1. A
Project Study Report
On
“Impact of celebrity endorsement on Brand Equity of Pepsi”
Submitted in partial fulfillment for the
Award of degree of
Master of Business Administration
Submitted By: 2011-2012 Submitted TO:
JAIDEV MEENA Jaya pareek
Year - 2nd year [IVth Sem.] Nidhi Tak
POORNIMA SCHOOL OF MANAGEMENT
ISI-2, RIICO Institutional Area, Goner Road, Sitapura, Jaipur.

2. CERTIFICATE
Poornima School of Management
This is to certify that Mr.JAIDEV MEENA student of MBA 4th semester from Poornima
school of management, Jaipur had completed its project report on the topic of “IMPACT
OF CELEBRITY ENDORSEMENT ON BRAND EQUITY OF PEPSI” under the
supervision of Ms.Jaya Pareek,Mrs Nidhi Tak .faculty member DMS PGC.
To best of my knowledge report is original and has not been copied or submitted
anywhere else. It is an independent work done by him.
Dr. Vandana Sharma
Director, PSOM

3. Declaration
Hereby I declare that the project report entitled “IMPACT OF CELEBRITY
ENDORSEMENT ON BRAND EQUITY OF PEPSI” submitted for the degree of MBA is
my original work and the project report has not formed the basis for the award of any
diploma, degree, associated ship, fellowship or similar other title. It has been not
submitted to any other university or institution for the award of any degree or diploma.
JAIDEV MEENA
MBA 2nd year 4th sem

4. Preface
Stars, who are known to shape destinies, cast an enormous influence. We‟re referring
to the powerful effect of celebrities on destinies of brands. One approving nod from a
famous face can translate into millions in brand sales. People love to live in dreams.
They worship celebrities. Celebrities may be sports stars like Sachin Tendulkar,
Mahindra Singh Dhoni,Roger Federer.Ronaldo and tiger woods‟ or Film Stars like tom
cruise, bredd pitt, Salman Khan, John Abraham. They treat them as God. . Perhaps
that‟s why the world over, companies have been using stars to endorse everything, from
food to food chains, from soft and hard drinks to health drinks, from clothes and
accessories to cars. For this they rope in these celebrities and give them whopping
amount of money. They believe that by doing this they can associate their products with
their target customers. This is called celebrity endorsement. But do this celebrity
endorsement acts as a source of brand-building and have impact over the purchasing
behavior of customers in case of automobiles? For this I decided to conduct this vary
research and objectives of my research are:
To identify the influence of celebrity endorsement on consumer buying behavior.
To study celebrity endorsement as a source of brand- for pepsi
To find which type of celebrity persona is more effective.
Secondary data used for this study are article of different authors, experts articles on
this study, magazines, market survey of pepsi, interview with distributers and Internet.
The main key elements of this study are as marketing strategies, product endorsement,
celebrity endorsement, marketing mix and advertising. Brand equity, Brand image,
Celebrities‟, Product endorsement etc.
Conclusion of this study is that Whether Celebrity endorsement has a positive or a
negative impact on the brand is a debate that is open to interpretation. But till the time
the corporate world continues to foot fancy bills of celebrity endorsers and till
consumers continue to be in awe of the stars, the party is not likely to break up and this
help companies to earn more profit and increase brand equity.

5. Acknowledgement
I express my sincere thanks to my project guide, Ms.Jaya Pareek Mrs. Nidhi Tak
madam, faculty department of management studies, for guiding me right from the
inception till the completion of the project. I sincerely acknowledge them for extending
their valuable guidance, support for literature, critical reviews of project and above all
the moral support they had provided to me with all stages of this project.
I would also like to thanks Mr. R. K. Agarwal (advisor, PGC) and Mr. Abhayjeet Singh (Asst.
dean) of college DMS, PGC for their help and cooperation throughout our project,
JAIDEV MEENA

6. EXECUTIVE SUMMARY:
The field of consumer behavior is the study of individuals, groups or organizations and
the processes they use to select, secure, use and dispose of product, services,
experiences, or ideas to satisfy needs and impacts that these processes have on the
consumer and society. And understanding the consumer behavior is the prime and
toughest task in front of every marketer. There are a lot of factors, which influence
consumer buyer behavior. This study aimed at to understand the influence of celebrity
endorsement on consumer buying behavior. Marketers pay millions of Dollars to
celebrity endorsee hoping that the stars will bring their magic to brand they endorse and
make them more appealing and successful. But all celebrity glitter is not gold.
Celebrity sources may enhance attitude change for a variety of reasons. They may
attract more attention to the advertisement than would non-celebrities or in many cases,
they may be viewed as more credible than non-celebrities. Third, consumers may
identify with or desire to emulate the celebrity. Finally, consumer may associate known
characteristics of the celebrity with attributes of the product that coincide with their own
needs or desire. The effectiveness of using a celebrity to endorse a firm's product can
generally be improved by matching the image of the celebrity with the personality of the
product and the actual or desired serf concept of the target market.
What therefore seems relevant by the study is that, yes, definitely celebrity endorsee
influence consumer buying behavior and brand building but while using celebrity
endorsee, marketer has to take care of all the aspect that whether they brought
personality and image of celebrity matches or not, whether celebrity endorsee has deep
penetration among the masses or not, whether he is considered as credible source or
not etc.

7. INDEX
S.NO CONTENT PAGE NO.
1. INTRODUCTION TO INDUSTRY 1-19
2. INTRODUCTION TO ORGANIZATION 20-50
3 REVIEW OF LITERATURE 51-75
4 76-79
RESEARCH METHODOLOGY
4.1. Title of study 76
4.2. Duration of the project 76
4.3. Objective of the project 77
4.4. Type of research 77-78
4.5. Sample size , method of selecting sample 78
4.6. Scope of study 78
5 Analysis and interpretation 79
6 Facts and finding 81-95
7 Limitation of study
8 SWOT analysis 99-100
9 Conclusion 99-100
8. Recommendation/ suggestion 101
9. Appendix 102-103
10. Bibliography 104-106

8. Introduction to the industry:
Background:
The industry began in mid 1900‟s with leading companies like Pepsi Co. and Coca
Cola controlling the beverage business sector with sweetened soft drinks and
carbonated soda water. American audiences attached excitement and convenience
to these popular drinks, and a variety of soft drink brands began to originate such as
Dr.Pepper, Sprite, etc. The beverage industry has undergone rapid expansion over
the last decade.
The only obstacle for these beverage companies was the high number of calories
and sugar levels their drinks contained; a drawback for health-conscious consumers.
A soft drink (also called pop, soda, coke, soda pop, fizzy drink, or carbonated
beverage) is a non-alcoholic beverage that typically contains carbonated water, a
sweetening agent, and a flavoring agent. The sweetening agent may be sugar, high-
fructose corn syrup, or a sugar substitute (in the case of diet drinks). A soft drink may
also contain caffeine or juice. Products such as energy drinks, Kool-Aid, and pure juice
are not considered to be soft drinks. Other beverages not considered to be soft drinks
are hot chocolate,hot,tea,coffee,milk,milkshakes,and schooled.
Small amounts of alcohol may be present in a soft drink, but the alcohol content must
be less than 0.5% of the total volume. If the drink is to be considered non-alcoholic.
Widely sold soft drink flavors are cola, lemon-lime, root beer, orange, grape, vanilla,
ginger ale, fruit punch, sparkling lemonade, squash, and water. Soft drinks may be
served chilled or at room temperature. They are rarely heated.
The first marketed soft drinks (non-carbonated) in the Western world appeared in the
17th century. They were made from water and lemon juice sweetened with honey. In
1676, the Companies des Lemonades of Paris was granted a monopoly for the sale
of lemonade soft drinks. Vendors carried tanks of lemonade on their backs and
dispensed cups of the soft drink to thirsty Parisians.
1

9. Carbonated drinks made without any alcohol are called Soft Drinks. They are also
known as Coke/Soda/Pop etc. Hot chocolate, teas, coffee etc are usually excluded
from this classification. They are sold in a variety of sizes and manner. In the U.S.,
they are often sold in two-liter bottles, one liter plastic bottles, 24 and 20 US fluid
ounce bottles and in 12 US fluid ounce cans. Packaging is also available in many
different quantities
In Japan, 1.5 liter bottles, 500 mL and 350 mL bottles and cans are sold. At times,
the fizzy soft drinks are served as fountain drinks in which carbonation is added to a
concentrate immediately prior to serving. In Europe, plastic and glass bottles of sizes
2, 1.5, 1, 0.5, 0.35, 0.33 liters, aluminum cans of 0.33, 0.35, and 0.25 liters are
popular. Almost all soft drinks are made of refined sugars. Hence, they are often
criticized for causing obesity and other health related problems. A link to problems of
sleep, bones, and teeth has been proven by many studies.
Market Structure:
The soft drink industry is a global marketing phenomenon. In essence, it is simply a
blended water drink with sweeteners, flavors and additives. The success in
advertising and marketing this product lies in convincing billions of consumers to
drink these instead of straight water or other less expensing alternatives. The brand
recognition of this industry is extraordinarily high. In 2002, world sales exceeded US
$193 billion. In contrast, fruit sales were just US $69 billion. Global consumption is
currently in excess of 327 billion liters.
Pepsi and Coca-Cola, between them, hold the dominant share of the world market.
Cadbury Schweppes follows a close third. Coca-Cola has approximately half of the
world market share and sells 4 out of the top 5 soft drink brands in the world. Coca
Cola sales for 2006 reached US $24.1 billion. It has profit margins of 20% and a
2

