Marketing Strategy for a New Soft drink Product to Be Launched in Asia

6 June 2016

The new product is called Cheers, a refreshing, ubiquitous, fashionable, value for money lifestyle drink. It promises the benefits of status, thirst-quenching, and easy access. Cheers, a new soft drink product is the identified subject in this strategy paper. It is intended to be marketed and distributed in the different country markets in Asia. It will compete with the established global brands. This is projected to be at par with the premium global brands at a fraction of the price.

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Its positioning can be summed up thus: an alternative lifestyle drink to rival Pepsi and Coke in Asia, conferring status and thirst-quenching benefits. Also, it comes with a taste tailored to the palate of the local populations. It is sold at a fraction of the cost of similar premium lifestyle soft drinks. As such, it brings the benefit of a value for money drink for cost-conscious Asians aspiring for a modern, hip lifestyle.

Explain how you are segmenting the market. Why did you choose this method of customer segmentation Be specific.

The company shall explore various segmenting variables. They are based on existing literature on market segments in the region. Kotler et al proposes various such possible segments within a country, in accordance with the proposed method. Common demographic variables such as age, generation, family size, gender and income can apply. Psychographic variables such as lifestyle and personality have also been applied in the region’s population in the past. Behavioral segmentation variables suggested included occasions, benefits, user status, loyalty status, and buyer-readiness (Kotler et al. 1999, p.273).

 Intuitively, one can say that the market for soft drinkers in Asia tilt heavily toward the young. One arrives at this conclusion when one looks at the chosen target market of competitive products. I have chosen age, because as a segmenting variable, it can be considered broad and generic enough. It can be easily applied across countries of varying sophistication and level of development. Intuitively also, one can say that the variable is precise enough to be able to define a target market that is a perfect match for the product. Perfect match means that the marketing and sales potential of the product can be realized.

Who is the target market? Be specific—use demographics, psychographics (lifestyle), etc to identify your customer.

Two things are to be considered in determining the target segment. One, we determine that age is to be the segmenting variable for the exercise. Two, the product is being positioned as a value for money alternative to more established premium soft drink brands such as Coke and Pepsi. Given the two considerations, the logical target segment would be the age bracket being targeted by the direct competitors of the product.

For instance, in India the target market for Pepsi and Thums are those in the age group of between 12 and 29 years old (Agencyfaqs! 2002). Given this assumption, we conclude that the target market for the new product should be the same age group of young people across the different countries as Pepsi’s target market. The benefit of Cheers to the target market is that it contains less sugar but perks up one’s energy level.

What are your products’ benefits to the target market?

The product’s benefits are low price, increased energy, increase image and status and affordable price. And since we are also using the value-based pricing method, we want to base the price on the effective value to the customer relative to alternative products. Thus, the benefit of the product will be a lower cost even to the younger populace.

At what price will your product be introduced? Why?

 My product will be introduced at $0.65 because it is worth its value in quality. We are also aware that customers are price-sensitive and we are sure that the quantity demanded will increase significantly if the introductory price is affordable. Also, we have packaged the product such that it will gain mass appeal fairly quickly.

What pricing strategy are you using? Why?

I am using a promotional discount strategy because this is the one the company is able to give at the start. When dealers get a big bulk, they get a promotional discount of up to 20 percent. This way, they are encouraged to promote the product the fastest way possible because they know that they can get additional cash discounts if they are able to sell a huge volume.

What objectives will be accomplished by using this strategy? Be specific.
Pricing objectives that will be accomplished by using this strategy is the current profit maximization that the company will badly need in rolling out the product successfully in the market. This is because the company wants to maximize current profit, taking into account revenue and costs. The pricing objective of maximizing quantity will also be accomplished because we want to maximize the number of units sold and the number of customers served so that just in case we lower the price later, this will be a buffer to the company.

Why is the product worth this price?

The product is worth this price because it is in keeping with the aura of class and elite, and at the same time, being equally available to the lower class market. It will also be competitive with the current prices of other soft drinks in the market.

Identify and explain what prices you should charge at each stage of the PLC?

In the case of Cheers soft drink, the product life cycle model identifies the market phases that products may go through during their life times. These are the Introduction stage, Growth, Maturity, Decline and Termination. During the Introduction Stage or the New Product Development Stage, it is recommended that a minimum introductory price be charged. It is during this stage that the dominant strategic concerns are with product development (R & D), finding customers (marketing) and paying for start-up, expansion and marketing programs (finance).  It is recommended that a $.65 charge be given per bottle. Marketing here is aimed at educating potential customers about the product rather than pointing out product differences or building identity for the firm’s product.
In the Market Introduction Stage, new distribution channels will then be sought like getting Walmart to carry the product. Marketing activity tends to remain at a high level. However, the nature of marketing changes from educating consumers to an emphasis on product differences and brand identity. One competitor’s sales growth does not have to come at the expense of the other and new competitors. However, as a business’s sales increase, the market share of any one competitor is likely to decline.

In the Growth Stage the firm shall seek a competitive advantage by lowering prices. Significant price cuts may further stimulate product demand.
During the Maturity Stage of Cheers, a major strategic issue is the need to reduce per unit costs. Cost cutting may involve closing plants or eliminating levels of management, and automating. One strategy for Cheers is to maintain or even try to increase market share at the expense of competitors. Pricing is likely to be more competitive. The pricing here will be set at about $.60 since distribution to a large number and a wide range of customers may be crucial during the maturity stage, particularly if a competitive advantage is difficult to achieve through either lower per unit or product differentiation.

During the Decline phase of the product, there will now be a more strategic emphasis on efficiency (reduced costs per unit) continues to be strong. This effort may be associated with reducing capital investment, rather than holding it steady. Here, the price will be $.55 since at this stage, product options and variations often are standardized and their number reduced. Efforts will now be made to improve marketing efficiency.

In the Termination Stage, product availability may be reduced sharply. Correspondingly, the price will be reduced and even promos will be given out.

References
Agencyfaqs! 2002. Thums Up: The Journey from ‘Old to ‘Grown Up.  Agencyfaqs news and features Accessed 5 Sept. 2006 at http://www .agencyfaqs.com/news/effie/effie_thumsup.html

Kotler, Philip, Ang, SH, Leong, SM, Tan, CT, 1999. Marketing Management: An Asian Perspective. Prentice Hall Pte Ltd., Singapore.

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