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Marketing Assessment Of Pepsi Max

Paper Type: Free Essay Subject: Marketing
Wordcount: 5392 words Published: 1st Jan 2015

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Pepsi Max was introduced in 1993 in the UK as a healthier alternative to the original Pepsi, and diet Pepsi. It offered consumers the full Pepsi taste with no sugar and low calories. By the end of 1994, Pepsi Max was being sold in more than 20 countries around the world and is now the most popular Pepsi drink across the world. Pepsi Max is sold in both bottles and cans along with various promotions. This drink is targeted at young to middle aged men [2] although was originally targeted at both males and females of this age group. Now Pepsi Max targets only the male group and is shown in the new packaging (Black/silver colour) and does not mention the word “diet” anywhere although with the old packaging that targeted both males and females (Blue colour) had the word “diet” which makes it target females also. The main competitor of this product is Coke Zero. This competitiveness has been going on since the release of the first soft drinks Coca-Cola and Pepsi-Cola and have been rivals ever since.

Overall Pepsi Max is a great product as it is one of the top 50 selling beverages and the most popular Pepsi drink and it makes PepsiCo a lot of profit and it is a successful product altogether.

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3

Product

Pepsi Max is an innovation from the product ‘Diet Pepsi’. Pepsi max has an additional ingredient ‘ginseng’ which can act as a nourishing stimulant among other things. PepsiCo have tried to make Pepsi Max known to people as a thirst nourishing, low calorie energy drink.

Packaging

Packaging is a very important aspect of a product as it can help target different target markets. [4] Pepsi Max is available in 375mL cans, 600mL, 1.25L and 2L bottles [5] and other various sizes and all of these are sold either individually, as single units, “Fridge packs” and packs ranging from 18, 24 and 30 cans. Diet Pepsi Max (Pepsi Max’s old name) was blue in colour, although this product targeted both males and females but the main focus was on men so the product’s name became Pepsi Max and also now the can in which it is packaged is black in colour, has the word MAX written in large letters, does not contain the word ‘diet’ and on some bottles, has the slogan “maximum kick no sugar”. PepsiCo have really improved on their aesthetic features to make it more appealing for males, even with their promotions (will be mentioned below), they have included a HSV GTS on the packaging of the boxes of the 18-30 can units (which is a target for males). The individual cans also include the words “zero calories maximum taste” which shows that it is a healthy drink but still has the full Pepsi taste. The various sized bottles also contain all of the nutritional information, amount of energy kJ, ingredients and also best before date.

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Positioning

Positioning is the image of a product compared with its competitors [6] . Pepsi Max’s image has been portrayed to young to middle aged men through the use of advertisements such as the incorporation of extreme sports [7] to show that it is a drink for real men with the use of the slogan “Live life to the Max”. It targets two different age groups with two different perceptions – the younger men who prefer the more ‘energy’ side of the drink whereas the middle aged men who prefer the ‘zero calorie’ part of the drink due to them being more health conscious although it is not directly shown in the advertisements because PepsiCo is trying to maintain the manly image of the drink.

Branding

A brand is a logo, name or symbol that identifies a particular product [8] . The logo of Pepsi Max is that of the original Pepsi drink which is a circle with three colours, red white and blue. These particular colours were chosen to commemorate the war efforts of the country USA [9] , although now the original blue colour in the Pepsi globe has been changed to black. This logo has developed over the years:

Pepsi Logo Transformation

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The present day logo is shown below, the old logo was meant to represent the “Pepsi Globe” whereas the new one is trying to represent a smile.

http://www.bevreview.com/wp-content/image_pepsilogochange1.gif

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Price

Pricing on a product is a strong influence on how many units are sold and how much profit is being made.

Cost

PepsiCo, Pepsi Max’s manufacturer calculate the price of their product by simply calculating the cost of manufacturing the product, producing the product and how much the distribution costs are and just simply add a certain percentage on top of this which gives them the selling price. For example a single unit of Pepsi Max (Can, 375mL) is sold for an average price of $2. This way of pricing the item is used by a large number of businesses because it is a simple way of coming up with the cost price of the item so that it is not under or overpriced

Competition-based pricing

Another pricing method that PepsiCo has adopted for Pepsi Max is competition-based pricing. This type of pricing method is when a business checks its competitor’s prices for similar products and sets its own price accordingly [12] . An example of a similar product in this case is Coke Zero. PepsiCo try to match this price and not be too overpriced so that people still purchase Pepsi Max because Coca-cola (Creators of Coke Zero) is highly known also and might mean some competition. The two products Pepsi Max and Coke Zero have had a rivalry with each other for a long time so PepsiCo need to monitor the moves of Coke Zero so that they do not get a competitive advantage and do not gain a higher market share.

