What were the key events in the marketing calendar of 2005? An answer may certainly be found in the eerie juxtaposition – back to back, right in the middle of the year – of the Olympic triumph and 7/7. The one caused incalculable damage to the tourist industry and engendered a more subtle short-term economic malaise; the other, oxymoronically, was a profound boost for the national psyche and promises almost anyone in marketing a prosperous run up to 2012.
But two other headline events this year may in time have a more far-reaching impact on the world of marketing. This was the year in which it became inescapably evident that Toyota was overtaking GM, the world’s top automobile manufacturer since 1931. It was also the year that PepsiCo’s market capitalisation surpassed that of Coca-Cola for the first time in 112 years. Neither of these look like being reversible events.
What surprises about Toyota is not so much that it has become ‘the car in front’, but its overtaking speed. Many pundits, as late as a few months ago, were projecting market leadership within only five years. Fashionable analysis has dwelt heavily upon GM’s steadily worsening economic woes as the main catalyst in the process. A $1,500 (&£847) surcharge on every GM car, in the form of health and pension benefits, certainly has a chilling effect on everything from the design budget to pricing incentives; all the more so since the Toyota equivalent is just $300 (&£169). But it is reputation and branding, especially within the key North American market, that is at the heart of Toyota’s success. To quote a typical US buyer: ‘It works good. It lasts forever. Gasoline-wise, it’s good.’ We might add that, environmentally, it’s good as well. The Toyota Prius, though in reality only one among myriad hybrids, has captured the public imagination as the representative car of a more environmentally aware generation.
Likewise PepsiCo, in spotting early the need for change and engaging whole-heartedly in the process of adaptation. For much of the last half century, Coca-Cola enjoyed a commanding advantage in global distribution, springing from it being the cola of choice among GIs during World War II. Success perhaps breeds complacency, or at least bureaucratic sclerosis. At all events, Coke failed to respond early enough to changing patterns of consumer behaviour, principally a growing preoccupation with healthy lifestyles. Where PepsiCo successfully diversified into snacks (now over half of total sales), Coke still relies on soft drinks for more than 80 per cent of its revenue (compared with 20 per cent at Pepsi). Even within the area of core competence, Pepsi has managed to surround itself with an armoury of acceptable cola alternatives, such as Aquafina, Gatorade and Tropicana, whereas Coke has struggled with Minute Maid and Dasani.
And the moral? Leadership confers great advantages, not least the long-term ability to map the market in your image, but it is not a permanent entitlement. Changes in the balance of global economic power may well have played a part in GM’s downfall (it could yet end up in Chapter 11); where Coke’s slide from grace has no such excuse. Fundamentally, their failures are their own.