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BAHRIA INSTITUTE OF MANAGEMENT & COMPUTER SCIENCES, KARACHI CAMPUS

Strategic Marketing
A Case Stu! Ana"!sis #$
Pe%siC#& Restaurants Internati#na"
Su'(itte T#)
THE HONORAB*E COURSE COOR+INATOR
MR& M& AHME+ BUTT
Su'(itte B!)
Hu(era Has,i( S!e
Israr A,(e
Kiran Fati(a
May 2, 2005
Strategic Marketing - A case study of PEPSICO Restaurants International
Bahria Institute of Management & Comuter Sciences !
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C ONTENTS ____________
Acknowledgement 1
Executive Summary 2
Introduction 3
History 3
Current Situation 12
Analysis o !ro"lem 15
Elements Contri"uting to t#e !ro"lem 1$
S%&' Analysis 1(
)*E* +atrix o !e,siCo* 23
+ission - &".ectives 25
+arkets - Strategies 27
+a,,ing !roduct +arkets 31
/escri"ing End 0sers 33
Analy1ing Com,etition 35
Segmentation 23
+arket 'arget 22
!ositioning Strategies 2$
Strategies or 4rand +anagement 51
Strategic Marketing - A case study of PEPSICO Restaurants International
Bahria Institute of Management & Comuter Sciences !
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ACKNO-*E+GMENT
%e are very t#ankul to Almig#ty Alla# w#o gave us t#e strengt# to com,lete t#is case
study analysis*
%e would like to extend s,ecial t#anks to our Course Counselor5 and 'eac#er5 Mr. M.
Ahmed Butt, or giving us t#e guidance to ,erorm t#is work successully5 in a results
oriented manner*
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E.ecuti/e Su((ar!
!6I5 t#e !e,sico 6estaurants International5 is a ,art o t#e !e,sico International5
and it uses many o t#e images and ,roducts o !e,sico*
'#e !6I #ad "een suering rom an inconsistent image5 and declining rates o
,roits5 u, to t#e end o 1772*
!6I #as analy1ed its glo"al ,ractices5 and carried out S%&' analyses o its own
and its com,etition* As a result5 it ound out t#at it needs to aggressively market5
advertise5 and ,romote its "rand identities5 using greater economies o scale5 uniied
standard o,erations5 and most modern tec#ni8ues o setting u, and running new "usiness
outlets at lower set u, costs*
!6I also identiied t#at its own sta5 and t#e sta em,loyed "y its "usiness
,artners needed to "e trained in its uniied international standards o o,erations5 and or
t#is it is necessary to set u, a central training acility5 t#at !6I calls its 90niversity:*
!6I used +c/onalds "usiness success as its "enc#mark5 and em"arked u,on a
successul marketing .ourney5 t#at is c#aracteri1ed "y its eorts to 9standardi1e:
everyt#ing rom its "rands5 advertising agencies5 signage5 restaurant ex,eriences5 and
ood 8uality*
!6I reali1ed t#at t#e ,ricing took a "ack seat in t#e customer loyalty5 and t#e
overall comorta"le ex,erience o visiting an outlet eatured as more im,ortant among t#e
loyal customers5 w#o kee, on coming "ack eeling sae5 secure5 comorta"le5 and as an
#onored guest*
0sing t#e 9standardi1ation: as a key com,onent o its uture market strategy5 !6I
continues to consolidate its strengt#s5 and successully com,ete wit# its contem,orary
;uick Service 6estaurants <;S6= "usinesses*
!6I also needs to work on a conce,t w#ere"y all t#e t#ree main 4rands5 >?C5
'aco 4ell and !i11a Hut are ,resent wit#in t#e same ,remises5 in order to ac#ieve
economies o scale and a successul integration o ,rocesses - delivery*
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Introduction
History:
!e,siCo5 Inc* is currently one o t#e most successul consumer ,roducts com,any in t#e
world wit# annual revenues exceeding @33 "illion and #as more t#an 2(35333 em,loyees*
!e,siCo5 Inc* "egan as a successor to a com,any incor,orated in 17315 known as Aot
Inc* &nce known as !e,siBCola5 t#e com,any ex,anded its "usiness and ado,ted its
current name5 !e,siCo5 ater a merger wit# ?ritoBAay in 17$5*
'#is merger dramatically increased !e,siCoCs market ,otential and set t#e oundation or
t#e com,anyCs tremendous growt#*
!e,siCoCs ,roducts are recogni1ed and are most res,ected all around t#e glo"e* Currently5
!e,siCo divisions o,erate in three major US and international usinessesD
4everages
Snack oods
6estaurants
BE!E"A#ES
!e,siCoCs "everage "usiness was ounded in 1(7( "y a ,#armacist named Cale" 4rad#am
w#o created a s,ecial "everage5 a sot drink5 in t#e "ack room o #is drug store in Eew
4ern5 Eort# Carolina* '#is new sot drink called F4radCs /rinkF #ad a uni8ue mixture o
kola nut extract5 vanilla and rare oils* Cale" "egan to advertise #is new creation wit# t#e
t#eme FEx#ilarating5 Invigorating5 Aids /igestionF and renamed it as F!e,siBCola*F
Cale" 4rad#am "egan #is cola o,eration in 1732* '#e !e,si Cola Com,any was
#ead8uartered in t#e "ack room o #is drug store w#ere #e ,ackaged t#e syru, or sale to
ot#er soda ountains* '#e "usiness increased5 and on Gune 1$5 17335 F!e,siBColaF was
oicially registered wit# t#e 0S !atent &ice* And as a result5 Cale" 4rad#am "egan to
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Bahria Institute of Management & Comuter Sciences !
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ranc#ise !e,siBCola to many inde,endent investors* 4y t#e end o 17135 !e,siBCola was
ranc#ised in 22 states*
0ntil %orld %ar I5 !e,siBCola Com,any ac#ieved 17 years o success and a new t#eme
was introduced5 F/rink !e,siBCola* It will satisy you*F However5 ater t#e war years5
Cale" 4rad#am suered "ankru,tcy* As a result5 !e,siBCola "ecame a su"sidiary to Aot
Incor,orated5 a large c#ain o candy stores and soda ountains*

'oday5 !e,siBCola Com,any is a ma.or division o !e,siCoCs cor,orate structure* !e,siB
Cola Com,any now ,roduces and markets a wide range o "everages to retail5 restaurants
and ood services in more t#an 171 countries and territories around t#e world and "rings
in a annual revenue o @13 "illion*
'#ere are 233 ,lants in t#e 0S and Canada5 as well as5 533 ,lants t#roug#out t#e rest o
t#e world5 t#at ,roduces !e,siBColaCs "everages*
Since t#e creation o !e,siBCola in 1(7(5 !e,siBCola Com,any #as introduced 13
"everages t#at wear t#e !e,siBCola trademark* ?ive o !e,siBColaCs "rand namesD !e,si5
/iet !e,si5 +ountain /ew5 7 0!5 and +irinda5 eac# "rings in an annual revenue in
consumer sales o @1 "illion*
In 17725 a ,artners#i, "etween '#omas G* Ai,ton and !e,si was ormed*
'#is ,artners#i, ,roduces5 markets5 and distri"utes Ai,ton 4rew5 Ai,ton 4risk and Ai,ton
?ountain IceB'ea* And in 17735 !e,si +ax a low calorie cola was created and introduced
only or t#e international markets* !e,si +ax is now ,roduced in over 23 countries and is
t#e t#ird largestBselling cola "rand outside t#e 0S*
!e,siCo is continuing to ex,and and introduce new alternative "everages in t#e market*
'#ere are our alternative "everages t#at are currently "eing tested in our market today*
+a1agran5 a cold s,arkling coee "ased "everage5 A8uaina5 a "ottled water5 and a low
at milk s#ake called Smoot# +oos*
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'#e latest "everage was launc#ed on +ay 225 177$ in !#iladel,#ia* !e,siB>ona5 a new
cola5 is a com"ination o t#e !e,siBCola lavor and t#e >ona "lend o coee*
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Bahria Institute of Management & Comuter Sciences !
