The New Pepsi Challenge: Strategic Design Thinking

via Brand Channel

In the wake of McKinsey’s purchase of the product design firm, Lunar, IBM’s $100 million investment in design and UX talent, and countless companies scrambling to bring design talent in-house, it seems like the corporate world is teeming with design.

Companies are re-examining the role of design beyond visual identity development and packaging for their brands and more as a way of thinking and a path to solving problems—experimenting, re-inventing and ultimately making products, services and experiences better positioned to serve customers.
 

PepsiCo is the latest company to come out in support of “design thinking” and to make a case for investment in design. In the September 2015 issue of the Harvard Business Review, PepsiCo CEO Indra Nooyi describes using design thinking to “rethink the entire experience, from conception to what’s on the shelf to the post-product experience.” Nooyi describes that, although early days, she believes her approach has “delivered great shareholder value while strengthening the company for the long term.”

What’s interesting is not just this public declaration of “design” as a corporate strategy, but also how the interview explores whether the new order at Pepsi is in fact “design thinking” or “innovation.” It’s an interesting discussion on concepts that the business world is still grappling with, but dwelling on definitions relegates these ideas to corporate buzzword status and misses the point—the opportunities that pursuing these ideas can create for a business.

For companies like PepsiCo, encouraging, and even mandating, a perspective that insists on customer experience and empathy can lead to richer insights, more on-point products and clearer strategies to deliver them by helping brands connect to what customers find compelling.

Pepsi is using this approach as a means to be more relevant and distinctive in the categories in which the company, which is still focused on “performance with purpose,” competes. Nooyi is inspired not by the theory of “design thinking” but rather the early success the company is seeing by tightening focus on customers while opening up its culture and internal processes.

PepsiCo’s chief design officer, Mauro Porcini, comments in a separateQ&A in that same HBR issue, “Design is more than the aesthetics and artifacts associated with products; it’s a strategic function that focuses on what people want and need and dream of, then crafts experiences across the full brand ecosystem that are meaningful and relevant for customers.”

It might seem curious to some that design has started driving strategy at companies like PepsiCo. But instead of seeing a shift in departmental influence within organizations and a left-brain vs. right-brain debate, what can emerge is a more adaptable, balanced and human-centric way to problem-solve and build brands. Ultimately, strategy must live in a business context while delivering value in a customer context.

For strategists, this simply means the toolbox is getting bigger and the call to collaborate has never been stronger. The design process leaves room for taking inspiration from across disciplines—not just “strategy” or “design” but also science, culture and history. Strategists must engage customers and colleagues alike to uncover insights. The good news: We are uniquely positioned to put those insights to work in the financial and cultural realities of a business in order to design great strategy—and great brands.

Coke's Movie Theater Trial Shows Beacon Potential

via Computer World 

Retail beacons have huge potential, but it can only be met when chains move beyond seeing beacons solely as tiny ad broadcasters. Coca-Cola is starting to get creative about beacons, with a trial in Norway movie theaters to not merely communicate with moviegoers but to remember them for re-targeting later.

Coke offered a free soda to get that initial click — from 24% of moviegoers — and then used the mobile app to find those people later to offer a free movie ticket if they returned. That re-targeting effort delivered a stunning 60% click-through and an almost-as-impressive 20% redemption.

The trial was done with VG, which is Norway's largest newspaper. A mobile advertising vendor "collected data about these users so that, a week later, when any of them opened the VG news app on their phones, they would receive a Coca-Cola ad offering them a free ticket that could be redeemed at the movie theater," according to a story about the effort in Mobile Marketer.

Trials like these are crucial if beacons are going to evolve. It's all about layering. It's not about using the beacon or the mobile phone or POS or a mobile app. It's about layering — integrating — as much together as possible. Hence, it's using the interaction with the beacon on top of the mobile app, which leverages geolocation and the proximity of a Wi-Fi connection (and that beacon) and accessing existing CRM profiles of that shopper. And then watching for profile online and matching it with activity in-store.

What Coke has done is use the beacon not to engage the customer directly, but to encourage an interaction with a specific app. The app then continues the conversation later. The next challenge is having that conversation move deeper online, with an individualized experience. Then it must come full circle, as it should influence the next in-store interaction.

