My interview with Sergio Zyman on the Pepsi Challenge is included in my upcoming book, Killing Giants: 10 Strategies to Topple the Goliath in Your Industry, to be published on March 31, 2011 by Portfolio. Join my advanced notice mailing list here.
“The brilliance of the strategy was that they were filming these people when they were doing the test. The thing that was creating the wow factor was that when you removed the box that was hiding the two cans, the Coke drinker, who looked like a Coke drinker, would say, Oh my God, I can’t believe it… and then, they had the great line which was, ‘don’t take my word for it – let your taste decide.’”
– Sergio Zyman
Think of the Pepsi Challenge and what comes to mind? For most – at least most of the people I’ve spoken to – and the idea of “head to head product comparison” comes to mind. They immediately say that any frontal assault is a “Pepsi Challenge,” as if it’s a metaphor. I have to admit that prior to talking with Sergio about this campaign a few months ago, I thought the same. I was dead wrong about the metaphor and I’m a far better marketer now for having had the conversation. Here’s why.
Sergio pointed out three absolute gems in the Pepsi Challenge that marketers everywhere should take to heart. Best of all, each of these gems has, at its core, a psychological principle that grounds it in hard social science.
Before we start, Sergio Zyman is the former Chief Marketing Officer of Coca Cola and the former head of marketing for Pepsi. He’s the author of several books, including The End of Marketing As We Know It and The End of Advertising As We Know It. He sits, in short, on the Mount Olympus of marketing.
“I didn’t start it… I inherited it when I went back to Pepsi in the US,” Sergio told me. “The Pepsi Challenge had been developed by a local agency in Dallas. Pepsi had a problem in the sense that they were not acceptable in the markets that Coke dominated. Coke had a 50 share in Dallas and a 60 share in Houston. The interesting thing about the Pepsi Challenge was that it never claimed to taste better than Coke. Pepsi just basically said we taste as good as Coke. The great insight when I was there that we found out was that if you cross the line and start making superiority claims, the consumer is going to throw you out. The Pepsi Challenge was only intended to make Pepsi and equal with Coke. Not superior, because superior would not have been credible.”
Pepsi never tried to prove that they were superior to Coke. They relied on the statistical game of interviewing thousands of people in the Dallas and central Texas area, coming out with roughly 50% preference, which frankly was all that was necessary to prove their point.
Gem #1: The Pepsi Challenge pushed the point that Pepsi “was as good as Coke” to an audience that thought Pepsi was unacceptable without straining their credibility among jaded consumers and without getting into a legal pie fight with Coca Cola. By not claiming superiority, Pepsi built what we’d call “source credibility” with its somewhat unfriendly local market – they argued against what many might call their self-interest, letting the viewer fill in the blanks.
“The brilliance of the strategy was that they were filming these people when they were doing the test,” Sergio continued. “The thing that was creating the wow factor was that when you removed the box that was hiding the 2 cans, the Coke drinker, who looked like a Coke drinker, would say, Oh my God, I can’t believe it… and then, they had the great line which was, ‘Don’t take my word for it – let your taste decide.’”
Two things happened here, both of which are important to showcase. First, if you believe a picture tells a thousand stories, you know that a video clip showing unvarnished consumer reactions tells a million of them. Having a Coke-like consumer, talking in a Texan accent, saying that they never would believe they’d end up choosing a Pepsi, was pure marketing power. This is what we’d call “source similarity,” showing the viewer at home that many similar others – just like them – have made this comparison and found Pepsi acceptable. The hook is fully sunk with the line, “Don’t’ take my word for it – let your taste decide,” which again hits the “source credibility” point of arguing against your own perceived self-interest. This line builds instant credibility, putting control back in the hands of the viewer.
Gem #2: The Pepsi Challenge showed the audience – with unvarnished video taken in the street of real people who looked and talked just like them – that people just like them were choosing Pepsi over Coke. How much more meaning is conveyed through the non-verbal cues we all give off when we speak – the facial expressions, the body language and the intonation of our words themselves?
Lastly, Sergio explained to me how it came together in the market. “They did a great job of merchandising,” he told me. “All of a sudden, the Pepsi Challenge made Pepsi attractive at that price. Pepsi, on execution, did fifty times better than Coke. The more they put Pepsi next to Coke in the stores, the more it created the comparison. And it favored Pepsi.”
This is a huge insight. The in-store placement of the two products, side by side, solidified everything that the television commercials planted. This is as close to an in-market Eigen-Value as we’ll find: an execution that defines itself by its mere presence.
Gem #3: The in-store placement of Pepsi next to Coke reinforced the television commercial comparison itself. The consumer played out the commercial time and time again in their mind every time they walked into a supermarket and saw those two stacks of product next to each other. We can attach the trigger of vividness, first and foremost, to this in-store execution, noting that it is better to be vivid than valid. What is sticky is remembered. It also holds an element of the core psychological hunger of stimulation, giving the shopper a glimpse into the first-person experience that those people on camera had when they took the Challenge themselves.
So you see, the Pepsi Challenge is about a whole lot more than “us versus them.” There is a world of nuance in this campaign that should give any marketer a lot to think about when they next turn their attention to competitive comparisons.