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Extending the “Pepsi Paradox” to Diet Cola

by | Fall 2015
Charlotte Schallenberg

Charlotte Schallenberg

My name is Charlotte Sophie Schallenberg and I graduated in May 2015 with a bachelor of arts in Psychology and Sociology. I am originally from the Netherlands but went to high school in New Canaan, Co... read more
My name is Charlotte Sophie Schallenberg and I graduated in May 2015 with a bachelor of arts in Psychology and Sociology. I am originally from the Netherlands but went to high school in New Canaan, Connecticut. After graduation I hope to pursue my masters in the Sociology of Sexuality at the University of Amsterdam in the Netherlands. Working on this project has been a rewarding experience and has taught me a great deal about research as well as writing academic articles. Coke versus Pepsi is a well-researched topic, so being able to develop it even further and advance the field to discover new information is gratifying. For the future, this has taught me about how to successfully conduct research and how the professional field of psychology operates. I would like to thank my mentor Dr. Melanie Palomares for giving me the opportunity to work with her and for helping me greatly through this whole process. Also, I would like to thank the Psychology 228 students who participated in the study, the TAs who facilitated the experiment and the rest of the Child Perception and Attention lab for their help. This research has been presented in part at Discovery Day at the University of South Carolina in April of 2014.

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Extending the “Pepsi Paradox” to Diet Cola

By Charlotte Schallenberg
Faculty Mentor: Melanie Palomares

 

 

Abstract

Since the invention of cola, the rivalry between Pepsi and Coca-Cola (i.e., Coke) has been in existence. Coke has been the preferred brand over all other colas, despite the preference for Pepsi in blind taste tests. This has been coined as the “Pepsi Paradox.” In the current study, we evaluated the “Pepsi Paradox” in both regular and diet cola. We entertained the possibility that preferences for cola brands would be roughly equivalent in South Carolina since it borders North Carolina and Georgia, the state of origin of Pepsi and Coke, respectively. The data showed that most people stated they preferred Coke products to Pepsi products. However, in the blind taste test, diet Pepsi was preferred over diet Coke. Moreover, people who stated preference for Pepsi were able to distinguish cola brands better than those who stated preference for Coke. The results suggest that the stated preference for Coca-Cola products, including Diet Coke, is based on factors other than taste. We discuss the influence of on-campus marketing, exposure and product availability on our findings,

 

 

Extending the “Pepsi Paradox” to Diet Cola

In the late 1800’s Coca-Cola and Pepsi, the world’s largest cola brands, were started in Georgia and North Carolina respectively (Hammp, 2012). Since then, they have been engaged in something known as the “Cola Wars” that has pitted them against each other in an ultimate rivalry where the companies have come to represent much more than just a beverage. Early studies suggest that consumers are poor in identifying cola based on taste alone. In fact, Pronko and Bowles (1948) said that findings in this field “permit the generalization that when subjects are asked to discriminate and identify Cola drinks, they might do just as well by drawing the names of those beverages out of a hat (p.564).”

However, in this so-called “Cola War,” Pepsi seems to have always been just one step behind, which leads to the question of “why?” Thumin (1962) collected data that showed the ability to identify a given brand was unrelated to whether or not that brand was the participant’s brand of choice, but since then, studies have increasingly shown otherwise. Is this due to the increase in marketing and advertising throughout the years? Clearly something has changed since then. Thumin (1962) was also the first to do a blind taste test for the colas where participants knew what beverages they were trying to identify instead of just random guesses as to which beverages were even in the study. This started the research of preference based on brand cues. Recently, it was reported that a taste preference to a mixture of colas (Coke, Pepsi and Royal Crown) were biased according to brand cues presented prior to the taste test (Kuhn & Gallinat, 2013).

Currently, when it comes to soda sales, Coke, Diet Coke, Pepsi and Diet Pepsi are ranked first, second, third and seventh respectively (Hartlaub, 2014). It has been suggested that a strong brand image is the key to the dominance of Coke over Pepsi (Gladwell, 2005). It has been proposed that this phenomenon is due to the idea of group membership: in that people will identify themselves with not only what they consume but by what they do not consume, so in the “Cola War,” Coca-Cola and Pepsi become diametrically opposed (Muniz & Hamer, 2001).

Studies have consistently found that there is much more to preference than taste or product quality and that it is reflected neurologically as well. To further this, the burgeoning field of Neuromarketing was developed in order to understand the biological markers associated with consumer behavior and attitudes towards brands. This field can make an enormous impact on marketing and how companies try to sell us our products by truly understanding what makes us want something.

