Bob's Gutsy Leadership Blog

Pepsi Ignores Rule #1

Two years ago PepsiCo set a goal of tripling sales of what the company called “good-for-you” products to $30 billion by 2020.  To fund this effort it massively shifted support away from its core beverage business, particularly Pepsi-Cola.  The result is that Pepsi-Cola dropped to the #3 sales slot, being passed by Diet Coke ( Regular Coke is #1).  Diet Pepsi is #7. PepsiCo’s stock price has remained basically flat over the past five years, while Coke has gone up 50%.

The most fundamental rule of business is to appropriately support and grow the going business, while you independently pursue new initiatives to drive the business further. The second activity should not get in the way of the first.  Pepsi violated this rule big time by massively under-supporting it’s beverage business over the past few years.  It is reported that PepsiCo needs to spend $580 million more on beverage marketing support in 2012 to be competitive.

Another rule that was violated was picking an arbitrary goal of tripling sales, based on nothing but hope that all the hype around healthy foods was actually driven by consumer interest.  It wasn’t.  The fact is not too many people hunger for a hummus-based snack!  Until your testing confirms that your product and marketing ideas generate consumer excitement and demand, be wise in your forecasting.

What is the learning for each of us?  Easy…

1.) Execute your core responsibilities very well.  That is your primary responsibility

2.) Generate and push new ideas and ways to do things, testing them and nurturing them until you have verified their value, and then push them hard without getting in the way of your primary responsibility.

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