Pepsi To STOP Advertising. Well, Not Really

September 29, 2009 | Sarah Chong http://www.penn-olson.com/2009/09/29/pepsi-to-stop-advertising/

Pepsi-To-Jump-R

PepsiCo is well known for throwing out heavy advertising dollars.

Despite it being a tradition rooted all the way back to the start of its intense rivalry with Coca Cola, CEO Indra K. Nooyi has concluded that anymore money spent on advertising will be considered a blatant waste.

According to The Onion, a series of meetings was held over the past months before this mind blowing decision (at least for us) was made.

PepsiCo released a statement to its shareholders declaring that PepsiCo is now “what it should have been all along: a company that just makes soda, and doesn’t get caught up in trying to make everyone like it.”

Highlights of CEO Inda K. Nooyi’s press release below.

5-indra-k-nooyi “We know it’s good, and everyone’s pretty happy with the overall taste, so why spend all our time worrying about what other people think?” PepsiCo CEO Indra K. Nooyi told reporters during a press conference at the company’s corporate headquarters. “Frankly, it just feels sort of weird and desperate to put all this energy into telling people what to drink. If they don’t like it, then they don’t like it. That’s not really any of our business anyway.”…

…”You can’t taste an ad, anyway,” Nooyi said. “People are going to make up their own minds regardless of whether we spend millions trying to inform them that Taylor Swift drinks Pepsi. I mean, seriously, does it really matter if Taylor Swift drinks Pepsi? She’s just a human being like everybody else.”

Will Pepsi Sales Drop?

pepsimax Well, that’s the question isn’t it? With the absence of ads, will Pepsi be remembered ten years later, especially in the younger generations?

Also, not caring what consumers think of your drink seems to be a pretty bad explanation for ceasing the ads. Either CEO Indra K. Nooyi has greater plans or she doesn’t have any idea what consumer behavior is all about. If you, the company that is earning my money doesn’t care about what I think, then why would I care enough to think about your brand?

Remember when we said consumers do not know what they want exactly? It is definitely the business of any company to tell consumers why they should choose your brand or product. If you have the “if you like it, you like it and if you don’t, too bad” mentality, chances are along the way, consumers would find something else they like better.

I can’t help but scoff at her “You can’t taste an ad” comment. Let’s leave being rational and assuming your consumers are to the economists. As marketers, we all understand how rational consumers really are. The mechanism behind perceptions and decision making is illogical but at the same time, perfectly sensible.

We’re not sure how long Pepsi is going to last with an empty advertising budget but sales is bound to drop sooner or later.

PepsiCo might be cutting cost and…

…this might just be a PR gimmick. The strategy is simple. Since PepsiCo decided to cease its advertising for now, why not create a buzz before doing so.

Could that be the real reason?

Edited

For all of you who are confused by this post quoted from The Onion, yes the story is fake because well, it’s from The Onion. Really appreciate the quick response. Now that we’ve caught your attention, we are leaving ourselves open to some serious discussion.

Is HEAVY advertising a waste of money for big companies that have already established themselves? Does Taylor Swift help sell more sodas? Let us know what you think!

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Tags: Advertising, Marketing, Pepsi

Maverick Money Makers Review

i think that I absolutely do not like the new logo. I feel the same about the Mountain ...... "I'm gonna stop drinking Pepsi!
brtsflk

i guess that ad budgets will always be a source of discussion every where. and someday everyone will put the brakes on what we see as excesses in those expenditures. we'll miss them when they disappear but there is always the maverick lurking out there who will release the explosion that starts the whole thing going again. it's only human.
brtsflk

i've gotta' think you've gone over the edge with this one. i'm not an advertising type but some of those who are will let you know that nothing happens for your company until you advertise. in lots of cases, i believe. and the big plus? it's an extremely amusing approach for those of us who look for the humor in everything.
sarah_chong

Hi there!

I agree with you completely on the advertising part. I did not in any way comment that it was not needed. But from what I can infer, you do support million dollar advertising for big companies. But what I am curious to know is if we can cut down the budget and achieve the same effect? Take a look at some of the most expensive ads around http://bit.ly/3JY7X and maybe Google how the Harry Potter Theme park didn't need as big a budget as it could have used.
strategic_growth_advisors

Thanks for the insightful discussion (as well as the laugh), Sarah. I knew it was a fake as soon as I read the name "The Onion."

However, in my own point of view, advertising is more than just an investment. It is a way of making people know that your product is there and it is the best product in the market. The more people are aware of your product, the more people will buy it.

And the best thing about advertising? Once you get a prominent individual to promote your product, even those who don't like it but idolize the endorser will also buy it. Why? Because that's advertising. That's the mystery of advertising.
sarah_chong

So here begs the question, why is Pepsi lagging behind in some countries? I don't think its a "ad budget" competition here but more of how Pepsi should utilize its ad dollars for branding. A very difficult task I would say but I agree that advertising is essential for any company. Is there anything wrong/lacking in Pepsi's branding?
Anon

Well, this did capture my attention. I fell into the trap.

But to be completely honest, it is not wise to give up million dollar advertising budgets. I believe there needs to be a balance in the way budgets are allocated instead (not putting all your eggs into one basket). That way, companies are able to capture a more wholesome picture of how the market is really like.

Nice article though. :D
Willis Wee

Thanks for the comment Anon!

I'm not too sure how much is PepsiCo earning from its cola sales. If they are earning billions (which probably is) there is no harm spending millions or even 5% - 10% of its sales on advertising.

But i must agree with you to a large extend about the eggs in the basket.

Kudos to Sarah for this great post.
Donagh Mc Sweeney

Emm sorry but isn't The Onion classified as a 'Fake News' website. NONE of the stories on it are actually true and are meant as light entertainment.It's satire!
sarah_chong

You're right! Let us know what you think about spending millions on advertising!
Donagh Mc Sweeney

Haha well I guess a false story or two slip by us all from time to time :D

www.donaghmcsweeney.com
Willis Wee

hey Donagh. Nicely written but i think you got the facts wrong. We're trying to play a gimmick but obviously didn't work out.

Anyway, "The Onion" was stated right from the start of our post (even on your screenshot!). So i guess that makes things clear. You can check our tweets (@pennolson) to see how we tried to play the game. I leave the rest to you.

It's 2am here. Cya around mate :D
Donagh Mc Sweeney

Thanks and I appreciate the head-up about the comments on my blog. Akismet seemed to be blocking everything for some reason.

As regards the advertising, I don't think it's a waste of time spending millions on advertising. Pepsi is a global brand and it needs to keep on top of all the emerging competition, both on an international and local level. For example, here in Ireland Pepsi is still lagging way behind Coke. I can't see it ever becoming the number 1, but without some advertising I would imagine it dropping even further down the popularity ladder.
sarah_chong

Hi Donagh!

Thanks for the comments! I guess the problem is not with whether there should be advertisements. We got to ask, why is Pepsi lagging behind Coke? Is it the branding? Most probably. And to compete more effectively, better planned advertising to shape perceptions should be in place. Ads to boost recall/presence is just not enough anymore.

Pepsi To STOP Advertising. Well, Not Really

Will Pepsi Sales Drop?

PepsiCo might be cutting cost and…

Edited

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