Marketing Mix 1

Marketing Mix
University of Phoenix
Arnel Brown, Jr.

The marketing mix is a device used by a marketer which breaks down into four
separate parts: product, price, place, and promotion, also referred to as the four P’s of
marketing. Older marketers have formed the opinion that this mentality should be based
on other factors. Experts today feel other important P’s that have been overlooked, or
intentionally ignored, such as politics and public opinion.

Product is the first P in the marketing mix. A product is any physical good, service
or idea that satisfies a want or need. Because the term “product” is somewhat vast in its
definition, marketers dissect the meaning into a smaller unit known as a commodity. A
commodity is a product with subtle differences. These differences can range from
physical to geographical. One example is Pepsi cola which has several different
beverages with different flavors but are all part of Pepsi cola. Pepsi-Cola North America
is headquartered in Purchase, N.Y. As the refreshment beverage unit of PepsiCo
Beverages and Foods North America, a division of PepsiCo, Inc. PepsiCo Beverages and
Foods North America, it also comprises PepsiCo's Tropicana, Gatorade and Quaker
Foods businesses in the United States and Canada.
http://www.pepsico.com/SearchResults.html?query=marketing+strategy

Pepsi-Cola North America's carbonated soft drinks, including: Pepsi, Diet Pepsi,
Pepsi Twist, Mountain Dew, Mountain Dew Code Red, Sierra Mist, and Mug Root Beer
account for nearly one-third of total soft drink sales in the United States. Pepsi-Cola
North America's non-carbonated beverage portfolio includes Aquafina, which is the
number one brand of bottled water in the United States, Dole single-serve juices and
SoBe, which offers a wide range of drinks with herbal ingredients. The company also
makes and markets North America's best-selling, ready-to-drink iced teas and coffees via
joint ventures with Lipton and Starbucks, respectively. PepsiCo, Inc. is one of the world's
largest food and beverage companies. The company's principal businesses include: Frito-
Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices, and Quaker
Foods. PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-
Lay. Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats
Company, creating the world’s fifth-largest food and beverage company. In 1963, the
Pepsi-Cola Company introduced its first diet drink - Diet Patio Cola. At the time, Pepsi
could not afford to properly promote Diet Patio Cola. To remedy this situation, in 1964,
they decided to rename their diet drink "Diet Pepsi." This made Pepsi-Cola the first
company to name a diet drink after their flagship brand. The initial advertising of Diet
Pepsi was combined with Pepsi advertising. The slogan was "Pepsi Either Way." Over the
years, Diet Pepsi has developed into a major brand, able to stand alone.

One of the interesting aspects of Diet Pepsi is the number of changes made to the product
and packaging. There have been a number of reformulations, including the elimination of
 Marketing Mix 2

cyclamates, the use of saccharin, and the introduction of NutraSweet. There have been
eight major packaging redesigns and many other minor redesigns. In May of this year,
Pepsi unveiled their latest redesign of Diet Pepsi packaging.
http://www.pepsicolacollectorsclub.com/news.html

Price is the next ingredient in the marketing mix. The price of a product depends on
several factors including, but not excluded to, the product being offered, competitors
pricing on a like item and the demand for the product. Companies have a variety of
methods to reach the most competitive price for their product. One example of this would
be cost-based pricing. Cost-based pricing is simply adding a markup to the cost of the
item. On the other hand, a company could also employ value-based pricing. Value-based
pricing is a hypothesis of the maximum amount of money a person will spend on a
product and then pricing the item below that figure to make the item more appealing.
Both pricing techniques take into account the supply and demand for an item. I think the
market for Pepsi is an elastic market, even though people love it. If the price rises to high
people you have some people that will switch to Coke or some other brand of cola. Pepsi
ranges in price anywhere from 89 cents to $1.59 for a 2 liter bottle. Pepsi price at this
point is comparable with its competitors. The fact that Pepsi keeps it price for 2 liter
bottles most of the time to $1.69 that makes the people purchase it more. But most of the
time you can find Pepsi somewhere on sale for 99 cents.

Once a product need is uncovered and a price is determined, the next step in the
marketing mix is deciding where to market the product. This is refereed to as place or
distribution. How and where will your products be sold? Companies chose to sell a
product directly to customer or use a retailer/wholesaler to distribute their product. The
best example of direct selling would be Directv service in their early years. Before there
was a Directv retailer in every city, a person did not have the option of walking into their
store and seeing the many options available. If a person wanted to purchase one of their
programming packages, he or she had to call the company direct. Now, Directv has
expanded into Best Buy, but you are still purchasing the service directly from Directv. A
retailer would be the average department store. These stores carry a wide-range of items
from several manufacturers. When you walk into one of these stores you can usually see
“like” items made by different companies. Radios would be a good example to illustrate
this point. Department stores usually radios made by different companies like Pioneer and
Sony. You will find it in grocery stores, drug stores, office buildings, schools, churches,
gas stations, etc. Pepsi competition is anything else that a person can drink. Pepsi has to
compete against the healthier drinks.

