A Pepsi for a poser:
Modern Cultural Upheaval
Case study by;
Makayla Watterson – firstname.lastname@example.org
John Matic – email@example.com
Chris Johnson – firstname.lastname@example.org
Ken Chen – email@example.com
Paul Kobasuk – firstname.lastname@example.org
Makayla Watterson (814) 573 4038
Jeanette Novakovich, Phd.
Cleveland State University
“Accounting 2019,” “General Business 2018,” “Information Systems 2018,” “Business Management 2019,” “Mechanical Engineering 2018”
When someone thinks about the brand Pepsi the product that will most likely come to mind is the soda “pop” we have all come to know. Like many other brands that have been marketed since the turn of the century, not only not only the products themselves but also the recollection of the memories associated with them have influenced generations. In this case, Pepsi, much like many other organizations has evolved their product offerings to expand and gain business outside of just carbonated, delightful refreshments.
Pepsi, now more formally known as PepsiCo is a multinational corporation with various divisions that have been acquired by the organization throughout its existence. Unlike the former years of the Pepsi man making his deliveries of glass bottled sodas, PepsiCo is the sole manufacturer and distributor of many of the snack related products that are consumed by many throughout the world. Today PepsiCo has added the likes of Lay’s, Gatorade, Quaker, and Tropicana to is a portfolio of product offerings. Within this range, the PepsiCo organization has been able to develop a well-rounded marketing plan that targets consumers in different markets including snack and health food as well as athletic supplements.
PepsiCo has developed its market strategy and client reach by expanding the corporation’s exposure to various product lines and supplying specific offerings based on the demands of each global market. In order to achieve this aspect of the global strategy, it was necessary for PepsiCo to operate more efficiently and in some cases independently of the parent organization. Currently, the corporation operates and achieves its goals through six global divisions of which the flagship is the North American Beverages division (NAB). In earlier times, this division was the origin of the company’s operations with a complete focus on the soft drink market and production with later grew into offerings of many other beverage related products including teas, juices, and sports drinks. For the PepsiCo, this division alone offers eleven product lines that are responsible for producing in upwards of one billion dollars worth of revenue each for the company. Other North American divisions include Frito-Lay, responsible for a large majority of various snack food products and Quaker Foods which produce many American grain related products including hot and cold cereals and side dishes such as rice and pasta.
Pepsi is one of the one of the most well-known American establishments that has helped define the culture of modern America. Like many of the founding companies that were established around the turn of the century in The United States, Pepsi was and still is synonymous with the “good ole’ days”. Although the PepsiCo we know of today was founded in the 1960’s when the Pepsi cola company merged with the Frito-Lay the roots of the Pepsi cola company is probably the most iconic.
The Pepsi cola company was established around 1890 by Caleb Bradham, a pharmacist in North Carolina as a craft soda fountain drink offered to his customers. After developing his trademark recipe Caleb decided to market his new concoction and made some rather unfounded investments that went bad during the First World War. From that point on the Pepsi cola company was managed by the Loft Candy Company, which continued to market and develop the Pepsi brand through the 1960’s.
Company Communication Methods
Due to the rapid advancement in communication methods within the past twenty years, the preferred means of communication for the PepsiCo organization can be most easily divided into two categories; pre and post internet. Regardless of the time frame considered, PepsiCo has to utilize communications in several forms to reach its customers in regards to its marketing strategies and complaint management.
In the past, the Pepsi cola company utilized many of the technologies available during that time to reach its customer base and receive feedback. These methods included at first, a simple word of mouth through its local customers then later through commercials aired on the radio. Since its beginnings, Pepsi was known to be a large part of Major League Baseball and their signs and banners could be seen in various stadiums across the United States. These methods were great at the time but the only way for customers to reach the company was either by written letter or potentially a telephone call later in time. These methods being what they are often got the job done but could take some time to process and actually get results for the customer. Another downfall to this old methodology is performing follow-ups was nearly impossible to perform in an efficient manner. It became too easy to “lose” complaints with no repercussion or obligation to follow up on the matter.
Currently, Pepsi utilizes multiple forms of social media and digital documentation to not only reach its current and potential customers with their market campaigns but also to address company issues. Using social media as resources to address large scale problems is an extremely effective way of projecting the message of “hey, we care deeply about or customers” through mass communication. There are times, however, when mass communication is not necessary or the best means for addressing a particular situation. In these cases, Pepsi like many other modern businesses relies on digital communication typically in the form of an email to address specific issues that do not concern a general client audience. In any situation, the use of social media is a means to promote a product to a large audience and serve as an extinguisher to potentially volatile situations.
