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REV: NOVEMBER 14, 2011
MICHAEL I. NORTON
JILL AVERY
The Pepsi Refresh Project: A Thirst for Change
Ana Maria “Ami” Irazabal grabbed a Pepsi from the soda fountain in the hallway as she dashed to her
meeting. She needed a caffeine boost to keep with the pace of her job as the senior marketing director for
Trademark Pepsi and the leader of the company’s Social Good program, the Pepsi Refresh Project. It was
December 2010, and the project was finishing its first year.
In 2009, Pepsi had announced that it would not run advertising for its trademark brands during the
2010 Super Bowl. Instead, the company diverted the $20 million – its typical Super Bowl budget – to
support grants for a cause marketing program. The Pepsi Refresh Project allowed people to submit ideas
for grants to “refresh” their communities. Grants were awarded to ideas that generated the most votes.
Consumer response to the program was tremendous. More consumers submitted ideas to the Pepsi
Refresh Project than auditioned for American Idol; more votes were cast for Pepsi Refresh projects than in
the previous U.S. presidential election. At the same time, Pepsi sales were slumping in the U.S. – down
5% in 2010 – and PepsiCo was losing market share to its rival, Coca-Cola.1 For the first time in twenty
years, Pepsi-Cola surrendered its title as the second best-selling carbonated beverage to Coke by slipping
to third, behind Diet Coke.2 PepsiCo’s share price was also down 5% in 2010.3
Irazabal sat down with her brand team to plan their strategy for 2011. Two questions loomed. Should
Pepsi continue to invest in the Pepsi Refresh Project? If so, how should the team tweak the marketing
strategy and execution to use the project’s success to drive Pepsi sales?
The History of the Pepsi Brand
Brand Pepsi was owned and managed by PepsiCo, a global consumer products company which
managed a diverse portfolio of snack food, beverage, and food brands – including Fritos, Doritos, Lay’s,
Gatorade, Tropicana, Sobe Waters, Aquafina, 7-Up, Mountain Dew, Quaker Oats, Cap’n Crunch, Rice-aRoni, and Aunt Jemima. In 2010, Pepsi was one of the world’s most valuable brands. Its brand equity was
valued at over $14 billion and it ranked 23rd on the Interbrand ranking of the best global brands.4 The
Pepsi brand had a long history, originating in 1898 as a hand-mixed carbonated creation developed to
delight the crowds at Caleb Bradham’s North Carolina pharmacy. The original Pepsi-Cola drink was
joined by Diet Pepsi, a low calorie drink launched in 1964, and Pepsi MAX, a zero-calorie, sugar-free cola
with double the amount of caffeine launched in 2007, to form the Trademark Pepsi brand family.
________________________________________________________________________________________________________________
Professors Michael I. Norton and Jill Avery (Simmons School of Management) prepared this case. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write
Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized,
photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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The Pepsi Refresh Project: A Thirst for Change
The Pepsi Generation
In its early days, Pepsi-Cola was sold as a healthful drink. During the Great Depression, it captured
consumers’ attention with a message of value, offering twelve ounces of soda (twice as much as the
competition) for a nickel. During World War II, Pepsi changed its packaging to red, white, and blue,
featuring patriotic themes in its advertising.
In the 1950’s, Pepsi was positioned as a drink for the young and the young at heart, embodying being
sociable and spirited, feeling free, and embracing change. In the 1960’s, Pepsi ran award-winning
advertising campaigns that designated the generation then coming of age as “The Pepsi Generation.” In
1985, Pepsi became “The Choice of a New Generation,” with an ad featuring pop star Michael Jackson,
putting Pepsi on the leading edge of popular culture. In 1997, Pepsi launched its “GeneratioNext”
campaign, reinvigorating the message for a new generation of Pepsi consumers. Pepsi continued to
include the most influential music artists (e.g., David Bowie, Madonna, Aretha Franklin, Faith Hill,
Britney Spears, Shakira, and Beyonce), sports heroes (e.g., Joe Montana and Shaquille O’Neal), and
fashion models (e.g., Cindy Crawford) in its advertising. Howard Pulchin, EVP, Managing Director,
Brand Stewardship of Edelman, Pepsi’s public relations agency, summarized Pepsi’s pop culture
strategy: “Pepsi has always been at the nexus of cultural shifts, trying different, new things. Pepsi is about
bringing together people and ideas at the nexus of culture. When people are together, Pepsi is there.”
