Pepsico. Segmentation and Target Market Paper

Pepsi-Cola was created in the 1890's by pharmacist Caleb Brandham.  In 1965, Frito-Lay and Pepsi-Cola merged to become PepsiCo.  PepsiCo has 19,000 employees and reports sales of $510 million.  Over the years, PepsiCo has merged with Tropicana, Quaker Oats, and bought Kentucky Fried Chicken and Taco Bell.  PepsiCo now offers a variety of drink choices under a variety of labels:  Soft drinks under Pepsi and Mountain Dew, sports drinks under Gatorade, and ready to drink teas and coffees under Lipton and Starbucks. ("Who we are", n.d.)  

Markets are divided into separate categories such as age, gender, income, education, nationality, etc., for the purpose of demographic segmentation.  Variables marketers use for demographic segmentation include age and life-cycle, life stage, gender, and income.  (Kotler & Keller, 2012)  In the 1990's, Pepsi shifts their focus to the late teen and young adult crowd, ages 18-29.  Marketing campaigns produced terms such as "Generation X," "New Generation," and "Pepsi Generation."  There were contracts made with schools, and the company has used Britney Spears as their spokesperson for their "Joy of Pepsi" campaign, Michael Jackson for their "New Generation" campaign and Beyonce for their "Mirrors" commercial.  The use of these spokespersons shows how Pepsi is geared toward the younger generation.

According to Kotler & Keller, "psychographics is the science of using psychology and demographics to better understand consumers."  Consumers have different interests and attitudes.  Psychographic segmentation divides the market into customer traits like personality, attitudes, lifestyles, and many times cultures.  PepsiCo focuses on social class, lifestyles, and personalities.  Pepsi is geared toward the young, lower upper and middle class.  One example is Mountain Dew.  The advertising for Mountain Dew is fast paced and adventurous.  It portrays snowboarders, surfers, and skateboarders.  This would appeal mostly to the younger crowd.  Even though PepsiCo is a large, global company, "the Pepsi user is psychographically very similar across the world" (Zmuda, 2012).

Geographic segmentation will divide the market by geographical traits.  Countries, states, cities, even neighborhoods are sections of geographic segmentation.  According to Kotler & Keller, companies can "tailor marketing programs to the needs and wants of local customer groups in trading areas, neighborhoods, even individual stores.  The whole idea of geographic segmentation is to focus on the individual as much as possible.  PepsiCo is doing business in every corner of the world and relates to many different consumers in each area.  There is little emphasis on segmenting the market geographically.