Pepsi Inc.’s Global Business Mistakes in China

Achieving global business success depends on various factors that facilitate a company to fulfill these aspects. Many businesses enter the international market, but a few would succeed in these markets due to multiple reasons. For a company to succeed in the global perspective, it needs to align its strategies with foreign markets’ interests. Some factors that cause business failure in the global market may include lack of planning. Moving to global markets means access to new customers and keeping up with the competition. However, some companies jump into the international markets without a proper plan due to the lack of market research and inappropriate strategies for the new market. Besides, poor communication and lack of market acceptance can cause significant problems leading to market failure. Pepsi Inc. experienced a market failure in China due to cultural mistakes in its marketing slogan “Pepsi Brings You Back to Life.” The saying caused significant problems, leading to market failure in the Chinese market.

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Over the years, the Pepsi brand had become boring in the market, especially in China, and had significant competition from huge companies such as Coca-Cola, which competed significantly in the global market. Between 1963 and 1967, Pepsi entered the Chinese market with a new slogan meant to revive its brand and beat its competitors. The new slogan was, “Pepsi brings you back to live” (Robertshaw, 2017). However, the company received a rejection in the Chinese market due to its translation in China. The Chinese people translated the slogan as a cultural abuse of their ancestors. According to the community, the Pepsi brand’s marketing slogan would bring dead people to life. More specifically, the Chinese translated it as if the brand meant to bring back their dead ancestors to life. People in China value their ancestors and the dead, and they translated the slogan as abusive to their ancestors. The company took this initiative to use the same catchphrase they used in the US market, hoping to make significant profits in the Chinese market. The slogan had achieved extraordinary success in the US market, making the Pepsi brand well-presented and accepted in the home market (Lingualinx, 2020). However, Pepsi Company did not achieve what it intended in China because its business strategy failed in the new market. Besides, the company wanted to keep up with the competition with the Coca-Cola Company in the Chinese market, which led to the development of the new slogan, which meant to revive the failed Pepsi brand in the global market.

Pepsi Company lacked proper planning and did not perform market research to understand the local culture in China. It did not have important information about this new culture, which led to the failure of its brand in the global market. A motive that pushes companies to go outside the local boundaries is gaining new customers and increasing profitability and popularity. However, a lack of planning can lead to business failure in global markets (Kokemuller, 2019). It is essential to understand the cultural and social aspects of the people in the market you intend to serve. Besides, companies that move to global markets require to conduct customer and market analysis to understand customer preferences and interests before launching a product in the new market. However, Pepsi did not take the initiative to conduct market research and customer surveys to understand the Chinese market and local communities and the cultural aspects they may encounter while servicing such a population.

Pepsi Company could have prevented this issue in various ways. First, the company could have considered its global brand, image, and reputation critical to its success in the Chinese market. Direct influence on customers plays a significant part in enhancing brand success in a new market (Roberto, 2018). In the same case, considering cultural aspects and personal interests for the new market is critical for enhancing global business success. The company could have prevented this mistake by first understanding the cultural, religious, and social beliefs that the Chinese people regard as valuable in their lives. Pepsi Company could have conducted market and customer surveys to understand the factors that could hinder their business operations in the new market and derive the necessary strategy to attract customers to the new product. It could have helped the company develop a slogan that could not hurt the Chinese beliefs and social lives.

A brand message should always transcend language, which facilitates emotional response. Language translation is an essential aspect of China, the second-largest economy for global products (Roberto, 2018). Cultural differences, such as language and religion, create significant differences in the market. Companies should consider the effects of these factors on their marketing efforts in the new market (Chand, n.d.).

Products related to people’s way of living should have significant alterations, or else they might not find acceptance in the new market (Chand, n.d.). Pepsi dealt with products related to people’s lives, making the brand a sensitive one in the Chinese market. The company could have done considerable market research and analysis when expanding to the Chinese market. Some aspects of this research should include market acceptance and responsiveness of the target audience (Crane, 2016). The Chinese cultural elements and beliefs were a significant factor in Pepsi’s success in the market. The company could have considered the meaning of its slogan in the Chinese culture to determine whether it could hurt their belief and culture. These aspects could have prevented the issue from affecting the company’s success. However, the company failed due to a lack of market analysis for the new market.

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The marketing slogan crafted by Pepsi, “Pepsi Brings You Back to Life,” was offensive to the Chinese population in the global Chinese market. The Chinese population perceived the slogan as “Pepsi Brings Your Ancestors Back from the Grave.” The Chinese people place significant importance and recognition on their ancestors (Lingualinx, 2020). The statement offended the consumer’s respect for their ancestors. The slogan offended their belief and respect for ancestors, making it a concern in the Chinese market. According to the Chinese people’s belief, the company meant that it had the power to bring back to live their ancestors. However, the question remains, who knew that the drink manufacturer had made would revive the dead back to life? Although the slogan had a significant effect on the Chinese market, leading to PepsiCo’s lack of recognition, the company reframed its slogan and later gained people’s trust. The company used various strategies to achieve success and trust in the Chinese market. Its brand in developing products considers the tastes and preferences of local customers (Chinadaily.com, 2013).

After the company failed in the Chinese market due to the slogan effect, the company had to review its marketing strategies. The company had to consider the cultural aspects of the Chinese population as part of its significant success factor. In the same case, Pepsi thought of the strategy translation as not having any foundation because only part of the population had taken it as a serious matter in their culture. Later, the company used market research in its new products, which considered the preferences and interests of the Chinese population in its developing products (Chinesedaily.com, 2013). The strategy has made the company achieve significant success in the Chinese market and gained acceptance in the local markets.

I would recommend other companies entering the global market to observe various aspects before entering into new countries. First, it is necessary to conduct market research in the new market. It is essential to understand the cultural and social aspects, among other factors, when providing products or services in a new market. These aspects tell customer acceptance by understanding customer preferences and interests before developing marketing strategies. Besides, market research and analysis help the company understand the products or services that might conflict with the customers’ cultural, religious, and social beliefs in the new market. Besides, it is essential for companies entering the global market to undertake market testing to determine the acceptable level of any product or service in the new country.

In general, marketing strategies have a significant role in determining a product’s success or failure in a new market. Entering the global market means that a company will encounter new cultures and religions in the new country. However, Pepsi Company failed to undertake the necessary steps when entering the Chinese market in 1963. The company introduced a slogan, “Pepsi Brings You Back to Life,” which caused adverse impacts on its success. The local Chinese people translated the phrase as if Pepsi Company’s brand would bring their ancestors back to life, which conflated their respect for their ancestors. However, the company changed its strategies later and gained success in the Chinese market. The company has gained local people’s trust after recognizing their interests and preferences.

References

Chand, S. (n.d.). 5 Factors You Must Consider While Your Company is entering a New Market. Your Article Library. Web.

Chinadaily.com. (2013). PepsiCo’s Strategy Wins Market Share. Web.

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Crane, A. (2016). Companies Entering New Markets Successfully. Sales Focus Advisory. Web.

Kokemuller, N. (2019). Factors for Global Business Failure. Chron. Web.

Lingualinx. (2020). 5 Global Marketing Failures (How Localization Could Have Saved Them). Web.

Roberto, A. (2018). Cultural Epic Fails: Brands Gone Wrong, and What Brands Can Learn from KFC, Mercedes Benz and Pepsi (In China)? Medium. Web.

Robertshaw, E. (2017). 5 Slogan Translation Fails. Andiamo. Web.

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