Coke vs. Pepsi: A very commercial rivalry

Pepsi’s recent controversial commercial may be off the air, but the bad taste it left in consumers’ mouths still lingers.

In early April 2017, Pepsi, the giant soda company, released an ad targeted to millennials that portrayed the era’s protest culture and aimed at the idea that Pepsi could bring everyone, despite their differences, together. What was meant to be a lighthearted ad about unity and peace was slammed by ad executives, TV pundits, and most importantly, the internet, as out of touch and completely tone-deaf. The company was accused of trivializing important causes like Black Lives Matter as a way of selling more soda. Within 24 hours of the commercial’s initial release, the company pulled the commercial from the airwaves and released an apologetic statement condemning their own ad. In an ironic twist, the shared hatred of the ad brought diverse groups of people together, though it didn’t help Pepsi’s sales. The brands stocks plummeted in the aftermath of the controversy. While the conversation Pepsi was attempting to start is a noble one, the execution of the ad failed it miserably.

The protest portrayed in the ad was generic, the decision to cast model and reality TV star Kendall Jenner as the leader of said protest was off-putting, and, perhaps worst of all, the idea that a can of soda could end a violent protest and unite protesters with police is laughable. If Pepsi’s goal was to get people talking about their product, they succeeded (sort of) – the YouTube video of the commercial amassed 1.6 million views in the first day and memes of the ad started almost immediately, and continued for weeks after. Saturday Night Live spoofed the ad in a scathing parody that very week. People were certainly talking about Pepsi, though not for the reasons they had initially hoped.

Can a can of soda change the world?

Coke vs. Pepsi: The rivalry continues

Pepsi’s big fumble brought to mind a similarly idyllic ad that rival soda brand Coca Cola produced in 1971, the famous “Hilltop” commercial. More than 40 years after its debut, people are still talking about “Hilltop”, and for good reasons. The ad was referenced in the finale of the AMC show Mad Men and it consistently makes the cut on lists of the best commercials ever made. Coke even remastered the original footage and re-released the commercial in 2016. The theme of the ad is similar to Pepsi’s attempt; it features a crowd of diverse people gathered together on a bucolic hillside with bottles of Coca Cola singing “I’d Like to Buy the World a Coke”. So why is Coke’s unity ad considered iconic while Pepsi’s was immediately reviled? The simple answer: execution.

Instead of using a bottle of Coke to bring people together in a big event, a diverse group of people simply gathered together to share their differences and commiserate over soda. Coke wasn’t the stimulus for the unity displayed in the commercial, people were. Coke’s ad is about people coming together in peace and harmony as a way to sell soda, not the other way around. That thought, combined with a catchy song, is what makes the commercial iconic.

Can soda change the cultural landscape?

Brands should use caution when tiptoeing the line between social commentary and social activism. Forward thinking brands are rewarded for taking a stand when consumers sense it is authentic. But companies are punished when people detect commerce behind the public social message. Things are not as simple as they were in 1971.

It could be argued that the success of Coca Cola’s ad in 1971 and the failure of Pepsi’s ad in 2017 is a difference in eras. In 1971, the Vietnam War was in full swing, with anti-war and women’s rights protests arising all over the country. It was a turbulent time that “Hilltop” was attempting to pacify. 2017 has seen a resurgence of social movements and terror attacks have launched a new era of global turbulence, something Pepsi wished to capitalize on with their Kendall Jenner-starring ad. What Pepsi failed to recognize is that, no matter the year, a can of soda can’t change the world.

commercial, Pepsi
The not-so-memorable Kendall Jenner commercial from Pepsi.

Discounts: Race to the Bottom?

The discount craze has been raging in the past few months in restaurant land. With each new offer or promotion (this year, they’re disguised as boxes) the competition gets hairier and the pressure for discounts is amplified. QSR and Casual Dining are bundling and cutting prices more than ever, it seems.

And as these offers come to an end, it seems that traffic does too. In data released by MillerPulse, when QSR slowed discounts at the end of Q2, average receipt increased (yay) but traffic counts dropped. Quite a bit.
Prior to that, when traffic was up, average check was down .6%. Presumably this is because people were coming in for the discount and not indulging in up-sell items.

The challenge for over discounted brands is to wean customers off of those. Often, this means weaning management off of discounts as well.

