Case Study: Coke vs. Pepsi This case study discussion is about branding. Formulate a response responding to the specific questions below rather than those within in the case study. Review this case study Coke and Pepsi offer products that are close substitutes.

How do the companies position their brands to differentiate their products? Each of the brands have used celebrity endorsers. Name a celebrity endorser for each brand and how they reflect a different position in the market. How are Coke and Pepsi positioning themselves to be the dominant choice of the younger generations such as Generation Z and Alpha?

Case Learning Outcomes After discussion of this case, students will be able to: explain the importance of an appropriate positioning strategy; describe how marketing could be utilized to differentiate two similar products; highlight the significance that celebrities play in brand endorsements; demonstrate comprehension of the complexity of developing strategies targeting Millennials and Generation Z; and evaluate the marketing strategies and tactics of the two cola leaders as they fight to maintain and grow market share in an increasingly global and competitive market. Introduction In the late 1800s, the Coca-Cola Company (Coke) and PepsiCo (Pepsi), the world's largest cola brands, were founded in Georgia and North Carolina, respectively. Since then, they have been engaged in a competition dubbed the "Cola Wars" that has pitted them against each other in an ultimate rivalry where the two companies have come to represent much more than a beverage. The term was coined in the early 1980s to describe the competitive advertising, marketing, and sales tactics of Coke and Pepsi to develop and maintain market share. Coke's marketing tactics have traditionally focused on goodness, nostalgia, and the family as a wholesome unit. Pepsi, on the other hand, has been positioning itself as a youthful brand that keeps up with the artistic and social shifts that occur with the rise of every new generation. The two titans compete fiercely with each other within multiple segments of the soft drink industry all over the world. It's not uncommon that when one launches a successful product or product line extension, the other will follow with a similar competing variety of that item. One of the most astonishing aspects of Pepsi's brand is that it wasn't always called Pepsi. In 1893, Caleb Bradham invented a beverage made of sugar, water, caramel, lemon oil, nutmeg, and other natural additives. He sold it at his pharmacy in New Bern, North Carolina, under the name "Brad's Drink." The new beverage was well received in his local community. Five years later, Bradham renamed his drink "Pepsi-Cola" to pursue mainstream success. Back then, Coca-Cola (also invented by a pharmacistJohn Pemberton) had already become an overnight sensation, so it is not surprising that Bradham sought a similar direction for his beverage. By the time Bradham adopted the Pepsi brand, Coca-Cola was already selling a million gallons per year. As a pharmacist, Bradham marketed his drink as a healthy drink that could relieve digestion and enhance energy levels. When Bradham developed his new brand name, he also had to have new logo (Bhasin, 2011a). Unsurprisingly, the new logo was very similar to Coca-Cola's. Fast forward 120 years, and the Super Bowl LIII (2019) was played in Atlanta, the birthplace of Coca-Cola and its current headquarters. Pepsi has been a key sponsor of the NFL for decades. Pepsi promotions, tied to the game, poked fun at the situation with slogans such as "Pepsi in Atlanta. How Refreshing," and "Hey Atlanta, Thanks for Hosting. We'll Bring the Drinks," and "Look Who's in Town for Super Bowl LIII." The company blanketed the home of Coca-Cola with thousands of ads on billboards, buses, fences, recycling bins, and the walls of train stations (Strunk, 2019). The two cola behemoths ran national TV ads during the Super Bowl, as Coca-Cola aired the commercial "A Coke Is a Coke" right before the Super Bowl's national anthem, while Pepsi ran a series of celebrity-packed commercials with the tagline "Is Pepsi OK?" (DeCosta-Klipa, 2019). Between Pepsi's rebranding in 1898 to mimic Coca-Cola and its aggressive Super Bowl LIII ads in Coca-Cola's backyard lies a century-plus of marketing battles and guerilla warfare. The original cola drink and its old contender engaged in countless tactics to instill brand loyalty and gain market share. The "Cola Wars" have been fought globally for decades, and it is safe to say there is no foreseeable end. Cola Wars The rivalry between Coke and Pepsi has been in full swing since the late 1800s. Because Coke was invented first, it has maintained an inherent advantage over Pepsi. It is the original cola drink and is one