Order ID | 53563633773 |
Type | Essay |
Writer Level | Masters |
Style | APA |
Sources/References | 4 |
Perfect Number of Pages to Order | 5-10 Pages |
Context Need Pricing at Pepsi Company
Executive Summary
The modern business environment is characterized by intensive competition.
Business needs to meet the expectations of the target market by continuously
delivering new products and services. A new product is identified as Pine is
proposed for Pepsi. Co. It will be natural health drinks with its ingredients being
extracted from fruits and vegetables.
The target market for Pine is Millennial, which is less sensitive to price in comparison
to the quality of products. This market has a growing need for healthy foods and
drinks due to health concerns that relate to lifestyles. The following is a context,
need, and pricing analysis for Pine.
Context Need Pricing
The company of interest for this assignment is Pepsi. Co. It is a multinational
company that operates in the industry of food and beverages. The company has
several product lines that include Tropicana, Pepsi-Cola, and Quaker, among others
(Kayabas et al. 2017).
Each category has several other products, all amounting to 22 brands. Pepsi is the
second leading corporation in the global industry of food and beverages. A proposed
new product is Pine, which is an organic nutrient drink.
The target market for this drink is millennials. Studies reveal that each year, an
average millennial spends at least $1,672 on food and drinks (Shoup, 2019).
They form about 80 million of the U.S population alone and spend an average of
$600 billion a year. Pine will be introduced in the market through price penetration to
capture a wide consumer base. The objectives of launching the drink in the market
will be tied to the existing brand image of Pepsi.Co.
Context
Pine will be integrated into the healthy beverages of the company. The product will
be made from organic products like citrus fruits, turmeric, blueberries, ginger, lemon,
and grapes. It will have high energy and vitamins contents to address the health
needs of consumers as well as the energy needs of athletes.
Pine will have non-negotiable features as it is expected to be a unique drink in the
market because it will be manufactured from purely natural products. The drink will
be unique in addressing the increasing health concerns of the consumers. Besides, it
will drive the business direction of Pepsi by diversifying is a risk portfolio.
The company is committed to creating positive impacts in society to create financial
success. Pepsi is continuously striving to build an image that depicts components of
integrity, honesty, and fairness.
This involves positioning itself in a better place for satisfying the needs and desires
of consumers. Pine will address this business goal of the company by addressing the
health needs of the market and generate additional revenue for the company.
Pepsi has a wide global presence in a hundred and sixty countries. The brand is
driven in the international market by diversity and inclusion of the locals, which
promotes its acceptability in markets with different cultural values (Kayabas et al.
2017).
It strives to replicate the diversity of consumer base to address their needs
effectively. The brand positioning of Pepsi is based on consumer satisfaction, which
includes delivering them the value of their products. An example of the defining
characteristics of the brand is a niche positioning that focuses on the company's
dominant segment of soft drinks.
Pepsi is defined by its unique marketing strategies that make the brand penetrate the
market with ease. The brand has a unique logo that is accompanied by its name that
eases advertising efforts.
The result has been the creation of customer loyalty that drives its sales. Today,
millions of customers around the world are fond of the flavors of this company,
making its products lines to sell globally (Beach, 2014). This is coupled with different
pricing and packaging strategies.
The introduction of Pine in the product line of Pepsi will translate to additional efforts
in the marketing strategies of the company. This implies promoting the products
before being launched to create artificial demand. Pine will have a new marketing
campaign that focuses on its nutritional values and health benefits to the target
customers.
Pepsi has already been successful in the branding efforts of existing products like
caffeine-free diet and zero-calorie cola. The company positions these brands as
unique to ensure that they reach the target customers (Pratap, 2019).
This is achieved through transparency and honesty. For example, Pepsi publishes
the primary ingredients of its products on its websites to explain the content of what
the consumers drink. The company has been making significant strides in
incorporating new supplementary features that position the entire brand as a whole
new level.
The result is making the products highly recognizable across the globe. The brands
are transferable and acceptable in the global market through different cultures and
religions. For example, its primary product, diet cola, and Pepsi cola have been
accepted in over 200 countries and are distributed in the different portfolio of
products to millions of customers (Kayabas et al. 2017).
This evaluation indicates a high likelihood of the new product to be successful in the
market. Other similar products have been successful by trading the brand of the
company. All the brands of the company cater to the needs of a specific market
segment and refrain from cannibalizing each other.
Pine is built on this trend and aims to reach the market needs of athletes and people
with health goals such as weight loss and those that seek to boost their immune
system.
