Pepsi marketing plan and business strategy

Pepsi marketing plan and business strategy As a student of strategic marketing, we have asked to make a marketing plan for an organization along with its relation to overall business strategy. For this purpose we have chose PEPSI and we shall be discussing its operations in Pakistan, PEPSI has been market leader in beverage industry since its launch in Pakistan but bow a major threat is been faces by aggressive marketing strategies by Coke. In the below mentioned lines we shall be discussing the marketing strategies to overcome such challenges. Marketing Plan Business Strategy Marketing plan and business strategy are two different things, business strategy or organizational objectives give the direction that where this organization will be going and how we are going to do business, in this sense business objectives play the role of very fundamental principles upon which all the departments establish their operational guidelines. On the other hand marketing plan is the tool to achieve the business objectives, while business objective tells what we are going to do marketing plan tells how we are going to do that. This makes a clear relationship between marketing plan and business strategy, where business strategy plays the role of guiding arrows (Wison, Gilligan, 1999). Since there are different kinds of business strategies, three of them are more popular, cost leadership, differentiation and focus. Keeping this in mind there will be different marketing plans if different organizations within the same industry opt for different business strategies. Competitor form same industry may have different business strategy thus their marketing plan will differ. Where ever a marketing plan is made it should have a clear understanding and link with business strategy otherwise organization will be going in one direction and marketing department will be going in other direction resulting in complete failure (Aaker, 2008). Components of a Marketing Plan A good marketing plan can have several components, ranging from industry analysis to media plan; however it depends from industry to industry and product to product that what a marketing plan should include, it also depends on the problem at hand and urgency of the requirement. However below are few components that marketing should in normal circumstanced, addition and subtraction is dependent on the situation. Company Analysis Company analysis gives the information about the current situation of organization, it comments of strengths, weakness, opportunities and threats in front of the company, for this purpose SWOT analysis is always a good tool to work with, BCG Matrix is also and good tool to judge the performance of company. Going more deep marketing plan can also or marketing audit report to judge the current performance of marketing department and then also suggest the ways to improve it, there are many tools available to do so, details which is not required here. Industry Analysis Industry analysis provides the information about the overall industry environment, its dynamics and level of competition. To have this information PEST and Porters five forces model are widely used tools to get birds eye view about the industry. Customer Information This is a high importance, risky and tricky part, it gives basic information about customers, their liking disliking, values, decision making behaviors, demographics and consuming patterns of the product. All this information is later used in construction of marketing plan, and it is also the basic brick for the segmentation part, If we as marketer fail to know the customer properly, total marketing plan will lead to wrong decision making. Competitor Analysis This part also has a relatively high importance, gives the information about competitors, their strengths, weaknesses, competitive edge, business strategy, value proposition, positioning and product features, customers opinions about competitors and their marketing mix analysis. Having the correct information about competitor, which is not always an easy this to do, can give you a clear understanding of current market situation and also helps in making better strategically moves. Segmentation One of the most important and risky part of marketing plan is segmentation, after getting the customer analysis done via detailed marketing research, market is divided into heterogeneous segments, thats where company can make the mistake, since rest of the marketing mix is dependent of the segmentation, it has be to be done very carefully, any misinterpretation of the information can lead any component of the marketing mix towards wrong direction. 2nd step in after segmentation is segment selection and making of marketing strategy, there are different approaches towards selection of selection, one, more or all segments can be selected for the target, and different marketing mix are made for each segment. Marketing Mix Product This includes the product description, its working, its brand name and positioning, its value proposition, how it is better than competitors product, and what advantages it gives to customer for increasing their value for money. What image we want to produce regarding product in customers mind. This may also include its packaging information and various packaging options can be given in this part. Price This part deals with the pricing of the product, how we are going to price that product, what is the relationship of price with overall positioning, how is price is going to be perceived, what are the discount offering and how we are going to bundle the price, these are questions that may be answered in this section. Place This deals with channel of distribution, what channel is to be acquired, how we are going to handle intermediaries, what