After Pepsi's announcement earlier this week that it would stop selling the full-leaded version of its soda pop in schools around the world, I was quoted in USAToday saying that I'm cynical about its purpose (the company doesn't really sell much in schools globally anyway) and doubtful of the connection to its sales strategy (so we should celebrate its retreat from selling sweet beverages by...buying more sweet beverages?).
The company got praise from a spokesman from a special interest group, however, and credit from an industry expert for "doing the right thing." This got me thinking about the matter some more and I think I finally understand what's going on.
The announcement was truly nonsense; Pepsi might as well have told us that it has sworn off sending evil thought waves at Coke drinkers, or that it had declared a bottling plant a nuclear-free zone. Giving up on a business that it doesn't possess says nothing about the brand. Deciding to shelve its regular mix entirely would have been a statement, only it won't do that unless consumers continue to walk away from it.
Do sugary drinks belong in schools? Of course they do; sugar and caffeine are a veritable food group for kids, and the stuff flows freely at fast food restaurants, gets served in gallon-sized cups at 7-Eleven, and literally falls off the shelves at grocery stores because it's priced so cheaply. Coke responded correctly to the Pepsi news by saying that it deferred to local school boards to decide whether soda pop, hamburgers, or classes convening before 9 am should be banned. Maybe they'll get to that after they limit the exploitation of students by sports apparel marketers.
Pepsi makes soda pop, not cigarettes or guns, so the schools decision doesn't make sense unless you look at who it’s intended to influence: that guy lauding Pepsi's gesture in the USAToday piece, and the special interests for which he speaks.
Welcome to the brave new world of Squeaky Wheel Marketing.
The Internet has enabled an entirely new level of organizing and advocacy, and does a good job of stripping single issues away from the reality of context in which they otherwise exist. Child obesity is one such "issue" and concerned individuals can "get involved" in it via a myriad of virtual ways: click, vote, comment, complain. Their involvement needs to be centered on wrongs that require righting so there must be targets (otherwise known as scapegoats) against which the virtual agitation can be directed. Soda pop in schools -- out of a zillion different contributors to kids getting fat, and nowhere near the top 100 -- somehow became a priority.
Are the folks involved in the child obesity issue now going to drink more Pepsi? Were they even consumers in the first place? Answering those questions doesn't really matter because our definition of brands requires that squeaky wheels get fixed...or their noise could scramble the messages we want to get out to everyone else. There's a brand image "out there" that needs to be protected, and the problem is that Internet search and various social media tools has made those threatening squeaks more common and a lot louder.
Only they're still squeaks. Most brands are committing time and money to track them, reply to them, and otherwise preoccupy marketing with them. I'm sure there were celebrations within the Pepsi communications department because of the press coverage of the announcement, confusing their response to a relatively narrow, single-issue constituency of maybe-sortof-who knows-consumers with doing something constructive.
Pepsi should make business decisions based on what will allow it to sell the most soda pop for the highest prices for as long as humanly possible. If signing off of schools supports that endeavor then I'm all for it; hell, the company should be willing to do anything just shy of breaking the law as far as I'm concerned.
But responding to voices that have been unduly elevated by the technology of the Internet is without integrity and expresses no principle other than that of convenience and dishonesty.
It's bad strategy. And it's squeaky wheel marketing.
I think you could be right, but then I'm really intrigued by what they hope to accomplish with their plan later on!
Posted by: Jonathan | March 21, 2010 at 09:18 AM
I really think what they did was just a marketing plan. If you are in a good mental condition, would you declare that your product is not good for this certain individuals.. of course not.. They have a much bigger plan behind that announcement!
Posted by: renaissance costume | March 21, 2010 at 09:11 AM
Adam, you make great points, though I don't think that making symbolic PR gestures that have no connection to business reality is a "new fangled marketing idea." :)
If Pepsi is moving its business to junk food instead of colas, I'm not sure it's doing much more than jumping out of one fire and into another. And my point about aggressively pursuing the school market was to illustrate a point: things are what they are, and pretending otherwise is a really old and mostly failed proposition.
