III.

EXECUTIVE SUMMARY
Mountain Dew the magnificent cash cow for Pepsico was invented in 1940 and was taken
over by PepsiCo in 1964. The original Mountain Dew now is a yellowish green sugar rich
drink with a relatively high degree of caffeine developed by Alley and Bartney Hartman who
then used lime as the key ingredient in its initial stage. They use to run a bottling plant in
Knoxville, USA. It was then used as a mixer besides the name was also used as slang for the
moonshine coming out of the hills in Virginia. Mountain Dew until 1 st January 1960 did not
enjoy the status and popularity it does today in the CSD market. Bill Jones the new owner
changed the Mountain Dew unique formula by adding more sugar, caffeine and orange
flavour in the very same year.
An article in Beverage Digest publication on 25 th March 2013, claims that the total revenue
for CSD industry is near USD 77.1 Billion, which shows a giant market potential for soft
drinks. Though the market is extremely competitive and Mountain Dew is categorized under
“Carbonated Soft Drinks or CSD” also at times faces intense competition from other major
leading brands in the same category. Recent finding shows a detail survey of market
penetration across America which puts Mountain Dew on the 4 th position with a market share
of 7.2% with total sales revenue of USD 633million behind Coca Cola (USD 1.59Billion),
Diet Coke (USD927Milion) and Pepsi (USD892Million). (Kindly refer to attachment)
Source: http://research.insead.edu/2012_08_01_archive.html
Adspend as a % of Sales

0.8

0.7
P e rc e n ta g e

0.6

0.5

0.4

0.3

0.2

0.1

0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Brand Coke Pepsi MountainDew Sprite Dr Pepper 7-UP Surge

To further analyze and understand in detail, the competitive market and where Mountain Dew
stands in that market and how it manages to maintain its Brand equity, a situational analysis
was conducted to elaborate Mountain Dew’s own capabilities within the market, the product
positioning besides looking at the external and internal factors that effects the product’s
potential and survival in the future. Situational analysis shows that there are three major
problems of market penetration, advertising campaign and competition from “healthier non
carbonated drinks”. We a group of three Masters of Management students analyzed a
concerning issue on their advertising campaign whereby their concentration on extreme
sports campaign is overexposed since other competitors are also embarking on similar idea to
advertise their products. The challenge is to come up with a creative advertising and
promotional strategy that helps to capture new market and maintaining existing customers.

Mountain Dew Recommendation

In the United States market penetration project is easily saleable to other regions as the market now
is technology based. Mountain Dew must set up a cloud computing team and a full-fledged SMN
team to handle this project. This could also be outsourced to organizations such as Yahoo who have
the expertise to carry out the task and at the same time stand competition form Google, Facebook
and Twitter. However, this option involves high risk as consumer information (database) is handled
by 3rd party. The sooner the better in order to have “first movers” advantage Have a unique code
behind the cap of every Mountain dew bottle Customers must create an account using this unique
code. The whole process can be done by logging on to Mountain Dew’s New Social Media Website
or by downloading the app to customer’s mobile device. Mountain Dew can easily target youth in
the urban region. This campaign also serves as a loyalty programme, due to this loyalty programme
there is a very high possibility of increase in sales. Mountain Dew for the very first time will have a
majority of its customer’s database. This will be the very first time a Fast Moving Consumer Goods
(FMCG) will be able to have its end customer’s database.
This database can be used to design very specific marketing campaign and these campaigns can be
carried out easily and cost effectively as the majority of customers would be linked by the Social
Media Network.

