III. EXECUTIVE SUMMARY

Mountain Dew the magnificent cash cow for Pepsico was invented in 1940 and was taken over by PepsiCo in 1964. The original Mountain Dew now is a yellowish green sugar rich drink with a relatively high degree ofcaffeine developed by Alley and Bartney Hartman who then used lime as the key ingredient in its initial stage. They use to run a bottling plant in Knoxville, USA. It was then used as a mixer besides the name was also used as slang for the moonshine coming out of the hills in Virginia. Mountain Dew until 1st January 1960 did not enjoy the status and popularity it does today in the CSD market. Bill Jones the new owner changed the Mountain Dew unique formula by adding more sugar, caffeine and orange flavour in the very same year.

An article in Beverage Digest publication on 25th March 2013, claims that the total revenue for CSD industry is near USD 77.1 Billion, which shows a giant market potential for soft drinks. Though the market is extremely competitive and Mountain Dew is categorized under Carbonated Soft Drinks or CSD also at times faces intense competition from other major leading brands in the same category. Recent finding shows a detail survey of market penetration across America which puts Mountain Dew on the 4th position with a market share of 7.2% with total sales revenue of USD 633million behind Coca Cola (USD 1.59Billion), Diet Coke (USD927Milion) and Pepsi (USD892Million). (Kindly refer to attachment) Source: http://research.insead.edu/2012_08_01_archive.html To further analyze and understand in detail, the competitive market and where Mountain Dew stands in that market and how it manages to maintain its Brand equity, a situational analysis was conducted to elaborate Mountain Dews own capabilities within the market, the product positioning besides looking at the external and internal factors that effects the products potential and survival in the future. Situational analysis shows that there are three major problems of market penetration, advertising campaign and competition from healthier non carbonated drinks. We a group of three Masters of Management students analyzed a concerning issue on their advertising campaign whereby their concentration on extreme sports campaign is overexposed since other competitors are also embarking on similar idea to advertise their products. The challenge is to come up with a creative advertising and promotional strategy that helps to capture new market and maintaining existing customers.

Mountain Dew Recommendation In the United States market penetration project is easily saleable to other regions as the market now is technology based. Mountain Dew must set up a cloud computing team and a full-fledged SMN team to handle this project. This could also be outsourced to organizations such as Yahoo who have the expertise to carry out the task and at the same time stand competition form Google, Facebook and Twitter. However, this option involves high risk as consumer information (database) is handled by 3rd party. The sooner the better in order to have first movers advantage Have a unique code behind the cap of every Mountain dew bottle Customers must create an account using this unique code. The whole process can be done by logging on to Mountain Dews New Social Media Website or by downloading the app to customers mobile device. Mountain Dew can easily target youth in the urban region. This campaign also serves as a loyalty programme, due to this loyalty programme there is a very high possibility of increase in sales. Mountain Dew for the very first time will have a majority of its customers database. This will be the very first time a Fast Moving Consumer Goods (FMCG) will be able to have its end customers database.

This database can be used to design very specific marketing campaign and these campaigns can be carried out easily and cost effectively as the majority of customers would be linked by the Social Media Network.IV. SITUATION ANALYSIS

A. Environment and Industry

Year was 1964 when Pepsico acquired Mountain Dew. Mountain Dew a bright yellow-green drink high in caffeine and sugar, packed in green bottle hinted a powerful citrus flavour. The dink had already made a name for itself and was quite popular among the rural market. PepsiCo, at that point of time did not have any flavour soft drink amongst its product lie up. Amazed by its sales in the Eastern seaboard and most rural areas, PepsiCo did not see a risk in buying Mountain Dew.

Senior management at PepsiCo wanted to expand Mountain Dews market from the rural area to the suburbs. A marketing promotion campaign in the 1970s Hello Sunshine sought tie Mountain Dews Distinctive product characteristics to a set backcountry recreation image was initiated by BBDO an international top ad agency. This campaign pulled in the image of active outdoor lifestyle. This was still to rural to attract suburbs. In 1980s a new but rather similar campaign Country Cool was launched to attract young urban crowd. This campaign was later followed by an innovative Do The Dew Campaign in 1990s. Both these campaigns used then popular and mainstream Music and Extreme sports as a tool to speak to its target customers. It was in the 1990s the alternative sports took off and was cashed by Mountain Dew. The combination of extreme sports and latest music genre such as Hip-hop, Rap, and Rock and Techno music did the job for Mountain Dew.

