The one with PepsiCo Beverages US CMO Mark Kirkham about the science of growth and the math of differentiation.

Summary

The CEO’s Guide to Marketing — “The Science of Growth and Math of Differentiation”

Guest: Mark Kirkham, CMO of PepsiCo Beverages North America
Host: Seth Matlins, Managing Director, Forbes CMO Network
Recording Date: September 12, 2025

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Episode Overview

This episode revolves around the central issue for modern marketers and the C-suite: How to differentiate products and brands in increasingly saturated markets—where “good enough” products abound, and cultural resonance is just as crucial as product function. Mark Kirkham, CMO at PepsiCo Beverages North America, brings candor and practical wisdom to tough questions about branding, product relevance, portfolio management across massive brands, and navigating a future where AI increasingly mediates consumer choice.

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Key Discussion Points & Insights

1. Product vs. Experience: What Are We Really Selling?

• Main Idea: A product is more than its physical ingredients—what companies truly “sell” is the experience, emotion, or lifestyle their brand creates.
  • Mark Kirkham: “You make products that ultimately create experiences…What you sell is experience. It could be refreshment in the case of beverages, a lifestyle in clothing or jewelry. But you sell something that’s bigger than the product itself.” (00:23)
• The C-suite must maintain clarity between product features and the overarching brand experience. Differentiation happens at the intersection of functional benefits and cultural/emotional relevance. (02:02)

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2. Crafting Differentiation in Mature Categories

• Markets like soft drinks seem saturated, yet differentiation is possible—and critical.
  • “The difference between Coke and Pepsi, Budweiser and Miller—it may seem like nuance, but the product’s role in moments has to be uniquely differentiated.” (02:02)
• Mark explains that for decades, Pepsi has leveraged the brand’s associations—in food, music, and sport—but real long-term value comes from connecting product roles to specific experiences (e.g., why Pepsi makes burgers taste better at a tailgate).

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3. Product Role vs. Brand Role (and Finding Their Balance)

• The Product Role: Fulfills a category's basic consumer needs (taste, refreshment, energy).
• The Brand Role: Adds emotional resonance and cultural context—making a consumption moment memorable or meaningful.
  • “If we just kind of associate the brand in a moment, frankly that’s just sponsorship… All I do is sponsor a team or a league and I don’t bring the product benefit...then I’ve missed a huge opportunity.” (05:28)
• Magic happens when marketers overlap emotion and function—something many brands lose sight of.

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4. Why Do Marketers Lose Balance? (Product vs Lifestyle Chasing)

• Many brands lose focus by chasing culture rather than rooting relevance in product benefits.
  • “I think we chase lifestyle too often… we feel that’s the job of marketing, to be in culture… [but] focusing on something simple as food… can be incredibly powerful and sexy if you do it right.” (08:06)

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5. Brand as Service vs. Product (The Coke Example)

• Brands succeed when they think of themselves as providing a service or benefit—“in service to that uplift, that refreshment, that enhancement of the moment.”
  • Seth recounts advising Coke to stop selling itself as a product but as a service. Mark responds:
    • “Brand differentiation is critical, and you do that over time… But if you can’t root it in a product truth, then… that service or experience [won’t] differentiate itself.” (10:33)

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6. Navigating Proliferating Categories and ‘Good Enough’ Products

• With an explosion of product variations, most differences are trivial to consumers; brand becomes the decision driver when products are “good enough.”
  • “The brand is ultimately the differentiator for the consumer… If we don’t have a clear understanding of our product differentiation, all that other stuff… gets lost in a sea of sameness.” (13:31)
• Mark flips the usual marketer’s logic:
  • Seth: “I tend to think about the brand elevating the product, but you’ve turned that inside out.”
  • Mark: “The brand has to be continually nourished… but if it’s built on a weak foundation… you’re just buying your way into someone’s lives and not actually anchor[ed] in their habits and rituals.” (14:31)

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7. Brand Identity, Iconic Branding, and Self-Expression

• Wearing a brand (Pepsi/Gatorade/Coke) says as much about the wearer as the product/company.
  • “I actually want to have people wear the brand because it says something about them. It’s about their identity.” (18:50)
• Example: Mark wears a Gatorade shirt—a simple icon with complex, cultural meaning.

