The Genius Strategy of Coca Cola to beat Pepsi | Business War: PEPSI VS COCA COLA

Summary

In 1992, Pepsi launched Crystal Pepsi, a clear cola that initially saw huge success, selling $474 million in its first year. However, it quickly failed due to a combination of poor taste preservation, incongruent marketing, and a clever attack strategy by Coca-Cola with their Tab Clear product. This case study explores the reasons behind Crystal Pepsi's failure, highlighting the importance of thorough product testing, clear marketing, and learning from bold, innovative attempts. Additionally, it underscores the lesson that effective positioning and clarity in marketing are crucial to avoid product failure.

Takeaways

• 🚀 In 1992, Pepsi launched Crystal Pepsi, a clear soda that was initially successful but failed within a year.
• 💡 Crystal Pepsi was a response to the 'clear craze' of the late 1980s and early 1990s, where clear products were seen as healthier and more honest.
• 📈 Crystal Pepsi quickly captured 2.4% of the American soft drink market and recorded sales of $474 million within a year, but failed to sustain its popularity.
• 🔬 Pepsi's food scientist, Surendra Kumar, warned about the potential issues with taste degradation due to sunlight exposure, which was ignored by Pepsi.
• 🤔 The product was marketed as a healthier alternative, but in reality, it was not significantly different from regular Pepsi in terms of calories and ingredients.
• 🛒 Coca-Cola launched Tab Clear as a kamikaze strategy to confuse the market and split the demand for clear sodas, which contributed to Crystal Pepsi's downfall.
• 🎯 Marketing congruence is crucial; consumers expect certain attributes from products based on their appearance and branding, which Crystal Pepsi failed to deliver.
• 🛑 Pepsi rushed the product development process, which resulted in a product that did not meet the fundamental taste and quality expectations of consumers.
• 📊 Coca-Cola's strategic move to launch a clear diet soda under the Tab brand instead of Coca-Cola protected their main brand while confusing the market.
• 📚 The story of Crystal Pepsi teaches three key business lessons: the importance of not compromising on product quality, clear product positioning, and the value of learning from failures.
• 🌟 Despite the failure, the attempt was brave, and it's important for businesses to continue innovating and trying new ideas, as success often follows many attempts.

Q & A

What was the name of the product launched by Pepsi in 1992 that was considered a sensation at the time?

The product launched by Pepsi in 1992 was called Crystal Pepsi.

How did Crystal Pepsi perform in terms of sales within its first year on the market?

Crystal Pepsi recorded sales of $474 million within its first year, capturing 2.4% of the American soft drink market.

What was the main reason Crystal Pepsi was considered a massive failure and was eventually pulled from the shelves?

Crystal Pepsi was considered a massive failure due to its bottling issue that led to a bad aftertaste when exposed to sunlight, and its incongruent positioning as a non-healthy clear drink.

What marketing strategy did Coca-Cola use to counter Pepsi's Crystal Pepsi?

Coca-Cola used the Kamikaze strategy by launching Tab Clear, a clear diet soda, to create confusion in the clear cola market and cannibalize the market for clear colas.

What is the 'clear craze' mentioned in the script, and how did it influence product launches during the late 1980s to early 2000s?

The 'clear craze' was a marketing trend where clear and transparent products were considered cool and associated with purity, honesty, and the absence of artificial colors and preservatives. This craze influenced many brands, including Pepsi and Coca-Cola, to launch clear versions of their products.

What was the role of Surender Kumar in the development of Crystal Pepsi, and what issue did he raise?

Surender Kumar was the head of Pepsi's research and development branch and was responsible for creating a clear Pepsi. He raised the issue that the clear bottle could cause the drink to develop off-flavors and odors when exposed to sunlight.

Why did Pepsi decide to rush the launch of Crystal Pepsi, and what event were they trying to capitalize on?

Pepsi decided to rush the launch of Crystal Pepsi to capitalize on the 'clear craze' and to have a strong marketing presence during the Super Bowl, which is a major American sports event with a huge viewership.

What is the significance of the Super Bowl in terms of advertising, and why was it important for Pepsi to launch Crystal Pepsi during this event?

The Super Bowl is significant for advertising because of its massive viewership, reaching up to 100 million people. It is a golden opportunity for advertisers to gain extraordinary returns on their ad costs, making it crucial for Pepsi to launch Crystal Pepsi during this event for maximum exposure.

What is the concept of 'congruence' in marketing, and how did Crystal Pepsi fail in this aspect?

Congruence in marketing refers to the alignment between consumer expectations and the actual product experience. Crystal Pepsi failed in this aspect because it was marketed as a pure and healthy drink due to its clear appearance, but it was not a healthier alternative in reality, leading to consumer disappointment.

What are the three main business lessons that the failure of Crystal Pepsi teaches us, according to the script?

The three main business lessons are: 1) Not to compromise on the fundamental qualities of a product during a rushed launch; 2) The importance of clear product positioning in marketing to avoid consumer confusion; and 3) The value of persistence and not fearing failure when attempting innovative ideas.