EPISODE TWENTY:

Lessons From Coca-Cola; Part 3

11.20.2019 - Summarized by Kaetlyn Bennett

J: They had stripped out the medicine taste, trimmed down the cocaine content, and Robinson was innovating marketing practices. Coca-Cola was off to the races. Thank you for joining us today, as we continue with part 3 of our series on the business lessons learned from Coca-Cola on this next episode of Straight Shot marketing podcast.

 

Welcome everyone to Straight Shot marketing podcast. Zachary and I were just sitting here talking about how he’s using some of these lessons from Coca-Cola in the new book he’s writing.

 

Z: Yes, as some of you may know, it was suggested to me that I write a book about my experiences and thoughts on marketing, so I’m in the throws of doing that. It won’t be released for some time because I’m still very much in the middle of it,.. but yeah – I have included several examples from the Coca-Cola story some of which we’ll get into later on in the podcast series. But it’s been fun and a lot more difficult than I thought. In marketing, we always try to be as efficient as possible with our words- so we say what we need to say as much as we can using as few words as possible. But with writing a book, you have to expand on thoughts and I’m not as used to that so…

 

Marketing Budget (2:12)

 

J: If you are new to Straight Shot, we are in the middle of our new series on Lessons From Coca-Cola, where we are analyzing their story and seeing what marketing related lessons we can pull from it, that can add value to business owners and executives today. Last episode, we talked about the invention of couponing: Robinson’s strategy had worked by now 1 out of every 9 people had sampled Coca-Cola. It was becoming a household name. He had decided early on to dedicate 20% of the company’s revenue towards marketing the product. Zachary, is a “normal” percentage?

 

Z: I always learned that a company’s marketing budget should be 15% to 20% of the company’s gross revenue. So, Coca-Cola was on the higher end of that “rule of thumb.”  It could even be said that they are one of the companies that help originated that percentage, because of their success. But it’s up to the individual companies as to how much they will invest in business communications. I’ve seen internet companies, with low overhead, spend upwards of 40% or more on marketing. Let me share some numbers with you from a talk I did a couple of years ago for the Gwinnett Chamber. Twitter spent 44% of their gross revenue because of Twitter’s website. They have no storefront or products. Salesforce spent 53%. Constant Contact spent 38%, and LinkedIn spent 35%. Those are on the higher end because all of those are websites or digital in some way. They have less overhead, so they dedicate more towards their marketing. Now other companies l8ike Oracle spends 20%. Tempur+Sealy spent 21%. Swapping over to the educational industry, Grand Canyon University spend 11%. Then, there’s companies like Apple, who spent 7%, so they’re actually under. However, they’re also 12 billion dollars. Google spends 12%, Intel spends 15%, and Microsoft spends 18%. There are different variables that go into it. There was a survey that was done by Duke University in 2014. B2B Businesses that have a product spend 11%. B2B Service Businesses spend 10%. B2C Product Businesses spend 16.3%, and B2C Service Businesses spend11%. But it’s different for every business. These are just guidelines. The typical marketing budget is going to be anywhere between 8-12% of your gross revenue. A more aggressive side of that would be 13-20%. If you want to move faster, invest at a higher percentage, these are usually companies that are newer with less market share or have lower overhead. If you aren’t interested as much in growth, but you’re more centered on maintaining, usually this is when you have high gross revenue, you can spend a lesser percentage. Now, relative to Coke’s story, they proudly note that in 1901 their marketing budget hit $100,000 for the first time. So, their gross revenue was $500,000 which means that had very sizeable growth between 1886 and 1901 – 15 years. 5 years later, in 1906, Robinson signed on to work with D’Arcy Advertising as their agency. – they had started national marketing 2 years before. Ten years later, their marketing budget was $1,000,000. So, their gross revenue had grown to $5,000,000. 10 times the amount just 10 years earlier.

 

B2B Marketing Strategies (8:19)

 

J: You mentioned B2B, that’s a nice segway – let’s talk a little about Coca-Cola’s B2B strategies. B2B, for those that don’t know, means Business-to-Business. So, if you are a business and your product or service is targeted towards other businesses then you are B2B. That is that your customers are businesses; Like ours, as an agency. We don’t offer services for your average individual; businesses hire us to develop brands, build strategies, and implement those strategies. We are B2B.