10. market capitalization of US $130 billion. Pepsi sales stood at US $36 billion but this
also includes snacks and other foods.
Some analysts view the definition of soft drinks incomplete and wish to add ready to
drinks also, to this industry. If they are added as well, these would add another 1.3
billion servings to 50 billion servings for these drinks.
Industry Definitions :
 Fizzy drinks: drinks injected with carbon dioxide at high pressure are called Fizzy
drinks.
 Floats: soft drink with scoops of ice-cream
 Soda: another term for soft drink
 Pop: another U.S. term for soft drinks
 Coke: a derivative and brand name of Coca-Cola, often used as a label for soft drinks
in general.
Market Metrics:
Soft drink market size for FY00 was around 270mn cases (6480mn bottles). The
market witnessed 5- 6% growth in the early„90s. Presently the market growth has
growth rate of 7- 8% per annum compared to 22% growth rate in the previous year.
The market size for FY01 is expected to be 7000mn bottles.
Soft Drink Production area
The market preference is highly regional based. While cola drinks have main markets
in metro cities and northern states of UP, Punjab, Haryana etc. Orange flavored
drinks are popular in southern states. Sodas too are sold largely in southern states
besides sale through bars. Western markets have preference towards mango
flavored drinks. Diet coke presently constitutes just 0.7% of the total carbonated
beverage market.
3

11. Growth promotional activities
The government has adopted liberalized policies for the soft drink trade to give the
industry a boast and promote the Indian brands internationally. Although the import
and manufacture of international brands like Pepsi and Coke is enhanced in India the
local brands are being stabilized by advertisements, good quality and low cost.
U.S. Market
The U.S. is closely linked with soft drinks with Coca Cola being an American in much
of the world. About 500 soft drinks companies operate in the U.S. Annual sales of
refreshments total approximately US $88 billion, of which three quarters are soft drink
sales. There are about 500 soft drink bottlers in the United States.
Soft drink companies manufacture and sell beverage syrups which are essentially
bases to bottling operators that then add sweeteners and/or carbonated water to
produce the final product. Independent bottlers work under license with various soft
drink manufacturers and are generally allotted specific territories to serve.
Manufacturers not only provide the bottlers with syrups and bases, but also often
provide other business services such as product quality control, marketing,
advertising, and engineering as well as financial and personnel training.
In return, the bottlers furnish the required capital investment for land, buildings,
machinery, equipment, trucks, bottles and cases. As noted previously, the soft drink
industry distributes and sells its product in two primary forms: packaged and fountain
service. In fountain service, the soft drink product is dispensed and served in cups in
restaurant or other retail oriented location with a food service station.
Coke, Pepsi and Cadbury Schweppes control over 91% of the U.S. market share.
They employ about 63,000 people in the U.S.
4

12. World Market:
Global sales of soft drinks exceed 327 billion liters and are valued at more than US
$393 billion annually. North America, Europe and Japan are the most mature markets
for global soft drinks. Coco Cola and PepsiCo Inc have significant control over the
global soft drinks market and both have similar business organizations and
processes worldwide. The industry includes other than the soft drink manufactures
themselves, the bottlers and various raw material suppliers. Suppliers of cans, plastic
and glass bottles are included in this category.
Globally, the soft drinks majors continue to face challenges. One key global trend is a
move away to healthier drinks, which may put some pressure on yearly growth in
sales of soft drinks. The push to diet beverages have been well covered by the major
producers – with sales of diet Coke and diet Pepsi still strong. A recent trend is the
rise in popularity of sports drinks. Bottled water has also experienced very strong
growth. Finally the quality of water used in the manufacture of soft drinks poses
serious issues for the industry. Major players are working on the issue as water
scarcity becomes a global issue.
5

13. Industry Players:
The Coca-Cola Company
Coca Cola is the number one brand globally and has been for over 40 years It is sold
in virtually every country of the world. The successful expansion that began in World
War II has continued unabated up to this date. Now, the company has more than 400
brands in its portfolio. Tab, produced in 1963 was one of the company‟s landmark
marketing successes.
PepsiCo Inc.
Pepsi-Cola was created in 1898 in New Bern, North Carolina, by druggist Caleb D.
Brad ham. PepsiCo Inc. holds about one-third of the U.S. market and is the second
largest soft drink major in the world. It owns Frito-Lay snacks and other businesses.
Pepsi soft drinks include brands such as Pepsi, Diet Pepsi, Slice, Mountain Dew and
Mug Root Beer.
Cadbury Schweppes
Cadbury Schweppes PLC is the number three global soft drink producer. The
portfolio includes Squirt, La Casera, TriNa, Spring Valley, and Wave. It has cornered
more then 17% of the world market. Total sales exceed US $12.9 billion.
6

14. Trends and Recent Developments
Private labels are becoming more prominent. Private Labels are brands owned by
stores and retailed through them. These private label manufacturers are retailing their
brands very aggressively these days. Although, lowering of prices is an open option
for the soft drink majors, it reduces their profits. Private labelers offer heavier
discounts and sales are increasing.
In 2007, a new issue is the lack of recycling of plastic bottled water containers.
Although the trend to bottled water is high, environmentalists point out many of these
are simply filtered tap water and that the discarded bottles are causing environmental
damage. The fallout among consumers is unclear at mid-point 2007.
After nearly a year of deliberation, Cadbury has finally announced a date for the de-
merger of its US soft drinks arm, American Beverages. Although it appears to make
sense to separate this group from the company's confectionery operations, the
separation could leave Cadbury vulnerable to a takeover, which its turnaround plan
may be unable to prevent.
The de-merger, which was first announced as a possibility back in March 2007, will
now take place in May and will see the creation of Dr Pepper Snapple Group as a
separate entity with a listing on the New York Stock Exchange and its own
management team. The confectionery arm is to be renamed Cadbury plc and will be
listed in London.
7

15. Carbonated drinks:
Soft drinks displayed on supermarket shelves.
In late 18th century, scientists made important progress in replicating naturally
carbonated mineral waters. In 1767, Englishman Joseph Priestley first discovered a
method of infusing water with carbon dioxide to make carbonated water which has
3.4 mg in the drink when he suspended a bowl of distilled water above a beer vat at
a local brewery in Leeds, England.
His invention of carbonated water, (also known as soda water), is the major and
defining component of most soft drinks. Priestley found water thus treated had a
pleasant taste, and he offered it to friends as a refreshing drink. In 1772, Priestley
published a paper entitled Impregnating Water with Fixed Air in which he describes
dripping oil of vitriol (or sulfuric acid as it is now called) onto chalk to produce carbon
dioxide gas, and encouraging the gas to dissolve into an agitated bowl of water.
Another Englishman, John Mervin Nooth, improved Priestley's design and sold his
apparatus for commercial use in pharmacies. Swedish chemist Torbern Bergman
invented a generating apparatus that made carbonated water from chalk by the use
of sulfuric acid. Bergman's apparatus allowed imitation mineral water to be produced
in large amounts. Swedish chemist Jöns Jacob Berzelius started to add flavors
(spices, juices and wine) to carbonated water in the late 18th century.
8

16. Soft drink bottling industry
Over 1,500 U.S. patents were filed for either a cork, cap, or lid for the carbonated
drink bottle tops during the early days of the bottling industry. Carbonated drink
bottles are under great pressure from the gas. Inventors were trying to find the best
way to prevent the carbon dioxide or bubbles from escaping. In 1892, the "Crown
Cork Bottle Seal" was patented by William Painter, a Baltimore, Maryland machine
shop operator. It was the first very successful method of keeping the bubbles in the
bottle.
Production:
Soft drink production
Soft drinks are made by mixing dry ingredients and/or fresh ingredients (e.g. lemons,
oranges, etc.) with water. Production of soft drinks can be done at factories, or at
home.
Soft drinks can be made at home by mixing either a syrup or dry ingredients with
carbonated water. Carbonated water is made using a home carbonation system or by
dropping dry ice into water. Syrups are commercially sold by companies such as
Soda-Club.
Ingredient quality:
Of most importance is that the ingredient meets the agreed specification on all major
parameters. This is not only the functional parameter, i.e. the level of the major
constituent, but the level of impurities, the microbiological status and physical
parameters such as color, particle size, etc.
9

17. Soft drink packaging :
USsoftdrinkcontainersin2008.
8, 12, 20, 24 oz and 2L sizes are shown in a can and in glass and plastic bottles.
In the United States, soft drinks are sold in a large number of different sizes including
500 mL (16.9 U.S. fl oz), 1 liter, 1.5L, 2 liter, 3L, and in 8, 12, 14, 16, 20 and 24 U.S.
fluid ounce plastic bottles, 12 U.S. fluid ounce cans, and short eight-ounce cans.
Some Coca-Cola products can be purchased in 8 and 12 U.S. fluid ounce glass
bottles. Jones Soda and Orange Crush are sold in 16 U.S. fluid ounce (1 U.S. pint)
glass bottles.
Cans are packaged in a variety of quantities such as six packs, 12 packs and cases
of 24, and 36. With the advent of energy drinks sold in eight-fluid-ounce cans in the
U.S., some soft drinks are now sold in similarly sized cans. It is also common for
carbonated soft drinks to be served as fountain drinks in which carbonation is added
to a concentrate immediately prior to serving. Containers have deposits in a few
states.
In Europe, soft drinks are typically sold in 2, 1.5, 1-liter, 500 mL plastic or 330 mL
glass bottles; aluminum cans are traditionally sized in 330 mL, although 250 mL slim
cans have become popular since the introduction of canned energy drinks and 355
10

18. mL variants of the slim cans have been introduced by Red Bull more recently. Cans
and bottles often come in packs of six or four. Several countries have standard
recyclable packaging with a container deposit, typically ranging from € 0.15 to 0.25.
The bottles are smelted, or cleaned and refilled; cans are crushed and sold as scrap
aluminum.
In Australia, soft drinks are usually sold in 375 mL cans or glass or plastic bottles.
Bottles are usually 390 mL, 600 mL, 1.25 or 2 liter. However, 1.5 liter bottles have
more recently been used by the Coca-Cola Company. South Australia is the only
state to offer a container recycling scheme, recently having lifted the deposit from 5
cents to 10 cents. This scheme is also done in the Philippines; people usually buy
glass bottles and return them in exchange for a small amount of money.
In Canada, soft drinks are sold in 237 mL (8.3 imp fl oz) and 355 mL (12.5 imp fl oz)
aluminum cans and 591 mL (20.8 imp fl oz), 710 mL (25.0 imp fl oz), 1 L (35.2 imp
fl oz), 1.89 L (66.5 imp fl oz), and 2 L (70.4 imp fl oz) plastic bottles. The odd sizes
are due to being the metric near-equivalents to 8, 12, 16, 20, 24 and 64 U.S. fluid
ounces. This allows bottlers to use the same-sized containers as in the U.S. market.
This is an example of a wider phenomenon in North America.
Brands of more international soft drinks such as Fanta and Red Bull are more likely
to come in round-figure capacities. In India, soft drinks are available in 200 mL and
300 mL glass bottles, 250 mL and 330 mL cans, and 600 mL, 1.25 L, 1.5 L and 2 L
plastic bottles.
11

