Redhawks Consulting Pepsi’s Vietnam Challenge “It’s important to remember that results count. If you can’t get the results over the goal line, are you really a leader?” -Steven Reinemund, Chairman & CEO of Pepsi

Overview Key Concern SWOT Analysis Identification of Alternatives Key Success Factors Recommendation Phases of Implementation Timeline Summary

Key Concern To advise the executives of Pepsi in Vietnam on the future strategic direction of the company.

SWOT Analysis Strengths  Brand recognition  Market leader and producer of soft drinks  Initial market entry  Cover all regions of Vietnam  Snack food industry  Improvement of distribution channels  Offer environmentally friendly products  Product development Weaknesses  Lack of health benefits  Low consumption of soft drinks in Vietnam  200 product variations per year  Size of company prevents government funding Opportunities  Soft drinks popular for special occasions  1994 trade embargo  Increased consumption in rural areas  Technological advancements  Increased brand exposure in fast food restaurants  Refrigeration systems  Expansion creates jobs for Vietnamese Threats  Traveling between provinces  Coca-Cola  Domestic products  Consumer prefer healthy food items

Identification of Alternatives 1.Refrigeration System and Sanitation 2.Snack Food Industry 3.Youth Market Segmentation 4.Exportation to Cambodia 5.Maintain Current Position

Alternative 1: Refrigeration System and Sanitation Advantages – Health and well-being of consumer – Provide additional service – Easier to serve items Disadvantages – Installation costs – Maintenance costs

Alternative 2: Snack Food Industry Advantages – Early in product life cycle – Build upon Pepsi Brand Disadvantages – Research cost – Higher than average risk of failure

Alternative 3: Youth Market Segmentation Advantages – Half of population under age of 25 – Technological advancements increase – Nostalgia and brand recognition Disadvantages – Vast market: 46 million people – Diversity – Rural regions

Alternative 4: Exportation to Cambodia Advantages – 14 million people (Median age of 22) – Annual Growth: 6.4% – Build upon current distribution channel Disadvantages – Very costly Promotional Infrastructure – Language Barrier

Alternative 5: Maintain Current Position Advantages – Low cost – Customer loyalty – Maintain short-term market share Disadvantages – No expected growth – May lead to relative depletion of long-term market share

Key Success Factors SanitationSnack Foods Youth Market CambodiaSame Production Efficiency11122 Supply Chain Management Brand Image33322 Return of Investment13211 Total:710977

Recommendation Alternative 2: Snack Food Industry

Phases of Implementation I.Establish Implementation Team II.Market Research III.Product Development IV.Infrastructure and Organizational Development V.Integrated Marketing and Communications VI.Milestone Review VII.Expansion VIII.Long-term Planning

Phase I: Establish Implementation Team Time frame: Immediately upon approval Parties involved: – Vietnam Pepsi Soft drinks Snack food – Cultural specialist (anthropologist) – Pepsi Co. of North America – Research professionals

Phase II: Market Research Time Frame: 0-3 Months Analyze the following: – Market – Distribution Networks – Trends – Demographics – Psychographics Utilize focus groups

Phase III: Product Development Time Frame: 3-9 months Select which products to introduce Product differentiation Ex: Aloe Vera specialty drinks in Asia

Phase IV: Infrastructure & Organizational Development Time Frame: 3-9 months Distribution networks Export and Import processes Hire executives and management – North, Central, and Southern regions

Phase V: Integrated Marketing & Communications Time frame: 9 months – Ongoing Utilize current Pepsi marketing avenues: – Television advertising – Point of sale displays – Promotional campaigns Market as “fast, on-the-go food” School incentive program

Phase VI: Milestone Review Time frame: 12 months Establish review criteria – Market share – Sales (net profit) Re-evaluate every 3-6 months

Phase VII: Expansion Time Frame: Upon 1 st successful review Offer other products – As directed by research

Phase VIII: Long-Term Planning Time Frame: 10 years + Cambodia Horizontal integration Sector and distribution network

Timeline Months + Phase I: Establish Implementation Team Phase II: Market Research Phase III: Product Development Phase IV: Infrastructure & Organizational Development Phase V: IMC Campaign Phase VI: Milestone Review Phase VII: Expansion Phase VIII: Long-term Planning

Redhawks Consulting Pepsi’s Vietnam Challenge “It’s important to remember that results count. If you can’t get the results over the goal line, are you really a leader?” -Steven Reinemund, Chairman & CEO of Pepsi