Need
The target market for Pine is Millennial. Individuals in this group are aged between
21 and 36 years. A majority comprising 57% has never been married and lives in
urban centers (Bialik & Fry, 2018). In the U.S alone, this market is estimated to
comprise at least 73 million individuals. Their peers easily influence them in
comparison to other generations.
They depend on their friends for advice and eventually turn on social media for
further guidance before making their purchase decision. This population is defined
by a dominant character, with individuals being an enthusiast of technology.
They tend to adopt new technologies quickly than any other group. A large
population is mostly disconnected from traditional media like TVs, radios, and
newspapers because their information needs are addressed by social networks
(Bialik & Fry, 2018).
Millennials do not consume products or services in silence but like sharing their
experiences with others, mostly by posting their pictures and photos on social media.
Besides, they are passionate about values and incorporate them in making business
decisions.
The marketing of Pine will focus on these characteristics by investing in celebrity
endorsement and social media marketing. These strategies can offer the necessary
information that the market needs before making their purchase decisions.
Psychographic characters of millennials include the personality of self-expression
and uniqueness (Miranda, 2018). They like sharing their ideas and airing their
demands whenever an opportunity arises. This brings new ideas and other
personalities into the target market, where individuals strive to prove themselves.
They are oriented to online shopping. Besides, individuals in this market are fond of
traveling and having fun with their peers. The marketing efforts of Pine will need to
be adjusted to give opportunities for customer feedback. It will be in the form of
customer reviews, which will be examined to modify the product appropriately to
ensure that it accurately meet the expectations of the customers.
The behavioral characteristics of this target population are that individuals are health
conscious. The average health index of most millennials is 95.1, which implies
majorities have optimal health (Bialik & Fry, 2018). They strive to improve long-term
health and wellness and are cautious of lifestyle health conditions like depression,
high blood pressure, diabetes, and obesity.
The behavioral characteristics of this market imply that Pine will be readily
acceptable in the market because it will satisfy their healthy needs. The drink will
address these health conditions by offering a natural alternative to food. Unlike other
available drinks that are provided by competitors, the drink will be produced using
extracts from the fresh farm produce, making it preferred in addressing health
concerns of the target market.
Pines will benefit consumers by improving their immune system. The product will be
made of purely natural products from fruits, which boosts the immune system. It will
have different flavors like orange, which contain vitamin C, and minerals like
potassium and folate that are basic components of strong immunity.
The organic drink contains essential elements that reduce the risks of diseases such
as diabetes, heart diseases, and cardiovascular diseases (Grumezescu & Holban,
2019).
Others include liver and stomach cancer and mouth infections, especially the ones
that are produced from citrus fruits. Pine also targets to address the need for weight
loss in consumers. Orange is among the group of citrus fruits that is commonly used
in weight loss programs by avoidance of artificial sweeteners.
Millennial is selected as the target market for Pine because of the health concerns
and awareness of this population. More consumers in this market are striving to
maintain their health by focusing on their lifestyles and what they eat and drink. The
majority of the population continuously prefers organic foods and drinks fresh from
farms (Grumezescu & Holban, 2019).
An increasing population of millennials is concerned with weight gain and weight loss
and, therefore, consumes foods and drinks that have a low concentration of
carbohydrates and high levels of nutrients.
The introduction of Pine in this market will solve this need due to its high level of
organic nutrients. The drink is expected to be a building block, especially for the
millennials that are underweight loss programs. It will satisfy their hunger without the
introduction of carbohydrates and proteins in their bodies.
Strengths and Weaknesses
The strength of customer loyalty drives Pepsi. The company has millions of
consumers that make repeated purchases. This loyalty makes its products among
the best seller in the international market. It is reinforced by the marketing, pricing,
and packaging of the products. This strength results in growth and revenue for the
company. Pepsi also focuses on the quality of its products to address the health
needs of the customers.
Pepsi has the strength of a wide global presence. The company has its operations in
many nations across the world, which reduces the cost of distribution. This location
strategy has enabled Pepsi to build a strong supply chain and distribution networks.
As a result, most of the products of this company can be found even in the most
remote part of the world.
Pepsi has strength of high turnover and outstanding financial stability. For example,
its annual average in 2018 and 2019 was $65.7 (Team, 2019). Last year, most of its
revenue was from food and snacks that averaged at $33.9 billion, which was 52% of
the revenue. These statistics place the company in a better position for acquiring
funds from lenders to finance its operations in the global market.
