Global Brand Management in the Pepsi Generation
This interview features a conversation between Marc de Swaan Arons of EffectiveBrands and Antonio Lucio of PepsiCo, Inc. where they 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.
To start, would you give me an overview of how your organization is structured and your operating model?
Lucio: 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.
- 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.
- We believe in 360-degree 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-degree 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-degree approach to the brands.
- 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.
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?
Lucio: 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”.
Who judges your success?
Lucio: 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.
Is there a steering committee of countries that drives what you do and sets an agenda at the center?
Lucio: 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.
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?
Lucio: 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.
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?
Lucio: 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.
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?
Lucio: 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 performance, 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.
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?
Lucio: Ultimately, the access to a wide network of best-in-class 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!
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?
Lucio: 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 multi-country locations. We run a highly fluid and interactive process that enables us to maximize global and local resources.
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?
Lucio: 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.
What advice would you give to your peers who travel around and meet with local markets, to help build those networks?
Lucio: 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.