Friday, March 28, 2008

History of Pepsi-Cola and its advertising - Free Essay -

History of Pepsi-Cola and its advertising

History of Pepsi-Cola

Advertising as Weaponry

Pepsi has marked more than the Hundred Years War with no decisive victory in sight. But then, perhaps victory would spoil all the fun -- not to mention the price wars that frequently let thirsty consumers load up at grocery chains for less than 17 cents a can. If it were just a matter of stuffing cola into an endless procession of cans, the days at Purchase and Somers, N.Y. (home of the Pepsi division) would hold no intrigue. (Ellis, 1979).

Slogan Wizardry

For decades Pepsi has defined itself through the wizardry of the slogan, the jingle and the storyboard and all that a succession of four ad agencies has spun from them. One hundred years after New Bern, N.C., druggist Caleb Bradham called it Pepsi-Cola (actually, Caleb Cola would have had a nice ring and spared Mr. Bradham the necessity of buying out an existing trademark, Pep-Kola, for the princely sum of $100), this worldly and sophisticated company still succumbs to the temptation to see itself as the ``feisty newcomer'' struggling in the shadow of tradition and Americana cast by ``the competitor.'' (Martin, 1962)

Selling In Bottles

The demand, it turned out, was already there. The race was how to make enough Pepsi without going broke in the process. Spritzing it out of fountain dispensers didn't begin to do the job. So Mr. Bradham turned to selling it in bottles. Unfortunately, this required bottles, which were only beginning their evolution from hand-blown delicacies to mass-produced containers. It also required bottlers willing to invest capital in Mr. Bradham's beverage. With the fundamentals of manufacturing still untamed, building additional demand through advertising probably was the least of anyone's concerns. (Martin, 1962)

Manufacturing Crisis

Indeed, it was a crisis of manufacturing, not marketing, that would swallow Pepsi up in the first of a series of bankruptcies. Sugar shortages during World War I and a cartel-induced price surge after that war convinced Caleb Bradham to buy up as much sugar as he could before prices got worse.

Unfortunately, prices soon got better, making everything else worse for Mr. Bradham, who found himself buried under a stockpile of overpriced sugar and debt. Facing bankruptcy, he prevailed upon Wall Street investor Roy Megargel to reorganize. But it came to nothing. In 1923, Mr. Bradham sold out for $35,000 to the Craven Holding Co., went back to the drugstore business and died 11 years later. Craven transplanted Pepsi to Richmond, Va.; while Mr. Megargel, now the largest stockholder, sat on the board and watched his company ekes out a modest growth record through the 1920s. It was reorganized again in 1928 as the National Pepsi-Cola Co., just in time for the the Depression and bankruptcy. Exit Roy Megargel, enter Charles Guth, president of the Loft Candy Store chain and a man with a score to settle against Coca-Cola Co., which had refused to supply Loft stores with syrup at a price Mr. Guth considered reasonable. With Pepsi on the block in 1931, he saw a source of supply that would be his to control. So he picked it up for $150,000, as much to avoid dickering with Coke as for any future he might have seen in Pepsi. (Mulchand, 2003)

An Approach to Coke

When a humiliated Charles Guth sent quiet feelers to Coca-Cola about buying out the company, Coke wasn't interested. It preferred to let Pepsi die a natural death, and the quicker the better. The year was 1934. Then, with nothing left to lose, Mr. Guth had a final idea, one shimmering with the glow of common sense. That March, something astonishing began appearing in Baltimore grocery stores -- 12-oz. bottles of Pepsi selling for 5 cents each. Without raising the price, Mr. Guth had taken Pepsi off the gold standard of the soft drink business, the 6-oz. sales unit. In the midst of the Great Depression, he offered customers a bargain. The result was a reversal of fortune worthy of a Frank Capra movie. Sales soared, bottlers materialized and the race was on to meet a suddenly huge demand. Pepsi began operations in Canada, Cuba and England and moved its main offices and bottling plant to Long Island City, N.Y. (Prendergast, 1993)