IV. SITUATION ANALYSIS

A. Environment and Industry
Year was 1964 when Pepsico acquired Mountain Dew. Mountain Dew a bright yellow-green
drink high in caffeine and sugar, packed in green bottle hinted a powerful citrus flavour. The
dink had already made a name for itself and was quite popular among the rural market.
PepsiCo, at that point of time did not have any flavour soft drink amongst its product lie up.
Amazed by its sales in the Eastern seaboard and most rural areas, PepsiCo did not see a risk
in buying Mountain Dew.
Senior management at PepsiCo wanted to expand Mountain Dew’s market from the rural area
to the suburbs. A marketing promotion campaign in the 1970s “Hello Sunshine” sought tie
Mountain Dew’s Distinctive product characteristics to a set backcountry recreation image
was initiated by BBDO an international top ad agency. This campaign pulled in the image of
active outdoor lifestyle. This was still to rural to attract suburbs. In 1980s a new but rather
similar campaign “Country Cool” was launched to attract young urban crowd. This campaign
was later followed by an innovative “Do The Dew” Campaign in 1990s. Both these
campaigns used then popular and mainstream Music and Extreme sports as a tool to speak to
its target customers. It was in the 1990s the “alternative sports” took off and was cashed by
Mountain Dew. The combination of extreme sports and latest music genre such as Hip-hop,
Rap, and Rock and Techno music did the job for Mountain Dew.
Poter’s Five Forces Model Analysis of Mountain Dew in the CSD market.
Suppliers Bargaining power: Suppliers Bargaining Power is low the reason would be
PepsiCo is a huge umbrella organization. PepsiCo supplier’s business depends highly on
PepsiCo. Therefore, their power of bargaining is relatively less. In addition PepsiCo owns
bottle manufacturing plant in many places in the USA and outside. This makes it even
difficulty for the suppliers to bargain.
Bargaining power of Buyers: Buyers bargaining power is High but in contrast of the
carbonated soft drink (CSD) industry there is no room for the buyers to bargain. All what
Mountain Dew does is influence consumer’s decision making process and sales are made
without an issue.
Threat of Substitute products: Threat of substitute products is low. Mountain Dew itself
defines its own market but the nearest competitors of it are 7Up and Sprite. Although 7Up is
PepsiCo’s product, it is very close in taste with Mountain Dew. The current sales of
Mountain Dew are more than its nearest competitors; their existence is a threat for Mountain
Dew.
Threat of New entrants: Threat of new entrances is low for Mountain dew. Although there
are several new entries that came and went and did not last long and many did not rise up to
the level of Mountain Dew.
B. Organization and Marketing Strategy
In FMCG market PepsiCo’s mission and objective is to be the world's top and leading
consumer Product Company focused on convenient foods and beverages. We forecast to earn
and allocate financial rewards to investors to increase the value of investment to the internal
and external stakeholders. The objective of this plan is to offer initial and long lasting
consistent quality and value to the stakeholders and is longed to be achieved through sales
growth, cost control and strategic investment of resources while providing products that are
reliable, full, economically capable and environmentally sound. PepsiCo is also interested in
commitment to their investors while adhering to the highest standards of integrity and social
responsibility.
PepsiCo endorses more than two dozen of drinking brands and one of the popular products of
it is Mountain Dew. As of 2007, Mountain Dew was the 4th best-selling carbonated soft
drink in the United States, behind Coca-Cola Classic, Pepsi-Cola, and Diet Coke.

The drink was created and first marketed in Marion, VA, Knoxville and Johnson City,
Tennessee, USA through the 1940s by Tin Corp. It was used originally for lime soda for
mixing in bars. In 1960 William Jones changed the formula by adding sugar, caffeine and
orange flavor and the product being marketed by Herman & Charles Minges in 1963. Sales
picked up since and in 1964 PepsiCo acquired the Mountain Dew.

Recent Mountain Dew Marketing Plan was designed in such way for the team to meet the
objectives of:
• Retain and increase market share
• Optimize relevance of Dew’s positioning among the target

The situational analysis and market segmentation was carried out to ensure the right
Marketing Mix is designed and implemented. The SWOT analysis of the Organization and
Marketing Strategy are as follows:

Strength Weaknesses Opportunities Threat

Organization • Brand name • About 27 no. • Advertising • Emerging of
& Strategy • Financial of product spending is less strong competitors
Strength line, tend to than competitor • Rising cost
• World-wide lose focus • Expose to country
footage and on priority and economy risk
market share at worldwide level
Marketing & • Dynamic • Extreme • Penetration on • More competitors
Strategy Marketing sports current market in the niche
mix Strategy campaign is • Explore other market of energy
• Created overexposed niche market and drink
loyal • Lower other combination • Brand health
customer market share of Promotion product is getting
• Strong ad in urban area strategy more popular
agency • Perceived as
(BBDO) unhealthy drink

Whilst target market for Mountain Dew is on 18 years old epicentre and linked to
adventurous, fun and energising activities. The segmentation was decided after vigorous
exercise in market research and the marketing team mainly adopting the quantitative method
of data gathering. They mostly used the research and observation method. In example, the
data of consumption index versus spectra lifestyles is gathered in order for the team to
understand the psychographic of Mountain Dews’ consumers.

