ACKNOWLEDGEMENTS

We would like to express the deepest appreciation to our lecturer, Puan Wan ShahrulAziahbt Wan Mahamad, who has gave us a lot of knowledge, guide line and encouragements to help us to do this report. Without her guide line, we believe this report was impossible to finish it. We also would like to say thanks to all our friends who are always give and shares the ideas and knowledge about this reports, hope from this sharing, it will give us more knowledge and will help us to more understanding about consumer behavior. Last but not least, we hope this reports will give us more knowledge and information about the consumer behavior that are happen around us.

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TABLE OF CONTENT

NO. 1. 2. Acknowledgement Introduction

CONTENTS

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1 3

Application

a) Market Segmentation and Strategic Targeting

b) Personality and Consumer Behavior 4-18 3. c) Consumer Perception

d) Consumer Learning

e) Consumer Attitude Formation and Change

f)

Communication and Consumer Behavior

4 5. 6. 7.

Conclusion Recommendation Appendices Bibliography

19 20 21 22

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INTRODUCTION
The product that we choose for our group project assignment is Pepsi By PepsiCo. Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo. It was created and developed in 1893 and introduced as Brad's Drink, it was renamed as Pepsi-Cola on August 28, 1898, then to Pepsi in 1961. Pepsi was first introduced as "Brad's Drink" in New Bern, North Carolina, United States, in 1893 by Caleb Bradham, who made it at his drugstore where the drink was sold. It was later labeled Pepsi Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy. In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse. In 1909, automobile race pioneer Barney Oldfield was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing, invigorating, a fine bracer before a race." The advertising theme "Delicious and Healthful" was then used over the next two decades.

As a product that provides satisfaction to the customer, Pepsi has to know the behavior of its consumer. Consumer behavior is the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products that they expect will satisfy their trends. For example, when a consumer is thirst he or she will search a product that will quenched the thirst. After make a choice, the consumer will purchase, using (drink it), evaluating the quality of the product and lastly dispose the product after done using it. This is the challenge that Pepsi has to overcome in order to reach the consumer because there a lot of beverages product existed in the market like Coke-cola, 100plus, Kickapoo or any other beverages existed. The objective of this group project assignment is to analyze the methods or research methodology that Pepsi uses to deliver their product to the consumer.

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1.0 MARKET SEGMENTATION

1.1 Market segmentation is the process of subdividing a market into distinct subsets of

customers who behave in the same way or have similar needs. Market segmentation, strategic targeting, and product (or service) positioning are the key elements of marketing most consumer goods. For example, in the beverages market, there are many types of drink that is available and many have to offers a lot of versions based on flavors and the existence or absence of sugar. PepsiCo have been using this type of advertising in order to create a difference in their products. PepsiCo have always compared their product to Coca-cola product. Below are some criteria for an effective targeting. Criteria for effective targeting Identifiable Sizeable Stable Accessible

For example, PepsiCo have always targeted the young and middle age generation as their market segment in a range of 13 years old to 30 years old. PepsiCo have always review their sales in order to monitor the size of the segmentation is according to the budget that have been provided. As a company produce a product, PepsiCo have always make a segmentation on a stable factor that relates to consumer lifestyle in order to avoid any unpredictable results and PepsiCo have been using advertisement like television commercial and newspaper to reach the consumer.

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1.2 BASES FOR SEGMENTATION 1.2.0 CONSUMER-ROOTED SEGMENTATION BASE 1.2.1 Demographic segmentation The core of almost all segmentations is demographics, due to the following reasons: (1) demographic are the easiest and logical way to classify people and can be measured more precisely than the other segmentation bases; (2) demographic offer the most cost-effective way to locate and reach specific segments; (3) demographic enable company to identify business opportunities enabled by shifts in population age, income, or geographic locations and (4) many consumption behaviors, attitudes and media exposure patterns are directly related to demographic. For example, PepsiCo have been using this kind of segmentation to reach the customer through its advertisement because it is easy to be implementing in their advertisement and most important part is the customer understand what is PepsiCo trying to send.

