Scenario Background Company: Pepsi Pepsi’s Product Portfolio Fun for you Better

Question

Scenario Background

Company:

Pepsi

Pepsi’s Product Portfolio

Fun for you

Better for you

Good for you

Pepsi’s Target Markets

Millennial

Generation X

Baby Boomer

Internal Environment

Board of Directors

Risk management director at board level

Multiple levels of corporate management

Chief risk officer at corporate management level

Multiple divisions

Multiple management levels within divisions

Executive risk manager at divisional level

Wholly owned subsidiaries

Multiple divisions within subsidiaries

Multiple management levels within divisions

External Environment

Bottling companies

Distributors

Point of sale locations

Community relations

Strategic alliances

Competitors

Risk Environment

Appetite

High degree of risk acceptance for marketing programs

High degree of risk acceptance related to return on investment timeline

Moderate degree of risk acceptance for distinction between lines on product portfolio

Low degree of risk acceptance regarding company reputation

Tolerance

High tolerance for risks related to relations with bottlers and distributors

Moderate tolerance for community relations

Low tolerance for risks related to brand image

Threshold

Defined by risk policies and procedures at the corporate and division levels

Scenario

Pepsi has concluded that continuing the Pepsi Refresh Program will, in fact, be profitable in the medium-term and is worth the investment outlined in the board’s subcommittee report. The board has directed the company executives to execute a pilot that will roll out the redesigned program for a period of 1 year. After 1 year, the board will analyze the results and make a determination on continuing, tweaking, or halting altogether the program.

The initial plan was to reduce focus on social media and focus more on traditional and sports marketing vehicles; however, the board received an industry report that shows companies are realizing increased revenue through increases in earned media value, and companies increase earned media value by combining traditional marketing vehicles with social media. Pepsi will increase focus on this one area during this 1-year pilot. The chief executive officer (CEO) assigned a program manager to implement the redesigned Pepsi Refresh Program and a project manager to focus on the combination of traditional marketing vehicles and social media.

The project manager assembled a project team with a project risk management professional (RMP) to manage project risks. The RMP will develop a project risk management plan that will integrate with theprogram risk management plan of the pilot program. The risk management plan will define procedures to identify risks throughout the phases of the project. The plan will lay out the major categories of risks associated with the project, how each category will affect the project's stakeholders, and how stakeholders will be engaged in the risk management process.

The risk management framework, detailed in the strategic plan, will serve as the foundation for the risk management plan employing corporate and division policies and procedures to manage risks to the project schedule, budget, and scope. The RMP will detail the risks to organizational assets and outline the environmental factors that the program and project managers should consider as they plan, execute, and monitor the project. Risk impacts and probability scales must show alignment with the organization’s risk appetite and tolerance and must set thresholds used to manage monitoring and response strategies. These strategies must allow for responses leveraging both external factors and relationships and internal corporate and divisional resources.

QUESTION:

From the above scenario, How should risk management be approached for the Pepsi Refresh Project.

Explanation / Answer

Leading up to the Pepsi Refresh campaign, their company had been plummeting in market share. Their main competitor and longtime product rival Coca-Cola surpassed Pepsi in both Coke and Diet Coke products. This lead to the humiliation of Pepsi in the soft drink market. Pepsi wanted their image to be more community oriented and show that they care about the public. They designed the Pepsi Refresh Project to give millions of dollars in grants to fund ideas by average citizens to help promote innovation and progress in small communities in the US.

SWOT

Strength– Pepsi is a well know corporation and has a global outreach. They have strong presence on social media sites such as Twitter and Facebook. This allows them to reach their targeted audience and get their message out effectively. Pepsi also has the funds to back this campaign. They can supply millions of dollars to the winning ideas. This can truly make a difference in the communities they provide money to.

Weaknesses- Pepsi’s Refresh campaign attracted a wide variety of organizations. This wasn’t their goal; they wanted to attract individuals with ideas instead large organizations with agendas. The whole campaign didn’t have a focus. People like simplicity and one clear goal, which Pepsi didn’t provide. It was hard for people to keep track of what Pepsi’s money was really going to. Also, the campaign didn’t directly correlate to the product, Pepsi soda. This didn’t give people incentive to purchase the product.

