Pepsi vs Coca-Cola

BRAND Behind the

April 2014 Volume 5

Coca-Cola vs. Pepsi: The real winner of the Cola War

Pepsi’s transitional tale from “bargin brand” to “brand-name”

Inside Coca-Cola: A Fizzy Forecast:

What’s next for the beverage industry?

How their beloved polar bear came to be

Table of

Contents 2 Letter from the Editor 3 The Soda Industry 5 The Chronical of Coca-Cola 7 Pepsi in the Past 9 The Cola War 9 “Simplicity” Sidebar 10 Advertising 11 Opinion 1

Editor

Letter from the

B

illboards, commercials, logos—you name it, it has probably stopped me in my tracks. My name is Jessi Royer; I am a freshman enrolled in the University of Kansas School of Journalism. I find myself constantly saying things like, “Great marketing,” or “That advertisement could’ve been better.” I watch TV to see commercials and read newspapers to critique advertisements. Sometimes I wonder if it’s normal for advertisements to consume my daily thoughts. Maybe this is because I’m a journalism major, or maybe it’s just my uncommon attention to detail.

Anyone who pays as much attention to advertisements as I do knows that Coca-Cola and Pepsi are two companies that tower over the rest.

These beverage industry giants have advertisements everywhere from the Olympics to your local movie theater. Everyone has their favorite brand, no matter how many times we are bombarded with each company’s logos and slogans. I don’t drink much soda but personally, I enjoy the sweeter taste of Pepsi as opposed to Coca-Cola. The taste difference is trivial as far as I’m concerned. I’m more struck by the unique commercials and signs that each company comes up with. In my opinion, these companies’ creativity is unparalleled.

Someday, I want to design advertising campaigns comparable to Coca-Cola and Pepsi— advertisements that change a company into a companion.

This issue will recount the history of the beverage industry and its two top competitors: The Coca-Cola Company and PepsiCo. I will discuss the legendary cola war—and the endeavors that got both companies where they are today. I will also explore Coca-Cola and Pepsi’s influential advertisements. It’s important to know these companies’ histories in order to succeed in any strategic communications position. If we do not learn from history we are doomed to repeat it.

Jessi Royer

2

The

Soft Drink Industry

call this simple blend of water and flavors, it has been dominating the marketplace for generations. The bubbly drink holds a remarkably high marketing standard. The bever-

3

tain owners paid to use these sodas.

the mixture of water, lemon juice and

Instead, fountain owners mixed vari-

honey it started out as. Joseph Priest-

ous extracts to make homemade root

ley experimented with adding carbon

beer and ginger ale for their patrons.

dioxide gas, mineral salts, and flavors

Soft drinks had to be bought and

to drinks in 1772 (Soft Drinks and

sold from a soda fountain because

Bottled Water, 2013). The cola we

bottling technology was only an

know today didn’t come along until

idea at this time (Tedlow, n.d.). The

1886 when John Pemberton in-

beverage industry changed drasti-

vented Coca-Cola (Bhasin, 2011; Soft

cally when bottling machinery was

Drinks, 2013). Beverage owners, like

invented in the 1890s. Soda could

Pemberton, were attempting to sell

now be shipped and sold more easily

their products to soda fountains in

(Soft Drinks, 2013).

Pepsi goes bankrupt

sider “soda” is quite different from

Coca-Cola designs contour bottle

2013; Tedlow, n.d.). Few soda foun-

Pepsi is invented

century Europe. What we now con-

Coca-Cola is invented

age industry has grown significantly

the nineteenth century (Soft Drinks,

1886

1898

1915

1923

1931

Pepsi adopts red, white, and blue logo

“Cola,” “pop,” “soda,” whatever you

since its introduction in seventeenth

Pepsi goes bankrupt again

“Cola,” “pop,” “soda,”

The name “soft drink” originated to differentiate the nonalcoholic beverages from the alcoholic or “hard” ones.

1941 Information from: Bhasin, 2011

The industry boomed as more and more soft drinks were consumed during the twentieth century.

