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PepsiCo

← Electronic CommerceComponents of E-business →

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PepsiCo is an American multinational corporation that formed in 1965 with the merger of Pepsi-Cola and Frito-Lay, Inc. and deals with production, marketing, and distribution of beverages and grain based snack foods. PepsiCo has its headquarters in Harrison, New York with its presence in four major divisions (PepsiCo Inc., 2010). In 2009, PepsiCo Americas Foods, which deals in foods and snacks in North and South America, contributed 43% of the total PepsiCo net profit (PepsiCo Inc., 2010).. There is also PepsiCo America Beverages, a division that markets both carbonated and non-carbonated beverages in North and South America. Other divisions include PepsiCo Europe and PepsiCo Asia, Middle East and Africa. Globally, the company is the second largest food and beverages’ company and it operates in more than 200 countries (Marshall, 2010). In 2009, PepsiCo collected total revenue of $43.3 billion, and was rated the largest food and beverages company in North America.

Pepsi Corporation distributes a number of brands, the key ones being those that generate annual sales of more than $1 billion each. These brands include Pepsi-Cola, 7Up, Fritos Mountain Dew, Gatorade, Doritos, Pepsi Max, Quaker Foods, Tropicana Cheetos, Miranda, Ruffles, Aquafina, Tostitos, Sierra Mist, Walker’s, and Lay’s Lipton (UBM, 2010). Amid distribution of the brands, PepsiCo engages in charitable activities and environmental conservation programs like water usage in U.S, India and U.K, packaging and recycling, energy usage as well as pesticide regulation in India to ensure that the environment and the available resources are utilized properly. PepsiCo’s advancement in ecommerce has been evident, and that is the focus of this report (Romanik, 2007).

Changing to ecommerce involves fully understanding the normal offline transactions and applying the principals of electronic funds transfer and electronic data interchange. Ecommerce also includes Internet marketing and inventory management systems through the World Wide Web, especially for virtual items. Changing to ecommerce entails complete overhaul of marketing techniques to accommodate new internet marketing strategies, electronic payments and training of employees to match the new electronic commerce and business.

PepsiCo’s adoption of ecommerce led to the collaboration with Yahoo. In the deal, PepsiCo would promote Yahoo on 1.5 billion soft drinks bottles displayed in 50,000 stores (Business Day, 2000). In return, Yahoo would promote PepsiCo products on Yahoo cobranded site called Pepsistuff.com (Gerstman & Meyers, 2002). This promotion started in August 2000 and has since led to advertisement cost minimization due to its ability to reach more people at ago through the website (Business Day, 2000). What does not work, according to Burwick, PepsiCo’s former marketing manager, is an advertising approach on television that in his view only entertains and moves.

However, Burwick notes that internet advertisement on the website provides a platform for interaction, which is a more active experience that is likely to have a more positive impact on sales (Business Day, 2000). This web advertisement that included music sites, banner advertisement and internet sweepstakes and barter arrangement with Yahoo, helped PepsiCo establish loyalty among its customers, greater brand exposure among its consumers under 25 years old and at the same time obtained relevant data that enabled the company respond to customer demands. Pepsi also uses the extranet strategy where customers flash their names and continue the marketing efforts of tweaking websites.

Other than its websites, PepsiCo has currently upheld its ecommerce strategy on Twitter, Facebook, and YouTube, which are social sites that provide interaction opportunities for millions of potential customers around the world. This has helped improve popularity of the corporation’s 19 major brands in all the four regions, and contributed to the revenue collected in 2009. Marketing the products plays a very important role in the consumer goods companies that consume $40 billion annually on non-internet advertising. Ecommerce in this regard plays a vital role in marketing, distribution, supply chain management, ordering and delivering of the products to the clients in all the four major regions. This strategy helps PepsiCo eliminate intermediaries in its business since consumers can order products directly. The company can also use banners on top of web pages to convey the information about its products. However, this has been eliciting responses that banners are too small and limit the amount of information that can be conveyed through them.

Besides Pepsistuff.com, PepsiCo also uses its website in providing information to all its customers and potential customers on the available products and the ordering and purchasing procedures as well as the charges involved for deliveries (Gerstman & Meyers, 2002). The strategy of e-business is multifarious, is more focused on these internal processes (Romanik, 2007). Its objective is to reduce costs while improving efficiency, as well as reducing costs while improving productivity. E-business includes ecommerce, and both address internal processes and technological infrastructure like application servers, security, databases, and legacy systems. E-commerce and e-business involve generating new value chains amid stakeholders, such as a company like PepsiCo and its clients.

PepsiCo initially used non-internet advertisement that included high impact television spots that were prepared to evoke emotional reaction among its customers, appealing to woe customers to purchase. The company also minimally used PowerPoint presentations of its products to that are flashed on the websites. According to Hill & Jones (2008), PepsiCo changed its business model and the manner in which it differentiated its product. Before adoption of the ecommerce initiative, PepsiCo fully depended on five regions that include North America, South America, Europe, and Asia regions (including India) in manufacturing, marketing, and delivering. These activities constituted manual offline transactions (Heinecke, 2011).

Any changes to the business model were necessitated by introduction of the e-Business initiative. The marketing, ordering, inventory management strategies, and the payment methods changed to adopt ecommerce methods. These necessitated change in PepsiCo’s organization structure and reduction of marketing staff and the cost of advertisement reduced by nearly 20% in 2010 (Heinecke, 2011). Through e-business, PepsiCo was able to effectively cut human errors and evade uneconomical duplications of duties that add little or no value to the business. Consequently, this saved the company business time, colossal amounts of resources.

The introduction of ecommerce into PepsiCo also improved the speed, accuracy, and efficiency in which processes are carried out in the corporation, leading to increased productivity. E-business guarantees proficiency in communication within PepsiCo and reduces turnaround time in ordering, delivery, and payment of products, as well as fostering faster decision-making process. The networking brought about by the use of Internet services gave PepsiCo an opportunity to easily compare and rate its products against those from its competitors in terms of quality, availability, and pricing.

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