TLDR: The “Pepsi Challenge” saw Pepsi take Coca-Cola head-on and, in doing so, put their stamp on popular culture. This sip test became well-known for highlighting consumer reactions and preferences over marketing messaging.
So What? When the market is tight, you have to find a way to stand out. Pepsi’s message that it won the “Pepsi Challenge” showed that consumers preferred Pepsi over the two major brands in the cola wars.
A few marketing campaigns stand out as cultural touchstones. These campaigns successfully capture the zeitgeist of the times, creating a historical moment in marketing.
The “Pepsi Challenge” is one of those campaigns.
Starting in 1975, the Pepsi Challenge was simple: at grocery stores and shopping malls across America, consumers would blind taste-test both Coca-Cola and Pepsi, then decide which brand they preferred.
This campaign is a masterclass on how confidence in your product and a willingness to swing big can put a brand on the map. Here’s what marketers today can learn from this high-risk, high-reward national cola campaign.
Taking on the Competition
In the 1970s and 1980s, Coca-Cola was the cola brand that people knew. It was one of the most recognizable brands in the world, and one of the most ubiquitous products in supermarkets and restaurants.
Pepsi-Cola wasn’t a slouch in the beverage market, but Coca-Cola’s revenues ($3.2 billion)were nearly double those of Pepsi ($1.8 billion). Pepsi’s marketing team was looking for a way to take on Coke directly.
This wasn’t easy. Beyond the market gap, the truth was that Pepsi and Coke were remarkably similar products, albeit with different recipes, with long histories before and after World War II.
Furthermore, both brands had quickly moved into new marketing venues, using different strategies: celebrity endorsements, sports sponsorships, and fast food partnerships. Coca-Cola was well-known for its wholesome image (with campaigns focusing on family events and Christmas) while Pepsi targeted younger consumers (with the infamous campaign featuring Michael Jackson).
But, could Pepsi differentiate itself on taste? Was it possible that consumers would prefer the slightly sweeter, fruitier Pepsi formula in a blind taste test?
There was risk involved: directly comparing products risks having people choose the competitor: not a good look. However, all Pepsi needed to do was win a majority, which would let them claim that “more people prefer Pepsi.”
Pepsi’s willingness to take Coke head-on was daring, and the “Pepsi Challenge” immediately put the soft drink at the forefront of consumers’ minds. Much more than just brand recognition, the “Pepsi Challenge” became a viral sensation – before viral marketing even existed.
Following the success of this campaign, Coca-Cola started changing its products, including introducing Diet Coke in 1983 and the disastrous “New Coke” formula in 1985.
Was the Pepsi Challenge Accurate?
By all accounts, it was a great marketing campaign: It got tons of PR, started the “Cola Wars,” and forced Coke’s hand.
But was it accurate?
There are reports that Pepsi purposefully served the two drinks at different temperatures so Coke’s flavor wouldn’t be as pronounced as Pepsi’s. Also, cultural writer Malcolm Gladwell noted in his book Blink that a “sip test” ultimately favored the sweeter Pepsi.
That said, it’s important to note that the Pepsi Challenge wasn’t a scientific study or a recipe commentary. It’s difficult to have a concrete reading on a large opinion, and the study’s criticisms rely on the fact that slight differences in presentation can change widespread opinion.
Unsurprisingly, Pepsi may have had its thumbs on the scale to reduce risk… but they never made direct claims about Coke. They simply said that the people tasting the product during their tests preferred Pepsi.
Marketer’s Takeaway
Sometimes, when you have a product in a crowded market, you must take risks to meet the competition. In Pepsi’s case, this meant creating a campaign that put them head-to-head (and then ahead) of their competitors.
The Pepsi Challenge created a cultural identity that would carry the company through the 80s and 90s. It pushed their brand awareness to the next level and put them on the same shelf as one of the most well-known brands in the world.
What can marketers take away from this campaign?
- Don’t be afraid to take risks. Pepsi’s marketing team took on the risk that consumers would actually prefer Coke, but the risk paid off.
- Do customer research. Great marketers take every opportunity to speak directly to consumers and listen to their feedback.
- Set yourself apart. Having a unique value proposition doesn’t happen in a vacuum. Understand what differentiates you and emphasize it.
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