Feb 092015

This this article follows on from initiatives undertaken by Pepsi in the 1970s and early 1980s that effectively repositioned the Coca-Cola brand during the period of the Cola Wars.

New Coke’s Repositioning of Pepsi

Leading up to 1985, Coca-Cola was facing numerous challenges as a result of Pepsi’s marketing initiatives, campaigns and successful repositioning of both the Pepsi and the Coke brands.

Of prime concern to the Coca-Cola management was that Pepsi was outselling Coke in the channels where consumers had a free choice – such as, supermarkets and drugstores. The Coke’s brand natural market leadership advantage over Pepsi was eroding as a result, with their market share falling 2.5 percentage points from 1980 to 1984.

Coca-Cola had tried numerous activities, such as dramatically increasing its promotional spend, the use of a high profile celebrity as their spokesperson, substantial sales promotions and discounting – all of which was supported by very strong brand equity, extensive retail distribution and highly efficient logistics.

However, despite all these activities, Coca-Cola was failing to reverse the trend of a declining market share, relative to their key competitor. As a consequence, Coca-Cola finally believed that the only marketing alternative left open to them was to introduce a new better tasting cola drink.

Eventually, in April 1985, Coca-Cola reformulated their existing Coke brand and relaunched it as “New” Coke. By reformulating it, they replace the existing Coca-Cola product and remained with a single cola offering in the marketplace (in addition to their Diet Coke product that was only three years old at the time).

Initially, prior to the public outcry, Coca-Cola’s management was very pleased with their decision and believes that this was a masterstroke strategy of strategy that would destroy Pepsi’s competitive position. Their intention, although not quite realized in the marketplace, is outlined in the following positioning map.

new coke positioning on a perceptual map

(This perceptual map has been produced using the free Excel template available on this website.)

As you can see, prior to the introduction of New Coke, Pepsi had successfully repositioned the Coke brand and had established themselves as the better tasting and more current/modern cola brand – this repositioning was the foundation of Pepsi’s success and they were threatening to become the number one cola brand in America as a result.

By introducing a “New” Coke to the marketplace, which Coca-Cola had determined through almost 200,000 taste tests was a better tasting product,and using a more youthful and exciting style of advertising, along with the word “new”; Coca-Cola truly believed that they had would successfully reposition the Coke brand as better tasting and modern as shown in the perceptual map above.

As you probably know, much of the market was unwilling to accept a new flavor of Coca-Cola, which the population regarded as an American icon (whether or not they were consumers of Coke or not). Regardless of this outcome, it does help illustrate how a perceptual map can be used to help determine a firm’s competitive market strategy.
Related topics

Also see of this article on How Pepsi Repositioned Coke



Feb 092015

A good way to understand the role of perceptual maps in competitive marketing strategy is to review the importance of positioning in the Cola Wars era that resulted in the launch of New Coke.

Pepsi’s Repositioning of the Coca-Cola Brand

Pepsi “the Choice of a New Generation” and the Pepsi Taste-test Challenge

There were three key marketing tactics that enabled Pepsi to effectively reposition Coke in the 1970’s and 1980’s during the Cola Wars era. These three repositioning tactics were:

  1. Pepsi’s “New Generation” image advertising primarily appealing to the youth market,
  2. Pepsi’s sponsorship of Michael Jackson at the height of his career, and
  3. Extensive use of Coke-Pepsi blind taste-tests and related advertising.

The “Pepsi Generation” advertising program was reinstated by Pepsi in the early 1970’s. This successful promotional campaign promoted the slogans of “The Pepsi Generation’ and “The Choice of a New Generation”. Their image focused TV commercials position the Pepsi as modern, young, innovation and energetic. At the same time, it was designed to reposition Coke in the minds of the consumers as old, tired and boring.

The Pepsi Challenge was built around a series of blind taste test with consumers, which means that consumers  didn’t know which soft drink they were tasting. These Pepsi Challenge taste tests were filmed and repackaged as a form of reality advertising, primarily focusing on loyal Coke drinkers suddenly realizing that Pepsi tasted better. Over time, Pepsi produced over 300 of these TV commercials for the American market.

The final component in Pepsi’s repositioning of the Coke brand was the signing of Michael Jackson to make, initially, two TV commercials promoting Pepsi. This was in the era when Michael had just released his Thriller album, which would go on to become the biggest selling album of all time. In other words, he was a superstar t the time with strong appeal to the youth market. This dovetailed beautifully with Pepsi’s desired brand image of a young, exciting, dynamic soft drink, as opposed to old boring Coke.

Pepsi’s repositioning of Coke is demonstrated in the following perceptual map, which has been produced using the free Excel template available on this site.

Pepsi repositions Coke in the Cola Wars

As you can see, Pepsi saw an opportunity to reposition both their Pepsi brand and to reposition Coca-Cola at the same time. Their promotional campaigns centered on image and taste demonstrated to the marketplace that they had a better tasting product and a brand that was more attuned to a younger, more modern consumer. Therefore, in the consumer’s mind, Coca-Cola becomes repositioned as having a poor taste and being seen as old people and outdated.

This successful repositioning of Pepsi versus Coca-Cola was one of the main reasons that Pepsi became the preferred brand in the “freedom of choice” retail channels (such as, supermarkets and grocery stores) and why they consistently closed the market share gap during the early 1980s.

Related topics

Please see the article on the New Coke product and how Coca-Cola attempted to reposition Pepsi through a new product introduction.