Marketing Principles Assignment 1

Nguyễn Thị Kiều Anh - Snow - F05014

BANKING ACADEMY, HANOI
BTEC HND IN BUSINESS (FINANCE)
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Nguyễn Thị Kiều Anh - Snow - F05A
F05 - 014
Unit 4: Marketing Principles
Gatorade in Vietnam
1 of 2
Ms. Doti Chee
19 November, 2012

I, ____Nguyễn Thị Kiều Anh____ hereby confirm that this assignment is my own work and not copied or
plagiarized from any source. I have referenced the sources from which information is obtained by me for this
assignment.

_____19th Novermber 2012____

________________________________
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Unit Outcomes
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Outcome

Evidence for the
criteria

Feedback

Assessor’s decision
First
attemp
t

Understand the
concept and
process of
marketing
LO1

Be able to use

the concepts
of segmentation,
targeting
and positioning
LO2

Explain the
various elements
of the marketing
process

1.1

Evaluate the
benefits and
costs of a
marketing
orientation for a
selected
organisation
Show macro and
micro
environmental
factors which
influence
marketing
decisions

1.2

2.1

Propose
segmentation
criteria to be
used for products
in different
markets

2.2

Choose a
targeting strategy
for a selected
product / service

2.3

Demonstrate
how buyer
behaviour affects
marketing
activities in
different buying
situations

2.4

Propose new
positioning for a

selected
product/service

2.5

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

2

Rewor
k

Internal
Verification

Nguyễn Thị Kiều Anh - Snow - F05014
Evidence for the
criteria

Outcome

Feedback

Assessor’s decision
First
attemp
t

Internal
Verification

Rewor
k

Assignment
( ) Well-structured; Reference is done properly / is not done properly /should be done (if any)
Overall, you’ve passed / referral………outcomes
Areas for improvement:

 To achieve a pass, you must meet all the requirements defined in the assessment criteria.
 To achieve a merit, you must identify and apply strategies to find appropriate solutions and
appropriate methods/techniques as well as to present and communicate appropriate findings.
 To achieve a distinction, you must use critical reflection to evaluate own work and justify
valid conclusions as well as to take responsibility for managing and organizing activities


DATE

ASSESSOR SIGNATURE

/ 11 / 2012

NAME: Doti Chee

(Oral feedback was also provided)
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DATE

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MARKETING AND THE CASE OF PEPSICO

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Prepared for:
Lecturer, Ms. Doti Chee
Marketing Principle
Banking Academy, Hanoi
BTEC HND in Business (Finance)

Prepared by:
Nguyễn Thị Kiều Anh – Snow - F05A
Registration No. ITPF05-014
No of words: 4200
Submission date: 19th November, 2012

TABLE OF CONTENTS
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EXECUTIVE SUMMARY
This assignment contains basic knowledge of marketing as well as analysis and assess the
most suitable and effective marketing strategies for Gatorade of PepsiCo in Vietnam. This
assignment is divided into seven parts as follows:
•

Explain the various elements of marketing process which effect decision making of

PepsiCo

•

Evaluate the benefits and costs of marketing orientation for PepsiCo

•

Show macro and micro environmental factors which influence marketing decisions

•

Propose segmentation criteria to be used for Gatorade in different markets

•

Choose a targeting strategy for Gatorade

•

Demonstrate how buyer behaviour affects marketing activities in different buying
situations

•

Propose new positioning for Gatorade
The recommendation for PepsiCo is that the company should do research about market

and its customers to have deeply understanding about them to meet their requirements.
Therefore, the company will gain more achievements in business operation.

