Guth's New Pepsi Cola Company example essay topic

Caleb Bradham was born in Chinquapin, Duplin County, in 1866. Intelligent and enterprising, he graduated from the University of North Carolina at Chapel Hill, and then entered medical school at the University of Maryland. Unfortunately, his family's financial problems forced him to give up the study of medicine after only two years and take a job teaching school in New Bern. Still driven by his interest in medicine, he left teaching to buy a pharmacy in 1893. Using his personality and salesmanship abilities, Bradham convinced the pharmacy's owner to sell him the business based almost solely on credit because he did not have any money to purchase the business. In those days pharmacies were a favorite gathering place, and Bradham set out to create a soft drink that would increase business at his store's soda fountain.

He created one such drink that became quite popular at the Bradham Pharmacy, a combination of carbonated water, sugar, vanilla, rare oils, and cola nuts, and the patrons started calling it "Brad's Drink". As the popularity of Brad's Drink grew, Bradham changed the name to Pepsi-Cola, after the pepsin and kola nut extract it contained. The name emphasized the supposed health benefits of the drink. Pepsin, an enzyme, was thought to aid in digestion, and caffeine, an alkaloid found in kola nuts, was believed to bestow beneficial energy.

In 1903, Bradham filed for a trademark for Pepsi-Cola with the state of North Carolina. However, he had to register it again a second time with the U.S. Patent Office because there was already a product named "Pep-Kola" on the market. Rather then change the name of his product, Bradham bought the rights to the "Pep-Kola" trademark and reapplied for his trademark August 28, 1898. By 1902, he had taken on an assistant, R.F. Butler, and put him in charge of running the pharmacy, while he threw all of his energy to producing and marketing his beverage. Bradham mixed the soft drink syrup himself in his store and sold it to pharmacies for their soda Vecchio 2 fountains. In 1903 he sold 7,968 gallons of syrup, aided by the advertising slogan "Exhilarating, Invigorating, Aids Digestion".

In 1905 they change the logo for the first time since 1898. By the end of the year he began selling 19,848 gallons a year, and also began selling Pepsi-Cola bottling franchises to independent investors. The first two franchises in the state opened in Charlotte and Durham. In 1906, the number of franchises grew to fifteen. In 1907, the company's forty franchises sold over one hundred thousand gallons of syrup. By 1915, Bradham's company had assets of more than $1 million.

Pepsi's popularity skyrocketed, thanks in part to Bradham's foresight and marketing expertise. In 1908 his company was among the first in the country to switch from horse-drawn wagons to motor vehicles. This new mode of transportation not only facilitated widespread distribution of Pepsi but also increased its visibility. In 1909 automobile racer pioneer Barney Oldfield endorsed Pepsi-Cola in the newspaper ads as "A bully drink. Refreshing, invigorating, a fine bracer before a race".

The following year, Bradham attracted attention by building a spectacular headquarters in New Bern. Pepsi's sales grew steadily until World War I. During the war, sugar prices rose rapidly as supplies decreased, and Bradham's company began operating at a loss. Prices continued to fluctuate after the war. Sugar went from 5 1/2 c per pound in 1917 to 22 1/2 c per pound in 1920. To protect himself from further price increases, Bradham decided to buy a huge quantity of sugar.

His decision proved disastrous when the price of sugar, after peaking at 26 c per pound, plummeted a few months later to just 2 c per pound. Bradham lost $150,000. "Pepsi buys a lot of sugar from different sources. There were maybe three to four different suppliers providing plants with different sweeteners, meaning different trucking companies. They wanted to add some continuity and quality control over the whole operation". (Rajendar, 256) Pepsi continued to have financial difficulties, and by 1921 only two Pepsi plants remained in operation.

They tried borrowing capital, selling assets, selling additional shares of stock, and they tried completely reorganizing. Nothing worked. Bradham fought to regain control, but on Vecchio 3 March 2, 1923, he declared bankruptcy. He sold Pepsi's formula, trademark, and assets for $30,000. The company survived three more bankruptcies before Charles G. Guth, president of Loft Candy Company, purchased it in 1931. By the end of the year, Guth's new Pepsi-Cola Company is insolvent.

In a serious of moves, he acquires interest in the company, giving himself 91% ownership of Pepsi. 1934 served as a landmark year for Pepsi-Cola. Guth reformulated Pepsi-Cola and moved the company's headquarters to New York. The company lost money until Guth began selling Pepsi in twelve-ounce bottles for five cents, instead of the usual ten cents charged for soft drinks. Pepsi earned $1 million within two years under its new owner, an impressive accomplishment during the Depression. Sales continued to grow as the beverage was introduced to other countries.

