Mountain Dew: Company Analysis

Mountain Dew: Company Analysis Executive Summary: This report is about the Mountain Dew, which was launched in Pakistan in 1994 by Pepsi Cola Inc. It was launched without any prior research of the market. It is a product of Pepsi Cola Inc. Originally it was a private brand, which was later purchased by Pepsi Cola Inc. In this short report first I will explore the reasons of its failure in Pakistan, and then I will suggest a marketing plan to re-launch. Mountain Dew world wide usually target sports oriented and adventure seeking people but due to pattern of living in Pakistan is different so I am going to position it as a refreshing drink with a unique energizing and citrus taste. It competitors include 7 UP (another product of Pepsi which is holding 52 % of share) and Sprite ( a product of Coca Cola holding 38% of market share)in a different way. Threat for re-launching Mountain Dew is that it might affect the sale of 7 UP which is another product of Pepsi Cola Inc. The area which I select to re-launch Mountain Dew is Karachi which is one of the major cities of Pakistan. Company PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500, American multinational corporation headquartered in purchase, New York, with interests in manufacturing and marketing a wide variety of carbonated and non-carbonated beverages, as well as salty, sweet and cereal-based snacks, and other foods. Besides the Pepsi brands, the company owns the brands Quaker Oats, Gatorade, Frito Lay, Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7UP (outside the USA). [1] Mission Our mission is to be the worlds premier consumer Products Company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity. [2] Product Mountain Dew, currently stylized predominantly as Mtn Dew, is a soft drink distributed by PepsiCo, but remains its own brand. The formula was made and first marketed in Marion, VA, Knoxville and Johnson City, Tennessee, USA through the 1940s, then in Fayetteville, North Carolina by Barney and Ally Hartman. By 1964, it was being distributed across United States. The formula still used today was created by Bill (William) Jones. As of 2007, Mountain Dew was the 4th best selling carbonated soft drink in the United States, behind Coca-Cola Classic, Pepsi-Cola, and Diet Coke. Mountain Dews Diet version ranked 9th in sales. On October 15, 2008, Mountain Dews official logo was redesigned to Mtn Dew, as a result of a PepsiCo re-branding of its core products. Currently in the UK, a new drink called Mountain Dew Energy has been introduced into the energy drink market. Mountain Dew was previously marketed in the UK in 1995, with a TV spot having the strap line Wild color, smooth taste. It was unsuccessful, and the sale of Mountain Dew in the UK was discontinued (except for imports) by 1997. [3] Mountain Dew in Pakistan (Situation Analysis): Mountain Dew was launched in Pakistan in 1994 by Pepsi Cola Inc. but failed to capture the market due to many reasons. Reasons of Failure Timing: It was launched at the end of July, but summer season in most part of the Pakistan starts from March and ends on September. So the timing to launch this product is not good. Packaging: It was introduced in glass bottles that were used by 7 UP. Same look, same color, only the brand name was changed. Distribution: Timing to launch Mountain Dew also affects the delivery and distribution system. Distributors did not take huge quantity of the drink. Fragmented Launching: The launch was fragmented. Instead of launching it in one city and covered more area they launch it in five cities (Islamabad, Karachi, Lahore, Gujranwala, Faisalabad) covering only one or two location. That was not good. Awareness: Pepsi Cola Inc. did not advertise properly in media to make consumer aware of the product. Market Situation: In Pakistan consumption of soft drinks in high. So the market is very attractive for new entrants. The sales are remarkably high during summer and cultural occasions like Eid, Ramadan, Birthday parties etc. Majority population in Pakistan is from middle and lower class. Thus high prices of non-essential goods are not acceptable. So company has to be careful in setting or increasing prices. Competitive Situation: The major competitors for Mountain Dew will be 7 UP, Teem and Sprite These competitors are charging same pricesà ¢Ã¢â€š ¬Ã‚ ¦ Rs.15 for disposable 250 ml bottle and Rs.10 for regular 250 ml bottle. Teem has very little advertisement where as 7 UP and Sprite are supported by Television advertisements, billboards etc. MARKETING PLAN I am going to re-launch it. I am assigning this product a separate business unit supported by required finance and facilities in the city of Karachi. Population of Karachi is estimated at 18 million. It is the best place for launching any product. People of Karachi are more risk taker and consider being a trendsetter for the rest of the country. Mountain Dew manufacturing plan will be located at SITE Industrial Area because of availability of resources like labor, electricity and most important water which plays an important role in manufacturing of soft drinks. Market Targeting Strategy A large group has been identified within the soft drink with similar wants for Mountain Dew and market segmentation will be done on the basis of geographic, demographics and psychographics of the customers. Positioning: Mountain Dew will be positioned as Refreshing and Energizing soft drink. Product Line: Mountain Dew will be launched in different packaging after getting success in a market. Price: Its price will be same as of its competitors. Distribution Outlets: Two channels