marketing plan of mountain dew - 2009-2010

MARKETING PLAN OF MOUNTAIN DEW (PEPSI CO.) DURING THE YEAR 2009 – 2010 : Learning Group A10

Table of Contents

Introduction........................................................................................................................2

Objective.............................................................................................................................2

Executive Summary...........................................................................................................2

Industry Analysis...............................................................................................................3

Company Analysis.............................................................................................................3

Competitor Analysis..........................................................................................................4

Climate Key Trends (PEST).............................................................................................4

SWOT Analysis..................................................................................................................5

Market Segmentation:.......................................................................................................6

Marketing Mix...................................................................................................................8

Price..................................................................................................................................10

Distribution:.....................................................................................................................12

Promotion.........................................................................................................................13

Plan for the Next 1 year...................................................................................................14

Conclusion........................................................................................................................15

Bibliography:....................................................................................................................16

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Introduction

Marketing Plan is a basic concept which is required to make a product successful. It consists of company’s

strategy based on industry and targeted customers trends to make that product successful. Marketing plan

analysis is done because companies want to distinguish the relevancy of their marketing plan in current

scenario. This analysis comprises of industry analysis, company analysis, product analysis, competitor analysis

and products 4Ps. As part of our academic work we have to analysis a product’s marketing plan and we choose

Mountain Dew because it’s in soft drink industry in which every youth is interested.

Objective

To understand the concept of marketing, marketing strategy and market planning.

To understand how key trend affects the product and industry and how consumer buying

behaviour affects the product.

To understand the concept of market segmentation, market positioning and targeting.

The main objective of this report is to understand how and what the strategies are used by PepsiCo to overcome

the competitors.

Executive Summary

This report is the marketing plan analysis of Mountain Dew in India. It is a product of PepsiCo which is a well-

known food and beverage company worldwide. This report emphasize on how Mountain Dew establish itself in

Indian market and also how it has make a good brand image among its target customer. This report is also

analysing mountain dew’s 4Ps which are important to understand when we are analysing product. We also

included the competitor’s analysis of Mountain Dew and analyse them. For all this process we used credible and

reliable sources and based on these sources we recommended plan for next one year.

Industry Analysis

Non-alcoholic market can be divided into soft drink and fruit juice. Some common soft drinks are flavoured

water, sweet tea, iced tea, squash, fruit punch and lemonade. Noncarbonated and carbonated is further part of

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soft drink. Carbonated drinks are cola, oranges, lemon while non-carbonated drink mango drinks (India Agro

Industry, 2009).

The total size of food industry in India is almost $ 65.6 billion and soft drinks (juices and carbonated beverage)

contain $ 1 billion. Indian soft drink market consumption in a year is 284 million crates. Soft drink market is

highly seasonal; consumption in during off-season is 15 million crates and in peak season is around 25 million

crates per month. In urban area consumption of soft drinks is 75% of whole market. Indian soft drink market is

dominated by MNC companies Coca-Cola and PepsiCo (Non-alcoholic beverage market in India, 2009).

The consumption of Soft drink in India has a share of 46.8% within the non alcoholic drink industry. In 2004

the total market value of soft drink was 307.2 $ billion and expected to grow 367.1 $ billion in 2009 (Analytics,

Press Release for Energy drink, 2009)

Company Analysis

The business of PepsiCo is based on its vision of making tomorrow better than today (PepsiCo India).

In 1989 PepsiCo entered in Indian market and became one of the leading food and beverage companies in India.

PepsiCo India and its partners have invested almost 1 billion U.S. dollar to growing their business. Including

supplier and distributor it provides more than 1, 50,000 Job for people in India. In India it provide diverse range

of brands that includes such- Pepsi, Mirinda, Mountain Dew and 7UP, low calorie product such as Diet Pepsi,

Aquafina drinking water and fruit juice based drinks- Slice, Tropicana. There are some local brands Lehar and

Mangola. Frito-Lay is market leader in salty snacks market, which is free of trans-fat. It manufactures

traditional snacks under Lehar and Kurkure brands. For supporting operations in India it has 43 bottling plants,

of which 15 are owned by company and remaining 28 are owned by franchisee (Our History, 2008).

Competitor Analysis

PepsiCo has a good market share in India but facing tough competition from Coca-Cola Company.

Products of Coca Cola Company such as sprite, Coca Cola, Limca and ThumsUp are the competitor of PepsiCo

in soft drink market (Bhushan, 2008). The most important drawback of its competitor is their promotion and

advertisement. Coca-Cola has less number of brand ambassadors as compare to PepsiCo (Baxter, 2009).