When this works, it goes beyond being seamless. Ideally, the interactions should be almost invisible, undetectable. The customer should see the online site as more useful, clueless that his/her online experience is different from anyone else's experience. In-store interactions should seem comfortable and store associates simply attentive and knowledgeable. "I just got really lucky, asking a store associate who happened to already know about the specific product I cared about," should be the reaction.

One movie theater trial in Norway is far from proving a marketing concept, but if this effort is emulated throughout retail, Coke's beacon strategy may just prove to be the real thing.

Coca-Cola to Reach Water Goal Five Years Early

via The Guardian

The Coca-Cola Company expects to replenish all the water it uses to make its beverages by the end of 2015, five years ahead of its scheduled goal.

The beverage giant, which manufactures brands such as Diet Coke, Sprite and Powerade, announced Tuesday that it and its bottling partners returned nearly all of the water used to make its beverages in 2014 to local communities and the environment.

Last year, the company used about 305bn liters of water to produce about 163bn liters of beverages sold globally. Based on last year’s sales volume, the company said it had replenished 94% of the water used in its products.

This puts Coca-Cola five years ahead of its goal, announced in 2007, that it would restore the amount of water equivalent to what it uses in its beverages and production by 2020.

There is growing awareness that the era of cheap, readily available water is coming to an end – something businesses are being advised to take into serious consideration. A report from the sustainable business consortium Ceres published in May, for example, found that most food companies aren’t prepared to deal with the water risks that Ceres expects will lead to higher water and food prices.

Coca-Cola, on the other hand, seems to be taking the issue of water insecurity seriously. As part of its efforts, the company has launched 209 community water projects in 61 countries, covering issues like improving access to safe drinking water and protecting watersheds. It has partnered with more than half a dozen aid and development organizations, including the United States Agency for International Development, the United Nations Development Program and the Millennium Challenge Corporation, to help meet its goals.

Environmental experts have previously questioned Coca-Cola’s water stewardship activities, suggesting they are a way for the company to use its influence and money to deflect criticism away from its environmental record.

The senior director of global water stewardship at The Coca-Cola Company, Greg Koch, said the ambition and scale of Coca-Cola’s goal helped make it a success. “You incentivize people, including our partners, by having an aggressive goal,” he said.

He also credited the scientists who helped the company craft its water replenishment initiatives in communities around the world. “They helped make all of us a little more intelligent on how to design projects with bigger impacts,” he said.

The water that isn’t used in the company’s beverages goes towards manufacturing operations such as cooling towers and cleaning mixing tanks and pipes, Koch said. He added that the company has spent about a billion dollars developing wastewater treatment plants around the world to date.

An estimated 90% of all wastewater in developing countries is discharged, untreated, directly into rivers, lakes or oceans, according to the UNEP. “We wanted to make sure we were not contributing to that,” said Koch.

In a statement, The Nature Conservancy (TNC), which helped Coca-Cola develop its methodology in measuring its water replenishment efforts, emphasized the importance of large corporations taking responsibility for the effect their business operations have on the environment.

“More and more companies now recognize that factoring nature into their decision-making is a smart business strategy,” said TNC CEO Mark Tercek. “Coca-Cola’s commitment to water underscores that investing in nature can produce very positive returns for businesses and local communities.”

Looking ahead, the company will increase its commitment to replenish water to match sales growth, Koch said.

“We manufacture locally, so we’re fully dependent on the stability of each community,” he said. “They all need reliable supplies of water – it’s an issue vital to our business.”

Pepsi vs. Coke: Which Brand Had the Most Successful Summer Campaign?

via 1to1 Media

Pepsi and Coca-Cola are notorious for their polarizing effect on the general public, as consumers typically love one and despise the other. However, this summer, both brands moved beyond the taste bud battle, instead competing for fans through promotions designed to enhance perception and loyalty. By embracing the fun-loving spirit of the season, both brands aimed to increase engagement during the time when consumers were most likely to seek cold refreshments. But which brand saw the greatest success?

