Name: Septiawan Vergian Fachrozie 125020207121023
Rizky Akbar 125020207121005
Pepsi Next Case Study
In February 2012 the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way.
Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product is described as a mid-calorie cola beverage, having a mix of sugar and artificial sweeteners, designed to deliver a full cola taste with reduced calories. While filling the market gap between full sugar and diet soft drinks, PepsiCo has indicated that its prime target market is lapsed cola drinkers (giving them a reason to return to the product category). PepsiCo, which owns range of high profile beverage brands in addition to its flagship brand Pepsi, appear to be highly committed to Pepsi Next providing it with strong launch and management support. In fact, according to PepsiCo themselves, this is their most significant product launch for several years. About PepsiCo
PepsiCo is the second largest food and beverage company in the world, with revenues now in excess of $60 billion. The corporation has 22 brands that achieve retail sales in excess of $1 billion each. As a result of their brand diversification, around half of PepsiCo’s revenue is generated from their food lines, such as Frito-Lay (snack food) and Quaker Oats. In addition, they have progressively expanded internationally and now access over 80% of the world’s population. Their international (non-US) markets account for almost 50% of their total revenues and they still see significant growth potential from these markets, on the basis that per capita consumption of snacks and beverages in other countries is well below US market levels. As a result, PepsiCo has achieved solid growth is many international markets. While their US beverage sales fell by 2% in 2011, this has been more than offset by double-digit sales increases in Europe, Asia, the Middle East and Africa. In terms of their overall strategic approach, PepsiCo (as highlighted on their website) see themselves as innovative and adaptive, as stated in the following website quote: “Pepsi is constantly on the lookout for ways to ensure their consumers get the products they want, when they want them and where they want them.”
PepsiCo Brand Strategy
In their Annual Report, PepsiCo has structured their brands around three related themes, as highlighted in the following table. This brand structure gives some insight into the role of their brands and how they see their brand portfolio developing in the future. Emphasis of Brand
Pepsi, Mountain Dew, 7-Up, Lays, Doritos, Cheetos, Red Rock
Pepsi Max, Diet Pepsi, Lays (oven baked), Quaker bars
Tropicana, Quaker Oats, Gatorade, Nut Harvest
(Note: The various terms, ‘Fun-for-you’ and so on are PepsiCo’s terminology, not the author’s.) As you can see from PepsiCo’s classification of their brands, it is appears that the firm has the dual goals of supporting and leveraging its existing ‘fun’ brands, while moving towards a broader range of healthier offerings. While this second goal may appear to be mainly related to improving their corporate image, it does have commercial intent, as explained on the PepsiCo website: “Because a healthier future for all people and our planet means a more successful future for PepsiCo.” To help implement this corporate goal, across their various brands, PepsiCo has focused on providing a wider range of healthier choices, introducing more natural ingredients, reducing fat content, reducing the environmental impact of their packaging, and so on. Recent Product Innovations
PepsiCo has a history of...
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