will be used for distributionà ¢Ã¢â€š ¬Ã‚ ¦ Direct channel (sale promotion officers) Indirect channel (retail outlets). Mountain Dew will be provided to 10500 of these outlets. Company will generate 75% of sale from these outlets. Sales Force: 50 sales promotional officer will be hired who are responsible for the direct sales to institutions i.e. marriage halls, hotels, offices, universities. Sale Promotion: Discount will be offered to retailers and distributors. Consumers are offered with buy one get one free offers. Advertising: Initially company will have to spent huge amount on advertising to create awareness. Commercials on entertainment channels and Fm radio will be on aired 30 times a day for at least a month. Company will also advertise through news papers, billboards, banners. Marketing Research: Keeping in view of objective to satisfy customers efficiently and effectively, marketing team will keep in touch with customers to identify their buying preferences, taste etc. Building Customer Satisfaction Value Retention Mountain Dew is trying to get the image of refreshing soft drink with unique taste. Sales team, shopkeepers at retail outlets will be friendly and supportive with customers in forwarding their suggestions and complaints to the company. Objective is to delight customers once it is achieved it will create emotional bond with the brand. Customer Satisfaction Survey: Mountain Dew will have to conduct surveys after every three months for the first year of launching in order to identify customers satisfaction and dissatisfaction level and implement those changes suggested by surveys. Delivering Customer Value and Satisfaction After identifying the customer value and satisfaction factors the next important thing is to effectively deliver those values. Here is suggested value chain system for Mountain Dew. Primary Activities Inbound Logistic and Operations: Mountain Dew will be manufactured using advance technology and processing facility located at SITE Industrial Area, Karachi. Team of potential and experienced individual will be hired to support its operations. Outbound Logistic: Delivery of Mountain Dew in Karachi will be through Distributors. Distributors will be divided according to regions like East, West, North and South. If there are places beyond distributors access, Mountain Dew will use its delivery vans. Marketing: Different medias will be used for promotions and making consumers aware of the product unique features. Support Activities: Supporting activities like procurement, human resource, accounting etc. will be carried out by separate departments established for these purposes. Scanning Marketing Environment Now we are going to analyze macro environment, the demographic, economic, technological, political-legal and social cultural, for the re-launch of Mountain Dew. Demographic Environment The first of the macro environmental force is population. The company is interested in the size, density and growth rate of population of Karachi. Karachi Population Growth: Karachis population consists of 18 million people and population growing at the rate of 5% per annum. Population can be divided into five different aged groups: school-age children, teenagers, young adults aged 25 to 40, middle aged adults age 40 to 65 and age 65 and above. Company has to target decision makers that are young adults. Economic Environment Purchasing power determines the economic environment of a country. Purchasing power depends on income, prices, savings etc. The income level of people in Karachi is very low, trends of savings is not there. Economy is dependent on foreign debts. Majority of people in Karachi are salaried or daily wages labor. Average family income is round about Rs. 6000 or less. Technological Environment I dont consider technology as important factor for Mountain Dew. Political Legal Environment Political and legal environment affects marketing decisions. Pakistan is politically unstable. It gives negative indicator to foreign investors. So company has to seek some sort of assurance for the responsibility of regulating business from some agencies. Social cultural Pakistan has a mix culture. People are following inherited tradition, traditional norms and values. Due to high poverty people can not afford very cost. Many families in Pakistan live under one roof, so purchasing patterns of consumers are highly influenced by the advices and recommendations of other family members. Mountain Dew is being re-launched in Karachi, which is the largest city of Pakistan in terms of population, size and area. Here soft drinks are utilized through out year due to hot weather. The People of Karachi are considered trendsetters of the country. Competition Mountain Dew has identified its competitors as 7 UP, Sprite, Teem that are substitute for each other with a very little difference in taste and filling where as Mountain Dew falls in this category with unique taste and packaging. Mountain Dew has to face tough competition from Sprite (brand of Coca-Cola Company) and 7 UP (brand of Pepsi) both constitute 92% the market share. Competitors Profile Coca Cola Inc The Coca-Cola Company began its operation in Pakistan in 1953. Its brands include Coca-Cola ®, Fanta ®, Sprite ®. It has approximately 70000 retail outlets in its distribution list. The Coca-Cola Company sponsors the Basant Festival in Lahore, a festival that marks the beginning of spring and attracts tourist from all over the world. It also sponsor music concerts through out the country for teenagers and underprivileged children. The Coca-Cola company is the selected supplier for Pakistan Railway, serving soft drinks in stations, platform and on trains. 