Group Case Study

Subject: Introduction to Marketing

Course Code: MKT 202.2
Assignment Type: Case Study & Solution
Submitted To:
Honorable Course Teacher

M. A. Sadat Shimul
Submitted By:
S.
N

Members

01

Shahidullah Shaon

112-0142-030

02

Shahriar Hassan

112-0684-030

03

Asif Mohammad Zakaria

112-0255-030

04

Numayer Ahmed Chaudhuri

111-0126-530

Section: Two
Date of Submission: DEC 05, 2011

Id No.

North South University Bangladesh

1. Address the following issues regarding market positioning and segmentation.

What market positioning and segmentation strategy has PepsiCo chosen in this

case?
How does this approach influence the marketing mix decisions for Pepsi One/

Pepsi Max?
To what degree is the soft-drink industry able to standardize products and
marketing-mix elements on a global basis?

Solution:
Market Positioning:
In the category of Diet drinks Diet Coke had a better market share than that of Diet Pepsi.
The customer were not fully satisfied with the word Diet as most of them believed that, it is
only suitable for diabetic patients and obese people. It also had a unsatisfactory aftertaste.
Keeping all this factors in mind, PepsiCo came up with a revolutionary idea of Pepsi One/ Pepsi
Max, which created a whole new meaning of the word Diet. PepsiCo wanted to introduced a
diet drink which contains all the ingredients of diet cola drink but tests different, has a better
aftertaste, and suitable for all age group.

Market Segmentation:
To be successful in market the PepsiCo has chosen Customer-driven Market Strategy.
PepsiCo adopted Demographic Market Segment for Pepsi One, specially targeting age group
of 20 years to 30 years. It wanted to create an different impression for Pepsi One/ Pepsi Max, as
general people had an idea the diet drink is highly recommended for older age group and they
often think it is for diabetic people and hobby people.

PepsiCo wanted to present the Pepsi One/ Pepsi Max in the market as the core product of
PepsiCo. To fulfill this goal the PepsiCo undertook few strategies. These strategies or approach
will influence the marketing mix decisions for Pepsi One/ Pepsi Max, which are discussed below.

Product:
The Pepsi One/ Pepsi Max was introduced by the PepsiCo as a better drink than the diet
drink. The Pepsi One/ Pepsi Max had a better aftertaste than the other diet cola flavored drinks
available in market. PepsiCo spent three years developing a product that would not taste like
typical diet cola .It is also suitable for all the age group rather than suitable for only specific age
group. As Pepsi One/ Pepsi Max was considered to be the representative of the PepsiCo, the
product was given much importance. Even on the packaging the word Pepsi seemed to be
secondary. The quality of this product was also a big concern. The marketing of Pepsi One/ Pepsi
Max was delayed in US as the sweetener was not approved by the government.
Place:
At first Pepsi One/ Pepsi Max was launched in two markets; the United Kingdom and
Italy. These two countries were selected because in United Kingdom diet cola represented
approximately seventeen percent of the total carbonated soft drink market and in Italy they
represented only three percent of the market. So, the PepsiCo was able to see the reaction of the
consumers from two customer segments, one of them is used to the flavor of diet drink and the
other is not. Then Pepsi One/ Pepsi Max was introduced to France. When it was introduced in
Canada in 1994, a market research showed that Canadians appreciate product innovation in soft
drinks. Later on, by the end of 1994 Pepsi One/ Pepsi Max was brought to the market of twenty
different countries including Spain, Portugal, Sweden, Denmark, Norway, Greece, Japan,
Thailand, New Zealand, and Uruguay. PepsiCo also planned to enter thirty more markets by the
end of 1995. So we can see for the marketing place selection of Pepsi One/ Pepsi Max PepsiCo
adopted a very careful and planned steps.

Promotion:
As Pepsi One/ Pepsi Max targeted all the age group and specially the age group of 20
years to 30 years, PepsiCo adopted the marketing promotion according to its targeted customers.
In Britain, promotion for Pepsi Max included commercials featuring teens accomplishing
dangerous feats, including skydiving from Big Ben, rollerblading off of the Sphinx, and surfing
down the dunes of the Sahara. In London PepsiCo engaged a club called Ministry of Sound to
promote Pepsi One/ Pepsi Max at dance parties all around the country. In United Kingdom
PepsiCo held an unusual but highly successful campaign. To gain the interest of the generation
X crowd, Pepsi mounted an aggressive in your face type of tasting campaign. Actors that
emulated the risk-taking characters from the Pepsi Max commercials were hired to take Pepsi
Max on a road show. This was an attempt to prove that Pepsi Max with its Live Life to the
Max slogan was not simply an image-based product. After this campaign the repeat purchasing
was quite strong; which indicates the campaign was a successful one. The packaging of Pepsi
One was also eye catching. The traditional blue was jazzed up a bit so that the consumers were
attracted.

Price:
For the price of the Pepsi One/ Pepsi Max PepsiCo must have thought about the
promotion cost, advertising costs and also the buying capability of their targeted customers.

