Pepsi Next Case StudyPresented by –Surbhi Biyani

Harsha Dhoot Prachi Sopariwala

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

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

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)

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

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

Before Pepsi Next

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

Q 1

• Outline the new product process for pepsi next.

How consistent is their approach to the process described marketing textbooks?

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

New product planning:

Opportunity analysis• International expansion of Pepsi next• New productsThreat analysis• Intense competition

New Product Development Process

Idea generation

Idea Screening

Concept testing

Strategy development

Business and financial analysis

Test marketing

Commercialisation

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

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

• 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?

• Decreasing market share• Competitor’s product• Increased substitutes in market• Increased health consciousness• To fill the market gap

Why new products

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

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 ?

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

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

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

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.

Alternative Launch program

• Needful free sample in market• Post launch promotional campaign • Promotion through information dissemination

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

THANK YOU