Pepsi Marketing Mix Across Japan and USA - Case Study Example

Marketing Mix xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Marketing xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Institution xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Pepsi Marketing Mix Across Japan and USA Marketing communication is the flow of information regarding a product between the customer and the seller. It is said to be effective when it smoothly flows betwee the two parties without the occurrence of miscommunication. Basically, the marketer communicates information about his/fer product to the customer while the customer in return gives his or her feedback. It is therefore a two-way process (Jobber 2004) In this assignment, we have chosen Pepsi as our product and we will compare its marketing communication and level of adaptation across Japan and the USA. We will start by giving a brief about what Pepsi is. Pepsi is a carbonated soft drink with 22 variants manufactured by PepsiCo. It has a huge market all over the world and its main competitor is the CocaCola brand it was first manufctured in the US back in 1898 and has grown over the years with a good reputation to establish itself as one of the market leaders in the soft drink world market today. Figure 1. Pepsi's first logo designed in 1898 Figure 2. Pepsi current logo Currently, PepsiCo generates more than $65 billion dollars net annual revenues and has a 22-brand product portfolio. Its huge success over the years has been built on a sound marketing communication mix. This is achievsed through massive advertisements campaigns that cost billions of dollars annually. For instance, it spent over $1.3 billion in advertising costs in 2004. Its main competitor is CocaCola and Pepsi has done pretty well over the years to retain its market share from the CocaCola ‘threat’. Statistically, it seems it will always be second, but only to CocaCola. (Mind-advertising) First it has had to continually adjust its marketing strategy over the years and across different regions in the world. With globalisation, advertisement and promotion has grown and become re-invented and producers have had to respond accordingly. This is because of the differences that exist across distint customersand countries (Armstrong & Kotler 2005). Marketing communication involves the four Ps: product, price, promotin and pricing. The product area includes product variety, brand name,packaging, services, features, design and quality (Jobber 2004) The product in this case is Pepsi. Pepsi-Cola contains carbonated water,caffeine, citric acidn natural flavours, fructose, sugar and colorings. It is worh noting rhat there have been other varieties that have been released for special seasons in the past and later discontinued such as Pepsi Cheer specifically for the 2010 world cup There are difeerent Pepsi varieties in the two countries and some of them areshown below. USA Japan Pepsi cola (the signature cola flavour) Peppsi Azuki Pepsi Wild cherry Pepsi Baobab Pepsi Natural Pepsi blue Hawaii Pepsi holiday spice Pepesi carnival Pepsi mojito Pepsi Carribean Gold Lemon Pepsi Pepsi Red Pepsi freeze Pepsi pink Pepsi next Pepsi X Energy Cola Pepsi vanilla Regarding price, it is defined in economics as the monetary value of a commodity. It icludes other aspects such as list price, dicounts, allowances, payment periods and credit terms. Pricing a commodity well detemines whether it will be successful in the market. The Pepsi varieties have different prices in the two countries. Pepsi determines the prices are determined based on Cola, the prices are a bit higher than in Japan. Sample pepsi global standard pricing list for the common Quantities. Quantity Price Regular Pepsi 250ml Rs. 15 Pepsi disposabl 500ml Rs.25 Pepsi 1.5l Rs. 50 Placement means the market where the product is sold. It contains aspects like channels of distribution, coverage of the market, assortments, inventory records and logistics services. Pepsi has a wellestablished distribution channels in both countries. The products are availed in bulk to to wholesaler,restaurants and hotels and retailers who in turn sell the requisite quantities to the final consumers. The market for Pepsi has spread all over the world. In the USA, it has a thriving market in all states. In Japan, it is relatively new but is market is growing fast. Its basic distribution channel is depicted below. supplier manufacturer distributor Retailor customer Promotion involves advertising, sales promotion, personal selling, publicity and public relations. The four components together create promotion mix. Pepsi is famous for its promotions such as the famous Pepsi Challenge that involved blindfolded people tasting different soft drinks and being asked to identify Pepsi. Its marketing campaigns worldwide and in particular in Japan and USA have always been vibrant. The main reason is because of CocaCola’s competition, having in mind that CocaCola is the traditional market leader worldwide. Personal selling is the most effective of all promotion methods. For this reason, Pepsi has used its staff to literally market its brands with impressive results. For instance, the Pepsi challenge helped change peoples minds when it was discovered that most people preferred the taste of Pepsi