Thu 27 Dec 2007
Coke and Pepsi are huge, pervasive brands — Coca Cola is arguably the text-book example of successful aggressive long-term marketing.
So what would happen if these two giant competitors suddenly just dropped their marketing budgets? Or at least reduced them by an order of magnitude?
Or, more generally, what if exceedingly well-branded companies in general — esp. market leaders and pop culture icons — stopped doing any/much advertising? And what less-visible parts of the marketing machine would they be losing along the way?
(Inspired by this Ask Metafilter question.)
Posted by Josh Millard12 answers so far!
Oooooh. Let’s put the 10K-a-year Education to use!
*ponders*
Right now Coke and Pepsi are already really ingrained in the minds of the Western populace - I worked at a fast food place and we regularly had people turning away in disgust because we only offer Pepsi products. So I wouldn’t say the effects would be immediate, necessarily. The lack of advertising might not even be noticed for a few years. I mean, the mark of successful advertising is you not realizing how strong its compulsions are, right?
But if the lack of advertising were to continue for, say, a decade… at any rate, long enough for a younger generation who hasn’t grown up around the “Pepsi, stay young” slogans and the “Coca-Cola polar bears” to start dominating the markets, smaller brands would definitely take over - they’re cheaper, often more unique, and the younger generation wouldn’t feel as much of a pressure to be part of the “Coke crowd” or the “Pepsi crowd”. And I mean, other brands aren’t going to let this lull in the market just go by without a fight - with the two major advertisers out of the way, even a small increase in media presence might boost a third brand’s shares by a fair bit.
It seems unlikely that a slew of smaller brands’ budgets put together could completely match the giant advertising budgets of Coke and Pepsi, so if the overall advertising budget of the cola industry declines, so will overall consumption, no? Any further effects would depend on how much the advertising is actually cut. Would “[insert cola here]-institutions” still exist? Would people care about licensing with one (expensive) brand when that brand no longer has a certain image associated with it? Would people start looking down on these brands the same way they do on Private Label brands like President’s Choice brands, because lack of media presence indicates cheapness?
And, yeah.
If they stopped marketing, i wouldn’t know which product to buy. Thank God this is just a crazy hypothetical.
I think a more interesting question (which looms on the horizon) is what happens to Pepsi and Coke’s bottom line when corn syrup subsidies are removed from the next farm bill. Will they advertise more when a soft drink costs 2 to 3 bucks, or will they cut ancillary spending to keep unit costs down?
You can buy a sugar coke for a buck or two in Texas that is imported from Mexico. People buy because it “tastes better.”
…and if you’re lucky you can find Passover Coke (made with sugar) in US markets during the season — it’s marked by a black cap and the kosher “K”, and it does taste better than HFCS Coke.
I think a more interesting question (which looms on the horizon) is what happens to Pepsi and Coke’s bottom line when corn syrup subsidies are removed from the next farm bill.
That reminds me of this Freakonomics post from the beginning of the year, speculating about a return to sugar with rising corn syrup costs.
Pants!, there’s a gas station in North Portland that sells “Mexican Coke” by the glass bottle. I’m not enough of a soda connoisseur to make a call on whether it is objectively and decisively better than corn syrup coke — but accepting that the novelty is probably a factor, it still tastes pretty great every time.
The lack of advertising might not even be noticed for a few years.
Phire, I don’t know about that — I think it’d be noticed pretty quickly, especially since marketroids and journos both would make a lot of noise about such a move — but I agree with you that the cultural imprint that e.g. Coke has is something that probably has a lot of independent momentum.
Is there a distinction to be made between New and Old brands? Is this question substantially different for, say, Coke vs. Sony Playstation?
I think it’s going to take more than one more round before the farm bill is changed for the better. With all the hype the past couple times, still no change.
Anyway, I think that without new advertising, people would continue to buy what they already buy. It would be slower going to break new products into the market. If other brands continued to advertise, Coke & Pepsi would lose market share. But they have a *tremendous* number of leading products on the market right now. People are not going to stop buying the chips and sodas they’ve been consuming for 20 years, at least not quickly. And if they do, a lot of what’s left for them to choose from will still be made by Coke or Pepsi. Nobody’s going out of business any time soon. (Actually I’d say never, in a reasonable time frame. 500 years from now, I don’t know what the world will be like.)
FWIW, while I notice advertising, it doesn’t make me buy anything. I mean, not from Coke or Pepsi. I still buy the same sodas and chips I’ve been buying for 20 years. ;) The new stuff I choose is based on what my grocery store stocks, its packaging and its price, and I don’t even notice who makes it.
You’re right about the farm bill, iguana. But we can always hope.
A cursory glance at the history of soft drink marketing shows how the focus has shifted from selling it as a medicine to selling it as a special-occasion treat to selling it as a cultural signifier and daily necessity. It would be interesting to analyze how these marketing dollars shifted when the beverage companies realized consumers were stupid enough to buy bottled water.
Which reminds me that I keep meaning to read this.
It would take a long, long time before Coke and Pepsi’s marketing efforts were completely gone, both visually and from the minds of people. A lot of people still equate the standard appearance of Santa Claus with Coke, nevermind polar bears and singing crowds (”I’d like to teach the world to sing…in perfect harmony…”).
The latter example was produced in 1971. I was one year old. I’m not sure where I saw it or when, but thinking “Coke marketing” immediately brings that to mind, as I’m sure it does for a lot of others.
However, would Coke lose market share over an extended period? Sure. But even if they stopped all marketing efforts to the public, but kept the product in the coolers of grocery stores across the world, I and millions upon millions of others would continue to choose Coke (and a smile) when we went shopping. They’ve just done their job that well.
Tangent, but I wonder when Coke et al. are going to capitalize on the “sugar Coke” phenomenon and start selling sodas with real sugar as a special thing or at a higher price directly to the American market.
There is definitely a difference. I can spot them in a blind taste test. The corn syrup sodas coat your mouth and throat; the sugar ones disappear, with a wonderfully SUGAR aftertaste. Yum. A shot of Maker’s to sip on and a big tall glass bottle of Mexican Coke, please.
Count me among those who prefer the real sugar Coke to the HFCS variant. We occasionally find them the Mexican groceries up here and it’s always a treat.
As to the big two ceasing all advertising? I think the initial change would come as a shock (in much the same way silence after a prolonged noise can seem odd), but I suspect that neither would loose too much market share, at least not right away.
People will keep drinking and eating what they have been for years, I know I wouldn’t switch. What I wonder is if kids who didn’t grow up under the media blitz would care, would they just take whatever was available? Would they develop loyalties based on what their parent drink?
I’m trying to think of other successful brands who eschew mainstream advertising and rely, instead, on word of mouth. The Onion maybe?
RC would slowly lose its stigma as a soda for the lowest of classes. However, it will still taste like ass. Drinking two liter bottles of Mountain Dew will still be seen as something computer nerds do, though.
I’ll also venture a guess that it wouldn’t make much difference at all. They’d probably just dump it into their other companies (”Now we can finally make more Pizza Hut commercials!”).
Oh, and Mexican Coke is totally awesome.