Here, we speak with David Porche, senior analyst, customer success group at Networked Insights, to examine the inner workings of both campaigns and how these promotions resonated with each brand's target audience:

1to1 Media: Describe both Pepsi and Coke's current campaigns. How are they similar/different from a strategic standpoint?

David Porche: Pepsi's summer campaign allows fans to win tickets to concerts and sporting events, as well as travel and restaurant deals. Every hour since June 15, fans have had the opportunity to win a variety of tickets, and can also use their Pepsi loyalty program app, Pepsi Pass, to access unique concert opportunities. Involvement in Pepsi's campaign can be as simple as hanging out with other friends who also have the Pepsi Pass app.

In contrast, Coke's #ShareACoke campaign is back for the second consecutive year with more names than ever. The #ShareACoke social strategy is impressive, offering consumers the ability to show up on Coca-Cola billboards if they share a picture using the hashtag #ShareACoke. This year's #ShareACoke experiential tour will distribute over one million Coke cans at theme parks and other big events.

Both events are inherently social due to each company's incorporation of a hashtag and encouragement of social sharing. However, Pepsi's campaign focuses on rewarding users, therefore improving customer loyalty, while Coke's focuses on spreading brand awareness. Pepsi's call-to-action to download the Pepsi Pass app is a great way to encourage sign ups to their loyalty program. It's also important to note that Pepsi is piggybacking off of negative feedback to Coke's #ShareACoke campaign. Pepsi has responded to #ShareACoke complaints on social media by encouraging consumers angered that their name is not on a Coke bottle to enter to win free concert tickets from Pepsi instead.

1to1: How have consumers responded to each campaign via social media? Why does this matter? How do these companies measure campaign success and customer sentiment in the first place?

DP: Companies often measure sentiment when analyzing a campaign. However, this is just one of the many measurement tactics they can use. Overall, volume and brand lift are some other common metrics. But brands can dig deeper and understand more by looking beyond simple sentiment to the emotions consumers express around their campaigns. Looking at sentiment alone may skew brand perception and give marketers an inaccurate view of consumer reaction. For example, looking at sentiment alone, Pepsi responses from July 4 to August 3 were 73 percent positive and zero percent negative. Coke, on the other hand, was only 11 percent positive. What does that really tell us?

Measuring consumer emotions, these brands can understand if and how their message is resonating. For example, we found that Pepsi's conversations elicited 100 percent positive emotional responses. The top emotions associated with Pepsi's campaign were success (80 percent), love (11 percent), and desire (8 percent). Consumers were expressing their love for the campaign and a desire to win tickets.

In that same time frame, Coke's #ShareACoke campaign elicited 98 percent positive emotional responses. The top three emotions were amusement (45 percent), love (15 percent), and hope (13 percent). Consumers were primarily excited about finding their names on bottles. Understanding the emotions associated with a campaign is essential to campaign analysis. Looking at sentiment alone gives a one-dimensional look at consumer responses to a topic, while emotions allow for a more complex understanding. In Coke's case, positive sentiment was lower than expected. However, by digging into their emotions, you see that consumers are, for the most part, enjoying #ShareACoke.

1to1: Why have consumers responded so positively to Pepsi's campaign? Why are fewer, but more positive, tweets indicative of its success?

DP: Consumers are excited to win giveaways and are expressing a desire to do so, accounting for much of Pepsi's positive conversation. While Pepsi might not garner a large number of tweets, it's important for marketers to measure how the campaign resonated with their target and potentially changed how consumers feel about the brand. A campaign that improves brand perception rather than increases conversation volume is more impressive than a campaign that accumulates a large sum of negative tweets.

1to1: What does Pepsi's success mean for Coke? How will this continue to impact the remainder of their #ShareACoke campaign?

DP: Pepsi's ability to respond to Coke's #ShareACoke campaign has really been an add-on to an already successful campaign, but that's not to say that Coke is in trouble. We found that, while Pepsi has benefitted from responding to the #ShareACoke campaign, the Coca-Cola brand hasn't been harmed as a result. For example, desire is still a top emotion for Coca-Cola as a brand, accounting for 26 percent of the brand's conversations. And we found that conversations related to desire are mostly consumers wishing they had a Coke. However, it is important that Coca-Cola (and other brands) monitor their competitors, as well as their own brand perception. Social posts can be indicative of purchase intent and other business metrics.