Price points

Pepsi Max uses price point to promote their product by having 6 pack of drink for $3.99 rather than $4. This is a psychological way of convincing the customer that the price is not $4 but is cheaper which can create a perception of value for money for the product. This same strategy has also been applied to the 1.25L bottle which is being sold at $1.09 rather than $1.10.

Discounts

Discounts have been given to customers that buy in bulk. For example Pepsi Max was selling two boxes for $34 with a $13 discount and was also done with the 2L bottles. This helps sell more of the product which helps gain a higher profit for the business.

Loss Leaders

When Pepsi Max was first introduced into the market; it was set lower than its competitor’s prices. This was done to try encouraging people to buy the product when it had first come out so that they could see that it was as good quality as its other products.

Place/Distribution

Pepsi Max is a product that men everywhere can drink so therefore the drink is distributed intensively, which means that it is available almost everywhere, in supermarkets, corner stores, convenience stores, petrol/service stations and even various vending machines.

Transport

PepsiCo own their own bottlers which give them the flexibility to decide how there drinks may be distributed, depending on consumer taste and preference changes. This was an advantage for PepsiCo as they were able to negotiate with their retailers rather than doing it through a ‘middleman’, a publicly owned bottler/intermediary. Without the use of intermediaries or distribution channels, the cost of distribution is ultimately cheaper for the business in the long run which would be a better choice for PepsiCo not to use since it has been around since 1902. The reason why this would be cheaper is that PepsiCo own their own trucks and are able to distribute the products themselves without having to rely on a company to do it for them. This would be cheaper in the long run because the only costs that they would incur would be for the maintenance and purchasing of the various trucks that will be needed. Another advantage of this is that with the distribution, advertising occurs as they may have the product name on the side of the truck which will reduce the costs of advertising as it is their own truck.

Warehousing

Pepsi Max own their own warehouses and bottlers where the drinks are manufactured and kept waiting for distribution. Pepsi is distributed under license by Schweppes Australia [13] . By the use of warehouses in Australia cost is reduced because there are no shipping costs- only distribution.

Inventory

(recommendations made in section 3) ( does not mention what they have done with inventory – Definitely not Just in time )

Promotion

Promotion is about effective communication with customers. The way that Pepsi Max is advertised is through television advertisements, billboards, giveaways etc. These promotions are all targeted at one specific group – teen to middle aged men and are shown to be throughout the advertisements.

Advertisements

One of the recent Superbowl Pepsi Max advertisements shows a man and a woman and the man wanting to sleep with her until a Pepsi Max is brought into the picture which then diverts all of the man’s attention to the drink and is no longer desiring to sleep with the woman however the woman’s attention does not seem to be diverted [14] . These advertisements aim to target the young to middle aged men by making the drink the ‘man’s only desire’ in each advertisement. The various advertisements are played throughout sports which men like to watch e.g. on commercials during football games and other various man-watched sports.

Pepsi has also advertised on billboards. One of the advertisements says “Too much taste to call ourselves a ZERO” which is trying to say that Pepsi Max is a more superior product to Coke Zero. This is unethical although is a good promotional strategy for Pepsi Max because it is showing that Pepsi Max is a better beverage than Coke Zero and also with the clever use of the word “Zero” implying that Coke Zero is an inferior product.

http://4.bp.blogspot.com/_GIchwvJ-aNk/TOiF55RambI/AAAAAAAAW2M/UuyYj5LjqfE/s800/Pepsi%2BMax%2Bzero%2Bcalories%2Bbillboard.jpg

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Public Relations

Pepsi Max uses public relations as one of its promotional strategies. Public relations is the use of publicity to develop a good public image in the market or general public [15] . One way in which Pepsi Max utilizes public relations is by sponsoring public events such as V8 supercars. Pepsi Max has its own team called “Pepsi Max crew” [16] . The reason why they had decided to have this promotion is because men are the main group who watch V8 supercars and is a great choice as this is also shown on television and for everyone to see. It is a great form of promotion and targets the main focus at the same time.