1.2.2 Psychographic segmentation The second type of segmentation is psychographic. Psychographic is the process of dividing the market based on the way of people think. This type of segmentation are difficult to measure, and lead into a discussion of why they are sometimes used with other segmentation variables to provide more detail descriptions of market segments. Psychographic segmentation includes the variables of personality, motives, lifestyle, and social class. For example, in one of Pepsi advertisement, Pepsi emphasize on music and adventure, it means whoever drinks Pepsi can enjoy more music and you can travel to any part of the world and Pepsi will always be available there.

1.2.3

Usage rate segmentation

Usage rate segmentation is the method of dividing a market based on the amount of product purchased or consumed. One person may drink a six-pack a week but another might drink a six-pack each day. This segmentation stems from differences among heavy, medium, and light users, and nonusers of a specific product, service, or brand. For instance, PepsiCo has recognized some country Page

as a heavy user of its product and develop frequent programs for them. Researcher found that although heavy users accommodate only a small percentage of the market, they contribute a high percentage in total buying. Usage rate segmentation is important so as to draw appropriate promotional campaigns.

2.0 PERSONALITY
Personality is those inner psychological characteristic that both determine and reflect how a person responds to his or environments. As see on this Pepsi drinks, the personality that are reflect on this product are more on spirited, happiness, down to earth and rhythm .

2.1.0.NATURES OF PERSONALITY

2.1.1 Personality Reflects Individual Differences On this nature, personality is a unique combination of factor. On this nature, some consumer have high in ethnocentrism that is they are willing to accept foreign- made product such as accept this Pepsi drinks. As we see on this Pepsi drinks, this is are the foreign made product that are come from New York, United State of America and when this Pepsi drinks are

introduced and market to others country such as Malaysia, most of these consumers are totally willing to accept this product in their country. On this nature, it also enabled the producer to categorize consumer into different group such as adult, teens, and celebrity.

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2.2.0 THEORIES OF PERSONALITY 2.2.1 FREUDIAN THEORY On this theory, it is the heart of human motivation and personality. On this Freudian Theory, the Idis the conceptualized as a warehouse of primitive and impulse drives that are contain basic physiological needs such as thirst and hunger-for which the individual seeks immediate satisfaction without concern for the specific means of satisfaction. As seen on this Pepsi drinks, it captured some of spirited, happiness and excitements associated with the forces of primitives drives. On the others Freudian theory that is superego, it is conceptualized as the individual internal expression of society moral and ethical codes of conduct. On this Freudian theory, it is to see that the individual satisfied, needs in a social acceptable fashion. As seen on this Pepsi drinks, this brands are totally acceptable and also satisfied the needs of the users in whole country. This product is acceptable by consumer around the country because the unique taste of the cola and also the variety types of Pepsi drinks that they are produced to the consumer. On this theory, the producers considered the consumer appearance and possession such as lifestyle as a reflection of individual personality. As seen on this Pepsi drinks, this product reflect the individual personality more on happiness and spirited.

2.3.0 PERSONALITY AND UNDERSTANDING CONSUMER BEHAVIOR.

2.3.1 CONSUMER INNOVATIVENESS AND RELATED PERSONALITY TRAITS i. Consumer Dogmatism Is a personality trait that measured the degree of rigidity (versus openness) that individual display towards the unfamiliar and towards information that is constrains in their own establishing belief. As see, some have high dogmatism and low dogmatism .For person who have low dogmatism, they are more open minded and more likely to prefer innovative product to establish alternative. It can be seen when the producers are produced the new Pepsi drinks such as Pepsi Twist, Pepsi Vanilla Page or Pepsi Diet, the consumer who are low dogmatism are ability to try the new Pepsi drinks products. For the consumer who have high dogmatism are closed minded

and they more likely to choose the establish rather than innovative alternatives. To make this Pepsi drinks are been recognized by high dogmatism consumer, the producers have used famous people such as celebrity and experts in their new product advertising to make it easier for potentially reluctant consumer to accept the innovation.

ii.

Social Characters

On this social character, its origins sociological research which focuses on the classification of individual into distinct socioculturer types that is from inner directedness to other directedness. On inner-directedness, a consumer tends to rely on their own inner values or standards in evaluating new product and is likely to be consumer innovators. As seen on this Pepsi drinks advertisement, it is likely to be appealing to the inner directed person. As seen on this Pepsi drinks advertisement, it is totally full of spirited, happiness and excitements of the rhythm and this advertisement is end with the inner directed through the full of spirited and happiness.

