's in the UK, but in 1998 Coca-
Cola launched it in the retail trade. However, it was withdrawn after a year following poor sales.

Hein,Apr 23, 2007.:-PepsiCo's summer lineup includes everything from baseball stars with
matinee good looks, sponsorship of the "biggest concert of the year," talking cartoon donkeys, a
soft drink inspired by a videogame and a team-up with the Transformer.This article defines that
“The choice of new generation.” Pepsi came up with the Live Earth event on cans and bottles as
part of their strategy to change package designs more than 35 times this year.

Moffett, Soto,1997.:-This case describes the complexity of PepsiCo's competitive position in the
Mexican soft drink market in late 1996. Following PepsiCo's anchor bottler in Mexico, Gemex,
the case details the strategies employed by PepsiCo's senior management beginning in 1993 to
expand its market share versus its traditional red nemesis, Coca-Cola. This article describes the
complexity position in the Mexican soft drink market. The various dimensions of PepsiCo
stategy- marketing,management,financial,strategic are all seen to have deteriorated of the
unexpected fall in the mexico peso. The case then describes pepsiCo’s response which only
seemed to increase the financial burdens which stumble the pepsi market share.
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Wayne,May 1985.:-The strategic planning is the essence of business, and it is the responsibility
of each division president, a responsibility that may not be delegated. However, no strategic plan
will succeed without good people or good leadership. Leadership is the only way to inspire
employees to achieve their highest level of productivity. A clear focus on results is a true mark of
leadership. Empathy is a prerequisite for successful leadership in the world today. Successful
leaders seem to gain power by giving it away; they share their power with their people.
PepsiCo's strategy is based on finding and encouraging people who have a clear vision of the
future.

Betty,Aug 16, 2001.:-

Coca-Cola and Procter & Gamble are restricting the role of a joint venture that would have
combined their juice and crisps operations in a $4bn company.As originally reported in the
Financial Times in July, Coca-Cola was expected to change the terms of the agreement after an
arduous due diligence process.Almost as soon as the venture was announced in February,
criticism erupted that Coca-Cola was trading its highly profitable Minute Maid juice brands for
the lacklustre P&G products, Sunny Delight and Pringles.The joint venture was to create new
healthy beverages by tapping into Coca-Cola's vast distribution network and P&G's extensive
research and development arm. It also mirrored PepsiCo's strategy of selling Frito-Lay crisps
and beverages together, known as "Power of One".

Deogun, Oct 3, 1997.:-

PepsiCo Inc. is close to announcing a multiyear agreement with Suntory Ltd. for the Japanese
beverage giant to become the premier bottler for Pepsi products in Japan, according to people
familiar with the situation. Financial terms of the agreement couldn't be determined and a
spokesman for Pepsi, based in Purchase, N.Y., declined to comment. Such an agreement, though,
would be in keeping with PepsiCo's strategy to rebuild its badly bruised overseas beverage
operations by teaming up with well-capitalized corporations and would be a big boost for Pepsi
in a country where it has lagged behind Coca-Cola Co. by a wide margin."This is going to be the
first of many deals where Pepsi strengthens its international beverage business by teaming up
with powerful local partners who understand the dynamics of the total soft-drink category," said
Andrew Conway, an analyst at Morgan Stanley, Dean Witter, Discover & Co.

Harty, Aug 28-Sep 8, 2000.:-

Aside from leveraging its long-standing association with the Olympics, including its current
Redfest consumer promotion, Coca-Cola has maintained its focus on the youth market. And a
major plank of PepsiCo's strategy has bee to target the youth market, using entertainers such as
Michael Jackson, Madonna and Ray Charles to endorse the product.

Anonymous. Drug Store Sep 14, 2009.:-

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The move is part of PepsiCo's strategy to fully integrate its beverage PepsiCo chief executive
Indra Nooyi said it was clear that "the changing dynamics of the North American liquid
refreshment beverage business demand that we create a more flexible, efficient and competitive
system that can drive growth across a full range of Pepsi brands. " Nooyi said an integrated
business will enable the company to "bring innovative products and packages to market faster,
streamline our manufacturing and distribution systems, and react more quickly to changes in the
marketplace."

Deogun, Oct 3, 1997.:-

PepsiCo Inc. is close to announcing a multiyear agreement with Suntory Ltd. for the
Japanese beverage giant to become the premier bottler for Pepsi products in Japan,
according to people familiar with the situation.Financial terms of the agreement couldn't
be determined and a spokesman for Pepsi, based in Purchase, N.Y., declined to comment.
Such an agreement, though, would be in keeping with PepsiCo's strategy to rebuild its
badly bruised overseas beverage operations by teaming up with well-capitalized
corporations and would be a big boost for Pepsi in a country where it has lagged behind
Coca-Cola Co. by a wide margin.

