I wrote on effects of recession on consumer behavior in one of my previous posts. In this era of great economic depression, customers want value for money and as such, cost based pricing or efficiency pricing are of great concern to customers as well as marketers.
Well, marketers well understand the implications of recession on consumers' purchase behavior. As such, PepsiCo has come up with a great strategy, that positions the brand on cost-based parameters. It says "Plenty in Twenty" (Twenty Mein Plenty), which is for 600ml. On contrary, Coca Cola sells at Rs. 22/600ml.
I think Pespsi has a real advantage here. Firstly, its positioning clearly indicates its concern towards customers in recessionary times. Secondly, Just Noticeable Difference (JND), in favor of Pepsi may be apparent. Though a difference of Rs. 2 is petty, but I think it is above JND for Coca Cola. This is because the drinks from PepsiCo and Coca Cola hardly have a distinguishing feature. As such, pricing can be a factor in favor of PepsiCo.
Well, sales will ultimately tell the impact of the current pricing strategy of PepsiCo.
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10 comments:
There are 2 main reasons for Pepsi coming out with its "Plenty in Twenty" concept.
First one as you have rightly mentioned to have a JND over Coke by pricing it cheaper and
the second one is the 20-20 Cricket IPL fever which is coming up. It means to convey the message that during the match of twenty twenty cricket drink plenty of Pepsi. During this summer, watching cricket enjoy a drink of Pepsi. It has made use of the situation very well taking the best advantage. A very wonderful strategy used here by Pepsi.
But Coke is also not lacking behind to take the advantage of the IPL Fever as it is the sponsor of Delhi Daredevils cricket team (www.dillidilse.com) Though Coke is Rs.2/- more than Pepsi, but still they will have competetion among them and at the end of the day lets wait watch and see what happens to their sales.
Thanks.
Regards,
Kunal Vaswani
Thanks for enlightening the readers. You are just oozing with knowledge. Why don't you start a blog on marketing. I think a lot of people are keen to read your insights on contemporary topics in marketing.
It’s my pleasure Lavika.
I believe knowledge is such a thing which one has to keep on acquiring till his/her last breath. In fact I gain a lot of knowledge from your blog.
Though I am a Finance student I have a passion towards marketing which makes me explore different aspects in it.
I am working on to start my blog soon. Thanks for encouraging me.
Continue with your excellent work.
Regards,
Kunal Vaswani
Absolutely Kunal. I see a thirst for knowledge in you and its appreciable that you know so much in marketing area, being a Finance student.
I wish I could be as astute and as keen as you are. Great going. Please give me some tips to excel..
We have seen a lot of changes in the brand ambassidors of a company, like Aishwarya being replaced by Sonam in Loreal or let it be Prety Zinta being replaced by Deepika Padukone in BSNL Ad.
Now i have bought about this topic here as even Pepsi has removed Sharukh Khan (SRK) as its brand ambassidor. SRK was the brand ambassidor of Pepsi from a long time from ads like Oye Bubbly, Youngistan etc. SRK was the one to bring Ranbir Kapoor and Deepika into the ad of Pepsi Youngistan. But now SRK is endorsing Pepsi's rival brand- SPRITE. Yes thats right SRK is no more a brand ambassidor of Pepsi, but Sprite.
Pepsi has lost the biggest brand brand ambassidor as of today. The second hit brand ambassidor is M.S. Dhoni. Nowe this can be a back foot for Pepsi.
Pepsi has even come out with some new strategies to take the advantage of IPL fever like it tells the consumers to collect the caps and labels of Pepsi and you could be the luckyone who would be the capain of the 1st ball bowled.
This strategy by Pepsi does not look attractive, as just to be a captain of the first ball where chances look to be very minute, hardly few people would be interested to waste their time out of their busy schedule and go all the way till South Africa where the matches will be played.
SRK had 42 ads in the year 2008, but in the current year he has endorsed only 21 ads. This may be the effect of recession as the companies do not want to spend much during this period.
My prediction says even though Coke is priced Rs.2 more than Pepsi, it has a better advatage over Pepsi. Lets see what happens.
Well Kunal, I think your writings don't coincide with my context of the current post. I am hereby measuring the effect of recession on pricing strategy of marketers.
To correct you on "Plenty in Twenty" campaign, they have no intension of relating it to the so-called IPL fever. The offer of collecting Pepsi caps to get chance to bowl the first ball of match is for ICC T20 World Cup 2009, England.IPL (to be held in South Africa) is different form ICC T20 World Cup.So, Plenty in Twenty is nowhere connected to Indian Premier League.
Moreover, the Pepsi commercial promoting "Captain of first bowl (First bowl ka captain)" offer do not communicate the price of the product. So, communication doesn't indicate the connection of pricing with ICC T20 World Cup.
Thats what I can say.Hope it gives you a clear picture on strategies for these two different elements of marketing mix.
For reference, go to http://www.maldiviandigital.com/site-related/announcements-news/38375-pepsi-launches-campaign-icc-t20-world-cup.html
I am Looking forward to read Kunal's blog. When is it gonna be portrayed?
Thanks Lavika for correcting me.
Kailash thank u so much for showing interest to read my blog which will be launced soon.
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