Dr. Pepper Rises to #2 - What Went Right?

Before the positioning duo dives into the rise of Dr. Pepper, Mark and Lorraine tackle the tough topic of politics -- without talking politics! Learn their perspective on the recent Republican National Convention and the re-positioning that has been done to do the hard job of changing perceptions. Then learn why Dr. Pepper is now #2 in the soft drink category... from the iconic Be a Pepper campaign to the more recent Fansville commercials.

Spend 30ish with Mark and Lorraine as they talk all things marketing, advertising, and of course ... positioning!

Transcript

Mark Vandegrift
Welcome to the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and with me today is the Doctor of Differentiation, Lorraine Kessler. Lorraine, wouldn't you like to be a differentiation doctor too? I don't think they had that one as one of the options in the original Dr. Pepper commercials. I remember it was boatin' peppers, totin' peppers, even good-looking peppers, or something like that. Do remember those commercials?

Lorraine Kessler
Yeah. I, not only do I remember them, I think it's one of the most memorable commercials I have in my cabanza for many years ago. I remember that David Naughton, who was famous for American Werewolf in London, I think, and then he was in a sitcom called Making It and did a song. I mean, it was great. And who can remember, I mean, the theme was I'm a Pepper. Wouldn't you like to be a Pepper too? I mean, it really genius and with the music and all that went on with it. It's Great advertisers.

Mark Vandegrift
Yeah, think the one, the only other one I remember back from those days that was that iconic was the KitKat bar. Break me off a piece of that KitKat bar.

Lorraine Kessler
Yeah. I mean, you know, we've lost some of that today. I know there was a lot of study that went around in the 90s that jingles aren't very convincing and they're not very persuasive. Well, no, but they're memorable. So the proposition is what's persuasive.

But having a jingle that really people can repeat these this many years later, think, you know, the goal of advertising at some point is to be make your brand famous and that makes the brand famous.

Mark Vandegrift
Well, as promised to our listeners, we're going to look at the other side of the recent Pepsi versus Dr. Pepper shift in market share. But before we do, Lorraine, let's talk politics without actually talking politics and tell me your thoughts on the recent Republican National Convention that finished up about, let's see, 10 days ago, I think it was.

Lorraine Kessler
Yeah, Right before that, yeah, we're not yet to the Democratic one, so we'll see what their response is. But I found it extremely interesting from a positioning standpoint, not a political standpoint, just a positioning... What message are you trying to own in the mind of constituents or reposition? And how are you repositioning competition? And I thought the RNC did an unbelievable job both symbolically with Vance as the vice presidential candidate, but with all the speeches that were given, which there seems to be this common theme that we are now the party for the American working class. And we are going to take care of real people in real communities who are facing real issues with inflation, not being able to buy a house, and not being able to afford groceries or medicine.

So all of a sudden, and we've heard this term populist, but all of a sudden this populist agenda has been kind of, I think, grabbed by the RNC. And what's weird about that is I have a long enough history to remember that the Republican Party in my parents' mindset was that this was the party for bankers and Wall Street, the financiers, the big guys. And the Democrats were for the little guys, right? 

So all of a sudden they've taken that position and they've repositioned the Democratic Party as being for elitists, the coastal elites on either coast or the urban elites, if you will, celebrities and Wall Street. And it's really interesting to me because I think the Republicans have a lot of… part of their policy supports this. So now you have things you can look at that they're trying to do that support this shift. It's a massive shift. And that's the goal of positioning, right? Is you stand for one thing in opposition to the choice, and we'll see how the Democrats respond. It'll be real interesting.

Mark Vandegrift
Well, again, we're not going to take sides or talk politics. So whatever you think about Trump from a political standpoint, set that aside as a positionist. He is brilliant. And why I say that is think of all the labels that he's given different people throughout the times. You know, Lyin’ Biden or Crooked Hillary or name all of those. And what is he doing there? He's positioning those people because people don't have a particular thought about them, right? 

