CASE: CRYSTAL PEPSI

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

PEPSI Company)
POLITICAL
-Political
interference,
government
change, policies &
belief of party in
power

ECONOMIC
-Business cycles,
commodity prices,
elasticity,
consumer
confidence,
inflation

SOCIAL
-Demographic,
living standards,
lifestyles,

Pepsi is a non-alcoholic beverage and so the FDA

regulates it. Pepsi is expected to maintain a firm
standard of the laws that the FDA sets with consistency.
Many different markets across the world follow 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.

The reduced profits led them to downsize internally and

reconsider about how they should penetrate the
market.

Pepsis 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.

Crystal Pepsi targeted older consumer with age of 21 to

25, compare 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, Patents , New
Business Processes

ENVIRONMENTAL
-Climate/climate
change,

Crystal Pepsi was introduced to the market from April

1992 to 1993 in United States and Canada. It was
formulated differently from the 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 societys perception in 1990s towards
healthier beverages based on its taste, its ingredients
and its clear look

PepsiCo tried to rescue Crystal Pepsis 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.

Ecological factors might affect Pepsi, but it will not have

any immense toll on its trade and profit generation.

biotic/abiotic
pressures, energy
consumption,
stewardship

LEGAL
- Legislations,
dispute
management
applicable laws

Ecological factors usually affect agricultural businesses

more directly.

Pepsis competitors like Coca-Cola presents competitive

pricing and this is a factor, which the firm should keep
in mind all the time. The 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,

Pepsis 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.

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.

AS SUPPLIER

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 healthconscious 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 PepsiCos strategys
workability.

THREATS OPPORTUN

STRENGTHS

WEAKNESSES

Continue to release new products

since the company has a huge following
and a credible brand name.

- With the companys apparent economic

strength in the market, merging with small
competitors would be advisable.

Find other markets through its

Improve the companys research and
development to cater the needs of
the consumer.

Find other markets through its distribution

Pepsi Co. could gain great opportunities with its
better

franchise

relations.

Long

term

international expansion can also be used as

an advantage.

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 competitors 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.