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SNAC$ %OO&S
!e,siCoCs ood "usiness started in 1732 at t#e "irt# o "ot#5 t#e ?ritoBAay
Com,any5 a ,roducer o corn c#i,s and H*%* Aay Com,any5 a ,roducer o ,otato
c#i,s* In 17$15 t#e ?ritoBAay Com,any merged wit# t#e H*%* Aay Com,any to
orm ?ritoBAay5 Inc* <23= 'oday5 ?ritoBAay Inc*5 is a ma.or division in !e,siCoCs
cor,orate structure* '#e ?ritoBAay Inc*5 is t#e worlds num"er one snack ood
com,any in t#e 0S and in most o its 37 international markets*
?ritoBAay manuactures5 distri"utes and markets snacks all over t#e world* In
17755 ?ritoBAay Com,any marketed more t#an 153 varieties o snack ood
,roducts worldwide and re,resenting over #al o t#e sales o snack c#i,s in t#e
0nited States*
Some o t#eir ,roducts includeD AayCs and 6ules "rand ,otato c#i,s5 /oritos and
'ostitos "rand tortilla c#i,s5 ?ritoCs "rand corn c#i,s5 C#eetos "rand c#eese
lavored snacks5 6old )old "rand ,ret1els5 and a variety o di,s and sal sas*
Since 17735 in t#e 0nited States alone5 volume #as grown 7 ,ercent annually*
In 17$$5 !e,siCo launc#ed its international snack oods o,erations* Currently5
?ritoBAayCs snack ,roducts are availa"le in (1 countries and territories outside
Eort# America*
Strategic Marketing - A case study of PEPSICO Restaurants International
Bahria Institute of Management & Comuter Sciences !
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"ESTAU"ANTS
!e,siCo is t#e largest restaurant system in t#e world*
'#e restaurant segment is engaged in t#e o,eration5 develo,ment5 ranc#ising5 and
licensing o !i11a Hut5 'aco 4ell and >?C conce,ts* In 17775 !i11a Hut "ecame a
,art o !e,siCo and is currently t#e leader among t#e ,i11a restaurant c#ain in t#e
0nited States* 'aco 4ell5 t#e largest +exicanBstyle restaurant in t#e 0nited States5
"ecame a ,art o !e,siCoCs restaurant system in 177(*
'oday5 'aco 4ell o,erates in 25(33 restaurants in t#e 0S and in 72 countries and
territories worldwide*
In 17($5 >?C .oined !e,siCo and is t#e leading astBood c#icken restaurant in t#e
0S ' #ere are more t#an 55333 com,any o,erated5 ranc#ised5 and licensed >?C
restaurants in t#e 0S*
!e,siCoCs restaurants #ave a record or growt# and #ave ,roduced more t#an @5
"illion in revenues*
!e,siCo restaurant system #as more t#an (5333 units outside t#e 0S and is
o,erated in more t#an 73 countries*
!e,siCoCs ?ood System <!?S= is t#e cor,orationCs restaurant su,,ly com,any and
is res,onsi"le or t#e consolidation o many restaurant activities*
!?S distri"utes to !i11a Hut5 'aco 4ell and >?C5 more t#an @3 "illion wort# o
restaurant e8ui,ment and su,,lies eac# year* However5 in Ganuary o 17775
!e,siCo announced it would "e s,litting rom its restaurant "usiness ater "eing in
it or nearly two decades* !e,siCo is ,lanning to concentrate on its aster growing
?ritoBAay and !e,si "usinesses*
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'())A HUT:
!i11a Hut started its o,erations in 1772* !resently it #as a total o six outlets in t#e
countryH our in >arac#i and two in Aa#ore* It is a"out to o,en t#ree more "ranc#es
soonH
!i11a Hut5 a ully oreign ullBservice ranc#ise5 #as ,lans to o,en a total o 25 "ranc#es
in !akistan "y year 2332* '#is means t#at t#e com,any #as to o,en 1$ new outlets in next
22 mont#s or one outlet every twoBandB#al mont#s* It is ,lanning to add at least one
more "ranc# in >arac#i "esides irstBever "ranc#es in ot#er cities including Islama"ad5
6awal,indi5 !es#awar5 +ultan5 ?aisala"ad and ;uetta*
'#e entrance o !i11a Hut in !akistan #as c#anged t#e trend in ood service industry in
many ways* As a result o w#ic# t#e our and iveBstar #otels are worried a"out t#eir
restaurant "usiness as !i11a Hut oers a c#oice or t#e ,eo,le to try out 8uality ood in a
ull service restaurant wit# an am"iance* It also made many local ast ood c#ains to
com,letely renovate t#eir ,remises to im,rove t#eir eating atmos,#ere*
!i11a Hut is ully owned "y 'ricon5 w#ic# #as ranc#ise rig#ts or t#e w#ole o !akistan
and em,loys over 533 ,eo,le at all5 levels* All !i11a Hut outlets deliver and serve "ot#
lunc# and dinner "etween 12 noon to 12 midnig#t exce,t t#e one in t#e inancial district5
I*I* C#undrigar 6oad >arac#i t#at o,ens rom 11 am to $ ,*m*
%#ile !i11a Hut also serves ot#er varieties o Italian ood it is ,rimarily identiied wit# a
single dis#5 as its name suggestsH !i11a* Strictly com,lying to t#e strict #ygienic and
8uality standards o its !rinci,al 'ricon5 t#e governing "ody o its organi1er w#ic# #as
t#e inal say in t#e a,,roval o every single ingredient and to,,ings5 !i11a Hut #as added
local ingredients to maintain t#e local taste* A,art rom regular to,,ings !i11a Hut #as
added many local to,,ings suc# as c#icken tikka in addition to local vegeta"les suc# as
Strategic Marketing - A case study of PEPSICO Restaurants International
Bahria Institute of Management & Comuter Sciences !
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locally grown mus#room in summerH im,orted canned mus#rooms are used w#en local
su"stitute is out o season*
'#e ma.ority o ingredients including t#e "asic lour5 mo11arella c#eese5 tomato
concentrated5 "ee and "ee ,e,,eronis are all im,orted to maintain t#e strict 8uality
standard set "y t#e 'ricon*
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$%C:
>entucky ?ried C#icken o,ened its irst outlet in >arac#i in 1777* >?C is ranc#ised to
t#e Artal )rou, t#roug# its su"sidiary Artal 6estaurants International* 'oday >?C #as
eleven outlets o,erating in !akistan5 eig#t in >arac#i and t#ree in Aa#ore
>?C en.oys a distinct advantage over ot#er oreign ast ood restaurants as c#icken5 t#e
"asic ingredient o all >?C meals5 is meat o c#oice o most !akistanis and t#ey say5 F%e
are t#e c#icken ex,erts*F F'#e act t#at $7 ,er cent o t#e total sales o +c/onalds come
rom +cC#icken5 a c#icken "urger5 is enoug# to ,rove t#is ,oint5:
Secondly5 t#e #uge !akistani market still muc# remains a Ivirgin marketJ as none o t#e
oreign ood ranc#ises #as yet "een a"le to ta, .ust a raction o its real ,otential* ?or
instance5 a,art rom >arac#i and Aa#ore none o t#e ma.or oreign ood c#ains yet #as a
,resence in t#e ederal ca,ital5 Islama"ad5 not to talk o ot#er ma.or cities o t#e country*
In s,ite o t#e worldwide recession and t#e economic sanctions im,osed on !akistan
ater it used its nuclear o,tion in last years5 t#e national economy s#owed no signs o
contracting at least or >?C* '#is was ,rimarily due to t#e act t#at eating out wit# t#e
amily is t#e ma.or orm o entertainment in !akistan*
Aike !i11a Hut5 >?C #as also made many c#anges in its menu to give it a local touc#*
A,art rom t#e origin reci,e >?C now also serves #ot and s,icy version to cater to t#e
local taste "uds* F%#ile >?C is not c#ea, it is certainly muc# less ex,ensive t#an t#e
ot#er oreign ine dining ranc#ises to ,rovide 8uality and value to t#e customers "y
oering amily oriented ood at an aorda"le ,rice*
Artal is raising its own c#icken in !akistan and #as a ,lant in Aa#ore* 'o not only meet
t#e re8uirements o >?C "ut it is also selling t#e ,roduct in t#e local market* '#e +B
Artal ,oultry ,lant ollows a strict standard or c#icken arming as it #as ixed a standard
weig#t o its c#icken at exact 1*2 kilogram w#en cut* It also #as a "read ,lant to
manuacture HarryJs "rand o loa "read w#ose ,roducts are used in >?C as well as
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marketed in t#e local market* However5 "akery ,roducts su,,lied to >?C "y HarryJs #ave
a dierent reci,e* >?C "uys some ,roducts5 in case it runs s#ort5 rom 0nilever !akistan
and exce,t or renc#Bries and cu,s t#e >?C does not im,ort anyt#ing rom outside*
'#e induction o oreign ood ranc#ises #as c#anged t#e eatingBout scenario in t#e
country in many ways t#e most ,articular o w#ic# is t#at t#e ,eo,le in t#e cities are
eating out more oten at ,resent t#an anytime in t#e ,ast* It #as also started a c#ain
reaction as t#ere are many ImeBtooJ entre,reneurs coming u, to o,en a new outlet or
adding an extra outlet* 'rends also s#ow5 t#at it #as also resulted in c#anging t#e attitude
o ,eo,le towards eating outH eating out5 ,articularly in a oreign ood ranc#ise is no
more seen as a status sym"ol "ut rat#er as .ust ,lain eating outside t#e conines o #aving
an ordinary meal at #ome*
'#e interest and t#e addition o "ranc#es o t#e oreign ood outlets #ave also resulted in
a com,etition5 as t#ese c#ains #ave "ecome more and more eicient to oer 8uality ood
wit# 8uality service to t#eir customers* >?C #as a distinct edge over its com,etitors5
,rimarily +c/onalds and local 8uickBservice "roast restaurants5 as it doesnJt want to
,ro.ect itsel as an ex,ensive ultraBmodern ound c#ain aiming to cater to only a certain
#ig#Bincome grou,*
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Bahria Institute of Management & Comuter Sciences !
