|Type of paper:||Essay|
|Categories:||Pepsi Strategic management Business strategy|
Recently, more and more people are buying the products they use daily through the internet. As e-commerce is quickly catching on, consumers are now buying groceries, packed foods and drinks through online platforms (Andam, 2014). Many companies, with Pepsi being one of them, are currently working to make sure that they capitalize on this new market to the maximum. E-commerce provides a perfect opportunity for these companies to increase their sales and also reach various consumer groups, especially the young people. According to recent studies, the internet is the best place for both small and large companies to acquire new customers. With Pepsi having recently announced that they have set aside a significant amount of money to invest in their e-commerce venture, it is clear that there are many strategies they can use to ensure success. This paper is going to suggest a strategy Pepsi can use to ensure that they dominate the e-commerce market. Additionally, the paper will address the implementation, sustainability, and weaknesses of the approach.
Markedly, Pepsi should ensure that proper attention is paid to selecting a good strategy for e-commerce. Previously, Pepsi has had success when targeting young people and should especially target them with e-commerce. An e-commerce platform that relates to and brings together young people would ensure the popularity of Pepsi among youths and thus lead to an increase in online sales. Additionally, the platform can address fashionable issues and topics that affect the youth which will help maintain the brand. As a strategy, Pepsi can customize the bottle caps of their products in a manner that will enable consumers to get discounts and win prizes for purchasing a Pepsi drink. Such a platform will interest young people, and they will gradually grow a healthy relationship with the brand which will help increase offline sales of PepsiCo's products. By including products that young people frequently use either for recreation or entertainment will ensure that individual connections are created between the young people and the brand.
Implementation of the Strategy
The bottle caps of Pepsi drinks will play a huge role in ensuring that this strategy is fruitful. The approach requires that consumers are aware that once they purchase a Pepsi drink, they can use the code in the bottle caps to get coupons and buy game equipment and other products at a discount from PepsiCo's online platform. Markedly, there will be a need to publicize this strategy even before its launch to ensure that there is a buildup and interest before it is implemented.
It is required that the strategy grows gradually on people and it should not be publicized through mainstream means. Consumers, especially young people, are expected to know of this strategy over a specified period so that they become accustomed to it. This will help create a sustainable and long-term relationship that will ensure that the sales of Pepsi products rise. The marketing approach of the strategy thus has to be flexible and needs to run over a reasonable period. PepsiCo should, therefore, use influencers and social media platforms to market the approach slowly. Additionally, since the bottle caps are at the center of this strategy, they can be rebranded in a manner that they are more attractive to the young people to drive sales up and ensure that consumers are interested in buying the products.
The priority of the implementation of this strategy will be to ensure that connections are created with young people. Other than an increase in sales, a relationship with young people will ensure that the team allocated the responsibility to market the strategy can get the much-needed feedback from consumers. Such feedback will help decide on what more policies can be used to help promote the bottle cap strategy. Time is also a factor that will be observed during the implementation of this strategy. Many companies are gearing towards dominating the online market and being one of the first companies to launch an e-commerce platform will be an added advantage.
Considering the importance of dominating the e-commerce market, a lot of attention, supervision, and investment will have to be put on this strategy. Moreover, the success of such an approach will not only drive up the sales of PepsiCo's beverages but also all other products that the company produces.
Reasons for this Strategy
This strategy is suitable for Pepsi due to a number of reasons. Markedly, it is a strategy that will be very easy for the company to implement. Although marketing the strategy to create individual connections with consumers, would pose many challenges, the actual process of implementing the strategy will take considerably fewer costs and human resources. Additionally, this is a strategy that will quickly help the online platform to become relatable to the young people. Young people like to be motivated and their no better way to do that than to offer them coupons and discounts on various products. Also, the strategy is highly flexible, and the company could easily change the types of incentives consumers can get. For example, during the holidays, consumers can use the code in the bottle caps to win trips to various places. Also, discounts on specific products can be included on particular days that will ensure that the brand gets the attention of young people on specific occasions.
