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ASSIGNMENT
Subject code: MB0030
(3 credits)
Set 1
Marks 60
SUBJECT NAME: MARKETING MANAGEMENT
Answer the following questions. Each Question carries 10 marks
1. Explain BCG Matrix.
Answer: The BCG Growth-Share Matrix
The BCG Growth-Share Matrix is a portfolio planning model developed by Bruce Henderson
of the Boston Consulting Group in the early 1970's. It is based on the observation that a
company's business units can be classified into four categories based on combinations of
market growth and market share relative to the largest competitor, hence the name "growth-
share". Market growth serves as a proxy for industry attractiveness, and relative market share
serves as a proxy for competitive advantage. The growth-share matrix thus maps the business
unit positions within these two important determinants of profitability.
BCG Growth-Share Matrix
This framework assumes that an increase in relative market share will result in an increase in
the generation of cash. This assumption often is true because of the experience curve;
increased relative market share implies that the firm is moving forward on the experience
curve relative to its competitors, thus developing a cost advantage. A second assumption is
that a growing market requires investment in assets to increase capacity and therefore results
in the consumption of cash. Thus the position of a business on the growth-share matrix
provides an indication of its cash generation and its cash consumption.
Henderson reasoned that the cash required by rapidly growing business units could be
obtained from the firm's other business units that were at a more mature stage and generating
significant cash. By investing to become the market share leader in a rapidly growing market,
the business unit could move along the experience curve and develop a cost advantage. From
this reasoning, the BCG Growth-Share Matrix was born.
The four categories are:
Dogs - Dogs have low market share and a low growth rate and thus neither generate
nor consume a large amount of cash. However, dogs are cash traps because of the money
tied up in a business that has little potential. Such businesses are candidates for
divestiture.
Question marks - Question marks are growing rapidly and thus consume large
amounts of cash, but because they have low market shares they do not generate much
cash. The result is a large net cash comsumption. A question mark (also known as a
"problem child") has the potential to gain market share and become a star, and eventually
a cash cow when the market growth slows. If the question mark does not succeed in
becoming the market leader, then after perhaps years of cash consumption it will
degenerate into a dog when the market growth declines. Question marks must be analyzed
carefully in order to determine whether they are worth the investment required to grow
market share.
Stars - Stars generate large amounts of cash because of their strong relative market
share, but also consume large amounts of cash because of their high growth rate;
therefore the cash in each direction approximately nets out. If a star can maintain its large
market share, it will become a cash cow when the market growth rate declines. The
portfolio of a diversified company always should have stars that will become the next
cash cows and ensure future cash generation.
Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that
is greater than the market growth rate, and thus generate more cash than they consume.
Such business units should be "milked", extracting the profits and investing as little cash
as possible. Cash cows provide the cash required to turn question marks into market
leaders, to cover the administrative costs of the company, to fund research and
development, to service the corporate debt, and to pay dividends to shareholders. Because
the cash cow generates a relatively stable cash flow, its value can be determined with
reasonable accuracy by calculating the present value of its cash stream using a discounted
cash flow analysis.
Under the growth-share matrix model, as an industry matures and its growth rate declines, a
business unit will become either a cash cow or a dog, determined soley by whether it had
become the market leader during the period of high growth.
While originally developed as a model for resource allocation among the various business
units in a corporation, the growth-share matrix also can be used for resource allocation
among products within a single business unit. Its simplicity is its strength - the relative
positions of the firm's entire business portfolio can be displayed in a single diagram.
Limitations:
The growth-share matrix once was used widely, but has since faded from popularity as more
comprehensive models have been developed. Some of its weaknesses are:
Market growth rate is only one factor in industry attractiveness, and relative market
share is only one factor in competitive advantage. The growth-share matrix overlooks
many other factors in these two important determinants of profitability.
The framework assumes that each business unit is independent of the others. In some
cases, a business unit that is a "dog" may be helping other business units gain a
competitive advantage.
The matrix depends heavily upon the breadth of the definition of the market. A
business unit may dominate its small niche, but have very low market share in the overall
industry. In such a case, the definition of the market can make the difference between a
dog and a cash cow.
While its importance has diminished, the BCG matrix still can serve as a simple tool for
viewing a corporation's business portfolio at a glance, and may serve as a starting point for
discussing resource allocation among strategic business units.
2. Describe the marketing mix for Pepsi.
Answer: Marketing Mix
Marketing Mix is the set of marketing tools that the firm uses to pursue its marketing
objectives. Marketing mix has a classification for these marketing tools. These marketing are
classified and called as the Four Ps i.e. Product, Price, Place and Promotion.
The most basic marketing tool is product which includes product design, quality, features,
branding, and packaging.
A critical marketing tool is price i.e. the amount of money that customers pay for the product.
It also includes discounts, allowances, credit terms and payment period.
Place is another key marketing mix tool. And it includes various activities the company
undertakes to make the product accessible and available to the customer. Some factors that
decide the place are transport facilities, channels of distribution, coverage area, etc.
Promotion is the fourth marketing mix tool which includes all the activities that the company
undertakes to communicate and promote its product to target market. Promotion includes
sales promotion, advertising, sales force, public relations, direct marketing, etc
The Pepsi-Cola drink contains basic ingredients found in most other similar drinks including
carbonated water, high fructose corn syrup, sugar, colorings, phosphoric acid, caffeine, citric
acid and natural flavors. The caffeine free Pepsi-Cola contains the same ingredients but no
caffeine.
Some of the different and varied brands of Pepsi are as follows:
1. All Sport
2. Aquafina
3. Caffeine-Free Pepsi
4. Crystal Pepsi
5. Diet Pepsi
6. Gatorade
7. Izze
8. Jazz
9. Josta
10. Kas
11. Manzanita Sol
12. Mirinda
13. Mountain Dew
14. Mountain Dew AMP
18. Pepsi
19. Pepsi Blue
20. Pepsi Cappuccino
21. Pepsi Max
22. Pepsi ONE
23. Pepsi Samba
24. Pepsi Tarik
25. Pepsi Twist
26. Propel Fitness Water
27. Sierra Mist
28. Slice
29. SoBe
30. Storm
31. Teem
15. Mountain Dew LiveWire
16. Mountain Dew MDX
17. Mug Root Beer
32. Tropicana Products
33. Tropicana Twister
Pepsi – Price
Pepsi again decides it price on the basis of competition. The best think about the company
Pepsi is that it is very flexible and it can come down with the price very quickly. The
company is renowned to bring the price down even up to half if needed.
