Coke vs Pepsi de-Positioning

CONTENTS Introduction ………………………………………………………………………………………………………………….. 1 Coca Cola versus Pepsi Cola – The History………………………………………………………………………. 2 Examples of Coca Cola vs Pepsi De-Positioning ……………………………………………………………….. 3 Critical Analysis ……………………………………………………………………………………………………………. Conclusion……………………………………………………………………………………………………………………. 8 References ……………………………………………………………………………………………………………………. 8 De-Positioning of Coca Cola vs Pepsi Many times a company deliberately repositions its brand to attract new customers, based on characteristics, towards which, the market seems to be more interested in.

This may often involve significant change in marketing strategies of such companies due to the market dynamics to promote and revitalize its brands. But,the concept we will be discussing here is based on repositioning of competitors’ brands rather than changing the position of one’s own brand and is called De-positioning. Marketers are expected to do more than just brand positioning, or repositioning, to promote their brands and increase sales.

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Moving your company forward is one thing, while holding back the competitors is quite another thing. By definition, “De-positioning is an attempt to change the identity of competitor’s brands and products, relative to the identity of your own product, in the collective minds of the target market”This means changing the customer’s reception about competitor’s brands in a less favorable manner. So, it’s about manipulating your competitors’ market image in a way, hat your own brand looks superior to it, allowing you to earn your competitors’ market share. According to an article by Kelly Alan, “The aim of De-positioning is about gaining and holding relative position, and driving a wedge creating distance – between you and your rivals” De-positioning is not necessarily about criticizing or condescending competitor’s product in adishonest approach. We can say that De-positioning is like war; but played like a sport – like a match of speed chess, where moves are proactive, prompt and usually disguised.

It’s not about harming or provoking the other brand but in fact a part of the game to earn more market, which in this scenario is earned by taking away from your competitors. In order to achieve competitive advantage, firms who want to take customer base away from their competitors for themselves, must play a more clever game of positioning and de-positioning, assess both opportunities and threats in a dynamic environment and make move(s) to win maximum benefit of the situation. ME2024 Page 1 De-Positioning of Coca Cola vs Pepsi

However, it is also very important to understand that if the competitor’s image is to be handled in any way whileDe-positioning, all the facts ensuring maximum caution NTRODUCTION should be taken care of in order to avoid any sort of legal issues originating from incautious use of the competitor’s image. I COCA COLA VERSUS PEPSI COLA – THE HISTORY Our main focus of study in this assignment is to discuss various de-positioning tactics used by two of the biggest players in soft drinks industry fighting for the same market to earn the supreme leadership, Coca Cola and Pepsi Cola.

The Coca Cola was first introduced in 1886 and the Coca Cola Company was founded in the year 1888 and the drink Coca Cola began to be sold in bottles in March 12, 1894. It was the same year when the first advertisement of this drink was painted on a wall. In 50 years of its inception, the drink got so popular that it started to be considered as a national icon in the US. In order to certify the drink for the Jew community as well, as a kosher drink, a few sources of the ingredients were changed and in 1935, it got certified, thus increasing its acceptability.

The Coca Cola Company, from there on till date is known for coming up with many other products as well, but the brand name of Coca Cola, and the drink, is still considered the basis behind all the extensions and is one of the strongest brands of the world today. From a customer’s perspective, Coca Cola is associated to several things for its customers like American, classic tradition, the real thing, coke way of life sports etc. Pepsi Cola on the other hand, is considered to be introduced in 1883 with another name “Brad’s Drink” but formally got the name Pepsi Cola in 1903.

In 1926, Pepsi’s first logo was designed and in 1931 and eight years after, the company went bankrupt twice when Charles Guth purchased its assets. Pepsi however, even suffering from bankruptcy and being offered to Coca Cola for purchase on three separate occasions, where it was rejected, finally started gain a lot of popularity by means of introducing a 12 ounce bottle with a price of 5 cents. After that, Pepsi never looked back and today is responsible for introducing products like Mountain Dew, Tropicana, Lays and many more. Today, Pepsi is also considered as one of the world’s largest brand with multiple ME2024 Page 2

De-Positioning of Coca Cola vs Pepsi extensions. From a Pepsi’s customer perspective, it is associated with a number of things like the next generation, celebrities, Pepsi spirit, satisfaction etc. From the very short introductions of both the companies, it is very evident that the basis behind both of the companies’ success was their cola drinks whose formula remains unchanged till date and also their most selling product till dateare the same as well. The country of origination of both of these international brands is also USA.

