The Coca-Cola Co.
Established in 1886?
Spent $253M on soda ads last year?
Established in 1898?
Spent $153M on soda ads last year?
At first glance, the marketing strategies of Coke and Pepsi — the two ubiquitous, global players that have dominated the soft drink market for decades — might appear more similar than different. Each brand deploys decidedly feel-good creative in its advertising, branding, email marketing and loyalty programs, around consistently happy-go-lucky themes like summertime, nightlife and Santa Claus. And yet, upon closer inspection, each has a distinctly unique marketing strategy.?
Each company spends a bucketload promoting its soda brands, but much less than in the past. The Coca-Cola Co. last year laid out $253 million on soda advertising while PepsiCo invested $153 million compared with $377 million and $348, respectively, back in 2005, as The Wall Street Journal reports.?
Sales of Pepsi-Cola and Diet Pepsi last year dropped by 4.8% and 5.2% respectively, while sales of Coca-Cola and Diet Coke slipped by 0.5% and 1%, according to media reports. Also last year, Pepsi fell from No. 2 to No. 3 in US sales, behind Coke and now Diet Coke. Representatives for both companies declined to comment ?for this story. ?
Despite that, Pepsi has indicated that it is taking off the gloves when it comes to confronting its principal rival. This summer it launched its first ad campaign in three years, “Summer Time Is Pepsi Time,” which included a TV spot featuring Santa Claus — star of iconic Coca-Cola ads throughout the years — living it up on the beach. ?
The in-your-face move on the part of Pepsi signals that Pepsi is embracing the role of challenger, says Spyro Kourtis, president and CEO of Seattle-based agency Hacker Group. “It’s an interesting video, but I feel that it very much states the fact that Pepsi is challenging Coke,” he says. “It feels basically like an attack on Coke.” ?
While both Coke and Pepsi are famous for their TV campaigns, including Super Bowl and holiday spots, direct marketing is another story. Coca-Cola does use direct mail for its loyalty programs, but, experts say, neither brand has done anything with direct mail, DRTV or other traditional direct marketing that’s especially memorable. “There’s nothing off the top of my head that stands out,” says Mark Weninger, chief creative officer at Merkle, a Columbia, Md.-based CRM agency. “I wouldn’t say that there’s anything as a direct marketer that would make me go ‘Wow.'” ?
However, each does rely upon direct tactics including loyalty marketing, CRM, email, social and digital. For example, each cola brand uses its website as a base for loyalty, email and database-building programs. Coca-Cola, for example, drives consumers in numerous ways from its homepage to the site of its My Coke Rewards program, which gives consumers points to redeem for items ranging from books and magazines to electronics. ?
Coca-Cola, whose soda brands include Sprite and Fanta, enables consumers to sign up for sweepstakes and offers from partner brands such as Nascar, Six Flags and Nike. My Coke Rewards includes a cause-marketing element as well, encouraging members to support the National Park Foundation and the Hispanic Scholarship Fund. The brand also runs promotions with Six Flags and T.G.I. Friday’s. ?
Pepsi, meanwhile, emphasizes its rewards program to a lesser ?degree, though it does enable consumers to cash in “loot” points for exclusive iTunes downloads. Still, Pepsi gets props for its “Dream Machine” recycling program, which doles out rewards points when consumers donate recyclables via vending machines. ?
“My Coke Rewards is an older program. Their challenge is to get people to redeem their points online and make them meaningful in both the short term and in the long term. That’s been a challenge they’ve had,” says Mark Johnson, president and CEO of consultancy Loyalty 360. “With Pepsi, they have tried to simplify their program and they have done more on the consumer side to figure out what the consumer wants. It’s a smaller program, and more focused ?on a core audience.” ?
Pepsi is also clearly invested in building its email database. Pepsi’s homepage sports multiple avenues for consumers to sign up for email alerts, including an email sign-up tab. The company also invites consumers to register for newsletters about a range of products, which include soda brands Mountain Dew and 7Up. Pepsi also sends consumers a welcome message shortly after they sign up, as well as routine emails about its products. ?
Coke does not have as clear an email sign-up mechanism on its homepage, though consumers can register for email messages on the My Coke Rewards page. ?
“I don’t think either of them seems to be drawn to email, but my guess is that as consumer packaged goods companies, they probably don’t look at email as that strong of an engagement channel,” says Weninger. “Many companies are increasingly asking consumers to market alongside them, and they’re going to let Facebook and social media do that for them.”?
Each company also uses its homepage as an e-commerce hub, though Pepsi outdoes Coke here as well. Coke’s homepage offers little merchandise directly for sale, while Pepsi promotes products ranging from logo-flashing bags and T-shirts. ?
In terms of social media, Coca-Cola is the clear winner in terms of popularity, with nearly 34 million fans and 360,000 Twitter ?followers, compared with Pepsi’s 5.6 million Facebook fans and 120,000 Twitter followers. ?
“I think in this day and age, corporations know how important it is to have a large Facebook fan contingent — the number of Facebook fans is like your stock-market price these days,” says Kourtis. “But I wonder if Pepsi is not more aggressive because they’re behind?” ?
Pepsi, meanwhile, is more experimental when it comes to digital promotions than Coke. Besides prominent links to its Facebook, Twitter and YouTube pages on its homepage, Pepsi, through its Refresh Project, is connected to assorted cause-marketing campaigns. ?
“From a consumer’s point of view, if you’re looking at emotionally what connects with me quicker, Pepsi’s site says that they care more about my generation, and there’s even a breast cancer tile. They’re overtly going after the female target audience,” says Ken Fitzgerald, executive creative director at Rochester, N.Y.-based agency Catalyst. “If you’re looking at what I would respond to, it would probably be Pepsi, ?and because of the emotional attachment it creates with the audience.”
From “Mean Joe” Greene to today’s nostalgic spots, Coca-Cola’s advertising has given the brand a unique place in American culture. But Pepsi’s recent social-minded initiatives, such as the Refresh Project, place it ahead of its rival in terms of marketing. By tying itself to the causes and technologies that young consumers care about, Pepsi is positioning itself as more than a soft drink brand to millions of young consumers whose interests go beyond quenching their thirst. ?