Case Study (Analysis)
Submitted by: Anselmo, Danille Bagtas, Catherine Joy E. Balana, Sherrie Rose N. Del Rosario, Brian Nethercott, Nethercott, Leula Jean Sardino, ladys R.
Submitted to: !ro". Juni#er $. %ulueta
I.
Time Context
II. Point of of Vi View III. III. Compa Company ny Back Backgro ground und IV. IV. Object Objectives ives !ant !ant"#u "#ust$ st$ V. %tat %tatem emen entt of of t&e t&e Prob Prob'e 'em m VI. ('terna ('ternative tive Cours Course e of (ction (ction VII. )ecommendation VIII VIII.. (cti (ction on P'a P'an n
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Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is the invention of Caleb Bradham left!, a pharmacist and dr"gstore o#ner in $e# Bern, $orth Carolina. The s"mmer of 1898, as "s"al, #as hot and h"mid in $e# Bern, $orth Carol aroliina. na. %o a yo"ng o"ng phar pharma maci cist st name named d Caleb aleb Brad Bradha ham m bega began n e&perimenting #ith combinations of spices, '"ices, and syr"ps trying to create create a refres refreshin hing g ne# drink drink to serve serve his c"stom c"stomers ers.. (e s"ccee s"cceeded ded beyond all e&pectations beca"se he invented the beverage bev erage kno#n aro"nd the #orld as Pepsi-Cola. Caleb Bradham kne# that to keep people ret"rning to his pharmacy, he #o"ld have to t"rn it into a gathering place. (e did so by concocting his o#n special beverage, a soft drink. (is creation, a "ni)"e mi&t"re of kola n"t e&tract, vanilla and rare oils, became so pop"lar his c"stomers named it *Brad+s rink.* Caleb decided to rename it *Pepsi-Cola,* and advertised his ne# soft drink. People responded, and sales of Pepsi-Cola started to gro#, convincing him that he sho"ld form a company to market the ne# beverage. n 19/, he la"nched the Pepsi-Cola Company in the back room of his pharmacy, and applied to the the 0.%. 0.%. Patent Patent ffi ffice ce for for a trad tradem emar ark. k. 2t firs first, t, he mi&ed mi&ed the the syr" syr"p p hims himsel elff and and sold sold it e&cl"sively thro"gh soda fo"ntains. B"t soon Caleb recogni3ed that a greater opport"nity e&isted to bottle Pepsi so that people co"ld drink it any#here. The b"siness began to gro#, gro#, and on 4"ne 15, 196, *Pepsi-Cola *Pepsi-Cola** #as officially officially registered registered #ith the 0.%. Patent ffice. That year, Caleb sold 7,958 gallons of syr"p, "sing the theme line *&hilarating, nvigorating, 2ids igestion.* (e also began a#arding franchises to bottle Pepsi to independent investors, #hose n"mber gre# from '"st t#o in 19, in the cities of Charlotte and "rham, $orth Carolina, to 1 the follo#ing year, and : by 197. By the end of 191, there #ere Pepsi-Cola franchises in /: states. Pepsi-Cola+s first bottling line res"lted from some less-than-sophisticated engineering in the back room of Caleb+s pharmacy. B"ilding a strong franchise system #as one of Caleb+s greatest achievements. ;ocal Pepsi-Cola bottlers, entreprene"rial in spirit and dedicated to the prod"ct+s s"ccess, provided a st"rdy fo"ndation. They #ere the cornerstone of the Pepsi-Cola enterprise. By 197, the ne# company #as selling more than 1, gallons of syr"p per year.
