Tuesday, January 31, 2012

Welcome back

Funny thing about branding. Unless you keep reminding people who you are, what you do and why you're worth the price, they tend to forget about you – no matter how big you are.

That's what Pepsi is finding out after underspending on marketing for the past decade.

Pepsi's market share peaked in 2004 has slowly slid to under 10% for their flagship brand. Yes, there are a lot of things working against Pepsi – health and diet trends, new competition, an aging population – but none of those are any real excuse. During those same years Coke's volume grew and their share increased to 17%.

What did Coke do right? Invest in good old fashioned advertising. They spent over $3 billion with a "b" last year, while Pepsi invested less than $2 billion.

While the wizards of Westchester were cutting budgets and chasing every shiny new marketing trend, Coke kept pounding away, sponsoring American Idol, buying Super Bowl spots, maintaining a very high profile and supporting it with great retail promotion.

This isn't rocket science. It's sugar water. It's not something people think a lot about. It's not something they want to engage with. They want to buy it, drink it, enjoy it and feel refreshed. Simple.

It's hard to admit your wrong. Even harder when that decision has cost you tens of millions of dollars or more in sales. But even worse than admitting your wrong is going down the same path and watching your business disappear. So Pepsi is expected to add $500 million dollars to its marketing budget this year.

Let's hope they've seen the light in time.

1 comment:

  1. Nice post Harv. The other thing that Pepsi doesn't seem to have figured out is how to take on Coke. When two giants are locked in battle, almost every history lesson (business or war) has proven that you attack around the edges, never a full frontal assault. I don't see Pepsi doing much of that, unfortunately.