Free Case Study On Pepsico Case

1.What is the case statement? What decisions need to be made?
In 2009, Pepsi had to deal with two problems that affected their sales compared to previous years. The first problem was the decrease of soda consumption in America. The second problem was obesity epidemics. The second factor required product modification in order to help fight obesity in America. PepsiCo had to find a way to attract “millennials” to buy their product on one hand, on the other hand, they had to make their products healthier, and lower in unhealthy ingredients.
2. Describe the environment in which Pepsi finds itself in 2009.
The year 2009 appeared to be full of tough challenges for the Pepsi product. The United States showed a significant decrease in soda consumption among children and adults. People were starting to change their preferences in soft drinks toward iced teas, bottled water, juices and even milk. Statistics had shown that back in 1998 people Americans were consuming a lot more carbonated drinks than in 2009: 864 servings in 1998 compared to 736 servings in 2009. Analysts were making prognosis for the further decrease of carbonated drinks consumption in the following 10 years.
However, this was not a single issue that the company was facing back in 2009. Awareness about obesity of the two-thirds of American adults and one-third of the American children began to rise among governmental figures. They suggested new conditions for companies that sold food and drinks high in fat sugar and calories. PepsiCo was one of them along with Coke, McDonald's and others. In public, these companies were presented as key reasons of the obesity problem, which had a tremendous negative impact on their image. Moreover, the company was forced to pay extra taxes in order to contribute to the obesity epidemics solution. The company had to modify the content of their products: the main goal was to create a product, lower in calories and in a smaller size. The consumer did not response too well on the new version of Pepsi. All the mentioned challenges created new conditions for PepsiCo: they had to come up with fresh ideas in order to survive.
3.What initial steps did Pepsi take to advance its products?
PepsiCo embraced the challenge and started working toward an image of a more wholesome food product company. They lowered the calorie rate of every product and divided all the products into two categories: fun-for-you and better-for-you. The first category was meant for tasty snacks, the second one included products, for more conscious consumers: the products were rich in healthy ingredients, with lower calorie, fat and sugar levels.
4. What perceived needs were filled by the new campaign? In what ways were these customers satisfied?
The new campaign fulfilled the needs of more conscious consumers: the products were lower in unhealthy ingredients and fitted better into a healthier lifestyle. At the same time, the fun-for-you product category was meant to fulfil the needs of those, who wanted to indulge themselves with something that tasted good, but was not that healthy.
5.What challenges were evident in the new strategy? What criticisms arose and why? Were they justified? Why/why not?
No matter the fact that PepsiCo tried to fulfil the needs of all consumers, they received a lot of criticism toward this campaign: people found that the company was losing its entity of the snack and soda business leader. The criticism was not totally justified: the company needed to find a way to adapt and adjust themselves in the newly created business environment. The government required a healthier approach on snacks and soda. More important: the consumer was also willing to switch to a healthier lifestyle. PepsiCo made life much easier for the people, who wanted to be able to find a healthy snack option in a regular supermarket. PepsiCo found a great compromise, that allowed them to save their old traditions, and at the same time be able to keep up with the new requirements of the market.
6. What have been the results of the program? Should Pepsi continue to fund it/in the same way?
Along with the changing of approach to their products, Pepsi also launched a philanthropic product “Refresh everything”, in order to attract younger consumers and create a positive image. The funds were taken from the traditional “Super Bowl” campaign. The results of the “Refresh everything” campaign had been very inspiring. However, they did not affect the rise of sales. Moreover, one year after the campaign launch, the sales of PepsiCo had fallen 4.8% for Pepsi-Cola and 5.9% for Diet Pepsi.
7. What are the “lessons learned?”
The philanthropic project may have affected the image of PepsiCo in a very positive way, but it did not make people buy more of their production. It would be more reasonable for the company, to invest in something that would regard entertainment, which is an industry more associated with sweet soda.
8. What is the status of the Pepsi Refresh Project today?
In 2012, PepsiCo had decided to abandon the project “ Refresh Everything”, as it was not helping to raise declining sales in any way. Until today the status of the project remains cancelled.