Evidence shows that there are nominal differences in neural activity when no brand information was given, but brain activity becomes more differentiated with brands and product preferences are introduced. Kuhn and Gallinat (2013) found that there was stronger brain activity in the ventral striatum, in addition to the prefrontal cortex, which is associated with reward based decision making, when participants viewed familiar labels with good reputations versus lesser-known labels. However, Koenigs and Tranel (2008) found that participants with prefrontal cortex damage were not impacted by brand information being present in taste tests. In fact, it made no difference on their preference. This suggests that if the cortical locus for decision-making does not work properly, our preference for Coke versus Pepsi effectively disappears. Thus, cola preference is not based on taste alone.

In the “Pepsi Paradox”, people state a preference for Coke but during blind taste tests choose Pepsi the majority of the time. McClure, et al. (2004) found that Coke causes more activity in ventromedial prefrontal cortex than Pepsi does. Interestingly, Coca-Cola cues elicit more intense processing in the amygdala, the emotional center of the brain, compared to Pepsi Cola, which may contribute to Pepsi being the eternal runner-up (Kuhn & Gallinat, 2013). This suggests that the Coke brand induce stronger emotional responses than the Pepsi brand.

In the current study, we tested the Pepsi Paradox in both regular and diet versions of cola. We aimed to replicate the effect found in regular cola, and evaluated whether it extended to less popular cola products. In contradistinction to a brand preference for regular Coke over regular Pepsi, it is possible that there would be true taste preference for diet Coke over diet Pepsi.

Methods

Participants

One hundred and thirty-six undergraduate students (96 females, 40 males), ranging in age from 18 to 46 years were recruited as part of an activity in a Psychology class at the University of South Carolina. Participation in this activity was voluntary and required consent. The participants were given a survey about their cola drinking preferences and frequency of soda consumption. All participants were unaware of the purpose of the study and were free of visual or motor problems that would have influenced their performance in the tasks. Sixty-nine participants were given regular Coke and regular Pepsi, while the remaining sixty-six participants were given Diet Coke and Diet Pepsi. One student opted not to participate in the cola taste test.

Materials and Procedures

For this experiment, questionnaires were created ahead of time that contained multiple tests for students to take part in during their scheduled lab periods for their Research Methods in Psychology class. The questionnaires were used to gather information that would later be used to compare and analyze data in the class. Students were asked three critical questions such as: frequency of cola consumption, ranked from 1 (low) to 5 (high), brand preference for cola (Coke or Pepsi) and their guess for the identity of cola A. These questions were answered after taking the taste test. In the experiment, each student was given three cups where one was labeled cola A, the second cola B and the third was water. Each of these cups contained 2 ounces of the specified product. Four trials were conducted and the procedure was the same for both regular and diet colas. In each of the four trials, students were told to take a sip of cola A followed by a sip of water, to cleanse their palate, and then a sip of B. This was repeated for each trial, but the order of A and B were counter-balanced to avoid preference based on order. This was a double blind experiment where both the students and the facilitator were unaware of which cola was Coke and which one was Pepsi. This was achieved by having the experimenter filling canisters with the colas and labeling one A and the other B. The experimenter was not present during the distribution or the tasting so as to keep it unbiased. These results were then given to a team of researchers who entered the data into a filing system. This system categorized each test and answer into an excel spreadsheet to be used by the class and lab team to analyze. Each student had access to this data during their scheduled labs and used it along with the IBM SPSS statistical analysis program. Preference in the taste test was operationalized by ≥3 trials of preferring that cola. Binomial sign tests were carried out as statistical analysis.

 

Results & Discussion

Overall, it was found that, for both regular and diet, Coke was stated to be the strong preference proportionally amongst our participants. When to came to the blind taste tests, Pepsi preference increased while Coke preference and no strong preference both decreased. It was also found that Pepsi drinkers were better at identifying the colas as well as staying consistent between stated preference and blind taste preference.

 

Regular Cola

For regular Coke and Pepsi (n=69), the majority of the participants stated that they preferred the brand Coke to Pepsi. Sixty-one percent of the participants stated that they preferred the Coke brand whereas 25% stated that they preferred Pepsi brand. Also, 14% of people reported no strong personal preference for either one. These results are consistent with previous reports that the Coca-Cola brand is preferred to Pepsi (Figure 1a).

