The Place of Pepsi-Cola in the Current Market Trends - Essay Example

Table of contents Introduction 2. Background 3. Research Approach 4. Research Design 4 Design Justification 4.2 Design 4.3 Qualitative Design 4.4 Quantitative Design 5. Research Procedure 5.1 Research Questions 5.2 Survey Questions 6. Research Analysis 6.1 Statistical Analysis with SPSS 6.2 Frequency Distribution Table 6.3 Marketing Research Objectives 6.4 Marketing Decision Problem 6.5 Hypothesis Testing 7.0 Reporting 7.1 Timing 8.0 References 1.0 Introduction Over the years since Pepsi’s introduction to the Australian market, the major competitor to the brand has been Coca-Cola. This is due largely to the fact that they both supply similar tasting drink, these two brands are often compared and fight for market share (Hartley). However in the last five years the soft drink market has expanded with a range drinks designed and marketed at various target groups, such as those used for the following reasons; energy supplements, diet supplements and mixer drinks. In the 2011 financial year, Pepsi-Cola recorded record drops in their profit margin, with sales particularly low in the demographic of customers aged 20 – 25 years of age. It appears that this group is consuming other soft drinks in large quantities and is attracted to buying drinks for reasons other than quenching thirst. This report will outline how Pepsi-cola should conduct their research using qualitative and quantitative techniques in order to understand the current market trends. This will enable the brand to capture a larger share of the market. 2.0 Background In Australia Pepsi competes with its main rival Coca Cola for a share of approximately $3.8Billion. It is estimated that market will continue to compound annually until 2016 by 2.5 percent. More recently market dynamics has changed with the introduction of a number of new healthier and trendy beverages. People are shifting to water and fruit drinks since these are perceived as healthier drinks. Energy drinks on the other hand are gaining popularity due to increase in their advertisement as alternative drinks. In addition it was previously estimated by 2010 this group would hold 40percent of the market (BMI, Q2 2012). These lifestyle and behavioral changes where people are gradually shifting to taking drinks that they perceive to be healthier and trendy have adversely affected the overall sales of the Pepsi cola soft drink product line as illustrated in figure 1. As illustrated in figure 2, the largest consumer group for Pepsi is the 35-50 year old segment, however over the last ten years this group has declined, while the 50-60 year old group is showing increases. On the other hand the 18-35 year old segment has steadily declined. In other words Pepsi’s customer base is declining because of poor adoption rates in the youngest group and changes in the older group’s consumption behaviour. The question that Pepsi’s management faces is on how to reverse the decline in sales. Is it to change the advertising/communication strategy or to develop a new product that will capture the market change, that is, to produce a drink that people will perceive as healthy and trendy? 3.0 Research Approach Today the consumer has a limitless choice of soft drinks available to them, all with diverse benefits to capture the many different lifestyles. In addition researchers indicate that the changing population age structure greatly affects a consumer’s decision to purchase various brands and how these brands are communicated to them (BMI, Q2 2012). Pepsis study of secondary data based on consumption and demographic data highlights these phenomena especially in the last the ten years. Business Monitor International supports this finding by indicating carbonate beverages will grow in the short term. However other non–carbonate beverages are likely to succeed in the long term, because demand will be driven by healthier and more active lifestyles (BMI, Q2 2012). This will directly erode the market share held by carbonated drinks such as Pepsi. . Figure 2 Consumption of Pepsi’s carbonated cola 4.0 Research Design 4.1 Design Justification It is argued that individuals are more likely to buy brands whose personalities intimately match their own self images (Schiffman &Kanuk, 2000) and therefore these traits will influence a consumer’s reason to purchase a product. If one can understand why consumers purchase a certain product and the association with purchasing it because of brand image, it is possible to identify the factors that drive them to buy the product. The company can then model their product based on this information so as to attract consumers to their product. This shapes the foundation for the research design that follows. 4.2 Design Description Group 14 proposes a combination of research design processes that will plan and recognise the scope Pepsi-Cola will need to engage in as the company seeks to experience growth in sales. 4.3 Qualitative Design “Qualitative research will help provide us with the insight and understanding of the problem setting” (Malhotra). Qualitative information will support and provide information and understanding to why Pepsi-cola has shown substantial losses in sales records last year. Group 14 will explore, through use of focus groups, random sampling surveys and in-depth interviews impact of consumer patterns on Pepsi-cola. 4.3.1 Procedure Mall- intercept surveying  Targeting venues where 20-25 year olds may frequent – record outlets, surf shops, retail outlets that supply modern lines of merchandise  Short and concise surveys that include; Developing questions based on projective techniques in order to get people’s opinions towards Pepsi-cola and other soft drinks (Malhotra). 