Frank Cooper, Chief Engagement Officer, PepsiCo Beverages, explained the enduring appeal of this
lifestyle positioning:
In the 1960’s, we built a successful ad campaign on the slogan ‘For those who think young.’
That idea morphed into ‘The Pepsi Generation.’ The Baby Boomers who were coming of age
were excited, engaged, and enthusiastic – and started a movement that transformed our culture.
In the 80’s and 90’s, Generation X experienced the transformation from typewriter to computer,
letters to email, isolated cultures to global infrastructure. Today’s Millennials, the most globally
connected group in history, embody and embrace change. They live life in beta.5
As the brand team shaped the Pepsi Refresh Project, they were careful to consider Pepsi’s rich brand
meaning from its long history, with Irazabal noting that “part of Pepsi’s DNA has always been the spirit
of the challenger, celebration of the next generation, and of optimism and all things young at heart.”6
The Cola Wars
In the 1970’s, Pepsi’s rising sales began to challenge those of the market leader, Coca-Cola – and the
“cola wars” began. Pepsi was fighting against a formidable competitor. In 2010, Coke’s brand equity was
valued at over $70 billion and it topped Interbrand’s list of the best global brands. Interbrand’s
assessment of the Coke brand was that “its brand promise of fun, freedom, spirit and refreshment
resonates the world over and it excels at keeping the brand fresh and always evolving – all this, while
also maintaining the nostalgia that reinforces customers’ deep connection to the brand.”7 Memorable
campaigns included “It’s the Real Thing” from 1969, “I’d Like to Teach the World to Sing” in 1971, “Have
a Coke and a Smile” from 1979, “Coke is It!” from 1982, and “Always Coca-Cola” from 1993.
In 1975, Pepsi’s brand team found a compelling way to differentiate Pepsi from Coke, converting
results from blind taste tests showing that people preferred the taste of Pepsi to Coca Cola into an awardwinning advertising campaign. The “Pepsi Challenge” energized Pepsi sales, catapulting the brand into
the #1 slot for the best-selling soft drink in American supermarkets. In response, Coca-Cola reformulated
Coke, creating a sweeter version that appeared on shelves in 1985. “New Coke” beat both Pepsi and Coke
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The Pepsi Refresh Project: A Thirst for Change
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in blind taste tests. However, Coke’s consumers revolted against New Coke, demonstrating the nostalgic
and iconic appeal of the Coke brand. In response, Coke quickly introduced Coca-Cola Classic.
Pepsi and Coke’s rivalry was enduring, with the two companies constantly trying to win the battle for
“brand switchers” – the large group of die-hard cola drinkers who were fickle enough in their preferences
to switch from one brand to the other on the basis of price discounts, innovative promotional strategies,
and other marketing efforts. In 2010, Coca-Cola led the soft drink market (Exhibit 1).
PepsiCo in the Twenty-First Century
As the new century dawned, PepsiCo faced significant challenges. The first was a decrease in soda
consumption in the United States. In 2009, the average American consumed 46 gallons of carbonated soft
drinks, the equivalent of 736 eight-ounce servings – more than two servings per day – but down
significantly from 1998, when Americans consumed 864 servings.8 Since peaking in 2004, volume sold
had declined for six straight years, as cola drinkers switched from soda to iced-teas, juices, and waters though in 2009 consumers still purchased more than twice as many gallons of cola than bottled water,
and more cola than milk and beer combined (Exhibit 2). Analysts expected volume to decline by 1.5% to
3% annually for the next ten years.9,10
The second challenge came from external pressure. By 2010, two-thirds of American adults and one
third of American children and adolescents were overweight or obese.11 First Lady Michelle Obama
initiated an anti-obesity initiative that included requiring soda manufacturers to put calorie content on
the front of containers.12 Groups lobbied lawmakers to sponsor soda taxes to reduce consumption and
pay for the health costs of obesity.13 Companies like PepsiCo, Coca-Cola, and McDonald’s were often
presented as corporate exemplars of the obesity problem. Jon Leibowitz, chairman of the Federal Trade
Commission, stated that his agency would begin “shaming companies that aren’t doing enough.”14
In response, the American Beverage Association pledged to reduce beverage calories in the
marketplace, with their member companies offering lower calorie beverages and smaller portion sizes.15
PepsiCo and the Coca-Cola Company stopped selling full-calorie sweetened drinks in U.S. schools in
2006.16 PepsiCo’s CEO, Indra Nooyi announced a new vision for the company – Performance with
Purpose – that placed global corporate citizenship at the forefront of PepsiCo’s mission:
PepsiCo’s people are united by our unique commitment to sustainable growth, called
Performance with Purpose. By dedicating ourselves to offering a broad array of choices for
healthy, convenient, and fun nourishment, reducing our environmental impact and fostering a
diverse and inclusive workplace culture, PepsiCo balances strong financial returns with giving
back to our communities worldwide.