Another way Pepsi Max has utilized public relation promotions is with the ‘Pepsi refresh project’ [17] . This project is where people vote for various ideas such as “Continuing the crusade against liver disease” and whichever idea gets the most votes will get funded by Pepsi [18] . An idea which is already being funded is the “St. Bernard Project” which is building houses, with 317 houses built so far. This promotional strategy is very useful for promoting the company and product and created a very good image in the minds of consumers because Pepsi is doing something good for the community.

Below the line promotion

Below the line promotions include promotional activities such as vouchers, loyalty cards, competitions etc. and are non-media promotions [19] . Pepsi Max offers various competitions such as the “50k giveaway or win HSV GTS” [20] which is shown on the 30 can boxes and also the 600mL, 1.25L or 2L bottles. This promotion gets people buying the product by giving them a chance of winning these expensive prizes.

Market Segmentation and product/service differentiation

Market segmentation is the process of breaking the total market down into smaller parts called segments [21] . The more segments which a business focuses its efforts on, the more the business can understand the needs and tastes of its consumers and be able to create a product to meet those needs. The total market can be broken down into gender, age, income and lifestyle, and if all of these areas are covered, the product will be most successful.

Gender

Pepsi Max focuses its target on young to middle aged men. In the past the focus was on both the men and women but this had changed once they saw that this was not very successful. It is suggested that the target market be shifted back to both men AND women even though more units have been sold after the target market had shifted to only men. Reasons for this suggestion are that even though the current target is on young to middle aged men, women are still consuming the beverage and if the target market was shifted back to both men and women while trying to keep the current image of the product but trying to include an aspect for women without making the product seem too girly for men, it will maintain interest of men. A suggestion for this is to include women in the advertisements who want to drink Pepsi Max due to it having “Zero calories” because most women like the taste of soft drinks but are scared that it may be unhealthy but if this was shown to be healthier than other alternatives, women would be more attracted to it.

Age

Pepsi Max’s main target age groups are young to middle aged men. The way that they are doing this is by making the beverage an energy drink while also being a drink with zero calories. This targets both age groups because the younger men prefer the ‘energy’ side to the drink because they are into the more extreme sports which are also sponsored by Pepsi Max & the ‘zero calorie’ side targets the middle aged men because in their age group the men become more health conscious but don’t think that it is manly enough to show it so this is not directly shown in the advertisements and campaigns. This strategy is not advised because many young teenagers and adolescents are consuming this beverage also and would be advised to target this age group also as they can have a huge influence on the purchasing of this product because of word of mouth and also that they can influence parents to buy this beverage for them, so if they were also a main concern in advertisements (for example having an advertisement based on teenagers) will have an influence on them. Another suggestion is to lower the price and make the product available in schools as a healthier alternative to other soft drinks available in school canteens so that people from the younger age groups would be able to afford it both at school and outside school.

Overall it is a good idea for Pepsi Max to have several advertisements (One targeting teens/adolescents, one targeting men and one targeting women) and playing each at separate times (teen/adolescent after school, women during the day, and men during sporting events).

Income

Pepsi Max’s price was set very well considering its competitors. This strategy was successful because it’s not too expensive and not to cheap so they are able to make a profit and most people, no matter what income are able to afford the product. Another strategy was them selling the bottles/cans in bundles of 18, 24 and 30 for cheaper prices. This is a good strategy because it helps sell more individual units, even though it is at a cheaper price, more of a profit is made so therefore this was a great move. A suggestion is to not make the 24-30 can bundle too cheap because this will reduce the price of the single units inside which will lower profits.

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Lifestyle

Pepsi Max has targeted different lifestyles by making the beverage a drink for ‘extreme’ people but also for people who want a healthier alternative. This means they have targeted people ages 18-34 (mainly men) because this age group is the most health conscious and are into the healthy lifestyles [22] . It is advised that Pepsi Max target a more broad market because it is a healthier alternative to move soda’s and has great potential to be bigger than it already is so it is advised that Pepsi Max focus its marketing on making the product known to be a healthier alternative than other beverages.

Product Differentiation

Product differentiation is all about making consumers aware of the differences of your product with other products of the same nature [23] . If a business is successful in this it will give them a competitive advantage over their competitors. Pepsi Max has done this by the use of advertisements with the use of the slogan “Too much taste to call ourselves a ZERO”. This was a good strategy because it allowed them to get a competitive edge in the eyes of their consumers and it made their product seem better than that of Coke Zero.

It is also advised that the shape of the bottle be changed so that the product can have its own unique shape so it can be different to its main competitor ‘Coke Zero’. This would help differentiate the product because people won’t think that they are the same product and might not go for other products, and also if it had a unique shape it would also attract young people as this is what they look for.