In the blind taste test, the difference in percentage of participants who preferred Coke over Pepsi decreased (Figure 1b). Forty-six percent preferred the taste of Coke and 39% preferred the taste of Pepsi. About 15% of the participants showed no preference in the taste test. The change in the percentages from the stated preference to the actual taste preference is consistent with the hypothesis that brand preference is not based on taste alone. These results are somewhat inconsistent with the reported Pepsi Paradox in that Pepsi Cola was not generally preferred in taste over Coca Cola (Hartlaub, 2014). However, these results are consistent with the observation that Coke and Pepsi are hard to distinguish (Pronko & Bowles, 1948).

The intersection between the stated and actual taste preference is the critical analysis. On the one hand, many Coke drinkers actually preferred the taste of Pepsi or had no taste preference. Sixty percent of the Coke drinkers preferred the taste of Coke in our blind taste test. On the other hand, only 20% of the Pepsi drinkers preferred Coke, which was significantly different from chance (p=0.049, Binomial sign test). Still, 40% of those who did not have a stated preference preferred the taste of Coke. Together, the data suggest that while Pepsi drinkers were more consistent in not preferring the taste of Coke, Coke drinkers were nearly at chance when preferring the taste of Coke (Figure 2a).

Additional analyses show that 60% of Coke drinkers were correct in identifying the cola brands, whereas a greater amount of Pepsi drinkers, 80%, identified the brands correctly. Those with no stated preference were much lower in accuracy, around 30%. Binomial sign tests resulted in significant difference from chance for those participants who stated preference for Pepsi, p=0.049, suggesting that Pepsi drinkers were superior in distinguishing between Pepsi and Coke than Coke drinkers (Figure 2b).

 

Diet Cola

For the diet cola taste test (n=66), the data show that about 58% of the participants stated that they preferred Diet Coke, while only 18% stated that they preferred Diet Pepsi. About 24% of the participants had no preference either way (Figure 3a). Interestingly, more people had no preference than preferred Diet Pepsi.

The blind taste test results showed that 30% of participants preferred the taste of Diet Coke, but 64% preferred the taste of Diet Pepsi. Only 6% had no taste preference either way (Figure 3b). These numbers differed greatly from the stated preference percentages and is consistent with the ‘Pepsi Paradox” (Hartlaub, 2014).

To further analyze this effect, we calculated conditional proportions on stated and actual taste preferences. Thirty-nine percent of Diet Coke drinkers preferred the taste of Diet Coke. However, no Diet Pepsi drinker preferred the taste of Diet Coke p<0.001, Binomial sign test. For those who did not state a preference, only 31% of them preferred the taste of Diet Coke (Figure 4a).

Lastly, we calculated the proportion of people who correctly identified the diet cola brands. Across all stated preference groups, accuracy hovered around chance performance, with a non-significant difference for all three categories of stated preference, p-values>0.05, Binomial sign tests (Figure 4b). Our data suggest that although our participants showed a taste preference for Diet Pepsi, they were not able to reliably identify the brands of the diet colas.

Regular versus Diet Cola

Across both regular and diet cola conditions, Coke products were stated to be the preferred beverage by the majority of the participants, but when it came to the taste test, Coke products were not preferred by both regular and diet Pepsi drinkers. However, the current study also revealed differences between regular and diet cola taste tests. First, we found a stronger “Pepsi Paradox” for diet colas than for regular colas. Second, brand identification accuracy was reliable for regular Pepsi drinkers but not for diet Pepsi drinkers.

The accuracy data could be explained by the relative taste familiarity of regular cola over diet cola, and the minority status of Pepsi drinkers. It is possible that regular cola is consumed more often and more consistently than diet cola. Thus, the taste of regular Coke and Pepsi are generally more familiar than the diet versions. Since many more establishments serve Coke products, Pepsi drinkers often are given Coke products, which provide the opportunity to taste both cola brands more frequently.

Our results show that the Pepsi paradox was stronger for the diet versions of the colas than for the regular versions. Because temperature affects the taste of food and beverages (Wilson & Lemon, 2014), our experimental conditions to obtain the Pepsi Paradox phenomenon (Hartlaub, 2014) may not have been ideal and could have tilted the preference towards regular Coke. Another possibility for our results is that the taste of regular Coke is more familiar than the taste of regular Pepsi, and that some participants taste test responses were based on taste familiarity rather than actual taste preference. Out of the 41 participants who correctly identified regular colas, 27 preferred regular Coke whereas out of the 36 participants who correctly identified diet colas, only 18 preferred diet Coke.

