Pepsi is an American-based multinational organization with global activities that manufacture, distribute, and sell soft drink products in different parts of the world. The company was established in 1965 through Frito-Lay Inc. and the Pepsi-Cola merger. The company has grown tremendously over the years to become one of the largest beverage companies in the world. Precisely, Pepsi ranks second after Coca-Cola in the food and beverage sector. By 2019, Pepsi had employed about 265,000 workers globally and raised revenues of about 67.161 U.S. million dollars. Currently, the company is working to ensure that it increases its market share by 5%, raises brand awareness by the same margin, and boosts sales revenue by 15% by the end of 2022, domestically and internationally.

Pepsi has a competitive advantage in the industry which comes from a strong network of supply chains that provides the company with adequate resources. A strong distribution network is another source of competitive advantage in the food and beverage sector, allowing it to distribute its products to different parts of the world. Technology also gives Pepsi a strong sense of competitive advantage because it supports research and development activities undertaken by the research and development team. Regardless of Pepsi’s strengths, the company also faces multifaceted challenges and weaknesses, as seen from the SWOT framework.

Additionally, the marketing environment is gradually evolving, and companies are forced to develop effective ways to ensure they remain relevant in the market. In this era, technological advancement has made consumers remain more informed, so using some old marketing strategies would not attract customers. This marketing plan proposes product placement and personalized marketing as ideal strategies for the company to expand its market base. The two systems would help PepsiCo maintain its competitive advantage in the market and help expand its local and international customer base.

Company Overview

Pepsi operates in the food and beverage industry. The company was formed in 1965 and had its headquarters in Harrison, New York. The company was formed after a merger between Frito-Lay Inc and Pepsi-Cola Company. The company controls most of its operations, including product manufacturing, distribution, and marketing (Pepsi. 2022). Over the years, the company has been involved in aggressive expansion involving diversification of food and beverage brands and acquiring competing companies such as Pioneer Foods for 1.7 billion dollars and Quaker Qats Company. The company made over 1 billion in sales from its 23 brands, distributing its products to more than 200 territories (Jin, 2022). The company is ranked second in the industry behind Nestle. The leading competitor has been Coca-Cola. Coca-Cola has dominated the United States sales, but Pepsi-Cola dominates North America Market.

The drink was developed by Caleb Bradham and was introduced to the market in 1898, with the first sales made in North Carolina. The company was formed in 1902 after increased sales of Pepsi, and the patent was signed in 1903. The company enjoyed much success in the industry until new policies on sugar limitations were introduced during World War 1. In 1923, the company was declared bankrupt, and the company and patent were later purchased by Craven Holding company (Dai, 2021). One of the significant milestones was noted in 1931 after the company trademark had been purchased by Craven Holding and Charles Guth, who reintroduced the soft drink. In 1961, the company created Diet Pepsi and acquired Mountain Dew. Currently, the company has been using celebrities in the marketing process. One of the major marketing approaches presently used is soccer-themed marketing.

PepsiCo, a significant global marketer of snacks, focuses on increasing market share through precise targeting and creative marketing. The company’s main markets for sales are North and South America, where it has long been a fierce rival. The corporation sells products, including Lipton teas, Doritos, Pepsi drinks, and diet Pepsi. Both draft food and Coca-Cola, offered across the U.S.U.S., Europe, and Asia, pose a severe threat to the corporation.

As a matter of concern, people have started wondering why PepsiCo is doing better than Coca-Cola in North America, as Mourdoukoutas (2018) finds that PepsiCo beating Coca-Cola surprises many individuals. According to Mourdoukoutas (2018), PepsiCo’s market share had grown by about 2.95% from 2016 to 2018 and 30.64% from 2013 to 2018. On the other hand, the claims of Coca-Cola had increased at a negative rate of -1.45% between 2016 and 2018 and a positive rate of 9.25% between 2013 and 2018. Essentially, this is despite Coca-Cola’s brand and ranking being stronger and higher than PepsiCo’s. As of 2018, Mourdoukoutas (2018) found that Coca-Cola occupied the sixth rank or position of having the most valuable brand while the brand PepsiCo took the 29th spot (see figure 1 in the appendix). Besides, Mourdoukoutas (2018), the market capitalization for Coca-Cola was higher than that of PepsiCo as of 2018, standing at 190.10 billion dollars and 159.46 billion dollars, respectively, as seen in figure 2 (See appendix).