World War II hit the beverage industry hard when the Office for Emergency Management implemented a United States sugar ration. All manufacturing went solely towards the war effort. Industry struggles ended soon after the war when veterans were provided with a 50,000 pound sugar allocation for opening a bottling plant (Beverage Industry: Celebrating Fifty Years of Service, 1996).

One can of soda contains 39 grams of sugar (Brain, n.d.). Fifty thousand pounds of sugar is enough to make 581,528 cans of soda. The 50s and 60s brought big changes when super-

markets started selling soda and the American Can Company invented a tin-free can. The steel can was originally used for beer in 1966 but colas followed quickly after (Soft Drinks, 2013).

Carbonated beverages became America’s number one beverage choice in 1977. The late twentieth century brought some difficulties for the industry when consumers began to demand more healthy options (Soft Drinks, 2013). Soda sales evened out while healthy beverage sales rose (Beverage Industry, 1996).

Historically, women were the primary buyers of soda. Today, consumers are mostly men ages 18- 34.

The industry currently boasts a 92.9

percent household penetration rate, however, consumers are buying less soda than they previously have (Mintel, 2013). The minor sales decrease is due to rising obesity rates (Soft Drinks, 2013). Heightened prices are expected to cause a slight revenue increase for the beverage industry in 2014 (Agnese, 2014).

The beverage industry has the highest brand recognition in the world. The industry’s greatest feat is attaining and sustaining a vast number of consumers (Soft Drinks, 2013). The industry’s steady increase has sparked interest in many researchers as they try to understand the extravagant sales that the industry boasts.

The Global Soft Drink Market in 2011 PepsiCo 26.9% Coca-Cola Company 34% Other 39.1%

Information from: Soft Drinks and Bottled Water, 2013.

4

The

Chronical of P

harmacist John Pemberton invented Coca-Cola in 1886 (Bhasin, 2011; Soft Drinks, 2013). Frank Robinson, who bought the young company from Pemberton, chose the name Coca-Cola because he thought the two C’s would work well in advertising. Robinson knew advertising would be influential to the company’s future (Tedlow, n.d.). Annual sales of Coca-Cola had already exceeded 1 million gallons by the year 1904— less than 20 years after its beginning (Bhasin, 2011). The company expanded its bottling operations to Canada, Cuba, and Europe early in the twentieth century. Ernest Woodruff purchased the company for 25 million dollars shortly after this large expansion (Bhasin, 2011; Tedlow, n.d.). Coca-Cola had reached 76 countries by 1929 (Tedlow, n.d.).

Coca-Cola Bottling Company sponsored television programs starting in 1951. The company hoped to expand its exposure through television advertising (Beverage Industry, 1996).

In 1985, Coca-Cola reformulated its beloved product to improve the taste and called it “New Coke” (Johnson, 2011; Tedlow, n.d.). The new product led to an initial boost in sales, but consumer dislike rose rapidly. Consumers weren’t happy about the company changing an American tradition (Johnson, 2011; Yglesias, 2013). This backlash caused the company to revert to the original formula three months later. The “New Coke” invention could have proved fatal for the company, but the catastrophe renewed consumer love of the Coca-Cola brand (Johnson, 2011). Coca-Cola’s success was not based on its product or its service but the fact that it found a way into

the hearts and minds of consumers (Tedlow, n.d.). The success continued as the Coca-Cola Company became the second largest beverage firm in 2010, behind Anheuser-Busch (Soft Drinks, 2013). “Coca-Cola” has become one of the most recognizable words around the world — only coming in second to “okay” (Johnson, 2011).

Coca-Cola’s basic goal for its advertisements was to make consumers think of its product when thirsty. The advertisement creators had a broad target audience: “CocaCola was looking for thirsty throats” (Tedlow, n.d, p. 9). Coca-Cola spent immense amounts to reach this audience. The Coca-Cola Company has always chosen slogans that reflect not only the company, but the times.

A slogan is a simple, straightforward method of communication.

This 1922 ad was the first appearance of the Coca-Cola polar bear (Ryan, 2012).

