But being No. 2 doesn't sit well with Coca-Cola, which believes if
it can get consumers to taste Vault, they'll convert. "Simply put,
it's designed to drive Vault consideration and recruitment among
Dew drinkers," said Scott Williamson, a Coca-Cola spokesman. "We
believe that when Dew consumers are offered the opportunity that
they'll like Vault better."
It doesn't hurt that the product will be given away for free, a
tactic that has garnered goodwill and delivered significant return
on investment for marketers including Starbucks, Dunkin' Donuts and
Taco Bell.
Free with purchase
Via Coca-Cola's promotion, consumers can get a 16-ounce, 20-ounce
or 24-ounce Vault free with any purchase of a 20-ounce Mtn Dew. The
offer, billed as the "Vault Taste Challenge," encourages consumers
to "Try Vault, with 30% more kick than Dew and a bold citrus
taste." The coupon is good through late July.
"It's not the largest Vault promo ever, but it's significant for
the brand," Mr. Williamson said. Coca-Cola declined to comment on
the number of coupons being distributed or the overall cost of the
program, but industry experts say the price tag will easily be in
the millions.
"It's going to be mighty expensive," said David Diamond, a
marketing consultant and former Catalina Marketing executive. "But
as a way to leverage for increased distribution of Vault, it
strikes me as very, very smart."
Another executive in the promotions business called the deal
"unusual" and "unique," noting that it would be too expensive for
most other package-goods companies. "Coupons are in vogue, and any
time a consumer can buy a product and get another product free,
especially with something that is so rapidly consumed, it is a
significant value."
Thanks to the recession, coupon-redemption rates are on the
rise, jumping 10% in the fourth quarter after years of declines.
Experts estimate redemption of the Vault coupons could reach as
high as 40%.
Still strong
Mtn Dew and Diet Mtn Dew are the only brands that managed to hold
their own in the beleaguered carbonated-soft-drink category last
year. Both Mtn Dew and Diet Mtn Dew gained 0.2% share in the
category. Diet Dew also managed to increase volume 3.7%, the only
brand in the top 10 to do so, according to Beverage Digest's
take-home data, which excludes Walmart.
As for the company that invented the Pepsi Challenge, it's
unfazed by Coke's move. "Many companies have challenged Mtn Dew
over time, whether it was Surge or Mello Yellow and now Vault,"
said Frank Cooper, Pepsi's VP-portfolio brands. "What we're seeing
now is a last-ditch effort to propel Vault forward in the face of
Mtn Dew growth. It's an interesting tactic, but I think that the
Mtn Dew consumer understands that the Mtn Dew product experience is
unique."
Vault's play might be well-timed. It comes amid a name and
design change for Mtn Dew that is proving unpopular with some
consumers, who have expressed confusion, saying the new packaging
makes the brand look like a knockoff. Those are, to some extent,
the same criticisms that last month felled the Tropicana redesign.
Peter Arnell, principal of Arnell Group, handled the redesign on
both brands, along with redesigns across the PepsiCo portfolio.
"There's always a concern that when you make changes,
particularly fundamental changes, that you can alienate the base,"
Mr. Cooper said. "But because we maintain a pretty constant
communication channel with this consumer, we feel comfortable about
making whatever adjustments are necessary."
Still, Mr. Cooper downplayed the design change, calling it
"incidental," though complementary, to the brand's overall efforts.
Those efforts include heavy involvement in the gaming space, with
an upcoming "World of Warcraft" partnership, and a strong digital
presence.
Bank on more promos like Vault's
Five reasons why, in this economy, we'll see more pushes like this.
- Coupon redemption rates jumped 10% in the fourth quarter; 94%
of consumers now say they use coupons.
- Enticing cash-strapped consumers with discounts and free
products is some marketers' best shot at taking share.
- As sales slow, growing share is becoming tougher than stealing
it.
- Coupons offer value without permanently eroding price
points.
- There are more options for coupon distribution, including
social media and downloadable coupons, that appeal to a young
audience yet eliminate some of the cost for marketers.
