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Marketing Strategy for a Business - Pepsico

Essay by   •  December 30, 2010  •  Case Study  •  2,374 Words (10 Pages)  •  1,778 Views

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Strengths, Weaknesses, Opportunities and Threats (SWOT).

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

n SWOT, strengths and weaknesses are internal factors.

For example:

A strength could be:

* Your specialist marketing expertise.

* A new, innovative product or service.

* Location of your business.

* Quality processes and procedures.

* Any other aspect of your business that adds value to your product or service

A weakness could be:

* Lack of marketing expertise.

* Undifferentiated products or services (i.e. in relation to your competitors).

* Location of your business.

* Poor quality goods or services.

* Damaged reputation.

In SWOT, opportunities and threats are external factors.

For example:

An opportunity could be:

* A developing market such as the Internet.

* Mergers, joint ventures or strategic alliances.

* Moving into new market segments that offer improved profits.

* A new international market.

* A market vacated by an ineffective competitor.

A threat could be:

* A new competitor in your home market.

* Price wars with competitors.

* A competitor has a new, innovative product or service.

* Competitors have superior access to channels of distribution.

* Taxation is introduced on your product or service.

A word of caution - SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.

Simple rules for successful SWOT analysis.

* Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.

* SWOT analysis should distinguish between where your organization is today, and where it could be in the future.

* SWOT should always be specific. Avoid grey areas.

* Always apply SWOT in relation to your competition i.e. better than or worse than your competition.

* Keep your SWOT short and simple. Avoid complexity and over analysis

* SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis - click to go straight to them

strengths

* Branding - One of PepsiCo's top brands is of course Pepsi, one of the most recognized brands of the world, ranked according to Interbrand. As of 2008 it ranked 26th amongst top 100 global brands. Pepsi generates more than $15,000 million of annual sales. Pepsi is joined in broad recognition by such PepsiCo brands as Diet Pepsi, Gatorade Mountain Dew, Thirst Quencher, Lay's Potato Chips, Lipton Teas (PepsiCo/Unilever Partnership), Tropicana Beverages, Fritos Corn, Tostitos Tortilla Chips, Doritos Tortilla Chips, Aquafina Bottled Water, Cheetos Cheese Flavored Snacks, Quaker Foods and Snacks, Ruffles Potato Chips, Mirinda, Tostitos Tortilla Chips, and Sierra Mist.

*

* The strength of these brands is evident in PepsiCo's presence in over 200 countries. The company has the largest market share in the US beverage at 39%, and snack food market at 25%. Such brand dominance insures loyalty and repetitive sales which contributes to over $15 million in annual sales for the company

* Diversification - PepsiCo's diversification is obvious in that the fact that each of its top 18 brands generates annual sales of over $1,000 million. PepsiCo's arsenal also includes ready-to-drink teas, juice drinks, bottled water, as well as breakfast cereals, cakes and cake mixes.This broad product base plus a multi-channel distribution system serve to help insulate PepsiCo from shifting business climates.

* Distribution - The company delivers its products directly from manufacturing plants and warehouses to customer warehouses and retail stores. This is part of a three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services.

Weaknesses

* Overdependence on Wal-Mart - Sales to Wal-Mart represent approximately 12% of PepsiCo's total net revenue. Wal-Mart is PepsiCo's largest customer. As a result PepsiCo's fortunes are influenced by the business strategy of Wal-Mart specifically its emphasis on private-label sales which produce a higher profit margin than national brands. Wal-Mart's low price themes put pressure on PepsiCo to hold down prices.

* Overdependence on US Markets - Despite its international presence, 52% of its revenues originate in the US. This concentration does leave PepsiCo somewhat vulnerable to the impact of changing economic conditions, and labor strikes. Large US customers could exploit PepsiCo's lack of bargaining power and negatively impact its revenues.

* Low Productivity - In 2008 PepsiCo had approximately 198,000 employees. Its

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