Internal and external analysis of Walkers crisps

Internal and immaterial analysis of Walkers crispsThe first section of paper forget introduce the background information of PepsiCo Inc. and then followed the company mission and vision. Then PepsiCo UK Ireland division is focussinged and further narrowed down to Walkers Crisp, the nosh food overlap line of the division.The abutting section is the food market situation analyses which identify the market size and growth in UK bite food industry followed by the external analysis conducted in the form of PESTLE. Subsequently, the internal analysis of Walkers Crisps and its competitor which consist of McCoys Crisps and Pringles is conducted to highlight the competitive advantage of Walkers Crisps.Last section covers the market seg mentation targeting and emplacement of Walkers Crisps in UK with the recommendation on Walkers Crisps marketing strategy as well as its implications on the division illustrated in forecast budget.Table of content1.0 smart set Background21.1Management Overview2-31.2 Financial Situation32.0 Mission Statement42.1 Mission42.2 Vision42.3 nurse42.4 intention43.0 marketplace Situation53.1 Market Size and Growth53.2 Market Trends5-63.3 External milieu summary7-93.31 Political Environment73.32 Economic Environment73.32 Social Environment73.34Technological Environment7-83.35 Legal and Regulatory Environment83.36 Natural Environment93.4 trick out Analysis of Walkers Crisps10-113.5Competitors Situation (SWOT Analysis)12-134.0 merchandise Segmentation, Targeting, Positioning14-165.0 Marketing Objectives176.0 Marketing Strategy6.1 Product18-196.2 Promotion19-206.3 Price206.4 Place207.0 Assumptions218.0 Forecast and Implication22-23Appendix24-26Bibliography27-29Company BackgroundPepsiCo, Inc. is the world leader in convenient snacks, foods and drinkables. The corporation is founded in 1995 by Donald M. Kend altogether, President and Chief executive director Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of the cardinal companies (PepsiCo Inc., 2010). Over the course of instructions, PepsiCo, Inc. continues to make effort to growing company portfolio by expanding market in different countries which resulted nearly 200 countries atomic number 18 exchange products nether the corporation. PepsiCo is now a listed company on the Dow J wizards North America Sustainability Index and Dow Jones cosmea Sustainability Index (PepsiCo Inc, 2010).1.1 Management OverviewFigure Business Units of PepsiCoAs illustrated in Figure 1, the four important divisions of PepsiCo ar PAF, PAB, PepsiCo europium and PepsiCo Asia, in-between East Africa (AMEA). PepsiCo UK and Ireland (PUK) is classified as PepsiCo Europe division. Under the leadership of Richard Evans, President of PepsiCo UK Ireland, Walkers achieved its highest-ever market share and the brand was re-established as a British icon (PepsiCo UK Ireland).Walkers has been core brand of PUK and mainly fa bricate in unite Kingdom and Republic of Ireland. Walkers is overly the UKs favourite crisps brand which owned by Frito-Lay which its current logo a derivative of the North Ameri tin Lays logo. Currently, Walkers Crisps hold 47% share of the UK crisps market (Net Re openings International, 2010).1.2 Financial SituationIn overall, PepsiCo grew 5 % in net revenue on a constant funds basis as compared to 2008 which was upset by the unfavourable economy condition. PepsiCo American Foods dominant 48% multitude net revenue. PepsiCo American Beverages and PepsiCo Europe fell 7.5% and 2.4% respectively. However, PepsiCo Asia, Middle East Africa (AMEA) grew 9% which increase the total net revenue of the group (PepsiCo, 2009). gibe to the annual report, PepsiCo Europe snack food volume in at last year declined 1% as compared to 2008 with 6% growth. Walkers in the United Kingdom declined at a low-single-digit rate which is caused by macroeconomic challenges.Source Annual physical compo sition 20092.0 Mission Statement2.1 MissionThe mission of PepsiCo is to be the worlds premier consumers product company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity (PepsiCo Inc., 2010).2.2 VisionPepsiCos vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company (PepsiCo Inc., 2010).2.3 ValuePepsiCo stressed on the commitment of delivering sustained growth