There are also many sizes of bottle to satisfy different kinds of consumers. Smaller bottles are easy for consumers to carry and larger ones with lower price are suitable for families.
When buying Pepsi-Cola, consumers get chances to take add-ons back home. It is really a good idea to set add-ons because it is not only advertising the new product among the consumers, but also stimulating customers to get more.
For the package, the symbol of brand is quite clear and obvious. However, the design of bottles is very similar as other brands of cola. It is not easy for consumer to recognize and be interested in it. The appearance of bottles can improve (to be) more fashionable or lovely to attract younger consumers and make loyal customers enjoy new style of Pepsi classical cola. Moreover, in the market, there are always few drink packages designed for particular groups of people, such as the kids. Kids are quite important consumers in the market. It is believed that it is better to design a package with some popular cartoon stars for children to choose. For examples, the bottle of Pepsi classical cola can be with the shape of Nemo or Winney the Pooh. Moreover, the bottles for children could be smaller than the usual size for them to carry to school. The children can also collect different kinds of cartoon bottles for fun. In this way, it can raise the sales of classical coke and attracts loyal consumers in a young age.
PRICE
Providing quality products at the lowest possible price has always been one of the main concerns of Pepsi. For example, in some parts of the country a two-litre bottle of Pepsi cost 99 cents a decade ago and still does today. One of the ways they have been able to assist this effort is by expanding their use of inexpensive and recyclable plastic bottles. (Pepsi World, 2004) Another ways is to reduce the cost of the bottles. The soft drink industry sold their drink to customers; they must have a container to carry. So bottles in the soft drink industry are a very important part of the whole processes. The company manufactures and sells soft drink relies on Pepsi bottlers. PepsiCo takes over the bottling operations from its franchisee. It does propose is to shift its franchisee operations from Coca-Cola to Pepsi.
As the bottlers shifted to Pepsi, Coca-Cola had to struggle hard to counter Pepsi's aggressive marketing strategies. They were getting bottles from neighbouring states incurring heavy expenditure on transportation and storage. What is more, they had to offer a lot of incentives, like Pepsi, without increasing the price. Coca-Cola is still having an upper hand with 56 per cent market share. But with the bottling operations shifting over to Pepsi in November 1997 -- which had forced Coca-Cola to import its bottles from outside till recently— Pepsi managed to increase its share to almost 44 per cent from a mere 30 per cent three years ago. (Sandesh, 2000) This takes over the bottling operations not just make Pepsi’s competitors to shift up their manufacturing cost on purchase the bottling, but also reduce its own risk on the bottles inflation and has a steady supply of bottle.
The soft drink industry today is confronted with a bewildering array of price increases. Pepsi expenditures for labour, ingredients, transportation and more rise continuously. The cost of aluminium alone has increased dramatically since last year. Across their entire system, however, have been cutting overhead and re-engineering our manufacturing process in order to keep our prices competitive. It is their policy to limit any price increases to the retail trade to the lowest possible extent.
Reducing and maintaining the cost is not the only marketing strategic used by Pepsi. Sometimes Pepsi use cutthroat competition to war with its main competitor – Coca-cola. One of the price war, triggered by Pepsi, follows an earlier onslaught when both the companies reduced prices by about 20 per cent across the board. Just before the Union Budget for 2003-04, Pepsi had to slash prices of its 300 ml returnable glass bottles to $0.6 and this price cut to make its brands more affordable in April 2003. The Pepsi management thinks in a high-consumption market, aggressive price points devolving from the 300-ml segment will work much better. As a consequence, 200-ml bottles are priced at $0.5. The new price points are 300 ml at $0.6, and 200 ml at $0.5. According to industry sources, this sector is heavily dependent on returnable glass bottles and Pepsi's latest price reduction strategy is critical to drive volumes. In the home-consumption segment too, Coca-Cola took the lead earlier in 2003 by slashing prices of its 1.5-litre and 2-litre PET bottles. Pepsi yet to follow suit too reduced prices of its 1.5-litre and 2-litre PET bottles, to 1.5 and 2.0 respectively, against the earlier price of $1.2 and $1.6. So that Pepsi sometimes takes non-profitable turns with the sole aim of retaining market shares. (PTI, 2003) However this cutthroat competition should not too often war with its main competitor. The consequence not just affects the Pepsi Co. net profit. Also it affects the normal price market. It will affect as the customer adapt and get use to the cheaper price. After the price war, price shift back to the normal price. The customers will change their taste to Coca-Cola more elastically.
