A case study to understand -Pepsico's product process -Challenges faced by company in launching Pepsi Next

1. Pepsi Next Case Study
Presented by –Surbhi Biyani
Harsha Dhoot
Prachi Sopariwala

2. Objectives
• To provide interesting insights into PepsiCo’s new
product process
• To understand the challenges faced by the company in
launching Pepsi Next
• To analyse the consistencty of PepsiNext’s product
process with the theorectical approach towards
product development
• To critically analyse PepsiNext’s launch strategy

3. PepsiCo
• Second largest fast food and beverage company in
the world
• House of 22 brands
• Access over 80% of world’s population
• International(non US) market accounts for 50% of
their total revenue
• Strategic Approach –Innovative and adaptive

4. PepsiCo Brand Structure
PepsiCo
Fun for you
(Pepsi , Mountain
Dew,Doritos)
Better for you
(Pepsi Max,Diet
Pepsi,Lays(oven baked))
Good For You
(Tropicana,Quacker
Oats,Nut Harvest)

5. Soft Drink Market
• The US soft drink market generates over $70 billion
in sales
• Late maturity –early decline stage (since 2005)
• New Competitors – Bottled Water , Sports drinks
,Energy drinks

6. Impact of the emerging subsitutes
on Pepsi
• Decline in Market share to about less than 10%
• Frequent come back with “reduced sugar”drinks
• Declining carbonated drink marke by around 90
million cases a year
• Shift in demand towards bottled water,energy
drinks,soft drinks

7. Before Pepsi Next

8. Pepsi Next
• Launched in US market in February 2012
• Mid calorie cold beverage – mix of sugar and artificial
sweeteners
• Delivers full cola taste with reduced calories
• Prime target market – lapsed cola drinkers

9. Q 1
• Outline the new product process for pepsi next.
How consistent is their approach to the process
described marketing textbooks?

10. What is a new product?
• Open new market
• Improvement and revision
Uses of new product
• Market share
• New segments

11. New product planning:
Opportunity analysis
• International expansion of Pepsi next
• New products
Threat analysis
• Intense competition

13. Idea generation
Idea Screening
Concept testing
Strategy
development
Business and
financial analysis
Test marketing
Commercialisation

14. Idea generation
• Mid calorie cola beverage having full cola taste
with reduced calories
Idea screening
• Target Market: Young generation and people
who are very much health conscious
Concept testing
• Blind taste test in 2011

15. Marketing strategy development
• Positioning: Healthy product
• Marketing: through TV, heavy free trials, social
media, adds on YouTube etc
• Distribution: Retailers and heavy free samples
Business and financial Analysis
• Market share=1%=$700 million per annum in US
alone
Test marketing
• Pepsi Next was test marketed in Iowa and Wisconsin

16. • Q2. PepsiCo has been quite persistent with
pursing mid-calories beverage products – why do
you think this ?
Do you agree with the decision to introduce Pepsi
Next ? Why/Why not?

17. • Decreasing market share
• Competitor’s product
• Increased substitutes in market
• Increased health consciousness
• To fill the market gap
Why new products

18. Decision to introduce Pepsi Next
• No, We don’t agree with the decision
• Already introduced similar product four times in
the market.
– Pepsi Light, 70 calories
– Jake’s diet Cola, 15 calories
– Pepsi XL, 70 calories
– Pepsi Edge, 70 calories
• Even if could affect its other brand product

19. Q3. How is the performance and
market acceptance of Pepsi Next
likely to impact the overall brand
equity of Pepsi ?
Should PepsiCo have launched this
product under a new brand instead
?

20. Pepsi Next impact on overall
brand equity
• If this product does not goes well in market then it
will affect/lower the sales of the other product of the
brand.
• Provide competitive barrier

21. Launch under new brand –
favorable or not
• No, PepsiCo should not have launched Pepsi Next
under new brand.
– Third wheel syndrome
– Enhancing brand’s image by healthy offering.
– Corporation will be positioned as Innovative
and involved with community

22. Q4. The launch strategy seemed to
heavily focus on generating trials.
Why was this important?
How else could the launch program
have been structured?

23. Why focus on trials?
• Fifth attempt at mid-calorie beverage
• To identify consumer behavior
• To identify whether Pepsi consumers are shifting or
the corporation is expanding its consumer base.

24. Alternative Launch program
• Needful free sample in market
• Post launch promotional campaign
• Promotion through information dissemination

25. Lessons from the case study
• Product not be judged on Initial Impulsive
buying
• Product can fail even after robust product
development
• Not all positive feedback is good feedback