But this risk taking attitude has also earned Pepsi losses. Though lowering the price would
attract the customers but it would not help them cover up the cost incurred in production
hence causing them losses. This was the situation earlier but now Pepsi is a full-fledged and
growing company. It has covered all its losses and is now growing at a rapid rate.
Pepsi – Place
Pepsi again has spread worldwide. Pepsi when entering a new market does not go in alone
but it looks for partners and mergers. Till now Pepsi has collaborated with companies like
Quaker Oats, Frito-lays, Lipton, Starbucks, etc.
Pepsi like Coke has spread all over the world. It is because of this worldwide spread that now
it is coming up with Advertisements which can be broadcasted in the different nations in the
world. The recent example with would be the Pepsi advertisements having David Beckham as
it brand ambassador.
Promotion
Promotion is one of the four aspects of marketing. Promotion comprises four subcategories:
1. Advertising
2. Personal selling
3. Sales promotion
4. Publicity and public relations
Pepsi started with its blind taste tests known as the Pepsi Challenge. The challenge is
designed to be a direct response to critics who allege that Coca-Cola and Pepsi-Cola are
identical drinks, with no meaningful differences. The challenge takes the form of a taste test.
At malls, shopping centers and other public locations, a Pepsi representative sets up a table
with two blank cups, one containing Pepsi and one with Coke. Shoppers are encouraged to
taste both colas, and then select which drink they prefer. Then the representative reveals the
two bottles so the taster can see whether they preferred Coke or Pepsi. If Pepsi is revealed,
the shopper is given a small prize.
Also ad-campaigns are put up on the television by both the players. The following statistic
just tells of much of share of ads on TV are captured by these players.
3. Choose any well-known company and study the micro environment and macro
environment for the same.
Answer: Micro Environment of Pepsi
The Company
PepsiCo
Supplier
Haidiri Beverages Private Limited, Pakistan
Marketing Intermediaries
The Haidiri Beverages Group was set up in 1979 and is Pepsi's sole selling agent for District
Rawalpindi and Islamabad. It is based in the CDA Industrial Triangle, Kahuta Road,
Islamabad. It manages the supply for several wholesalers, retailers, restaurants, hotels and
other such food outlets. In order to achieve the projected sales targets effectively, the
organization ensures a comprehensive strategic alignment with the overall Pepsi Cola’s
business strategy.
Customers
Pepsi customers are mostly young group between the ages of 14 to 30.
Competitors
Coca Cola
RC Cola
Red Bull
Nestle Water
Publics
There are a lots of public are included. Such as channels, investment houses, radio stations,
newspapers, minority groups, general public etc and also internal publics include workers,
board of directors, managers and so on.
GEO, ARY, STAR ONE etc.
Sunday Magazine, Fashion Magazine, Newsletters etc.
Radio and Newspapers.
PepsiCo organizing Meetings, Seminars, Exhibitions for the awareness of the local public
Macro Environment of Pepsi
Demographic Forces
Age: The potential customers of Pepsi would be of age group of 14 - 30 years.
Income:
As for the income levels, Pepsi targets the middle class to the upper class.
Economical Forces
When the economy of the consumer is low and the expenses becomes high so that consumers
move towards another product which is lower in price than the PepsiCo product.
Natural Forces
Due to any disaster, earthquake and some shortage by the marketers or suppliers so it’s
affected their product and market.
Technology Forces
There is huge investment from the government to develop the infrastructure, opportunities
and the creation of new products such as new advanced formulas, new technological factors
changed so that it is very much effected by their product.
Political and Legal
Pakistan is a politically stable economy; as a result foreign investors are attracted to Pakistan
as diversification strategies. The Pakistani government is on a regular effort improving
business relations with trade and investment partners in US and Asia.
Cultural Forces
Due to Islamic Cultural values people prefer to use products made from Halal ingredients.
4. Write a short note on consumer buying behavior.
Answer: Buying Behavior is the decision processes and acts of people involved in buying
and using products.
Need to understand:
Why consumers make the purchases that they make?
What factors influence consumer purchases?
The changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm
needs to analyze buying behavior for:
Buyers reactions to a firms marketing strategy has a great impact on the firms success.
The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies
(gives utility to) customers, therefore need to analyze the what, where, when and how
consumers buy.
Marketers can better predict how consumers will respond to marketing strategies.
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase. All
consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.
The 6 stages are:
Problem Recognition(awareness of need)--difference between the desired state and the actual
condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to
eat.
Can be stimulated by the marketer through product information--did not know you were
deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you
need a new pair of shoes.
Information search--
Internal search, memory.
External search if you need more information. Friends and relatives (word of mouth).
Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set.
Hungry, want to go out and eat, evoked set is
Chinese food
Indian food
Burger king
Klondike kates etc
Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer
wants or does not want. Rank/weight alternatives or resume search. May decide that you want
to eat something spicy, indian gets highest rank etc.
If not satisfied with your choice then return to the search phase. Can you think of another
restaurant? Look in the yellow pages etc. Information from different sources may be treated
differently. Marketers try to influence by "framing" alternatives.
Purchase decision--Choose buying alternative, includes product, package, store, method of
purchase etc.
Purchase--May differ from decision, time lapse between 4 & 5, product availability.
Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance,
have you made the right decision. This can be reduced by warranties, after sales
communication etc.
After eating an indian meal, may think that really you wanted a chinese meal instead.
Types of Consumer Buying Behavior
Types of consumer buying behavior are determined by:
Level of Involvement in purchase decision. Importance and intensity of interest in a product
in a particular situation.
Buyers level of involvement determines why he/she is motivated to seek information about a
certain products and brands but virtually ignores others.
High involvement purchases--Honda Motorbike, high priced goods, products visible to
others, and the higher the risk the higher the involvement. Types of risk:
Personal risk
Social risk
Economic risk
The four type of consumer buying behavior are:
Routine Response/Programmed Behavior--buying low involvement frequently purchased low
cost items; need very little search and decision effort; purchased almost automatically.
Examples include soft drinks, snack foods, milk etc.
Limited Decision Making--buying product occasionally. When you need to obtain
information about unfamiliar brand in a familiar product category, perhaps. Requires a
moderate amount of time for information gathering. Examples include Clothes--know
product class but not the brand.
Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or
infrequently bought products. High degree of economic/performance/psychological risk.
Examples include cars, homes, computers, education. Spend alot of time seeking information
and deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go through
all six stages of the buying process.
Impulse buying, no conscious planning.
The purchase of the same product does not always elicit the same Buying Behavior. Product
can shift from one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someone that
does not go out often at all), but limited decision making for someone else. The reason for the
dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also
determine the extent of the decision making.
A consumer, making a purchase decision will be affected by the following three factors:
Personal
Psychological
Social
The marketer must be aware of these factors in order to develop an appropriate MM for its
target market.
Return to Contents List
Personal
Unique to a particular person. Demographic Factors. Sex, Race, Age etc.
Who in the family is responsible for the decision making.
Young people purchase things for different reasons than older people.
Handout...From choices to checkout...
Highlights the differences between male and female shoppers in the supermarket.
Return to Contents List
Psychological factors
Psychological factors include:
Motives--
A motive is an internal energizing force that orients a person's activities toward satisfying a
need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify motives then
they can better develop a marketing mix.
MASLOW hierarchy of needs!!
Physiological
Safety
Love and Belonging
Esteem
Self Actualization
Need to determine what level of the hierarchy the consumers are at to determine what
motivates their purchases.
Handout...Nutrament Debunked...
Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at consumers
that needed to receive additional energy from their drinks after exercise etc., a fitness drink. It
was therefore targeted at consumers whose needs were for either love and Belonging or
esteem. The product was not selling well, and was almost terminated. Upon extensive
research it was determined that the product did sell well in inner-city convenience stores. It
was determined that the consumers for the product were actually drug addicts who couldn't
not digest a regular meal. They would purchase Nutrament as a substitute for a meal. Their
motivation to purchase was completely different to the motivation that B-MS had originally
thought. These consumers were at the Physiological level of the hierarchy. BM-S therefore
had to redesign its MM to better meet the needs of this target market.
Motives often operate at a subconscious level therefore are difficult to measure.
Perception--
What do you see?? Perception is the process of selecting, organizing and interpreting
information inputs to produce meaning. IE we chose what info we pay attention to, organize
it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell and touch.
Selective Exposure-select inputs to be exposed to our awareness. More likely if it is linked to
an event, satisfies current needs, intensity of input changes (sharp price drop).
Selective Distortion-Changing/twisting current received information, inconsistent with
beliefs.
Advertisers that use comparative advertisements (pitching one product against another), have
to be very careful that consumers do not distort the facts and perceive that the advertisement
was for the competitor. A current example...MCI and AT&T...do you ever get confused?
Selective Retention-Remember inputs that support beliefs, forgets those that don't.
Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30
minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement per day. Can't be
expected to be aware of all these inputs, and certainly will not retain many.
Interpreting information is based on what is already familiar, on knowledge that is stored in
the memory.
Handout...South Africa wine....
Problems marketing wine from South Africa. Consumers have strong perceptions of the
country, and hence its products.
Ability and Knowledge--
Need to understand individuals capacity to learn. Learning, changes in a person's behavior
caused by information and experience. Therefore to change consumers' behavior about your
product, need to give them new information re: product...free sample etc.
South Africa...open bottle of wine and pour it!! Also educate american consumers about
changes in SA. Need to sell a whole new country.
When making buying decisions, buyers must process information.
Knowledge is the familiarity with the product and expertise.
Inexperience buyers often use prices as an indicator of quality more than those who have
knowledge of a product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack, because they
assume that the greater price indicates greater quality.
Learning is the process through which a relatively permanent change in behavior results from
the consequences of past behavior.
Attitudes--
Knowledge and positive and negative feelings about an object or activity-maybe tangible or
intangible, living or non- living.....Drive perceptions
Individual learns attitudes through experience and interaction with other people.
Consumer attitudes toward a firm and its products greatly influence the success or failure of
the firm's marketing strategy.
Handout...Oldsmobile.....
Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovered by class
exercise) need to disassociate Aurora from the Oldsmobile name.
Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic oil spill.
Honda "You meet the nicest people on a Honda", dispel the unsavory image of a motorbike
rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas market
returning to hard core. To change this they have a new slogan "Come ride with us".
Attitudes and attitude change are influenced by consumers personality and lifestyle.
Consumers screen information that conflicts with their attitudes. Distort information to make
it consistent and selectively retain information that reinforces our attitudes. IE brand loyalty.
There is a difference between attitude and intention to buy (ability to buy).
Personality--
all the internal traits and behaviors that make a person unique, uniqueness arrives from a
person's heredity and personal experience. Examples include:
Workaholism
Compulsiveness
Self confidence
Friendliness
Adaptability
Ambitiousness
Dogmatism
Authoritarianism
Introversion
Extroversion
Aggressiveness
Competitiveness.
Traits effect the way people behave. Marketers try to match the store image to the perceived
image of their customers.
There is a weak association between personality and Buying Behavior, this may be due to
unreliable measures. Nike ads. Consumers buy products that are consistent with their self
concept.
Lifestyles--
Recent US trends in lifestyles are a shift towards personal independence and individualism
and a preference for a healthy, natural lifestyle.
Lifestyles are the consistent patterns people follow in their lives.
EXAMPLE healthy foods for a healthy lifestyle. Sun tan not considered fashionable in US
until 1920's. Now an assault by the American Academy of Dermatology.
5. Company A has homogeneous consumer preferences in the market; Company B
sells different variants of soaps, while Company C is a small firm with constrained
resources. What do you think is the most suitable market coverage strategy for the all
the three companies.
Answer: One of the most important decisions that a company makes is what market coverage
strategy to use for a brand. In analyzing any one product, the first thing to consider is the
market. In case of company A, market is too broad to segment effectively (since it
homogeneous consumer preferences), so it makes sense to narrow the market to what can be
called a focus market, in this case the consumer preferences for market. In a sense, the focus
market rules out products that are not substitutes. For example, a marketing analysis for
Gatorade (which has about a 90% market share) should not exclude water since that is a
substitute for a sports drink and a possible source of new sales. Otherwise the analysis would
be stuck with a market definition of sports drinks and thus virtually no practical way of
increasing sales.
Consumer segmentation variables include demographics (e.g., age, gender and family life
cycle), psychographics (e.g., self concept and lifestyle), usage rate (e.g., heavy and light
users) and benefits sought. In this case benefits sought may be batteries for normal vs. high-
drain devices.