No Money for Radio

By 1936, Pepsi had a $500,000 ad budget and retained the Brown Agency, a small shop in Manhattan. Pepsi had no money for network radio, which was the glamour end of the ad business. Spending doubled by 1938, and the Pepsi account moved to Metropolitan Advertising in Manhattan. In the midst of the Pepsi renaissance, though, an internecine battle broke out between Mr. Loft and Mr. Guth that would open a new management era for Pepsi. After Mr. Guth stepped down as Loft president in 1935, the company demanded his 91% share of Pepsi on the grounds he had built it with Loft capital. In 1938, after three years of litigation, Mr. Guth was out and Pepsi was a division of Loft. (Earl, 1998)

Ownership Change

In July 1939, Walter Mack, a VP of Phoenix Securities, Philadelphia, which owned 29% of Loft, took over Pepsi. A year later Phoenix sold off the last of its Loft stock, cutting forever the link to Pepsi. In 1939, the cola wars got serious. When producer Billy Rose decided to sell Pepsi in his Aquacade show at the New York World's Fair that summer, Coke got the fair's lawyers to block him, an order Mr. Rose immediately ignored with his usual flair. This brought out police to seize the contraband Pepsi, which in turn drew an injunction from Mr. Rose, one that was upheld a month later in court. A few weeks later, as if to emphasize its victory, Pepsi launched a sky-writing campaign by putting its signature directly over the fair grounds. (A Selection of …..1998)

An Agency Switch

With manufacturing and distribution finally on sound footing, Mr. Mack knew marketing would drive Pepsi's future. He fired Metropolitan Advertising and in August hired the Newell Emmett Co., which 10 years later would become Cunningham & Walsh. In May 1942, Newell Emmett took Pepsi advertising into network radio for the first time, but in a weekly five-minute slot on the second-string NBC Blue Network (soon to become ABC). A second try in February 1946, with a 15-minute Sunday evening commentary program by journalist Quentin Reynolds, also was brief, as was a third network flirtation involving ``Counter-Spy'' in 1949 and 1950. (Hein, 2004)

A Move to Manhattan

In 1948, with sales dropping, Mr. Mack took two steps to separate the old Pepsi from the new. He moved company headquarters across the East River from industrial Long Island City to fashionable Fifth Ave. and 57th St. in Manhattan. And, as CEOs routinely do at such times, he fired his agency. Newell Emmett was out; the Biow Agency was in. Milton Biow had given America ``Call for Philip Morris-s-s'' and ``B-U-L-O-V-A -- Bulova watch time.'' In 1949, with a $3 million budget in hand, he intended to give Pepsi ``Twice as Much for a Nickel, Too.''

In October 1950, with Pepsi sales down $16 million from 1947, Walter Mack resigned at age 54, clearing the way for his heir apparent, Alfred Steele, whom Mr. Mack had recruited from Coca-Cola in 1949. It wasn't the last talent Coke would surrender to Pepsi. In 1951 Biow beckoned three key executives from Coke's long-time agency, D'Arcy Advertising, presumably at the instruction of Mr. Steele, who had been friends with each of them since his Coke days with D'Arcy in 1939. (Ellis, 1979)

A Stylish Image

``More Bounce to the Ounce'' became the Pepsi mantra as Mr. Steele took over, a line that complemented his taste for glamour, not to mention his TV sponsorship of Faye Emerson, whose plunging necklines and d├ęcolletage were the talk of the industry. The old ``John Peel'' jingle was phased out, and a stylish Polly Bergen personified Pepsi's modern image as she talked about a ``the light refreshment that refreshed without filling.'' Pepsi's stylish image was further burnished when Alfred Steele married actress Joan Crawford in 1956. ``Reduced calories'' became a Pepsi theme years, bringing with it the whole diet category, as slender women in Dior suits set the new upscale look. Even the Pepsi-Cola logo was lightened from two hyphens to one. (Riley, 1958)

An Angry Breakup

Eight million dollars was an account worth fighting for in 1955, and rumors of a change were in the air after D'Arcy lost Coke to McCann-Erickson in October. John Tiago, speaking for the Biow Agency (by now Biow-Beirn-Tiago), said he knew nothing about a Pepsi agency switch and that in any case he was loyal to BBT. Two weeks later, Pepsi fired BBT and hired Kenyon & Eckhardt. What had apparently piqued Pepsi for several months was the appearance in July of BBT's high-fashion Philip Morris campaign, whose art and type style were too close to Pepsi's for comfort. In Pepsi's view, it was sheer plagiarism, because the company credited Mr. Steele and not BBT with coming up with the high-fashion glamour look. (Martin, 1962)