2.4.0 COGNITIVE PERSONALITY FACTORS

2.4.1 NEED FOR COGNITION (NFC) Need for cognition it is a measures a persons craving for enjoyment of thinking. On this factor, it has high and low NFC. For a consumer who is high in NFC are more likely to be responsive to the part of an ad that is rich in product-related information or description. It can be say that, the consumer who are high in NFC are more effective in written message advertisement. As see on this Pepsi drinks, the producers use written advertisement to attract the consumer who have high in NFC. Meanwhile for the consumers who are low in NFC are more likely to be attracted to the background or peripheral aspect of an ad, such as an attractive model or well know celebrity. It can be say that, the consumer who are low in NFC are more readily accept a marketers recommended alternative so that the consumer are more easily make a purchase decision. As seen on this Pepsi drinks, the producers use the famous celebrity

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as the medium to advertise the Pepsi drinks to the consumer who have low in NFC.

2.5.0 BRANDS PERSONALITY

2.5.1 PERSONALITY AND COLOUR Personality not only ascribes personality traits to product, but they also tend to associated personality factors with specific color. For instance, Pepsi is associated with blue which connotes strong and powerful and also related to the America because this is the favored color and also this Pepsi drinks are made and come from America .

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3.0 CONSUMER PERCEPTION

Perception is defined as the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. It can be described as how we see the world around us. For example, Pepsi may introduced a product to two different guys and being exposed to the same stimuli under the same apparent conditions, but how each person recognizes, selects, organizes, and interprets these stimuli is a highly individual process based on each persons own needs, values and expectations.

3.0.1

Sensation

Sensation is the immediate and direct responses of the sensory organs to stimuli. A stimulus is any unit of input to any of the sense (sensory input, packaging, brand names, advertisement, and commercial). Sensory receptors are the human organs that receive sensory input. Their sensory functions are to see, hear, smell, taste, and touch. All of these functions play an important role in the purchase, use, and evaluation of consumer products. Sensitivity to stimuli varies with quality of an individuals sensory receptors and the amount of the stimuli to which he or she is exposed. For example, a consumer of Pepsi may realize that advertisement is for Pepsi product; meanwhile another person may not realize the advertisement at all because that person is not a consumer of Pepsi product.

3.0.2

The absolute threshold (Sensory adaption)

Sensory adaption is a problem that concerns PepsiCo, which is why they try to change their advertising campaigns regularly. They are concern that consumer will get used them to their current print ads and TV commercials that they will no longer see them; that is, the ads will no longer provide sufficient sensory input to be noted. In order to prevent advertising clutter, PepsiCo has implement some promotional methods that is product placement (branded entertainment), this method entails integrating products into TV shows, films and even webisodes. Example of films is home alone, back to the future, or some in music videos of

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a celebrity.

3.0.3

The differential threshold

The minimal difference that can be detected between two similar stimuli is called differential threshold, or the just noticeable difference (j.n.d). A nineteenthcentury German scientist named Ernst Weber discovered that the j.n.d between stimuli was not absolute amount, but an amount relative to the intensity of the first stimulus (Webers law). Marketing applications of the J.N.D

Pepsi carefully changes their product logo in order to create minimal j.n.d, so that consumer will perceive only minimal difference between succeeding versions. (The color of red is still maintain by the company since year 1898 till today)

3.1.0 ELEMENTS OF PERCEPTION

3.1.1 PERCEPTUAL SELECTION Nature of stimulus Marketing stimuli include an enormous number of variables that affect the consumers perception, such as the nature of the products, its physical attributes, the package design, the brand name, the advertisement and commercials. PepsiCo have always used more than one stimulus in their advertisement in order to reach the consumer. For example, when seeing a blue, red and white color advertisement, consumer will directly presume that advertisement is related

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to Pepsi because the basic color of Pepsi is blue, white and red.