role whole seller and retailer will be playing the distribution of the product, where we are going open outlets, what is the criteria of outlet selection, what convenience we are going to give to customer and how we are going to make the availability of the product. Promotion This part deals with actually promoting the product, this should discuss the sales promotion offers, long term or short term promotional strategies, integrated marketing communication strategies, media selection and its relationship with target market. Reach and effectiveness of each medium selected. A brief media plan can also accompany this section. Marketing Plan and Risks There are several risk that one can face while constructing the marketing plan, one of the risk is lack of required information, we need information from within company, we need information from industry and most importantly we need information from our competitors, this amount of information is not readily available, some time it is really hard to get secondary data, while have not sufficient information it is risky to make critical decision and that puts the entire marketing plan on stake. One another aspect of risk is the correctness and validity of information, secondary data is a good source but at the same time it is a risky proposition to make your decision on the basis of the information which is doubted to be valid. The above mentioned both risk deals with industry information as well as competitor information. One another risk is also there which is lack of understanding of information, that mainly deals with the customer analysis part and affects the segmentation that in result affects the entire marketing mix, misunderstanding the research or taking the research into wrong direction are main reasons with this. The final risk is the lack of managements consent on the marketing plan, in some cases marketing department works in on direction and entire company works in other direction, this risk also deals with non-compliance of marketing plan with business objectives. Marketing Plan-PEPSI PEPSI has been the market leader in cola industry in Pakistan, here their business strategy is low cost leadership, below presented marketing plan is made keeping in mind the business strategy. Company Analysis PEPSI has been the market leader in beverage industry in Pakistan; it has gained this position by leveraging first movers advantage and then maintained this position with its aggressive marketing and channel management techniques. Its strengths are a well established brand name, a well managed distribution channel, and strong financial backing. Its weakness are inability to cope with local beverage producers as they take them lightly and now they are becoming a threat, more over cokes aggressive marketing is also a threat to PEPSI. Industry Analysis Beverage industry in Pakistan has been a highly competitive industry since the emergence of other player like Coke and some local manufacturers. With almost zero switching cost, relatively very low differentiation in taste and wide variety of available substitutes makes the cola customer very difficult to make brand loyal. Increasing advertising and operational cost along with every day increasing power of retailer making the competition more intense where price and brand is not the only factor which can give them the success. Now the power rests with customer and retailer as there are many substitutes available to cola drink, not only direct substitutes but also indirect substitutes are also available when come to satisfaction of thrust. Customer Analysis Since company has been on mass marketing strategy then everybody is a prospect customer, everybody who gets thirsty is a customer of PEPSI, cola drinks are kind of product which is presented with food and to guests, so the main purpose is not satisfying the thrust but having a little bit more luxury in drinking. Keeping this thing in mind we come to know that cola customer will be using this product on some special occasions like family get together, or having food or presenting it to guests. So at while drinks are not presented in original bottle customer will be less brand concisions. Pakistani market is always been price sensitive, so is the case with cola. However it is highly affected by the availability factor. Competitor Analysis This is highly competitive market, with more substitutes and zero switching costs. During the last decade Coke has been a tough competitor for PEPSI, with its aggressive marketing campaigns, increasing and aggressive channel of distribution and a good positioning coke is emerging a well established widely accepted and preferred brand especially in metropolitan cities. Another emerging competitor is a local producer which is not really a major threat for PEPSI but yes it has all the capabilities required to become and major competitor, its brand name is Gourmet Cola, a private brand of a local bakery chain, this chain is getting being widely accepted in metropolitan and its growing like anything Segment Selections Apparently there are not much difference in the customer of cola, the same taste is accepted everywhere in the some variation, there is a minor segment which is diet conscious and want a zero calorie cola drink. If we talk about the segment selection then company should go for and its has been going for mass marking, standard marketing mix for everyone, for diet conscious customers diet Pepsi should be introduced. Right now we shall be talking about standard cola drink and its marketing. Marketing Mix Product The product is a standard cola drink, that satisfies the need of thrust and more it works a drink to be presented with the food and on get together occasions. It is positioned as a drink which relates to personal achievement, its focus