Consumer Behavior Team Assignment: Consumer Report

1. Introduction For many years now, the cola soft drink market is led by the Coca−Cola Company and PepsiCo Inc. Besides the cola market, they have expanded their businesses to the other soft drink markets as well and achieved oligopoly positions with tremendous market shares in all of these markets. Different other brands and new companies have tried to successfully enter the cola market and other soft drink markets (f.e. Freeway Cola and Cherry Coke), but none of them was able to achieve a good market share and survive in this oligopolistic environment. Our company, Fei Fei Company, therefore sees a big challenge in trying to enter the cola market successfully. That is why we have chosen cola as our product category. This report will discuss the introduction of our new product, Fei Fei Cola, in the European and Asian markets. It is a new kind of cola with the addition of oriental flavors, which will give a kind of eastern touch to our cola. We think that consumers feel a need for innovation in the cola market, which we want to satisfy with our new cola. Through the use of different consumer behavior concepts, we will try to explain why we think our product will or can be a success. First, we will discuss the consumers' needs and motivations with regard to cola soft drinks. We will identify why people buy cola and for what reasons. After that, we will discuss the two main competitors in our market, so the Coca−Cola Company and PepsiCo Inc., and their marketing strategies to reach customers. Based on the needs and motivations identified before, we will critically look at why our main competitors and their marketing strategies are so successful and what can be improved or changed. Based on these outcomes, we are able to explain why we think our product can be successful in the cola soft drink market and we will discuss our marketing strategy for introducing our new product.

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The purpose of our report is to show why our product can be successful, based on the principles of consumer behavior. This does not automatically mean that our product will be successful, but it indicates the possibility for successfully entering the cola market. 2. Cola and consumers' needs and motivations Cola is a soft drink product which can be seen as a product to reduce the need of thirst. However, thirst could also be reduced by drinking water or another soft drink, so the consumption of cola to satisfy the need thirst is better described as a want. The choice of drinking cola when one is thirsty depends on a consumer's cultural environment, his learning experiences and his history. For example, in western countries it is quite normal to drink cola when you are thirsty, while in developing countries people will satisfy this need with water. Based on what is learned and what the cultural conditions are, people will or will not drink cola. Therefore cola is a want instead of a need. People do not need cola, they want it. Cola satisfies in the first place a utilitarian need, namely it takes away the thirst of a consumer. But cola can also be seen as to satisfy a hedonic need. Consumers who drink cola can experience a refreshing moment, which is more an emotional response. This satisfaction of a hedonic need can particular be seen in the commercials of cola producers, who often show the consumption of cola as a refreshing and fun experience. So consumers' motivation to buy cola depends on how strong they feel about satisfying the needs and wants described before. This will depend largely on their culture and how they are raised. Also, the consumption of cola can cause an approach−avoidance conflict. Although it takes away your thirst and can give you a refreshing moment, it also contains a lot of sugar which is not good for your health. Therefore people can be less motivated to buy cola. Because cola satisfies in the first place an utilitarian need, we think consumers are not very involved when they buy cola. Especially in western countries, where cola is more of a everyday product, people purchase cola soft drinks based on inertia, or in other words habit. Usually, consumers will not take into account the different cola brands, but just purchase the brand they always take if it satisfies their needs, or in this case wants. Research has even proven that when consumers do not see the brand they are drinking, they do not taste any difference. It seems that the choice of cola brand depends on how the different cola producers position their product in a consumer's mind. As cola has become an everyday product in which consumers are not very involved, we believe that their values will not have a big influence on the choice of brand. Especially because the cola market is led by two competitors who stress the same kind of western values, consumers will at this moment not place much attention on their values when buying cola. 3. Inventory of consumers reactions The two main competitors for our introduction of Fei Fei Cola in the cola market are Coca−Cola Company and PepsiCo Inc. Both are very successful and dominate the cola as well as other soft drink markets. For the product category cola, Coca−Cola and Pepsi are perfect substitutes without noticeable taste difference; however, the two products are not substitutes for most of the people. Cola as a drink is a low involvement product, but marketers for both Coca−Cola and Pepsi have tried to increase consumers' involvements throughout various advertisement campaigns and sponsoring various events. Taking a good look at their marketing actions and the consumer reactions to it will provide important information regarding our new product. Needs and wants Coca−Cola and Pepsi appeal to different people, because they satisfy different needs and wants of the 2