19. Producers:
In every area of the world there are major carbonated beverage producers, however
a few major North American companies are present in most of the countries of the
world, such as Pepsi and Coca Cola.
Producers by region : North America
Pepsi co.
Coca Cola
RC Cola
South America
Ajegroup: (Peruvian origin, operates in 14 countries, now headquartered in Mexico),
producers of Big Cola, Cielo (mineral water), Cifrut (fruit juice), Free Tea, Free World
Light (referred to locally as Free Light), Kola Real, Oro, Pulp (nectar), Sporade
(sports drink) and Volt (energy drink)
AmBev: (Brazil, operates in 14 countries, owned by Anheuser-Busch InBev), the
largest bottler of Pepsi Cola products outside the United States, also produces
Guarana Antarctica, Soda Limonada, Sukita, H2OH! and Guara!
Corporación José R. Lindley S.A.: (Peru), producers of Aquarius (flavored water),
Burn (energy drink), Coca-Cola, Crush, Fanta, Frugos (nectar), Inca Kola, Kola
Inglesa, Powerade (energy drink), San Luis (mineral water) and Sprite
Embotelladora Don Jorge S.A.C.: (Peru), producers of Agua Vida (mineral water),
Click(fruit drink), Isaac Kola and Perú Cola
Embotelladora Latinoamericana S.A. (ELSA): (Colombia), producers of Cyro,
Liv(mineral water), RC Cola and Ship
Pepsico Inc Sucursal Del Peru: (Peru), producers of Pepsi Cola, Seven Up, Triple
Kola, Concordia, San Carlos (mineral water), Evervess, Gatorade (sports drink) and
Adrenalina Rush (energy drink)
12

20. Europe
. Perrier
East Asia
Ramune
Australia
Bundaberg
As consumers became more health educated and aware of their nutritional intake,
large beverage companies acted quickly with the creation of the “diet”, no-calorie
soda in 1959 (Bells). The diet, or “light” soft drinks kept American audiences content
for a number of years because they offered what was thought to be a healthier
alternative to soft drinks with the same great taste. More recently, however,
consumers have become aware that even these “diet” drinks contain unnatural and
unhealthy nutritional
ingredients.
For the last decade, industry leaders have been forced to switch their focus from
sweetened soft drinks and calorie-free diet drinks to healthier, natural beverages. Health
conscious consumers have lost interest in beverages with unnatural ingredients and
have begun focusing on beverages that offer more than just hydration.
The latest trend in the beverage market is functional, healthy drinks. Industry leaders
haveintroduced vitamin-enhanced waters, sports beverages, energy drinks, and
functional beverages.
All of these beverages offer healthy alternatives to soft drinks, with the added bonus of
incorporating specificingredients targeted for different functions. Energy drinks have
high levels of caffeine and Vitamin C tokeep consumers alert and awake, while offering
different varieties such as caffeine-free and zero-sugaradded. Vitamin-enhanced waters
13

21. give consumers the same hydration as water, with added vitamins.Sports drinks and
functional beverages both work similarly to the vitamin waters, with particularvitamins,
antioxidants and other ingredients specified for athletics and other functions.
A relatively new functional beverage company is Function Drinks, located in Redondo
Beach, California. Function distributes their products through MD Drinks, Inc. The
company began in 2004,with an orthopedic surgeon Dr. Alex Hughes, a graduate from
UCLA Medical School.
While in school, Hughes realized that many of the powerful, all-natural ingredients used
to treat patients in medical facilities were available to the public, yet not widely
recognized or known-about. Soon after his epiphany, Hughes began working on a
company that would incorporate these ingredients into beverages that could be
available to the public. The company instantly gained a strong following of people, full
ofactive and health-conscious consumers. Function Drinks offers a line of eight
beverages, each with a unique function and flavor.
The line includes: Urban Detox, Shock Sports, Braniac, Alternative Energy, Night Life,
Vacation and Light Weight. The strongest seller is Urban Detox, which comes in Prickly
Pear or Goji Berry flavors, incorporates a combination of “prickly pear extract and the
“smog-scrubbing” super-antioxidant N-Acetyl Cesteine” in order to “support healthy
lungs and sinuses in the face of particulate airborne pollution. These same ingredients
support the liver‟s efforts in combating hangovers” as well (Functiondrinks.com).
Another prominent seller is Light Weight, available in Blueberry Raspberry, Pink
Grapefruit, and Acai Pomegranate.
This specific drink functions to speed up the body‟s natural metabolism, with
ingredients Polygonum Cusidatum and EGCG from green tea specified to support the
body‟s natural calorie burning engine (Functiondrinks.com)
As this beverages market increases, the competition among industry producers will also
rise. Industry leaders have grown to their market and size because of their unique
products and aggressive marketing skills. They have successfully achieved brand
14

22. recognition among target consumers through a variety of promotional strategies and
advertising methods, including television commercials, celebrity sponsorship,
promotion through in-store displays, demonstrations, and through social media
websites.
The Top Selling Soft Drinks Companies
Worldwide
The Top 10 Soft Drinks Companies in 2009 by market share
Coca-Cola (& bottling partners) Red Bull
PepsiCo (& bottling partners) Danone
Nestle Kirin
Suntory Asahi Breweries
Dr Pepper Snapple Ito En
USA
The Top 10 Carbonated Soft Drinks Brands in the US in 2010 by volume
Coke Sprite
Diet Coke Diet Pepsi
Pepsi-Cola Diet Mtn Dew (PepsiCo)
Mtn Dew (PepsiCo) Diet Dr Pepper (Dr Pepper Snapple)
Dr Pepper (Dr Pepper Snapple) Fanta
Source: Beverage Digest
The Top 10 Carbonated Soft Drinks Manufacturers in the US in 2010 by volume
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23. Coca-Cola Hansen Natural
PepsiCo Red Bull
Dr Pepper Snapple Big Red Soda
Cott Corp Rockstar
National Beverage private label & other
Source: Beverage Digest
The Top 10 Bottled Water Brands Worldwide by sales in 2008
Nestle Pure Life (Nestle Waters) ($3.8bn) Crystal Geyser (CGWC) ($1.5bn)
Dasani (Coca-Cola) ($2.9bn) Volvic (Danone) ($1.4bn)
Aquafina (PepsiCo) ($2.8bn) Arrowhead (Nestle Waters) ($1.3bn)
Poland Spring (Nestle Waters) ($2.1bn) Perrier (Nestle Waters) ($1.1bn)
Evian (Danone) ($1.9bn) S Pellegrino (Nestle Waters) ($1.1bn)
Source: Nestle
UK
The UK's Top 10 Soft Drinks Manufacturers by take-home sales value in 2009
Coca-Cola Enterprises Red Bull
Britvic Soft Drinks AG Barr
GlaxoSmithKline Innocent Drinks
Danone Gerber Foods
16

24. Tropicana UK (PepsiCo) Nestle Waters
The UK's Top 10 Soft Drinks by take-home sales value in 2009
Coca-Cola Red Bull
Lucozade (GlaxoSmithKline) Ribena (Glaxo SmithKline)
Robinsons (Britvic) Schweppes (Coca-Cola)
Pepsi (Britvic) Actimel (Danone)
Tropicana (PepsiCo) Volvic (Danone)
Source: Britvic/Nielsen ScanTrack
Britvic's 2010 report on the UK Soft Drinks market
Other Non-Alcoholic Beverage Companies & Brands Profiled in Adbrands
Unilever Starbucks
Ocean Spray Tchibo
Britvic Soft Drinks Glaxo SmithKline
Nescafe Sunny Delight
Procter & Gamble Innocent Drinks
Lipton Folgers
Nestea Cott Corp
Fanta Japan Tobacco
AmBev
17

25. The soft drink industry is so profitable
An industry analysis through Porter‟s Five Forces reveals that market forces are
favorable for profitability. Defining the industry Both concentrate producers (CP) and
bottlers are profitable. These two parts of the Industries are extremely interdependent,
sharing costs in procurement, production, marketing and distribution. Many of their
functions overlap; for instance, CPs do some bottling, and bottlers conduct many
promotional activities. The industry is already vertically integrated to some extent. They
also deal with similar suppliers and buyers. Entry into the industry would involve
developing operations in either or both disciplines. Beverage substitutes would threaten
both CPs and their associated bottlers. Because of operational overlap and similarities
in their market environment, we can include both CPs and bottlers in our definition of
the soft drink industry. In 1993, CPs earned 29% pretax profits on their sales, while
bottlers earned 9% profits on their sales, for a total industry profitability of 14% .
This industry as a whole generates positive economic profits
Rivalry:
Revenues are extremely concentrated in this industry, with Coke and Pepsi, together
with their associated bottlers, commanding 73% of the case market in 1994. Adding in
the next tier of soft drink companies, the top six controlled 89% of the market. In fact,
one could characterize the soft drink market as an oligopoly, or even a duopoly between
Coke and Pepsi, resulting in positive economic profits. To be sure, there was tough
competition between Coke and Pepsi for market share, and this occasionally hampered
profitability.
For example, price wars resulted in weak brand loyalty and eroded margins for both
companies in the 1980s. The Pepsi Challenge, meanwhile, affected market share
without hampering per case profitability, as Pepsi was able to compete on attributes
other than price.
18

26. Substitutes:
Through the early 1960s, soft drinks were synonymous with “colas” in the mind of
consumers. Over time, however, other beverages, from bottled water to teas, became
more popular, especially in the 1980s and 1990s. Coke and Pepsi responded by
expanding their offerings, through alliances (e.g. Coke and Nestea), acquisitions (e.g.
Coke and Minute Maid), and internal product innovation (e.g. Pepsi creating Orange
Slice), capturing the value of increasingly popular substitutes internally.
Proliferation in the number of brands did threaten the profitability of bottlers through
1986, as they more frequent line set-ups, increased capital investment, and
development of special management skills for more complex manufacturing operations
and distribution. Bottlers were able to overcome these operational challenges through
consolidation to achieve economies of scale. Overall, because of the CPs efforts in
diversification, however, substitutes became less of a threat.
19

