PRINCIPLES OF MARKETING

PROJECT REPORT ON

NEW

PRODUCT DEVELOPMENT

BY

JHARNA SUBHASH (52786)

SHAHID SIRAJ (54924)

SIR HAFEEZ-UR-REHMAN

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HISTORY

PepsiCo, Inc. is one of the world's largest food and beverage companies. The company's

principal businesses include:

Frito-Lay snacks

Pepsi-Cola beverages

Gatorade sports drinks

Tropicana juices

Quaker Foods

PepsiCo, Inc. was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay.

Tropicana was acquired in 1998. In 2001, PepsiCo merged with the Quaker Oats

Company, creating the world’s fifth-largest food and beverage company, with 15 brands

– each generating more than $1 billion in annual retail sales. PepsiCo’s success is the

result of superior products, high standards of performance, distinctive competitive

strategies and the high level of integrity of our people.

PepsiCo brands are available in nearly 200 countries and territories and generate sales at

the retail level of about $85 billion.

Many of PepsiCo's brand names are more than 100-years-old, but the corporation is

relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and

Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats

Company, including Gatorade, in 2001.

PepsiCo offers product choices to meet a broad variety of needs and preference -- from

fun-for-you items to product choices that contribute to healthier lifestyles.

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INTRODUCTION

At PepsiCo, we believe that as a corporate citizen, we have a responsibility to contribute

to the quality of life in our communities. This philosophy is expressed in our

sustainability vision which states: “PepsiCo’s responsibility is to continually improve all

aspects of the world in which we operate – environment, social, economic -- creating a

better tomorrow than today.”

At Pepsi-Cola Company, consumer satisfaction is of the utmost importance. In response

to consumer interest, this page is designed to provide ingredient information frequently

requested by our consumers. We are initially providing information on caffeine as set

forth below and we expect to add information in the future about other product

ingredients such as sweeteners and colors.

PepsiCo is a world leader in convenient foods and beverages, with 2005 revenues of

more than $32 billion and more than 157,000 employees.

PEPSI DELIVERS:

Consumer preferred brands

Equipment that delivers top quality Pepsi-Cola beverages

Marketing that keeps Beverages sales growing

Service never down

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VISION & MISSION

Mission

“To be the world's premier consumer products company focused on convenient foods

and beverages. We seek to produce healthy financial rewards to investors as we provide

opportunities for growth and enrichment to our employees, our business partners and the

communities in which we operate. And in everything we do, we strive for honesty,

fairness and integrity.”

Vision

Our vision is put into action through programs and a focus on environmental stewardship,

activities to benefit society, and a commitment to build shareholder value by making

PepsiCo a truly sustainable company.

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PEPSI COLA BRANDS

AQUAFINA- PRODUCT INFORMATION

Enjoy the crisp, refreshing taste of Aquafina – 100% pure, non-carbonated, purified

drinking water. The consistent purity and great taste of Aquafina are guaranteed by

means of a state-of-the-art purification process that includes reverse osmosis and carbon

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filtration. Since its debut in 1995, Aquafina has won over consumers with its great taste

and purity. Aquafina is currently America's #1 selling bottled water brand in measured

retail channels.

It’s true. Water is good for you. The more you drink, the better you feel and since our

state-of-the-art HYDRO 7TM purification system removes substances most other bottled

waters leave in, you get pure water and perfect test every time.

INDIVIDUAL SIZES:

500- ml bottle

1.5- liter bottle

HOW PURIFY?

To bring you water as pure as Aquafina, they create the state of the art Hydro-7 TM

purification system. See 7 step of Aquafina to pure water and perfect taste.

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1. Perfiltration

With this first filter, that says Goodbye to tiny-sized particles in water.

2. Polishing Filter

Any smaller particle that gets through, this first round of polishing filter will catch them.

3. High-intensity Light

At this stage, a burst of high-intensity light imparts energy to the water stream to protect against naturally occurring organic substances in the water.

