Question

The company PepsiCo (Pepsi) research the various product line and product mix. Then analyze their offerings. Explain the idea of cannibalization, is it a concern for your company, explain? Is there a gap in their product mix? Discuss some of the target markets they are reaching with their various product. Are you surprised by all the different brands the company owns? Do you think there is a product line they should add and or harvest, why?

Answer 1

Pepsi has a wide range of products and brands, that include beverages, sports drinks, bottled water, teas, foods, and snacks under the brand name as Mountain dew, Doritos, Lipton Teas, Cheetos, Mirinda, etc.

While the top brands here in terms of sales is Pepsi, Dew while the less performing includes Pepsi Max or Zero Sugar drink, also the Tostitos chips, which was acquired by Pepsi.

Cannibalization is a reduction in sales of one product due to the introduction of other similar products. Thus, when two similar products come from a brand, one becomes more popular and takes up a share that leads to another product being impoverished.

Yes, it is a concern for Pepsi, as it launches a lot of products under the carbonated drink segment, which can cannibalize the other products. For example, Pepsi owns 7up and Dew, which are almost similar. Thus, we can see a lesser sales of 7up. The same is with Doritos tortilla chips and Tostitos tortilla chips. Thus, similar products pose a threat to acquiring market share.

No, there is no identifiable gap in the product mix. They are into the F&B industry and products are catering to that line. With products like organic tea, nachos, oats, sports drink, they are gradually covering the segment which is related to quick consumption.

PepsiCo. targets middle and upper-middle-class with its products, majorly. Their prices are set accordingly. This market can be found in developing countries and developed. It is one of the largest segments. Amongst these, are mostly youth, male and female. Starting with the carbonated drinks, Pepsi had to diversify in healthier options like Oats, and green tea to cater to changing demands of people and concern towards health.

This concern is more acute in developed countries and other tiers 1 cities.

No, the product mix is very strategic as it was gradual and competitive. From carbonated drinks to sports drinks, snacks, bottled water, and now healthy products like oats and green tea. This was based upon the growing demand of people and Pepsi catering to it. It was also influenced by the competition. From just a beverage company, Pepsi has positioned itself as a food and beverage company.

They should add more healthy products in their catalog, as the demand for it is increasing. With widespread health hazards of carbonated and sugary drinks, people are losing their attraction towards it. Hence, in order to sustain in the market, it would be better to bring more products that are healthier in F&B, it can be cereals, or probiotic drinks, etc.