Pepsico & Aquafina

TABLE OF CONTENTS

TABLE OF CONTENTS 2

1. An Introduction to the Brand 3

PepsiCo. Background 3

The change of logo throughout time 3

Aquafina, the sub-branch 4

2. Marketing Issues 4

3. DENTPCS Analysis 5

4. Case Questions 7

5. Conclusion & Recommendations 12

1. An Introduction to the Brand

PepsiCo. Background

PepsiCo brands are available in nearly 200 countries and territories. Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.

PepsiCo (symbol: PEP) shares are traded principally on the New York Stock Exchange in the United States. The company is also listed on the Amsterdam, Chicago, Swiss and Tokyo stock exchanges. PepsiCo has consistently paid cash dividends since the corporation was founded.

PepsiCo World Headquarters is located in Purchase, New York, approximately 45 minutes from New York City. The seven-building headquarters complex was designed by Edward Durrell Stone, one of America's foremost architects. The building occupies 10 acres of a 144-acre complex that includes the Donald M. Kendall Sculpture Gardens, a world acclaimed sculpture collection in a garden setting.

The change of logo throughout time

Aquafina, the sub-branch

Aquafina is a popular brand of bottled water. It was first distributed in Wichita, Kansas in 1994, was distributed across the United States and Canada by 1997 and Turkey, and as of 2003, had become the United States' top-selling bottled water brand in measured retail channels. The water is standard tap water but goes through an extensive purification process that includes charcoal filtration, reverse osmosis and ozonation.

Aquafina uses PepsiCo's own purification system, which it calls HydRO-7. PepsiCo states in marketing material that this system removes substances that may be in other brands of bottled water.

PepsiCo produces several other products under the Aquafina label:

* Aquafina Sparkling, carbonated flavored water, available in Berry Blast (Raspberry), and Citrus Twist.

* Aquafina FlavorSplash, flavored water (without carbonation), available in Grape, Citrus Blend, Wild Berry, and Raspberry.

* Aquafina Alive, a low calorie, vitamin-enhanced water beverage, available in Berry Pomegranate, Peach Mango and Orange Lime.

2. Marketing Issues

There are several marketing issues Pepsi needs to deal with. Pepsi is placed in a market which is rather mature and not growing very rapidly. This makes it more challenging for the company to find new fronts which will generate new sales and new customers.

Another marketing issue concerns Pepsi's Aquafina promotion mix. Aquafina is water with no taste or odor, which makes it difficult to differentiate from the market. Given that their products are placed in a market with over 800 competitors, the big question for Pepsi is how to promote Aquafina effectively. Pepsi already tried several initiatives to attack the market, with both spring water and sparkling water, but each failed. Moreover, subsidies such as Evian and Perrier have already established a much stronger image and brand which makes them more dominate in the water market. This makes it difficult for Pepsi to find a niche for Aquafina and a new responding target group. Later on in 2003 this marketing issue was solved through effective promotional strategies, Pepsi doubled its promotion budget to $40 million the year before, which increased their market share and put them up market.

Due to the fact that many consumers shop based on price which automatically creates a higher bargaining power for them. This means that it is difficult for Pepsi to build a brand or brand loyalty, which is most important in such competitive market. Therefore Pepsi needs to develop a promotion mix that creates a stronger brand across their products in a market characterized by price-conscious shoppers and tough competition.

Given that Pepsi's product is similar to its competitors; consumers are likely to shop based on price. This means that such similarity within the market makes it difficult to build brand or brand loyalty. This might draw new battle lines Ð'- this time for the water wars. Pepsi needs to convince their water instead of their competitors. Promoting a product which has no actual difference compared to the others available in the market, since its water, colorless, odorless and tasteless will be difficult to differentiate. This however is the key for Pepsi to survive in the market and to strengthen their brand.

3. DENTPCS Analysis

To conduct a correct advertising campaign we need basic microenvironmental data about the market, this can be found and a multitude of factors around the company.

On a demographic point of view, Pepsi, or more exactly Aquafina, tries to reach a global market. There are no sex, age or diversity limits to drinking water. And they follow the idea in most of their promotion material. They do aim at certain niches sometimes, to raise brand awareness, but more or less, their advertisements and marketing aims at everyone and anyone. It hems in all generations, especially in one of their TV ads called "drink, drink, drink".

Moreover, the economic aspect shows that more and more people are willing to deviate their buying patterns towards cleaner water. The bottled water market is the second fastest growing market after the "performance drinks" market, in the bottled liquid domain. Therefore, people are buying more and more bottled water. But most consumers will barely look at the taste difference, considering water is supposed to be tasteless. They will then move on to either the health benefits, or the price difference. Here Aquafina, beats its main concurrent by being over three times cheaper and offering larger quantities in bigger bottles.

To keep their leaders