Now that a need has been found, a price has been determined, and a means for
distribution has been established, the final step is to promote the product. All other
 Marketing Mix 3

factors considered; advertising is probably the most important aspect of the marketing
mix. A product, which no one has heard about, is not making a company any money.
Companies spend millions of dollars a year on advertising. Advertising is a very intricate
process. Contrary to popular belief, ads are directed at a very specific audience, and have
well defined goals. Some companies use advertising to promote their product while
others may advertise their products as a public service. Pepsi markets
Gatorade/PowerAde as a product that anyone can drink, but I think Pepsi mainly promote
this product to the younger crowd more so than the older generation. I remember Pepsi
Generation X commercials. I think that the Pepsi commercials are still pushing towards
the younger crowds. I also believe that this is a good marketing strategy. Coca Cola has
been around forever, and the older generation is known to stick to what they know and
like. Brand loyalty is what has hindered Pepsi from appealing these potential customers.
Pepsi realized that some people are just loyal to what they like, so they are marketing to
the younger crowd. This will enable them to outgrow Coca Cola in the future. Once the
younger crowd becomes the older crowd, then Pepsi will be the front runner and now
have brand loyalty from its customers. So overall I think that Pepsi is doing a pretty good
job selling its products. Based on my examination of Pepsi marketing mix, Pepsi has
done a good job of meeting the needs of its customers. As I stated earlier, the product is
preferred among a great percentage of people that drink soft drinks, the price is
comparable to other soft drinks, and anyone can find the Pepsi soft drink anywhere. As
stated earlier, I believe that Pepsi targeted audience is the Generation X, from ages 16 –
35.

One thing that I would change in regards to trying to reach that older generation
that are devout Coke drinkers is my content in my TV commercials and radio
announcements. Most of the commercials that I see and hear from Pepsi are that their
spokesperson is relatively a person in that age bracket that I mention earlier. I think if
they are trying to reach an older group of people they should have an older person be the
spokesperson. They should have things like how drinking Pepsi doesn’t affect my health
or they should say something like “every now and then I need a cold Pepsi to satisfy my
thirst” or show senior sitting at a bingo table with a can of Pepsi next to them. I think
that these subliminal messages will allow them to gain more of that older generation.
Now Pepsi already has a snack line under the brand name of Frito Lay and that’s mainly
marketed toward the little kids, teenagers, and young adults. I would try to implement
some type of healthy snack food line. It would include foods like great tasting rice cakes,
low calorie popcorn, snacks, and chips, low fat meal replacement bars, etc. I think that if
Pepsi can’t get the older crowd to purchase their soft drink then go ahead and offer them
something else that they may have more of an interest in. hubpages.com/hub/Pepsi-
Brand-Review
 Marketing Mix 4

Also, Pepsi is using sports figures and other new strategies in advertising. Pepsi is
putting a familiar twist on its core brands. "Pepsi Lemon NFL Kickoff" colas will hit
shelves on Aug. 11. The limited-time-only, lemon-flavored soda will be available in both
diet and regular until November. A Pepsi rep confirmed the details of the pending launch.
Pepsi is no stranger to lemon-flavored cola. Its Pepsi Twist colas debuted in 2000 and
were discontinued two years ago. PepsiCo, as well as Coca-Cola, have shied away from
full-time line extensions in favor of a less risky in-and-out strategy. Most recently,
PepsiCo has introduced Sierra Mist Undercover Orange (in conjunction with the movie
Get Smart). Last year, it trotted out Pepsi Summer Mix, Mountain Dew Game Fuel (tying
in with Halo 3) and Sierra Mist Lemon Squeeze. The new entry, which will be available
nationally in 20-oz., two-liter and 12-pack cans, will be supported by TV, print and online
ads. Dallas Cowboys quarterback Tony Romo (who has been linked to pop singer Jessica
Simpson) will make his third appearance in a Pepsi spot. Marketing will tout the product
as "Pepsi with a kick of lemon." BBDO, New York, is Pepsi's agency. The new product
will endorse the current Pepsi Stuff promotion. Each cap of specially marked Pepsi NFL
Kickoff will feature a code worth double Pepsi Stuff points. Pepsi Stuff offers consumers
a way to collect codes from Pepsi products and use them to redeem prizes including
music downloads, Pepsi fashion apparel, a trip to the Super Bowl and others. The
program kicked off in January. Nearly all of Pepsi's marketing dollars have been
dedicated to promoting Pepsi Stuff. The budget behind Pepsi NFL Kickoff was not
disclosed. However, Pepsi spent $27 million on ads during the same period last year, per
Nielsen Monitor-Plus.
 Marketing Mix 5

References

http://www.pepsico.com/SearchResults.html?query=marketing+strategy

http://www.pepsicolacollectorsclub.com/news.html

hubpages.com/hub/Pepsi-Brand-Review