Poters Five Forces Model Analysis of Mountain Dew in the CSD market.Suppliers Bargaining power: Suppliers Bargaining Power is low the reason would be PepsiCo is a huge umbrella organization. PepsiCo suppliers business depends highly on PepsiCo. Therefore, their power of bargaining is relatively less. In addition PepsiCo owns bottle manufacturing plant in many places in the USA and outside. This makes it even difficulty for the suppliers to bargain.

Bargaining power of Buyers: Buyers bargaining power is High but in contrast of the carbonated soft drink (CSD) industry there is no room for the buyers to bargain. All what Mountain Dew does is influence consumers decision making process and sales are made without an issue.

Threat of Substitute products: Threat of substitute products is low. Mountain Dew itself defines its own market but the nearest competitors of it are 7Up and Sprite. Although 7Up is PepsiCos product, it is very close in taste with Mountain Dew. The current sales of Mountain Dew are more than its nearest competitors; their existence is a threat for Mountain Dew.

Threat of New entrants: Threat of new entrances is low for Mountain dew. Although there are several new entries that came and went and did not last long and many did not rise up to the level of Mountain Dew.

B. Organization and Marketing Strategy

In FMCG market PepsiCos mission and objective is to be the world's top and leading consumer Product Company focused on convenient foods and beverages. We forecast to earn and allocate financial rewards to investors to increase the value of investment to the internal and external stakeholders. The objective of this plan is to offer initial and long lasting consistent quality and value to the stakeholders and is longed to be achieved through sales growth, cost control and strategic investment of resources while providing products that are reliable, full, economically capable and environmentally sound. PepsiCo is also interested in commitment to their investors while adhering to the highest standards of integrity and social responsibility.PepsiCo endorses more than two dozen of drinking brands and one of the popular products of it is Mountain Dew. As of 2007, Mountain Dew was the 4th best-selling carbonated soft drink in the United States, behind Coca-Cola Classic, Pepsi-Cola, and Diet Coke.

The drink was created and first marketed in Marion, VA, Knoxville and Johnson City, Tennessee, USA through the 1940s by Tin Corp. It was used originally for lime soda for mixing in bars. In 1960 William Jones changed the formula by adding sugar, caffeine and orange flavor and the product being marketed by Herman & Charles Minges in 1963. Sales picked up since and in 1964 PepsiCo acquired the Mountain Dew.Recent Mountain Dew Marketing Plan was designed in such way for the team to meet the objectives of:

Retain and increase market share

Optimize relevance of Dews positioning among the target The situational analysis and market segmentation was carried out to ensure the right Marketing Mix is designed and implemented. The SWOT analysis of the Organization and Marketing Strategy are as follows:

StrengthWeaknessesOpportunitiesThreat

Organization & Strategy Brand name Financial Strength World-wide footage and market share About 27 no. of product line, tend to lose focus on priority

Advertising spending is less than competitor

Emerging of strong competitors Rising cost Expose to country and economy risk at worldwide level

Marketing & Strategy Dynamic Marketing mix Strategy Created loyal customer Strong ad agency (BBDO) Extreme sports campaign is overexposed Lower market share in urban area Penetration on current market Explore other niche market and other combination of Promotion strategy

More competitors in the niche market of energy drink Brand health product is getting more popular Perceived as unhealthy drink

Whilst target market for Mountain Dew is on 18 years old epicentre and linked to adventurous, fun and energising activities. The segmentation was decided after vigorous exercise in market research and the marketing team mainly adopting the quantitative method of data gathering. They mostly used the research and observation method. In example, the data of consumption index versus spectra lifestyles is gathered in order for the team to understand the psychographic of Mountain Dews consumers.

The decided target market determined the Mountain Dew marketing mix decision and activities. Below are the market perceptions towards Mountain Dew and examples of marketing mix implemented.Marketing MixPerception /Implementation Examples

Product

A soft and energy drinks to satisfy thirst

Unique taste with higher caffeine than other CSD and less Carbonated. Drinks is considered as convenience good so it is a routine buying decision to customer

It has a brand name linked to fun and athletic image

PriceTo End Customer the pricing strategies are:

Value Based Pricing used, meaning consumer not just buying the beverage but also the image which goes with it Odd pricing which price is set at one or few cents lower. i.e USD 0.99 cents or USD 1.99.

