Comparative Advertising: Pepsi Vs Coca Cola

The proper study of war is the study of history focusing on why things happened rather than what happened. One way to test the validity of marketing warfare principles is to look at the history of an industry and then analyze key competitive moves in terms of those principles. And what better example than the cola war that has raged for decades between the Coca-Cola armies of Atlanta; and the Pepsi-Cola battalions of Purchase, New York.

A fresh start

Coca-Cola is a 100-year-old soft drink that started out as anything but soft. Invented by a pharmacist and former confederate officer, John Styth Pemberton.

It was, first and foremost, a medicine. “A delicious, exhilarating, refreshing, invigorating beverage in addition to being a cure for all nervous afflictions, sick headaches, neuralgia, hysteria, melancholy,” said an early advertisement.

By 1902, with an ad budget of $120,000, Coca-Cola had become the best-known product in America. Fanned by advertising and the temperance movement, Coca-Cola grew rapidly. By 1907 some 825 of the 994 counties of the ex-Confederate states had gone dry. “Great National Temperance Drink,” said the ads. In 1915, a designer from Terre Haute, Indiana, came up with a new 6 ½ ounce bottle that captured the uniqueness of Coca-Cola.

The new bottle design arrived just in time. Imitators were springing up all over the country. In 1916 alone, the courts struck down 155 imposters, including Fig Cola, Candy Cola, Cold Cola, Cay Ola, and Koca Nola. In the twenties, Coca-Cola had no real competition.

The company’s only problem was to increase the consumption of soft drinks, which rose slowly from 2.4 gallons per capita in 1919 to 3.3 gallons in 1929. (Compared with more than 40 gallons today.) Coca-Cola advertising tried to stimulate consumption. “Thirst knows no season” (1922) and “The pause that refreshes” (1929) are the best examples.

Twice as much for a nickel, too

The depression of the thirties helped Coca-Cola’s competition, especially Pepsi-Cola and Royal Crown, get off the ground. The key concept was the 12-ounce bottle that would sell for the same nickel that would buy only 6 ½ ounces of Coca-Cola. Pepsi-Cola hit on the idea in 1934, but it wasn’t until 1939 (and the arrival of Waiter Mack) that the idea was brought to life.

It was brilliant strategy executed in a spectacular way. It hit the mark, especially with the young. In candy and cola, kids went for quantity rather than quality.

And it was done with a limited advertising budget. In 1939 Coca-Cola spent $15 million on advertising, Pepsi-Cola just $600,000. Now Coca-Cola was on the spot. They couldn’t increase the quantity unless they were willing to scrap a billion or so 6 ½ ounce bottles. They couldn’t cut the price because of the hundreds of thousands of nickel soft drink machines on the market. Pepsi-Cola had launched a classic flanking attack at the low end. But it was more than that.

Pepsi turned a successful flanking move into an offensive attack against the heart of Coca-Cola’s strength. Offensive principle No. 2: Find a weakness in the leader’s strength and attack at that point.

The folks in Atlanta obviously felt that the Coke bottle itself was their greatest strength. They used it in every ad and even trademarked it. Raymond Loewy dubbed it “the most perfectly designed package in use. ” Pepsi-Cola promotion turned that strength into a weakness.

That perfectly designed GX ounce bottles that fit the hand couldn’t he scaled up to 12 ounces. Not unless you had the hand of a 7 foot center for the New York Knicks.

During World War II, Pepsi-Cola passed both Royal Crown and Dr. Pepper to become No. 2 to Coca-Cola itself.

What Coke could have done?

Defensive principle No. 2: The best defensive strategy is the courage to attack yourself Coca-Cola should have attacked themselves with a second brand long before Pepsi did it to them.

And the ideal time to launch a second brand with a low cost Pepsi type theme would have been early in the thirties when the depression was just getting started. (Double Cola, a brand on the market today, would have been a good name to use.)

Coke started the decade of the fifties 5 to 1 ahead of Pepsi. As 1960 rolled around, Pepsi had cut that lead in half. How long could Coca-Cola hold out against the larger size containers! The moment of truth was the year 1954. Coke’s sales fell 3 percent and Pepsi’s rose 12 percent.

