CASE STUDY-For Culture

8/3/2019 CASE STUDY-For Culture

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PepsiCo India (Eastern Region): The Mountain Dew Strategy

It was 1st

March, 2011. Indranil Ghosh, the newly appointed Regional Manager of PepsiCo. India

(Eastern Region)1 (Refer to Exhibit 1) was on his way back from the airport to the regional

headquarters of PepsiCo India at Kolkata2. As the car stood at a traffic signal, he looked at the

huge billboard for Mountain Dew (Refer to Exhibit 2) across the road. It reminded him of the

meeting he had attended just the day before, with the top executives of PepsiCo India at their

corporate headquarters at Gurgaon. Strategies for boosting sales of Mountain Dew in the eastern

region were discussed at the meeting. Following the meeting, Indranils task was to develop a

strategy that would double Mountain Dews market share in his region from the current level of

about 1.5% - 3% in the next quarter (Apr-June)3. Indranil was quite confident of meeting his

target since he has successfully performed similar kinds of assignments in the past. However, ifhe fails he may have to cut a sorry figure to the PepsiCo management.

COMPANY BACKGROUND

US based PepsiCo Inc. was one of the largest food and beverages companies in the world with

revenues of nearly USD 58 billion (Refer to Exhibit 3). PepsiCo was formed in 1965 with the

merger of the Pepsi-Cola Company and Frito-Lay Inc. PepsiCo has since expanded from its

flagship product Pepsi to a broader range of food and beverage brands that includes 19 mega

brands. Each of these brands generated revenues of USD 1 billion or more in 2010. (Refer to

Exhibit 4).

PepsiCo entered India in 1989 and has grown to become one of the countrys leading food and

beverages companies. PepsiCo Indias range of products include beverages such as Pepsi, Seven

1From a business perspective India is geographically divided into four main regionsEast, West, North and South.

Eastern region consists of the state of West Bengal, Bihar, Jharkhand, Orissa, Sikkim, Meghalaya, Arunachal

Pradesh, Assam, Manipur, Tripura, Mizoram and Nagaland.

2Kolkata formerly known as Calcutta is the capital of West Bengal state and is the commercial capital of East

India. Located on the east bank of the river Hooghly, it has a population of around 15 million making it the one of

the most populated cities of India.

3East India has hot and humid summer during the months of April to June reaching its peak during the month of

May
http://en.wikipedia.org/wiki/Pepsi-Colahttp://en.wikipedia.org/wiki/Frito-Layhttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Pepsihttp://en.wikipedia.org/wiki/Frito-Layhttp://en.wikipedia.org/wiki/Pepsi-Cola


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Up, Mirinda and Mountain Dew, Aquafina drinking water, Gatorade, Tropicana 100% fruit juice,

Tropicana Nectars, Tropicana Twister and Slice. Local brands like Evervess Soda, Dukes

Lemonade and Mangola also add up to their diverse range of products.

PepsiCos food company Frito-Lays product portfolio includes Lays Potato Chips, Cheetos,

Uncle Chipps and snacks under the Kurkure and Lehar brands. It had 36 bottling plants in India,

of which 13 were company owned and 23 were franchisee owned. In West Bengal there were

three plants. Two were located at Kolkata and one at Burdwan. PepsiCos Frito Lay food

division had 3 state-of-the-art plants at Channo (Punjab), Pune (Mahasrashtra) and Sankrail

(West Bengal).

The Indian soft drinks market grew by 11.1% in 2010 to reach a value of USD 3,813.3 million

(Refer to Exhibit 5). According to Datamonitor4 report, by the year 2015, the Indian soft drinks

market was expected to grow to USD 5,883.6 million, an increase of by 54.3% from 2010.

Carbonated soft drink (CSD) is the largest segment of the soft drinks market accounting for

50.5% of the total market value (Refer to Exhibit 6). Coca Cola Company was the leading

player in the Indian soft drinks market that generated a share of 33.2% of the markets volume.