We disagree, pure and simple. But it has been a great give-and-take, so thank you for that!
Posted by: Jonathan | March 19, 2010 at 08:18 AM
My premise is not that Pepsi is on its way out of the cola business (though it may be). My point is that the responsibility of a company is to ensure its continued profitable existence. Since the world constantly changes, every company must constantly look for threats and opportunities and must constantly try new things in order to avoid obsolescence. And they must also take the bigger picture into account.
It's not about getting outside of your core. I know that's trendy but it's not my point. It's about survival.
You have not addressed my arguments nor does it seem you have understood my logic. Do you really think stagecoach manufacturers should have hung onto their stagecoach business for dear life down to the last cowboy? You don't think maybe they should have done things to diversify or modernize so that they could still sell stuff to people once nobody wanted stagecoaches anymore? Really?
And yes, there are many examples of businesses that succeed by staying in their core. But my examples are not "flawed" as you put it. I didn't argue that all companies should stray from their core. I argued that all companies need to do what they must in order to survive. Since the world changes that often means exploring things outside of the core but it doesn't necessarily mean that it has to.
You also didn't address my question about Pepsi investing in Lay's and its various other businesses. Shouldn't they get rid of it all and just focus the hell on selling sugary black carbonated liquid?
Incidentally, I'm sure you've read the same articles that I've read. Consumption of soda has been declining for a few years already. Pepsi (and Coke) are surviving based on all of their other businesses. They have been buying water brands, ice tea brands, snack food brands, energy drink brands, etc. That's not only where the growth is, it's where survival is. By your logic it's all wrong. So what that fewer and fewer people are drinking carbonated beverages. Damn the torpedoes and keep pushing that stuff!
To answer your question, the reason Pepsi shouldn't go to town and exploit the school market if they are on their way out of the cola business is that this short of short term thinking is exactly what has landed stagecoach manufacturers in the dustbin of business history. Vigorously milking a declining business and staunchly refusing to see the bigger picture and the longer-term effects is not smart. The same heat that was brought to bear on the tobacco companies and the gun manufacturers is being brought to bear on the food industry. Like it or not, Pepsi must manage the impact that squeaky wheels can have. Not every one. But there is some critical mass to the movement now around kids and obesity in this country. You can try and convince people that Pepsi should more aggressively push high-calorie beverages to kids in schools. Good luck with that argument.
Sorry. I know you relish the role of being the rejectionist of all new-fangled marketing ideas. Frankly, I often agree. But you're just wrong here.
Posted by: Adam Schorr | March 19, 2010 at 08:05 AM
Adam, thanks for exploring your point further, and yes, we do disagree.
Your premise is that Pepsi is on its way out of the cola business? If so, why the hell isn't it going to town and exploiting the school market for as long as it can? Further, your examples of companies that have, or are trying to get out of their "core" businesses into others is reasonably flawed...for every example of a company that looked far afield to sustain its existence (like WPP getting into the ad agency mgmt business, which is at best a model in dire crisis right now) there are many more examples of businesses that have no, er, business presuming they can do things outside of what they know how to do (I give you Microsoft).
I'm not trying to be a purist as much as a realist. The Pepsi announcement is still nonsense, however one cuts it.
But again, I really appreciate you digging deeper into this one. It helps my thinking.
Posted by: Jonathan | March 19, 2010 at 07:10 AM
OK, we can disagree. But before we sign that deal, let me probe just a bit further. You say that Pepsi's job is to "sell the most soda pop for the highest prices for as long as humanly possible." OK. Then you must also agree with the following statements. Do you?