The question now lies in how Pepsico manages to beat Coca-Cola in North America. In addressing this question, it is essential to acknowledge that PepsiCo is a larger organization than Coca-Cola. With the strategies and the bigger size of the company, it can be imperative that PepsiCo should be doing better, holding other factors constant. As noted by Mourdoukoutas (2018), PepsiCo had an almost double revenue figure relative to its competitor, Coca-Cola, valued at 64billion dollars. As can be seen in Figures 3 and 4 (see appendix), the difference in performance between the two companies is reflected in differences in operating margins and return on assets ratio.

PepsiCo’s diversification strategy is another way to enhance its competition over Coca-Cola in North America. Essentially, this is because of PepsiCo’s improved capabilities to go beyond providing carbonated drinks to providing snacks that can be consumed together with the beverages it offers. Such snacks, as noted by Mourdoukoutas (2018), have a competitive advantage over Coca-Cola because they have recently enabled PepsiCo to grow at an unprecedented rate. For instance, Mourdoukoutas (2018) noted that in the third quarter of 2018, the Frito-Lay line North America of PepsiCo’s snack division had managed to increase its operating profits by 5%. As a result of this profit growth, PepsiCo could offset its 16% reduction in operating profits in its beverage division in North America. This insinuates that having a stronger brand like Coca-Cola does not reflect a stronger equity performance.

Objectives/ Goals

Pepsi is the second-largest company in the food and beverage sector. The company provides a wide range of goods. Developing clearly defined business objectives play a crucial role in the performance and success of an organization. As stipulated in research done by Almasri et al. (2013), it has become increasingly important for business managers to think strategically about how to align their strategic business objectives with their information strategies to have a competitive advantage in the market. According to Almasri et al. (2013), this alignment ensures that the organization can achieve its set objectives and goals. Clearly defined goals and objectives also help an organization to be innovative and creative on how to go about implementing the goals and objectives.

Being among the biggest food and beverage corporations globally, its goal is to offer consumers nourishing breakfasts, nutritious and enjoyable afternoon drinks, snacks, and pleasures. Essentially, this is in line with the new vision the company adopted in 2019 of being the leader in offering convenient beverages and food globally (PepsiCo, Inc., 2019). These meals and beverages must be excellent, inexpensive, handy, and complimentary. PepsiCo Limited’s main goal is to produce as much profit as possible by expanding its national distribution network and introducing new products to satisfy shifting customer demand (Dai, 2021). PepsiCo Limited seeks to gain more market share and provide goods that ensure consumer happiness, which also satisfies the organizational objective. In line with these objectives, PepsiCo has adopted future growth strategies, including penetrating emerging markets in Africa and Asia, running more customer-centric adverts, and engaging more with customers.

Situational Analysis

The breadth of Pepsi’s range of brands, which spans the industry, is the company’s key competitive advantage. Each of the twenty-two brands owned by Pepsi produces over $1 billion in yearly retail sales. By participating in more than 200 nations worldwide, the company has taken advantage of having a significant global footprint (Dai, 2021). The company’s overwhelming presence in markets around the globe has increased customer consciousness and advertising strategy on a worldwide scale. However, over-reliance on carbonated beverages and packaged goods reduces the company’s ability to adapt in the event of market unrest. Most of the company’s carbonated soft beverages have high sugar concentrations, and snacks have much salt and artificial flavors (Helmold, 2022). That is a significant flaw, especially in the present markets for health-conscious consumers. One opportunity that Pepsi has is going online. Customers are increasingly shopping online through digital means. Pepsi has the chance to increase sales through different networks and use the advantages of online purchasing by growing its e-commerce.

Further situational analysis of the Pepsi Company reveals that its increased profits and value emanate from its distribution and strong production techniques. Much of this evidence arises from SWOT analysis, market analysis, industry analysis, and competitive analysis of the company. Essentially, this analysis can help reveal the strong position of Pepsi within the food and beverage industry.

Industry analysis of Pepsi Company

PepsiCo is in an excellent position in the food and beverage or soft drink sectors. According to Aithal (2017), conducting an industry analysis is crucial because it helps business managers understand what kind of opportunities and problems are in the industry and how they should overcome them. According to Arize et al. (2012), industry analysis helps establish the risks and returns that a business can encounter or experience. Summing up these findings, it is imperative to conclude that conducting an industry analysis of a company is beneficial in forecasting demand and supply and the subsequent economic returns of a particular endeavor. Organizations should develop competitive and sustainable advantages when the industry is highly competitive.

