Pepsi used a very simple and effective way of calculating Goodwill. After the Satyam issue Goodwill Valuation by using the financial statements seems to be less reliable.
Pepsi did a survey where it went to people and asked will they buy a Rs 10 Pepsi cold drink bottle. When the reply was 'Yes'. They asked the same person by showing another bottle will he buy it for Rs 10 (This bottle was the same cold drink bottle as one shown before with a difference that it didn't have a Pepsi tag on the bottle).He said NO. Then they reduced the price and asked if he will buy at Rs 9. Again the answer was NO. They reduced the price and finally the person said he will buy the cola bottle at Rs 5. So Pepsi said Goodwill of the company is Rs 5 per bottle. By putting a tag of Pepsi people are ready to pay an extra ampunt of Rs 5 every bottle.
What an innovative way to value Goodwill!!!
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2 comments:
is dis a real story ?? difficult to believe...
if person A is rdy to buy a cola @ 5
n person B is rdy to buy @ 6....C @ 9....this valuation won't give a rite ans.
wat abt the loyal consumers who won't buy a cola without a pepsi tag...will the co. take Rs.10 for goodwill valuation?? the choice depends on various parameters like distribution...availability...
mkt substitutes...seasons...promotional campaigns ..etc.
somehow the way they have derived Rs.5 per bottle seems improper.
final point cost of pepsi is not Rs.10 as per my info.
:)
Brilliant!!
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