Rozelle: Aug 28-Sep 8, 2000.:-

Aside from leveraging its long-standing association with the Olympics, including its current
Redfest consumer promotion, Coca-Cola has maintained its focus on the youth market. And a
major plank of PepsiCo's strategy has bee to target the youth market, using entertainers such as
Michael Jackson, Madonna and Ray Charles to endorse the product.

Anonymous, New York: Sep 14, 2009.:-

The move is part of PepsiCo's strategy to fully integrate its beverage PepsiCo chief executive
Indra Nooyi said it was clear that "the changing dynamics of the North American liquid
refreshment beverage business demand that we create a more flexible, efficient and competitive
system that can drive growth across a full range of Pepsi brands." A decade ago, PepsiCo
followed rival Coca-Cola Co.'s lead to separate its bottling operation, a model that worked well
when carbonated beverages accounted for 70% of PepsiCo's business. Sales of carbonated
beverages make up about 45% of the company's business today, and are expected to drop to
between 30% and 40% over the next five or 10 years as juice, enhanced water and tea
increasingly dominate Pepsi's portfolio.

Introducedhttp:/ww
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Swot Analysis of Pepsico:

Strengths:
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Branding - One of PepsiCo’s top brands is of course Pepsi, one of the most recognized brands of
the world, ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global
brands. Pepsi generates more than $15,000 million of annual sales. Pepsi is joined in broad
recognition by such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher,
Lay’s Potato Chips, Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos
Corn, Tostitos Tortilla Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese
Flavored Snacks, Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla
Chips, and Sierra Mist.

• The strength of these brands is evident in PepsiCo’s presence in over 200 countries. The
company has the largest market share in the US beverage at 39%, and snack food market
at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to
over $15 million in annual sales for the company
• Diversification - PepsiCo’s diversification is obvious in that the fact that each of its top
18 brands generates annual sales of over $1,000 million. PepsiCo’s arsenal also includes
ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals, cakes and
cake mixes.This broad product base plus a multi-channel distribution system serve to
help insulate PepsiCo from shifting business climates.
• Distribution - The company delivers its products directly from manufacturing plants and
warehouses to customer warehouses and retail stores. This is part of a three pronged
approach which also includes employees making direct store deliveries of snacks and
beverages and the use of third party distribution services.

Weaknesses:

• Overdependence on Wal-Mart - Sales to Wal-Mart represent approximately 12% of

PepsiCo’s total net revenue. Wal-Mart is PepsiCo’s largest customer. As a result
PepsiCo’s fortunes are influenced by the business strategy of Wal-Mart specifically its
emphasis on private-label sales which produce a higher profit margin than national
brands. Wal-Mart’s low price themes put pressure on PepsiCo to hold down prices.
• Overdependence on US Markets - Despite its international presence, 52% of its
revenues originate in the US. This concentration does leave PepsiCo somewhat
vulnerable to the impact of changing economic conditions, and labor strikes. Large US
customers could exploit PepsiCo’s lack of bargaining power and negatively impact its
revenues.
• Low Productivity - In 2008 PepsiCo had approximately 198,000 employees. Its revenue
per employee was $219,439, which was lower that its competitors. This may indicate
comparatively low productivity on the part of PepsiCo employees.
• Image Damage Due to Product Recall - Recently (2008) salmonella contamination
forced PepsiCo to pull Aunt Jemima pancake and waffle mix from retail shelves. This
followed incidents of exploding Diet Pepsi cans in 2007. Such occurrences damage
company image and reduce consumer confidence in PepsiCo products.

Opportunities:
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• Broadening of Product Base - PepsiCo is seeking to address one of its potential

weaknesses; dependency on US markets by acquiring Russia’s leading Juice Company,
Lebedyansky, and V Wwater in the United Kingdom. It continues to broaden its product
base by introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with
Unilever. These recent initiatives will enable PepsiCo to adjust to the changing lifestyles
of its consumers.
• International Expansion - PepsiCo is in the midst of making a $1, 000 million
investment in China, and a $500 million investment in India. Both initiatives are part of
its expansion into international markets and a lessening of its dependence on US sales. In
addition the company plans on major capital initiatives in Brazil and Mexico.
• Growing Savory Snack and Bottled Water market in US - PepsiCo is positioned well
to capitalize on the growing bottle water market which is projected to be worth over $24
million by 2012. Products such as Aquafina, and Propel are well established products and
in a position to ride the upward crest.PepsiCo products such as, Doritos tortilla chips,
Cheetos cheese flavored snacks, Tostitos tortilla chips, Fritos corn chips, Ruffles potato
chips, Sun Chips multigrain snacks, Rold Gold pretzels, Santitas are also benefiting from
a growing savory snack market which is projected to grow as much as 27% by 2013,
representing an increase of $28 million.