to that of CocaCola contrary to what people thought. This helped it boost its sales an expand its market. Message, Appeal, Execution, Media and Promotions Mix. Marketers normally approach different markets differently when advertising. They either take an adapted approach, a standard approach or a combination of the two. Standardized approach is used when the same advertising campaign is used for all markets. Adapted approach is used when the marketing campaign differs from region to region so as to suit the local conditions. (Barnes et al 2004) The messages passed in the US and Japan are quite different due to the different cultures in the two countries. The messages in the US are normally targeted for the Youth while in Japan it is more or less general for the whole population. The slogans include: "Come Alive, You're in the Pepsi Generation", "Generation Next", “You've Got a Lot to live and Pepsi's Got a Lot to Give" and “Pepsi. The Choice of a New Generation" (featured Michael Jackson). Japanese messages have included "Every Generation Refreshes the World" and "Something For Everyone". In the area of appeal, marketing communication is focused on creating appeal for Pepsi. The messages are meant to imply that it is the best soft drink available. The messages also paint it as suitable for everybody at all times. These messages for creating appeal are more or less the same in the two countries and they include such slogans as: "Summer Time is Pepsi Time", "Any Weather is Pepsi Weather", "Say Pepsi, Please", "It’s cheaper than Coke!” Execution is the activation of the marketing mix. Having been the soft drink industry for a long time, it is well aware of the customer target groups, has sufficient data and has established a good customer relationship over the years. Other than using data to execute its marketing communication, Pepsi has adopted online videos and uploaded them in sites like YouTube. In the US it has engaged in sport marketing by sponsoring sports personalities. The main challenge it faces in the US and Japan is an ever-changing market place due to stiff competition from coke which is the market leader in both countries. In both countries, the media is extensively used in its promotions. Promotions are the key element in marketing communication and media is the best channel for promotions. Pepsi mainly uses television in both US and Japan but in the US, it mainly runs its commercials during specific TV programs. It also uses newspapers and the internet to enhance its advertisements and promotions activities. Marketing communication objectives The extensive marketing activities carried by Pepsi in both countries and indeed worldwide are aimed at achieving several objectives. The objectives are identical in both countries. The overriding factor is to increase the revenue hence profits. The organisation is alo keen to spend little in marketing activities in order to remain profitable. However, before entering any new market, it is often forced to outspend its revenue but once established, the losses are recovered. The following are some of the objectives for marketing communication by Pepsi. The first objective is to create awareness of the product to prospective customers. The adverts are meant to capture the attention of the audience either by watching or listening and make them develop an interest in the poduct. Once this is achieved, information is then passed about the product with an intention of making the audience aware of its benefits over the other similar products in the market. The other objective is to change the customers’ attitude and beliefs about the product. This was the primary aim of the Pepsi challenge as it intended to change the common belief that people held assuming that CocaCola has a better taste than Pepsi. Most of them had reached that opinion even without having ever tasted Pepsi due to the prevalence CocaCola had before Pepsi entered the market. The aim was therefore to change that misleading opinion and increase customer base. The other objective is to increase the level of sales which translates to profits. This is the main aim of marketing as organisations enter into business to make profits. In the US, revenue is higher due to the presence of more customers as well as more flavours compared to Japan. The other reason is that Pepsi has traditionally been American where it started before expanding its market into the other countries such as Japan where it is still establishing itself and expanding to cover all regions. Encouraging repeat purchases is the other aim of marketing communication. Due to the high competition in the soft drink industry, it is important to esure there is retention of customers. Pepsi is well aware of that and mainly focuses its ads to the youth as they are easier to retain adults who are not very adventorous an many of them have ‘fixed’ brands that they take. The other benefit of the youth is that they are abe to influence their parents to purchase some products they would otherwise have not purchased. Increasing the market share of a brand is also an objective of marketing communication. Pepsi has done relatively well and has been able to penetrate new markets previously dominated by other competitors such as Japan where its share is still