Fool.com: The Cola Marketing Wars[Rule Maker] June 1, 2000 The Cola Marketing Wars

By Rob Landley (TMF Oak)
June 1, 2000

I want to collectively slap Coca-Cola's (NYSE: KO) management. I get this urge from time to time about each of the companies in our portfolio. (Regarding Microsoft it never goes away.) But right now, there's a marketer in charge of Coke, who has publicly acknowledged that Coke is primarily a marketing company, and he hasn't even fixed their marketing campaign yet. Ouch.

Forget the stock price. I'm invested in the company, not the stock. A low stock price is just an excuse to buy in cheap, as long as it's a good company. What I'm upset about is that Coke is a marketing company that's forgotten how to do marketing.

Historically, Coca-Cola and PepsiCo (NYSE: PEP) have held a classic advertising duel. Coke was talking about its products, Pepsi was talking about its customers. Coke had very successful advertising campaigns with "Things go better with Coca-Cola," "Can't beat the Real Thing," "Coke is it," etc. Pepsi flailed around with everything from "You're the Pepsi Generation" to "Pepsi Stuff," and wondered why Coke stayed ahead.

Consumers distrust advertising, but one of the few areas they might possibly consider a company to be an authority on is its own products. The Coca-Cola Company just might know more about Coke than I do, and thus might conceivably have something intelligent to say about it. Similarly, Pepsi might be able to convince me there's a reason they make Pepsi. When companies talk about their products, on a good day consumers might even be mildly interested.

On the other hand, neither Coke nor Pepsi is an authority on me as an individual. If I start out ambivalent towards Pepsi, and Pepsi tells me I'm the "Pepsi Generation," the instinctive response is "oh no I'm not." Granting me membership to some exclusive club is not the same as saying Pepsi is a good product. (If it's that good, why is it exclusive?) Even when the message is virtually the same, phrasing it as "this product is cool" is more believable than "if you use this product you will be cool." They know their products, they don't know me.

Coke's strategy wasn't just more effective in the short term, it was a cumulative investment in brand equity. Their constant mantra, "Coke is great," "Coke is still great," "Here's a new way Coke is great," gradually built up a mental image of Coke as a good thing. No big ambitious grabs for a central role in anyone's life, just "The pause that refreshes" -- an ongoing attempt to get you to like Coke just a little more than you did before.

Meanwhile, Pepsi was going for short-term sales. Act now before all the Pepsi Stuff is gone. Coke has been coasting for years on a backlog of accumulated brand equity, a luxury Pepsi could never really afford.

This is why I'm so incredibly torqued that Coke just came out with a new ad campaign, "It could be your next Coke." BLYEACH!!! I thought it was stupid when Pepsi used the prizes scheme! Do people need to be bribed into buying this stuff, or is it great stuff? Pick one!

Coke, when it is successful, has ALWAYS centered its advertising around the notion that Coke is wonderful and it just has to tell people about it. Now Coke is doing the sort of push towards short-term sales with no ongoing investment in brand equity that kept Pepsi in second place for decades. And this isn't the first time -- they're following up on "The Coke Card" campaign. They've copied a poor promotion TWICE! WHY?!

Meanwhile, Pepsi has started tentatively repeating a positive mantra about Pepsi being good stuff: "The Joy of Cola." They seem to have finally figured out why their 1980s campaign, "You've got the right one baby," worked so well. It wasn't the "you've got" part that their advertising traditionally centered around, but rather it was calling Pepsi "the right one" and the repetitive emotional reinforcement of the "uh-huh" girls. Yes, Pepsi is the right one, uh-huh-uh-huh, with music by Ray Charles. As an ad, THAT works.

As an advertising campaign, "It could be your next Coke" makes me physically ill. Back when Coke had an ex-accountant as CEO I could understand "The Coke Card" and at least hope he'd grow out of it. But Coke's current CEO worked his way up as a salesman.

Mr. Daft, I honestly expected better.

This calls for a simple poll. From a brand perspective, who's doing a better job of making the rules in the beverage industry?

  1. Coke
  2. Pepsi

Vote here to share your thoughts.

- Oak