So, now we’re watching the industry chase it’s tail. Brands offer discounts to fight lagging traffic numbers. In doing so, they’ve trained a segment of their customers to expect a lower check. When they try to take price or to simply end the discounting, those guests stop visiting. Traffic counts suffer in the absence of those price breaks.

At the same time, competition has never been tougher. Grocery, mail-order and a ton of delivery services are cutting in to visits. Each brand looks at their competitive set and tries to figure out what others are doing to gain share. Discounts.

Discounts can be a powerful tool if used with discipline. The QSR discount model is a very compelling offer, surrounded by compelling upsell items at point of sale to take that original check up in value. The guest still feels they got a deal, and the brand earned their share. When done well, a great offer drives traffic along with increased sales from effective point of sale and employee sales technique.

And like anything that feels good, it can be easy to get hooked. One discount follows another. That’s when traffic starts to wane. We have studied brands that have big success driving traffic with a vehicle like FSI, and quickly turn that into a “strategy.” In one case, a casual dining brand got up to 19 FSI in a year, getting almost no return along with diminished traffic the rest of the year.

The challenge for over discounted brands (much of the current industry) is to wean customers off of those. Often, this means weaning management off of discounts as well. Here are 3 keys:

1. Create something of value elsewhere in the menu beyond discounts.

This might be what we see McDonald’s doing with their McPick menu today. Replace the discounts with items that feel discounted, which might just be a new combination or bundle, or presenting items in a new size or format along with a new price. Train guests not to wait for the new discount and get them used to ‘everyday value.’

2. Distract regulars from discounts with new items.

They know the cost of their favorite dish. They know when it’s discounted. Based on items that have been heavily discounted with a high take-rate, look for inspiration for new items that the same audience will like, and will distract from cost. Added as a series of LTOs, brands can reset expectations on menu and pricing to create a new relationship with guests.

3. Be willing to lose some discount hunters.

Traffic is not traffic. As we see in the MillerPulse data, even when traffic was up recently, sales were down by half a percent. It takes discipline to not just chase down anyone who will place an order and trade up for guests who know you brand is worth the full check. Over time, brands can move up to guests who don’t come just for discounts.

Discounting can be a powerful tool, and an addictive drug to brands and consumers alike. What we’re seeing now is the hangover for both. Believe it or not, consumers have discount fatigue. With so many options, dining brands will have to come up with new ways to bring guests in the doors.

Growing an emerging brand: three key factors for success

watering can, new product, CPG

Growing an emerging brand in the CPG space takes a special focus and attention.

A growing consumer package goods company can efficiently and effectively create demand and generate trial with limited distribution and a limited budget. The way it’s done is by doing a few things well and with great precision.

It’s important to remember when setting a precise strategy, you must sacrifice some things you think you want to do. Staying focused on what’s working will prevent you from straying to random tactics and getting off message. There are three critical components to an effective marketing strategy for most emerging brands. They’re designed to focus your limited budget on the optimal tactics and messages through a test and optimize approach. More on that later. The three critical components are: geo-targeting, target audience, and optimal messaging.

1. Geo-targeting

Geo-target your promotional investment in your best markets. Examine your ACV in each market to ensure people will be able to find your product once you create an interest.

You need to understand who your best and most likely customer is.

Start by identifying your top five designated market areas (DMAs) based on where you have the best distribution. Your primary objective is to generate awareness so you can generate trial. Several great ways to generate that awareness include: paid search, paid social, and online video. All tactics can be implemented relatively inexpensively.

2. Target audience

Have a precise target audience for your product. Do not try to reach broad demographics like “Adults 25-54.” It’s not efficient. You want to understand who your best and most likely customer is. You’ll base this not only on gender and age, but also with a clear psychographic profile. Understanding who your raving fans are is important so you can use all the digital targeting tools available today to go find more people with the same profile. When setting your target there are several tools available, like social listening, Facebook Insights and Google Analytics.

3. Optimal messaging

Create optimal messaging that will resonate, engage and motivate your audience. Because you are implementing the test and optimize model, there is no need to limit your message options. Since you’re early in your marketing efforts you want to test a variety of approaches to determine which ones resonate with your audience and creates the best click through rates and conversions.

As you learn what advertising messages and types are generating click through and conversion, you optimize your advertising spend on the most effective ads.

Consumers are looking for new products all the time. They’re interested in new flavors, new options to replace old favorites or they’re just trying new products out of curiosity, and they use a variety of channels to seek them out. Whether it’s search, social channels or websites; emerging brands need to get their message out there so we can discover your great new product.