27. 2 Introduction to the organization :
PepsiCo
Type Public
Food
Industry
Beverages
Delaware - June 8, 1965
Founded reincorporated in North Carolina
– 1986
Donald M. Kendall
Founder(s)
Herman W. Lay
Headquarters Purchase, Harrison, New York
Area served Worldwide
Indra Nooyi
Key people
(Chairperson and CEO)
Pepsi
Diet Pepsi
Mountain Dew
Aquafina
Sierra Mist
Products Lipton Teas
7up (outside the U.S.)
Mirinda
Tropicana Products
Naked Juice
Gatorade
20

28. Quaker Oats Company
Lay's
Doritos
Cheetos
Walkers snack foods
Fritos
Tostitos
Revenue US$ 57.838 billion (2010)[2]
Operating
US$ 8.332 billion (2010)[2]
income
Net income US$ 6.338 billion (2010)[2]
Total assets US$ 68.153 billion (2010)[2]
Total equity US$ 21.476 billion (2010)[2]
Employees 294,000 (2010)[2]
PepsiCo Americas Foods;
PepsiCo Americas Beverages;
Divisions
PepsiCo Europe; PepsiCo Asia,
Middle East & Africa
NYSE: PEP
Traded as
S&P 500 Component
Website PepsiCo.com
PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American global corporation
21

29. Pepsi - Yeh Hai Youngistan Meri Jaan
Brand History
Pepsi is a hundred year old brand loved by over 200 million people worldwide. The
largest single selling soft drink brand in India is the ubiquitous'socialiser'at every
occasion.
Youngistaan loves it. 200 million people worldwide love it. But what has made
Pepsi the single largest selling soft drink brand in India is actually a formula
concocted a century ago in a far away continent.
1886, United States of America. Caleb Bradman, the man with a plan, got on to
formulate a blockbuster digestive drink and decided to call it Brad‟s drink. It was
this doctor‟s potion that was to become Pepsi Cola in 1898, and eventually,
Pepsi in 1903.
22

30. Pepsi has always played on the front foot and since its inception has come out
with revolutionary concepts like Diet, 2L bottles, recyclable plastic cola bottles
and the enviable My Can.
Brand Advantage
Pepsi has become a friend to the youth and has led many youth cultures.
Youngsters over the generations have grown up with Pepsi and share an
emotional connect with it, unlike any other cola brand. Be it parties, hangouts, or
just another day at home, a day is never complete without the fizz of Pepsi!
Pepsi, Cricket and Bollywood have been joined at the hip since the beginning.
Shah Rukh Khan, Sachin Tendulkar, Saif Ali Khan, Amitabh Bachchan, Kareena
Kapoor, Priyanka Chopra, Virender Sehwag, M. S. Dhoni, John Abraham, Ranbir
Kapoor and Deepika Padukone are a few celebrities who will go any length for a
chilled Pepsi.
The Pepsi My Can is undoubtedly the most popular cola pack of all times. It is
not just a pack but a style statement for today‟s youth.
23

31. PepsiCo is a world leader in convenient snacks, foods and beverages.
1. Solid Philosophy, Solid Company
Creating a Better Tomorrow for Future Generations
2.
Our Mission and Vision
At PepsiCo, we believe being a responsible corporate citizen is not only the right
thing to do, but the right thing to do for our business.
3.
PepsiCo Values & Philosophy
Our Values & Philosophy are a reflection of the socially and environmentally
responsible company we aspire to be. They are the foundation for every
business decision we make.
24

32. 4.
Corporate Governance
PepsiCo has adopted strict corporate standards that govern our operations and
ensures accountability for our actions. Learn more about the processes and
policies guiding our business.
World-Class, Muscular Brands
PepsiCo is home to hundreds of brands around the globe. Listed here are some of our
most recognized. More »
25

33. Our Leadership
PepsiCo is a company full of strong, talented individuals starting with the company leadership.
Get to know the inspiring people helping lead PepsiCo on its 'Performance with Purpose'
journey.
1. 3
Indra K. Noo Massimo d'Amore
Chairman and CEO, PepsiCo CEO, PepsiCo Beverages Americas
2. 4
John Compton Eric Foss
CEO, PepsiCo Americas Foods CEO, Pepsi Beverages Company
5 6
Zein Abdalla Saad Abdul-Latif
CEO, PepsiCo Europe CEO, PepsiCo Asia, Middle East, Africa
26

34. PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American global corporation
headquartered in Purchase, Harrison, New York, with interests in the manufacturing,
marketing and distribution of grain-based snack foods, beverages, and other products.
PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay,
Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range
of food and beverage brands, the largest of which include an acquisition of Tropicana in
1998 and a merger with Quaker Oats in 2001 - which added the Gatorade brand to its
portfolio as well.
As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion
each,[4] and the company‟s products were distributed across more than 200 countries,
resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the
second largest food & beverage business in the world.[5] Within North America, PepsiCo
is ranked (by net revenue) as the largest food and beverage business.
Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the
company employed approximately 285,000 people worldwide as of 2010. [6] The
company‟s beverage distribution and bottling is conducted by PepsiCo as well as by
licensed bottlers in certain regions.[7] PepsiCo is a SIC 2080 (beverage) company.
27

35. History:
Origins
The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern,
North Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola"
in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in
1902 and registered a patent for his recipe in 1903. The Pepsi-Cola Company was first
incorporated in the state of Delaware in 1919. Ownership of this company traded hands
several times throughout the 1920s and 1930s, and in the early 1960s its product line
expanded with the creation of Diet Pepsi and Mountain Dew.
Separately, the Frito Company and H.W. Lay & Company - two American potato and
corn chip snack manufacturers - began working together in 1945 with a licensing
agreement allowing H.W. Lay to distribute Fritos in the Southeastern United States. The
companies merged to become Frito-Lay, Inc. in 1961. In 1965, the Pepsi-Cola Company
merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at
present. At the time of its foundation, PepsiCo was incorporated in the state of
Delaware and headquartered in Manhattan, New York. The company's headquarters
were relocated to its still-current location of Purchase, New York in 1970, and in 1986
PepsiCo was reincorporated in the state of North Carolina.
Acquisitions and divestments:
Between the late-1970s and the mid-1990s, PepsiCo expanded via acquisition of
businesses outside of its core focus of packaged food and beverage brands; however it
exited these non-core business lines largely in 1997, selling some, and spinning off
others into a new company named Tricon Global Restaurants, which later became
known as Yum! Brands, Inc.. PepsiCo also previously owned several other brands that
it later sold, in order to allow it to return focus to its primary snack food and beverage
lines, according to investment analysts reporting on the divestments in 1997. Brands
28

36. formerly (no longer) owned by PepsiCo include: Pizza Hut, Taco Bell, KFC, Hot 'n Now,
East Side Mario's, D'Angelo Sandwich Shops, Chevys Fresh Mex, California Pizza
Kitchen, Stolichnaya (via licensed agreement), Wilson Sporting Goods and North
American Van Lines.
The divestments concluding in 2007 were followed by multiple large-scale acquisitions,
as PepsiCo began to extend its operations beyond soft drinks and snack foods into
other lines of foods and beverages. PepsiCo purchased the orange juice company
Tropicana Products in 1998, and merged with Quaker Oats Company in 2001, adding
with it the Gatorade sports drink line and other Quaker Oats brands such as Chewy
Granola Bars and Aunt Jemima, among others.
In August 2009, PepsiCo made a $7 billion offer to acquire the two largest bottlers of its
products in North America: Pepsi Bottling Group and PepsiAmericas. In 2010 this
acquisition was completed, resulting in the formation of a new wholly owned subsidiary
of PepsiCo, Pepsi Beverages Company. Also in late 2010, the company made its
largest international acquisition when it purchased a majority stake in Wimm-Bill-Dann
Foods - a Russian food company which produces milk, yogurt, fruit juices and dairy
products.
Competition:
The Coca-Cola Company has historically been considered PepsiCo‟s primary
competitor in the beverage market, and in December 2005, PepsiCo surpassed The
Coca-Cola Company in market value for the first time in 112 years since both
companies began to compete. In 2009, the Coca-Cola Company held a higher market
share in carbonated soft drink sales within the U.S. In the same year, PepsiCo
maintained a higher share of the U.S. refreshment beverage market, however, reflecting
the differences in product lines between the two companies. As a result of mergers,
acquisitions and partnerships pursued by PepsiCo in the 1990s and 2000s, its business
has shifted to include a broader product base, including foods, snacks and beverages.
The majority of PepsiCo's revenues no longer come from the production and sale of
carbonated soft drinks. Beverages accounted for less than 50 percent of its total
29

37. revenue in 2009. In the same year, slightly more than 60 percent of PepsiCo's beverage
sales came from its primary non-carbonated brands, namely Gatorade and Tropicana.
PepsiCo's Frito-Lay and Quaker Oats brands hold a significant share of the U.S. snack
food market, accounting for approximately 39 percent of U.S. snack food sales in 2009.
One of PepsiCo's primary competitors in the snack food market overall is Kraft Foods,
which in the same year held 11 percent of the U.S. snack market share.
Products and brands
Largest PepsiCo Brands (based on 2009 retail sales)
Brand
Pepsi
Mountain Dew
Lay's potato chips
Gatorade
Diet Pepsi
Tropicana beverages
7UP (outside U.S.)
Doritos tortilla chips
Lipton teas (PepsiCo/Unilever
partnership)
Quaker foods and snacks
Cheetos
Mirinda
Ruffles potato chips
Aquafina bottled water
30