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CURRENT SITUATION:
!e,siCo divisions o,erate in three major US and international usinessesD
4everages
Snack oods
6estaurants
In eac# o t#ese "usinesses5 !e,siCo #as attained a leaders#i, ,osition as "eing t#e 2nd
largestBselling in cola sot drink in 0nited States*
!e,siCo manages t#e largest worldwide ;uick Service 6estaurant system5 wit# almost
2753333 units com,osed o !i11a Hut5 'aco 4ell5 and >?C c#ains*
4everages "usiness ,rimarily markets its !e,si5 /iet !e,si5 +ountain /ew and 70!
internationally*
In year 17725 Sales and ,roit growt# in t#e "everage "usiness #as "een ueled "y t#e
introduction o new ,roducts* It contri"utes in 32K o total sales o !e,si Co* and 3(K o
'otal &,erating !roits* '#e sales account or a"out one it# o t#e total international sot
drink industry sales*
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Bahria Institute of Management & Comuter Sciences !
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'#e Snack ood segments consists o well known "rands as D
Aays
6ules
?irst
/oritos
Santitas
C#eeBtos
'#e snack ood "usiness accounts or 27K o total com,any sales and 23K o total
com,anyJs o,erating ,roits* '#e net sales and o,erating ,roits #ave "een increasing
L a com,ounded annual growt# rate o 15*5 and 12*2 K res,ectively*
'#e increase in sales #as "een t#e result o new ,roducts and line extensions o
existing "rands*
In 17725 !e,siCo Snack oods ca,tured 2(K o total international retail sales o snack
c#i,s*
'#e restaurant "usiness consists o t#e o,erations o worldwide !i11a Hut5 'aco 4ell
and >?C c#ains* !e,siCo ac8uired t#e !i11a Hut in 17775 'aco 4ell in 177( and >?C
in 17($*!e,siCo o,erated t#e largest 0*S* restaurant system wit# almost 17533 units5
and t#e worlds largest restaurant system wit# almost 275333 units in 1772*
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Share o* the + Business Se,ments in 'e-siCo..s Sales and O-eratin,
'ro*its
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Sales
34%
29%
37%
Beverages
Snack foods
Rest
Operating Profit
38%
43%
23%
Beverages
Snack foods
Rest
ANA*0SIS OF PROB*EMS AN+ THEIR REASONS)
'#e ,ro"lem !e,si co restaurant international #as "een acing is declining rate o ,roits
since 1773 rom t#e existing units* And it #as "een o main concern or t#e to,
management*
'#is is des,ite t#e act t#at its sales increased to a record o @13*5 "illion in 17725 world
wide 7( K o increase was due to addition o new units* &,erating ,roits declined in
1772 rom $(5*1 million in 1773 to $5(*1 million in 1772*similarly international
restaurants aced a second consecutive year o declining ,roits in 1772*
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CORE E*EMENTS CONTRIBUTING TO THE PROB*EM)
'#e in de,t# consumer and marketing researc# "y senior vice ,resident o marketing
/wig#t 6iskey and a small marketing sta came u, wit# a num"er o dierent reasons
related to t#e declining ,roits o restaurant "usiness*
&ne o t#em was t#at >?C5 !i11a Hut and 'aco 4ell did not #ave integrated5 ric# and
clear "rand e8uity and t#ey also discovered t#at t#eir marketing ,rograms and advertising
are not as im,actul as t#ey s#ould "e*
(NCOHE"ENT B"AN& 'OS(T(ON(N#:
'#ere were large dierences wit#in and "etween >?C5 !i11a Hut and 'acco 4ellJs units
"ecause o "elonging to com,any owned units and nonBcom,any owned units* In
dierent ,arts o t#e world t#e dierent "rands o t#e com,any #ave dierent
,ositioning5 /ierent menus5 /ierent ,roduct reci,es5 %idely dierent store designs
and /Mcor even dierent signage* %it# t#e divergence o "rand ,ositioning t#e
economies o scale was not "eing ac#ieved*
'#e country managers and marketing coo,eratives use t#e inluence and autonomy in
develo,ing marketing ,rograms and veto ,ro,osals "y !e,si Com,any mangers and
marketing executives* '#us a uniied a,,roac# to t#e services was not ,resent*
'#e Country +arket surveys revealed t#at !i11a Hut and >?C ared less avora"ly on
restaurant related attri"utes <s,eed5 interiorNexterior5 atmos,#ere5 am,le seating=5 and
value attri"utes <inex,ensive5 s,ecial oers=*
'#e 6esearc# also revealed t#at t#e restaurants were lacking in ,roviding a uni8ue and
identiia"le comorta"le 9EO!E6IEECE: to t#e customers*
'#e Services t#ey receive5 t#e restaurant environment* !e,siCo* 6estaurants do not #ave
t#eir own s,ecial culture as com,ared to its com,etitor +c/onalds*
Consumers donJt get any t#ing dierent5 to make t#em eel comorta"le sae and #a,,y5
any uni8ue and distinctive t#ing*
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!e,si co Inc was taking t#e services o 12 dierent advertising agencies around t#e
world* +a.ority o t#e agencies used were local oreign local or national agencies #ired
"y t#e marketing coo,eratives w#ic# re,resented a coalition o ranc#isees in a country or
a region
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Bahria Institute of Management & Comuter Sciences !