growing. Marketing communication also aims at building customer traffic and enhancing the firms image. Pepsi has always tried to do this by engaging in community service and sponsorships in addition to advertising. Customers normally value a firm that they see engaging in beneficial activities apart from their own business. For instance, Pepsi is the sponsor of the Pakistan cricket team and this has made it acquire competitive advantage over other competitors such as CocaCola in that market. This is directly attributed to the sponsorship which has made it a valued brand in the country. Consumer behavior Consumer behaviour is the the study of the factors that influence a consumers decision to either buy a product or not. It is difficult to predict but it is influencd by many factors among them buyer characteristics such as: lifestyle, attitudes, knowledge, motivation, perceptions and personality. Environmental factors include economic, demographic,political,technological, cultural characteristics. The market influencers include the product itself, price, place and promotion. The buyer then goes through the decision process after which he/she gives a response. The decision process involves problem recognition, search of informatiom, looking at alternatives and making the purchase and post purchase decisions. Belch and Belch (2007) In the US, buyers attitudes towards Pepsi is very positive especiall yamong the young people who are the main target of marketing campaigns. In Japan, the attitude is moderate with both the young and adults making almost equal customer composition. Demographically, most of the population in both countries reside in the urban areas. Marketing activities are therefore concentrated in the urban areas through such means as billboards, but much of the information still reaches the rural residents through the print media, internet and telebision Environmental factors such as political and technological and cultural have relatively the same impact on customers in both countries. This may be attributed to proximity that exists in the countries’ technological and economic levels. Their economic well being enables them to purchase the commodity. The market influences of product, pricing, promotion and placement play the greatest role in the final decision. This means the seller, who influences the four factors, is well placed to make the buyers buy by responding accordingly regarding the product, price, placement and promotion. Pepsi puts a lot of emphasis in these factors. In the USA, promotion and product have the greatest impact on the buyer’s decisions while in Japan, placement and price have the greatest impact. Marketing communication assessment As stated above, the ojectives of marketing communication are to develop awareness, change customer belief, encourage repeat purchases, customer traffic,firm image, increase market share and increase the revenues. In the USA, the marketing communication has been very effective as continued promotions have created awareness of Pepsi products. Almost all consumers know of the products, their placement, pricing and the promotions being carried out. The US market is therefore reaping the intended fruits and this is translated in sales revenue and profits. On the other hand in Japan, marketing efforts of the Pepsi varieties is not as much as in the US. As aresult, the Japanese market is behind the US market. This targets for both countries will be achieved, but the US market will achieve its goals more easily than the Japanese market. When it comes to public relations, the aims have been achieved easily in both countries. Through the marketing communication targeting specific groups, good relations with the public have been achieved throug that interaction. Use of celebrities such as Dvid Beckham have also contributed to a good reputation for Pepsi not only in the two countries but all over the globe. Regarding the change of consumer belief, amrketing communication has succeeded more in the US then in Japan. The main factor thet has contributed to this chnge in the US is the earlier mentioned Pepsi challenge that went a lon way in changing the beliefs of mny people that CocaCola is better than Pepsi. The other main contributor to this is the celebrities’ endorsements by such famous people as Michael Jackson, the Spice Girls, Ronaldinho and David Beckham. People normally tend to believe that a commodity is perfect once it is endorsed by a popular celebrity thst they love. On the other hand howevr, in Japan consumer belifs have not changed much but Pepsi has been helped by the fact that most Japanese people are not very choosy and that has somehow contributed to Pepsi’s success in that market. Works Cited Armstrong,G & Kotler, P. Marketing: An Introduction. New Jersy: Pearson Education, 2005 Belch, G.E., and Belch, M.A. , Advertising and Promotion: An Integrated Marketing Communications Perspective, Seventh Edition. New York: McGraw-Hill/Irwin. 2007 Barnes, Kitchen P.J. Spickett-Jones, G. & Yu.Investigating the impact of International cosmetics advertising in China. International Journal of Advertising 23: 361-387.2004 Jobber, D. Principles and practice of marketing. Maidenhead: McGraw-Hill, cop. Retrieved from: www.mind-advertising.com. 2004 Read More