Opportunities– It allowed many people to get involved. It allowed people to have a say and vote over what happened in the project. It gave people a sense of importance which builds a connection between the customer and brand. Also people would see that a local project to help the community was sponsored by Pepsi. This gives more authenticity and small feel to a big brand. This makes people more prone to buy the product over a huge corporation and rival, Coca-Cola.

Threats– Coca- Cola is a constant threat to Pepsi and their rivalry is well known. Some customers have already chose Coke as their favorite product which would make this advertising futile. Also, to sponsor this campaign, Pepsi withdrew their ads from the Super Bowl. That move could seriously hurt their marketing if the Refresh project failed.

Planning

Research

Pepsi decided to go in the approach of social networks to gain information on their audience. Through Facebook, Pepsi asked buyers different questions on what had worked and not worked during the past. They did this every week for a month to find what their public image was and what they could do differently. They found that for the donations, 84% of consumers want to select their own causes and 83% said personal relevance is key (2008 Cone Cause Evolution Study). 95% of Millennials were still very optimistic about their lives- despite what was happening around them (2008 Pepsi Optimism Project). 94% percent of Americans agreed that optimism is important in creating ideas that can have a positive impact, and the best ideas come from “normal people” (66%) versus public figures (2009 Pepsi Optimism Project). Based on the public reviews from Facebook, Pepsi came up with their idea for Pepsi Refresh. Their starting idea was to create a network online and offline of people working together to help each other.

Goals

The goals of the PRP are as follows:

Objectives

Pepsi looked to be the “optimistic catalyst” that America wanted to drive people together. The PRP planned to give away $20 million in the US to fund ideas, large and small, that would create change in the community. Working with public relation firms, Edelman and Weber Shandwick, PepsiCo. worked to create a communication and voting model for the project.

Target audience

The project looked to target the Millennial generation, which includes people from ages 14 to 29. The classic media forms were not reaching this group the way they are meant to, so Pepsi looked for a new campaign platform. Research showed Pepsi that people were more interested in the ways companies were spending their revenue on marketing over using it for enacting a change.

Tactics

The campaign was launched to run alongside Obama’s first inauguration in 2009. The campaign marketed for a new era of change. Having Obama’s campaign revolve around change increased the interest in the PRP. The campaign was launched on a YouTube channel first, then moved to its own website, RefreshEverything.com.

Execution

Due to Edelman and Weber Shandwick’s professional management of the PRP, there were many successes within the campaign. The campaign was noted in a Huffington Post op-ed by Jill Beraud. Media blew up the PRP to the Super Bowl, POP, and showing the grant recipients. The microsite, RefreshEverything.com, was the prime location for posting the ideas generated by registered consumers.

Evaluation

After launching the PRP campaign, Pepsi found themselves becoming the most talked about brand during the Super Bowl without running any ads during. It was very successful in becoming a well-known campaign quickly, rising to 37% of American knowing what the PRP campaign was. Through social media the campaign was widely talked about through the skyrocketing Facebook likes and tweets. The Pepsi Refresh Project greatly surpassed media impressions goal by generating about 3 billion audience impressions in eight months. Looking through the statistics of their rising popularity and success through the Refresh campaign you would think it was a great success. In fact, during the campaign Pepsi was still falling behind Coke and Diet Coke. The campaign was flawed in many different aspects but the main reasons that this campaign failed and didn’t generate more consumption of the product was because attempting to support a variety of communal projects/organizations led to scattered results and difficulties in voting for them. In the words of Craid Bida, “When it comes to cause if you don’t stand for something, you stand for nothing”. This really hurt Pepsi because there wasn’t one cause they were supporting just helping people support other causes. There was no direct relation to any specific issue. Even though the campaign wasn’t extremely successful Pepsi did a very good job with their use of social media and audience participation.

After analyzing the PRP, our group decided that there were multiple things that were beneficial to the success of the campaign. The use of social media to reach the large target audience enhanced the reach of the campaign. Setting up the website that was interactive also made the campaign more than a money issue; it put the power into the people’s hands so that they were in charge of which idea got the grant.

Although the power of the campaign, it began to fizzle out due to skewing of the voting. People began to vote for obscure ideas that were not obtainable with the amount of the grant. Despite the quick nature of the campaign, the PRP was effective in reaching many people and bettering the US community.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.