Please evaluate Pepsi Refresh Project from different perspectives:

1.Break-Even perspective:

a.How much sales (by %) should Pepsi increase in order to cover the expenses on Refresh Project? (5 pts.)

b.What does the result imply? (5 pts.)

2.Brand Measures perspective:

a.What brand metrics did Pepsi Refresh Project team use to measure the success of the project? (5 pts.)

b.Is the Pepsi Brand team focused on the right metrics to measure success? Why or why not? (5 pts.)

3.ROI perspective:

a.Considering the ROI of Pepsi Refresh Project, how many consumer impressions did this project create per dollar? (5 pts.)

b.What does this ROI imply for PepsiCo? (5 pts.)

GOOD, an integrated media company for "the people, businesses, and NGOs moving the world Internal research demonstrated the program's impact on employees: 97% said that the project forward," played a major partnership role. PepsiCo envisioned GOOD as a guide and an enabler. reinforced their pride in PepsiCo as a company, 83% planned to vote for an idea, and 25% planned to "We brought GOOD in to shepherd us through the process. They had insight into how things really submit an idea. Once the program went live to consumers, employees were encouraged to submit work-not just giving to an organization and hoping that they would accomplish something, but ideas; in the first 10 months, 94 employees or their immediate families had done so. Kristine Hinck, getting involved directly to help execute an idea," said Cooper. GOOD's participation granted senior manager, Pepsi Beverages Company Communications, summarized the employee response: PepsiCo legitimacy, as Irazabal explained: "We talked to non-profit entrepreneurs to understand whether it would work. Will it be called greenwashing? How do we make it authentic?" The brand team's decision to engage employees first was unique and significant. This approach really helped employees across the company become active, educated, passionate GOOD played several roles. They recruited and managed a team of Ambassadors-emerging ambassadors during the launch of the consumer-facing program. We had employees writing in leaders, activists, neighborhood advocates, and non-profit founders-who worked to increase the to say, 'In my 30 years as a PepsiCo employee, I've never been more proud!" involvement of the non-profit community and cultivate and curate innovative ideas in their areas of expertise. GOOD worked with Pepsi personnel to vet submitted ideas to ensure that they adhered to Bottler Engagement Programs the spirit and law of the program before being opened to consumer voting. The democratic nature of the program-allowing consumers to decide which causes Pepsi would support-made the project Pepsi also engaged its bottler partners in the Pepsi Refresh Project. PepsiCo distributed its soda unique among cause marketing programs. Lauren Hobart, chief marketing officer, PepsiCo Sparkling through a complex network of independent companies who owned the franchise rights to distribute Beverages, felt that "there was a time when brands wanted to keep total control, but we gave control Pepsi products in particular geographic areas. Since the bottlers were Pepsi's front line in stores and to the people-which is crucial in engaging today's consumers." The idea-vetting process was in local communities, the brand team knew their support was crucial to the success of the program. designed to ensure that Pepsi did not fund ideas that could damage the brand's reputation. Andrea Foote, senior manager of Pepsi Beverages Company Communications, was one of the employees The project was announced at a national bottler meeting and webinars were produced to walk involved. She noted, "Pepsi has a code of conduct and ethics, and we all try to live by it. What bottlers through the logistical details of the program. A special bottler grant contest spurred idea happens when there's an idea that's not in accordance with that code? Can Pepsi stand behind it?" submissions from the bottlers. Because bottlers would manage local public relations and events surrounding the grant winners, the brand team created winner kits (with banners and oversized GOOD worked with grant winners to maximize their success in executing their ideas in their checks) and press kits for bottlers to use with their local news organizations. communities. They also managed other agencies involved in the grant process, such as Global Giving, which conducted due diligence on the spending of the grant money, and Mission Some bottlers were skeptical of the program's ability to sell more product; others recognized its Measurement, which assessed the social impact of the grants. Grant Garrison, grants director of appeal for burnishing the brand's image. As Foote recalled: "The bottlers understood that the project GOOD, explained: "Once the money is out there, how do we ensure that the grantees impact their was partly about the brand image, about changing people's perceptions of carbonated soft drinks- community - and actually do what the voters wanted them to do? Our team of grant managers which had become the poster child for bad eating habits. But, for our bottlers, sales volume is much conducts public relations for winners' events to help them attract as much community participation more important to them. So for any program that we launch, their bottom line is, 'How is this going as possible." to help me sell more Pepsi?"" The goal was to help grantees succeed. Irazabal noted that "we have a whole backstage Dave Pederson, vice president of soft drink sales at Bernick's Beverages and Vending in organization that supports the winners to make their ideas a reality. We aren't holding their hands Minnesota, believed that the project had enhanced his ability to increase Pepsi's visibility in stores: per se, as these are very driven people, but we're making sure we have the right support for them."21 "We fight for floor space and locations in the stores, and this year I think we're getting better locations than our competitors. We're getting bigger displays, because [stores] are seeing that we're Employee Engagement Programs giving back to the community."2 But others expressed concern. Brian Charneski, a representative of 16 independent bottlers said, "People feel good about [the Pepsi Refresh Project] and I think it's neat, In addition to its external partners, PepsiCo relied on its employees to generate excitement for the but it doesn't translate to "I'm going to buy a Pepsi."