In the biggest product launch the Coca-Cola company has undertaken in 22 years, Coke Zero has risen to become the third biggest-selling cola product in the category, convincingly outstripping its sugar-free competitor, Pepsi Max. Just how it managed to do this has to do with its heritage, deep pockets, and believe it or not, its marketing strategy.
Since 1994, Pepsi Max has aimed at a niche segment – young, risk-taking men who identify with American pop culture. The message its advertising has put across is “Don’t worry, there’s no sugar”, with executions featuring extreme sports and bizarre situations such as an orang-utan driving a taxi.
When approached about this story, a PepsiCo Australia spokesperson said it was “unable to comment” on the subject.
In contrast, Coca-Cola has been very forthcoming. Unsurprising, really, as according to ACNielsen, research conducted after the first five weeks of Coke Zero’s entry to the market showed the product set new records, achieving the highest level of household penetration ever for any beverage, confectionary or personal care launch in Australia.
Gareth Edgecombe, managing director of Coca-Cola Australia, was not shy about singing Zero’s praises, but seemed to forget that his competitor has been in the market for quite a while.
The power of zero
“The success of Coca-Cola Zero is testament to the power of the ‘zero’ sugar proposition in responding to consumer beverage requirements and demonstrates the impact new products have when a gap in the market can be successfully identified and boldly executed,” Edgecombe said.
Perhaps Coca-Cola’s time lag in introducing a competitor to Pepsi Max lies in the historical failures it has clocked up whenever it has tried to introduce a new formulation. “New Coke” was a spectacular failure in 1985. Other minor product launches, such as Coke with a twist of lime, have been trialled and quietly withdrawn.
Coke outlaid $18m on a three-phase multi-platform launch for Zero in Australia. Everything, from the advertising approach to the packaging and the formulation inside the bottle, was designed for the Australian market.
However, it hasn’t been plain sailing. Phase one comprised unbranded outdoor, online and ambient elements that prompted a huge backlash against what many saw as “misleading advertising”.
The “Zero Movement” website started out as a blog from a group of “activists” aiming to “rid the world of all the negative consequences that limit us all”, and every solution had the word “zero” somewhere in it. For example: “Why can’t New Year’s come with zero resolutions?”
The problem was that the bloggers were actually Coke employees, not activists. Some people were so upset by the deception that they set up spoof websites to expose the company and posts quickly appeared from consumers, saying things such as “It offends me when companies try and pretend their (sic) cool like this. Coke, listen to me: you are not my friend, you are not my mentor, you are the corporation that makes flavoured water. That’s your lot in life. Learn to live with it”.
Harsh words for a marketer to swallow.
The second phase of the campaign also had problems. The TV campaign, in which a man jumps on the roof of a moving bus, was banned by the Advertising Standards Bureau.
The Australian Coke Zero advertising was created by Kindred, with planning by Naked. When asked whether the debacle of the launch campaigns would cause them to change their marketing strategy, a Coca-Cola representative replied “No”.
Interestingly, it is the Australian launch that made the most use of online and alternative media and despite the controversy, has proven more successful than the TV-focused US launch.
Coke seems to have cast the net a lot wider than Pepsi Max when defining its target audience for Zero. Whilst also aiming at the male market (the “Diet” variants of both brands are aimed at the female segment), they are promoting the fact that the product tastes the same as the original formulation, only without that nasty additive, sugar.
Karl Treacher, CEO of brand intelligence group Brand Behaviour, believes Coke is targeting the classic Coke drinkers who now want a healthier alternative.
“Coke now has its sights set on increasing market share via the segments of ‘fatties’, diabetics and caffeine junkies. For them, Coke Zero is methadone, only it’s available at the corner store,” he said.
maxed out
In just over twelve months, and despite negative publicity, Coke Zero has reached third position in the Australian cola market, after Coca-Cola and Diet Coke.
Treacher thinks this success is because Coke is one of the world’s most recognisable brands.
“Coke Zero can indulge in a bloodline that for many market segments means ‘cola of excellence’. I don’t think it has just shaken up the market; it has eclipsed [it],” he said.
Pepsi responded by increasing its ad budget in 2006 by 67%, spending $7.4m on advertising Pepsi Max over the last calendar year, according to Nielsen Media Research AdEx.
While both Pepsi Max and Coke Zero have done well in Australia, their launches overseas have not always been as successful.
Australia was one of the initial markets Max was introduced into, but by the end of 1995, it was being sold in over 40 countries. The USA was not one of them, because one of the sweetening ingredients did not pass the Food and Drug Administration’s criteria. It finally passed muster in 1998 and within an hour of the news, Pepsi announced the introduction of Pepsi ONE, the US version of Max.
In 1994, one year after its launch in the UK, Nielsen data revealed that Pepsi Max had captured 4% of the total cola market, 50% of the volume coming from outside the branded cola market. A case study released by the World Advertising Research Centre (WARC) concluded that the product was entirely “a creation of its advertising”.
When asked about the longevity of the two brands in Australia, Treacher echoed the sentiments of the WARC, saying, “Whilst the media continues to ‘educate’ society about the dangers of a diabetic lifestyle, there will be money to be made”.