The category of beverages and concentrates yielded $30.7 (Team, 2019). Before the
emergence of the coronavirus, the company had projected a growth rate of 12%
after the acquisition of Sodastream. The company utilizes its production capacity
fully, which contributes to high revenue that challenges Coca-Cola, its main
competitor.
A weakness that impacts the achievement of the vision and mission of Pepsi is a low
rate of penetration outside the Americas. The company derives three-quarters of its
sales from North and South America, which is an indication that the international
growth model of Pepsi is not very effective (Muzumdar, 2014). Besides, the company
limits its focus on the food and beverage industry. This weakness increases its risks
portfolio.
The consumer trend of buying from local will significantly shape the direction of
Pepsi. The introduction of Pine in the product lines of the company will require the
inclusion of local vegetable and fruit producers in its supply chain. This will translate
to participation in corporate social responsibility by promoting the livelihood of the
local communities.
It is an indirect marketing strategy that increases customer base by bringing new
customers as a reciprocal of buying their products. Consumers will be able to buy
Pine from online stores. The product will be incorporated in the existing e-commerce
channel for Pepsi. It will also be integrated in the distribution channel to make it
available at local stores.
Pepsi has invested $1 billion in the purchase of green bonds that are expected to
change the footprint of the company in the environment (Muzumdar, 2014). This
project is embedded in technology, research, and development to nurture
innovations for promoting the company to promote its environmental sustainability.
The packaging material for the new product, Pine, is proposed to be biodegradable
material such as a carton. The containers will also be recyclable to promote the
environmental sustainability of the company.
A significant threat that Pepsi faces is the increasing shift of consumers to healthy
and organic foods and beverages. The trend is rapidly becoming significant to
revenue generation and the sustainability of the company. Some of the products of
its products, such as Pepsi Cola, Twister, and Pepsi Next, contain sugar and other
inorganic ingredients that customers are avoiding.
However, the introduction of Pine is expected to address this threat. Its success in
the market may prompt the company to replace some of the products with natural
ingredients. This may be a way of mitigating the risk.
Ethics concerns are instrumental to the brand image of a company. Pepsi is an
international corporation and, therefore, it is exposed to different ethical concerns
depending on specific markets. This introduces the practice of situational ethics,
where international companies adjust to local practices.
Different target populations have different perceptions of ethical behaviors. Ethics
and influenced by culture, which vary from one society to another. Consumers
detach themselves from a company that violates ethical practices. They can even
boycott its products, which result in tremendous losses and even product failure.
The identified factors are critical in the branding operations of the company. They
bring together all the departments of the organization in the utilization of strengths
and the available opportunities that can further the branding goals of Pepsi. This is
an ideal platform that facilitates the conversion of weaknesses and threats into
opportunities for the company.
Core Competencies
Pepsi is driven by the competence of strong marketing and branding capabilities. For
example, the company spent $4 billion in 2017 in marketing and $2.4billion in
advertisements (Nguyen, 2019). It has wide digital capabilities where it conducts
digital campaigns. Pepsi will use this competence to launch Pine in the market
through an intensive marketing campaign.
An example is the Bring Home Happiness campaign that had more than 1billion
views. Another competence that the company will have after the introduction of Pine
is a unique formula for producing a healthy organic drink. This competence is
expected to give the company a unique position in the market and widen its
customer base.
Pricing
Fixed
cost ($) Variable
cost ($) Total Cost
(FX+VC)
200 50 250
200 100 300
200 150 350
200 200 400
Variable and fixed costs are significant components that will help the company
determine the quantity of Pine that will be produced. Their sum will be the total cost,
which is necessary for estimating the profitability of the product. Both fixed and
variable costs of Pine will be the foundation of Pepsi to achieve its financial goals in
the line of beverages.
The target market is willing to pay $1.8 per 300ml of Pine (Nguyen, 2019). A majority
of Millennials (80%) are driven by the quality of food or drinks rather than price. They
are also driven by transparency in the supply chain and processing of what they eat
or drink. Millennials are continuously becoming conscious of what they purchase,
especially food.
It is estimated that 69% of the consumers are more likely to purchase a product that
aligns with their preferences (Nguyen, 2019). In the U.S, 60% of this market care
about food additives and their ingredients.
Pine will be launched in the market using a price penetration strategy. This pricing
strategy entails the use of initial lower price to attract more customers from the
competitors. The initial price will be low, but it will be increased gradually according
to the performance of the product in the market.
Penetration pricing is associated with the risk that new customers may prefer the
brand initially but turn to competitors after the increase in price. This risk will be
addressed by producing high quality drink and use the strategy as a competitive
advantage.
