Global Brand Management in the Pepsi Generation

Leading Global Brands Bulletin

http://www.effectivebrands.com

Antonio Lucio

To date, over 65 global brand executives have
participated in an exciting learning project on
Leading Global Brands. All participants are the CEO,
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thought leaders in developing ideas and best
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future.

Pepsi
Global Brand Management in the
Pepsi Generation

This Bulletin features a conversation between EffectiveBrands
(EB) and Antonio Lucio (AL) of PepsiCo, Inc. where we
discuss Pepsi’s operating model and philosophy on the role of
the global marketing team.

Antonio Lucio is the Senior Vice President Insights and
Innovation at PepsiCo, Inc. In his role since January 2005, he
drives the growth agenda across all divisions. At the time of
this interview, Mr. Lucio was the Senior Vice President and
Chief Marketing Officer of Pepsi-Cola International, a division
of PepsiCo, Inc. He was responsible for leading the
development and implementation of all global brand
marketing programs and initiatives for the beverage
portfolio. The only market for which he was not responsible
was the U.S.

Prior to PepsiCo Mr. Lucio had 15 years of consumer goods
experience with Procter and Gamble and Phillip Morris' Kraft
General Foods.

EB: To start, would you give me an overview of how
your organization is structured and your operating
model?

AL: We operate under a “local relevance” with “global scale”
model. We are a very fast-growing company – the fastest
growing international beverage company – but we are the #2
player. For us, maximizing scale when competing is of the
essence.
How do we work? Everyone on our central team, by
design, comes from our field operations. This provides
instant credibility of our work to our field operations. I don’t
bring international marketers from the outside world to do
isolated, ivory tower type analyses and program
development. Globally, my central group owns positioning,
formulation, label design, and packaging parameters. We
also deliver a comprehensive package of tools and programs
every year: global advertising, new product options,
promotional platform, and merchandising solutions. The way
in which we go about it is different. We operate through a
bottom-up, highly participatory and interactive process. It is
lengthy and time-consuming, but highly effective.

A. Several times a year, we gather marketers from our
key markets to identify needs and provide input to
everything we do at the center and at each and every
step of the development process – from advertising to
product development.

B. We believe in 360° marketing for all of our brands.
This means consistency and concurrency of all the
aspects of the marketing mix. To do this, we have
enlisted a very select group of partners and agencies.
Our key account planner is the Chairman of BBDO,
Allen Rosenshine. He is able to leverage a network of
centers of excellence from around the world to deliver
a global pool that drives 360° marketing. That means
all spots are designed with “the store” in mind. As the
advertising pools are developed, our alternate media
and below-the-line groups get to work to present a
comprehensive 360° approach to the brands.

C. All of this is delivered to our field in June. From July
through September, our field supplements and plans
implementation of the next year’s activities.

EB: So with respect to your group’s role it appears that
in one case you’re directive, and in another you’re
more of a service organization. Is that how you see it?

AL: Definitely. We’re directive in terms of strategy, but we’re
a service supplier in terms of marketing deliverables:
advertising, products, innovation and promotional platforms.
Our goal is clear: if we cannot provide goods that are
significantly above what a market or region can provide on
its own, then we just “don’t do it”.

EB: Who judges your success?

AL: Our success is measured in the business results of our
markets. We also judge it by the usage of the programs and
tools that have been centrally developed.

EB: Is there a steering committee of countries that
drives what you do and sets an agenda at the center?

AL: Yes, there is a committee – consisting of people from the
top 29 countries around the world – that drives everything
we do. We also have a smaller operating group, consisting of
7 Regional Vice Presidents and 4 core brand VP’s from the
center who make final decisions on the work developed by
the top 29 team. Then, if there is a discrepancy, I cast the
final vote.

EB: In the areas of strategy positioning, I’m sure you
have bottlers who have ideas that clash with your
own. How do you address those issues?

AL: The concept is to provide role clarity: what is
it that they do and what is it that we do. We are
responsible for the brands, and they are responsible for the
manufacture, sale, and delivery of the product.

We’ve created a joint planning process that brings together
bottler and franchise houses on a day-to-day basis, where
they look at the trends together to reach conclusions and
indicate actions on all elements of the brand business. It all
boils down to fact-based analysis and joint planning. If
conflict is not sorted through this process, then the franchise
house will make the final decision on brand-related matters,
and the bottler will rule in operations.

EB: Through our work, we’ve observed that marketing
organizations typically split between development and
activation. P&G has found a way to re-invent the local
marketing position. It involves the division of roles &
responsibilities and a better understanding of what’s
important to a marketer in each situation. What role
does local marketing play at Pepsi?

AL: I haven’t seen this happening at PepsiCo because our
organization handles this differently. At Pepsi, the local
marketer owns the branding locally: the actual manifestation
of the positioning statement within the context of his/her
particular market. What we, at the center, do is to provide a
menu of programs that first and foremost, those local guys
helped develop.