The company began to enhance its product portfolio with wholesome foods and beverages, with a
new approach to segmenting its product line: fun-for-you products such as Pepsi, Doritos, and Mountain
Dew; better-for-you products such as Baked Lays and Propel water with levels of fat, sodium and sugar in
line with dietary intake recommendations; and good-for-you products such as Gatorade, Quaker oatmeal,
and Naked juices that included whole grains, fruits, vegetables, and nutrients. Research and development
operations were directed to explore new means of making all of PepsiCo’s products healthier. PepsiCo’s
goal was to triple the number of good-for-you products by 2020. Nooyi stated: “By expanding our
portfolio, we are making sure our consumers can treat themselves when they want enjoyable products,
but are able to buy a range of appetizing and healthier snacks when they are being health conscious.”
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The Pepsi Refresh Project: A Thirst for Change
As the company focused on making their product offerings healthier, critics claimed that PepsiCo’s
senior management was losing its focus on the core soda and snack businesses – and that the stock price
was suffering as a result. Sanford Bernstein analyst, Ali Dibadj, stated that “they have to realize that at
their core they are a sugary, fatty cola company and people like that. Health and wellness is a good focus,
but you can’t be singularly focused on it.”17
The Refresh Everything Campaign
As Irazabal, Cooper, and their advertising agency, TBWAChiatDay searched for the next big idea to
anchor Pepsi’s 2009 advertising campaign, they observed several important cultural shifts in the U.S. The
financial crisis of 2008 had provided a sobering end to the excesses of the 2000’s. A Pepsi consumer
survey in December 2008, however, showed that Americans were hopeful about the future; this was
particularly true for Millennial consumers (ages 17-27), 80% of whom expressed hope about their future.
In response, Pepsi launched a new campaign – “Refresh” – with the tagline “Every Generation
Refreshes the World,” which had three executions: Wordplay, targeted mainly to Millennials; Bottle Pass,
targeted mainly to Baby Boomers; and Refresh Anthem for the Super Bowl. All executions communicated
themes of optimism, hope, joy, and love; the campaign was launched to coincide with New Year’s Eve
2009 and Pepsi kicked off the excitement by plastering Times Square in New York City, the site of the
biggest New Year’s Eve party in the United States, with advertising. The campaign challenged consumers
to refresh and renew their world.
A “Refresh Anthem” commercial was created for the 2009 Super Bowl, featuring Bob Dylan and
will.i.am, the lead singer of the Black Eyed Peas, to the tune of the Dylan classic, “Forever Young.” The ad
featured the tagline, “Every Generation Refreshes the World,” and juxtaposed scenes from the 1960’s and
the 2000’s. The visuals focused on the similarities between the Baby Boomer and Millennial generations
and communicated themes of happiness, change, and youthfulness. TBWAChiatDay’s Pepsi account
planner, Jeremy Simon, explained the campaign:
It came from insight into two business problems facing Pepsi. Our core Baby Boomer
consumers were leaving the soda category and weren’t being replaced by Millennials. Our
challenge was to find a single solution to both problems, to keep Baby Boomers and attract
Millennials. Our insight was that those two generations have a lot of shared values and
attitudes – they are optimistic generations who believe that they can change the world.