Pepsi had gone from losing small amounts of money, year after year, to making over $2,000,000 in profits, and by 1938 it was making over $4,000,000. Guth resigned from Loft Inc. and started running Pepsi-Cola full time. On December 30, 1935 Loft Inc. sued Guth for ownership of all the Pepsi-Cola stock he owned. Guth lost but immediately appealed the courts decision to give Pepsi-Cola to Loft Inc. Walter S. Mack was elected President of the Pepsi-Cola Company, and turned Pepsi into a modern marketing company. Mr. Mack was similar in nature to Mr. Guth in that they were both very powerful and aggressive men that ran their company with an iron fist.

Mr. Mack inspired those around him with a sense that he ran an honest operation. He was also not just a man with an enormously strong will, but a man who had a brilliant mind and a warm personality. (Martin, 3246) One of the first things Mack did was concentrate heavily on advertising. He hired a very well respected advertising company, Newell, Emmett & Company. The characters "Pepsi and Pete" were created and became extremely popular.

In 1940 Pepsi-Cola made advertising history when the first nationwide radio jingle, "Nickel, Nickel", was broadcasted: "Pepsi-Cola hits the spot. Twelve full ounces, that's a lot. Twice as much for a nickel, too. Vecchio 4 Pepsi-Cola is the drink for you" This little jingle would go on to be recorded in fifty-five different languages.

Pepsi underwent several changes in ownership and management through the 1940's and confronted mounting sugar prices again during World War II. Throughout the 1940's and 1950's, Pepsi continued to expand its worldwide market and to launch creative advertising campaigns. Another thing that Mack was responsible for was a major change in Pepsi-Cola bottles. He replaced the old bottles with bottles containing the word Pepsi in block letters formed into the bottle along the side. The new Pepsi bottle had a paper label that would eventually be replaced by blowing the label right into the glass. As World War II approached, Mack also had Pepsi's bottles reflect a new patriotic Red, White, and Blue theme.

After World War II Pepsi was faced with the same problem of sugar prices increasing and decreasing. By 1950 the Pepsi board of directors decided that the Pepsi-Cola Company needed a change in management. Pepsi further refined its target audience, recognizing the increasing importance of the younger, post-war generation. "Now it's Pepsi, for those who think young" defines youth as a state of mind as much as a chronological age, maintaining the brand's appeal to all market segments. Alfred N Steele becomes President and CEO of Pepsi-Cola in 1950. He invested heavily into advertising in a regional market moved the company aggressively into supermarkets, vending machines, and into overseas markets.

Over the years Pepsi-Cola would go through a serious of Presidents and CEO including Herbert Barnet, Donald M. Kendall, Vic Bonobo, John Sculley, Roger Enrico, and Craig Weather cup. Also in 1950, Pepsi received its new logo, which incorporated the "bottle cap" look. They also replaced the straight-sided bottle with the "swirl" bottle and moved from the 12-ounce to a 16-ounce bottle. In the 1960's, Pepsi introduced Teem (a lemon lime based soda), Mountain Dew, Slice, and Diet Pepsi to the soft drink market.

Pepsi's famous advertising campaign in 1963 urged baby boomers to "Come alive! You " re in the Pepsi Generation". In 1965 Pepsi merged with Frito-Lay to become PepsiCo, Incorporated. Military 12-ounce cans are a success and a full-scale commercial distribution begins. In 1970 Pepsi introduces the industry's first two-liter bottles, Vecchio 5 granting the requests for a lightweight, recyclable, plastic bottles. The 1970's and 1980's brought further prosperity to PepsiCo.

The "Pepsi Challenge" and other advertising campaigns, featuring celebrities such as Michael Jackson, Joe Montana, and Billy Crystal, made the product even better known. (Louis, Yazijian, 123) "The Pepsi Challenge, a landmark marketing strategy, convinces millions of consumers that Pepsi's taste is superior". (Enrico, Kornbluth, 301) In 1982 Pepsi Free, a caffeine-free cola, is introduced nationwide. Pepsi becomes "the choice of a New Generation" in 1984. Lemon Lime Slice, the first major soft drink with real fruit juice is introduced, creating a new soft drink category, "juice added". Mandarin Orange Slice goes on to become the number one orange soft drink in the U.S. 7-Up and Mug Root Beer are acquired.

