Case@Pepsi Crystal

Pepsi
In pursuit of purity
Coca-Cola may have one of the most famous brand failures of all time, but its long-standing rival has
also had its fair share of marketing mishaps.
For instance, in 1992 Pepsi spotted what it considered to be a gap in the market. What the world was
waiting for, the company decided, was a clear cola. After all, there had already been a variety of diet
colas, cherry colas, sugar-free colas, caffeine-free colas, caffeine-enhanced colas, and all had
achieved at least some form of success. So why not a clear cola?
After months of tests and experiments the company arrived at its new, clear formula and decided to
call it Crystal Pepsi. They also produced a diet version – Diet Crystal Pepsi. Both products, Pepsi
believed, answered the ‘new consumer demand for purity.’ After all, this was a time when
consumers were starting to opt for a bottle of Evian or Perrier just as often as they were picking up a
bottle of Coke or Pepsi.
The only problem was that a product with the word ‘Pepsi’ in its name was expected to taste like,
well, Pepsi. But it didn’t. In fact, nobody seemed to know what it tasted of.
Anyway, after a little more than a year, Pepsi halted the production of Crystal Pepsi and started work
on a new clear formula. In 1994, the reworked product appeared on the shelves, branded simply as
Crystal, and available only in regular. However, the negative associations persisted and Crystal mark
two did even worse than its unpopular predecessor. Pepsi eventually admitted defeat and scrapped
the whole concept of clear cola. But never one to give in easily, Pepsi remained aware of the ‘new
consumer demand for purity.’ In 1994, the same year it launched Crystal, Pepsi decided it wanted a
piece of the growing bottled water market. It therefore launched its own bottled water product,
entitled Aquafina, which had considerably more success than Crystal in the US market.
In addition to Crystal, there have been other, more general marketing problems for Pepsi over the
years. In particular, it has had trouble differentiating its brand identity from Coca-Cola. As it wasn’t
the first to market the cola category, Pepsi was never going to be the generic name. People rarely
say, ‘I’m going to have a Pepsi’. Even when they have a Pepsi bottle in their fridge they would be
more likely to say, ‘I’m going to have a Coke.’…However, although this situation couldn’t be
avoided, Pepsi’s branding for many years failed to give the product a stand-alone identity. Crucially,
Pepsi breached what Al and Laura Ries refer to as ‘The Law of the Color,’ one of their 22 Immutable
Laws of Branding in the book of the same name. As they state:
There is a powerful logic for selecting a color that is the opposite of your major competitors
[. . .] Cola is a reddish-brown liquid so the logical color for a cola brand is red. Which is one
reason why Coca-Cola has been using red for more than a hundred years.
Pepsi-Cola made a poor choice. It picked red and blue as the brand’s colors. Red to symbolize cola
and blue to differentiate the brand from Coca-Cola. For years Pepsi has struggled with a less-than-
ideal response to Coke’s color strategy.
Recently, though, Pepsi is sacrificing red for mainly blue to create a stronger distinction between the
two leading brands. Now Coca-Cola equals red and Pepsi equals blue.
Lessons from Pepsi
 Don’t assume that gaps should always be filled. If you spot a hole in the market, it doesn’t
mean that you should fill it. Just because clear cola didn’t exist, it didn’t mean it had to be
invented. However, the previous success the company had with its Diet Pepsi product (the
first cola of its kind) had convinced Pepsi that there were more gaps to fill.
 Don’t relaunch a failed product. Crystal failed once, but Pepsi still believed the world was
crying out for a clear cola. The second version fared even worse than the first.
 Differentiate yourself from your main competitor. For years Pepsi’s visual identity was
diluted through its red and blue branding.

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