Threats:

• Decline in Carbonated Drink Sales - Soft drink sales are projected to decline by as
much as 2.7% by 2012, down $ 63,459 million in value. PepsiCo is in the process of
diversification, but is likely to feel the impact of the projected decline.
• Potential Negative Impact of Government Regulations - It is anticipated that
government initiatives related to environmental, health and safety may have the potential
to negatively impact PepsiCo. For example, manufacturing, marketing, and distribution
of food products may be altered as a result of state, federal or local dictates. Preliminary
studies on acrylamide seem to suggest that it may cause cancer in laboratory animals
when consumed in significant amounts. If the company has to comply with a related
regulation and add warning labels or place warnings in certain locations where its
products are sold, a negative impact may result for PepsiCo.
• Intense Competition - The Coca-Cola Company is PepsiCo’s primary competitors. But
others include Nestlé, Groupe Danone and Kraft Foods. Intense competition may
influence pricing, advertising, sales promotion initiatives undertaken by PepsiCo.
Resently Coca-Cola passed PepsiCo in Juice sales.
• Potential Disruption Due to Labor Unrest - Based upon recent history, PepsiCo may
be vulnerable to strikes and other labor disputes. In 2008 a strike in India shut down
production for nearly an entire month. This disrupted both manufacturing and
distribution.
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BCG Growth Matrix Analysis:4

In the society of consumption, individuals are consciously finding products and status by the
self-image and lifestyle. It is said that products brand image is something which is complicated
to concretize as it only deals with impression of the target market. As mentioned, each and every
organisation in the marketplace is trying to establish strong product portfolio to compete with
their rivals and sustain their competitive position and advantage. Brands are known as the names
used to differentiate the company products or services from the competitors (Kotler, 1997), like
the brand of PepsiCo, Coca Cola and other famous and competitive brands. In addition, product
brand is a corporate identity which provides intangible benefits aside from the usage by the
products which makes it difficult for other company to imitate. This is the important role that the
product image plays in marketing competition. Furthermore, many organisations recognised their
product portfolio as one of the most precious assets which enable them to sustain their
competitive advantage among their rival (Aaker, 1991). Hence, many companies try to establish
brand equity for their own brand along with their efforts in using effective approach to maintain
such equity.

PepsiCo BCG Matrix:

The study aims on analyzing the products and services offered by PepsiCo. The BCG matrix
approach is based on the product life cycle concepts which can be utilised to identify what
priorities should be given in the product portfolio of a business level. To make sure that the
company is creating long-term value, an industry should have a portfolio of products which
contains both high-growth products in need of cash inputs as well as low-growth products which
establishes a lot of profit or cash.
BCG matrix relies on 2 dimensions: market growth and market share.
The basic notion behind it is that the higher the market share of a specific product has or the
faster the product’s marketability grows, the better it is for the industry. Placing appropriate
products in the BCG matrix, results in 4 categories, in the business portfolio of an industry. The
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four categories include the Stars, cash cows, dogs, question marks. Each of these categories has
their own measurement.
First, the Stars are considered as those products which have high market growth and market
share. The stars products use large amounts of cash and considered to have competitive position
in the business which results in generating more profit. The stars products are frequently noted as
rough in balance on net cash flow. But if needed, any attempt should be created to hold market
share to avoid becoming cash cow.

The second category is Cash cows which are commonly considered to have low growth with
high market share. Herein, the profits and generation of cash are considered high but because of
the low market growth, the investment required should be low. It is said that cash cows should
keep the profit high and is noted to be the foundation of the company.
The next category is Dogs which is low market growth and share. It is noted that an industry
should avoid or reduce the number of dog’s products in the industry. In addition, the company is
also recommended to beware of the expensive turn around plans.
The last category is Question markets which is high growth with low market share. Question
marks products are considered to be the worst cash features of all, because high demands make it
to have low returns due to low market share. Herein, if the company would not be able to solve
the issue of question market products, these may be able to absorb great amount of cash and may
result from stopping dogs to grow.

