Pepsi-Cola – An Entry in the Marketing Creativity Hall of Shame

Julie Lidberg, @msjulie, analyzes Pepsi’s approach to marketing creativity. Read on!

Pepsi-Cola — The Hall of Shame

 Pepsi-Cola has long been trying harder and chasing after Coca-Cola to become number one in the cola war.  They held the spot of number two for many years but now they aren’t even holding their own. Instead of going to number one, they have shrunk to number three. Coca-Cola passed them again with Coke being number one and now Diet Coke as number 2 (News, 2011).

What is causing this wrong turn at Pepsi?  It seems to me, they are making many marketing mistakes. It is a shame.  I nominate them for the Hall of Shame for the many marketing blunders they have made in the past years that are keeping them down.

Background

Pepsi-Cola has much of the same beginnings as Coca-Cola only seemed to have a much rougher time of it. They both were started in the South at a drug store. Pepsi was first introduced as “Brad’s Drink” in New Bern, NC, in 1893 by Caleb Bradham. He made it at his drugstore where he sold it. It was later labeled Pepsi-Cola, named after the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy(History of a Birthplace, n.d.).

Pepsi had its first celebrity endorsement in 1909 by a car race pioneer, Barney Oldfield. He appeared in a newspaper ad describing it as “A bully drink…refreshing, invigorating, a fine bracer before a race. The theme “Delicious and Healthful” appears and will be used intermittently over the next two decades (Pepsi, Frequently Asked Questions, n.d.). In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again.

In 1931, during the Depression, Pepsi entered bankruptcy. Assets were sold and Roy C. Megargel bought the Pepsi trademark (The History of Pepsi-Cola, n.d.). Megargel was unsuccessful, and soon Pepsi’s assets were purchased by Charles Guth, the President of Loft. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores’ fountains after Coke refused to give him a discount on syrup. Guth then had Loft’s chemists reformulate the Pepsi-Cola syrup formula. On three separate occasions between 1922 and 1933, The Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company, and it declined on each occasion. Senior Executive Harry Lee offered the Pepsi-Cola company as much as $150,000 for the company, and when Pepsi-Cola declined, this sparked competition between the companies that continues today! (Pendergrast, 1993).

Why Should Pepsi-Cola be in the Hall of Shame?

I don’t claim to be a marketing creativity genius but I can certainly see that Pepsi has made a lot of marketing snafus through the years. I’ll cover some of them here.

Since market expansion has gone international, it is especially important that marketers know their audience. Hello, the world is not all American! When you enter a market in a foreign country, it seems like a no-brainer to me that you learn the language. Pepsi didn’t do this obvious thing when entering the Asian Market back in the 60s. Pepsi expanded to China using its slogan, “Pepsi Brings You Back to Life,” which translated in Chinese means, “Pepsi Brings Your Ancestors Back from the Grave.” Besides not knowing the language, Pepsi didn’t know about the culture. Pepsi also lost market share in Southeast Asia when it changed its vending machines from deep blue to light blue. Light blue is a symbol of death and mourning in Southeast Asia(Qualman, 2011).  Sounds like Pepsi has a lot to do with death!

In the 70s, Pepsi had an idea to rapidly gain market share by buying fast food chains, kick Coca-Cola out of these stores and restock them with Pepsi. Pepsi bought Taco Bell and Pizza Hut and they began selling Pepsi. Easy, Breezy, Brilliant idea? NOT. Pepsi’s market share started to drop. By entering the fast food arena, Pepsi now had dozens of new competitors! The other fast food chains and independents which had been selling Pepsi quickly switched to Coke! They didn’t want to help build the profits of their fast food competitor’s parent company — Pepsi (Cooney, n.d.)!  Hello, Pepsi Marketing. Basic rule in building market share: Plan for the reaction of your competitors. By the way, you sell soda, not tacos and pizza.

In the 80s, Pepsi started having problems with the pop star celebrities they picked to endorse their product. The first one they picked was Michael Jackson.  While filming an ad for Pepsi in 1984, a pyrotechnics stunt went wrong and badly burnt Jackson. The accident would leave Jackson addicted to painkillers for the rest of his life (Russell, 2012). In 1987, David Bowie and Tina Turner sang a duet of “Modern Love” for a Pepsi ad. The same year, Bowie was accused of sexual assault and the company dropped the ad immediately. In 1989, they named Madonna as their spokeswoman. Her video for “Like a Prayer,” a song used in a Pepsi commercial, was deemed blasphemous and brought accusations of anti-Catholicism against Pepsi. In 2002, Pepsi pulled a national 30-second ad featuring Ludacris from the air after Fox’s Bill O’Reilly called for a boycott of the Pepsi for using an “immoral rapper” as their spokesperson. When Pepsi began running ads with the Osbournes instead, Russell Simmons said it was racially insensitive. In the end, Pepsi was asked to make an annual contribution of $1 million to the Ludacris Foundation for three years as amends (Russell, 2012). Hello Pepsi Marketing.  Quit while you’re ahead!