38. Pepsi Max
Tostitos tortilla chips
Sierra Mist
Fritatos corn chips
Walkers potato crisps
Source: 2009 Annual Report[29] $0 $5b $10b $15b
$20b
PepsiCo‟s product mix as of 2009 (based on worldwide net revenue) consists of 63
percent foods, and 37 percent beverages. On a worldwide basis, the company‟s current
products lines include several hundred brands that in 2009 were estimated to have
generated approximately $108 billion in cumulative annual retail sales.
The primary identifier of companies' main brands within the food and beverage industry
are those which generate annual sales exceeding $1 billion, and 19 of PepsiCo's brands
met this description as of 2009: Pepsi-Cola, Mountain Dew, Lay's, Gatorade, Tropicana,
7Up, Doritos, Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles, Aquafina, Pepsi
Max, Tostitos, Sierra Mist, Fritos, and Walker's.
Areas of business :
The structure of PepsiCo's global operations has shifted multiple times in its history as a
result of international expansion, and as of 2010 it is separated into four main
divisions:[30] PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe,
and PepsiCo Asia, Middle East and Africa. As of 2009, 71 percent of the company‟s net
revenues came from North and South America, 16 percent from Europe and 13 percent
from Asia, the Middle East and Africa.
PepsiCo Americas Foods
PepsiCo Americas Foods consists of the company‟s food and snack operations in North
and South America. This operating division is further segmented into Frito-Lay North
America, Quaker Foods & Snacks, Sabritas, Gamesa and Latin America Foods. Food
31

39. and snack sales in North and South America combined contributed 48 percent of
PepsiCo‟s net revenue in 2009.
Frito-Lay North America, the result of a merger in 1961 between the Frito Company and
the H.W. Lay Company, produces the top selling line of snack foods in the U.S. Its main
brands in the U.S., Canada and Mexico and include Lay's and Ruffles potato chips,
Doritos tortilla chips, Tostitos tortilla chips and dips, Cheetos cheese flavored snacks,
Fritos corn chips, Rold Gold pretzels, Sun Chips and Cracker Jack popcorn. Products
made by this division are sold to independent distributors and retailers, and are
transported from Frito-Lay's manufacturing plants to distribution centers, principally in
vehicles owned and operated by the company.
Quaker Foods North America, created following PepsiCo‟s acquisition of the Quaker
Oats Company in 2001, manufactures, markets and sells Quaker Oatmeal, Rice-A-
Roni, Cap'n Crunch and Life cereals, as well as Near East side dishes within North
America. This division also owns and produces the Aunt Jemima brand, which as of
2009 was the top selling line of syrups and pancake mixes within this region.
Sabritas and Gamesa are two of PepsiCo‟s food and snack business lines
headquartered in Mexico, and they were acquired by PepsiCo in 1966 and 1990,
respectively. Sabritas markets Frito-Lay products in Mexico, including local brands such
as Poffets, Rancheritos, Crujitos and Sabritones. Gamesa is the largest manufacturer of
cookies in Mexico, distributing brands such as Emperador, Arcoiris and Marías
Gamesa.
PepsiCo‟s Latin America Foods (Spanish: Snacks América Latina) operations market
and sell primarily Quaker- and Frito-Lay-branded snack foods within Central and South
America, including Argentina, Brazil, Peru and other countries in this region.[36] Snacks
América Latina purchased Peruvian company Karinto S.A.C. including its production
company Bocaditas Nacionales (with three production facilities in Peru) from the
Hayashida family of Lima in 2009, adding the Karito brand to its product line, including
Cuates, Fripapas, and Papi Frits.
32

40. PepsiCo Americas Beverages:
This division contributed 23 percent of PepsiCo‟s net revenue as of 2009, [29] and
involves the manufacture (and in some cases licensing), marketing and sales of both
carbonated and non-carbonated beverages in North, Central and South America.[38] The
main brands distributed under this division include Pepsi, Mountain Dew, Gatorade,
7UP (outside the U.S.), Tropicana Pure Premium orange juice, Sierra Mist, SoBe
Lifewater, Tropicana juice drinks, AMP Energy, Naked Juice and Izze. Aquafina, the
company‟s bottled water brand, is also marketed and licensed through PepsiCo
Americas Beverages.
PepsiCo also has formed partnerships with several beverage brands it does not own, in
order to distribute these or market them with its own brands. [1] As of 2010, its
partnerships include: Starbucks (Frappuccino, DoubleShot and Iced Coffee), Unilever‟s
Lipton brand (Lipton Brisk and Lipton Iced Tea), and Dole (licensed juices and drinks).
PepsiCo Europe:
PepsiCo began to expand its distribution in Europe in the 1980s, and in 2009 it made up
16 percent of the company's global net revenue. Unlike PepsiCo‟s Americas business
segments, both foods and beverages are manufactured and marketed under one
umbrella division in this region, known as PepsiCo Europe. The primary brands sold by
PepsiCo in Europe include Pepsi-Cola beverages, Frito-Lay snacks, Tropicana juices
and Quaker food products, as well as regional brands unique to Europe such as
Walkers crisps, Copella, Paw Ridge, Snack-a-Jack, Duyvis and others. PepsiCo also
distributes the soft drink 7UP in Europe via license agreement. epsiCo's European
presence expanded with its acquisition of Russian juice and dairy product brand Wimm-
Bill-Dann Foods in December 2010.
33

41. PepsiCo Asia, Middle East & Africa :
The most recently created operating division of PepsiCo covers Asia, the Middle East
and Africa In addition to the production and sales of several worldwide Pepsi-Cola,
Quaker Foods and Frito-Lay beverage and food product lines (including Pepsi and
Doritos), this segment of PepsiCo‟s business markets regional brands such as Mirinda,
Kurkure and Red Rock Deli, among others. While PepsiCo owns its own manufacturing
and distribution facilities in certain parts of these regions, more of this production is
conducted via alternate means such as licensing (which it does with Aquafina), contract
manufacturing, joint ventures and affiliate operations. PepsiCo‟s businesses in these
regions, as of 2009, contributed 13 percent to the company‟s net revenue worldwide.
Corporate governance:
Headquartered in Purchase, New York, with research and development headquarters in
Valhalla, New York, PepsiCo‟s Chairman and CEO is Indra Nooyi.[40] The board of
directors is composed of eleven outside directors as of 2010, including Ray Lee Hunt,
Shona L. Brown, Victor Dzau, Arthur C. Martinez, Sharon Percy Rockefeller, Daniel
Vasella, Dina Dublon, Ian M. Cook, Alberto Ibargüen, James J. Schiro and Lloyd G.
Trotter. Former top executives at PepsiCo include Steven Reinemund, Roger Enrico, D.
Wayne Calloway, John Sculley, Michael H. Jordan, Donald M. Kendall, Christopher A.
Sinclair and Alfred Steele.
On October 1, 2006, former Chief Financial Officer and President Indra Nooyi replaced
Steve Reinemund as Chief Executive Officer. Nooyi remained as the corporation's
president, and became Chairman of the Board in May 2007, later (in 2010) being
named #1 on Fortune's list of the "50 Most Powerful Women" and #6 on Forbes' list of
the "World's 100 Most Powerful Women". PepsiCo received a 100 percent rating on the
Corporate Equality Indexreleased by the LGBT-advocate group Human Rights
Campaign starting in 2004, the third year of the report.
34

42. Headquarters
PepsiCo headquarters
The PepsiCo headquarters are located in Purchase, Harrison, New York. It was one of
the last architectural works by Edward Durell Stone. It consists of seven three story
buildings. Each building is connected to its neighbor through a corner. The property
includes a sculpture garden with 45 sculptures. Works include those of Alexander
Calder, Henry Moore, and Auguste Rodin. Westchester Magazine stated "The buildings‟
square blocks rise from the ground into low, inverted ziggurats, with each of the three
floors having strips of dark windows; patterned pre-cast concrete panels add texture to
the exterior surfaces." In 2010 the magazine ranked the building as one of the ten most
beautiful buildings in Westchester County.
At one time PepsiCo had its headquarters in 500 Park Avenue in Midtown Manhattan,
New York City. In 1956 Pepsico paid $2 million for the original building. PepsiCo built
the new 500 Park Avenue in 1960. In 1966 Mayor of New York City John Lindsay
started a private campaign to convince PepsiCo to remain in New York City. In 1967
PepsiCo announced that it was moving to 112 acres (45 ha) of the Blind Brook Polo
Club in Westchester County. After PepsiCo left the Manhattan building, it became
known as the Olivetti Building.
35

43. Charitable activities:
Headquarters of Pepsi-Cola Venezuela (ES)
PepsiCo has maintained a philanthropic program since 1962 called the PepsiCo
Foundation, in which it primarily funds “nutrition and activity, safe water and water
usage efficiencies, and education,” according to the foundation‟s website. In 2009,
$27.9 million was contributed through this foundation, including grants to the United
Way and YMCA, among others.
In 2009, PepsiCo launched an initiative which the company calls the Pepsi Refresh
Project, in which individuals submit and vote on charitable and nonprofit collaborations.
The main recipients of grants as part of the refresh project are community organizations
with a local focus and nonprofit organizations, such as a high school in Michigan which -
as a result of being selected - received $250,000 in 2010 towards construction of a
fitness room for high school students. Following the Gulf of Mexico oil spill which
occurred in the spring of 2010, PepsiCo donated $1.3 million to grant winners in
determined by popular vote. As of October, 2010, the company had provided a
cumulative total of $11.7 million in funding, spread across 287 ideas of participant
projects from 203 cities in North America. In late 2010, the refresh project was reported
to be expanding to include countries outside of North America in 2011.
36

