Commentary

PepsiCo's New Marketing Mindset

The economic importance of the Hispanic market is not lost on Carlos Saavedra, director of culture marketing at PepsiCo Beverages America. He is currently learning Spanish in Colombia as part of an intensive four-month “Cultural Fluency” curriculum. The goal is to help him succeed in a global operating model, and in the U.S., to better target and connect with Hispanics and other cross-cultural consumers.

“In addition to learning Spanish, I am working with our Latin American teams to find ways to partner together in areas that are increasingly transcending borders -- particularly music and sports,” says Saavedra, a fourth-generation U.S. Hispanic. “While we are not advocates of a straight “lift and shift” approach to Latin America and the U.S. Hispanic market, we see increasing opportunities to develop joint programs that create scale and deliver highly relevant assets. But it requires intense collaboration from the outset, with a deep understanding of the consumer insights for each market.”

Saavedra, a featured speaker at the 2013 ANA Multicultural Marketing & Diversity Conference, November 3-5, in Los Angeles, Calif., talks about PepsiCo’s new cross-cultural marketing approach, the company’s innovative Culture Lab, and breaking through the media clutter, among other topics.

Q. You refer to members of your team as “culture marketers” rather than multicultural marketers. Please explain why. And how has this shift benefited the company?

A. To be honest, changing our name to the “Culture Marketing Team” has probably been the easiest part of our journey, but one of the most remarked upon. The name change is indicative of a much larger shift within our organization as we move from a more traditional approach to multicultural marketing to a new cross-cultural approach. Like many companies, our traditional approach to multicultural marketing involved narrowing in on specific ethnic groups and developing campaigns specifically targeted to them. Now we are taking a much more expansive view of culture to provide content that is relevant to our consumer, regardless of ethnicity. It is no longer about marketing to a specific ethnic group, but about finding shared interests across different facets of culture that align with our brands.

This shift benefits the organization in two ways. First, it is more reflective of our consumers as they have become much more fluid in how they view themselves and how they consume media content. No longer do multicultural consumers feel like they are only part of one culture; rather, they feel comfortable picking and choosing parts of different cultures -- for example, skate culture, sneaker culture, or foodie culture. Second, the traditional model simply wasn’t sustainable from a resource standpoint. It is more cost-effective for our brands to create content around a shared interest rather than creating separate content for individual demographic groups.

Q. Tell me about the purpose of the Pepsi Culture Lab, and how it has helped PepsiCo stay connected to consumers. Please provide an example.

The Culture Lab is both a physical space and a creative community. The physical space is an area within a larger creative hub called SEED, near downtown Los Angeles in the toy district. It is one of the last “frontiers” of L.A. that is witnessing a huge surge of creative development. Within the SEED space there is a recording studio, event space, an outdoor music venue, and now, the Pepsi Culture Lab. The more important aspect of the Culture Lab is the creative community. We’ve engaged a group of artists, entrepreneurs, and creative thought leaders from a wide range of disciplines, including fashion, music, design, and entertainment. We have planned a series of events, utilizing the Culture Lab space, to bring this dynamic group together around shared interests.

The Culture Lab was developed with two main goals in mind. First, we want to increase the organization’s “cultural fluency,” or dexterity, by leveraging different aspects of culture to connect with our consumers in a really authentic way. It is our belief that you cannot truly learn about culture, be it art, design, music, or technology, from a conference room. We need to be in the midst of it and helping to create it in order to more fully understand it. Our second goal is to use the Culture Lab as an incubator for engagement ideas. We can experiment and try new things with the understanding that it is okay if some things don’t work out as planned. And better yet, by collaborating with the creative thinkers in the Culture Lab, we get an infusion of fresh thinking to help expand our perspective.

A recent example is the leisure market. As part of a collaboration with Innovative Leisure, an indie music label, we hosted a big outdoor fair at the Culture Lab that explored the intersection of fashion, music, and innovation at the local level. We had a huge crowd turn out to hear great music, browse rapidly growing clothing brands, eat from hip L.A. food trucks, and of course, enjoy some refreshment from Pepsi. For us, we were thrilled to see the tremendous response from a crowd that probably more often associates Pepsi with our big pop-music programs. And this event speaks to the diversity I mentioned earlier -- beyond ethnic groups.

Q. You have said that marketing to tomorrow’s multicultural consumers will require totally new approaches to break through the media clutter. Please elaborate. Do you expect to shift more of your budget toward new technology?

A. In the past, it was pretty easy to target multicultural consumers with traditional media. You could buy media on Univision and BET and capture a large part of your target audience. And while Univision and BET are still great partners, the media landscape is so much more fragmented now, not just across networks but across media and devices, as consumers have become much more fluid in terms of their media consumption. And we have gotten a lot more granular in terms of who we are targeting, what types of media they are consuming, and what type of content they prefer. So, while this makes us much more precise in terms of finding and engaging our consumers, it also makes it more difficult to build programs at scale.

One of the ways we are adapting to this is by shifting more of our budget mix to new media. While we are probably not quite to “fair share,” we are big fans of a digital-first approach and ask all of our agencies -- not just the digital agencies -- to think with a digital hat on. Another way we are adapting is by working much more closely with our media partners to develop more native advertising. A recent example is a program we did with Mountain Dew Kickstart and Mun2, a network that targets the increasingly fluid cross-cultural millennial. Kickstart is a new energizing Dew with juice, so what better way to showcase how it can put a kick in your day than by partnering with a hugely popular brunch series in Washington Heights, N.Y.? Our partners at Mun2 covered the “energetic” event, and Kickstart received lots of visibility among the millennial crowd, which, by definition, was highly diverse.

Q. Why is it important to think beyond demographics when marketing to multicultural audiences? What do you also take into account to more finely tune your marketing and advertising?

A. It’s important because our consumers do not view themselves solely through the lens of ethnicity. That is not to say that ethnicity is not an important aspect; it’s just not the only aspect. We need to take a much more holistic view of our consumers. One of the ways we are doing that is through a framework called “Demand Spaces.” These spaces give us a much more comprehensive view of our consumers -- what and when they are consuming, who they are consuming with, and most importantly, their motivation to consume. By understanding the “why,” we can better speak to their underlying needs and motivations through our communications and promotions. 

Q. How is PepsiCo preparing for the growth of the Hispanic market?

A. One area we are working to improve is our ability to track both our cross-cultural consumers and our general market consumers. This involves significant investments in our volume, equity, and brand health tracking metrics. To truly speak with confidence about the impact of our efforts, we need to have more accurate data.

Another area is innovation. We are working hard to find the right products and packages that meet the needs of cross-cultural consumers. Pepsi NEXT is a great example of a product designed with cross-cultural consumers in mind. While many consumers are interested in lowering their sugar and calorie intake, it is particularly important to Hispanics -- who at the same time, significantly under-index on consumption of diet colas. Pepsi NEXT provides 60 percent less sugar while still delivering the Pepsi taste consumers love. By offering a product that meets a core consumer need with a cross-cultural message, Pepsi NEXT reached $100 million in sales in only nine months, and Hispanics are 30 percent more likely to drink Pepsi NEXT versus non-Hispanics. That’s truly a cross-cultural success story.

 

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