CASE: CRYSTAL PEPSI

1. General or Mega Environment of CRYSTAL PEPSI ( a product of PEPSI Company)

POLITICAL
-Political interference, - Pepsi is a non-alcoholic beverage and so the FDA regulates it. Pepsi is
government change, expected to maintain a firm standard of the laws that the FDA sets
policies & belief of party with consistency. Many different markets across the world follow
in power different set of regulations, which are either relaxed or severe.

- The political scenario is very important because there can be certain

civil disturbance in some markets. The most important element of all
is that cross-border situations are extremely different. As a result,
Pepsi has to stay in line with all changes and policies in order to
adapt to them accordingly.

ECONOMIC
-Business cycles, - The reduced profits led them to downsize internally and reconsider
commodity prices, about how they should penetrate the market.
elasticity, consumer
confidence, inflation - Pepsi’s favor that when the economic downturn started in 2008, it
resulted in increased sales for the company. This is because people
started spending more time with friends and family, or at home,
when they got laid off from jobs.

SOCIAL
-Demographic, living - Crystal Pepsi targeted older consumer with age of 21 to 25, compare
standards, lifestyles, to regular colas, which are most popular among 14 to 21 years old.
Michael Bellas, president of Beverage Marketing Corp, pointed out
that consumer among these range (21 to 25 years old) prefer
healthier soft drinks (Grossman, 1992).

TECHNOLOGICAL
-New products, R&D, - Crystal Pepsi was introduced to the market from April 1992 to 1993
Patents , New Business in United States and Canada. It was formulated differently from the
Processes original brown cola, and the new colorless cola was 100% naturally
flavored with no preservations and no caffeine. It did have a lighter
taste than the original Pepsi.

- Tom Pirko, who runs a beverage consulting company in Los Angeles

called Bev Mark, figured that there are two reasons Pepsi decided to
bring out this Crystal Pepsi product (Pepsi Product ‘Crystal Pepsi’ is
Clear, 1992). The first reason was due to competition with Coca-Cola
whereby this new idea was intended to obtain a great deal of
attention from the market. The second reason was due to society’s
perception in 1990s towards healthier beverages based on its taste,
its ingredients and its clear look

- PepsiCo tried to rescue Crystal Pepsi’s negative positioning in the

market performance by adding citrus flavor to its clear cola.

- Crystal Pepsi came in both clear bottles and silver cans.

- By removing the caramel color of regular cola has, Crystal Pepsi was
presenting an image of “good health, purity, and icy cold water” to
its drinkers (Grossman, 1992). It was following the fashion existed
during early 90s that many products had been made colorless in
order to give their consumers the impression of pureness and clarity.

ENVIRONMENTAL
-Climate/climate - Ecological factors might affect Pepsi, but it will not have any
change, biotic/abiotic immense toll on its trade and profit generation. Ecological factors
pressures, energy usually affect agricultural businesses more directly.
consumption,
stewardship

LEGAL
- Legislations, dispute - Pepsi’s competitors like Coca-Cola presents competitive pricing and
management applicable this is a factor, which the firm should keep in mind all the time. The
laws political scenario is very important because there can be certain civil
disturbance in some markets. Another reason could be fall in sales
due to inflation. The most important element of all is that cross-
border situations are extremely different. As a result, Pepsi has to
 stay in line with all changes and policies in order to adapt to them
accordingly.

2. Task Environment of CRYSTAL PEPSI ( a product of PEPSI Company)

COMPETITOR - Crystal Pepsi was developed to compete with new age beverages
such as Clearly Canadian and Quibell, which are still selling today.
Clearly Canadian is currently selling Clearly Canadian Sparkling, a
naturally fruit flavored sparkling water, and Clearly Canadian Natural
Enhanced Water, a premium non-carbonated daily beverages which
uses pristine Canadian artesian water. On the other hand, Quibell
has fruit flavored carbonated mineral water.

- After Crystal Pepsi was launched into the market, Pepsi’s close
competitor, Coca-cola, then introduced Tab Clear, a clear, sugar-free
and calorie free diet cola to 10 U.S. cities in mid January 1993 and
launched nationally by mid year of 1993. However, Coca-Cola also
suffered a great financial lost with Tab Clear.

CUSTOMERS
- Health-conscious and less frequent cola drinkers were the target
market of Crystal Pepsi. However, it failed to provide the image of
healthy and distinctive beverage, so Crystal Pepsi could not fully
attracted its target market.