One Of The Hundred Sprite x Nike LeBron 12 “LeBron’s Mix” Pack Is For Sale On eBay!

via Kicks On Fire

Are you one of the people looking for the elusive Sprite x Nike LeBron 12“LeBron’s Mix” pack? The reason I say elusive is because only 100 of these packages were ever made, meaning that there’s good odds that you don’t own one of them. If that’s the case there appears to be one of those said packs up for grabs!

The Sprite x Nike LeBron 12 “LeBron’s Mix” package contains a special edition colorway of the Nike LeBron 12 along with Beats by Dre headphones and a few cans of LeBron’s custom Sprite flavor. Available in a size 13 (just in case you’re actually going to wear them) you can now own your very own package as it’s for sale on eBay for a cool $2,000.

via NBC 

ATLANTA -- Maybe it wasn't the most scientific approach, but Atlanta came out with bragging rights after the company Honesty Tea put Atlantans through an honesty challenge.

Honest Tea went to 27 cities around America, all of the biggest cities. They set up an Honest Tea stand and put out racks of tea for a dollar a bottle.

You had to pay on an honor system, by putting a dollar in a box.

Thousands upon thousands of bottles of tea were sold, and the one city came out on top.

Honest Tea CEO Seth Goldman said, "This year, 94% of Americans were honest. The top city this year was Atlanta at a 100% honesty."

Only in one city did people take money out of the box. That happened in Washington D.C.

Pepsi, AMV BBDO FInally Find a Purpose for Drones

via AdWeek

Drones have been your new best friends since 2014. Whether filming remote G.E. plants, delivering puppies or replacing chief creative officers, they remain all the rage back home in your agency’s “throw mud at the wall” innovation meetings.

Now AMV BBDO, in collaboration with RSA and directing collective O.M.D. (not the band), may have discovered the first truly productive use for these newfangled flying machines: finding your stoned friends at a dance music festival.

Watch how it works here!

O.M.D. and AMV BBDO creative team Nicholas Hulley and Nadja Lassgott made this one happen with the help of “three practical working ‘Friend Finders'” and shot it at a real festival in order to make it more authentic.

Now the drone needs to be able to tell EDM fans how many hits of molly their missing friends have ingested in the interest of both convenience and public health.

Also: what was going on in the bushes? We may never know.

Mountain Dew's Latest VR Stunt Features Dale Earnhardt Jr.

via The Drum

Mountain Dew has created a virtual reality experience for Nascar fans featuring professional racecar driver Dale Earnhardt Jr. that gives viewers the chance to see what it’s like to be in the driver’s seat at Bristol Motor Speedway in Tennessee.

This is the soda brand’s third time leveraging virtual reality technology to try and appeal to consumers as it attempts to position itself as a ‘digital instigator.’

Earlier this year, its Oculus Rift snowboarding experience featuring Olympic snowboarder Danny Davis debuted at the Burton US Open of Snowboarding in Vail, Colorado and at South by Southwest in Austin, Texas.

Last year, the brand rolled out its first experiment with virtual reality called the ‘Dew VR Skate Experience’ that featured pro skateboarder Paul Rodriguez.

The Nascar experience will first debut on Saturday 22 August in Bristol for fans to try out.

Watch "Dew VR Bristol with Dale Jr YT 360" here. 

Mountain Dew to Bring Dew Shack Festival Tour to Liverpool

via Event Magazine

Britvic brand Mountain Dew will activate its Dew Shack festival experience at Liverpool International Music Festival from 27-31 August.

The festival tour features Europe's largest portable vert ramp

Mountain Dew has teamed up with experiential agency ID to devise the experience, which is designed to drive mass awareness among its target audience of 16 to 24-year old males.

The tour focuses in on the soft drink brand’s relationship with skate lifestyles, and includes the Live and Loud Tour, which features Europe's largest portable vert ramp as its centre.

A series of pro-skaters led by King Ramps will showcase their talents via demonstrations on the ramp throughout the festival. 

