Pepsico Case Study Essay

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1. What is PepsiCo’s corporate strategy? Briefly identify the business strategies that PepsiCo is using in each of its consumer business segments in 2008.

PepsiCo’s corporate strategy had diversified, in 2008, the company into salty and sweet snacks, soft drinks, orange juice, bottled water, and ready-to-eat drink teas and coffees, purified and functional waters, isotonic beverages, hot and ready-to-eat breakfast cereals, grain-based products, and breakfast condiments. Strategies that kept their brands at the top were tied to new product innovation, close relationships with distribution allies, international expansion, and strategic acquisitions. A new element of PepsiCo’s corporate strategy was product reformulations to make snack
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For example, in 2006, the acquisition of Izze lightly carbonated sparkling fruit drinks was targeted towards health-conscious consumers. Furthermore, the product lines for its water business were developed around customer type and lifestyle. For instance, Propel was targeted towards the physically active consumers while Life Water was targeted towards image-driven consumers. In addition, PepsiCo International division includes all the PepsiCo snacks, beverages, and food items sold outside North America. They are doing extremely well in emerging markets such as Russia, the Middle East, and Turkey. As for Chile, the sales are a little lousy. They find that the Power of One strategy works there since Frito-Lay has 90 percent of the market. Again, the Power of One strategy is simply placing PepsiCo products next to Frito-Lay products. Simply, the developing an understanding of consumer taste preferences was a key to expanding into international markets. The taste preferences for salty snacks were similar from country to country, which enables PepsiCo to make moderate changes to its snacks in most countries. For example, Lay’s, Doritos, and Cheetos snacks were sold in Latin America. However, a seaweed-flavored Atesanas chips sold in Thailand and Lay’s White Mushroom potato chips are sold in Russia. In 2007, PepsiCo was eliminating trans fat from its snacks and expanding in Europe, since the demand for health and wellness products is increasing 10-13
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