The Role Of Packaging In Brand Activation – A Case Study Of PepsiCo AMEA

Introduction to PepsiCo AMEA

Strategic Issues are critical challenges faced by the company during the process of achieving the organisation goal. It is one of the most difficult steps in the planning process for the company. PepsiCo AMEA faced the critical situations due to its planning process. In this report, PepsiCo AMEA is taken into consideration to analyse the key issues face by the company. AMEA is the Asia, Middle East and African region of the world where PepsiCo is available. PepsiCo is a multinational food, snack, and beverage company; it was established in 1965 with the merger of Pepsi-Cola Company. PepsiCo AMEA has it’s headquarter in Dubai. PepsiCo AMEA expanded its business with the products of drink with the brand name Pepsi. Pepsi reached at the broader range in the food and beverage brands. PepsiCo AMEA earned retail sales of more than $ 1billion and it operates the business in more than 200 countries today which results that the company earned annual net revenues of $43.3 billion. This report will be specifically based on AMEA region of PepsiCo. The below image provides a brief information about how important these markets are for PepsiCo.

PepsiCo AMEA faced the strategic issues such as adaptation of price strategy, consumption consumer behaviour and others (PepsiCo, 2017). In this report the discussion will be made on the issues and strategies of PepsiCo AMEA. In the starting of the report, issues faced by the company will be discussed. After that, alternative solutions will be discussed. The recommendations and implementation of the strategy is provided in the end of the report.

In this case, consumer behaviour is an issue which is faced by the company. Packaging has the capacity to satisfy the consumer needs in the different countries and PepsiCo AMEA used different packaging to handle different consumers. In this case study it is mentioned that different country has different types of consumption pattern which is an issue for the company such as some people take the drink with their lunch and some of the consumer take drink during work period. The company has more than 24 packs for the different types of consumers and it also changes the packaging as per the special occasions in the MEA market (Balakrishnan, 2015). The company changes its packaging in the football season; it comes with a special can with the picture of Football on it. Earlier the size of the can was 500 ml but in Saudi Arabia the company sold the can of 355 ml size (Solomon, Dahl, White, Zaichkowsky, and Polegato, 2014).

Strategic Issues faced by PepsiCo AMEA

According to the case, it was also found that in AMEA market the consumption behaviour of the consumer is affected with the packaging. It was found that consumer started preferring cans and non-returnable bottles (NRB). Not only this, the size of packs also gets changed according to the income level of the countries in AMEA market. For example – Low income countries preferred larger packs of 1.5 litre over 1 litre PET bottle. An image provided below gives a clear picture of how PepsiCo manages the different demands of sizes of packs.              

The company design the different product with the different festivals. As per the case, the company design the product with the common design at the time of national day celebration which is too expensive for the company and there are some people did not like the drink. The demand of the consumers will change with the passage of time. Differences in products affect the quality of product which reduces the sale of the product too.

Theory of Consumer Behaviour is very important in case of PepsiCo AMEA. The company analyses the behaviour of consumers in different parts of the world and makes it packages accordingly. In this case study, it is observed that the packaging, size and material are the factors which affect the consumer behaviour. The company also considers different occasions such as sports and festivals in order to understand the consumer behaviour and prepare its packaging accordingly. However, still it is found that the company is facing challenges in the market due to high competition and rapidly changing nature of the consumers.

In this case, it is observed that Pepsi has different types of packaging which affects the pricing strategy of the company in the AMEA market. Different types of packaging consumes different amount of cost which affects the revenues of the company. PepsiCo AMEA offers multipacks such as 24 packs for cans, 12 packs for cans and bottle, 8 packs for bottles and 6 packs for cans and bottles (Alamdari, and Fagan, 2017). Different cans have different cost that becomes a loss for the company. The sale of different cans was a function of the market consumption. Packaging is also differing on the different types of retail channels such as in Airports and cafes; a special 300 ml can is served instead of 350 ml product.  It has been seen that the different countries has different rules and restrictions related to size, language, labelling and price. All the information of product is mentioned on the side panel of the product which also consumes the cost.  In this case, to attract the consumer towards the product it publishes the pictures on the aluminium cans which are also too expensive for the company. The different size and package consume higher cost which is an issue for the company and it directly affects the profit of the company. The company design the aluminium cans which leads to the higher cost and is also sold at the lower price to enhance the sale of the product. According to the case, the company faces the issues of high cost material such because it use the multipacks to attracts the consumer which is too expensive for the company (Banker, Mashruwala, & Tripathy, 2014).                                         