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In India with the market share of 16.4% Thums Up is at number 1, sprite with 15.6% at 2nd position

followed by Pepsi at 13% according to AC Nielsen data. In India Coca-Cola is leader market share of 57.8%

followed by Pepsi with 35.6%. In the portfolio of PepsiCo Pepsi is the only one brand with market share of

13.1% but its rival coca cola has four brands that have more than 10% market share in India. Those are

ThumsUp 16.45, Sprite 12.2%, Limca 10.9% and Fanta 10%.

Market share of soft drink in India

Coca ColaPepsiCoother

SOURCE- AC Nielson

Climate Key Trends (PEST)

Political factor: The government’s response initially was guarded in nature as well as individuals health.

The government has decided certain rule for beverage industry regarding to production and also has decided

level of ingredients like sugar, carcinogenic pesticide etc that are used in soft drink. PepsiCo has to follow

seriously these rules and set of criteria (PepsiCo India).

Economical factor: Soft drink is not expensive and it is used by most people. So soft drink industry is not

much tilted towards the economic influences.

But the raw materials they use in their soft drinks, juices and snacks like sugar, vegetables, fruits and potato

may slightly affect the production cost and the profit. The distribution channel and transportation also affect the

product cost slightly.

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Another factor is the role of government like increase in tax.

Social factor: People today are very trendy, sensitive towards the advertisement. It means people drinking

Dew are fashionable and are very trendy. Taking this into account PepsiCo targeted new generation people, and

they are able to differentiate between them.

Some people are conscious about caffeine so they might have negative anticipation about soft drinks. Also some

people think that soft drinks companies spread pollution in manufacturing process. For this Pepsi has a column

in their website mentioning about their social responsibility.

Technological factor: Technology for manufacturing and packaging of a product, transportation of raw

material or delivery of a product is changing time to time, and thus it also affects the production cost,

transportation cost and unskilled labour. Technology also plays a big role in packaging and designing of a

product.

SWOT Analysis

In this part we are going to analyses the strength, weakness, threats and opportunity of the PepsiCo.

STRENGTH

PepsiCo has good brand name, reputation and broader product line in international market.

With the revenue of more than 390 $ million PepsiCo is global leader in convenient snacks

(BrandZ Top 100 Most Valuable, 2009)

International brand, innovative capabilities, strong distribution network.

Pepsi is market leader in making of snacks, sports drink and bottled water.

One of major strength of PepsiCo that it has developed into a large, strong organization because

of its good franchise system.

Strong advertising campaign and marketing policy for promoting brands.

Global presence, Sponsorship, Focus on most important customer trend -“satisfaction”.

WEAKNESS

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Pepsi is far away from main competitor Coca-cola in international market.

More than 50 percent of sales come from snacks (Frito-lay), it is a big threat if snacks market

comedown (Analytics, Store-Bought Non-Alcoholic Beverages in India, 2009).

OPPORTUNITIES

Food is must for everyone so it can be expand internationally.

Offer and increase new healthy food and beverage because people are moving towards healthy

food.

The fastest growing part of industry is noncarbonated drinks.

THREATS

Strong competitor in the market like coca-cola, Cadbury Schweppes, Craft food and small bottle

firms.

People are moving towards healthy food (Babaria & Dharod, 2009).

Market Segmentation:

Group of individuals who possess similar needs and choices represent a segment of market (David Jobber,

2005). Mountain dew has segmented itself mainly on the basis of demography and lifestyle in a niche market of

adventurer and extreme sports. In this niche market most of the consumers are youth (Product Differentiation

and Mergers in the Carbonated Soft Drink Industry, 2005). The key features of this market-

Age: Mountain dew is targeting the consumer of age 12-28 means youth or teenagers. Cold drinks are very

popular among this age group and became a part of lifestyle. In the term of life stage this age group falls in

youth or teenage who lives with their parents and are depends on their parents economically. To target this age

group Mountain Dew is making its availability easily to consumer in different volumes (Holt, 2004).

Lifestyles: They are targeting lifestyles of their consumer and it is reflected in their advertisements. The chief

and main consumers of mountain dew are the youth who are ready to take on excitement, extreme sporting and

adventure. They are daring, fun loving, confident and energetic (Peter & Olson, 2005). It is targeting the

consumer’s tendency of fearlessness.

