0:03

Get ready for your daily dose of marketing

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strategies and tactics from entrepreneurs

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with the guile and experience to help

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you find success in any marketing

0:12

capacity. You're listening to Marketing

0:14

School with your instructors Neil Patel

0:16

and Eric Sue.

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All right, guys, before we start, we got a special

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to improve your low time. Welcome

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to another episode of Marketing School.

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I'm Eric Sue and I'm Neil Patel, and today

0:57

we are going to talk about how Pepsi defeated

1:00

Coke in two battles and what

1:02

you can learn from it. So we all know Coke is

1:04

Coke still the biggest beverage company in the world. Yes,

1:06

yeah, okay, and market cap WHI is

1:09

at least Coca Cola is bigger. M hm, Pepsi

1:11

has a huge market cap as well. Yeah, I'm like

1:13

looking up Coca Cola's market cap. I'm like ninety

1:16

nine percent sure Coca Cola has a larger

1:18

market cap, so as he's looking for it. So here's

1:20

the story. So Pepsi actually beat out

1:22

Coke in two occasions, and the story

1:25

is really fascinating. There's a there's a book called

1:27

fizz or Fizzled, which talks

1:29

about the battle between the two companies. And there's

1:31

this other podcast that listened to that talked

1:33

about the battle between Coke and Pepsi. It's called

1:35

Business Wars, So check out that one. But

1:38

what really caught my attention was that even the little

1:40

underdog Pepsi, which went out of business a couple of times

1:42

and had to be resurrected, what they

1:44

did when Coke was way ahead and it

1:46

seemed like they couldn't be stopped. Well, they

1:48

said, hey, five cents you get double the

1:50

amount, okay, So basically Coke

1:53

was charging ten cents at the time, they're charging five cents.

1:55

It was just their marketing play. Five cents you

1:57

get double the amount, and they started

1:59

taking and their sales started growing

2:01

a lot, even when Coke was trying to sue everyone out of

2:03

existence at the time. So, Neil, I

2:05

mean that seems like marketing one on

2:07

one thing. It doesn't seem that unique to us today. What

2:10

are your thoughts around that? Yeah, So going back

2:12

first to size, Coca

2:14

Cola is roughly twenty one percent

2:17

larger than pepsi. If you do

2:19

something that's very price sensitive,

2:22

like reducing it drastically, giving

2:24

people real value for the money, even if

2:26

that means you're going to lose money or have no margins,

2:28

kind of like the Amazon philosophy. It's

2:30

a great way to gobble up market share

2:33

and take over. Once you take

2:35

out most of your competitors. Yes,

2:37

you want to start increasing your prices or eventually

2:40

you're going to have no choice, but it's a great

2:42

strategy at the beginning. It's just like Uber and Lyft.

2:44

They kept offering amazing deals

2:47

and bonuses for you to use Uber Overlyft

2:49

or vice versa. It made it where the

2:51

drivers eventually didn't get paid as much as they wanted.

2:54

But that strategy helped Uber

2:56

and Lyft grow into these multi billion dollar

2:59

companies and take more people away

3:01

from not just the taxicab industry, but

3:03

also from them just buying their own car

3:05

and driving. It's a great strategy,

3:07

but if you don't have a ton of cash,

3:09

it can't hurt you, and it may not work out in the short

3:11

run. Right. So here's the second story.

3:14

And really like all these these business war

3:16

stories, So in the I

3:18

think it's the eighties, when did When did well?

3:20

I guess I don't want to like, you know, let's just talk

3:22

about the story. So in the eighties, Michael

3:25

Jackson was really popular, right, and I would

3:27

say even in the seventies too, right. Seventies

3:29

yeah, seventies, okay, seventies, eighties, right, So Michael

3:31

Jackson was like the king of pop, number one pop

3:34

star in the world. Right. So you

3:36

know, at the time, Pepsy was losing market share again

3:38

and they didn't know what to do. So what they did was

3:41

the secret weapon that they had their trump card, was they

3:43

reached out to Michael Jackson. They said, hey,

3:45

we'll pay you, you know, a million dollars or whatever. He's like, no,

3:47

he pay me a couple million dollars, And I'll do

3:49

it because I'm going to make Coke wish that they were

3:51

PEPSI Right, And after they did that.

3:54

They literally like it was a I

3:56

don't know, they showed his gloves, it showed like his hair,

3:58

everything. He like a unique song

4:01

like a just four pepsi for that commercial.

4:03

And they just started to take off in the eighties and

4:05

I think I don't think they overtook Coke, but they

4:08

really started to blow up at that time. So these are a

4:10

couple of two occasions where they really

4:12

started to jump. They're lagging behind and they started

4:14

to jump forward because they did these things. Yeah,

4:17

and when it comes to strategies, I personally

4:19

prefer the first one just undercutting the

4:21

competition. I do it as well, and you see

4:23

it these days by things like freemium

4:26

or free trials or just even free.

4:28

But now with the second one, they're leveraging

4:31

influencers. You guys all see this on Instagram

4:33

with the influencer marketing. It's a mini version

4:35

of it. It's quite expensive. It

4:37

doesn't produce as much of an ROI as most people

4:40

think. Yes, if you get a celebrity like the Kardashians,

4:42

it can help your business. But let me ask

4:45

you this, if Kim Kardashian promoted

4:48

I Neil Pateel or my ad agency, Neil

4:50

Pateel Digital being like they're the best marketers

4:52

ever. A lot of people wouldn't

4:55

really care because they're just like Kim. You're

4:57

known as a fashionista.

5:00

She's known for being famous and

5:02

probably a few other things. She is smart. I

5:04

don't know personally, but when

5:07

people look at that, they're not going to be like, oh,

5:09

we got to work with Neil. On the flip side,

5:11

if Bill Gates or Warren Buffett said, you

5:14

know, Neil Betel's ad agency is amazing, you guys

5:16

got to all work with him, Everyone's

5:18

going to be like, oh, Warren Buffett said something about

5:20

Neil. He knows what he's talking about. He's business oriented.

5:23

He has way less followers than Kim

5:25

Kardashian. He may not even be on all the social

5:27

sites. It just shows you that influencers

5:30

that are relevant are much more effective than

5:32

broad influencers. And

5:34

that's why influencer marketing doesn't work

5:36

that well because the people

5:38

that you ideally want to promote you, in

5:41

most cases they're not online. It doesn't mean you can't

5:43

find them, but it works much better for

5:45

like broad consumer type of products

5:48

or things that have mass appeal. Yeah,

5:50

I think Neil brings up a good point too, because it all depends

5:52

on the times that we live in. So you know,

5:55

back in that day, you do a Michael Jackson

5:57

thing, everybody's like, oh, and then it's a consumer product,

5:59

right that everyone can drink people drinks.

6:01

Yeah, so just think about like it has to match

6:03

up with your audience. And just to bring

6:05

up the point that you mentioned a

6:07

second ago, a couple of years ago,

6:10

PEPSI actually tried to do it again. They did Beyonce

6:12

and then they did Britney Spears and it did

6:14

someone else and it fell flat.

6:17

Like they conepe their sales continue to

6:19

decline because that's when you know, people start

6:21

to realize like America is like too fat,

6:23

and like well, people started to like, you know,

6:25

the war on sugary drinks started to happen. So keep

6:28

that in mind. It doesn't always work, but it might

6:30

give you a couple of ideas. I think Neil brings

6:32

up a couple of counterpoints that are really good for both

6:34

the first story and the second story. Anything else,

6:36

Nope, that's it for mine, all right, So that's

6:38

it for today. If you want us to throw a live

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of twenty nineteen, and we hope to see you there.

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