This document addresses a global marketing plan; how the external environmental factors affect a business and the business strategies to be considered for a successful enterprise. It discusses the general strategies towards PepsiCo growth in Mexico and the specific plan to propel the company to globalize its business. Also, it highlights the company’s social responsibilities to the host country. PepsiCo is a global consumer brand that is known for producing drinks and snacks for consumers all over the world. This paper focuses on the global marketing plan that can help the company achieve global dominance in production of soft drinks and snacks. The above analysis and strategies will help PepsiCo to develop successively and attain a global recognition in the world’s economy. All these factors have been systematically and comprehensively elaborated in this paper.
Introduction
PepsiCo is a global company dealing in different brands of consumer products such as drinks and snacks for consumers all over the world. This paper is going to focus on a global marketing plan that can help the company achieve market dominance in Mexico for the production of soft drinks and snacks. The global plan will include the general environmental analysis, environmental analysis of the host country (Mexico). The legal, regulatory, socio-economic and political will be examined to ascertain that PepsiCo will be well established. The paper will also look into the strategies both general and specific, and plans that can be employed according to the environmental analysis.
General Environmental Analysis
Economical
PepsiCo is one of the largest multinational beverage companies managing over 20,000 enterprises in 28 countries worldwide. PepsiCo has exponentially grown since its establishment, dominating most parts of the United States. The company hired more than 290,000 workers in 2019, with its products widely spread in 200 countries globally. In 2020 PepsiCo generated over $70billion from selling a wide range of drinks and snacks. The company has a stable financial history which has been improving each subsequent year. PepsiCo must keep track of the economic trends in places where the company operates and respond to them accordingly.
Social and Cultural
Social analysis entails how PepsiCo generally affects people’s lives, particularly the people’s perception of their products. Strict health rules can threaten PepsiCo customer base because of the high level of sugar, cholesterol, and salt in their products. These rules can also be an advantage to the company to work on such concerns and improve their products. People with busy lifestyles tend to eat fast foods, particularly those from PepsiCo because they do not have time to cook therefore, giving PepsiCo a market segment to address.
Political
PepsiCo is multinational company and stands to be affected by host countries’ political situation. Political stability is an opportunity for a company since it will provide peaceful operation for its growth. Countries with developed economies such as Mexico and United States have a stable political structure, thus giving development environment to PepsiCo. Moreover, the government can also pass bills that may affect the business operation in a given country. For instance, a government can pass a bill against carbonated drinks; this will impact the company negatively. On the other hand, governments can decide to enter into cooperation; this can be a good opportunity for PepsiCo to attain a global expansion.
Legal and Regulatory
For PepsiCo to operate effectively around the world, it must adhere to the laws of the specific countries. Some of these regulations may include safety laws, environmental laws, and labor laws. These regulations can sometimes be challenging; therefore, a company should carefully scrutinize the rules before setting up a business in a given country. According to Paramore (2017), regulation against using genetically obtained ingredients specifically in Europe, can be a threat and an opportunity at the same time. If PepsiCo is strictly dependents on GMOs, they can lose a market in Europe, but if they reduce GMOs’ use, PepsiCo can stand a better chance in Europe’s market.
Environmental Situation Analysis in Mexico
Mexico’s population has been growing exponentially over the years, with a population of 128,932,753 in the year 2020. A higher percentage of the population is young, under the age of 15 years due to a higher birth rate. 83.4% of the population are found in the urban areas, while the rest of the population live in rural areas (Angel et.al 2017). This growing young population will offer a ready market for the PepsiCo Company.
Economic
Mexico stands among the countries with the largest economies globally, ranked 15th in the world and second in Latin America. The country massively relies on United States as its major trading partner, exporting almost 80% of its products to America. The GDP of Mexico in the year 2020 dropped by about 9% as a result of the COVID 19 pandemic as per IMF report.
However, as per recent World Bank reports, the GDP is expected to improve to 4.3% in 2021 and 2.5% in 2022. These projections will positively impact PepsiCo since the improvement of the country’s economy will translate to company success.
Trade
According to World Bank’s latest data, Mexico majorly relies on foreign trade, which contributed to almost 78.2% of the total GDP in the year 2019. Majorly Mexico exports vehicles and its spare parts, software products, fuel ores, oil, and machines. The country’s imports are electronics, petrol products, and motor parts. The drastic fall in the value of imports and export was due to the COVID 19 outbreak. The United States is the leading country’s trading partner, accounting for over 75% of Mexico’s export. Mexico has active and potential trading networks which favor the growth of businesses such as PepsiCo.