through empowered people acting responsibly and building trust (PepsiCo Inc, 2010).2.4 GoalsNon financial Goals1. To reduce piddle consumption in world(a) by 20 percent per unit of production by 2015.2. To grow juicy snack and limpid refreshment beverage market share in the top 20 markets.3. To develop a group of leaders who better understand how to work more cohesively at the global level in multidiscipline teams.Financial Goals1. To improve brand equity scores for PepsiCos 19 billion-dollar brands in top 10 markets.2. To grow savoury snack and liquid refreshment beverage market share in the top 20 markets.3. To grow the companys nutrition businesses from $10 billion to $30 billion in the next decade.3.0 Market Situation3.1 Market Size and GrowthAccording to Key Note, the UK snack foods market in terms of retail sales has a substantive of 8.4% was seen between 2008 and 2009 as manufacturers passed on steep rises in commodity exists for items such as white potatoes, sunf refuse oil and nuts. The total value of the market has tilt magnitude by 12% between 2005 and 2009 to reach 2.39bn. white potato snack gained 85% of UK snack foods market followed by other savoury snacks and snack nuts (MyCompanyPR, 2010) .3.2 Market Trend proud motivation in synthetic rubber and healthy foodsConsumers demand in safe and healthy snack food is an emerging trend. According to Report, in that location been a high proportion of consumers interested in natural and healthful food and drinks increases, so lead sales of products with naturally nutritionally rich and flavour calorie content. Manufacturers of snack foods reducing salt and fat content in their foods through the introduction of light and low-fat variants to respond to health issues. Emphasis has been placed on the use of more natural ingredients, as well as on baked, rather than fried wides (MyCompanyPR, 2010). The trend is more distinct when UK government has imposed repressive food and drink nutritional labelling regulations as to control the obesity population in the country. world(prenominal) media influence consumers choiceConsumers buying behaviour change in a way of becoming active information seeker on the food nutritional and cal orie content before purchase decision is made. The availability of Internet allows consumers have greater access to products information around the world. Thus, more and more snack manufacturers share their product nutritional label in their prescribed web posts for consumers references.Consumers embraced estimable productOn the other hand, more people are inspired to buy food that has minimal impact on the environment. This shows that consumers product military rank work more than just the tastiness or quality but take consideration of the food products packaging and manufacturing process. on that pointfore major marketers and retailers are progressively tapping into this trend by offering more ethical products, upping their corporate responsibility efforts through energy-efficient green facilities and sustainable business practices, and increasing their associated cause-related marketing efforts (Packaged Facts, 2010).According to Mintels Global New Products Database (GNPD), in between 2005 and 2010 to date, there have been 17,208 food and drink products launched in Europe that make some claim towards being ethical. Between 2005 and 2009, Mintel set a 963 per cent increase in product launches in the category, from 445 products in 2005 to 4,732 last year (Decision News Media SAS, 2010). Mintel comments thatthe key shift in the focus of ethical products from animal- well-disposed toenvironment- neighbourlyproducts is a sustainable factor for many snack manufacturer in rebuilding brands.3.3 External Environment Analysis3.31 Political EnvironmentUK practices the integration of terzetto government departments on food labelling policy which are Food Standards force (FSA), Department for Environment, Food and Rural Affairs (Defra) and Department of wellness. FSA has the responsibility for food safety aspect in nutritional labelling in Scotland, Wales and Northern Ireland. In England, Department of Health responsible for nutritional policy and Defra become responsible for country of telephone circuit labelling and various other types of food labelling non related to