 

Environmental influences

As a location, South Carolina is good places to conduct a cola taste test between two dominant products because it is flanked by the states where Pepsi and Coca-Cola originated.

However, the University of South Carolina, where this experiment was run, is primarily a Coca-Cola campus, so it is readily available in dinning halls and vending machines. We believe that this has an impact on the amount of people who state Coke preference because they have more associations with the Coca-Cola brand since it is all around them. Furthermore, we believe that those who still state Pepsi or Diet Pepsi as their favorite are basing their decisions more on taste than cultural and marketing influences because even though they are surrounded by both subconscious and conscious motivators for Coke (such as the availability and visual cues) they have not switched to being “Coke people.”

It would be interesting to conduct a taste test on a “Pepsi campus” such as the University of Maryland or Kent State University to see whether availability of Pepsi products would change the proportions for stated preference. Moreover, if Coke drinkers were on a “Pepsi campus,” would they be better at distinguishing between the colas? Additional experiments testing conformity, such as the Asch Paradigm (Walker & Andrade, 1996), for brand preference might be useful to see if overtime the minority will switch to what is easier to accept (i.e. Pepsi drinkers switching to Coke in our case).

Future research should also include surveys about location of origin for each participant. Since there are out of state students at the University of South Carolina it would have been helpful to know where students were originally from because this may have had an impact on their Coke versus Pepsi preference and identification abilities.

 

Business and Marketing Strategies

The popularity, exposure and availability of a certain brand seems to have a larger impact on whether someone chooses it than more sensible factors such as taste and price. However, this preference also holds true within brands. For example, in the early 1990’s Pepsi came out with Crystal Pepsi (a clear cola) but it ultimately failed, even internationally. We see this happen to different spin offs for Coke brand products as well – such as the distinction between the failed New Coke and Classic Coke in the 1980s. This shows us that despite having different options available, people are still sticking with what they see as the traditional and beloved product.

Today, both Coke and Pepsi use social media to boost their sales. These companies, like many others, have developed Facebook pages and Twitter accounts so that consumers can “like” or “follow” them and show their support for the product while at the same time seeing more advertisements for the company since they are now part of the user’s social networking sites. On Facebook, each company has their own pages and Coca-Cola brand has more than double the “likes,” or fans, that Pepsi. For Coca-Cola over 79.5 million Facebook users have liked the product while Pepsi only has about 31.5 million “likes” (as of March 2014). Also, Facebook tracks how many users are currently talking about each product and Coca-Cola had over four times more people talking about their products

To keep up with Coke, who was always one step ahead, Pepsi merged with Frito-Lay in 1965 to expand and diversify their business into the food industry. In Pepsi’s annual revenue from 2013, 52% came from food and 48% came from beverages showing that their inclusion of food has not only expanded their company but has become a very important component (PepsiCo). Furthermore, in 2013 Coke had net revenue of $48 billion (Coca-Cola) while Pepsi had net revenue of $66 billion (PepsiCo). This shows us that Pepsi has generated more money than Coca-Cola as a whole in the last year, but Coke is still at the top when it comes to beverages.

In general, the Coca-Cola company has been very successful in advertising its products. In 2010 alone, it budgeted $2.9 billion in advertising (Bhasin, 2011), whereas Pepsi had a raised its budget $2.5 billion in 2012 to promote a more diverse group of products, including healthier products (REUTERS, 2012). Moreover, advertisement and marketing campaigns have had a history of bad luck and poor outcomes, including accusations of race insensitivity (For a summary, see Russell, 2012). Meanwhile, Coke was hailed as 2011 Marketer of the Year by Advertising Age, a magazine that delivers news, analysis and data on marketing and media. Recently, Ridley Scott produced an animated short film based on the Coca-Cola Polar Bears (https://www.youtube.com/watch?v=I6zK7I2OocI), which further solidifies the association of traditional values with the Coke brand. Because Pepsi and Coke are archrivals (Muniz & Hamer, 2001), Pepsi ad campaigns are modern and edgy to counter the nostalgic message of Coke, exemplified by prank videos with Jeff Gordon (https://www.youtube.com/watch?v=RyP_KePP8Go).