Coca-Cola designed their classic contour bottle in 1915 (Bhasin, 2011).

The bottle became an important piece of brand history and major icon for the company (Johnson, 2011).

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(Ryan, 2012)

(Chira-Aphakul, 2009)

1886

1900 Coca-Cola’s most famous slogans include: “The Only Thing Like CocaCola is Coca-Cola Itself,” “I’d Like to Buy the World a Coke,” and “Open Happiness” (A History of Coca-Cola Advertising, 2012, p. 2). Musician Hilda Clark was the first celebrity to endorse Coca-Cola Industries in 1900, but she wouldn’t be the last.

Coca-Cola began incorporating athletes—especially baseball players—in its advertising starting in 1907 (Bhasin, 2011). The Advertising Club of America declared Coca-Cola the United States’ best-advertised product in 1912 (Tedlow, n.d.).

Coca-Cola used to represent a fun, young personality through its advertisements, but as the company matured it gravitated toward a more emotional side of branding. CocaCola focused more on advertising themes like worldwide diversity, community, overcoming hardships, and embracing differences. The company showed these themes through universal similarities — like love of Coke. The transition between advertisement strategies was partly due to a change in the target audience; Coca-Cola knew that moms did the shopping. To appeal to moms they needed a more emotional pull (Johnson, 2011).

The Coca-Cola company asked Ken Stewart to develop an innovative commercial in 1922 to enhance its “mom appeal.” One day, while searching for ideas, Stewart looked at his dog, who resembled

a polar bear as a puppy. That’s how the Coca-Cola Polar Bear came to be. Coca-Cola’s goal was to create a lovable character that reflected the best human attributes (A History of Coca-Cola’s Polar Bears, 2012).

The adorably innocent and slightly mischievous bear did just that (Ryan, 2012). The Coca-Cola polar bear has since become a family of polar bears who are constantly brought together

by Coke. Coca-Cola’s other famous character is Santa Clause because Santa is an extremely universal figure. These Coca-Cola characters aim right at the heart of consumers (Johnson, 2011).

Logo Retrospect The Coca-Cola logo, a form of Spencerian Script, was designed in the twentieth century. It began as a rather bold, thick font but thinned out gradually. It wasn’t until the 60s that the ribbon was added. The 1990s brought gradients, gloss, and water droplets, but in the new millennium the logo was dramatically simplified.

The designers brought the product back to its roots for a classic feel.

They realized that the heart of the Coca-Cola brand didn’t only lie within the classic cursive font, but also within the Coca-Cola bottle itself.

The designers created a silhouette of the famous bottle which became the new brand hero (Johnson, 2011).

1940

1950

1960

1985

1987

1990

2000

2009 (Coca-cola vs. pepsi, n.d.)

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in the

Past P

epsi was invented in 1898, almost a decade after Coca-Cola, by North Carolina pharmacist Caleb Bradham (Bahasin, 2011; Johnson, 2011; Soft Drinks, 2011). Bradham originally called the drink “Brad’s Drink” but changed the name to “Pepsi-Cola” because he believed his soda could relieve the pain of peptic ulcers. Originally operations were conducted from the back room of Bradham’s drug store (Tedlow, n.d.).

Pepsi went bankrupt due to World War II sugar rationing in 1923. Eight years later the company went bankrupt again (Bahasin, 2011). That same year Charles G. Guth purchased the company. Guth saw Pepsi’s bankruptcies as an opportunity for the company to improve (Tedlow, n.d.). The company started selling 12-ounce bottles for five cents, in contrast to Coca-Cola’s equally priced 6 1/2-ounce bottles (Bhasin, 2011). This marketing strategy attracted many price-conscious buyers (Tedlow, n.d.).

Pepsi had changed its product in terms of price and amount. The company then established a concise consumer image: the soda that gave you more. They focused on the lower price and advertised it well. Their bargain brand was commonly poured into Coca-Cola cans to be served to guests. However, when the company was no longer able to sell 12-ounce bottles for a nickel, unfaithful, price-conscious consumers began to stray and Pepsi began to crumble (Tedlow, n.d.).