Now you may be the biggest, say you're the biggest Hillary Clinton fan, that's fine, you're not going to listen to that. But for those that are like, hmm, I don't know what I think about her, all of a sudden, Trump has put in the mind, know, Crooked Hillary. And that's always trying to do with that. And so taking and applying that to the entire RNC. Of course, he inserted his daughter-in-law as one of the co-executive directors or whatever the term is for the RNC. But, you know, that's what they're redoing is they have repositioned the Republican Party to be a much broader party. And I think they've done it not only by who they had speak, you know, former lifelong Democrats, for example.

But you also have the repositioning of the Democrat Party, as you mentioned, in so many different ways with the talking points that came out of the RNC.

Lorraine Kessler
Yeah, and I think in the repositioning that I just put, which is pretty dramatic for the Republican Party. And again, my history, my age really informs this more than maybe even your age, because you remember Reagan, and Reagan kind of became more populist. But the party itself since Hoover, I like for 100 years, has been about banking interests, Wall Street interests, and kind of a loop. 

All of a sudden, they're the grassroots party and they're for the American worker and they're for American people and they own these issues and they have the advantage because we always say this, whoever brings it up first wins. They brought this up first and they were in such unity in all the speakers and how they were hitting different aspects of this that I think they put the Democratic Party at a disadvantage as if they're not at one already because of controversy over Biden's fitness for office. 

So this will be real interesting to see how the Democrats respond and whether they're successful. And that's purely positioning. I don't really care where you are. Anybody who watched this can see the strategic direction as to what they were trying to do. And I think it's actually very effective. We'll see how effective after August.

Mark Vandegrift
Well, it's a real life positioning masterclass. I mean, I really do believe Trump understands whether he consciously understands it or subconsciously, he really is a master positionist. And I think that's what we're seeing here. 

The other principle I see in play is it's interesting because of what you said, what a traditional Republican has been and what a traditional Democrat has been and the fact that, think how long this transition has been going on it takes forever for minds to change and so even people that they've had to have a light bulb go on and say I switched from this to this because of this reason, my family's always been this way. Well, that just is another positioning principle is, once you have a position in your mind, it's really hard to get that mind to change. This is no short effort here. This is not like an easy task. It's a Herculean task. I think what RNC is trying to do, whether they're successful, who knows? But you can see it in real time. And I'm glad that you shared that with us. That's really, it is a masterclass on positioning happening right before our very eyes.

Good, let's get to our topic today. Two episodes ago, we shared all that we thought may have gone wrong with Pepsi. So this time we'll review all the great things we think Dr. Pepper has done and is doing to move into the number two spot behind Coke. Thing one, just remind our listeners of your original perspective of Dr. Pepper growing up.

Lorraine Kessler
Yeah, well, Dr. Pepper was always a of a cult brand, if you will, right? And it was very much a guerrilla brand. We might come back to that, where they were unlike, very differentiated from all other colas. Their flavor mix was totally different than what you would expect from a typical cola, whether Pepsi-Cola, RC Cola, Coca-Cola, right?

So even to this day, there's no comparative in their flavor profile, the original. Now they have some other varieties, and we can talk about that a little later. And so they were very distinctive, and they were very southern-based, because they were, and I think you will mention this, but they're from Texas. And when I moved to Dallas in the end of the 70s and the early 80s, anybody in Texas reminded you that this is a Texas brand. 

You know, Dr. Pepper, was, and there was a, I would say the loyalty there and the market share was probably off the charts relative to the rest of the country, right? So it's very much a Southern kind of flavor. So that's where I think we are now. 

I have a very bad memory of Dr. Pepper because as a kid, we used to go to the local bowling alley, you know, mean, bowling was big, and I think I was in sixth or seventh grade. I don't know, you're younger than I am, but in those days, you know, first of all, bowling alleys have those low ceilings and they're super dark. The lighting's weird. 