Company “A” has three basic choices for market coverage strategy:
Undifferentiated—ignore segmentation variables and go after the whole market with one
brand.
Differentiated—operate in all or several segments of the market and design separate brands
for each.
Concentrated—operate in one or only a few segments of the larger market following a niche
strategy with one brand.
A way of telling what market coverage strategy a company is using is the number of
separately-branded products that it offers in any one market. Gap could have regional
variation in product assortments (say for different climates), but if there was only one Gap
name, the market coverage strategy would be undifferentiated.
Once a company chooses a market coverage strategy for a brand it knows its target market. A
concentrated market coverage strategy leads to one target market as does an undifferentiated
market coverage strategy. A differentiated market coverage strategy leads to as many target
markets as there are brands.
A company must be sure to avoid the trap of defining a target market by who is in that market
before analyzing the needs and wants of the target market. That's why we say that what the
market is comes first, and then the choice of a market coverage strategy.
For company B, which sells different variant of soap, the growth is not as high as there is
expansion in the market for soaps. The cash cows for HLL include Lifebouy, Lux, Liril,
Rexona and Breeze. The company's premium soap include Dove, Pears. The company has
come up with a new product offering i.e. Fair & Lovely soap. The strategy for 2006-07 would
be to increase the market share from existing 63% to 70%. The strategic changes taking 4 P's
into consideration would be:
Product: I would continue with the existing portfolio of the products and would concentrate
on coming with new fragrances on different soaps than launching new soaps. I would
position Dove and Lux International soap very urban rich women who are extra conscious for
their complexion. Pears, Lux International would be positioned for the urban and rural rich.
For the consuming urban class, Liril, Rexona, Pears and Lifebouy International would be
positioned. I would also come up with 40gm packaging for different products. I will also be
thinking of extending popular brands of cosmetics in the soap segment by that decision would
be based on the popularity and acceptance of that particular brand (Brand Extension).
Price: I would be try to customize the packaging of various products on the basis of price
points. e.g. I will come up with the pricing of Rs 5, Rs 10 and Rs 15 for different products. I
would try to experiment it with the products positioned for consuming class.
Promotion: For promotion, apart from continuing the existing strategy of concentrating on
T.V. channels, I would try to focus on the promotional campaign in rural sector. I would also
concentrate on promoting through radio and sponsoring the programs e.g. 'Krishi Darshan'
and 'Aap ka Swasthaya' programs that have greater number of audience. The advertising for
them would have a pastoral and cultural looks.
Place: As the marketing channels of the company are already established I would try to
increase the penetration in the rural sector to the extreme remote areas which are not touched
till now. I would try to reduce the delivery time of the products by choosing and increasing
the strategic locations of warehouses.
In case of company ‘C’, which is small firm, which constrained resources, It is often argued
that governments should promote SMEs because of their greater economic benefits compared
to large firms-in terms of job creation, efficiency, and growth.
Share of Firms and Employment. In most developing countries, microenterprises and small-
scale enterprises account for the majority of firms and a large share of employment. In
Ecuador, for exarnple, firms with fewer than 50 employees accounted for 99 percent of firms
and 55 percent of employment in 1980; in Bangladesh, enterprises with fewer than 100
workers accounted for 99 percent of enterprises and 58 percent of employment in 1986.
Labor Intensity. Small firms employ a large share of the labor force in many developing
countries, but are they more labor demanding than large firms (for a given scale of
production)? Many analysts argue that, within industries, SMEs are more labor intensive than
large firms. However, the evidence suggests that enterprise scale is an unreliable guide to
labor intensity: many small firms are in fact more capital-intensive than larger firms in the
same industry.! Labor intensity exhibits more variation across industries than among firm-
size groups within industries-leading some authors to suggest that efforts to make economic
growth more labor-demanding should focus on altering the pattern of demands in favor of
labor-intensive industries rather than on supply-side efforts to change the size distribution of
firms.
Job Creation. Apart from labor intensity, it is often argued that SMEs are important for
employment growth, i.e., job creation. Here again, the evidence does not support the
conventional wisdom. While gross job creation rates are substantially higher for small firms,
so are gross destruction rates. This is because small firms exhibit high birthrates and high
death rates, and many small firms fail to grow. In developed countries, net job creation rates
i(gross job creation less gross job destruction) do not exhibit a systematic relationship to firm
size.3 For example, in the United States between 1973 and 1988, despite a widespread belief
to the contrary, small manufacturing firms did not consistently create more jobs on a net basis
(after allowing for jobs eliminated and 4 firms that went out of business) than large firms.
There is some evidence that the same conclusion holds for developing economies. Efficiency.
Measures of enterprise efficiency (e.g., labor productivity or total factor productivity) vary
greatly 'both within and across industries. Firm size may be associated with some other
factors that are correlated with efficiency, such as management skill and technology, and the
effects of the policy environment. Wages and Benefits. While there are many exceptions to
the basic pattern, the weight of evidence suggests that larger employers offer better jobs in
terms of wages, fringe benefits, working conditions, and opportunities for skills
enhancement, as well as. Social, Political, and Equity Justifications. SMEs are often said to
contribute to a more equal distribution of income or wealth. To the extent that SME owners
and workers are in the lower half of the income distribution, promoting the growth of SMEs
may lead to a more equitable distribution of income. It is often argued that SME promotion is
justified on grounds of the job-creating prowess of SMEs or of their greater efficiency and
growth. Attempts are often made to draw a causal link between SMEs and poverty alleviation
so as to justify policies and subsidies in favor of SMEs. But the empirical evidence
supporting many of these claims is very mixed, making it difficult to justify SME promotion
on the basis of inherent economic benefits of smallness.
6. Describe various bases for positioning the product with example.
Answer: Three bases of positioning can be distinguished
Functional (solve problem, provide benefits to customers)
Symbolic (Self-image enhancement, ego identification, belongingness and social
meaningfulness, affective fulfillment)
Experiential (provide sensory stimulation; provide cognitive stimulation)
Steps in product positioning process
Identify competing products
Identify the attributes, also called dimensions that define the product ‘space’
Collect information from a sample of customers about their perceptions of each
product on the relevant attributes
Collect information from a sample of customers about their perceptions of each
product on the relevant attributes
Determine the share of mind of each product
Determine the current location of each product in the product space
Determine the target market’s preferred combination of attributes. These are called:
an ideal vector.