4.3.2 Personal Interviews  Targeting nightclubs and music venues patronised by the target group (20 -25 year olds)  on the spot interviews in the venues Questions need to be different to mall-intercept. Brief depth interviews will be used to gain insight into the motivations, attitudes and feelings of Pepsi-Cola (Malhotra pg. 185) 4.4. Quantitative Design Quantitative research in this case is used to “compliment Qualitative research” (Malhotra), it aims to evaluate the research data collected by previous findings of Pepsi-cola’s survey samples. To ensure we have the necessary data collected to make informed decisions, external and internal secondary data will be sourced. These findings will endorse the directed qualitative research completed by Group 14. The data collected through questionnaires will help to define the competitive position of Pepsi-cola (Steppingstone). Exploration of past internal secondary data could assist with understanding the timeframe in which Pepsi started losing traction in the market place. 5.0 Research Procedure 5.1 Data Collection and Procedures Any marketing research will be exposed to huge risk of failure if the process of conducting research and data collection is not properly defined. The data collection process is usually comprised of gathering of primary as well as secondary data. There are diverse ways of collecting primary data. As far as this research is concerned a ‘focus group interview’ will be useful. As per Lederman, a focus group interview is “a technique involving the use of in-depth group interviews in which participants are selected because they are a purposive and ‘focused’ on a given topic” (Rabiee, 2004). Focus groups are interactive in nature and sample size of 20-25 will be chosen for this purpose. Individuals like distributors and consumers of Pepsi and other products of Pepsi will be selected for the interviews. In addition to that people who are directly involved with the sales and marketing department of the company will also be contacted for the purpose of conducting interview. A questionnaire will also be designed and it will include questions that are likely to assist in attaining the main objectives of this research. Questions will be regarding the consumers’ perception about Pepsi, demographic factors and current trend among the major target market of the company and its products. Secondary data which is crucial for the literature review will be collected from various books, journal and scholarly articles. It is important to note here that primary research is costlier and more time taking as compared to secondary research (Kelly, n.d.). The analysis part will follow the data collection task. During the process of data collection it must be remembered that there will be several factors that are likely to limit the entire practice. First of all not all consumers, distributors and people from the company will agree to go through an interview process that is included in such a research project. Furthermore, all the information provided by the interviewees may not be true in all respect. So this will affect the accuracy of the result of this research. Even in case of secondary research all the desired data may not available either online or offline. 5.2 Research Questions As it theorised, the decline in consumption of soft drinks is a lifestyle choice, therefore the research questions are designed to explore the consumers personal preferences, behaviours or occasions that motivate the consumer to purchase a particular product. 1. How often does the customer consume soft drinks, either carbonated or non-carbonated? The aim of this question is to determine consumption patterns of the current product on offer. The outcome will provide insight into whether a new product should be developed or changes in the advertisement strategy of the existing product. 2. How many different types of soft drinks are consumed and on what occasion does this occur. Knowing when the customer consumes the beverage allows the development of marketing communication to be more specific to these occasions. Furthermore understanding the market segment enables product development to these specific occasions. 3. Compared to other known brands, how aware is the consumer of the Pepsi brand; This will highlight if it is either a brand awareness issue or product issue. 5.3 Survey Questionnaire 1) What age group do you belong to? a. 20 - 25 b. 25 – 30 c. 30 -35 2) Do you like Pepsi products? a. Yes b. No 4) Why Pepsi is your favourite drink? a. It tastes good b. Different from others c. makes me feel relaxed d. I love to take it during meals e.. Other: please identify 5) Do you have any reason that can prevent you from buying Pepsi? a. Price b. Location of the stores c. Appearance d. Other: please identify 6) Where do you usually buy Pepsi from? a. Supermarket b. Specific Store c. Other: Please identify 7) What do you think Pepsi, as product needs to improve in? a. Design b. Packaging c. Price d. Taste 8) Do you drink any of the following? a. Red Bull b. PowerAde c. Coke Zero 9) If so, for what reason do you take these drinks? a. Mixed drink b. Diet supplement c. Energy booster 10) Would you consider Pepsi for any of the above reasons? a. Yes b. No 11) How often do you take a soft drink? a. Daily b. Twice per week c. Never 12) Do you drink Pepsi for the a. Taste b. Mixer drink c. Energy booster d. Other: please identify 6.0 Research Analysis The numerical collected data will be entered into the SPSS, to be analysed by using different types of statistical process to generate the Frequency Distribution table, MRO’s, MDP and statistical Hypothesis. 