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8. Managing Large Brand Portfolios: The “CITY” Acronym

• Analogy: Managing a portfolio is like building a city (C-I-T-Y):
  • Consumer — Who are they? What’s the benefit?
  • Ingredients — What’s included that makes consumers want to “live” there?
  • Trends — What’s changing that might create a gap or opportunity?
  • Your Brands — Can your brands deliver on these needs, or should you build/acquire new ones?
  • “If you map out your portfolio like you map out building a city, you look at it holistically…Get people out of the marketing head and into the business building head.” (21:41)

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9. Strategic Risk, Failure, & Category Growth vs. Brand Growth

• PepsiCo is structured for calculated risk and experimentation by virtue of a vast portfolio; failures like “Crystal Pepsi” are learning opportunities.
  • “If you set the right objective, maybe the objective isn’t pass/fail… Maybe the objective is to change the mindset.” (26:00)
• Mark cautions: Don't try to make every brand a mega-brand; set specific objectives for different product roles and targets.

Category Growth vs. Brand Growth

• Fundamental to growth: Penetration—growing the entire category as well as individual brand reach.
  • “If we’re not building the category, whether we’re the number one leader or the number five player, we’re not going to grow. Penetration drives growth.” (31:23)
• Sometimes, focusing on category adoption (root beer as a flavor) precedes brand preference (Mug vs. others).
• De-averaging penetration is vital: Know which segments, demographics, or psychographics are truly driving your growth, rather than chasing ‘gen pop’ (the undifferentiated mass market). (35:14)

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10. AI, Bots, and Marketing in the Coming Decades

• Will brand become more or less important as bots buy for consumers?
  • Mark: “We need to stop thinking of AI or bots… as the enemy… All the inputs to AI came from humans, from brands, from behaviors. It’s not about AI as output, but as input—as a collaborator or enabler.” (38:06)
  • “If an idea can’t land in a way that can be read in this world of bots and agents, then it’s probably not a good idea.” (42:41)
• Marketers must now research and “know their audience”—both human and non-human (bots/AI)—and ensure their messaging is discoverable and relevant in a digitally mediated world.
  • “If my team doesn’t think about how our work can be relevant to that new world, then we’re missing an opportunity.” (43:41)
• Fundamental marketing principles endure; only the “how” shifts.

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Notable Quotes & Memorable Moments

• On Product vs. Brand:
  • “If we just sort of associate the brand in a moment…frankly, that’s just sponsorship… I want [consumers] to know Pepsi goes really well with their food while tailgating, waiting for the Commanders game.” —Mark (05:28)
• On Chasing Lifestyle:
  • “I think we chase lifestyle too often… The only reason [Pepsi] lasted the test of time… is because [we] were culturally relevant at different moments.” —Mark (08:11)
• On Portfolios:
  • “Think about building a city—CITY: Consumer, Ingredients, Trends, Your brands… Map your portfolio like a city.” —Mark (21:42)
• On Failure/Risk:
  • “A failure is actually a learning. I don’t think there’s actually such a thing as failure if you set the right objectives.” —Mark (26:00)
• On Category vs. Brand Growth:
  • “If we’re not building the category, we’re not going to grow. Penetration drives growth.” —Mark (31:23)
• On AI as Marketing Audience:
  • “If an idea can’t land in a way that can be read in this world of bots and agents, then it’s probably not a good idea.” —Mark (42:41)
  • “You have to know both—humans and bots. If we don’t make our marketing relevant for both, we’re missing out.” —Mark (43:41)

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Timestamps for Important Segments

• 00:23–02:02: Defining product vs. experience and the marketer's real job.
• 05:28–07:56: Difference between brand role & product role in a moment; balancing act in marketing.
• 08:06–09:03: Why marketers over-index on lifestyle, and how to regain focus on product relevance.
• 13:31–14:31: With good-enough products, the brand becomes the differentiator.
• 18:50–19:53: Brand identity, why people wear logos, and what it says about consumers.
• 21:41–23:28: Portfolio management, the CITY model, and business-building vs. marketing mindsets.
• 26:00–29:59: On failure, risk-taking, setting the right objectives/KPIs for new products.
• 31:23–35:14: Connection between category growth, brand growth, and penetration.
• 38:06–43:41: The future: AI, bots, and how brands will need to adjust tactics—not essence—for discoverability and resonance.
• 42:41: “If an idea can’t land in a way that can be read in this world of bots and agents, then it’s probably not a good idea.”