Examine the fit between: the positions of competing products, the position of your
product and the position of the ideal vector
Select the optimum position
Three positioning strategies
Reverse Positioning: This method removes ‘sacred product attributes. Simultaneously nes
attributes are added that would typically be found only in highly augmented product. For
example IKEA is not delivering to your home the products which you have bought, and it
offers no sales consultancy.
Breakaway positioning: This method associates the product with a radically different
category. By manipulating the cues of consumers of how they perceive and categorize a
product, a firm can change how they perceive and categorize a product; a firm can change
how consumers frame a product.
Stealth Positioning: This variant gradually interests consumers for a new offering, by hiding
the products true nature. For example Sony’s AIBO robot was positioned as a lovable pet.
This shifted consumer’s attention away from its major limitations as a household aide. It
apparently even turned elderly people into early technology adopters.
ASSIGNMENT
Subject code: MB0030
(3 credits)
Set 2
Marks 60
SUBJECT NAME: MARKETING MANAGEMENT
Answer the following questions. Each Question carries 10 marks
1. Write a short note on product life cycle.
Answer: The product life cycle goes through many phases, involves many professional
disciplines, and requires many skills, tools and processes. Product life cycle (PLC) has to do
with the life of a product in the market with respect to business/commercial costs and sales
measures; whereas product life cycle management (PLM) has more to do with managing
descriptions and properties of a product through its development and useful life, mainly from
a business/engineering point of view. To say that a product has a life cycle is to assert four
things: 1) that products have a limited life, 2) product sales pass through distinct stages, each
posing different challenges, opportunities, and problems to the seller, 3) profits rise and fall at
different stages of product life cycle, and 4) products require different marketing, financial,
manufacturing, purchasing, and human resource strategies in each life cycle stage.
The different stages in a product life cycle are:
1.Market introduction stage
I:* costs are high
II:* slow sales volumes to start
III:* little or no competition - competitive manufacturers watch for acceptance/segment
growth losses
IV:* demand has to be created
V:* customers have to be prompted to try the product
VI: makes no money at this stage
2.Growth stage
I:* costs reduced due to economies of scale
II:* sales volume increases significantly
III:* profitability begins to rise
IV:* public awareness increases
V:* competition begins to increase with a few new players in establishing market
VI:* increased competition leads to price decreases
3.Mature stage
I:* Costs are lowered as a result of production volumes increasing and experience curve
effects
II:* sales volume peaks and market saturation is reached
III:* increase in competitors entering the market
IV:* prices tend to drop due to the proliferation of competing products
V:* brand differentiation and feature diversification is emphasized to maintain or increase
market share
VI:* Industrial profits go down
4.Saturation and decline stage
I:* costs become counter-optimal
II:* sales volume decline or stabilize
III:* prices, profitability diminish
IV:* profit becomes more a challenge of production/distribution efficiency than increased
sales
Request for Deviation
In the process of building a product following defined procedure, an RFD is a request for
authorization, granted prior to the manufacture of an item, to depart from a particular
performance or design requirement of a specification, drawing or other document, for a
specific number of units or a specific period of time.
Market Identification
A "micro-market" can be used to describe a Walkman, more portable, as well as individually
and privately recordable; and then Compact Discs ("CDs") brought increased capacity and
CD-R offered individual private recording...and so the process goes. The below section on
the "technology lifecycle" is a most appropriate concept in this context.[clarification needed]
Most of the context is not in English so you may need a translator.[clarification needed]
In short, termination is not always the end of the cycle; it can be the end of a micro-entrant
within the grander scope of a macro-environment. The auto industry, fast-food industry,
petro-chemical industry, are just a few that demonstrate a macro-environment that overall has
not terminated even while micro-entrants over time have come and gone.
It is claimed that every product has a life cycle. It is launched, it grows, and at some point,
may die. A fair comment is that - at least in the short term - not all products or services die.
Jeans may die, but clothes probably will not. Legal services or medical services may die, but
depending on the social and political climate, probably will not.
Even though its validity is questionable, it can offer a useful 'model' for managers to keep at
the back of their mind. Indeed, if their products are in the introductory or growth phases, or in
that of decline, it perhaps should be at the front of their mind; for the predominant features of
these phases may be those revolving around such life and death. Between these two extremes,
it is salutary for them to have that vision of mortality in front of them.
However, the most important aspect of product life-cycles is that, even under normal
conditions, to all practical intents and purposes they often do not exist (hence, there needs to
be more emphasis on model/reality mappings). In most markets the majority of the major
brands have held their position for at least two decades. The dominant product life-cycle, that
of the brand leaders which almost monopolize many markets, is therefore one of continuity.
In the criticism of the product life cycle, Dhalla & Yuspeh state:
The PLC is a dependent variable which is determined by market actions; it is not an
independent variable to which companies should adapt their marketing programs. Marketing
management itself can alter the shape and duration of a brand's life cycle.[1]
Thus, the life cycle may be useful as a description, but not as a predictor; and usually should
be firmly under the control of the marketer. The important point is that in many markets the
product or brand life cycle is significantly longer than the planning cycle of the organisations
involved. Thus, it offers little practical value for most marketers. Even if the PLC (and the
related PLM support) exists for them, their plans will be based just upon that piece of the
curve where they currently reside (most probably in the 'mature' stage); and their view of that
part of it will almost certainly be 'linear' (and limited), and will not encompass the whole
range from growth to decline.
2. Explain various categories of brand sponsorship with example.
Answer: Sponsorship plays a significant role in the planning and execution of any brand
promotion. Sponsors consider return on investment (ROI) when measuring the value of
sponsorships. And the most important elements include awareness and financial benefits. For
the Taste of Chicago 2007, a total of 69 sponsors across 12 different sponsorship categories
supported the event.
Christine Jacob, senior manager of corporate sponsorships in the Mayor’s Office of Special
Events in Chicago, supports numerous programs throughout the year. But for the Taste, her
goal is to identify sponsors and secure/negotiate terms early to help maximize the event's
total revenue.
Sponsorship categories at the Taste include the following:
Presenting ($750,000)
Family Village ($125,000)
3rd of July ($125,000)
Official Credit Card ($90,000)
Taste Stage ($90,000)
Concert: 1 per night (customized)
Gourmet Dining Pavilion ($50,000)
Dining Pavilion ($40,000)
Participating ($30,000)
On-Site: 10 days ($25,000)
On-Site: 1 day ($5,000)
Media: in-kind value ($120,000)
Of course, sponsors are savvy and measure the benefits of participating in a community
festival against their own business objectives.
