Holistic Marketing Management at PepsiCo Discussion questions Instructions have been attached in the Required Info.docx. Instructions Paper must follow APA

Holistic Marketing Management at PepsiCo Discussion questions Instructions have been attached in the Required Info.docx. Instructions
Paper must follow APA Style! Can use different paragraph for each
question (Identify the question by stating a title that is meaningful to
each question before writing the body). Paper must include at least 10
APA style references in the reference list. Each reference needs to have
in text citation in the paper. References can be from scholarly sources
and may include video, websites etc also. The minimum word count for
this paper is 2000 words (can be more) without including the references.
Question:
What do marketers “market”? What do you understand by
“Holistic Marketing Concept”? Do you think PepsiCo has a
thorough understanding of “Holistic Marketing Concept”? Justify
your answer with examples preferably* from the first fifteen pages
of the attached PepsiCo’s Annual Report (Attached). You must also
include theories/theoretical concepts etc. to support your examples.
You may use theories, theoretical concepts etc. from the text book,
journal articles etc. to help support your examples. Entire Annual Report
can be used as well
Rubric for Paper:
BOOK: http://socioline.ru/files/5/283/kotler_keller__marketing_management_14th_edition.pdf
Holistic Marketing Concept Information can be found in page 18 of the
book ^
GOOD
FOR
YOU
BETTER
FOR
YOU
>>>>>
FUN
FOR
YOU
// 2017 ANNUAL REPORT / PERFORMANCE WITH PURPOSE
Performing while Transforming
In 2017, PepsiCo continued to deliver strong performance and shareholder returns,
powered by our portfolio of Fun for You, Better for You and Good for You products.*
2.3%
organic revenue
growth1
$6.5B
cash returned to
shareholders through
dividends and
share repurchases
9%
core constant
currency EPS
growth1
The joint launch of MTN DEW ICE
and Doritos Blaze harnessed
the power of PepsiCo’s
complementary food and
beverage brands.
$7.3B
free cash
flow, excluding
certain items1
PepsiCo’s distinctive
black can Pepsi, with maximum
cola taste and zero sugar,
expanded to 35+ new markets
around the world in 2017.
Our selection of low- and
zero-calorie beverages and morenutritious foods continued to grow,
including Aqua Minerale Water+Juice,
new flavors of KeVita Master Brew
Kombucha, Quaker 3 Minutos
and Off the Eaten Path.
~$1B
annual savings
enabled by productivity
agenda
22.9%
core net
return on invested
capital (ROIC)1
Frito-Lay’s expanded Simply line
offers great-tasting
snacks with no artificial
flavors or colors.
1. Full-year reported net revenue increased 1.2%. Full-year reported EPS declined 23%. Full-year reported EPS results include a $2.5 billion provisional net tax expense ($1.70 per share) associated with the enactment of the
U.S. Tax Cuts and Jobs Act. Full-year cash flow from operating activities was $10 billion. Over the past five years, reported net revenue declined at a 1% compound annual growth rate and reported EPS declined an average
of 2%. Organic, core and constant currency results, free cash flow, excluding certain items, as well as ROIC and core net ROIC, are non-GAAP financial measures. Please refer to “Reconciliation of GAAP and Non-GAAP
Information” beginning on page 147 of this Annual Report for definitions and more information about these results, including a reconciliation to the most directly comparable financial measure in accordance with GAAP.
2017 PepsiCo Annual Report | 1
Indra K. Nooyi
PepsiCo Chairman
of the Board of
Directors and Chief
Executive Officer
Dear Fellow
Shareholders,
More than half a century ago, standing before an assembly
of civic leaders and citizens in Frankfurt, Germany, President
John F. Kennedy — a man who, for so many, embodied the
dawning of a new era — articulated his philosophy on progress:
“For time and the world do not stand still,” he said. “Change
is the law of life. And those who look only to the past or the
present are certain to miss the future.”
Two years later, in 1965, Frito-Lay and Pepsi-Cola merged
to form PepsiCo. And ever since, we have done our best to
live up to those words, to the idea of always looking to the
future. Throughout our history, we have continually scanned
the horizon, strived to identify new and emerging trends,
and focused on making the necessary investments and
adjustments to navigate them successfully.
That is why, decade after decade, we have consistently delivered
top-tier returns, outperformed the competition and built a
portfolio of iconic brands, while also attracting and developing
some of the best and brightest leaders in our industry.
