PESTLE Analysis

Choose any Organization of your choice Reflect on the evolution of the marketing concept. Outline the elements of the Marketing Process. 

One of the most popular American MNC in the food and beverage industry is PepsiCo. The company was founded in 1903 and is growing since then with great reputation and supplies food, snacks, beverages, and other products to more than 200 countries (PepsiCo Inc. Success Story, 2017). The recipe of the drink was founded by a pharmacist and industrialist Caleb Bradham. In 1965, it made a merger with Frito Lay and named the drink Pepsi-Cola. The headquarters of the company is situated in Purchase in New York and with rising reputation under the namesake of ‘Pepsi’, has extended its wings into several food and beverage brands spread all over the globe (Pepsico , 2017). The company holds second position worldwide in food and beverage industry and is the owner of major brands like Pizza Hut, KFC, Wilson Sporting Goods, California Pizza Kitchen, Taco Bell and many more. In 1998 the company made a successful purchase of Tropicana products and also did a merger with Quaker Oats in 2001. Presently the chief executive of the company is Indra Krishnamurthy Nooyi under whom the company has achieved new highs. The company employees more than two hundred and seventy four thousand people who works not only in U.S.A, but many other subsidiaries and divisions spread worldwide. The company had always faced many challenges from its competitors like Coca Cola, but with outstanding marketing strategy and increase in its efficiency in natural resources, it had survived the market and is one of the most recognised brands globally. (Bailey, 2014)

PepsiCo is the second largest company worldwide dealing in food and beverage industry. PESTLE analysis is a tool which will help us to look into different factors which are exterior to the control of the company, but is significant to the firm. Threats which the company faces are global market challenges, while opportunities to improve the same are also created in its growth path. With proper evaluation and reforms based on the model of PESTLE analysis, PepsiCo’s long term growth in changing environment of market will be boosted. Stability in the government politically, and intergovernmental cooperation provides growth opportunity and improves global expansion. The economic threats which the company faces constantly are due to initiatives against sweetened carbonated drinks which affect the profit in affected areas. In order to avoid such threats, the company can keep changing its product and its recipes. The company has vast opportunity for enlargement and development as economic stability of developed countries it deals in is high in its growth rates. Hence, with this element PepsiCo can utilise market diversification to attain steady intercontinental growth. There are few threats also which are related to economic factors as the company is highly depended on economic stability and growth of developing countries like China (Meyer, 2017).

SWOT Analysis

External factors like health consciousness in customers about salt, sugar, fat content, etc. in beverages have been a social threat to the company. However the same also provides scope for developing the product and with its upgrading, PepsiCo can enhance the market. With the changing habits and busy lifestyle, people are more interested in buying ready to eat food like those of PepsiCo which can prove advantageous for the company especially in urbanised and industrializing marketplace worldwide. The company must utilise this opportunity and keep improving its products according to the consumers demand along with high quality production. Thus alignment in consumer’s behaviour and product with proper marketing strategy is what demanded after making PESTLE analysis considering social factor. In technological aspect the company can acquire latest and advanced technology in its processes with the help of which it can enhance the production and increase strategic decision making (Dudovskiy, 2016). This PESTLE analysis shows that with new and advanced technology it can develop business competitiveness.

To incorporate a sense of responsibility and to improve its perception regarding its environmental impacts, PepsiCo can improve its waste clearance strategies like recycling. Climatically, the company faces threat as if any change occurs; it can disturb the market supply chain. The risk involving exposure to climate change can be minimised if the company promotes diversification in its global supply chain. On basis of this analysis, PepsiCo must get better in its environmental force to catch the attention and maintain relation with customers with stable market supply chain (Kevin-F, 2010). In countries like Europe, Genetically modified (GM) crops are being developed rapidly.  By reducing GM component in PepsiCo products, it can satisfy country regulations and can present safe and healthy products. Thus with an acceptable regulatory requirement, PepsiCo can attain an opportunity of its growth in the long term. With legal analysis of the company, it can be said that to comply with regulations and focus on product improvement will be beneficial for the company externally.

Despite of various challenges and threats, PepsiCo’s ability to strengthen its market by growing continuously makes it one of the most prominent in food and beverage industries. This SWOT analysis structure will identify and analyse strength and opportunities of the company to overcome its threats and weaknesses with the help of which it can minimise hurdles in its worldwide growth. PepsiCo holds one of the strongest brands in the market which helps to gain attention of the customers while launching any new product. Frito-Lay products, Quaker Products, and Pepsi products are few examples of its successful brands which has captured the entire food market with ease. The effective and advanced global production and supply network are its strength which has helped in establishing international growth and expansion strategy of the company. On the other hand, 70% of its total revenue is observed from the markets of North America and South America, PepsiCo’s weakness in internal strategic factor states that the company has not yet maximised its possible revenue outside America. Any risk related in food and beverage market can be a direct hit to the company as it deals largely in food and beverages only. Therefore the weakness of the company lies in its dependence on other food market completely and to overcome this weakness, the company have to make changes in its growth strategy (Young, 2017).

