Skip to content
Pepsi, a humble family, how to turn the tables against the wind?
When it comes to old consumption, Coca Cola is an old brand that we can not avoid. When it comes to Coca Cola, you will think of Pepsi Cola. If your impression of Pepsi is only the “second in ten thousand years” in the beverage industry, and you think Pepsi is too far fetched as a good brand for old consumption, then I would like to list several data here:
(1) From the global market, PepsiCo’s annual revenue in 2021 was US $79.474 billion (about 504.977 billion yuan). Coca Cola’s annual net revenue was US $38.655 billion (about 245.613 billion yuan). In 2021, the revenue gap between Coca Cola and Pepsi exceeded US $40 billion. From the perspective of the carbonated beverage segment, in 2021, the revenue difference between Coca Cola of US $31.9 billion and Pepsi Cola of US $16.4 billion was US $15.5 billion.
(2) According to the data of the world’s top 500 in 2021, Pepsi ranked 131 and Coca Cola ranked 370.
(3) Coca Cola currently has more than 500 brands in the world, but only 21 brands with annual income of more than 1 billion US dollars; In contrast, Pepsi Cola has less than 300 brands worldwide, but 22 brands with annual income of more than US $1 billion.
From the above data, why is PepsiCo a strong player in terms of brand efficiency, world ranking, global revenue, etc? Pepsi, which was born 12 years later than Coca Cola, was vagrant at the beginning of its birth, but it can still stand firm after 100 years, even surpassing Coca Cola in other fields. How did PepsiCo turn around against the wind? Perhaps here I will take you into a familiar common scene, and you will understand.
At 8:00 in the morning, you put on your pajamas while brushing the latest microblog hot search of the day and pouring milk into Quaker Oats as breakfast;
At nine o’clock in the morning, after opening the work attendance, you make a cup of Lipton tea in the thermos cup to refresh yourself;
Half an hour before dinner at 12:00, you can turn on a bag of herbal green root fruit beside the computer to satisfy your hunger;
At 12:30 noon, you go to the shopping mall under the office building to find food. You find pizza hut, KFC and Taco Bell have all launched the latest packages. You wonder which one to choose today;
During the lunch break, you open the newly bought crispy corner and happy potato chips, turn around and chat with colleagues over snacks;
After work at 6:00 pm, you go to the supermarket to buy a bottle of Pepsi Cola and prepare to go home to make the newly learned Cola Chicken wings;
At 8:00 pm, you come to the gym to sweat and buy a bottle of Gatorade sports drink in front of the vending machine.
In the above-mentioned living scenes, these brands, large and small, are either the sub brands of Pepsi or have countless relationships with him. As a company that started with coke, it can extend the industry to such a vast space, and enter the global market to become bigger and stronger, becoming a global classic old brand. Among them
In 1902, Colby founded Pepsi Cola. In the following years, he has been living in the shadow of Coca Cola as a “fake brand” in the carbonated beverage industry. Later, he changed hands several times. In the economic crisis of 1931, facing bankruptcy, Charles Gus, a New York businessman, finally took over. However, under the impact of the economic downturn, even Gus, the boss of the largest confectionery company in the United States at that time, was unable to protect himself. Under the circumstances, Gus proposed to Coca Cola to sell his assets at a low price, but Coca Cola refused to do so. At this time, Gus had no choice but to break the jar and launch a “sales promotion sale”
At that time, Coca Cola sold for 5 cents and 6 ounces (about 170 ml), and competitors and imitators in the market also sold at this price. Gus found that the cost of bottled Cola is actually very low, that is, raw water and water. Even if we add more weight to each bottle, the profit will not be reduced. So Pepsi launched a 12 ounce bottle of coke, still selling for five cents.
The advertising slogan at that time was as follows: “the same price, double happiness.” “Increase the quantity without increasing the price. Hurry up and buy it.”. Pepsi also provided a special magic music “nickel, nickel, nickel” (five cents) “to brainwash the people in the north and south of the country. It has even been translated into 55 languages and spread around the world.
You see, is this kind of line very similar to the saying of going to department stores for big sales? Is this magic advertisement very similar to the way you hear it in the elevator at ordinary times, which is more brainwashing than snow ice city? Pepsi has been used up more than 100 years ago. Pepsi is like a “newborn calf” against Coca Cola. It seems to be “strangled in the cradle”, but the result is reversed. Pepsi’s gamble successfully turned him around.