4. Reverse Osmosis (R.O.)

Reverse Osmosis uses pressure and a hyperfilter to remove over 98% of

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the Total Dissolved Solids (TDS) from our water.

5. Charcoal Filtration

Time to isolate those trace elements that can affect the taste of water by using a charcoal filter.

6. Polishing Filter

Here’s where every H & O gets a nice polish. Not with a soft cloth. But with a polishing filter that’s designed to make your water crystal clear.

7. Ozonation

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Company’s final seals in the purity. By passing purified oxygen molecules are brought together as assurance that unwanted particles are kept away. After they’ve done their job, they revert back to double oxygen molecules ensuring you enjoy pure water and perfect taste with every bottle of Aquafina.

Pure Satisfaction

That’s what you get when the only thing you taste in your water is water. Pure water, Perfect taste, Aquafina.

WATER FACTS

What is Aquafina?

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Aquafina purifies its water with the HydRO-7TM purification system.

The HydRO-7TM purification system delivers water with an average TDS of 4

ppm, which is 2.5 times lower than the FDA standard of 10 ppm.

Aquafina delivers pure water with perfect taste every time.

Who’s hydrated? Cities most aware of the health benefits of water consumption are Karachi,

Lahore, Islamabad, Rawalpindi, Faisalabad, Multan, Hyderabad, & Sukker

Research shows that residents of Karachi drink the most water during the course

of an average day.

Resident of rural areas consumes least amount of water.

What’s bottled water?

Bottled water is regulated under standards set by both the Environmental

protection agency and food & drug administration.

The food & drug administration total dissolved solids TDS as a measure for

purity.

TDS is sum of all dissolved solids in water measured in parts per million (ppm)

All bottled water contains TDS.

Spring water is delivered from an underground formation from which water flows

to the earth’s surface and is treated to remove bacteria and other organic material.

FDA regulations mandate a maximum TDS of 500 ppm for spring water.

Purified water is sourced from EPA regulated water systems that already provide

safe drinking water. FDA regulations mandate a maximum TDS of 10 ppm for

purified water.

HEALTHY HABITS

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Keeps the water flowing year round, even during cold monthsWhen it’s cold outside, your body needs extra energy to maintain the right temperature. Drinking water can do that and help keep you warm.

Make sure your children drink enough waterChildren drink water to balance their intake of other beverages- especially during activities.

Drink plenty of water throughout the dayMake it easy. Carry a bottle of water when you commute to work or run errands.

Don’t substitute caffeinated or alcoholic beverages for waterHave a glass of water with each caffeinated or alcoholic beverage.

Develop good water drinking habits nowYour “thirst signal” decline with age, so it’s important to develop the habit of drinking plenty of water even if you’re not thirsty.

Don’t wait until you are thirsty to drink waterBy the time you feel thirsty, you’ve probably already lost two or more cups of your total body water.

Start and end your day with waterYour body losses water when you sleep, so drink a glass of water before going to bed and again when you wake up

THE IMPORTANCE OF WATER

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Although a person can live without food for several days, a person can live

without water for just a few days.

At normal activity levels, you lose 2-3 cups of water a day in perspiration. But

during an hour of vigorous exercise, you sweat out approximately a quart of

water.

Water plays a vital role in regulating your body temperature at a perfect 98.6

degrees, delivering nutrients and oxygen to cells, removing waste, cushioning

joints and protecting organs and tissues.

Up to 60% of your body is water. Your brain is 75% water, blood is 82% and

lungs are nearly 90% water.

Water ranks first as the single most abundant substance in the human body.

Next to oxygen, water is your body’s most important nutrient.