1) WPP's job is to sell as many wire baskets for the highest prices for as long as humanly possible
2) Company X's job is to sell as many stagecoaches for the highest prices for as long as humanly possible
3) JWT's job is to sell as many 30 second TV spots for the highest prices for as long as humanly possible
4) Microsoft's job is to sell as many boxes of Office for the highest prices for as long as humanly possible
It all seems a bit strange to me. I'm not sure how a smart fella like yourself could really argue that companies should focus exclusively on selling the hell out of product X in a world that changes. Where consumer needs change. Where laws and regulations change. Where competition is dynamic...
So if you really agree with the 4 statements above, then yes, we do disagree. Because I think the job of a company is to sustainably make money (and I mean sustainably as in they should sustain themselves). As a shareholder I don't care how they make money (so long as it's legal and moral). If WPP can make more money selling marketing services than it can selling wire baskets then, as the aussies say, good on ya!
I wonder how you could support Pepsi investing in all of its other business (e.g. Lay's) if it's job is to sell more soda. Surely they could sell more soda if they focused all of their resources on that business.
Your last sentence hits it on the head. That was part of my point. It's easy for a guy like you or me to blog about the purity or lack thereof of a marketing strategy. Try running a business though. Where you live in a sea of stakeholders that can make or break your business (employees, regulators, public interest groups, bloggers, the media, consumers, investors...)
WIthdrawing from the schools was not a marketing strategy. It was a PR strategy designed to let some steam out of the system. Steam that could have boiled over and caused serious damage (in its opinion).
Posted by: Adam Schorr | March 19, 2010 at 06:45 AM
Hummm...I think we'll have to respectfully disagree on this one, Adam. Pepsi's job is absolutely as I stated it, and if Public Opinion is an influence on business then it should respond (or proactively act, to your point) accordingly. So the schools gesture will help it sell more soda pop for longer and at higher prices? I doubt anybody will make a purchasing decision this week that includes this little factoid, let along a year or two from now. But if it buys the company some space from the regulators who are working toward putting it out of business (if they are indeed doing that) then it's a worthwhile gesture.
Posted by: Jonathan | March 19, 2010 at 05:55 AM
Jonathan:
I think you are way off base here. Particularly with this comment: "Pepsi should make business decisions based on what will allow it to sell the most soda pop for the highest prices for as long as humanly possible."
This is nuts to me. It is entirely possible that in the future nobody will drink soda pop for any one of a thousand reasons. Pepsi's job is to ensure it's continued vitality. Which means they need to constantly look out towards the future and assess threats and opportunities. And they need to move on those before it becomes absolutely necessary. Hanging on to a dying business by the last thread is just plain nuts.
Now I don't know if soda is going to go the way of the stagecoach. But neither do you. Pepsi does need to be thinking about this. Public opinion can seriously damage businesses. If Pepsi felt that this would help them avoid crisis levels of public ire then it was a wise decision.
Adam
Posted by: Adam Schorr | March 18, 2010 at 11:35 PM
Sheldon, I'm with you, only I suspect that any goodwill that comes from the announcement will be fleeting and, over time, conflicts with the overall purpose of Pepsi's business. My guess is that it's feeling the heat from regulators and pressure groups so it was a preemptive gesture to try to buy some time. The obesity issue advocates are not going to stop on their quest based on this response.
Posted by: Jonathan | March 18, 2010 at 07:56 AM
I typically agree with your blog and from a marketing perspective, I see your point. In fact, Pepsi may actually hurt themselves by not instilling their taste into a new generation. But regardless of soda in schools ranking on the causes of childhood obesity list, from a health point of view they can shut down their empty calorie factories as far as I'm concerned. Soda's a detriment to everyone, not just kids.
Knowing that Pepsi is not big in schools to begin with, I think Pepsi spent relatively little money and made little change to make a statement that puts Coca-Cola on the spot in the eyes of consumers who care about the issue. I know this article had already hit my nutrition radar before you brought it to light. Good will for the cost of a press release, all pros and very few cons... Why not take advantage of it?
Posted by: Sheldon Woytek | March 18, 2010 at 03:51 AM