The Indian soft drinks market was concentrated with the leading three players namely Coca Cola

Company, PepsiCo and Parle Bisleri Ltd. holding 74.1% of the total market volume (Refer to

Exhibit 7). Market researcher Nielsens data showed that the fizzy lime-lemon category grew

16-17% in the year 2010-11, while colas such as Thums Up, Pepsi and Coca-Cola grew about

11% and orange-flavored drinks like Fanta and Mirinda grew 8%.5

MOUNTAIN DEW - THE BRAND

Mountain Dew was invented in 1940 at Knoxville, Tennessee in the United States by Barny and

Ally Hartman. Subsequently it was bought by PepsiCo in 1964. In 1965 the first campaign of

Mountain Dew was launched with the tagline, Ya-Hoo Mountain Dew Itll tickle your innards.

That was followed by a new tag line, Ya-Hoo, Mountain Dew!. In 1973, PepsiCo again

changed their tag line to Put a little Ya-Hoo in your life. They also modified the logo to appeal

to the younger, adventure seeking Americans. In 1974 a new slogan Hello, Sunshine, Hello,

4GlobalMarket Research Agency

5Economic Times, Apr 29, 2011


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Mountain Dew was introduced.Dew it country cool became the new tag line for Mountain

Dew in 1986. The same year PepsiCo introduced low sugar Diet Mountain Dew in the US

market. In 1992, they came up with Been there, Done that campaign followed by Do the

Dew campaign in 1993. The logo was again updated in 1999 and again in 2005. In 2008, the

Mountain Dew logo was redesigned to Mtn Dew in the US market.

By 2010, Mountain Dew had a market share of 6.8% in the US and had generated revenues of

around USD 8 billion. (Refer to Exhibit 8) It had several variants like Diet Mountain Dew,

Caffeine Free, Caffeine Free Diet, Throwback, Code Red, Diet Code Red, Livewire, Baja Blast,

Whiteout, Pitchblack, Supernova, Diet Supernova, Voltage and Diet Voltage.

THE MEETING

It was half past nine in the morning when Indranil and his team arrived at the board-room. Ms

Kalpana Chauhan (Marketing Director of PepsiCo India) and Mr. Deepak Mehta (Vice President

of marketing) along with a few members of the top management were already present. After they

welcomed Indranil and his team, Kalpana commenced the meeting by saying:

We are excited to unveil this years campaign for Mountain Dew, with our first ever brand

ambassador, Salman Khan6. The central message is to encourage all youth in their moment of

fear, to believe in themselves and just go for it because - beyond fear, lies victory.This campaign

takes the idea of Darr Ke Aage Jeet Hai7

to the next level. The concept and the action are

larger than life and never seen before in India. With this exciting campaign and Salman as our

brand ambassador, we look forward to another blockbuster summer for brand Mountain Dew,

which has been growing at a rapid pace for the last three years8.

She elaborated on the celebrity association by adding:

6Salman Khan is a leading Indian film actor who has acted in more than 80 Hindi films.

7Darr Ke Aage Jeet Hai is tagline in Hindi, the national language of India. Translated in English it means Beyond

Fear Lies Victory

8Dew has been growing at the rate of 5.5% per annum currently as told by company officials.


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Mountain Dew is strongly anchored in the consumer insight of Darr Ke Aage Jeet Hai.

Salman Khan embodies this philosophy and he has strong national appeal. We look forward to

the partnership and are confident that it will be mutually rewarding.9

Kalpana pointed to the PowerPoint slides and continued

PepsiCo had approximately 21.5% market share compared to Coca Cola which had 33.2%

market share by volume in 2010. Mountain Dews share in the industry is 7% - 8%. It is a very

popular drink in the northern parts of the country including Punjab, Haryana and parts of Delhi

and Uttar Pradesh accounting for over 5% of the market. However, it accounts for only around

1.5% to 2% of the market share in the eastern region. 10

She looked at Indranil and paused for a moment.