PepsiCo’s marketing strategies have developed over time, as they have acquired different brands, which involve the effects of mergers and acquisitions. The company mainly uses marketing mix of 4ps (Product, Place, Promotion, and Price), which is their main tactics and strategies formulated based on the different acquisition of products and brands that they possess. Despite, all the changes and various tactics and strategy based on their products and brands, PepsiCo remains one of the most successful companies worldwide to date.
The types of products under Pepsi brand that made available for consumers to purchase are:
- Soft Drinks
- Sport Drinks
- Coffee Drinks
- Energy Drinks
- Bottled Water
- Rice Snacks
Most of PepsiCo’s products are made available for purchase in local retail stores, supermarkets, and convenience stores. They also have an online store for merchandise for clothing, cups, and backpacks etc. Based on their distribution strategy, consumers seems to make most their purchase at retailers but not online.
PepsiCo main strategy seems to be using advertisement for promotion. Their primary method is endorsing famous celebrities, radio shows, TV, print, and online media. Another method would be using sales promotion, such as giving out a discount on the certain product for a limited time. Then through local Pepsi office, they use it for distribution for negotiating an agreement for the wholesale price. Finally, the public relation in for endorsing sponsorship events.
PepsiCo has lots of products and brand so mainly price their product to be affordable for an everyday product, as they want people to purchase it daily.
Pepsi is currently a part of two industries, the packaged food, and beverage industries. Pepsi was first introduced into the beverage industry in 1903. PepsiCo has different brands available in over two hundred countries. PepsiCo has to prepare and deal with external factors. Competition is one external factor PepsiCo has to focus on. Pepsi’s major competition is Coca-Cola, which has always dominated the soft drink market, but they also have competition from Kellogg Company, DPSG, and many others. Pepsi finally became popular in the soft drink market when a blind study was done in 1975, and people chose Pepsi over Coke. PepsiCo owns 20.5% of the soft drink market. Bargaining power of buyers and suppliers are another two external factors of PepsiCo. Bargaining power of suppliers is insignificant as an external factor. Because Pepsi is in a perfectly competitive market, it also has to worry about new entries into the market. Another external factor PepsiCo has to deal with is substitute products.
The government decided to get people to drink less soda they would impose taxes on the sugary beverages, therefore causing the retailers to raise the price of these beverages. However, the retailers were willing to pay the extra fee, therefore they did not raise the price of the soda. This movement of taxing the sodas caused PepsiCo to make changes in their company. They decided that they should branch out and have other items, rather than just soda. There are many regulations such as production, packaging, distribution, Occupational Safety, and Health Act, The Clean Air Act, and many others. There are so many regulations because PepsiCo is a part of different industries that have different regulations. They are a part of the soft beverage industry and the food industry. They also have labor laws so they have to follow all the regulations that go along with having employees. Government agencies at any given time are allowed to impose new requirements that PepsiCo then has to follow. There is one law that states if certain ingredients are in the products and these ingredients are found to cause cancer or birth defects, then PepsiCo has to list them. If PepsiCo refuses to meet the regulations and restrictions they could be liable for criminal and civil enforcement actions.
Public issues are important for a company because it helps them understand how potential investors feel about their company. If potential investors view the company as going they would be more likely to invest in the company. PepsiCo is a company that has been around for many of years and has built a reputable name for itself. Pepsi is not known for having bad public issues. Pepsi is a successful company and many people have made money from buying stock in the company. Over the past few years, Pepsi stock has not had a dramatic drop in price which allows their stakeholders to make money because the stock price never has a big drop. When the stock price does not drop often and investors are not guessing what the price would be on a certain that gives them more confidence to invest in the company.
Stakeholders are key to PepsiCo for many reasons. They are recognized as direct and immediate members on the board. PepsiCo has to involve these stakeholders in all aspects of the company to help the company reach its goals and continue to grow. It is important to give each stakeholder and role and make sure that each stakeholder knows their job for their specific role. If the stakeholders are aware of all aspects of the company then they will prove to be an asset to PepsiCo.
