In 1898 a pharmacist in a small North Carolina town created a new drink and began offering it to his customers (Pepsico.com, n.d.).. The drink was called Pepsi, and it was created to be a direct competitor of Coca-Cola, a product that had been around since 1886. Since that time, Coca-Cola has been the front-runner in the world of soft drinks; Pepsi has been the challenger.
Brand Strategies
While there’s no argument to be had that the companies compete in the beverage arena, their brand strategies, and even their business models, are decidedly different. Coca-Cola, under the guidance of CEO James Quincey, is committed to being a “total beverage company” (Doering, 2019). PepsiCo, on the other hand, is far more diversified, and a major player in the food and snacks industry (Trefis Team, 2020).
Coca-Cola’s Branding Strategy
Before committing to becoming a total beverage company, in 2016 Coca-Cola embraced what it called a One Brand strategy, with the brand of course being Coca-Cola (rather than, for example, Sprite) (Taylor, n.d.). Shortly after, the company eliminated its Chief Marketing Officer position and recognized Francisco Crespo as its Chief Growth Officer. Crespo takes a strategic approach to branding and focuses on what he calls the Brand Edge, which he says “is finding the reasons our brand solves consumer needs better” (Talbot, 2019). One can read meaning into that statement when considering the company historically focused its brand strategy around connecting through feelings and emotions (Gevorgyan, 2018). This focus includes music (I’d like to buy the world a Coke) and visual elements (the Christmas bears), all designed and delivered to reach the consumer on a lasting, personal, and emotional level.
Pepsi’s Branding Strategy
Then there is Pepsi, which takes an opposite approach of sorts. Pepsi’s branding is and has been celebrity and, more recently, influencer driven. Pepsi is specifically marketed to make a splash with its target demographic of people ages 15 to 35. If you are my age it’s unlikely you’ll ever forget Michael Jackson’s hair catching fire. Since then the company has touted Britney Spears, Beyonce, and others (Gevorgyan, 2018).
One needs look no further than the Design and Innovation section of Pepsi’s website to understand its use of visual components in branding. Here you will find the “Pepsi Big Bold Blue” strategy, which it taglines as a “refreshed global visual system.” Here you will find visual references that are exactly what you would expect given the title, and that tout “Now” and “Visuals that pop”, in stark contrast to the lasting relationship pursued by its rival (PepsiCo, n.d.).
How Pepsi Can Gain Market Share Against Coke
Now is a good time to remind you we are talking about the beverages Pepsi and Coke in this section; PepsiCo itself is doing quite well overall. But there is no question Pepsi Cola has long been the underdog in the relationship. Here are ways it might improve:
- Don’t let failure stand in the way of success
Not long ago Pepsi released an ad campaign that seemed very much inline with its strategy. The company tapped celebrity Kendall Jenner to star in a commercial in which she handed a Pepsi to a police officer. The message was meant to be one of global unity, but was pulled after being heavily criticized as insensitive to Black Lives Matter and police brutality (Smith, 2017).While tone deaf in this case, Pepsi should not let this failure make it more conservative. I would encourage Pepsi to continue to feature stars popular among Millennials and Generation Z and to focus on delivering that message of unity in ways that make sense. - Pick a position (or positions) and stick to it
Pepsi has done well in diversifying its product offerings, and it is right to invest in healthy alternatives to meet the growing demands of younger generations. This the company has done through promoting brands like Bubly and Naked. But, the company should not shy away from being Pepsi, a brand and a soft drink that people have chosen for decades. Pepsi might do well to understand and promote the idea that sometimes people just want a soda. Why not make it Big, Bold, and Blue? - Learn from Coke, and fold it into your formula for success
Pepsi has done a good job for a long time of harnessing the power and flash of celebrity; it is a visually aggressive brand and clearly does well drawing attention. But the company might do well to consider the long-lasting relationships its competitor builds. It seems to me people these days care about the companies they give business to; Pepsi has proven it can grab attention, so the question in considering closing the gap between itself and Coke may be, can it build a relationship with the consumers it captures early in life?
Top Dogs (Market Leaders) and Underdogs (Market Challengers)
If a majority of consumers prefer a market leader, it probably is not by accident. Top dogs have several advantages over competition such as higher sales volume, which can lead to lower operating and material acquisition costs. A leader also will have the top spot in distribution channels, meaning it can get its products on shelves faster and with better positioning. It may also be better positioned in supply chain development and securing discounts through bulk purchases (Penpoin, 2020).
If this sounds like a case where success begets success, it can be just that. Higher profits mean more marketing spend, the ability to develop new products quickly, and opportunities to develop brand loyalty in bulk. Personally, I’ll take the underdog. I love the idea that a market challenger has something to prove, and naturally I think it is more driven to innovate, create, and deliver improved options. After all, it can hardly rest on its reputation.
References
Doering, C. (2019, December 9). DIVE AWARDS 2019 Executive of the Year: James Quincey, Coca-Cola. Retrieved from https://www.fooddive.com/news/executive-james-quincey-coca-cola-dive-awards/565455/
Gevorgyan, L. (2018, April 24). Marketing Strategies of Coca Cola and Pepsi: Which one is better? Retrieved from https://medium.com/@lucygevorgyan12/marketing-strategies-of-coca-cola-and-pepsi-which-one-is-better-34ab13f60e9b
Penpoin. (2020, December 5). Market Leadership: Characteristics, Strategies, Advantages. Retrieved from https://penpoin.com/market-leadership/
PepsiCo. (n.d.). About the Company. Retrieved from https://www.pepsico.com/about/about-the-company
PepsiCo. (n.d.). Big Bold Blue - Pepsi. Retrieved from http://design.pepsico.com/bbb.php?v=129#section1
Smith, A. (2017, April 5). Pepsi Pulls Controversial Kendall Jenner Ad After Outcry. Retrieved from https://www.nbcnews.com/news/nbcblk/pepsi-ad-kendall-jenner-echoes-black-lives-matter-sparks-anger-n742811
Talbot, P. (2019, April 26). Inside Coca-Cola's Marketing Strategy. Retrieved from https://www.forbes.com/sites/paultalbot/2019/04/26/inside-coca-colas-marketing-strategy/?sh=3169f6012801
Taylor, D. (n.d.). Coke "one brand" strategy: simpler and with more sausage. Retrieved from https://www.marketingsociety.com/the-gym/coke-one-brand-strategy-simpler-and-more-sausage
Trefis Team. (2020, June 17). Coca-Cola Or PepsiCo? Retrieved from https://www.forbes.com/sites/greatspeculations/2020/06/17/coca-cola-or-pepsico/?sh=194546457cfa