'Pepsi Challenge' and the Birth of Niche Marketing A new book, The Real Pepsi Challenge, looks at how the cola company sought brand loyalty among African Americans in the 1940s. Hear from the man who led Pepsi's marketing team.

'Pepsi Challenge' and the Birth of Niche Marketing

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I'm Farai Chideya and this is NEWS & NOTES.

The cola wars between Pepsi and Coke are now famous. They began in the late 1930s when Pepsi started closing the gap with Coke, gaining more of the cola market for itself. Pepsi sought the advantage in part by appealing to the African-American dollar. In 1940, Pepsi CEO Walter Mack had the unprecedented idea of putting together an all-black Negro markets department. Edward Boyd was 32 when Mack called him in for a meeting at Pepsi headquarters.

Mr. EDWARD BOYD (Employee, PepsiCo): I wasn't asking for job per se, because I had a job with the Urban League, but it resulted in a job offer which I guess was a beginning of the Negro market as such.

CHIDEYA: At Pepsi, Boyd became one of the first black executives in corporate America. His team developed a marketing strategy that created brand loyalty for Pepsi among African-Americans. That strategy would be the first example of what's known today as niche marketing. Stephanie Capparell is a writer for The Wall Street Journal. Her latest book is called "The Real Pepsi Challenge". It documents Pepsi's efforts to reach the African-American community.

I asked Stephanie just how groundbreaking was Pepsi's Negro markets venture at the time.

Ms. STEPHANIE CAPPARELL (Author, "The Real Pepsi Challenge"): Well it was groundbreaking. There weren't many companies who were willing to take the risk, and it was a risk. Of course, they all wanted the African-American consumer's dollar; that part was easy. But they had to walk a very fine line, because if they were too much associated with blacks, they would start to be shunned by whites. And I'm not talking about, you know, radical whites, I just mean the average white American would to tend to be hostile toward the product. Sometimes there are actual boycotts, but more often it was just an association with something as a bargain item.

CHIDEYA: And so when he, Walter Mack, the CEO, moved into niche marketing, how did it roll out. You have, you know, images of Aunt Jemima and Uncle Ben that were the norm in advertising. We recently spoke about it here on NEWS & NOTES, the history of that and spoke to the author of a book called "Slave in a Box" about Aunt Jemima and her history.

What you were talking about with Pepsi was different. It was a different kind of marketing with sort of the everyday American family represented in a black form. What did that do, Stephanie, to the market?

Ms. CAPPARELL: Well that was sort of a convergence of a couple of different trends, and Mr. Boyd was right there at the center. There was an agency started in New York that started to have some of the first professional black models, and they intentionally decided they did not want people who looked like Aunt Jemima.

And a matter of fact looking back at it today, some people say well, they're just favoring light-skinned women. But it really was a deliberate attempt to try to get away from the old stereotype. And Mr. Boyd was instrumental and he sort of believed in the philosophy of the National Urban League at the time and NAACP, that you should really promote the professionals in the population and in the community.

So Mr. Boyd did some fantastic ads highlighting successful African-American businessmen and women and profiled them in these ads. And that was a time when, although testimonial ads might have been popular, you just didn't see that kind of promotion.

CHIDEYA: But Mr. Boyd, tell me what exactly you set out to do?

Mr. BOYD: Well, what I set out to do is to change the image from Aunt Jemima or Crème of Wheat or stereotypes that the Negro market was made up of normal people who did regular things like everybody else. And I wanted to show them in the advertising in such a way, not as cooks or flopping pancakes or something of that sort. We wanted to bring them into this world. That was the intention.

CHIDEYA: How did you interact with, for example, the team of African-American employees and then also balance that with dealing with the white management of the company?

Mr. BOYD: Well, the white management of the company were indifferent, really. Walter Mack, who was their head, chose to do it that way, and so they had no choice but to follow it.

CHIDEYA: But some people who you worked with just couldn't take the heat, I guess, from the racial tensions. There was a gentleman named Alexander Jackson(ph). What happened to him, tell me?

Mr. BOYD: I don't know. We lost him. And one of the problems - you know, our program got so popular with the bottlers, particularly in the South where a great deal of the black population resided, that they wanted us to come. And one of the persons, the bottlers, the franchisee owners in the South who invited us, was a man in Alabama. His new franchise was Tuskegee Institute. And Alexander Jackson was one of the four of our team that I sent down there to work in that franchise, working for the bottler, really, at his request to help him make more money and improve his way of life.

At the end of our work in Tuskegee, we had another request from a bottler, a franchise owner in Montgomery. And the only way to get from Tuskegee to Montgomery was by bus. And so we caught a bus, I led them to the back of the bus - one of the things which bothers me to this day - to seats in the back of the bus. The bus took off to Montgomery.

