Competition in Energy Drinks

COMPETITION IN ENERGY DRINKS 1

Competitionin Energy Drinks

PepsiCoInc.

PepsiCotends to be one of most successful snacks and beverage business inthe world. The company was started in 1965. During that time thePepsi-Colas president and CEO Donald M, Kendall approachedFrito-Lays, Herman Lay CEO and chair with a proposition of more ofmerging the two companies. The companies were to provide food andbeverage with a complementary product that may give a lesseropportunity for joint merchandising, cost sharing and skills andknowledge transfers (Armstrong&amp Cunningham, 2012).

PepsiCobrands exist in over 200 countries and various territories. It baseson creation of different food and drinks that tend to soothe thetaste of its customers. According to a recent survey, it is one ofthe world leaders in convenient food and beverages. It has revenuesthat approximates to $58 billion and over 295000 employees(Thompson, 2012).

Theintroduction of new products, reinvention of various products, andexpansion into international markets, and more of clever advertisingcampaigns are the focus of the PepsiCo Inc. PepsiCo has aconsiderable marketing expertise. It leverages in marketing of pizza,fried chicken and Mexican fast foods.

TheCompany’s Current Profile

Pepsi-Colais located in the northern America and has its headquarters in theNew York. The main products include food and beverages. The otherbranches include PepsiCo’s Tropicana, Quaker, and Gatorade foodbusiness in Canada and United States. The Brand Pepsi and thePepsi-Cola products approximate nearly one-third of all soft drinkssales made in the United States. Similarly, it has a consumer marketthat totals to about $57 billion. Pepsi-Cola beverages arediversified to more than 160 countries other than its headquarter inthe United States. Currently, the products of Pepsi-Cola accounts foralmost quarter of the soft drinks that are sold internationally(Armstrong&amp Cunningham, 2012).In addition, the company has widened its operations to other emergingcountries. They include Hungary, Poland, India, Czech Republic, andRussia. The company’s products were first advertised to consumersin the United States. The company provides marketing, advertising,promotional, and sales support to the Pepsi bottlers and food servicecustomers. Pepsi-Co tends to be one of the most recognized companiesin advertising models. The marvelous advertising and excitingpromotions more of keeping the company seems younger.

Performanceand Achievements

PepsiCocurrent achievement and performance is Conserving more than 13billion liters of water. The conservation entails efficiencyimprovements within the Pepsi-Cola operations as in comparison withthe 2009 baseline. The company tends to be the first one to introducea compostable Sun Chip bag. The bag consists of 100 percent therenewable sort of plant-based materials. The company has enhancedstrategies in the empowerment of women by increasing its femaleemployees to 30 percent globally. The success of the PepsiCo dependson its distinctive competitive strategies, high standards ofperformance, high integrity, and superior products (Thompson,2012).

TheMacro-environment analysis of the PepsiCo Company

PoliticalFactors:

ThePepsiCo products adhere to federal laws such as Occupational Safetyand Health Act, Food, Drug and Cosmetics, and the American and TheDisabilities Acts. The company follows the set rules and regulationsset by the government. The company works on avoiding fines set by thegovernment in case of breaching the law. PepsiCo also adheres to thestate, federal and local laws. PepsiCo also works on the de taxationpolicy of various countries where it operates. Additionally, thecompany ensures that all environmental laws and regulations arefollowed with great perspectives.

Inthe political stability, the government affects the businessprosperity whenever it is stable. The business manager will work onensuring that the political stability in the country works along withthe implementation strategies of the company. Similarly, the PepsiCoalways expands their business to countries that seem to havestability. The balance provides security to the business as itprevents them from the future decline in market share that may leadto their depreciation (Thompson,2012).

EconomicFactors

ThePepsiCo faces different economic factors that may affect theircompetitive aspects. The considerations include the interest rate,the inflation rate and the foreign exchange rate. The company facesmajor economic factors. They tend to subdivide the rising costs ofinput that are due to the structural inflation. The periods of steadyinflation seem to be affecting the working plans of the PepsiCo.Similarly, the PepsiCo manages its overall financing plans to balanceits risks and opportunities. In addressing the financial constraints,the company’s manager works on various strategies. The companyincorporates the interest rate and the currency swaps thateffectively modify the rate on interest thus reducing its borrowingcosts (Armstrong&amp Cunningham, 2012).

Social,cultural Factors

ThePepsiCo consumers due to ethnicity at times tend to dislike theirproducts. The age and ethnicity appear to be the main implicationthat affects the preferences of consumers. They tend to preferalternative drinks other than the soft drinks. Therefore, the PepsiComanagers are working on minimizing the social, cultural effects inthis industry. Thompson(2012) arguesthat the age and gender appear to be the primary factor affecting theconsumer’s preferences. Teens prefer making fun and different modeldrinks. Similarly, the health problem that may arise from taking softdrinks is one of the issues that may affect the PepsiCo productivity.To address the issue PepsiCo is working on targeting age groups ofthe consumers. For instance, it is initiating promotional strategiesthat seem to address the age and gender issues. The PepsiCo hasestablished a target of the young generation.

Thesocial environment within the food sector seems to be changingsignificantly. People are currently consuming healthy products andare very selective. Therefore, PepsiCo tries to come up withsuccessful strategies through adopting of new goals. It works on newproducts that may be in order to meet the healthier and consciousmarket.

