Introduction

PepsiCoisaleaderintheworldbeveragemarketandfoodmarketsunderwellknownbrandssuchasPepsi,
SevenUp,Gatorade,DoritosandLays.PepsiCohasdiversifieditsproductmixbuthasnotventuredintothe
largeflavouredmilkmarketinAustralia.(PepsiCo,2009)

Flavoured milkenjoysahigherproportionof thebeveragemarketinAustralia than most othercountriesin

the world and this market grew by 7% in 2009. (Westwick Farrow, 2008) Coca Cola has recognised the
potential of this market by launching its Goulburn Valley flavoured milk range (Booth, 2008) and PepsiCo
wouldbenefitfromanearlyentryintocompetitionwithCocaColaandensureitmaintainsitsmarketsharein
the Australian beverage market. This plan details PepsiCos launch of a new and distinctive flavoured milk
productunderthebrandTropicana.

Competitivebackground/environment

The beverage market has a large number of competitive products

and has been subjected to many startups. The flavoured milk
market has not been subjected to the same level of competitive
entrantsduetothenatureoftheproductduetoitslowshelflifeand
complicated production processes. This requires very large
investmentsinplantandmachinery;itwouldbeinPepsiCosinterest
to partner with a processor, most of whom already have existing
alignments.Initiallyoutsourcingtoaprocessorwillbearrangedand
withcontinueddevelopmentandbrandandsalesgrowth,corporate
strategy will demand autonomy with capital investment to enable
internalproduction.

CurrentlythemarketisdominatedbyNationalFoodswhichpromotesflavouredmilkviatraditionalfarmers
cooperativebrandsalreadyestablishedinthiscountry.(Lee,2004)Theyhavealsotargetedindividualbrands
at different demographics, such as Moove for adolescents and Dare for young adult men. (the inspiration
room, 2008) (Dairy Farmers) Other competitors include Parmalat with their Pauls and Breaka brands
(Parmalat,2010)andFonterrawhoownSupershake,ChillandBrowns,(Fonterra)amongstothers.CocaCola
AmatilhasnowenteredthemarketusingtheGoulburnValleybrand.(Booth,2008)Itshouldbenotedthatthe
icedcoffeeflavouristhestrongestsellerintheadultmarketthroughoutAustralia.(Convenienceandimpulse
retailing,2006)

With the exception of Coca Cola, PepsiCos competitive brands benefit greatly from their traditional
communitybackgroundandhistoricallydirectrelationshipwiththeproducersoftherawproduct.CocaCola
Amatil has entered the market by purchasing an established brand name associated with freshness and
naturalproducts,whichtheyareattemptingtoexploitwiththeirglobalmarketingstrengths.(Booth,2008)


Inenteringanewmarket,itwouldbewiseforPepsiCotoavoiddirectconfrontationwiththebiggestplayer
(NationalFoods(WestwickFarrow,2008)),whilecompetingdirectlywithCocaColaAmatil,whohasalready
destabilised the market for flavoured milk products. Fonterra and Parmalat are also possible targeted
competitors due to their smaller market positions. Coca Cola will see this move as part of the traditional
corporatewarbetweenthetwocolabrands.

PepsiCoholdsstrengthinitswelldevelopeddistributionnetwork,verystrongrelationshipswithretailersand
an exclusive arrangement with fast food outlets, previously owned by their former subsidiary Yum! (the
economist, 2005). These restaurants included market leaders such as KFC and Pizza Hut, providing a major
opportunityforeasyproductplacementanddistribution.However,becauseoftheseexclusivityagreements
which often exist between retailers and producers, PepsiCo will face a major challenge in distribution to a
widerretailnetwork.Inordertocompetewiththeoldfarmerscooperativebrands(whicharesopositively
ingrainedintheAustralianPsyche),PepsiCowillneedtoemulatethebrandqualitiesoftheseproductswhile
creatingacleardifferentiation.Thiswillrequireasubstantialinvestmentinmarketing.