KEY ACTIVITIES INVOLVED IN NEW PRODUCT DEVELOPMENT

PROCESS AT PEPSI COMPANY

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a) Idea

b) Initial screening

c) Preliminary Investigation

d) Pre development business and financial analysis

e) Product development

f) In house product tests

g) Customer product tests

h) Trail production

i) Precommercialization business analysis

j) Product start-up

k) Market launch

NEW PRODUCT DEVELOPMENT PROCESS AT PEPSI COMPANY

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This process starts with the ideation for the new product or innovation in the existing line

of products. Mostly the source of the idea comes through the ongoing marketing planning

and as well as from the ongoing corporate planning. Afterwards the idea passes through

the first gate that is called the initial screen. At this point the idea is matched with the

policies of the company that whether it is strategically fit with the company’s policies and

approach or not.

1. INITIAL SCREENING

This is the first step after the ideation. The initial screening is a basic rough picture which

is much needed before the launch of any type of new product. Every company indulges

this step as a prior to all steps. PepsiCo does the same thing at the launch of their new

deals. The Aquafina water product was already researched as well as launched in North

America. In Pakistan they just imitated the previously launched product; in this they

captured new market; initial screening was the first step toward launching Aquafina in

Pakistan; the below figure shows the first gate of whole process is initial screening.

Initial Screen

Ideation Preliminary Investigation

2. PRELIMINARY INVESTIGATION:

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Idea Stage 1Gate

1

This is the first stage of the whole process, this stage thus provide the preliminary market

assessment as well as technical information- at low cost & in as short time- to enable a

cursory and first pass financial analysis as input to gate 2. because of a limited efforts

and depending on the size of the project, very often stage one can be handled by a team

of just several people perhaps from marketing and from technical group. The below

described preliminary market and technical assessment in Pepsi company.

a) PRELIMINARY MARKET ASSESMENT

A preliminary market assessment is one facet of stage 1 and involves a variety of

relatively inexpensive activities; In this stage Pepsi worked for identified market size,

market potential, and the scope of the water project in the Pakistani market, as they

researched that most of the disease start from the water that people drink that is not

favorable for their life; and selected major cities of the Pakistan. The preliminary market

assessment has been done by the Pepsi mostly in other countries.

This assessment is usually the in-house assessment where we convey message to the

headquarter at North America that there is a demand of drinking water, this assessment is

done by our local managers, we observe that this particular drinking water should be

launched for this particular group, because people need it. There is so many local

companies serving major portion of the Pakistani markets, only nestle company was

providing the better purified water, that’s productivity was not able to meet the demand

for their product. So on that basis market demand for water was high and supply was low,

customers ask for nestles but not available in market they use low quality product. So, we

organize analysis which are rough and that tells us that should we launch this new

product or not.

b) PRELIMINARY TECHNICAL ASSESMENT

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It involves a quick & preliminary in-house appraisal of proposed product. In this stage

every company like Pepsi think about technical assessment, what technology will be used

to produce the product to satisfy customers need. In this process they gather information

related water purification system and they reached at the decision, Aquafina purifies its

water with the HydRO-7TM purification system. This system provides the customer with

quality drinking water as much as nestle provide to their customers.

After this the concepts and things that are developed in the first stage are passed thought

the second gate that is second screen in which the thorough screening is done, e.g. the

technology is to be considered that whether the technology is present in the company or

not for the new product. Do the developed concepts strategically fit with the

organizations production process or not? Is there any need of this new idea in the market

or not? The perceptual mapping is done by the marketing research department.

Second Screen

Preliminary Investigation Detailed Investigation

2. DETAILED MARKET STUDY

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Stage 1Stage 2Gat

e 2

After this gate the second stage of the product process starts that is detailed investigation.

As shown from the name detailed investigation in this stages the commercial viability of

the new product. The financials of the new product are made on the basis of past

experiences and the future estimates. The project evaluation is being done here.

Market study fir this new launch has been done but it is not that detailed as it should be

and as we do in other but few countries, in other countries like North America, China,

Japan etc. Detailed market study was conducted at Pakistan before the launch of

Aquafina. At that time it was analyzed that Aquafina would get a success in all market of

Pakistan, the Pakistani market is well judged by the Pepsi Company and here basically

people want to change themselves very soon because Pepsi is well known brand

worldwide, Aquafina bottled water ads written that it’s product of Pepsi Company so it

make good impression for consumers.

