Fresh Juice in China - Case Study Example

Fresh Juice in China Name Institution Course Date Executive summary Marketing plan is an important part of a business plan, this plan is destined for a Pepsi Company to produce and distribute new carbonated fruit juice in china. This marketing plan will establish and examine the internal and external market forces that will affect the sales of the product. This paper will analyze the soft drink industry in general and the possibility of Pepsi Company in china market considering the opportunities and threats. Table of Contents Executive summary 2 Table of Contents 3 Introduction and Company Background 4 Market Description 4 Marketing mix 9 Customer value proposition 10 Justification Strategy: Marketing Communications Objective 11 Conclusion 11 References 12 Introduction and Company Background This marketing report is aimed to provide the foundation for an inclusive marketing plan for the fruit juice by the Pepsi Co, Inc. PepsiCo, Inc is specialized in production, distribution and sales of soft drinks but they have a brand new product they wish to introduce into the China market. So as to be successful in marketing of the carbonated fruit juice, the target market has been identified; the SWOT analysis has been done for the new brand and the company plus the marketing goals have been set (Lavinsky, 2013). PepsiCo, Inc. is classified among the world’s largest producers of soft drinks. The company has factories in China in a move to open up and expand expands its market share so as to close the gap with the market leader Coca-Cola Co. PepsiCo was started by Donald m Kendal who was its chief executive officer and the chief executive officer of Frito-lay Herman merged the two companies in 1945. The company is located in New York. The company deals with production and distribution of grain based snacks, carbonated and non- carbonated beverages. The company has grown and expanded its market operating in more than 200 countries globally and the company is classified as second in revenue collection in the line of food and beverage industry (PepsiCo, 2014) Market Description Development of the soft drinks market in china started in the early 1980s and has developed fully in the soft drink market. Today, this market has full-fledged into a mature and huge market. During the recent past, with the fast economic development, urban and rural consumers’ income levels and the continued improvement of the spending power that improve the individuals demand on the consumption of beverages. The beverage industry in China has a high market base that relies on and boasts of a great room for development (Euro monitor, 2014) According to National Bureau of Statistics China (2004), the soft drink industry between 2011and 2015 has maintained an annual growth rate of 12% - 15%. Generally, the size of the market continues to increase. While the beverage market regularly adjust to accommodate the shifting demand, the soft drink business will keep on adjusting its production configuration, bottled water will keep on occupying the huge portion of the market, protein drinks, tea drinks will boost the percentage plus the healthy drinks will turn out to be a major part of the industry formation (China daily, 2006) According to Euro monitor (2014), throughout the period of Eleventh Five-Year Plan, China has emphasized on changing the structure of the beverages products while reducing the amount of carbonated beverages. This will result in an increase in total production of beverages. This industry has paid more attention on growth and development of vegetable and fruit drinks, tea drinks, and plant protein drinks in additional to other products, reasonable development of cola, bottled water and so on while slowly reducing the manufacture of carbonated drinks (China daily, 2006). The favorable policy will drive the future soft drinks business to experience a reconstruction of the structural framework with fruit juices, healthy beverages, teas and other functional drinks forming the main outline structure. The pursuit of health drinks in China will be unavoidable direction in the beverage industry. PepsiCo, Inc. has a market share of 4.9%, making it the fourth largest producer in China. Coca-Cola leads with 15.8% followed by Tingyi with 13.1% of the market share (National Bureau of Statistics China, 2004). SWOT Analysis Strengths PepsiCo, Inc. is a multinational company therefore it has an already established market. Strong after sale services to the customers. There is customer loyalty The company has a lot of finances hence financially stable Extensive experience in acquisition and mergers Product design and innovativeness. The extensive supply chain and distribution channels of the PepsiCo Inc. Weakness Lack of popularity of the new product or brand awareness Use of intermediaries to introduce the product in the market. Opportunities The high growth rate of china’s population Brand recognition Buy out competition Health based products are becoming more popular in china. Threats Competition from other companies like coca cola Health issues Legal issues Price changes SWOT analysis is used to analyze the strength, weakness, opportunities and threats of the market strategy. The analysis on the external market environment shows there exists major opportunities. One of the opportunities is the rose in the sales of the soft drinks meant for adults in the recent years and the least amount of new or latest fruit juices advertisement done by the competitors. China Daily (2006) reported that adult soft drink sales increased by forty seven percent in the year 2006. This reveals that there is an increasing market of the fruit juices. Internal factors that were assessed in the SWOT analysis shows that there is devotion to the customer service plus the innovativeness and design of the products. Customer service in China is still at a basic level in terms of creating relationship with new customers. PepsiCo offers