Kalpana said:

Now our main objective is to make Darr Ke Aage Jeet Hai campaign a huge success and

meet our targets of doubling our market share in the eastern region to 3% in the next three

months. Although consumers are aware of this brand, we have not been able to capture a decent

market share. Mountain Dew had faced stiff competition from local products like lemon soda,

laal sharbat and Rooh Afza. We have undertaken a number of campaigns in the past but they

have not been able to deliver the desired results in the eastern region.

Deepak added Mountain Dew is a citrus flavored drink which gives a refreshing rush of energy.

It is not a substitute for Seven Up or Sprite as most retailers consider it to be. In fact our

positioning strategy makes it is a substitute for Thums up. Moreover, this brand is referred to as

sticky as people who taste this drink generally become loyal towards the brand and this is

seen as a trend since the beginning. Through Mountain Dew, we have always inspiredconsumers to look beyond their fear and take up challenges that the brand threw at them.

Mountain Dew was a citrus based yellow coloured drink and was hence considered as a

substitute for Seven up or Sprite by the retailers. The advertising and communication campaign

9http://www.salmanonline.net/news-desk/news-archive/1582-salman-khan-to-endorse-mountain-dew.html (accessed

on 30th May, 2011)10

Data as provided by the company


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however, positioned the brand as a high-adrenaline adventure related drink and hence consumers

considered the brand to be more similar to Thums up than Sprite or Seven up. Therefore, there

was a mismatch in brand perception by the channel and consumers.

Indranil observed:

But, comparing Thums Up ad with Dew ad, it was seen that both are based on the similar

positioning planks both were aligned with coolness along with masculinity and stunts, and

were strongly action-oriented Is it this positioning which had put them on a collision course?

Now both the brands, intent on establishing a better connect, are riding on Bollywood11

stars

Akshay Kumar and Salman Khan respectively.

Indranil further added:

The distributors and the retailers consider Mountain Dew as an alternative to Sprite and Seven

Up. This is primarily because of the green coloured bottles of Mountain Dew which is quite

similar to Sprite or Mountain Dew. Even majority of the retailers said Its always safe for us to

keep crates of Sprite or Seven Up since these are well established brands and sells well. But

consumers hardly asks for Mountain Dew. So, why should we invest in Dew?

Deepak clarified

Mountain Dew had been involved in some stunt-based campaigns, based on mountain-biking,

extreme racing etc., as well as light humour. Its current campaign on Darr Ke Aage Jeet Hai

promised a lot of action in the near future. On the other hand, Thums Up had always been about

being more macho or the numerous reality-defying stunts that Akshay Kumar portrayed for them.

It had a strong connect with action and stunts.

Thums Up had already established itself in the market whereas Mountain Dew was a new

product and to capture a decent market share it had to adopt aggressive promotional strategies.

Hence, to capture a market share for itself it would take time. Thums Up was eating the market

share of Mountain Dew as its ad was also targeting the youngsters by adventurous and sporty

image.

11Bollywood is the popular term being used to refer to Hindi movie industry.


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Deepak continued

We need to keep our budget, the target audience, the marketing plan, the brand strategy,

consumers and sales promotional tools, packaging aspect, line extensions, and even product

modifications in mind while communicating the brand.

The PepsiCo management had understood this fact after the initial launch of Mountain Dew.In

2003, when Mountain Dew was first launched inIndia, Dews overall market share in India was only

1% to 2%. It remained stagnant till the next campaign Do the Dew in 2005. It showed a slight

improvement and till 2007 it could a capture of market share of approximately 3%. By 2009-10

its overall market share was 6.3%.The current market share was 8.2% as of 30 th May, 2011. 12

Deepak recalled

Mountain Dew was first launched in 2003 with the tag line Cheetah Bhi Peeta Hai13 and

positioned as an energy and exhilarating drink. It depicted an ad in which consumers have to

fight for their lives in order to get Mountain Dew. Within first three months of its launch it was

able to capture 4%-5% market share in the carbonated soft drinks market nationwide.14

.