*As we evolve our portfolio and expand our offerings, we are continually updating our definitions of our Good for You, Better for You and Fun for You categories,
and what products fit within each category. Below are 2017 definitions:
GOOD FOR YOU options help consumers meet recommended daily intakes of whole grains, vegetables, fruits, dairy, nuts and seeds with low to no amounts of
particular nutrients, such as added sugars, salt or saturated fat.
BETTER FOR YOU options can help consumers limit particular nutrients, such as added sugars, salt or saturated fat, when incorporated into a well-balanced diet.
These options include beverages with fewer or no calories. In this category, we also include products specifically formulated to provide a functional benefit,
such as addressing the performance needs of athletes.
FUN FOR YOU options are treats for consumers to enjoy responsibly.
Table of
Contents
Letter to Shareholders 01
Financial Highlights 10
PepsiCo Board of Directors 11
PepsiCo Leadership 12
PepsiCo Form 10-K 13
Reconciliation of GAAP
and Non-GAAP Information 147
Forward-Looking Statements 150
Common Stock and
Shareholder Information 151
Corporate Information 152
Our commitment to excellence and innovation served us well
once again in 2017, unlocking another year of strong operating
performance1:
• We delivered organic revenue growth of 2.3%.
• We expanded core operating margins by 45 basis points.
• We grew core constant currency EPS by 9%, exceeding the
8% goal we set at the beginning of 2017.
• We generated free cash flow, excluding certain items, of
$7.3 billion, which exceeded our goal of approximately
$7 billion we set at the beginning of 2017.
• Core net ROIC expanded by 140 basis points and now
stands at 22.9%.
• We met our goal of returning $6.5 billion in cash
to shareholders through dividends and share
repurchases combined.
Our 2017 results build
on a strong five-year
track record:
• Organic revenue grew at a 4% compound rate.
• Core operating margin expanded by 220 basis points.
• Core constant currency EPS growth averaged more than
9% annually.
I have written about some of these megatrends in past
letters to shareholders, but what sets this moment apart
is not just the perpetuation of these trends, but also their
acceleration and the amplification of their impact on our
business — and all businesses.
A recent study of how companies perform when confronted by
industry-wide disruption found that only one-third successfully
navigate change and emerge on the other side.
I am absolutely confident PepsiCo will be one of those
companies, emerging from this period stronger than before —
because we have anticipated many of these trends and
changes, and invested behind them.
The ongoing transformation of our portfolio with more
delicious, nutritious choices is helping ensure the health
of our business. The power of our retail and foodservice
partnerships offers an unmatched advantage in the
marketplace. We are differentiating ourselves with worldclass design and capturing growth in eCommerce.
Digitalization is empowering us to be more responsive to
the needs of customers and consumers, and helping drive
greater agility and efficiency, leading to greater productivity.
We are minimizing our impact on the planet while reducing
costs. And upskilling our associates is helping ensure
we have the workforce of the future, while uplifting our
communities is helping ensure we are a good neighbor in
the markets we serve.
• Core net ROIC expanded more than 750 basis points.
• Our annualized dividend per share increased by 50%.
• We returned $38 billion to shareholders through dividends
and share repurchases combined.
These are impressive results, particularly in light of all
the global megatrends impacting our business, including
macroeconomic and political volatility; the continued
rebalancing of the economic world; shifting consumer
preferences and increasing demand for more nutritious
foods and beverages; the disruption of retail; and
the emergence of niche brands capturing growth in
many markets.
One of the other powerful megatrends impacting our business,
of course, is the relentless pace of digital innovation. Internetenabled services, automation across the value chain, the rise
of Big Data, and pervasive social media–driven consumption
are fundamentally transforming how all of us live, work,
communicate, shop and do business.
Let’s take these, one at a time:
More Delicious,
Nutritious Choices
We are offering consumers a wide array of great-tasting
choices, from Fun for You, to Better for You, to Good for
You products, and leveraging the power of our distribution
system to make them available everywhere consumers
want them.
In 2017, we continued expanding our selection of low- and
zero-calorie beverages, with launches such as Aqua
Minerale Water+Juice and new flavors of KeVita Master Brew
2017 PepsiCo Annual Report 2 | 3
Portfolio
Transformation
Kombucha, while introducing Tropicana Probiotics. And our
distinctive black can Pepsi — known as Pepsi Zero Sugar or
Pepsi Max — continued to gain ground around the world.
Better for You and Good for You
products are an increasing
percentage of our total portfolio.
