Pepper and key derivation/stretching
A pepper is similar to a salt, but it is kept secret. So while the salt is stored in the DB the pepper is kept elsewhere, for instance in the code that verifies the password hashes.

A pepper can be used anywhere where a salt is present - mainly PBKDFs: password based key derivation functions. It makes somewhat less sense for KBKDF's: key based key derivation functions as the input secret of KBKDF's is already a key and you would expect it to be kept secure as it is.

The pepper is not really a method, it is just an addition to the salt. The salt is still required as the pepper is generally static. That would mean that identical passphrases would generate the same password hash or symmetric key. 

The pepper doesn't increase the work factor / iteration count (much) but it does make it impossible for an attacker to perform the calculations while the pepper is not known. Basically the pepper acts as a secret key that is required to perform the calculations.

Stretching the password using an iteration count is a different way of protecting the password. These are two different ways of making a PBKDF more secure; they do not directly influence each other.