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Income Level: It is not concentrating on income levels because their target consumer can easily purchase the

product as it is charging the standard price that is 6, 10, 15, 20 and 45 Rs. for different volumes. It is also not

important because all the other major soft drinks also have the same price of their variants (mall, 2009).

Targeting: Mountain Dew is targeting customers which are generally college students and young executives.

Generally customers of youth group are not concerned about price. This is a niche market of adventurer, daring,

and extreme sports lover and most of the people falls in this category are young (Arens, 2006).

Positioning:

Positioning of brand or product is choice of a company to target the market where it can compete and take

advantage over competitor (David Jobber, 2005). Positioning statement of Mountain Dew by PepsiCo is:

“To 16-18 year old males, who embrace excitement, adventure and fun, Mountain Dew is the great tasting

carbonated soft drink that exhilarates like no other because it is energizing, thirst quenching, and has a one of a

kind citrus flavour” (Shimp, 2008)

Company’s positioning statement itself defining dew’s strategy that this drink will target and made impact

among the persons who are adventurer, funny, excited and daring. Also it is positioning itself by promoting

itself as a high energy and citrus flavour drink (Watts, 2006).

Segmentation Table:

Marketing Mix

The term Marketing Mix was originally developed by Neil H. Borden to explain the right combination, in a

specific set of situations, of the four foremost factors that are the heart of a product’s marketing plan (Mackay,

2005).

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Age 16-25

Life Stage Youth and Teenage

Who Students and Young Executive

Lifestyles Adventurer, Extreme Sports,

Daring

Positioning Energy and Exhilaration drink


Product: Mountain Dew is available in different sizes and volumes

200ml

250ml (can)

300ml (bottle & can)

1.5 lt.

Ingredients: Regular glass bottle contains carbonated water, high fructose, corn syrup, concentrated orange

juice and other flavours, citric acid, sodium benzoate, caffeine. Sodium citrate, gum arbic, erythorbic acid,

calcium disodium EDTA, brominates vegetable oil and yellow 5. For a regular glass bottle it provides calories

(kcal) 110 and caffeine 35mg (Product Details, 2009).

Product Level: There are five type of product level which a marketer need to concentrate on for the success of

product (Kotler, Keller, Koshy, & Jha, 2009).

Core Benefit: The basic buying reason of that product by customer. The core benefit for

mountain dew is to quench their thirst.

Basic Product: Basic product is the vital features of that product. Basic product for mountain

dew is carbonated water with some added flavours.

Expected Product: Expected product for mountain dew is a soft drink which gives more energy

and taste to consumer.

Augmented Product: It is the extra features provided by company to their customer. It is giving

more energy and taste to their customer by providing them more caffeine in their offering.

Potential Product: It is the all possible changes and transformation that a product can undergo

in future. Because it is targeting youth it can modified its regular bottle shape into some different

and innovative way so youth can attract. It can launch a new designed art form bottle (CCL and

Mountain Dew Turn the Aluminum Bottle into an Art Form, 2008).

Product Classifications

Durability and Non Durability: It falls under the category of non-durable goods because it is

has been used on regular basis by the consumer

Consumer-Goods Classification: Under this classification it comes under the convenience

goods as it is very easily available and requires less search effort.

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Product Differentiation

Form: It is differentiating itself in market by the size and shape of its 300ml bottle (Product

Details, 2009). This bottle’s neck is thin and long like beak and no other major soft drink is

offering this type of shape. This different shape attracts youth who is their target market.

Image Differentiation: It has made a different image in customer mind by its effective

advertising. Their advertisements generally consist of extreme sports and Adventure by which it

is targeting youth (Peter & Olson, 2005).

Product Mix and Product Line Analysis

Product Mix: The width of product mix or the number of product line offered by Pepsi in India is 5 and

the length of product mix is 14. The depth of Beverage product line where due is situated is 6. These all

product lines of Pepsi are consistent and related to each other as they all are drinks or snacks (PepsiCo

India).

Product Line Analysis: In

product line analysis we can

classify mountain dew in

‘specialties’ because lower sales

with higher promotion.

Product Depth: Mountain dew

has no other variant available in

market. It is available only in

one variant but in different volumes

i.e. 200ml, 250ml can, 300ml and

1.5lt bottle so its product depth

is 4.

Product Life Cycle: Company changes its marketing plan and strategy as product’s life stage changes so it is

important to know that product is in which life cycle. Soft drinks industry is a very old industry in India. It is

now saturating and stepping towards maturation stage of product life cycle. Soft drinks are easily available in

urban area and it is now getting popular in rural areas also so it is better it to put it in the stage where it is

moving from growth to maturation.