Political, Legal and Regulatory
Mexico is a multiparty state and has a peaceful political climate that favors the development of companies. Most policies and bills are determined by the government legislative arm, a chamber of deputies, and the senate. The president is the head of state elected by the people. The country has a stable constitution that guides on the legal procedures in the country.
Social and Cultural
Social life in Mexico changes depending on social, economic, sex, ethnicity, and racial ideas. Social class divisions are based on a financial and academic levels, with most educated and wealthy people staying in the urban areas while the poor people occupy the rural areas (Griffin, 2019). Different economic class cultures vary according to what they eat; most middle-class Mexican eat corn and beans as their staple food. Dairy products and soft drinks are consumed in small proportions because they cause heart-related diseases and increase blood sugars. This is a challenge to PepsiCo since most of its products have high sugars levels (Griffin, 2019). Among the poor Mexicans, PepsiCo can get a better preference since they rely on desserts such as soft drinks, chocolates, and sweet bread.
Market Research
According to market research and opinions, Mexico’s industrial market attained 7.66 billion pesos in 2019 and 7.35million in 2018. Mexico was ranked second-largest market in Latin America in the year 2018. The population of Mexico grows each year, translating to a growth in the market for locally produced products. Apart from the demand within the country, the United States is their major trading partner providing a large market for the exported goods. PepsiCo has a great chance to invest in Mexico and be sure of a large market in the country.
Information System
The information system is a fundamental component in any business environment since they play a significant role in business success. It is involved in the processing, dispatching, and sharing of information and data in the right time interval. Mexico has one of the best-developed information systems in Latin America, with a well-established communication network, both mobile and landline. Mexico has up to 26 internet providers within the country, contributing to a stable information system. Due to law reviews, telecom companies in Mexico combine all mobile phones and landlines to include a fast speed internet. With this in place, Pepsi cola will have a favorable business environment.
Big Data
Big data involves an extensive variety of information and data collecting strategies and analysis to assist a business in decision making. The main challenge for adoption of big data in Mexico is that there is little knowledge on extensive data analysis. Institutions use this big data to compete in a specific environment and become innovative. Mexico has no vast knowledge of big data since there is no evidence of business success through big data.
General Strategy
Global markets are considered to be very competitive and therefore, for a company to thrive, they require exact strategies targeted to a specific market. In these extra-competitive markets, the various producers, suppliers, and marketing agencies trade goods and services for cash, data, time and referrals. When making a global marketing plan, a company needs to come up with market segmentation, targeting, and a positioning strategy (STP) plan as discussed below.
Segmentation
According to De Villiers et al., 2019 for a market player to effectively target a market and satisfy it according to its specific requirements, companies devise a marketing approach that focuses on dividing the market into subsections, usually known as segments. Understanding the needs of a given subsection is of great importance to a stable business organization that can compete favorably in the global market.
PepsiCo’s STP plan can be termed as the key to the success of the whole marketing plan. PepsiCo market segments are mainly geographic, demographic, behavioral, and psychographic. For instance, the demographic part of the age brackets has proven to influence younger populations.
Market Targeting and Positioning
Dudovskiy (2016) noted how PepsiCo use several segments at the same time and is able to position itself strategically. The different segments identified are fed with different types of products, in this case, PepsiCo which is a well-placed soft drink company produces drinks that are sweet and have a refreshing feeling. The company started offering a diet Pepsi drink for a segment that complained of the high sugar content in the usual Pepsi drinks. Pepsi has adopted the same market positioning and targeting and applies it in all its markets. The main aim of segmentation is to make sure that existing potential buyers can be engaged easily. The products, and services should be customized for specific markets.
Market segmentation and targeting can be done in several ways, including behavioral, demographic, psychographic, and geographic. When using the demographic approach, PepsiCo chooses the following features to segment a market; age group, gender, ethnicity, and a phase-specific to a family’s cycle.
The purchasing power and behavior, change according to the stage of development consequently affecting the company’s sales; different family setups also impact buying behaviors because their size and the composition affect their needs. On the other hand, ethnicity affects company’s sales because different groups have diverse preferences that consequently affect type and quantity of product they purchase. Other market segmentation approaches that PepsiCo can explore in Mexico include the geographical approach and the behavioral approach, which are determined by the social stratification. PepsiCo has learned to produce products that meet the needs of the lifestyles created by the social classes.
Exporting Selling and Sourcing Activities
A market strategy must identify the target market and how a given product will perform in the targeted market. These is often determined by the marketing mix variables: people, place, promotion, development, and price. Since PepsiCo was founded, it has strived to deliver reasonably priced products to boost sales and reduce cost. This marketing strategy has been effective and has gained popularity amongst PepsiCo customers in Mexico (a middle-income country in Latin America).
