Note to Pepsi: Throw Back the Throwbacks

Key Points:

1. The year 1984 marked the emergence of one of the most successful marketing strategies of all time: Pepsi’s use of the hottest celebs to boost its brand image.

2. By 1990, Pepsi had Coca-Cola on the ropes, but a period of intense innovation in the beverage market played to Coca-Cola’s strengths.

3. Pepsi is waffling now, resorting to a poor strategy of vintage throwbacks in an attempt to be cool. Even with the natural sugar angle, it won’t work.

I remember 1984.

It was the year Michael Jackson reached the height of his popularity. It also happened to be the year when a technician’s accident during the filming of a Pepsi commercial seriously burned his scalp.

Ah, the (funny) memories.

What strikes us about that story isn’t necessarily the Michael flambé, but what Michael meant for the Pepsi brand. Until that point, Pepsi has always been Coca-Cola’s ugly stepchild. It didn’t have the market share. It didn’t have the brand portfolio. It wasn’t served in many chain restaurants.

But signing Michael represented a fundamental solidification of brand strategy. Instead of trying to copycat the Coca-Cola strategy, Pepsi worked a completely new angle. Pepsi was the “choice of a new generation.”

Pepsi was hip. It was new. It was cool. Coke, by contrast, was stodgy. It was what your dad drank. It was “classic” at a time when people wanted to look forward.

You could even make a case that the success of the Pepsi branding strategy led to the what could aptly be called the biggest marketing blunder of all time: new Coke. But it wasn’t quite that simple.

To pull off the “cool” brand strategy, Pepsi took advantage of borrowed brand equity. Michael Jackson was cool. The company signed him. When he became uncool, it dropped him. When Brittany Spears became cool, it signed her. When she became uncool (or really, like Michael, went off the deep end), it dropped her.

Pepsi’s brand position meant the company needed to hitch its wagon to the newest, hippest, and coolest thing to power its brand engine.

And by all measures, it worked.

By the late 1980s, regular Pepsi has essentially mirrored regular Coke in annual sales and market volume. Yes, Coke was able to retain big contracts (McDonald’s, etc), but the damage was done. Very smart people were predicting the eventual fall of the Coca-Cola soft-drink empire.

But something funny happened on the way to the graveyard.

The beverage market began an intense period of disruptive innovation. Out of the crucible of the early 1990s came bottled water (yes, we will pay for something that comes free from a drinking fountain), sports drinks (not just for athletes anymore), energy drinks (like the future Red Bull), and the Starbucks coffee empire (not your mother’s Folgers crystals).

In other words, Pepsi and Coke (the corn syrup-sweetened, colored-water versions) were no longer the only games in town. Both summarily began to lose market share.

But here’s the rub for Pepsi: Coca-Cola—the corporation—is a master at merchandising. By leveraging its market power, it was able to either buy or create dominant brands in each segment. Pepsi? Not so much.

And another funny thing happened on the way to that same graveyard. Coca-Cola was able to reposition itself as the new, hip, and smart drink. Sometimes that meant Coke. Sometimes that meant Diet Coke. Sometimes that meant Dasani water. It didn’t matter. They had the touch.

At the same time, Pepsi struggled with the fallout from one fallen spokesperson star after another.

Essentially, that brings us to 2009.

Pepsi’s marketing department frustration is obvious: They’ve resorted to throwbacks. After a ho-hum new logo launch last year, Pepsi’s latest promotion involves “vintage” Pepsi designs and free T-shirts.

The argument to drop the nostalgia bomb is always the same: On the surface, the rationale says you are connecting consumers with their past. They’ll remember that great summer they had way back when, and the Pepsi can will take them there. It will spark interest and, more importantly, help forge a new buying habit.

But the reality (at least to us branding types) is a painful admission: Pepsi has nothing new to talk about.

A bit harsh, but true.

Think of where you see the “throwback” concept elsewhere, and you’ll see why.

You may have noticed “throwback” General Mills cereal boxes (Cheerios, Lucky Charms, etc). The truth is, its brands are facing stiff competition from organic brands such as Kashi. Cheerios would be better advised to keep pushing the “heart health” angle.

You may have noticed sports teams donning “throwback” uniforms. Do they spark a little interest? Maybe. But don’t get me started on the powder blue San Diego Chargers football uniforms. Better to field a competitive team instead.

You certainly have heard musical remakes. On occasion, a new artist creates a reinterpretation that adds to—or even surpasses—the original. But they usually suck.

You can’t go a summer without seeing a movie remake. They almost always suck.

You can’t go to a car dealership without seeing some odd attempt to bring back a forgotten model. They usually sell poorly after some initial buzz.

And that speaks to the whole point of the throwback strategy: It’s almost impossible to bring back that emotional connection. That’s why it doesn’t work. Younger people don’t understand it, and it’s easy to misfire for those who do remember.

You may see a short-lived blip, but they are rarely worth the trouble. In this case, the Pepsi throwback features natural sugar (in case you thought there was some other kind). At best, this is a case of mis-thinking the organic/natural trend. At worst, it’s a classic case of “we-we” advertising—talking about yourself instead of talking about your customer.

The bigger problem for Pepsi, however, isn’t a poor strategy per se, but what that decision means for the Pepsi brand. The brand was so successful crafting a “trendy” image that resorting to a “throwback” strategy is a double-whammy problem. Not just fruitless, but harmful.

In the end, I’m not sure what would re-invigorate the Pepsi brand, but I am sure a vintage T-shirt and real sugar isn’t going to cut it.

Related Links

Retro Pepsi

Comments

[Matt Holland]

I think you are missing an important point in regards to Pepsi and Mt. Dew throwback. The taste! The real sugar stuff is far far better than the normal versions. The people I have talked to aren't buying Throwback for the retro appeal, but for the real sugar.