3. PRE-DEVELOPMENT BUSINESS & FINANCIAL ANALYSIS

There is not much pre-development business practices which they do because they

acquire simple strategy that how much we have to produce, in how much time, are almost

similar to over all their product, process of production is much similar to their other

beverages products so they didn’t faced any problems regarding machinery. Financial

work is completed and there was little risk involved in launching water product

(Aquafina). We have done several analyses at pre-development stage which we cannot

disclose to all.

Decision on Business Case

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Detailed Investigation Development

(Build Business case)

In the third stage gate of the process for proceed further. After that the new product

concept is entered in the phase of development, the third phase of product development

process at Pepsi Company.

4. PRODUCT DEVELOPMENT

In the third stage, the development for the new product is done, the product specifications

are made and technicalities are being set for the production. The chief engineer heads the

new product team and played the following role:

Coordinating broadly, not just in engineering but also production and sales

Coordinating the entire project from concept to market

Specification, cost target, layout and major component choices, making sure that

each bottle contained similar minerals as written on the bottle.

Communicating directly and frequently with designers, top management and

engineers.

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Stage 2 Stage 3Gate 3

Post Development Preview

Development Testing & Validating

Aquafina has been made for the internal trials and test by the company has been done.

This all done in the testing and validation process, the fourth stage, which also includes

the customer tests. The company has got the database of their customers so they test their

products by trial test in-house and with customers.

5. IN-HOUSE PRODUCT TEST

The Pepsi Company follows high TQM standard as it is certified with the ISO standards,

they maintain their quality they have quality control department, Quality assurance

department, having several laboratories for quality check. Aquafina product has it’s

separate all of the above written departments, Aquafina water bottle is certified with ISO

9001 standards. So in this they control their product quality performance every time.

Quality assurance department guarantied that every drop has same test, and quality.

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Stage 3 Stage 4Gat

e 4

6. CUSTOMER PRODUCT TEST

The fourth stage, which also includes the customer tests. The company has got the

database of their customers so they test their products by trial test in-house and with

customers. This was not held at Pakistani market, we as member was the company’s

customers testing our product. This type of test held in North America, and Japan. Our

customers are fully aware of our taste; we know what they expect from us and what the

needs of our customers & we are actually providing to them.

7. TRAIL PRODUCTION

The trial production is also done in this development process, because the main focus of

the company at the end of the process is based on three things that are as follows:

a) Customer satisfaction

b) Time to market

c) Cost

In the trial production the production time is being improved. Because the time to reach

the market is important for the company. At last the project is again analyzed after the

changes implemented in the development and validation & testing stages.

8. PRECOMMERCIALIZATION BUSINESS ANALYSIS

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As far as the commercialization is concerned, all the decisions are made that how it will

work and how we’ll be operating a certain thing. Business analysis are almost done and

financial analysis are also at the last stage and about to complete, as every business took

some time to finalize its decisions.

Precommercialization Business Analysis

Testing & Validating Full Production & Market Launch

In 5 stages the proper and full production process starts and the new products are ready to

enter in the market

9. PRODUCTION START-UP

Aquafina water bottles have fully started into production, have good capacity to satisfy

customers demand, still supply meets the market requirement, as soon as we capture

major market share we will enhance our plant.

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Stage 4 Stage 5Gate 5

10. MARKET LAUNCH

For the launch the target market demographic has been studied and through various

channels the new product is launched. Now Aquafina have covered majors cities of

Pakistan, as in Karachi Aquafina is available in major stores, such as Aga’s, motas,

cannes mart, and sani’s supper store; we also other small stores, as well as institutes,

restaurants, hotels, etc. The main marketing task for this product is to make availability

for customer.