In October 1996, the cover of Fortune read, “How Coke is Kicking Pepsi’s Can.”   As Pepsi’s profits trailed Coca-Cola’s by 47 percent, the magazine declared that the brand had officially lost the war. Coke’s then-CEO, Roberto Goizueta, dismissed his rival in the article, saying “As they’ve become less relevant, I don’t need to look at them very much anymore (Russell, 2012).”

Professor Bryan Sharp, a professor of Marketing Science at the University of South Australia, noted that it is rare for a company to make blunder after blunder but Pepsi has done it again and again. This is the company that launched the Tropicana disaster by removing the brand’s distinctive assets from the pack. Sales dropped sharply overnight. In the same year Pepsi decided to call Gatorade just G, and ditch their logo. Again they have been backtracking ever since (Sharp, 2011).

In 2009 Pepsi paid the Arnell Group $1 million dollars to change its logo. The new logo was not much different that the old one (Russell, 2012). They were not offering anything new nor were they expanding into a new market. They had no new value proposition.  In addition, the logo also made headlines for resembling that of newly elected President Obama. Coupled with Pepsi’s new slogans — “Yes You Can” and “Choose Change” — the company was criticized for copying Obama’s award winning campaign and aligning itself with it at the same time. In a response to these allegations, Pepsi Brands chief Frank Cooper seemed to insinuate that Pepsi may  have inspired Obama’s campaign (Russell, 2012). Here is the video:

http://adage.com/article/video/pepsi-exec-responds-obama-logo-controversy/134176/

This Pepsi Logo change ended up being a nearly $2 billion dollar expenditure that resulted in reduced brand affinity and loss of No.2 position to a Diet soda (Branding Blunders, 2011). A company that already has a professional logo, and is entertaining a re-design, with no change in the product or marketplace is one of the most tangible Branding Blunders you can witness. Hey, Pepsi Marketing: Changing your logo for no apparent reason is not a creative way to compete against Coca-Cola. Have you thought about hiring some of the creative marketers from Coca-Cola to help you out here?

In 2010, Pepsi told the world that they were going to revolutionize their marketing by taking a huge chunk of their marketing budget out of TV advertising and move it into social media related initiatives. Pepsi decided they weren’t going to participate in the Super Bowl! Whaaaat! They essentially handed the Super Bowl to Coca-Cola! Instead, they took the $20 million they would have put in ads and invested it in the “Pepsi Refresh Project.” Pepsi said the project was an exercise in brand building, but any marketing investment should have an impact on sales. This was not a sales driven program. Pepsi sales declined by 6%, sharper decline than the 4.3 percent of soda’s overall (Russell, 2012). Bob Hoffman from the Ad Contrarian summed it up: The Refresh Project accomplished everything a social media program is expected to: Over 80 million votes were registered; almost 3.5 million “likes” on the Pepsi Facebook page; almost 60,000 Twitter followers. The only thing it failed to do was sell Pepsi. It achieved all the false goals and failed to achieve the only legitimate one (Hoffman, 2011). Hello Pepsi Marketing. I learned in my advertising class that you still need traditional advertising along with social media. You don’t cold turkey right out of television advertising, especially the Super Bowl, and go right into social media. Have you taken an Advertising class?  It might be a good idea. I know a good teacher.  (By the way, Ad Age declared the program would be a case for marketing textbooks.)

In July of 2011, Pepsi announced a return to television advertising with the first new campaign in three years. The campaign, “Summer Time is Pepsi Time” was to poke fun at Coca-Cola featuring the Polar Bears and Santa Claus in the summer time; but it ended up featuring more of Coca-Cola’s products than Pepsi’s. The ads ended up helping Coca-Cola (Russell, 2012).

Here is a link to some of the images:

https://www.google.com/search?q=summer+time+is+pepsi+time&rlz=1C1LAVG_enUS420&tbm=isch&tbo=u&source=univ&sa=X&ei=SQrjUaqdK8zi4APBkYDADQ&ved=0CD4QsAQ&biw=1600&bih=767

Hello Pepsi Marketing. Me again. Who are you advertising for? You need to show your product! Don’t show the distinctive assets of the competition. Have you taken Marketing 101?

