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Authors: Michael Moss
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o’clock—and make pilgrimages to Waco, Texas, where a pharmacist at Morrison’s Old Corner Drug Store invented the drink in 1885. This kind of devotion afforded Dr Pepper a distant but comfortable third-place spot behind Coke and Pepsi, the giants of the soda aisle until 2001, when sudden changes inthe marketing game in the soda aisle precipitated a crisis for Dr Pepper. The trouble began when a flood of spinoffs from Coca-Cola and Pepsi showed up on the shelves. Seemingly overnight, there were lemons and limes, vanillas and coffees, raspberries and oranges, whites and blues and clears—all vying for the shopper’s attention. In grocery lingo, these new flavors and colors are known as “line extensions,” and they’re not meant to replace the original product. Rather, they’re meant to bring buzz to the brand, and often they do this so well that people start eating or drinking more of the original product too.
In this case, Pepsi and Coke were using their line extensions to strengthen their hold on the soda aisle at a critical moment, just as American consumption was starting to peak. As Pepsi and Coke grew their sales with these new extensions,Dr Pepper began to slip from the third-place perch it had enjoyed for so long. In 2002, Coca-Cola sold 93 million cases more than the previous year, for a total of 4.5 billion cases in the United States alone. Pepsi was up a little bit too, with its 3.2 billion cases. By contrast, Dr Pepper was slumping, down 15 million cases to a total of 708 million, and soda industry watchers sounded a warning. “Dr Pepper—once an industry growth brand—lost volume and share,” the trade journal
Beverage Digest
reported. The soda from Waco needed to turn things around.
Never in its 115-year history had Dr Pepper created a line extension, beyond a diet version. Given the cult following, the idea of tinkering with the soda’s unique taste seemed dubious, even dangerous. But with sales declining and the soda aisle changing, Dr Pepper had to act. In 2002, it created its first-ever spinoff, which by any measure should have been a hit. The new flavor had a rich cherry taste, a bold red color, and a name, Red Fusion, that had been carefully chosen from a field of three hundred candidates.“If we are to re-establish Dr Pepper back to its historic growth rates, we have to add more excitement,” the company’s president, Jack Kilduff, said. Research showed that Red Fusion would even attract new customers to the brand. One particularly promising market, Kilduff pointed out, was the “rapidly growing Hispanic and African-American communities,” where Dr Pepper had “lower brand development.”
But the sales force never got a chance to explore these new markets. Red Fusion’s failure wasn’t the fault of the company’s advertising crew. Rather, it was its taste. Consumers hated it, and diehard Peppers were aghast. “Dr Pepper is my all time favorite drink, so I was curious about the Red Fusion,” a California mother of three wrote on a blog to warn other Peppers away. “It’s disgusting. Gagging. Never again.”
Stung by the rejection, the company regrouped and spent the next year developing and testing a different variation. This time, the company’s technicians couldn’t even get it past the taste testers. The hope for a new soda died before going into production.
In 2004, Dr Pepper decided to go outside the company for help. It turned to a man named Howard Moskowitz, whose success in delivering mega-sellers had turned him a food industry legend. Trained in mathematics and experimental psychology, Moskowitz runs a consulting firm in White Plains, New York, where he has established a long track record of triumphs in consumer goods, from credit cards to point-and-shoot cameras to computer games. Much of his success stems from his ability to group consumers into segments, with different emotional needs, and target them with precision.He boosted sales for the jewelry company
In this case, Pepsi and Coke were using their line extensions to strengthen their hold on the soda aisle at a critical moment, just as American consumption was starting to peak. As Pepsi and Coke grew their sales with these new extensions,Dr Pepper began to slip from the third-place perch it had enjoyed for so long. In 2002, Coca-Cola sold 93 million cases more than the previous year, for a total of 4.5 billion cases in the United States alone. Pepsi was up a little bit too, with its 3.2 billion cases. By contrast, Dr Pepper was slumping, down 15 million cases to a total of 708 million, and soda industry watchers sounded a warning. “Dr Pepper—once an industry growth brand—lost volume and share,” the trade journal
Beverage Digest
reported. The soda from Waco needed to turn things around.
Never in its 115-year history had Dr Pepper created a line extension, beyond a diet version. Given the cult following, the idea of tinkering with the soda’s unique taste seemed dubious, even dangerous. But with sales declining and the soda aisle changing, Dr Pepper had to act. In 2002, it created its first-ever spinoff, which by any measure should have been a hit. The new flavor had a rich cherry taste, a bold red color, and a name, Red Fusion, that had been carefully chosen from a field of three hundred candidates.“If we are to re-establish Dr Pepper back to its historic growth rates, we have to add more excitement,” the company’s president, Jack Kilduff, said. Research showed that Red Fusion would even attract new customers to the brand. One particularly promising market, Kilduff pointed out, was the “rapidly growing Hispanic and African-American communities,” where Dr Pepper had “lower brand development.”
But the sales force never got a chance to explore these new markets. Red Fusion’s failure wasn’t the fault of the company’s advertising crew. Rather, it was its taste. Consumers hated it, and diehard Peppers were aghast. “Dr Pepper is my all time favorite drink, so I was curious about the Red Fusion,” a California mother of three wrote on a blog to warn other Peppers away. “It’s disgusting. Gagging. Never again.”
Stung by the rejection, the company regrouped and spent the next year developing and testing a different variation. This time, the company’s technicians couldn’t even get it past the taste testers. The hope for a new soda died before going into production.
In 2004, Dr Pepper decided to go outside the company for help. It turned to a man named Howard Moskowitz, whose success in delivering mega-sellers had turned him a food industry legend. Trained in mathematics and experimental psychology, Moskowitz runs a consulting firm in White Plains, New York, where he has established a long track record of triumphs in consumer goods, from credit cards to point-and-shoot cameras to computer games. Much of his success stems from his ability to group consumers into segments, with different emotional needs, and target them with precision.He boosted sales for the jewelry company
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