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SWOT ANALYSIS

Strength:

Brands image

Financially sound

Distribution channel/coverage

Technology advancement

Quality

Price competitive

Personnel aspect

Market expertise

International component

High promotional activities

Weakness:

New to the company

Low market share

Opportunities:

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Capture the market

New areas

Market potential

Brand awareness

Increase in investment

Threats:

Higher availability of competitors

Direct competitors are about to enter in Pakistani market.

Technological environment

New in market

4 P’s OF AQUAFINA

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PRODUCT

In many countries, Aquafina is preferred by the consumer who likes

quality goods.

Research shows that residents of Karachi, Islamabad, Rawalpindi,

Lahore, Hyderabad, drinks the most water during the course of an

average day.

Aquafina is certified with ISO 9001 standards.

Aquafina come with the new opportunity for the company to come

into market.

Aquafina serves consumer worldwide.

PRICE

As in Pakistan price allocated for the bottled product is very competitive

as nestle bottle water 500 ml Rs: 15 as Aquafina 500ml price Rs: 10 only,

for 1.5 liters nestle priced Rs: 25, Aquafina 1.5 liters bottle Rs:20 only.

But in the international market may be higher then the Pakistani market.

PLACE

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As Pepsi is a multinational company, Aquafina is one of the good selling brand, has a

proper coverage internationally and as well as domestically.

Domestically Aquafina has covered the following cities:

Karachi

Islamabad

Lahore

Rawalpindi

Murree

Gujranwalla

Faisalabad

Multan

Hyderabad

Sukker

Quetta

Pishawar

Aquafina has captured international market as well the following countries where you

will find Aquafina:

Australia

Brazil

Canada

China

Finland

France

Japan

Malaysia

Pakistan

Singapore

USA

PROMOTION

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In Pakistan Aquafina is advertised only thought the printed media, it

includes, signboards, newspapers ads, magazine ads, and so on. As the

printed media is the easy and less costly step toward publicity of the

product. So Aquafina is new in the market does not want to spent more on

the TV ads, as internationally they have ads on internationally TV

Channels. The standard of advertising they are maintaining through out

the world.

SUSTAINABLE ADVANTAGE

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Three major sustainable advantages give PepsiCo a competitive edge as we operate in the global marketplace:

1.Big, muscular brands;

2.Proven ability to innovate and create differentiated products; and

3.Powerful go-to-market systems.

Making it all work are our extraordinarily talented and dedicated people.

When we take these competitive advantages and invest in them with dollars generated

from top-line growth and cost-saving initiatives, we sustain a value cycle for our

shareholders.

In essence, investing in innovation fuels the building of our brands.

This in turn drives top-line growth.

Dollars from that top-line growth are strategically reinvested back into new products and other innovation, along with cost-savings projects.

Thus, the cycle continues.

CONCLUSION

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In this 3 month research study I conclude the following things.

In Pakistan Pepsi Company launched water product, as water product was already

available in the market, the company saw in bottle water opportunity to come into the

market by serving people with better quality at low cost. It’s totally new to the company

but it’s already in the market.

Aquafina bottled water serves domestically as well as internationally, domestically they

serve major cities of Pakistan, Includes Karachi, Islamabad, Lahore, Rawalpindi,

Hyderabad, Multan, Faisalabad and some other major cities.

Aquafina have similar process steps that have written in the new product development

book, I have already discussed those steps in this report.

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RECOMMENDATIONS

Company should introduce their product into the other cities of Pakistan as

like as Pepsi Brand.

Company should maintain the quality of the bottle water

Government should reduce taxes on the manufacturing companies.

Company should be registered

They should introduce large bottle for family packs, such as 19 liter bottles,

12 liter bottles.

Maintain low cost as they are currently serving the markets of Pakistan.

Company should have recycled program

BIBLIOGRAPHY

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Internet:

www.pepsi.com

www.pepsiworld.com

www.pepsico.com

www.aquafina.com

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