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Skywriter Sid Pike helped Pepsi make a comeback in 1939. The owner of Pepsi offered Mr. Pike fifty dollars if he could make the words “Pepsi-Cola” stay in the sky for three minutes. Pike traveled around the United States skywriting and making an impression on consumers. Some days he got his fifty bucks, and some days it was just too windy to make the words linger (Tedlow, n.d.).

Skywriting was just a small part of PepsiCo’s strategy to get its name out to the public. The company also focused its efforts into finding a new target audience. Pepsi decided to market to women, the primary grocery buyers, and designed a diet cola. This change allowed Pepsi to differentiate itself from Coca-Cola by calories instead of cents (Tedlow, n.d.). Pepsi’s strategy made them the number one cola drink in supermarkets by 1973 (Who We Are, n.d.).

PepsiCo was the first to introduce the bubbly beverage in cans (Bahasin, 2011). They were also the first to introduce two-liter bottles to the industry (Who We Are, n.d.).

Logo Retrospect Pepsi’s logo had a whimsical feel originally, but by the 1940s the company had adopted a classic font quite similar to Coca-Cola’s. The company designed its famous red, white and blue icon in 1941 to support the war effort. The ‘60s changed Pepsi’s curly cursive font to a bold, new sans-serif typeface (Stamp, 2013). Advancing computer graphics helped the Pepsi logo become more and more ornate throughout the years. The new millennium added glossy highlights and water droplets to Pepsi’s classic Americana logo (Johnson, 2011).

Not long after, the designers stripped the logo of its heavy shine and reverted to simple fonts and solid colors. The company revamped its image entirely in 2008 by changing its familiar typography and symbolic logo. This change outraged consumers and worried others. They were afraid Pepsi was throwing away its recognizable logo. Pepsi’s current ad strategy uses its re-created logo in place of the “O” in various advertisements (Johnson, 2011).

1898

1905

1906

1950

1962

1973

1991

1998

2005

These 1963 Pepsi ads were part of The Pepsi Generation ad campaign. This campaign offered something new and hip for consumers. These ads were a transitional part of Pepsi’s rebranding (Stamp, 2013).

(Stamp, 2013)

2008 (Coca-cola vs. pepsi, n.d.)

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The

Battle

Beverages

of the

T

he battle between Coca-Cola and Pepsi started after Pepsi’s invention in 1898. The term “Cola War,” however, wasn’t coined until 1950.

The first found use of the phrase was in an essay in The New Yorker (Tedlow, n.d.). Coca-Cola has always led this century-old battle and Pepsi has always been slightly behind — the “challenger” (Yglesias, 2013). This is due mostly to Coca-Cola’s maturity; they were already selling a million gallons a year by the time Pepsi was invented (Bhasin, 2011).

The battle has always been intense. Each company has taken up arms to outdo the other. The CocaCola Company fought hard and dirty to keep their leading position in the industry. Coca-Cola spread untrue rumors that Pepsi was filled with chemicals. Coca-Cola delivery

“Less is more” 9

workers would follow Pepsi deliveries to big chain grocery stores. After the Pepsi truck drove off, CocaCola workers would replace Pepsi signs with Coca-Cola signs. They’d also stack the cases of Coca-Cola around the cases of Pepsi, preventing the consumer from seeing Pepsi’s product. Pepsi threatened a lawsuit and Coca-Cola quickly stopped the tactics (Tedlow, n.d.).

Pepsi set up an experimental blind taste test years later, in an attempt to beat the best (Johnson, 2011; Yglesias, 2013). Most participants chose Pepsi over Coca-Cola in the commercials and in reality.

This contradicted previous statistics that stated Coca-Cola was the better soda. The taste test was a marking triumph for PepsiCo; however, the results proved to be slightly inaccurate. The experiment consisted of small sips of the two colas, and most

subjects chose the sweeter option, Pepsi. However, most consumers don’t drink small sips of soda. They drink cans, bottles and giant cups full. Consumers enjoy a sip of Pepsi, but the soda appears to be too sweet to be guzzled in such great amounts (Yglesias, 2013).