7 UP Pepsi Cola Inc. launched 7 UP in Pakistan in 1969. It is consider as the market leader in the white drinks category. Pepsi Cola introduced 7 UP in Pakistan in 1969. Today 7 UP is considered the market leader in the white drinks category. 7 UP is financially strong and well established brand. Competitive Strategy for Mountain Dew Mountain Dew is new to the soft drink market of Pakistan as it was failed in the previous experience due to not having good marketing strategy. After analysis I recommend following strategy moves for Mountain Dew in order to compete with 7 UP and Sprite. Product Proliferation Now it will be provided in variety of sizes (see table 1.1) in order to increase the consumption and making price conscious consumer buy the product as they will purchase it according to their specific need. Product Innovation Mountain Dew itself is an innovative product in the market of Pakistan because of it unique citrus taste and energizing attributes. Distribution Innovation Mountain Dew will not only rely on distributors but it will develop its own distribution channel in order to get access to the market from all the dimensions. Market Segmentation A large group has been identified within the soft drink with similar wants for Mountain Dew and market segmentation will be done on the basis of geographic, demographics and psychographics of the customers. Geographic At start it will be launched in Karachi city only after that it will be introduced in the rest of Sindh, Punjab, NWFP and Baluchistan. Developing an Advertising Program Advertisement is a cost effective way to circulate messages, whether, build brand preference or to educate people. Advertising Objective Convince the market of the brand superiority. Type of Advertising As Mountain Dew is at its initial stage, we will use informative advertising, making people aware of the product, its quality and benefits of using the product. Advertisement Budget Mountain Dew is at the beginning of product life cycle, as consumers are not aware of it, thus large investment will be required for advertisement. Advertising Message Forget past as its gone, look new and choice new which is Mountain Dew. Selecting Media For Mountain Dew advertisement we will chose media that is cost effective and covering large number of audience. As it is customer-oriented company, its goal is to serve maximum number of customers. Electronic Media Electronic media will be used for advertising Mountain Dew i.e. TV. Its commercials will be on aired on PTV (Pakistans national Channel) and entertainment channels like ARY Digital, Hum TV and GEO Entertainment. Print Media Apart from electronic media company will advertise in newspapers like The News, Dawn and Magazines like Akhbar-e-Jehan. Billboards Billboards will be place on all major areas of the cities like Deltons, SITE, Korangi Bridge, FTC etc. Sales Promotion: Sale promotion tools we are going to use for Mountain Dew are as under: Free Trials Free trails will be offered for the first week to 2000 consumer who visited retail outlets. Prizes / Contest For the first two month company will attach coupon to each bottle, after filling it customer will return this coupon to retailer who then forward to company, through lucky draw on weekly basis consumer will be awarded prizes like motorbike, bicycle, mobile etc. Critical Reflection on Learning Outcomes Mountain was first launched in 1994. It tried to get the image of activating and energetic soft drink with a unique citrus taste, providing customer with a highest product value. Customer had wide range of choices in selecting product quantity. Mountain Dew offered the same price as its competitors were offering i.e. Rs. 10 for regular bottle but with additional quantity of 50 ml. the reason it failed to capture the market was market plan. Following were the problem with there marketing plan: 1. Company introduced the product at the end of July, but summer season in Pakistan starts from march and ends on September, so the timing to introduce the product was not good. 2. It was introduced in glass bottles that were used by 7 UP. Same look, same color, only the brand name was changed 3. The launch was fragmented. Instead of launching it in one city and covered more area they launch it in five cities (Islamabad, Karachi, Lahore, Gujranwala, Faisalabad) covering only one or two location. That was not good. 4. Pepsi Cola Inc. did not advertise properly in media to make consumer aware of the product. Why Organization Need Marketing Plan It is an essential document for both large corporate marketing departments and for startup companies. The Marketing Plan is generally undertaken for one of the following reasons: Needed as part of the yearly planning process within the marketing functional area. Needed for a specialized strategy to introduce something new, such as new product planning, entering new markets, or trying a new strategy to fix an existing problem. Is a component within an overall business plan, such as a new business proposal to the financial community? When writing the business plan, the Marketing Plan section explains how youre going to get your customers to buy your products and/or services. The marketing plan, then, will include sections detailing your: Products and/or Services and your Unique Selling Proposition Pricing Strategy Sales/Distribution Plan Advertising and Promotions Plan The easiest way to develop your marketing plan is to work through each of these sections, referring to the market research you completed when you were writing the previous sections of the business plan.