Product and Service

Pepsi Max’s main goal is to offer the normal Pepsi drink but with ‘zero calories’. Pepsi Max have achieved this goal because the beverage has the same Pepsi taste but with no calories. This is good because Pepsi Max have achieved what they said to their consumers which created a trust for the brand and helps with the popularity and prestige of the brand name and is recommended that this strategy is continued.

Since the beginning the packaging of Pepsi Max has changed significantly, from the main base colour of the can to the “Pepsi Globe” symbol (circle with red white and blue). This strategy had been applied to target the new target market which is young to middle aged men. This was a very good move because if the can was blue in colour, it was suggest that it is not completely manly which contradicts the image that Pepsi Max is trying to create (Being a manly product). Depending on if previous recommendations have been applied (Go back to target males & females to increase their consumer base) it is recommended that they go back to a dark blue colour which is not too girly and not too manly which would be good for both target markets which would ultimately improve their customer base.

Another way they tried to make it more manly is by the removal of the word ‘diet’ off the name so that men don’t think that it is something targeted at girls and could turn them off the product. This was a very intelligent move as they have done the research needed and had found out how a man’s mind works and have acted upon the issue.

Pepsi Max is sold in various sizes of bottles and also sold in different pack sizes. The aim of this was to target different markets with their lifestyles and circumstances such as family dinners or even just for a simple drink. This strategy is very good because there is a bottle size for almost any circumstance that the consumer is in.

This beverage has been portrayed to young to middle aged men that it is a drink for real men through the use of television advertisements and campaigns such as the advertisements that incorporate extreme sports. It is suggested that Pepsi Max does not use extreme sports for the promotion of the product because people may think that they are not worthy of drinking it if they cannot do what is shown on television so therefore a suggestion would be to continue promoting it in the same way it was done in the recent superbowl commercial of a man’s attention being diverted to the Pepsi Max while the woman did not get distracted at all. (Was in a non extreme environment)

Price including pricing methods

Penetration Pricing

One Pepsi Max can’s (375mL) average selling price in $2. This price is also the same selling price for competitor such as Coke Zero. As the bottle sizes increase the price starts to decrease so the consumer is getting more for their money. This strategy is good because overall this means that the consumer will buy more units of the product, no matter which, and will therefore increase profits for the business.

It is suggested that this business sells its product cheaper than its competitors (Coke Zero mainly) so that they may increase their market share and will also cause consumers to buy more of the product as it is cheaper and also cheaper than its competitors. Another reason why this would be a good idea is because Coke Zero is a well known brand worldwide as it sells various types of beverages also and its prestige may be as good as Pepsi Max so therefore if the price was sold lower, people would be more attracted to Pepsi Max as it is also a well known product and people could trust in its quality and will not think that it is ‘inferior’ to Coke Zero if the price was reduced.

Price points

Pepsi Max’s products incorporate the use of Price points as a pricing strategy. The Pepsi Max 6 pack bundle is sold for $3.99 rather than $4. This strategy is good because in the mind of customers it seems as though the price is cheaper than normal. It is suggested to keep this price strategy although attempt to mix it with another one such as the penetration pricing suggestion mentioned above. If the prices were set a bit lower than its competitors then these strategies will have twice the effect on the consumers as they will think that the product is much cheaper. If the price was set to $1.79 rather than $1.99 when buying two, this makes a much bigger difference than just keeping the price the same as its competitors. This will increase sales which ultimately would increase revenue and profits.

Discounts

The discounts that are being offered at the moment with Pepsi are when consumers buy in bulk, i.e. Buying boxes of the drink rather than just single units. This method helps increase sales of units which increases profits, as mentioned above. Strategies would be to only sell 18 unit pack’s for a discount because as the number of units increase, the price per unit decreases which decreases profit although if this suggestion is carried out, with a bit of mathematical calculations, it is evident that the price for each unit sold will be much higher and ultimately in the end the profits made would be greater.

Promotion

Pepsi Max is advertised through television advertisements, billboards, giveaway and other various methods. The advertisements are all mostly targeting the young to middle aged men (20-29).

Advertisements

One form of advertisement that is used to promote Pepsi Max is television advertisements. The recent television advertisements for Pepsi Max were for the superbowl (in USA). This promotional technique is really good considering the target market for the beverage, as many young to middle aged men watch superbowl and is a great way to get it known. It is advised to not only have superbowl advertisements but to have advertisements with other sports which are watched by young to middle aged men. This strategy is recommended as it will increase the products consumer base which will increase sales and profits.