The decided target market determined the Mountain Dew marketing mix decision and
activities. Below are the market perceptions towards Mountain Dew and examples of
marketing mix implemented.
Marketing Perception /Implementation Examples
Mix
Product • A soft and energy drinks to satisfy thirst
• Unique taste with higher caffeine than other CSD and less Carbonated.
• Drinks is considered as convenience good so it is a routine buying decision to
customer
• It has a brand name linked to fun and athletic image

Price To End Customer the pricing strategies are:

• Value Based Pricing used, meaning consumer not just buying the beverage but
also the image which goes with it
• Odd pricing which price is set at one or few cents lower. i.e USD 0.99 cents or
USD 1.99.
• Seasonal Discount where discounts are given during festivals or special events
(e.g. Superbowl)
• Quantity discount where bulk purchase e.g.1.5 litres in a crate of 12 is cheaper
compared to single 1.5 litres
To Retailer
• Trade offers given in the form of price-off or free merchandise during
promotion (i.e. during Super Bowl free caps and T-shirts)
Promotion • Aggressive in advertisement campaign by rejuvenate the Mountain dew image
almost yearly. All types of mass media were used in the Dew advertisements’
plus product placement method, where the best spot or shelves being rented at
most of the popular store. They boldly took one of the advertisement popular
slot during Super Bowl broadcast as this given them the opportunities to:
 Increase the value of the brand image i.e perceived as ‘prestigious
brand’
 Sales tool to motivate retailers and distributors
 diversely coverage by Demographic (e.g. age, income, education)/
 Geographic/ Social (e.g. ethnic, social class, religion)
Sales Promotion being adopted especially the seasonal promotion (Public
Relation by using press releases was used to update the Dew’s communication
strategies. Even during the Super Bowl season, Mountain Dew received ‘free
press release’ when they were interviewed for getting the ‘popular slot’ during
the Super Bowl season.
Placement • Direct channel and intensive distribution are implemented.
& • Company uses its own fleet of vehicles & warehouses. The cost of logistic is
Packaging high but it is compensated in off season by merging of routes .In order to
avoid channel conflicts exclusivity funds are given to the customer.
• Flexible packaging is used i.e. high quality plastic bottles with few sizes to
cater for different customer’s preferences and consumption.
• Dynamic and Creative bottle/can design and logo. Over the years the company
creatively designed new logo/bottles and can design to reflect the refreshing
and target market image of the Mountain dew.

V.PROBLEMS
The idea of situational analysis is to understand and determine Mountain Dew’s own
capabilities within the market, the product positioning besides looking at the external and
internal factors that effects the product’s potential and survival in the future. Basically, by
conducting SWOT analysis, Poter’s 5 Forces model as well as other market factors, we have
identified 3 main problems faced by Mountain Dew such as:
a. Market Penetration
b. Advertising Campaign
c. Competition from “healthier non-carbonated drinks”

The statistical facts shows that USA has the highest consumption of carbonated soda drinks
(216litres) followed by Ireland (125litres) and Canada (119litres). The data proves that US is
a large market for CSD compared to other countries. (Kindly refer to attachment) Source:
http://www.nxtbook.com/nxtbooks/macfadden/bw0513/#/48 However, in terms of market penetration within
America, Mountain Dew are still at the 4 th position with a market share of 7.2% behind Coca
Cola (17.5%), Diet Coke (9,9%) and Pepsi (9.7%). Mountain Dew main market as per study
conducted by AC Nielsen proved that in terms of demography, majority of their consumers
are down scale rural besides rural town and farm communities. This simply means that they
are losing out market share to their main competitor Coca Cola and particularly among the
upscale suburbs and down scale urban communities. Probably they have to rethink about their
promotional and advertising campaign to capture the other market segments as well as
maintaining their loyal existing customers.

On the advertising campaign, the target market for Mountain Dew is on 18 years old and
above who are linked to adventurous, fun and energising activities. However, their
concentration on extreme sports campaign is overexposed since they have been relying on the
same concept of adventurous, active, youthful and cool for long and other competitors like
7up, Sprite and Surge are also embarking on similar idea in communicating the
psychographic imagery of adventurous, active, youthful and free spirited.
 Mountain Dew needs to establish extraordinary creativity to explore other options beyond
alternative sports to express exhilarating intensity and enhance consumer’s perception about
their products. Examples of soft drinks associated with extreme sports image are like Formula
X, Monster, Emv, Vault and Surge. Surge is highly associated with extreme sports just like
Mountain Dew. It is a citrus based drink with high caffeine ingredients that was produced by
Coke in 1996 as soda and energy drink for US market. It was also known as “Mountain Dew
killer” to compete with Mountain Dew.