But people smoked in those bowling leagues. So you are in this box with bad ventilation and tons of cigarette smoke. And I remember we went on a Dr. Pepper binge for some reason at the vending machine. I must have drank six of these things. And with the sound of the bowling balls and that environment, I had a migraine for two days and I never drank Dr. Pepper again. I just associated with that terrible, terrible memory. And I barely, barely like going to a bowling alley. You we've had grandkids birthday parties and if I see a bowling party, I'm like, ugh, you know.

Mark Vandegrift
I'm with you. Just being that smoke going nowhere because the ceilings were so low. And I'm very, allergic to cigarette smoke. So you didn't even have to get past that part of the story. But the Dr. Pepper's part doesn't sound very good.

Lorraine Kessler
I don't know what hit us, but we were like buying those cans, like hitting that vending machine. It's like crazy.

Mark Vandegrift 
That's back in the day you could throw a dime in and get a pop. Or in New Jersey it was soda, right? Yeah, soda.

Lorraine Kessler
Soda, yeah, soda. We love pop. Pop is way too, I don't, juvenile, I don't know, too nice. It's too nice. It's like the Midwest.

Mark Vandegrift
We'll remind our listeners and for any new listeners that may not have heard our two episodes ago, talking about Pepsi, this topic was triggered by the recent article in Beverage Digest that Pepsi lost the number two market share spot to Dr. Pepper. 

And the stats were this, Beverage Digest reported on June 4th, so it's been a couple months now, that Dr. Pepper and Pepsi were at 8.3 % market share and that Dr. Pepper had technically, I'm sure a rounding error, right, moved ahead of Pepsi. Coke remains the market leader at 19.2 % share. And then rounding out the top five are Coke's other signature brands, number four Sprite. So Pepsi's number three. Number four Sprite at 8.1% and number five, Diet Coke at 7.8%. 

The trend I think that's concerning for Pepsi is they're trending down while these other three are trending up. So they could see themselves not just at number three, but number four and number five pretty soon because 8.3, 8.1, 7.8, those are all pretty close to one another. So Lorraine, we already looked at Pepsi's saga. What would you say are the, let's call them the headlines, for Dr. Pepper's rise in market share?

Lorraine Kessler
Well, I think it comes down in broad strokes to two things that we preach quite a bit, Constancy and consistency. Dr. Pepper has been very astute in being in the market and being differentiated not only in its product, but in its advertising for a very long time. And they haven't really swayed too much. And obviously, fast growth hasn't been their thing, greed at all costs or whatever. 

They've really taken a measured approach. But if I broke these two broad concepts down, I think I could come to a couple of other specifics. One, they started with a great foundation, this idea of, Be a Pepper. And when you think about that, going back to 1981 when that commercial first ran, and we talk about this in modern terms as if this is a new idea. This idea of having a brand, have people personally identify with a brand to the extent that that brand, when they carry it, becomes an identity issue. This defines me and that fusion. 

We act like that's new, but really the whole campaign. I'm a Pepper, don't you want to be a Pepper too is about, and then via Pepper, is all about identification. So it's a pretty great attitudinal kind of positioning based on personal connection, which again relates, I think, to the cult status of how they started. 

Then they had this very unique flavor profile, which we talked about in the original formula. I believe prunes were the key dominant. And that's my, that was my college nickname, by the way, high school nickname, Prunes. Yeah, that's a whole other story. We won't go there. And then they had, you know, they did very targeted campaigns over the years. I mean, they knew their audience and they stayed first, geographically more centric and saturated. But now with social media, they've been able to do that with social media by being very targeted and I think doing a really great job in that. 

And so now they're moving to product diversification with different flavors within their list, but they're unique flavors. They're not just cherry flavored, right? It's creamy coconut. Like there's some unique things. And they do have a cherry Dr. Pepper, but I think they're doing some unique combinations. So all these things and more, kind of lead up to, you know, being steady eddies, constancy, consistency, understanding that they're very different flavor profile and that their advertising should be differentiated as well.