There is also the Dew Shack itself, which is constructed out of a shipping container, meanwhile graffiti artists will deliver live street art tutorials and street art displays. 

Brand ambassadors will be on hand to provide festival-goers with samples of the soft drink. 

The Dew Shack first visited Devon’s Gold Coast Ocean festival in June, as well as Lovebox festival in Victoria Park, London during the month of July.

The Dew Shack Festival Tour forms part of the brands wider digital, PR and social activity, which is focused around the UK skate scene.

This is not the first time Mountain Dew has worked with ID. In November of last year it selected the agency to devise an 'experiential shack', which appeared in Birmingham and on London's Southbank.

MillerCoors Looks for Sales Pop With Hard Soda

via Adage

Sure, craft beer is on an incredible run. Hard cider is cool, and fruity ales are having their day.

Now here comes hard soda.

Fueled by buzz generated by liquored-up root beers—most notably Small Town Brewery's Not Your Father's Root Beer—big brewers are jumping into the category.

The latest is MillerCoors. The Chicago-based joint venture best known for Miller Lite and Coors Light plans to start selling Henry's Hard Ginger Ale and Henry's Hard Orange sodas in six packs of 12-ounce bottles (suggested retail price $8.99) and in 16-ounce individual cans to retailers across the country in January. Backed with a national ad campaign that will feature spots on television and digital marketing, MillerCoors is aiming its products at Gen Xers who grew up drinking soda and now have more disposable income to spend on boozy alternatives.

The brewer over the past decade has hemorrhaged share of the U.S. beer market to an ever-growing army of craft competitors whose combined share of the beer market crossed double digits for the first time in 2014. In response, MillerCoors has focused on expanding its craft offerings under its Blue Moon and Leinenkugel's banners and branched into fruit-forward beers with Redd's Apple Ale and cider with its growing Smith & Forge line.

Now it sees a huge opportunity in hard soda, a category that, save root beer, largely remains untapped. "This is a true white-space opportunity in the marketplace," says Bryan Ferschinger, MillerCoors' director of innovation. "We're seeing very strong trends in craft sodas and other flavorful offerings with alcohol, and we see huge consumer appeal that will allow this to be a strong national play out of the gates."

Both sodas are sweetened with pure cane sugar and clock in at a meager 4.2% alcohol by volume, in line with light domestic beers. While initially available in only two flavors, Ferschinger says more are in the works. "That's why we're calling it the launch of our hard soda platform," he says. "Everything we see leads us to believe this is not a flash in the pan."

If history is a guide, however, hard soda's staying power is up against fairly long odds. Remember Zima? How about Smirnoff Ice? Both brands shot out of the gate with a vengeance before sales eventually cooled, and in Zima's case disappeared altogether in the U.S.

Even MillerCoors competitorAnheuser-Busch InBev's Bud Light Lime-a-Rita, a margarita-flavored beer that launched in 2012 to wild success, recently collapsed. Sales of the company's beverage coolers, which include the Lime-a-Rita family of products, are down 9.7% in the 12-month period ended July 12, according to Chicago-based market research firm IRI.

"The big open question is whether they can break the cycle," says Bart Watson, chief economist of the Brewers Association, a Boulder, Colo.-based trade group. "Every time a new brand or a new flavor is introduced, sales rocket up, but they tend to fall down just as hard."

Mike's Hard Lemonade, which launched in 1999 with its namesake brand, rose to national prominence by positioning itself as an alternative for beer drinkers. The Chicago-based brand, now in its 16th year, has more or less bucked the trend with continuous innovation. Now with more than 30 products, including obscure flavors like hard blood orange, sales continue to rise.

When sales of its flagship line started to slow—revenue is down 4.3% to $239.3 million over the 12 months ended July 12, according to IRI—Mike's Hard found another way to differentiate: an amped-up offshoot called Mike's Harder. This 8% alcohol-by-volume version has outperformed the rest of the category by a wide margin, with sales rising 18.3% over the same period to $194.4 million, IRI says.