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Tone & Language

Mark Kirkham and Seth Matlins keep the discussion candid, practical, and occasionally self-deprecating—mixing hard truths for the C-suite (“You’re just buying your way into someone’s lives...”) with entertaining analogies (SimCity, “smoking our own exhaust,” and playful jabs about T-shirts and Hollywood impressions).

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This episode is essential listening for marketing leaders, CEOs, and CFOs grappling with how to drive true differentiation and growth—when “brand” and “product” must work hand in hand, and the next disruption is already here.

Transcript

[A]

Foreign. So here's my first question mark. What's the difference? And what can you tell our audience and in particular the CEOs and CFOs out there? What's the difference between what you make, what you manufacture? Right. The physical product, and we'll leave services to the side for the moment, and what it is you're selling?

[B]

I think at the end of the day, you make products that ultimately create experiences. So I think while you want to separate them, in many ways, they're one and the same. You have to be able to have real clarity on what your product is, what it stands for, what's in it. All the basic ingredients for any CPG product or any electronics product doesn't matter. It has to have those ingredients. But what you sell ultimately has to be what your brand stands for. And what you sell is experience. It could be a benefit of refreshment in the case of beverages. It could be a lifestyle in the case of, you know, clothing or jewelry. But you sell something that's bigger than the product itself. And if you can't articulate the difference, then you get lost.

[A]

Right. So. So here, here's a question. Let's make it super specific to. To you. Why not? Why not?

[B]

Why not?

[A]

And Pepsi. Right, Right. Within. And not just about Pepsi. But, you know, I think, as you know, I spent years working with the Coca Cola company many years ago. You don't actually sell the product. Right. It's never about the ingredients. It's about what the ingredients to your earlier point do for you. Right. It's that uplift, the refreshment goes good with food, blah, blah, when the product itself is simply a conveyance for that experience, experience for that brand message. How do you go about shaping that? How do you go about identifying it and in a way that's differentiated within the category?

[B]

Yeah. I think you have to start with the fact that even though the category may seem a lot of similar type of products, they are different. You know, I mean, there is a difference between Coke and Pepsi. There's a difference between Budweiser and Miller. But I think you need to identify, well, what makes it different and where can that difference be brought to life in the best way way? The brands can do similar things, but the product's role in those moments has to be uniquely differentiated. And I think about the work we've done in Pepsi Challenge for decades. If I think about the work we're doing in food, why does Pepsi make a burger taste better than another product? Why does that experience and the brand, how it comes to life in that experience stand out different. And I think this is where that combination of kind of product benefit and emotional benefit have to kind of combine in a really special way. You know, you think about all of our history in music and sports and all of these things which are additional to what the product is. But I think where you have to make it really special is just make sure that it has a reason for being there. And that reason can't just be because your brand is there. You've got to give a real clear role for the product. So making those moments more special because you're having an ice cold Pepsi, yes, it's refreshing, yes, it tastes good, yes, all of those things. But what is the cultural context? What is that moment? You think about the NFL tailgate, You think about the moment before a big soccer match. You want people to enjoy your product while they're also enjoying something else. But there needs to be a product benefit, there needs to be a refreshment, there needs to be a taste, There needs to be something that relates to them, that they choose you over the competition.

[A]

Right. But taste, obviously being the fundamental differentiator, I would think, and, and we're going to go probably a little deeper into to, you know, the, one of the many brands you represent and we typically do on the show simply because I think, you know, Coke versus Pepsi and Pepsi versus Coke, it's such an iconic, historic generations long marketing battle and construct and case study that, that I think it's really useful for, for the audience. But in that moment, let's just use the tailgate. Before Pepsi had the NFL, excuse me, Coke had the NFL. Right. So in that moment, like what is the differentiating premise for why Pepsi might make that tailgate better than another beverage choice? We don't have to keep talking about.