44. Sustainability practices:
According to its 2009 annual report, PepsiCo states that it is “committed to delivering
sustainable growth by investing in a healthier future for people and our planet”, which it
has defined in its mission statement since 2006 as “Performance with Purpose”.
According to news and magazine coverage on the subject in 2010, the objective of this
initiative is to increase the number and variety of In PepsiCo‟s CEO Indra Nooyi made a
trip to India to address water usage practices in the country, prompting prior critic Sunita
Narain, director of the Centre for Science & Environment (CSE), to note that PepsiCo
"seem(s) to be doing something serious about water now." According to the company‟s
2009 corporate citizenship report, as well as media reports at the time, the company (in
2009) replenished nearly six billion liters of water within India, exceeding the aggregate
water intake of approximately five billion liters by PepsiCo‟s India manufacturing
facilities.
Water usage concerns have arisen at times in other countries in which PepsiCo
operates. In the U.S., water shortages in certain regions resulted in increased scrutiny
on the company‟s production facilities, which were cited in media reports as being
among the largest water users in cities facing drought - such as Atlanta, Georgia.[67][68]
In response, the company formed partnerships with non-profit organizations such as the
Earth Institute and Water.org, and in 2009 began cleaning new Gatorade bottles with
purified air instead of rinsing with water, among other water conservation practices.[69] In
the United Kingdom, also in response to regional drought conditions, PepsiCo snacks
brand Walkers' reduced water usage at its largest potato chip facility by 45 percent
between the years 2001 and 2008. In doing so, the factory employed machinery which
captured the water naturally contained in potatoes, and used that water to largely offset
the need to bring in outside water to the factory.
As a result of water reduction practices and efficiency improvements, PepsiCo in 2009
saved more than more than 12 billion liters of water worldwide, compared to its 2006
water usage. Environmental advocacy organizations including the Natural Resources
Defense Council and individual critics such as Rocky Anderson (mayor of Salt Lake
37

45. City, Utah) voiced concerns in 2009, noting that the company could conserve additional
water by refraining from the production of discretionary products such as Aquafina.[73]
The company maintained its positioning of bottled water as “healthy and convenient”,
while also beginning to partially offset environmental impacts of such products through
alternate means, including packaging weight reduction.
Packaging and recycling:
Environmental advocates have raised concern over the environmental impacts
surrounding the disposal of PepsiCo‟s bottled beverage products in particular, as bottle
recycling rates for the company‟s products in 2009 averaged 34 percent within the U.S.
The company has employed efforts to minimize these environmental impacts via
packaging developments combined with recycling initiatives. In 2010, PepsiCo
announced a goal to create partnerships that prompt an increase the beverage
container recycling rate in the U.S. to 50 percent by 2018.
One strategy enacted to reach this goal has been the placement of interactive recycling
kiosks called “Dream Machines” in supermarkets, convenience stores and gas stations,
with the intent of increasing access to recycling receptacles. The use of resin to
manufacture its plastic bottles has resulted in reduced packaging weight, which in turn
reduces the volume of fossil fuels required to transport certain PepsiCo products. The
weight of Aquafina bottles was reduced nearly 40 percent, to 15 grams, with a
packaging redesign in 2009. Also in that year, PepsiCo brand Naked Juice began
production and distribution of the first 100 percent post-consumer recycled plastic bottle.
Energy usage and carbon footprint:
PepsiCo, along with other manufacturers in its industry, has drawn criticism from
environmental advocacy groups for the production and distribution of plastic product
packaging, which consumed an additional 1.5 billion gallons of petrochemicals in 2008.
These critics have also expressed apprehension over the production volume of plastic
packaging, which results in the emission of carbon dioxide. Beginning largely in 2006,
PepsiCo began development of more efficient means of producing and distributing its
38

46. products using less energy, while also placing a focus on emissions reduction. In a
comparison of 2009 energy usage with recorded usage in 2006, the company‟s per-unit
use of energy was reduced by 16 percent in its beverage plants and 7 percent in snack
plants.
In 2009, Tropicana (owned by PepsiCo) was the first brand in the U.S. to determine the
carbon footprint of its orange juice product, as certified by the Carbon Trust, an outside
auditor of carbon emissions. Also in 2009, PepsiCo began the test deployment of so-
called “green vending machines,” which reduce energy usage by 15 percent in
comparison to average models in use. It developed these machines in coordination with
Greenpeace, which described the initiative as “transforming the industry in a way that is
going to be more climate-friendly to a great degree.”
Product diversity
From its founding in 1965 until the early 1990s, the majority of PepsiCo‟s product line
consisted of carbonated soft drinks and convenience snacks. PepsiCo broadened its
product line substantially throughout the 1990s and 2000s with the acquisition and
development of what its CEO deemed as “good-for-you” products, including Quaker
Oats, Naked Juice and Tropicana orange juice. Sales of such healthier-oriented
PepsiCo brands totaled $10 billion in 2009, representing 18 percent of the company‟s
total revenue in that year. This movement into a broader, healthier product range has
been moderately well received by nutrition advocates; though commentators in this field
have also suggested that PepsiCo market its healthier items as aggressively as less-
healthy core products
In response to shifting consumer preferences and in part due to increasing
governmental regulation, PepsiCo in 2010 indicated its intention to grow this segment of
its business, forecasting that sales of fruit, vegetable, whole grain and fiber-based
products will amount to $30 billion by 2020. To meet this intended target, the company
has said that it plans to acquire additional health-oriented brands while also making
changes to the composition of existing products that it sells.
39

47. Ingredient changes:
Public health advocates have suggested that there may be a link between the ingredient
makeup of PepsiCo‟s core snack and carbonated soft drink products and rising rates of
health conditions such as obesity and diabetes. The company aligns with personal
responsibility advocates, who assert that food and beverages with higher proportions of
sugar or salt content are fit for consumption in moderation by individuals who also
exercise on a regular basis.
Changes to the composition of its products with nutrition in mind have involved reducing
fat content, moving away from trans-fats, and producing products in calorie-specific
serving sizes to discourage overconsumption, among other changes. One of the earlier
ingredient changes involved sugar and caloric reduction, with the introduction of Diet
Pepsi in 1964 and Pepsi Max in 1993 - both of which are variants of their full-calorie
counterpart, Pepsi. More recent changes have consisted of saturated fat reduction,
which Frito-Lay reduced by 50% in Lay's and Ruffles potato chips in the U.S. between
2006 and 2009.[95] Also in 2009, PepsiCo‟s Tropicana brand introduced a new variation
of orange juice (Trop50) sweetened in part by the plant Stevia, which reduced calories
by half.[95] Since 2007, the company also made available lower-calorie variants of
Gatorade, which it calls “G2”.
Distribution to children:
As public perception placed additional scrutiny on the marketing and distribution of
carbonated soft drinks to children, PepsiCo announced in 2010 that by 2012, it will
remove beverages with higher sugar content from primary and secondary schools
worldwide. It also, under voluntary guidelines adopted in 2006, replaced “full-calorie”
beverages in U.S. schools with “lower-calorie” alternatives, leading to a 95 percent
reduction in the 2009 sales of full-calorie variants in these schools in comparison to the
sales recorded in 2004. In 2008, in accordance with guidelines adopted by the
International Council of Beverages Associations, PepsiCo eliminated the advertising
40

48. and marketing of products that do not meet its nutrition standards, to children under the
age of 12.
In 2010, First Lady Michelle Obama initiated a campaign to end childhood obesity
(entitled Let's Move!), in which she sought to encourage healthier food options in public
schools, improved food nutrition labeling and increased physical activity for children. In
response to this initiative, PepsiCo, along with food manufacturers Campbell Soup,
Coca-Cola, General Mills and others in an alliance referred to as the "Healthy Weight
Commitment Foundation", announced in 2010 that the companies will collectively cut
one trillion calories from their products sold by the end of 2012 and 1.5 trillion calories
Performance with Purpose
At PepsiCo, we're committed to achieving business and financial success while leaving
a positive imprint on society - delivering what we call Performance with Purpose.
Our approach to superior financial performance is straightforward - drive shareholder
value. By addressing social and environmental issues, we also deliver on our purpose
agenda, which consists of human, environmental, and talent sustainability.
41

49. Guiding Principles:
We uphold our commitment with six guiding principles.
We must always strive to:
1. Care for our customers, our consumers and the world we live in.
We are driven by the intense, competitive spirit of the marketplace, but we direct
this spirit toward solutions that benefit both our company and our constituents.
Our success depends on a thorough understanding of our customers, consumers
and communities. To foster this spirit of generosity, we go the extra mile to show
we care.
2. Sell only products we can be proud of.
The true test of our standards is our own ability to consume and personally
endorse the products we sell. Without reservation. Our confidence helps ensure
the quality of our products, from the moment we purchase ingredients to the
moment it reaches the consumer's hand.
3. Speak with truth and candor.
We tell the whole story, not just what's convenient to our individual goals. In
addition to being clear, honest and accurate, we are responsible for ensuring our
communications are understood.
4. Balance short term and long term.
In every decision, we weigh both short-term and long-term risks and benefits.
Maintaining this balance helps sustain our growth and ensures our ideas and
solutions are relevant both now and in the future.
5. Win with diversity and inclusion.
We embrace people with diverse backgrounds, traits and ways of thinking. Our
diversity brings new perspectives into the workplace and encourages innovation,
as well as the ability to identify new market opportunities.
42

50. 6. Respect others and succeed together.
Our mutual success depends on mutual respect, inside and outside the
company. It requires people who are capable of working together as part of a
team or informal collaboration. While our company is built on individual
excellence, we also recognize the importance and value of teamwork in turning
our goals into accomplishments.
43

51. About PepsiCo India
PepsiCo entered India in 1989 and has grown to become the country‟s largest selling
food and Beverage Company. One of the largest multinational investors in the country,
PepsiCo has established a business which aims to serve the long term dynamic needs
of consumers in India.
PepsiCo nourishes consumers with a range of products from treats to healthy eats that
deliver joy as well as nutrition and always, good taste. PepsiCo India‟s expansive
portfolio includes iconic refreshment beverages Pepsi, 7 UP, Mirinda and Mountain
Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional
beverages such as Aquafina drinking water, isotonic sports drinks - Gatorade,
Tropicana 100% fruit juices, and juice based drinks – Tropicana Nectars, Tropicana
Twister and Slice, non-carbonated beverage and a new innovation Nimbooz by 7Up.
Local brands – Lehar Evervess Soda, Dukes Lemonade and Mangola add to the
diverse range of brands.
PepsiCo‟s foods company, Frito-Lay, is the leader in the branded salty snack market
and all Frito Lay products are free of trans-fat and MSG. It manufactures Lay‟s Potato
Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the
Kurkure and Lehar brands and the recently launched „Aliva‟ savoury crackers. The
company‟s high fibre breakfast cereal, Quaker Oats, and low fat and roasted snack
options enhance the healthful choices available to consumers. Frito Lay‟s core
products, Lay‟s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil to
significantly reduce saturated fats and all of its products contain voluntary nutritional
labeling on their packets.
The group has built an expansive beverage and foods business. To support its
operations, PepsiCo has 36 bottling plants in India, of which 13 are company owned
and 23 are franchisee owned. In addition to this, PepsiCo‟s Frito Lay foods division has
3 state-of-the-art plants. PepsiCo‟s business is based on its sustainability vision of
making tomorrow better than today. PepsiCo‟s commitment to living by this vision every
day is visible in its contribution to the country, consumers and farmers.
44

