What Everyone Seems To Be Missing With Dr. Pepper, Pepsi, and Coca-Cola: The Recent "Upset" Is Not What It's Being Made Out To Be

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So I've been reading about the News about Dr. Pepper, Pepsi, and Coca-Cola the past few days.

Dr. Pepper Upsets Pepsi!

According to what I have been reading, while Pepsi and Coca-Cola have been at War with each other for Decades, it seems that Dr. Pepper has "Slipped Past" Pepsi and has taken the 2nd Position in the Market.

When you read these articles, you may end up with certain Ideas about what has happened.

How could Pepsi "not" see itself losing ground to Dr. Pepper?

Is this a Case where when you Focus too Much on one thing, you miss something else happening?

Is Coca-Cola Next?

Well, let's not Indulge in these Questions too much because they all Completely Miss what is happening.

It is absolutely true that Pepsi and Coca-Cola have been "Competing" for Decades for the Dominance of the Best Cola on the Market.

Although, "Competing" is a strong word because Pepsi has Never taken the Market from Coca-Cola.

It's a perfect example of Category King/Queen Dominance.

Coca-Cola was crowned the Category King/Queen of Colas decades ago, and Pepsi has been in a Losing Battle due to Faulty Marketing.

Pepsi has been playing what is known as the "Better" Game, but when a Category King/Queen is determined the "Better" Game only ends up Highlighting the Category King/Queen "More".

In Marketing, the "Better" Game becomes a Losing Proposition because the Category King/Queen has Created the Game.

When You Create the Game, the Rules of the Game "Always" Benefits You.

It doesn't matter if you are "Better" when the Rules are Rigged Against You.

It's the same thing we've seen in the Phone Market - Many Phones are "Significantly" Better than an iPhone, yet Apple still Dominates the Market.

Every other Phone Company is playing "Apple's Game", where the Rules Benefit Apple.

Pepsi continues to Lose to Coca-Cola because Pepsi is Playing "Coca-Cola's Game".

Just for Context, I actually prefer Pepsi myself, but the Economics around this Don't Lie.

However, Dr. Pepper is a Completely Different thing altogether.

Want to Know how I Know this?

If Dr. Pepper were a "Direct" Cola Competitor, why would "Both" Coca-Cola "And" Pepsi allow Dr. Pepper to Share their Soda Fountains?

If you look at the Cola War, any Restaurant you go to has "Either" Coca-Cola "Or" Pepsi, but "Never" both.

However, regardless of whether a Restaurant has Coca-Cola or Pepsi Products, you almost "Always" see Dr. Pepper as well.

If Dr. Pepper was a Competitor in the Cola Wars, why would these companies shoot themselves in the foot by allowing Dr. Pepper to be there?

The Simple Answer is that They Don't!

Why?

Dr. Pepper has "Never" been a Cola!

If you actually look into this, Dr. Pepper is classified as a "Pepper Soda".

Its Marketing of "23 Different Flavors" is not Competing with Colas.

It's a Category Differentiator (So differentiated that the Category is named "after" the Product).

Instead of Playing Coca-Cola's Game as Pepsi has been doing, Dr. Pepper went a different route and is a Completely Different Category of Soda!

Neither Coca-Cola nor Pepsi "Have" a Pepper Soda, which is exactly why they allow Dr. Pepper to share in the Fountain Drinks Section at Restaurants.

Dr. Pepper Is Not A Direct Competitor!

Due to this, it actually "Benefits" both Coca-Cola and Pepsi when they share territory with Dr. Pepper.

Instead of "Forcing" a Choice of "Cola" versus "Pepper Soda" at Restaurants, you instead have "Both" Choices!

But, let's take this a Step Further.

What does Dr. Pepper overtaking Pepsi actually mean?

What we are seeing "Is Not" that Pepsi is losing ground to Dr. Pepper, regardless of what people are saying.

Instead, what we are seeing is that "Colas" are losing ground to "Pepper Drinks".

Then the Bigger Question becomes "Why"?

