PepsiCo Beverages CMO Mark Kirkham Talks Science Of Growth And The Math Of Differentiation

Key Concepts

• Product vs. Brand: The distinction between the physical product and the overall experience/lifestyle it represents.
• Product Role vs. Brand Role: The functional benefits of a product versus its emotional association with the consumer.
• Brand Differentiation: Establishing a unique identity for a brand within its category.
• Portfolio Management: Strategically managing a collection of brands to maximize overall value and minimize cannibalization.
• Strategic Risk: Calculated risks in product and brand development, with an understanding that failure can be a learning opportunity.
• Penetration: Driving trial and adoption of a product within a category.
• AI as an Enabler: Harnessing artificial intelligence as a tool to enhance marketing efforts rather than viewing it as a threat.

Product vs. Experience

• Mark emphasizes that while a product has basic ingredients and functionalities, what you ultimately sell is an experience tied to the brand.
• Examples:
  • Beverages: Refreshment
  • Clothing/Jewelry: Lifestyle
• "You make products that ultimately create experiences."
• Clarity on both product and brand is crucial to avoid getting "lost."

Shaping Brand Experience

• Even within similar product categories (e.g., Coke vs. Pepsi), there are key differences.
• The challenge is to identify and amplify those differences.
• Pepsi Challenge: A decades-long effort to highlight Pepsi's unique taste.
• The product's role in cultural moments (e.g., NFL tailgate) must be uniquely differentiated.
• The combination of product benefit (taste, refreshment) and emotional benefit (association with music, sports) is essential.
• The product needs a "reason for being there" beyond just brand presence.
• "You've got to give a real clear role for the product."

Product Role vs. Brand Role (Detailed)

• Product Role: Functional benefits like taste, refreshment, and energy. These are the basic needs the consumer has.
• Brand Role: How the brand is associated with the moment and the person.
• The ideal is a balance of both – a "ying and yang."
• Simply associating the brand with an event is just sponsorship.
• The goal is to make the product benefit (e.g., Pepsi making food taste better) resonate as much as the association with the event (e.g., sports).
• "It's that combination of emotion and function that that is it's the magic sauce of any marketer's job."
• Over time, brands can lose focus on this balance, leaning too heavily on the experience or associated event.

Rebalancing Product and Brand

• The current focus is on ensuring people understand why they would choose a specific product (e.g., Pepsi) in a given moment.
• This choice should be based on taste, refreshment, and the product's relevance to the specific occasion (e.g., tailgating).
• The challenge is to understand the product's role ("What is the reason the product is sitting at the table?") and why that brand was chosen.
• Over-reliance on lifestyle marketing can lead to neglecting the product's relevance.
• Focusing on something "not sexy" like food can be powerful if done in a relevant way.

Product as a Service

• The idea of thinking about a product (e.g., Coke) as a service that provides uplift, refreshment, and enhancement of the moment.
• If you can't root the brand experience in a product truth, the experience becomes undifferentiated.
• Sponsorship vs. Endemic: Anyone can sponsor an event, but if the product is integral to the experience, it becomes endemic.
• Gatorade: A prime example of a product benefit (hydration) evolving into a significant social currency.

Fragmentation and Proliferation

• As categories become more fragmented, the differences between products can seem insignificant to consumers.
• In a world of "good enough" products and services, the brand becomes the differentiator.
• The brand justifies paying more and choosing one product over another.
• However, without a clear understanding of product differentiation, the brand message gets lost.
• "Using your product as a way to really elevate the brand."
• Building a brand on a weak product foundation leads to borrowing equity from other things and inauthentic insertion into people's lives.
• Innovation should add value to the brand, not just ingredients to the product.

Brand Identity

• Wearing a brand logo says something about the person and their reasons for wearing it.
• Some brands are just "wallpaper," while others represent the wearer's identity.
• Example: Wearing a Crystal Pepsi t-shirt sparks conversation and highlights the brand's uniqueness.
• Gatorade's simple logo represents sport and lifestyle.

Portfolio Management: The "City" Analogy

• Building a product portfolio is like building a city.
• Consumer: Who are they? What benefits do they need? Why would they want it?
• Ingredients: What elements are needed to attract consumers?
• Trends: What changes in the environment are being missed?
• Your Brands: Can your brands deliver on the consumer need, carry the ingredients, and be relevant to the trends?
• If a brand doesn't fit, consider acquiring or building a new one.
• This holistic approach helps avoid simply reacting to competitors or pushing R&D innovations without a clear consumer need.

Strategic Risk and Failure

• A portfolio business allows for experimentation and failure.
• Failure is a learning opportunity if the right objectives and goals are set.
• Objectives should sometimes be about changing mindsets or gaining relevance with a smaller group of consumers.
• The biggest challenge for marketers is stretching brands into spaces where they don't belong.
• A broader portfolio provides more choices.
• KPIs and expectations should be aligned with the role of each brand.

The Role of Mug Root Beer

• Mug Root Beer offers a differentiated taste and experience.
• It's experiencing growth due to its appeal to younger consumers who didn't grow up with it.
• It's a 100% social brand with a focus on silly humor.
• The goal isn't to make everyone like root beer, but to connect with those who appreciate the experience and humor.
• This targeted approach allows for flexibility in innovation and opportunity chasing.

Category Growth vs. Brand Growth

• Penetration is key to growth.
• Building the category benefits all players, even if you're not the leader.
• Penetration drives growth by driving trial.
• Competition is a good thing, inspiring innovation and a competitive spirit.
• Penetration should be viewed through different lenses (e.g., demographics, regions).
• Deleveraging the drivers of growth allows for differentiation and exponential growth.
• "The average answer to all the questions is not the answer."

The Fallacy of Demography

• Avoid marketing as if demographics were homogeneous.
• Example: Ozzy Osbourne and Prince Charles share similar demographics but have vastly different psychographics.

The Future: AI and Bots

• AI and bots should be viewed as enablers, not enemies.
• The inputs to AI are human intelligence.
• AI algorithms are based on averages, but prompting can help deverage.
• AI can be a collaborator in the creative process.
• Shopping bots scrape past behaviors and reviews, which is essentially word-of-mouth.
• The key is to harness AI and leverage it as an enabler.

Building Brands in the AI Era

• The what of brand building (values, product) remains the same.
• The how (execution) must adapt to a world where artificial agents are defining brands.
• If an idea can't be read by bots and agents, it's probably not a good idea.
• Know your audience, both human and artificial.
• Understand how bots operate and market in a way that captures messages, images, and emotions.
• Ensure your brand is discoverable and understandable by these new technology-driven tools.
• The fundamentals of marketing don't change, but the application must adapt to the new consumer, channel, and technology.

Conclusion

The key takeaways are the importance of balancing product and brand, understanding the role of each in creating a compelling experience, and adapting marketing strategies to leverage new technologies like AI while staying true to the fundamental principles of knowing your audience and driving penetration. The "City" analogy provides a useful framework for managing a portfolio of brands, and the emphasis on strategic risk and learning from failure encourages innovation. Ultimately, the goal is to build brands that resonate with consumers on both a functional and emotional level, creating a lasting connection that transcends fleeting trends.