Deepakcontinued to talk about the second campaign Do theDew.

The ad campaign conveyed the message that bungee jumping was an adventurous and risky task

for youth and achieving victory was very difficult. As soon as any dangerous task (bungee

jumping) was completed, the participants asked for Dew, portraying an attitude of a person. The

attitude being that people with such adventurous attitude drink Dew. . The ad campaign was

supported by several road shows where specially fabricated trucks were moving on a pre-

planned route. The trucks were designed like rock climbing walls so that the target group can

live the experience of being adventurous and daring. The road shows also included on the spot

12As told by company officials

13Cheetah Bhi Peeta Hai is a tagline in Hindi, the national language of India. Translated in English it means Even

Cheetah drinks Mountain Dew

14http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-

mart/130773/(((a(accessed on 30th May, 2011)
http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/http://www.business-standard.com/india/news/mountain-dew-grabs-5soft-drinks-mart/130773/


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discounted sales of Mountain Dew priced at INR 515

(0.11 cents). Interactive games were also

arranged and the winners were given Mountain Dew goodies.

Indranil disagreed.

The consumers in Eastern region however could not relate the ad and promotional activities to

their daily lives. It focused on activities such as bungee jumping, rock climbing and other

dangerous tasks which consumers were reluctant to perform. Moreover, people of Eastern India

are much more polite by nature compared to the people from North India. East Indian people

are cultural, food loving, sports fanatics and intellectual people. While people from Northern

India are predominantly into drinking and machoism. For instance, in my opinion we could have

launched the campaign during some cricket tournament and after every over bowled, we could

have promoted Mountain Dew as an energy drink motivating the cricketers to put in their efforts

and win the world cup. Besides cricket, football is also immensely popular among the people of

eastern India. Similar campaigns can also be launched during major football tournaments like

the IFA (Indian Football Association) Shield16

(Refer to Exhibit 9).

Indranil went onto say

Mountain Dew was also being promoted in MTV Roadies17, inspiring and motivating the

participants to perform all the dangerous tasks symbolizing the new tag line Darr Ke aage Jeet

Hai. Well, we should also keep in mind that Mountain Dew was promoted in the movie Mission

Istanbul but however, the movie could not perform satisfactorily at the box office18

and the

promotion did not contribute to improving the sales of Dew and making it a popular brand.

Kalpana remarked:

15USD 1= INR 45 (approx) as on 30

thMay, 2011

16National football tournament

17MTV Roadies is a youth-based popular reality television show shown on MTV India

18The term frequently used in the context of the film industry, it refers to the amount of business a movie does.


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Image building activities such as advertising campaigns and associations with Roadies and

Mission Istanbul may not have had a direct impact on sales in the eastern region and hence some

strategies to push the product through the channel seemed pertinent.

Well, gentlemen I am glad to see that you are all aware of the mistakes that we had made in the

previous campaigns. This new campaign should be executed and implemented keeping in mind

all the errors and mistakes that were made in the previous campaigns. We need to meet the sales

target this time and aim for positive results.

After a pause Kalpana continued

I am sure we all are aware that the UTC (Under the Crown) campaign Empty Deposit Scheme

that had been launched specifically for the eastern region. However, I would like to give you a

small briefing on it. Under this campaign the sales representatives would walk up to the retail

outlets and persuade the retailers to buy empty crates for a deposit of INR8180 (USD 4). When

the retailers purchased these empty crates they were required to fill in these crates with empty

bottles which they had in stock with them and get in exchanged with the distributors in return for

crates of filled bottles of Mountain Dew. By doing this, brand was made available in the outlet.

