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Product Life Cycle of Pepsi
Product Life Cycle of Pepsi
2) Introduction 1902
Brad began selling Pepsi-Cola and achieved sales of 7,968 gallons of syrup in the first year.
Objectives: Brad aimed to generate initial awareness and trial of his product, and far
exceeded his targets!
Product: Only a basic product was launched Pepsi-Cola was initially sold even without
bottles. Instead the product was sold through soda fountains located in Brads pharmacies.
Price: Initially a simple cost-plus pricing strategy was used. It is likely that Pepsi-Cola
started with a skimming strategy, to quickly recuperate start-up costs.
Place: A highly selective distribution is initially recommended, and this is evident with PepsiCola only launching in Brads pharmacies.
Advertising: To generate awareness, a celebrity endorsement with race-car driver Barney
3) Growth 1930s-1970s
After bankruptcy and then becoming acquired by Loft Inc., Pepsi-Colas sales sky-rocketed in
the great depression. Consumers were attracted by the value-for-money competitive
positioning: 5 cents would buy consumers 12 ounces of Pepsi-Cola, but only 6 ounces of
Coca-Cola.
Objectives: During growth, gaining market share is critical. Hence, Pepsi-Cola was
marketed aggressively against Coca-Cola to encourage consumers to defect.
Product: As the market becomes increasingly competitive it is important to continually
improve the product. Hence, Pepsi-Cola now came in bottles, rather than just soda fountains.
Price: To support the aim of gaining market share, the low price penetration strategy was one
of the key reasons why the brand grew massively in this time period.
Place: An extensive distribution network is needed to support rapid sales growth; therefore
exclusivity to pharmacies ended and the product became a mainstream consumer good.
Advertising: It is vital to capture the early majority stage, requiring that advertising was
designed to effectively reach a mass audience. For example, Radio was selected as a medium
because of its low cost-per reach click here to listen to an ad from the 1930s! During this
time, the name was changed to just Pepsi to help differentiate the brand from Coca-Cola.
Lastly, the 1975 Pepsi Challenge marketing campaign was so effective it almost destroyed
the Coca-Cola brand!
Sales-promotion: Due to the overwhelming success of the drink, no sales promotion was
used given that the price was already highly competitive and the company struggled to keepup with demand.
In summary, the product life cycle of Pepsi is a great business case study that both students
and managers can learn from. They key points to remember are that marketing strategiesneed
to be ready for implementation, before the product enters each phase of the life cycle,
otherwise opportunities are missed and the brand becomes reactive to change.