Most of the people consider the taste of both the products with very less dissimilarities which is why both the brands have been fighting for the same market for a century now. Since both these brands are global, they keep on trying to earn a bigger market share through depositioning tactics, employed very wisely. As a result, in some areas Pepsi beats Coke and vice versa. First we will analyze a few interesting examples which will explain how both these giants have de-positioned each other and how they react to it followed by some critical analysis later in this article.

EXAMPLES OF COKEVS PEPSI DE-POSITIONING In 1974, Pepsi launched the “The Pepsi Challenge” campaign in Dallas, Texas, wherein, blind taste tests were conducted. As a part of the campaign, people were asked to taste cola drinks after hiding the brand names, and were asked, which one they thought tasted better. The campaign actually showed that consumers preferred Pepsi over Coca cola and that, Pepsi was thus the better tasting cola drink. The most dominant brand was Coca Cola at that time, with Pepsi second and Dr. Pepper being the third one with a considerable distance from the first two.

However, after this campaign, the sales of Pepsi in the city shot up and thus Pepsi took the campaign nation-wide and in the 1980s, global. Coca cola countered with rebates, rival claims, retail price cuts, and a series of advertisements, questioning the validity of the tests. In particular, Coca cola used retail price discounts selectively, in markets where the Coke bottler was company owned and the Pepsi bottler was franchisee owned. Nonetheless, the Pepsi campaign successfully ME2024 Page 3 De-Positioning of Coca Cola vs Pepsi managed to erode Coca cola’s market-share.

In 1979, Pepsi passed Coca cola in food store sales for the first time. Due to these taste tests, Pepsi managed to de-position Coca cola, to become the better tasting cola drink. With the market-share erosion of the 1970s and early 1980s, despite strong advertising and superior distribution, Coca cola began to look at the soft-drink product itself. Taste was suspected as the chief culprit in Coke’s decline, and marketing research seemed to confirm this. In September 1984, the technical division developed a sweeter flavor of Coke.

In perhaps the biggest taste test ever, costing $4 million, 55 percent of 191,000 people approved it over Pepsi and the original formula of Coke. Top executives unanimously agreed to change the taste and take the old Coke off the market. In 1985, Coca cola launched “The New Coke”, with the new sweeter formula and took the old coke completely off the market. However, the move back lashed, and many of the Coke loyalists, complained about it. There was a huge out-cry and people began to speak about Coke as American symbol and as a long-time friend which had betrayed them.

Anger spread across the country fuelled by media publicity. The company began receiving complains and hate-letters at the rate of more than 5000 per day. And in three months’ time, Coca cola was forced to bring back the old Coke as “The Coke Classic”. While some admit it to be one of the biggest marketing blunders, some say it was a conspiracy to reaffirm the public affection for Coca cola, as it swung-back the media and public interest back in the favor of Coca-cola Whatever, the truth, knowingly or unknowingly, Coca cola was able to de-position Pepsi back and established itself a market leader once again.

On the other hand, Pepsi came up with an ad in which a young boy acting as the famous American legend guitarist, James Hendrix aka Jimmy Hendrix is walking on a street in Seattle in his early teens with a Pizza slice in his hand. He suddenly finds Pepsi vending machine on his one side and Coke vending machine on the other and gets confused on which one to pick. He looks at the Pepsi vending machine which is placed besides a guitar shop when suddenly a melody in guitar starts playing which is one of the famous ME2024 Page 4 De-Positioning of Coca Cola vs Pepsi elodies of Jimmy Hendrix’s music career. Then he looks at the Coke vending machine which is placed besides an Accordion shop and then the same tune plays in Accordion instead of guitar which sounds boring. Then he buys the Pepsi and a guitar. This ad actually gives a number of powerful messages to the Coke and Pepsi customers like the endorsement of Jimmy Hendrix to Pepsi who was a famous Rock n Roll guitarist of that time, establishes a connection for the viewer that Pepsi helped Jimmy Hendrix make his choice and thirdly, Pepsi is the best combination with pizza.

