The Genius Strategy of Coca Cola to beat Pepsi | Business War: PEPSI VS COCA COLA

[Music] hi everybody in 1992 Pepsi launched a sensational product that blew the mind of America this product was called Crystal Pepsi there's never been a product quite like it I love it it's refreshing clear taste just different Crystal Pepsi really appeals to everyone at all ages especially the health C consumer Crystal Pepsi was such a crazy product that within just one year it recorded a sale of $474 million it captured 2.4% of the entire American soft drink market and most importantly it scared the hell out of Coca-Cola but you know what within just 9 months something shocking happened because of which the same crystal Pepsi turned out to be a massive failure it was pulled out from the shelves of America and Time magazine named it among the top 10 failures of all time every leader has what I call an epic fail the business you know did take off when we launched Crystal Pepsi I mean everybody tried red Crystal Pepsi it was like a gigantic In-N-Out product but people didn't come back and buy it again so it didn't have the sustainability that I was hoping for and this failure of Pepsi teaches us a very very important lesson on how to avoid a terrible product failure and from Coca-Cola standpoint it teaches us how to kill a competitor's product using a marketing strategy so in this case study let's do a deep dive and try to understand why did Pepsi release the crystal Pepsi what went wrong in their business strategy how did Coca-Cola kill Pepsi's opportunity and most importantly what are the business lessons that we need to learn from this epic failure of Pepsi before we move on I want to quickly thank Geeks for geeks for supporting our content people the new year is finally here and I'm sure most of you have planned to learn a lot of skills this year and if you're considering to master your coding skills this year then Geeks for geeks is one of the best platforms to learn from whether you're aiming for a Tech Career or just a new skill coding enhances problem 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something called the clear craze Coca-Cola launch tab clear a sugar-free soft drink with a mysterious new flavor and completely clear unveiling in test markets the newest weapon in the Cola Wars Crystal FC to tell you about it clear craze was a marketing fat from the late 1980s to early 2000s so any brand that launched something clear and transparent was considered to be a cool product because somehow people equated clear with transparency and honesty in case of food if you sold a drink that was colorful it was perceived as if the drink had a lot of artificial colors and preservatives but at the same time transparent goods were viewed as if they had no preservatives no artificial colors and no harmful flavors at all this is the reason why not just Pepsi but many Brands were trying to release products that were transparent products so beer companies came up with the trend of Light beer which had fewer calories Proctor and Gamble changed their soap color after 100 years from milky to transparent Nintendo released a translucent Game Boy and even Apple made its iMac translucent this is iMac the whole thing is translucent you can see into it it's so cool this is how powerful the clear graze was now when it comes to the soft drink Market of the United States Coca-Cola and Pepsi both were dominating the cola was while Coca-Cola had a market share of 19.7% Pepsi was trailing with 17.8% % market share while Diet Coke had 8.7% market share Diet Pepsi had just 5.7% market share this was also the time when the US economy was facing a recession because of which the soft drink Market was slowing down this is the reason why Pepsi decided to find a way to capitalize on the clear craze of America so you know what they decided to launch a brand new product in just 9 months now usually a new Pepsi product took at least 3 years to be properly launched this was because the product first had to be made then it has to be tested in the lab for safety then it had to be tested with a sample audience supply chain had to be designed marketing campaigns needed to be designed and then slowly the product needed to be taken to the masses with a giant marketing campaign but with Crystal all of this was done three times faster why because they were just 9 months away from the greatest American sports event of the year which the Americans called the Super Bowl the National Football League proudly presents a small world salute to 25 years of the Super Bowl in the biggest annual American sports event in the world the Super Bowl for those who don't know the Super Bowl is America's national football league championship which is 10 times crazier than IPL and it hits a peak viewership of 100 million people watching this is the reason why it was and still is a golden opportunity for every Advertiser to get extraordinary Returns on their ad cost in fact according to Kanto research the 2021 Super Bowl ads delivered an average return on investment of 360% on every dollar spent on ads this is a reason why even a 302 ad at Super Bowl cost $7 million so Pepsi did not want to lose out on this golden opportunity this is the reason why they FastTrack the launch of Crystal Pepsi and after a lot of hard work finally Crystal Pepsi was launched in December 1992 and their Super Bowl ad launch happened in 1993 now as we all know from the intro the ad was a massive hit and Pepsi sold $474 Million worth of Crystal Pepsi but even then it failed miserably so the question is what exactly went wrong well the first thing that went wrong with Crystal was its bottling issue to tell you about it Pepsi had a food scientist named surender Kumar and surrender was the head of Pepsi's research and development Branch so Pepsi asked him to make clear Pepsi in clear bottles so that they could show off the transparency of the soft drink but you know what Surendra pointed out an important problem to tell you about it if you look at 7 Up and Sprite they are packaged in a green bottle instead of a transparent bottle now most people will tell you that it is done to make the drink look more interesting and attractive but the real reason is that soft drinks contain various ingredients like flavors sweeteners preservatives and acids so when they are exposed to sunlight these components can react for example UV light can cause some flavors and preservatives to break down or react with other ingredients this leads to off flavors and odors so in the words of surinder it made the drink smell and taste like shoe polish so even though surender raised this flag Pepsi did not care secondly surrender was told to make a caffeine and preservative free clear soda that tastes just like the original Pepsi but at the same time time they did not reveal the secret recipe of Pepsi to surender so somehow Surendra Kumar had to find a way to mimic the Pepsi recipe without knowing the recipe at all and make it clear and transparent but even then Surendra turned out to be such a genius that he cracked the problem and got Pepsi a clear