PepsiCo has to manage their stakeholders in a specific way. Managing their stakeholders is simply communication and working with them to help them understand the company’s goals. Once the stakeholders are told what their position is with the company they then can be managed into each phase of the company. The first thing PepsiCo shows is how to solve possible problems that occur in the company. The stakeholders can then tell PepsiCo what they think they should do, or what they think they are doing wrong. PepsiCo can then take the suggestion to help improve their company.
Everyone is familiar with the brand name Pepsi. Pepsi is one of the biggest brands in the world. Pepsi was not the actual company name, the company name is PepsiCo, Inc because of all the brands that are under the company PepsiCo, Inc. was established because of a merger. The merger was between Pepsi-Cola and Frito-Lay. Caleb Bradham was the creator of Pepsi-Cola, which was created in the late 1890s. Caleb was a New Bern, N.C. pharmacist. Frito-Lay Inc was formed due to the 1961 merger of the Frito Company. The Frito Company was founded by Elmer Doolin in 1932. Donald M. Kendall was the former President and CEO of Pepsi-Cola became the President and chief executive officer of the new company PepsiCo. Doritos was the first product the PepsiCo Company introduced. The Doritos tortilla chips were introduced in 1966 and they would become the most popular snack chip in the United States. In the 1970’s Frito-Lay starts expanding the company plants and opening a new one every year over the next decade. PepsiCo acquired Pizza Hut in 1977 and acquired Taco Bell in 1978. PepsiCo was a company that was expanding and growing fast. In 1985 PepsiCo was the largest company in the beverage industry. Their products were available in nearly 150 countries and territories.
The Pepsi-Cola company formulated Pepsi-Cola in 1898, Diet Pepsi was formulated in 1964, and Mountain Dew which was introduced by the Tip Corporation in 1948. Pepsi-Cola introduced the new modern looking logo. The logo still featured the red, white and blue color scheme, which was adopted in 1943. In the 1976 Pepsi-Cola became the number one cola drink in supermarkets. Pepsi-Cola also introduced Pepsi Light. Pepsi Light was an alternative to the traditional diet colas and it had more of a lemon taste. In 1982 Pepsi Free and Diet Pepsi Free was introduced. When they were introduced, they were the first major brand caffeine-free colas. In 1984 Slice and Diet Slice were introduced. Slice and Diet Slice were the first major soft drinks with fruit juice. In 1985 a Pepsi “space can” was tested aboard the space shuttle. PepsiCo was the largest company in the beverage industry. Pepsi-Cola acquired Mug Root Beer in 1986. Pepsi-Cola joined a joint venture with Unilever in 1991 to develop tea-based drinks. Pepsi-Cola introduced freshness dating on their products in 1993. At the time Pepsi-Cola was one of the first companies to introduce freshness dating on their products. In 1994, Pepsi-Cola is the first major soft drink maker to produce and distribute its products in Vietnam. Pepsi-Cola celebrated the 100th anniversary of Pepsi in 1998. Five years later in the year on 2003, the Pepsi-Cola trademark turned 100 years old
1898-Pepsi-Cola was created
1940-Mountain Dew was created
1964-No calorie Diet Pepsi was introduced
1991-Pepsi teamed up Unilever LLC to launch Lipton
1994-Pepsi Entered a partnership with Starbucks
1994-Pepsi entered the bottled water market with Aquafina
1998- Acquired Tropicana and Dole. PepsiCo became the leader in 100% juice and juice drink category
2000-Acquired Sobe Teas & Elixirs
2001- Acquired Gatorade
2002-Launched Propel water which is produced by Gatorade
2006-Acquired Izze the sparkling juice company
2007-Naked Juice line joined PepsiCo, was acquired the same year as Izze
2007-Pepsi Max was released. Pepsi Max provided the bold taste of cola and was zero calories.
2008-Launched 0-calorie Sobe and Trop50. Two of the first beverages sweetened with stevia extract.
2008-Began distributing Tazo iced tea. Tazo tea offers a range of sweetened and unsweetened ready to drink teas.
2013- Expanded more low-calorie options
2014-Pepsi True was introduced. Pepsi True was caffeine free, 30% less sugar than regular Pepsi and no artificial sweeteners.
