How Pepsi Exposed Coke's Secret Formula
Since the inception of Pepsi in 1899, it has always flourished as the second best under the shadow of Coca-Cola.
For it’s first 50 years, things were rough for Pepsi and they were never in the contest with Coke. However, something changed in 1975.
The graph below shows the relative market share of both Pepsi and Coke for the period of 1975 to 1980. You can easily spot the rise in Pepsi’s marketing share and the dip in Coke. This was all due to one of the greatest marketing strategies implemented by Pepsi.
During this period, Coke took pride in their secret formula for making their drink. They always took this position to reinforce it with their customers that Coke’s formula can’t be replicated and that it was so unique that no drink will ever taste like Coke. Pepsi decided to target Coke by putting this statement by a free test.
At malls, shopping centers, and other public locations, a Pepsi representative would set up a table with two white cups. One would be containing Pepsi, and one with Coke.
Shoppers would be encouraged to taste each and select which drink they prefer. After the patron had a drink of the two colas, the representative would reveal which drink was the Pepsi and which one was Coke.
This marketing strategy was masterful. Two conclusions were made from this experiment:
- The tastes of both drinks aren’t much different.
- Pepsi was the preferred drink by Americans
Coca-Cola took this to heart and felt like they needed to get back at Pepsi. They took it seriously and wanted to reclaim their position within the market. Coca-Cola launched a “New Coke” with a supposedly “New Formula.” This move was disastrous and it led to further decline of market share.
Coke is still number one after all these years, but this was one time they were outclassed, and outsmarted by their competitor.