after sale services to its customers with the customer service teams spread all over China in the major cities. This method of after sales service lacks in the soft drinks industry in China. The innovativeness and design of the product is its strength, the new product is only adult soft drink (Euro monitor, 2014). The major weakness is the brand awareness, being a brand new product, the product has 0% awareness in the market but this can be addressed through marketing. Recommendations Target market In a move to establish a sufficient market for the new product, it is important to understand the target market that the product will be directed to. The marketing for this product can be classified in relation to the segmentation variables (Schiffman et al, 2005). The most relevant variables to this type of product are geography, family life cycle, user situation, age and awareness level (Schiffman et al, 2005). Through the use of the above variables, it is likely to define the market. It is possible to segment the market further to the ideal target market for the product. The age groups can be used to segment the market further, even though the elderly in the family have a major influence on the decisions to purchase in china, Duncan (2005) suggested that the elderly people are a fraction of the late majority group that is not attracted to the new product, hence the age segment targeted will be 18 to 44 who have a high probability to adapt the new product. According to National Bureau of Statistics China (2004), this target group form more than 35 % of the china’s total population and therefore form a profitable group to target. Marketing mix Marketing refers to how the new product is placed in the market sequentially to please the market needs (Mariampolski, 2001). To market a product successfully, there are four vital basics that are involved. These are the four P’s of marketing; promotion, price, place and product. The achievement of a product in a market is dependent on the four P’s hence they are very important particularly when introducing a new product such as fruit juice. A dealer is supposed to assess the four P’s and come to a decision which best matches the new product. Product According to Roger, (2008), product means to the goods and/or services that are being offered. There is also product design and innovativeness that is related with product which might also draw consumers. There also exist other features that are associated with the product that is being presented. This makes the product being presented to be a bundle rather than only the product or service (Shimizu, 2012). The fruit juice has its allied characteristics tailored to meet the exact market target. The fruit juice is a new product of the PepsiCo; the company has a reputation of producing products that are of high value, good quality in additional to healthy food products. The proposed new fruit juice has been enriched with complex carbohydrates, vitamin b- complex and other minerals. Price The price of the product has to reflect the cost of the production and marketing of the product, the new fruit juice is enhanced with minerals in which the cost has to be recovered from the sales of the product. Place The place that the product will be found is very important. Pepsi co will use its already established distribution channels to distribute the new fresh juice all over the county and make it available to everyone. Promotion Promotion is the sequence of events followed to persuade the customers to buy a certain product. Considering the new fruit juice is a new entrant n the market with 0% awareness,. After designing the new product, the company will use their resources to create awareness about the product and persuade people to buy the product (Duncan, 2005). Customer value proposition The new fruit juice has high dietary composition. The fruit juice is a new product of the PepsiCo; the company has a reputation of producing products that are of high value, good quality in additional to healthy food products. The proposed new fruit juice has been enriched with complex carbohydrates, vitamin b- complex and other minerals (Duncan, 2005). Justification Strategy: Marketing Communications Objective For a company to be successful in marketing of a new product, they should have objectives that are specific, measurable, achievable, and challenging (Duncan, 2005). To address the main weakness of the fruit juice, increasing the brand knowledge is a high priority for the company. Through achievement of this objective, awareness will be created that will be further transformed into desire and interest. The objective is set with a close attention to the SWOT analysis discussed earlier. Conclusion In conclusion, Marketing of the new fresh juice is a process that requires understanding the product features and coming up with the right market segment. Market segmentation allows the business to reduce the production and marketing costs. This is through targeting the consumers who really need their product at reasonable marketing prices. References China Daily 2006, Soft drink sales cooling down, Accessed on August 30, 2014 from Duncan, T 2005, Principles of Advertising & IMC (2nd ed.), McGraw-Hill/Irwin, New York. Euro monitor 2014, Juice in china. Accessed on August 30, 2014 from http://www.euromonitor.com/juice-in-china/report Lavinsky, D 2013, Marketing Plan Template: Exactly What to Include, Accessed on August 30, 2014 from . Mariampolski, H 2001, Qualitative Market Research: A Comprehensive Guide, Sage Publications, Thousand Oaks, CA National Bureau of Statistics China 2004, www.stats.gov.cn, Accessed on August 30, 2014 from PepsiCo, 2014. Accessed on August 30, 2014 from http://www.pepsico.com/ Roger, B 2008, Market‐Based Management, 5th ed., Pearson Publishing Schiffman, L. et al, 2005, Consumer Behavior, Pearson Education Australia, Frenchs Forest. Shimizu, K 2012, The Cores of Strategic Management. Hoboken: Taylor & Francis. Read More