[B]

Yeah, yeah, yeah. I think, I think what's interesting is that I think we've at times lost focus on what the product benefit or reason for being in those moments is. And we've spent a lot of time trying to understand why do we make food taste better. You know, we spend a lot of time from an R and D standpoint, a lot of time from a marketing standpoint. And if I'm honest, over the years we lost focus on the product role in those kind of emotional cultural moments. You know, we talked about the brand a lot, we talked about our association with music and sport and the brand was kind of coming along as like, you know, a sidekick.

[A]

Can I, can I ask you to explain to the audience who at least Those who might not understand the difference between the product role and the brand role in the same moment.

[B]

Yeah, I think, I think the product role is probably where the category has defined. So soft drinks, right? The product rule, the end of the day is taste, refreshment, maybe some energy. It's that the basic needs the consumer has on a functional level that they have with their food, with their friends, whatever it is. The brand role is how that brand is associated with that moment and the person. You know, I think what we lose sometimes is trying to find the balance of both. It is a yin and yang, it's the concentric overlap of circles kind of thing. But. But I think if we just kind of associate the brand in a moment, frankly that's just sponsorship. All you're going to be is aware that, hey, Pepsi does sports. But actually, I want them to know that actually Pepsi goes really well with their food while they're tailgating, waiting for the Commander's game. And if I can make the food benefit resonate as much as the association with the sport, that's a win win. If all I do is sponsor a team or a league and I don't bring the product benefit and the products roll in that moment a la refreshment, taste tasting better, making the food taste better, then I've actually missed a huge opportunity. And all I've done is kind of associated with a borrowed equity versus building a functional equity on the product in those moments. You know, it's that combination of emotion and function that is, it's the magic sauce of any marketer's job. And I do believe over time, lots of brands lose focus on that. You gotta make sure you kind of find that balance. And I think we over time have kind of maybe gone too much in the experience of the brand or the associated event or partner, and less about the product. And if you see the work we're doing now, I think what's more important now is make sure people understand why I would choose Pepsi or why I would choose brand X versus brand Y in those moments, because it tastes better or it really is refreshing or it's something. It's a brand or a product that I choose because it's the one I like, but it's the one I like in those moments where I'm with my friends getting ready for that big game, getting ready for that concert, whatever it is. And I think that's where the magic sauce is. And that's. I think one of the bigger challenges in marketing is we've lost a little bit of the balancing act. And I think we need to find a way to be able to understand what the product role, like, what is the reason the product is sitting at the table, but also why that brand was the choice for the consumer in that moment.

[A]

Why do you think, speaking broadly, that we've, we've gotten out of balance or lost, lost some of the relationship between product and brand?

[B]

I think we chase lifestyle too often.

[A]

Why?

[B]

Because I think we feel that's the job of marketing, is to be in culture. And, and it is, let me be very clear. We have to be relevant to culture because brands last the test of time, even if your products need to evolve. And the only reason you were able to last the test of time for 125plus years in the case of Pepsi, is because you were culturally relevant at different moments. Not relevant necessarily as a product. Always. The product's always going to be relevant. The category is always going to be relevant. But I think we kind of maybe chased the lifestyle or the culture side of what makes our brand relevant. And at times we've kind of lost focus on, well, what makes my product relevant in those moments. So focusing on something simple as food, which sounds frankly not sexy for marketers, actually can be incredibly powerful and incredibly sexy if you do it the right way. It's not about the what you're doing, it's how you do it in a relevant way.

[A]

Yeah, yeah, always. You know, I think I told you this story when we were sitting together earlier this summer that this is rather astoundingly to me 25 years ago, it's actually one of my first meetings. I'm at Creative Artist agency called Coke's, our first client. I'm at a marketing leadership off site with the then new global CMO of the company. And I don't know what gave me the cojones to walk up to him and say this, but I'd sat through so many positioning statement meetings from them as they were optimizing and tweaking and playing with what it could be. And I'm sorry, I should apologize to those who were there, that sounded dismissive. I don't mean it dismissively. And I said to him, you know, hey, what if you stop selling and thinking about Coke as a product? And this was brand Coke and more about it as a service. Right? Because it was, it's always in service to that uplift, that refreshment, that enhancement of the moment. Right? The product does it, but you're not in fact selling a product, you're selling a service. You're selling emotional, physical benefit. Does that make any sense to you? Like, what do you think about that? And really a long way of saying not Was I right 25 years ago? But are we thinking so much about products that are oftentimes yours being different because of taste, undifferentiated, that we kind of lose the role of brand?

