December 2010 – Marketing: New Ideas Around

Base on the facts and statistics we learned, Pepsi co. used millions and millions of dollars of advertising that their soft drink and water is the best in the world, it taste better, and it’s more pure. However, the truth that their soft drinks contains this cocktail of pesticides completely above the stipulated standard. While the companies say there are no stipulated standards just because of a simple reason: they don’t allow standards to be formulated and there is no explanation about why they did that. This action totally contrasts their environmental policy that Nina introduced. Although the CSE (The Centre for Science and Environment) is demanding that the government implements the standards immediately and makes the standards mandatory for the soft drink companies. Pepsi co still fought tooth and nail against setting up a final product standard. This is a classic case of double standards by a large multinational company in India. They are selling sub-standard products in India that could never be sold in Europe.

According to Aquafina, using the same water source as our tap water, costs $1.39 per bottle. From the tap, you can pour over 6.4 gallons for penny. That makes the bottled stuff about 7000 times more expensive. Now we understand where their profit come from is the cheating over the fans of this brand Pepsi. Pepsi Company claimed that it is committed to being an environmental friendly responsible corporate citizen. According to the truth, can we still believe the commitment and so-call “responsibility”. Consumers should not be informed their high-priced bottled water is really just filtered tap water is consistent with the aims of food, drug and beverage corporations, who almost universally agree that consumers should be given less information, not more, about the products they’re swallowing. argues that Pepsi companies mishandled the issue; they should have taken problem head on by admitting guilt and stopping marketing soft drinks till they were thoroughly tested and Euro-level standards were introduced. This would have built trust and goodwill among the consumers.

The obvious ethical question is whether or not it is appropriate for the cola companies to produce beverages with such high levels of pesticides. Theoretically, it is possible (and prior to the backlash and bans, probable) that the local governments did not prohibit such high levels of pesticides in the drinks, and the cola companies, accordingly, produced beverages in line with local regulations. More pesticides probably coincided with greater profits On the other hand; some executives do not talking of the ethics of doing this, but business-wise, and this would have been a bad decision. If I am right about my claim that customers don’t want to think too deeply about fun stuff, then taking such action would not lead to goodwill. It will simply remind people of pesticides. Short-circuiting ethical codes and cutting corners might produce short-term profits and destroy the reputation of the company and it’s product like pepsi.

I just read the newspaper about the acquisition of the newell company. As a finance major student, I get interested in this topic.

“Newellization” Process: requires skills in acquisition and restructuring. This process involves expertise information sharing, simplifying strategy and multi-divisional measurement. Newell might be capable of exercising the management power over Rubbermaid due to the firm size that Rubbermaid has. It is also difficult for Newell to deal with the “Rubbermaid” culture.

Acquisition Analysis:

Shelf space: due to the high production costs and their inability of lowering price to their major retail customers, Rubbermaid has difficulty of enhancing the number of their shelf spaces. In this case, the buyers have to cover the high production costs that Rubbermaid has. Therefore, retailers are more willing to give shelf spaces to other companies instead of Rubbermaid.
Different Strategies: Newell and Rubbermaid have different strategies. Newell is mainly focusing on providing satisfied customers service and building up good relationships with their major retailers; on the other hand, Rubbermaid has terrible relationships with their retailers due to failure of achieving economy of scale. It would definitely influence the business if Newell does acquire Rubbermaid because shelf space matters.
Sales Volumes: Newell cannot sell as much as before after acquiring Rubbermaid due to the scarce number of shelf spaces.
Profitability: Rubbermaid incurred 18% costs in the past. It is also hard for Rubbermaid to lower their production and administrative cost. The administrative costs would be much higher for Newell than before after the acquisition.