52. .
PepsiCo India and its partners have invested more than USD1 billion since the
company was established in the country.
Employment
PepsiCo India provides direct and indirect employment to 150,000 people including
suppliers and distributors
45

53. Brand Facts
PepsiCo nourishes consumers with a range of products from tasty treats to healthy eats
that deliver enjoyment, nutrition, convenience as well as affordability
Beverages
PepsiCo India‟s expansive portfolio includes iconic refreshment beverages Pepsi, 7 UP,
Nimbooz, Mirinda and Mountain Dew, in addition to low calorie options such as Diet
Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic
sports drinks - Gatorade, Tropicana100% fruit juices, and juice based drinks –
Tropicana Nectars, Tropicana Twister and Slice. Local brands – Lehar Evervess Soda,
Dukes Lemonade and Mangola add to the diverse range of brands.
46

54. Foods
PepsiCo‟s food division, Frito-Lay, is the leader in the branded salty snack market and
all Frito Lay products are free of trans-fat and MSG. It manufactures Lay‟s Potato Chips,
Cheetos extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and
Lehar brands. The company‟s high fibre breakfast cereal, Quaker Oats, and low fat and
roasted snack options enhance the healthful choices available to consumers. Frito Lay‟s
core products, Lay‟s, Kurkure, Uncle Chipps and Cheetos are cooked in Rice Bran Oil
to significantly reduce saturated fats and all of its products contain voluntary nutritional
labeling on their packets.
47

55. Celebrity endorsement of Pepsi:
Celebrities have been paid to advertise for Pepsi products.
United States
NASCAR driver Jeff Gordon who runs a Pepsi paint scheme at Talladega
Superspeedway and Auto Club Speedway. Joan Crawford was married to PepsiCo
president Alfred Steele from 1955 to 1959 (his death), and was advertising executive
and board of directors member from 1959 to 1973.
During the 1960s, Joanie Sommers sang two popular commercial songs ("It's Pepsi, for
those who think young" and "Now you see it, now you don't, oh, Diet Pepsi") for Pepsi-
Cola that were run in commercials and for which she came to be often referred to as
"The Pepsi Girl".
During 1984, Michael Jackson signed a large contract with Pepsi that has since
produced many commercials and world tours through 1993.
During the 1989 Grammy Awards telecast, Pepsi and Puerto Rican singer Chayanne
was featured in the first advertising spot in Spanish language to be broadcast on
national television without dubbing or subtitles.
In the early 1990s, Ray Charles was the star of a Diet Pepsi campaign called "You Got
the Right One, Baby," which was also known as "Uh-huh."
In 2001, Britney Spears became a spokesperson for Pepsi. Spears' contract concluded
with an advertisement with Pink and Beyonce. The ad was made featuring the cover of
the song "We Will Rock You" by Queen.
In 2005, Christina Aguilera was signed to promote the popular drink (she was previously
promoting Coca-Cola in 2000). The campaign featuring Aguilera was released in 2006,
but not in the United States. Some commercials featured singer Elissa, and some with
48

56. Aguilera by herself. PepsiCo said in a recent interview that Christina Aguilera has that
'dare for more' approach. Aretha Franklin was also a spokesperson in 1998. And also in
1999 Janet Jackson signed on to the original "Ask For More" campaign which featured
a song of the same name written and sung by Jackson.
In 2008, PepsiCo launched the "Cool Tones" campaign. It involved Mariah Carey, Mary
J Blige and The All American Rejects writing and performing ringtones that can be
obtained by purchasing a Pepsi bottle. Carey also recorded a commercial for the
campaign in which she performs one of her original ringtones.
Europe and the United Kingdom
For the 1988 and 1989 seasons, Pepsi was the title sponsor of Suzuki's effort in
motorcycle road racing's premier class, Grand Prix 500cc. The Pepsi livery was a new
addition to grand prix motorcycling, and a change from tobacco sponsors.
During 1988-9, Suzuki also produced a number of road going replicas of the GP bikes,
emblazoned with the same Pepsi signage as the works bikes. Due to the livery's
association with one of Suzuki's riders, the Texan, Kevin Schwantz, riders today are still
producing their own replicas as tribute.[citation needed]
Since 2001, Sakis Rouvas has been a spokesperson in the Greek and Balkan
campaign under contract with the headquarters of United Kingdom, being the only
Greek artist to have ever been proposed to represent the brand.[1]
Latin America
In Latin America, Colombian artists Shakira, and Juanes; Dominican Sammy Sosa, and
Puerto Rican Daddy Yankee have promoted the soft drink. Spanish-speaking Jaci
Velasquez did some commercials. In 2007 RBD promoted the drink in their home
country of Mexico.
49

57. Asia
As for Asia, celebrity and singers Show Luo, Leslie Cheung, Jay Chou, Aaron Kwok,
Jolin Tsai, Rain, Louis Koo, Nicholas Tse, F4, Faye Wong, and Kelly Chan have
appeared in several different advertisements.
In Pakistan, Pepsi sponsors the Pakistan cricket team and many Pakistani celebrities
and personalities have been spokespersons for the brand includding, Junaid Jamshed,
Shoaib Akhtar, Bob Woolmer, Younus Khan, Kamran Akmal, Adnan Sami, Reema
Khan, Call, and Vital Signs.
In India, Pepsi first used Aamir Khan, model turned actress Mahima Chaudhary and
model and ex-Miss World Aishwariya Rai to promote its product. Later it used Amitabh
Bachchan, Shahrukh Khan, Kajol, Rani Mukherjee, Saif Ali Khan, Fardeen Khan,
Akshay Kumar, Shahid Kapur (before he entered the movie world), Preity Zinta, John
Abraham, Priyanka Chopra, and Kareena Kapoor as well as the national cricket team.
Australia
In Australia, the trend has been to use local Australian celebrities to promote Pepsi
including Kylie Minogue, Jennifer Hawkins (Miss Universe 2004), Holly Valance, Harry
Kewell, Sonny Bill Williams, Delta Goodrem, Mark Philippoussis and several others.
50

58. LITERATURE REVIEW
 Celebrity Endorsement
Erdogan (1999) in his article describe that Use of celebrities as part of marketing
communications strategy is a fairly common practice for major firms in supporting
corporate or brand imagery. Firms invest significant monies in juxtaposing brands and
organizations with endorser qualities such as attractiveness, likeability, and
trustworthiness. They trust that these qualities operate in a transferable way, and, will
generate desirable campaign outcomes. But, at times, celebrity qualities may be
inappropriate, irrelevant, and undesirable. Thus, a major question is: how can
companies select and retain the 'right' celebrity among many competing alternatives,
and, simultaneously manage this resource, while avoiding potential pitfalls? This paper
seeks to explore variables, which may be considered in any celebrity selection process
by drawing together strands from various literatures.
Athletes and sporting products:
In 1995, U.S. companies paid more than one billion dollars to 2000 athletes for
endorsement deals (Lane, 1996). This means that approximately ten percent of the
expenditure on corporate sponsorships is spent on this specific promotion strategy. The
combination of basketball superstar Michael "Air" Jordan and Nike has become the
sports business euphemism for "a perfect fit" (Amis, Pant & Slack, 1997). By early 1993,
one in three pairs of athletic shoes sold in the United States were made by Nike, with
"Air Jordan" shoes and apparel contributing more than US$ 200 million a year in sales
to the Nike empire (Katz, 1994). Sport specific products and non-sport specific products
According to Veltri and Long (1998), athletes will usually pursue two types of
endorsements: "sport specific products" and "non-sport specific products". Sport specific
products are defined as articles necessary for the athlete to play his or her sport (shoes,
racquets, clothing, etc.). Non-sport specific products include all other products or
services not related to the sport itself (cars, cosmetics, etc.). According to O'Mahony
51

59. and Meenaghan (1997/98), consumers' response to endorsement messages is linked to
relatedness, which means that the more the athlete is related with the product, the more
effective the endorsement is. This largely emphasizes the importance of elite-level
athletes as endorsers for athletic shoe companies (producing sport specific products),
which are unquestionably the largest spenders on endorsements.
On the other hand, when an athlete has an endorsement-deal with a producer of non-
sport specific products it is crucial that there is an appropriate "image match" between
the athlete or the sport in which he's involved and the brand. For example, for a
company such as Mercedes it would be appropriate to sponsor a golf player, because of
the shared perceptual characteristics (Milne & McDonald, 1999).
Many of today's top professional athletes have signed sport specific endorsement
contracts with sport apparel companies (Tedeschi, 1995). Beside Michael Jordan, other
examples of high profile celebrity endorsers include Tiger Woods, Andre Agassi, Pete
Sampras and Renaldo for Nike, Shaquille O'Neal for Reebok, Earvin "Magic" Johnson
for Converse, Donovan Bailey for Adidas and Lindford Christie and Merlene Ottey for
Puma. In Europe the most eminent cases are situated in soccer: del Pierro, Zidane,
Beckham and Kluivert as the showpieces of Adidas and Alan Shearer as the holder of a
multi-million contract with Umbro.
Some international sport celebrities have their own signature line of products,
specifically designed to their individual characteristics and preferences. Again, the "Air
Jordan" brand of Nike, characterized by the magic number 23 and the image of a
dunking basketball player instead of the 'Swoosh' symbol, can be considered to be the
best example. Through a careful promotional campaign, Nike made its "Air Jordan"
range of athletic footwear the biggest selling athletic shoe of all time (Amis et al., 1997).
Other signature products include the idiosyncratic golden spikes of Johnson, Renaldo‟s
'R9 Mercurial' soccer boots and the diverse apparel and footwear lines inspired by the
personalities of Sampras, Agassi and Woods.
Endorsement as a marketing strategy :
52