Closing the Gap

Kenyon & Eckhardt raised the stakes of elegance and good taste still higher. ``Say Pepsi Please'' became the slogan de jour going into 1957, as the Coke-Pepsi sales gap closed from 5 to 1 in 1950 to 2 to 1. A quiet revolution was taking place in Pepsi advertising. In trying to tell a quality story, the advertising emphasis had drifted from product qualities to an association with a quality-conscious lifestyle. The principle was good, and more basic than anyone may have sensed. There was only one problem: For a soft drink, the lifestyle lacked any sense of reality. (Mulchand, 2003)

New Office, New Logo

Then in April 1959, Alfred Steele, the master of it all who made Pepsi the nation's 57th largest advertiser, died at age 57. Mr. Steele's demise signaled big changes just ahead. There would be Pepsi in new pop-top cans, whose pull rings, buyers soon discovered, not only made the old ``church key'' obsolete but made excellent slugs in parking meters (an unintended design benefit later corrected by American Can Co.). Also just ahead: a new non-script logo, new Manhattan offices at 500 Park Ave., new brands like Teem and Patio, the first Diet Pepsi cola. (Riley, 1958)

Donald Kendall’s Rise

Over the next three years, real power shifted to Donald Kendall. After joining Pepsi in 1947 as a syrup salesman, this gregarious salesman-politician and friend-of-U.S. Presidents secured control of the company in 1963 and began the acquisition spree that would turn Pepsi into a multinational conglomerate. First came Tip Corp., maker of Mountain Dew, in September 1964. Then in 1965 came the merger with Frito-Lay. With Frito-Lay came the creation of PepsiCo, parent company of all once and future acquisitions. (A Selection of ….1998)

Zeroing In On the Young

Seeing a young stampede barreling toward the marketplace, Pepsi zeroed in on a population that saw itself as distinct and separate from its parents in a way earlier generations hadn't. Three weeks after John Kennedy was inaugurated as President in 1961, Pepsi set out to take that generation for its own. To the tune of ``Makin' Whoopie,'' singer Joannie Sommers rolled out the message that would steer the Pepsi personality for the rest of the century -- ``for those who think young.'' The phrase became a colloquialism that United Artists even used as the name of a beach-romp film. The intensity of the campaign symbolized a fierce new overall aggressiveness against Coke.

The phrase ``Pepsi Generation'' soon became interchangeable with baby boomer, although it didn't materialize until four years later when BBDO launched the ``Come Alive . . .''You're in the Pepsi Generation'' campaign, also with Ms. Sommers. (A Selection of ….1998)

Using Folk Music

In the hot-blooded '70s the folk sound seemed safer. Pepsi used a different folk style in ``You've Got a Lot to Live, and Pepsi's Got a Lot to Give.'' And as for the pop hits, Pepsi had charted one five years before with its own music for Diet Pepsi, ``Music to Watch Girls By.'' There also was a growing tolerance for diversity as commercials became proudly multi-racial. For the first time viewers saw black and white consumers, not only in the same spot, but actually socializing with one another. (Riley, 1958)

Varying the Message

But BBDO knew this was not a happy land. Wisely Pepsi scratched a mid-'70s campaign on the ``Smilin' Majority'' in the wake of Watergate in favor ``Join the Pepsi People, Feelin' Free.'' A sanitized counter-culture sensibility pervaded even the most traditional Main Street visuals of swimming holes and farm life, as lines such as ``you be you, I'll be me'' blended a non-judgmental open-mindedness with red, white and blue patriotism. (A Selection of ….1998)

Music as A Road Map

Music has become the road map to the next generation, wherever it might be hiding. By the mid-'80s, the Michael Jackson tour sponsorships made Pepsi and BBDO show-business players in ways not seen since the '30s and '40s, when great advertisers and agencies produced packaged music stars like Bing Crosby (Kraft) and Benny Goodman (Camels) for network radio.

Company-Agency Synergy

Under a succession of smart company men a client-agency relationship of considerable dimension has developed. Each has complemented the other's weaknesses with a countervailing strength. They have much to celebrate.

by Anonymous Student

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