ELI5: Why does Coca-cola still advertise?

[u/bigdubsy]

Why do companies that have seemingly maxed out on brand recognition still spend so much money on advertising? There is not a person watching TV who doesn't know about Pepsi/Coke. So it occurs to me that they cannot increase the awareness of their product or bring new customers to the product. Without creating new customers, isn't advertisement a waste of money?

I understand that they need to advertise new products, but oftentimes, it's not a new product featured in a TV commercial.

The big soda companies are the best example I can think of.

Edit: Answered. Thanks everyone!

Edit 2: Thanks again to everybody for the discussions! I learned alot more than I expected. If we weren't all strangers on the internet, I'd buy everyone a Pepsi.

[u/p7r]

I discovered some years ago that the point of most advertising at a certain marque level was not to acquire new customers, but to retain them or even stop "buyer's regret".

For example, BMW pretty much never expect somebody to see one of their adverts and think "Oh, that car looks good, I'll buy one of those!", because who the hell makes a purchasing decision of that size based on advertising? Most of their advertising is actually focused on people who recently bought one of their cars and is sat there thinking how much of a Ford or GM they could have got for 40% less. It prevents buyer's regret, and pushes them from just a buyer into a brand-loyal fan. It also enhances brand value in general, which is critical when establishing how much your brand is worth financially.

Brand value is where Coca-Cola come in. Frequently in the UK people will say "it feels like Christmas now", once the "Christmas is coming" Coke ad with santa on lorries going through town is aired. Think about how powerful that is: people associate the celebration of the Messiah's birth, or perhaps the most intense emotional experience of the year that you can point to on a calendar, with a can of sugar water.

When you hear "Coke", you immediately think of the colours of the can, the taste of the drink, and have an emotional response which is probably very happy, positive and affirming. That's what a lifetime of Coca-Cola telling you what they stand for has done to you.

Recipe-wise, it's almost identical to Pepsi, but think about how you feel when you think of Pepsi, and how you feel when you think of Coca-Cola. That difference? That's the advertising. And it kicks in when you're stood in front of a fridge about to make a purchasing decision.

Most of the Coca-Cola sold around the World is produced under license, it doesn't come from a magic well, and is relatively easy to synthesise. So how much would the company be worth if it weren't anything special? Their entire advertising strategy is to increase brand value which also helps them whenever a customer hesitates about buying their product.

EDIT: I strongly recommend if you're interested in how advertising really works, that you check out the counter-argument to all advertising, Ad Busters magazine. Their website is good, but not nearly as awesome or eye-opening as their magazine.

EDIT 2: Some people are saying the difference between Coke and Pepsi is "obviously" different. Science says different. You might want to read this paper that says mental association with brand values is more important than taste, so your brain is tricking you somewhat. Here is a good little write-up on neuromarketing that asks some interesting questions.

EDIT 3: This is now my highest ranked comment on Reddit, and I just noticed I got Reddit Gold. Thanks! I really appreciate it, whoever you are.

EDIT 4: Filbs mentioned in a reply to this post that it would be great to have somewhere where we could rip apart advertising campaigns and spots and work out advertiser motivation. As this discussion has shown, some ads are very straight to the point, some are quite complex and involve complex layering of emotions. Also, I felt it would be good to collect and discuss links to papers, articles and lectures on the science behind advertising. I'm quite well read on this area, but I'm not a professional, so I was reluctant, but I realised my fascination with this area is above and beyond the casual, so I present to you: /r/adbreakdown/ Please do consider joining in if this is an area that fascinates.

P.S. This morning this appeared in my news feed and I thought some of you might appreciate its "honesty" ;-)

[u/bigdubsy → u/p7r]

I like your buyers regret point, But can they really still increase their brand loyalty? People don't convert, and they already pass their preference down to their kids. There's nobody new to influence.

Edit: I was typing during your edit. I will check that out.

[u/eine_person → u/bigdubsy]

Passing preferences to your kids is not going to substitute for the full-grown ad-spectacle brands like Coca Cola pull off for you. Also, as soon as they gave this up, other brands would start to fill up this gap. So indeed, Coca Cola is doing this as some kind of preventive mind-washing.

[u/bigdubsy → u/eine_person]

I think this "filling in the gap" is the factor I didn't think of. Just because there are only 2 dominant brands, does not mean that others cannot get a share. So if Coke stopped advertising, Faygo (shoutout to my favorite regional brand) might be able to increase their ad budget and grab a higher market share. Given infinite time and money, perhaps there would eventually be as high of a demand for Faygo on store shelves as Coke.

I still doubt the ability to "convert" people away from their preferred soda. I know for a fact that I drink Pepsi because its what my parents bought my whole life. This is far more powerful than polar bears.

[u/eine_person → u/bigdubsy]

To me things I have heard so many times about Coca Cola as an employer in third world countries make up for quite a lot of polar bears. But I guess, this doesn't belong here.

[u/apollo888 → u/eine_person]

he was talking about the coke polar bear ads

[u/twdalbeck → u/apollo888]

I love those ads! I wonder if that bear moonlights for Klondike too?