In March of 2012, Pepsi let its “Choice of a New Generation” slogan from the 1984 to 1991 expire and an oatmeal company took it over. Letting a part of its brand’s history be recycled like that was a rookie move on Pepsi’s part. Either the trademark renewal slipped through the cracks in the constant manager shuffling, or Pepsi just gave up (Russell, 2012). Also in March, they changed its recipe so they wouldn’t have to put cancer labels on its cans. In May of 2012, their Chief Creative Officer, Brad Jakeman, spent $5 million dollars and nine months trying to figure out what set his brand apart from the competition. His final conclusion was that “Coke is timeless. Pepsi is timely.” Coke represents permanent happiness while Pepsi is all about excitement (Russell, 2012). Hello Mr. Jakeman. Maybe you could have had an intern figure that out for you? Coke is Classic and traditional. Look at your old slogans, Pepsi is always about youth. Then Pepsi unveiled a new campaign. Surprise! Another pop star! Hello, Pepsi Marketing. Do you think you could be a little more creative than just throwing pop stars at your product over and over again? Then Pepsi announced it was resurrecting Michael Jackson to put on cans. Remember when Michael Jackson got burned in a video for your product that lead him to taking painkillers, which he became addicted to and then he eventually died of an overdose (Russell, 2012)? Hello Pepsi, Marketing. Do you ever look at your old campaigns or slogans? Now in 2013, Pepsi has, you guessed it, another pop star, Beyonce, in their ads! Time will tell how this works out. Fingers crossed! https://www.google.com/search?q=pepsi+and+beyonce&rlz=1C1LAVG_enUS420&tbm=isch&tbo=u&source=univ&sa=X&ei=MBzjUdS-O9O44APf4IHYAg&sqi=2&ved=0CEIQsAQ&biw=1600&bih=767

Pepsi has gone through years of turnover and reshuffling of senior marketing positions. In March of 2013, after a $1 billion dollar loss in sales, Global Chief Marketing Officer, Salman Amin left to become COO at S. C. Johnson. He was the 30th senior brand manager to leave Pepsi since 2008 (Edwards, 2013)!

I actually started feeling sorry for Pepsi after reading the fiascos of marketing errors that they have made through the years. It is a shame that Pepsi, with all their resources, cannot pull together some kind of marketing creativity, even by accident. The Accidental Creative should be required reading starting at the top of the organization. I’m so depressed; I’m going to open a can of Coke and Get Happy!

References:

Branding Blunders. (2011). Retrieved from http://brandingblunders.com/page/4

Cooney, M. (n.d.). Marketing Mistakes We Can Learn From, Part II. Retrieved from http://www.businesslife.com/articles.php?id=393

Edwards, J. (2013, March 8). Pepsi’s Global Marketing Chief Is Out After $1 Billion In Lost Sales. Retrieved from http://www.businessinsider.com/salman-amin-leaves-pepsico-2013-3

History of a Birthplace. (n.d.). Retrieved from http://www.pepsistore.com/history.asp

Hoffman, B. (2011, March 11). Social Media’s Massive Failure. Retrieved from http://adcontrarian.blogspot.com/2011/03/social-medias-massive-failure.html

News, C. (2011, March 17). Pepsi slips to No. 3 in cola war. Retrieved from http://www.cbc.ca/news/business/story/2011/03/17/pepsi-coke-cola.html

Pendergrast, M. (1993). For God, Country, and Coca-Cola. Basic Books.

Pepsi, Frequently Asked Questions. (n.d.). Retrieved from Pepsi USA: http://www.pepsiusa.com/faqs.php?section=highlights

Qualman, E. (2011, March 30). 13 Marketing Translation Mistakes to Learn From. Retrieved from http://www.clickz.com/clickz/column/2036234/marketing-translation-mistakes-learn

Russell, M. (2012, May 12). How Pepsi Went From Coke’s Greatest Rival To An Also-Ran In The Cola Wars. Retrieved from http://www.businessinsider.com/how-pepsi-lost-cola-war-against-coke-2012-5?op=1#ixzz2YwTjhdcU

Sharp, B. (2011, March 7). What is Pepsi doing ? Marketing blunder after blunder. Retrieved from http://www.byronsharp.com/blog/files/8f17f4decb5d46f6511718a1c0c1cee3-10.html

The History of Pepsi-Cola. (n.d.). Retrieved from http://web.archive.org/web/20010415161612/http://sodamuseum.bigstep.com/generic.jhtml?pid=3

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