In terms of competition from non-carbonated soft drinks, sales in US decline in 2012 since
more health conscious customers are searching for alternatives particularly mineral water,
fruit juice, and energy drink which they perceive as healthy. In response to this issue,
PepsiCo introduce “Mountain Dew Diet” which uses a blend of sweetness to deliver half of
the calories of a standard Mountain Dew. PepsiCo also turning into bottle tea called “Tazo”, a
joint venture with Starbucks Corporation to explore and expand sales of their new products in
a bigger scale worldwide.

Even Coke has announced a slim down version of Sprite and Fanta. Besides that Coca Cola is
highlighting its new product, known as “Fuze”, the juice tea brand that it acquired in year
2007 with an estimated price of USD250 million. Another competitor Dr. Pepper has gone
down further with 10 calories version using a blend of artificial sweeteners and high fructose
corn syrup in many of its carbonated drinks. Mountain Dew needs to be innovative in ways of
getting calories out of beverage and still providing the taste consumers couldn’t find in
today’s diet drink.

VI. STRATEGIC ALTERNATIVES

A.Market Penetration

From the report earlier, the market penetration for Mountain Dew from its sales in North
America and urban area in USA are very low.

As a result, the company will develop the best marketing mix possible which includes the
product, promotion, pricing and distribution in order to retain and increase the market share
of Mountain Dew which has been mentioned in market perceptions towards Mountain Dew
and examples of marketing mix implemented in the page 3-4

Initiatives to be executed by Mountain Dew:

a) Special offers , free merchandise and coupons to retailers and distributors;

b) Promote a new use of the product and enhance its Price war with competitors
c) Public Relations and Brand Image

We believe that the above strategies would attract the new market share particularly in North
America and in the urban area within USA. We trust that the new target market is ready to
take new excitement. The attitude of the youth who always want to try new drinks is
sufficient to prove that they will purchase and become loyal and lead to a new parameter in
the market share.
B.Advertizing Campaign
For many years, the advertisement by Pepsi and Mountain Dew are targeting the young
people between 20-30 years old and the drink is associated with extreme sports and music.
They partnered with influential celebrities as this personality or Idol has the influential to the
youth culture.

In Sport, sponsorship of individual athletes who participate in professional action sports has
been a part of the Mountain Dew brand since the late 1990s, with present sponsorship
including Eli Reed (skateboarder), Paul Rodriguez (skateboarder), and Danny Davis
(snowboarder)

We recommend Mountain Dew to sponsor live music rock festivals as Music is truly a global
industry. The Nielsen Company & Billboard’s 2012 Industry Report shows overall music
sales increased 3.1% over 2011. Digital sales caused this increase, with a Digital Album sales
growth of 14.1% and Digital Track sales growth of 5.1%,. Despite the decrease, physical
albums were still the dominant album format. Vinyl Record sales increased by 17.7%. Total
revenue by year 2012 was USD 16.5 Billion.

Pop and Rock stars influence younger generations, there are live music concerts held all over
the year. These live music concerts which feature influential music industry personalities are
great source of enjoyment and excitement all around the globe. Brantley Gilbert is among the
popular lead singer of the music industry will be selected as an ambassador or Icon for the
drink.

Social Media.

We recommend the brand to establish itself on social media platform through channeling its
promotion concert fairs. The existing advertising on The ‘Dew or Die’ campaign which was
Under the cap games received a great response from consumers. This idea can be
implemented and under the cap games would let its player win free concert tickets.

Some other platform features to include are as follows:

a) The advertising will fully responsive build for all site works on all devices including
Android and Apple.
b) A stand-alone Facebook application;

C.Corporate Social Responsibility

Mountain Dew should take the advantage the Corporate Social Responsibility in Advertising
Campaign like for example providing innovative ways to minimize the impact on the
environment by conserving energy and water and reducing packaging volume and Go green
Campaign.
A potential benefit of CSR is that it could improve the company’s reputation and branding
and this in turn will improves the prospects of the company to be more effective in the way
that it manages communications and marketing in efforts to attract new customers and
increase market share.

Brand Image

The customer perception towards Mountain Dew as unhealthy drink is something that will
dilute the Mountain Dew market share in the future. The company brand image need to
rebrand in order to compete with other non carbonated soft drinks such as juice drink and
energy drink.

We would suggest the company to release new drink which is good for health with a
combination of fruit juice and dates as an energy drink.

