Coke Pepsi Redux
“IF THIS DOESN’T WORK, you’re both fired,” Dale Sohn informed Pendleton
and Wallace.
In its heyday, Coca-Cola, like Apple, had mastered the art of pop-
culture marketing. The curvy bottle with its red label and white lettering
was an American consumer institution. It was a remarkable victory for what
really amounted to a sugary, carbonated, caffeinated beverage.
A raft of other cola drinks entered and exited the crowded soft-drink
market. Nearly all were eclipsed by Coke. Then Pepsi, the young person’s
cola, came along and made it a two-horse race.
Pepsi confronted the industry leader head-to-head with its “Pepsi
Challenge” campaign in the 1970s. In a series of commercials shot at
shopping malls and parks, random people were given blind taste tests
sipping cups of Coke and Pepsi, the labels hidden.
The majority opted for Pepsi, the sweeter drink. It was a legendary but
controversial stroke of marketing, breaking the adage that you avoided
attacking a competitor head-on. What if more people chose Coke?
Coke, in response, became convinced, as a result of the Pepsi challenge,
that Americans preferred a sweeter drink. So it changed its sacrosanct
recipe for the first time in its history, creating a new and sweeter Coca-
Cola called “New Coke.” But in the process, it made the unforgivable error
of abandoning a huge market of traditional Coke lovers. Sales collapsed,
and people accused Coke of gutting a drink associated with America itself.
Within three months Coke restored the original version, now called “Coke
Classic.”
Coke came back from the disaster over time, but from that point on, it
was always competing in the presence of Pepsi.