Why is the "Pepper Drink" Category Growing while the "Cola" Category appears to be Losing Ground?

This is where Category Differentiation comes into Play Again!

What is the Difference between the Cola Category and the Pepper Drink Category when it comes to Marketing?

Colas are advertised as a Drink you have "with" Meals.

Dr. Pepper is advertised as a "Treat", very similar to how you may have an Ice Cream.

When you look at Dr. Pepper's Lineup, you can see this as well.

Their Appearance gives off a similar feel to an Old (or Vintage) Soda Shop where teenagers used to hang out.

These Shops were places where people went to have fun and celebrate, which is what Dr. Pepper is evoking!

Even their different flavors - Cherry, Vanilla, Cherry Vanilla, Cream Soda, and Coconut Cream - are all "Desert" or "Treat" Flavors.

You don't Drink Dr. Pepper "with" your Food, You "Enjoy" the 23 Flavors of Dr. Pepper!

I mean, technically you "Can" drink Dr. Pepper with your Food (Lord knows I did like a Madman back in the day!), but that isn't their Primary Market!

Unlike Colas where their Primary Market "is" to be had "with" Food.

Now, why is this an Important Category Differentiator?

It all has to do with the Health-Consciousness of Today's World.

See, most people are Horribly Sick, and even the few who aren't are Extremely Worried about Becoming Sick (For Good Reason!).

Most People are Second-Guessing their Drink Choices, and they have been for Years.

If you go back a few Decades, No One Thought Twice about whether they would have Soda, Water, Tea, or Coffee at a Meal - you knew which one you Enjoyed and ordered it immediately!

However, today, because people are becoming more Health-Conscious, they will often "Pass" on the Soda because they know it isn't Healthy (Even if they would admit they would "Prefer" a Soda Taste).

Which is the Brilliance of Dr. Pepper with their Category Design!

Due to Dr. Pepper's Branding as a "Treat", when people get a Dr. Pepper, they already "Know" they aren't paying attention to Health.

Just in the same way that we all know that Ice Cream isn't really "Good" for us, yet we still have it as a Treat!

Making it a "Treat" that we "Occasionally" Enjoy suddenly makes it "Ok"!

It's not like you have a Treat at "Every Meal" (... Even if you "do" have one at Every Meal...Or more... Which I've been Guilty of with Dr. Pepper in the Past).

However, do you know what Category is "Not" Enjoying that "Treat" Treatment?

Colas.

This has pushed them to "Try" to Break Into that "Soda Treat" Market...

Except...

Dr. Pepper is Already the Category King/Queen of that Market as well!

You are hearing that correctly, Dr. Pepper is actually the Category King/Queen of "Both" Pepper Drinks and Soda Treats!

When people are Choosing between Dr. Pepper Vanilla, Pepsi Vanilla, and Coke Vanilla, who generally wins?

Dr. Pepper Vanilla does.

That is what happens when you Own the Category.

We are seeing a Change in Category Dominance, one which Favors Dr. Pepper in how they have built the Category.

Now, the "Cola Category" hasn't "Completely" Lost to the "Soda Treat Category" yet, but with the Growth of Health Consciousness, it is unlikely we will see things Improve for Coca-Cola or Pepsi.

Ironically, I talk a lot about Health and Stressors in my work and how they tie to Leadership, so I don't recommend any of these Products for your Health as they all will Create Stressors in your Body!

As I always say, All Stress Adds - Even if that Stress comes from your Digestive System and the Neurogastroenterology that is involved.

This is also coming from someone who "used" to down between 8 and 12 16oz Glasses of Dr. Pepper at University Meals... Plus 2 Large 32oz Dr. Peppers after that at a Fast Food Joint... Plus on late Study Nights a 2-Liter of Dr. Pepper... This is not an exaggeration...

So I know how Addictive they are, how difficult it can be to break the Habit, and exactly how slippery the Slope can be to get Hooked Again.

However, from a Business Perspective, this is a Fascinating Lesson in how Categories Grow and Change, and how these are often Completely Misunderstood.

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