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KIN Summit 2007 Innovation For Marketplace Success

KIN Summit 2007 Innovation For Marketplace Success. Albert Manzone President, PepsiCo Shelf Stable Juices PepsiCo, Inc June 18-19, 2007. Innovation Has Been Critical To Meet PepsiCo Growth Target. 2004-2007E. ~40% of growth. Up To Today, We Have Been Able To Figure Out The World Around Us.

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KIN Summit 2007 Innovation For Marketplace Success

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  1. KIN Summit 2007Innovation For Marketplace Success Albert ManzonePresident, PepsiCo Shelf Stable JuicesPepsiCo, IncJune 18-19, 2007

  2. Innovation Has Been Critical To Meet PepsiCo Growth Target 2004-2007E ~40% of growth 061807_KIN Summit_Legal Approved Copy

  3. Up To Today, We Have Been Able To Figure Out The World Around Us • Innovation a relatively “simple” competitive advantage… • …Relying on a “repeatable” formula that values scale, reach and speed • Fast follower is enough to win • Narrower portfolio and competitive pressure mostly Coke • Space not a constraint 061807_KIN Summit_Legal Approved Copy

  4. We Know What Works Innovation Success Formula Compelling Consumer Proposition Impactful Marketing Aligned Operating Envelope Sustained Execution Right Expectations • Deep insights • Differentiated proposition • Product and packaging fulfill consumer need • Relevant messaging and activation • Sufficient and sustained support • Leverages current assets • Serve national footprint • Distribution targets achieved • Right placement • Right level of in-store inventory • Ongoing support • Clarity on innovation role Structural and Cultural Enablers • Risk tolerance and patience • Pace of innovation • Algorithm expectation 061807_KIN Summit_Legal Approved Copy

  5. Compelling Consumer Proposition Impactful Marketing Aligned Operating Envelope Sustained Execution Right Expectations 061807_KIN Summit_Legal Approved Copy

  6. The World Around Us Is Changing • Consumers more savvy, sophisticated, and demand fragmenting • Categories blurring • Emboldened Pure Plays are true innovation leaders • Stronger, more demanding customers • Broader portfolio to support • Space bottlenecks 061807_KIN Summit_Legal Approved Copy

  7. Space Bottlenecks Have Increased Dramatically 5 Years Ago225 Today 375 Grocery 30,000 SKUs 061807_KIN Summit_Legal Approved Copy

  8. New Realities Are Challenging Our Innovation Factors Contributing To Innovation Misses Compelling Consumer Proposition Impactful Marketing Aligned Operating Envelope Sustained Execution Right Expectations • Rushed to market • No advantage versus competition • Limited launch A&M and not sustained • Late alignment with conflicting messages to the system • Distribution targets not achieved • Support window only • Giving up in less than 1 year • Push/pull unbalanced • False optimism Structural and Cultural Enablers • Low risk tolerance and lack of patience • Amount of innovation beyond sales / system capacity to execute • Algorithm constraints 061807_KIN Summit_Legal Approved Copy

  9. Fuel the Core Mostly Scale, Some Niche Internal Development / Organic Expand Out Mostly Niche Initially, With Intent To Scale External Development / M&A In This New Environment, Innovation Has To Achieve A Better Balancing Act 061807_KIN Summit_Legal Approved Copy

  10. M&A $ $ $ Fast Follower Greenfield • Few available • Scale vs. timing • Sky-high valuation • When can leverage existing assets or competitive advantage • Does not address blurring/fragmentation • Challenging in image-driven categories • Create future advantaged growth in emerging categories • Required when no competitive advantage in category • But more difficult and requiring more patience And We Need To Find New Ways To “Expand Out” “Fuel The Core” “EXPAND OUT” 061807_KIN Summit_Legal Approved Copy

  11. Develop More Nimble CommercializationAnd Incubation GTM Option 061807_KIN Summit_Legal Approved Copy

  12. Patience And Sustained Investment Culture MM cs (8 oz) Aquafina Gatorade Propel Snapple Monster Red Bull Vitamin Water Years from launch 061807_KIN Summit_Legal Approved Copy

  13. Case Study 061807_KIN Summit_Legal Approved Copy

  14. Discovery: Provide Stimuli To Targeted Consumers For Their Interpretation Show. Don’t Tell • Anchor in a ‘backed-up’ proposition • Product: Delicious, Natural/GFY, Unique, Stylish Design • Company With a Conscience: Global Education Fund • Company With a story (entrepreneurial, Boulder)

  15. Discovery 2, 3, 4: Provide Stimuli To Targeted Consumers For Their Interpretation Show. Don’t Tell • Anchor in a ‘backed-up’ proposition • Product: Delicious, Natural/GFY, Unique • Company With a Conscience and a Story • Present a premium, impeccable appearance • At the right places… • High-profile events • Culture-driving locations • Hip, premium venues • Retail • In the right hands • Influencers and celebrities • Culturally creative, discerning adults

  16. IMPECCABLE APPEARANCE: consistency in Field Force creative and presentation – always beautiful, premium

  17. IMPECCABLE APPEARANCE: consistency in Field Force creative and presentation – always beautiful, premium

  18. PREMIUM APPEARANCE: present the ‘art’ of IZZE

  19. RIGHT PLACES. RIGHT WAY – Retail demos are key

  20. INFLUENTIAL EVENTS & ASSOCIATIONS Tribeca Film Festival After Parties Gibson Guitar Lounges Victoria Secret Natural Food Trade Shows Celebrity Events Guess Co-Promotion Event Spa Event

  21. RIGHT HANDS: (celebs and influencers)

  22. The Structure: PepsiCo’s Innovation Republic • Separated structures within Corporate culture! • Protected resources – people / funds • Aspirational leader reporting to the top • Outward orientation • Great set of external partners • Different type of matrix 061807_KIN Summit_Legal Approved Copy

  23. CORPORATE, Chief Innovation Officer FRITO LAY NORTH AMERICA PEPSI COLA NORTH AMERICA Confederation of Decentralized "States" QUAKER TROPICANA GATORADE PEPSICO INTERNATIONAL 061807_KIN Summit_Legal Approved Copy

  24. Marketing Innovation Dedicated Structures CMO Split: Chief Marketing Officer/Chief Innovation Officer • Dedicated resources • Top management oversight Chief Marketing Officer/Chief Innovation Officer Roundtable • Quarterly forum for cross-divisional opportunities • Share best practices • Drive innovation agenda • Aligned vision 061807_KIN Summit_Legal Approved Copy

  25. Not Only Marketers: • Proven problem-solvers • Strong analytical minds • Leveraging of external resources & partners • Cultural bilingualism – balanced brain • Self-motivated / creators Non-Traditional Executive Profile 061807_KIN Summit_Legal Approved Copy

  26. Challenging Our Thinking With Best-In-Class Partners “The Dudes” New Best-In-Class Partners • Developing breakthrough innovation with best-in-class partners that challenge our thinking • New capabilities • New mindset • New insights 061807_KIN Summit_Legal Approved Copy

  27. Pushing The Innovation Envelope Different Set of Matrix Risk Return C B A New Benefits New Markets Complexity 061807_KIN Summit_Legal Approved Copy

  28. Marketer Of The Future Historian Ethnographer Storyteller 061807_KIN Summit_Legal Approved Copy

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