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S-OT Ana"!sis #$ Pe%siC# Restaurants
Internati#na" 1PRI2)
Here is a Strengt#s5 %eaknesses5 &,,ortunities5 and '#reats <S%&'= analysis i t#e !6I5
"ased on t#e data collected "y t#e SP!5 +arketing5 !6ID
Internal com,onentsD
Strengt#D
1* !e,siCo #as t#e largest 0S and worldwide restaurant system wit# 175533 units in
0S and 275333 units internationally*
2* Com,osition o t#e management team "y !6I to .ointly oversee and direct
international ex,ansion o its restaurants and t#e aim to ind marketing and
o,erational eiciencies*
3* !rovision o consistent 8uality "y t#e 6+I restaurants to its customers*
2* AargeBscale customer studies and market sensing is an im,ortant strengt# or 6+I
restaurants*

%eaknessesD
1* /eclining rates o ,roit o existing units o !6I restaurants5 indicating an increase
in t#e o,erational costs
2* !e,siCo was losing control over restaurants "y engaging in inde,endently
o,erating .oint ventures in Ga,an and 0>*
3* '#ere was a large dierence in organi1ational culture "etween t#e com,any
owned and non com,anyB&wned units*
2* 4ecause o an inconsistency in "rand image !e,siCo international was not a"le to
ac#ieve economies to scale*
5* !6I was ineicient in t#e grounds o a comorta"le "uying ex,erience and
su,erior value to its customers as com,ared wit# its com,etitors*
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$* !romotional advertising cam,aigns alone are not good enoug# to create t#e "and
identity in t#e minds o customers*

E/ternal 0om-onents:
&,,ortunitiesD
1* !e,siCo can utili1e on t#e com,etitive advantages o "uilding a consistent
"rand image5 and im,lementing a uniied and integrated management system5
worldwide and ac#ieve t#e economies o scale*
2* !6I can increase t#e contri"ution in t#e international ood service sales as
currently its s#are in t#e international oods service N ;uick Service
6estaurants <;S6= sales is very low*
3* '#e ;S6 industry is acing a social c#ange as more ,eo,le ,reerred to take
t#e ood outside t#eir #omes*
2* '#roug# t#e use o satellite restaurants !6I can reac# its customers more
eectively and can increase its target market*
5* '#roug# t#e use o "etter tec#nology5 intellectual ca,ital and lower ,rices !6I
can "eat its com,etitors "y "etter serving t#e customers*
$* !6I s#ould use t#e "rand advertising to create t#e "rand identity in t#e minds5
so t#at t#e customers can relate t#e "rands and see value into t#em*
'#reatsD
1* !6I senior +anagement team may ace retaliation rom marketing coo,eratives in
im,lementing marketing ,rogram worldwide as t#ey #ave #ad inluence and
autonomy in decisionBmaking*
2* '#e !6I did not #ave t#e eicient tec#nology to lower t#e develo,ment costs o
new restaurants and to increase t#e s,eed o esta"lis#ing new restaurants*
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I""ustrati#n O$ Inustr! Attracti/eness An
Business Strengt, C#(%utati#ns $#r Pe%siC#
Internati#na")
BE!E"A#ES:
(ndustry Attra0ti1eness 2ei,ht "atin, !alue
&verall market si1e 3*23 2 3*(3
Annual market growt# rate 3*23 2 3*(3
Historical ,roit margin 3*15 3 3*25
Com,etitive intensity 3*15 2 3*$3
'ec#nological re8uirements 3*13 2 3*23
Inlationary vulnera"ility 3*35 2 3*13
Energy re8uirements 3*35 3 3*15
Environmental im,act 3*35 3 3*15
SocialNAegalN!olitical 3*35 3 3*15
Total 3.44 +.54
4usiness Strengt# %eig#t 6ating Palue
+arket s#are 3*15 2 3*$3
S#are growt# 3*15 5 3*75
!roduct 8uality 3*13 2 3*23
4rand re,utation 3*13 2 3*23
/istri"ution network 3*13 2 3*23
!romotional eectiveness 3*35 2 3*23
!roductive ca,acity 3*13 2 3*23
!roductive eiciency 3*35 2 3*23
0nit costs 3*35 3 3*15
+aterial su,,lies 3*35 3 3*15
6-/ ,erormance 3*35 2 3*23
+anagerial inluence 3*35 2 3*23
Total 3.44 6.47
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SNAC$ %OO&S:
(ndustry Attra0ti1eness 2ei,ht "atin, !alue
&verall market si1e 3*23 2 3*(3
Annual market growt# rate 3*23 2 3*(3
Historical ,roit margin 3*15 2 3*$3
Com,etitive intensity 3*15 2 3*$3
'ec#nological re8uirements 3*13 2 3*23
Inlationary vulnera"ility 3*35 3 3*15
Energy re8uirements 3*35 2 3*23
Environmental im,act 3*35 3 3*15
SocialNAegalN!olitical 3*35 3 3*15
Total 3.44 +.87
4usiness Strengt# %eig#t 6ating Palue
+arket s#are 3*15 5 3*75
S#are growt# 3*15 5 3*75
!roduct 8uality 3*13 5 3*53
4rand re,utation 3*13 2 3*23
/istri"ution network 3*13 2 3*23
!romotional eectiveness 3*35 3 3*15
!roductive ca,acity 3*13 2 3*23
!roductive eiciency 3*35 2 3*23
0nit costs 3*35 3 3*15
+aterial su,,lies 3*35 3 3*15
6-/ ,erormance 3*35 2 3*23
+anagerial inluence 3*35 2 3*23
Total 3.44 6.97
Strategic Marketing - A case study of PEPSICO Restaurants International
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Page 23 of 57
"ESTAU"ANTS:
(ndustry Attra0ti1eness 2ei,ht "atin, !alue
&verall market si1e 3*23 5 1*33
Annual market growt# rate 3*23 2 3*(3
Historical ,roit margin 3*15 2 3*$3
Com,etitive intensity 3*15 2 3*$3
'ec#nological re8uirements 3*13 2 3*23
Inlationary vulnera"ility 3*35 3 3*15
Energy re8uirements 3*35 3 3*15
Environmental im,act 3*35 3 3*15
SocialNAegalN!olitical 3*35 2 3*23
Total 3.44 6.47
4usiness Strengt# %eig#t 6ating Palue
+arket s#are 3*13 3 3*33
S#are growt# 3*15 3 3*25
!roduct 8uality 3*13 2 3*23
4rand re,utation 3*13 2 3*23
/istri"ution network 3*13 2 3*23
!romotional eectiveness 3*13 2 3*23
!roductive ca,acity 3*13 2 3*23
!roductive eiciency 3*35 3 3*15
0nit costs 3*35 3 3*15
+aterial su,,lies 3*35 3 3*15
6-/ ,erormance 3*35 3 3*15
+anagerial inluence 3*35 2 3*23
Total 3.44 +.37
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Page 22 of 57
GES 9 ce !u"ine"" #ort$oio Matri% o$
#e&"iCo Internationa:
4usiness Strengt#
5 2 3 2 1
2
3
2
1
Strategic Marketing - A case study of PEPSICO Restaurants International
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I
n
d
u
s
t
r
y

a
t
t
r
a
c
t
i
v
e
n
e
s
s
4everages
Snack oods
6estaurants
4everagesD
!e,siCo* S#ould invest and grow in t#e sot drink industry* It can go or market
develo,ment and market ,enetration strategies*
Snack ?oodD
!e,siCo s#ould invest and grow in t#e snack ood industry5 as t#e industry
attractiveness and "usiness strengt#s "ot# are avora"le* It can go or market
develo,ment5 ,roduct develo,ment strategies*
6estaurantsD
'#e 8uick Service restaurant industry at t#e growt# stage5 as t#e trends are
c#anging day "y day "ecause o c#anges in t#e lie styles o ,eo,le at increasing rate*
!e,siCo s#ould invest and grow in t#is segment o ast ood restaurants as well5 as
t#ere are a num"er o o,,ortunities availa"le due to t#e transormation o industryJs
"oundaries and new trendJs emergence*
'#e com,any s#ould concentrate on market develo,ment5 market ,enetration and
,roduct develo,ment*
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MISSION ' O!(ECTI)ES:
Cor,orate AevelD
+issionD
9'o increase t#e value o s#are#oldersC investments t#roug# sales growt#5
investments and inancial activities* '#e success de,ends u,on t#e 8uality and value o
!e,siCoJs ,roducts "y ,roviding a sae5 w#olesome ex,erience5 economically eicient
and a #ealt#y environment and a uni8ue and s,ecial culture or its customers:
&".ectivesD
It is t#e o".ective o t#e !e,siCo 6estaurants International <!6I=5 t#at it must
ac#ieve t#e #ig#est recognition t#roug#out t#e world5 as a leader in ;uick Service
6estaurant <;S6= Industry5 and "e most ,roita"le5 ado,ting a uniied "rand5 image5
8uality5 systems and ,rocedures5 wit# increasing num"er o loyal em,loyees and
customers* '#ese o".ectives are to "e ac#ieved using economies o scale5 and reduced
costs o overall o,erations5 maximi1ing ,roit margins*
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+arketing B /e,artment AevelD
!6I /e,artments consist o its 3 main "randsD >?C5 !i11a Hut5 and t#e 'aco 4ell*
Eac# one o t#em aims to ,rovide a total ex,erience o its own "rand5 wit# attractive
restaurant interior designing5 courteous #os,itality according to t#e "est o t#e local
standards corres,onding to t#e geogra,#ical location o t#e outlet5 cleanliness5 taste5
