Coke and Pepsi's New Marketing Strategy: Pull at Your Heart Strings
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World Water Day 2008 (March 22) will see a flurry of announcements from bottled water companies who claim to be helping solve the globe's water crisis. The catch is that these altruistic claims are intimately tied to major advertising campaigns designed to convince the public to buy their products.
Numerous media and industry reports are saying that sales of bottled water are slowing as a result of campaigns targeting the product's environmental and social impact. In a recent article, Brandweek declared that Pepsi and Coke are facing "evaporating sales growth for bottled water and increased concerns about their products' impact on the environment."
Another report, from industry publication Beverage Digest, said that sales and growth of the bottled water industry in 2007 was about half of what it was in 2006. Recently reported annual results from the world's largest bottled water company NestlÃ© show a slowdown in growth in its bottled water sector from 2006. According to the Beverage Marketing Corporation, global sales growth has consistently dropped since 2003.
The slowdown in growth of bottled water sales combined with industry reports and widespread media attention on the negative impacts of bottled water highlight how the global anti-bottled water campaign is having a major impact.
While campaigners may raise a crystal glass (of tap water) to this news, it is important to keep in mind that the industry is not rolling over and going away. People are still buying huge amounts of the stuff and the corporations will be trying their best to keep existing customers and attract new markets in new regions. The question is how will bottled water companies continue to convince people to buy its products.
How will the BW giants fight the backlash?
Marketing trade publication Brandweek predicts that Coke and Pepsi will fight the growing backlash against bottled water with intense 'ethical' or 'responsible' marketing, understood as tying the purchase of a product to charitable activities. A number of ad campaigns for bottled water already include charitable ties. According to Brandweek, the use of A-list celebrity endorsements of these types of campaigns is likely to increase.
PepsiCo has already started down this path through its relationship with Matt Damon. Earlier this year PepsiCo donated $2.5 million to Damon's H20 Africa clean water initiative. To compliment Pepsi's donation, the movie star is endorsing Ethos bottled water (Starbucks' bottled water brand), which will be launched nationally this spring through PepsiCo and Starbucks' North American Coffee Partnership joint venture.
The Ethos brand is promoted by claiming to donate 5 cents from every bottle sold to help children around the world gain access to clean water. Part of a slogan from the brand's upcoming North American ad campaign states "if you choose to drink bottled water, please choose to make a difference." Until now Ethos water has only been available at Starbucks' 7,000 North American outlets. This will soon change when PepsiCo's huge national distribution system moves the brand out to 40,000 merchandisers in North America.
Not to be outdone, according to Brandweek, Coca-Cola North America is getting ready to launch its own 'socially responsible' water brand. There is speculation that the company will enlist a movie star to co-brand the new beverage. Coke already uses celebrities to shill its various brands, and it is only matter of time until a public figure endorser steps up to push Coke's green message.
Coke is no stranger to this type of marketing and has recently been in hot water for pushing one of its water brands by convincing people that its product will help reforest Australia. In a recent ad campaign for its Mt. Franklin water brand, customers are encouraged to 'plant a tree' by registering the bottle's barcode on the company's website. Once registered, the company along with its partner Landcare Australia will plant a tree in the registrant's name.
Under the arrangement Coca Cola Amatil (30 percent owned by The Coca-Cola Company) will pay one of Australia's biggest environmental groups, Landcare, $150,000 to plant 250,000 trees. In return, Coca Cola Amatil places the well known Landcare logo on every bottle of Mt. Franklin Water. One Landcare employee who spoke out against the partnership said that the logo is being used "by a corporate giant who is only interested in greenwashing public opinion and tricking people living in the city into thinking they are doing the correct thing by the environment by purchasing their product."
Selling green to make green
Which ever way you look at it, this technique known in the marketing world as 'responsible' or 'ethical' marketing, is just that, marketing. In other words, it is a means to convince people to buy a product, thus, ensuring higher profits with a bonus to the company of greenwashing social and environmental impacts. This tactic is a clever trick because it lends brands a social image and injects a charitable dimension into consumer spending.
The technique is not new and the bottled water industry has used this type of marketing in the past to sell its products. In one example, a Danone ad campaign in Germany for the Volvic brand used the ad slogan '1 litre for 10 litres' accompanied by the UNICEF logo. The goal was to tell consumers that for every litre of Volvic water purchased 10 litres of clean drinking water would be provided for communities in Ethiopia. The campaign was structured around a donation of $250,000 euros from Danone to the United Nations Children's Fund (UNICEF). German magazine Der Spiegel called the campaign unclear and revealed that when calculated with monthly sales figures the donation amounted to 0.28 cents per liter sold during the three month campaign.
Danone revived this ad campaign in North America in 2008. This time it has pledged $500,000 to UNICEF and will use the tagline "every litre of Volvic you drink will provide ten litres of clean drinking water to children in Ethiopia." Danone started this marketing campaign in Germany and has extended it to France, Japan and now the US.
Brandweek calls this the industry's 'charitable solution' to a drop in sales. This type of marketing preys on the heart of the consumer by capitalizing on guilt and conscience. Companies employing these types of ad campaigns try to convince the public that they are doing the right thing.
Marketing experts point out that marketing strategies, in general, work best when they enjoy the support of society at large. When companies use agencies like UNICEF to promote their products they hope to earn long-run support by making people feel (including noncustomers) served by the ad campaign.
It is stressed by ad experts that major trends point to consumers wanting and expecting brands to make a commitment to social and environmental change. Marketers know that consumers are beginning to choose brands that claim to be giving something back to society.
To verify this tendency one needs only to quickly browse the websites of the big four global bottled water companies (Coke, Pepsi, NestlÃ© and Danone) where environmental and sustainability initiatives are boldly highlighted. All four of the big bottled water companies are also clamoring to show the world that they are taking the lead on issues such as water sustainability and climate change. One such example is the UN Global Compact's CEO Water Mandate (all four companies have signed on), a voluntary initiative designed to enlist corporations to address the water challenge faced by the world today. Under the guise of environmental stewardship, it actually provides a roadmap for increasing corporate control over water governance and management.
Paradox and mis-perceptions
These advertising strategies are slick corporate maneuvering and posturing that expose a glaring paradox. Bottled water, along with the overall operations of the corporations involved, remain central players to the very problems the marketing campaigns claim to be trying to solve. Contributions to green house gas emissions, use of fossil fuels and increasing corporate control of water resources are just a few of the numerous ways the industry contributes to the very things they claim to be helping through what can be called mis-perception marketing.
The corporations hope this strategy will construct a positive image of a corporate brand as a solution to the problem of water scarcity or climate change instead of one of the causes. Their goal is to associate the purchase of a bottled of water with a good deed in order to convince people that their products are beneficial to society while ensuring continued sales growth.
Make no mistake the industry is ultimately concerned about the drop in growth of bottle water and is looking for solutions to bolster sales and respond to the growing, well organized and visible global anti-bottled water campaign.
So remember, look closely this World Water Day at who is behind the glossy well produced advertisements claiming to help protect our global common good. Chances are that the stirring and emotional call to arms for the defense of water is tied to a company looking for a way to brighten its sagging water brands, greenwash its destructive operations and gain more control of its main raw material. All of this comes under the guise of helping the 1 billion people around the world without access to clean water, when it is profit for a much smaller number of shareholders that is the real objective.
Richard Girard is the corporate researcher at the Polaris Institute.