Mark Vandegrift
Good. Well, a little known fact, unless you visited Waco, Texas, and you hinted at this earlier. 

Lorraine Kessler
No, have not. Wacko, Wacko, Wacko Texas, it's yeah. Sorry, Texas, I really didn't mean that.

Mark Vandegrift
Well, that's where the Dr. Pepper Museum is. It's right down the street from the Magnolia Empire of Chip and Joanna Gaines. And my guess is since they, meaning the Gaines, put Waco back on the map, the Dr. Pepper Museum has benefited quite considerably. I know we wouldn't have gone to Waco, which we did in May, just for the Dr. Pepper Museum. But because we were in Waco, we went to the museum, and it was a ton of fun. 

I didn't even realize this, but my daughters are huge fans. Even my daughter who drinks Dr. Pepper has now started drinking the Poppi version of that called Doc Pop and she really likes that flavor. So it's interesting to just have gone through that tour. And then of course they love the sampling station at the end. So they got to sample one of the flavors that wasn't out yet that was going to hit in June. And sure enough, it came out in June. It might have even been that creamy coconut one, I don't recall. So one, I don't think you knew that it originated in Waco. But did you know that it was invented one year before Coke in 1885?

Lorraine Kessler
Wow, well, a couple of things. One, I want to go back to something you said about the museum and being at that museum in Waco itself. Waco was a spot on the map. I mean, it was not a place anybody would travel to until the Gaines, until Magnolia. So talk about repositioning a territory, a region or a city or a place. It really took the personalities of the games and their success because you're not the only one I know. When I hear that, I'm like, what? People are actually going to wake up because my husband traveled.

Mark Vandegrift 
Yeah, we talked to a gal at the Magnolia, one of the little shops in their little, I don't know what they call that compound. You know, Waco is known for their cults. But she grew up in Austin, attended school in Dallas. So, you know, that's straight up whatever road that is right there. And she goes, the last thing you did was stop in Waco. It was dangerous. You stopped at like one of the gas stations prior to that, but you never wanted to stop in Waco. She goes, the last thing I ever thought, when I was going to college, that I would work in Waco. And she said the transformation is just beyond belief there. So that is a good point about repositioning a city.

Lorraine Kessler
Yeah, and that's repositioned. And that happened fast, but really it was built on the coattails of notoriety of the Gaines empire of Magnolia. And that's a pretty amazing transformation. That's what positioning can do if you have the right kind of ingredients kind of put together. So to ask your question, yeah, I did know it was Waco that they, I did not know that it was invented before Coca-Cola.

However, I will say that even Coca-Cola and these drinks, right, if you go back, they were all elixirs. That's what they were promoted as for medicinal reasons, to take care of different things that we don't like to talk about today. A lot of them have to do with bathroom issues or whatever else. And that's how these things were promoted. And that's why some of these things weren't very well regulated either. So, but that's interesting that they were, they predate Coke.

Mark Vandegrift
Yeah. Let's dig into some of the items you pointed out. First off, because we're, of course, a positioning podcast, how do you think Dr. Pepper pulled off their differentiation? And let me give you some context around this. 

You mentioned the unique flavor profile, and that speaks to the flavor profile. But how did they dramatize that position in the marketplace over all these years? In other words, what makes Be a Pepper such a powerful line? Was it putting it to music? Was it that there is no such thing as a Pepper? What is it? Give us some context around this.

Lorraine Kessler
Well, I think it's the whole of the creative. I think it's all those things. I think it's the differentiated formula, which led to differentiated, very entertaining and memorable commercial advertising with a powerful line, you know, to Be a Pepper. I'm a Pepper, you can be, don't you want to Be a Pepper too? Which is a question and an invitation, if you will, into the franchise.

And this idea of you being able to self-identify with it. I mean, it's hard to say be a Coke right be a Like it didn't really have that so I think they they did they did a lot of things right all together and they did them in a way that made them profitable for many years without excessive growth. I mean they didn't they didn't try and boil the ocean if you all so, I think it's all those things.