Role of Packaging in Consumer Behavior

Cost Leadership is the theory that can help PepsiCo AMEA here. It suggests that the company needs to produce the products at minimum cost so that it can enhance its profits in order to become a cost leader. Cost leadership theory clears that PepsiCo AMEA is incurring higher cost in making its packaging in cans. Consumer satisfaction concept is also used by the company because the company use the multipack to satisfy the consumer demands.

It has been seen that the company promotes the products with the help of local retailers which affects the brand image of the product. In this case study, packaging is the brand equity builder for the company. The company introduced the product packages featuring local sports celebrities, music shows, and cultural celebrations. It can be said that the company used the local culture which has good impact on the sale of the product of the company. At the international level, this issue was more difficult for the company because the occasions are not similar at the same point of time. Different occasion at the different place at the different point of time is the result of breaking uniformity in product. Local Culture affects the brand image; a big celebrity promotes the product – this means the product is highly branded but if not then it means the company is a local brand. Brand image of the company goes down due to adaptation of local culture. At the international level, local culture is appreciated at a certain level because different country has different culture, language. There are some consumers who do not like the traditional activities which is also a reason that reduces the sale of the product of the company. The company use the QR code to build the brand image in the market in this winner of the code get a chance to watch the live final match. It is difficult for the company to give the ticket to more consumers which is unethical. This QR code is hidden in the seal; some consumers cannot find that code which shows the unethical behaviour of the company that becomes a reason for the company of reducing brand image.

Culture Adaptation theory defines the process to understand the new culture which takes times. The company uses this theory to understand the local culture of the country. Target markets, positioning, segmentation is a concept which is used by PepsiCo AMEA to adopt the local culture (Kwan, and Li, 2016).

Packaging and Cultural Differences

Strong social media presence

From the above analysis, it has been seen that the company adapted the local culture which affected the brand image at the international level. The company can promote the products by using the social media for marketing. The company can post the local content on the social media for marketing which enhance the sale of the product. At the time of occasions, the company can post the local content as per the country festivals and language such as at the time of Diwali, the company can promote the product by posting the traditional content on social media from which the consumers attracts towards the product. At the time of Christmas, the company put the post on that country that celebrate the festival and also offers the discount which attracts the consumers. Local content on social media is more beneficial instead of adapting the local brand adaption, it also improve the brand image of the company. Promoting the product by adopting the local culture is a costly method but the company can use the local content to promote the product (Ethiraj, Gambardella, and Helfat, 2018).

It has been seen that the company makes different packaging to the different types of consumers and according the rules and regulations for the company. Different packaging increases the cost of the company that is why the company has the responsibility to maintain the cost with the other activity. The company can easily connect the people with their advertisement so that the consumers get attracted towards the product and sale of the product increases (Rundh, 2016). The company can design the packaging with elements which induce the human emotions to attract the consumers and enhance the marketing campaigns. Emotional packaging can relate the consumer with the brand in a personal manner and sometime it revokes the memories of their lives which can easily attracts the consumer towards the product (Zhang, Sun, Liu, and Knight, 2014). But it is difficult to find the content that can generate the emotional response and affect consumer behaviour. If the company hire the employee to generate that content which includes the additional expenses that increase the cost of the product.

To improve the brand image the company has to introduce healthier products focusing on carbonated soft drinks. It helps the company to reach to the health conscious consumers that further improve the brand image and it also increases the market share of the company. It also encourages the other customer for healthier diet. But the company has the risk of alternating consumers who do not like the healthy product (Hill, Jones, and Schilling, 2014). Consumer’s behaviour is an issue which can be solved with this solution because nowadays consumers are more conscious for their health that is why the healthier products attract more consumers; even the old age people. This solution increase the sale by targeting the new consumers but other who don’t like the taste of healthy products; stop consuming the products and this is a risk factor for the company (Rothaermel, 2015).