Competitive Analysis

PepsiCo fails in effective marketing as many of its products does not reach to the consumers which are more health conscious and thus require giving more stress on its marketing strategy. By penetrating in the market of developing countries outside America, PepsiCo can generate more revenues globally. By purchasing another company which is not in the food and beverage industry, PepsiCo can obtain an opportunity by diversifying its business. The market existence can also be increased by making collaboration and alliance with complimentary business. Threats regarding competition in the market have always been there for PepsiCo. Companies like Coca Cola and Dr Pepper Snapple had always influenced the company severely. The changing habits of the consumers and their concern for health and lifestyle had been another threat for the company. This aspect of SWOT analysis demands that PepsiCo must restructure its strategies to reduce the threat and gradually observe the opportunity behind it. (Pratap, 2016)

The current market in terms of supply and demand is highly diverse. In any product, to keep up with consumer’s preference is vital and cannot be neglected. With the use of unique marketing strategy and brand name, PepsiCo had succeeded in winning the mind set of customers. Quality product and easy availability is what demanded in any marketplace and decision of the company’s position in the market is based highly on it (SAIHJPAL, 2010). PepsiCo have to face constant competition in the market with other companies dealing in same group.  There are big competitors like Odwalla, Perrier Coca-Cola, and Cadbury-Schweppes, and smaller ones include Budweiser, Evian, Heineken, and Fresh Samantha. Though there are many, the two most significant competitors of the company are Coca-Cola Company and Dr Pepper Snapple Group. In order to make a competitive analysis of PepsiCo, it is important to know about the market structure and the key strategies of its competitors. Coca- Cola being its top most competitors rules the industry in top position and was founded in the year 1886. The company produces and sells non- alcoholic beverages, water products, and fruit juices. The company employees 123,200 people globally and hold assets valuing more than US490.093 billion. (About Us Coca-Cola History, 2017) The company is highly efficient in utilizing and assembling suitable amalgamation of resources. It also has a strong advertising management strategy which enables its product to reach the desired consumers with ease and maintains excellent response in changing market conditions.  The war between the two companies has been witnessed constantly as the two regain weaknesses and strengths closely. Pepsi had always satisfied its suppliers with its easy availability which was a drawback for Coca-Cola as it lacks in the supply sometimes and also maintains moderate connections with them. In advertising segment also Pepsi dominates Coca-Cola as it spends a lot in it and is highly appreciated by consumers. But while making marketing analysis, Coca-Cola dominates PepsiCo fairly as with a wide network of distribution channel throughout the globe, the Coca-Cola products are readily available in more countries than PepsiCo. Thus with the help of analysis of both the company, it is seen that PepsiCo has a small product portfolio than Coco-Cola which makes it second in market comparison (Briggs, 2016).

Dr Pepper Snapple remains constantly in third position in food and beverage industry after Coca-Cola and PepsiCo. In US, the carbonated soft drinks market has been shrinking continuously due to customers shifting away from calorie filled soda to sports drinks, ready to drink tea and coffee, and bottled water. Although, CSD’s amounts to 41% of 31 billion gallon liquid refreshment market, which had been crucial for Dr Pepper Snapple as 80%of its product is related to beverage making. Both Coke and Pepsi holds majority of the global market strongly but Dr Pepper is also giving tough competitions to them and is also one of the chief competitors of Pepsi. Dr Pepper Snapple was founded in 2008 and was a result of merger between American soft drink Company in Texas and Britain’s Cadbury Schweppes (Dr Pepper Snapple (DPS), 2017). The company follows cost cutting strategy which had made it come in alignment with PepsiCo and is giving potential revenue return from present market where all others are struggling to survive. The company has always been struggling to hold a position in international market and as a result sold the rights to Coca Cola for international market sales. It also sold distribution rights of 7UP, which is core of Dr Pepper, to PepsiCo in 1986 for $246 million. Thus by enabling its products in international market with the help of bigger companies, saved its marketing cost and under the namesake of them, it gained popularity. After making competitive analysis it can be said that although PepsiCo outwit Dr Pepper, but have to keep a close watch as the former is increasing its market size fairly (Gooch, 2017).