*23 Pepsi Refresh Project. The brand team seeded a special contest among PepsiCo's employee resource groups, such as the Women's Initiative Network and Adelante, the Pepsi Latino/Hispanic Inclusion The Launch Group. Each group was asked to submit an idea for a $10,000 grant, and employees voted for their favorites. During the voting period, the Pepsi Refresh Project team took over PepsiCo's headquarters, The Pepsi Refresh campaign website went live on January 13, 2010. Irazabal remembered the wrapping the space with Pepsi Refresh Project signage. All 41,000 PepsiCo employees received moment: "All of the media support for the Pepsi brands went toward the project in 2010. It was the information about the program via Pepsi's internal newsletter, and branded T-shirts were dropped theme that united all the activities of the brand - one voice, one project." One key decision was how on every desk. The winner of the employee resource group contest was announced at a Town Hall best to incorporate the Pepsi brand and products into the project. Kate Watts, of Pepsi's digital Meeting featuring CEO Nooyi as the keynote speaker. Flavin recalled the excitement of the launch: agency, HUGE, noted that "there was no direct call to action for purchase on the website. The "Indra told us that never in her wildest imagination did she think that a brand would internalize branding was obviously very much Pepsi, but there was no direct push to sell the product in any Performance with Purpose and bring it to life in such a meaningful way. She encouraged all of us to shape or form. And that was the original intent-it was supposed to elevate the brand, not drive tell 10 people about the Pepsi Refresh Project." sales."was required to participate. Irazabal explained that "we were purists in the way we presented the would argue that a 30-second commercial has potential to penetrate a lot more than a quick, project. The fear of being seen as inauthentic prevented us from pushing soda sales more." incidental reference on a blog post. A good Super Bowl commercial can create massive viral multiples."34 In fact, some people participating in the project, both submitters and voters, were not soda drinkers, and some grant winners admitted not being partial to soft drinks. Cooper noted: Analyzing the Results We wondered whether we should build in an advantage for people who are Pepsi consumers. We decided not to do so, because we felt that the program should be as pure as Irazabal and her team spent the meeting analyzing the project's results. Many were positive. By possible in its intent. Everyone knew that there would be some skepticism about the the end of November 2010, 182,931 ideas had been submitted by people of all ages from all 50 states. program-this is Pepsi, and Pepsi's in the business of selling beverages. If a critic wrote that Over 57 million people had voted for an idea (Exhibits 6 and 7). The project had generated 3.24 barely beneath the surface was the quid pro quo of driving sales, the criticism might override billion media impressions, estimated to be worth some $66 million in earned media value. Paul the good intent. Massey of Weber Shandwick, Pepsi's public relations agency, commented on the momentum: We've worked in close contact with the grantees, who have been remarkable spokespeople Punting the Super Bowl for the impact that they've had; we've coordinated with GOOD in setting up one-on-one interviews for grantees with local media. That's the PR machine behind the project-a steady One of the biggest decisions surrounding the project was Pepsi's choice to walk away from the drumbeat of content that tells the story of how Pepsi is making an impact at the local level. Super Bowl, after being one of its biggest advertisers for 23 years. Cooper described the reaction: "I was surprised by the emotional response-people lost their minds. They were deeply attached to Prior to the project, Pepsi lagged behind Coke in Facebook fans, with 225,000 to Coke's 3.5 million: Pepsi's appearing in the Super Bowl, viewing it as part of the cultural experience of the game." the project added 3 million Facebook fans and 53,000 Twitter followers. The project won the Titanium Award at the Cannes Lions International Advertising Festival, the world's biggest advertising The Super Bowl was a preeminent advertising arena, bringing in 100 million viewers anticipating awards show. Forbes magazine named the program among the "best ever social media campaigns." the debut of new advertising during the game. Thirty-second advertising spots cost $2.5 to $3 million, and Pepsi had spent $143 million on Super Bowl advertising between 1999 and 2008, second only to The team was most excited about the brand health measures (Exhibit 8). An independent study Anheuser-Busch; Coca-Cola spent $30.5 million during the same period.2 