Some claim that Coca-Cola always has been the superior soda while others swear by Pepsi. However, the true war is not a matter of which company has the superior product. Instead it’s all about marketing. This battle is affected less by the bubbly beverage and more by the branding behind it. One company is not winning over the other; in this war both sides are winners. This is because the cola war provides advertising for both companies by simply bringing attention to the industry (Tedlow, n.d.).

A lot can be learned from Coca-Cola and Pepsi’s giant advertisement campaigns. Take this Coke Zero slogan for example, “Simplicity. If it doesn’t add anything, take it away,” (Johnson, 2011, p. 12). While Coca-Cola is referring to its soda recipe, this idea can directly apply to advertising. Mies van der Rohe, a famous design pioneer, invented the “less is more” design principle. This principle states that you should use only what is needed in design (Driscoll, 2012). This strategy makes advertisement campaigns look professional and clutter-free.

Pepsi’s most recent advertisement campaign uses a party-like theme and stars like Nicki Minaj to give a feel of freedom and youth (Buss, 2012).

(Buss, 2012)

Advertising

Advertising is almost as old as communication itself, but the idea of spending millions of dollars every year to advertise a product is a development of the twentieth century (Tedlow, n.d.). The goal of any business is to create a strong brand equity (Ojha, 2013). Brand equity is the value that a company gains from selling a product with a familiar brand name in comparison to the generic product. Brand equity can be affected by taste, celebrity endorsement and ad clarity (Ojha, 2013).

Branding is the area of design that depicts shifts in design trends.

Coca-Cola and Pepsi not only follow design trends, but they also create them (Johnson, 2011).

Pepsi’s advertisements have continually included humor, famous musicians and youthful-ness while Coca-Cola uses a strong sense of family and freedom in its advertisements (Johnson, 2011; Tedlow, n.d). The industry is currently dominated by male consumers, so many of Coca-Cola and Pepsi’s advertisements are targeted to men (Mintel, 2013). PepsiCo has branched out to include many other products, such as fast-food restaurants, sports drinks, and snack foods, while the Coca-Cola Company has focused its resources more on the soda (Bhasin, 2012). Both Coca-Cola and Pepsi have taken responsibility for their strong influence in society. Pepsi has adopted a voluntary pledge to only advertise products that meet nutritional criteria to children under twelve years of age (Responsible Marketing, n.d.).

This can is a great example of CocaCola’s branding strategy. Coca-Cola turned their simple print ad idea into an icon through constant incorporation.

The company continues to use their famous polar bears in ads to increase brand recognition.

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Author’s Opinion The A

re you a Pepsi person? Or a connoisseur of Coca-Cola? Whether you prefer a cold, classic CocaCola or the pleasure of a Pepsi, we can agree on one thing: advertising is key for any company. CocaCola and Pepsi aren’t just beverage industry giants, they are marketing giants. As a designer, journalist, or marketer it is imperative that you learn from the successes and failures of other companies. This will insure that you don’t repeat the mistakes of others.

Coca-Cola and Pepsi are excellent examples of how to create a brand and market it impeccably.

I think that the time and money put into a company for advertising directly affects the sales of the company. It is evident to me, after much research, that Coca-Cola is the superior company— and thus the winner of the battle. My conclusion is not based on the assumption that Coca-Cola is of a higher quality. Instead, I think it boasts a stronger advertisement strategy. Coca-Cola has managed to create not only a superb soda, but also an outstanding brand that has stuck with consumers. This company has advertised its product so well that it has become as American as apple pie and baseball.

Classic Coca-Cola bottles are now collectors’ items.

When you spot a polar bear advertisement, it doesn’t take long for the Coca-Cola family of bears to come to mind—and warm your heart. The Coca-Cola Company doesn’t sell soda, it sells peace, love, and unity—all in one bubbly beverage.