3.1.2 PERCEPTUAL ORGANIATION Figure and ground As mention before, PepsiCo usually used product placement (Branded entertainment) in order to increase awareness among the consumer and avoid advertising clutter is integrated into film or music videos (i.e., the ground), Pepsi will advertised their product (i.e., the figure) through it in one or more of the following ways: (1) the product is being used by the cast or celebrity (Nicki Minaj); (2) the product is integrated into the plot of a story of films (home alone); (3) the product is associated with a character (the character is also the products advertising spokesperson) (Michael Jackson).

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4.0 CONSUMER ATTITUDE

Towards securing their customers Pepsi Company has relates some of the customer attitudes when buying their product especially Pepsi beverages products. To convincing their customer Pepsi has applied a few methods based on customer attitude natures, sources of influence on attitude formation and strategies of attitudes changes.

4.1.0 NATURE OF ATTITUDES There is a few natures that Pepsi have learned about especially to get the customers predisposition towards a favorable products from customers. Firstly, the attitude object itself which it should be interpreted broadly to include specific consumption or marketing related concepts, such as product , product category , brand , services, possessions , product use causes or issues , people , advertisement, Internet site, price , medium or retailer. For example, if we were interested in learning consumer attitudes toward three major brands of soft drink, our object might include Pepsi, Coca-Cola and A&W. Secondly, attitudes are a learning predisposition, here it means attitudes relevant to purchase behavior are formed as a result of direct experience with the product. The customer can be learned or developed by their own pas experiences by their own self experiences or others experiences when purchasing Pepsi product. When they feel favorable towards our product, they will make a repeat purchased and tell others using word- of- mouth. This is how Pepsi get a free learned predisposition, where it spread among peers, friends, or their neighbors. In the other hand, Pepsi also developed their customer by exposing about their products such as using mass media advertising, the Internet and various form of direct marketing - such as using a retailers catalog. Lastly, in the nature of attitudes, the Pepsi also have study that customer attitudes also have a consistency, based on product. This can be explain when a customers have a

any of carbonated drinks. Here it can be said that the customer attitudes consistently wont buy

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carbonated drinks such as they do not like to drink a carbonated drinks so they would never buy

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problem with a certain products, in Pepsi perception that people who has a problem with a

the products, or they do not buy the product in a very long term. This group of customer attitudes can be change this will be explain more on strategies of attitude changes. 4.2.0 THE SOURCES OF INFLUENCE ON ATTITUDE FORMATION When Pepsi has studied on their customer attitudes Pepsi company will using sources which will influence them on attitudes formation. Attitudes formation is how the Pepsi customer itself are learned. There is a lot of source on attitudes formation, but Pepsi company only apply 3 of it, which: personal experiences, influence and mass media. The personal experiences can be divided into two, which is a direct experience, where the customers buy, and go through their own experiences, then they will give their opinion about the Pepsi product itself whether it is a good product or not, if it is a positive experience, the customer will tends to make a repeat purchase. If not the customer will ignore the product and will not buy it again. The second personal experiences is the marketing strategies from Pepsi itself, where they used a promoter to distributes a sample in the supermarket to make sure the customer aware about their product (for a new customers and potential customers). Not only that, Pepsi also do make a promotion such as buy Pepsi drinks product will get 35% discount on World Cup tickets. This promotion usually used by Pepsi to maintain their current customers. All this is to build the customer attitude formation towards the Pepsi drinks. Next is the influence, where it plays the biggest role in attitudes formation because it may contributes to a very long chain of product life cycle. The main people who are in the influence group are family, and friends. Buying attitudes formation based on family will encourage the other member of the family will tends or influenced by the family members such as if a mother always buy a Pepsi cola drinks in every celebration in their house, it might influence the children for example to buy the Pepsi cola drinks product when they have any functions or a celebration with their friends. Not only family but the friends also have the power to influence the others friends to buy. For example, Didie and Khadijah go to KFC and ordered a meals then Didie choose Pepsi cola drinks then Khadijah also have the tendency to order the same things. Because when they are friends, they have an outstanding believes towards each other, so Khadijah will follow what her friend orders or suggestion. Last but not least, is the mass media. Pepsi used mass media as their medium to makes their customer knows and aware about the new products promotions and information. Not only a purpose towards the product but to influence them in formation of emotions and

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feelings. For example in the television advertisement, Pepsi used to change their advertisement based on current celebrations such World Cup, which it will attract the customers attention who mad with football, assuming that Pepsi also do understand their interest in football. Here Pepsi apply the feeling and emotions towards theirs customer, where emotional appeals are the most effectives.