[B]

I think we become undifferentiated when we forget about what makes us differentiated. Brand differentiation is critical, and you do that over time. It's like the adage of you build equity over time. It doesn't happen overnight, but if you can't root it in a product truth, then I think you lose the ability to make that, call it that service or that experience differentiate in itself. You talk earlier we were talking about sponsorship. Anyone can sponsor something, but if your product can be part of the experience in a relevant and distinctive way, then you're no longer a sponsor. You're actually part of that moment. You're endemic. You're endemic. You know, and you look at Gatorade, Gatorade's endemic because they invented the category. They created a product benefit that ultimately became the anchor of a brand benefit. But the brand became so big in all the things it stands for within sport and lifestyle. And I think that's where a perfect example of product benefit evolved into a really big social currency. And that was the way for soft drinks and many categories for years. But I think as times as categories get more fragmented and proliferated, I think getting that balance right is more important than ever.

[A]

You bring up something I've been thinking a lot about. Right. Which is you just talked about as categories get more fragments, fragmented, a result of proliferation. Right. Which is everybody looking for kind of like a point of difference that's a nuance oftentimes rather than something more significant. Right. So, you know, how. How many flavors of ketchup does one really need in their pantry? Sorry, Todd. Todd Kaplan, Shout out. I'm sure we need many more than we have. I kind of wonder if, like, sometimes we marketers aren't just smoking our own exhaust. And the fact of the matter is, across product and service categories, the differences we see are just not that meaningful to the difference that the consumer or the customer sees. Which is to say that as. As there's been an explosion of products and services, and there has, and, you know, World Economic Forum data makes it quite, quite clear, even if our own anecdotal and observational evidence doesn't, the differences are. Even if they're. They're visible and, and easily manifest. It's like it's good enough. It quenches my thirst, it's does my accounting. You know, I was talking to somebody from one of the platforms yesterday about something and I was like, I was scrolling. I don't remember what I was scrolling. Right. I was on a social feed. I don't know whose it was. In a world of good enough products and services, what then is the role of brand?

[B]

Well, I think the brand is ultimately the differentiator for the consumer, especially when it comes to worth paying more for. It comes when you're trying to really establish brand X versus brand Y. But again, I think if we don't have a clear understanding of our product differentiation, all that other stuff to your point on the feed, it just gets lost in a sea of sameness, you know, And I think this is where using your product as a way to really elevate the brand in how it comes to life through experiences, through, through partnership, through events, through your own social and storytelling. If you don't put the product at the center, it's just another story.

[A]

I love, I love what you said because I've not actually thought about it that way. Using the product to elevate the brand. I tend as a brand driven marketer to think about the brand elevating the product. But you've turned that inside out, which I think is super interesting.

[B]

I think you have to, because, you know, the brand has to be continually nourished and built.

[A]

Sure.

[B]

But if it's built on a weak foundation, a product or a portfolio of products that just is in a sea of sameness, then all you're doing in many cases is borrowing equity from other things or kind of in, you know, kind of trying to insert yourself in people's lives in an inauthentic way because you don't have a reason to believe. And at the end of the day, in the world of consumer packaged goods, your reason to believe isn't just a brand belief, it is part of the reason to believe. But if you don't have a product truth or a product point of differentiation, then ultimately you're just, you're just buying your way into someone's lives and not actually anchor themselves in their habits and their behaviors, in their rituals. And you know, soft drinks have been around for, you know, hundreds of years. And if we're not elevating the brand experience through the product experience, then we're missing in some cases half the opportunity. And I think it's in a world where need to continuously innovate. Innovation is about Adding value back to the brand, not just adding ingredients to a product. And that's where I think this combination of getting this balance between having a clear product reason to believe, but having a brand that people relate to, resonate with, that they can identify with, that they're proud to wear on their shirt and not just drink with their friends, I think that's the big difference maker. And I think that's where finding that balance is. That is where the art, there is no science is the art and science of marketing is. And this is also part of the problem where people have to understand what's the role of marketing. Yes, it is brand building, but it's giving the product the reason to believe in those moments where someone. Yeah, exactly. And I think that's, that's the balancing act where I think every brand has gone through, you know, the other sides of the spectrum. They've gone all the way to just brand focus, brand focus, brand focus. The product falls behind or product benefit focus. If it's unique and differentiate and they build the brand behind that.