Another suggestion which would be a good promotional technique would be to partner up with a snack or chip company such as Doritos and to try selling the Chip packets with cans or Pepsi Max as a bundle which would increase profits for both companies and would also help promote more. The reason why this would be a good idea is because as was mentioned earlier, it will increase sales and profits and also bring up the name of Pepsi Max as Doritos is a well known brand.

On one of the billboard advertisements it has the words “Too much taste to call ourselves a ZERO” which is trying to say that Pepsi Max is a more superior product to Coke Zero. This strategy was good because it is implying with the use of the word “Zero” (as in Coke Zero) that Coke Zero is an inferior product both in taste and quality. This promotional strategy was good for this reason although it was be a good idea to not try to mock Coke Zero as there can be even more competition between them and will also promote disputes between the products as Coke Zero also has a big name and can have a major effect on Pepsi Max. It is advised to have these billboards in main city areas where they are visible

Public Relations

Pepsi Max sponsors public events to try to get more known and to get a better public image. One Public event which is partly sponsored by Pepsi Max is V8 supercars and is done by sponsoring one of the teams which is now called “Pepsi Max Crew”. This event is mainly watched by males of the targeted age group so therefore is a good promotional technique as the targeted age group and gender are made aware of the product. A good strategy with this would be for the Pepsi Max Crew to hire a very good driver so that way if they were able to win a few events the product will be promoted much more than it will be how it is. This is good because it will increase awareness of the product and people would look up to the drivers as an opinion leader and think that he himself consumes the beverage and will influence their choices.

The ‘Pepsi refresh project’ is another way in which Pepsi Max has used Public Relations to promote its product because this is all about helping the community with funding for various ideas. Pepsi Max has funded the building of houses for the homeless. This strategy was a very good thing to utilize because it creates a very good image about the product name in the consumer minds and will encourage them to buy the product more thinking that some of the profits are going to such initiatives like this. The fact that the people get to vote for what the funds will go to is another very good idea and it is recommended that this promotion be carried out for a long period of time although not too long as most of the profits will be lost with this.

Below the line promotion

The below the line promotions that Pepsi Max do are giveaways. This promotion is very helpful with the sales of the product because most consumers are interested in winning prizes worth much more than the product. One of the give aways is either a “50k giveaway or a HSV GTS”. It advised that these promotions are not done as often as they are because combining this with the other forms of promotion could be very costly to the company and will be detrimental to the profits of the business.

Personal Selling

It is advised that Pepsi max partner up with more fast food companies than with just one as this will increase the number of sales dramatically if Pepsi Max can’s were sold in fast food stores rather than the majority Coke Zero. This is strongly suggested and is strongly recommended as people search for healthier alternatives these days and many people turn to fast foods due to their busy lifestyles and will increase profits and sales for both the fast food companies and also PepsiCo.

Place/Distribution

Warehousing

Pepsi Max have their own warehouses and bottlers in Australia. This is great although it would be advised to have the warehouses more widely spread around Australia to minimize the distribution costs over long distances. This would also increase the amount of output by the bottlers so therefore more get sent out which means more sales.

Distribution Channels

Pepsi Max has decided to distribute its products intensively, just like the original version Pepsi, so wherever Pepsi is located, Pepsi Max should be there. This strategy is recommended to continue because the more places this is available, the more sales there will be.

Transport

Pepsi Max has its own fleet of trucks which distribute the drinks to its retailers from the bottling factory. This is a good thing because in the long run, it will save a lot of money due to the fact that Pepsi has been around since 1902 and does not seem like it is going to go bankrupt. Although it is advised to have one major manufacturing company in one country which ships over the bottled drinks and then use that ‘fleet of trucks’ to distribute the drinks to the retailers, that way it will be cheaper as they will not have to pay for excess labour costs, only for the drink distribution truck drivers. Also they would not have to pay for intermediaries to distribute the drinks.

Inventory

It is important for Pepsi Max to have enough stock ready to be able to meet customer demands as the demand for the product is now growing. A suggestion would be to create an inventory policy to be able to keep track of how much stock there is, where it is and what is stored in the actual warehouse so that they are able to manage their inventory properly to cater for the needs of the retailers and the demand for the product just in case they get a big order and not enough stock is available.

 

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