An escalation of the cola wars between Coke and Pepsi
Look who’s vexing the Real Thing now
An escalation of the cola wars between Coke and Pepsi
The real riddle of the Canadian cola wars is whether Pepsi has forced Coke to play its game. The name of the game is the Pepsi Challenge, one of the most aggressive and effective comparative advertising campaigns ever devised. Launched in Dallas in 1975, the Challenge was based on a series of blind taste tests that found that a majority of Coke drinkers chose Pepsi over Coke when the unlabelled drinks were offered to them. The cola market has always been fiercely competitive, but the thrusts and parries of the past few months have spurred the cola wars to feverish intensity. Last November, Pepsi-Cola Canada Ltd. upped the advertising ante considerably by launching the newest phase of the Challenge, which spotlighted Gallup poll figures citing mass conversions to Pepsi. Coke, it seems, has finally taken the bait in its latest series of television commercials. The efforts of other colas that compare themselves to the Real Thing are ridiculed by comedian Bill Cosby. “And one of them is even doing taste tests and challenges and consumer polls trying to compare its taste to the taste of Coca-Cola,” scoffs Cosby. Although Pepsi is never named, only a viewer struck with sudden amnesia could fail to recognize the target.
Pepsi, the perennial underdog, may at last have Coke on the run. The Pepsi Challenge has proven to be a classic campaign, breaking new ground in comparative advertising and spawning imitators. The long-running ad campaign has also been the key to a successful drive by the No. 2 soft drink in the world to close the gap on the once-invincible
Coke, because the power of advertising is greatest when the two products are essentially the same.
What must undoubtedly have Coke executives worried are the steady gains that Pepsi has been making in both Canada and the U.S. over the past five years. “Up until 1975 Coke had been the totally dominant brand here. They were outselling us two to one,” says Colin Naughton, marketing director of Pepsi-
Cola Canada. “In 1975, Coke had about 28 per cent of the take-home sales; we had around 15 per cent. In 1980, we had 22 per cent and Coke had 26 per cent. Each share point is worth $10 million. That’s big money.” Coke insists that Pepsi’s share gains are not at its expense. “We have a higher home market share now than we had before the Challenge started,” claims John Brennan, vice-president of marketing at CocaCola Ltd., adding: “The question is, how much are you willing to pay for the extra share points?”
It’s plenty, if the current full-scale slugfest currently gracing Canadian television screens is any indication. What lies behind the smiling face of Coke’s Cosby commercials—the campaign theme and slogan is “Have a Coke and a Smile”—is a corporate colossus running on anger. “When you’re the No. 1 brand, it sometimes takes a lot to get the guys going,” says Brennan. “We’re a bit of a sleeping giant at times. But Pepsi has made our guys pretty angry and the giant is now awake.”
Pepsi Canada has run very hard with a campaign that has been mounted somewhat more selectively and tentatively south of the border. Since launching the Canadian campaign in 1976, the Challenge advertising has been expanded from shots of one person taking the taste test, to many people taking the Challenge at fairs across the country, to the current feisty Gallup ads. In the U.S., the Pepsi Challenge has never been a truly national campaign but rather a series of tactical regional ones in areas where Coke enjoys a commanding lead. Because Pepsi Canada was trailing farther behind Coke than its American counterpart, there was more opportunity to run an effective nationwide Challenge campaign in Canada.
The most basic comparative advertising operates on the principle that the runner-up (or any lesser competitor) benefits from a comparison with the brand leader when it can demonstrate that its product is as good. So, for instance, a Ford Granada ad proudly points out that some of its features are as good as those of a Mercedes-Benz. Most-recently in Canada, Lipton soup has used the tactic to challenge Campbell soup. In the U.S., Schlitz beer tackled Miller and Budweiser in live televised taste tests during the recent National Football League playoff broadcasts.
A stronger comparison is achieved
when the product can be touted to be not only as good as but better than the recognized leader. A further refinement is added when the judges would seem to be biased in favor of the leader. As Colin Naughton suggests: “What’s the toughest possible test for Pepsi? Coke. The toughest critic? A Coke drinker. The comparison also has to be meaningful to the consumer. Taste strikes to the core.”
The Challenge provided a brilliant boost to Pepsi’s taste image, but Coke was still seen as the most popular cola. “We wanted to show people don’t just prefer Pepsi in blind taste tests but that in the marketplace Coke users have switched over,” says Naughton. So,
Pepsi Canada stepped up the Challenge. Spearheaded by the strutting slogan “Look who’s drinking Pepsi now!” and an upbeat music track, these now familiar ads cite a Gallup poll, taken last May and based on a sample of 3,500 people across the country, which projects that 721,000 Coke drinkers have switched to Pepsi (355,000 more than switched the other way). The visuals show people switching from Coke to Pepsi, a Pepsi truck overtaking a Coke truck and the Pepsi blimp passing in front of the Coke balloon. The legal costs were almost as great as the creative costs, suggests Alan Middleton, Pepsi’s advertising account executive at J. Walter Thompson Co. “Obviously we couldn’t say we’re the biggest, because we’re not,” he says. “What we could legitimately say was that more and more people are discovering we taste better and are switching. It’s a momentum story.” Pepsi’s escalation of the Canadian cola wars is almost impossible for Coke to ignore. Coke has responded to the Pepsi Challenge in a variety of ways ranging from ignoring it, to spoofing it, to ridiculing or condemning it. When the Gallup poll offensive first appeared, Coke pulled off its Canadian-produced ads and ran the popular Mean Joe Greene commercials (which featured a well-known American football player) exclusively. In addition to the Cosby commercials, the company has responded more directly on radio by running an attempted spoof featuring an imaginary professor, with a foreign accent and a ridiculous name, whose lines include such gems as: “They compare themselves to Coke because they don’t have anything to say about themselves.” Another early response to the Gallup ad was a print campaign riding on the slogan: IF THERE WASN’T A CHAMPION . . . THERE WOULD BE NO CHALLENGERS. Replies Pepsi’s Naughton: “Why Coca-Cola would put the word challenger in their advertising is beyond me.” Coke executives maintain that the Pepsi Challenge and its subsequent variations are based on deliberate subterfuge. “It’s not a taste test, it’s a sip test. People can’t differentiate between beer and ale, or scotch and rye, on the basis of a sip test. You’re looking at like products, so random chance comes into play,” says Brennan. Adman Middleton suggests that Coke management is somewhat ambivalent, though, about attacking Pepsi directly in its advertising. “You’ve almost got a conflict within the Coke organization,” he says. “Some of the Coke people recognize Pepsi as a threat and others can’t get used to it. The golden rule in this business is never underestimate your opponent.”
Only time and fickle consumers will decide whether or not Coke has been stymied by the Pepsi strategy. Brennan admits Coke is confronted by the dilemma facing any brand leader that’s the target of slick comparative advertising. “You walk a fine line,” he says. “It’s easy to fall into the trap the other guy sets.” Pepsi contends that Coke already has one foot caught in the trap by indulging in the radio spoofs, “champion” ads and Cosby commercials, which are all just lightly disguised forms of comparative advertising. “No,” counters Brennan, “it’s superiority advertising. What we’re saying is Coke’s the Real Thing, the gold standard of colas.” But Pepsi’s Naughton, ever the cocky challenger, has the last word: “As long as we’re initiating and Coke’s reacting, we’re going to win.”
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