The Secret Behind PepsiCo, Inc. (PEP)’s Better Performance: The Coca-Cola Company(KO)

The strategy
The company has worked very hard in advertising and marketing over the past year. It increased its marketing budget to range between $500 million and $600 million. The company’s snack business which has been a great success experienced average results. In order to effectively compete with fellow peer Coca Cola it is important for the company to fix this segment soon. The company is also working on marketing techniques and investing heavily to rebuild its brand in the soda segment.

In addition, Chief Executive Indra Nooyi appears to be extremely excited with some “promising projects” about the upcoming product launches that the company is working on. Presently the products in the pipeline are being reviewed by the FDA. Once these products are commercialized, it would give stiff competition to the Diet Coke and Coke Zero offered by Coca Cola.

In addition, Pepsi’s prospect in Asia looks much stronger than Coca Cola’s, particularly after the former’s joint venture with Chinese player Tingyi. The alliance has made Pepsi grow into the largest beverage company in the mainland, despite Coca Cola’s huge investment in this emerging market. While, both Coca Cola and Pepsi have huge international presence, Dr Pepper Snapple’s global presence is much lesser. The addition of Dr Pepper Snapple to Zaxby’s offering would help the company expand over 13 states with a total of 565 locations in the domestic market.

Looking forward
The company has been undertaking a number of steps to push its revenue up. It still believes that the soda segment has attractive prospects. PepsiCo has a number of upcoming products with reduced calories which could give both Coca-Cola and Dr Pepper Snapple drinks tough competition. The company is making sure that calories are brought down without compromising with taste. It is therefore experimenting with a natural sweetener which would keep the taste intact. With a robust product pipeline, better managed supply chain and improved processing techniques the company is confident to experience a stronger year ahead.

The article The Secret Behind PepsiCo’s Better Performance originally appeared on Fool.com and is written by Rajesh Marwah.

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