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PepsiCo India Product

Beverages Juices Sports

Drink

Bottled

Water

Snacks

Pepsi Tropicana Gatorade Aquafina Lays

Miranda Cheetos

7up Uncle

Chips

Mountain

Dew

Lehar

Slice Kurkure

Dukes Lemonade


Price

Market segmentation, positioning and competitor’s pricing strategy plays a major role in defining a product’s

pricing strategy.

In shaping price of a product a company should analyze the consumer’s buying behaviour to purchase that

product on the basis of price (Kotler, Keller, Koshy, & Jha, 2009). So company has to think 3 important

aspects-

Reference prices: It means what the other brands are charging for the same. It is available at the

same price as the others products of the same category are available in market (our market

research).

Price-Quality inferences: Many consumers take price as a quality indicator. Dew is a product of

PepsiCo which has an image of good quality at low price in consumer’s mind.

Price cues: Perception of consumers plays an important role in price setting. In the beverage

industry consumers have a perception to give money in round figure so most of the prices in this

industry end with the digit of 5 or 0.

Setting the Price:

A company has to take some steps before defining the price-

Selecting the Pricing Objectives: The pricing objective for mountain dew is survival because

intense competition in sector as well as to increase market share they are using market

penetration pricing strategy (Fund, 2003).

Determining the Demand: The customer which mountain dew are targeting are less price

sensitive and also it is a low price product so price do not effect so much to demand. It is in a

segment where price is inelastic and change in price doesn’t lead to a big change in demand

(Fizz goes flat: Non-colas have slipped, 2008).

Estimating Costs: Before establishing the cost companies have to count its own expenses.

Mountain dew has several costs in his production and distribution process like intergradient,

bottle, packaging, promotion and advertising, carriage etc.

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Analysis of competitor’s price: A company should also take a look over its competitor’s price

because it also helps to determine price. Mountain dew has the same price as its rivals.

Selecting the pricing methods: PepsiCo has selected value pricing method for its cola products

because it wants customer loyalty with low price and high quality (PepsiCo India).

Selecting final price: After passing through all this process company decide the prices of

product which will reach to customer. (We have already mentioned the prices of different

variants of mountain dew) sometimes on different occasions company announces discounts or

allowances but mountain dew has no such type of strategy.

Distribution:

After company manufacture the product, it has to decide that from how many and which type of channels

through product will reach to customer.

Mountain dew is PepsiCo’s product and PepsiCo has a huge supply channel network for its entire product.

Through these channels it distributes mountain dew. So instead of analyzing supply channels of mountain dew

we are analyzing Pepsi’s supply chain management and distribution systems (Our History, 2008).

Mountain dew is available through intensive distribution because it is easily available at everywhere. It has

implemented this intensive distribution to supply saturation exposure of the market by using all accessible

channels. That’s why Mountain Dew is available in all parts of rural and urban area at all the miniature and

large retails stores, supermarkets, departmental stores.

There can be zero to 5 levels of intermediaries implicated in the intact supply chain before product reaches to

the end consumer. This is because India is a big country and PepsiCo don’t actually have an extensive network

of sales agents, brokers and additional force which is very important and is perfect for make product

approachable to the markets. This work is done by distributors, wholesalers and retailers. The margins reserved

by these mediators sort from 2% to 5%. PepsiCo transported its products from 43 manufacturing units which are

in separate parts of India via different C&F agents or warehouses to distributors who further sell it to the

stockiest who lastly sell it to the retailers. Because beverage industry is highly unstable and vibrant so products

should be available in market at all the time. The supply of product primarily depends upon the quantity

required by retailers and it can be supplied on the regular basis or after some intervals.

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PepsiCo also have a bundled service with Pizza Hut where Pepsi products including mountain dew is available

with pizza at special price. It is a zero level channel system. It has tie up with HUL to distribute in rural area

because HUL has a very large network in rural areas of India. PepsiCo has provided jobs to 150000 people in

India including its distributors.

Promotion

Advertising: For advertising different kind of media is being used by mountain dew which are as follows:

Television

Radio

Internet

Newspaper

Others

The main product of PepsiCo is Pepsi but they are spending 75% of its advertising budget on mountain dew

advertising.

Ads of mountain dew

1. One of the most appealing ad of mountain dew is with tag line “cheetah bhi peetah hai” where it is

targeting there target customer by showing a fighting with a leopard for Dew. This ad is suitable which its

image of daredevil and fearlessness.