Considering the competition that is present in the online market, getting an edge over the other companies is very important to Pepsi. The premise to offer discounts to consumers is a strategy that has worked well with other companies such as Amazon. The approach will mainly motivate young people to buy the Pepsi brand to access discounts on products.
Porter's Five Forces
Porter's framework of business analysis has been used widely to help businesses and companies to get a competitive advantage in their respective industries. Competition, the risk of new entrants, the power of consumers, the power of suppliers, and the risk of substitution are the five forces (Porter, 2008). As Pepsi adopt this strategy, some things will have to change as per the Porter framework.
Two forces will be affected, that is, competition and the threat of new entrants into the market. With competition, there are many competitors in the online market. However, PepsiCo's main competitor in the beverage industry is the Coca-Cola Company. According to Porter's framework, the competition force considers issues such as the differences in the quality of products, switching costs, the number of competitors in the industry and the loyalty customer have to the company. When Pepsi uses this strategy, the loyalty of customers is going to change. The approach will ensure that the commitment of the customers they already have is strengthened. This will help increase the power Pepsi has in the industry.
Considering the number of companies willing to introduce e-commerce platforms, the risk of a new entry is entirely a possibility. By being one of the first companies to invest seriously on an e-commerce platform, Pepsi will be able to get an amount of dominance in the market and thus reduce the chances of new companies entering the online space.
Once the strategy is launched, Pepsi will most likely address the capacity of the products to be produced. With the anticipation that there will be a rise in sales, more of Pepsi's products should be available since new consumers will be interested in accessing the discounts. The capacity of production by the company will thus increase.
Another aspect that will change will be the outlook that consumers have on the products of the company. With the introduction of the strategy, customers will be more willing to pay for the Pepsi brand. The amount of money customers are ready to pay for a product is the willingness to pay. It is difficult for customers to be eager to pay for a product of which they think the price is not worthy. Chatterjee and Kumar (2017) point out that customers are prepared to pay if they think the price is fair and worthy of the service or product they are purchasing. The strategy suggested above goes further to give customers more than they are paying for and thus they will be more willing to pay for a Pepsi brand.
To ensure sustainability, companies usually go the extra mile to ensure that their activities have minimal or no impact at all on the environment. With the bottle cap strategy, the company will have to ensure that they continue with their past approach to ensure sustainability. Encouraging people to recycle beverage bottles and bottle caps is one of those strategies. Additionally, with the launch of the policy, bottle caps will now be of more importance to the customer than before and will thus reduce the likelihood of littering. According to Rao and Purkayastha (2017), PepsiCo has been recycling plastics since 2014 to ensure sustainability, and this, therefore, will not be an issue.
Each business strategy has strengths and weaknesses. The approach suggested above is no exception. After analyzing the approach, there is likely to be a few weaknesses to its implementation. While Pepsi has an excellent online presence, it is not entirely stabilized in social media platforms. Marketing and publicizing this strategy will need a strong presence in social media platforms to be able to reach the young people and get quality feedback from them. Without such an excellent social media presence, it will be a bit tough for the marketing to be able to reach the young people. Additionally, it is clear that Pepsi has a very number of customers worldwide. Although PepsiCo is an established multi-national company, implementing this strategy is likely to cause financial constraints to the company considering the amount of discounts that will be given to clients.
In summary, the online market poses an excellent opportunity for companies to expand their services to customers all over. Using the bottle cap strategy, PepsiCo will be able to create an online presence that will help capitalize on this new market and also lead to a rise in sales.
Rao, A. S., & Purkayastha, D. (2017). Sustainable development at PepsiCo. In Case Studies in Sustainability Management (pp. 77-98). Routledge.
Chatterjee, P., & Kumar, A. (2017). Consumer willingness to pay across retail channels. Journal of Retailing and Consumer Services, 34, 264-270.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
Andam, Z. R. (2014). e-Commerce and e-Business.
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