Pepsi Raw – New Product Development

Pepsi, the US cola giant that has also diversified into orange juice – through Tropicana – has discontinued Pepsi Raw, after two years in the U.K market. As part of a rebranding strategy to focus on healthy alternatives to cola, Pepsi Raw was launched exclusively in the U.K and sold with confusing healthy credentials: despite containing no flavourings, colourings, sweeteners or preservatives, it still had added sugar. Although the product was essentially an extension strategy of their cola – which is a cash cow that is well into the maturity stage of the product life-cycle – Pepsi Raw, itself, is an example of the risks associated with new product development. It ultimately failed for two reasons.

Despite being called Pepsi’s marketing director praising the drink as “the most significant innovation from Pepsi in fifteen years” at its launch, no one anticipated the high level of risk associated with product development, as outlined in Ansoff’s Matrix. Hence, albeit consumers are more concerned about healthy products, Pepsi, as an organisation of people, do not necessarily have the skills nor experience to exploit this trend. While they can make something innovative, does not mean that they can market it as a commercial success. This, however, is an inevitable part of new product development, which could be said for any company – not just Pepsi. Perhaps it was this lack of experience that created an inconsistent message for consumers: ‘is this product differentiated because of its natural ingredients or health benefits?’ – or maybe it was consumers will never associate the brand name Pepsi with healthy drinks.

The second reason for the failure of Pepsi Raw concerns the ‘place’ element of the marketing mix and the distribution used. Although the drink sold well in bars and pubs, according to Britvic, Pepsi’s bottler, the distribution channel failed to reach retailers; Pepsi Raw was a rare sight in supermarkets, where there is the mass-market potential for sales. Instead, the premium pricing and niche marketing limited the products influence in their product portfolio and Pepsi have now decided to focus on healthier, sugar-free products like Pepsi Max.

Evidently, as the drinks company is still keen to market its health values, one product failure does not matter. And in the long-term withdrawing a product and admitting its failure is far more sensible than having an inconsistent cola drinks range that is full of dead dog’s leaching off profitable cash cows. By discontinuing Pepsi Max, in effect, paves the way for their next product…

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