food safety, and food composition policies in England.3.32 Economic EnvironmentThe economy of United Kingdom is in the recovery stage after having a severe recession in 2009. The GDP growth of UK in 2010 quarter two remain unrevised from the increase of 1.2% published last month (Office for National Statistics, 2010). Consumer disposable income is medium low as the household consumption expenditure rose slightly rose by 0.7% in latest quarter. A rise in world commodity outlays for grocery product have indirectly increase food price. PepsiCo UK Walkers is in the disfavor position due to an increase in subprogram cost and engage in price war to attract more market share.3.33 Social EnvironmentObesity is the major health problem of the UK nations and healthy eating is one of the trends in food and drink sectors in UK. Consumers actively scrutinize the ingredients and nut ritional labelling as a way to choose the right snack foods. PUK Walkers Brands respond to the change of consumer preference toward healthy snack by using Sun Seed oils to parry their crisps in order to reduce saturated fat content of the crisps. Walkers also provide a front-of-pack Guideline Daily Amount (GDA) label to inform consumers nearly the amount of energy and key nutrients provided in a portion of the product, and the contribution they make to the GDA for that nutrient (PepsiCo UK Ireland, 2010).3.34 Technological EnvironmentAccording to ITU, 82.5% of the population in UK are Internet user. Most popular sites visit overall among UK Web user are Google, YouTube and social network visits have climbed from about 10% of all UK site visits to 11.88% of the total (eMarketer Inc., 2009). PUK Walkers Crisps has adapted to the surfing trends and connect consumers through social network. Last year, Walkers Crisps launched a Do us a Flavour, Pick us a master campaign which uses el ectronic vote via mobile,Facebookor email was successful to capture the heart of the nation inviting the public to create the next great flavour of Walkers Crisps (Enzo Annunziata, 2009). courseUsersPopulation% Pop.Usage Source200015,400,00058,789,19426.2 %ITU200535,807,92959,889,40759.8 %Nielsen Net//Ratings200738,512,83760,363,60263.8 %Nielsen//NR200948,755,00061,113,20579.8 %Nielsen Online201051,442,10062,348,47782.5 %ITUSource http//www.internetworldstats.com/eu/uk.htmBesides snack manufacturers start to embrace green technology on their production. PUK adapted to the change by upgrading Walkers brands with eco- friendly packaging by using starch derived from potato peelings to make chips bag, thus helping save on costs by cycle potato by-products (TFTS Technology, 2010).3.35 Legal Regulatory EnvironmentUK government has been imposing restrictive regulatory pressure on food safety. The Food Safety Act 1990 is one of the main food laws in UK by preventing food business from re ndering food injurious to healthy (Section 7) and selling to the purchasers prejudice any food which is not of the nature or substance or quality demanded by the purchaser (Section 14). Food companies that offence the Section 7 or 14 will be penalized with fine up to 5,000 per offence or a prison sentence of up to six months (Food Standard Agency, 2010). The Food Hygiene (England) Regulations 2006 is the food hygiene rules for all food businesses, applying effective and proportionate controls throughout the food chain, from primary production to sale or supply to the food consumer (Food Standard Agency, 2010).3.36 Natural EnvironmentAccording to Report of Department of Food and Rural Affairs (DEFRA), UK environment is improving as the serious incidents affecting water, air and land are dropping from year 2002 to 2008. However, climate change like drought has a huge impact in food production. PepsiCo UK Ireland has taken initiative on reducing the carbon track in their manufacturin g, distribution and packaging processes, and those of their suppliers. They switching to 100% British potatoes to lower food miles, reusing waste oil in biodiesel in their trucks as well as practice light-weighting of packaging. As a result they achieved a 7% reduction of Walkers carbon footprint between 2007 and 2009 (CIB, 2010).Source http//www.defra.gov.uk/evidence/statistics/environment/inlwater/kf/iwkf11.htm3.4 SWOT Analysis of PepsiCo UK (Walkers Brand)StrengthUK market leader in crispsExperienced management teams and board of directors.Strong manufacturing and distribution systemProvide a variety of crisps flavours using acquainted(predicate) and natural ingredientsStrong financial support from PepsiCo Inc.Launch the first Carbon Reduction LabelimpuissanceesWalkers brands sales declinedInaccuracy in product nutritional labellingCommodity price is inconsistent.OpportunityIncreasing consumption of snackEating healthy snack is a trendHigh demand in environmental friendly polis hed food as in packagingThreatSnack viewed as unhealthy productIntense CompetitionWater stress and crop mischance in functionVolatile in foreign exchange rateStrengthPepsiCo UKs (PUK) favour internally are its strengths of an experienced managements team and board of directors which pose a clear direction of the selling strategy of Walkers Crisps. Besides, PUK and Walkers actively engage with carbon emissions reduction from its supply chain to packaging has scored the company a good reputation in the effort of preserving environments. Walkers brand uses healthy oil to fry or baked the crisps which suit consumers demand of healthy snack food. Walkers brand also gain competitive advantage of being the first product that launched Carbon Reduction label which other competitors could have takes measure to imitate in future.WeaknessThe weakness of PUK is the sales volume of Walkers crisps is decreasing attribute to the consumers negative perception of snack food. Walkers brand crisps have been engage with a number of problem and care about inaccuracy in nutritional label. In particularly, Walkers claimed their flavour is suitable for Coeliacs but not entirely gluten free (contains barley malt). Once consumers find the product labelling is misleading, they would not repurchase the item as it indicated the product is unsafe to consume. Nevertheless, the increase in commodity prices due to the disruption of unfavourable climate imposes high production cost to the company.Opportunity and ThreatFavourable external factors include the rising demands of snack, food processing technological breakthrough in packaging which addressing the consumers demand of environmental friendly product which start practising by competitors. Main threat of PUK is disruption of production due to adverse climate such as water stress will increase the crop failure. PUK Walkers crisps face intense competition from both direct and indirect competitors which would adversely affect its curren t market share in UK snack food industry. United Biscuit Ltd and Procter Gamble Company are the direct competitors of PUK whereas the indirect product competitors are Kraft Food, Nestle and Kellogg.3.5 Competitors Brand Situation (SWOT Analysis)The main competitors of Walkers Crisps are McCoys Crisps and Pringles. The table below shows the SWOT analysis of these companies.Competitors BrandsMcCoys CrispsPringlesManufacturerUnited Biscuit Ltd1The Procter Gamble CompanyCountry of OriginUnited KingdomUnited StatesMarket Shares29%21%StrengthDominance the young male market e.g. Slogan the original and best crisp designed specifically for men and their distinctive tastes.2Special flavours as compared to other e.g. curry flavoursConsumers can control the proportion of salt and addictives in their snackStrong financial support from the groupWide manufacturing facilitiesApproach different group of consumers from children to adults Slogan Once You Pop, The Fun Doesnt StopUnique canister pack aging3and sealable lidDifferentiation on crisps build a hyperbolic parabolic saddle shapeStrong financial support form groupWeaknessSalty and FatteningFail to approaching female and children marketOrganisation less focus on the brandInconsistency in campaign effort especially in social network.higher(prenominal) price as compared to other normal potato productOpportunityIncreasing consumption of snackHigh demand in environmental friendly processed food as in packaging4Demands for exotic flavours snack is still highAble to approach different group of consumersProduce tender flavoursThreatMarket share widen by other non-potato snack productMarket share widen by other non-potato snack rivalrous snack market climateAddiction of productEngage in negative food issues HVP Salmonella