Pepsico Australia Case Study

Introduction

In 2012, PepsiCo Australia released Pepsi Next, a mid-calorie cola beverage designed to be the successor to the original Pepsi. As PepsiCo must adapt their product to the Australian environment, the purpose of this report is to provide an analysis of both the macro-environment and micro-environment that currently surrounds Pepsi Next. It will begin by analysing the macro-environment using PESTEL analysis: that is, the political, economic, socio-cultural, technological, environmental and legal environment of the Australian economy. It will then analyse the microenvironment: competitors, suppliers, distributors, industry, customers, and partners. Finally, it will conclude by summarising key points.

Macro-Environment (PESTEL Analysis)

Political:

Sparked by concerns of a general decrease in the health of Australian’s aging population, The Australian Food and Grocery Council has launched ‘Healthier Australia Commitment’ to combat the occurrence of chronic preventable diseases in sugar drinks, (Australian Food & Grocery Council, 2012).

Economic:

The 2008 Global Financial Crisis slowed sectors of the Australian economy down including finance and construction which lowered the purchasing power of Australian consumers(Moshirian, 2011); the result has been “reduced demand for Pepsi resulting from a slow-down in the general global economy (PepsiCo, 2012). Customers have begun to shift to cheaper substitutes such as regional, local or private label products (Yani-de-Soriano, 2012).

Socio-Cultural:

The Australian society has an increasing negative perception of the poor health implications of soft drink consumption, particularly obesity and metabolic diseases (Christiansen, 2010). More than 10 per cent of the national health budget (approximately $6.3 billion) and substantial health care money is spent annually on the treatment of cardiovascular diseases associated with diabetes and obesity (Hector, Rangan, Louie, Flood and Gill., 2009). Consumers have shifted spending to healthy alternatives; with 28% of all drinks bought are marketed as healthy (Hector et al. 2009).

Technological:

The advent of technological changes has seen Australian companies needing to adapt. For example, Australia has seen an increase in widget advertising on social websites such as Facebook or LinkedIn and community marketing, which consists of people connecting with other people to market a product (Wang and Tcherney, 2012). This social media explosion has allowed PepsiCo to interact with consumers in real time, reach out to youth who embrace up-to-date social media, and increase brand recall plus brand engagement (Wang and Tcherney, 2012).

Environmental (Natural Environment):

PepsiCo