Along the way, I guess the driver of the bus noticed that there was a Negro man who was out of place according to their custom. And he stopped the bus. The bus driver stop and he came back and talked to the man. He spoke to the man. He said you know better. You're sitting next to a white, you know better. You know better than that.

And that is one of the things that Jackson, Alexander Jackson, couldn't take. He was from Chicago. He was a Harvard graduate. He was down there in Alabama really against his will. And he couldn't take it. We lost him largely as a result of that. It just so offended him that he couldn't take it.

CHIDEYA: Stephanie, this was a period where all sorts of color barriers were being tested, in some cases broken, in some cases upheld. And it appears that at the time there was still ambivalence, even though Pepsi was groundbreaking in some ways, there was still ambivalence that you mentioned earlier about this branding with African-Americans. Why don't you tell us a little bit about the reputation that Pepsi had as a Negro drink and some of the uglier moments that that inspired.

Ms. CAPPARELL: Pepsi was already popular among African-Americans because you got twice as much for a nickel; that was their slogan. And so anybody on a tight budget, such as African-Americans or kids or laborers, took to Pepsi. And so it was quite popular. And Mack decided, though, that the potential is much greater so he really started to market it heavily in the black community with these teams of salesman.

But he had to be careful because even though he knew what he wanted and he knew the direction he wanted to go, a lot of the bottlers weren't exactly on the same page. So they - I think he was really playing to the bottlers when he stood up once in front of the convention of bottlers and said, look, we've got to start maybe having little bit better image for Pepsi than we've had in the past. We don't want to be considered a Nigger drink. And that's when Mr. Boyd got so offended that he got up and walked out.

And the problem was that actually the team had been too successful in some ways for the bottler's own good, they felt. They had done such a good job of building up brand loyalty that they were afraid they're going to start giving Pepsi the wrong reputation.

Mr. BOYD: Reading the book, I was reminded of events that happened which I had long since forgotten. They weren't all pleasant. I think all in all, my experience with Pepsi Cola was pleasant and extremely meaningful. But I think for example of that incident that Stephanie just mentioned, walking out when Walter Mack, who was my great friend and who I really adored, was using the N-word. And walking out, that was a long, long walk. I can't tell you - I recall walking out. It was a long walk.

The other thing that I remember when I left Pepsi, fired from Pepsi - largely I think because not wanting to accept all of the customs of the South - I was fired by a man who later became president of Pepsi-Cola by the name of Herbert Barnet.

He came and called me in his office one day. He was shivering, oh, he was shaking; I've never seen anybody shake like he was. I was so sorry for him. He was delivering the message, doing the dirty work for Al Steele. The thing that always bothered me was he was Jewish and he allowed himself to do Al Steele's dirty work. That has always bothered me.

I felt sorry for him. He was shaking I think for two reasons. He was shaking was because he was uncomfortable doing it. And secondly, because he knew that we had worked with the black publishers and business leaders. And if I had gone to them, there would've been an action taken against Pepsi-Cola, undoubtedly. I did never go to them.

And everybody kept his job except me. But I remember those two things particularly as being things that I never, never forget.

CHIDEYA: Stephanie, do you think that there are lessons from this story about Pepsi, about integration, about breaking down barriers in business that are applicable today in the business world?

Ms. CAPPARELL: Oh, absolutely. I still think that people - that when corporations hire African-Americans, they tend to put them on a very narrow path. And it's often a barrier not just to get them through the door but once they're inside the door to see where they can fit higher up and to lead the company as a whole in sort of being so specialized.

I mean it's important to have African-Americans deal with, still today, the niche market. But I wish that corporations would think of putting more minorities and minority status people higher up the ladder and lead the whole company.

CHIDEYA: Well, Stephanie Capparell, Edward Boyd, thank you both so much.

Ms. CAPPARELL: OK, thank you.

Mr. BOYD: Thank you, my dear, so much.

CHIDEYA: Stephanie Capparell is the author of "The Real Pepsi Challenge." Edward Boyd is one of the subjects of that book. Read the introduction to "The Real Pepsi Challenge" and see examples of Edward Boyd's groundbreaking ads at our Web site, npr.org.

And please join us on the next NEWS & NOTES for a special tribute to Dr. Martin Luther King Jr. We'll hear personal memories of Dr. King from friends and family members. And Dr. King's legacy also continues to resonate in pop culture. Rappers Common and Will.i.am have incorporated parts of Dr. King's, "I have a Dream" speech into a hot new song.

(Soundbite of song, "I have a dream")

Dr. MARTIN LUTHER KING: I am happy. I have a dream.

Unidentified Man: (Singing) I got a dream.

CHIDEYA: That's our show for today. Visit us npr.org. NEWS & NOTES was created by NPR News and the African-American Public Radio Consortium.

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