Coca-Cola and PepsiCo listed in NYSE and NASDAQ respectively, both two beverages gains diversified into segments other than carbonated soft drinks by selling juices, water, sports drinks, iced coffee, snacks, and other beverages.

 
CONTENTS
1       Introduction. 2
2       Project Framework. 2
3       Problem Statement and Project Justification. 2
Problem Statement. 2
To improve the revenue by revisiting marketing strategy. 2
Project Justification: 2
To improve the revenue by revisiting marketing strategy. 2
4       Project goals and activities. 2
5       Project Management Outlines. 3
6       Budgeting.. 3
7       Monitoring and Evaluation Plan. 3
8       Conclusion. 3
 
 
 
 

1      Introduction

Coca-Cola and PepsiCo listed in NYSE and NASDAQ respectively, both two beverages gains diversified into segments other than carbonated soft drinks by selling juices, water, sports drinks, iced coffee, snacks, and other beverages.
 
It been understood that  PepsiCo has been capitalize the market on its diverse offerings in a much better way, which has helped the company to consistently record revenues much higher than that of Coke. In the year of 2018 Pepsi reported revenues of $64.7 billion as against $31.9 billion by Coca-cola, when Coke management dig around the revenue analysis and their marketing strategy, Coca-cola following the traditional marketing approach advertisements on print media, radio, television. A major part of its advertising expense has historically been directed towards its bottling operations, Pepsi has predominantly focus on catering to the health-conscious audience with most of its marketing budget being reserved for health snacks, sports drinks and non-carbonated beverages by digital marketing which significantly reduces their marketing budget
Hence Coca cola management to revisit their marketing strategy, an improvement on pushing healthy products, ready-to-make tea/coffee and non-carbonated beverages would provide a tough competition to PepsiCo in the segment. In addition to that Coca cola could emphasize on digital marketing with tie-ups with e-commerce companies and also enhancing its own online presence with its app, which could help the company reach a larger audience at a much lower cost
Coca-Cola’s marketing spend ($5.8 billion or 18.3% of revenue in FY 2018) is still much higher compared to PepsiCo’s ($4.2 billion or 6.5% of revenue in FY 2018). Coca-Cola decreases its advertising and marketing expenditure over the next two years. . Additionally, their future strategy could increase revenue by 1.5%-2.0% during this period, as against a revenue decline over the last 3 years. Assuming that PepsiCo continues with its current, highly effective strategy, Coca-Cola would be able to significantly reduce its gap with PepsiCo with a projected A&M spending of $5 billion in 2020, as against PEP’s estimated expense of $4.3 billion
 
 

2     Project Framework

 
Coca Cola current Marketing campaign
 

 

3    Problem Statement and Project Justification

Problem Statement

ü  Increase Coca cola Revenue and Profitability by Slashing Advertisement in the next two years

 

Project Justification:

Coca-Cola’s margins are higher than PepsiCo’s due to refranchising of its low-margin bottling business. However, with the expected reversal of revenue trend and decline in costs with a change in marketing strategy, coca cola net income margin is expected to increase from 20.2% in 2018 to 21% and 22% in 2019 and 2020, respectively, much higher compared to Pepsi’s margin which is likely to hover around 8.5% to 9% over the next two years.

Along with higher margins, an increase in revenues (due to higher sales of non-carbonated products) would likely lead to a much healthier growth in EPS and stock price for Coca colas as compared to Pepsi. As per current trend, Coca cola market share has been estimated $50/ Share albeit, if Coca Kola Company manages to alter its marketing and advertising program, the expected fundamental stock value could rise to $55 in 2020. This would make a remarkable achievement to mark a CAGR of 10.4% in 2019 followed by 10.1% in 2020 over its current market price of ~$45. This potential double-digit return for two consecutive years is much more than PepsiCo’s expected CAGR of 3.3% and 4.6% in 2019 and 2020

4    Project goals and activities

 

5    Project Management Outlines

6    Budgeting

7    Monitoring and Evaluation Plan

8    Conclusion

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