Marketing Strategies for PepsiCo AMEA

From the above analysis, it has been recommended that the company has to adopt the healthier product solution. Nowadays, the consumers are more conscious for their health that helps the company to promote the healthy product (Sigurdsson, Larsen, and Gunnarsson, 2014). The company can easily introduce the healthy product in the market; even government provide subsidies on the healthy products which helps the company in reducing the cost of the product. Healthy product attracts all age of consumers and even the first preferences of families are always the healthy product. Healthy products improve the brand image of the company and help to promote the sale of the product (Dean, et al., 2007). The company can increase the selling price of the product because manufacturing healthy product leads to higher cost and it is observed that other companies of healthy product also incurring the higher cost. The main advantage of this solution is that the taste of the product cannot be changed at different places.

The company uses the consumer behaviour theory for this solution. By using the consumer behaviour theory, PepsiCo AMEA can analyse the needs and wants of consumers and can satisfy the consumer demands. Consumer behaviour theory refers the demand and reaction towards the product which helps the company to understand the product. The sale of product is high as it leads to satisfaction of the consumer demand (Bamossy, and Solomon, 2016).

The company has to implement the solution with the help of its highly skilled employees. The company can implement this solution after making the plan. Planning includes the budgeting, management and time which is required to implement the effective solution. Below is an estimated budget for the implementation of the recommended plan-

1Million is an estimated price for manufacturing the new product of the company. This cost is estimated only for delivering the small amount of services in the market. First the company deliver the services in a small city just to get the experience and analyse the demand of consumers.  

The new products have high scope in the market due to which the sale of the product is increases. The increasing sale manages the cost of the company and it is also beneficial for the society. It encourages the people towards the healthy product which is beneficial for the community (Venkataraman, Summers, and Venkataraman, 2017).

It is observed that the company also faces some barriers with lots of advantages; there are many customers who do not like the taste of healthy products. The customer can easily claim for the quality of product. There is huge risk of complaints or loss of consumers (Wheelen, Hunger, Hoffman, and Bamford, 2017).

Recommendations

Conclusion

From the above analysis, it has been concluded that the company faces the critical challenges due to its price strategy, adaption of local culture and consumer behaviour. To solve the problem, the company has to promote the healthy products; develop local taste to manage the cost of the company which will further increase the sale of the product. Healthy product solution is more preferable for the company because there is large number of health conscious consumers in the world and the number of health conscious consumers is also increasing day by day.  The sale of healthy products is increases not only for PepsiCo AMEA but also for other Food and Beverages company. The cost is required to manufacture the healthy product and as PepsiCo AMEA is the largest beverage company then the cost is affordable by the company. The company has an advantage to implement the healthy product solution in the market because the product has high scope in the market. It can be said that the company will earn the high profit in the near future.

References

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Balakrishnan, M.S., 2015. PepsiCo MEA: the role of packaging in brand activation. Emerald Emerging Markets Case Studies, 5(3), pp.1-12.

Bamossy, G.J. and Solomon, M.R., 2016. Consumer behaviour: A European perspective. Pearson Education.

Banker, D. R., Mashruwala, R., & Tripathy, A. (2014). Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision, 52(5), 872-896.

Dean, M., Shepherd, R., Arvola, A., Vassallo, M., Winkelmann, M., Claupein, E., Lähteenmäki, L., Raats, M.M. and Saba, A., 2007. Consumer perceptions of healthy cereal products and production methods. Journal of Cereal Science, 46(3), pp.188-196.

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Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

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Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

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Sigurdsson, V., Larsen, N.M. and Gunnarsson, D., 2014. Healthy food products at the point of purchase: An in?store experimental analysis. Journal of Applied Behavior Analysis, 47(1), pp.151-154.

Solomon, M.R., Dahl, D.W., White, K., Zaichkowsky, J.L. and Polegato, R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). London: Pearson.

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Zhang, H., Sun, J., Liu, F. and G. Knight, J., 2014. Be rational or be emotional: advertising appeals, service types and consumer responses. European Journal of Marketing, 48(11/12), pp.2105-2126.

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