Pepsi's Mountain Dew advertising controversy and competitive strategy

Pepsi Problem

In this case, Pepsi is under scrutiny because of some allegations that an ad campaign of their brand Mountain Dew were offensive. An aggressive marketing agent for Mountain Dew had recently created a unique ad campaign that may have used some urban or racial themes in the context of the commercial. The commercials may depict violence and crime within the black community if interpreted in that manner. As a result of this maneuver, the impossibly to define " racial argument " was suggested by a professor who was eager to demonstrate his personal lines of decency in an overtly political matter. Despite the ridiculousness of the accusations, it appears that Pepsi Co. may need to react to this recent charge: that unless reparations are made regarding a Mountain Dew commercial depicting a fictitious goat, millions of dollars are at risk due to a negative public relations campaign against the company.

Analysis

The core issues at stake is the attitudes that consumers have towards Pepsi Co and its subsidiaries. Abiding by social norms are secondary concerns in this case, as Pepsi's goal is to make money and gain market share. That is not to say that a racial backlash may be what this company needs, it may or may not depending on other circumstances, regardless this is a subsidiary issue in the case. All criteria involved in this decision should be based on the ability for Pepsi CO to maintain a competitive advantage and dominate the market.

To fully grasp the totality of this case study it is very necessary to compile useful information and analyze it. A SWOT model can help this process by outlining key and important internal and external factors that surely affect the organization's ability to promote a competitive advantage within their soft drink industry that brings in billions of dollars a year and provides thousands of others employment and a living wage despite the healthfulness of their products and methods.

SWOT

Internal Strengths: Billions of dollars in reserve capital. A world wide brand name. An addictive line of products.

Internal Weakness: The sheer size of the company makes it a target. Product is generally bad for people. Caffeine is a drug. Many competitors. Corporate espionage.

External Opportunities: The consuming public is highly suggestive. Competition relies on having a foe to build support for their own brand. Pepsi should be in more places such as churches, schools and all public places.

External Threat: Coke and others want more market share. Fascist moralists such as Watkins need to project their own inadequacies and inefficiencies on a public figure like Pepsi Co.

Recommendations and Conclusions

Based on the alternative courses of action considered, it is recommended that the company decision maker should take alternative 1 and simply do nothing in response to Dr. Watkins' allegations. After all there is no such thing as negative publicity if it is managed in the correct manner. The consuming public is truly not aware of the power of advertising and regardless of what type of commercials are being aired, people will still buy the product simply because it is on television. To help minimize the damage, Pepsi should look elsewhere for awhile before inserting controversial themes within their commercials to prevent any further discussion of the matter and let it die down with the countless other mistakes that are made on a daily basis. This recommendation needs to be implemented from the top down to provide a sense of calm throughout the company and allow the workforce to truly understand the corporate strategy for this event.

Appendices

Appendix 1: SWOT Analysis

Strengths:

-Brand Name

-Billions in reserve capital

Weaknesses

-- A big target

- Many competitors

Opportunities

- Consumers are easily led

- Pepsi is not everywhere

Threats

- Coke

- Fascist moralists, who don't like soda or free speech

Appendix II: Evaluation of Alternatives

Alternative I: Do nothing. Let it run its course. Ignore and overcome.

Alternative II: Create a counter ad campaign embracing racial differences and in essence become a post-racial corporation.