In 2007, Australia and Asia accounted

for 35% of the global milk market and
flavoured milk accounted for 5% of all
milkproducts.(WestwickFarrow,2008)
The flavoured milk market in Australia
is currently worth over 450 million
dollars and the average Australian
drinks10litresperyear,withpotential
for further growth. (Booth, 2008) With
the current emphasis in the media for
healthy eating, milk is a natural
alternativetothesoftdrinkmarket.

Marketsegmentation/targetmarket

Flavoured milk appeals to a very wide audience and segmentation

thereforehastobedrivenbybrandingratherthanbytheproductitself.PreviousproductssuchasMooveand
Oak,dividedthemarketbyage.PepsiCowilltargettheyouthmarket,peopleagedbetweensixteenandthirty
fivewhoconsiderthemselvestrendsettersandwhousuallyidentifywithfashionablebrands.PepsiCowill
approachthemarketwithseparateproductlaunchesstatebystate.Thiswillresultinthecreationofstrong
foundationsforthebrand.Asecondarymarketwillbecreatedinyoungerconsumerswhowillbeinfluenced
bytheirparentsuptakeoftheproductsandthedragthrougheffectoftheiroldersiblings.

Newtown, a prime target for this niche audience.

Marketingmix

Product:

The product will be launched using the PepsiCo

owned Tropicana brand. This will limit capital
expenditure on a new name while projecting a
youthful fresh image for the young adult market.
Key flavours will include chocolate for its wide
appeal and close association with milk flavours,
strawberry and banana for healthy fruity
alternatives and iced coffee for its adult oriented
appeal and existing strength in the market. (Lee,
2004) A particularly strong marketing strategy will
bethatallfourflavourswillbeinfusedwithGuarana
to exploit the popularity of this additive in that
demographic.

Additionally,innovativeprocessingandpreservingmethodschosenwillenhancethefreshandlightmilktaste
oftheproductcounteredtothetraditionalcompetitorsprocessingmethodssuchasultraheattreating(UHT)
whichdeliverperceivedheavyaftertastes.(marshall,2003)

It has been identified that the chosen target market

prefers resealable packaging. For this reason 600ml
recyclable PET bottles will be used rather than drinking
cartons (the recyclable nature of which will be
emphasised to target the environmental awareness of
the target market). The 600ml size direct sales for the
singleusemarket.

Position:

The product will be positioned to appeal to the

fashionable alternative and environmentally aware
lifestyles of generation Y, while not alienating the more
conservative market place. The positioning of this
productwillsitwellwiththetraditionalPepsimarketing
stylewhichhasnotbeenexploitedbyanyotherbrands.

ThisstrategyisknownasaNichingStrategy.

Price:

In the long term a price which reflects an acceptable profit above the cost of production, distribution and
marketing, while keeping in line with competitors prices will be used, presently around three dollars. The
productbrandwillbethekeypromotionalpointandnottheprice.Aninitialpromotionalpricingstrategyin
theshorttermwillhelpbuildbrandawarenessandmoveproduct.

Place:

AnalysisshowsthatinSouthAustraliamilkconsumptionishigherthansoftdrinkconsumptionbutWestern
Australia has a higher per capita consumption of flavoured milk than any other state. (Booth, 2008) To
minimise launch costs and maximise brand identification and uptake, the launch will begin in Western
Australia. Following a good launch in Western Australia, the next market attack would be South Australia,
giventhepreferenceforthatpopulationformilkproductstosoftdrinks.Thiswillbefollowedbyafulllaunch
acrosstheEasternseaboardtoaddressthemajoritypopulationofAustralia.

Initialproductplacementwillbeinfashionablenichestoreswherethetargetconsumerpreferstoshop.Once
brandrecognitionisachieved,distributionwillextendtocornerstores,milkbars,conveniencestores,bakeries
andfastfoodoutlets.Thefinalmovewillbeintosupermarkets.

