Pepsi won!
Updated: May 12
In the 1970s, Pepsi had a bold idea. They believed their product was superior to Coca-Cola. However, claiming to be the best is a risky proposition. With that in mind, they conducted a market survey. They asked random people to choose their preferred soda based on a blind taste test. The results were eye-opening.
Pepsi had evidence to back their claim. This sparked what became known as the Cola Wars. Their advertising strategy was aggressive. The Pepsi Challenge took over malls and promenades. Smiling participants gasped when the brand was revealed after the blind taste test. The surprising outcome? Many preferred Pepsi over Coke. This campaign was so effective that Coca-Cola's market share began to decline.
Coca-Cola went back to the drawing board. They analyzed the situation. They were determined to prove they were the better cola. They conducted in-house tests and focus groups. They made improvements and ran more tests. Finally, they developed a new formula they believed was superior to Pepsi. Their data confirmed it. Finance would be pleased. They enhanced the taste of Coke, making it better than Pepsi.
New Coke hit the market in late April 1985.
On April 23, 1985, a billboard near Coca-Cola's headquarters in Atlanta, Georgia, featured an ad. This was the same ad that then-CEO of Pepsi-Cola, Roger Enrico, had run in The New York Times. It read: “After 87 years of going at it eyeball to eyeball, the other guy just blinked. There is no question the long-term market success of Pepsi has forced this move.”
Pepsi Beat Coca-Cola
Pepsi outsold Coke in grocery stores. They made Coke blink publicly. Consumers were not fond of New Coke. Children's birthday parties were disrupted, leading to increased smoking. Taxi drivers suffered from dehydration. Dating took a hit. McDonald's had to give away free Dr Pepper. The Unabomber injured John Hauser. John Anthony Walker Jr. was arrested for passing classified Navy communications to the Soviets. America was in turmoil!
Are you playing to win, or are you playing to play?
The Cola Wars teach us a valuable lesson. There are two games to play. You must know which one you are in: are you playing to win or just to play? The finite game requires a winner and a loser. Importantly, the game must end for a winner to emerge. Pepsi was playing the finite game against Coke, and Coke chose to join them. Coke lost. They lost because they adopted someone else's measure of success.
To win a game, it has to end.
Both companies adapted after the Cola Wars. Coke recognized their brand equity when they "gifted" the old formula back to consumers. They shifted their tactics in supermarkets. They returned to their roots, focusing on family and shared moments in their advertising. Pepsi reverted to their "New Generation" branding, emphasizing youth, modernity, and dynamism. Later, Pepsi merged with Lay's Chips, forming PepsiCo, and focused on customers buying both a drink and a snack.
Other Case Studies
Dove serves as an excellent example of a brand that does not engage in shadowboxing with competitors. Their "Real Beauty" campaign has been their message for decades. Dove did not gain attention by trying to outdo other soap or skincare brands. Instead, they consistently reinforced their beliefs about beauty, self-image, and how women wish to be perceived.
Unilever reports that Dove achieved its highest underlying sales growth in over a decade in 2023, generating over $6 billion for the business. Regardless of individual opinions on their executions, the key takeaway is clear: consistency of meaning is a vital asset in branding. What comes to mind when you hear "Lifebuoy" or "LUX"? (*read: 20 years on: Dove and the future of Real Beauty)
If I were to ask for advice as a new parent about which car would be the safest for my child, I bet the first name you mention will likely be Volvo. For decades, Volvo has consistently promoted its commitment to safety. This isn't about tricking customers; it's about authenticity and trust. Safety is not just a tagline for Volvo; it is their core value, proven over time.
1959: First to make 3-point safety belt standard (saving millions of lives).
1964: First to have rear-facing child safety seats (optimizing protection for young passengers).
1960s: First to introduce safety cage & crumple zones (structural protection in all collisions).
1991: First to use Side Impact Protection System (SIPS) (minimizing injuries from side impacts).
2001: First to include Blind Spot Safety System (BLIS) (enhancing driver awareness and preventing crashes).
In 2008, Volvo took a bold step. They set a new Big Hairy Audacious Goal called "Vision 2020." Building safe cars was no longer sufficient. As Håkan Samuelsson, President and CEO of Volvo Cars, stated: "Volvo Cars has a vision that nobody should be seriously injured or killed in a new Volvo." (*read: Volvo's Vision 2020)
Key Takeaways
Advertising is not a competition. It is especially not a contest with a brand you perceive as a rival. Shadowboxing can harm your market share. You may waste money and effort while your competitor moves forward, unsure of your intentions. Coca-Cola's real mistake was not losing to Pepsi on the product; it was stepping into a finite game with them. Pepsi defined victory. New Coke may have beaten Pepsi, but Coca-Cola lost its connection with customers—they got caught up in shadowboxing. Pepsi engaged in shadowboxing too, yet they still landed in second place. Perhaps that is simply Pepsi's fate.
Brands that endure do not merely try to stand out from the crowd. They become recognizable and unmistakable by focusing on who they are, not on who they compete with. This does not mean you cannot poke fun at others occasionally.
What is your advertising approach? Are you playing the finite game? Are you fixating on competitors and inventing measures of success to outdo them? What do your customers truly care about? What are they saying about your product or brand? Why do they choose your product or service? Remember, you are not your customer, nor is your competition.
Evaluate what your marketing communicates. Is it from the perspective of the brand you are trying to beat, or from the viewpoint of your value offering?
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