Moreover, the retailers were given incentives to buy the empty crates of Mountain Dew in which

some amount of prize money was assured to them. Here, the UTC scheme playeda major role

in boosting sales. When the consumers ask for Dew and the retailers opened these bottles and

gave it to them, every crown that they opened had prize money in it. For instance, mobile

phones, emergency lights, INR19 150 (USD 3.33) vouchers, etc. were some of the prizes that

were available. The distributors needed to persuade the retailers to keep stock of Dew so that

when consumers asked for it, it was available in the outlet.Deepak looked perplexed and raised a doubt

I think this campaign would involve more of a push strategy than a pull strategy.

Kalpana after thinking for a while said

191 USD = INR 45(approx) as on 30

thMay, 2011


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Yes, we were using push strategy to increase sales of the brand by providing incentives to the

retailers.

Deepak interrupted by saying

But, this is what we do every time; we always push the sales through the retailers.

You are absolutely correct Mr. Mehta, but in case of Mountain Dew we needed to provide good

schemes and incentives to the retailers in order to request them to make Dew available in the

outlet as the demand for this drink was not much. Moreover, the advertisements also have not

had much of an impact on the consumers, so a push strategy needed to be implemented

especially in case of this drink. Kalpana replied.

Kalpana concluded the meeting by saying

Ok Indranil. I hope you have understood the underlying strategy behind our Darr Ke Aage Jeet

Hai campaign. However, I would like you to prepare a marketing plan for the eastern region

and send it to me by next week? We can deliberate on it in our next meeting. I wish you and your

team all the best

THE DILEMMA

Indranil was pleased with the fact that Mountain Dew was the fastest growing aerated drink in

the country for the past three years. However, several questions ran across his mind. Was

Mountain Dews association with high-energy adventure sports the reason for its poor sales in

the eastern region? Or was it its unique taste? Will the newly launched Darr Ke Aage Jeet Hai

campaign be successful in this region? Should we have a regional brand ambassador like the

former Indian cricket captain Sourav Ganguly? Baichung Bhutia, the captain of the Indian

football team may also be another option of being the brand ambassador since football has a

huge fan following in eastern India. What other promotional campaigns could be launched?

What are the measures that can be taken to improve the brand image of Mountain Dew in this

region? If the world-wide brand image of Mountain Dew does not appeal to the Eastern Indian

youth, should the market be driven by push or pull strategy? Can the taste of the product and its

inherent stickiness be used in some way to pull the consumers rather than be forced to use a push

strategy? His thoughts were broken by the loud honk of a passing car as the signal turned green.


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Exhibit 1

(Map showing the states of India comprising East India)

(Source: www.besttofind.com)


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Exhibit 2

(Billboard showing Darr Ke Aage Jeet Hai)

(Source: www.network2media.com)


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Exhibit 3

(PepsiCo Key Financials)

(Source: Company Annual Report 2009-10)


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Exhibit 4

(Source: PepsiCo Annual Report 2010-11)


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Year USD INR % Growth

(in millions) (in millions)

2006 2,512.7 115,422.1

2007 2,782.9 127,837.0 10.8

2008 3,081.6 141,554.6 10.7

2009 3,433.5 157,723.7 11.4

2010 3,813.3 175,167.9 11.1

Exhibit 5

(Annual Growth Rate for 2006-2010)

(Source: Datamonitor)

Exhibit 6

(Indian soft drinks market share by segments, 2010)



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Exhibit 7

(Indian soft drinks market share by volume, 2010)



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Exhibit 8

(Top CSD Companies and Brands for 2010 in US)

(Source: www.beverage-digest.com)


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Exhibit 9

(Television viewership of football)

(Source: Adapted from TAM Peoplemeter System, www.tamindia.com)

0

1020

30

40

50

60

70

80

90

100

Kolkata W.Bengal Assam All India Delhi Uttar Pradesh


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Note: The case is primarily based on the real life observation and discussion with Mr.

Indranil Datta, Market Development Manager (East) of PepsiCo. though the names have

been changes to maintain the confidentiality.

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