Retail price of Rs 20, a larger bottle and slight change of habit is sometimes all that is needed to alter what consumers choose.
In the price-sensitive market of the Indian beverage industry, consumer choice is often thought to be determined by taste. However, in the daily decision-making process of buying, the habit factor becomes more decisive.
Consumers often tend to stick with the known brand, not necessarily because they can easily differentiate the alternatives, but because, over time, a sense of comfort and preference develops through continual use.
This is especially evident in the cola category where established brands such as Thums Up and Coca Cola, which are owned by The Coca-Cola Company, have been enjoying solid consumer loyalty. Conversely, the flagship of PepsiCo has had to struggle not only with flavour, but against deeply ingrained consumption habits.
The intriguing aspect of this competitive environment is that minor changes in product strategy, especially regarding packaging and pricing, can have an impact on consumer behaviour that extends beyond immediate value-perception. The change in this dynamic can be noted by the Pepsi packaging strategy within the Rs 20 price segment.
A year ago, Pepsi launched a 400 ml bottle that sold at Rs 20 in comparison with the more widespread 250 ml bottles sold by rival brands at the same price. This was in effect a gain of about 150 ml or about 60 percent more product at the same price.
On the surface, this was an obvious value proposition, more quantity at the same price. But the consequences of this change are possibly bigger than consumer attraction in the short term. By increasing the quantity without changing the price, Pepsi altered the way the product was consumed.
A 250 ml bottle is typically consumed quickly, often within a short span. Conversely, a 400 ml bottle extends the consumption experience with more quantity, more sips, more time, and more frequent interaction with the same product. This, translated into many purchases, means greater exposure to the taste of Pepsi.
Insight through industry suggests that beverage companies in India often employ the packaging and price-point strategy to encourage consumption and attract new consumers. Changes in pack size are not only about affordability but also about encouraging greater frequency and depth of usage.
In this regard, the action by Pepsi fits with the discussion of a wider industry strategy, but the effects become most interesting when it is considered through the lens of consumer behaviour. When it comes to products such as carbonated drinks, many consumers cannot clearly distinguish the flavours of rival brands at first.
However, this dynamic may start to vary when the level and frequency of consumption of a certain product rises. Repeated exposure can be used to enhance the familiarity with the specific taste. Over time, what was once indistinguishable may become recognisable. And once recognisable, it may become preferable. This suggests that Pepsi’s larger bottle strategy may not have only increased sales in the short term but also increased the intensity of product experience per purchase.
The effect of such a strategy is more visible in the long term when the initial quantity advantage is no longer apparent in all markets. Where the business aspect of the packaging seems to have leaned more toward the standard range of packaging sizes, such as 250 ml, the perception of the consumer might have changed. The flavour is already known, and the habit has already started to take shape. By this time, it is not easy to revert to the previous tastes. It is not the cost or accessibility, but a slight change in familiarity and comfort. In a sense, the strategy takes a leap further than price competition and into preference building on experience.
Instead of advertising or brand messaging, this strategy emphasises the use of packaging to change consumption itself. By simply providing a 400 ml bottle at the same price of Rs 20 (as compared to the standard 250 ml), Pepsi not only added value but also the degree to which people would interact with the product. This is especially pertinent in the Rs 20 category in India where purchases tend to be common and regular.
The extra 150 ml is not a big thing in one instance, but in the long run, it will result in greater exposure to the same product. The higher the consumption, the greater the familiarity.
Customers who have undergone increased exposure levels might still carry over that familiarity, and the initial preference becomes less influential. The bigger lesson here is that in habit-driven markets, it can be as important to affect the extent to which a product is consumed as it is to affect the way it is perceived.
Reeti Garg is a student of CHRIST (Deemed to be University), Bangalore. Views are personal.