8uality and 8uantity o t#e ood5 at t#e most aorda"le and com,etitive ,rices*
+issionD
'#e +arketing de,artment will create a well knit environment and set o
customer servicing ,rocedures5 at eac# o t#e !6I "rand site <>?C5 !i11a Hut5
'aco 4ell=5 t#at will create a customer ,erce,tion identiying eac# "rand wit#
#is satisying and comorta"le ,ersonal ex,erience at eac# visit to t#e outlets*
&".ectivesD
1* Increase t#e sales revenues at eac# outlet5 "y at least 13 ,ercent ,er
annum
2* 6educe t#e o,erating ex,enses5 to o"tain a minimum net margin o
15K o t#e sales revenues
3* 0niy t#e advertising tec#ni8ues t#roug#out t#e world
2* Create a single5 standard5 and attractive "rand signage5 and image5 or
eac# o t#e !6I 4rand
5* &"tain economies o scale in eac# and every ste, o t#e ,roduct and
services marketing to t#e customers
$* Create a consolidated !6I 3 "rands centers5 rom w#ere t#e ood can
"e served centrally5 "ut still using t#e "rand counters and seating
arrangements
7* &"tain5 and evaluate5 customer satisaction level res,onses
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Markets & Strategies
As +arkets and Strategies are interlinked5 market c#anges oten re8uire altering
"usiness and marketing strategies*
!e,siCo did aulty market sensing5 due to w#ic# its existing "usiness units aced
declining ,roits* 'o 4ecome market oriented5 !e,siCo* S#ould #ave #ad develo,ed a
s#ared market vision to assess ,ossi"le uture directions o c#ange*
?actors ex,ected to transorm t#e industry "oundariesD
'#e c#ange #as "een occurring due toD
)lo"al Excess Ca,acity
Intense glo"al com,etition
Co 4randing
C#anging customer ex,ectations
'ec#nological advancements
/emogra,#ic s#its and c#anging lie styles*
Palue +igration situation was one o t#e actors aecting t#e restaurants industry*
Customers now look or su,erior value5 w#ere t#ey get t#e w#olesome comorta"le
ex,erience rom5 and not .ust ood*
!e,siCo* Intl* 6estaurants s#ould antici,ate - sense t#ese c#anges to develo, a
clear uture market vision5 and s#ould see t#em as o,,ortunities to ca,itali1e on*
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#loal E/0ess Ca-a0ity
A new trend is t#e searc# or new ty,es o locations to reac# consumers and
utili1e maximum ca,acity o ,roduction at one ,lace or use at a ,lace o scarcity5 wit#
maximum eiciency*
A num"er o 8uick service restaurants now #ave 9satellite: restaurants in 1oos5
#os,itals5 air,orts5 and retail stores*
!e,siCoJs restaurants s#ould also start ,roviding services t#roug# mo"ile vans5
#ome delivery5 and satellite kiosks so t#at it can reac# most o t#e target market and
,rovide maximum convenience to its customers*
(ntense ,loal 0om-etition
'#e glo"al com,etition is "ecoming IE'EESE day "y day* As now t#e
com,etition is coming not only rom t#e direct sources and com,etitors5 suc# as t#ose
targeting t#e same target market as !e,siCoJs restaurants5 "ut also t#e indirect sources
and com,etitors w#ic# are entering into t#e ,roduct market and increasing day "y day*
'#e /irect Sources may includeD
o Increasing num"er o ;uick Service 6estaurant C#ains
'#e indirect sources includeD
o '#e new range o ro1en ood ,roducts "eing introduced
o '#e new tec#nology o microwave oven ,roviding more and more
convenience to customers in cooking*
o Su,ermarkets - Convenience storesD as a variety o snack ood is
availa"le or customers to .ust ,ick u, and consume to satisy t#e
"asic need*
o 'raditional 6estaurantsD As it is also one o t#e su"stitutes
availa"le to satisy t#e "asic need o t#e consumer i eeling
#ungry*
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Co Brandin,
Anot#er new trend in t#e industry is Co "randing*
'#e com,etitors like +c/onalds #ave already "een using t#is a,,roac# t#roug#
alliances wit# C#evron and A+&C& w#ere"y t#e restaurant and oil com,any .ointly
utili1e and ,romote a site*
!e,si also #as used t#is a,,roac# "y locating two or more o its restaurants
c#ains5 like >?C5 !i11a Hut5 and 'aco 4ell on t#e same site*
Chan,in, 0ustomer e/-e0tations
Customer Palues and ex,ectations are c#anging5 and now more and more
customers are s#iting t#eir ,urc#ases rom t#e ,roducts generated rom outmoded
"usiness designs to new ones5 ,roviding greater and su,erior value*
Exam,les include one o t#e ma.or com,etitors o !e,siCo 6estaurants5 t#at is
+c/onalds*
%#at consumers want today is not G0S' ?&&/5 "ut ast and accurate service5 riendly
sales ,eo,le5 #ygienic environment5 ,roviding comort in t#e ex,erience o "uying*
%#ic# w#en com"ined5 results in loyal customers*
+c/onalds #as already "een using t#ese strategies5 and #as "een successul*
!i11a Hut5 >?C - 'aco 4ell need to transorm t#eir ,rocesses and services5 uniy t#eir
image5 and concentrate more on ,roviding su,erior value t#roug# su,erior services and
dierentiation*
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Te0hnolo,i0al ad1an0ements
A )rowing trend in t#e industry #as "een lowering develo,ment costs o new
restaurants and increasing s,eed o "uilding new ones5 "y standardi1ation o materials5
using modular "uilding tec#ni8ues and e8ui,ments and glo"al sourcing*
+c/onald #as ,ioneered modular "uilding ully o,erational restaurants on a
vacant lot wit#in an ama1ing time o only 7 #ours*
!e,si Co* 6estaurants s#ould also ado,t t#is tec#nology and s#ould ca,itali1e on
t#e tec#nological advancement o,,ortunities5 as "eing done "y its com,etitor to increase
o,erational eiciencies and ,roviding more customer value "y using latest tec#nologies
to ,rovide act5 accurate and consistent services*
&emo,ra-hi0 shi*ts and 0han,in, li*e styles:
'#e ConsumerJs ood dollar is s,ent or ood away rom #ome* ?or Every dollar
s,ent on 0S ?ood stores5 consumers s,end 55 cents at restaurants5 u, rom 32 cents or
every ood dollar in 1772*
'#is is "ecause o more and more two working ,arents5 working ladies5 single
,arentJs amilies in t#e west* Consumers get less time to cook5 and t#ey go more or 8uick
service restaurants and ro1en oods convenient or t#em*
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Ma%%ing Pr#uct Markets
"he Product market contains an interrelated grou of #rands $or roducts
%hose relationshis concerning need su#stitution and cometition are strong
enough& so that the others in the roduct-market influence each #rand's sales(

In ma,,ing t#e ,roduct market5 it is essential to esta"lis# "oundaries t#at
contain all o t#e relevant ,roduct categories t#at are com,eting or t#e same
"uyer needs*
!e,si Co*Js restaurants com,ete like ot#er "rands o ,roducts in generic5
,roductBty,e5 ,roductBvariant ,roduct markets*
B"EA$(N# OUT '"O&UCT:MA"$ET BOUN&A"(ES
#eneri0 'rodu0t Mar;et
'#e 4road grou, o ,roducts and services t#at satisy t#e general5 yet similar need
o satisying #unger t#roug# ast and convenient ,re,aration o oods5 availa"le at
aorda"le ,rices5 t#e "uyer #as several ways o meeting t#e needD
Home madeNcooked ood
'raditional 6estaurants
'#e Palue C#ains o ;uick Service 6estaurants
?ro1en ?oods
Snack ?oods
+icrowave &ven readyBtoBcook +eals

As all o t#ese serve as su"stitutes to one anot#er in satisying one general
need5 #ence s#ould "e included in t#e ,roduct market*
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'rodu0t Cate,ory:
Here is a list o ma.or ,layers in t#e ;uick 6estaurant Industry or ast ood
restaurants t#at com,ete or similar market segment and "usinessD
o !i11a Hut
o >?C
o 'aco 4ell
o +c/onalds
o Su"way
o 4urger >ing
o %endyJs
o /unkin /onuts
o /airy ;ueen
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+escri'ing En Users
C#aracteristics suc# as amily si1e5 age 5income5 geogra,#ical location and occu,ation
will #el, in identiying "uyers in consumer markets5 w#o are t#e end users*
In somew#at details5 we can categori1e a ty,ical ;S6 customer as one o t#e
ollowingD
8. Hurried sho--ers
'#ese are "usy ,eo,le w#o mostly eat at #ome "ut look or s#o,,ing and cooking
s#ort cuts*
<. $it0hen Stran,ers
>itc#en Strangers are ,eo,le wit#out c#ildren5 w#o ind cooking inconvenient