For example, some sponsors use the Taste as an opportunity to brand themselves with some
of the entertainment options to expand their visibility with event attendees. The result:
Humana Senior Pavilion, Dominick’s Cooking Corner, Gallo Wine Pavilion (part of Gourmet
Dining).
How to Secure Sponsors
Because the Taste of Chicago is an established annual event, sponsorship renewals typically
begin in September for the following year with contract commitments by December.
“We’re fortunate that Taste is what it is,” Jacob explains. “People call us – which is great. It’s
a marketer’s dream to be part of Taste.”
When the programming committee for the Taste meets each year in the fall, they consider
new programming areas and that’s when the sponsorship team begins to integrate these ideas
into the their platform.
In 2007, the Taste included three new areas: Goin’ Green Pavillion, Sports Pavilion, and a
International Pavilion. If a sponsor isn’t identified, the category is simply sponsored by the
city, and the benefits are measured and used to find a sponsor for the following year (as long
as the for the next year.
If sponsors do not commit by year end or drops out for any reason, it’s time for the
sponsorship team to pursue new sponsors.
“That could mean cold calls and pitches,” Jacobs explains. “For example, if an automotive
sponsor drops out, we’ll approach another automotive sponsor who we’ve worked with in the
past.”
For those approaching sponsorship for the first time or those who are holding a previous
organized event that is now annualized, Jacobs offers the following tips:
Even if you’re not successful, try to secure a first year sponsor.
Sponsorships must be identified as part of the initial planning phase.
Brainstorm program elements early to allow maximum time to secure sponsors.
Identify the value of each category; reinforce the benefits of a previously held program and
its sponsorship levels.
Create a fact sheet for each property/individual sponsorship category.
Offer higher level sponsors the right of first refusal. Majority of sponsors are either
participatin or onsite. Many renew all sponsorships at least six months prior to the event.
Secure new/replacement sponsors at least three months prior to the event.
Hold weekly or regular meetings to communicate sponsor status and renewals.
Common Elements in a Sponsorship Package
Sponsors consider return on investment (ROI) when measuring the value of sponsorships.
And the most important elements include awareness and financial benefits.
Nevertheless, event planners who organize community events such as a food festival will
determine sponsorship levels and direct benefits from the organizer to help support those ROI
objectives. Depending on the sponsorship level, visibility included in the Taste may include
any portion or all of the following:
Signage/banner opportunities (stage, railing, towers, street pole, etc.)
Corporate logo on main stage
Category exclusivity
Promotional tent
Advertisement in program materials
Status level on event brochure
Corporate logo on event advertisements
Corporate logo at ticket windows
Mentions in radio advertising
Priority seating tickets
Use of corporate hospitality tents
Main stage presentations
Main stage mentions
Opportunity to bring inflatable for increased visibility
Corporate press releases with event press kits
Parking and delivery permits
Invitations to press preview party
Opportunity to distribute pre-approved sample items
Benefits of Sponsorship
While “cash” may seem like the most obvious reason to secure sponsors, many other benefits
exist for incorporating sponsorship categories into a community food festival, according to
Jacob:
Concert sponsorship helps bring top name artists.
Corporate sponsorships enhance programming.
The Value of In-Kind Offers
To be sure, sponsoring an established event like the Taste is beneficial to both sponsor and
organizer, so in-kind offers can sometimes be viewed as cash. Some examples that Jacob
suggests include the following:
Media sponsors to provide TV, radio and print advertising.
Radio sponsors to offset talent expenses.
Airline sponsors to provide seats for out of town entertainment.
Hotels to provide complimentary guest rooms for entertainment.
Another important factor when identifying sponsors for a family event: “We do not have any
‘sin’ categories. We avoid tobacco and sex related sponsors,” Jacob says. “And because this
is a food festival, no food sampling is allowed.”
For anyone who is considering an event like this for the first time, Jacob recommends doing a
lot of research, and suggests that planners consider using an experienced firm to find out how
other people do it.
3. Explain the product mix pricing strategies with example.
Answer: Pricing is one of the most important elements of the marketing mix, as it is the only
mix, which generates a turnover for the organisation. The remaining 3p’s are the variable cost
for the organisation. It costs to produce and design a product; it costs to distribute a product
and costs to promote it. Price must support these elements of the mix. Pricing is difficult and
must reflect supply and demand relationship. Pricing a product too high or too low could
mean a loss of sales for the organisation. Pricing should take into account the following
factors:
Fixed and variable costs.
Competition
Company objectives
Proposed positioning strategies.
Target group and willingness to pay.
Types of Pricing Strategies
An organisation can adopt a number of pricing strategies. The pricing strategies are based
much on what objectives the company has set itself to achieve.
Penetration pricing: Where the organisation sets a low price to increase sales and market
share.
Skimming pricing: The organisation sets an initial high price and then slowly lowers the
price to make the product available to a wider market. The objective is to skim profits of the
market layer by layer.
Competition pricing: Setting a price in comparison with competitors.
Product Line Pricing: Pricing different products within the same product range at different
price points. An example would be a video manufacturer offering different video recorders
with different features at different prices. The greater the features and the benefit obtained the
greater the consumer will pay. This form of price discrimination assists the company in
maximizing turnover and profits.
Bundle Pricing: The organisation bundles a group of products at a reduced price.
Psychological pricing: The seller here will consider the psychology of price and the
positioning of price within the market place. The seller will therefore charge 99p instead £1
or $199 instead of $200
Premium pricing: The price set is high to reflect the exclusiveness of the product. An
example of products using this strategy would be Harrods, first class airline services, Porsche
etc.
Optional pricing: The organization sells optional extras along with the product to maximize
its turnover. This strategy is used commonly within the car industry.
4. What are various logistics functions? Describe in brief.
Answer: It is important to recognize that the various logistic functions come together to form
the totality of logistics support. A NATO logistician of one discipline will often work with a
staff officer of another discipline and, as a very minimum, will have to appreciate the other's
responsibilities and problems. For example, logistic planning originates in national, NATO or
MNC policy guidance and has to be coordinated with all the staff branches concerned,
whether they be operational, administrative or logistic, military or civil.