 

Conclusions

Overall in the Cola Wars, Coke seems to be the current winner, despite the finding that the taste of Pepsi’s cola products is preferred over Coke cola products. This suggests that Coke has won the competition due to superior marketing and advertising campaigns. Therefore, Pepsi could potentially counteract the “Pepsi Paradox” with better advertising. Our results suggest a strong “Pepsi Paradox” in the diet cola taste test. Notably, marketing teams could use neural measures to understand the efficacy of their marketing messages (Madan, 2010). Strengthening the positive emotional association with diet and health-related products could propel Pepsi to the top beverage spot.

 

Acknowledgments: Thanks to Mandy Morgan, Bryn Schiele, Hannah Smith, Diane Woodbrown, the students of Psyc 228 and the members of the CPandA lab for help in data collection.

 

References

 

Bhasin, K. (2011). 15 Facts About Coca-Cola That Will Blow Your Mind. In (Vol. 2014). http://www.businessinder.com: Business Insider.

“Coca-Cola 2012/2013 GRI Report.” Coca-colacompany. N.p., n.d. Web. 15 June 2014. http://assets.cocacolacompany.com/44/d4/e4eb8b6f4682804bdf6ba2ca89b8/2012-2013-gri-report.pdf.

Gladwell, M. (2005). Blink. New York, NY: Time Warner Book Group, (Chapter Chapter).

Hammp, A. (2012). The Cola wars. In Billboard (Vol. 15, pp. 1): Prometheus Global Media.

Hartlaub. (2014). Sweet! America’s Top 10 Brands of Soda. In (Vol. 2014). msnbc.com.

Hogg, M. K., & Savolainen, M. (1997). The Role of Aversion in Product/Brand Choice. In Association for Consumer Research Annual Conference. Denver, CO.

Koenigs, M., & Tranel, D. (2008). Prefrontal cortex damage abolishes brand-cued changes in cola preference. Soc Cogn Affect Neurosci, 3, 1-6.

Kuhn, S., & Gallinat, J. (2013). Does taste matter? How anticipation of cola brands influences gustatory processing in the brain. PLoS One, 8, e61569.

Madan, C. (2010). Neuromarketing: The Next Step in Market Research? Eureka, 1, 34-42.

McClure, S. M., Li, J., Tomlin, D., Cypert, K. S., Montague, L. M., & Montague, P. R. (2004). Neural correlates of behavioral preference for culturally familiar drinks. Neuron, 44, 379-387.

Muniz, A. J., & Hamer, L. O. (2001). Us versus Them: Oppositional Brand Loyalty and the Cola Wars. In M. Gilly & J. Meyers-Levy (Eds.), Advances in Consumer Research (Vol. 28, pp. 355-361). Provo, UT.

“PepsiCo 2013 Annual Report.” PepsiCo. N.p., n.d. Web. 15 June 2014. http://www.pepsic
o.com/Assets/Download/PEP_Annual_Report_2013.pdf

Pronko, N. H., & Bowles, J. W., Jr. (1948). Identification of cola beverages. J Appl Psychol, 32, 304-312.

REUTERS. (2012). PepsiCo to Revamp and Cut 8,700 Jobs. In New York Times. New York: New York Times.

Russell, M. (2012). How Pepsi Went From Coke’s Greatest Rival To An Also-Ran In The Cola Wars. In Business Insider.

Thumin, F. J. (1962). Identification of Cola Preferences. J Appl Psychol, 46, 358-360.

Walker, M. B., & Andrade, M. G. (1996). Conformity in the Asch task as a function of age. J Soc Psychol, 136, 367-372.

Wilson, D. M., & Lemon, C. H. (2014). Temperature systematically modifies neural activity for sweet taste. J Neurophysiol.

 

 

 

 

Figure 1: Data for Regular Cola. Pie charts showing (a) the stated preferences for regular colas and (b) the result of the blind taste test. Number of participants falling into each category is indicated by the numerals inside the chart.

 

pepsi_fig1

 

Figure 2: Data for regular cola. Bar graphs showing (a) the actual taste preferences for regular colas as a function of stated preference and (b) the proportion of participants correctly identifying colas.

 

pepsi_fig2

 

Figure 3: Data for diet cola. Pie charts showing (a) the stated preferences for diet colas and (b) the result of the blind taste test. Number of participants falling into each category is indicated by the numerals inside the chart.

 

pepsi_fig3

 

Figure 4: Data for diet cola. Bar graphs showing (a) the actual taste preferences for diet colas as a function of stated preference and (b) the proportion of participants correctly identifying colas.

pepsi_fig4

 

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