Case in point, PepsiCo has pursued competitive and sustainable strategies to remain relevant in the highly competitive soft drink industry. Diversifying its product portfolio is one of the strategies that has enabled PepsiCo to have a competitive advantage in the market. Besides, the wide portfolio of products has enabled the company to have a competitive and sustainable position in the market. Additionally, PepsiCo had toiled hard to improve how the general public perceives it. Some of the ways to enhance public perception is through tax compliance. Through the development of various competitive strategies, it is no doubt that Pepsi is on its way to becoming the number one brand in the soft drink industry.

The way the public perceives and rates an organization has significant implications for its failure and success. Nowadays, every matter is about going green to reduce the impacts of climate change. Governments, environmentalists, policymakers, and other interested agencies have raised an outcry for the need to protect our environment with measures such as adopting renewable energy sources and avoiding burning carbon fuels. As Bozdo (2020) indicated in his study, maintaining a good reputation in society is crucial because it influences people’s decisions. In other words, a bad reputation ruins a company’s success path, while a good reputation helps build an organization’s success path (Bozdo, 2020). On this matter, PepsiCo has undertaken severe measures to create a positive image in society by reducing environmental pollution by replacing plastic bottles with reusable plastic. Through such practice, the company has a strong environmental safety profile.

SWOT analysis

The company’s competitive advantages emanate from Pepsi’s internal strengths, as noted in the SWOT analysis. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. Through SWOT analysis, competitive analysis, marketing analysis, and industry analysis, it is easy to see where the company is headed and where it requires improvements. One of the strengths that give PepsiCo a competitive advantage in the market is its brand. According to Mourdoukoutas (2018), PepsiCo ranks among the most valuable brands globally on Forbes 500.

Another strength of the company emanates from the diversification program. Essentially, Pepsi offers snacks and beverages in the Frito-Lay North America division, making it a diversified and stronger organization. The high diversification comprising 22 brands like Fritos, Pepsi Max, Diet Pepsi, and Pepsi helps to increase the company’s revenue streams. Global presence is another source of competitive advantage for PepsiCo. The company enjoys an overwhelmingly global presence in more than 200 states. The company’s global presence in many countries has helped PepsiCo increase recognition and awareness of its brand amongst consumers in these countries. Additionally, dominance in the market is another strength that gives PepsiCo a competitive advantage over its competitors, such as Coca-Cola. Notably, as mentioned earlier, PepsiCo has been doing better than Coca-Cola in some parts of the world where it has operations, such as in the United States and North America.

Customer loyalty is another source of PepsiCo’s strength and a source of competitive advantage. The younger generation, mostly the target market for PepsiCo’s products, is very loyal. The youths love the great taste of soft drink products. As a result of the loyalty of the customers, PepsiCo has launched PepCoin as a way of rewarding loyal customers. Another strength of PepsiCo emanates from its strong sense of corporate social responsibility whereby the company collaborates with community-based, national, and international organizations to tackle challenges facing most societies today, precisely challenges relating to environmental protection. Moreover, the ability of PepsiCo to market through sports add to the pool of its strengths and source of competitive advantage. Essentially, this strategy enables the company to advertise its products directly to consumers spectating sporting events.

Weaknesses

Pepsi is like any other company in terms of experiencing weaknesses. Essentially, the company has to strategize how it can overcome such weaknesses. One of the weaknesses that PepsiCo experiences are its extreme reliance on single companies such as Wal-Mart to sell its products. The low prices offered by Walmart make PepsiCo sell its products at low profits. Another implication of this on PepsiCo is that in case of financial problems for Wal-Mart, PepsiCo would suffer immensely. Another weakness that PepsiCo faces is a negative perception of some of its products that seems unhealthy. In 2011, for instance, PepsiCo, among other companies that used coloring components to color its beverages, was carcinogenic (The Guardian, 2011). Such negative perceptions about the company’s products have considerable weaknesses in the organization regarding revenue and profit generation.

Opportunities

Opportunities represent areas that can be capitalized upon. In the business arena, opportunities represent arenas that organizations can take advantage of to increase profits and create an excellent image for the public. One of the opportunities that present for PepsiCo is the diversification of its products. Although the company has diversified its products to 22 different brands, it should continually diversify its product portfolio. Notably, most of its diversification falls under food and beverage. However, it can increasingly diversify to include products that fall outside food and beverages, such as sportswear. According to Olalere et al. (2021), diversification helps a firm expand its revenue streams and enhance its stability.