drink that tastes just like Pepsi and cherry on the cake when Pepsi tested this product with a few people those people enjoyed Crystal Pepsi a lot but you know the problem was that after exposure to sunlight the Taste of drink became a little different and soon enough it started leaving a bad aftertaste this was the first problem with Crystal Pepsi secondly Crystal Pepsi was an in congruent drink now this is very very interesting so hear me out in congruent literally means a lack of consistency as in a mismatch between what is expected and what is actually received by the customer and this is where Coca-Cola also came up with a genius strategy you see there are multiple research papers which show that there is a very deep relationship between the degree to which consumers can make sense of a new product and their evaluation of a product for example if you look at sports cars sports cars are traditionally associated with powerful and ruring engines but if I give you an option between an electric sports car which is very quiet and environmentally friendly and the other that sounds like this my question to you is which one would you buy obviously the Roaring sports car right this is because our brain believes that if it is a sports car it has to freaking Roar now I know it's not logical but somehow that's how consumer Behavior Works similarly in packaging whim is known for its tagline of carrying the power of 100 lemons and even its packaging and liquid color shows as if it is literally made up of lemons but if you look at the back label and their website there is no mention of 100 lemons in their ingredients at all and lastly if you look at detl and savlon detol burns when applied and savlon doesn't but but somehow a lot of people thought that detl is more effective and not Savon this is because when you apply detl it burns so it almost feels as if DET all is working so this is congruence of people's perception with the expectation of how the product looks feels and operates if this is very clear to you let's understand Pepsi's scenario in Pepsi's case the clear C stood for pureness naturalness and health but in reality Crystal Pepsi was anything but healthy while a 12 O can of regular Pepsi had 150 calories Crystal Pepsi came in pretty close with 130 calories now even though it was caffeine free it was filled with high fructose corn syrup so even though it was clear it tasted like Pepsi it had the same calories as Pepsi and it wasn't a health drink so if you look at this product it looked like a health drink but did not taste or operate like a health drink now some people thought this would work because consumer behavior is illogical but this is where Coca-Cola stepped into the game and Coke went into attack mode to use something called the Kami Kazi strategy to kill the demand of Crystal Pepsi to tell you about it the Kami Kazi strategy is basically a war tactic that the Japanese used during the World War II in this war move they sent Pilots to crash their bomb loaded aircrafts into the enemy ships this way they could kill the Americans by committing suicide we thought we had the war one and then when they began the kamikazi attacks it just it scared the Living Daylights out of everybody the Japanese pilot Dives then coly deliberately aims his bom Laden zero fighter at the SRO and crashes into the ship now in the context of Coca-Cola Coca-Cola decided to launch a product that would purposefully fail and while failing it would also kill Crystal Pepsi so the question is how did Coca-Cola apply this Kami Kazi strategy and kill Crystal pepsy well Coca-Cola launched a product called tab clear which was their version of clear soda this product was meant to cause confusion in the clear cola market so if you look at the strategy closely tab clear was positioned as a die drink whereas Crystal Pepsi was marketed as a regular Cola so this introduction of a clear diet variant by a major competitor like Goa created lots of confusion among consumers about what a clear cola was supposed to be whether it was supposed to be a regular drink or a die drink secondly the entry of tab clear cannibalized the market for Clear colas so instead of one clear cola option which was crystal Pepsi consumers now had two major choices this split the market and made it difficult for Crystal Pepsi to survive and the best part was while Pepsi launched Crystal Pepsi with the name Pepsi in it Coca-Cola very cleverly launched its clear cola under the brand of tab so that Coca-Cola's brand name would not suffer this is how Coca-Cola added to the confusion and the customers became sick of clear drink and false wellness and when this got combined with a bad aftertaste crystal soda became a massive failure in the United States of America so because of the Super Bowl ad everybody bought it once but nobody tried it again so the S tanked retailers rejected it and Crystal Pepsi was no longer selling in America this is how in spite of selling $474 Million worth of products Crystal Pepsi became an epic failure in the American market and this failure of Crystal Pepsi teaches us three very important business lessons lesson number one in the rise of FASTT tring the process of your product launch you should never compromise on the fundamental qualities of a product in this case instead of taking 3 years to build test and improve the product Pepsi rushed to capitalize on the clear Trend and compromised on the fundamental taste and positioning of its product lesson number two clear product positioning is by far the most important step in marketing and even if your marketing is slightly confusing please pull back all of your campaigns evaluate it and then roll it because marketing must be used to convince people and not to confuse them and this confusion will kill your products within no time and lastly never ever stop yourself from failing miserably in this case While most amateurs might consider Pepsi to be stupid for trying something like Crystal Pepsi what is important to note is that only Brave attempts lead to gamechanging inventions and many legendary people were called stupid when they tried something absolutely crazy whether that is Steve Jobs for making iPad or Elon Musk for making SpaceX but even then they had the persistence to try again so don't hold back your crazy ideas and keep trying them out because the the world will definitely call you a fool until you succeed and when you succeed you will be called an overnight success but only you will know that you are an overnight success but yours in the making that's all from my S of today guys if you learn something valuable please make sure to hit the like button in order to make you baba happy and for more such insightful business and political case studies please subscribe to our Channel thank you so much for watching I will see you in the next one [Music] bye-bye [Music]

Channel: Think School

Views: 488,078

Keywords: thethinkschool, think school, think, thinkschool, ganeshprasad, think school case study, think school business

Id: b9rLMlN5QnU

Length: 15min 36sec (936 seconds)

Published: Sun Jan 07 2024