PEPSICO

Case Study 2: Pepsico

Case Study 2: Pepsico

Historical Perspective

The history of Pepsi-Cola starts in 1896 in the town of New Bern in North Carolina, USA in a drugstore owned by the pharmacist Caleb Bradham. He came up with many recipes of new drinks to be served at the soda fountain of his drugstore.

Bradham aim was to create a drink both delicious, healthy, aiding digestion and boosting energy. It would be free of impurities and it should not contain any strong narcotics. Eventually one of his drinks became very popular and the customers started to call it Brad's drink. This was the beginning of Pepsi-Cola's story and later, Bradham's vision was turned into a mission for the future company.

In the beginning, the business remained small and based on operations conducted within its immediate territory. By 1898 the drink was renamed Pepsi and given its first logo and patented trademark. By 1902 the popularity of Pepsi transformed the company into a fully-fledged business.

New Bern Weekly Journal published the first newspaper advertisement and the bottling system was improved with the addition of five-gallons kegs to six ounce bottles and a marketing slogan: “Exhilarating, Invigorating, Aids Digestion”.

a. Review the organization's earlier strategies and structure.

If we look at the Pepsi-Cola Company from the outside, there has been a certain amount of repetitiveness in its development. By following the trends and focusing on how to lower the price as much as possible, they managed to create a successful company. By investing in the development of the bottling and distribution sector, Pepsi found their balance in the market.

Then in 1920's Pepsi-Cola Company failed because they didn't concentrate enough energy on branding. Within a few years Pepsi was declared bankrupt twice. By the end of the 1930's the company was reorganized from inside and the marketing policy drastically changed. Major investment was now directed towards making people more familiar with the product.

After acquiring Mountain Dew, new sources of financing and revenue opportunities were needed because the acquisition was not an instant success. Therefore, in 1965 Pepsi merged with Frito Lay. In the 1980's the decreasing sales in the beverage market induced the industry to adjust with more aggressive marketing strategy and new products. In fact, Coke marketed a new cola formula, whereas Pepsi persisted with promotional efforts and improved customer responsiveness to increase sales volume.

Following these cyclical changes in the marketing policy of the firm (every 20 years there is a huge turn over), one could conclude that this is the time for PepsiCo's to readjust. The circumstances underlying the merger with Quaker Oats are significant. Nowadays, the market is rapidly changing and it's becoming saturated. The entrance into potential new markets is more complex than ever consequently, the only way for the company to expand is by gaining market share by mergers or strategic alliances. Furthermore, the marketing strategies in foreign markets like China and India are experiencing problems in customer responsiveness. Currently, the beverage sector is following a trend of continuous launch of new ...