Pepsico Research Paper


The PepsiCo challenge is to keep up with archrival The Coca-Cola Company - never ends for the world's soft-drink maker. PepsiCo's soft drinks (including Pepsi, Mountain Dew, and Slice) make up about one-quarter of its sales. (Bottling operations are run independently). Pepsi Co also owns Frito-Lay, the world's number 1 maker of snacks such as corn chips (Doritos, Fritos) and potato chips (Lay's, Ruffles, WOW!). PepsiCo sells its Gatorade sports drink and Tropicana orange juice brands through other divisions. The company also sells Aquafina bottled water, Dole juices (licensed), Lipton ready-to-drink tea, and Rold Gold pretzels. Pepsi's mission is to be the world's premier consumer products company focused on convenient foods and beverages. They seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Problem Statement:

What does product and service design do to help Pepsi meet its consumer needs?

Research Questions

1. What kind of things does Pepsi do in regards to research and development?

2. What are the existing products and services?

3. What are new products and services?

4. What are their legal, Ethical, and Environmental Issues?

5. Examine Pepsi's life cycle.

6. Does Pepsi supply a standardized product?

7. Does Pepsi design for mass customization?

8. What are Pepsi's production requirements?

9. What kind of things does Pepsi do regarding their social responsibility?

10. What kind of factors does Pepsi emphasizes on service design?


Our team will be using the Internet to obtain various information on the company, such as: the income statement, sales revenues, history, finance, products/operations, and industry. We will also be using periodicals and our text book to compile information about product and service design. The text book will be used as a guideline for understanding the concepts of product and service design. While the periodicals such as "Wall Street Journal" and "Forbes" will be used to authenticate our findings and research.

Results and Findings

1. What kind of things does Pepsi do in regards to research and development?

PepsiCo's research and development refers to organized efforts to increase scientific knowledge or product innovation in communications, medicines, and space technology. PepsiCo gives to the community through the PepsiCo Foundation, the PepsiCo Community Affairs Department and PepsiCo divisions. The PepsiCo Foundation, PepsiCo and its divisions contributed approximately $26.4 million to nonprofit groups in 2002. The PepsiCo Foundation and its operating divisions gave grants to more than 1,000 community organizations, of which a significant portion were organizations championing diversity efforts. Organizations are also supported through gifts in-kind, such as product, premiums, printing, meeting arrangements, equipment donations, support of events, conventions, journals and meetings. The geographical area most at risk of HIV/AIDS impacts the health of people and of nations is Sub-Sahara Africa. As a company as PepsiCo with operations in Africa, PepsiCo actively works to address the associated health risk among its employees and in the community. As a global company and concerned corporate citizen, PepsiCo has joined with other businesses to fight HIV/AIDS on a worldwide basis. PepsiCo advise these vendors of PepsiCo's family companies' commitment to support minority economic development with respect to majority-owned companies and general contractors. PepsiCo encourages these suppliers to use minority and women vendors, distributors and qualified subcontractors as part of their service. PepsiCo also makes a great job on product innovation, such as "buying into the burgeoning industry through Pepsi Bottling Group (PBG, $23), the leading manufacturer and distributor in the U.S. of Pepsi's beverage brands. Bottlers are more exposed to the water business, since their fortunes aren't based on, say, how well Chester the Cheetah pushes Cheetos for Pepsi's Frito-Lay division. PBG, which is nearly half-owned by PepsiCo North America, is expected to reap some 40% of its domestic profit growth over the next few years to come from H2O. That could push profitability 'surprisingly high'" suggests by Goldman analyst Marc Cohen in Lee Clifford's articles (pg.204). Therefore, Aquafina is named No. 1 best-selling brand of bottled water in The New York Times in 2003.

2. What are the existing products and services?

PepsiCo's success is the result of superior products, high standards of performance, distinctive competitive strategies and the high integrity of its services by all employees. PepsiCo has hundreds of brands. PepsiCo's brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service. There are five best known brands are: Frito-Lay Brands, Pepsi-Cola Brands, Gatorade Brands, Tropicana Brands, and Quaker Brands. The PepsiCo creates more new product lines to serve different tastes for the different kinds of customers in the market. That is also the successful strategy to keep the company running well in both domestic and international market. Almost each year the PepsiCo has the new products to introduce to the market.