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INTRODUCTION
Starting with ordinary sources, PepsiCo still has survived after bankrupt twice and
become the 2nd largest beverage company in the world. Today, the global symbol of the Pepsi
logo is one of the best known in over the world. In 1991, Pepsi Corporation appeared in
Vietnam, through 15 years operate; the company becomes the leader in the term of sport drinks
with Gatorade product. To have his success, Pepsi company have to set a specific marketing
strategy to approach Vietnam market. For example, product’s tastes were changed slightly in
order to become more suitable for Vietnamese. Marketing is an important part of any
organization. If an organization wants to attract consumer and moreover become a market leader,
they must understand deeply about marketing concept to apply it effectively.
This assignment focus on analyzing the most general aspects of marketing process such
as analyzing the factors which PepsiCo effect directly on marketing activities of PepsiCo or
understanding buying behavior to build a appropriate marketing strategies to attract customers.
The information in this assignment is collected from many different resources such as book,
websites on the internet and some document which related to marketing knowledge and Gatorade
of PepsiCo in Vietnam.
However, because of limitations about time, words, this assignment only gives general
information. The researcher hopes that those disadvantages will be improved in the future.

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CONTENTS
I. Understand the concept and process of marketing
1.1 Explain the various elements of the marketing process
1.1a Elements of the marketing process

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Marketing process

1.1b Situation Analysis
1.1b.1 Trends
Situation analysis requires a thorough study of the broad trends within the
economy and society, as well as a detail analysis of markets, consumers, and
competitors (BPP Professional Education 2004, p.44). The main purpose of
analyzing markets, consumers, and competitors is to help PepsiCo prepare
campaigns to adapt to new conditions.
1.1b.2 Internal environment
Understanding of the organization’s internal environment and its strengths and
weaknesses will help PepsiCo recognize strong points to continue exploring, and
weak points to overcome those shortcomings.

1.1b.3 External environment
Analyzing the opportunities and threats help PepsiCo take advantage of

opportunities to create more profits and recognize threats to minimize effects.
1.1c Marketing strategy
1.1c.1 Porter’s five forces
Porter’s five forces include:
•

Bargaining power of suppliers

•

Bargaining power of buyers

•

Threat of new entrants

•

Threat of substitute products

•

Rivalry among existing competitors

It is a yardstick for assessing industry profitability. Five forces analysis helps
PepsiCo understand the competitive forces in beverage industry; and assess the
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attractiveness, growth opportunities within a new industry. Base on these,
PepsiCo can give effective strategies to raise the profitability, power and
competitive position.
1.1c.2 Generic strategy
According to Michael Porter, businesses can secure a sustainable competitive
advantage by adopting one of three generic strategies:
•

Cost leadership

•

Differentiation

•

Focus/niche marketing

In other words, the purpose of generic strategies is to create a competitive
advantage. In order not to “stuck in the middle”, PepsiCo choose “Focus” as a
method to create competitive advantage in the Vietnam market.

1.1c.3 Ansoff’s Product/Market Matrix

Ansoff’s Product

Ansoff’s four strategies are tools used within marketing were developed by Igor Ansoff
in 1957. It enables business to decide growth strategy depends on whether to sell new
or existing products in new or existing markets.
1.1d Marketing mix decision

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According to Stanton, marketing mix is a combination of four elements (4Ps): product,
place, price, and promotion. Marketing mix play an important role in the firm’s
enterprise. The purpose of marketing mix is to satisfy customer’s needs and wants by
creating products with innovative features in right place, with reasonable price and
flexible promotion.
1.1e Implementation & control
Implementation and control is last step in the marketing process which is considered as
the result of process of building marketing strategy. After implementing plan, the firm
can evaluate whether the marketing strategy meet customer’s demand or not. Base on
this, the company will adjust it become more suitable to reach objectives.
In conclusion, defining elements of marketing process will help company know ways to analyze,
evaluate and form marketing strategies effectively. Therefore, understanding the marketing
process is essential to organization success.

1.2 Evaluate the benefits and costs of a marketing orientation for a selected
organization
1.2a Basic concepts of marketing orientation
There are 5 alternative concepts
•

Production concept: “The philosophy that customers will favor products that are
available and highly affordable and that the organization should therefore focus on
improving production and distribution.” (Kotler & Armstrong, 2010)

•

Product concept: “The idea that consumers will favor products that offer the most
quality, performance and features and that the organization should therefore devote
its energy to making continuous product improvements.” (Kotler & Armstrong,
2010)

•

Selling concept: “The idea that consumers will not buy enough of the firm’s
products unless it undertakes a large-scale selling and promotion effort.” (Kotler &
Armstrong, 2010)

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•

Marketing concept: “The marketing management philosophy which holds that
achieving organizational goals depends on determining the needs and wants of target
markets and delivering the desired satisfactions more effectively and efficiently than
competitors do.” (Kotler & Armstrong, 2010)

•

Societal marketing concept: “The idea that the organization should determine the
needs, wants, and interests of target markets and deliver the desired satisfactions
more effectively and efficiently than competitors in a way that maintains or
improves the consumer’s and society’s well being.” (Kotler & Armstrong, 2010)

1.2b Marketing orientation for PepsiCo in Vietnam

Marketing concept is the most suitable marketing orientation for PepsiCo’s Gatorade
in Vietnam. The reason is that applying marketing concept will help PepsiCo define
ways to approach Vietnam’s market and then understand customers’ needs and wants
to satisfy them as efficiently as possible. To analyze exactly the costs and benefits of
marketing strategy, the researcher has based on some factors in the following table:
Marketing
concept

Characteristics

Benefits

Costs

Sports drink with - Thirst quenching
optimum
R&D
(Product)

Cost

- Maintain hydrated researching,

combination

of

Evaluation
for Multi-choices
for

customer,

rehydrate and using more satisfies

fluids,

replenishes

and materials

electrolytes,

refuel for athletes

individual
demand

of

carbohydrates and best (According to

people. Should

great

invest

tasting Case study - The

flavors (According thirst quencher)
to Case study The

thirst

quencher)
Geographic - Help firms see Costs
Market

segmentation:

segmentation Vietnam

opportunities in the improving
market through the products
12

for Defining
exactly
if location, target


Nguyễn Thị Kiều Anh - Snow - F05014
-

Demographic analysis needs of firms

segmentation:
youth,

each

changed customers

customer market

especially group

is

very important

segmentation

so

market

high-performance

- Create products

segmentation

athletes

better than its rivals

should

- Psychographic

- Satisfy different

invested

segmentation:

demands

be

of

suitable for people different customers
who

like

experiment

to
with

new flavors, like
sports.
Include

- Keep long-term -

Identifying

- Customer focus

relationship

customers

- Customer delight

customers

- Customer loyalty

- Build customer’s - Spend money

Costs

for Indentify what

with customer

customer need

services

trust

and

is a good invest

time

for

- Customers will advertising,
buy

more

and agents,

introduce to their commission,
friends

Branding

and

initial

Gatorade:

Build - Attract customers

discount
Costs

famous

brand - Build reputation,

advertising,

because

designing

value

(According to the and loyalty

for Need

invest
the
of

the

case study - The

brand is long-

thirst quencher)

term.

From above analysis, it is not difficult to recognize that the costs for applying marketing concept

are not small but the benefits that it brings are very big and long-term. Therefore, there is no
doubt that when marketing concept is applied, PepsiCo will become the market leader and make
its competitors relegate not only Vietnam but also many countries in over the world.
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II. Be able to use the concepts of segmentation, targeting and positioning
2.1 Show macro and micro environmental factors which influence marketing
decisions
2.1a Environmental factors
Marketing activities of any businesses is affected by many factors, that factors form a
firm’s business environment. Marketing environment includes macro and micro
environmental factors.
•

The micro environment consists of factors that are closely related to business. It
included internal environment (stakeholders, 7S) and external environment
(Competitors). These factors directly impacts on the operation of the business and
firm also has a certain influence on these factors.

Micro environment
•

The macro environment includes factors that involve larger societal forces such as
political, economical, social, and technological (PEST factors). These factors affect
on the whole micro environment and firms’ marketing decisions.

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12
3
4

Macro environment

2.1b Micro environment
Micro environment
Stakeholders

Explanation how effect marketing decisions
Employees has important role in manufacturing.
Management is a key factor in developing strategy.

Internal stakeholders
- Employees
- Management

They have a significant effect on the operation of the
business.
 PepsiCo need train and promote so that staff has
the opportunity to express their maximum ability in

giving marketing strategies.
Connected stakeholders The change in shareholders’ investment and
- Shareholders

customers’ tastes also affect directly on operating of

- Customers

the company. The company must change strategy to
adapt to new conditions.
 To be continued investing by shareholder,
PepsiCo committed to build shareholder value by
making PepsiCo a truly sustainable company
(According to Scenario)

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 To attract customer, PepsiCo must base on each
person’s hobby, financial situation, and their habits
to produce diversified products with reasonable
prices.
Vietnam government has policies to encourage
foreign companies in investment.
 PepsiCo has chance to more invest and expand in
External stakeholders
- Government

Vietnam market. For example, on August 16
PepsiCo

announced

that

it

plans

to

invest

$250million in Vietnam over next three years
(PepsiCo, n.d.)

PepsiCo’s current structure:
- “Decentralized organizational structure”
- “Empowerment to its employees”
Structure

Due to the expansion and growth of PepsiCo, they
must add new senior-level workforce to take
advantage of opportunities (Christopher, n.d.)
PepsiCo must face many competitions and they
recognize important role of human resources

7s

Strategy

 The main motivation strategy is that their

employees are empowered and are allowed to make
their own decisions and speak out their ideas.
There are many kinds of sport drinks in the market.

Competitors

Threat of substitute

Threat of substitute products is high. Therefore, to

products

attract customers besides improving the quality of
products, PepsiCo also has to apply right strategies

The rivalry amongst

in prices.
There is a lot of beverage companies with big and

current competitors in

small sized such as Coca Cola, Red Bull, Samurai,

the industry

ect. Therefore, the competitive rivalry is high.

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 PepsiCo want to exist in this environment, they
must have competitive action such as: advertising
battles, introducing new products for the market,
providing guarantees or warranties.

SWOT ANALYSIS
•

Strengths
Branding: famous, loyalty (according to

•

Weaknesses
Cultural differences

Inter brand, it ranked 26th amongst top

•

High cost due to modern

100 global brands in 2008)
•

Company image

•

Diversification: many kinds

•

Flexible distribution

technology
•

Environmental concern – PET bottles

2.1c Macro environment
Macro
environment

Explanation how effect marketing decisions
All company operate in Vietnam must comply with government obligations such

Political

Economical

as tax policy, political stability (John, n.d.).
 Accordingly, PepsiCo must pay 25% for income tax. Besides, they have to
obey regulations about environmental protection, and employment laws.
Vietnam’s economy develops stably and low inflation brings more income. For
instance, Vietnamese’s income is increasing rapidly in recent years (GDP is
$1024 in 2008 whereas 2007 is $833) which change the structure of expenditure
for products; customers spend more in consumer goods, especially beverage.

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 It will create favorable conditions for PepsiCo to develop production.
Vietnam is a populous country (87.84 million in 2010) with young population is
main

Social

 Demand for sport activities is huge so PepsiCo will have big chance to
develop Gatorade product – sport drinks in Vietnam.
Nowadays, Vietnam has a rapid development in technology. This is a

Technologica

competitive advantage to the companies.
 Aware its importance, PepsiCo focus on R&D activity and apply modern

l

technology to produce their products.
SWOT ANALYSIS
Opportunities
•

Increase population

•

Changing social trend

•

New market when Vietnam joins WTO

Threats
•

Intense competition: PowerAde of
Coca Cola company

•

Imitators

•

Government regulations

In short, that is effects of marketing environment on PepsiCo in Vietnam. These effects create
both opportunities and threats for PepsiCo. Therefore, the task of marketer is to carefully analyze
the changes of the environment to know strengths to explore, and weaknesses to overcome then
make accurately marketing decisions to bring revenue for the company.

2.2 Propose segmentation criteria to be used for products in different markets
2.2a Segmentation
•

Definition of segmentation
Market segmentation is “the subdividing of a market into distinct and increasingly
homogenous subgroups of customer, where any subgroup can conceivably be
selected as a target market to be met with a distinct marketing mix” (Kotler, 1994).

•

Types of market segmentation

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There are 2 type of segment market:
- Consumer market segmentation
- Industrial market segmentation
2.2b Base for segmentation
•

Consumer market

There are many ways which consumer market can be segmented; these are Geographic
variables, demographic variable, psychographic variable, and behavioral variable. To
suitable with given strategy, marketer chooses demographic variable to become main
way to segment the Vietnam market.
•

Industrial market

Industrial markets might be segmented on characteristics such as: by location, customer

size, usage rates. With proposal marketing strategy, marketer chooses customer size to
segment Vietnam’s industrial market.
Segmentation

Characteristics
With Gatorade - a sport drink, 
PepsiCo

Consumer

Demographi

market

c

focus

Customer

market

size

young demand easily  create

generation (18-24 years old) innovative
who

interested

in

products

to

sports, satisfy their requirements

high-performance  Make higher profit

especially

Organizational

on

Benefits
Identify customer’s

athletes.
Focus on large size, such as 

Create

competitive

super markets which are heavy advantage
 Make high profit

users.

2.2c Requirement / Criteria of segmenting markets
There are many ways to segment a market. To be useful, market segments must be:
measurable, accessible, substantial, and actionable. PepsiCo meet all criteria above.
Requirement
Measurable

Customer market
According

to

UNFPA,
19

Industrial market
Vietnam’s Nowadays,

supermarkets


Nguyễn Thị Kiều Anh - Snow - F05014
population was 87.84 million in 2010 with grow as mushrooming such
18-24 accounted for 20%; moreover they as BigC, Metro, ect and a
belong to high income group.

variety of big shops in the

 size of target market segment , buying city center

 purchasing power is huge

power is huge

Along with product’s benefits bring to To be large company  Have
youth,
Accessible

wide

distribution

system

and capability of approaching and

advertising is also strength point of PepsiCo providing enough goods for
 ability to reach customers is extremely customers
large
Huge volume of customer  able to grow With large size of target

Substantial

profitability  investment and development customer  focus more on
of specific marketing mix is feasible

them to make higher profit is

feasible
Young, talented staffs  understand the To be big company have

need of young customers  able to sell enough
Actionable

product

effectively



The

segmentation can be actionable

plan

capital,

moreover

for Vietnamese labor is abundant
 This segment can be
implemented with effective
strategies.

2.2e Evaluate market segments
Both industrial market and consumer market have the same evaluation with 4 factors:
market, economic and technological, competitive and environmental.
Factors
Market
Economic and

•

Size of segment

•

Segment growth rate

Barriers to entry

Evaluate segmentation
Vietnam is a potential market, this segment is large
and increasing day by day
 More and more people use Gatorade
PepsiCo has to face many government obligations
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of Vietnam. However, base on this they feel safer

technological

Competitive

when investing in Vietnam
Competitions are the biggest barrier of PepsiCo
Competitive intensity

when investing in Vietnam. However, if overcome
this threats, company will make more profit in
investing these segments
Vietnam’s economy develops stably  People’s

Environmenta
l

Exposure to economic

demand in these segment increase  Create

fluctuations

favorable conditions for PepsiCo to develop
production.

In short, identifying and assessing market segmentation in 2 markets: consumer market and
industrial market play an important role in success of marketing strategy. If marketer research
and identify exactly market segmentation, the companies will create competitive advantage in
the market.

2.3 Choose a targeting strategy for a selected product/ service
2.3a Definition of targeting strategy
A target market is a market or segment selected for special attention by an organization
(BPP Professional Education 2004, p.163).
2.3b Target strategies for Gatorade
There are 3 policy options

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Three alternative markets - coverage strategies
•

Undifferentiated marketing strategy: produce a single product, segmentation is
ignored entirely.

•

Concentrated marketing: produce the ideal product for a single segment of the
market.

•

Differentiated marketing: introduce several product versions for different market
segment.

Concentrated marketing is the most suitable for 2 markets Gatorade in Vietnam.
2.3b.1 Customer market
PepsiCo’s target market is young generation who like sports. Therefore,
PepsiCo focus on this specific target market with developing many kinds of
product such as: G series, G series pro, and G natural to satisfy customers.
2.3b.2 Industrial market
PepsiCo focus on satisfying big company with many products: G series, G
series pro and G natural.
2.3c Advantages of concentrated marketing
•

Satisfy the needs of specific consumer segment
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•

Achieve a strong position in the target market

•

Specialization in a particular market segment  Increase sales profitability

2.3d Evaluating meet criteria
There are 5 criteria need to be considered when choosing a target - marketing strategy:
Company resources: Concentrated marketing suitable for small company have

•

limited resources. Although PepsiCo is big company with abundant resources,
Gatorade is still a new product in Vietnam market. Therefore, choosing
concentrated marketing is most suitable for PepsiCo in this situation.
The degree of product variability: PepsiCo focus on specific target market with

•

many kinds of product (G series, G series pro and G natural).
Product’ life-cycle stage: Life - cycle stage of Gatorade is good. From appearing in

•

Vietnam to today, Gatorade still keep high position
•

Market variability: Vietnam market is not change in beverage industry.

•

Competitors’ marketing strategies: PepsiCo’s marketing strategies is more effective
than PowerAde’s one. This is proved in annual revenue of each company (in 2010,
PepsiCo’s revenue is 11.8 billion while Coca’s one is 10 billion).

In short, with identifying exactly targeting strategy in 2 markets, PepsiCo will know key
customers to meet their needs.

2.4 Demonstrate how buyer behavior affects marketing activities in different buying
situations
2.4a Definition of consumer buying behavior and organizational buying behavior
•

Consumer buying behavior can be defined as, ‘the decision processes and acts of
individuals involved in buying and using products or services’ (BPP Professional
Education 2004, p.125)

•

Organizational buying behavior may be defined as ‘the decision - making process
by which formal organizations establish the need for purchased products and

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services and identify, evaluate and choose among alternative brands and
suppliers’ (BPP Professional Education 2004, p.149)
2.4b. The difference between customer buying behaviour and organizational buying
behaviour

Characteristics

Customer behaviour

Demand
Number of customers
Volume
Buying influence
Nature of buy
Supplier relationships
Location
Negotiations
Motivation

Individual
Smaller
Smaller
Single
More personal
Intangible
Dispersed

Easy
Interests and lifestyle

Organizational
behaviour
Organization
Fewer
Larger
Multiple
More professional
Close
Concentrated
Complex
Purpose of organization

Organizational and customer buying comparision (Kotler 1997)

2.4c. Consumer buying behavior
2.4c.1 Types of buying situation

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Consumer involvement

It consists of 3 situations:
•

Routine problem solving (Low involvement): Habitual decisions

•

Limited problem solving: Limited decision-making

•

Extended problem solving (High involvement): Lengthy decisions

Consumer problem solving comparisons (Kotle,, 1997)

Gatorade is sport drinks with low price so customers do not research or put
decision making effort when buying these products. Therefore, buying
situation of Gatorade is low involvement and limited problem solving.
2.4c.2 Buying situation effect on buying process and marketing activities

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