 

Z: Coca-Cola is a product for individuals, but they sell THROUGH other businesses. So, in their case, they are both B2B and B2C.

 

J: And starting in 1896, Coke developed a rewards strategy for their B2B customers. They would provide gifts for pharmacies and soda fountains that reached a certain purchasing threshold. If you bought at least 100 gallons of syrup, you received a Porcelain Syrup Urn to use in your business. If you bought more than 125 gallons, you received Coca-Cola Apothecary scales.

 

Z: These types of reward programs are still very common. We just developed one for NAPA Auto Parts where the store owners (who are B2B customers of the manufacturer) receive awards for meeting or exceeding their monthly sales goals. When building one of these strategies, you have to remember that your gift needs to bring value to the customer. It needs to be something they want or need in their business or it can be personal for the owner as well, depending on the business. But if it’s a throw-away item, it won’t work as well as an incentive. Now you can brand items, like Coca-Cola did, and then it’s a win/win because it reminds the customer of who they are, and it also speaks to the end-user.

 

J: That’s one of the B2B strategies that Coca-Cola used. But they also stumbled into another B2B opportunity… “bass-ackwards”, if you will. In 1899, Benjamin Thomas and Joseph Whitehead, lawyers from TN, came to Candler (the new owner of Coke if you remember) to try to convince him to start bottling Coca-Cola, as a beverage for the end user. Not just providing the syrup to soda fountains that then make a beverage for the end user. This was a new concept and Candler was very skeptical because it wasn’t practical for him. So, he sold the rights to bottle the drink to Thomas and Whitehead for $1. And they created the soft drink bottling system in Chattanooga, TN.

 

Z: For Candler, these bottlers were simply another distribution point for his syrup. But it took off like gangbusters. Global expansion started through bottling and by using innovative methods to distribute the product. We’ll show some pictures. Some of these methods, as you could tell, carried throughout the years. Even today. Now, I’ll throw back to our signage episode where we talked about car wraps. Notice, the brand is all over these delivery methods. Again, taking advantage of every opportunity to get your brand out there.

 

Coca-Cola Girls (19:18)

 

J: Let’s talk about that, the brand – the look and feel of Coca-Cola.

 

Z: Well, Coca-Cola red started back with delivering syrup to pharmacies and soda-fountains. They used to paint their barrels red, so they would stand out from the others. So, that’s where the red starts to tie into the brand. But brand goes beyond look. There is also feel a character, a personality for the brand that can be harder to establish so, they started using who became known as the Coca-Cola Girl to communicate it.

 

J: Her name was Hilda Clark. She was an America model, actress, and singer. She represented Coke from 1895-1903. They used her everywhere: The Coca-Cola tasting coupons, calendars, clocks, menu cards, mirrors, serving trays, and point of sale displays.

 

Z: Yes, she was a Victorian era beauty that represented who the customers they wanted. Someone with some disposable income. Someone who was wholesome, the Every-woman, American, confident, no longer requiring an escort but could have adventures on her own. Now, over the years, Coke changed models, but the Coca-Cola girl campaign ran from the 1890s through the 1960s. They all represented the same brand attributes. And of course, they continued to put their logo on relative items. On the B2B side that included: glass lamp shades, clocks, coasters, pencils, napkins, ashtrays, serving trays, displays, and signage, festoons, walls, point of sales displays, menus, etc. All the elements we discussed earlier with Hilda Clark on them. They also developed a Coca-Cola Bottler magazine for the Bottlers starting in 1909. The Friendly Hand (later known as The Red Barrel) magazine for all employees starts in 1921. They influenced not only their external culture but their internal culture as well. On the B2C side, they included things that represented everyday enjoyment, to make you think Coca-Cola when you thought about enjoyment. These included: atlas, change purse, pocket mirror, cufflinks, keychains, pocketknives, bottle openers, wallets, map covers, piggy banks. They also had a campaign where you could send postage stamps to receive sheet music by Coca-Cola like. “My Coca-Cola bride” and “We found that he’d been drinking Coca-Cola” There are two major points here: Yes, they put the logo on a lot of different promo items. Keep in mind mass media didn’t really exist yet. But they put it on things with a purpose, trying to make Coke synonymous with everyday enjoyment. It was strategic, not hap-hazard.