4.3 STRATEGIES OF ATTITUDE CHANGES The main reasons is to change the attitudes of the market leader`s when developing their marketing strategies. The strategies could be more than one, but Pepsi company has choose only one of the strategies which interrelated with Pepsi company product and concepts, which is associating the product with an admired group or event. Here the attitudes are related, at least in part, to certain group, social events or causes. For example in Pepsi advertisement they use spokesperson such as football player to promote their product which is a well-known celebrities to attract the admired groups. In other hand Pepsi company also do an sponsor an events to increase their public relations with customer and give a good impression towards their product. For example, Pepsi company is one of the World Cup sponsor. Not only that , Pepsi company also do understand that there is a certain group of consumer that do not like to drinks a carbonated drinks because high in sugar contains, to strengthen the Pepsi company public relations Pepsi has come out with the diet Pepsi cola drinks that might increase their customer belief in their products and to change their customers attitude towards carbonated drinks that is not good for a health. All the elaborations above is based on Pepsi company advertisement that can be relates to the consumer attitudes topic, there is a lot of characteristics , source and strategies but all been mention above is the most related to Pepsi company carbonated drinks advertisement and can be easily defined.

5.0 COMMUNICATION AND CONSUMER BEHAVIOR

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One of the major strategic applications of classical conditioning is repetition. Repetition of an advertisement can have unique, separable impact on people effective response to the advertisement as a whole. However, there is a limit to the amount of repetition that will aid retention. Although some repetition beyond what is necessary for learning aids retention, it also can become full with numerous exposures, and both attention and retention will decline. The effect will happen is advertising wear out. Advertising wear out is a less effective to attract attention. Some marketers avoid wear out by using cosmetic variations in their advertisement while repeating the same advertising theme. There are three hit model in this strategic first, to make consumers aware about the product, a second to show consumers the relevance of the product, and a third to remind them of the benefits of product. PepsiCo used this type of advertisement because them do not want customer become bored when always watch their ads. It also show in the advertisement the benefits people will get after drink Pepsi such as have energy to do a work when they tired.

5.1 STIMULUS GENERALIZATION Stimulus generalization refers to the ability of individuals to generalize the advertisement. Making the same response to slightly different stimuli also called stimulus generalization. A marketer may want consumers to generalize by using a popular brand name like Pepsi on several different products. This is known as brand extensions.

The first point under stimulus generalization is allowing a well-known brand name to be affixed to products of another manufacturer known as licensing. This is another strategy that operates on the principle of stimulus generalization. For example, PepsiCo. Give the right to use their brand name to others company or events. Bradford Licensing, LLC, the exclusive international brand licensing agency for PepsiCo Inc., is pleased to highlight the successful showing of Formitzs Pepsi apparel range. Formitz is located in Brazil put together a full fashion range of men and women apparel for the hip and trendy customer. The deal with Formitz was handled by sub-agent Supermarcas, stemming out of Bradfords international structure. Vice President of sub agent Supermarcas, is pleased with this first showing of the Pepsi fashion range, believing the results will be excellent. The result was very positive and the licensee Formitz is happy with the result of the increased brand awareness.

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The second point under stimulus generalization is family branding. Family branding is the practice of marketing a whole line of company products under the same brand name. It make consumers ability to generalize favorable brand associations from one product to others. For example, PepsiCo produce another brand such as snacks, fruit drinks, energy drink. It show PepsiCo not only focus to beverage it also produce variety product to make customer of PepsiCo loyalty to them, and aware about their new product.

Encode Sender (Source) Message Channel (Medium)

Decode Receiver (Consumer)

Feedback

FIGURE 1.1 COMMUNICATION PROCESS

To make consumer aware of the product or service, induce purchase or commitment, create a positive attitude toward the product, or show how it can solve the consumers problem better than a competitive product. The sender as the initiator of the communication can be a formal or an informal source. A formal source represents either a for-profit or a not-for-profit organization. An informal source was originally defined as a person whom the message receiver knows personally. Today, informal sources also include people who influence ones informal communications sources are perceived as having nothing to gain from the receivers

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consumption via online social networks and other Web forums. Consumers often rely on

subsequent actions. Therefore, Pepsi must always encourage even initiate positive word-ofmouth (WOM) communications about their products and services.