60. Endorsement objectives
According to Segers (1992), the majority of Belgian companies are considering sport
sponsorship and athlete endorsements in particular, as a marketing tool to boost
communication with existing and potential consumers. The use of celebrities as a
marketing strategy contributes to brand name recognition and creates a positive
association with the endorsed product (McCarville & Copeland, 1994; McCracken,
1989; Segers, 1992). In general, endorsements may serve both awareness and image
functions as a contribution to brand equity. The value for the sponsorship dollar is
increased as the sponsorship is used as an identity-enhancing vehicle as well as a
name-awareness tool (Milne & McDonald, 1999).
Most of the endorsement objectives can be categorized according to the general
classification scheme of Sandler and Shane (1993). These researchers identified three
broad categories of sponsorship objectives for business: broad corporate objectives
(image based), marketing objectives (brand promotion, sales increase) and media
objectives (cost effectiveness, reaching target markets). A more recent trend identified
by Thwaites, Aguilar-Manjarrez and Kidd (1998) views sponsorship as an effective
mechanism for developing image and awareness through its use as a focus for
community involvement, particularly in support of grassroots initiatives. Consequently,
this new category, community based objectives, should be added to the framework of
Sandler and Shani (1993).
Celebrities as Spokespersons:
Companies frequently use spokespersons to deliver their advertising message and
convince consumers of their brands. A widely used and very popular type of
spokesperson is the celebrity endorser (Tom et al., 1992). According to Agrawal and
Kamakura (1995) celebrities make the advertisements believable and enhance the
message in the minds of the consumers. Furthermore, celebrities increase awareness
of a company‟s advertising, creating a positive feeling towards the brand. Thus using a
celebrity in a company‟s advertising is likely to have a positive impact on the
consumers‟ brand perception and purchase decision. One of the main reason behind
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61. the popularization of celebrity used in advertisements is the company‟s belief that the
message when delivered by well-know personality will achieve a high degree of
attention and recall (Hainan, 1991). This only happens when there is an appropriate
connection between the celebrity and the product endorsed or when the celebrity‟s
represents of some aspect of product endorsed.
Early researches have shown that about 20 percent of all television commercial use
celebrity as their endorsers and increasing competition for seeking consumers‟
attention has encouraged marketers to use attention- creating media stars to assist in
product marketing (Erdogan, 1999). Marketers believe that using popular celebrity can
effect consumers feeling and their purchase intention and also believe celebrity to
influence consumers‟ persuasion of the product according to the image of it (Belch &
Belch, 2001). Use of celebrity as endorsers may have a significant positive impact.
Another very prominent drawback of celebrity endorsements is the „Vampire Effect‟ or
the celebrity overshadowing the brand (Kulkarni and Gaulkar, 2005). This happens
when the audience forgets the brand advertised and concentrates more on the celebrity
endorsing the brand. As Cooper (1984) states in his study, “the product, not the
celebrity, must be the star” Similarly another problem is celebrity greed and
overexposure, when a celebrity becomes an endorser for many diverse products
(Erdogan, 1999).
Tripp et al. (1994) and Redenbach (2005) both investigated and suggested that when
as many as four products are endorsed, celebrity credibility and likeability, as well as
attitude towards the ad, may be taken carelessly.
In conclusion the good match with product and celebrity can make the advertising more
believable, can improve the brand recognition, create a positive attitude towards the
brand name and create a distinct personality for the brand (Agrawal & Kamakura 1997).
Alperstein 1991says that “Traditional celebrity endorsements are as well established as
the concept of celebrity itself.”(Anonymous, 2007).Celebrities influence on consumers
appears to be larger than ever before. When used effectively celebrity endorsers have
54

62. the potential of serving a valuable role in enhancing a brand‟s competitive position and
developing brand equity. Till 1998.Schikel (1985) highlights the subtle yet intense
impact of celebrities on everyday thinking and living. Defined as „intimacy at a distance‟,
it is seen that individuals have a tendency to form illusions of an interpersonal
relationship with celebrities.
Horton &Wohl 1956 describe that A person who enjoys public recognition from a large
share of a certain group of people and uses this recognition on behalf of a consumer
good by appearing with it in advertisements is known as a celebrity. McCraken 1989
says that They are usually known to the public for their accomplishments in areas other
than the product endorsed by them. Friedman &Friedman 1979 says that This stands
true for classic forms of celebrities such as actors like Shah Rukh Khan, models like
Milan Somen, Sports athletes like Sachin Tendullkar and entertainers like MaliakaArora
Khan but also for less obvious groups such as businessmen like the Ambani‟s or
politicians like Rahul Gandhi
Schlecht 2003 say that In India especially, it is not difficult to find motives for the
increasing use if celebrities in advertisements as Indians have always been in awe of
the stars of the celluloid world. Unlike the foreign counterparts they have always
consecrated them and placed a halo behind their heads implying that their celebrities
could do no wrong. (Anonymous, 2001). Indeed, some people are seen to admire,
imitate, and become besotted with their favorite celebrities,
Celebrities as a form of Aspirational Reference Group
From a theoretical perspective, celebrities are considered to be effective endorsers as
because of the presence of their symbolic desirable reference group alliance. Soloman
and Assael, 1987Assael 1984 suggests that the effectiveness of the celebrity
endorsement is present because of its ability to tap into the consumer‟s symbolic union
with its aspirational reference group
Menon describe that Reference groups among consumers are viewed as being a
critical source of brand meanings as it helps them to evaluate their believe about the
world particularly with others who share the same beliefs or are similar on relevant
55

63. dimensions. Consumers form associations between reference groups and the brands
they use and transfer this meaning from brand to self and one 14
Today celebrity endorsement is being seen more and more as an integral part in an
integrated marketing communication strategy. Hamish and Pringle (2004) suggest 3
macro factors present in the market today that in principal justifies the validity of
celebrity endorsement as a promotional strategy. The first factors the increasing
opportunity for interactivity between brands and their consumers. Second is the “era of
consent” situation present today where consumers have more control over the
messages they receive. And lastly is the increasing media fragmentation and
commercial communication clutter.
Temperley and Tangen, 2006 Pappas (1999) examined the value of star power in an
endorsement and pointed towards how a well-designed advertising helped celebrities
convert their star power into brand equity
Celebrities are deemed to be referents by consumers, which refers to imaginary or
actual individuals envisioned to have significant bearing on the consumer‟s evaluations,
aspirations and behaviour. The power of the celebrities lies in these influences that they
exert on consumers, even though they themselves are physically and socially distant
from an average consumer
Choi & Rifon, 2007 said that Consumers have a tendency to form an attachment to any
object that reinforces one‟s self identity or desired image, renders feelings of
connectedness to a group or to any object that elicit nostalgia, and perhaps the most
vivid example of this form of attachment maybe found in the consumers preoccupation
with the celebrities. (O‟Mahony and Meenaghan, 1998).
56

64. Pros of celebrity endorsement
Academic researchers have conducted sufficient empirical research to express the
benefits of product endorsement, in addition to the intuitive arguments that rationalize
this practice.Till and Shimp, 1998 says that It is observed that the presence of a
renowned persona helps in solving the problem of over communication that is becoming
more and more prevalent these days
Kulkarni & Gaulankar, 2005) says that The increased consumer power over
programmed advertisement has made advertising has made advertising more
challenging. To ease this threat and to help create and maintain consumer attention to
advertisements celebrity endorsement strategy is seen to be advantageous. Celebrities
have the potential of helping the advertisements stand out from the surrounding clutter,
guiding towards a improved communicative ability by cutting through excess noise in a
communication process( Sherman 1985). Also one probable solution in the face of
tarnished company image is the hiring of a celebrity to restore it. Celebrity Endorsement
assists in the image polishing of the company‟s image
Erdogan, 1999 in his theory says that A stream of studies identifies the attributes such
trustworthiness, similarity, likableness, expertise that cause a celebrity to stand as a
persuasive source which in turn creates a sense of certainty.(Mustafa 2005). It is shown
by research and experience that consumers are highly ready to spend and more
comfortable , when products that relate to their desired image is endorsed by
celebrities. (Internet World 2001) as it helps them to take more notice of celebrity
endorsements and improve their level of product recall.
Bowman 2002 says that Another reason for the use of celebrity endorsement is
because it has a strong impact on the learning style and memory which is critical to
marketing communication success. This is because most consumers are not in a
purchasing situation when they come into contact with the brand message.
Schultz & Barnes, 1995 Marketers make use of celebrity endorsements as they lead to
better information storage in the minds of the consumers which can be readily retrieved
when the purchasing situation dose arise
57

65. Selecting the „Right‟ celebrity
Shimp (2000) put forward five factors in order of decreasing importance namely, (1) the
celebrity credibility, (2) celebrity and audience match-up, (3) celebrity and brand match
up,(4) celebrity attractiveness, and (5) miscellaneous considerations, which were
considered by advertising executives while making their celebrity-selection decisions.
Models and 20 concepts were constructed by scholars to draw the liaison between
celebrities, the brand they endorsed and the perception of the people related to the
product.
Khatri, 2006 says that One of the earliest models was the Source Credibility Model by
Hovland et al. (1953). Apart from this there were 3 additional models recognised by
Erdogan (1999) which were the Match-up Hypothesis by Forkan (1980), the Source
Attractiveness Model by McGuire (1985) and the Meaning Transfer Model by McCraken
(1989). The following part will take a closer look at the stated considerations and the
associated models.
Celebrity Endorsement – Indian Perspective
Celebrities are involved in endorsing activities since late nineteenth century Erdogan,
1999 says that The latter part of the '80s saw the mushrooming of a new trend in India;
brands started being endorsed by celebrities (Katyal, 2007) says that The advent of
celebrity endorsements in advertising in India began when Hindi film and TV stars as
well as sportspersons began making inroads on a territory that was, until then, the
exclusive domain of models
Kulkarni and Gaulkar, 2005 describe that One of the first sports endorsements in India
was when Farokh Engineer became the first Indian cricketer to model for Bryl cream
(Kulkarni and Gaulkar, 2005). Probably Lux the soap brand has managed to realize and
made it synonyms with celebrity endorsement in India till date (Katyal, 2007).
58