2. Second ad includes one man fighting with long horny animal for the dew can. It also shows hardiness

nature and also tells how powerful the drink is with the tag line Do the Dew.

Sales Promotion

Mountain dew is not using many type of sales promotion because it is in a niche market and customers are

loyal. It is using some contests on its website to create awareness about product and the price for right answers

is free adventure tour which is also suitable to its positioning.

Public relations and publicity

It is not using this tool of promotion very much but in recent in the movie mission Istanbul it was one of the

partners and got publicity by this.

Events and Experiences

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Events are the important part of its promotion as it is targeting youth. It is organizing many bike racing,

mountain riding events where youth participates. It has also organized road shows with Jagran Solutions for

consumer awareness in 185 cities of 7 states.

Word of mouth

This is the important way of promotion where satisfied customers encourage other people who come in his

contract. Mountain dew is enjoying this tool of promotion because it is youth targeted drink and satisfied youth

themselves promote it as a good drink among his friends.

Plan for the Next 1 year

After doing the whole analysis for mountain dew’s marketing strategies we are now able to give our opinion

that what should company do for better results.

Product

As we have already described that what is the mountain dew’s product strategy at the time so now we will only

emphasize on the key points they can change in their product.

There is only one flavour of mountain dew available in Indian market. We will make this

existing mountain dew more specifically targeted at these youngsters by including additional

features like stylish shape of bottle and design etc.

We will launch more variant of mountain dew like caffeine free mountain dew for the consumers

who are more health conscious, flavoured mountain dew which can be lemon, orange etc. We

will also like to launch an energy drink variant of Dew which made of coconut water.

Mountain dew’s differentiation strategy is good at the time and it has made an image in

customer’s mind. We will also like to differentiate it on the basis of social awareness issues like

pollution, poverty, population, corruption etc. with this strategy we segment market on the basis

of psychographic.

Price:

Mountain dew is available at different price range in India. All prices at which it is available are reasonable and less

marginable because of intense competition in market. All the soft drinks in Indian market are available at same price

range so it can’t hike its price also it can’t cut down prices because already there are less margins. But there are very less

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discount offer are provided by mountain dew so it can give some discounts on a bundle purchasing like 5rs. Off on the

purchase of two 2liter Bottles.

Promotion

There is no brand ambassador for it so we will like to select a brand ambassador to endorse and promote

mountain dew. We will like to select Narayanan Karthikeyan as the brand ambassador for it because he is from

F1 racing and suitable for the brand image of mountain dew.

We will to promote it mostly near colleges and BPO centres because most of the people there are young. In

beverage industry personal selling is not applicable. Instead of this we like to sponsor more adventurer program

and associate with them. We can also advertise on the social and public issues like pollution and corruption

because today’s youth is so sensitive about these issues and he will associate themselves very soon with these

advertisements.

Place

Indian soft drink industry is estimated to grow at 8% per year so it is important to secure good supply

throughout country. For this we will apply Pepsi Bottling Group (PBG) in India because it has successfully

managed PepsiCo’s distribution in USA. Also we will make some strategic partnership as already with pizza

hut. India has a lowest per capita consumption of cola so there are a lot of possibilities to do in rural area.

Strategy on the basis of competitor -

Coca cola’s market share is greater than PEPSICO. As we can see that the market share of mountain dew is

6.8% is less than his main competitor sprite 15.6% and ThumsUp is 16.4(AC Nielson). In terms of taste and

same kind of product sprite is main competitor of mountain dew, but sprites main target is collegians as it is

indicated by Sprite ad “Seedhi Baat” USP by coming out with the Ghumo Ghumao Sprite Express TV ads”.

ThumsUp is also eating the market share of Mountain Dew as its ad is also targeting the adventures and young

promoted by Akshay Kumar. So seeing the both competitor we will spend more money on advertisement to

make it more attract and adventures.

For designing a communication strategy we will use creative strategy. In which we will use transformational

appeals as a communication. To defeat both competitors we would like to organize some adventures events and

road show.

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Conclusion

After analyzing and describing the whole marketing strategy of mountain dew we can conclude that mountain

dew is doing well in market. We want to conclude that practices makes improved but not ideal so we hope that

this report will help PepsiCo to improve results. With the best marketing plan a product can’t be successful

because outside forces will affect it but with the marketing plan process you can achieve success because then

you are also adopting conditions.

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