PepsiCo Team Jab We Marketed Proposal(2)

8/8/2019 PepsiCo Team Jab We Marketed Proposal(2)

1/21

Index Proposal 2010

Submitted by

Jab We Marketed


2/21

2

IINNTTRROODDUUCCTTIIOONN

This proposal aims at bringing out the approach, methodology and tools to be used by the

team to conduct the research and generate concrete results which can be interpreted to

determine effectiveness of various consumer sales promotions as well as identify newer

methods of sales promotion. Our proposal is based on a series of primary & secondary

research which has helped us develop a better understanding of the consumer behavior.

MMaannaaggeemmeenntt OObbjjeeccttiivvee

To improve the effectiveness of consumer sales promotion schemes in increasing salesof Pepsi

MMaarrkkeettiinngg OObbjjeeccttiivvee

To understand the effectiveness of various consumer sales promotions on

different segments of consumers

To identify the best methods of sales promotion to target the different segments

based on their behavior, attitudes and preferences

MMaarrkkeettiinngg RReesseeaarrcchh PPrroobblleemmss

What are the different segments of consumers in terms of their perceptions,attitudes and behavior towards sales promotion schemes?

What are the consumers perceptions regarding various schemes in this category

and what are the consumer responses towards them?

What are the consumer perceptions towards the brand (in terms of quality,

image) offering sales promotion schemes?

What are the consumer preferences towards different schemes?

What are the consumer attitudes towards such sales promotions (in terms of

rejection, liking, preference, insistence)?


3/21

3

What are the behavioral aspects of the consumer in terms of the following patterns:

Consumers who do without the sales promotion scheme

Consumers who postpone the purchase

Consumers who substitute the brand with other brands

Consumers who use the brand on a trial basis

Consumers who are 1st time buyersConsumers who Regularly repeat the purchase because of the sales promotion

What are the barriers in picking up a promotion offered by a company?

KKeeyy DDeelliivveerraabblleess

Develop a model that performs comprehensive consumer segmentation in the CSD

market

Evaluate the appropriateness of existing promotional schemes for each consumer

segment

Propose methods to enhance the current sales promotions for all consumer segments

Recommend new promotion schemes/campaigns as per the consumer segments to propelsales

Develop projections on impact of the proposed improvements/campaigns on sales and

brand


4/21

4

The Indian Soft Drinks Market

The Indian soft drinks market has

leading players like The Coca-Cola

Company, PepsiCo and Parle Agrowhich collectively account for around

88% of the market volume. The

constituents of the soft drinks market

are bottled water, carbonates,

concentrates, functional drinks, juices

and ready-to-drink tea and coffee.

In India, colas, by industry estimates,comprise only 38% of the Rs.7500-

crore domestic market for sparkling

drinks, while flavours (clear lime,

cloudy lime, orange and apple)

command a market share of 54%. This

is in contrast with the situation three

years ago when colas had a 46% share

of the market. According to industry

experts, the reason for this has been the

switching of consumers from colas to

healthier beverages.

The Indian soft drinks market grew by

7.7% in 2008 to reach a value of $3.4

billion. This represented a compounded

annual growth rate of 6.7% in the

period from 2004 to 2008. By2013, the

market is expected to grow to $4.6

billion of revenues, indicating a CAGR

of 6.5% for the period.

Sales Value of the Indian Soft Drinks

Market

Year $billion

INRbillion

%Growth

2004 2.6 113.6

2005 2.7 120.1 5.7%

2006 2.9 127.5 6.2%

2007 3.1 136.7 7.2%

2008 3.4 147.2 7.7%

Growth in the Indian Soft Drinks Market

Pie Graph showing breakup of sales amongst

the Players in the industry

0

1

2

3

4

2004 2005 2006 2007 2008

2.6 2.72.9 3.1

3.4

Sales ($ billion)

41%

27%

20%

12%

Sales

Coca Cola

Pepsico

Parle Argo

Others


5/21

5

The carbonated soft drinks (CSD)

market is the leading revenue source for

the broader soft drinks industry in India,

generating 57.3% of the total value. The

major brands in the carbonated soft

drinks industry and their market shares

are shown in the table below.