Corporate Communication Following the Incident
On April 4th, 2017 the Pepsi commercial that shook half of the nation due to the fact people felt that they were “attacking” minorities and certain races with a message of giving policemen a cold can of Pepsi could solve everything and stop riots from continuing. Since the release of the commercial, it took less than 24 hours for the company to realize they were being hated on and losing sales because people disagreed with the message they were trying to spread amongst the globe. What the company was going for was clearly a way to get a global message out there without causing more controversy. Unfortunately, it didn’t play out the way the company had imagined. The head Pepsi corporation was trying to bite off of what Coke a Cola had done a couple years back with their commercial that was trying to send a message to the black lives matter protest and thought they had struck gold when they created this past ad and boy were they wrong. The company was most definitely very apologetic to everyone how had viewed the commercial and wanted them to know that that was not their intention what so ever. Pepsi even felt very disgusted in the fact that they gave Kendall Jenner a bad look since she was the focal point of the commercial and grabbed the attention of everyone and it made people think that she was a part of the atrocity of the ad. She separately gave out an apologetic message herself and didn’t mean to put people or races in a hard place. What really threw people off within the commercial was how Kendall Jenner changed her appearance when she whipped her makeup away and changed into different clothes so she would appear to be “one” of the rioters giving them a bad look as if the have no money and dress alike. Just before the ad got taken off the air Constance Grady had the chance to speak to a Pepsi spokesperson who had said ““This is a global ad that reflects people from different walks of life coming together in a spirit of harmony, and we think that’s an important message to convey.” Which was clear that they were going for this, no huge corporation would inadvertently try to sabotage their company or discourage their audience and consumers. Everybody makes mistakes and sometimes when you are trying to get a certain message across it takes courage and no one knows what the outcome will be until it’s released.
New Policies Developed
Since the major uproar that occurred Pepsi decided that they will take just a minor step back when it comes to advertising. What they mean by that is that when it comes to advertising they will just go back to their regular marketing ways by just promoting their product in a normal fashion with people enjoying the soft drink with their friends or giving the product to someone who maybe had a bad day and cheers them up with a refreshing can of Pepsi. They will most definitely drive themselves away from the marketing aspect of race as of right now until the feel they can really nail this one on the head because they have already gotten so many backlashes from the nation that they cannot afford to take a hit like the Kendall Jenner ad had taken. Just because Pepsi corporation failed at their most recent marketing trial does not mean that the will not attempt something in the future to make a difference or at least try to bring everyone together without profiling certain races in the fashion they did so.
Another huge policy Pepsi is trying to do is to hire and utilize women within their company. The reason they are doing this is because they claim that their teams are much “stronger” whenever the women are around. They have been recruiting them from all over the world and they really want to increase female participation. This is absolutely the right move for Pepsi because it shows that they really do care about equality and everybody as a human being. They are putting forth their effort to show that they can utilize any one no matter what color or their skin is or the race. They succeed because everyone works together as a team to try and represent Pepsi in a classy and ethical corporation that is willing to do whatever it takes to succeed. Pepsi not only is looking for women but they also help out a bunch of others that are in need of a job and believe they can help in a certain for the company by hiring war veterans. This gives a good image especially to our country; Pepsi shows their support to our country by helping the ones who fought for us. Pepsi does not just hire veterans but the also help our troops that are currently in battle by showing support and on memorial day “PepsiCo truck drivers paid tribute to the nation’s (and the company’s) war veterans with “Rolling Remembrance,” a 5,400-mile journey from California to New York to transport an American flag once flown on an Afghanistan combat mission” (PepsiCo). This is a great act by Pepsi not because it is “the right thing to do” they continuously do acts of kindness and support like this all the time. The even had a policy that’s called the “Global Anti-Harassment and Anti-Discrimination Policy” which is a “zero-tolerance policy toward any type of harassment or discrimination based on race, color, religion, sex, sexual orientation, gender identity, age, national origin, disability or veteran status, or any other protected category under applicable law.” (PepsiCo). Pepsi really does believe in our country and always wants to make this planet a better place. They treat their employees incredibly and try to treat their customers the same exact way. It should be very clear that it was not their intentions to rattle to the globe by coming out with their controversial commercial. They were trying to integrate everyone to make a difference within the country and show the globe that they want to change and want everyone to respect and accept everyone equally.
The company’s initiative seems to launch a campaign called “Performance with Action” as they focus on product, people, and the planet. PepsiCo promotes their products using famous celebrities for a commercial that enjoys their products in a fun way. For example, Messi, a globally known soccer player that was hired by PepsiCo in order to partner up with one of their brands for a collaboration. They also want to earn brand loyalty from the younger generation as they use tech in order to draw them in. PepsiCo is developing this tech called the “smart cap” and a sweat patch that comes with Gatorade. Its purpose is to indicate how much and when the individual should drink as the sweat patch is supposed to tell how much sodium is one body loses.