recalls5*the calculation of market share has included potato crisps, snack, and nuts.4.0 Marketing Segmentation, Targeting and PositioningSegment baseChildrenYouthAdultsDemographicAgeIncomeOccupationFamily l ife cycleBelow 12Parents allowanceStudentKids13-24Below 2000Students, Part-timersSingle, couples25 44Above 2000Self-employed, Full-timers, ProfessionalSingle, couples, marriedGeographicCountryRegionsUnited KingdomScotland, North Ireland, MidlandsPsychographicSocial classLifestyleMiddle, HighLeisureMiddle, HighLeisure, Fast-movingLow, Middle, HighFast-moving, convenient, less constraintBehaviouralUsage rateUser statusMediumRegularHeavyRegularMediumRegularCrisps and savoury snack consumption by age group and genderGenderAge Group2-1011-1819-3435-4950-64MalesMean1922181916Median1818131313% consumers7987563722FemalesMean2023171313Median181912911% consumers8684534526Modified source Low income diet and nutrition survey by food standard postPercentage of crisps and savoury snack consumption according to country / regionGenderCountry / regionEnglandScotlandWalesNorthCentral /MidlandsSouthAllEnglandMen (%)304528334132Females (%)324236364029Modified source Low income diet and nutrition surv ey by food standard agencyTargeted groupsThe primary targeted is the youth which is from 13 year old to 24 year old. Low income diet and nutrition survey by Food Standard Agency reveal that 79% male and 86% female of this group consumed crisps and savoury snack. Older children and teens can be manipulated by the strong emotive messages in advertisements.The lowly targeted group is adult between the ages of 25 and 44. This group are medium snack consumers which has less budget constraints as compared to youth group. The frequent user of snack is working adult living in a fast moving lifestyle. Convenient snack become the instant meals for working adult who has less time on cooking their own meals.MarVariety of flavoursFattyHomogenous flavoursHealthyWalker CrispsPringles ChipsMcCoys CrispsKettle ChipsDoritosket Positioning of Walkers CrispsFigure Perceptual map of Walker CrispsWalkers Crisps is benefited in the soul that positioned itself to be a healthy crisps which provides variet y of flavours. Figure 2 shows that Walkers Crisps closest competitor is in house brand Doritos, and other competitors brands like Pringles Chips and Kettle Chips are far below its because consumers perceive them as fattening and homogenous in term of flavours. In term of crisps flavour, McCoys Crisps is the closest competitor of Walkers attributed to its uniqueness of crisps flavours which keep or so innovative consumers buying on it.5.0 Marketing Objectives (SMART)To increase the market share of Walkers Crisps in UK market.To increase the sales volume of Walker sunbaked by 30% from 2010 to 2012.Walkers to remove all artificial flavour enhancers, colours and preservatives, by 2012 (PUK Health Report).50% of savoury snacks to be baked, or include positive nutrition*, by 2015.Increase availability of Walkers adust by 25% by 2012 for consumers on-the-go.Trial marketing campaigns to transition consumers who have high per-capita consumption of savoury snacks to healthier alternatives, from 2010 (PUK Health Report).6.0 Marketing Strategy6.1 Product StrategyAs discussed earlier in market situation analysis, consumers healthy eating demands are the key focus of PepsiCo UK in snack foods industry. PUK is recommended to remain focus its competitive advantage on producing healthful snack with healthy oil with eco-friendly packaging. Out of the five product extension under Walkers brands as shown in Table 1, PUK should undertake brand building of Walkers Baked because its contain less than 70% fat content which believe to meet consumers demand of healthy snack food.Table Walkers Brands CrispsProductProduct DescriptionFlavoursWalkers CrispsSource http//walkers.co.uk/?redirect=null/our-rangePotato crisps that cooked in Sun seed Oil which contained lower saturated fat.Ready salted, Cheese Onion, Prawn Cocktail, Salt Vinegar, Roast Chicken, Smoky Bacon, BBQ Rib, Steak Onion, Marmite, Tomato Ketchup, Pickled Onion, Worcester SauceWalkers LightSource http//walkers.co.uk/? redirect=null/our-range/walkers-lightsPotato crisps that is deliciously light, 33% less fat than ordinary crisps and under 