Although Pepsi did buy conducted by Edelman- the Edelman Good Purpose Study 2010-showed that Pepsi was the leading traditional 30-second spots in key networks, the brand team also decided to co-produce integrated brand that came to mind when consumers were asked to consider which brands placed as much or programming. Pepsi had historically used the Super Bowl to launch new campaigns, and consumers more importance on supporting a good cause as they place on profits, ahead of Coke (at #4), Nike, often rated Pepsi's Super Bowl ads highly, extending the reach and impact of the ads in the following and Newman's Own.35 weeks. The first month's grant recipients reflected the diversity of causes funded (see Exhibit 9 for Irazabal explained the decision: "We didn't feel the Super Bowl was the right platform for the examples). Mid-year, following a catastrophic oil spill in the Gulf of Mexico, Pepsi added a special Pepsi Refresh Project. We probably sacrificed awareness, but I think we gained authenticity and grant contest for ideas to help the Gulf. Submitted ideas included relocating endangered sea turtles credibility." Hobart continued, "It is an environment where people expect humor, and this project and setting up a camp for young musicians. Pepsi estimated that through November 2010, the project didn't lend itself to that. That said, Pepsi had a long legacy on the Super Bowl-it was hard to walk had positively impacted some 73,000 people directly and an additional 29,000 people indirectly. away from that exposure, and we heard it from our bottlers." However, there were also troubling trends in the data. The average time spent on the Refresh Third-party commentators, such as Marc Lucas of Kirshenbaum Bond Senecal & Partners, Everything website was low-between three and four minutes. The website was functioning well as a applauded Pepsi's decision: "I am talking to clients now who used to be scared to walk away from voting engine, but its content was not keeping people engaged. In 2011, Singh felt that the team million dollar TV ads, but that's not the case anymore. On the flip side, I think it's very bold to not be needed to "treat the voting as a starting point-as the permission for deeper engagement. What we in a place where you know you're going to have an audience."29 Others were more critical, such as see today is a consumer who comes to the site, looks at an idea, votes, and then jumps ship." Jeremiah Owyang, an Altimeter Group partner. "The company alienated a key channel and missed out on tying Pepsi Refresh to the most-watched television event in Western media. By not having any In addition, the team was not sure that the program was attracting the right consumers- either In-game discussion on the advertisements, [Pepsi] was unable to use the Super Bowl as a catapult to idea submitters or voters. Irazabal noted the preponderante of large non-profit organizations that launch the campaign into the social sphere."30 were submitting ideas and marshaling their older supporters to drive votes (Exhibit 10). By the end of the first year, only $1.7 million had been given to 61 grantees under the age of 24. However, Pepsi was the second-most buzzed-about brand around the Super Bowl (Exhibit 5).31 Pepsi added 300,000 fans to its Facebook page during the Super Bowl period, while Coca-Cola, which The project also garnered some negative press. One blogger asked, "What do Pepsi and Coke took advantage of Pepsi's absence and ran multiple Super Bowl ads, added 390,000.32 Coca-Cola's actually sell? Soft drinks; liquid with a lot of sugar and no vitamins. And now they want to get chief marketing officer, Katie Bayne, said, "We feel the Super Bowl is one of those iconic moments associated with health, planet, art and culture, food and shelter, neighborhoods, and education? that helps Coke burnish its brand."33 Others, like Pete Blackshaw of NM Incite, cautioned PepsiCo Using social media? I am very sorry, but I think there is a value clash somewhere." not to underestimate the value of a paid ad versus impressions generated by social media: "Some 10 11The Pepsi Generation brand into the #1 slot for the best-selling soft drink in American supermarkets. In response, Coca- Cola reformulated Coke, creating a sweeter version that appeared on shelves in 1985. "New Coke" In its early days, Pepsi-Cola was sold as a healthful drink. During the Great Depression, it beat both Pepsi and Coke in blind taste tests. However, Coke's consumers revolted against New captured consumers' attention with a message of value, offering 12 ounces of soda (twice as much as Coke, demonstrating the nostalgic and iconic appeal of the Coke brand. In response, Coke quickly the competition) for a nickel. During World War II, Pepsi changed its packaging to red, white, and introduced Coca-Cola Classic. blue, featuring patriotic themes in its advertising. Pepsi and Coke's rivalry was enduring, with the two companies constantly trying to win the battle In the 1950s, Pepsi was positioned as a drink for the young and the young at heart, embodying for "brand switchers" - the large group of die-hard cola drinkers who were fickle enough in their being sociable and spirited, feeling free, and embracing change. In the 1960s, Pepsi ran award- preferences to switch from one brand to the other on the basis of price discounts, innovative winning advertising campaigns that designated the generation then coming of age as "The Pepsi promotional strategies, and other marketing efforts. In 2010, Coca-Cola led the soft drink market Generation." In 1985, Pepsi became "The Choice of a New Generation," with an ad featuring pop star (Exhibit 1). Michael Jackson, putting