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John Scully speaking at Socialbakers Engage2015

Lessons from Apple’s former CEO Sculley on marketing ‘failures’

John Sculley is no stranger to ailing business lines.

Sculley is known for his work at pulling in market share for PepsiCo from dominant rival Coca-Cola.

The New York Times credited Sculley for bringing his marketing know-how and corporate discipline to Apple, citing how the company grew tenfold in sales under his leadership from US$800 million a year to US$8 billion. His reign was also famous for being on the board that had Steve Jobs kicked out of his own company.

Two moments, among many, highlight his marketing ingenuity: The well-known Pepsi Challenge and Apple’s 1984 ad, both of which pulled in market share and sales for the brands respectively.

Sculley terms the recurring theme in both instances: they were both examples of “experience marketing”.

Experience marketing: The Pepsi Challenge and Apple 1984 ad

For Pepsi, Sculley described how Pepsi was outsold on a ratio of 10 to one by Coca-Cola.

“People used to say that if they had guests over, if they were pouring them a Coke, they would bring the can out of the kitchen and pour it for them. But if it was a Pepsi, they’d pour it in the kitchen and hope no one was the wiser,” laughed Sculley, speaking at Socialbakers’ Engage Prague 2015 conference.

“We had a problem.”

But in actual taste, both brands were similar, and in fact, Pepsi could “likely beat Coke by a small margin”, he added.

“So we created a campaign called the Pepsi Taste challenge and launched it in San Antonio Texas. We called it experience marketing, where you sell the experience and not the product,” he said.

Pepsi filmed a nine-year-old girl and her grandma tasting the product without revealing the result until the end. At the end, the girl exclaims: “Grandma, you picked Pepsi!”

“And the grandma goes, ‘I’ve never had a Pepsi in my life. I guess I must like Pepsi better’.That was a 30-second commercial.”

While eventually, Pepsi still lost the cola war to Coke, the marketing move helped the former to pull over some market share from the latter, though many argue the brand’s later marketing gaffes pulled it down.

As for Apple’s outrageous 1984 ad, Sculley marks it as a success.

If anyone needs a refresher, here you go:

It was 1983 and the company was getting ready to launch the next Mac model. The trouble was, Bloomberg Businessweek had just published an article on how the winner in the PC business was IBM.

“We were sitting there with our agency ChiatDay (TBWAChiatDay) and thought – what are we going to do?

“We thought of the book 1984 and said, well, Orwell said it’s going to be a success. So we thought, let’s do something outrageous. So we created a commercial for 1984, with zombie-like figures marching, and a talking head saying ‘we will control your life’.”

The scene ends with the commercial saying: “On January 24, Apple will introduce the Mac and 1984 won’t be like 1983.”

Sculley said board members hung their heads in horror when they saw the ad, but both him and Jobs decided to go on with the plan.

After paying a million dollars for a minute’s airtime during the Super Bowl, Sculley said it got 45 minutes of free publicity as TV networks kept running it for free after.

Sculley told Bloomberg Businessweek that the move helped Apple sell 72,000 units in the Macintosh’s first 100 days, which was 44% more than its target.

Lessons for brands

These days, Sculley has his hands full with a new venture – a low-cost smartphone venture he announced last year, Obi.

The brand offers low-cost phones, competing with budget Chinese phone manufacturers (not Apple, emphasises Sculley) such as Xiaomi – packaged in a “beautiful design”.

One vital lesson in marketing he has learned in all his years and is applying to Obi? Have a noble cause.

“I remember when we talked about ideas with Steve, we never talked about making money. It was always about creating a noble cause,” said Sculley, talking about building the best brands, as well as expressing his admiration for the late Apple founder.

“This phone is about changing the lives of people in less developed countries by giving them internet access, after food and water.

“The role of smartphones for the rest of the world is a noble cause,” added Sculley, talking about how it would connect people even in villages with capabilities such as mobile payments and basic access to the rest of the world, after fundamental human needs were met.

“That’s what will differentiate us from a ‘manufactured in China’ brand.”

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