When a product enters into a market, to make it more successful and popular, the
company needs to standardize that product and its marketing mix on a global basis. Same thing
should approach with a soft-drinks company. Soft-drinks have an attraction to all aged people.
People look for variation of taste, quantity and quality. Standardization of a soft-drink can be
improving the taste, targeting different customers and understanding their needs, always
maintaining a good image globally and internally. And also soft-drinks companies always should
focus on the marketing mix. Soft-drinks industries should always put a spot light on their

product. On the other hand, price is a big matter to think. Global promotion is not an easy job to
do. But it provides a huge popularity and recognition over the world. Thats how a soft-drinks
industry can standardize their product and marketing mix globally.

2. Pepsi core displays will include Pepsi, Mountain Dew, Diet Pepsi, and Pepsi One, says
Philip Marineau, CEO Pepsi North America. Pepsi One will be treated as a Pepsi core
brand and it will be sold everywhere the other core brands are available. Will Pepsi One
take away market share from Diet Pepsi, or will it generate more revenues and increase
the market share for PepsiCo? Given the limited amount of fountains, shelf space and
vending machines, how can Pepsi effectively manage two products in the diet soft-drink
market?

Solution:
Pepsi Co. displayed Pepsi One with their other core product because Pepsi Co. wanted to
enhance their brand image to a higher extent by including Pepsi One in their display. Pepsi One
has been a revolutionary product in soft drink industry. Pepsi One has made a lot of innovation in
the world of Diet colas and it has improved it just like the way consumers wanted it. By placing
Pepsi One with all their other soft drinks, gives consumer a choice between Diet colas. So in
short Pepsi One will not take a large chunk of Market Share away from Diet Pepsi as people will
not switch from Diet Pepsi to Pepsi One or from other colas very fast. But Pepsi One can build
on their customer in long run and eventually they will topple Diet Pepsi as because both Diet

Pepsi and Pepsi One are of same genre. So comparing between this two Pepsi One has an
advantage of Taste and Name and the targeted market is very young age group, so they can build
on it and really go high in terms of market share. As far as the revenue is concern Pepsi One will
generate extra revenue for Pepsi Co. in the short run but in long run Pepsi One will not generate
extra revenue as because presumably Pepsi One will take away market share form Diet Pepsi so
whatever extra revenue Pepsi One will generate will compensated from the loss or low sale of
Diet Pepsi, even then Pepsi Co. will earn more than they used to, because its not only the Diet
Pepsi consumers will come to take Pepsi One there will many other cola consumers leaving their
product behind and getting Pepsi One and Pepsi One also got huge response from around the
globe and especially in Europe and America where they targeted the most. Revenues will
generated more from these places then compared to other parts of the world. So Pepsi Co. will
generate more revenue than they used to but not something substantial from the inclusion of
Pepsi One.
In this time when the soft drinks are well established in the market it will very difficult
from Pepsi Co. to introduce and manage Pepsi One effectively and also provided there are
limited shelf space, fountains and vending machines, so to manage two Colas from Diet soft
drink Pepsi Co. can take a market survey in the major cities to begin with and see which one, i.e.
Diet Pepsi or Pepsi One, has competitive advantage in that particular place and put more
emphasize on that with that particular product on that place. For e.g. in survey if it found that
Pepsi One has got more consumer in New York compare to Texas than Pepsi One should be in
more outlets in New York, and in Texas Pepsi Co. should concentrate with Diet Pepsi. So at
beginning they should concentrate on major cities. After the initial phase of surveying major
cities they should concentrate on each and every place where there is even a minimum possibility
to excel. Without surveying it will be difficult for Pepsi Co. to manage two drinks effectively as
because they just cannot put Pepsi One and Diet Pepsi and expect it be sold and make losses
from actually not selling it. Apart from the market survey they also do have a targeted market for
their Pepsi One, i.e. from 16-30 years age group, so they can concentrate on outlets outside
school, colleges, universities, dormitories and other places where people of this age group visit
often. By maintaining these things Pepsi Co. can effectively manage two colas of same genre.

3. Wed be thrilled if consumers just call it One, says Steve Fund, director of marketing
for Pepsi-Cola. What are the possible reasons why Pepsi wants to deemphasize the
corporate brand name Pepsi for this new product? How can Pepsi One still enhance the
corporate brand image of Pepsi?
Solution:
Pepsi is a world famous name in the sector of soft-drinks. The Pepsi One is the
newest product and it was chosen to be the core product of PepsiCo. Steve Fund, director
of marketing for Pepsi-Cola, wanted the customers to call their newest product as One
for several reasons. First, One goes with the product slogan they have for Pepsi One
which is Only ONE has it all. Second, the word One creates an image inside
consumers mind that this is the best one and this is the only one drink that you are
looking for. This helped the Pepsi One to be successful in the market.
Pepsi One will enhance the name of PepsiCo as the consumers will know about
the company from where this new and improved drink as it gets popular. The packaging
of Pepsi One has the blue color which represents PepsiCo. Pepsi One will take the name
with it as it gets popular day by day as this is the core product of PepsiCo. So at last we
can say that, Pepsi One will still enhance the corporate brand image of Pepsi.