Pepsi on the leading edge of popular culture. In 1997, Pepsi launched its "Generationext" campaign, reinvigorating the message for a new generation of Pepsi consumers. Pepsi continued to include the most influential music artists (e.g., David Bowie, Madonna, Aretha PepsiCo in the Twenty-First Century Franklin, Faith Hill, Britney Spears, Shakira, and Beyonce), sports heroes (e.g., Joe Montana and Shaquille O'NEAL), and fashion models (e.g., Cindy Crawford) in its advertising. Howard Pulchin, As the new century dawned, PepsiCo faced significant challenges. The first was a decrease in soda EVP and managing director of Brand Stewardship for Edelman, Pepsi's public relations agency, consumption in the United States. In 2009, the average American consumed 46 gallons of carbonated summarized Pepsi's pop culture strategy: "Pepsi has always been at the nexus of cultural shifts, soft drinks, the equivalent of 736 8-ounce servings-more than 2 servings per day-but down trying different, new things. Pepsi is about bringing together people and ideas at the nexus of culture. significantly from 1998, when Americans consumed 864 servings. Since peaking in 2004, volume When people are together, Pepsi is there." sold had declined for six straight years, as cola drinkers switched from soda to iced teas, juices, and waters-though in 2009 consumers still purchased more than twice as many gallons of cola than Frank Cooper, chief engagement officer of PepsiCo Beverages, explained the enduring appeal of bottled water, and more cola than milk and beer combined (Exhibit 2). Analysts expected volume to this lifestyle positioning: decline by 1.5% to 3% annually for the next ten years.".10 In the 1960s, we built a successful ad campaign on the slogan "For those who think young." The second challenge came from external pressure. By 2010, two-thirds of American adults and That idea morphed into "The Pepsi Generation." The Baby Boomers who were coming of age one-third of American children and adolescents were overweight or obese.! First Lady Michelle were excited, engaged, and enthusiastic-and started a movement that transformed our Obama initiated an anti-obesity initiative that included requiring soda manufacturers to put calorie culture. In the 80s and 90s, Generation X experienced the transformation from typewriter to content on the front of containers.12 Groups lobbied lawmakers to sponsor soda taxes to reduce computer, letters to email, isolated cultures to global infrastructure. Today's Millennials, the consumption and pay for the health costs of obesity.13 Companies like PepsiCo, Coca-Cola, and most globally connected group in history, embody and embrace change. They live life in beta.5 McDonald's were often presented as corporate exemplars of the obesity problem. Jon Leibowitz, chairman of the Federal Trade Commission, stated that his agency would begin "shaming companies As the brand team shaped the Pepsi Refresh Project, they were careful to consider Pepsi's rich that aren't doing enough."14 brand meaning from its long history, with Irazabal noting that "part of Pepsi's DNA has always been the spirit of the challenger, celebration of the next generation, and of optimism and all things young In response, the American Beverage Association pledged to reduce beverage calories in the at heart."6 marketplace, with their member companies offering lower-calorie beverages and smaller portion sizes.15 PepsiCo and the Coca-Cola Company stopped selling full-calorie sweetened drinks in U.S. The Cola Wars schools in 2006.16 In 2009, PepsiCo's CEO, Indra Nooyi, announced a new vision for the company - Performance with Purpose-that placed global corporate citizenship at the forefront of PepsiCo's In the 1970s, Pepsi's rising sales began to challenge those of the market leader, Coca-Cola-and mission: the "cola wars" began. Pepsi was fighting against a formidable competitor. In 2010, Coke's brand equity was valued at over $70 billion and it topped Interbrand's list of the best global brands. PepsiCo's people are united by our unique commitment to sustainable growth, called Interbrand's assessment of the Coke brand was that "its brand promise of fun, freedom, spirit, and Performance with Purpose. By dedicating ourselves to offering a broad array of choices for refreshment resonates the world over and it excels at keeping the brand fresh and always evolving- healthy, convenient, and fun nourishment, reducing our environmental impact, and fostering a all this, while also maintaining the nostalgia that reinforces customers' deep connection to the diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving brand."7 Memorable campaigns included "It's the Real Thing" from 1969, "I'd Like to Teach the back to our communities worldwide. World to Sing" in 1971, "Have a Coke and a Smile" from 1979, "Coke is It!" from 1982, and "Always Coca-Cola" from 1993. The company began to enhance its product portfolio with wholesome foods and beverages, with a new approach to segmenting its product line: fun-for-you products such as Pepsi, Doritos, and In 1975, Pepsi's brand team found a compelling way to differentiate Pepsi from Coke, converting Mountain Dew; better-for-you products such as Baked Lays and Propel water, with levels of fat, results from blind taste tests showing that people preferred the taste of Pepsi to Coca-Cola into an sodium, and sugar in line with dietary-intake recommendations; and good-for-you products such as award-winning advertising campaign. The "Pepsi Challenge" energized Pepsi sales, catapulting the Gatorade, Quaker oatmeal, and Naked juices that included whole grains, fruits, vegetables, andnutrients. Research and development operations were directed to explore new means of making all of The Pepsi Refresh Project PepsiCo's products healthier. PepsiCo's goal was to triple the number of good-for-you products by 2020. Nooyi stated: "By expanding our portfolio, we are making sure our consumers can treat As the "Refresh Everything" campaign moved into its second year, the mood of the nation had themselves when they want enjoyable products, but are able to buy a range of appetizing and changed again. Simon explained: "2010 became a year of action, not words. 