Evaluating Product Life Cycle Stages and Adaptation: PepsiCo Report

This report provides a comprehensive analysis of PepsiCo's product life cycle, examining the stages from pre-launch to decline, using the Pepsi brand as a case study. It explores how PepsiCo has adapted its marketing strategies to each stage, including pricing, distribution, advertising, and sales promotion. The report evaluates the company's strengths and weaknesses, including its brand image, product mix, and global presence. It also discusses product line management choices and the importance of product adaptation to meet the needs of different markets. The analysis highlights the significance of innovation, adaptation, and renovation in maintaining a product's relevance and profitability throughout its life cycle. The report concludes with an assessment of the company's strategies for the future.

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
1-Testing the production life stages of products or products in (the selected company),
Product life cycle concept :
Product life cycle management is an essential part of all effective marketing strategies. If you are
aware of where your product is in its life cycle, you can market it in a way that will maximize its
sales.
Product Life Cycle Stages – PLC
There are five key stages of the product life cycle:
1) Pre-launch – no sales and profit are made because the product is still in development.
2) Introduction – initial sales are made to innovators, consumers who enjoy trying new
products, but these are insufficient to recuperate development costs
3) Growth – sales being to increase rapidly as the product gains popularity among the early
majority. It is at this stage that profits are first generated.
4) Maturity – this is the longest stage and generates the majority of a product’s sales and
profits from the late majority. To ‘milk’ the product for as much profit as possible,
extension strategies are often implemented to pro-long the maturity stage.
5) Decline – eventually all products stop selling, such as VHS tapes. As expected, sales
begin to decline until the product is no longer profitable. At each stage, marketers should
adapt their marketing strategies to the external changes in the market place. Let’s take a
look at how PepsiCo have used the product life cycle to successful grow Pepsi into one of
the most consumed drinks in the world.

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
Technologist with drawing – PLC
On a company of your choice
Product Life Cycle of Pepsi:
1) Pre-launch – the 1890s In 1898, pharmacist Caleb Brad ham 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

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
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
PepsiCola only launching in Brad’s pharmacies.
Advertising: To generate awareness, a celebrity endorsement with race-car driver Barney
Oldfield (above) was utilized.
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 – click here to listen to an ad from the 1930s!

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
During this time, the name was changed to just ‘Pepsi’ to help differentiate the brand from
Coca-Cola. Lastly, the 1975 Pepsi Challenge marketing campaign was so effective it almost
destroyed the CocaCola brand!
Sales-promotion: Due to the overwhelming success of the drink, no sales promotion was
used given that the price was already highly competitive and the company struggled to keep-
up with demand.
4) Maturity – 1980s – Present day
Since the 1980s Pepsi has been in the maturity stage of the product life cycle, helping the
parent company earn almost $20 billion in annual revenue.
Objectives: At this stage products are most profitable, which is why PepsiCo are likely to
consider Pepsi as a Cash Cow and aim to make as much profit as possible from the brand.
Product: Now that the product is well established, entire ranges can be introduced that act
as extension strategies to prolong the most profitable stage of the product’s life. These
include the highly successful Pepsi Max, to the disastrous Pepsi Raw.
Price: PepsiCo and Coca-Cola clearly do not want to enter price-wars, which is a high risk
during this very competitive stage. As a result, the price rarely fluctuates away from the
market average.
Place: The product now has a global distribution to penetrate emerging economies.
Advertising: The main focus of Pepsi’s advertising during maturity to is to differentiate the
brand. This has been mainly achieved through the use of celebrity endorsements – like
Beyonce and Michael Jackson – to position the product as a younger and edgier alternative
to Coca-Cola
Sales-promotion: To keep consistent with the brand’s value-for-money positioning, Pepsi
frequently have both value increasing and value adding offers. An example of the former is
offering larger bottle sizes – still to this day – than Coca-Cola; and the latter can be seen in
the competitions advertised on Pepsi’s bottles.
5) Decline – sometime in the future
Despite growing consumer interest in healthier lifestyles, sales of Pepsi show no signs of
slowing down in the immediate future. Regardless of this, it is recommended that PepsiCo
have the following strategies ready to be be implemented in the event of the product entering
decline.

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
Objectives: Cost-reduction is key at this stage to help the brand remain profitable despite
generating fewer sales.
Product: The range should become rationalized, and may be reduced to just Pepsi to
leverage economies of scale and minimize costs.
Price: The price could be reduced further to increase sales among price-sensitive consumers
and be an effective advertising cue for this low involvement product.
Place: The product now returns back to selective distribution to focus efforts on just the few
remaining outlets that generate profits on Pepsi.
Advertising and Sales Promotion: It can be recommended that PepsiCo could go as far as
completely cutting advertising and sales promotion to further reduce overheads. In summary,
the product life cycle of Pepsi is a great business case study that both students and managers
can learn from. They key points to remember are that marketing strategies need to be ready
for implementation, before the product enters each phase of the life cycle, otherwise
opportunities are missed and the brand becomes reactive to change.
2-Evaluate which appropriate product line management choices are required for
individual products or services :
PepsiCo’s Strengths :
PepsiCo's continued global growth and prominence reflects the company’s strengths :
 Strong brand image
 Broad product mix
 Extensive global production network
 Extensive global distribution network
As a successful global company, PepsiCo has one of the strongest brands in the market.
This strength enables the firm to attract consumers to its new products. In addition, the
broad product mix represents PepsiCo’s increasing ability to reach various markets and
segments, such as through Frito-Lay products, Quaker products, and Pepsi products.
PepsiCo’s extensive global production and distribution networks are strengths that
support the company’s international growth and expansion strategies.

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
PepsiCo’s Weaknesses :
PepsiCo suffers from a number of weaknesses that act as barriers to international growth.
 Low penetration outside the Americas
 Limited business portfolio
 Weak marketing to health-conscious consumers
PepsiCo derives about 70% of its revenues from markets in North America and South America.
This weakness indicates that the company has not yet maximized potential revenues outside the
Americas. In addition, PepsiCo operates primarily in the food and beverage industry. This is a
weakness because it maximizes the company’s vulnerability to risks in the food-and-beverage
market. Also, PepsiCo fails to effectively market many of its products to health-conscious
consumers.
Product Adaption
Air Product Adaption concept : is the process of changing a product to meet the needs of
customers in a market other than the one in which it is made. Making the product more appealing
to a foreign customer base by changing its packaging, size, price or even the entire brand.
Product Adaption its importance to the company : the process of modifying an
existing product so it is suitable for different customers or markets. An adaptation strategy is
particularly important for companies that export their products because it ensures that the
product meets local cultural and regulatory requirements.
how to apply it : Product adaptation is the process of changing a product to meet customer
needs in a market other than the market in which it is manufactured. This can be an important
part of a company's strategy to sell in any country.
The product may need to be adapted for a number of reasons, including:
Compliance with global laws and regulations - such as labeling requirements
Make the product more attractive to the global customer base by changing its packaging, size,
price or even the entire brand

Assess the life-cycle stage of the products or services in a company’s portfolio and evaluate
whether innovation, adaptation or renovation are needed for the individual products or
services.
You have to make an evaluation in which you clarify the strengths and weaknesses from your
point of view on how the chosen company provides comfort and meets the needs of its customers
by providing products and services that make them feel attractive to them, buying products and
repeating the purchase process where customers realize their sense of completeness, explaining
this with information from the set of sources that have been Validate it.
Advantages: Respect local specifications and expectations, excellent local image and
customers keep their landmarks and feel noticed.
Disadvantages: Higher cost, time consuming, poor speed of execution and difficulty to know
customers’ expectations.