and rely on take out ood and restaurants*
34. Ba0helors
4ac#elors usually ,reer to go or convenience in cooking and ood* '#ey usually
avoid getting into t#e trou"le o cooking at #ome*
33. 2or;in, 'arents
Eowadays5 as more and more women #ave started working5 t#e working class is
increasing at an increasing rate* 4ot# t#e ,arents in a amily work5 and do not get muc#
time to s,end in t#e kitc#en or ,re,aring ood5 and look orward to convenience in
"uying and cooking ex,erience*
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7. Un*ettered Sho--ers:
'#ese are older working ,eo,le w#ose kids #ave lown t#e nest leaving t#em wit#
most dis,osa"le income to s,end on ood*

5.S0hool ;ids and Busy Students
Sc#ool kids are one o t#e ma.or users and most lucrative target market* >ids
usually go or convenience in t#e "uying and eating ex,erience at aorda"le ,rices5
w#ic# is served "y t#e 8uick service industry*
?or t#e !e,si Co Inc* t#ese are t#e most im,ortant "uyers* In order to gras, t#is target
market !e,si Co Inc*5 s,ecially unettered s#o,,ers5 it must consider t#at t#ese ,eo,le
are not only in searc# o good ood "ut t#ey want a com,lete w#ere t#ey can eel t#em
selves as in comorta"le5 and en.oy t#e atmos,#ere wit# a com,lete deal o line o
services w#ic# can dierentiate t#e !e,si Co Inc rom t#e ot#er com,etitors and will
"ecome t#e uni8ue selling ,oint or t#e com,any*
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Ana"!3ing C#(%etiti#n
In t#is #ig#ly com,etitive glo"al market5 t#e core o com,etition is considered
around a !roduct and Services structure and t#eir market segments*
$ee-in, that 0ore usiness in mind, the *ollo=in, 0y0le o* ste-s is used in
analy>in, the 0om-etition:
1* /eine t#e industry structure5 and its c#aracteristics
2* Identiy and descri"e t#e com,etitors
3* Evaluate key com,etitors
2* Antici,ate t#e actions o t#e com,etitors
5* Identiy new com,etitors
$* Qero in5 on to t#e key strengt#s o t#e com,etition
Ater t#e industry c#aracteristics are deined5 t#e market s#are5 growt# rates5 and
,roit margins5 and uni8ue ,ositioning strategies o t#e com,etitors are determined5 and
counter measures are necessary to "e devised to "eat or at least matc# t#e com,etitive
advantages*
Major 0om-onents o* the analysis in0lude:
1* Extent o market coverage5 including domestic5 regional5 and international
2* Customer satisaction
3* Current Ca,a"ilities
2* !ast ,erormances
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?or t#e !e,si Co Inc* t#ere are a num"er o direct and indirect com,etitors* +c/onalds is
one o t#e ma.or direct com,etitors or t#e com,any w#ile ready to cook ood5
microwave ovens 5 traditional oods are ew o t#e indirect com,etitors or t#e !e,si Co*
six market and com,etitive trends are a,,arent in t#e worldwide 8uick service restaurant
industry *
An increasing amount o a consumerJs ood dollar is s,ent or ood away rom
#ome*
)rowing em,#asis on lowering t#e develo,ment cost o new restaurants and t#e
increasing s,eed wit# w#ic# new restaurants are "uilt*
Searc# or t#e new ty,es o locations to reac# consumers*
Co "randing*
)rowing em,#asis on t#e delivery service*
Increasing use o ranc#ising as a means or market ,enetration*
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3. &e*inin, (ndustry ? Stru0ture
!i11a Hut5 >?C and 'acco 4ell com,ete in t#e world wide 8uick service resturant
industry*t#e world wide 8uick service resturant industry consist o resturants t#at
eature ast service and a limited menu o moderately ,riced cooked to order
items*world wide ;S6 retail sales were estimated to "e @12$ "illion in 1772* !e,si
Co Inc managed t#e largest world wide ;S6 system wit# almost 27333 units*
9. (denti*y ? &es0rie $ey Com-etitors
'#e main key com,etitor is +c/onalds wit# its own es,ecial culture and consistent
image*
+. E1aluatin, $ey Com-etitor:
'#e +c/onalds #as managed itsel in #os,itality5 cleanliness5 and comort and wit# a
uni8ue culture
2* Anti0i-atin, A0tions By $ey Com-etitor:
+c/onalds #as reduced t#e cost o "uilding materials and e8ui,ment t#roug#
standardi1ation and glo"al sourcing *It #as also ,ioneered modular "uilding design and
construction in England* '#is ,ractice made it ,ossi"le to ,ut in ,lace a ully o,erational
restaurant on a vacant lot in 7 #ours*
+c/onalds #as im,lemented t#e a,,roac# o Co "randing t#roug# alliances wit#
C#evron and A+&C&* %#ere"y t#e restaurant and t#e oil com,any .ointly utili1e and
,romote t#e site*
It also uses t#e ollowing strategiesD
1* >ee,s trying on ,ortraying t#e consistent "rand image to t#e consumers*
2* 'o 4e t#e "est em,loyer or t#eir ,eo,le in eac# community around t#e world*
3* /eliver o,erational excellence to t#eir customers in eac# o t#eir restaurants*
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2* Ac#ieve enduring ,roita"le growt# "y ex,anding t#e "rand and leveraging t#e
strengt#s o t#e +c/onaldCs system t#roug# innovation and tec#nology*
7. (denti*yin, Ne= Com-etitors:
A,art rom t#e existing direct com,etitors5 t#e com,etition is "ecoming intense5
"ecause o t#e new entrants5 and new ty,e o com,etitors5 w#ic# are com,eting in
,roviding t#e same convenience to t#e consumers and satisying t#e similar need*
%#ic# is 8uick and convenient ex,erience o "uying5 cooking - #aving ood*
'#e new com,etitors may includeD
?ro1en ?ood 6ange
Snack ?oods
+icrowave &ven
6eady to cook meals
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&es0ri-tion@Analysis o* Com-etitor : MC &ONAA&S:
+c/onaldCs is t#e largest and "estBknown glo"al oodservice retailer wit# a"out 2(5333
restaurants in 121 countries* Ret on any day5 even as t#e market leader5 +c/onaldCs
serves less t#an one ,ercent o t#e worldCs ,o,ulation* '#eir outstanding "rand
recognition5 ex,erienced management5 #ig#B8uality ood5 site develo,ment ex,ertise5
advanced o,erational systems and uni8ue glo"al inrastructure ,osition are ,roviding
t#em glo"al o,,ortunities* '#ey ,lan to ex,and t#eir leaders#i, ,osition t#roug# great
tasting ood5 su,erior service5 everyday value and convenience* '#eir eorts to increase
market s#are5 ,roita"ility and customer satisaction #ave ,roduced #ig# return to
s#are#olders BB a com,ound annual total return o 17 ,ercent over t#e ,ast ten years*
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Seg(entati#n
"he Segmentation is a marketing rocess) %here#y a su#grou of customers is identified)
and a mass scale ser*ice and + or roduct is tailored for them) and offered to that
articular segment(
As comared %ith the segmentation) the total market is looked at as,
Market - eole . urchasing o%er . %illingness to #uy
'#ereore5 t#e segmentation goes dee,er into t#e a"ove ormula5 inds5 and targets t#e
real ,eo,le w#o are interested in t#e ;uick Service ?ood Industry5 due to various
constraints5 and motivations in t#eir lie styles*
'#e !6I customer ,roile can "e descri"ed as t#e modern generation t#at tends to save its
time in ood ,re,aration5 and also en.oy very tasty %estern 'rendy ast ood meals5 w#ic#
#ave "ecome a #ouse#old name t#roug# out t#e world*
'#e Segmentation is done on t#e "asis o demogra,#ic and ,syc#ogra,#ic actors* %#ere
t#e /emogra,#ic actors may include5 Age5 income5 occu,ation* %#ereas5 ,#sycogra,#ic
segmentation is done on t#e "asis o liestyles*
>ee,ing t#e various actors in view5 t#e ;S6 market can "e divided into t#e ollowing
segmentsD
1* !eo,le on t#e move most o t#e time
2* >itc#en 6unners <#aters=
3* 4ac#elors
2* Students
5* ?un loving yout#
$* !eo,le loyal to ast ood traditions5 identiying it as an American 'rend5 t#at oug#t
to "e ollowed to associate wit# modern liestyle
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7* Elders5 senior aged ,ersons5 wit# little room and su,,ort o t#eir own cooking
(* !laces w#ere ,eo,le re8uent5 and are orced to look or a 8uick "ite during t#eir
c#ores5 suc# as Hos,itals5 Sc#ools5 4eac#es5 S#o,,ing +alls5 Hig#way )as
Stations5 and ?estivals
7* /ine in5 and 'ake away are also clearly identiia"le segments
13* Aower and +iddle Income grou,s ,o,ulation centers