The following year, Coca-Cola launched a bottle blitz kreig: 10, 12, and 26 ounces. As supplies were used up, the 6-½ ounce Coke trademark slowly disappeared into the history books.

Besides this, there were definite signs of confusion down in Atlanta with Coke’s advertising theme changing every year as the company grappled with ways to counteract the Pepsi push. 1956: “Coca-Cola makes good things taste better.” 1957: “Sign of good taste.” 1958: “The cold, crisp taste of Coke.” 1959: “Be really refreshed.”

The Pepsi generation

The larger container was the “one” and the Pepsi generation was the “two” in Pepsi’s one two punch, which put Coke on the ropes. Finding weakness in the leader’s strength is the key offensive principle of a marketing war.

Where is Coca-Cola strong! It was the first cola drink. It had been on the market much longer than Pepsi. This authenticity was an obvious strength of Coke, but it had another less obvious result. Older people were more likely to drink Coke. Younger people were more likely to drink Pepsi. Furthermore, the larger size containers also held youth appeal. What adult could swig down a 12 ounce bottle the way a teenager could!

The first expression of this concept was 1961’s “Now it’s Pepsi for those who think young.” By 1964 this idea found wings with the classic “Come alive, you’re in the Pepsi generation.” The intent of Pepsi’s new strategy was to reposition the competition as “out of step, out of touch, and out of date.”

Which it did, but it also had another psychological benefit of equal value. It took advantage of natural sibling rivalry among the target audience. Since more people drank Coca-Cola than Pepsi, older siblings were also more likely to drink Coke. Pepsi also wisely used music, a traditional form of teenage rebellion, as a key component in its strategy.

The current Pepsi theme, “The choice of a new generation,” is another expression of its youth strategy, which is the key point of attack against the “older” Coca-Cola product. The overall effect of Pepsi’s efforts was to steadily erode Coke’s leadership. From 2.5 to 1 in 1960 to 1.15 to 1 in 1985.

Coca-Cola’s comeback attempt

Over the years, Coca-Cola had missed the opportunity to block Pepsi by not introducing a second brand in a larger bottle. “Twice as much for a nickel, too” would have worked just as well for a Coke brand as it did for Pepsi.

Coca-Cola sold soft drinks while Pepsi sold Pepsi. “The pause that refreshes” being a typical example. “Things go better with Coke” being another. But in 1970 Coca-Cola finally found the best defensive strategy for a leader.

That is, leadership itself. “It’s the real thing.” By implication, everything else is an imitation of Coca-Cola. Which, of course, is exactly what the other colas are. But the real thing didn’t last long. 1975: “Look up, America.” 1976: “Coke adds life.” 1979: “Have a Coke and a smile.”

By 1982 Coke had hit bottom in insipidness with the slogan: “Coke is it.” Even though Coke deep sixed “the real thing” years ago, they can’t kill the idea. Mention “the real thing” and most people will say Coca-Cola. Ask them “Who’s it” and see how many people say “Coke is it.”

The Pepsi challenge

One other Pepsi strategic move in the mid seventies deserves comment. Called the “Pepsi challenge,” it involved blind taste tests between two unnamed colas, In the tests, tasters preferred Pepsi 3 to 2 over Coke, a fact which was trumpeted in television commercials. Good strategy?

Perhaps, because it exploits a weak point in the competitive product. Since Pepsi is about 9 percent sweeter than Coke, the first taste favors Pepsi. But not good strategy, as a second front to the major Pepsi effort. A No. 2 product can’t afford two campaigns. But then Coca-Cola did the one thing a leader should never do.After years of fighting the Pepsi challenge, Coca-Cola suddenly and publicly changed their formula to match the sweetness of Pepsi-Cola.

Now the real thing was no longer the real thing any more. In one stroke Coca-Cola had undermined their own position. The issue was not whether to change the formula or not. The issue was whether or not to announce the change.To many companies “new, improved” is a marketing way of life. What makes the Coca-Cola situation different is its “real thing” position.

In a rapidly changing world, the taste of Coca-Cola was a constant that reassured consumers that they weren’t getting older. The loss of the Coke bottle was bad enough. Now the formula is gone too.