Spiked root beer is riding high, too, for now at least. Wauconda, Ill.-based Small Town brewed its first batch of hard root beer in 2013 and sold it mostly to Chicago-area bars. When Not Your Father's Root Beer hit Binny's stores around the holidays last year, at $9.99 a six pack, "we were holding on for dear life hoping to keep it in stock," says Pat Brophy, beer buyer for the Chicago chain. "To my pleasure, it's continued. It's just tremendous growth."

Although sweet enough to lump in with the hard soda or flavored malt beverage category, Not Your Father's is technically an ale, and many stores stock it among craft beer. It is the top-selling beer at many Binny's outlets, Mr. Brophy says. Its rise has nudged sales of other hard root beers, such as Sprecher's of Glendale, Wis., and Chicago's Berghoff Rowdy Root Beer, and spurred the launch of newbies, like Coney Island Hard Root Beer from Boston Beer, maker of Samuel Adams beer.

In another sign of the thirst for hard root beer, Small Town recently sold the Not Your Father's brand to a group of investors that include Pabst Brewing CEO Eugene Kaspher.

Mr. Brophy says hard root beers and hard sodas have a chance to outlast boozed-up pop predecessors because they play on nostalgia and appeal to beer drinkers and non-beer drinkers alike. Another key, he says, is marketing to both men and women, a tactic employed successfully by Not Your Father's.

But MillerCoors, which once made Zima, thought it had something that would last, too.

Study Shows Millenials' Opinion of Brands that Sponsor Music Festivals

via Your EDM

These days, it’s almost entirely impossible to attend a music festival without witnessing heavy signs of branding across the grounds. From banners on the walls to stage names to dedicated vendor booths, large-scale events have become innately bonded to companies like Red Bull, 7-Up, Bud Light, and T-Mobile. Even though the purist in me wants to say that I dislike any overly saturated corporate involvement in something that should be entirely catered toward enjoying the music, the reality of the situation remains. These brands play an integral and often enjoyable role in the cultivation of a complete and fulfilling music festival experience.

Their presence brings not only necessary funding required to create the sheer scale of such events, but also a newfound appreciation and feeling of brotherhood between themselves and those in attendance. As these brands host more and more events, their image and services become highly associated with the actual festival itself. A recent study made by live promoter group AEG and branding company Momentum Worldwide details exactly how warm the relationship is between them and the fans. Specifically, they targeted their research on the Millenial generation, the obvious leaders in current festival attendance.

According to their research, an overwhelming 93% of those surveyed stated that they liked the brands that sponsor live events. 80% said that they will purchase a product following a music festival experience, as opposed to 55% of those who were not in attendance. Finally, those who attended a music festival with brand sponsorship walked away with a 37% better perception of the company.

It isn’t easy, however, for a brand to output a consistently positive image at such events. It takes far more than a paycheck and few posters to foster a steady relationship with the fans, and is far more complicated than one might think. Glenn Minerley of Worldwide Momentum reacts to the study findings:

The research clearly shows people will welcome brands in their music experiences. The interesting challenge now is how to do so in a way that feels more memorable to consumers and valuable to brands than what our industry has delivered in the past. We all need to evolve.

The way these brands go about hosting their festivals has had a noticeable impact on my own experiences in the past. The main one that comes to mind for me is Red Bull. Whether I’m in Los Angeles or Chicago, it’s extremely rare not to see a dedicated Red Bull booth or two on the grounds, serving different flavors of their drinks behind a blue counter. Known for their involvement in everything “exciting and extreme”, I’ve found momentary comfort at many different events when I remember that a nicely sized, cold kick of energy is waiting for me right around the corner. Their commitment to hosting so many of the fantastic shows I’ve attended over the years has ingrained their image into my actual memories. The fondness I feel for these festivals is due in part to the brands that make the experience possible.

Another notable incorporation of brands into the music scene comes directly through artist relations. Between sponsored songs, accompanying commercials, and artists acting as spokesmen for heavily involved brands, like Martin Garrix and Tiësto with 7UP, the evolution of music becomes more apparent than ever and rather well received by fans who are far more likely to purchase products touted by their favorite musicians. Whether promoted subtly or with their face firmly planted on the products, there is no doubt that corporate involvement in our scene is at an all-time high. We can’t wait to see what comes next.