strategic-management

234 JOHN AND SHERRY ROSS
EXHIBIT 1 PepsiCo’s Organizational Structure
PepsiCo
Americas Foods
(PAF)
Frito-Lay North
America (FLNA)
Quaker Foods North
America (QFNA)
Latin America Foods
(LAF)
Source: PepsiCo, 2009 Form 10K (2009).
PEPSICO
PepsiCo Americas
Beverages
(PAB)
United Kingdom &
Europe (UKEU)
Middle East, Africa,
& Asia (MEAA)
PepsiCo
International
(PI)
(Wal-Mart accounts for approximately 12 percent of total revenues and 18 percent of North
American revenues), PepsiCo must appeal to the ultimate consumer through extensive advertising
and promotional activities. This pull marketing strategy is highly dependent on creative
marketing and the development of catchy slogans, along with the continued development of
new and reinvented brands (Pepsi-Cola Brands). As consumer tastes have changed, PepsiCo
has developed liquid refreshment products that are light, calorie free, sugar free, caffeine
free, sports and energy directed, and flavored (Pepsi, Voltage, Aquafina). Snacks now have
less salt and less fat and are baked, kettled, and made with vegetables (Frito-Lay TrueNorth).
This strategy continues into the juice segment (Tropicana) and the Quaker product line as
well as the Gatorade products.
PepsiCo works closely with its bottlers and retailers in promoting and advertising
its entire range of products around the world. In 2006, PepsiCo spent approximately
$10.1 billion on sales incentives and discounts; in 2007, it spent $11.3 billion, and in
2008, $12.5 billion was spent. This does not include advertising expenses, which were
$1.8 billion in 2008 and 2007, and $1.6 billion in 2006. Although these numbers may
seem excessive, the level of worldwide competition (particularly Coca-Cola, which spent
some $2.9 billion on advertising alone in 2008) requires extensive advertising and promotion
to remain in the minds of the ultimate consumer. PepsiCo uses all available media to
promote its products and attempts to attract younger consumers through Web-related
media such as YouTube, and having appealing Web pages with the latest ads and productrelated
games.
Advertising for both Pepsi and Coca-Cola has generally been built around short,
memorable slogans to attract and hold the attention of consumers. Of the more than 40 slogans
and songs created since 1939, some of the more successful slogans for Pepsi have
included: “Twice as Much for a Nickel” (1939–1950), which allowed Pepsi to grow during
the depression; “Have a Pepsi Day” (1961–1963); “Pepsi Now! Take the Challenge”
(1983–1984) was one of the most successful; “Drink Pepsi. Get Stuff” (1995–1996); “For
Those Who Think Young” (1999–2000); “Pepsi Stuff” (2008) Super Bowl commercial;
and today’s “Refresh Everything” and “Every Generation Refreshes the World” (2009).
Financials
Recent consolidated financial data obtained from the 2009 10K are presented in Exhibits 2
through 6. Although the financials appear very good with revenues increasing from just