Tuesday, November 27, 2012

What the Cola Wars Tell Us About the State of the GOP

While the GOP may have lost recent battles, the majority of Americans still consider themselves conservative, especially on economic issues.  In poll after poll the majority of Americans agree with most of the values expressed in the GOP's official party platform.  However, the GOP has only been able to win a majority of the popular vote in presidential elections one time in the past 24 years, a sobering fact.

Establishment Republicans are starting to reveal what strategy  they think the GOP needs to employ so that it can attract more people to the "big tent" party and thereby start winning presidential elections.  That strategy is to embrace policies like amnesty for illegal immigrants or going to war with Iran that they believe will help win them support among key Democrat constituencies.  Putting the historical evidence pointing towards the fallacy of that argument for a moment, let's look at it from a strictly business and marketing perspective.

Imagine the GOP is Coke.  You are the number one brand among America's middle-class, with 58% of middle-class soda drinkers saying they prefer your brand, compared to 40% that say they prefer Pepsi.  However, Pepsi is the dominate soda among the lower and upper class, with 93% and 70% respectively saying they prefer Pepsi.

At first glance, the newly graduated marketing major might be inclined to target lower and upper-class soda drinkers, believing that if they can just move those percentages a bit more in Coke's direction they'd be able to reclaim their position as the superpower in the Cola Wars.  So with this idea in mind they begin spending millions targeting those demographics.  They introduce new flavors, new jingles.  They sign up new spokesmen.

After an ample amount of time passes a new study is commissioned and Coke executives find, much to their surprise, that all their advertising has had no effect.  It's been 4 years of constant marketing blitz target the lower and upper-class demographic and study reveals the proportion with which they prefer Pepsi over Coke has not changed.  In fact, in the case of the lower-class, they have moved more towards Pepsi.

What the newly minted marketing exec missed was that those 'key" demographics Pepsi relies on only make up 28% of soda drinkers, meaning those middle-class soda drinkers make up 72% of the market.  Had Coke targeted its advertising towards them and increased their lead from 58% to 62 or 63% they would have crushed the competition.

In order for Pepsi to be the dominate brand, not only do they need to maintain near homogeneous control over the lower and upper-class soda drinker market, but they need to win 40+% of the middle-class market that often has very different ideas of what makes a good soda then those in the other demographics.  On the other hand, for Coke to come out on top, all they need to do is expand their support among middle-class soda drinkers by just a few percentage points.

Back to politics, which strategy makes more sense for the GOP moving forward, pandering to the black, Hispanic, Asian, and Jewish vote, which constitutes less than 28% of the electorate and whose values often stand in direct contradiction to the values of the GOP's base, or expand their advantage among white voters by championing policies designed to protect and give advantage to hardworking men and women regardless of their race?

1 comment:

Anonymous said...

I wish the GOP leaders would read this post. It makes too much sense. It would be easier to increase your percentage of the people you are already appealing to than to blow up your brand and reconfigure your product for a different market.

Now one might argue if you had market saturation in your target market, you would have to look elsewhere. But given that the GOP only gets 58% of their target market, and the other side routinely gets 75% or higher with their targets, one would think there is still some upside in targeting the white vote for the GOP