Table for the market share enjoyed by

individual brands

Brand Market Share

Thums Up 15.8%

Sprite 14.2%

Pepsi 13.7%

Coca Cola 8%

Coca-Cola and PepsiCo, the two giants in the

industry, together control about 90 per cent of

the carbonated beverage market in India. The

greater energy focus in both is on expanding

their CSD portfolio by way of flavours and

variants. PepsiCo, for instance, has witnessed a

big shift from a portfolio dominated by

carbonated beverages to a more balanced one

(as of 2009, the ratio of CSD to non-carbonated

was 2:1 as compared to 9:1 a few years back).

Coca-Cola is identifying new flavours. Its core

cola brands continue to contribute more to

revenues; Thums Up is the top-selling soft

drink in India. But the scales are now shifting

in favour of flavoured beverages. (Dogra,

2009)


6/21

6

LLii tteerraattuurree RReevviieeww

We conducted a thorough review of

published research papers relevant to

the management objective to get a

better understanding of the consumer

behaviour in the beverage industry. We

have also looked for information

related to the effect of promotions on

consumer behaviour. The findings of

our research are given below.

A few studies have been conducted on

consumer behaviour in the carbonated

soft drinks market. One such study

(Vijayakumar, 2005), which was

conducted in certain urban centres in

Tamil Nadu found that in the case of

consumption of chilled or warm soft

drinks, consumers who were less than26 years of age and who had completed

their education up to the college level

preferred chilled carbonated soft

drinks. Younger consumers (less than

26 years old) were found to consume

more soft drinks than all other age

groups. Also, in terms of gender, males

consumed more soft drinks than

females.

It was also found in this study that

during special offer periods, consumers

belonging to different age groups,

marital status, occupation and income showed

significant differences in the interestdeveloped in the offers. However, the study

stops short of discussing the details regarding

the behaviour of various segments related to

promotional activities.

Several studies have been conducted on

consumer response towards promotions,

although none could be found specific to thesoft drinks industry. It has been found that

temporary retail price reductions substantially

increase sales in the short term (Woodside &

Waddle, 1975). Also, higher market share

brands have lower deal elasticity though

higher share brands may capture a large

proportion of switchers (Bolton, 1989).

Promoting higher quality brands impacts

weaker brands disproportionately, causing a

large proportion of consumers of the weaker

brand to switch (Blattberg & Wisniewski,

1989). Promotion was found to result in a

significant temporal and cross-sectional

shifting of category demand.

Studies indicate the apparently obvious fact

that display and feature advertising have

strong positive effects on item sales. It has also

been found that promotions lead consumers to


7/21

7

stockpile (i.e., buy extra quantity of the

product and store for future use) and upgrade

to higher quality products (Blattberg, Briesch,

& Fox, 1995).

Studies Reveal

Males consume more soft drinks than

females

People less that 26 years of age consume

more soft drinks than all other age groups

Display and feature advertising have

strong positive effects on item sales

Promotions lead consumers to stockpile

and upgrade to higher quality products

PPrroommoottiioonnaall CCaammppaaiiggnnss iinn tthhee IInnddiiaann SSoofftt DDrriinnkkss

MMaarrkkeett

Due to the intense competition in the Indian soft drinks industry, there have been a

host of promotions, especially by the industry giants Pepsico and Coca Cola

Company. Given below is a list of popular promotions which were introduced in the

market in the past few years.

The Pepsi ChallengeThis involved taste tests designed in response to the

view that Pepsi and Coca Cola are identical drinks

In blind taste tests, more consumers were seen to have preferred Pepsi to

Coke

Campaigns featuring Bollywood celebrities

Akshay Kumar, Aamir Khan, Shahrukh, Priyanka Chopra and several

others

Promotional codes on the back of labels in bottles

SMS the codes to get rewarded with ringtone, MMS or other prizes

Promotional codes under the crown

Limca Laptop ki Barish - Computer generated lucky draw to give away

a laptop every hourCampaigns focusing on the health aspect with Diet variants of the drinks

Cokes Open Happiness campaign

Buy one get one free/free samples during the initial launch of the product and

some of the seasons


8/21

8

Pepsis Youngistaan campaign to attract the youth

Campaigns centred around cricket and cricketers

During IPL, Coke had a contest wherein a person buying 2 pet bottles of 2 liters

gets a chance to meet the KingsXI Punjab team

The popular Main Kaun Hoon, Main Kahaan Hoon with the Sachin/Warne duo,

launched during an India-Australia Cricket Series

Men in Blue campaign by Pepsi during the Cricket World Cup

Sprite had a special Sprite Kolkata Knight Riders edition with insignia of key players

Coca Cola and McDonalds had a We go together campaign

Cola companies providing refrigerators (visicoolers) to retailers boards displaying shop

names

Thumbs Up Chowfulla - This promotional scheme entails one to buy a 600 ml bottle of

any of the Coca-Cola products and get a free ticket to the Thumbs Up Chowfulla. The

event is based on folk dance in Maharashtra. This is targeted at rural folks.