STRATEGIC ALTERNATIVES AND IMPLEMENTATION

A.) Statement of Selected Strategy
Mountain Dew is the fourth largest carbonated soft drink in the market, whilst target market
for Mountain Dew is on the young people between 18-30 years old epicenter. We recommend
that Advertizing Campaign Strategies are the best strategic alternatives for solving
problems and achieve Mountain Dew’s targets. Strategies focuses on:
I. Popular two sport games in U.S recently which are basketball and tennis and
less focus on advertising campaign related to extreme sports.
II. The best three music genre: rap, rock, pop and Techno Music
III. Corporate Social Responsibility

B.) Justification for selection of strategy:

1-According to the IEG sponsorship Report, 14.9$ was projected to be spent on sponsorships
in North America during 2007 with 66% of this going to sports. Basketball is a very popular
sport played all around the world, though it is more popular in certain countries particularly
the US where it was invented. Meanwhile, the NBA cites research from Experian Simmons,
which finds basketball to be the most played sport among a set of U.S. teenagers.
Based on basketball sport strategic, Mountain Dew will be part of a personally relevant
moment in consumer’s lives can broaden and deepen a Mountain Dew’s relationship with
target market.

2- Music has always been in mainstream all over the world. Nowadays, three musical trends
dominated the airwaves. In recent years, controversy surrounding rap music has been in the
forefront of the American media. The rap remained very popular among male teens,
especially in urban area.
Popular or pop music is largely vocal and appeals to a large, mainly young audience. Pop
music scene also exploded at roughly the same time and was hugely popular on college
campuses. A revolution of Electronic Music, this music genre is techno music and including
the elements of American jazz, Chicago house and funk initially. Techno music began
making significant inroads into American youth culture.

3- Corporate Social Responsibility: Over the past few years, businesses and academic
researchers alike have displayed increased levels of enthusiasm for corporate social
responsibility (CSR). In particular, recent research suggests that CSR may be an excellent
instrument to enhance the legitimacy of the firm among its stakeholders. Corporate Social
Responsibility (CSR) aims to better integrate social and environmental concerns into business
routines on a voluntary basis.
C.) Description of Implementation of Strategy:
Sport:
The basketball drew the biggest audience of the year and the advertisings received an
amazing amount of attention. Successful sponsorships require choosing the appropriate
events. Nowadays, the sport events meet the marketing objectives and communication
strategy defined for the brand. The sport events have sufficient awareness, possess the desired
image and be capable of creating the desired effects. We are suggesting that Mountain Dew
should sponsor the important and biggest sport events based on basketball and tennis:
-The NBA All-Star Game is an exhibition game hosted annually by the National Basketball
Association (NBA), matching the league's star players from the Eastern Conference against
their counterparts from the Western Conference.
-Using the name of Mountain Dew to sponsor the arena, stadium and other venues that hold
the sport events like Emirates stadium, red bull arena and so on.
Music:
This strategy aims to attract the audience of the three major music in universe to achieve
competitive advantage.

Media endorsement
The genre
of music

Rap and hip -Sponsor the rap programs in Sponsor the best rappers in the world
hop (gangster TV like Yo! MTV Raps, like Eminem, Dr.Dre ,Lil wayne and
life) JUMPOFF.TV … etc so on.
-Sponsor the celebrations.

POP music -Sponsor the pop programs Sponsor the famous singers of pop
 media such as MTV pop, Pop such as Lady gag, Britney Spears,
TV Justin Bieber ... etc.
- Sponsor the celebrations.

Techno music Sponsor the biggest concert Sponsor the best DJs in the universe
like tomorrow land music such as Tiesto, Armin van Buuren,
festival. David Guetta and so on.

CSR:

The attempting of Mountain Dew to contribute the Corporate Social Responsibility and
spread awareness on Social Responsibility. Mountain Dew views its goal of decreasing its
environmental impact not only as socially responsible, but also in the best interest of its
stakeholders. For Mountain Dew, a large part of its sustainability efforts involves reducing
the negative effects resulting from the production and consumption of its products. This
includes “going green” (for example, through water conservation and the reduction of waste
products) and reducing its carbon footprint. It should reduce its impact on the environment
through various water, energy, and packaging initiatives. Because Mountain Dew develops
products using water, and actually sells bottled water, it should actively implementing
programs to reduce waste and conserve resources. This involves water recycling and
treatment efforts, where recycled water is treated thoroughly and reused within its products.
Mountain Dew should reduce the amount of plastic used in its beverage containers, which has
significantly decreased the amount of waste sent to landfills. Finally, Mountain Dew should
actively creating partnerships with community organizations geared toward increasing
recycling efforts. Another aspect of Mountain Dew commitment to social responsibility
should reflected in its support of and commitment to its employees. It is PepsiCo’s goal to
encourage a diverse corporate culture along with employee engagement in the workplace and
community.