Seasonal Discount where discounts are given during festivals or special events (e.g. Superbowl)

Quantity discount where bulk purchase e.g.1.5 litres in a crate of 12 is cheaper compared to single 1.5 litres

To Retailer

Trade offers given in the form of price-off or free merchandise during promotion (i.e. during Super Bowl free caps and T-shirts)

Promotion Aggressive in advertisement campaign by rejuvenate the Mountain dew image almost yearly. All types of mass media were used in the Dew advertisements plus product placement method, where the best spot or shelves being rented at most of the popular store. They boldly took one of the advertisement popular slot during Super Bowl broadcast as this given them the opportunities to:

Increase the value of the brand image i.e perceived as prestigious brand

Sales tool to motivate retailers and distributors

diversely coverage by Demographic (e.g. age, income, education)/ Geographic/ Social (e.g. ethnic, social class, religion)

Sales Promotion being adopted especially the seasonal promotion (Public Relation by using press releases was used to update the Dews communication strategies. Even during the Super Bowl season, Mountain Dew received free press release when they were interviewed for getting the popular slot during the Super Bowl season.

Placement

& Packaging Direct channel and intensive distribution are implemented. Company uses its own fleet of vehicles & warehouses. The cost of logistic is high but it is compensated in off season by merging of routes .In order to avoid channel conflicts exclusivity funds are given to the customer.

Flexible packaging is used i.e. high quality plastic bottles with few sizes to cater for different customers preferences and consumption.

Dynamic and Creative bottle/can design and logo. Over the years the company creatively designed new logo/bottles and can design to reflect the refreshing and target market image of the Mountain dew.

V.PROBLEMSThe idea of situational analysis is to understand and determine Mountain Dews own capabilities within the market, the product positioning besides looking at the external and internal factors that effects the products potential and survival in the future. Basically, by conducting SWOT analysis, Poters 5 Forces model as well as other market factors, we have identified 3 main problems faced by Mountain Dew such as:a. Market Penetration

b. Advertising Campaign

c. Competition from healthier non-carbonated drinks

The statistical facts shows that USA has the highest consumption of carbonated soda drinks (216litres) followed by Ireland (125litres) and Canada (119litres). The data proves that US is a large market for CSD compared to other countries. (Kindly refer to attachment) Source: http://www.nxtbook.com/nxtbooks/macfadden/bw0513/#/48 However, in terms of market penetration within America, Mountain Dew are still at the 4th position with a market share of 7.2% behind Coca Cola (17.5%), Diet Coke (9,9%) and Pepsi (9.7%). Mountain Dew main market as per study conducted by AC Nielsen proved that in terms of demography, majority of their consumers are down scale rural besides rural town and farm communities. This simply means that they are losing out market share to their main competitor Coca Cola and particularly among the upscale suburbs and down scale urban communities. Probably they have to rethink about their promotional and advertising campaign to capture the other market segments as well as maintaining their loyal existing customers.

On the advertising campaign, the target market for Mountain Dew is on 18 years old and above who are linked to adventurous, fun and energising activities. However, their concentration on extreme sports campaign is overexposed since they have been relying on the same concept of adventurous, active, youthful and cool for long and other competitors like 7up, Sprite and Surge are also embarking on similar idea in communicating the psychographic imagery of adventurous, active, youthful and free spirited.

Mountain Dew needs to establish extraordinary creativity to explore other options beyond alternative sports to express exhilarating intensity and enhance consumers perception about their products. Examples of soft drinks associated with extreme sports image are like Formula X, Monster, Emv, Vault and Surge. Surge is highly associated with extreme sports just like Mountain Dew. It is a citrus based drink with high caffeine ingredients that was produced by Coke in 1996 as soda and energy drink for US market. It was also known as Mountain Dew killer to compete with Mountain Dew.

In terms of competition from non-carbonated soft drinks, sales in US decline in 2012 since more health conscious customers are searching for alternatives particularly mineral water, fruit juice, and energy drink which they perceive as healthy. In response to this issue, PepsiCo introduce Mountain Dew Diet which uses a blend of sweetness to deliver half of the calories of a standard Mountain Dew. PepsiCo also turning into bottle tea called Tazo, a joint venture with Starbucks Corporation to explore and expand sales of their new products in a bigger scale worldwide.