115 calories.Cheese Onion, Sea Salt Cracked Black Pepper, Simply Salted, Sour rake ChiveWalkers MaxSource http//walkers.co.uk/?redirect=null/our-range/walkers-maxDeep ridge potato crisp, which gives more crunch and fuller flavour.Chargrilled Steak, Cheese Onion, Paprika, CheeseburgerWalkers BakedSource http//www.walkers-baked.co.uk/Crunchy potato crisp that oven baked twice and contained 70% less fat than other Walkers crisp.Mango Chilli, Cheese Onion, Bacon Cheddar, Sour Cream Chive, Ready Salted, Salt VinegarWalkers otiose CrunchySource http//walkers.co.uk/?redirect=null/our-range/walkers-extra-crunchyPotato crisp that sliced thicker, cooked little longer and crunchier than regular Walkers.Simply Salted, Salt Malt Vinegar, Cheddar Sour Cream, engaging Chilli Chicken, Flame Grilled Steakhttp//www.scholieren.com/werkstukken/245486.2 Promotion Strate gyKey promotion programs that PepsiCo UK is recommended is featuring in sponsorship of home event (treasure hunt), collaborative promotion with pics and social network advertising.Sponsorship of Walkers Baked Treasure HuntsPepsiCo UK will be sponsoring a charity event named Walkers Baked Treasure Hunt which participants are encouraged to have minimum purchase of two packages of Walkers Baked. The group will also donate 1% of the revenue in each purchases of Walkers Baked to the Carbon Trust Fund. The event is intended to promote the world-shattering of human role on preserving the Earth by reducing the carbon emission. Besides, it could facilitate sales of Walkers Bakes and re-emphasize the environmental friendly brand image of Walkers. cooperative promotion with cinemaPeople tend to associated snack food with entertainments like watching movie. Therefore, PepsiCo UK should made strategic partnership with local cinemas like Cineplex, to enable the cinema to sells the Walkers brand crisps to the ongoing audiences. In addition, Cineplex can work closely with Walker Crisps through screening the brands commercial and collaborate with movies freebies giving away promotion.Social meshing AdvertisingWalkers Baked Fan Page will be set up as an arena to connect fans about the product. By recruiting fan can increase the popularity of Walkers Baked and fans will be constantly updated with the incoming events like Walkers Baked Treasure Hunt and other seasonal promotions. Past events images will be uploaded to reconnect the existing fans.6.3 Price StrategyPricing of Walkers Baked vary according to place and size of the product. Pricing in petrol station and convenience gunstock are fixed whereas the pricing of retail is varying depending on the special occasion (e.g. Easter Day) and competitors brand pricing. The price strategy of undertaken by Walker Baked includes psychological pricing which priced at 1.99 instead of 2 and competitors based pricing.6.4 Place Strateg yWalkers Baked crisps will be mass distributed in most of the shops in petrol kiosk such as Shell and BP. Walkers brands snack vending machine in entertainment parks such as bowling nerve centre and cinema as a way to increase consumers exposure to the product. Besides, Walkers Baked crisps will be placed at the middle condola or shelve in hypermarket like Asda, Tesco and other convenient shops because consumers can pay more attention to products put at middle shelves as it is reach on hand easily.7.0 AssumptionsThere will be no large fluctuation are made in the market. The company mitigates the exchange rate fluctuation through buying and selling forward in principal currencies of activity and aligning currency of cost with the currency of sales.The financial data of PepsiCo UK and Ireland is assumed to be included in operation review of PepsiCo Europe in PepsiCo Annual Report 2009.Sales and operating profit PepsiCo UK Ireland is assumed to be the net revenue and operating profit of PepsiCo Europe Division respectively.Operating expenses in year 2009 is assumed to be 7% of the total sales.8.0 Forecast and ImplicationForecast Budget of PepsiCo Europe Division from 2009 -2012 stratum2009201020112012$m$m$m$mForecast Sales6727700077008470Cost of Sales5795595064687030Percent86%85%84%83%Operating clear932105012321440Percent14%15%16%17%Operating expenses471420385339Percent7%6%5%4%Profit4616308471101Percent7%9%11%13%With the stimulation of mar