Take The Pepsi Challenge

31 May 2012|broomec

Combining the Right Ingredients for Growth.

The decision to change the strategic direction of the company to find new growth streams is not one that’s taken lightly.  But it is a decision which CEO’s like Indra Nooyi of PepsiCo are faced with making several times in their careers.  Which is probably why so many CEO’s feature in Time Magazine’s “100 Most Influential People in the World”.

Such game-changing decisions are backed up with intelligence and a cloudless clarity on which direction to take and what decision will reap the best return.

 

“Consumers don’t split occasions into beverage and snack occasions. Why do we?”  Indra Nooyi, CEO PepsiCo.

 

Good point.

Sometimes we marketers get lost in data, needstates and occasions, and can forget that consumers are just real people who are just like us. We structure our businesses in a way we would never think of arranging our kitchen cupboards or choosing what to have for lunch. Indra Nooyi had the foresight to see that the PepsiCo business would be more efficient and could open up new growth if the beverages and snacks divisions could work more closely together.

We’ve worked with PepsiCo for years helping them to get to know their consumers better, to fine tune the positioning of their brands and to find gaps in the market for new snack or drink innovations like Walkers Sensations and Tropicana. But combining all the snacks and drinks brands into one huge segmentation study that would work across all their markets was a seriously big challenge.  In fact, PepsiCo called the project the Power of One, which gives an idea of where the bar was set.

PepsiCo didn’t only want to find ways for the businesses to work better together in terms of innovations and routes to market.  They also wanted to find out how their products were being consumed and what with; how they complemented each other; how they didn’t and how they ranked versus the competition.  So we did what we do best. We ran one of our “6W’s” (Who, What, Where, When, Why & Why Not) market mapping studies.

Globally we interviewed tens of thousands of people (40,000 to be precise) about the hundreds of thousands of occasions (500,000+ actually) when they consumed something.   A world-wide Added Value team worked together across markets to support the PepsiCo global team in finding out what people wanted in 28 countries, across thousands of brands which make up 90% of their value sales. Together the team were tasked with creating an inspiring, manageable model that all employees and suppliers could connect with and use. And that would provide clear direction for the business.

A straight stats solution always implied that food and beverages were completely different – they’re opposites. One fills you up and one hydrates you. But that felt a bit too simple. Where was the common ground? The answer was actually based in something we’re all familiar with: Maslow’s hierarchy of needs, the most basic of which deals with our hunger or thirst. But we had to go deeper to understand consumers’ desires, led by current trends like Health & Wellbeing and Enhancing the Moment.  And we developed a model which scoped out all the motivations consumers have, when reaching for a snack or drink.

The multi-layered model is complex, but simple to navigate.  And more importantly, it helps unearth where the next opportunities lie. So far we’ve created growth strategies for Lays and Lipton Ice Tea and are working on how beverage and snacks can combine to make the consumption moment perfect.

Above this, we’ve helped PepsiCo become experts in people – how real, every day people like you and me relate to the products in their categories. And we learned a few things ourselves along the way. The client was pleased too.

“For the first time ever in the history of PepsiCo, we have a common language to talk about the landscape, the consumer, our business, and our growth opportunities. It’s the deceptively simple and intuitive nature of the model, that’s galvanised this 60 plus billion dollar organisation. (And) it’s the clarity, not only around the insight but how you action against the insight, that really sets this piece of work apart from all others.” John Livanos Global Insights, PepsiCo.

Pepsi Co’s challenge was vast and business-changing.  But not all growth decisions require this level of scope. The trick is making the right ones.  The ones that will make a big difference to the future of your brand.

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If you’d like to chat to us about how we can help you, drop us a line at enquiries@added-value.com.

 

(image source: multimedia.pepsico.com)

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