Pepsi launched an ad that was heavily criticized as the public seems perceived the ad trivializing the black lives matter. As the commercial seems to use a protest to sell their product. While the company was under fire with the heated response, the company release a public statement the next day after the ad aired to the public stating, “Pepsi was trying to project a global message of unity, peace, and understanding. Clearly, we missed the mark and apologize,” and continues by stating “ We did not intend to make light of any serious issue. We are pulling the content and halting any further rollout.” Therefore, quelling the anger from the majority of the public.
Social Media Response
Most of the social media response was made to poke fun at Pepsi commercial Kendall Jenner that misfired:
It is not uncommon for companies to get sued by the public. There are many of things that can lead to a potential lawsuit. You do not hear about companies being sued often but when there is a lawsuit against a company it usually makes headlines. PepsiCo is not a company that is known for being sued by the public over its products. PepsiCo has been sued throughout the years and the cases tend to make headlines because it is uncommon for them to get sued. A couple of their major lawsuits have been due to promotional games and product labeling errors.
Since the release of the commercial it gave Pepsi a bad look and everyone knew that. The next day since the commercial aired it drew “1.25 million mentions on on Twitter, Facebook and Instagram, with 58.6% of them negative, according to social media monitoring company Brandwatch” (Schultz). The company certainly received backlash from a lot of customers and citizens of the United States but at the time when it happened, they really could not do much since it all happened so fast. In the past, the best option was to remove the ad for the air and just wait for the criticism to diminish. When something this significant it can be very devastating, luckily for Pepsi their company is big and well known across the globe it is almost being treated as if it were brushed under the rug and they moved on from it while also learning a valuable lesson. Believe it or not but Pepsi’s actual stock rose since the commercial was aired because people were so infatuated with the fact Kendall Jenner was in the ad. Which was an excellent marketing ad to bring such a well-known individual that would draw attention to their product and her. At first, the stock went up but as soon as the ad was taken off the internet and television people started to realize why it was pulled and people lost their minds which eventually ended up having the Pepsi stock drop. The drop was not as significant as you would think but it defiantly plummeted.
1. Tell the truth.
The Pepsi ad that shows Kendall Jenner joining a protest and offering a Pepsi to a police officer was simply trying to show a sense of togetherness. Pepsi wrote a statement saying “Pepsi was trying to project a global message of unity, peace, and understanding. Clearly, we missed the mark, and we apologize.”
2. Prove it with action.
The issue with the commercial is that it sparked people to think it is a racial protest movement to sell Pepsi. McKesson has an issue with the apology that PepsiCo gave. He says that PepsiCo should have apologized to all of the people who have been protesting for two years on behalf of the death of Michael Brown.
3. Listen to stakeholders.
When the backlash for the commercial first came about PepsiCo wrote a statement claiming what they meant by the commercial and apologizing for not reaching that audience. They even apologized for putting Kendall Jenner in this situation. They then said they would remove the commercial. When McKesson came forward with his issues with the apology, PepsiCo then made another statement saying they meant no disrespect and believe in everything Dr. King stood for.
4. Manage for tomorrow.
PepsiCo pulled the commercial to show that they were truly sorry for the way it was taken.
5. Conduct public relations as if the whole enterprise depends on it.
Normally when an ad flops, it is old news by the next news cycle. This was not the case with PepsiCo, the backlash was so harsh and all over the news, that it will be around for a while. PepsiCo has to find a way to not lose too many sales during this time. After PepsiCo sent out their public apology, they refused to make any other comments.
6. Realize an enterprise’s true character is expressed by its people.
The strongest opinions — good or bad — about an enterprise are shaped by the words and deeds of an increasingly diverse workforce. As a result, every employee — active or retired — is involved with public relations. It is the responsibility of corporate communications to advocate for respect, diversity, and inclusion in the workforce and to support each employee’s capability and desire to be an honest, knowledgeable ambassador to customers, friends, shareowners and public officials.
7. Remain calm, patient and good-humored.
Lay the groundwork for public relations successes with consistent and reasoned attention to information and stakeholders. When a crisis arises, remember, cool heads communicate best.
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