All of these messages appeal to the younger generation and de-positions Coke as an old and a boring brand. Another example of Coke de-positioning Pepsi is its ads and taglines which said “The Real Thing” as opposed to Pepsi’s “Pepsi Generation” The Real Thing statement gave a clear signal to the viewers that no matter what Pepsi or any competitor does, it can Never be the real thing whereas Coke on the other hand is. This message indirectly depositions Pepsi without naming any competitor.

The history of both Pepsi and Coke are filled with multiple examples of de-positioning where one is trying to de-position the other to take a bigger market share. CRITICAL ANALYSIS Even though effective de-positioning can help promote a brand to steal market share from the competition, but in the scenario of Coke vs Pepsi, it initially helped Pepsi to gain market more when Coke tried to respond to Pepsi’s de-positioning. In 1936, Pepsi was in a very unstable position when they introduced a new campaign based on “Lateentry Strategies”in which they started selling 12 ounce bottle for 5cents.

This campaign became successful and earned them good sales. This campaign was presented while playing a jingle on radios which abstractly referred Coke as being expensive since it was offering 6 ounce bottle for that price. However, Coca Cola had the bigger market share at that time due to the Pioneering Advantagewhile Pepsi was just growing. Being students of marketing, we can deduce from the course studies that every marketing decision has a price and at that time, being the leading Cola brand, Coca cola had an ME2024 Page 5

De-Positioning of Coca Cola vs Pepsi option to either respond directly or ignore to respond to Pepsi’s de-positioning act. Coca Cola started to get in to price war with Pepsi after that moment, which in our opinion was one of the biggest reasons behind Pepsi’s initial recognition in the market since Coke was considered as the bigger brand at that time. Pepsi was struggling to win its market share, but from the consumers’ perspective, Pepsi was still not offering the brand association which Coke did at that time.

But when the Coke customers noticed that Coke was trying to position itself in competition to a new brand called “Pepsi”, they started taking Pepsi more seriously as well. In context to the book “Kellogg on Branding”, the author discusses the importance of branding and the associated values it offers through its products. The author even states that perceptions matter even more than the actual truth, which is why building a brand is so important.

When we discussed the example of the blind Cola testing earlier, it was a depiction of customers’ opinionsabout Cola beverage without knowing the brand as they were not told which product they tasted. However, when Coca Cola tried to respond to Pepsi with their “New Coke” after a series of blind taste tests, which showed positive results to the new taste Coca Cola was planning to launch, when the actual product “New Coke” was launched, people did not want to buy it and the campaign was a total failure.

An interesting extraction from this example is that the customers did not want to buy “New Coke” when it was launched because it was a New product and did not have the brand associations as the Original coke. After three months, when “Classic Coke” was re-introduced, it re-earned its position as the market leader because of its brand associations even though coke’s blind taste tests suggested that the “New Coke” is a superior product.

Thus, proving the importance of building a strong brand image as advised in the book. The book “Kellogg on branding” talks about the advantages of strong brands where it states on page 41 “A brand is a differentiator, a promise, a license to charge a premium. A brand is a mental shortcut that discourages rational thought, an infusing with the spirit of the maker, a naming that invites this essence to inhabit this body” In Coca Cola and Pepsi’s brand ositioning, they both try associating their brands as life style brands by using slogans like “Coke side of life” and “The Pepsi generation” Pepsi tries to focus their marketing strategy towards the younger generation more by associating various pop icons like Brittney Spears, Shakira, etc. by including them in their ads, whereas ME2024 Page 6 De-Positioning of Coca Cola vs Pepsi Coke tries to market themselves as “The Real Thing” as a reaction to Pepsi’s marketing campaign. Coke also associates some classical appeal to it as the real American brand whereas Pepsi tries to portray more flashy and modern culture with it.