The website provides the whole list of the PepsiCo's new introductory products and events of each year from 1965 to 2003. For examples, Doritos brand tortilla chips are introduced and Pepsi enters Japan and Eastern Europe in 1966. In 1967, PepsiCo stock splits two-for-one. And Pepsi Generation advertising, "Come Alive! You're in the Pepsi Generation" campaign that named and claimed a whole generation (1963-67), introduces a new theme: "Taste that beats the others cold. Pepsi pours it on!" In 1969 Bold, modern Pepsi-Cola packaging using red, white and blue is introduced. "You've got a lot to live, Pepsi's got a lot to give,"


The Pepsi-Cola Story

  • Length: 907 words (2.6 double-spaced pages)
  • Rating: Excellent
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The Pepsi-Cola Story

Summer of 1898, a young pharmacist Caleb Bradham looking for ways to attract people to his pharmacy invented the beverage now known around the world as Pepsi-Cola. After the first advertisement the sales of the new soft drink began to go up. Knowing the importance of good distribution system Pepsi was one of the first to switch from horse drawn transport to motor vehicles. Throughout its existence Pepsi adjusted its marketing strategies trying to keep up with the social and economic conditions of its consumers. During the Great Depression and continuing into the World War II Pepsi emphasized the low prices of the drink knowing that people had narrowed their budgets. In the mid. 1950s the emphasis fell on Pepsi being a lifestyle accompaniment. The breakthrough move by Pepsi was made in the late 1950s to capture the market of new generation of baby boomers. Its best known advertisement slogans such as “You’re in the Pepsi Generation”, “Have a Pepsi day” or “You’ve got a lot to live, Pepsi’s got a lot to give” set a new standard for advertising. To dominate in a soft drink category Pepsi, after 65 years of selling only Pepsi-Cola, introduced new products: “Mountain Dew and Diet Pepsi.” To capture the completely new market of X-ers, throughout 1980s and 1990s Pepsi’s commercials featured superstars, supermodels, actors and sport stars. In the mid. 1980s Pepsi-Cola declared a victory in the cola wars.

     Keeping Pepsi-Cola as its cash cow presidents of Pepsi-Cola decided to back up their positions by investing in a fast food restaurants and snack industry. In 1965 the new PepsiCo resulted from the merger of Pepsi-Cola and Frito Lay’s, Inc.. Pepsi-Cola stuff knew that in order to survive in the direct competition with giants like Coca-Cola they will have to come up with more innovative products. Pepsi-Cola Company now accounts for 25% of the world’s soft drinks with more than 70% of its sales coming from North America. In the beverage category Pepsi-Cola Company had some losses but are thinking of restructuring their strategies to create a new and even more dominant beverage company. Frito-Lay Company is the most successful snack chip company on Earth with 5 of its products leading the world snack chip market. Frito-Lay leads the market with a greatest margin of lead from the closest competitor. By 1996 Frito-Lay operated in 39 countries what means that there is a long way to go.

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MLA Citation:
"The Pepsi-Cola Story." 14 Mar 2018

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With over 30,000 restaurants, PepsiCo has more restaurants than any other company in the world. Today the new PepsiCo has grown to be one of the largest consumer products companies in the world with its best known brands such as “Pizza Hut, KFC, Taco Bell, Frito Lay and Lay’s Potato Chips.”

     Knowing how important innovations are to the constantly changing environment in which consumers become more spoiled than ever, PepsiCo as always chooses the right strategy. Starting in the mid 1960s when Pepsi-Cola came up with its “Mountain Dew” the company saw the birth of an additional cash cow whose benefits it still enjoys. To appeal to the enormous variety of tastes in the early 1990s, Pepsi-Cola came up with the caffeine free versions of Pepsi, Diet Pepsi and Mountain Dew. Later they introduced the “Slice” to expand Pepsi’s soft drink portfolio. Through a partnership with the Thomas J. Lipton Company, Pepsi is the leading marketer of ready-to-drink iced teas. To get its leading share in the single serve juice market Pepsi created partnership with the Ocean Spray. Today, producing a wide variety of beverages Pepsi-Cola Company continues to come up with new products to satisfy the needs of its customers around the world. In France for example, Pepsi-Cola changes the taste of its main brand of cola and repackages the product with new design. (Advertising Age) In the US Pepsi-Cola is currently introducing its “Aquafina” brand of bottled water. The idea of bottled water came up when the researchers found that the baby-boomers are changing their preferences from sweet, carbonated drinks. Discovering that the company might lose its share of $3.6 billion from the domestic bottled water market Pepsi-Cola speeded up the introduction of their brand to beat Coca-Cola’s late reaction to invade the bottled water market. (USA Today) Also finding out that customers seek some changes in the products they are used to, Pepsi-Cola Company is looking forward to changing the can graphics on some of its products. (Product Alert)

     In the snack business Frito-Lay, which formerly produced only one category of snacks, now makes and markets snack foods for every style and snacking preference. To react to the latest researches, Frito-Lay is introducing more varieties of its “Doritos sandwich crackers” in a ready to eat packages of six. The latest was the “Nacho Cheesier” kind. Also they are introducing more varieties of “Chee-tos Sandwich Crackers”, their “Peter Pan Sandwich Crackers” with cheese peanut butter and Big Grab Potato Chips with Pepper Grill Tangy BBQ. (Product Alert)

     PepsiCo’s president believes that the size will help them provide very reasonable prices through mass production. The economies of scale is and has always been one of the most important factors why big companies are able to better satisfy their customers. During the Great Depression and continuing into World War II Pepsi-Cola managed to stay in business only after they introduced the new Pepsi’s pricing advantage “Twice as much for a nickel” which later was adopted by all the major cola companies.

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