All these campaigns have seen varying levels of success in attracting consumers from the

competitor. The actual list of promotions would be much larger, but this list includes the

most popular ones which the consumers could recall

CCoonnssuummeerr IInnss iigghhttss

To get a feel of the perceptions of the target group, we conducted an exploratory research on

carbonated soft drinks promotions. The research was conducted in the form of in-depth

interviews and focused group discussions (FGDs). The FGDs were centred on consumer

promotions in general. The interviews were qualitative involving questions like What is your

favourite soft drink?, What are the recent promotion schemes that you recall? etc. The

insights from these interactions have been summarized below.

SEC A is not affected by promotion schemes; SEC B is the most sensitized to promotions

and SEC C is not aware about the various schemes.

Brand loyalty is not very important in the purchase decision in case of large purchases


9/21


10/21

10

What are the underlying personality and lifestyle traits that define a consumers attitude,

perceptions and behaviour towards consumer promotions?

1.2.Data Analysis Tools and Techniques:Factor analysis : to identify the underlying variables which can be use to segment the

consumers

Cluster analysis: to identify the segments of consumers based on the variables identified

Discriminant analysis: to understand the demographic and psychographic characteristics

that help to differentiate between consumers based on their response to consumer

promotions

1.3. Expected Output:List of underlying variables which can be used to segment the Target Group

Clusters of consumers exhibiting similar behaviour based on demographic and

psychographic variables

Segregation of the target group (based on psychographic and demographic factors) with

respect to their response (attitude and behaviour) towards different types of promotion

schemes.

2. Research Objective 1:To assess current consumer sales promotion schemes undertaken by Pepsi and other cola

players in the market.

2.1.Research Questions:Which brands promotion schemes that the consumers recall from the past?

What effect did the promotion schemes have on the consumption pattern of the

consumers for that particular brand?

What effect did the promotion schemes have on the attitude of the consumers towards

the brand?


11/21

1

How effective have the promotion schemes been at inducing brand switching?

How do Pepsis promotion schemes fare against those of the competition?

Have the promotion schemes been able to attract first-time buyers?

Do the promotion schemes create brand loyalty and repeat purchases among the

consumers?

2.2.Data Analysis Tools and Techniques:Correlation analysis: To determine the impact of promotion on sales

Multiple regression analysis: to show the relative importance of various factors (type of

scheme, quantum of reward, immediacy of benefit, brand, and deal-proneness of the

consumer) on the buying behaviour of consumers

Multi-dimensional scaling: to plot spatial maps that help to analyze the perception of

consumers regarding the promotion schemes of Pepsi vis-a-vis its competitors

2.3.Expected Output:Impact of the customer sales promotions on sales

Relative strength of various factors like type of scheme, quantum of reward, immediacy

of benefit, brand, deal-proneness of the consumer, etc.) in impacting sales of the product

Perceptual maps that help to understand how the consumers perceive the promotion

schemes of Pepsi

3. Research Objective 2:To study consumer perceptions regarding various schemes in this category and

preference towards them

3.1.Research Questions:What is the purpose of these promotion schemes as perceived by the consumer?

What are the promotion schemes that the consumers participate in?What is the reaction when a peer participates in these promotions?

What are the motivations that govern a customers participation in a promotion scheme

(size of reward, ease of participation, chances of winning etc)


12/21

12

What is the perception of consumers about the kind of people participating in a particular

promotional scheme?(Eg: Collecting crowns is for kids)

Is there a difference between the stated attitude towards promotion schemes and the

behaviour towards them?

What are the kinds of schemes liked and disliked by the consumers?

3.2.Data Analysis Tools and Techniques:Factor Analysis: To arrive at the factor loadings for the various factors (size of reward,

ease of participation, chances of winning) that influence a customers participation in a

promotion scheme.

