Pepsi Latte

Product failure Every day, there are many new products launched into the market. They are also brand new brand from new manufacturers and new products from existing manufacturers. “Brand line extension” is the using an established product’s brand name to launch a new, slightly different item in the same product category. Example of brand line extensions are new flavors, package sizes, nutritional content or products containing special additives. Group 3 presented about the failure (or poor performance) of Sunlight Strawberry, explaining that perhaps consumers do not find strawberry a particularly appealing link to cleaning benefits, compared to lemon or citrus fruits. I would like to raise a contrasting case by talking about Pepsi Latte, which launched in Thailand and eventually failed. Pepsi is the big name of soft drink around the world. It competes with Coke by tit for tat. The original flavor of Pepsi and Coke is well known by customers and they are fight very aggressive to be winner. Differential and creative strategy is a tool that Pepsi use to gain more market share. New Pepsi flavors are always introduced into the market. On December 2005, Pepsi Thai launched “Pepsi Latte” to the Thai customers. Its flavor is the combination of original Pepsi and latte coffee.

Pepsi latte is focusing to the customers aged above 18 years who are currently be Pepsi customers and new switching customers who currently drink latte coffee and try to use to increase the total market share of Pepsi Brand. Pepsi latte is promoting by the slogan “When Pepsi meets coffee” and “Modern lifestyle”. Pepsi show the research that 73% of customers who have ever tried this flavor will repurchase it. 1 But the result didn’t be seemed like its research. Pepsi latte was in the market for short period and it had already gone from the shelves. What be happened with it? First, the position of the product isn’t clear enough. Its position is between soft drink and coffee. Which is the real target market? Customer who are current drink original Pepsi don’t have intention to try new one. While the coffee lover perceives no need to buy it because they think real coffee is the best. Second, the problem comes from product itself. Its taste isn’t good enough to influence trial customers to repurchase the product. Current Pepsi customers have tried the flavor but they don’t like the taste so they won’t buy this flavor. Third, customer don’t perceived the value added of the products.

If they want to drink Pepsi, they still love the original flavor. They can’t see the value of new flavor. For the coffee mania, they perceived higher value of the real coffee so they will buy the real coffee only. Pepsi latte and Sunlight strawberry face with the same problems. Pepsi and Sunlight’s product owners, Serm Suk and Unilever Thai Holding, are the very big manufactures in Thailand. Its distribution channels, sales forces, pricing and promotion strategies aren’t the problems but the main cause is the product itself. They can’t create the distinct value added to the products while its original products, Original Pepsi and Sunlight Lemon, have very strong perception to the customers. Then, customers still be loyalty to the original products and don’t switch to buy the new ones. The only difference between Pepsi latte and Sunlight strawberry are different category, food and non-food product. Customers will be more sensitive about the products that they will eat it than use it externally.

http://www.positioningmag.com/magazine/details.aspx?id=43703

Lessons Learned The value that customers perceived is the most important things to make them buy the products. We can make the best products with lowest price and strong distribution channels and launch in the suitable period. But if the customers can’t perceive the value of the product, they won’t buy the products. To create distinct value to the customer, the product must be clear in position to the market. The product must have differentiation compared to other competitors to make customers switch to buy the product. If new products can’t do, they will be failure as many products. The question may be raised that why Pepsi or Unilever still launch new some products and they always be failure. They may want to only make some activities to the market but don’t focus about the sales. They may only want to remind brand to the customers’ perception by using new flavor activities. The reason that they can do like this because they have big big big money!!!

References:

http://www.positioningmag.com/magazine/details.aspx?id=43703 http://www.indianmba.com/Occasional_Papers/OP64/op64.htm