 

J: Ok, let’s take a quick break to hear from our sponsor for this episode and when we come back, let’s discuss Coca-Cola and their impact on Christmas with seasonal marketing. I hear they have quite the tie in with Santa Claus…in just a moment.

 

Ok, hello everyone, welcome back to the show. I’d also like to take a quick moment to remind everyone of our Patreon page. The agency does sponsor Straight Shot but putting out quality content for you can be quite an endeavor, so if you get value our of our show, please consider supporting us on Patreon.com/straightshot. There you can receive early releases of our episodes, t-shirts, Q&A with Zachary and myself, etc. but above all, you’ll help us continue putting on the show. So, thank you to those that support us and if you haven’t already, please consider it.

 

Seasonal Advertising (13:34)

 

J: Now – seasonal advertising…. Zachary, is it true that Coca-Cola invented Santa Claus?

 

Z: Yes and no… let me explain. It all began in 1923. Coca-Cola wanted to use Santa Claus in their promotion because people enjoy it. So, Santa Claus did already exist in our society. So, they began using him in seasonal advertising. However, their effort in 1923 isn’t the one that made in impact. However, the 1931 effort, did. In 1931, Archie Lee, Coca-Cola’s account executive at D’Arcy Advertising Agency, directed the creatives to make a different kind of Santa for their client-Coca-Cola. He wanted someone that was wholesome, realistic, and symbolic at the same time. The most famous is by Haddon Sundblom for the Thirst Knows No Season campaign. Let’s take a look. Inspired by Clement Clark Moore’s 1822 Poem, A Visit from St Nicholas, commonly known as T’was the Night Before Christmas. It led to a warm, friendly, pleasantly plump and human Santa. It was so popular; the artist was used from then until 1961. This is the representation of Santa that we all have grown to love and remember in our minds. Prior to 1931, Santa was depicted as everything from a tall gaunt man to a spooky-looking elf. He has donned a bishop's robe and a Norse huntsman's animal skin. In fact, when Civil War cartoonist Thomas Nast of German descent, who is considered the inventor of the American Santa Claus (out of European traditions), drew him into an illustration for Harper's Weekly in 1862. Then again, in 1863, Santa was a small elf-like figure who supported the Union army. Nast continued to draw Santa for 30 years, changing the color of his coat from tan to blue to the red he’s known for today. Now, let’s look at a few of the Coca-Cola Christmas ads. The 3rd painting is actually a touch up of the first (because of the depression.) So, Coke didn’t invent Santa Claus, just his look as we know remember it.

 

J: What about the polar bears campaign?

 

Z: 1992, an agency strategist named Ken Stewart tied in polar bears with Coke’s brand attributes: cold and refreshing, mythical & magical. With the 1993, the animated ad called Northern Lights debuted. New technology – animation by computer. Polar bears are enjoying the sights and pause for refreshment with Coca-Cola. A few more from that campaign. Seasonal advertising was designed to help increase sales during the slower winter months. They developed strategies based on business observations and goals.

 

Straight Shot (44:26)

 

J: So, let’s do our sum up of today’s lessons as the Straight Shot.

 

Z: #1 – Establish a marketing budget. 10-20% of your gross revenue is standard. Make a plan, set it in your heart, commit and then follow it. #2 – Embrace every opportunity to communicate your brand. We discussed B2B Marketing Strategies (think internal and external target audiences.) Use Relative Promo Items and Marketing/Advertising that reflect your audience and your brand – be strategic. #3 – And that Brand is more than a look. Though look is important because it’s quick to recognize. But it’s also the feel and character, the personality of a company. Something that people can relate to outside of consumerism. Be sure you are showcasing all of WHO you are rather than simply WHAT you do. For Coke it included everyday enjoyment and refreshment. #4 – If something works, stick with it. It yields long term success. Consistency leads to being remembered. Coca-Cola Girls and Santa Claus. #5 – Measure your business success and build strategies as a result – seasonal advertising.

 

J: Ok guys – that’s our show for today. Be sure to tune in next time when we continue to learn from the history of Coca-Cola. The next episode is centered around Mystery, Imitation, and War. Find out what I mean on the next episode of Straight Shot marketing podcast. Be sure to subscribe if you are watching us on YouTube, hit the bell to receive notifications or text the word Reformation to 90210 to be notified via text message on your cell phone when episodes are released. Until next time, bye!

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