Accordingly, BCG matrix approach can help the business companies to understand a frequently
made approach mistake. Boston Consulting Group Matrix is a tool used for product portfolio
planning. This tool has two controlling elements which includes market growth relative market
share. In this manner, the current situation PepsiCo in the standpoint of the market environment
will be analysed using this marketing tool. This analysis will give emphasis on the product and
service portfolio of PepsiCo. Thus, the product and services that the company offers will be
analysed using the following figure.
It can be said that PepsiCo products and business portfolio can be divided in four major products
or services; each service operates in accordance with its functions along with the products and
services in different areas especially made as a distinction of each division. The PepsiCo analysis
will be based in assessment of the services offered by the company.
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The following shows the product portfolio analysis of the PepsiCo using BCG Matrix analysis.
Accordingly, PepsiCo is consisted of 5 major brands: Gatorade, Quaker, Pepsi products, Frito-
Lay and Tropicana. As mentioned the assessment has been based on each products provided by
the company. With this, it shows that the products that belong to the question mark are Gatorade
and also Tropicana. Because of the emergence of different healthy drinks and beverages in the
global market, the market share of Tropicana and Gatorade are being threatened. Although these
brands have already established in the marketplace, the company still needs to have an effective
marketing approach to increase the sale of these brands or brands. Accordingly, question mark
category means that these products have a low share of a possible high growth market and may
become a star product because of the positive response of the customers.

As can be seen in the figure, the services that fall in star category are is the pay-is Pepsi brands.
The star category shows the products with a high share of a gradual growth of market and these
products have a tendency to produce high amount of profits. The next category that can be seen
in the figure is the cash cows. Herein, the products are considered to have a high share of a slow
growth market.
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PepsiCo Strategy to Market their Products:

It can be said that PepsiCo has been able to market their products and increase their market share
and market growth by using different strategies and approaches. The company enhances the
market share of their brands by considering different marketing entry modes. Through
collaborative venture PepsiCo has been able to se merger and acquisition along with joint
venture approach.
Furthermore, franchising is another method that PepsiCo used to enhance the market share of the
brands of the company (Welch, 1990). This model used by Welch (1990) has been utilised by
PepsiCo in order to expand its business portfolio in other regions in the world. In this manner,
the management of PepsiCo considers franchising an existing company in an international
market while applying the methods of collaborative venture.
In order to make this foreign operational mode combination a success, PepsiCo consider the
most suitable and effective expansion strategy. It can be said that the spread of PepsiCo is truly
global. The company has hundreds of brands, which can be found in almost 200 countries and
territories around the world. Market concentration is the result of interaction between the market
size and a few vital factors. It is said that the industry of Carbonated Soft Drinks (CSD) is highly
concentrated. There are three major industries that compete in this business (PepsiCo, Coca-Cola
and Cadbury Schweppes).
 20

Conclusion:

The context of product analysis is said to be useful in terms of comprehending and analyzing the
competitive position of an organisation. The brand or the products of the company remains an
important part of marketing approach as it is mostly recognised by their target market.. It can be
said that the heavy consideration on marketing strategy and analysis in products of specific
company can create the impression that the product’s market share and growth can be enhanced.

In this analysis, it shows that through BCG analysis the strengths and effectiveness of the brands
of PepsiCo has been discussed. Much has been said about the importance of having a strong and
effective product image. Based on this analysis, it can be said that a strong and effective products
and marketing approach is something that can influence the choice of the target market.

Companies like PepsiCo perceived that their brand and products have some personalities and
characteristics in which clients and customers use as a channel for expressing themselves or to
experience the predicted emotional benefits that differentiate a specific brand from another. The
considered product characteristics evolved through the different approaches used by the
company and it is the one used for identifying which products should be put in the stars, dogs,
cash cows or question marks categories in the BCG matrix.

Accordingly, there are various management approaches that the company may use to have a
strong and effective brand image and to determine which brands are more appealing to the
market and which brands are not doing well. In order to build a strong brand and effective
image, the management who of PepsiCo should think of two things in planning a strategy. Such
things are first is to sell the service of the company as a short-term goal and second is to build a
strong brand image in the long run.

