Introduction
This decision essay will critically evaluate the case study titled ‘Pepsi Canada: The Pepsi Refresh Project’ so as to identify the prevailing issues and to develop a potential course of responsive action. The decision essay will use the state-and-prove model to structure the paper.
Brief Summary
Pepsi was founded by Caleb Davis Bradham in North Carolina, United States in 1893 as ‘Brad’s Drink’ and it adopted the name ‘Pepsi-Cola Company’ in 1898. In the initial stages of its operations, the company expanded the business by selling franchises in various states.
Currently, Pepsi is one of the world’s largest carbonated soft drink companies and holds a notable share of the US market. Coca Cola is the major competitor of Pepsi and both these companies collectively account for over 70% of the global carbonated soft drinks industry. In late December 2008, the Pepsi U.S launched a marketing campaign called ‘Refresh Everything’ positioning the company as ‘the optimistic catalyst for idea creation’. The major objective of this marketing campaign was to engage and empower consumers and thereby drive Americans to RefershEverything.com. As a continuation of the ‘Refresh Everything’ campaign, the Pepsi U.S implemented Pepsi Refresh Project (PRP) in November 2009 based on the information obtained with the help of three outside agencies (Richard Ivey School of Business Management, 2011). The major intent of this marketing program was to award financial grants to individuals and organizations so as to enable them to fund their ideas/projects that had the potential to improve communities. In 2010, the Pepsi Canada launched the Canadian version of the Pepsi Refresh Project following a poll of 1,006 Canadians in April of that year. By August 2011, the Pepsi U.S distributed over $20 million in grants whereas Pepsi Canada given out over $1.2 million in community grants under the PRP marketing campaign (Richard Ivey School of Business Management, 2011).
Recommended Decision
While analyzing the case study, it is identified that Pepsi’s high-profile marketing campaign PRP did not make a significant impact on the firm’s performance as intended. The Exhibits 1, 2 & 4 make it clear that Coca Cola dominantly outperformed Pepsi during the fiscal periods following the launch of the PRP campaign. Pepsi’s stock prices fell drastically during the period September 2010 to July 2011 compared to Coca Cola’ stock prices. When PepsiCo earned net income of $6,669 million in 2010 at the cost of $2,800 in advertising and marketing expenses, Coca Cola attained net income of $8,209 million expending only $878 million in advertising and marketing expenses (Richard Ivey School of Business Management, 2011).
The PepsiCo management has to design and implement its marketing campaign using the platform of social media, which have become a power channel of modern communication. The most potential feature of social media-based marketing campaign is that it not only assists the organization to improve its market reach but also cut down its marketing costs. Today most of the people maintain an account in any of the social networking websites like Facebook, Twitter, or Instagram and they frequently use those websites to keep in touch with their friends and relatives and share their ideas and opinions. Hence, through maintaining well-updated pages in those social networking sites, the PepsiCo would be able to communicate its marketing message to existing customers as well as to broader population of prospective consumers. A major strength of this strategy is that the company can directly interact with consumers and recognize what they actually expect from the business. This practice can benefit the organization to modify its operational policies and practices in accordance with the changing interests of modern customers.
Currently, the organization focuses specifically on young customers and it almost passes up the rest of the adult population. However, the social media-based marketing strategy can aid the company to listen to the interests of consumers belonging to different age categories and thereby strengthen its sales revenues. As noted already, the PepsiCo spends too much in advertising and marketing expenses compared to its major competitor Coca Cola without actually realizing justifying outcomes. At this juncture, a shift towards the social media strategy can help the organization trim down its advertising expenses notably thus leading to improved net income. Finally, social media can be a potential platform for the company to publicize its CSR initiatives with regard to environmental sustainability and community welfare to a wider population.
Decision Options
In this digital age, it is better for the company to make use of the infinite scope of social media to promote its marketing efforts. The company is suggested to use its Facebook and Twitter pages to interact with existing and prospective consumers and to gather consumer feedbacks. This strategy can greatly assist the organization to interact with actual users of its soft drinks and to collect their opinions/suggestions on Pepsi products. In addition, this approach is beneficial for the company to interact with prospective consumers and to generate more sales among them. Finally, this marketing strategy can benefit the organization to reach people of all ages at affordable costs.
Similarly, it is recommendable for the organization to develop marketing strategies that focus specifically on environmental sustainability and waste management. In the current world, dumping of e-wastes and other hazard materials and emission of greenhouse gasses have become a potential threat to the environment. At this juncture, it would be a sensible approach for the PepsiCo to develop marketing strategies giving particular attention the promotion of biofuels like biopetroleum. Reports indicate that individuals and communities tend to welcome such changes in industries because they are increasingly concerned about growing environmental challenges like global warming and climate change (TCE, 2008). Eco-friendly marketing strategies can benefit the organization to influence a wider consumer population in an effective manner.