Even Coke has announced a slim down version of Sprite and Fanta. Besides that Coca Cola is highlighting its new product, known as Fuze, the juice tea brand that it acquired in year 2007 with an estimated price of USD250 million. Another competitor Dr. Pepper has gone down further with 10 calories version using a blend of artificial sweeteners and high fructose corn syrup in many of its carbonated drinks. Mountain Dew needs to be innovative in ways of getting calories out of beverage and still providing the taste consumers couldnt find in todays diet drink. VI. STRATEGIC ALTERNATIVESA.Market PenetrationFrom the report earlier, the market penetration for Mountain Dew from its sales in North America and urban area in USA are very low. As a result, the company will develop the best marketing mix possible which includes the product, promotion, pricing and distribution in order to retain and increase the market share of Mountain Dew which has been mentioned in market perceptions towards Mountain Dew and examples of marketing mix implemented in the page 3-4Initiatives to be executed by Mountain Dew:

a) Special offers , free merchandise and coupons to retailers and distributors; b) Promote a new use of the product and enhance its Price war with competitorsc) Public Relations and Brand ImageWe believe that the above strategies would attract the new market share particularly in North America and in the urban area within USA. We trust that the new target market is ready to take new excitement. The attitude of the youth who always want to try new drinks is sufficient to prove that they will purchase and become loyal and lead to a new parameter in the market share.B.Advertizing Campaign

For many years, the advertisement by Pepsi and Mountain Dew are targeting the young people between 20-30 years old and the drink is associated with extreme sports and music. They partnered with influential celebrities as this personality or Idol has the influential to the youth culture.

In Sport, sponsorship of individual athletes who participate in professional action sports has been a part of the Mountain Dew brand since the late 1990s, with present sponsorship including Eli Reed (skateboarder), Paul Rodriguez (skateboarder), and Danny Davis (snowboarder)

We recommend Mountain Dew to sponsor live music rock festivals as Music is truly a global industry. The Nielsen Company & Billboards 2012 Industry Report shows overall music sales increased 3.1% over 2011. Digital sales caused this increase, with a Digital Album sales growth of 14.1% and Digital Track sales growth of 5.1%,. Despite the decrease, physical albums were still the dominant album format. Vinyl Record sales increased by 17.7%. Total revenue by year 2012 was USD 16.5 Billion. Pop and Rock stars influence younger generations, there are live music concerts held all over the year. These live music concerts which feature influential music industry personalities are great source of enjoyment and excitement all around the globe. Brantley Gilbert is among the popular lead singer of the music industry will be selected as an ambassador or Icon for the drink.

Social Media.

We recommend the brand to establish itself on social media platform through channeling its promotion concert fairs. The existing advertising on The Dew or Die campaign which was Under the cap games received a great response from consumers. This idea can be implemented and under the cap games would let its player win free concert tickets.

Some other platform features to include are as follows:a) The advertising will fully responsive build for all site works on all devices including Android and Apple.b) A stand-alone Facebook application;C.Corporate Social Responsibility Mountain Dew should take the advantage the Corporate Social Responsibility in Advertising Campaign like for example providing innovative ways to minimize the impact on the environment by conserving energy and water and reducing packaging volume and Go green Campaign.A potential benefit of CSR is that it could improve the companys reputation and branding and this in turn will improves the prospects of the company to be more effective in the way that it manages communications and marketing in efforts to attract new customers and increase market share. Brand ImageThe customer perception towards Mountain Dew as unhealthy drink is something that will dilute the Mountain Dew market share in the future. The company brand image need to rebrand in order to compete with other non carbonated soft drinks such as juice drink and energy drink.

We would suggest the company to release new drink which is good for health with a combination of fruit juice and dates as an energy drink.

STRATEGIC ALTERNATIVES AND IMPLEMENTATIONA.) Statement of Selected Strategy

Mountain Dew is the fourth largest carbonated soft drink in the market, whilst target market for Mountain Dew is on the young people between 18-30 years old epicenter. We recommend that Advertizing Campaign Strategies are the best strategic alternatives for solving problems and achieve Mountain Dews targets. Strategies focuses on:

I. Popular two sport games in U.S recently which are basketball and tennis and less focus on advertising campaign related to extreme sports.