Diet Pepsi is reformulated with NutraSweet brand sweetener. By the end of 1985, the New Generation campaign earns more than 58 Major advertising and film-related awards. In 1989 Pepsi-Cola introduces Wild Cherry Pepsi, an exciting new flavor. During the 1990's Pepsi-Cola continued to make great changes and advancements. In 1990 American Music Award and Grammy winner rap artist Young MC writes and performs songs exclusively for national radio ads for Pepsi. Ray Charles joins the Pepsi family by endorsing Diet Pepsi with the slogan "You Got The Right One Baby".

Pepsi introduces the first beverage bottles containing recycled polyethylene terephthalate into the marketplace marking the first time recycled plastic being used in direct contact with food in packaging. In 1992, a Pepsi-Cola and Lipton Tea Partnership is formed. Americans become more weight-conscious, and a new strategy based on Pepsi's lower caloric content is implemented with "The Light Refreshment" campaign. Crystal Pepsi, a refreshing, clear soda that is caffeine free, has 100% natural flavors, no preservatives and is low in sodium, goes national. Pepsi-Cola was constantly trying to change their look and appeal to younger customers. By 1993, Pepsi-Cola profits surpass one billion, also introducing an innovative 24-can multipack that satisfies growing consumer demand for convenient large-size soft drink packaging.

Vecchio 6 In 1994 Pepsi Foods International and Pepsi-Cola International merge, creating the PepsiCo Food and Beverages Company. In February 1996, Pepsi makes history once again by launching one of the most ambitious entertainment sites on the World Wide Web. 1997 PepsiCo announces that it will spin off its restaurant decision to form Tric on Global Restaurants, Inc. Including Pizza Hut, Taco Bell, & KFC, making it the largest restaurant company in the world in units and second largest in sales. In my opinion this was a very smart move. They could now be the main products being sold in three already major food restaurants.

With the three of them combined, they would now be able to ship less amounts of products, still gaining recognition worldwide through each of these popular restaurants. 1998 marks the 100th anniversary for Pepsi-Cola, and also introduces Pepsi One, the first one-calorie drink without that diet taste. (Stoddard, 202) People began to trust in Pepsi and the quality of what their products would bring. "Pepsi is known for their quality. Once you tell prospects you " re one of two suppliers for the company, you " ve achieved a quality commitment level other people are interested in. People recognize that if we " re supplying Pepsi, we have to be doing something right".

(Dietz, 134) In 1999, "The Joy of Cola" new advertising campaign for Brand Pepsi features the voices of actors Marlon Brando, Isaac Hayes and "Queen of Soul" Aretha Franklin. The spots also feature child actress Hallie Eisenberg as the "Little Girl". Pepsi and Lucasfilm team up again as "Star Wars: Episode I - The Phantom Menace" hits movie theaters. Consumer excitement surrounding the long-awaited return of the Star Wars series is heightened as special Pepsi bottles and cans offer 24 different Star Wars characters. The collection series includes a gold Yoda can. In a dramatic restructuring of the business, Pepsi announces one of the largest IPOs in history.

On March 31, 1999, The Pepsi Bottling Group, Inc. (PBG) becomes a publicly traded company and Pepsi's largest bottler. PBG is headed by President and CEO Craig Weather up. The year 2001 was also an exciting year for Pepsi-Cola. Pepsi puts "a little twist on a great thing", introducing lemon-flavored Pepsi Twist and Diet Pepsi Twist. Pop star Britney Spears appears in her first Pepsi commercial during the 2001 Academy Awards.

The high- Vecchio 7 energy spot also runs online, where more than two million fans click their way to Britney's own version of "The Joy Of Pepsi". Pepsi unveils its F unWraps Factory, letting consumers personalize Pepsi cans with fun designs and unique messages. With a wide variety of sports, entertainment and holiday images to choose from, Pepsi drinkers begin creating their own can labels for just about any occasion. In 2002 Pepsi becomes the official soft drink sponsor of the National Football League. The company introduces Pepsi Blue, a fusion of berries with a splash of cola, the blue-hued soft drink is created by and for teens. In a new blockbuster commercial, Britney Spears takes consumers through a fast-paced look at the "Pepsi Generations", from the 1950's through today.

Before the commercial debuts during the Super Bowl, more than 415,000 fans click to Pepsi world. com and vote for their favorite generation. The key to the success at Pepsi both past and future appears to be advertising. When the company came across a jingle that gained great popularity, company sales increased. When they tried to save money by not advertising sales plummeted.

By continuing to update the company's advertising towards the young target market Pepsi can continue to gain new customers. They can continue to expand by reacting to the changing marketplace. Getting consumer feedback on current products and future products they would like to purchase. When Pepsi saw how popular bottled water was becoming they started marketing Aqua fina water. Continuing to create new products and utilizing target marketing will keep Pepsi a very profitable company with an excellent future.