~38%
~50%
2006
2017
Fun for You
Better for You & Good for You
While delivering strong performance,
we continued to expand our selection of
more nutritious foods and beverages to
meet consumers’ shifting preferences and
unlock opportunities for growth.
We also introduced Quaker 3 Minutos, an affordable, wholegrain, oat-based product that delivers daily nutrition to
consumers across Latin America, and Off the Eaten Path,
a series of vegetable- and legume-based products like
Veggie Crisps, Hummus Crisps and Sweet Potato Crisps
available in the U.S. and UK. And we built on the success
of the Simply brand with new products like Simply Doritos
White Cheddar.
These are just a few of the more nutritious products we
launched in 2017, building on more than a decade of progress
transforming our portfolio. In fact, while in 2006 our Fun for
You portfolio was about 70% larger than our Good for You
and Better for You portfolios combined, by the end of 2017,
they were nearly equal in size.
Enabling this shift in our portfolio has been our long-term
investment in R&D — from product reformulation to sweetener
and ingredient discovery — that has produced foods and
beverages with fewer calories, less salt and reduced fat
without sacrificing great taste.
~$200M
Building
Powerful Brands
PepsiCo’s premium bottled
water brand LIFEWTR generated
approximately $200M in
estimated annual retail sales
in 2017, its first year. Four series
of bottles celebrated public
art, women in the arts,
fashion and arts in
education.
We continued to engage consumers with
cutting-edge design, exciting campaigns
and world-class partnerships.
SERIES
SER
ERIES
IES 1
SERIES
SERIES 2
LIFEWTR
PepsiCo’s premium bottled
water brand LIFEWTR
generated more than $200MM
in annualized retail sales in its
first year. The ‘Series 2’ bottles
celebrated female artists,
“Made For This” campaign
generating buzz with
an high school athletes
featured
“Art By A Woman” campaign
and the hard work behind
that included an interactive
their greatest moments,
art installation in New
York
underscoring
that athletes
City.
are made for these moments,
and Gatorade is made
to fuel them.
Gatorade’s
UEFA
Champions
League
PepsiCo celebrated its
second year of partnership with
UEFA Champions League, with more
than 100 markets activating across some
of PepsiCo’s biggest global brands,
including Pepsi, Lay’s and Gatorade.
SERIES
SER
ERIES
IES 3
SERIES
SERIES 4
2017 PepsiCo Annual Report 4 | 5
The strength of our partnerships in the U.S. was reflected
in Kantar Retail’s 2017 PoweRanking® survey, where, for the
second consecutive year in the 21-year history of Kantar, our
retail partners named us the #1, best-in-class manufacturer,
with the gap between #1 and #2 widening significantly since
2016. This ranking is a testament to the dedication of our
associates and the innovations we continue to bring to market,
including our Hello Goodness platform that offers consumers a
range of lower-calorie and more-nutritious options.
We were also ranked by the Advantage Report™ as the #1
food and beverage supplier in the U.S., and many of our
business units are highly ranked in markets such as China,
Thailand, Russia, the UK, Poland and Mexico.
Based on our reputation for top-tier service and world-class
innovation, we forged or extended a number of foodservice
partnerships in 2017, increasing distribution and market share.
We completed long-term renewals with YUM Brands in the U.S.
Hello Goodness vending machines,
coolers and racks, offering more
nutritious on-the-go snacks and
beverages, significantly expanded
across the U.S., with nearly 40,000
units sold into the market.
R
R
K AN TA
T
A
IL
201
7
P
O
Retail partners
scored PepsiCo
#1
Manufacturer
in Kantar Retail’s
2017 PoweRanking®
Survey
ANKING
ER
Enabled by our integrated Global Foodservice team, we are
leveraging our complementary food and beverage portfolios
to drive sales and help support our retail and foodservice
partners in the U.S. and across the world.
E
W
Unmatched
Retail and Foodservice
Partnerships
and several international markets, expanded our partnership
with Subway to China, France and Colombia, and won new
colleges and universities, including Portland State University,
the University of Kansas and University of Utah.
Differentiating
PepsiCo with Design
In 2017, our design team helped drive successful launches of
new products such as LIFEWTR, while creating meaningful,
memorable experiences for customers and consumers
at major global events, from Super Bowl LI to Milan Design
Week to the UEFA Champions League Final. Recognized
with more than 400 awards since 2012, PepsiCo’s design team
helps bolster our reputation as one of the world’s leading
corporate innovators.