The 29-people team has dual roles: activation in the local
market and joint development of a global platform. For
example, we have a global soccer platform. The local
marketers helped develop the platform for global use. They
also take it and adapt it to their own local markets by
supplementing it with local players and activation programs.
Our local marketer feels that he totally owns branding: he
helped develop global programs and is 100% responsible for
the local activation.

EB: When you travel do you always meet with both the
marketers and the bottlers? When you came into this
role, how did you build relationships to begin working
with and leading these people?

AL: Yes, I meet with both marketers and bottlers when I
travel. In our particular case, given the dynamics of our
business, the only approach that works is “Leadership by
Influencing.”

In order to be successful in this style, you need to have a
strong command of several things:

1. Knowledge of what the brand essence is today in that
market

2. Knowledge of what the brand essence should be
tomorrow

3. Knowledge of the local market conditions and

4. Awareness of the relationship between the franchise
house and the bottler.

At the end of that interaction, if both bottler and franchisee
felt that you added value to the local agenda, then you were
successful in your visit.

EB: The ability to claim thought leadership comes up
often in other interviews. How do you ensure that
what you are doing is of better quality than what key
markets could develop?

AL: Ultimately, the access to a wide network of best-inclass
international support agencies – advertising,
promotional, packaging, etc. – together with the level of
centralized funds that we can assign to a project, will result
in a superior project that our local countries can’t do on their
own. To ensure that that is the case, the global work is
tested in all our key top 29 markets. The norm is clear:
global work has to obtain best-in-class scores in our local
markets…otherwise it does not work!

EB: Sometimes local countries (e.g., Brazil), in tandem
with local agencies, are able to come up with great
programs. Do you have any thoughts on this?

AL: Three thoughts. First, we work with centers of creative
excellence that deliver our global goals and drive the local
agenda. In the example you mentioned, Brazil is one of our
centers of excellence. The work done by Brazil is leveraged
both locally and globally.

Second, outstanding local work is also showcased as best
practices with our markets.

Finally, sometimes even a key local market is supported
financially by the center to deliver projects with multicountry
locations. We run a highly fluid and interactive
process that enables us to maximize global and local
resources.

EB: On the pitfalls to avoid, you’ve been at Kraft and
P&G, so you’ve seen how different operating models
work with global brands. What are the 3 things to
really watch out for when you’re in a global brand
role?

AL: Only two things are critical in our book: ownership and
participation by the field organization.

By getting the field involved in the development of the global
agenda, they feel that they own it. It’s as simple and as
complicated as that. When our process hasn’t worked, it’s
because the people who were in charge of activating the
brand at a local level didn’t feel that they owned it.

EB: What advice would you give to your peers who
travel around and meet with local markets, to help
build those networks?

AL: Be there often. Get immersed in the local numbers.
Listen and always build bridges between the local agendas
and the global priorities. When in doubt, trust the field. And
always, always make a point to add value… to the local
agenda.

Principles of Effective Global Brand
Leadership

Over the last 4 years, EffectiveBrands has developed The 8
Principles of Effective Global Brand Leadership. In this
discussion, Antonio Lucio illustrates how Pepsi exhibits
three of these global brand leadership principles.

Ensure Absolute Clarity for Stakeholders

EffectiveBrands has found that it is not the breadth of
responsibilities, but the clarity of responsibilities that drives
effectiveness. Pepsi demonstrates this fundamental
understanding by clearly defining who sets the global
agenda, who makes the final decisions on the priorities,
and who casts the final vote if any discrepancies exist. In
dealing with bottlers, there is also a clear mutually agreed
upon operating framework where the central team is
responsible for the brands and the bottlers are responsible
for the operations. If a conflict arises, then each party has
the final decision in the respective areas for which they are
responsible.

Adopt a Servant Leadership Mindset

Pepsi recognizes that global marketing takes place in the
local market place. Antonio Lucio makes a specific point of
avoiding the ‘ivory tower’ way of working and leads with
the mindset of ‘Leadership by Influencing.’ He understands
that his role is to make the local marketers and bottlers
more effective and successful. As a result, his goal is to
meet their needs and to always add value to their agenda.
This is achieved through showcasing outstanding local
work as best practices, in addition to leveraging centers of
excellence to deliver global goals and drive local agendas.

Focus the Global Brand Team

Pepsi understands that the global marketing team must
focus only on initiatives that the local markets would not
otherwise be able to develop either due to lack of time or
resources. Many of these initiatives could also be
categorized as long-term and ‘very important, but not
urgent.’ To build credibility with their local operating
companies, Pepsi operates in a bottom-up process
involving local marketers in every step of the development
process. If the initiatives developed by the central team
can be provided at the same level of quality by a local or
regional market, then it is scrapped. The global team
measures their success based on the business results of
their local markets and on the usage of programs and tools
that were developed centrally.

About EffectiveBrands

EffectiveBrands focuses exclusively on servicing the unique
opportunities and challenges faced by global brand
marketers. We provide effective solutions for global
innovation, organization, and capability development.
Working with a global network of expert partner consultants,
we have achieved outstanding results and client satisfaction
on key projects for global industry leaders.

http://www.effectivebrands.com