“Barefoot is not afraid to wear shoes”, the words are not rough. Pepsi Cola won the stage victory through the price war. A large part of the reason is that “the Jedi survive”. Either they die or they are resurrected with blood. At the time of dying struggle, every opportunity is a chance. On the other hand, Coca Cola has a large volume and industrial standardized operation. The brand of Coca Cola is completely customized production and a large amount of coke is stored. If Pepsi Cola’s strategy of “increasing the quantity without increasing the price” is followed, hundreds of millions of bottles in the warehouse will be scrapped. This cost is too high. Secondly, and most importantly, the volume of Coca Cola is much larger than Pepsi Cola, and it disdains to follow Pepsi Cola.
Two years after the “obscene development”, Pepsi Cola rose rapidly in 1933, opening 313 branches in 84 countries around the world. By 1936, the annual net profit exceeded US $2 million. Compared with the per capita GDP, the then US $2 million exceeded the current US $200 million.
In 1941, Pepsi Cola’s market share rose to 14%, and it successfully won the second place in the United States.
·See the demographic dividend and make friends with young people
During World War II, Pepsi Cola was affected by the wartime “sugar restriction order”, and its development fell into a quagmire. However, this does not affect PepsiCo
This generation of young people themselves have the characteristics of rebellious thinking and pursuing freedom. However, Pepsi did not find this point. Coca Cola’s market share is five times larger than Pepsi’s, which makes Pepsi focus on “following strategy”. It was not until 1960 that Pepsi handed over the advertising business to BBDO, which analyzed the changes in consumer structure and psychological characteristics. It was Pepsi’s marketing firepower, aimed at the “traditional” image of Coca Cola, and successfully occupied the “young people’s drink” with the help of advertising marketing combination, laying a solid foundation for Pepsi’s long-term marketing strategy in the future.
For example, in 1975, Pepsi Cola carried out a taste experiment, that is, the trademarks of Pepsi Cola and Coca Cola were torn off, and passers-by were asked to blindly test the two types of cola and select the better one. As a result, Pepsi Cola won, and BBDO also publicized it, so that consumers could re-examine the consumption decision of “old Coke” and compare it with “new coke”.
In 1984, BBDO Pepsi spent $5 million to cooperate with Michael Jackson to shoot “the most successful advertisement in history”. A group of young people and children wearing leather clothes, leather pants and cowboy T-shirts are dancing in the street, swaggering and uninhibited. Mike Jackson’s songs about Pepsi are also pleasant and brainwashing. Even now, they are very infectious. According to Pepsi’s internal statistics, about 97% of Americans watched this advertisement in the year it was broadcast, 12 times per person, far exceeding the “seven times rule”.
Young people like to resist rebellion. PepsiCo has recruited such stars as Michael Jackson, the king of rock and roll, Madonna, the queen of pop music and so on to speak for them. The star endorsement strategy has also been copied by PepsiCo to various countries, just like the “Pepsi stars” when they entered the Chinese market, which invited the mainstream stars at that time. In terms of packaging, Pepsi Cola specially designed and adopted spiral bottle, and the brand owner’s visual design was blue, showing the youthful appearance of young people, and the taste was gradually sweet, which was in line with young people’s preferences.
Pepsi Cola bet on the young people’s game of chess. After the marketing combination, the sales volume continued to soar. According to the third-party data, as of 1970, Coca Cola’s market share in the soft drink market accounted for 29.7%, while Pepsi Cola succeeded in catching up with 19.8%.
If Pepsi Cola’s “war of creation” is based on following Coca Cola’s strategy, the “Pepsi Generation” that anchors the new generation of consumers is Pepsi Cola’s “war of standing”.
“Duopoly” pattern of carbonated beverage market
“In the long run, any market will eventually become a competition between two horses.”
When talking about market competition, trout and Reese replied in the 22 business rules that “from an economic perspective, multiple competition will lead to a huge waste of resources, which is very unfortunate.”
In the period when new categories emerge, many brands keep abreast of each other. Everyone wants to rush to a new size quickly in the window period of “strong category cognition and weak brand cognition”, and then occupy the only two positions when the category is mature
In the business history, it is not uncommon for people of the same category to fall in love and kill each other. Pepsi and Coca Cola are only quite famous ones. For example, in the smart phone industry, Samsung and apple are closely related to each other in the global market share, and occupy the first and second place all the year round. A few years ago, the hot take out platform has reached the era of meituan first and hungry second. There are also Mercedes Benz and BMW of German luxury cars. In almost all similar cases, the first and the second will always occupy an absolute advantage in market share, which has almost become a law in the business world, that is, the “duopoly pattern” we often call – the tacit rules of competition between the first and the second in mature categories, reducing the threat of potential competitors and entrants.
In a fast-growing industry, it will gradually evolve from a number of competitive enterprises to several leading enterprises that hold the majority of the market share, and the leading enterprises are often the role that can determine the ceiling of an industry. At the same time, several leading enterprises are in an interdependent relationship, and the behavior of any one company will have a large or small impact on the profits of other companies, which causes leading enterprises to form a certain tacit understanding with their competitors. Before taking actions, they must first consider how the other party will react.