Discriminant Analysis: A Discriminant Analysis performed on the results of the Factor

Analysis would give us some groups of consumers: consumers inclined to buy,

indifferent consumers and consumers who are put off by promotions

Fishbein Model: To analyze whether the likelihood of benefits from the scheme or the

importance of that benefit plays a more vital role in participating in a scheme

T-test (with significance test): To understand the most preferred schemes of consumers

3.3.Expected Output:List of factors that influence a customers participation in a promotion scheme

Difference in perception towards promotion schemes between different segments in theTG based on their demographic and psychographic characteristics

Insight on relative importance of benefits that consumers see in sales promotions

4. Research Objective 4:Study the attitudes of consumers towards such sales promotions in terms of rejection,

liking, preference, insistence

4.1.Research Questions:Does the kind of promotion scheme offered on a carbonated drink affect the choice of

drink by the consumer?

Does the presence of sales promotion induce a consumer to buy a bigger SKU?


13/21

1

What aspects of a promotion scheme might de-motivate a consumer from participating?

What aspects of a promotion scheme might motivate a consumer to participate?

Does the presence of a promotion scheme induce purchase of a product not normally

bought by the consumer?

Do consumers stick to their preferred brand in case other brands offer promotion

schemes?

4.2.Data Analysis Tools and Techniques:Factor Analysis: To understand which factors cause rejection, liking, preference and

insistence

Discriminant Analysis: To understand if there is any difference in rejection, liking,

preference and insistence based on demographic and psychographic characteristics

Multi Dimensional Scaling: to plot spatial maps that help to analyze the perception of

consumers regarding different types of promotion schemes

4.3.Expected Output:List of factors causing rejection, liking, preference and insistence

List of demographic and psychographic characteristics that cause a difference in

rejection, liking, preference and insistence

Perceptual maps that help to understand how the consumers perceive the promotionschemes of Pepsi

5. Research Objective 5:To study the behavioural aspects of the consumer


14/21

14

5.1.Research Questions:What are the personality traits of a consumer who will purchase his favourite brand

regardless of consumer promotions?

What are the personality traits of a consumer who will postpone purchase to takeadvantage of a consumer promotion?

What are the personality traits of a consumer who will purchase another brand offering a

consumer promotion in place of his favourite brand?

What are the personality traits of a consumer who will purchase a brand on a trial basis

during the promotion period?

What are the personality traits of a consumer who will try out a category or brand of soft

drinks for the first time based on consumer promotions?

What are the personality traits of a consumer who will purchase a particular brand more

frequently during the period of sales promotions?

5.2.Data Analysis Tools and Techniques:Factor Analysis: To understand which personality traits cause different behaviours with

respect to loyalty, postponement, substitution, etc.

Discriminant Analysis: To understand if there is any difference in loyalty, postponement,

substitution, etc based on psychographic characteristics

5.3.Expected Output:List of personality traits that cause different behaviours with respect to loyalty,

postponement, substitution, etc

List of psychographic characteristics that cause a difference in loyalty, postponement,

substitution, etc

6. Research Objective 6:What are the barriers in picking up a promotion offered by a company?

6.1.Research QuestionsWhat are the barriers that prevent consumers from participating in a promotion offered by the

company?

Are the barriers different for different segments of consumers?


15/21

1

6.2.Data Analysis Tools and TechniquesFactor Analysis: To understand the underlying barriers that prevents a consumer from

participating in a promotion

6.3.Expected OutputList of factors preventing a consumer from participating in a promotion

7. Research Objective 7:Consumers perception towards the brand (in terms of quality, image) offering sales

promotion schemes

7.1.Research Questions:Do promotions significantly affect the attitude towards the brand?

Is there any link between quality levels and promotions?

Do promotions improve the brand image in the consumers mind?

Is the consumers perception towards the brand influenced by demographic or

psychographic characteristics?

7.2.Data Analysis Tools and Techniques:T-test (with significance test): To determine whether promotions make a significant

impact on the perception of quality and brand image

Discriminant Analysis: To determine positive/negative link between quality, brand image

and demographic/psychographic characteristics

7.3.Expected Output:Presence or absence of significant difference in perception of quality and brand image

based on promotions run by the company

Relationship between quality, brand image and demographic/psychographic

characteristics


16/21

16

HHyyppootthheesseess GGeenneerraatteedd

There are two possible outcomes: if the result confirms the hypothesis, then you've made a

measurement. If the result is contrary to the hypothesis, then you've made a discovery.~Enrico

Fermi

H1:There is no significant effect of promotion schemes on the long-term behaviour of Sec A

consumers

H2:There is a significant effect of promotion schemes on the behaviour of Sec B consumers

H3: The level of awareness about promotion schemes is very low among Sec C consumers

H3:The perceived low probability of winning is a de-motivator for participation in promotion

schemes

H4:Consumers prefer smaller but assured gifts to big but rare gifts

H5: For bulk purchases, consumers are more sensitive to sales promotions than to the favourite

brand of the CSD.