'#e taste o t#e customers diers5 varying rom one culture to anot#er* Slig#t variety in
s,ices and contents is a must or success wit#in a given geo,#ysical ,resence* +exicans5
and Asians5 or instance5 like s,icy ood5 w#ile most o t#e Euro,ean and Eort#
Americans <0SA5 Canada= ,reer non s,icy versions o t#e same ood ,resentations*
In case o !6I5 it could "e in t#e orm o Pegetarian meals in ,laces like India5 and Sri
Aanka5 w#ere Hindu and 4udd#ist ,o,ulation segments avoid "ee and meat ,roducts* It
can also mass target "y age grou, segments5 like >iddy meals cou,led wit# toys5 or
instance5 or a su,er si1ed com"o meal or adults
In case o ;S65 value meals5 sometimes called ?amily +eals5 w#ere"y a larger 8uantity
is oered or a s,ecial ,rice ,ackage5 is one o t#e ways to target a mid level market
segment*
In view o t#e !6IJs glo"al a,,eal and customers5 some national attri"utes o a ,articular
market segment will #ave to "e satisied* ?or exam,le5 oering more ,otato c#i,s at one
,lace mig#t work wonders5 w#ereas a dou"le meat "urger mig#t "e more attractive in a
,articular market*
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MARKET TARGET)
!e,siCo is a gigantic ,layer in t#e category o restaurants and is o,erating in dierent
locations o t#e world and is catering to dierent segments in t#e 0S and nonB0S
markets* '#e market target decision is o immense im,ortance "ecause it #el,s in t#e
setting o o".ectives and develo,ing t#e ,ositioning strategy*
'#e to, management o t#e !6I kee,s many actors in to mind w#ile designing or
deciding t#e target market* Some o t#ese actors are as ollows
D
1* +arketJs maturity N stage o industry liecycle*
2* '#e diversity o t#e "uyers need and ,reerences*
3* '#e irmJs si1e com,ared wit# t#at o com,etitors*
2* Cor,orate resources and ,riorities*
5* '#e volume o sales re8uired to ac#ieve t#e avora"le inancial results*
1B+arketJs maturity N stage o t#e industry lie cycleD
'#e markets are growing very ra,idly and all t#e ,layers are com,eting to attract t#e
customers more eectively t#an t#e com,etitors* '#ere are new ,roducts coming in to t#e
market "ecause it is a very lucrative segment and t#e customers are also willing to "uy
t#e ,roducts* '#e industry is acing a social s#it as more and more ,eo,le now ,reer to
take t#e ood outside t#eir #omes and are seeking #os,itality5 cleanliness comort5 and are
looking or comort and relaxation w#ile t#ey visit t#ose restaurants*
So industry is at t#e growt# stage o t#e industry lie cycle as t#e ,layers are ranc#ising
and licensing to make sure t#at t#ey are ,resent in all t#e markets to take advantage o
t#is lucrative segment o t#e market*

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2B /iversity o t#e "uyerJs needs and ,reerencesD
)enerally t#e "uyerJs needs relating to t#e core ,roducts are very muc# t#e same5 as
indicated "y t#e researc# work done "y 6iskey in #is largeBscale consumer studies
conducted rom t#e users o !6I restaurants in 21 countries* Its analysis uncovered
remarka"le similarities in t#e consumer ratings o >?C5 !i11a Hut5 relative to +c/onalds
across almost all t#e countries*
'#e ex,ectations o t#e customers relating to ot#er nonBood items are increasing and are
t#ey are looking or t#e value o t#eir money and are inding #os,itality5 a distinct image
o t#e restaurant5 comort in to services o t#e restaurants*
3B '#e irms si1e com,ared wit# t#at o com,etitorsD
!e,siCo #ad t#e largest restaurant system in 0SA and worldwide in 1772* '#ey o,erated
175533 restaurants in 0nited States and 275333 restaurants worldwide* %it# worldwide
sales o 0S @13*5 "illion and an o,erating ,roit o 0S @733 million*
'#e sales and ,roit ,erormance o !e,siCo restaurants is a matter o concern or t#e to,
management* Even t#oug# t#e worldwide sales grew to 0S @ 13*5 "illion "ut most o t#e
sales was due to t#e increase o addition o new units and not in increase in sales o t#e
existing units*

2B Cor,orate resources and ,rioritiesD
!e,siCo international #as a lot o inancial and tec#nological resources to inance its
o,erations as it is making ,roit in t#e industry since its esta"lis#ment in 1731* "utt
still !e,siCo needs to "e more eicient in t#e use o tec#nology to "etter serve t#e
customers and meet t#e marketing and o,erational eiciencies* And also to ac#ieve
t#e growing em,#asis on lowering t#e develo,ment costs o new restaurants and t#e
increasing s,eed at w#ic# t#ese restaurants are "uilt* +c/onalds is using t#e
tec#nologies to its greater eect5 as it is a"le to esta"lis# a restaurant in a vacant lot in
nine #ours*
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5B '#e volume o sales re8uired to ac#ieve t#e avora"le inancial
resultsD
'#e ma.or ,ro"lem t#at t#e !e,siCo restaurants are acing is t#at even t#oug# t#e
worldwide sales grew to 13*5 "illion "ut most o t#e sales were due to t#e increase o
addition o new units and not "ecause o t#e increase in sales o t#e existing units*
'o increase t#e sales o t#e existing units t#e !e,siCo restaurants #as to c#ange its
advertising cam,aigns and try to create longBterm "rand recognition and "rand strengt#
t#roug# its advertising cam,aigns rat#er t#an ocusing t#e attention on t#e ,romotional
advertisings*
It is im,ortant "ecause t#e ,romotional advertising can "e eective or s#ort term
,ur,oses5 to get t#e customers in to t#e restaurants "ut not good or long term ,ur,oses5
to retain t#ose customers
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+EFINING THE MARKET TARGET OF PEPSICO
RESTAURANTS)
'#e market target o !e,siCo restaurants would mostly "e similar across all t#e countries5
"ut still some dierences can ,revail "ecause o dierent cultures5 "uying motives and
ex,ectations* 4ut generally t#e target market would includeD
1* +en5 women and c#ildren w#o ind cooking inconvenient and instead rely on
takeBout ood and restaurants5 including t#e "usy students5 sc#ool kids5 t#e
working class*
2* !eo,le w#o #ave enoug# dis,osa"le income to takeBood outside t#eir #omes*
3* !eo,le "elonging to middle and u,,er social class o t#e society*
2* All t#ose ,eo,le <,ros,ects= w#ic# take ood rom t#e alternate sources*
Hence5 again we can say5 t#at '#e !6I customer ,roile can "e descri"ed as t#e modern
generation t#at tends to save its time in ood ,re,aration5 and also en.oy very tasty
%estern 'rendy ast ood meals5 w#ic# #ave "ecome a #ouse#old name t#roug# out t#e
world*

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POSITIONING OF PRO+UCTS AN+ BRAN+
MANAGEMENT)
P#siti#ning Strategies
'#e marketing ,rogram ,ositioning strategy is t#e com"ination o marketing mix
<,roduct5 c#annel distri"ution5 ,rice and ,romotion= strategies5 w#ic# are used "y
!e,siCo to ,osition itsel against its key com,etitors in meeting t#e needs and wants o
t#e market target*
'#e aim o t#e ,ositioning is to ,osition t#e ,roduct in t#e minds and eyes o t#e "uyers
and distinguis# t#e ,roduct rom t#at o com,etitors*
In order to create an eective ,ositioning strategy o t#e !e,siCo restaurants we need
ela"orate eac# o t#e marketing mix elements in more detailD
3: 'rodu0t strate,y:
)enerally all t#e !roducts o t#e !e,siCo restaurants are well known and loved* And t#is
is a very strong "asis to create a ,owerul "rand* '#eir "rands #ad a good ood related
attri"utes e*g*5 8uality5 taste5 and nutrition* 0nortunately t#e "rand e8uities o t#eir
,roducts were not ric# in ,ersonalities* And t#ey did not #ave a ,ower o integrated5
clear5 ric# "rand e8uity*
Some ,ro,osed strategies related to ,roduct are as ollowsD
1* !rovide consistency in to t#e ,roducts so t#at t#e ,roduct s#ould sound t#e same
every time t#e customer uses it*
2* !roducts s#ould "e made wit#in sixty seconds <es,ecially 4urgers and
sandwic#es=*
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3* !roducts must #ave t#e consistent #ig# 8uality to satisy t#e customers*
2* '#e international standards o cleanliness and #ealt# must "e ollowed or t#e
,ur,ose o ,rovision o #ig#er 8uality to customers*
