Building brands needs new approach: PepsiCo ceo

24 March 2010

PURCHASE, New York: The process of building brands has changed beyond recognition, meaning advertisers must find new ways of engaging consumers, Indra Nooyi, ceo of PepsiCo, has said.

Speaking at an event for investors this week, Nooyi stated that the food and beverage giant serves 1 billion outlets globally each week, and generates $300 million in retail sales daily.

"The fact that we touch so many consumers and customers around the world, allows us to have a fairly granular understanding of what's happening on the ground with the consumer," she argued.

One trend currently observable in many areas, and particularly the US and Europe, is a heightened emphasis on the "value equation" among shoppers.

"Consumers are using coupons a lot more. They are making multiple stops in a particular shopping trip to get the best deal, and we have to vary our channel strategies very carefully," said Nooyi.

"The 'moment of truth' used to be on the shelf ... Now the 'moment of truth' is shifting to the home, because the consumer is planning what they are going to buy before they leave home."

Effectively connecting with this audience has also become considerably more complicated as media usage habits fragment.

"The world of brand-building is not the same as it was ... We are seeing a tremendous fragmentation of media. The days when you used celebrities exclusively through TV is a thing of the past," said Nooyi.

More specifically, channels such as the web are playing an increasingly vital role in the marketing strategies of most major advertisers.

"You've got to reach the consumer through multiple methods. Through digital. Through viral networks. You've got to reach them through newspapers. Through TV," added Nooyi.

"You've got to deploy every possible media that you can lay your hands on … The new brand-building model has to encompass an extremely rich mix of items we have to deploy to talk to the consumer."

At present, PepsiCo owns 19 brands which post at least $1bn in annual revenues – including its trademark cola, Cheetos, Lay's and Aquafina – up from just six in 1990 and 11 in 2000.

"Each of these brands has great brand equity, they are trusted by consumers, they are much loved," said Nooyi.

Currently, 70% of its revenues are attributable to developed nations, with emerging economies on 30%, but this latter figure is set to improve going forward.

"Many consumers in emerging and developing markets also want products that celebrate local tastes and local heritage ... It's critically important we incorporate those into our products," said Nooyi.

In response, PepsiCo has launched new innovations such as Nimbooz lemon drink in India, and offerings based on traditional medicines in China.

The US conglomerate has also outlined its intention to improve the returns derived from its health and wellness operations.

One way of achieving this aim will be producing more natural goods, particularly in emerging markets, where consumers are "not enamoured" with sweeteners and high-fructose corn syrup.

"In every country ... we have programmes to transform the portfolio from 'fun for you' to 'better for you' as quickly as possible and as much good for you products to the portfolio," Nooyi said.

Other target demographics are Hispanic consumers in the US, the 1.4 billion "boomers" worldwide, as well as grandparents and moms, who act as the "gatekeepers" when it comes to purchase decisions.

Data sourced from PepsiCo; additional content by Warc staff