New Channels
for Growth
~$1B
Our investment in digital capabilities and
eCommerce helped drive strong results in 2017,
particularly in the U.S. and China, positioning
us well for future growth.
in annualized
retail sales from
eCommerce
Exclusive
eCommerce offerings
PepsiCo’s eCommerce team
developed branded NFL gift packs
with team-themed products
to help consumers amp up their
game-watch parties.
USA
In China, one of the biggest
eCommerce markets in the
world, PepsiCo has launched
innovative snacks exclusively
for online channels, driving
revenue gains in the region.
CHINA
Breakthrough
digital engagement
PepsiCo Greater China
celebrated the 6th year of its
“Bring Happiness Home”
campaign, with a video that
generated more than
1 billion views.
2017 PepsiCo Annual Report 6 | 7
Capturing
Growth in eCommerce
Our investment in eCommerce across multiple channels
helped drive strong results in 2017, particularly in the U.S.
and China. We are leveraging Big Data and predictive
analytics to shape real-time marketing messages, dynamic
merchandising and tailored offers. And we are increasingly
collaborating with retail customers to make eCommerce a
point of differentiation for PepsiCo, earning awards for
eCommerce excellence. In fact, our eCommerce business in
2017 generated approximately $1 billion in annualized retail
sales, and we believe we are well-positioned to seize the
dynamic future of this space.
Digitalizing
PepsiCo
In the face of rapid technological innovation and accelerating
change throughout our industry, we are deploying digital
capabilities widely across the company. Frito-Lay North
America is using Big Data to help make sure consumers can
find their favorite snacks in local stores. In India, we set up a
Digital Command Center to analyze links between consumer
behavior and business results. In China, we leveraged
social media to launch the latest “Bring Happiness Home”
Chinese New Year campaign, including a 20-minute video
that generated more than 1 billion views. Our increased
commitment to digitalization in Latin America drove up our
return on investment from advertising and marketing. We
are capitalizing on the emerging capabilities of the Internet
of Things, from predicting when plant equipment will need
maintenance to reducing energy consumption. And we are just
getting started.
Enhancing
Productivity with Greater
Agility and Efficiency
In 2017, we generated approximately $1 billion in savings,
enabled by our productivity agenda. Our productivity
has been driven by a relentless continuous-improvement
mindset, focused on every aspect of our value chain. We
have refined our business model to reduce management
layers and accelerate decision-making. We have harnessed
leading-edge digital tools to increase manufacturing
throughput, curb logistics costs, and improve go-to-market
efficiency and effectiveness. And we are sustainably
reinvesting in our business, positioning ourselves to capture
tomorrow’s growth.
Minimizing Our
Environmental Impact
while Cutting Costs
We are accelerating our efforts to minimize PepsiCo’s
environmental footprint, enabling us to curb costs and
mitigate our operational impact on the communities
we serve.
In 2017, we teamed up with leading universities,
governments and innovators on projects such as developing
biodegradable film resins that meet the sustainable
flexible packaging needs of our global business — helping
advance our goal of designing 100% of our packaging to be
recyclable, compostable or biodegradable by 2025.
We also continued investing in long-term water security,
from Latin America, where we are developing innovative
solutions to help public institutions more efficiently
manage water, to the Middle East, where we are working
with the Jordanian Ministry of Water and Irrigation to
replenish water at its source. In fact, through community
programs, we returned more water than we consumed
in Jordan every year from 2013 to 2015 — more than
600 million liters annually.
Upskilling Our
Workforce and Uplifting
Communities
PepsiCo’s success has always rested on our single greatest
asset: our people. At a time of sweeping change in our
industry, we are helping associates develop the skills they need
to grow and our company needs to thrive, from enhancing our
Education Assistance Program so frontline associates can
build their skills and earn a degree in an area that advances
their careers, to expanding PepsiCo University’s course
offerings on digital trends. In 2017, our associates completed
over 1 million hours of training for the second consecutive year,
and more than 3,000 associates attended Learn Together
sessions with subject-matter experts to enhance their skills.
In 2017, we also renewed our commitment to supporting our
associates in other ways. On-site and near-site childcare
opened in Purchase and Plano — joining the childcare options
already available at or near PepsiCo locations around the
world — and we launched our Ready to Return initiative, a
10-week “boot camp” for professionals seeking to refresh their
skills after taking time off to care for a loved one.
This trend reflects the idea that, in the 21st century, being a
great company means being a good company, too. It means
focusing not only on the coming quarters, but also the coming
years, considering the level, as well as duration of returns.
At PepsiCo,…
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