Mark Vandegrift
Good, look at the flavor profile. So if that's truly the differentiating point, the 23 ingredients or whatever it is, and then compare that to the new flavors they offer, do you think that's conflicting in their focus on the unique taste? How do you think they've been able to successfully pull off the flavor variations?

Lorraine Kessler
Well, I think that Americans have no end of variation of a brand that they're willing to try. But there is a point at which that becomes unwieldy and can erode the core. So you have to manage that from a portfolio standpoint, I think really smartly. Do they have too many flavors? I don't know. Do they have too little? I think they have to look at how the sales are going. And I believe in less is more.

So I would be a lot circumspect about how many flavors I bring in. One, I would have a certain kind of criterion, right? One would be that whatever our flavors are, they have to be unique. They have to be like lemon strawberry, like not just strawberry. I actually had a martini like that the other night and it was phenomenal. It blew me away because I don't really like martinis, but I like this. 

So, you know, the coconut's an interesting thing, but if it's coconut mango, like try and tap into… people seem to be today searching for all these different flavor profiles. But again, you've got to manage that really judiciously and with an eye on, you know, what's happening to the whole line. 

If you add too much, you can detract and you can actually hurt the brand. Plus, you know, you have things to consider like you have canning and bottling and distribution-wise, it becomes very complicated for your distributors. It becomes complicated for some of the grocery stores. 

So I would operate from that philosophy that my flavors always have to be something truly unique because that's what we stand for. And even to the point of dill pickle, right? I mean, that kind of “out there.” I know that sounds crazy. What was it I just had that somebody had a dill pickle flavor and I was like, you got to be kidding me and it was fantastic. And there was another one I tried, it was called Sweet Cheese, which I thought would be terrible. It was fantastic. 

Now, I don't know if that's just the name or how they did it, but anyway, I think I would be bold in my flavor mixes and unique, and I would operate from less is more. And one of the things you can do too, Mark, is you can do seasonal launches of certain flavors like around holidays, October, Christmas, you know, like the beers do, and then you pull them back, which is a neat way to bring new people in to the franchise who might not have been there before, but then not to like just weigh down the whole line forever.

Mark Vandegrift
And it seems like based on what we heard at the museum, they tease out the new flavor right there at the tasting station that they have there to get buzz, because people that visit there then push that out on social media and then they give a launch date and then they do it in limited distribution. So you have to go out and try to find it. 

Now I don't go search for Dr. Pepper flavors or Dr. Pepper at all because I don't drink soft drinks anymore, but that seems like it's been a good formula for them. It's kind of the seasonality approach, but it's more of, only going to do this every so often. When we do, it's going to be, we're going to take the scarcity approach so that people have to go search for it. And it's not going to be dousing all of the places they distribute with tons and tons of inventory.

Lorraine Kessler
And that's really smart because what that does is you build demand that's bigger than the supply. And when you do that, then people want that the next year. I know there's the shamrock shake for McDonald's, right? And people wait for that. They can't wait till that comes out. So, creating more demand than supply intentionally is a great way to really kind of keep that momentum going forward.

Mark Vandegrift
One of the promotions that I love for them that they run every year and it might be because this goes back to Roy H. Williams thing about, can you go wrong by being in sports, right? Advertising in sports. 

I love their Fansville commercials. They're creative. There's a storyline to it across the different commercials, so they release the beginning of the story and then the next story and then you get to the end and it says, as the season comes to a close, you know, blah, blah, blah, and they kind of leave you hanging. 

And they're always relevant to what's going on. So I remember the one where the whole NIL thing, the name, image and likeness kind of exploded. And the one commercial has the guy being sucked through the portal and which, you know, it was a spiritual portal versus thing that the college football has. And it just surprises me a little because the storyline doesn't do much to draw attention to the drink itself, but you can't argue with moving into the number two market share spot. How do you think the execution of the creative connects to the drink?