of those auspicious brands that has become a generic term. Pepsi has always been the runner up; a strong adversary that comes as the second best would be a good way to describe its 100-year global competition against the "real thing." Marketing strategies and tactics have been in the forefront of the "Cola Wars." Coca-Cola and Pepsi's tastes can be considered similar. Many people cannot reliably distinguish any difference in a blind taste test (Ambridge, 2015). However, some blind taste experiments have suggested that Pepsi tastes better. Nevertheless, Coke is the number one cola drink, a phenomenon known as the "Pepsi Paradox" (Van Doorn & Miloyan, 2018). Thus, there would be little point for Pepsi to modify its formula. Pepsi is not up against a superior product but rather dominant brand storytelling from a deep-rooted brand. What brand story can Pepsi articulate to differentiate itself? Logos If logos are the gateway to a brand and its story, then it is obvious that Coca-Cola and Pepsi have very different stories. The Coca-Cola logo has remained practically unchanged since its inception in 1886. The Pepsi logo, on the other hand, has undergone a dozen changes in its 125-year history. For the first five decades of its existence, the Pepsi logo was strikingly similar to that of Coca-Cola with its flourish-filled red script. The first major change to Pepsi's logo came during World War II when, in a patriotic gesture, the company brought in blue for a red, white, and blue color scheme. The introduction of blue was a stark turning point in Pepsi's brand differentiation. The company's brand story of positioning itself as being current and in-sync with the youth and the future is well told through its logo's lettering. Whereas Coca-Cola can't really tweak their lettering, Pepsi has the flexibility to reinvent itself every decade or so, while still remaining a global brand. Slogans Because both drinks' inventors were pharmacists, they contended that their products had medicinal benefits. Coke's 1900 slogan was "For headache and exhaustion, drink Coca-Cola," while Pepsi's 1903 slogan was "Exhilarating, Invigorating, Aids Digestion." Pepsi followed that one by "Here's Health!" in 1929. Over the next several decades, Coke's taglines subsequently revolved around the themes of "refreshing" and "satisfying:" 1904: "Coca-Cola satisfies" 1904: "Delicious and Refreshing" 1906: "Thirst quenchingdelicious and refreshing" 1907: "Cooling... refreshing... delicious" 1909: "Delicious, wholesome, refreshing" 1909: "Drink delicious Coca-Cola" 1924: "Refresh Yourself" 1927: "Around the Corner from Everywhere" 1942: "The only thing like Coca-Cola is Coca-Cola itself" 1945: "Whenever you hear 'Have a Coke,' you hear the voice of America" Pepsi turned to projecting the image of getting more value for the money: 1934: "Double Size" 1939: "Twice as Much for a Nickel" 1943: "Bigger Drink, Better Taste" 1949: "Why Take Less When Pepsi's Best?" However, touting itself as the economic alternative did not work well for Pepsi, and Coca-Cola remained the number one selling soda drink in the United States. Pepsi had to reposition itself. Making Coke look old and out of touch was its next strategy: 1961: "Now It's Pepsi for Those Who Think Young" 1963: "Come Alive! You're in the Pepsi Generation" 1983: "Pepsi Now!" 1984: "The Choice of a New Generation" 1989: "A Generation Ahead" 1993: "Be Young, Have Fun, Drink Pepsi" 1997: "Generation Next" 2003: "Pepsi! It's the Cola" 2012: "Live for Now" 2019: "For the Love of it" adopted in 100 countries, not including the United States (Shultz, 2019). Although its supremacy was never shaken by Pepsi, Coke responded with these slogans reiterating its unbeatable quality and tradition: 1970: "It's the real thing" 1982: "Coke Is It!" 1985: "America's Real Choice" 1989: "Can't Beat the Feeling" 1990: "Can't Beat the Real Thing" 1993: "Always Coca-Cola" 2009: "Open Happiness" While Coca-Cola leans to the nostalgic past and traditional familiarity, Pepsi leans forward in an attempt to seize youth before they fall for warm and fuzzy Coke connotations. Celebrity Endorsements In the early 1980s, Pepsi added another weapon: celebrities. Endorsements are commonplace nowadays, but 40 years ago, this was unchartered territory. In 1983, Pepsi signed Michael Jackson in a USD 5 million deal that would permanently reinvent the battle scene. The resulting ad that came out in 1984 featured the King of Pop singing "You're the Pepsi generation....Guzzle down and taste the thrill of the day.....And feel the Pepsi way." The album Thriller, which became the best-selling album of all time, was still fresh in people's minds. Michael Jackson, who was innovative and contemporary, was the perfect choice for the new generation. Since then, Pepsi