TechnologicalFactors

PepsiCoand its subdivision work on the utilization of technology aiming atsustaining the company’s growth and demands. Similarly, thecompany’s manager always works on ensuring that there are asustained growth and performance strategies. The company also doesresearch on machinery and other technological aspects that tend toimprove the company’s current and future prospects. Increase intechnology when improved tends to facilitate companies growth thusmeeting their targets.

LegalFactors

ThePepsi-Cola Company’s products are as per the law formulation of thegovernment. They ensure that their products adhere to the copyrightand patent rules. Abiding by these, laws tend to enhance their growthand avoid further uncertainties according to the breach of the law.

EnvironmentFactors:

Environmentalfactors play important role in the acceptability of products in themarket. In the Environmental sector, PepsiCo Foundation seeks toprotect water sources and more of creating a better use for theexisting water sources. For example, PepsiCo adheres to environmentalfactors in order to minimize the growing water crisis that is facedby millions of people around the globe (Thompson,2012).

SWOT(Strengths, Weaknesses, Opportunities and Threats)

Strengths

Branding:One of PepsiCo’s leading brands is, of course, the Pepsi. It is oneof the recognizable brands globally. The brand is listed according tothe Interbrand. In 2008, it was ranked 26th amongst 100 top globalbrands. Similarly, Pepsi works on generating more than $16000 millionof the annual sales. These revenues have made it possible for Pepsito capture most of its consumers. This creates more hope forachievement of future prospects by PepsiCo.

Diversification: the PepsiCo tends to be diverse in that all of its 18 brands seem togenerate the annual sales of approximately $1000 million turnover.The company also manufactures various diverse drinks. For instance,juice drinks, bottled water, ready to drink teas, cake mixes andother many brands. The company bases on multinational distributionchannels that insulate the shifting business climates. The diversityacts as a pillar for strengthening Pepsi’s market benefits.Therefore, the diversity aspects facilitates the ease of Pepsimeeting their set goals.

Distribution: PepsiCo works on delivering its products directly from themanufacturing warehouses to its retail stores and customer’swarehouses. Similarly, it uses a third party delivery services thatenhance its demands to consumers (Buse,2011).

Weaknesses

SecondMover Disadvantage:the diet Pepsi cola has a first mover advantage, which makes it amajor shortcoming in the US market. The product has no extensiveefforts in the popularizing of it. In terms of brand, the comparativescale of diet coke tends to prove on being a better brand image inthe customer mind than.

Competitor: PepsiCo faces competition from readily established companies such ascoca-cola. These two companies have strong competition. Coke doesmuch in its advertising strategies that tend to be a threat to Pepsi.

Opportunities

LowestPer Capita Consumption: Pepsi has great opportunities towards itsgrowth. In the US as per the capita consumption of the carbonatedbeverages, Pepsi tends to be the lowest. Pepsi provides healthydrinks, which are more of on demand thus acts as an opportunity inimproving its targets (Armstrong&amp Cunningham, 2012).

Newmarkets expansion: the new market seems to be opening up and haw loopholes forexpansion. The most apparent market for PepsiCo tends to be Chinesemarket. Chinese has a large population, which increases the demand ofsoft drink products. Pepsi continuing diversity seems to provide themuch-needed benchmark for the company and thus allows it to more ofrely on other businesses and companies than just a solving thepowerful brand.

Threats

Health:Growing health awareness towards people and some of the ill effectsof carbonated drinks seem to be pursuing many people to switch overto the non-carbonated beverages. This makes it a great threat toPepsiCo products. That threat can seriously impede the sort oflong-term prospects of entire Industry and Pepsi (Anders,2013).

NewVenture

PepsiCoCompany and its managers are working on ensuring that their futureprospects are achievable. They seek to implement the use of theporter’s forces in implementing the aspects. The forces include thebarrier to entry, threats of substitute, bargaining power of thesuppliers, bargaining power of customers and competitive rivalry(Armstrong&amp Cunningham, 2012).

Barriersto entry

Thenew entrants to the market may not create much competitive pressure.PepsiCo dominates with its strong brand name and its superiorchannels in the distribution. However, the soft drink industry seemssaturated. The full saturation makes it very difficult for new andunknown entrants to prosper. The high fixed costs are also barriersto the new entrants in the market. Therefore, the new entrants maynever be a threat to the prospects of the Pepsi(Thompson,2012).

Threatof Substitutes

ThePepsi faces threats from other substitutes of its products. Thealternatives range from the bottled water to coffee and other drinks.However, the little switch costs of consumers tend to make thethreats of substitute very high.

Thebargaining power of the supplier

SincePepsi owns majority of the bottle, it makes its suppliers have lessbargaining power. The PepsiCo is working on introducing new productsat reliable rates. The distribution and operational complexity of thenew product introductions tends to affect the more of the bottom lineof bottles. However, other equipment manufacturers tend to supply thesame products. This factor takes away too much of the customersbargaining power. Similarly, the rise in raw materials tends to beanother factor affecting the Pepsi products.

TheBargaining power of Buyers

Thebargaining power of the customers tends to be on the rise and veryhigh. The aspect steps in when Pepsi distributes its products to thestores for resale. An increased shift in buyer demands on the healthychoices enhances the market for the substitute drinks. Consumers tendto concentrate on more healthy products (Anders,2013).

Competitiverivalry

Rivalrycompletion seems to be the greatest competition facing PepsiCo. Inthe year, 2006 Pepsi had small sales as compared to its competitors.However, the introduction of active Pepsi brands makes it a strongcompetitor to its competitors(Thompson, 2012).

References

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Anders,J. (2013). Coca-Cola`sMarketing Strategy: An Analysis of Price, Product and Communication.GRIN Verlag.

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