Porter Five Forces: Pepsi and PepsiCo

Title: Porter’s forces on PepsiCo and Pepsi.

Porter’s Five Forces is used by companies to better understand their own strength and the power of the competition. In this project, Porter’s five forces are implemented to better understand their situation with the market.

­­­­­­­­­­­­­­­­­­­­­

1.0 Target market for PepsiCo.

Country: Brunei Darussalam.

1) Age – The major target market would be from the age of 14 – 28. This will be the most concentrated target. Other age group are less concentrated in terms of advertising.

2) Locations – In Brunei, There can only be a coca cola sign or pepsi sign installed on business (Restaurants, cafes and etc) names. So the ideal target is to partner up with food outlets to increase sales and most importantly awarness.

1.1 Reasons for the targeted market :-

1) Bruneian people prefer to drink and eat outside rather than purchasing the product for home usage. Selling a tin of pepsi is more profitable than selling in bulks thus target area for location is successful.

2) Big market share to compete in Brunei Darusallam.

2.0 Porter’s Five Forces.

Fig. 2.0.1, Porter’s Five Forces.

2.1 Buyer’s power (Customers)

- Big market.

- Low switching cost to other product.

- It is not an essential product for customers.

2.2 Supplier’s power.

- High switching cost

- Supplier controls market.

2.3 Threat of new entrants

- Company that produces other kinds beverage can be a threat to pepsi.

- Accessed to raw materials is restricted. Ex, Sugar.

2.4 Threat of substitute product

- Low switching cost.

- Depends of customers mood.

- Growing trends of healthy beverages.

2.5 Intra-rivalry

- Coca cola or coke is the main competitor.

- Barriers to exit is high.

2.6 Analysis: With these targeted threats, Pepsi can use this information to better understand towards their goal. With its intense intra rivalry competition to take place on the hill, they have incorporated popular culture into their strategies. Pepsi has choose to going all towards the FIFA world cup that has just finished for one reason only. Keeping people aware of their product and selling them.