The previo"s year, Pepsi had been one of the first companies in the 0nited %tates to s#itch from horse-dra#n transport to motor vehicles, and Caleb+s b"siness e&pertise capt"red #idespread attention. (e #as even mentioned as a possible candidate for
orld >ar , and the cost of doing b"siness increased drastically. %"gar prices see sa#ed bet#een record highs h ighs and disastro"s lo#s, and so did the price of prod"cing Pepsi-Cola. Caleb #as forced into a series of b"siness gambles '"st to s"rvive, "ntil finally, after three e&ha"sting years, his l"ck ran o"t and he #as bankr"pted. By 19/1, only t#o plants p lants remained open. t #asn+t "ntil a s"ccessf"l candy man"fact"rer, Charles <. <"th, appeared on the scene that the f"t"re of Pepsi-Cola #as ass"red. <"th #as president of ;oft ncorporated, a large chain of candy stores and soda fo"ntains along the eastern seaboard. (e sa# Pepsi-Cola as an opport"nity to discontin"e an "nsatisfactory b"siness relationship #ith the Coca-Cola Company, and at the same time to add an attractive dra#ing card to ;oft+s soda fo"ntains. (e #as right. 2fter five o#ners and 1 "nprofitable years, Pepsi-Cola #as once again a thriving national brand. ne oddity of the time, for a n"mber of years, all of Pepsi-Cola+s sales sales #ere #ere act"al act"ally ly admini administe stered red from from a Baltim Baltimore ore b"ildi b"ilding ng apparently o#ned by Coca-Cola, and named for its president. >ithin t#o years, Pepsi #o"ld earn ?1 million for its ne# o#ner. >ith >ith the res"rgence res"rgence came ne# confidence, confidence, a rarity rarity in those days beca"se the nation #as #as in the the early early stages stages of a seve severe re econ economi omicc decl declin inee that that came came to be kno# kno#n n as the the
1905 2 ne# logo appears, the first change from the original created in 1898 . 1906 The logo is redesigned and a ne# slogan added@ *The original p"re food drink.* The trademark is registered in Canada. 1907 The Pepsi trademark is registered in Ae&ico. 1909 2"tomobile racing pioneer Barney ldfield becomes Pepsi+s first celebrity endorser #hen he appears in ne#spaper ads describing Pepsi-Cola as *2 b"lly drink...refreshing, invigorating, a fine bracer before a race.* The theme *elicio"s and (ealthf"l* appears, and #ill be "sed intermittently over the ne&t t#o decades. 1920 Pepsi appeals to cons"mers #ith, *rink Pepsi-Cola. t #ill satisfy yo".*
2rgentina. 1932 The trademark is registered in 2rgentina. 1934 Pepsi begins selling a 1/-o"nce bottle for five cents, the same price charged by its competitors for si& o"nces. 1938 The trademark is registered in the %oviet 0nion. 1939 2 ne#spaper cartoon strip, *Pepsi Pete,* introd"ces the theme *T#ice as A"ch for a $ickel* to increase cons"mer a#areness of Pepsi+s val"e advantage. 1940 Pepsi makes advertising history #ith the first advertising 'ingle ever broadcast nation#ide. *$ickel, $ickel* #ill event"ally become a hit record and #ill be translated into lang"ages. 2 ne#, more modern logo is adopted. 1941 n s"pport of 2merica+s #ar effort, Pepsi changes the color of its bottle cro#ns to red, #hite and bl"e. 2 Pepsi canteen in Times %)"are, $e# ork, operates thro"gho"t the #ar, enabling more than a million families to record messages for armed services personnel overseas. 1943 The *T#ice as A"ch* advertising strategy e&pands to incl"de the theme, *Bigger rink, Better Taste.* 1949 *>hy take less #hen Pepsi+s bestD* is added to *T#ice as A"ch* advertising. 1950 *Aore Bo"nce to the "nce* becomes Pepsi+s ne# theme as changing soft drink economics force Pepsi to raise prices to competitive levels. The logo is aga in "pdated. 1953 2mericans become more #eight conscio"s, and a ne# strategy based on Pepsi+s lo#er caloric content is implemented #ith *The ;ight Eefreshment* campaign.
>itho"t =illing.* 1954 *The ;ight Eefreshment* evolves to incorporate *Eefreshing >itho"t 1958 Pepsi str"ggles to enhance its brand image. %ometimes referred to as *the kitchen cola,* as a conse)"ence of its long-time positioning as a bargain brand, Pepsi no# identifies itself #ith yo"ng, fashionable cons"mers #ith the *Be %ociable, (ave a Pepsi* theme. 2 distinctive *s#irl* bottle replaces Pepsi+s earlier straight-sided straight-sided bottle. 1959 %oviet Premier $ikita Fhr"shchev and 0.%. Gice-President Eichard $i&on meet in the soon-to-be-famo"s *kitchen debate* at an international trade fair. The meeting, over Pepsi, is photo-captioned in the 0.%. as *Fhr"shchev
co mmercial history, the post-#ar baby 1963 n one of the most significant demographic events in commercial boom emerges as a social and marketplace phenomenon. Pepsi recogni3es the change, and positions Pepsi as the brand belonging to the ne# generation-The Pepsi hen research indicates that cons"mers place a premi"m on Pepsi+s s"perior taste #hen chille chilled, d, *Tas *Taste te that that beats beats the others others cold. Pepsi Pepsi po"rs po"rs it on* emphasi emphasi3es 3es Pepsi+s Pepsi+s prod"ct prod"ct s"periority. The campaign, #hile prod"ct-oriented, adheres closely to the energetic, yo"thf"l, lifestyle imagery established in the initial Pepsi
1975 The Pepsi Challenge, a landmark marketing strategy, convinces millions of cons"mers that Pepsi+s taste is s"perior. 1976 *(ave a Pepsi ay* is the Pepsi ith the end of the +7s comes the end of a national malaise. Patriotism has been restored by an e&"berant celebration of the 0.%. bicentennial, and 2mericans are looking to the f"t"re #ith rene#ed optimism. *Catch that Pepsi %piritH* catches the mood and the Pepsi ith all the evidence sho#ing that Pepsi+s taste is s"perior, the only )"estion remaining is ho# to add that message to Pepsi
1990 Teen stars =red %avage and Firk Cameron 'oin the *$e#
Celebriti ities es 'oin 'oin cons"m cons"mers ers,, declar declaring ing that that they *eather"p >eather"p e&plaining the relationship bet#een freshness and s"perior taste to cons"mers. 1995 n a ne# campaign, the company declares *$othing else is a Pepsi* and takes top honors in the year+s national advertising championship.