[A]

I want to, I want to ask you a question about something you said, you know, building a brand that they're proud to wear.

[B]

Right.

[A]

You know, if, and I'm sorry, I don't want to keep making it about Coke and Pepsi, despite what I said. But let me ask you a question because I think, I think it'll, it'll be a nice exclamation point on this part of the show, which is you got the same person walking down the street, you know, 25 year old woman walking down the street, Times Square. She's wearing a shirt that's got a Pepsi logo on it. Let's, let's go nostalgia. So old school 70s kind of thing. Stick a pin in it. Same, exact same person in the exact same place. She's wearing a shirt with an old school Coke logo on it from the 70s. What is she saying about herself in those two moments that's different from your perspective?

[B]

Look, I think if this is where the brand and what the brand stands for and what the brand has built over time makes a difference. You know, if I see someone wearing a certain brand, it says something about them, but it also says something about the reason they're wearing that brand. You know, they're wearing that brand because they either like it or they think it just looks good.

[A]

Right.

[B]

I think a lot of times when, and I think of our brands and I happen to be wearing one right now. When, when I wear this, this actually is, is saying something about me. It's saying the type of person I am.

[A]

What's. What is your Gatorade?

[B]

So I'm wearing a Gatorade shirt.

[A]

Yeah.

[B]

What's. You know, to be honest, I just. The logo itself, I mean, it's pretty cool. No, it's a very simple, you know what it was without having to put the word on it. I think it's a great example of how the brand has been able to expand by simply articulating the bolt in a way that just represents something more. Does it say that I care about fitness? Do I like sport? Does it say that I know people will know what it means? So that makes me unique and different and I think that's the difference between brands. Some brands frankly can just be wallpaper or merchandising or advertising. Sometimes when people are wearing, you know, a lot of marketers just want you to wear the brand because you're just another impression.

[A]

Right.

[B]

I actually want to have people wear the brand because it says something about them. It says something about their identity. It's about their identity. And I think they are different. I think there are different people who wear different brands for different reasons. Some may be for nostalgia, some because they want to stand out from the crowd. You know, one of my favorite T shirts is a Crystal Pepsi T shirt. Why? Because every time I wear it, someone asks about it and that's why it matters. And I think that kind of conversation, by the way, and that's actually about a product because everyone always asks when you bring it back Crystal Pepsi. It's not about whether I bring back Crystal Pepsi. It's the fact that you're asking me whether I'm going to bring back this Pepsi because there's something about that brand and something about that's different and unique and they associate it with something that was different and unique and not like every other beverage or every other brand. So I think there's the simplicity of what I'm wearing here that I think Gatorade has built over time and represents a lot about sport and lifestyle and yes, the category. But I think when you compare different brands you have to ask what is that person trying to say versus are they just wearing it to be the.

[A]

Way my kids wear Nirvana T shirts.

[B]

With and haven't listened to single Nirvana track in their life.

[A]

Yeah, yeah. Confuses me. You also mentioned a few moments ago portfolios and you manage not inconsequential from any metric in terms of number of products and brands to absolute volume size, dollar wise and otherwise a really significant portfolio. What, what's from your perspective, what might the C suite of other companies with portfolios of brands not understand about the art and science of managing those portfolios so that they are accretive to each other and not cannibalizing each other unless that cannibalization is very intentional and strategic?

[B]

You know, I was thinking about this when we were talking last, and I kind of analogy would be, you know, especially looking from a CEO's perspective is like, well, what. How do I build my portfolio? And the analogy is like, think about how you build a city. When you think about a city. And I go back to like SimCity and like those fun games and that, like, you knew nothing what you were doing and you'd fail 90% of the time.

[A]

That's the story of my career.

