Chloe Jane B.

Macabalos
CA 201
Operations Management
Activity 1

Prepare a product life cycle of a particular commercial product in the market. Explain each stages of its
product cycle. What are the reasons of its growth, maturity and decline?

PRODUCT LIFE CYCLE OF PEPSI

MARKET INTRODUCTION

Introduction initial sales are made to innovators, consumers who enjoy trying new products, but these are
insufficient to recuperate development costs.

In the 1890s, pharmacist Caleb Bdraham created 'Brads Drink,' a mixture supposed to help digestion. Brad
renames the drink 'Pepsi-Cola' and obtains the trademark 'Pep Cola' for $100 after receiving a lot of
interest from customers at his drugstore. In 1902 Brad began selling Pepsi-Cola and achieved sales of
7,968 gallons of syrup in the first year.

Brad aimed to increase initial product awareness and trial, and he well exceeded his goals. Only a basic
product was introduced: Pepsi-Cola was sold without bottles. Instead, the product was sold at soda
fountains at Brad's pharmacies. Initially, extremely controlled distribution is recommended, as seen by
Pepsi-introduced Colas in Brad's pharmacies. To promote awareness, race-car driver Barney Oldfield
utilized a celebrity endorsement. Initially, a simple cost-plus pricing approach was used. Pepsi-Cola most
likely began with a skimming strategy to quickly recover start-up costs. Furthermore, when it was
originally released, Pepsi-Cola was not advertised. Promotions, on the other hand, should make an effort
to attract people to sample the product at this level.

GROWTH

Growth sales being to increase rapidly as the product gains popularity among the early majority. It is at
this stage that profits are first generated.

In the 1930s-1970s, following bankruptcy and subsequent acquisition by Loft Inc., Pepsi sales of Cola's
skyrocketed during the Great Depression. Consumers were drawn in by the competing positioning's value-
for-money: 5 cents bought 12 ounces of Pepsi-Cola but only 6 ounces of Coca-Cola.

Gaining market share is crucial during expansion. As a result, Pepsi-Cola was actively advertised against
Coca-Cola to persuade people to switch. As the market gets more competitive, it is critical to continually
enhance or improve the product. And as a result, Pepsi-Cola began to be sold in bottles rather than merely
at soda fountains. The low-cost penetration strategy was one of the key reasons the brand grew so fast
during that period to support the objective of achieving market domination. A large distribution network
is essential to permit quick sales development; hence, exclusivity to pharmacies vanished, and the product
became a popular consumer item.
It is crucial to achieving the early majority stage, which involves the development of advertising that can
reach a high number of people rapidly. Because of the low cost of radio, they picked it as their medium,
and the name was changed to just 'Pepsi' at the time to further distinguish the brand from Coca-Cola.
Finally, in 1975, the Pepsi Challenge marketing campaign was so effective that it nearly destroyed the
Coca-Cola brand. Because the drink was so popular, there was no need for a sales effort because the
pricing was already highly competitive and the company was struggling to keep up with demand.

MATURITY

Maturity is the longest stage and accounts for the vast majority of a product's sales and earnings.
Extension techniques are frequently used to pro-long the mature period in order to milk the product for
as much profit as feasible.

Since the 1980s, Pepsi has been at the maturity stage of the product life cycle, assisting the parent
business in earning about $20 billion in yearly sales. Products are most profitable at this time, which is
why PepsiCo is likely to view Pepsi as a cash cow and strive to maximize profits from the brand.

Because the product is already well-established, full ranges can be launched as extension plans to extend
the product's most profitable stage of life. PepsiCo and Coca-Cola do not want to engage in price wars,
which are a major risk at this level of competition. As a result, the pricing rarely deviates from the market
average. The product currently has global distribution to target new markets.

During maturity, the primary goal of Pepsi's advertising is to differentiate the brand. These have been
accomplished by the use of celebrity sponsorships such as Beyonce and Michael Jackson, with Beyonce
positioning the beverage as a younger and edgier alternative to Coca-Cola Sales. Pepsi regularly provides
both value-increasing and value-adding offerings to stay consistent with the brand's value-for-money
proposition.

DECLINE

Decline Eventually, all items stop selling. Sales begin to drop as planned until the product is no longer
profitable. Marketers should modify their marketing strategy to external market developments at each
level.

Notwithstanding rising consumer interest in healthy living, Pepsi sales show no indications of diminishing
shortly. Regardless, it is advised that PepsiCo have the following methods ready to apply if the product
begins to degrade or decline.

At this level, cost reduction is critical to ensuring that the brand remains profitable while producing fewer
sales. To harness economies of scale and decrease expenses, the range should be simplified and limited
to simply Pepsi. The price might be cut even further to improve sales among budget-sensitive consumers
and to serve as an excellent advertising signal for this low-effort product. The product is currently being
distributed selectively to concentrate efforts on the few surviving stores that make money for Pepsi. It is
suggested that PepsiCo go so far as to eliminate all advertising and sales promotion to further minimize
overheads.
Activity 2

Brainstorm or think of a new product that you want to introduce or sell in the market. Explain why this
product is essential and highly marketable to the public. Be creative and innovative as much as possible.

‘’WDUPB (We Don't Use Plastics But) leaf wrap."

NASA climate scientists are trending all over the world for increasing awareness about allowing the earth
to breathe, saving the environment, and making a difference because they are deeply concerned about
safeguarding the planet. As one of them, I want to utilize my voice to raise awareness about this crucial
issue through this product. There is no such thing as planet B; Earth is our only home.

This new product has high marketability, and I am convinced that it will help with the implementation of
improvements. My product is an alternative to utilizing plastic bags, plastic covers, foil-sealed bags, and
other similar items. This product may be used in the packing and ordering of apparel by internet vendors,
for instance.

We may help the environment by using the leaf as a wrapping material, bag, or packaging. It is
environmentally friendly and has been shown to contribute to keeping our environment clean and
healthy. It is also easy to recycle, and it may be used for fertilizer or composting, which suppresses weeds
and fertilizes the soil as it decomposes.