The consumer’s behaviour is highly depended on factors like product packaging, advertising, campaigning, and most important brand image. (Jannet, 2010) In consumer satisfaction and brand preference analysis, PepsiCo products are more preferred and the consumers seem more satisfied with the taste and price of its products. The most prominent companies which PepsiCo holds are Pizza Hut, KFC, Pepsi-Cola, etc. which proves to be a profitable business outlets in food, shops, and restaurants. The company produces and supplies its products of refreshments and ready to eat products to more than one hundred countries (Unhale, 2017). The company has strong business in many countries and is growing rapidly by diversifying in functional areas. Along with great entrepreneurship skills, it has established strong franchise system and maintains campaigning and advertising to attract consumers (Ahmed, 2017). Brands and company which are able to attract the customers with innovative strategies are the one who are capable of sustaining in today’s market. The considerable change in the lifestyle of consumers have made it necessary for the companies to diversify and change accordingly which PepsiCo has done to great extent and is highly accepted by customers. With enhanced marketing strategy, PepsiCo had played a chief position in soft drink business and also inclined the attitude of consumers towards the product. Pricing of the product is also important part which determines brand first choice in a competitive market place. PepsiCo again holds its position as it settles on the price of its product after studying the market pattern and economy of the country. The analysis of consumer psychology is also an important factor as in modern market any consumer buying a product gets attached to it emotionally. Consuming soft drink not only quenches thirst but also possesses emotional attachment to it. PepsiCo have always tried to understand people satisfaction points and have won to attain the same to large extent. Advertising is the basic tool which is utilised for marketing communication and with the help of social media like TV, magazine, radio, and online media it had maintained its popularity (Nguyen, 2014).

Conclusion

After making a brief analysis in major relating factors, it can be said that PepsiCo holds a strong position and had maintained reputation by understanding customer’s psychology and demands. With efficient supply and quality production it had survived tactfully and gained loyalty among customers. The analysis also shows that PepsiCo’s supply chain network with modern techniques had captured the market widely (Fergusan, 2017). Thus on a concluding note it can be said that PepsiCo, although attains a second place worldwide, yet is a very well-built entity and should make more effort upon its weaknesses and rise above the threats with a more stronger organizational structure and reformed marketing strategies. It should try to diversify as much as feasible and also make sure that the struggle is dealt with by advancing technologically as well as modernising. It can improvise upon its inefficiencies by accepting the needs of the consumers which keeps on altering. Thus the business strategy has to be originated as such which could be formed as per the demands of the condition.

References

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Ahmed, R. (2017). Marketing situation analysis on PepsiCo. Retrieved from https://www.academia.edu/19587850/Marketing_situation_analysis_on_PepsiCo

Bailey, S. (2014). PepsiCo: A company overview. Retrieved from https://marketrealist.com/2014/12/pepsico-company-overview/

Briggs, A. S. (2016). Lessons from A Competitive Analysis of Coca Cola and Pepsi. Retrieved from https://www.techbullion.com/business-plan-lessons-competitive-analysis-coca-cola-pepsi/

Dr Pepper Snapple (DPS). (2017). Retrieved from https://www.trefis.com/stock/dps/model/trefis?easyAccessToken=PROVIDER_007d5f006fc7709611836b35bd78fde3e5de0621

Dudovskiy, J. (2016). PepsiCo PESTEL Analysis. Retrieved from https://research-methodology.net/pepsico-pestel-analysis-2014/

Fergusan, E. (2017). PepsiCo’s Generic and Intensive Growth Strategies. Retrieved from https://panmore.com/pepsico-generic-strategy-intensive-growth-strategies

Gooch, C. (2017). Coca-Cola And Pepsi Are Ubiquitous: Choose Dr Pepper Snapple. Retrieved from https://seekingalpha.com/article/4064485-coca-cola-pepsi-ubiquitous-choose-dr-pepper-snapple?page=7

Jannet. (2010). Pepsi – Brand Positioning. Retrieved from https://itsallaboutbrands.blogspot.in/

Kevin-F. (2010). Performing A Pest Analysis: Walking Through an Example. Retrieved from https://www.brighthubpm.com/project-planning/100507-performing-a-pest-analysis-walking-through-an-example/

Meyer, P. (2017). PepsiCo PESTEL/PESTLE Analysis & Recommendations. Retrieved from https://panmore.com/pepsico-pestel-pestle-analysis-recommendations

Nguyen, F. (2014). How PepsiCo meets the needs of today’s consumer. Retrieved from https://www.imediaconnection.com/article/145436/how-pepsico-meets-the-needs-of-todays-consumer)

Pepsico . (2017). Retrieved from https://www.pepsico.com/

PepsiCo Inc. Success Story. (2017). Retrieved from https://successstory.com/companies/pepsico-inc

Pratap, A. (2016). Pepsi SWOT Analysis 2016. Retrieved from https://www.cheshnotes.com/2016/11/pepsi-swot-analysis-2016/

SAIHJPAL, M. A. (2010). Analysis of Marketing Strategy of Coca-Cola and Pepsi. Retrieved from https://www.scribd.com/doc/20596818/analysis-of-marketing-strategy-of-coca-cola-and-pepsi

Unhale, S. (2017). Consumer behaviour towards the marketing of Pepsi Co brand. Retrieved from https://www.academia.edu/6622212/Consumer_behaviour_towards_the_marketing_of_Pepsi_Co_brand

Young, J. (2017). PepsiCo SWOT Analysis & Recommendations. Retrieved from https://panmore.com/pepsico-swot-analysis-recommendations