'Refresh Everything' healthier snacks when they are being health conscious." would be judged on the brand's actions, not just on the words in our advertising. We knew we had to do something really big and tangible, a physical manifestation of our brand platform." As the company focused on making their product offerings healthier, critics claimed that PepsiCo's senior management was losing its focus on the core soda and snack businesses - and that Irazabal's research showed that Millennials perceived the Pepsi brand as superficial: "Consumers the stock price was suffering as a result. Sanford Bernstein analyst Ali Dibadj stated that "they have are tired of words without actions. 'So, great, you're refreshing the world. Show me how."" Cooper to realize that at their core they are a sugary, fatty cola company and people like that. Health and noted that "one of the ideas that came up was to show consumers that the brand is giving back to the wellness is a good focus, but you can't be singularly focused on it."17 world - that the brand is not just taking." The Pepsi Refresh Project was a marketing program geared to solicit and reward consumers' ideas The Refresh Everything Campaign for refreshing their communities: Pepsi would enable consumers to enact change by funding their ideas. For 2010, $20 million-originally earmarked for other marketing activities including Super As Irazabal, Cooper, and their advertising agency, TBWA\\ Chiat\\ Day, searched for the next big Bowl advertising- would fund the best ideas submitted by consumers. Grants ranging from $5,000 to idea to anchor Pepsi's 2009 advertising campaign, they observed several important cultural shifts in $250,000 would support ideas in six categories, such as "Education" and "The Planet" (Exhibit 3). the U.S. The financial crisis of 2008 had provided a sobering end to the excesses of the 2000s, A Pepsi The hub of the program was its website-www.refresheverything.com-where consumers submitted consumer survey in December 2008, however, showed that Americans were hopeful about the future; ideas, reviewed idea proposals, and cast their votes. Each month, the site accepted up to 1,000 idea this was particularly true for Millennial consumers (ages 17-27), 80% of whom expressed hope about submissions. Consumers were encouraged to return frequently to vote; each person could vote for 10 their future ideas per day during a 30-day voting period. In response, Pepsi launched a new campaign-"Refresh" -with the tagline "Every Generation The project capitalized on several converging trends. First, studies showed that brands' social Refreshes the World," which had three executions: Wordplay, targeted mainly to Millennials; Bottle capital was important to Millennials: 69% claimed that they considered a company's social and Pass, targeted mainly to Baby Boomers; and Refresh Anthem for the Super Bowl. All executions environmental commitment when shopping, and 89% said that they would switch to a brand communicated themes of optimism, hope, joy, and love; the campaign was launched to coincide with associated with a good cause. Second, Millennials believed that they were both obligated and New Year's Eve 2009, and Pepsi kicked off the excitement by plastering Times Square in New York empowered to make the world a better place: 92% believed the world needed to be changed, and 83% City, the site of the biggest New Year's Eve party in the U.S., with advertising. The campaign believed that their generation had a duty to change the world." Third, Millennials believed that challenged consumers to refresh and renew their world. technology, and specifically social media linking people together, was a force for change.20 A "Refresh Anthem" commercial was created for the 2009 Super Bowl, featuring Bob Dylan and The brand team encapsulated these trends with the tagline "Every generation refreshes the world. william, the lead singer of the Black Eyed Peas, to the tune of the Dylan classic "Forever Young." Now, it's your turn." Launch materials invited consumers to participate: The ad featured the tagline "Every Generation Refreshes the World" and juxtaposed scenes from the 1960s and the 2000s. The visuals focused on the similarities between the Baby Boomer and Millennial Imagine if people from all walks of life across the U.S. had just one idea to make the world generations and communicated themes of happiness, change, and youthfulness. TBWA\\ Chiat\\ Day's better. Now imagine if they had the means to bring their ideas to life. The Pepsi Refresh Project Pepsi account planner, Jeremy Simon, explained the campaign: offers a platform for change, empowering Americans to bring a positive impact to their It came from insight into two business problems facing Pepsi. Our core Baby Boomer communities . .. . The Pepsi Refresh Project is about the power of people and their ideas. consumers were leaving the soda category and weren't being replaced by Millennials. Our Pepsi's Partner Network challenge was to find a single solution to both problems, to keep Baby Boomers and attract Millennials. Our insight was that those two generations