As a result of attending ProductCamp NYC I’ve been asked a lot more questions recently about how Product Mangers can avoid making mistakes with their products. Half of that answer is to make sure that you understand the fundamentals of Product Management. The other half is to learn from the mistakes of others. Like the big mistake Pepsi made when they tried to change their Gatorade product…
The Problem With Gatorade
Pepsi’s Gatorade story starts back in 2001 when Pepsi paid $13.8B to buy Quaker Oats and got Gatorade as part of the deal. Gatorade has gone on to become Pepsi’s second biggest selling beverage product by volume (after Pepsi!) and is key driver of Pepsi’s North American profits.
Gatorade currently has about 75% of the sports drink market. However this market segment is coming under pressure as a host of new competitors have shown up. These competitors include teas, juices, and enhanced brands of water. Pepsi is responsible for some of this competition because they have introduced the Propel and SoBe Lifewater brands.
Pepsi’s Big Plan
Gatorade has started to lose market share due to increased competition – sales are starting to slide. Gatorade has lost 4.5% of the sports-drink market and volume has slipped 17.5% in the first six months of the year. Clearly something needed to be done.
What Pepsi decided to do was to rebrand their product in order to attract new customers. They did this by simplifying the product label to a “G”. They also rolled out a complete marketing campaign to TV, print, and online outlets that asked the question “What is G?”. Those of you with long memories may remember that they also paid for a Superbowl commercial that revealed that “G” was really Gatorade.
What Went Wrong?
Perhaps a better question is what didn’t go wrong? After the product makeover, customers complained that they were confused by the Gatorade “G” campaign. What Pepsi had done was to replace the Gatorade product name on the bottle with a big “G” and at the same time they shrunk the distinctive lightning blot’s size.
It’s pretty clear that what Pepsi was trying to do here was to make Gatorade “cool” once again. However, it’s also pretty clear that they have flubbed up. Pepsi has done the worst thing that you can do to a brand – you’ve confused your customers.
Indra Nooyi is the CEO of Pepsi. Unfortunately, she has been at the helm when Pepsi has made two major product stumbles: the Tropicana disaster and now the Gatorade failure. Somehow Pepsi product mangers have lost touch with their customers and seem to be getting caught up in too many internal meetings where they convince themselves that they know what their customers want.
Somebody at Pepsi needs to take a step back and stop the product rebranding madness. What’s been missing from the Gatorade campaign is a true reason for the makeover. The core audience for Gatorade remains the same – athletes who are hot. Pepsi product managers need to spend their time finding ways to once again make Gatorade the brand that gets chosen at the right time. If they can do this, then they will have once again have found out how great product managers make their product(s) fantastically successful.
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