PepsiCo Story: How Marketing can Sell Carbonated Water?

Caleb "Doc" Bradham (1867-1934), a pharmacist, opened a pharmacy in New Bern, North Carolina, in 1893. Bradham wanted to be a doctor, but his father lost his employment, so he had to drop out of medical school. Many inhabitants of the southern town frequented Bradham's drugstore, not just for the medications he sold but also to catch up with friends at the soda fountain. His customers particularly liked "Brad's Drink," which was made with sugar, vanilla, oils, spices, the African kola nut, and carbonated water. The drink, according to Doc Bradham, will help relieve the symptoms of dyspepsia, or a disturbed stomach, as well as ulcers.

Bradham began his soda company in 1898, changing the name of his famous drink to Pepsi-Cola. Initially, he mixed the syrup in his pharmacy and delivered it in barrels to soda fountains, where it was mixed with carbonated water. Pepsi was also distilled and marketed by him. Bradham licensed the Pepsi-Cola trademark and closed his drugstore to devote all of his time to producing, bottling, and selling Pepsi after four years of profitable distribution. By 1905, he'd set up his first two bottling franchises, or companies that bought the right to bottle and distribute Pepsi from him.

Pepsi-Cola had 250 bottling franchises throughout the United States in 1910.

PepsiCo had established itself as a major player in the fast food, snack food, and beverage markets by the 1980s. They had bought three restaurant chains, Pizza Hut, Taco Bell, and Kentucky Fried Chicken, which they later sold in 1997. The firm also launched several new soft drinks, including Diet Pepsi, Pepsi Free, and Slice & signed Michael Jackson, one of the world's most exciting and talented superstars (1958). This partnership marked the start of a long line of pop stars that used their celebrity to sell PepsiCo products. In the 1980s, the company went through a time of turmoil and controversy, in addition to its successes. Employees of PepsiCo were found using fake documents in the Philippines and Mexico to make it seem that the company was making more money than it was. PepsiCo's earnings fell by 25% in 1982 as a result of the widely publicized scandal. Profits started to fall in 1983 as the peso, Mexico's currency, fell sharply in value. PepsiCo's soft drink and snack sales in Mexico were the highest in the international market at the time. Pepsi produced the world's first radio jingle in 1940. The catchy song, titled "Nickel, Nickel," explained that:

PepsiCo, on the other hand, received assistance quickly. Coca-Cola chose to alter the formula of their century-old syrup in the summer of 1985. They launched New Coke, a new and improved flavor that they said was milder than the original. The rival firm, according to PepsiCo, was attempting to make Coke taste more like Pepsi.

PepsiCo hoped that the new formula would persuade customers to switch brands, so they ran full-page Pepsi ads the day New Coke was introduced to replace the old. What occurred astounded everybody. Rather than swapping colas, die-hard fans requested that their old Coke be returned. New Coke was discontinued after just ninety days on the market, and Coca-Cola Classic was introduced with the restored formula. Pepsi had a brief lead in the cola wars at this period, when tasters were trying to make up their minds.

Pepsi-ownership Cola's shifted several times, narrowly enduring a second and third bankruptcy. It was eventually handed over to Charles Guth, Loft Inc. Owner, a candy and fountain shop in New York. Guth had been selling Coca-Cola but was enraged when Coke refused to let him purchase a large quantity of syrup at a reduced price. Despite his customers' reservations about the new cola, he decided to stick to Pepsi.

Pepsi's profits rose in 1934, owing largely to a key decision taken by Guth. The United States was in the midst of a crippling Depression that lasted throughout the 1930s and displaced millions of people. Guth agreed to charge five cents for a twelve-ounce bottle of Pepsi, the same price as six ounces of Coke. For those who were counting their pennies, this was a great deal.

Due to continued good management and innovative advertising, the Pepsi-Cola Company, established in 1941, experienced steady growth for the next two decades. By 1954, the company was headed by Alfred N. Steele (1901-1959), a former Coke employee with a strong marketing background. He was also married to Joan Crawford, a well-known actress (1908-1977). During television interviews, the popular actress discussed Pepsi, and the product's vending machines and trucks were occasionally featured in her films. Pepsi sales had risen to $14.2 million by 1960, and the company was marketing its soft drink to "those who think young."

During the 1960s and 1970s, Pepsi-Cola had unprecedented success, thanks in large part to Donald M. Kendall, the company's current CEO. During this period, Kendall was known for leading his company in five main areas: huge ads, the launch of new soft drink products, innovative packaging, international growth, and product line expansion. Kendall and Pepsi made marketing history in 1963 when they changed the way they marketed their drink. Rather than concentrating on Pepsi the soda, the company's television ads targeted a particular demographic: baby boomers. Baby boomers were children born between 1946 and 1964, shortly after World War II (1939-45), and numbered in the millions. They were ordered by Pepsi to "Come to life! You are a member of the Pepsi Generation." Following that, advertising slogans tended to focus on the active, youthful lifestyles of baby boomer teenagers. They also advised a generation of viewers who were going through major social changes: "You've got a long life ahead of you. "Join the Pepsi people, feeling free," and "Pepsi has a lot to offer."

Pepsi, as popular as it was in the 1960s, was still a distant second to Coke. Kendall responded by stating that the company's product range could be expanded beyond soft drinks. He met Herman W. Lay, the president and chief executive officer (CEO) of Frito-Lay, the nation's leading maker of snack foods like Lay's potato chips, Cheetos, Ruffles, and Rold Gold pretzels, at a grocer's convention in 1960. In 1965, the two companies agreed to combine, and the resulting company was called PepsiCo, Inc. They launched Doritos a year later, which became the most popular snack chip in the United States.

So, what made PepsiCo so successful? Most of the company's success stems from its ability to keep up with evolving trends and lifestyles, providing customers with the preferences and conveniences they need.