H6: Sales promotions which offer material gifts (price discounts, scholarships, gifts) are

preferred over promotion schemes which offer non-material gifts (meeting with movie stars)

H7:There is no significant difference between the recall rates of different promotion schemes

H8:Promotion schemes have significant effect in the form of increased soft drink consumption

H9:Promotion schemes have been effective at inducing brand switching only until the life of the

promotion

H10: Consumers perceive promotion schemes as an attempt to push a sub-standard product

H11:A lotterylike promotion scheme gives the same thrill as a real lottery

H12:Promotions do not affect the perception about quality of the product

H13:Promotions affect the perception about the brand image of the product

H14: Lack of awareness of promotions is the most important barrier in preventing consumers

from participating in promotions


17/21

1

AAppppeennddiixx

Work Flow Chart

PreliminaryResearch

Literature survey

Industry analysis

Market analysis

FGDs and In-DepthInterviews

To analyse:

Promotion recall

Influencers

Preparation ofResearch InstrumentsQuestionnaires based on: Preliminary Research

FGD In-depth Interviews

Pilot TestingTo identify flows in:

Questionnaire

Test instructions

Time limits

Game Design

To properly disguisethe questionnaire in thegame

Beta Testing

To verify the veracityof the game design

Index Fair (DataCollection) Inviting target segment

Dedicated escort to ensurerespondent care andproper process flow

Time limits

Preliminary DataAnalysis

To analyse the collected

data using specificstatistical tools

Conclusions

& Recommendations

Based on research

objectives and dataanalysis


18/21

18

Timelines

It is assumed that the final project presentation will be on January 16, 2011.

Indicative sampling frame

We plan the sample frame to be as follows. The outcome at the index fair maybe different. This

frame is only indicative.

Sec A Sec B Sec C Total

In Depth

Interview

1 3 2 8

Pre-Test 8 7 5 24

Index 72 110 13 188


19/21

1

Sample Output

Discriminant Analysis

The discriminant analysis is used to differentiate which set of customers respond to a particular

promotion method. With this we can target a particular promotion on to a particular segment.

Factor Analysis

Gives the explanation of variance in the decision of whether the customer will respond to a

particular promotion or not.

Variance Factor 1 Factor 2 Factor 3 Factor 4 Factor 5


20/21

20

Factor Loading Matrix

The matrix helps us in arriving at the major factors that play a role in the effect of promotion on

buying decision. With the help of these factors we arrive at the perceptual map illustrated below.

Segmentation Variables Factor 1 Factor 2 Factor 3 Factor 4

SEC Classification

Psychographic Variables

Demographic Variables

Behavioural Variables

Family Income

Family Size

Perceptual Map

The perceptual map specifies what customer attributes play a role in deciding which promotion

will provoke maximum response among a set of customers. In this indicative map the attributes

shown are age and income. The different promotion types are placed in the perceptual space.


21/21

2

RReeffeerreenncceess

Blattberg, R., & Wisniewski, K. (1989). Price-Induced Patterns of Competition. MarketingScience , 291-309.

Blattberg, R., Briesch, R., & Fox, E. (1995). How Promotions Work. Marketing Science

, 122-132.

Bolton, R. (1989). The Relationship Between Market Characteristics and Promotional

Price Elasticities. Marketing Science , 153-169.

Dogra, S. (2009, March 3). Carbonated drinks losing fizz to flavours. Business Standard

, pp. -.

Vijayakumar, S. (2005). Consumer Behaviour Relating to Carbonated Soft Drinks in

Selected Urban Centres in Tamil Nadu. Finance India , 600-607.

Woodside, A., & Waddle, G. (1975). Sales Effects of In-Store Advertising. Journal ofAdvertising Research , 29-33.

PepsiCo Team Jab We Marketed Proposal(2)

Documents

Transcript of PepsiCo Team Jab We Marketed Proposal(2)