Mike Fromowitz
Jan 13, 2014

Challenger brand takes on Coke and Pepsi

SodaStream, the marketer of home soda-making machines, is taking direct aim at Coke and Pepsi.

Challenger brand takes on Coke and Pepsi

According to an Ad Age article, "SodaStream Plots 'Edgy' Return to Super Bowl", CEO Daniel Birnbaum says the company's 2014 ad campaign "will be edgy because that is whom we are. You have to be edgy if you are challenging and disrupting a big category."

Controversy has arisen because several American TV networks have banned SodaStream's competitive commercials. They fear taking the risk of pissing off Coke and Pepsi who are big sponsors on their channels.

Free publicity by going online.

In 2013, SodaStream received a wave of free publicity when their rejected ads were  distributed digitally. The result was 5 million views on YouTube, which were free. SodaStream worked with former CP&B creative guru Alex Bogusky, who worked on its 2013 ad. According to Birnbaum, Bogusky brought a disruptive edge to the work.

See the spot here:

The SodaStream innovation enables users to make carbonated water and soft drinks simply by turning tap water into sparkling water in under 30 seconds. SodaStream’s marketing strategy focuses on the enjoyment of freshness and the convenience of homemade soda while protecting the environment. There are no heavy bottles to carry, to store at home or to throw away.

SodaStream home soda maker has over 50 regular, diet and caffeine-free Sodamix flavors to choose from. According to the company's website, SodaStream promises “sodas that are freshly made, are great-tasting, and fits your health and diet.  Sodamix flavors contain less sugar, calories, carbohydrates and sodium than national drink brands. Regular flavors contain no high-fructose corn syrup and are sweetened with a blend of sugar and sucralose”.

The smarter, better for you alternative.

A SodaStream global campaign will launch on 2 February, promising an “unforgettable viewer experience”, encouraging consumers to enjoy a “smarter, better for you alternative to packaged soda”. The company’s strategy plans to generate $1bn in global revenue by 2015. In its third quarter to 30 September, SodaStream increased revenue by 28.5 per cent to $112.5m.

For 2014, the company will be more mindful of putting ads on air that could be rejected. According to Marketing Week, SodaStream’s UK Managing Director Fiona Hope sees 2014 as too important a year to air TV ads that could still be rejected. “Our creative has a lot of integrity and has an important point to make. We’re not trying to score points, but we are looking to be provocative as we are hoping to disrupt the entire industry and encourage consumers to be more conscious in their choices.”

SodaStream's communications will, most likely, move on from a sustainability focus, like last year’s banned ad, and will instead highlight the brand's health and wellbeing benefits. Creative being developed in the USA has not yet been finalised. The company also has its sights focused on the 2014 Super Bowl as it wants to follow any Coke and Pepsi ads.

It’s the real “same old” thing

Ad Age reports that Birnbaum expects his competitors to do their usual by talking about "happiness and love and all those beautiful attributes in life. Maybe the time has come for these big companies to take responsibility for the health of America and confront the obesity issue in a more honest way and the environmental hazard of bottles," he said.

Coca-Cola has set its own goal—to recover 50% of the bottles and cans it puts into the North American market by 2015. The majority of its packages are 100% recyclable. While Coca-Cola and PepsiCo have been promoting their efforts to market and launch more zero and low-calorie products, both companies have been under attack for the role their products play in obesity.

Coca-Cola has not discussed the creative direction of its new Super Bowl advertising for 2014, but Jonathan Mildenhall, Coke’s VP for Global Advertising Strategy and Content, has tweeted scenes from the commercial shoot featuring roller skaters and tap dancers. He says that the advertising "would be all about celebrating 'American society' and Coca-Cola's role within it."

Pepsi’s commercials for the Super bowl have not yet been determined, however, insiders say that agency TBWA may emphasize multiple brands in its TV spots, with new ads featuring each of Pepsi's varieties -- Pepsi, Diet Pepsi, Pepsi Max, Pepsi Nex.

SodaStream, which is based in Israel, promotes its flavors as having less sugar, calories, carbohydrates and sodium than traditional sodas. An 8-ounce serving of its classic cola flavor has 8 grams of sugar, according to the company’s website. A 12-ounce serving of Coke has 39 sugar grams, according to a Coca-Cola website.

SodaStream machines are now available in more than 60,000 retail stores in 45 countries. It has adopted mainstream marketing techniques, including partnering with big food companies such as Kraft Foods Group.

The new soda wars

As part of SodaStream’s marketing campaign, the company erected a cage full of Coke’s trademark trash in South Africa’s OR Tambo International Airport, the 20th such installation built around the world.  This made the powerful soda giant Coke pull out the big guns. They hired litigation lawyers to demand its removal.

The lawyers claimed that SodaStream was making unauthorized use of their trademark in order to promote their own product and that their campaign was potentially damaging and  in contravention of the Code of Advertising Practice and common law. “It will take a lot more than a letter from a lawyer to shut me up,” said Daniel Birnbaum who refuses to back down.– according to Forbes.

Disruption by Challenger Brands

Marketers have adopted the term “Challenger Brands” to describe disruptive brands like SodaStream that aggressively market themselves to unseat a market leader.  It’s the brand with a better mousetrap. Almost any brand could adopt challenger strategies and tactics to dethrone a market leader. Today, new technology has ramped up the speed of innovation, making consumers less brand loyal and willing to ditch their brands when something better comes along.

Intel's Andy Grove once said "only the paranoid survive," and this couldn't be more true today. Both Intel and GE reinvent themselves every few years, thinking that complacency is usually closely followed by getting knocked out of the lead.

SodaStreams Fiona Hope thinks “there’s not enough genuine innovation in the soft drinks market. It’s limited by packaging and so on. That arena is where we thrive because we are really fast in our innovation, be it flavours, or a dispensing innovation with Soda Caps, or our new machine Play.

“There’s also a macro trend in the world at the moment about making stuff yourself, be it your own playlist or making cupcakes and SodaStream plays into that trend with genuine innovation. We think our marketing next year will really engage people with the category.”

Want your brand to be a Challenger Brand?

Being a Challenger Brand is not about being number two or three or four. It’s, above all, a state of mind. It’s more about the people behind the brand whose business ambitions exceed its conventional marketing resources. It’s their determination and need to change the category criteria in its brand’s favour. In order to see the opportunities that exist for a challenger brand we must see through the clutter of knowledge and ‘experience’ that makes up our existing strategic thinking and disrupt that conventional thinking.

There are two leaders in most categories. The first is the market leader – the brand with the biggest distribution and share of the market. The second, is the thought leader – not the largest brand,  but the one that everyone is talking about, like Apple, the brand with the highest momentum in the consumer’s mindset.

For Challenger Brands, capturing the target’s imagination and the pursuit of the right publicity and word of mouth, can be the most powerful business tools at their disposal.

On the other hand, success can be a very dangerous thing. It sometimes causes brands and consumers to stop behaving in the way that made them initially successful. It’s critical for Challenger Brands to maintain their momentum by focusing on the implementation of new ideas that renew the consumer experience with the brand.

To learn more about Challenger Brands, I recommend reading the following books:
“Eating the Big Fish”, by Adam Morgan;  “Disruption” by Jean-Marie Dru, and “How Disruption Brought Order”, also by Jean-Marie Dru.

Mike Fromowitz



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