Many noted similarities between the messaging of “Refresh Everything” and the rhetoric of Barack
Obama, and between Pepsi’s newly redesigned logo and the logo used by Obama in his presidential
campaign. To capitalize on the excitement surrounding Obama’s inauguration, Pepsi peppered the crowd
with Pepsi tote bags and t-shirts and blanketed Washington, DC with Pepsi Word Play billboards. Nicole
Flavin, Pepsi Brand Marketing Director, Diets and Innovation, explained that “our point was not to have
a political point of view, but to make sure that we were riding the sentiment in the country – and the
sentiment was change.”
The Pepsi Refresh Project
As the “Refresh Everything” campaign moved into its second year, the mood of the nation had
changed again. Simon explained: “2010 became a year of action, not words. ‘Refresh Everything’ would
be judged on the brand’s actions, not just on the words in our advertising. We knew we had to do
something really big and tangible, a physical manifestation of our brand platform.”
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Irazabal’s research showed that Millennials perceived the Pepsi brand as superficial: “Consumers are
tired of words without actions. ‘So, great, you’re refreshing the world. Show me how’.” Cooper noted
that “one of the ideas that came up was to show consumers that the brand is giving back to the world –
that the brand is not just taking.”
The Pepsi Refresh Project was a marketing program geared to solicit and reward consumers’ ideas for
refreshing their communities: Pepsi would enable consumers to enact change by funding their ideas. For
2010, $20 million – originally earmarked for other marketing activities including Super Bowl advertising –
would fund the best ideas submitted by consumers. Grants ranging from $5,000 to $250,000 would
support ideas in six categories, such as “Education” and “The Planet” (Exhibit 3). The hub of the program
was its website – www.refresheverything.com – where consumers submitted ideas, reviewed idea
proposals, and cast their votes. Each month, the site accepted up to 1,000 idea submissions. Consumers
were encouraged to return frequently to vote; each person could vote for ten ideas per day during a thirty
day voting period.
The project capitalized on several converging trends. First, studies showed that brands’ social capital
was important to Millennials: 69% claimed that they considered a company’s social and environmental
commitment when shopping and 89% said that they would switch to a brand associated with a good
cause.18 Second, Millennials believed that they were both obligated and empowered to make the world a
better place: 92% believed the world needed to be changed, and 83% believed that their generation had a
duty to change the world.19 Third, Millennials believed that technology, and specifically social media
linking people together, was a force for change.20
The brand team encapsulated these trends with the tagline “Every generation refreshes the world.
Now, it’s your turn.” Launch materials invited consumers to participate:
Imagine if people from all walks of life across the U.S. had just one idea to make the world better. Now
imagine if they had the means to bring their ideas to life. The Pepsi Refresh Project offers a platform for
change, empowering Americans to bring a positive impact to their communities…The Pepsi Refresh
Project is about the power of people and their ideas.
Pepsi’s Partner Network
The scope and the scale of the project were unlike anything Pepsi had done before. The brand team
enlisted a cadre of agency partners to help plan and execute the project. In addition, all internal Pepsi
brand resources – both financial and personnel – were diverted from other marketing programs. Irazabal
laughed as she recalled the support she had received:
We have about 125 people working on the project, including everyone here at Pepsi and at our
agency partners. If you ask any one of them, they all feel like they own the project. There is a huge
sense of pride. People who work on the other brands here at PepsiCo ask, ‘is there any way I can
help?’ We have a group of employees who are Millennials who help us moderate the ideas each
month, just because they want to be a part of it, not because it is part of their job.
GOOD, an integrated media company for “the people, businesses, and NGOs moving the world
forward,” played a major partnership role. PepsiCo envisioned GOOD as a guide and an enabler. “We
brought GOOD in to shepherd us through the process. They had insight into how things really work –
not just giving to an organization and hoping that they would accomplish something, but getting
involved directly to help execute an idea,” said Cooper. GOOD’s participation granted PepsiCo
legitimacy, as Irazabal explained: “We talked to non-profit entrepreneurs to understand whether it would
work. Will it be called greenwashing? How do we make it authentic?”
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The Pepsi Refresh Project: A Thirst for Change
GOOD played several roles. They recruited and managed a team of Ambassadors – emerging leaders,
activists, neighborhood advocates, and non-profit found …
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