Pepsi - the Magic of Marketing in the 21st Century - Case Study Example

The Importance of Marketing in the Twenty-First Century Introduction The brand and product that has been selected for the purpose of this paper is Pepsi. In this text, we shall discuss all aspects of the marketing strategy adopted by Pepsi for the successful marketing of its worldwide known soft drink. This soft beverage is consumed by people of all ages and they do not seem to get bored of enjoying the same product throughout their lives. The magic of marketing behind this success will be highlighted here including how they have made their marketing consumer-focused as well as the manner in which they have revolutionized from the time the product came into being. This will be explained better with the help of material available in text books such as the one written by Baines, Fill and Page (2008) and a few concepts from other books such as Principles of Marketing by Philip Kotler and Gary Armstrong. Overview of the Product Pepsi is a carbonated drink that was developed in the United States of America as Brad’s drink in 1898 and in its existence, of more than a century; it changed its name twice. First change resulted in Pepsi Cola and then finally Pepsi. The trademark received recognition in 1902. There have been various Pepsi variants produced over the years, as will be discussed shortly. Many changes in the marketing strategy have taken place from the very beginning including in the change of its logo design. Currently, Pepsi has a share of 43.9% in the beverage industry in the USA. Marketing Environment As explained by Philip Kotler, in his book Marketing Principles, marketing environment is a set of conditions that either directly or indirectly affect the performance of a brand or a product. These include various factors such as government regulation, culture, social factors and many others. Pepsi is a global product that is marketed throughout the world. Though it does not change its product but does alter other marketing strategies. It is important to discuss two factors here. Firstly, due to increased consumer protection and awareness amongst individuals, Pepsi had to become more conscious about its product’s ingredients and other related quality measures with respect to that. Another aspect of the environment is the competition that they face. The fiercest competition comes from the side of Coca Cola. Although, it is more expensive but still it is the second largest carbonated beverage with a market share of nearly 30.9% in USA. Other competition comes from Nestle fresh juices and now also Red Bull. However, they are not that close behind. Marketing Research Some people have a perception that established brands such as Pepsi do not need marketing research. This is an absolutely wrong perception and they also require and conduct research, for instance in designing their promotional strategy. In a consumer society like today’s, no brand no matter how strong it is, cannot maintain its existence without catering to the needs of the consumer and this can only be done if the true requirements are known which can only be discovered through marketing research and consumer surveys. There are several different ways of conducting marketing research. One such strategy adopted by Pepsi back in 1975 was blind testing of customers to compare Coke and Pepsi, and then asking them which one they liked better (Frank 1993). The research revealed that the taste of Pepsi was preferred more. Similar studies are being conducted in different parts of the world to check whether the opinion is still the same because the taste and preference of the population keeps on changing. Marketing Strategy It is basically a method of achieving competitive advantage over competitors while keeping customer wants and needs at the center. It has several subparts and most of them will be discussed below. Pepsi’s marketing strategy has helped itself by developing plans which are viable, aimed at looking at the long term, as well as fulfilling the desires and requirements of its target audiences across the board. Market Segmentation Their distribution is spread all over the world and people of all age groups are targeted, however major focus is on the young population falling in the bracket of 14 to 35 years. In some countries, the distribution is limited to urban cities only. However, people belonging to all income brackets are targeted as it is a reasonable drink. It is depicted as a drink of celebration and thus is associated with gatherings, dining out, parties and other social events. Therefore, it can be said that the marketing segmentation of Pepsi is more of mass marketing to reach all types of people all around the globe. Market Positioning Once the company has decided on its market segment and target consumer group, it can move on to the next step which is of positioning the product. As explained by Baines, Fill and Page (2008) in their book, market positioning is basically creating a certain perception about the product in the eyes of the consumers. Usually, people can understand a product better when they compare it with some other product. This idea is used by Pepsi in their positioning. They have created a perception about Pepsi with the help of this idea only and by stating that they hold a larger market share and it is the preference of most people. They have re-emphasized this by the slogan such as Pepsi - the choice of a new generation, and with the help of celebrities that have huge fan clubs. Differentiation Pepsi differentiates on several grounds. The deep blue color of their bottle, where they spent 637 million dollars over 5 years to develop, has gained them an edge amongst teenagers. Apart from this they are also pioneers in their field and trend setters as they came up with Pepsi-One which is a drink with one calorie. Marketing Mix Marketing mix mainly relates to the four Ps of marketing namely, product, place, promotion and price. This is a crucial part of marketing strategy. Recently other Ps have been included to this range to consider other potential factors that have an effect on the marketing success of a certain product. However, in this text we will focus on these four elements only. Product: There are two aspects of product that we will discuss here. The first one will be the product line and the second, the diversified range of packaging. Many variants of Pepsi were introduced every now and then, sometimes just to bring about a change and at other times to meet the new hype in the market about an upcoming event. There are still many variants of Pepsi available in the