6.1 Statistical Analysis with SPSS Numerical data collected will be separated under the metric and non-metrical data from the distributed questionnaire results through Univariate Test. Intervals, ratios and likert scales will be analysed with metric data; nominal and ordinal data will be measured by non-metric data. In addition to that a multivariate test will determine the relationship between questionnaires and focus group (De Veaux, Velleman, & Bock, 2008). 6.2 Frequency Distribution Table Frequency distribution table will transform the responses from the questionnaire into percentages. It is this percentages that indicate MRO for the company. This distribution table will provide the central tendency of mean, median and mode which will describe the overall consumer buying and consumption behaviours (Bryman, & Bell, 2011). 6.3 Marketing Research Objectives (MRO) 1) Explore consumer interaction with different types of drinks (a) What percentage of the market users consume soft drinks specially Pepsi? 2. Usage and attitudes towards Pepsi and other soft drinks (a) What percentage of consumers prefers Pepsi in comparison to other soft drinks? 3. Describe the characteristics of soft drink consumers. (a) What percentage of users is male? (b) What percentage of users is female? 4. Estimate the percentage of consumers that actively use Pepsi in hospitality industry (a) What percentage of consumers specifically uses Pepsi items? 5) At what point did the market share of Pepsi start to decline? (a) What is the percentage decline in Pepsi users? 6.4 Marketing Decision Problem (MDP) Why market share are decreasing in consumer market and why manager need to concern about that. This research proposal completion will explain and quantify why, how, when market share stated decreasing and what will be the possible way to increase the Pepsi market share. Furthermore, this research will provide solution how to change the consumer mind i.e. how to increase the Pepsi consumption in soft drinks market (Malhotra, 2010). 6.5 Hypothesis Testing Malhotra (2010) identified the following steps to perform Hypothesis testing: 1. Formulate the null (Ho) and alternative (H1) hypothesis Ho = PEPSI Cola consumption is not growing faster than other soft drinks in the market. H1 = PEPSI Cola consumption is decreasing faster than other some specified soft drinks in the market. Ho = Consumers are not buying PEPSI Cola due to varieties of other soft drinks in the market. H1 = Consumers are purchasing less PEPSI Cola due to varieties of other soft drinks in the market. 2. Choose an appropriate statistical technique (normal or chi-square distribution) to analyse data. 3. Calculate the level of significance to determine error in data. 4. Collect data, determine sample size and calculate test statistic to determine the value of Z. 5. Determine the critical values associated with the test statistics that divide the rejection and no rejection regions. 6. Determine whether the test statistics has fallen into rejection and no rejection regions. 7. Choose statistical decision either reject or not reject the null hypothesis. 8. Express opinion about marketing research. 7.0 Timeline Week Activity 1-4 Exploratory Activity 5 Exploratory Research Report available 6 Questionnaire Development 7 Pilot 8 Questionnaire Adjustment 9-11 Quantitative Stage 12-13 Analysis of results 14 Final Presentation and Report available References 1. Business Monitor International, Australia Food and Drink, Q2 2012 Pepsi, The Pepsi Cola Story http://www.pepsi.com/PepsiLegacy_Book.pdf 2. De Veaux, R., Velleman, P., and Bock, D. (2008) Stats: Data and models, second edition, Addison Wesley, Boston. 3. Hartley.M.K, Cola Wars: Coca-Cola vs Pepsi Co, Chapter 3 9/28 2005 Page 31. 4. Kelly, M. No Date, Primary and Secondary Data, McKinnon Secondary College, retrieved from http://www.mckinnonsc.vic.edu.au/vceit/infodata/primarysecondary.htm on February 28, 2012. 5. K. Kuan-Shun Chiu, R. Lin, M.K. Hsu, S. Chen (2011) Symbolic and Functional Brand Effects for Market Segmentation, Australian Journal of Business and Management Research Vol.1 No.6 [75-86] September-2011 6. Malhotra, N. (2010). Frequency Distribution, Cross Tabulation and Hypothesis Testing. In: Jackson, S. Heine, J Marketing Research An Applied Orientation. 6th ed. USA: Pearson Education, Inc. 481-527 7. Malhotra, N K (2010), Marketing Research, An Applied Orientation, 6th edn, Pearson Education, Upper Saddle River, New Jersey. 8. Rabiee, F. 2004, Focus-group interview and data analysis, University of Central England, [Online] Available at: http://journals.cambridge.org/download.php?file=%2FPNS%2FPNS63_04%2FS0029665104000874a.pdf&code=bed44b7adb29a0520e528452fc6608c7 on February 28, 2012. 9. Steppingstones Partnership Inc. (2004) Research using Secondary Data Sources, 17:47 Read More