[B]

But, you know, if you think about a city, and I'll use the acronym to help tell this story is that first you start with the consumer. Why do they want to live there? What is the neighborhood they want to live in? And what is the benefit of living in that neighborhood? And that you think about your products the same kind of thing, like, what is. Who is that consumer? What's the benefit they need? And why would they want it? Okay, the second is the ingredients, right? The ingredients.

[A]

City is the acronym.

[B]

City is the acronym. Okay, yeah. All right. What are the ingredients? What is the stuff you need to put into that product or into that city, you know, that are going to make those consumers want to live there? I think the second or the third is trends, like, what has changed in the dynamics of an environment or a portfolio that you are missing something in the world of a city? Do I need to build a stadium to bring more people to my city? But for us, it's like, do I have a gap in more portfolio that I need to actually put something else in that portfolio that doesn't live there because there's a trend happening and I'm kind of missing it. And then the last one, and this is forced because I couldn't find a letter that begins with why it's your brands. All right? And you have to ask yourself, can your brands deliver on that consumer, carry those ingredients and be relevant to the trends? And if they're not, you may have to go and acquire or build a new one. And. And if you, if you map out your portfolio like you map out building a city, it'll allow you to look at it holistically. I think too often we just look at, oh, someone's doing this, I need to do that. Well, maybe not. Or you look at it and say that R and D has this amazing technology. We need to make a thing that uses it. I would look at it differently and say, is there a consumer need? Can we create it? Is it on trend or relevant to consumers as a whole? And will my brands actually fit that portfolio or do I need to build a brand or in some cases buy a brand to do that? I think that's the portfolio mindset. I kind of like the idea of putting it in an analogy or an example because then you can kind of get people out of the marketing head and to get into the business building head, you know, well, isn't it, isn't.

[A]

It a shame that there's a difference between a marketing head and a business?

[B]

There shouldn't be.

[A]

There shouldn't be. There shouldn't be. So one of my favorite quotes, and I believe it to be accurate, I don't in fact know, is attributed to Jeff Bezos, who years and years ago at Amazon was in an on an investor call and as I understand this story, somebody asked him about Amazon Fire and it was not a success. It was a failure, in fact. And, and you know, why did it fail? Some such question. And Bezos is reported to have said, you think that was a failure? We're working on much bigger failures right now, which I, I love it so much because it talks about the need to, to invent and reinvent and take calculated strategic risk. You talk about Crystal Pepsi, which to my wreck I could be wrong. Like it doesn't exist. It's not on shelves today because it had a moment in time. Right. Yours is a category that takes great risk, has had failures, and I think there are extraordinary lessons for that's just the cost of doing business. Right. How what can you rising above the category, but from your experience within it, what can you tell the audience about kind of beyond your Citi acronym when it's right to create the product. Right. New product, new brand. And when you make the decision that, okay, we played this, we made the wrong bet, or the bet's not going to pay out the way we thought about it, even though we executed perfectly. What's your perspective on strategic risk here?

[B]

Yeah, I mean, you got to step back. And I think the nice thing about my company, my business is it is a portfolio business. I am, I am not about one brand. I may have been built on one brand, but I am many brands. You know, $27 billion is not one brand. You know, we've got, I've got over $20 billion brands just in beverages alone. And I think what you're managing a.

[A]

Portfolio of over $20 billion brands and beverages alone. Okay.

[B]

And if you think about, you have to first ask yourself like can this brand even stretch into that space? And I think that's where the experimentation and the failure happens a lot and it's okay. And actually a failure is actually a learning. I don't think there's actually such thing as failure if you set the right objectives.

[A]

Please tell my 11th grade biology teacher.

[B]

Yeah, but the problem is we live in a society that grades your results based on pass fail. The reality is if you set the right objective, maybe the objective isn't pass fail. Maybe the objective is change the mindset. Maybe the objective is only to get relevance to this smaller group of consumer with the larger goal to grow from there. And I think it starts with hey, can my brand play a role there? And I think a lot of times what about.

[A]

But sorry to interrupt. So there's two considerations I think right within that, which is can an existing brand stretch to play a role? And, and, or are we better served creating a new brand? Right.

