ASSINGMENT: 02

STRATEGIC MANAGEMENT

SUMBITTED TO: DR. FOZIA MALIK

SUMBITTED BY:

AMNA QASIM 2018-MS (BA) -003

SARA AZIZ 2018-MS (BA)-016

SHABNAM NAZIR 2018-MS (BA)-017

DATED: 16TH SEPTEMBER 2018

FATIMA JINNAH WOMEN UNIVERSITY RAWALPINDI

Page | 1
1. Integration strategy of PEPSI:
 Forward integration:
Since 1999, Pepsi has been looking for a choice of forward integration to repurchase bottlers.
The company focused on marketing and left most operating decisions to bottlers. As the
consumers gathered to non-carbonated beverages/soda industry, Pepsi has gained more control
over the distribution to expand their offerings. Pepsi concentrates more to gain authority towards
distribution.  The competing firms, Pepsi and Coca Cola are also called as Upstream
Manufacturing Companies that sell their products to downstream bottling and distributing
companies. Eventually, a change in strategy through Pepsi Americas and Pepsi Bottling Group
acquisitions resulted a higher flexibility in pricing model and products in 2010. In forward
integration the Pepsi has their own bottling plant and Pepsi also sell their product to the others
companies. The Pepsi also has their own franchises. As the Pepsi head office is located in
America, so the company has their own retailer in order to increase the control on distributors.
The other distributors or the franchises of the Pepsi are given below:

 Riaz Bottler Lahore

 Pakistan Beverage Karachi
 Punjab Beverage Faisalabad
 Naubahar bottler Gujranwala
 Haidri Beverage Islamabad
 Northern bottler Peshawar
 Sakhar Beverages
 Backward integration:

Pepsi as company is using the backward integration strategy in order to get the basic ingredient
of its beverages from its main head office America. These thing is send to its production
location. The things include the raw material, soda, concentrated water and all other things. As
the Pepsi has a brand of Lays, so for this the Pepsi also has its potato farm as well.

 Horizontal integration:

In horizontal integration, Pepsi do a partnership with Starbucks and the KFC. In Pakistan, Pepsi
can do a partnership with Murree brewery, due to low share of Murree brewer in the market and

Page | 2
the cost of purchasing the company will also be low. When the Pepsi do a partnership with the
Murree brewery it help the Pepsi to compete with coca cola because due to merger the market
share of the Pepsi will increase and it will also help the Pepsi in product development in form of
different flavors and then Pepsi can easily compete with the big rivals of the beverage industry.

2. Intensive strategies of PEPSI:

 Market Penetration:
Pepsi uses aggressive marketing to attract more consumers. In marketing penetration strategy the
PEPSI keep the prices of the product low to increase the sale of the product in the market. This
help the PEPSI to increase the market share as well. The brand also uses promotional campaigns
like seasonal discounts to increase sales among its existing customers. It releases new packages
and runs promotional campaigns that are aimed at increasing the sales of its products worldwide.
Different existing products the company entered into the existing market to increase the sale of
the product such as diet PEPSI entered into existing market with the competitors.

 Market development:

Pepsi continues to expand its distribution network to reach the last remaining markets or
segments, especially in developing regions. PEPSI products are sold in more than 150 countries.
The brand has spread globally to nearly every corner of the world.  Apart from the flavor of the
PEPSI products and there affordable prices, the credit also goes to the use of marketing and
promotions for international growth. The strategy has been highly effective and helped PEPSI to
grab the leadership position in the beverages industry. But company try more to expand their
business globally to compete with the rival brands. The launch of PEPSI diet in 2005 was a
classic example of this strategy, the great taste of PEPSI but with zero sugar and low calories
was launched for the female because of their diet conscious behavior.

 Product development:

This involves developing new products for existing markets by thinking about how new products
can meet customer needs more closely and outperform competitors. PEPSI do product
developments by making new products and by modifying existing ones, such as low-calorie,
reduced-salt, or low- soda for its beverage products. The launch of Cherry PEPSI in 1985 was

Page | 3
the first PEPSI extension beyond its original recipe. Later it added other flavored variants
including lime, lemon and vanilla due to successful launching of the new flavor.

3. Diversification strategy of PEPSI:

 Related diversification:

The PEPSI Company is a non-alcoholic beverage company. The Company owns or licenses and
markets more than 350 non-alcoholic beverage brands, but also a variety of still beverages such
as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy
and sports drinks. It also owns and markets non-alcoholic sparkling beverage brands, including
PEPSI diet, PEPSI max, PEPSI light, PEPSI fresh, Mirinda, 7up, mountain dew and Sprite. It
manufactures, markets and sells syrups, including fountain syrups and finished sparkling and still
beverages operates. The other product of PEPSI is PEPSI Caffechino. The PEPSI have its related
diversification in water with the name of Aquafina. This product has its own brand name and the
target market as well.

 Unrelated diversification of PEPSI:

In unrelated diversification, the PEPSI offer Pepsi’ bags, Pepsi shirts, PEPSI jeans to the
consumer. It also offers merchandise from pen and glasses to frides to increase its brand
extension. It also sponsor a PEPSI battle of the band which shows that it promotes the Music.
The PEPSI has also launched a different product like lays (available in different flavors and
packing) and the other is KURKURY (available in different flavors and packing).

__________________________________________________________________________

Page | 4