has partnered with Bebe Rexha, Beyonc, Blake Shelton, Britney Spears, Cardi B, Christina Aguilera, 1 Cindy Crawford, David Beckham, David Bowie, Drew Brees, Enrique Iglesias, Jackie Chan, Janet Jackson, Jeff Gordon, Jennifer Lopez, Justin Timberlake, Kanye West, Katy Perry, Kendall Jenner, Lady Gaga, Leonel Messi, Ludacris, Mariah Carey, Mike Tyson, Mohamed Salah, Nicki Minaj, Pink, Pitbull, Shakira, Snoop Dog, Spice Girls, Steve Carell, and Tina Turner. It is safe to say that Pepsi loves to use celebrities to help endorse its products and causes. The company utilizes this strategy more often than Coke. Some would argue that Pepsi has won the celebrity battle in the Cola War. Signing rebellious and eccentric celebrities and athletes has helped Pepsi connect with younger generations and reinforce this rebel image. Consumers think that if a product is enjoyed by someone famous and successful, then it's good for them too. Using celebrities in Pepsi's advertising campaigns helps to promote the company's products and raise its awareness. Pepsi, as the rebel underdog, takes more risk recruiting "cool" and "hip" celebrities. These personalities have to conform with the image Pepsi desires to project. For instance, during the late 1990s, the Spice Girls became the face of Pepsi with the tagline "Generation Next" as consumers were enthused by the Spice Girls' song "Move Over." Promotion included TV ads, CD singles for the promo single "Step to Me," and collectible cans and glasses with each Spice Girl on a different can or cup. The strategy of using celebrities is inherently risky. Because, by their very nature, celebrities are frequently in the news and are monitored relentlessly, a celebrity who takes an unpopular stand on anything risks damaging his or her image as well as the brand's. A celebrity scandal can immediately incite a negative consumer perception to any brand affiliated with that celebrity, thereby harming the brand. Pepsi is seemingly aware of this, yet they are willing to live with the risk. Coke is more conservative and careful with this strategy.epsi has long been a staple of the Super Bowl's commercial line-up, and viewers have come to expect clever ads from the company. Featuring celebrities and poking fun at Coca-Cola has become the norm during this epic sporting event. From 2008 to 2017, Pepsi has spent approximately USD 174 million on Super Bowl ads, making it the third-largest ad spender during the NFL championship games (Vranica & Lombardo, 2018). Coke, on the other hand, does not rely so much on celebrity endorsements. The company's advertising campaigns focus on the refreshing taste of the iconic cola, while telling stories about special moments in lifea bottle of Coke at the center of it all, bringing people together. The soda giant did not get into the celebrity game until the early 2000s when Penelope Cruz and Courteney Cox were featured in the "Coca-Cola Real" campaign. Then, in 2014, when Beyonc was a big hit endorsing Diet Pepsi, Coke signed Taylor Swift to endorse Diet Coke. This was a big change in the company's strategy but indicates they did not want to miss out on reaching younger generations. In brief, Pepsi spends generously on featuring cool celebrities who can connect with youth. But there have been mishaps. The most controversial was the Kendall Jenner commercial in 2017. The ad was criticized as being superficial and for trivializing the Black Lives Matter movement, and the company had to pull it after vocal backlash (D'Addario, 2017). Co-branding The two cola hulks are known for their alliances and collaborations with other high profile brand names. The McDonald's and Coca-Cola alliance, for instance, was forged in 1955 and helped make the two companies the giants they are today. McDonald's is now the world's leading global food service retailer with more than 35,000 local restaurants serving nearly 70 million people in more than 150 countries (McDonald's Annual Report, 2017), while Coca-Cola is the world's largest beverage company owning and licensing around 1.9 billion beverage servings worldwide every day in more than 200 countries (Coca-Cola Company Annual Report, 2018). McDonald's boldly launched an unbranded marketing campaign in April 2017, in which the fast-food restaurant's name was never revealed in the ads. In fact, in these ads, comedian Mindy Kaling refers to the restaurant as "that place where Coke tastes SO good"never once mentioning the McDonald's brand. In one of these ads, Kaling even challenges viewers to Google it themselves and find out what that place is. This marketing campaign is shrewd all around. It takes advantage of the credibility of a self-proclaimed McDonald's-loving celebrity and the power and reputation of Google and Coca-Cola. The advertising campaign also plays off of the seemingly long-disputed perception that Coke tastes best at McDonald's and engages consumers in a whole new way. The Coca-Cola Company is a longtime sponsor and beverage supplier at Disney's theme parks. It has been present since Disneyland's opening day on July 17, 1955. Both Coca-Cola and Pepsi products were available at Disney parks until 1990 when an exclusive agreement was signed with Coca-Cola allowing only its beverages at the parks. The Coca-Cola brand is also featured throughout the parks. 