PLACE
Pepsi-cola as a famous brand is welcomed almost everywhere in the world and is well supported by millions of people.. Its beverage business contains North America and international. According to the statistics from the Australia Pepsi website, currently there are “more than 400 Pepsi-cola bottlers in the US and more than 600 internationally. The Pepsi-cola product is sold approximately about 195 countries and Territories” (PepsiCo Inc, 2004). The Pepsi Company manufactures and sells their products to the company they owned, and the independent bottlers that are franchised operating facilities through out the United States and Canada. Meanwhile, the PepsiCo also sell Pepsi-cola through the cooperation with other partners (PepsiCo Inc., 2004). The Pepsi website states that in 1992, a partnership agreement was formed by Pepsi-cola with Thomas J. Lipton Co, owner of the number one tea trademark in the US, and a distribution agreement was also entered with Ocean Spray, the number one non-refrigerated juice trademark in supermarkets (PepsiCo Inc., 2004). Other partners such as Pizza Hut, KFC and Hard Rock CAFÉ have partner relationship with Pepsi -cola. They receive support from PepsiCo and sell the product. The incentive for the PepsiCo is to extend their brand reputation in the whole world through those businesses, resulted in great sales. Normally, consumers can purchase Pepsi-cola from supermarkets, restaurant, KFC and Pizza Hut, which have partnership with Pepsi. Pepsi-cola brand is already been brought into the mind of the consumers as an invisible image. As the good reputation and image was created, Pepsi-cola almost exist anywhere and can be easily purchased by customers.
In contrast, Pepsi-cola still need improvement for their market strategy in order to have an increase in their product sales. For instance, localization of Pepsi-cola in the limited area would limit the product sales volume and lower its profit. Pepsi-cola may try to establish better relationships with other fast food businesses such as MacDonald. Pepsi -cola could possibly sign the contract with MacDonald competing with their competitor. Due to the same reputation as KFC, the permission of sale for Pepsi-cola in the MacDonald would be helpful to raise its reputation and profit. The more places the Pepsi-cola can be sold, the more reputation and revenue the company would have.
PROMOTION
Pepsi-cola has an extensive integrated marketing communication by coordinating promotional efforts. It uses advertising, public relations, personal selling and sales promotion to continuously reinforce consumers’ attitudes and perception of the product.
In advertising strategies, Pepsi-cola attracts consumers’ attention by the new campaign “Pepsi, It is the cola”, associating with the food-friendly strategy (PepsiCo. Inc, 2004). In the new released television commercial, it spreads the food-friendly message strategy by identifying customers’ benefit— consumes Pepsi with popular American food like hot dogs and tacos is an enjoyment, fun and satisfaction. This commercial released during the Super Bowl XXXVIII as an in-game advertisement. Pepsi-cola also used outdoor advertising in billboards and at bus stops all over America. The campaign persuades and reminds consumers the product brand images— spirited, spontaneous, contemporary and exciting, and adding a new ‘hero” image to the product. These strategies also put into the features of new radio, prints and on line adverting. (PepsiCo Inc., 2004)
Another advertising tool frequently used by Pepsi-cola is sponsorship. It sponsors various sports teams and events including soccer, football, baseball and car racing (PepsiCo. Inc, 2004). Different sports stars, movie stars and famous singers are used as a representative of the product to attract consumers’ attention and affect the liking of the product. A sponsorship deal was signed with Magna Entertainment Corp. in September as an extension of this strategy (The Blood-Horse Inc, 2004). Besides, the automatic vending machines are placed all over the country, targeting the self-selecting target market.
For public relations, Pepsi-cola makes an effort on building a responsible image on both environment and the well-being of consumers (Wong & Takamune, 1997). In the annual report 2003, Pepsi declares its action on environmental improvement, like efficient usage of water, seeking methods that are socially responsible, such as using 10% recycled materials in plastic bottles; develops education programs and follows environmental legislations. The report also declares its concern on responsibility to contribute to the well-being of consumers, support communities with direct contribution to not-for-profit groups and working with organizations delicate to improving the life of people (PepsiCo. Inc, 2004). Other public relation strategies like posing newsworthy information on the company website have also been used.
Pepsi-cola contests and games promotions are one of the major tools it uses to achieve sales promotion objectives—rewarding loyal customers and lure customers away from its competitor Coca-cola. Other sales promotion like in-store displays to attract consumers’ attention during shopping increases sales. Latest sales promotion featuring a collectable Pepsi die-cast car in a commemorative vending tin on the internet and a million give away in a television show (PepsiCo. Inc, 2004).
