Problem Identification: Pepsi Blue

Problem Identification: Pepsi Blue

The main problem with the Pepsi Blue case was that their 500 million dollar marketing campaign spent in 1996, was based on mediocre and in conclusive evidence surrounding their test market of Bahrain in 1995. In 1995, Pepsi decided to test their product on the population of Bahrain for four reasons, all of which had errors and showed bias. Their first reason was that Pepsi’s management in the Middle East had already been experimenting with the blue color, because white colors had been washing out due to the bright sunlight, which was common to the region.

The fact that Pepsi had been experimenting with the blue configuration of the new Pepsi design on “point of sales materials” in the region, shows an interactive testing effect bias, and grounds for dismissal of test results. In an interactive testing effect, a prior observation has sensitized the respondent to the treatment, which affects his/her reaction to the treatment. (MKT 346, Dommeyer) In other words, since Pepsi customers in Bahrain were already exposed to the new blue design, they did not react to the new design as they normally would, thus bringing the test into question because of low external validity.

The second reason Pepsi tested their new design in Bahrain was because Bahrain had a single franchisee bottler who on occasion had been critical of Pepsi. Pepsi thought this would bring credibility to their product; however the problem with this, is that Pepsi usually deals with numerous bottlers in regions that have a much higher population than that of Bahrain. Since Pepsi was conducting their tests in Bahrain under a non-laboratory setting, they were in fact conducting a field experiment. The threats to external validity such as sample bias and situational bias are again made prevalent through Pepsi’s use of conditions that were not conducive to their actual target market.

The third reason Pepsi tested Blue in Bahrain was because Pepsi dominated coke sales 3 to 1 as in many other Middle Eastern countries. The immediate problem with this is the sample bias associated with the test. If the Pepsi marketing department truly wanted to test their product they would have conducted a more randomized testing approach, and not used subjects who were already favored to choose Pepsi over Coke, leading to low external validity in experimental testing.

The final reason Pepsi chose to test Blue in Bahrain was because Bahrain had a low population of 1 million people and figured that this would be a decent means for conducting a field experiment. Again we see a severe sample bias. Rather than choosing to test Pepsi Blue in a more developed country, which would have been more conducive with the “world-wide” target market that Pepsi Blue was trying to appeal to, Pepsi chose to test Blue in a growing, not yet developed country such as Bahrain.

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