consumers. Of course, both satisfy the physiological, utilitarian need thirst, but marketers of both companies have tried to make cola a product that also satisfies higher level needs such as hedonic needs, ego needs and self−actualization. They try to make consumers believe that drinking their product involves a refreshing, exiting experience in a way that is only satisfied with their product. Think for example of Coca−Cola commercials in which people who drink Coca−Cola are seen as being cool. Pepsi tries to reach consumers by stressing out the relaxing experience of drinking Pepsi. Also, Pepsi's advertisement of Diet Pepsi truck uses the principle of credibility to show how Pepsi fulfils the need of Ego. Both companies target the higher level needs in order to build brand loyalty for ensuring consistent sells. Motivation and Involvement As stated before, the motivation of people to buy cola depends on how strong they feel about satisfying their needs and wants. This also has influence on their involvement with the product. Both Coca−Cola and Pepsi have strong campaigns to increase the motivation and involvement with their product. Pepsi recently had an advertisement campaign together with iPod Mini, in which they gave out free iTunes songs and free iPod minis. While listening to music is a form of relaxation, this campaign adds to the existing brand identity of Pepsi. Moreover, the campaign combines consumers' interest in music and soft drinks. It appeals to people who have an iPod and to people who enjoy music. By co−branding, Pepsi increases the motivation of consumers to buy the product, in order to get the free songs and free iPod Mini. Also, iPod is a high involvement product, so co−branding will increase consumers' involvement with Pepsi. The Coca−Cola Company held a Fire−passing activity to pass the fire of the Olympic Games, in preparation of the Beijing 2008 Olympic Games. Not only can this raise the brand awareness of Coca−Cola in the new market of China, it can also enhance the involvement of consumer from a low one to a high one, making them to feel like Coca−Cola being a part of their lives. This will increase their motivation to buy Coca−Cola. Apart from appealing to music fans, Pepsi has been one of the sponsors for the Superbowl for years. It associates Pepsi with this sport event and makes Pepsi appeal to the football fans. In one of the advertisement, Pepsi's vending machine is playing on the field during the Superbowl. This gives Pepsi the character of a good football player and creates the image that when being a football fan, Pepsi is the choice. Both Pepsi and Coca−Cola have spent a lot of money on advertisements, these shape the perception of consumers towards the brands. At the same time, the advertisement campaigns raise consumers' awareness of what the two brands provide, rather than the actual products. These campaigns first increase consumers' motivation to buy the products and hence, increase consumers' involvement with the products. Attract attention In an oligopolistic market such as the cola market, in which the two main competitors offer similar products, it is very important to attract the attention of consumers in order to make them buy your product. Both Coca−Cola and PepsiCo Inc use good techniques to ensure their products are noticed. Coca−Cola and Pepsi use bright and vivid colors for their packaging and their logos to attract the attention of consumers. Through the enormous exposure of these logos to consumers, people recognize these logos and associate these colors with these brands. For Coca−Cola this is the color red and for Pepsi the color blue. This association makes sure their products are stored in the long term memory of consumers. In the packaging of Coca−Cola, one can find the figure of a woman/breasts. This sexual sign attracts unconsciously the attention of people. Pepsi and Coca−Cola both use famous people to attract the attention of consumers. Think for example of 3

