Americans are ditching fizzy, sugary sodas more than ever before. Pepsi’s marketing head is adopting a challenger mindset to survive. (PEP)

PepsiCo

Pepsi is finding a way around soda’s image problem by diversifying its portfolio to products like Bubly and adopting a challenger mindset, said its VP of marketing Todd Kaplan.
Kaplan told Business Insider said the brand was taking a page from Burger King and Domino’s playbooks in being disruptive.
He also said Pepsi learned from its Kendall Jenner ad fiasco of 2017 by working more closely with its agencies.
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As people seek out healthier drinks, sugary soda is battling an image problem.

Pepsi is fighting back by diversifying its product portfolio, adopting a challenger mindset, and doing more consumer-led marketing, said its vp of marketing Todd Kaplan. Pepsi’s beverage unit grew sales 2% in the first quarter of 2017.

Business Insider caught up with Kaplan as Pepsi gets ready to launch its latest summer-themed campaign. Here’s an edited version of the conversation.

Tanya Dua: You’ve had various roles during your career at PepsiCo, from leading incubation brands to global innovation and insights. How has that prepared you for your current role?

Todd Kaplan: Starting new brands like Lifewtr and Bubly has its own challenges. But going on to an established brand like Pepsi is a very different conundrum. When you look at Pepsi, it’s not that it has an awareness issue, or a penetration issue, or a trial issue. It’s really about brand relevance, and how people connect with the brands and interact with it. And so that’s where I’ve put my focus: On being consumer-led and making sure that we have our finger on the pulse of culture.

Dua: How are you doing that?

Kaplan: We’re trying to take a bit of a challenger mindset to the Pepsi brand and rethink some of the conventions. So whether it’s innovation and things like Nitro Pepsi or having a splash of real fruit juice in Pepsi, or in culture like really addressing the question "Is Pepsi OK?" head on in the Super Bowl and doing it in a fun and culturally relevant way with Cardi B. No matter what brand or product, the key is being consumer-led and paying attention to what’s happening in culture and letting that be a guide.

Being a challenger is more of a mindset than anything else. It all starts with really truly understanding who you are as a brand and what’s your point of view and outlook on the world. We’re maniacally focused on connecting with consumers in culture, and doing it in a way that is always true to who we are. There are a bunch of brands that have adopted this mindset and are constantly disrupting the space while continuing to scale their businesses, like Burger King and Domino’s.

Dua: Your category is struggling, with people not drinking soda beverages like before. How do you deliver on the challenger brand mindset?

Kaplan: You have got to question category norms and think about where the pockets of growth are. Brand Pepsi is back in growth. We’re growing 4% — the fastest we’ve had in the past seven years. And we’re seeing growth across all our core sublines. There’s definitely growth, it’s just the question of how you get it and where do you get it, subject to kind of the strategies that you employ. You can go after share, but then there’s also opportunities to go after new occasions and rethink what soda is and what cola means to the next generation of consumers with new propositions. You don’t have to accept the norms as they’ve been handed to you.

Dua: There are reports that you are looking to invest in an in-house data, media-planning and analytics team. What is the importance of having data and analytics close?

Kaplan: It is critically important. Between mobile devices, and everything’s tracked and stored everything in between, there’s a lot of rich insights that can come from that. As marketing strategies get more fragmented and custom-tailored, data, and analytics are a great conduit to help marketers become more effective in that journey.

Dua: How does that focus on data and analytics help as you look to ramp up e-commerce?

Kaplan: E-commerce is a critical growth opportunity for Pepsi and just the broader beverage space. It is an area that has been obviously exploding in recent years. We need to look at all the different channels of business and where we sell our products.

Dua: You’re rolling out a new summer campaign with AR lenses, QR codes and Instagram. What’s the strategy there?

Kaplan: Summer is obviously a critical time for cola, and social media usage tends to spike around the summertime, which also makes sense as people are out and about with their phones. Instagram was a great platform for us for our big summer program, given it is where this user behavior already exists. "Pepsi Summergrams" has hundreds of custom AR filters that you can activate by scanning QR codes you can find across 200 million bottles and 30 million fountain cups. We think it’s a really fun way to connect with fans during key summer moments.

Dua: The Kendall Jenner ad happened before your time, but how has that affected how closely you work with agencies now?

Kaplan: Creativity is at a premium today, and we need to make sure we’re getting the most creative, consumer-minded, and really culturally relevant ideas out there. And so we’re constantly working with our agency partners as critical pieces of our teams across all disciplines. It’s important, given how, omni-channel marketing has become across all different mediums and different formats. There’s people internally we work with on a variety of different things. But on our core creative capabilities and model, we’re working with a variety of different agencies.

Dua: Why is it important for marketing and innovation to go hand and hand? And how do they influence each other?

Kaplan: You have to evolve not only how you market, how you talk to people, and what kind of creative you use, but also know how consumer preferences and the channels of commerce are changing. You need to constantly make sure that the product that you’re selling and offering is going to be relevant to the consumers that you’re trying to talk to. At the same time, you need to make sure that your messaging is contextually relevant to the right people, the right place in the right time.

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