Pepsico Diversification Essay

PepsiCo’s Diversification Strategy in 2008 PepsiCo was the world’s largest snack and beverage company, with 2007 net revenues of approximately $39. 5 billion. The company’s portfolio of businesses in 2008 included Frito-Lay salty snacks, Quaker Chewy granola bars, Pepsi soft drink products, Tropicana orange juice, Lipton Brisk tea, Gatorade, Propel, SoBe, Quaker Oatmeal, Cap’n Crunch, Aquafina, Rice-A-Roni, Aunt Jemima pancake mix, and many other regularly consumed products. Company History PepsiCo Inc. was established in 1965 when Pepsi-Cola and Frito-Lay shareholders agreed to a merger between the salty snack icon and soft drink giant. The new company was founded with annual revenues of $510 million and such well-known brands as Pepsi-Cola, Mountain Dew, Fritos, Lay’s, Cheetos, Ruffles, and Rold Gold. PepsiCo’s roots can be traced to 1898 when New Bern, North Carolina, pharmacist Caleb Bradham created the formula for a carbonated beverage he named Pepsi-Cola. The company’s salty-snack business began in 1932 when Elmer Doolin of San Antonio, Texas, began manufacturing and marketing Fritos corn chips and Herman Lay started started a potato chip distribution business in Nashville, Tennessee. In 1961, Doolin and Lay agreed to a merger between their businesses to establish the Frito-Lay Company. There are also so many other products and companies that merger with PepsiCo throughout the years. Once Quaker Oats’ food, snack and beverage brand merged with PepsiCo companies in the United States and internationally broadened it portfolio of the brands. Internationally Pepsi brought countries like the Netherlands, Poland, Ukraine, Bulgaria, Brazil and Canada. Marketing From the 1930s through the late ’50s, â€Å"Pepsi-Cola Hits The Spot† was the most commonly used slogan in the days of old radio, classic motion pictures, and later television. Its jingle (conceived in the days when Pepsi cost only five cents) was used in many different forms with different lyrics. With the rise of television, Pepsi utilized the services of a young, up-and-coming actress named Polly Bergento promote products, oftentimes lending her singing talents to the classic â€Å"†¦ Hits The Spot† jingle. Some of these Bergen spots can be seen on ClassicTVAds. com. Through the intervening decades, there have been many different Pepsi theme songs sung on television by a variety of artists, from Joanie Summersto The Jacksonsto Britney Spears. See Slogans) In 1975, Pepsi introduced the Pepsi Challengemarketing campaign where PepsiCo set up a blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the majority of participants picked Pepsi as the better tasting of the two soft drinks. PepsiCo took great advantage of the campaign with television commercialsreporting the results to the public. In late 2008, Pepsi overh auled their entire brand, simultaneously introducing a new logo and a minimalistlabel design. The redesign was comparable to Coca-Cola’s earlier simplification of their can and bottle designs. Also in 2008 Pepsi teamed up with Google/YouTube to produce the first daily entertainment show on Youtube, Poptub. This daily show deals with pop culture, internet viral videos, and celebrity gossip. Poptub is updated daily from Pepsi. In 2009, â€Å"Bring Home the Cup,† changed to â€Å"Team Up and Bring Home the Cup. † The new installment of the campaign asks for team involvement and an advocate to submit content on behalf of their team for the chance to have the Stanley Cupdelivered to the team’s hometown by Mark Messier. Pepsi has official sponsorship deals with three of the four major North American professional sports leagues: the National Football League, National Hockey Leagueand Major League Baseball. Pepsi also sponsors Major League Soccer. Pepsi also has sponsorship deals in international cricketteams. The Pakistan cricket teamis one of the teams that the brand sponsors. The team wears the Pepsi logo on the front of their test and ODI test match clothing. On July 6, 2009, Pepsi announced it would make a $1 billion investment in Russia over three years, bringing the total Pepsi investment in the country to $4 billion. In July 2009, Shag-me started marketing itself as Pepsi in Argentinain response to its name being mispronounced by 25% of the population and as a way to connect more with all of the population. In October 2008, Pepsi announced that it would be redesigning its logo and re-branding many of its products by early 2009. In 2009, Pepsi, Diet Pepsiand Pepsi Maxbegan using all lower-case fonts for name brands, and Diet Pepsi Max was re-branded as Pepsi Max. The brand’s blue and red globe trademarkbecame a series of â€Å"smiles,† with the central white band arcing at different angles depending on the product until 2010. Pepsi released this logo in U. S. in late 2008, and later it was released in 2009 in Canada(the first country outside of the United States for Pepsi’s new logo), Brazil, Bolivia, Guatemala, Nicaragua, Honduras, El Salvador, Colombia, Argentina, Puerto Rico, Costa Rica, Panama, Chile, Dominican Republic, the Philippines and Australia; in the rest of the world the new logo has been released in 2010, meaning the old logo has been phased out entirely (most recently, Franceand Mexicoswitched to Pepsi’s current logo). The UK started to use the new Pepsi logo on cans in an order different from the US can. In mid-2010, all Pepsi variants, regular, diet, and Pepsi Max, have started using only the medium-sized â€Å"smile† Pepsi Globe. Pepsi and Pepsi Max cans and bottles in Australia now carry the localized version of the new Pepsi Logo. The word Pepsi and the logo are in the new style, while the word â€Å"Max† is still in the previous style. Pepsi Wild Cherryfinally received the 2008 Pepsi design in March 2010. PepsiCo and it’s THREAT According to Consumer Reports, in the 1970s, the rivalry continued to heat up the market. Pepsi conducted blind taste testsin stores, in what was called the â€Å"Pepsi Challenge†. These tests suggested that more consumers preferred the taste of Pepsi (which is believed to have more lemonoil, less orangeoil, and uses vanillinrather than vanilla) to Coke. The sales of Pepsi started to climb, and Pepsi kicked off the â€Å"Challenge† across the nation. This became known as the â€Å"Cola Wars†. In 1985, The Coca-Cola Company, amid much publicity, changed its formula. The theory has been advanced that New Coke, as the reformulated drink came to be known, was invented specifically in response to the Pepsi Challenge. However, a consumer backlash led to Coca-Cola quickly reintroducing the original formula as Coke â€Å"Classic†. According to Beverage Digest’2008 report on carbonated soft drinks, PepsiCo’s U. S. market share is 30. 8 percent, while The Coca-Cola Company’s is 42. 7 percent. Coca-Cola outsells Pepsi in most parts of the U. S. , notable exceptions being central Appalachia, North Dakota, and Utah. In the city of Buffalo, New York, Pepsi outsells Coca-Cola by a two-to-one margin. Overall, Coca-Cola continues to outsell Pepsi in almost all areas of the world. However, exceptions include India; Saudi Arabia; Pakistan(Pepsi has been a dominant sponsor of the Pakistan cricket teamsince the 1990s); the Dominican Republic; Guatemalathe Canadian provincesof Quebec, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island; and Northern Ontario.