AS SUPPLIER
- Pepsi Company (PepsiCo) owns many brands of beverages, snacks
and other foods. Its major product, Pepsi Cola, is one of the most
popular carbonated beverages. Besides that, PepsiCo owns the
brands Quaker Oats, Gatorade, Frito-Lay, Tropicana, Mountain Dew,
Naked, Mirinda and SoBe.

- Pepsi Free introduced in 1982, Pepsi AM introduced in 1989, Pepsi

 Tropical introduced in 1994, Pepsi Blue introduced in 2003, Pepsi
Edge introduce in 2004, Pepsi Lime introduced in 2005, and Pepsi Ice
introduced in 2007.

3. Part of the general environment PepsiCo failed to consider in the marketing plan and its
critical success factor in the market that would have extended the Crystal Pepsi PLC.

MARKET CONDTIONS
1. Insignificant point of difference.
- The main reason of failure of Crystal Pepsi is it did not have
significant point of difference compare with other regular colas. Even
though PepsiCo stressed that it was produced by different formulas from
its Pepsi Cola, consumers could not tell the difference.
- During development stage, PepsiCo had tested 3,000 variations of
formulas with 5,000 consumers in their company laboratories and malls
taste-tested survey (Grossman, 1993).
- Finally the company decided a smoother and lighter taste than
traditional colas, and most importantly the clear color had been selected
as their new product. However, Crystal Pepsi did not success in
maintaining repeat purchases from consumers.

2. Incomplete market and product definition before product

development starts
- Crystal Pepsi did not exactly meet consumers’ needs and wants.
The clear color of Crystal Pepsi was to target health-conscious consumers.
Even though it had removed caffeine and the caramel color, Crystal Pepsi
did not present an image of healthier soft-drink to most consumers as it
was supposed to be. In fact, Crystal Pepsi contains 130 calories compare to
150 calories in regular Pepsi Cola in a 12 ounce serving (Grossman, 1993).

3. Too little market attractiveness

- Lack of market attractiveness was another major factor of
failure of Crystal Pepsi. Health-conscious and less frequent cola drinkers
were the target market of Crystal Pepsi. However, it failed to provide the
image of healthy and distinctive beverage, so Crystal Pepsi could not fully
attracted its target market.
 4. Poor Name Execution
- “Crystal” implicitly means clean, pure and clear. Although
Crystal Pepsi had a clear look from outside, it did not have the pureness of
taste. The name “Crystal” was very ordinary that could not attract
Generation-X to purchase or try.
- In addition, consumers had the impression of Pepsi related
with Pepsi Cola, it was very difficult for health-conscious consumers to
accept that the Crystal Pepsi was healthier simply from its brand.

4. What could and should have been done differently.

SWOT Analysis will assist us in the determining and evaluation PepsiCo’s strategy’s workability.

STRENGTHS WEAKNESSES

· Continue to release new products since the - With the company’s apparent economic strength in the
company has a huge following and a credible market, merging with small competitors would be advisable.
brand name.
- Find other markets through its distribution network to
· Find other markets through its distribution peddle its products.
network to peddle its products.
OPPORTUNITIES

 The company has strong brand names

 The company has a good reputation

among customers

 The company has cost advantages from

proprietary know-how

 The company has favorable access to

distribution networks
 Pepsi Co. could gain great opportunities with its better
Improve the company’s research and
franchise relations. Long term international expansion
development to cater the needs of the
can also be used as an advantage.
consumer.

· The company has an unfulfilled customer need

THREATS

· Work with the country’s government

agencies to intensify the strictness of entry · There is the possibility of arrival of new technologies

regulations in the industry.

· There has been the removal of international trade
barriers

PepsiCo should have had recognized earlier that there is a greater growth driven by flavors.
They should have developed a drink with distinctive taste compared to cola to attract the targeted
market segments. Besides that, a unique and cool bottle design would also be able to boost some
attention from the market because of its differences from normal cola design and competitor’s design.
Consumers were still having the perception that Crystal Pepsi was water plus sugar.

To satisfy the health conscious drinkers, PepsiCo should have studied the wants and needs of
health conscious drinkers more thoroughly in order to create a healthier formulation.

In order to create market attractiveness, PepsiCo need to develop a healthy drink with
competitive advantage, such as including daily vitamins as ingredients. After that, PepsiCo should
initiate multiple media advertising, campaigns, and promotions such as sponsoring national sport events
to build up brand loyalty to expand sales. “Crystal Pepsi” or “Crystal” was not an attractive brand name.
PepsiCo should have considered using a brand name with brand personality, such as “Pepsi” which is
associated with personality traits of being young, exciting and hip.