It can be concluded that through the use of BCG Matrix analysis, companies like PepsiCo has
been able to know which products can be considered as the foundation of the company and
which products needs effective marketing approach to enhance its market share and growth in
the marketplace. All in all, it can be said that BCG matrix is really a helpful marketing tools for
different companies to know their competitive position in the market. It can also be said that
effective marketing approach is a complex phenomena and it can easily be understood using
metaphors such as understanding the current situation of the brands in the market. Analysis has
shown that to be able to have a strong and effective brand, it must be able to meet the needs and
demands of the clients and the company itself. In addition, analysis shows that the use of
promotional activities is an important aspect to make the brand be more attractive and appealing
to the target market.

Refrences:
 21

http://www.thesmartmarketing.co.cc/index.php/basics/4-the-bcg-matrix-a-powerful-portfolio-
analysis

http://marketingteacher.com/swot/pepsi-swot.html

Find a healthy balance

Gemma Charles. Marketing. London: Mar 31, 2010. pg. 16, 1 pgs
http://proquest.umi.com/pqdweb?
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=309&VName=PQD&TS=1289404266&clientId=129893

TROPICANA: Not all out of juice just yet

Camille Alarcon. Marketing Week. London: Nov 13, 2008. pg. 30
http://proquest.umi.com/pqdweb?
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=309&VName=PQD&TS=1289404629&clientId=129893

PepsiCo's Strategy: A Long, Hot Summer.Kenneth Hein. Adweek. New York: Apr 23, 2007.
Vol. 48, Iss. 17; pg. 6, 1 pgs http://proquest.umi.com/pqdweb?
index=2&did=2153956401&SrchMode=1&sid=9&Fmt=2&VInst=PROD&VType=PQD&RQT
=309&VName=PQD&TS=1289404629&clientId=129893

Pepsico in Mexico
Michael H. Moffett, Tomas Soto. Thunderbird Case Collection (The Garvin School of
International Management). Glendale: 1997. 26 pgs
http://proquest.umi.com/pqdweb?
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=309&VName=PQD&TS=1289404629&clientId=129893

The Straw That Stirs the Drink: Leadership at PepsiCo

Calloway, D. Wayne. Planning Review. Dayton: May 1985. Vol. 13, Iss. 3; pg. 8, 6 pgs
http://proquest.umi.com/pqdweb?
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=309&VName=PQD&TS=1289404629&clientId=129893

Coke sets limits on P&G venture; Liu, Betty.Financial

Times. London (UK): Aug 16, 2001. pg. 17
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=309&VName=PQD&TS=1289404629&clientId=129893

Pepsi May Get Boost in Japan From Suntory

By Nikhil Deogun. Wall Street Journal. (Eastern
edition). New York, N.Y.: Oct 3, 1997. pg. 1
 22

http://proquest.umi.com/pqdweb?
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=309&VName=PQD&TS=1289404629&clientId=129893

Activity maintains 'vibrant' category

Cheryl Harty. Retail World. Rozelle: Aug 28-
Sep 8, 2000. Vol. 53, Iss. 17; pg. 16

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Coke sets limits on P&G venture; [USA edition]

Liu, Betty. Financial Times. London (UK): Aug
16, 2001. pg. 17
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=309&VName=PQD&TS=1289404629&clientId=129893

.PepsiCo seals up deal, acquires two bottling cos.

Anonymous. Drug Store News. New York: Sep
14, 2009. Vol. 31, Iss. 10; pg. 125,
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 23

ANNEXTURE:
 PepsiCo
24

Type Public (NYSE: PEP)

Food
Industry
Beverages

New Bern, North Carolina, U.S.

Founded
(1898)

Caleb Bradham
Founder(s) Donald M. Kendall
Herman W. Lay

Headquart
Purchase, New York, U.S.
ers

Area
Worldwide
served

Indra Nooyi
Key people
(Chairperson and CEO)

Pepsi
Diet Pepsi
Mountain Dew
AMP Energy
Aquafina
Sierra Mist
SoBe
Starbucks Frappuccino
Lipton Iced Tea
7up
Mirinda
Izze
Tropicana Products
Products Copella
Naked Juice
Gatorade
Propel Fitness Water
 25

Corporate Officers:

1.

Indra K. Nooyi
Chairman of the Board
and Chief Executive Officer
PepsiCo

2.

Zein Abdalla
Chief Executive Officer
PepsiCo Europe

3.

Saad Abdul-Latif
Chief Executive Officer
PepsiCo Asia, Middle East, Africa

4.
 26

Peter A. Bridgman
Senior Vice President
and Controller
PepsiCo

5.

Albert P. Carey
President and Chief Executive Officer
Frito-Lay North America

6.

John Compton
Chief Executive Officer
PepsiCo Americas Foods

Pepsico Brands: