Pepsi and "Performance with Purpose"

As part of its "Performance with Purpose" strategy, PepsiCo has three types of product portfolios. One is "fun for you" foods and beverages like Mountain Dew. The second is "better for you" products like Baked Doritos. And the third is "good for you" products like Naked Juice.

 Just a few days ago, it acquired Bare Snacks Inc., which markets Carrot Chips, Apple Chips, and other crunchy snacks made from fruits and veggies. This acquisition expands the pantry of "good for you" products.

http://www.nutritiongreenhouse.com/

In the beginning, Bare Snacks produced apple chips and other products from its own organic apples. The company recently said that no matter who acquired it, Bare Snacks would stay true to its strategy of producing fruit and veggie snacks that taste good, as well as being healthy.

PepsiCo is also using a "brand incubator" to encourage small businesses to pursue "good for you" food and beverage innovation. In addition to money, the entrepreneurial brands enrolled in the Nutrition Greenhouse incubator receive mentoring to grow their businesses.

Inside the Non-Cola Wars

Both PepsiCo and Coca-Cola are finding that colas aren't in as high demand as they once were. So the "cola wars" that raged for decades are actually becoming the "non-cola wars" between these two industry giants. Not to mention the "water wars" as Coke's Dasani brand battles Pepsi's Aquafina brand for sales and market share.

In fact, Coke recently acquired the Topo Chico mineral water brand, adding to its strength in bottled waters. Coca-Cola is also refreshing non-cola brands, like Schweppes, to rebuild awareness and encourage preference among adults. A UK marketing exec with Coca-Cola says the goal with Schweppes is to "re-establish the brand in the hearts and minds of consumers."

Pepsi's water portfolio is also receiving marketing attention, as the company shifts away from sugary/fizzy drinks. "We're on a multiyear journey to move people to healthier products, to lower-calorie options," says Pepsi's finance chief. But moving marketing attention away from traditional flagship brands like Pepsi and Mountain Dew is hurting soft-drink results.

Interestingly, Pepsi has decided to move aggressively into e-commerce activities as it sees the shifting landscape in grocery retailing. And, not surprisingly, Coca-Cola is also involved in e-commerce, seeing that consumer behavior is changing and therefore the brands that make the shopping list/restock list will be the ones ordered and delivered. In other words, understanding the evolution of the consumer buying process is vital for marketers waging the non-cola wars.

Brands Ride Along with Disney's Theme Park Expansion Plans

Walt Disney has a new theme park, Shanghai Disneyland. PepsiCo was at the opening, with a limited-edition.

PepsiCo also partnered on a branded stage inside the Shanghai park. Four years ago, Pepsi opened a special R&D center to develop products that fit the taste buds of customers in China. Working with Disney furthers PepsiCo's expansion in China.

Starbucks is another brand that sees opportunity in working with Disney. In Shanghai at the Disney Resort, Starbucks just opened what will be its busiest coffee shop in the world, with 110 baristas to serve 25 million customers yearly. Starbucks already had a presence in each of the Disney parks in Orlando, and in Disneyland California.

These are only two of the global brands that are riding along with Disney's marketing magic in its global expansion. One more brand enjoying the ride is Hasbro, which won the lucrative doll license from Mattel and now produces princess dolls and other toys based on strong Disney brand franchises like Frozen.

Crowdsourced Product Ideas = Engaged Customers

Sarah Barmak, writing in Canadian Business posted on Marketing, makes a very important point about crowdsourced product ideas.

You know, like PepsiCo's Frito-Lay "Do Us A Flavor" contest (2014 winner: Kettle Cooked Wasabi Ginger flavor) and Tim Hortons' "Duelling Donuts" vote (2014 winner: Love Reese's to Pieces, shown at right).

The contests draw lots and lots of ideas: Hortons received more than 76,000 entries.

Will these crowdsourced flavors become perennials on grocery shelves? Unlikely. They're new and they're different, which is much of the appeal.

For variety-seeing consumers, they'll be fun to try and talk about. For stores, they'll build traffic and attention. For a limited time.

The real value is in engaging customers, generating excitement, and revealing how and where customers prefer to interact and communicate with brands.

The head of PepsiCo Food Canada explains: "As we evaluated last year’s [Do Us a Flavor] program, we found that consumers want to engage on other channels as well." As a result, PepsiCo expanded voting platforms beyond Facebook to include Instagram, Twitter, even text messaging.

The more platforms, the merrier--more ways to reach out to consumers, more ways to hear from consumers, more brand awareness, more excitement.

The Green Dream Machine

Visiting Texas A&M last week, I passed one of several big blue PepsiCo Promise Dream Machines on campus--kiosks designed to encourage recycling of bottles and cans while simultaneously educating and rewarding green behavior.

The idea is that students and faculty will use this recycling kiosk and instantly see how they're helping the environment.

Plus they accumulate points that can be redeemed for stuff. And for each item recycled, Pepsi donates money to help disabled veterans.

A couple of years ago, when a Fast Company editor looked at the Dream Machine strategy, she was skeptical that the rewards (Blockbuster discounts, for example!) would really motivate behavioral change. Her idea: "What if, when you recycled a can, you got a random cash reward, up to five bucks or so?" Good point.

Sustainability is a hot topic of social media conversation, to be sure. The Dream Machine Facebook page has attracted 14,700 likes and was busy on Earth Day this year. 

Although PepsiCo has a number of sustainability initiatives underway, the Dream Machine is attracting users--so many, in fact, that PepsiCo recently donated $500,000 to the Entrepreneurship Bootcamp for Veterans with Disabilities, bringing its total contributions to $1.5 million over three years.

Smart Strategy: Segmenting Your Pricing

PepsiCo's CFO, Hugh Johnston, recently spoke to an investors' conference about the company's segmented pricing strategy. Johnston explained that PepsiCo must "meet the needs of the widening gap between value, middle, and premium consumers" while simultaneously being responsive to higher price sensitivity among all segments.

So what's PepsiCo doing? Instead of adjusting pricing across the board to account for higher costs, the company has segmented its markets by channel, consumption occasion, and consumption needs.

For example, it offers 99-cent/1.5 liter bottles for consumption at home by smaller households and offers 20-packs of cans for special occasions when people gather, such as holidays or birthdays. It also offers 99-cent/16 oz. bottles in convenience stores and gas station markets for consumers in a hurry to grab and go. And it created a 7.5 oz. can for consumers who are "light users" of carbonated soft drinks at home--a tactic that lets Pepsi charge more per ounce while adding value by helping consumers limit the amount they drink.

Meanwhile, PepsiCo's ongoing rivalry with Coca-Cola is even fiercer, with US sales of carbonated beverages stagnating and consumers not spending as freely on extras as in pre-recession days. That's why Pepsi is also kicking its promotions into high gear, on Facebook, Twitter, and Youtube.

Marketing Salt

Browsing the Penzeys spice catalog (and visiting one of its stores), it's clear that marketing salt can be a delicate balancing act. It tastes good but eating too much can have health consequences. Plus salt is quite plentiful, which means marketers have to sell the "sizzle."

Now Penzeys offers two salts. Here's what the online catalog has to say:

For years we have stayed away from selling salts. We find more excitement in blending spices (sometimes with salt) than in just packaging a product we get elsewhere. All salt is really sea salt. The salt mines are just bringing up salt that settled at the bottom of the sea many millions of years ago.

Yet people are excited about exotic salts with gourmet possibilities, so Penzeys now sells Pacific Sea Salt and Kosher Style Flake Salt.

Meanwhile, PepsiCo is creating a designer salt that adds less sodium to people's diet. By 2015, the corporate goal is to slash the amount of sodium in its salty snacks by 25%.

Today's Wall Street Journal quotes Pepsico's Indra Nooyi as saying: "We want our potato chips to be fried in the healthiest oils with the lowest salt." In other words, the marketing sizzle will be on the taste and health aspects of PepsiCo's designer salt.