About PepsiCo PepsiCo is the second largest food and beverage company in the #orld, #ith reven"es no# in e&cess of ?5 billion. The corporation has // brands that achieve retail sales in e&cess of ?1 billion each. 2s a res"lt of their brand diversification, aro"nd half of PepsiCoJs reven"e is generated from their food lines, s"ch as =rito-;ay snack food! food ! and K"aker ats.
n addition, they have progressively e&panded internationally and no# access over 8L of the #orldJs pop"lation. Their international non-0%! markets acco"nt for almost L of their total reven"es and they still see significant gro#th potential from these markets, on the basis that per capita cons"mption of snacks and beverages be verages in other co"ntries is #ell belo# 0% market levels.
2s a res"lt, PepsiCo has achieved solid gro#th is many international markets. >hile their 0% beverage sales fell by /L in /11, this has been more than offset by do"ble-digit sales increases in "rope, 2sia, the Aiddle ast and an d 2frica. n terms of their overall strategic approach, PepsiCo as highlighted on their #ebsite! see themselves as innovative and adaptive, as stated in the follo#ing #ebsite )"ote@ “Pepsi is constantly on the lookout for ways to ensure their consumers get the products they want, when they want them and where they want them.”
POINT OF VIEW PepsiCo B!"# $t!te%&
mphasis of Brand
Fey Brands
="n-for-yo"
Pepsi, Ao Ao"ntain e e#, 7-0p, ;a ;ays, o oritos, Ch Cheetos, Ee Eed Eo Eock
Better-foror-yo"
Pep Pepsi Aa Aa&, i iet Pe Pepsi psi, ;ay ;ayss ov oveen ba baked!, K" K"aker ba bars
Tropicana, K" K"aker a ats,
(Note: The various terms, !un"for"you# and so on are Pepsi$o#s terminology, not the author#s.%
n their 2nn"al Eeport, PepsiCo has str"ct"red their brands aro"nd three related themes, as highlighted in the follo#ing table. This brand str"ct"re gives some insight into the role of their brands and ho# they see their brand portfolio developing in the f"t"re. 2s yo" can see from PepsiCoJs classification of their brands, it is appears that the firm has the d"al goals of s"pporting and leveraging its e&isting Mf"nJ brands, #hile moving to#ards a broader range of healthier offerings. >hile this second goal may appear to be mainly related to improving their corporate image, it does have commercial intent, as e&plained on the PepsiCo #ebsite@ “&ecause a healthier future for all people and our planet means a more successful future for Pepsi$o.” Pepsi$o.”
To help implement this corporate goal, across their vario"s brands, PepsiCo has foc"sed on providing a #ider range of healthier choices, introd"cing more nat"ral ingredients, red"cing fat content, red"cing the environmental impact of their packaging, and so on.
(bout t&e %oft -rink #arket The 0% soft drink market generates over ?7 billion in sales. Gol"mes "nits! have #eakened slightly since /, indicating that the market is in late mat"rity-early decline stage of the prod"ct life cycle. Eetail dollar sales have been s"pported some#hat by price increases. ne of the biggest impacts on soft drink cons"mption has come from bottled #ater, #hich no# acco"nts acco"nts for over 1L of beverage cons"mption. cons"mption. This is "p from '"st /L in /. 2nd the soft drink market has also been slightly challenged by sports drinks and energy drinks that have seen a minor increase in market share. The trend to#ards diet diet soft soft drinks contin"es, contin"es, #ith these offerings offerings no# representi representing ng 6L of the carbonated soft drink C%! market, "p from /L '"st 1 years ago. verall, these movements indicate changing tastes of cons"mers as a res"lt of a stronger health foc"s. ne of the brands most impacted by these market changes has been the flagship Pepsi brand. n the most recent market share fig"res available, Pepsi no# has less than 1L share of the 0% C% market #hich ranks the brand 6rd behind Coke and iet Coke!. >hile still #ell positioned, keep in mind that they #ere sitting at over 16L market share ahead of iet Coke 1 years ago, at a time #hen the C% market #as still gro#ing at 6L per year. Their iet Pepsi prod"ct en'oys a solid L market share. That prod"ct, along #ith PepsiJs other soft drink offerings Ao"ntain e# in partic"lar!, gives Pepsi an almost 6L share of the 0% C% market, behind Coca-Cola at :/L #ith Coke at 17L and iet Coke at 1L! and ahead of r Pepper %napple at 17L.
$t!te'e"t o( t)e Pob*e'
WHAT MUST PEPSI DO TOWARDS GENERATING INCREASED SALES VOLUME AND EVENTUALLY LOWER ITS OPERATING COST
TO CONTINUALLY BE THE CHOICE OF THE NEW GENERATION?