have a lot of shared values and The scope and the scale of the project were unlike anything Pepsi had done before. The brand attitudes-they are optimistic generations who believe that they can change the world. team enlisted a cadre of agency partners to help plan and execute the project. In addition, all internal Pepsi brand resources-both financial resources and personnel - were diverted from other marketing Many noted similarities between the messaging of "Refresh Everything" and the rhetoric of programs. Irazabal laughed as she recalled the support she had received: Barack Obama, and between Pepsi's newly redesigned logo and the logo used by Obama in his presidential campaign. To capitalize on the excitement surrounding Obama's inauguration, Pepsi We have about 125 people working on the project, including everyone here at Pepsi and at peppered the crowd with Pepsi tote bags and T-shirts and blanketed Washington, DC, with Pepsi our agency partners. If you ask any one of them, they all feel like they own the project. There is Word Play billboards. Nicole Flavin, Pepsi Brand marketing director for Diets and Innovation, a huge sense of pride. People who work on the other brands here at PepsiCo ask, 'Is there any explained that "our point was not to have a political point of view, but to make sure that we were way I can help?' We have a group of employees who are Millennials who help us moderate the riding the sentiment in the country - and the sentiment was change." ideas each month, just because they want to be a part of it, not because it is part of their job.Finally, the most troubling numbers came from the field, as sales continued to slump: Pepsi-Cola's Second, if the team decided to move ahead with the program, they needed to make changes. volume fell 4.8%, and Diet Pepsi's fell 5.2% in 2010. Both Pepsi and Diet Pepsi lost market share, Irazabal explained: "Millennials are the people who engage most with the program once they are while Coca-cola eked out a 0.1 percentage-point gain. Singh remarked, "This is a tension point: aware of it, but they are also the people that drink less soda. Only 12% of Trademark Pepsi drinkers something that builds brand equity doesn't translate into an immediate ROI. It translates into sales a are Millennials, but 38% of Pepsi Refresh folks are Millennials. If, at some point, they're going to year later or a few years later. It's a big brand bet and investment." Irazabal described her thinking: choose a cola, we want them to choose Pepsi." Irazabal also worried about sustaining consumers' "The short-term pressures are very challenging- we all recognize that it would have been better if interest in the program for another year. One idea that the team was considering was adding "power the project had driven sales. But in the end, we want to do well by doing good. That's where we need voting," where Pepsi drinkers could garner up to 100 extra votes from codes hidden under the caps to go in 2011: our programs need to be linked to sales in consumers' minds." Cooper felt that it was of Pepsi products. Another idea was changing the grant categories and/ or grant amounts. "partially a leap of faith. If you believe that your brand health scores are headed in the right direction, and that consumers are more engaged with the brand, then you expect more purchasing As the team debated, Pepsi's critics weighed in. Professor Mark Ritson claimed, "An overt focus from your current consumers or an influx of new consumers - hopefully brand switchers." on social media had blinded Pepsi to the realities of its market. It was not marketing a movement, it was marketing cola. Marketing at Pepsi should have never been about conversations or dialogue-it Given all of the data in front of them, the team struggled with how to define success. Cooper tried should have been about reminding consumers what Pepsi stands for and encouraging them to go buy to stay focused on the long term: "We are building more relationships and we have more points of it."35 Rance Crain, editor of Advertising Age, was most direct: "The bigger question is whether any contact with our consumers. We also measure activity within social media and the response has been marketer should put all of its eggs in the do-good basket. It's risky to build your entire campaign tremendous. Ultimately, allowing people to do good through our platform will serve us at the retail around a cause that doesn't give any tangible reasons for consuming your product. There's also the shelf. People who are at the market, torn between our competitors and us - this will tilt purchasing in danger that consumers could conceivably tire of causes or decide that Pepsi, a marketer long known our favor because of how we're giving back and adding value to people's lives." for its ability to amuse and entertain, is taking itself too seriously. After all, we're talking about fizzy soda water here."39 Looking Ahead As the team looked ahead to 2011, they had several pressing decisions to make. The first was whether to continue to support the Pepsi Refresh Project from the brand marketing budget. Unlike PepsiCo's other philanthropic endeavors that were funded by the PepsiCo Foundation-such as charitable contributions to nonprofit causes including Save the Children and the Safe Water Network-the project was funded using dollars earmarked for Trademark Pepsi brand marketing. The team wondered whether the project was the most effective way to drive sales. Irazabal struggled with the optimal way to link the program to the brand: "I think that's still the biggest challenge- making sure that consumers know that it's the brand, not the Pepsi corporation. How