will be I being the personal achievement. It will be positioned as drink of youth, the drink of successful youth. The element of excitement and emotions will be included in the positioning. It will be presented in various packaging, for example pet bottle, half letter, one litter and 2.5 litters, this packing variation will increase and help its use on various occasions. Price Since it has been a high price competitive industry, price of PEPSI will be kept at par of the industry, some discounts will be introduced in the bulk buying and on one litter and more packaging. Since colas are affected with the push of retailer, good dealer and retailer margins will be given to retailer and distributer, so that they can make sure the availability and push the product, since brand loyal is low in this product, retailer push is always required and helpful in getting the desired results. Channel of Distribution This part is one of the most important parts of the entire marketing plan. Here in Pakistan retailer has the power in the channel more than any other industry, colas has more substitutes, low brand loyalty and zero switching cost, customer will drink whatever cola brand is available on the retail shop, that scenario gives more power to retailer. So we shall be focusing in the improving our strength in retail channel, building the relationships with retailers, making sure the availability and leveraging the exclusivity on retail shops, and giving them more commission so that they can maintain the exclusivity and push the product to customer, once retailer push and exclusivity is achieved there will be no problem with customer to buy the product. Promotion This is another high importance component of marketing plan; more focus will be given on this part as well. PEPSI will focus on building brand and up to some extent brand loyalty among youth by focusing on its positioning and also by maintaining brand recall. More sales promotions will be offered during local occasions like EID etc. followed and good spend on the media especially during the promotional period. Mitigation Strategy There are few elements in plan that are of high risk, one the positioning factor that needs to be handled in a careful manner, the individual success positioning can turn back, on the other hand Cokes positioning is we the family and get together, if positioning can is not handled properly its can be a disaster. The second risky elements is the increasing power of retailers, we are at the same time exploiting the retailer power but on the other hand giving more power to them by adopting push strategy, if more and more power is given to retailer then in the end they will be able to blackmail us on their own conditions. To handle this risk brand should be build so strong that it can generate pull. Plans Relation with Strategic Objective Business strategy is cost leadership, since PEPSI is a market leader is has to maintain its position and at the same time they want to reduce costs. Now if we look at the marketing plan it focuses on the push strategy, building relationships with retailers, giving them incentives for push and winning exclusivity on the retail out lets, if this plan is executed well we can reduce out marketing cost without compromising or even increasing on sales and market share. This plan also suggest that PEPSI should get exclusivity on the large cash and carry retail stores like, METRO, MACRO Hyperstar where customers buy in large quantities, if they are able to do so their marketing cost will decrease and sales will increase noticeably. One can argue that plan also supports the brand building which is an expensive thing to do, I would answer that brand building and getting mindshare is something unavoidable, this is not a luxury spending of marketing budgets but it is in return creates the pull for the brand and pays in the longer run. Agreement and Plan Tracking The success of the plan depends on the total consolidated effort by the entire company that is why managements approval and consent will be required to get whole organization on board. This plan will be presented to all stake holder and if management approves then all other departments will be working on the same direction, for example if management want to cut cost then they are do so with a better management of supply chain, similarly other departments will have their roles to play in achievement of strategic objectives. Success of the plan will be tracked at every execution step with continuously monitoring, on the brand side studies will be conducted to monitor the achievement of brand related targets like top of the mind brand recall, retailer relationship management will be monitored that ho successful we have been bringing retailers on boards and winning exclusivity. A relationship of these tracking studies with overall market share and sales will be established that will determine the success of this plan, if problem found and targets are not achieved then strategy will be review and necessary actions will be taken to improve the performance. Conclusion Making a strategic plan is a tricky this, challenge is to keep the department on the track provided the top management while producing the workable and successful solution, at the same time direction of the other stake holders is also required to be in the same direction. While every care is taken even then there are chance that plan is based on some misunderstanding of information required or required information is also not provided, these are the greatest challenges that a strategic marketer has to face. For getting the plan worked a continuous monitoring is required on its execution part. Some very good strategies tend to fail while in execution, that is another care that a strategic marketer has to be careful about.