When entering a new market, a company should explore many options to widen its market scope. The entry method comes with varying costs, uncertainties, and the level of control that the company will have in the given market. One of the simplest forms of entering a new market is the direct or indirect use of agents. Other forms include joint ventures or even the use of special economic zones. Direct investments where the company decides to do full-scale production, and marketing by using fully-owned subsidiaries. To penetrate the competitive market of soft drinks in Mexico, Pepsi will have to bank on exports and franchising strategy where their products will go to the market by licensing franchiser SBC.
Specific Plan and Strategies
To develop a more specific plan and strategy for PepsiCo, several company attributes and the host country (Mexico), will be examined. The details that have been looked at in this paper include the competitive advantages of the company, 4Ps in product branding include, digital media advertisements, the companies CSR and social regression of the company.
Competitive Advantages
Competitive advantages are unique features that a company possesses and the perception that the target market has on the product compared to other similar brands. Competitive advantages are the ones that instill brand loyalty and are behind the reason why one prefers a certain product over the other. There are several types of competitive advantages that a company can focus on these include; pricing, service, and strategies.
About pricing the PepsiCo has been giving its arch-rival Coca-Cola a tough competition. For instance, PepsiCo offered a 30% discount on its products forcing a fraction of coke consumers to change to Pepsi, which were just a few cents. The PepsiCo offer led to switching of brands based on the current prices. With innovations and strategies, PepsiCo has shifted its attention from competing with other soft drink companies like Coca-Cola to working on an accurate business models for the future. Pepsi drink has started defining itself as both a beverage and a snack mogul in the market. PepsiCo has covered its restaurant business and has consequently acquired Tropicana as well as Quake. By looking at the relationship between the combined companies, there is a great strength. Pepsi still holds on to the innovation of new products to help it compete in the changing market segments.
The 4Ps
The 4ps in marketing refers to product/service, place, promotion, and price. They are significant elements to bring about a competitive edge and a brand unique part. The product in my mentor company is soft drinks, although PepsiCo later introduced snacks in their catalog. This was a strategic move since their customers needed something to accompany the drinks they were selling. After the product is launched, the price is set; the cost is meant to cover the end amount that the consumer will end up paying for the given product, the price directly determines the sales of the product. Product promotion is the next step; it involves marketing communication methodologies such as advertisements, special offers such as discounts, public relations, and sales promotion. The last “p” stands for place; this entails how the product will get to the consumer; it involves distributing the product to various markets in the world.
Digital Media and Integrated Market Campaigns (IMC)
Digital media are forms of media transmitted through electronic devices. After transmission of the digital media, it can be viewed, modified, or redistributed. Digital media include software, videos, social media, online advertisements, etc. PepsiCo, my mentor company, has recently stepped up its marketing platforms and has shifted from traditional media to digital media as the COVID 19 pandemic continues to hit the world. PepsiCo, which is behind the productions of products like Gatorade, Mountain Dew, Tostitos, has utilized the digital platforms to tackle the health campaigns necessitated by consumers and governments’ concerns.
Pepsi Cola happens to be among the world’s leading consumer of food and beverage brands these days. The company developed an effective Integrated Marketing Communication (IMC) strategy during its lifetime. Contributing to product growth by developing new roles and advancing firm production orientation by high-quality beverages as is part of the curriculum. Pepsi Cola, as a global company, must adapt its IMC and promotional agencies to the local people’s specialties.
Company CSR and Social Responsibilities
Harvey, 2018 observed that the company’s Social Responsibility (CSR) is integrated into PepsiCo’s business structure in Mexico. The business operations work in a way that do not interfere with the people’s way of life or the environment. These processes should boost the company’s growth and build the community in which it is established.
Conclusion
In conclusion a global marketing plan is essential for the prosperity and competitiveness of any given company. Looking at PepsiCo from the environmental analysis to the general and specific strategic plans, it is evident that PepsiCo’s venture in Mexico will be a success since the market is well segmented and the company has a product for each segment. Ensuring that they will be able to cater for every need of their customer. The global marketing plan will help them create a globally recognized brand which will be an added advantage considering the competition presently in the market.
References
Angel, J. L., Vega, W., & LĂłpez-Ortega, M. (2017). Aging in Mexico: Population trends and emerging issues. The Gerontologist, 57(2), 153-162.
De Villiers, R., Tipgomut, P., & Franklin, D. (2019). International Market Segmentation across Consumption and Communication Categories: Identity, Demographics, and Consumer Decisions and Online Habits. Promotion and Marketing Communications [Working Title]. Web.
Griffin. (2019). Mexico – Daily life and social customs. In Encyclopædia Britannica. Web.
Harvey, M. (2018). Corporate Social Responsibility of PepsiCo in Mexico. Essay48. Web.