Kashif Khadim Assignment

Semester 8th
BS Public Policy (2017-21)
Subject:
Strategic Management
Topic:
BCG Matrix of PepsiCo
Submitted by:
Kashif Khadim
Roll No:
21
Submitted to:
Ms. Aniqa
BCG Matrix of PepsiCo.
BCG Matrix also is known as the growth-share matrix is used by organizations to classify
their business units or products into 4 different categories: Dogs, Stars, Cash Cows and Question
Mark. The growth rate of an industry and the market share of a respective business relative to the
largest competitor present in the industry are taken as the basis for the classifications, for that
reason, BCG Matrix is also called as Growth-Share Matrix. Past few years have been an
inflection point for the company with PepsiCo seeing a major drop in their carbonated drinks
business, thus prompting it to go back to the drawing board and relook at its future strategy and
also its product offerings. In this BCG matrix, we will talk about different brands of PepsiCo
which over the years have seen a fall in market share due to changing market scenarios and also
brands which saw exponential growth in their market share.
Let’s see what the 4 different quadrants of BCG Matrix are for PepsiCo and its various
brands and below is the matrix:
Question Mark
Products in high growth markets with a low market share. Products or business units of
the company that are still in the nascent stage of their product lifecycle and can either become a
revenue generator by taking the position of a Star or can become a loss-making machine for the
company in the future. The industry has high potential to grow hence giving the room to the
products to grow as well only if the pertinent issues are managed effectively.
There are products that formulate a part of the industry that is still in the phase of
development, yet the organization has not been able to create a significant position in that
industry. The small market share obtained by the organization makes the future outlook for the
product uncertain, therefore investing in such domains is seen as a high-risk decision.
Diet Sodas, once seen by consumers looking to cut calories as an alternative to traditions
sodas, are losing their fizz.
Ξ Diet Pepsi was launched with an aim to help Pepsico regain their market share but failed to
capture the desired response from the customers and one of the major reasons for that was tough
competition from Diet Coke.
Ξ 7up Nimbooz is one more brand which failed to succeed, launched in India in 2009,
the brand was not able to achieve significant sales volume.
The strategies for this quadrant are Market Penetration, Market and Product
Developments.
Star
These are the products which are in high growth markets with a high market share.
Products or Business Units which hold a high market share and are also considered to grow in
the future are positioned as Stars. As a result, companies are interested to invest in developing
these units further to gain a larger market share and attain a stronger position in the market.
These products have the potential of being positioned as cash cows in the future owing to the
industry growth prospects.
In the case of PepsiCo, Pepsi falls in the Star quadrant of the BCG Matrix of Pepsi. Over
the years, Pepsi has faced stiff competition from Coca-Cola and has also seen its market share
take a hit. The company has to spend millions of dollars on brand awareness and promotional
activities in order to maintain its market share. People are turning away from sugary drinks and
empty calories. Evolving tastes and sugar taxes have encouraged brands like Pepsi to invest in
healthier alternatives. Because of stiff competition from Coca-Cola and changing customer
preferences towards healthy and low-calorie drinks. Pepsi is seeing a shift from STAR
quadrant to Dogs quadrant.
Aquafina is one other brand which can be placed in star quadrant, Aquafina holds 15% of
bottled water market share and is second to Bisleri which has 36% market share.
Aquafina is slowly and steadily catching up with Bisleri and is expected to see a twice a growth
in the next 5 years.
Tropicana and Gatorade: Amid falling sales of aerated drinks as consumers shift to healthier

drinks, PepsiCo aims to double the Tropicana business by 2020.
Carbonated soft drinks segment has seen a major decline in the past few years, the overall liquid
refreshment beverage market has been growing. Consumers aren’t drinking fewer fluids, they are
just not drinking sugary sodas as much anymore.
This change in consumer preferences is what has helped Gatorade see an exponential growth in
its market share.
Gatorade has been a forerunner for Pepsi in sports drink market with a mammoth 77% share,
whereas Powerade has 20% of this market.
Growing healthier lifestyle trends and emerging markets have prompted the brand to
invest large amounts of investments in healthier beverages and snacks in order to differentiate
from competitors and grow brand awareness.
The strategies for this quadrant are all types of Market Integrations, Market
Penetration, Market Development and Product Development.
Cash Cows
These are the products which are in low growth markets with high market share. Products
which are market leaders in their specific industry and their industry is not expected to see any
major growth in the future are considered as Cash Cows. These products are the money churners
for the company and require very low investments to sustain their leadership and profitability in
the market.
For Pepsi, Frito Lays is undoubtedly the Cash Cow for the company. Frito
Lays dominates the savory snacks market in the U.S with a 36.6% market share. The next
biggest manufacturers in this sector are Kellogg’s and Mondelez with much smaller 7% and
5.6% share respectively. In the tortilla and tostada chips segment, Frito lays command a market
share of 72.4% with strong brands such as Doritos and Tostitos contributing to this market share
gain. The product requires very less investment to maintain its market share and fight off any
competition.
For this quadrant, the strategies are Product Development, Diversification and
Retrenchment.
Dogs
These are the products with low growth or market share. These are low growth or low
market share products and have very few chances of showing any growth. The investment
strategy for these products has to be very well thought through by the management as there are
chances that these businesses might not yield any profit for the organization. These business
units or products are cash traps and therefore are not seen as a useful source of earning.
Failure to deliver the expected results makes the product a source of loss for the
organization, propelling the management to withdraw future investment in the venture. Since the
product is not expected to bring in any significant capital, future investment is seen as a wastage
of company resources, which could be invested in a Question mark or Star category instead.
Pepsi – Seeing Pepsi in Dog quadrant will shock a lot of people but considering the
present and future scenario, Pepsi will see a shift from Star to Dog quadrant. Pepsi’s has dropped
from 10.3% to 8.4%, Declining carbonated soft drinks segment share due to increasing demand
for low calorie and healthy beverages and snacks is what is attributing the diminishing sales of
Pepsi brand.
Suggested strategies for this quadrant are Liquidation and Retrenchment.

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Semester 8th

BS Public Policy (2017-21)

BCG Matrix of PepsiCo

Tropicana and Gatorade: Amid falling sales of aerated drinks as consumers shift to healthier

Suggested strategies for this quadrant are Liquidation and Retrenchment.

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