Materiel Function of Logistics
Production or acquisition logistics covers materiel, from the first phase of the life cycle to its
final disposal from the inventory. The first part of the cycle, from specification, design and
production is clearly a function of production logistics. Reception of the equipment into
service, its distribution and storage, repair, maintenance and disposal are clearly a consumer
logistic task. However, the initial design of the equipment which is part of production
logistics has to take account of the consumer aspects of repair and maintenance, and therefore
involves both disciplines.
Supply Function of Logistics
Supply covers all materiel and items used in the equipment, support and maintenance of
military forces (classes of supply are listed at Annex A). The supply function includes the
determination of stock levels, provisioning, distribution and replenishment.
Maintenance and Repair Function of Logistics
Maintenance means all actions to retain the materiel in or restore it to a specified condition.
The operational effectiveness of land, naval and air forces will depend to a great extent on a
high standard of preventive maintenance, in peacetime, of the equipment and associated
materiel in use. Repair includes all measures taken to restore materiel to a serviceable
condition in the shortest possible time.
Battle Damage Repair (BDR) is an important element in maintaining materiel availability
during operations. It is designed to restore damaged materiel to a battleworthy condition,
irrespective of the cause of the failure, as quickly as possible. Damage assessment has to be
done rapidly and must not always require the use of automated test equipment or
sophisticated tools. The considerations are primarily aimed at limiting the damage,
determining the cause of the damage, establishing a plan for damage repair, and minimizing
the risk to equipment and operators. Once the operational mission has been accomplished,
BDR must be followed by specialized maintenance or repair to restore the equipment to fully
serviceable condition.
Service Function of Logistics
The provision of manpower and skills in support of combat troops or logistic activities
includes a wide range of services such as combat resupply, map distribution, labour
resources, postal and courier services, canteen, laundry and bathing facilities, burials, etc.
These services may be provided either to one's own national forces or to those of another
nation and their effectiveness depends on close cooperation between operational, logistic and
civil planning staffs.
Explosive Ordnance Disposal (EOD) Function of Logistics
EOD involves the investigation, detection, location, marking, initial identification and
reporting of suspected unexploded ordnance, followed by the on-site evaluation, rendering
safe, recovery and final disposal of unexploded explosive ordnance. It may also include
explosive ordnance which has become hazardous by damage or deterioration. The NATO
EOD Technical Information Centre (EODTIC) holds records of all past and present
ammunition and explosives, and provides an immediate advisory service on EOD problems.
Movement and Transportation Function of Logistics
It is a requirement that a flexible capability exists to move forces in a timely manner within
and between theatres to undertake the full spectrum of Alliance roles and missions. It also
applies to the logistic support necessary to mount and sustain operations.
Engineering Function of Logistics
The area of logistic engineering, while not exclusively a logistic function will require close
coordination with logistics as the mission is very closely aligned with logistics in terms of
facilitating the logistic mission of opening lines of communication and constructing support
facilities. The engineering mission bridges the gap from logistics to operations and is closely
related to the ultimate success of both. The acquisition, construction and operation of
facilities forms the basis for the NISP. This is the term generally used in NATO for
installations and facilities for the support of military forces.
Medical Function of Logistics
This function entails the provision of an efficient medical support system to treat and
evacuate sick, injured and wounded personnel, minimise man days lost due to injury and
illness, and return casualties to duty. An effective medical support system is thus considered a
potential force multiplier. Though medical support is normally a national responsibility,
planning must be flexible and consider coordinated multinational approaches to medical
support. The degree of multinationality will vary depending on the circumstances of the
mission, and be dependent upon the willingness of nations to participate in any aspect of
integrated medical support.
Contracting Function of Logistics
Contracting has become increasingly important to the conduct of operations, particularly
when operating beyond NATO's area of responsibility. It is a significant tool that may be
employed to gain fast access to in-country resources by procuring the supplies and services
that the NATO Commander requires.
Budget and Finance Function of Logistics
The areas of budget and finance impact virtually every aspect of logistic operations. The
funding and budget policies to pay for deployment and sustainment and redeployment are
unique. While nations are generally expected to finance their own operations.
5. What is IMC? Describe the communication development process in brief.
Answer: A management concept that is designed to make all aspects of marketing
communication such as advertising, sales promotion, public relations, and direct marketing
work together as a unified force, rather than permitting each to work in isolation.
It aims to ensure consistency of message and the complementary use of media. The concept
includes online and offline marketing channels. Online marketing channels include any e-
marketing campaigns or programs, from search engine optimization (SEO), pay-per-click,
affiliate, email, banner to latest web related channels for webinar, blog, micro-blogging, RSS,
podcast, and Internet TV. Offline marketing channels are traditional print (newspaper,
magazine), mail order, public relations, industry relations, billboard, radio, and television. A
company develops its integrated marketing communication programme using all the elements
of the marketing mix (product, price, place, and promotion).
Integrated marketing communication is integration of all marketing tools, approaches, and
resources within a company which maximizes impact on consumer mind and which results
into maximum profit at minimum cost. Generally marketing starts from "Marketing Mix".
Promotion is one element of Marketing Mix. Promotional activities include Advertising(by
using different medium), sales promotion (sales and trades promotion), and personal selling
activities. It also includes internet marketing, sponsorship marketing, direct marketing,
database marketing and public relations. And integration of all these promotional tools along
with other components of marketing mix to gain edge over competitor is called Integrated
Marketing Communication.
Reasons for the Growing Importance of IMC
Several shifts in the advertising and media industry have caused IMC to develop into a
primary strategy for marketers:
From media advertising to multiple forms of communication.
From mass media to more specialized (niche) media, which are centered around specific
target audiences.
From a manufacturer-dominated market to a retailer-dominated, consumer-controlled market.
From general-focus advertising and marketing to data-based marketing.
From low agency accountability to greater agency accountability, particularly in advertising.
From traditional compensation to performance-based compensation (increased sales or
benefits to the company).
From limited Internet access to 24/7 Internet availability and access to goods and services.
Selecting the Most Effective Communications Elements
The goal of selecting the elements of proposed integrated marketing communications is to
create a campaign that is effective and consistent across media platforms. Some marketers
may want only ads with the greatest breadth of appeal: the executions that, when combined,
provide the greatest number of attention-getting, branded, and motivational moments. Others
may only want ads with the greatest depth of appeal: the ads with the greatest number of
attention-getting, branded, and motivational points within each.
Although integrated marketing communications is more than just an advertising campaign,
the bulk of marketing dollars is spent on the creation and distribution of advertisements.