Threats

Threats comprise factors that make a company vulnerable in the market. One of PepsiCo’s main threats is intense rivalry from iconic global brands such as Unilever, Nestle, and Coca-Cola. Stiff competition is a threat to the company because it puts profitability and sustainability in the long term at risk. Notably, competition increases the company’s cost of protecting its share in the market through discounts, promotions, and adverts directed at attracting new customers and retaining loyal ones. Another threat facing the company is an economic crisis because PepsiCo can suffer huge losses. This is because its products are seemingly luxurious and can be among the first items consumers drop off on their to-do lists if an economic or financial crisis occurs. Another threat facing the company is increasingly health-conscious customers. Notably, this is a considerable threat given that most snacks are too salty and beverages too sugary for health-conscious consumers. If PepsiCo does not address this promptly, it can lose many customers to rival firms.

S.T.P. Analysis

Pepsi has a multi-segment approach as a positioning strategy and, as a result, simultaneously markets to multiple consumer segments with various product offerings. For instance, Pepsi-Cola is promoted as a drink with a wonderful flavor and a soothing effect. Pepsi-Cola is not marketed to consumers worried about the consequences of drinking carbonated drinks because it has high sugar content. Instead, Pepsi is marketing its Diet Pepsi to this customer demographic sensitive to the health effects of drinking carbonated drinks.

Pepsi’s Marketing Strategy

Pepsi has deployed numerous strategic marketing plans to enhance its competitive advantage. The company is creative in targeting customers and marketing its products. One effective strategy is celebrity endorsement, which involves using public figures to endorse a brand. According to Kumar and Patra (2017), celebrity advertising has become the norm in modern marketing plans. Kumar and Patra (2017) argue that this marketing strategy enhances brand equity in terms of increased sales and customer attraction.

Similarly, PepsiCo has been using celebrity advertisements to increase brand awareness and boost sales of various products. Some celebrity endorsements used by PepsiCo include Lionel Messi, Kun Sergio Aguero, David Beckham, Beyonce, Robbie Williams, and Michael Jackson, among others. Essentially, celebrity advertising is not a new concept since many global organizations have been using this approach for many years. Global companies set aside millions to endorse celebrities to market their products. Consumers who associate with the celebrity are likely influenced or persuaded to buy the product. Notably, this is in line with a study by Chopra and Avhad (2020) identifying that millennials are looking for celebrity influencers in advertisements because they trust them and feel more connected with them. Due to the proliferation of the internet, most youths are using social media platforms such as TikTok to have fun. Given this fact, PepsiCo should capitalize on celebrity advertising by engaging with TikTok users. Instagram is another platform where PepsiCo can promote its products by endorsing key influencers such as Ronaldo, Erling Haaland, and Lionel Messi. However, it has opportunities to expand the marketing plan to include ideal strategies to spur its market leadership. Such marketing strategies include product placement and personalized marketing.

Product placement involves featuring branded goods and services in productions that target a mass audience (Chandra et al., 2022). The advertisement should not bother the audience so much, but they will still see the advert. Pepsi can utilize this strategy by featuring its products in various channels that attract a mass audience. One significant opportunity is using the channels that show live soccer matches. The company can feature its products on the screens of the media houses that show major soccer leagues in North America and beyond. For instance, the company’s products should appear as inset images on the screens during the FIFA 2022 World Cup. Such a strategy can offer it an opportunity to secure a large customer base.

Implementation Plan

The initial stage of the implementation plan is to dedicate a portion of Pepsi’s budget to be set aside for advertising as the first step to ensure that the company will obtain a competitive edge through the endorsement of celebrities. This comprises negotiating a deal with public figures so that they will promote the Pepsi brand in exchange for financial compensation. With this contract that has been established and this budget that has been committed towards celebrity endorsement, a large market will be activated, and the brand will achieve the number of desired sales and revenue it aims for per the marketing strategy.

Evaluation and control Metrics

In order to ensure that the Pepsi brand is fulfilling its purpose and that the customers are satisfied and feel included, it is essential to have a mechanism set that facilitates information exchange (Matta, 2022). Therefore in this way, Pepsi will be able to understand what needs to be done and implemented. The evaluation process for Pepsi entails conducting a marketing program performance analysis; this will be informed of evaluating the return on investment, monitoring the market progress and market share, and using questionnaires to gauge customers’ preferences. The following strategy is to conduct social engagement on the media platforms to find out what the target customers prefer and their views on Pepsi. The following control metric is to evaluate the customer relationship. The most crucial aspect of Pepsi’s cooperation is its customers; therefore, in establishing great trust in the brand, it is essential to prioritize customer needs and suggestions. In this manner, Pepsi will establish customer loyalty to the brand and ensure that its customers feel appreciated; therefore, they will remain loyal to the brand. (Mall, 202). Hence Pepsi can manage its partnership by creating a department for customer relationships to evaluate and control the base.