Skip to main content

Pepsi Refresh Notwithstanding, Cause Marketing Still Sells the Goods

In a post about Starbuck CEO Howard Schultz at theatlantic.com, ‘Jack Flack’ (aka Paul Pendergrass) takes a swipe about the effectiveness of cause marketing that isn’t supported by the facts.

Flack’s post is about the fact that Schultz is at the top of the ‘spin’-cycle right now. The stock is at an all-time high, in Dec 2011 Schultz was named Fortune magazine’s Business Leader of the Year and the CEO has launched some audacious initiatives that aren’t directly about selling coffee.

In September 2011 Schultz pledged that he would stop making donations to incumbent politicians until they demonstrated a credible plan to address the Federal budget deficit. More than 100 other CEOs also pledged to withhold political donations from incumbents. Later in the year Starbucks unveiled its ‘Indivisible’ wristband effort, which generates loanable funds to small businesses nationwide. I’ve covered both issues here and here.

Schultz, says Flack, is a flavor of the month. I don’t disagree. Unless Schultz is about to have a long Steve Jobs moment, it’s doubtful that Schultz and Starbucks have any direction to go from here except down, at least for the near future.

My disagreement with Flack comes as he makes his case that Schultz is over-exposed and thereby vulnerable. Here’s what he writes:
“While the emphasis about politics and jobs may be intended to draw attention away from the fact that Starbucks will surely continue to show real steeliness in delivering the promised 15-20% profit growth currently keeping the company's P/E floating above 30, such distractions tend to ultimately back-fire.’

“Just ask PepsiCo shareholders, where a much publicized shift to "cause-marketing" helped trigger substantial share losses, which in turn have triggered growing speculation about CEO Indra Nooyi's job.”
Let’s parse that out bit by bit. First off, Pepsi did make a very big deal out of Pepsi Refresh, a cause marketing effort that generated donations to causes and relied on social media and PR for activation. Second, Pepsi did lay off people and its stock has taken a terrible haircut, and Refresh has been a ready scapegoat.

But Flack’s implicit suggestion that cause marketing thereby doesn’t work is not born out by the facts.

Certainly other forces are at work. Pepsi and Coke are both mature brands now. Almost no one left on the planet hasn’t heard of them or couldn’t easily get one if they had the money. Americans drink more Coke and Pepsi than any other nation, but it’s probably not realistic to expect that the rest of the world is ever going to drink as many soft drinks as Americans do.

Second, both brands have taken a beating over the last six years, although Pepsi more so than Coke. Sales of soft drinks have been declining since before the start of the Great Recession. Simply put, there’s more competition for soft drinks than ever. Even Snapple has been taking market share from Pepsi.

Pepsi Refresh was bold but it was also experimental. Pepsi posited that by activating the campaign via social media that it could forego some portion of its traditional advertising budget and save money. Remember when Pepsi pointedly didn’t advertise on the Super Bowl because that wasn’t true to the branding premise of Refresh?

There are numerous examples of cause marketing that sells the goods; TOMS Shoes always comes to mind.

But the better counter-example is from Coke, Pepsi’s fierce competitor. Coke also does tons of cause marketing, but it never quit advertising in hopes that PR and social media would take up the slack.

Flack fingers cause marketing for Pepsi’s flameout. But I think it’s more accurate to say that social media isn’t ready to carry all the weight of activating a cause marketing campaign for a heavyweight brand like Pepsi.

Comments

Popular posts from this blog

Top Eight Cause-Related Marketing Campaigns of 2007

Yeah, You Read it Right. It's a Top 8 List.

More cause-related marketing campaigns are unveiled every day across the world than I review in a year at the cause-related marketing blog. And, frankly, I don’t see very many campaigns from outside North America. So I won’t pretend that my annual list of the top cause-related marketing campaigns is exhaustive.

But, like any other self-respecting blogger, I won’t let my superficial purview stop me from drawing my own tortured conclusions!

So… cue the drumroll (and the dismissive snickers)… without further ado, here is my list of the eight best cause-related marketing campaigns of 2007.

My list of the worst cause-related marketing campaigns of 2007 follows on Thursday.


Chilis and St. Jude Children’s Research Hospital
I was delighted by the scope of Chilis’ campaign for St. Jude Children’s Research Hospital. As you walked in you saw the servers adorned in black co-branded shirts. Other elements included message points on the Chilis beverage coas…

Cause-Related Marketing Meets Microfinance

Kiva.org and Advanta.com Mix it Up

You’d have had to have been in Ulaanbaatar, Mongolia the last year or so to have missed the run up of microfinance. Between 2004 and 2006 more than $4 billion of capital flowed into microfinance institutions. All told experts say the total loan microfinance loan portfolio may be as much as $12.5 billion. And of course the father of microfinance, Muhammad Yunus won the 2006 Nobel Peace Prize. Microfinance is now so respectable, so effective, (so profitable!) that it’s already enjoying its first global backlash.

Actually that first sentence is hyperbole. Because even in Ulaanbaatar… far from almost anywhere on the vast, frigid steppes of Mongolia… microfinance is thriving such that the earliest recipients of micro loans there are now complaining about taxes and government bureaucracy! And May 29-31, 2008 the Conference of Microfinance Institutions will convene in Ulaanbaatar, the eleventh such annual conference.
Now Advanta, a credit card issuer to small…

Cause Marketing Beer with BOGO, Brew One Give One

On Monday’s post I touched on the topic of telling people what your cause marketing campaign accomplished when completed. I’ve recommended this approach to clients as a way to keep open the lines of communication with customers and clients and to get extra value from the campaign.

In other words, you’ll want to hold back some of the promotion’s budget to continue to activate the effort until the very end.

But what if that really cuts across the grain in your organization? What if it’s just not in your corporate DNA to do anything but to frontload your cause marketing activation? Well, then, add the report back to the activation of your next cause marketing effort.

New Belgium Brewing of Ft. Collins, Colorado, said to be the seventh largest brewery in the United States, did just that with this ad in Sunset magazine. I found this ad in the Alden Keene Cause Marketing Database.

New Belgium donates $1 for every barrel it brews and sells. It’s a BOGO cause marketing effort, Buy One Give One. …