• by Kate Newlin , May 11, 2009

There's a great deal of sturm und drang about the loss of fizz at Pepsi -- and, arguably, at Coke as well. Both companies face declining sales of their flagship brands and have used, to greater or lesser success, predictable ways to mask the fundamental issue: Fewer people are buying less and less of these iconic brands.

Conventional wisdom says do two things at once: Buy up more trendy beverages, like waters, sports and energy drinks; and work really, really hard to reinvigorate the base brands.

So, Pepsi hires Peter Arnell, fires its long-time ad agency and creates a manifesto that calls for marketing its wares at "the real me." According to BusinessWeek, the challenge was to make Pepsi as culturally relevant as the iPod. Good luck with that, Peter.

The temptation, of course, is honest: Wouldn't it be great if brown, sugary water could be as cool as the latest touch-screen gadget? Gosh, it would be great. However, it's not going to happen. So rather than sending marketing execs on "cool hunts" for design inspiration, here's a more daunting trek: Take a look at what other brands have done when confronted by what Coke and Pepsi have to do -- to each other. Grow share in a declining market.

It would be so great to imagine that there's something to be done with either of these brands that could forge an entirely new category of experience -- and, therefore, consumer behaviors -- the way the iPod has.

But the truth is, they'd learn much more by taking a commuter flight to Winston-Salem, N.C. It's so very transgressive to even suggest it, but the only people who have spent time trying to wrestle for share in declining markets are the tobacco brands.

Soft Drink Marketers Could Learn From Tobacco

When I did the research for my book Passion Brands, I was as shocked as anyone when Camel came up as a passion brand -- i.e., "a brand I feel so strongly about that when I recommend it to a friend and the friend doesn't love it the way I do, there's a question mark over the friendship, not the brand."

Indeed, one of the great lessons of Camel is the vitality of its outlier personae: The folks there figured out how to telegraph its negative-negative side of the marketing matrix status ("I'm not supposed to be smoking at all, and if I do smoke, I should smoke Marlboro like everyone else"). It's leveraging its social capital in a distinctly anti-social way.

It will be hard for the folks at Pepsi or Coke to imagine that the image they need to project isn't one of social aspiration and cool "it" brand status -- until they have to. But, if taxes start going on the sugary stuff, and distribution is curtailed further to make the point that this isn't kid stuff, well -- they may well have to come to grips with being in the marketing ghetto of pure share wars in a declining market.

That's when an entirely different series of tactics emerge -- and that's when this will get really interesting.

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