Hence, the bulk of the research budget is also spent on these elements of the campaign. Once
the key marketing pieces have been tested, the researched elements can then be applied to
other contact points: letterhead, packaging, logistics, customer service training, and more, to
complete the IMC cycle.
6. What are alternative approaches to marketing while going international? Study
Pepsi’s international marketing strategy.
Answer: Markets and marketing are becoming ever more international in their nature and
managers around the world ignore this fact at their peril. To achieve sustainable growth in
markets that are becoming increasingly global, or merely to survive in domestic markets that
are increasingly attacked by international players, it is essential that organisations understand
the complexity and diversity of international marketing and that their managers develop the
skills, aptitudes and knowledge necessary to compete effectively around the globe.
A company must learn how to enter foreign markets and increase their global
competitiveness. Firms that do venture abroad find the international marketplace far different
from the domestic one. Market sizes, buyer behavior and marketing practices all vary,
meaning that international marketers must carefully evaluate all market segments in which
they expect to compete.
Whether to compete globally is a strategic decision (strategic intent) that will fundamentally
affect the firm, including its operations and its management. For many companies, the
decision to globalize remains an important and difficult one (global strategy and action).
Typically, there are many issues behind a company`s decision to begin to compete in foreign
markets. For some firms, going abroad is the result of a deliberate policy decision (exploiting
market potential and growth); for others, it is a reaction to a specific business opportunity
(global financial turmoil, etc.) or a competitive challenge (pressuring competitors). But, a
decision of this magnitude is always a strategic proactive decision rather than simply a
reaction (learning how to business abroad). Reasons for global expansion are mentioned
below:
a) Opportunistic global market development (diversifying markets)
b) Following customers abroad (customer satisfaction)
c) Pursuing geographic diversification (climate, topography, space, etc.)
d) Exploiting different economic growth rates (gaining scale and scope)
e) Exploiting product life cycle differences (technology)
f) Pursuing potential abroad
g) Globalizing for defensive reasons
h) Pursuing a global logic or imperative (new markets and profits)
Moreover, there can be several reasons to be mentioned including comparative advantage,
economic trends, demographic conditions, competition at home, the stage in the product life
cycle, tax structures and peace. To succeed in global marketing companies need to look
carefully at their geographic expansion. To some extent, a firm makes a conscious decision
about its extent of globalization by choosing a posture that may range from entirely domestic
without any international involvement (domestic focus) to a global reach where the company
devotes its entire marketing strategy to global competition. In the development of an
international marketing strategy, the firm may decide to be domestic-only, home-country,
host-country or regional/global-oriented.
Each level of globalization will profoundly change the way a company competes and will
require different strategies with respect to marketing programs, planning, organization and
control of the international marketing effort. An industry in which firm competes is also
important in applying different strategies. For example, when a firm which competes in the
pharmaeutical industry which is heavily globalized, it has to set its own strategies to deal with
global competitors. (constant innovation)
Tracking the development of the large global corporations today reveals a recurring,
sequential pattern of expansion. The first step is to understand the international marketing
environment, particularly the international trade system. Second, the company must consider
what proportion of foreign to total sales to seek, whether to do business in a few or many
countries and what types of countries to enter. The third step is to decide on which particular
markets to enter and this calls for evaluating the probable rate of return on investment against
the level of risk (market differences). Then, the company has to decide how to enter each
attractive market. Many companies start as indirect or direct export exporters and then move
to licensing, joint-ventures and finally direct investment; this company evolution has been
called the internationalization process. Companies must next decide on the extent to which
their products, promotion, price and distribution should be adapted to individual foreign
markets. Finally, the company must develop an effective organization for pursuing
international marketing. Most firms start with an export department and graduate to an
international division. A few become global companies which means that top management
plans and organizes on a global basis (organization history).
Typically, these companies began their business development phase by entrenching
themselves first in their domestic markets. Often, international development did not occur
until maturity was reached domestically. After that phase, these firms began to turn into
companies with some international business, usually on an export basis. But, this process may
vary dramatically with the size of the domestic market.
Pepsi’s international marketing strategy
When the "You're in the Pepsi Generation" advertising campaign launched in 1963, it may
have been the first time a brand was marketed primarily with an association to its consumers'
aspirational attitudes. A decidedly youth-oriented strategy, The newest campaign slogan,
introduced this year, is "More Happy," which definitely coincides with one concrete example
of "more" in the packaging of Pepsi products today—more designs. Many more. At least 35
distinct design ideas will grace the packaging of Pepsi's cans and bottles this year alone, and
this design strategy may continue indefinitely.
Though not "generational" in word, the campaign certainly has a youth-oriented feel with
package designs, advertising, and websites that are fun and playful. PepsiCo worked closely
with Peter Arnell and Arnell Group, based in New York City, to devise a comprehensive new
strategy that would connect with Pepsi's core consumers. Arnell reinvented the Pepsi package
as a meaningful and appealing communications tool for the latest generation of youth that are
not overwhelmed by media, music, or digital distractions.
Pepsi actually asked their loyal consumers what brand elements would have to remain so that
they would be intuitively reassured that their favorite drinks were not changing and the brand
they trusted was still essentially the same. Their answer was direct and consistent. Pepsi-
lovers needed to see three elements for sure—the Pepsi "globe," the iconic Pepsi blue, and the
familiar tilted Pepsi capital letters.
The most recent logo design had the Pepsi wordmark on top of and slightly overlapping the
iconic Pepsi red-white-and-blue "globe." On the previous can design, the wordmark wrapped
halfway around the can, and the globe was off-center. The new cans and bottles have un-
bundled the word and globe, making the newly centered globe more of the hero, and the
smaller Pepsi wordmark less prominent.
Television ad campaigns are reinforcing the globe-centric approach by featuring a boulder-
sized Pepsi globe in various settings careening to and fro like a pinball. In the ads and on the
front of most of the new packages is the reassuring tag line: "Same Pepsi inside, new look
outside." Miller explains that it is customary and important to reassure consumers for at least
six months in situations like this.
Today's youth as demanding authenticity from the products they come into contact with in
their day-to-day experiences. The new Pepsi design strategy is versatile because it can be
authentic and stay current, and it could also make introducing special seasonal or regional
designs more intriguing and less disruptive. "This is a new way of using packaging as
media," explains Miller. "The consumer is looking for more variety and expecting more from
their brands. They want to have a dialogue with their favorite brands.”
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