In the business world of the jungle, the winners and losers and rankings among enterprises are watched by passers-by. For enterprises, what is really important is to be responsible for the company’s revenue, shareholders’ wealth, consumer experience and product quality. As the brand director of Pepsi said in an interview with the media: nothing can attract consumers’ attention more than putting these two brands together.
With the increasingly fierce competition in the soft drink market, Coca Cola and Pepsi occupy the main market shares. According to the statistics of 2021, they jointly occupy 70% of the carbonated beverage market in the United States. As early as the 1960s, PepsiCo had already realized that the incremental space of the coke market was getting smaller and smaller, and constantly sought other business opportunities. Since Pepsi is destined to be the number two player in the cola industry, it will find another way to seize another blue ocean.
In 1965, Pepsi Cola merged with the snack food giant frito lay and officially changed its name to Pepsi. Since 1977, PepsiCo has entered the fast food industry, successively taking over pizza hut, Taco Bell and KFC, and then entered the peak of diversified operation for more than 30 years.
However, in the 1990s, with the increasingly fierce market competition and the gradual refinement of the market, PepsiCo, as an extensive diversified enterprise, faced with the pressure from various branches of the capital chain and multi category competitors, and the gradual weakening of the control ability of PepsiCo group, which led to the sharp reduction of the influence of the core brand. Relying on his keen sense of the market, Lu Yingde, PepsiCo’s Chief Strategic Officer, began to gradually change the company’s strategy from extensive diversification, Transition to relevance diversification contraction.
Lu Yingde laid out PepsiCo’s future with a long-term strategic vision, and found that the annual fixed assets investment in the catering business was huge, which brought great pressure on the headquarters’ capital. After entering the 21st century, with the improvement of living standards, people have a great demand for food
Hive can provide a shelter for these products and brands. It can take over those products that have made certain achievements but have not reached the DSD system standard, cultivate these brands, and promote them to the market through appropriate channels. For example, bubble water has successfully survived in Pepsi Cola.
From Coke’s second son to the world’s second largest food group
From the “war of creation” following Coca Cola to the “war of standing” represented by “Pepsi Generation”, and from the rapid expansion to the contraction of related diversification, Pepsi Cola has seized the future increment ahead of time.
Pepsi’s diversified attempts have also gradually formed a scale effect. In the recently released Forbes Global 2000, Nestle won the title of the world’s largest food company with sales of more than US $95 billion (revenue in 2021), followed by Pepsi with annual revenue of US $79.4 billion and Coca Cola with annual revenue of US $38.6 billion. In terms of revenue, Pepsi Cola is twice as large as Coca Cola.
However, on the net profit level, Coca Cola’s profit of US $10.3 billion exceeded Pepsi’s profit of US $7.6 billion. Coca Cola’s profit margin is about ten times that of Pepsi. Behind the difference in scale and profit margin is the different expansion strategies of the two.
The diversification of Coca Cola’s category focuses on “intake of liquids”, which is derived from the expansion strategy of legendary CEO Guo Sida – “everyone consumes 64 ounces of water per day, of which Coca Cola only accounts for 2 ounces. Although our market share has reached 35.9%, our share in consumers’ stomachs is only 3.12%. Expanding from consumers’ stomachs, there are unlimited opportunities in the future”.
Based on this, the diversification of Coca Cola is “liquid”, from pure water, coffee, tea drinks to sports drinks. Pepsi Cola spans beverages and snacks, and aims to contract all kinds of food in convenience stores. Its product line includes hundreds of brands. As of 2015, there are more than 20 product brands with annual sales of more than US $1 billion, such as Pepsi Cola, surf, happy, Gatorade, Tropicana, 7up, dolidoz, brisk, Quaker food, Chido and Melinda.
In the future, the “first opponent” of Pepsi Cola will no longer be Coca Cola, but Nestle.
Therefore, there is no secret book for successful cultivation. Pepsi will never define where to go now and in the future because of its past success. In Pepsi, who is over 100 years old, we don’t see a stubborn old man who is stubborn and complacent. Instead, we see a young man who is full of vitality and has set off waves in the tide of the times.
Times are changing, the mainstream is changing, consumer demand is changing, and Pepsi is changing.
Original title: what can I learn from “old consumption” Pepsi from Coke’s “second son” to the world’s second largest food group Author: Zhao Tiantian; Source: marketing beauty (ID: yingxiaozhimei), reprinted with authorization. Reprint authorization and media business cooperation: Amy (wechat: 1
What can we learn from Pepsi from the second largest food group in the world?
- Admit it, humans can’t refuse kittens. KFC, Xicha and Coca Cola have all started
- Affordable ice cream is still king