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A List of

References

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A History of Coca-Cola Advertising Slogans.

(2012, Jan 1). Retrieved online on 2014, Feb. 24 from http://www.coca-cola company.com/stories/coke-lore-polar-bears

Soft Drinks and Bottled Water. Encyclope dia of Global Industries. Ed. Lynn M. Pearce.

Detroit: Gale, 2013. Business Insights: Es sentials. Web. 24 Feb. 2014.

Beverage Industry: Celebrating 50 years of service. (1996, June). Retrieved online on 2014, Feb. 17 from http://memory.loc.gov/ ammem/ccmphtml/indsthst.html

A History of Coca-Cola’s Polar Bears. (2012, Jan1). Retrieved online on 2014, Feb. 17 from http://www.coca-colacompany.com/ stories/coke-lore-slogans

Bhasin, K. (2011, November 2). Coke vs. pepsi: The amazing story behind the cola wars. Retrieved online on 2014, Feb. 17 from http://www.businessinsider.com/ soda-wars-coca-cola-pepsi-history-infograph ic-2011-11?op=1

Johnson, J. (2011, March 24). Pepsi vs coke: The Power of a Brand. Retrieved online on 2014, Feb. 17 from http://designshack.net/articles/ graphics/pepsi-vs-coke-the-power-of-a-brand/ Mintel. (June 2013) Carbonated Soft Drinks -US. Retrieved online on 2014, Feb. 25 from http://academic.mintel.com.www2.lib. ku.edu:2048/display/637665/

Stamp, J. (2013, Sept. 11). The architectural his tory of pepsi-cola, part 1: The ‘mad men’years.

Retrieved online on 2014, April 11 from http://www.smithsonianmag.com/arts-cul ture/the-architectural-history-of-pepsi-cola- part-1-the-mad-men-years-6053511/

Brain, M. (n.d.). How much sugar in soda?

Retrieved online on 2014 March, 23 from http://marshallbrain.com/science/sugar-in- soda.htm Chira-Aphakul, H. (2009, June 01). Registra tion of bottle shapes in Thailand.

Retrieved from http://www.asiaiplaw.com/ article/41/858/ Coca-cola vs. pepsi – evolutia logo-urilor. (n.d.).

Retrieved from http://victorsosea.gds.ro/coca- cola-vs-pepsi-evolutia-logo-urilor/ Driscoll, M. (March, 2012 27). Ludwig mies van der rohe: Father of ‘less is more’ architec ture. Retrieved online on 2014 March, 30 from http://www.csmonitor.com/Innovation/ Tech-Culture/2012/0327/Ludwig-Mies-van- der-Rohe-Father-of-less-is-more-architecture- video

Ojha, D.. Role of Advertisement in Managing the Brand Equity of Carbonated Drinks Among Generation-Z. International Journal of Applied Services Marketing Perspectives, North America, 2, Jan. 2014. Retrieved online on 2014 Feb. 24 from http://pezzot taitejournals.net/index.php/IJASMP/article/ view/922 Responsible marketing. (n.d.). Retrieved on 2014, Feb. 21 from http://www.pepsico.com/ Purpose/Human-Sustainability/Responsible- Marketing

Tedlow, R. (n.d.). New and improved: The story of mass marketing in America. Retrieved online on 2014, Feb. 15 from http://www. businessweek.com/chapter/tedlow.ht Who we are. (n.d.). Retrieved online on 2014, Feb. 20 from http://www.pepsico.com/Com pany/Our-History Yglesias, M. (2013, August 9). Sweet sorrow: Coke won the cola wars because great taste takes more than a single sip. Retrieved online on 2014, Feb. 17 from http://www.slate.com/ articles/business/rivalries/2013/08/pepsi_para dox_why_people_prefer_coke_even_though_ pepsi_wins_in_taste_tests.html

Ryan, T. (2012, January 01). The enduring his tory of coca-cola’s polar bears. Retrieved online on 2014, March 3 from http://www. coca-colacompany.com/stories/coke-lorepolar-bears

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