Redhawks Consulting
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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 AnalysisStrengths
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 Sanitation2. Snack Food Industry3. Youth Market Segmentation4. Exportation to Cambodia5. 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
Sanitation Snack Foods
Youth Market
Cambodia Same
Production Efficiency 1 1 1 2 2Supply Chain Management 2 3 2 2 2
Brand Image 3 3 3 2 2
Return of Investment 1 3 2 1 1
Total: 7 10 9 7 7
Recommendation
• Alternative 2:Snack Food Industry
Phases of Implementation
I. Establish Implementation TeamII. Market ResearchIII. Product Development IV. Infrastructure and Organizational DevelopmentV. Integrated Marketing and CommunicationsVI. Milestone ReviewVII. ExpansionVIII.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 1st 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
0 3 6 9 12 15Months +Phase I: Establish Implementation TeamPhase II: Market Research
Phase III: Product DevelopmentPhase IV: Infrastructure & Organizational DevelopmentPhase 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