Sugaring the Pill : from CocaCola to IrnBru

1
Sugaring the Pill from Coca-Cola to Irn-Bru ?

• Professor Paul Freathy
• Department of Marketing
• University of Stirling

2
The Official Version
Coca-Cola was supposedly born in a humble
three-legged kettle in Pembertons back yard
He leaned over the pot to smell the bouquet
of his brew. Then he took a long wooden spoon and
captured a little of the thick brown bubbling
contents of the pot, allowing it to cool a
moment. He lifted the spoon to his lips
and tasted. ALWAYS COCA-COLA
3
The Real Version
Slowly Pemberton doubled over with pain. It was
his stomach again. Shaking he filled the
hypodermic, turned it to his arm and slowly
pulled the plunger. Pemberton was 54 years old.
He looked 10 years older. He was addicted to
morphine. Coca was a cure for his morphine
addiction. Coca is a South American plant whose
leaf has been chewed for thousands of years as an
aphrodisiac, digestif, stimulant and life
extender - cocaine is its principal alkaloid.
Coca-Cola contained a minute trace of cocaine
for its first 15-20 years.
4
Fragmentation

• Flavoured Water
• Home-made Brews
• Soda Fountains
• Local Markets
• Low 'Technology'
• No Brands

5
Coca-Cola

• Invented 1886
• A Hangover Cure, Aphrodisiac
• Not a distinctive product
• - Schweppe 1790
• - 1840-90 developments
• - Dr Pepper 1885
• Soda Fountains - Variable Product

6
Coca-Cola as System

• Ownership
• Entrepreneurship
• Sales Force
• Bottler Network
• Advertising Program
• Trademark Defence

7
Pepsi-Cola

• Invented c1898
• Pepsi from dyspepsia
• Rapid growth
• Sugar price problems c1920
• 1923 and 1931 bankrupt

8
The Competition

• 1933 Pepsi began selling in 12 ounce bottle at
  same
• price as 6 - 7 ounce bottle
• Much cheaper, standard product
• Reasons for turnaround
• new owner/manager
• Pepsi couldn't be me-too
• dramatic gesture (price/volume)
• distribution
• Coca-Cola too profitable !

9
Phase II

• Duopoly
• Commodity Product
• 'Universal' Distribution
• Standard Products - 2 bottle types
  - soda fountains

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Phase III - Pepsi

• Product Positioning
• Price based for long period
• Product development - bottle sizes
• - distribution channels
• Segmentation (age) - The Pepsi Generation

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Pepsi Generation

• ? Age
• ? Lifestyle
• ? Class
• A low price strategy when market share is
  relatively
• small and there are no clear cut advantages
• is precarious. The Pepsi Generation made possible
• competition on a new basis.

12
Coca-Cola Wars ?

• Coca-Cola New products, new names (Tab)
  Same formula 1980's change occurred (Coke)
  1985 formula change disaster
• Pepsi-Cola New product, linked names (Diet
  Pepsi) Changed formula The Pepsi Challenge
  (blind tastings)
• Staid, Safety vs Change, Challenge

13
Phase III

• Product Proliferation
• Advertising
• Positioning

14
The UK Market

• Product Segmentation
• Continued Development
• Local Products - Same Route
• Lifestyle
• Irn-Bru Advertisements - Pastiche of Coke -
  Pastiche of Pepsi

15
Explain Diet Irn-Bru

• Irn-Bru itself (hangover cure, history)
• Product proliferation (bottle and can sizes,
  locations etc)
• Customer change (IB as distinct, lifestyle,
  identity, nationalism)
• Diet and health issues (sugar free, response to
  customers)

16
Modern Soft Drinks

• Retailer brands challenge
• Lifestyle brands (Virgin, Jolt etc)
• Energy beverages (points of sweat)
• New Age beverages
• Alco-pops (Thickhead etc)