Promotion:

Heavy focus on our integrated marketing plan will be on below the line marketing strategies as the youth
demographicisknowledgeableandcynicalaboutabovethelinemarketing.Thistypeofmarketingwillinclude
sponsorships,endorsementsandtheheavyuseofsocialmedia.Althoughthisdemographictendstobecynical
toabovethelinemarketing,theyarestillsensitivetomassappeal.Thismentalitymakesthemreceptivetoin
storedisplaysandpersonalsellingintheformofsampletasting.

Atalaterstage,between maturityand postmaturity, moremassappealadvertising maybeused basedon

consumerreactionandresearchintothemarket.ThiswouldincludeTVadvertisements,billboardsandprint
mediaads.Thiswillbelinkedtothemassdistributionstagesaftertheinitialbrandinginnichestoreshasbeen
achieved.

Facebook, now a more conventional social media marketing tool.

ProductTimeline

Establishment
In the initial stage of launch
scheduled for six months, the
emphasis is on
brand
development and recognition.
This will be made easier with
the use of the staggered state
by state distribution plan and
promotional pricing/standard
pricing strategy we have
employed.

Within
the
six
month
establishmentphase,staggeredlauncheswillhelpwithdistributionandproductiondevelopment,whichwill
initiallybeoutsourced.Postlaunchmarketresearchwillbetakentoevaluatebranddevelopment.Basedon
theresultsofthisresearch,arestructuredstrategymaybeneeded.

Growth

Once the six month establishment period is over, a strategy for growth will be put into place. During this
growthphasewewillacceleratethepromotionalmiximplementedintheestablishmentphase.Overthenext
twelvetotwentyfourmonths,continuedbranddevelopmentwilltakeplaceastheproductspositioninthe
market matures. This will be paired with a shift from outsourced processing to internal processing and
distributionchannels,andfulldistributionthroughoutAustralia.

Maturity

It is expected that the brand and sales of any product will reach a plateau, at which point reevaluation of
salesanddistributiontechniqueswilltakeplace.Furthermassdistributionthroughasmanyretailchannelsas
possibleisexecutedatthisstage,withaclearlyidentifieddriveintosupermarkets.TheMassmarketingplan
will be implemented, with an emphasis on the development of the secondary target market. This will be
accompanied with diversification of product flavours. These flavours, should retain the niching style with
flavoursnotoftenseenonthemassmarket.Thelongtermpricingstrategywillthenbeused.

Postmaturity

Postmaturityisastagewhen you eitherselloutof orredevelop aproduct.PepsiCosnormal strategy isto

retainandrelauncheffectivebrands.Thisstageisforecastedfor45yearspostlaunch.Brandredevelopment
andproductrelaunchwilloccur.Bynowthebrandhasaclearpositioninthemarketplaceandthisposition
willactasthefoundationoftherelaunch.Withmassdistributionnewpricingconsiderationsmayneedtobe
made.

Successmeasures

Successwillbemeasuredbysurveyingbrandrecognitionwithinthechosendemographicsatallstagesandby
thecontinuedmeasurementofsalesandsalegrowth.

Conclusion

ThroughthismarketingandpromotionalmixthelaunchofanewflavouredmilkproductbyPepsiCowillbean
outstanding success. The entry of new competitors into the flavoured milk market had given PepsiCo the
opportunity to capitalise on destabilisation in the market. This product launch will exploit a demographic
whichhasbeenignoredbyitscompetitorsbutwhichalreadyhasastrongestablishedallegiancetoPepsiCo
brands. This product plan uses the experience, expertise, infrastructure and financial resources of an
international leading beverage company to succeed. This plan directs the use of innovative production
techniques,theadditionofanadditivewhichthedemographichasidentifiedasdesirable,aclearlydirected
andplannedstagedmarketingstrategyandprovisionsforcontinuedgrowth.

Packaging Concept

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