Analysis and evaluationof the PepsiCo corporate strategy and assessment of whether this corporate strategy provides any parenting advantage to any of the businesses part of the corporate enterprise when compared to other buisiness models

1. An analysis of the strategy and
parenting advantage
Group 3
Sarah Bennani Vladimir Pushmin Anton Telepnev Maria Zatkova
140008670130014419140010985 140022155

2. PepsiCo – Performance With Purpose
1960s
1965: PepsiCo, Inc.
was established through
the merger of Pepsi-Cola
and Frito-Lay
1966: Introduction of
Doritos in USA
Pepsi’s entry into Japan and
Eastern Europe market
1970s
1970: Pepsi introduces its
first two-liter bottle
Frito-Lay starts its
expansion: more than one
new plant each year
1974: Pepsi Cola becomes
the first American consumer
product to be sold in the
former Soviet Union
1977: PepsiCo acquires
Pizza Hut. Inc.
1977: PepsiCo acquires
Pizza Hut. Inc.
1980s
1981: Frito-Lay starts the
nutritional labeling
1982: First Pepsi-Cola
operation in China
1982: Introduction of Diet
Pepsi
1985: PepsiCo became the
largest beverage company
1989: PepsiCo acquires
Walkers, UK snack food
company
1990s
1990: PepsiCo acquires
GAMESA, the largest cookie
company in Mexico
1995: Introduction of Lays
Crisps in 20 countries
1998: PepsiCo acquires
TROPICANA= the biggest
acquisition
2000s
2001: PepsiCo merges with
the Quaker Oats Company
2005: 40th Anniversary of
PepsiCo, Inc.
2007: Introduction of the
project “Performance with
Purpose”
2010s
2010: PepsiCo acquires
Pepsi Bottling Group, Inc
2014: First Pepsi Spire, a
fountain Beverage
23%
4%
13%
10%17%
33%
% Net Revenue by Division
Frito-Lay North America
Quaker Foods North
America
Latin America
Asia, Middle East & North
Africa
Europe Sub-Saharan Africa
47%
53%
% Revenue by segment
Beverage
Food
44%
56%
% Revenue by region
Outside USA
USA
PepsiCo is one of the world’s leading food and beverage company with over $63 billion in net revenue in 2016
and a global portfolio of 22 diverse and beloved brands

3. 1 Strategic Expansion
Mergers and acquisitions
• Seizing all the merges and acquisition
opportunities in order to gain in
competencies and infrastructure
• Consequence of the strategy
implementation: 22 global brands-
each of them has generated $1 billion
sales in 2015
Strategic Alliances
Global dispersion: China, India, Saudi-
Arabia as an integral part of the corporate
strategy
Emerging market
• Strengthening its operations in China,
Middle-East, Pakistan
• Doubling its e-commerce Business in
China
4 Branding
• Through the combination of innovative
ideas, effective communication and
aggressive advertising; PepsiCo has
been able to stay relevant to its
customers
• Price based on customer perceptions
• Focusing its positioning strategy on
teens and young adult segment
• Use of social media to promote
products
2 Innovation in Marketing
• Celebrity endorsement
• Cross-cultural differences are
taken into account when
delivering messages
5 5Cs of Business Strategy
• Commercial Agenda
• New Capabilities
• Increased focus on cost
• Culture of collaboration
• Disciple on capital returns
3 Performance with purpose
• $550 million of packaging weight
removed
• 23% reduction in operational water use
per unit/production
• 6 million people provided access to
safe water in developing countries so
far
• 434,000 metric tons of added sugar
removed from the U.S. & Canada
production
Group Level Strategy