Beyonce, Britney Speares and Christina Aguilera who have participated in commercials of Coca−Cola and Pepsi. By showing that these famous people drink their product and are willing to recommend it, they hope to persuade people to buy their product. Also, they offered saving campaigns, where consumers could get points when they bought their products. With these points, consumers could save for cd of the famous singers who participated in the advertisements. These campaigns caused repeated purchases of the same brand and hopefully created brand loyalty. Memory In order to create brand awareness and loyalty, it is very important for a company to make sure that their product is stored in the long term memory of consumers. Coca−Cola and Pepsi use effective techniques to achieve successful long term memory storage. Coca−Cola uses a lot of jingles and songs in their commercials. Through the use of classical conditioning they try to link their product with these jingles and songs. Think for example of the Chihuahua song. Because the song was used in a commercial of Coca−Cola, people associated this song with Coca−Cola. Every time they heard this song on TV or the radio they were reminded of Coca−Cola. This is a very smart but also cheap way of advertising, because the classical conditioning will evoke a though of Coca−Cola even when this is not even the intention and through this repetition the product is stored in the long term memory of consumers. Both Pepsi and Coca−Cola expose consumers a lot to their brands. Through sponsoring of big events and organizing very intensive campaigns, they repeatedly create awareness of their products. This way their products are put in the long term memories of consumers. Persuasion In order to increase sales, Coca−Cola and Pepsi use different techniques to persuade people to buy their product. By making light variants of their products and associating their brands with sport activities, Coca−Cola and Pepsi try to take away the approach−avoidance conflict people can have towards their products. They try to decrease the unhealthy aspect of their products. This way they hope to persuade more people to buy their products. Especially Coca−Cola makes use of vicarious reinforcement. It shows happy and laughing people in their advertisements when they drink Coca−Cola. These people serve as models for consumers. If consumers perceive the models' happy and fun moment as being caused by Coca−Cola, they are motivated to buy Coca−Cola too. This way Coca−Cola tries to persuade people to buy their product. Cultures and subcultures Coca−Cola and Pepsi try to appeal to different subcultures by stressing out different values. The values that Coca−Cola wants to stress are family, friendship, happiness, exercise, and being cool. Their product appeals therefore to a broad range of people. It is a product for everyone, every time, everywhere. For Pepsi these values are enjoyment, relaxing and energy. Pepsi appeals more to young, active and sportive people. Although these values are somewhat different, they are all western values, so will appeal more to western cultures. To also reach consumers in non−western cultures and countries, both companies make different advertisements campaigns for these regions. Appealing to the local cultures is a very efficient way to gain sells. For example, in the Chinese market, Pepsi is more successful because it associates itself with the local pop stars and the pop culture. By using the source credibility techniques, it creates the image that Pepsi is following the culture of youth. 4

Failure to cope with the local cultures might lead to negative associations with a product. For example, there are large billboards of Coca−Cola in the Mainland China. People in China are used to large billboard with slogans on new government policies. Since many of those policies have proven to be a wrong step in the country's development (e.g. the Big Steel Refining Campaign, which turned out to be a mass production of scrap metal), the credibility of such billboards is very low from Chinese people's point of view. Therefore, the aim to raise the brand awareness in this new market is not achieved. Instead, this gives a negative image of the Coca−Cola Company. Conclusion The two leading brands in the cola market both have a successful marketing strategies that distinguish them from the uniform quality. Pepsi and Coca−Cola have spent a lot of money on advertisements to enhance consumer awareness and motivation. The packaging of both are appealing and outstanding by the vivid color and designed shape. Celebrities are invited to boost brand awareness. Sensational memories like music are implemented as well. The multilevel marketing strategies both companies use, give them a strong establishment in the western market. Now both companies are expanding and designing new tactics for new non−western markets, with but also without success. We feel that on this point there lays a good opportunity for our product. 4. Challenging our competitors: our marketing strategy Our new product, Fei Fei Cola, that our company intends to launch into the European and Asian markets, is a cola soft drink with Asian traits. The main characteristic of our product is that it is added with herbs and spices traditionally used in Asian cultures. Hence, it differentiates our new product from the rest of the market. Our company focuses on certain values and philosophy which focus on creating a third option for consumers besides Coca−Cola and Pepsi: a soft drink which can not be attached to the American culture and way of life, as opposed to the products of our two main competitors. On the contrary, the values we want to stress are peace, family, collective goals and harmony with others. Nowadays consumers have an emerging need to reject the American culture, so our cola provides this need. Consumers will have the motivation to buy Fei Fei Cola as the new Asian style cola first raises their curiosity and then appeal to them as a brand new choice. Consumers could develop a high level of involvement with our product if they perceive Asian values as peace, family, collective goals and harmony with others in it, through affective involvement. According to what was said before, our marketing strategy will try to focus on the mentioned values within it. We are going to select some elements of a typical marketing strategy and we will show how it can influence and persuade the potential consumers to buy our product. Name We have decided to call our new product Fei Fei Cola and our company Fei Fei Company. This choice is due to different reasons: 1) It is a short and catchy name. 2) It is easy to pronounce. 3) Therefore it is easy to remember. 4) It has an Asian sound. Besides, there is another Chinese expression very close to this one which means fly and herbs fragrance. 5