It is very interesting to note that even though both brands fight for the same market, yet they position themselves completely opposite to each other, in order to maintain the brand values and associations for its customers. This proves the importance of differentiation of brand perceptions which is highlighted in the course book as well. Both the brands, Coca cola and Pepsi, have seen various challenges throughout the time after their inception which involved de-positioning each other not just regarding the product offering, but by presenting themselves as the more socially responsible of the both.

Their rivalry has reached to such an extent that both even try to present an image that “Anything you can do, I can do greener” in an effort to be the more environment friendly company since the customers have started to take environmental issues more seriously. Another challenge these both Companies have given to each other is also based on market trend shifting towards diet drinks. Both companies presented their own diet versions of Coke and Pepsi and then claiming to be the better drinks than each other.

All of these are examples of Competitive brand strategies. An interesting aspect discussed earlier is that both these companies have tried to associate themselves withdifferent brand images than each other while trying to incorporate all the latest and ever changing market trends in order to capture the bigger market share, which is a significant aim of their brand strategy in their century long history. It is also safe to assume that every common customer of either one of these brand knows the ivalry of these brands and Coke has proven to be the bigger brand globally. However, when Pepsi’s new CEO took over the company in 2006, Ms. IndraNooyi, she brought in a few significant changes in the overall marketing strategy of the company. Understanding that the market for more “healthier and organic” products was increasing and knowing that Pepsi’s image in the market is basically controlled by its flagship brand of cola beverage, she started to introduce new products to the market which were targeted to the “healthy lifestyle based” market.

A new line of “Better For You Products” was targeted to change the consumers’ perceptions of Pepsi as a company and as an overall brand where the flagship name of Pepsi can be recognized as a positive endorser for new products, yet making maximum out of the ME2024 Page 7 De-Positioning of Coca Cola vs Pepsi change in market trend. In other words, she started to communicate a different meaning of the brand Pepsi by introducing and shifting the product focus to products like Aquafina, Gatorade, Tropicana, Quaker Oats etc.

This activity also led to a comparative lessening of the marketing activities of Pepsi Cola drink which also gave signals to the market that it is no longer competing with coke as Coke is not a brand which offers such healthier products. Interestingly, this whole act can be considered as a massive depositioning example from Pepsi since it is changing its perception to a healthier brand by decreasing its focus on direct Pepsi vs Coke wars.

As discussed in the book “Kellogg on Branding”, it is clearly stated that brands can reach out to the market by creating an illusion which customers are not able to identify rationally. This is a perfect example of the content. On the other hand, as history proved that Coke and Pepsi have always acted against each other in a way to maintain its brand identification, Coke did not decrease its focus towards the flagship product of Coca Cola at all.

The initial result was that Coke lost much less market in the cola business than Pepsi to the new organic and healthy drinks, however, Pepsi was able to gain market share in newer products more. If critically analyzed, customers might think that Pepsi accepted defeat in the Cola war, whereas, being students of marketing, it is quite evident that the shift of focus is yet another way of de-positioning. CONCLUSION In essence, Coke versus Pepsi wars are the examples of the longest running depositioning examples existing in today’s world of marketing.

Both companies have fought for the same market for over a century and they are still fighting for it. In context to the course literature, one can comprehensively identify the basis of both of these giants and how they manipulate different ideas to steal each other’s markets in different parts of the world. However, the strong brand identities, which both these brands have earned over decades, is a testament of great branding and marketing since it has already been proved that a good product alone cannot beat the brand. REFERENCES ME2024 Page 8 De-Positioning of Coca Cola vs Pepsi

Kellogg on Branding by Kellogg School of Management Creating Strategic Brand Alliances by HenrikUggla http://en. wikipedia. org/wiki/Pepsi http://en. wikipedia. org/wiki/Coca_cola http://en. wikipedia. org/wiki/Cola_wars http://www. that-thing-called-success. com/? p=63 http://philip. kiracofe. com/2010/02/01/csr-coke-vs-pepsi-a-battle-to-be-greengreenwork-magazine/ http://www. investmentu. com/2010/November/are-the-coke-vs-pepsi-cola-warsover. html http://en. wikipedia. org/wiki/Positioning_%28marketing%29 Public Relations Quarterly, Summer 2001 by Kelly, Alan ME2024 Page 9