The Pepsi Bottling Group has about 6000 salespeople and recently invested in a Pocket PCs with customized software “Shelflink” to its sales force. It helps the salespeople to reduce time spending on various calculations and getting all sales information immediately. This new technology allows Pepsi-cola sales force achieve the sales objectives quicker by increasing time efficiency (Microsoft Corp., 2003)
Pepsi-cola’s promotion is highly supported by PepsiCo. Ink’s online marketing plan. The Pepsi.com coordinates with the Pepsi-cola advertising strategies by combining attractive graphics with the marketing message. It provides easy to access product information and latest promotion programs to customers. The PepsiCo.com has constantly updated news and information on the product. (PepsiCo. Inc, 2004)
The overall performance of Pepsi-cola’s promotion strategies is satisfactory. It generates sales and increases demand of the product effectively. Advertising is “the action of calling something to the attention of the public, especially by paid announcements” (Webster, 1993). Pepsi-cola existing advertising strategies can achieve the attention of the public effectively and achieve its advertising objectives—to persuade buyers to purchase the product and switch to the brand, and remind consumers the brand image in order to maintain top-of-mind product awareness. The new message strategy “Pepsi, It is the cola” communicates well to consumers the new hero image added to the product. Another message of the new advertising campaign is “Pepsi-cola is food-friendly”. This message combines with related graphics to attract attentions; however the campaign’s creative message cannot relates to the food-friendly strategy. Since creative message has a large effect on consumers’ memory, Pepsi-cola is recommended to increase its effectiveness of creative messages exclusively. Besides, major media types have been use to reach and expose to the target market effectively.
Sponsorship is one of the most important advertising tools used by Pepsi-cola. Sponsoring sport events and teams can be very effective on spreading its brand images. Like the new in-game commercials during famous sport event Super Bowl XXXVIII can effectively tailor to suit large amount of sport loving consumers. On the other hand, the automatic vending machines tailor to suit the self-selecting targets. It is unquestionable that sufficient spending has been made in these areas, and it has been successfully generates to increase sales and improve brand image (PepsiCo. Inc, 2004).
Building good relationship with various publics by building up a good product image is important for a brand. Pepsi-cola attempted to create a healthy image—including declares to take responsibilities on consumers’ health and the environment. As both are the new trends that increasingly concerned by the public, this strategy is able to bring positive image to the product. Press releases of Pepsi-cola in the Pepsi Co. Ink website is also a good tool of building a positive product image, with more credibility and a much lower cost than advertising. Pepsi-cola should increase its usage of public relations to impact the public awareness of the product, such as making public speeches and presentations (PRSA, 2004).
Sales promotion can push up sales in short term and building up consumers’ long term commitment. Using games and contests to push up sales is one of the most effective ways of increasing consumers’ product awareness. Pepsi-cola is able to create large incentive to consumers, but it needs to consider the cost effectiveness of these promotions carefully. Increasing usage of other sales promotion tools is also recommended as alternatives, such as patronage rewards and redeemable coupons in order to attract various consumers by different types of incentives.
Pepsi-cola salespeople should be able to make good relationships and communicating well with retailers. The new technology improves the performances of the sales force, with access of all sales information in hand all the time. This helps the salespeople to understand the needs of the retailers and be able to build a good connection with them. Constant retraining should be provided to the salespeople in order to improve their performances and keep up with the latest market trends.
Beside all the traditional marketing tools, online marketing is the latest and fastest growing trend in the global market. Pepsi has developed the Pepsi.com and PepsiCo.com—two major website related to Pepsi-cola. The fashionable graphics and a user-friendly menu are able to attract many web servers’ attention. These websites is designed to coordinate with all of the advertising campaigns and strategies, public relations strategies and sales promotion strategies of Pepsi-cola. On the other hand, the websites are able to target another group of consumers in the market.
On the whole, Pepsi-cola has well-developed promotion plan and strategies in all dimensions. Facing its greatest competitor Coca-cola—the market leader of soda, Pepsi-cola’s promotion strategies helps to gain a large market during the last decade. (PepsiCo. Inc, 2004). This is a proof to its success on promotion strategies. Nevertheless, there is some space of improvement for Pepsi-cola. Notes that market research would be able to help the marketers to gain more understanding of its target market, it is recommended to increase the budget spending in this area. Moreover, since the effectiveness of promotion strategies is greatly affected by the economy, marketers should also study the changing economic condition and trends.