can we continue to communicate that Pepsi, the cola, is actually helping to refresh the world?" Cooper worried that the singular focus left other aspects of the brand's equity at risk: The aspect that concerned me most was that it was all consuming. The Pepsi brand meant many different things over time. When Refresh became the single idea for 2010, we risked brand equity in other areas. At the same time, the perception of what the Pepsi brand could be had narrowed -it became a cola. Refresh was a disruptive move that, if sustained long enough, would encourage people to think of Pepsi in a broader way. Hobart worried that the program lacked some key elements of the brand's personality: "By definition, the project is heavy. The stories on the website can make you shed tears. How can we bring in Pepsi's DNA, which is all about fun and optimism and the spirit of youth?" 12 131995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2006 2009 (est.) Total Coca-Cola Company 3,798.0 4,005.1 4,208.6 4,399.5 4,377.5 4,383.8 4,375.9 4,468.1 4,459.8 4,414.8 4,408.4 4,357.5 4,241.1 4,107.6 3,947.0 Coke 1,868.6 1,929.2 1,978.2 2,037.5 2,018.0 2,028.1 1,987.5 1,947.8 1,889.4 1,832.7 1,796.0 1 1,760.1 1,707.3 1 1,664.6 1,598.0 Diet Coke 793.0 811.4 819.0 851.8 843.0 864.1 878.8 905.2 950.5 998.0 999.0 998.0 990.0 960.3 936.3 Other Coke Variants" 315.1 3123 307.6 314.5 311.3 303.1 320.2 435.9 432.4 441.5 429.9 357.4 317.5 286.5 265.7 Total PepsiCo 2,770.7 2,880.6 2,965.7 3,100.2 3,119.5 3,124.1 3,163.5 3,170.1 3,227.7 3,246.1 1 3,207.8 3,167.5 3,082.8 2 2,964.3 2,815.3 Pepsi-Cola 1,344.3 1,384.6 1,391.5 1,399.8 1,371.8 1,358.1 1,320.1 1,267.3 1,210.3 1,179.5 1,141.8 1,113.2 1,059.8 990.9 936.4 Diet Pepsi 521.4 529.8 524.5 529.7 503.0 523.1 533.6 552.3 586.0 625.0 613.1 607.0 594.9 550.3 525.5 Pepsi MAX 15.0 21.8 20.4 Other Pepsi Variants 193.8 205.1 211.5 263.3 298.3 278.7 282.1 287.8 293.4 279.8 296.7 271.0 237.3 214.6 199.2 Includes Coke Zero, Caffeine Free Diet Coke, Cherry Coke, Caffeine Free Coke, Cherry Coke Zero, Diet Coke with Lime, Vanilla Coke, Diet Cherry Coke, Diet Coke with Splenda, Diet Coke Plus, Vanilla Coke Zero, Diet Coke Black Cherry Vanilla, Coke Black Cherry Vanilla, Coke Blak, Coke with Lime, Coke C2, Diet Coke with Lemon, Diet Vanilla Coke, Coca-Cola IL Includes Wild Cherry Pepsi (Reg/Diet), Caffeine Free Diet Pepsi, Caffeine Free Pepsi, Pepsi One, Pepsi Throwback, Diet Pepsi Lime, Diet Pepsi Vanilla, Pepsi Natural, Pepsi NFL, Diet Pepsi Jazz, Pepsi Lime, Pepsi Summer Mix, Pepsi Vanilla, Diet Pepsi Twist, Pepsi Twist. Source: Casewriters, compiled from data contained in Fact Book Statistical Yearbook of Non-Alcoholic Beverages (2010), assembled by the editorial staff of Beverage Digest, 15th ed. (Bedford Hills, NY: Beverage Digest). 512-018 -15- Exhibit 2 U.S. Liquid Consumption Trends (Gallons per Person per Year) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Soft Drinks 48.3 50.0 50.9 52.0 53.0 54.0 53.6 53.0 52.6 52.5 52.3 52.3 51.7 51.0 49.3 47.4 46.0 Beer 22.6 22.4 21.9 21.8 21.7 21.8 21.9 21.8 21.7 21.8 21.6 21.9 22.0 21.7 21.0 Milk 23.2 23.0 228 22.7 22.3 21.7 21.3 20.7 20.7 20.5 20.2 20.3 20.0 21.7 21.4 21.5 Bottled Water 8.7 9.6 10.1 11.0 11.3 11.8 12.6 13.2 14.5 15.4 16.6 17.7 19.5 21.0 22.5 21.4 20.6 Coffee 25.2 23.3 21.3 20.2 19.4 18.0 172 16.8 16.9 16.8 16.7 16.6 16.4 16.2 16.0 15.8 Juices 8.8 9.0 8.9 9.0 9.0 9.5 94 9.5 9.0 8.9 8.5 8.6 8.2 8.3 8.1 Tea 6.9 7.1 6.8 6.9 6.9 7.0 7.0 7.0 Sports Drinks 1.0 1.2 1.3 1.5 1.7 1.9 2.2 2.3 26 3.0 3.5 4.2 4.7 4.9 Powdered Drinks 5.0 4.8 4.5 4.2 4.0 3.7 34 3.0 2.7 24 2.5 2.6 2.6 24 2.2 Wine 1.7 1.7 1.8 1.8 1.9 1.9 2.0 20 2.1 2.2 23 25 Distilled Spirits 13 1.3 17 17 12 13 13 13 14 1 4 14 Tap Water/ Hybrids/ All Others 29.8 29 2 31.0 30.3 30.0 29.8 30.7 31.6 31.8 30.3 29.0 27.6 263 24.8 28.9 31.8 Source: Casewriters, compiled from data contained in Fact Book Statistical Yearbook of Non-Alcoholic Beverages (2010), assembled by the editorial staff of Beverage Digest, 15% ed. (Bedford Hills, NY Beverage Digest).A launch blitz was designed to build excitement (see Exhibit 4 for examples). Edelman and Weber Traditional Media Programs Shandwick, Pepsi's public relations agencies, managed a multifaceted national and local public relations program. Actors Kevin Bacon and Demi Moore participated in a Pepsi Refresh Celebrity PepsiCo was one of the largest advertising media buyers in the U.S., spending $136 million to Challenge, seeking votes for their favorite causes; the Celebrity Challenge was announced for the first support its Trademark Pepsi brands in 2009.25 Through August 2010, Pepsi had spent $109 million time on The Today Show. The Pepsi Refresh Facebook page also featured an exclusive opportunity to advertising the Pepsi Refresh Project.26 Media buys included television advertising on NBC, ABC, watch the "Pepsi Refresh Everything through Great Ideas" brainstorm live from New York City. The Fox, MTV, Spike, and ESPN, and print advertising in People and Parade magazines. brainstorm brought together Moore, Bacon, CMO and president of joint ventures for PepsiCo Americas Beverages Jill Beraud, advisory board member Majora Carter, and college students from Erin Matts, chief digital officer of OMD Digital, Pepsi's media buying agency, explained the media the New York City area to discuss ideas that they believed would positively move the world forward. strategy: "The plan was to get people engaged early on to start a snowball effect as we reached Viewers submitted questions in real time via Facebook and Twitter (@Pepsi); content from the critical mass. Public relations and media placements helped, but we wanted to engage people