This strategy will help Pepsi to maximize profits through maximum sales and a low-
profit margin. Price penetration is an effective strategy for gaining a competitive
advantage in the market.
Refinement
The evaluation of the success of Pine will be conducted by gathering customer
feedback, sales, and channel partners. Information from these sources will suggest
the areas that may need improvement. Early customer success, such as testimonies
and positive feedback, will be critical in gaining momentum.
Another metric will be the production and sales data, which will indicate the
performance of the product in the market. The evaluation will be done weekly
throughout the sales cycle.
Among the business-wide feedback loops and processes that will be implemented in
support of the idea is regular communication. The sales team will be required to
make weekly reports of the sales activities. The management will, in turn,
communicate the required information such as sales targets.
Data will be collected from field reports of the sales teams as well as customer
feedback on the e-commerce websites of the company. These are primary sources
of data, which implies that the information will be accurate and significant to the
company.
The response to a crisis is a critical factor that needs to be considered in the
implementation of the new idea. Even with adequate planning, the crisis is inevitable
due to unforeseen reasons. However, being prepared to respond to situations is
essential than avoid their occurrence. Another significant consideration is intellectual
property rights.
This element offers a business an exclusive right to the use of an idea. It raises the
need for its full protection. An idea with weak property rights can be copied easily
and ceases to be a competitive advantage of a company.
Conclusion and Summary
Pine has great potentials of success in the market. It is a proposed healthy drink that
is expected to be introduced in the product lines of Pepsi. The target market for the
drink is millennial because this market is wide and has high levels of health
awareness.
Pine will be introduced in the market through price skimming to attract more
customers and build customer loyalty. The success of this product in the market will
be evaluated by customer feedback as well as sales the data.
References
Beach, J. (2014). Pepsi brand inventory. Retrieved from
https://jennambeach.files.wordpress.com/2014/04/jbeach_613_w6.pdf
Bialik, K & Fry, R. (2018). Millennial life: How young adulthood today compares with
prior generations. Pew Research Center. Retrieved from
https://www.pewsocialtrends.org/essay/millennial-life-how-young-adulthood-today-
compares-with-prior-generations/
Grumezescu, M. A & Holban, M.A. (2019). Natural beverages: The science of
beverages. Volume Thirteen, Elsevier Inc.
Kayabas, D. T, Boyraz. G & Derdiyok, R. (2017). Examining Coca-Cola and Pepsi
brands under the basis of globalization and multinational companies. International
Journal of Academic Research in Business and Social Science, 7(12).
http://hrmars.com/hrmars_papers/Examining_Coca-
Cola_and_Pepsi_Brands_under_the_Basis_of_Globalisation_and_Multinational_Co
mpanies.pdf
Miranda, T. (2018). Being a millennial: Age-based or mindset-based? Retrieved from
http://broncoscholar.library.cpp.edu/bitstream/handle/10211.3/205854/MirandaTerrin
a_Project2018.pdf?sequence=4
Muzumdar, P. (2014). A study of business process: Case study approach to
PepsiCo. Retrieved from
https://www.researchgate.net/publication/272221472_A_Study_of_Business_Proces
s_Case_Study_Approach_to_PepsiCo
Nguyen, H. (2019). Millennials’ food choices are driven by quality and they’re willing
to pay more for it. Retrieved from https://today.yougov.com/topics/food/articles-
reports/2019/09/09/millennials-food-choices-are-driven-quality
Pratap, A. (2019). Pepsi sources of competitive advantage. Retrieved
https://notesmatic.com/2019/01/pepsi-sources-of-competitive-advantage/
Shoup, E. M. (2019). A year in food: Survey reveals millennials’ eating and spending
habits. Retrieved from https://www.foodnavigator-usa.com/Article/2019/08/28/A-year-
in-food-Survey-reveals-millennials-eating-and-spending-habits
Team, T. (2019). Can Coca-Cola bridge its revenue gap with
PepsiCo? Forbes. Retrieved from
https://www.forbes.com/sites/greatspeculations/2019/12/18/can-coca-cola-bridge-its-
|
||||||||||||||||||||||||||||||||
GET THIS PROJECT NOW BY CLICKING ON THIS LINK TO PLACE THE ORDERCLICK ON THE LINK HERE: https://www.perfectacademic.com/orders/ordernowAlso, you can place the order at www.collegepaper.us/orders/ordernow / www.phdwriters.us/orders/ordernow |
||||||||||||||||||||||||||||||||
|