2 In 2002, Delta Air Lines partnered with Coke to serve Coca-Cola products on all flights. The deal also included Delta's five SkyTeam Alliance partners: Aeromexico, Air France, Alitalia, CSA Czech Airlines, and Korean Air. Air France previously served Pepsi products. The agreement gave Coca-Cola access to millions of passengers on Delta's daily flights. It also opened the door for cross-promotional marketing efforts between SkyTeam and Coca-Cola. The alliance has been a success, except for a mishap in January 2019. Coca-Cola distributed napkins with drinks on Delta Air Lines that encouraged passengers to reach out to their "plane crush." "Be a little old school, write down your number and give it to your plane crush because you're on a plane full of interesting people, and hey ... you never know," one side of the napkin read. The note was criticized as creepy, and both companies apologized and pulled the controversial napkins (Flynn, 2019). Another successful Coke alliance that came into existence in 2014 was with InterContinental Hotels Group (IHG), one of the world's leading hotel companies (representing more than 3,200 hotels). Under this brand collaboration, IHG could only serve Coca-Cola soft drinks and juice brands to its guests in the United States. Pepsi's foray into co-branding includes a collaboration with Yum! Brands, which has given the beverage company abundant exposure as Pepsi products were exclusively sold in tens of thousands of Yum's restaurants around the world (KFC, Pizza Hut, and Taco Bell). Also, United Airlines and the National Football League have recently switched from Coke to Pepsi, while Coke has signed a deal with Regal Cinemas. In short, co-branding is an invaluable weapon in the infamous "Cola Wars." Coke comes out the definite winner, with gigantic contracts at Arby's, Burger King, Chick-fil-A, Chipotle, Denny's, Domino's Pizza, Five Guys, Hardee's, In-N-Out Burger, Jimmy John's, McDonald's, Olive Garden, Outback Steakhouse, Red Lobster, Ruby Tuesday, Sonic, Steak 'n Shake, Subway, The Cheesecake Factory, TGI Fridays, Wendy's, and Whataburger. Pepsi still has some prominent brands, like Applebee's, Buffalo Wild Wings, Golden Corral, Hooters, IHOP, KFC, Little Caesars, Panera, Papa John's Pizza, Pizza Hut, Quiznos, and Taco Bell. Attempting to convert chain restaurants into the rival's products has been an ongoing practice for decades. Creative Promotions Coca-Cola was named the most effective brand according to the 2015 Effie Effectiveness Index, 3 which recognizes the companies, brands, and agencies behind the world's most effective marketing ideas. This index is based on more than 40 national and regional Effie Award competitions yielding 3,000+ finalists. The beverage company's 2014 "Share a Coke" campaign, in which individual first names are directly printed onto Coke bottle labels, strongly contributed to this achievement. Using the most popular 250 first names among teens and Millennials in addition to generic phrases such as "superstar," "bff," "family," and "friends" printed on 20 oz. bottles of Coke, Diet Coke, and Coke Zero was a simple yet brilliant way to connect with younger generations. "Share a Coke" was a big hit, contributing to improved sales trends as consumers scooped up bottles in search of their own or a friend's name on the label. In the summer of 2015, Coke brought back its hit campaign using at least three times the names and more packaging sizes and formats (Rooney, 2015). To get back at Coke, which was targeting its audience with such a hip campaign, Pepsi launched an aggressive campaign reintroducing retro packaging (the 1973 logo). The retro packaging was used for 2 liter bottles, 20 oz bottles, and 12oz can 12-packs across the brand's entire portfolio. Meanwhile, the company also re-established the "Pepsi Stuff" loyalty scheme. Customers in the United States could redeem accumulated Pepsi points online at Pepsistuff.com for branded merchandise, such as t-shirts, hats, LED signs, varsity jackets, and bikes. Special codes for the "Pepsi Stuff" scheme could be found on the company's retro-designed products. The campaign was a hit, pushing the company to the number one rank as the most effective brand and dethroning Coca-Cola.