In which product life cycle stage, Pepsi Black falls?
Answers
Answer:
Product Life Cycle of Pepsi:
1) Pre-launch – the 1890s
In 1898, pharmacist Caleb Bradham developed ‘Brads Drink’, a formula designed aid digestion. After strong interest from consumers in his pharmacy, Brad renames the drink ‘Pepsi-Cola’ and purchases the trademark ‘Pep Cola’ for $100. The origins of Pepsi are very similar to that of Lucozade, which was also first produced for medicinal purposes.
Although $100 does not appear much, adjusted for inflation that amount of money in the 19th Century is equivalent to $2516.34 in 2014. This highlights the difficulties companies have in the pre-launch phases with surviving periods of negative cash-flow, large research costs and development expenditure.
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 Brad’s 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 Pepsi-Cola only launching in Brad’s pharmacies.
Advertising: To generate awareness, a celebrity endorsement with race-car driver Barney Oldfield (above) wa
Sales-promotion: Pepsi-Cola was not launched with any promotions. However, if promotions are used at this stage they should aim to encourage consumers to trial the product.
3) Growth – 1930s-1970s
After bankruptcy and then becoming acquired by Loft Inc., Pepsi-Cola’s 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