By choosing this name for the new product we are aiming to attain consumer's attention and stay in their memories. We think that consumer's attention would be easily attracted as we are using a Chinese name, which involves a novelty in the cola market. This could be seen as an exotic feature of our product by the European market, while it can be used a signal of identity within the Asian market. We also appeal to semantic meaning by using this kind of name. In other words, as we are employing an Asian name, our product could be associated easily to the values we are focusing on. In addition, we think that the chosen name, Fei Fei Cola, is a catchy name which could help the customers to store our product's name in their long−term memory. This could provide us a well established place in the market. Packaging With regard to the product's packaging, we are going to launch the product in two different sizes: 33cl and 2l. We have chosen different materials for the two different sized packaging, a tin can for the former, whereas tetra−brick for the latter. Although two liters tetra−brick is not an usual way of selling a cola soft drink, with this special packaging we are trying to appeal to two main objectives related to consumer's perception: consumer's sense of consciousness and differentiation. By consumers' consciousness we mean that we are aiming at an environment friendly awareness by the consumers and they likely would be more involved with our product's concerns about the environment. By differentiation we are appealing again to consumers' memory capacity as our product's packaging would be easier to be recognized, not only in the purchasing points but also wherever our product is seen. Concerning our packaging color, we have decide to make it brown. From our company's marketing perspective, this color could be easily attached by a learned association mechanism with Mother Earth. Mother Earth is on of the keystones of oriental philosophy, which is in line with the values we want to remark. We think that appealing to Mother Earth is another way of gathering consumers' psychological needs such as harmony and respect with the environment, which are nowadays very fashionable values.

The logo of Fei Fei cola will be an oriental symbol colored in green. The logo is composed by two FF in an unusual shape, by this way they are not immediately recognized but unconsciously they are memorized in the consumer's mind. This means that each time that the customers see the logo, it is very easy for them to identify the product. On the other hand, the brown color of the packaging with the green color of the logo symbolizes the forests of the Mother Earth which goes in the same direction of harmony and peace. The special shape of the package takes the consumer's mind unconsciously to a woman's body. This technique is commonly used to attract consumer attention and to 6

make easier the decision making, because of its sexual appealing or because of the resemblance to a maternal meaning, which involves a feeling of security and peace, depending of the type of consumer. In addition to this value focused strategy we have to remark the ergonomic shape of our product, achieving an easy handle packaging. Advertising Concerning our product's advertising campaign, our primary target is brand awareness. At a first moment, our campaign will be focused on the introduction of our brand and product into consumer's mind as well as its maintenance. By doing this we are trying to replace the image of our competitors Coca−Cola and Pepsi, by our brand within consumer's mind. In order to implement the campaign we will use several ways of communication techniques such as, mainly, advertising, public relations and sponsorship. In addition to these, we will also use sales promotion techniques. In this paper we will stress our effort on advertising and the way in which we intend to reach consumers through it. Before launching the product to the market we will develop commercials which will be focused on our logo without showing the product to the audience as to obtaining the consumer expectation before the launching of the product. By doing that, our brand will be known before we physically launch the product into the market. By making several exposures of the logo, which means implementing the repetition technique in advertising, we intend to make consumer to be used to it, to make it familiar to all the potential consumers. We would design series of commercials which allow us to transmit clearly the values which make our brand different: peaceful, harmonic and environment friendly. To achieve this aim we will use persuasion techniques based on the credibility of the source; in other words, the advertisements will be performed by well known people within a familiar, natural and peaceful atmosphere. One of them could be a well known person with his/her family drinking Fei Fei Cola in an oriental garden, with a relaxing but catchy tune. The colors would be mainly blue and green and other soft ones. By using these kind of commercials we are directly appealing to the culture and subculture of consumers, dealing with their family models and ideal way of life, which is related to the ideal self. We believe that by using all of these marketing strategies, based on consumer behavior theories, we are able to compete with the existing brands in the cola market and hopefully achieve an good market share! 11

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