Businesses are studying history’s great recessions and downturns to understand how to navigate the Covid-19 fallout. John Sculley, former Apple chief executive and Pepsi president, and a tech investor, has seen his fair share of business challenges. As part of The Drum's Can-Do Festival, he shared how to build a brand when others shrink at the challenge.
Keep on advertising
The 83-year-old's first piece of advice rings as true in a recession as it does in a pandemic: keep on advertising. This reflex, as evidenced by the studies of Peter Field and Les Binet, exists for several reasons – cheap ad inventory and less competition for share of voice among them.
But Sculley offered another dynamic to consider. A silent brand could be perceived as a struggling brand by consumers. Especially one that was never off the TV until lockdown hit.
Sculley said: “Going dark during this time really raises a question mark. Are they concerned? Is there a problem in their company?”
“Great brands,” he said, will be able to play a role in society greater than just selling a product. And that will likely pay off in the long-term.
“Companies that act that way will be looked upon as ones that have really helped us through the crisis. You pay attention to the brands that pay attention to you.”
Don’t play by their rules
As a Pepsi president in the 1970s, Sculley helped create the paradigm-shifting Pepsi Challenge. He’d just turned 30 years old when he took the job and was tasked with strengthening Pepsi so it could claim Coca-Cola’s crown.
Sculley said: “We really weren't a legitimate nationwide brand then – and we were up against, at that time, the world's most valuable brand. There was no way to beat them if we played by their rules.”
There was one valuable insight that proved to be Coca-Cola's Achilles' Heel. In blind taste tests, Pepsi performed slightly better than the market leader. Authentic responses from real Americans were aired on TV.
He said: “The Coca-Cola Company went nuts for us insinuating that maybe Pepsi was a better-tasting product, but it wasn't us making the claims.
“The more Coke complained about it, the more we liked it. They sued us and tried to stop us from running those commercials.”
Of course, he reflected, there were a mere three national TV channels when he was plying his trade there, and the explosion of media today muddies those waters.
By the time he left Pepsi, it had surpassed Coca-Cola as the largest-selling consumer packaged goods brand in America.
“Even if you are a small company at a disadvantage, if you change the ground rules, you can have a huge impact. This shows you the power of brand advertising.”
Find your price and stick by it
Sculley was later attracted to Apple as chief executive between 1983 and 1993, tempted with a pitch from Steve Jobs: "Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?"
During this time, the Apple brand planted the seeds that would see it conquer the world.
Memorable even now is the iconic 1984 ad, directed by Ridley Scott. Jobs and Sculley, upon seeing the work, immediately purchased a Super Bowl spot.
But Sculley leveraged all his Pepsi experience to try and guide a young Apple staffed with a wealth of ambitious 22-year-olds.
His main claim to fame is how he helped set Jobs on the premium pricing path. At that time, Jobs and co had the urge to discount to the almost unprecedented $1,500 for a Macintosh computer.
Sculley claimed to have told Jobs: “If you want to hold to your high standards, then we're going to have to price it as a premium product.
“We didn't have to get the largest share market. That strategy ultimately won. When I left Apple 10 years later, we had the largest selling personal computer in the world."
In the following three decades, Sculley’s been a tech investor and formed digital marketing agency Zeta Global with long-time friend David Steinberg, its chief executive officer.
From some of the work Sculley has helped deliver the marketing agency, he has observed the power of loyalty and customer retention.
He said: “The companies who come out of this pandemic in a better position than when they came in are the ones that will digitally know who their most loyal customers are, and then reward their loyalty.”
He posited Amazon Prime as a prime example of this.
With all of its added benefits, the $9 a month price tag, seems low. But Prime members buy are four and a half times more than the average customer.
Never waste a good crisis
Sculley’s business partner Steinberg was also speaking at the event and spoke of how brands should "never waste a good crisis”.
Periods of huge disruption have a way of reshaping the world. One example he offered was the invention of the soap opera by P&G during the Great Depression. Few today remember that P&G's cleaning ranges are why the genre is referred to as soaps. Branded shows were just as common back then as they are today.
“Radio airtime costs dropped dramatically. P&G went into the depression somewhere between the 15th or 20th largest consumer packaged goods firm in the USA. It was the largest in the world by the time we came out of the depression."
Is empathy here to stay?
And finally, we've seen a huge swelling of compassionate brands, almost suddenly in these so-called "unprecedented times".
That tone might be here to stay, predicted Steinberg.
Many brands have pivoted to empathy-led marketing, away from action-orientated measures. Some see straight marketing efforts are crass, others don’t have the stock to justify the hard sell.
Steinberg said: “Some brands won't go back, some will stick with an empathetic message.
“Companies that have more longer-term outlooks are going to look at this sort of pivot to empathy, and they're going to continue with it.”
Sculley and Steinberg spoke with The Drum's Stephen Lepitak as part of The Drum's Can-Do Festival, an online event celebrating the positive energy, innovation and creative thinking that can make the marketing community such a powerful force for good. You can watch the interview in full here.
Sign up to watch forthcoming sessions and see the full Can-Do schedule here.