II. The best three music genre: rap, rock, pop and Techno Music

III. Corporate Social Responsibility B.) Justification for selection of strategy:

1-According to the IEG sponsorship Report, 14.9$ was projected to be spent on sponsorships in North America during 2007 with 66% of this going to sports. Basketball is a very popular sport played all around the world, though it is more popular in certain countries particularly the US where it was invented. Meanwhile, the NBA cites research from Experian Simmons, which finds basketball to be the most played sport among a set of U.S. teenagers.

Based on basketball sport strategic, Mountain Dew will be part of a personally relevant moment in consumers lives can broaden and deepen a Mountain Dews relationship with target market.

2- Music has always been in mainstream all over the world. Nowadays, three musical trends dominated the airwaves. In recent years, controversy surrounding rap music has been in the forefront of the American media. The rap remained very popular among male teens, especially in urban area.

Popular or pop music is largely vocal and appeals to a large, mainly young audience. Pop music scene also exploded at roughly the same time and was hugely popular on college campuses. A revolution of Electronic Music, this music genre is techno music and including the elements of American jazz, Chicago house and funk initially. Techno music began making significant inroads into American youth culture.

3- Corporate Social Responsibility: Over the past few years, businesses and academic researchers alike have displayed increased levels of enthusiasm for corporate social responsibility (CSR). In particular, recent research suggests that CSR may be an excellent instrument to enhance the legitimacy of the firm among its stakeholders. Corporate Social Responsibility (CSR) aims to better integrate social and environmental concerns into business routines on a voluntary basis.

C.) Description of Implementation of Strategy:

Sport:

The basketball drew the biggest audience of the year and the advertisings received an amazing amount of attention. Successful sponsorships require choosing the appropriate events. Nowadays, the sport events meet the marketing objectives and communication strategy defined for the brand. The sport events have sufficient awareness, possess the desired image and be capable of creating the desired effects. We are suggesting that Mountain Dew should sponsor the important and biggest sport events based on basketball and tennis:

-The NBA All-Star Game is an exhibition game hosted annually by the National Basketball Association (NBA), matching the league's star players from the Eastern Conference against their counterparts from the Western Conference.

-Using the name of Mountain Dew to sponsor the arena, stadium and other venues that hold the sport events like Emirates stadium, red bull arena and so on.

Music:

This strategy aims to attract the audience of the three major music in universe to achieve competitive advantage.

The genre

of musicMediaendorsement

Rap and hip hop (gangster life)-Sponsor the rap programs in TV like Yo! MTV Raps, JUMPOFF.TV etc

-Sponsor the celebrations.Sponsor the best rappers in the world like Eminem, Dr.Dre ,Lil wayne and so on.

POP music-Sponsor the pop programs media such as MTV pop, Pop TV

- Sponsor the celebrations.Sponsor the famous singers of pop such as Lady gag, Britney Spears, Justin Bieber ... etc.

Techno music Sponsor the biggest concert like tomorrow land music festival.Sponsor the best DJs in the universe such as Tiesto, Armin van Buuren, David Guetta and so on.

CSR:

The attempting of Mountain Dew to contribute the Corporate Social Responsibility and spread awareness on Social Responsibility. Mountain Dew views its goal of decreasing its environmental impact not only as socially responsible, but also in the best interest of its stakeholders. For Mountain Dew, a large part of its sustainability efforts involves reducing the negative effects resulting from the production and consumption of its products. This includes going green (for example, through water conservation and the reduction of waste products) and reducing its carbon footprint. It should reduce its impact on the environment through various water, energy, and packaging initiatives. Because Mountain Dew develops products using water, and actually sells bottled water, it should actively implementing programs to reduce waste and conserve resources. This involves water recycling and treatment efforts, where recycled water is treated thoroughly and reused within its products. Mountain Dew should reduce the amount of plastic used in its beverage containers, which has significantly decreased the amount of waste sent to landfills. Finally, Mountain Dew should actively creating partnerships with community organizations geared toward increasing recycling efforts. Another aspect of Mountain Dew commitment to social responsibility should reflected in its support of and commitment to its employees. It is PepsiCos goal to encourage a diverse corporate culture along with employee engagement in the workplace and community.