market including Pepsi Max, Pepsi Twist, Regular Pepsi, Diet Pepsi and a number of others, depending on the region under focus. However, none of the product variation has gained the amount of popularity that the original tasting Pepsi has. Due to the move towards health consciousness, Diet Pepsi is becoming a close runner up. Apart from this Pepsi is available in liter bottles, mini cans, and regular sized bottles (300 ml), and in several different shapes and quantities to meet the different needs of people with differing consumption patterns. Similar is the case with packaging. In 2007, they changed their can packaging for the 14th time. This time around they came with around more than thirty different backgrounds. One was with repeated printing of the number 73774 which stands for Pepsi only. Price: Prices are set according to the location in which it is to be sold. Mostly pricing decisions are made by marketing managers. However, as the product passes several hands before getting to the actual consumer, every middleman adds their cut accordingly. Usually the can and diet prices are more than the regular ones in the bottles. Further, their prices are lower than that of their closest competitors Coca Cola. Promotion: Promotion is a set of techniques through which the seller tries to persuade people from the target audience to purchase the product. This is a very broad definition of promotion and it serves many other purposes even. Endorsement of celebrities is not the only type of promotion carried out by Pepsi. There are several other strategies such as unique partnership with Grammy award winning Mariah Carey who designed special ring tones of Pepsi that were only available through Motorola and Pepsi promotions. Apart from this, famous celebrities such as Michael Jackson and Britney Spears have endorsed and helped promote Pepsi. Another very unique and important promotional strategy of Pepsi is that they connect themselves to any upcoming event or something the general public is looking forward to. This way, they take advantage of the already created hype and excitement and link it with their product. For example, when Batman Returns was about to be released or when any sports event like FIFA was about to be started, Pepsi came in sharply. Pepsi utilizes almost all options and sources of promotion, both above the line and below the line (Calvert 2008). They use a promotional mix which is not only cost effective but also effective to cover a large population as well as creating an appeal and desire for the product. Place: As mentioned earlier, this is a mass marketed product and thus it is important that it is readily available to the general public. Therefore, people all around the world can have access to it by going to the store closest to their house. Apart from this, they have contracts with some food outlets all around the world where only their product is delivered and not that of Coca Cola, for example, KFC and Pizza Hut. On the other hand, there are wholesalers and retailers. The delivery is made through base market distributors or outstation distributors. Other Marketing Factors Slogans Another important aspect that is worth mentioning here is their slogans. This has been a unique reason behind their success. They have inherited the concept of transnational focus when it comes to designing their slogan, i.e. they adapt their slogan to the given culture. A few examples are, “Pepsi the choice of a new generation” which was done with Michael Jackson. Apart from this, another very popular slogan was “Pepsify karogay” (Want to Pepsify), which was used in India and Pakistan. These concepts were especially appealing to the young audiences. Quality Another winning attribute of Pepsi is their standard quality. They have maintained the trust and confidence of consumers all around the world in their product through standardizing it. No matter what part of the world one goes in to, Pepsi tastes exactly the same. Marketing Communication A related concept is that of marketing communication. This is a broad topic that covers many aspects such as branding, advertising, promotion, sales promotion or any other strategy that involves passing messages to the public about the product. As already discussed, every aspect of this drink speaks out to the consumers and also to the potential consumers. They have not selected a single approach but used a conglomeration of approaches to connect to their consumers and to persuade them to consume the product. They truly use the concept of AIDA (Attention-Interest-Desire-Action), as Baines, Fill and Page (2008) explained in their book. These four steps result in consumption. They not only create awareness by showing various dimensions of the product but also capture the interest of the viewer in addition to creating a desire and sometimes literal thirst which finally persuades the consumer to buy it. One thing Pepsi makes sure is that it adapts its communication to suit the culture of the target audience otherwise; mishaps such as what happened to them earlier could be repeated. They did not alter their slogan ‘Pepsi brings you to life’ which when translated in Chinese meant Pepsi brings your dead ancestors back to life. Importance of Marketing of Pepsi in the 21st Century In the 21st century, it is important to remember that communication is only effective when it is designed keeping in mind the recipients. Communication by Pepsi serves several different purposes such as creating loyalty for the product, forming links with other products such as Pepsi with popcorns at movie theaters, for highlighting its attributes and many others. They take many forms of the communication to build or reinforce a certain opinion or perception amongst their target audience. 21st century holds a great deal of hope and novelties for Pepsi if and only if a proper commitment is envisaged on the part of the Pepsi team all over the world. Conclusion Pepsi has been successful in creating its image worldwide not only in the category of soft drinks but general snacks also. No meal or party is considered complete without it. This worldwide success not only deserves appreciation but it should also be considered a benchmarking standard for all those companies seeking marketing enhancement. Bibliography Baines, P, Fill, C & Page, K (2008). Marketing. Oxford University Press Calvert, S (2008). The Four Domains of Sports Marketing: a Conceptual Framework. Sport Marketing Quarterly, Vol. 17 Frank, T (1993). Was There a Pepsi Generation before Pepsi Discovered It? Youth-based Segmentation in Marketing. Business History Review, Vol. 67 Read More