Dynamic Marketing Communiqué

For EVERY generation: How this soda giant became a pop culture icon [Monday Marketing Marvels]

May 18, 2020

An average American drinks 44.7 gallons of soda a year.

That’s around 286 bottles or 487 cans in total.

That’s 1.3 cans per person per day for one year!

These fizzy beverages are loved by millions more around the world.

With so many flavors to choose from, popping open a fresh bottle or can is always a satisfying experience!

In an attractive market like this, multiple brands have fought for dominance.

PEPSI is one of them.

The drink’s secret formula was developed in 1898 by pharmacist and businessman Caleb Bradham.

By the turn of the 20th century, Pepsi became one of the most popular brands in America.

After merging with Frito Lay Inc. in 1965, the company changed its name from Pepsi-Cola Company to PepsiCo.

The merger helped the company grow and Pepsi became one of the most popular brands in the world.

Pepsi vs. Coca-Cola: The biggest rivals in the soft drink industry.

These two soda giants weren’t just competitive with their products, but they were constantly trying to outdo each other with their marketing and promotions.

They’ve always had ambitious marketing campaigns with some directly throwing jabs at each other!

It’s always tough dealing with competitors, but Pepsi kept their cool and focused on creating some of the most amazing marketing campaigns the world has seen.

[Fun Fact: Pepsi was the first product to have its own jingle played on the radio!]

Michael Jackson and the Drink of the Generation (1984)

This commercial showed kids and teens holding and drinking Pepsi while dancing to Jackson’s Billie Jean on the street. There was even a kid dressed in the pop icon’s classic stage attire!

This campaign was not only one of the first successful campaigns that featured celebrities, but it also helped the company generate USD 7.7 billion in sales in 1984!

Friendly competition between Pepsi and Coca-Cola (1995)

This commercial showed a Pepsi and Coca-Cola drinker trying out each other’s drinks. They meet each other at a diner, and get into a friendly conversation.

Both of them offered a can of their favorite soda to each other. They tasted the drinks but that led to some problems. The Coca-Cola guy did not want to give back the Pepsi!

A diner stool was thrown out of a window, indicating that they got into a fight for the drink.

The end of the commercial shows the tagline, “Nothing beats a Pepsi.”

This campaign was a great example of storytelling and is another jab at Coca-Cola, showing that even their drinkers want a taste of Pepsi!

“Ask for More” (2002)

“Ask for More” was a campaign released to tap into the international market, particularly Asia. They collaborated with Taiwanese boy band F4 to create a commercial, compose a single, promote ads, and even sponsor their concert tours.

The commercial showed three of its members (Jerry Yan, Vanness Wu, and Vic Chou) chasing a Pepsi truck (driven by Ken Chu) in a race to give a Pepsi to a girl they met!

This campaign shows that Pepsi keeps itself updated on the newest trends to reach out and engage with international customers.

“We Will Rock You” (2004)

This commercial featured the most electrifying music talents of the 2000s. Britney Spears, Beyonce, Pink, and Enrique Iglesias were all dressed in gladiator gear in the Roman Colosseum, singing their own rendition of the classic Queen song.

PepsiCo Beverages North America was able to increase its net sales to USD 8.3 billion that same year, up from USD 7.7 billion in 2003!

Pepsi Generations (2018)

Pepsi has a history of successful marketing campaigns and this next example was no exception.

To celebrate 120 years of Pepsi’s rich history in pop culture, the brand launched Pepsi Generations.

The campaign looked back at some of their most successful promos in the past years.

Celebrities that they have collaborated with over the years like singer Ray Charles and Britney Spears were featured!

The campaign also showed the evolution of Pepsi how it has connected with people over the years.

Pepsi Generations launched in the 2018 Super Bowl LII with the commercial titled, “This is the Pepsi.”

As part of the campaign Pepsi launched products with retro packaging—a nice throwback to some of the brand’s classic designs!

They also announced the return of the Pepsi Stuff loyalty program, which allowed those loyal to the brand to redeem points and get premium items!

Pepsi Generations was a success, helping the company generate a net income of USD 12.5 billion. This is higher than in the past two years combined!

2017 – USD 4.9 billion
2016 – USD 6.3 billion

Pepsi’s impact on pop culture and the beverage industry is huge.

With generations of consumers enjoying Pepsi products, the brand remains strong while crafting its own youthful and dynamic image.

PepsiCo’s Earning Power: Valens Research vs. As-reported numbers

PepsiCo makes for a great case study that we come back to regularly. One great reason?

The company has proven itself to be a phenomenal earning power generator.

So, how well has PepsiCo been growing its business in the past years?

The research doesn’t lie—nor do the results. Earning power (the blue bars) continues to show results much higher than what traditional databases show.

The blue bars in the chart above represent PepsiCo’s earning power (Uniform Return On Assets). These numbers have been positive, going over 20% for the past 16 years.

The global ROA average is just 6%

The orange bars are the company’s as-reported financial information. If you relied on these numbers, you won’t see the 20% Uniform ROA (return on assets, a measure of earning power) for 2019. You’d just see the company report less than that, at 9% as-reported ROA.

That’s what you’ll see in Yahoo Finance, Google Finance, and most other databases.

The company’s stock price also performed better than the rest of the stock market over the decade, which we can see in the blue line in the chart below. Their returns have been well above the market.

The numbers show that they are doing well and making a profit.

Despite the tough and competitive industry, Pepsi remains relevant and successful by carving out its own unique identity.

Their campaigns stood out due to their influence on pop culture. Being associated with some of the biggest stars and names helped take their brand to the next level.

As Pepsi continues to push the envelope in their marketing campaigns, they were able to prove that they can take competition head-on and remain successful throughout the years.

About The Dynamic Marketing Communiqué’s
“Monday Marketing Marvels”

Too often, industry experts and the marketing press sing the praises of some company’s marketing strategy.

…Only for the audience to later find out that their product was a flop, or worse, that the company went bankrupt.

The true ROI in marketing can’t be separated from the business as a whole.

What good is a marketing case study if one can’t prove that the company’s efforts actually paid off?

At the end of the day, either the entire business is successful or it isn’t. And the role of marketing is always paramount to that success.

Every Monday, we publish a case study that highlights the world’s greatest marketing strategies.

However, the difference between our case studies and the numerous ones out there, is that we will always make certain that the firm really did generate and demonstrate earning power worthy of study in the first place (compliments of Valens Research’s finance group).

By looking at the true earnings of a company, we can now rely on those successful businesses to get tips and insights on what they did right.

We’ll also study the greatest marketing fails and analyze what they did wrong, or what they needed to improve on. We all make our mistakes, but better we learn from others’ mistakes—and earlier, rather than later.

Hope you found this week’s marketing marvel interesting and helpful.

Stay tuned for next week’s Monday Marketing Marvels!

Cheers,

Kyle Yu
Head of Marketing
Valens Dynamic Marketing Capabilities
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