4. Customer
identification
Generation Y:
Active students, video gamers,
adrenalin seekers
Older audience:
Drivers, office workers, etc.
Crisps lovers of all ages with a
dominant concern about quality
and nutritive factors and ability
to afford premium prices for
crisps
Mainly athletes and coaches –
20 – 40 years old, both men
and women with a high athletic
performance
Health and environment
conscious individuals with
above average income and
desire for some higher quality
drinks
Customer
engagement
While there is some freedom in
choosing various products
company’s business model
utilizes the “bus” system, which
produce a limited selection of
products in a standardized
manner
Pure bus model. The product
line is aimed at mass customer
customer and offers no
customisation. However, the
firm offers a wide range of
flavours to satisfy different
tastes
Company’s business model
utilizes the “bus” system, which
produce a limited selection of
products in a standardized
manner, but still offers wide
range of flavors
Bus model. Products are aimed
at mass market and offer no
customization. However,
customers can choose between
and within product lines to
choose the drink with the best
flavor
Value Chain
Linkages
Red Bull use a wall-to-wall
manufacturing - can
manufacturing and filling
process carried out on the
same site in Bangkok, product
is distributed through national
and regional distributors
Tyrrells manufactures its
"Home made" crisps in small
batches Helfordshire using
traditional production
processes and potatoes from
local farms with further
distribution to wholesalers
Works by analysing and
seeking to meet the athletic
customer’s demand by being
easily accessible through
online service worldwide,
grocery and healthy stores,
gyms and fitness centers
Works closely with various fruit
producers to get the best
ingredients and then sells the
drinks directly to a range
wholesalers around the country
Monetization
Red Bull charges a premium
price, which is 1,5X times
higher than its closest rival
“Monster”
Tyrrells charges a premium
price of £1.99 for a standard
125gr pack, which is 1/3 more
expensive that most of its
competitors
Drinks are usually sold in
cases, where 12 SuperDrink
bottles cost $23.95
Drinks are sold with a premium
price through a large range of
intermediaries all around the
country
Competing business models

5. Premium juices
Crisps
• Tropicana and Cawston Press are both focusing on providing the market high
quality, healthy juice-based drinks.
• Both firms try to attract new customers through various marketing campaigns
and heavy investment in their R&D process to constantly come up with new
flavors for the market, however they do it in different ways.
• Tropicana mainly expands through expanding its existing range, by adding
more and more flavors and mixes to its existing fruit juices range, like new
Probiotic mixes
• Cawston Press often focuses on differentiation of its product lines and
offering new vegetable juices and making multi-million-pound investment into
production of fruit soft drinks.
Energy drinks
Sports drinks
• AMP energy drink made by PepsiCo mainly targets millennials, primarily
those who are interested in gaming and racing (NASCAR)
• Red Bull attracts new customers through heavy advertising using various
media channels and other ways of online promotion, sponsorships, etc., while
AMP use only social media platforms, which creates sales problems, due to
product nature
• AMP is priced at the same level as other energy drinks (£1,39 for 500 ml
can), but below the Red Bull price and usually sell it in cases of 12 cans
• AMP create awareness and trust among consumers on new markets through
collaboration with Mountain Dew drink, where AMP acts as an energy
extension of the carbonated product
• BodyArmor’s and Gatorade’s customers are mainly athletes and coaches,
who are keen on refreshing their bodies with post-workout drinks, while
supporting their immune system
• BodyArmor claims that it is one of the few healthy sports drinks out there,
when others aren’t.
• Part of BodyArmor’s success is recruiting an all-star cast of athletes who
aren't paid to endorse the product but are instead invited to take an equity
stake in the company. In the same time, Gatorade uses the traditional means
of advertising.
• Gatorade constantly updates its product line following the trends by adding
new types with the latest addition of the G Organic sport drink.
• Tyrrells’s strategy focuses on a smaller part of the market by serving high-
income crisps lovers, with the production of premium quality crisps.
• It’s struggling to keep up with competition in UK and primarily focuses its
attention on the expansion abroad through exporting its products in Europe
and acquisition of local similar brands like Aroma Snacks Co, German
organic crisps producer.
• PepsiCo’s Walkers is currently the biggest crisps seller in the UK, over 53%
of UK market. Bigger R&D budget allows to invest a lot into new
technologies and innovations to further improve its production processes and
bring new products to the customer. Furthermore, the company invests
heavily into the extensive marketing campaign that fuels its fast growth by
attracting many new customers.
Comparison by segment

6. Healthy Juices
Benefit: High. Significant gains in R&D, production, marketing and
distribution capabilities.
Feel: High. Possesses all of the core competencies due to operation in
the related industry.
Energy drinks
Benefit: High. Significant gains in R&D, production, marketing and
distribution capabilities.
Feel: Medium. Part of the PepsiCo diversification strategy, but not core
Crisps
Benefit: High/Medium. Significant gains in marketing and distribution
capabilities.
Feel: Medium. An important part of PepsiCo’s diversification strategy but
noncore.
Sports drinks
Benefit: High. Significant gains in R&D, production, marketing and
distribution capabilities.
Feel: High. Core part of PepsiCo group-level strategy
”Feel” and “Benefit” analysis Parenting matrix
Parenting advantage