Pepsi cost leadership

Both Coca-Cola and PepsiCo are global leaders in the beverage industry, offering consumers hundreds of beverage brands.

What is pepsico business model

Highly fragmented markets and markets that involve a lot of brand loyalty may not offer much of an opportunity to attract a large segment of customers. As long as PepsiCo achieves selling price is greater than or equal to market price, the company enjoys more profit due to economies of scale. IKEA is the cost leader in the furniture industry. The high premium charged covers the additional cost of production Porter, In addition, the organisation has been able to augment and update the existing product portfolio. Payless ShoeSource, for example, sells name-brand shoes at inexpensive prices. For example Coca-Cola and Pepsi, two similar companies competing for the same market can employ these strategies to outdo each other. In contrast, Coca-Cola has made efforts to dominate the beverage industry almost exclusively and shied away from the cross-promotion of multiple products in multiple industries. PepsiCo has adopted effective growth strategies in the context of global food and beverages industry. However, it will have to decrease the over-dependence on Wal- Mart for increasing sales volume.

Financial profitability can only be ensured if the market shares increases and revenue generation is ensured. The organisation has been able to lower its operating cost as a result of which, the financial performance of PepsiCo has been improved. PepsiCo implements market penetration as its primary intensive growth strategy.

pepsico focus strategy

Coca-Cola for instance may decide to produce products different from those of Pepsi by simple modification of the ingredients. Marketing of Coca-Cola has transformed tremendously since the era of Goizueta. In addition, both companies offer ancillary products such as consumer packaged goods.

pepsico global strategy

Merchant, H. Coca-cola can increase the quality of its products and therefore can charge slightly higher prices.

Pepsico target market

IKEA is the cost leader in the furniture industry. Return to Figure 5. For example Coca-Cola and Pepsi, two similar companies competing for the same market can employ these strategies to outdo each other. Coca-cola can increase the quality of its products and therefore can charge slightly higher prices. By PepsiCo trying to minimize the cost of production, it can sell at low price in the market. Payless ShoeSource is a discount retailer that sells inexpensive shoes for men, women, and children. Since every large market has been fully tapped by the beverage industry, the remaining smaller markets require efficient operations to turn a profit and make a lucrative investment, since the sales volume felt in countries such as the U. The diversification strategy adopted by Indra Nooyi has helped PepsiCo in increasing market share worldwide. For keeping pace with the changing pattern and dynamics in food and beverage industry, PepsiCo needs to focus on increasing the brand awareness amongst the consumers. The company also sometimes has special promotional offers with discounted prices.

Several examples of firms pursuing a cost leadership strategy are illustrated below.

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PepsiCo’s Generic and Intensive Growth Strategies