CONCLUTION
In brief, Pepsi has built a good reputation around the world. In the analysis of Pepsi’s marketing strategy, this report has built a clear sense through four important elements---product, price, place and promotion. Moreover, some usual definitions relative to the analysis have been broadened out. Furthermore, a detailed view at Pepsi Co. was also conducted. Overall, Pepsi is a company in the soft drink market with a strong history, an impeccable image and an assurance of quality in all aspects that explains its current success and will lead to its undeniable success in the future.
RECOMMENDATION
On the whole, there are a few improvement can be made by Pepsi-Cola. Although Pepsi is the fifth largest food and beverage company, its product Pepsi-Cola is still quite cheap comparing with Coca-Cola— the leading soft drink provider. Most people can link price with quality and the low-price may actually indicates poor quality and it could cause Pepsi to lose the business in the long run.
If an advertisement that show Pepsi only allow excellent quality product to be sold to the consumers, it could alter the consumer’s perspective on Pepsi (i.e. Pepsi offer excellent quality product only).
Pepsi currently have contract with some fast food outlets to sell Pepsi products only, for examples, KFC, Pizza Hut and Taco Bell. These fast food restaurants are usually seen as lower to middle class restaurants and it could affect the brand name in the minds of consumers. However there are some small restaurants selling Pepsi when customer asks for it, it still doesn’t change consumer’s perspective of Pepsi. If a contract was written with smaller restaurant, such as a restaurant beverage must include all Pepsi products and not any of Pepsi competitor’s products could improve Pepsi’s image as a beverage provider for middle class families.
Some recommendations for Pepsi are as follows:
- Pepsi should increase its price to show it has high quality product.
- Advertise that all Pepsi products must pass high standard, rigorous quality control tests and strict bottling procedures all over the world.
- Pepsi should make contract with smaller restaurant as well instead of just fast food outlets.
- Pepsi should sign contract with some small takeaways to buy Pepsi form Pepsi Co. directly as this could reduce the cost of both Pepsi Co. and the take way owner.
However there are draw back for all of the recommendations, the higher price of Pepsi product could lead people to buy more coke as the soft beverage market is a highly elastic market, which means a small price change could lead to a large change in quantity demanded (Kotler, 2004 p.491).
The advertisement showing Pepsi products pass high quality control could have some effect on consumer’s perspective of the product Pepsi; however excess advertising of this could be a major expenditure for Pepsi with limited effects, especially in a large economy that is in recession such as America.
BIBLIOGRAPHY
Mark Henderson, October 14, 2004, Coke or Pepsi? In fact it's all in the mind
http://www.timesonline.co.uk/article/0,,3-1308477_1,00.html
Merriam-Webster’s Collegiate Dictionary, 1993, 10th Ed.
Microsoft Corporation, 2003, Microsoft Customer Evidence: Pepsi Bottling Group, The Pocket PCs Helps the Pepsi Bottling Group Sell Soda More Effectively.
http://www.microsoft.com/resources/casestudies/CaseStudy.asp?CaseStudyID=13819
PepsiCo, Inc., 2004, Ads & history –highlights
http://www.pepsi.com/help/faqs/faq.php?category=ads_and_history&page=highlights
PepsiCo, Inc., 2004, About the Pepsi-Cola Company
http://www.pepsi.com/help/company_info/index.php
PepsiCo, Inc., 2004, CORPORATE INFORMATION - PepsiCo Corporate Information
http://www.pepsi.com/help/faqs/faq.php?category=corporate_information&page=corporate_information
PepsiCo, Inc., 2004, Pepsi.com.au
http://www.pepsi.com.au/v3/info.htm
PepsiCo, Inc., 2004, PepsiCo
PepsiCo, Inc. Strategic Marketing. The Coca Cola Company versus PepsiCo.
PepsiCo, Inc., 2004, The History of Pepsi-Cola
http://www.angelfire.com/ga/struitt/pepsi.html
PepsiCo, Inc., 2004, The Leading supplier of data, consulting and Financial Services to the global beverage industry
http://www.beveragemarketing.com/marketreportsLma.htm
PepsiCo, Inc., 2004, Pepsi Smash
http://www.pepsismash.com/lo/home.php
PepsiCo, Inc., 2004, PepsiCo Financial Releases: Pepsi-Cola Press releases
http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=IROL-earningsReleases_Pepsi-Cola04
PepsiCo. Inc, 2004, Annual Reports
Public Relations Society of America (PRSA), 2004, The public relations profession: About public relations
Rediff on the net. Pepsi to take over major bottling unit
Rediff.com. Pepsi cuts price, Coke yet follow suit
The Blood-Horse Inc, 2004. Horse Racing and Breeding information from the Blood-Horse, “MEC Inks Sponsorship Deal with Pepsi-Cola