5* AessBcalorie ,roducts s#ould "e oered in t#e markets w#ere t#e customers are
#ealt# conscious es,ecially in t#e 0S markets*
$* !e,siCo s#ould try to ,ut more em,#asis on t#e ,roducts t#at are o su,erior
8uality rom t#e ,roducts o com,etitors*
7* '#e 8uantity and 8uality o t#e materials used to make a ,roduct s#ould "e suc#5
t#at every time t#e end ,roduct s#ould #ave t#e same look5 eel5 and taste t#e
same5 in order to create t#e ,roduct consistency*
(* It must work to im,rove its ,rocesses "y making it aster and 8uicker5 so t#at it
could attract t#e consumers5 save t#eir time and #ave an edge over its com,etitors
es,ecially +c/onalds
7* It must strive to ,rovide en#anced value added services to "eat t#e com,etition*
13* It must ocus on t#e ,roduct develo,ment "ecause t#e ex,ectations o t#e
customers are c#anging*
9: 'ri0in, strate,y:
'#e ,ricing strategies are as ollowsD
1* +ore ,rice discounts s#ould "e oered to get t#e customers in to t#e restaurants
and ater getting t#em in to restaurants t#roug# t#e use o consistent and "etter
8uality we can make t#em t#e regular ,atrons o our restaurants*
2* !rices s#ould "e lower in t#e intense com,etitive markets to "etter com,ete in t#e
,rice wars*
3* !remium ,ricing s#ould "e c#arged or t#e "rands or w#ic# !e,siCo is
renowned*
2* Cou,on system s#ould "e used w#ic# can "e convenient or t#e customers and at
t#e same time can "oost t#e sales*
5* '#e ,rices s#ould "e set in suc# a way t#at t#e aorda"ility o t#e target market is
taken in to account*
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+: &istriution strate,y:
1* !e,siCo restaurants s#ould try to go in to ot#er countries as well5 "ecause in
almost all t#e countries t#is industry is growing*
2* !e,siCo restaurants s#ould also try to "uy t#e idea o +c/onalds "y o,ening
more satellite stores in order to reac# more customers*
3* !e,siCo restaurants s#ould also ocus its attention on t#e delivery system5 as was
an emerging trend in t#e marketsS t#is strategy s#ould "e ollowed es,ecially or
t#e !i11as*
*
6 : 'romotional Strate,y:
1* /ierent +eans o Eective !romotion s#ould "e used in order to create a
strong "rand image*
2* /ierent !romotional and Advertising cam,aigns s#ould "e used or !i11a
Hut5 >?C and 'aco 4ell as individual units5 so t#at t#e "rand leaders#i, o
eac# is strengt#ened in t#e long run*
3* '#e advertising cam,aigns s#ould "e integrated worldwide5 in order to ensure
t#e consistent "rand image*
2* Sales ,romotion tec#ni8ues can "e used to attract customer segments "y age
grou,D Aike >iddie meals wit# toys5 com"o meals wit# s,ecial discounted
,ricing5 amily value meals5 etc*
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7: 'eo-le strate,y:
1* Since itJs a service related "usiness5 it is critical to maintain a consistent set o
,olicies5 ,rocedures5 and standards* '#ereore5 training o all t#e em,loyees is
necessary to "ring t#em at ,ar wit# t#e standards* !e,siCo5 s#ould set u, a !6I
0niversity to im,art t#e training* It would "e necessary to instill t#e customer
related "e#avior w#ile dealing wit# t#em*
2* '#e activities o t#e !6I sta must also "e monitored5 and a senior oicer must
visit t#e locations o t#e ranc#isers to identiy any laws in t#e standard ,ractices5
es,ecially o t#e customer related "e#avior*
3* '#e training ,eriod o t#e contact em,loyees must "e increased and urt#er
evaluated t#roug# t#e use o mystery s#o,,ers*
5: 'ro0ess strate,y:
1* !e,siCo restaurants s#ould work on its o,erational eiciencies to "etter serve t#e
customers in a timely manner and to "e more eective t#an t#e com,etitors*
2* !e,siCo restaurants s#ould maintain cleanliness in its daily o,erations and s#ould
"e u, to t#e standards ,rescri"ed "y international #ealt# organi1ation*
3* '#e ,rocesses s#ould "e 8uick at t#e !e,siCo internationals to save t#e time o t#e
customers and it would also "e #el,ul in t#e days o excess demand*
2* !rocess eiciencies can attract more customers in to t#e restaurants5 w#o come to
take t#e ready ood "ecause o t#eir "usy sc#edules*
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B: 'hysi0al E1iden0e strate,y:
1* '#e !e,siCo restaurants s#ould try to create an environment w#ere t#e customers
can en.oy w#en t#ey are taking t#eir ood*
2* !e,siCo restaurants s#ould work to im,rove t#e am"ience o t#eir restaurants*
3* '#e restaurants s#ould "e designed in suc# a way t#at ,eo,le wit# dierent
moods can "e treated in an eective manner*
2* '#e same standard signage s#ould "e used in order to create consistent "rand
image worldwide*

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Strategies $#r t,e Bran Manage(ent)
1* In order to create an eective "rand image and to create t#e "rand identity5 "rand
e8uity and ,ersonality !e,siCo restaurants must advertise t#eir 4rand t#roug#
4rand Advertising instead o ,utting em,#asis on t#e ,romotional advertising*
2* '#e !e,siCo must work exclusively on t#e consistency o t#e 8uality o t#eir
,roducts*
3* '#e ,ositioning must "e done on t#e "asis o "rands*
2* Im,roving t#e o,erational situations at restaurants can increase t#e "rand e8uity*
5* +eeting t#e needs and ,reerences is also an im,ortant element to increase t#e
"rand identity o t#e restaurants*
$* !6I s#ould create its own uni8ue uniied culture worldwide5 kee,ing in view its
customers ex,ectations5 a ,lace wit# w#ic# t#ey can associate t#emselves well5 in
order to increase its "rand identity and "rand e8uity*
7* !6I must ado,t a universal advertising agency resource5 in order to ,romote and
carry a distinct image t#roug#out t#e world* It could5 #owever5 consider #iring
two se,arate consulting services or >?C and !i11a Hut5 in order to maintain a
com,etitive s,irit among t#e advertising agency services

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BI*BI*IOGRAPH0
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SOURCES OF INFORMATION
&nline Sources
6elated %e"sites
4ooksD
Strategic +arketing "y /avid %* Carvens T$
t#
Edition
Consumer 4e#avior "y /avid A* Aoudon - Al"ert G*
/ella 4itta
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SUMMAR0
!6I5 t#e !e,sico 6estaurants International5 is a ,art o
t#e !e,sico International5 and it uses many o t#e images
and ,roducts o !e,sico*
'#e !6I #ad "een suering rom an inconsistent
image5 and declining rates o ,roits5 u, to t#e end o 1772*
!6I #as analy1ed its glo"al ,ractices5 and carried out
S%&' analyses o its own and its com,etition* As a result5
it ound out t#at it needs to aggressively market5 advertise5
and ,romote its "rand identities5 using greater economies o
scale5 uniied standard o,erations5 and most modern
tec#ni8ues o setting u, and running new "usiness outlets at
lower set u, costs*
!6I also identiied t#at its own sta5 and t#e sta
em,loyed "y its "usiness ,artners needed to "e trained in
its uniied international standards o o,erations5 and or t#is
it is necessary to set u, a central training acility5 t#at !6I
calls its 90niversity:*
!6I used +c/onalds "usiness success as its
"enc#mark5 and em"arked u,on a successul marketing
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.ourney5 t#at is c#aracteri1ed "y its eorts to 9standardi1e:
everyt#ing rom its "rands5 advertising agencies5 signage5
restaurant ex,eriences5 and ood 8uality*
!6I reali1ed t#at t#e ,ricing took a "ack seat in t#e
customer loyalty5 and t#e overall comorta"le ex,erience o
visiting an outlet eatured as more im,ortant among t#e
loyal customers5 w#o kee, on coming "ack eeling sae5
secure5 comorta"le5 and as an #onored guest*
0sing t#e 9standardi1ation: as a key com,onent o its
uture market strategy5 !6I continues to consolidate its
strengt#s5 and successully com,ete wit# its contem,orary
;uick Service 6estaurants <;S6= "usinesses*
!6I also needs to work on a conce,t w#ere"y all t#e
t#ree main 4rands5 >?C5 'aco 4ell and !i11a Hut are
,resent wit#in t#e same ,remises5 in order to ac#ieve
economies o scale and a successul integration o
,rocesses - delivery*
U U U
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