[u/livinlavidal0ca → u/bigdubsy]

Faygo already got to the Juggalos of the world

[u/Malfeasant → u/bigdubsy]

another thing to keep in mind- while many of us do have our brand preference that will never change, there are (i think more) people who don't care either way, but might be in a position to buy for some other group of people- the ads aren't for you as much as for those people- when they're buying for others, they're going to lean toward whatever seems more popular. (which unfortunately is rarely dr pepper)

[u/bigdubsy → u/Malfeasant]

I've honestly never met a "don't care either way" person. Unless they just don't drink pop. Cola is completely polarized in my experience.

I'm sure there are fence sitters, I really don't think they're a majority. Not a big enough market to be worth targeting.

[u/HawkEyeTS → u/bigdubsy]

Ironically my parents to this day continue to buy Pepsi, but my taste buds have changed over the years to prefer Coke to the point that when I go somewhere with Pepsi as the only option, I'll drink Mt. Dew instead.

[u/bigdubsy → u/HawkEyeTS]

For what it's worth, Mountain Dew is a Pepsi product. Why do you like that over Mello Yello?

I don't drink cola often. So I often get mountain dew or sierra mist even if they do have Pepsi. Which brings to mind the fact that I have no preference between sierra mist and sprite. This is even further evidence that the cola war is only in our heads.

[u/HawkEyeTS → u/bigdubsy]

To be perfectly honest, I haven't had the option of drinking Mellow Yellow in most situations. The scenario I described before was with a choice of the standard Pepsi products, even if I might have wanted a cola, I'd drink Mountain Dew instead because I dislike Pepsi in comparison to Coke. Unfortunately Mellow Yellow isn't often found in restaurant/fast food soda machines, and when I buy bottles, I usually go for things I'm sure I'll like rather than experimenting.

[u/Barbarossa6969 → u/bigdubsy]

eyes you suspiciously "You ain't one o' dem juggalos are ya?"

[u/bigdubsy → u/Barbarossa6969]

nope. just a michigander on a budget who likes delicious beverages loaded with corn syrup.

[u/onsos → u/bigdubsy]

It's not an all or nothing proposition. I love Coke, and have it maybe once a week. Okay, a little more than that. Why not get me to have it everyday? Instead of coffee? I could be drinking two or three times as much Coke, easy. Or I might get some pork scratchings, an energy drink, a bottle of water.

[u/kneeonball → u/bigdubsy]

Sometimes seeing a coca-cola commercial makes me want to go out and buy a coke.

[u/onsos → u/kneeonball]

I feel reassured when I see a Coca-Cola vending machine. If it sells cans, and I have coins, there's a good chance I will spring for it.

[u/ScottyEsq → u/kneeonball]

Or walk to the fridge and grab one creating the need to buy more latter.

[u/p7r → u/bigdubsy]

Coca-Cola don't just have customers. They have fans.

I mentioned it in a reply to another point somebody made, but I also think you might want to check out this talk by Simon Sinek which might make you look at how advertising for some brands works.

Do Coca-Cola do this? I think so, yes. They "want to teach the World to sing". They tell you to "make it real", that "life begins here", that you "can't beat the feeling" or the "real thing".

And don't just take my word for it that this stuff has an effect. Science says so too

As this is ELI5, I'll break that paper's findings down a bit more for you: they scanned people's brains, and gave them Coke and Pepsi anonymously and looked at what their brains did. The brain did the same thing both times. Then they gave them another sample and told them it was the brand they had already stated they preferred. Result? The brain responded very differently: their brains were making strong emotional responses and creating associations with that drink. Give them the one they don't prefer? Different brain pattern.

That is impressive. It's what hundreds of millions of dollars of advertising every year and putting a brand in front of a human from almost the cradle can give you in terms of impact.

[u/opolaski → u/bigdubsy]

Coca Cola has like 4 billion people who it still needs to market to, and part of that will be ensuring that Coca Cola seems like a "rich person" drink.

Maintaining drinkers in the developed world, faced with increasing concern with obesity is a serious concern for a global corporation.

Is marketing a sure-fire way of selling Coca-Cola? No. But marketing/communications are games of chance, so it's important to minimize risk once you're so successful.

[u/[deleted] → u/bigdubsy]

Advertising is also for brand awareness. Granted, everyone is aware of coke and that isn't going to change soon. But just like talking to your friend about something you bought, constant advertising increases brand awareness, and keeps it fresh in people's minds.

[u/mib5799 → u/bigdubsy]

It's not about "making you aware". Like you say, everyone is aware of coke.

It's about keeping it at the forefront of your mind. The idea being that without the ads, you sit down, look at the soft drink selection, and pick something. You're aware of Coke, but also of the other choices.

With the advertising, it makes you think about Coke more than 7Up, so when you sit down, you just reflexively order a Coke without looking at the choices, because Coke has been on your mind

[u/k1down → u/bigdubsy]

My parents never gave me soda. I learned that habit on my own

[u/Wingslapped → u/bigdubsy]

People do switch or jump brands because of a better price, better quality, better or unique features, great customer service, or other reasons. Ads can promise these things and other inticements to switch.