How Pepsi Got Its Groove Back

Back in the 1950s Coke used to outsell Pepsi by 9-1. For Pepsi to compete with Coke, Pepsi managers overhauled their marketing strategy.

Our job was to convince people that Pepsi was a big enough decision that they ought to pay attention to it, and eventually switch. We decided that we had to treat Pepsi like a necktie. In that era people cared what necktie they wore. The necktie said: “Here’s how I want you to see me.” So we have to make Pepsi like a nice necktie. When you are holding a Pepsi in your hand, its says, “Here’s how I want you to see me.”

We did some research and we discovered that when people were going to serve soft drinks to a friend in their home, if they had Coca Cola in the fridge, they would go out to the kitchen, open the fridge, take out the Coke bottle, bring it out, put it on the table and pour a glass in front of their guests.

If it was a Pepsi, they would go out in to the kitchen, take it out of the fridge, open it, and pour it in a glass in the kitchen, and only bring the glass out. The point was people were embarrassed to have someone know that they were serving Pepsi. Maybe they would think it was Coke because Coke had a better perception. It was a better necktie. Steve was fascinated by that.

We talked a lot about how perception leads reality and how if you are going to create a reality you have to be able to create the perception. We did it with something called the Pepsi generation.

I had learned through a lecture that Dr. Margaret Mead had given, an anthropologist in the 60’s, that the most important fact for marketers was going to be the emergence of an affluent middle class — what we call the Baby Boomers, who are now turning 60. They were the first people to have discretionary income. They could go out and spend money for things other than what they had to have.

When we created Pepsi generation it was created with them in mind. It was always focusing on the user of the drink, never the drink.

Coke always focused on the drink. We focused on the person using it. We showed people riding dirt bikes, waterskiing, or kite flying, hang gliding — doing different things. And at the end of it there would always be a Pepsi as a reward. This all happened when color television was first coming in. We were the first company to do lifestyle marketing. The first and the longest-running lifestyle campaign was — and still is — Pepsi.

We did it was just as color television was coming in and when large-screen TVs were coming in, like 19-inch screens. We didn’t go to people who made TV commercials because they were making commercials for little tiny black-and-white screens. We went out to Hollywood and got the best movie directors and said we want you to make 60-second movies for us. They were lifestyle movies. The whole thing was to create the perception that Pepsi was number one because you couldn’t be number one unless you thought like number one. You had to appear like number one.

From Cult Of Mac Interview of John Sculley Former CEO of PEPSI & APPLE

That is how Pepsi got its groove back