who brainstorm was available on Ustream, Facebook, and a new iphone application. would give the program the start it deserved." Rather than buying advertising spots and filling them with Pepsi ads, Pepsi co-produced integrated programming. MTV correspondent Su Chin Pak and In just 72 hours, the site reached the 1,000-idea submission limit for the first month, with at least actor, comedian, and rapper Nick Cannon traveled around the country in a Pepsi Refresh bus to film one submission from each state. More than 141,000 votes were cast in the first three days of voting. In segments about grant winners. NBC's Today Show featured three weeks of stories on idea submissions the second month of the program, it took only 16 hours to field 1,000 submissions. Pulchin the hosts were passionate about. Parade conducted a national poll on "What America Cares About" remembers the moment when the team realized that the program would be a success: "We were with a cover feature on the results and featured a monthly "What Celebrities Care About" column worried that there would be too few ideas submitted. What if no one participates? What if no one with a customized Refresh advertisement adjacent to the column. Director of media strategy Seth votes? But there were way more ideas than we could put up on the site." Kaufman noted the advantages of this type of advertising: "Now I get the right eyeballs, they're engaged with my message, and they're looking at branded content, not advertising. Integration into Social Media Programs The Today Show, where we're part of the messaging in a genuine way, is 60% more effective than running an ad." Given the Millennial target audience and the fact that the projects would be posted and the voting would take place online, the team relied heavily on social media for its reach and impact. Irazabal Using branded content put the brand's messaging in the hands of its media partners. Kaufman increased her digital advertising spend by 60% for 2010." Pepsi sponsored Social Media Week, an admitted that "losing control of our creative was very, very hard" but felt that giving up control industry conference on trends in social and mobile media, and solicited three influential bloggers to ultimately led to more effective media: "Although no one knows the Pepsi consumer like we do, no compete for a $50,000 grant. Irazabal, Cooper, and other executives were interviewed by bloggers at one knows the MTV viewer like MTV does." the event, which generated 50 million impressions on Twitter. Sports Marketing Programs Consumers interacted with the project across social media platforms. They voted for ideas on the main website, on Facebook, or via SMS text messaging. They were encouraged to "Like" the Pepsi Pepsi also utilized its sports marketing assets. During the lead-up to the 2010 Super Bowl, New Refresh Project on Facebook and to use Twitter to generate publicity and solicit votes. A mobile Orleans Saints quarterback Drew Brees, New York Jets quarterback Mark Sanchez, and Dallas application allowed consumers to view ideas in their area and vote from their mobile phones. On the Cowboys linebacker DeMarcus Ware submitted ideas for a $100,000 grant, and fans voted on website, winners were encouraged to blog about their efforts to increase awareness of their causes. www.nfl.com. The effort generated 530,000 votes in five days. Brees, who later was the 2010 Super Bowl's most valuable player, was awarded the grant to support The Hope Lodge in New Orleans, Soon, the site was receiving four to five million unique visitors each month. About half of those which provides rooms for cancer patients and their caregivers. The grant was awarded on the Friday registering on the site to submit ideas opted in to receive brand communications and coupons from night before the Super Bowl at a party hosted by musical artist Rhianna, which generated over 376 Pepsi. By March 2010, the project had earned Pepsi an additional 300,000 Facebook friends and was million media impressions. generating 1,000 tweets per day. Public relations efforts yielded 6 to 12 media stories each day. The amount of content generated by the program was staggering The process was repeated for other sports sponsorships. Major League Baseball players- including stars like C.C. Sabathia, Johnny Damon, and Evan Longoria-submitted ideas. After 2.5 Shiv Singh, Pepsi's head of digital, noted that the Refresh Everything website was generating million votes were cast, the winning grant went to the Minnesota Twins to build a field for more content and traffic than many of the websites that Pepsi had traditionally pursued for wheelchairs for The Courage Center, a wheelchair softball team. The check was delivered during advertising buys: Fox's broadcast of the World Series. NASCAR drivers Dale Earnhardt, Jr., Jeff Gordon, and Jimmy We are now a media company in our own right. Rather than having our consumers on Johnson competed for a grant, as did athletes from the U.S. Men's National Soccer Team during the someone else's website, we have their traffic. Rather than spending hundreds of thousands of FIFA World Cup. dollars advertising Pepsi on a media company's website, I can use that money to create content In-Store Programs for Refresh Everything that leads to deeper engagement and a stronger relationship-and consumers take that content and let it travel. A more toned-down approach was used in retail stores where Pepsi products were sold. Pepsi's 2- liter bottles and 12-pack cartons were stickered with a Pepsi Refresh Project snipe, but Pepsi was careful to distance the program from the purchase of a Pepsi product. Importantly, no Pepsi purchase