The first type of advertising appeals that related with Pepsi is comparative advertising is a widely used marketing strategy in which a marketer claims product superiority for its brand over one or more explicitly named or implicitly identified competitors, either on an overall basis or on selected product attributes. PepsiCo has been using this type of advertising in order to promote their product in the market. PepsiCo always compare their product with their close competitor that is Coke Cola, in terms of taste, product design and packaging. PepsiCo always use indirect approach in order to compare their product with Coca Cola product. For example Pepsi Straws Advertisement, from the perception of consumer, Pepsi has implement that consumer should drink Pepsi than Coca Cola.

The second type of advertising appeals that Pepsi use is using celebrities. Consumers sometimes regard the spokesperson delivering the product message as the source of the message. Whether male or female who appears in person or in a commercial or advertisement has a major influence on message credibility. For example Pepsi have been using FaizalTahir and Suki One in the Millionaire in their advertisement. In this advertisement, Pepsi has divided this advertisement into two sections that is music and adventurer.

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6.0 CONCLUSION
PepsiCo use three major criteria in dividing their customer that criteria are; Demographic, psychographic and use rate segmentation. Where in demographic, Pepsi targeted consumer was determine by who actually the customer are. In psychographic, it is determine through how the customer think and in used rate, the customer are divided in term of how much they consume. Pepsi also consider their consumer personality in marketing their product. Customer are analyzed by their personal psychological characteristic that reflect the differences between every customer. It help Pepsi to understand their consumer innovativeness and personality traits. Pepsi also personalize their own brand to maximize their product attractiveness in the customer point of view. Perception is defined as the process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world. It can be described as how we see the world around us, this term need to be understood by Pepsi so they can predict what their customer select and organize their perception when Pepsi doing their marketing strategies. Pepsi need to ensure their cues can be interprets by their consumer. Good consumer attitude can benefits Pepsi in term of positive word of mouth. If the correct approach was implementing by Pepsi, they literally can change a negative perception toward their product to the positive one.

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7.0 RECOMMENDATION

1. Coca Cola always overshadow Pepsi. As a proof, every single strategies that implemented by either company will be follow. Pepsi need to distinguish their self and create a new cola wave to persuade younger customer to change from the old school cola; which is Coke and choose them as an alternative.

2. More on viral marketing because of Pepsi target market was range between 13-30 years old. Most of them was born in the X and Y generation where they are more expose to technology, and Pepsi can use this as a medium of viral marketing.

3. Put more attention on the new market like China, India and South East Asia. Localize their content and focusing their promotion on this market. Do some direct contact to the customer like they done in United States where they sponsored major sport event, music award and concert. When market in the U.S was already concentrated, they need to fine another market to focus and conquer.

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8.0 APPENDICES

PEPSI CAN DESIGN PEPSI CURRENT LOGO

PEPSI ADVERTISEMENT

REVOLUTION OF PEPSI LOGO

PEPSI SPOKESPERSON - RONALDHINIO

MALAYSIA ADVERTISEMENTS

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9.0 BIBLIOGRAPHY

1. Leon G.Schiffman , Leslie Lazar Kanuk , et al (2010) . Consumer Behavior .United

State Pearson Education, Inc.

2. (12/5/12) PepsiCo Pepsi-Cola Brands | PepsiCo.com 3. www.pepsico.com/brands/Pepsi_Cola-Brands.html 4. Tejas Article : Image Advertising: The Advertising Strategies of Pepsi and Coca
Cola in India (12/6/12) tejas-iimb.org/articles/58.php 5. http://www.youtube.com/user/pepsi 6. http://globalwebindex.net/thinking/drink-to-that-pepsi-customers-and-theirmotivation-to-follow-pepsi-online/ 7. http://html.rincondelvago.com/consumer-behaviour_1.html 8. http://www.pepsico.com/

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