Decision Criteria
In the current scenario, the PepsiCo is forced to seek alternative marketing strategies because its massive PRP fails to deliver the outcomes intended. When the company spends its whole resources and energy targeting the young consumers (aged between 18 and 29), it simply passes up the rest of the adult population. In addition, consumers may not necessarily remain loyal to a soft drink brand throughout their life once they have been captured in their youth. Therefore, it is vital for the PepsiCo to broaden its consumer focus so as to improve its revenues and to remain competitive in the marketplace. In short, the company is suggested to direct its marketing efforts at focusing the needs of a wider consumer population. Hence, the first decision criterion is that the marketing strategy must be capable of extending the PepsiCo’s focus to a wider size of population.
Similarly, the company’s marketing strategy must focus particularly on the aspect of corporate social responsibility (CSR) and this is the second decision criterion. In the modern world, people, communities, and governments are really aware of the serious repercussions of environmental issues like global warming and climate change, and therefore, they would not support any business that pays little attention environmental sustainability. In addition, businesses are expected to take significant efforts to improve the wellbeing of the communities in which they operate. Therefore, the PepsiCo has to integrate socially responsible initiatives into its marketing campaign. While integrating CSR policies into the marketing campaign, the organization should ensure that its CSR efforts are not viewed as a mere attempt to adhere to sustainability requirements. The third criterion is that the organization must identify and seize opportunities that others do not see. In other words, it should be innovative while designing marketing campaigns. For this, the PepsiCo management has to encourage stakeholder participation during the process of strategic planning. This approach can assist the company to make certain that its marketing campaign specifically tries to meet the needs of existing and prospective consumers.
Proof of Recommended Option
The social media approach recommended for the PepsiCo is really advantageous for the company to address the current issues associated with its PRP marketing campaign and to focus on a broader population of consumers belonging to different age groups. Evidences suggest that people, communities, and governments are interested to promote a business that invests a significant amount of their time and money in environmental sustainability and community uplift. To illustrate, Pepsi has collaborated with Earth Institute and Hollywood actor Matt Damon to support the supply of clean water to communities in developing countries like Africa, India, Brazil, and China. As part of this CSR initiative, the PepsiCo has planned to make an investment of $8million in two long-water projects (TCE, 2008). This CSR program of the PepsiCo has been widely accepted in these countries and this favourable market situation in turn helped the company grow its business in these markets notably. In addition, the example of Apple reflects how a corporate company can make use of social media to communicate its marketing message to the target audience effectively. Apple maintains a group of insanely loyal customers in social media to defend the company in times of crises and to publicize company’s new product launches (Gattiker, 2013, p.57). This strong social media strategy has assisted Apple to become an innovation leader in the computer software/hardware industry. Therefore, the marketing option recommended can significantly contribute to further market expansion of PepsiCo in Canada.
Critique of Options
Two other options discussed in the previous part are less desirable for the company as these options have some limitations compared to the chosen one. To make it clear, the decision to design a marketing strategy focusing specifically on environmental sustainability and waste management may not benefit the company much because there are other areas like community welfare that are also required to be addressed by a corporate company. Furthermore, today many people think that it is the responsibility of corporations to contribute to environmental sustainability, and hence, such a marketing strategy may not make a significant impact on the firm’s business. Another potential issue associated with this marketing strategy is that the organization may be forced to spend huge amounts of money to implement and monitor those high-profile marketing strategies. If the company fails to generate enough revenues to outweigh such huge costs, the situation would lead to a net loss for the company.
Likewise, a marketing strategy based on promoting occupational health and safety (OHS) is also less effective for the company in comparison to the current strategy chosen. The major demerit of this strategy is that it focuses only on the internal aspects of the company, and therefore, it would not be much effective to capture a wider market attention. In addition, this approach may prevent the business from focusing on other key marketing areas such as changing trends and consumer expectations.
Action Plan
In order to implement the chosen marketing strategy, the PepsiCo management is advised to hire a professional internet marketing team that has expertise in online promotion activities such as SEO, Google AdWords, and pay-per-clicks. The service of such a professional team is vital for the company to improve its social media presence and to excel at using modern techniques that would create a strong virtual background for the business. In addition, the company has to hire creative people who can develop attractive content for the firm’s social networking pages.
Conclusion
References
Gattiker, U. E. (2013). Social Media Audits: Achieving Deep Impact Without Sacrificing the Bottom Line. Boston: Chandos Publishing.
Richard Ivey School of Business Management. (2011). Pepsi Canada: The Pepsi Refresh Project.
Smith, C. W. (2014). We didn’t want to totally break the law: Industrial Legality, the Pepsi Strike, and Workers' Collective Rights in Canada. Labour/Le Travail, 74, 89-121.
TCE. (2008). Singing the praises of switchgrass. Retrieved from tcetoday.com.