Lorraine Kessler
Well, I think it's a little more metaphorical or allegorical than like the straight-ended positioning that, you know, was Jack Trout was famous for, right? Where you just have a proposition and you put it out there and that's what people buy. So I think the fact that these commercials are so unique and, Fansville is fun. 

And when they first aired, I was like, what is going on here? What is this all about? Right. But one thing that was not missed and it's really, to the credit of the creative, the agency who did the creative is you knew it was Dr. Pepper. So how'd you know intuitively it was Dr. Pepper? I think cause they've always been so different. It's a different type of product. 

If this was Bud Light, right. Which is like every beer. I don't think it'd be as successful because it's just like another, lot of creative swirl around a bad beer. So I think this is a situation where understanding the product and its unique attributes or attributes that people assigned to it, in terms of its flavor profile and being very distinctive and very different, combined with this very different storyline of Fansville, somehow it works. I'd be really interested to hearing from our audience on this because I think it works and I'm not very good at really articulating beyond what I just said, why I think it works and why I think it's still a good position.

Mark Vandegrift
Well, one of the things I think they do really well with the creative is they get into the mind of the college football fan. A great example of this, and I'll show the commercial on screen here, is that one of my favorite ones is, and they run this at the beginning of the season or they did last year, everyone's around the TV and all of a sudden you know the play went horribly wrong.

The one guy goes, “the season's over” and someone else is throwing things. And one guy goes outside and he has a whole pile of his fan gear and he lights it on fire. And then he comes back in and the guy sitting there goes, “guys, this was just the first play of the first game of the season.” And they're like, “okay, I guess we overreacted a little bit.”

So, but that's really what a fan feels about their team, right? You know, if that first play of the season is a clunker, it's like, there goes this season. So I think they do, they really get into the head of the teams or of the fans that are watching their teams play. And you can just totally relate to the creative and they just exaggerate it and make it so funny.

Lorraine Kessler
That's so funny because when we were at the lake, my husband follows the Detroit Tigers, who I happen to think is a very exciting young team. And they're kind of a spoiler team. They beat the Phillies and they're playing the Dodgers. And I think they were behind nine to four, it was like the eighth inning. And he's like, that's it, I'm done. So the next day they put the score on TV and it said Tigers won 11 to 9.

“But that's wrong! They must have the wrong score.” And here they, in the ninth inning, they came in and won the game. So it's like, need to hang in there. It's just pretty funny.

Mark Vandegrift
Well, this has been a great discussion. great doctor of differentiation. It's fun to be able to share some good news about a brand doing great things. And there's enough bad advertising going around that this was very refreshing. So any closing comments for our loyal listeners?

Lorraine Kessler
Well, first was that a pun that this is very refreshing since this is the... 

Mark Vandegrift 
Yeah, it was a pun. Very good. You picked up on it.

Lorraine Kessler
I shouldn't have flagged it. Now, just think that, you know, just keep in mind that positioning is a strategy. It's a strategy for gaining advantage and also for trapping your competitor into a corner of their own making or repositioning them as we talked about. 

And it doesn't matter if it's politics, even religion. I don't care what the subject history, right? Historians get into this, that this strategy plays out across… beyond commerce and beyond marketing into any field that you want to go into, particularly even in criminal and civil law, right? That's what the lawyer does. They give their story of the case, which is really a brand position of the case, that what they think has happened and they say, I'm going to prove this. And in that, I'm going to prove the other story not as valid or effective or what have you. So positioning comes into play in all that.

Mark Vandegrift
Very good. Thank you for all those who joined us today and for all the new listeners that we're getting on a regular basis. We appreciate having you join us. And if you haven't liked, shared or subscribed, please subscribe. That's so critical to get the word out about the Brand Shorthand Podcast. Tell your friends about it. Get them to subscribe. We just really appreciate that. And until next time, have an amazing day.