PepsiCo, Inc. is one of the famous American multinational company of beverage, snack and food. The company is headquartered in New York. PepsiCo has great interest in manufacturing, distribution, and marketing of the beverages, food and grain-based snacks, and other items. The company was founded in 1965 along with the merger of Frito-Lay and Pepsi-Cola Company. The company has expanded much from the namesake product “Pepsi” to wide range of beverage and food brands (PepsiCo, 2020).
The article is about Ansoff Matrix. Ansoff had designed this matrix in 1957 as a framework. This framework helps the companies in identifying the new opportunities related to growth. It also helps in analysing the companies on the basis of product and market with opportunities. This is determined by establishing the merge of new and current products (CFI, 2020). Here is the detailed Ansoff matrix of PepsiCo.
Market Penetration
Market Penetration is mostly least risky among all four strategies. This is mainly because PepsiCo sells existing products in the existing market. The parameters of the products remain same. However, this strategy is not completely risk free. If the company uses low prices for penetrating the market. This leads to damaging prices war which reduces profit margin in industry. PepsiCo is selling its beverage Pepsi in the current market. This strategy supports the growth by increasing the sales and market share. For example, different sizes of Pepsi soft drink were introduced in market. Aggressive marketing is used by PepsiCo for attracting consumers as David Beckham was shown in marketing campaigns in international market. PepsiCo also introduced more local flavour in existing market (Ferguson, 2017).
Product Development
The secondary growth intensive strategy of PepsiCo is Product development. This means new products will be introduced by the company in existing market. This mainly benefits the company in attracting more consumers. For example, PepsiCo continued to develop the variants or products of the existing items like Low calorie drink, low saturated fat variant. PepsiCo introduced natural fruit juice Tropicana. This boost the investment in R&D for more innovation in products. The competitive strategy of PepsiCo supports the intensive strategy by introducing unique products for attracting consumers. PepsiCo also develop fruit juices and partnership with Unilever and Starbucks for producing tea and coffee and offer their juice. Mineral water Aquafina was also considered as Product Development for PepsiCo (Croos, 2015).
Market Development
Market development is the supporting intensive strategy for growth in PepsiCo. This strategy supports existing products of the company in new markets. The company here try to find more market segments and new markets to introduce its current products. For example, the PepsiCo continued to expand the distribution networks in different market segments in developing regions. PepsiCo has expanded its business according to the different regions and separate it among Pepsi Euro, Pepsi Africa, Pepsi America, Pepsi Middle east and Pepsi Asia. However, the market development of PepsiCo has significant presence worldwide. The strategic objective of the company is to expand the distribution and supply chain for growth. More investment will be used for expanding in new markets, but cost minimization will be the step towards growth. (UK Essay, 2018).
Diversification
Diversification is the strategy used by the company. This deals in introducing new product for new markets in which company is not operating before. This means new products, new consumers, new markets, and new marketing techniques for the growth of the company. PepsiCo was a beverage company initially, but with diversification, the company started operating in food and snack industry. PepsiCo has changed itself from the traditional beverage firm into food company. For example, whole grain, fiber based products, snacks like Lays, Walker, Doritos etc. This diversification helps company in further growth in future years and mitigate the risk only from beverage to food industry. (Drink insight, 2018).
References
CFI, 2020. Ansoff Matrix, the product/market expansion grid. [Online], Available at: https://corporatefinanceinstitute.com/resources/knowledge/strategy/ansoff-matrix/, [Accessed on: 9th January, 2020].
Croos, D. 2015. Pepsi co strategic management. [Online], Available at: https://www.slideshare.net/CroosDavid/pepsi-co-strategic-management, [Accessed on: 9th January, 2020].
Drink insight, 2018. PepsiCo’s diversification strategy pays dividends. [Online], Available at: https://www.drinks-insight-network.com/comment/pepsicos-diversification-strategy-pays-dividends/, [Accessed on: 9th January, 2020].
Ferguson, E. 2017. PepsiCo’s Generic and Intensive Growth Strategies. [Online], Available at: http://panmore.com/pepsico-generic-strategy-intensive-growth-strategies, [Accessed on: 9th January, 2020].
PepsiCo, 2020. About the company. [Online], Available at: https://www.pepsico.com/about/about-the-company, [Accessed on: 9th January, 2020].
UK essay, 2018. The operations of the PepsiCo Company. [Online]. Available at: https://www.ukessays.com/essays/business/the-operations-of-the-pepsico-company-business-essay.php?vref=1, [Accessed on: 9th January, 2020].