[B]

A hundred percent. One hundred percent. And I think this is probably the biggest challenge for marketers today is especially marketers who have smaller portfolios, they at times will try to stretch brands into spaces that they shouldn't go. When you have a broader portfolio, it gives you more choice and that that decision making will always start with where can I from a pure business standpoint, where can I get the most value? You know we're going to get the most value from the brand for the business, for the consumer. But I think at times this is where getting, setting the right KPIs and expectations from a portfolio standpoint, the role of that brand is going to be different. So think about mug root beer. The role of that brand is incredibly different than Pepsi. But ultimately they're in the same category. What's the role of mug root mug root beer as a product is to offer a differentiated taste and experience that most people didn't grow up with. The odd thing is right now mug is growing like it's growing 35%. It's doubled in business over the last couple years. You know it's going to be, I think because young consumers actually I know this because my 16 year old was, was has become a root beer fan. They didn't grow up with it. All of a sudden it's new to them. You know, it's a new taste. Their friends are talking about it. We are 100% social brand. We don't do anything but social. And we do really silly, you know, sophomore humor stuff. Like we got like 200,000 people to actually send picture them with mugs so they could win a stick because we wanted to play fetch with them. All right, so if you can get into culture through tapping into what was an interesting product truth, people liked root beer. Okay, well, how do I get people to like root beer more? I didn't try to make the whole world like root beer. What the team focused on is I just want the people who like this kind of experience, this kind of humor, this kind of attitude to like root beer, you know, so If I get 200,000 people to fetch a stick and they tell another 200,000 people, now I've got a couple million people who want to get a stick and maybe I don't. I stopped giving away sticks and they want that next thing. And I think this idea that, that I have brands that can serve different roles makes me, it makes. Gives me more flexibility to how I innovate and also chase different opportunities. And again, if consumer is doing one thing and it's a good fit for Pepsi, great. If consumer is doing something and it doesn't work for Pepsi, I, I have other choices. But you have to be thoughtful on how you set the objectives for that. Because if you set the goal to be this massive scale brand, you know, and you don't deliver, then guess what, someone's going to call it a failure.

[A]

Yeah.

[B]

But if you define that goal as, hey, I just want to be super relevant with this consumer target in this certain channel, and I know it's going to take me more time to become the multibillionaire, the brand like the others. I can actually set expectations over time. And if there's one thing I think marketers are all guilty of, especially as they manage expectations with their CEOs, is setting too lofty goals, setting maybe the wrong expectations and not being clear on what the role of that brand or that initiative is in the bigger picture. Because we all want to grow. We all have business objectives that have to deliver. We have to be drivers of growth as marketers. But we got to be much more selective in how we choose the role for the brands and the initiatives and be really clear on those KPIs and those goals based on the role of that brand or the role of that initiative.

[A]

You said something that I think is super important when you were talking about mug that I don't want to go to get lost in the important things you said. Following what you said Is how do we get people to. I'm going to screw it up a little bit. But. But you talked about want more root beer. You didn't talk about want more mug. And what's really interesting to me about that is it immediately made me think the focus on the category right before the brand Rising tide lifts all boats is if I'm right, I think it's Byron Sharp and how brands grow. Who said once you get to a certain size, if you're a leader, growth comes from a few things, not the least of which is, of course, growth and share in a bigger category. I don't think, and I'm going to paint with a broad brush that there are shit ton of CEOs and probably fewer still CFOs out there. Be like, Mark, I don't care if people like more root beer. I want them to like more mug. What can you tell them about the relationship? I don't know why I put on that fake voice. I don't know anyone who it was. I, I was in Hollywood a long time. I always wanted to be too long. What can you tell the audience about kind of the, the relationship between category growth and brand growth? And when you think about one versus the other and if that question doesn't make sense, just say, seth, that's stupid. Let's keep going.

[B]

No, it's not stupid, actually. It's fundamental. And I'll use Byron Sharp's, you know, analogies on penetration. Penetration is king, queen, you know, joker, pawn, whatever. It's. If you think about penetration, we don't talk. We do talk about. We measure it as brand penetration. But if we're not building the category, whether we're the number one leader or the number five player, then we're not going to grow. Penetration drives growth. And so the interesting thing about does.

[A]

Penetration drive growth or is it a consequence of growth? Which is.

[B]

It's probably both. I mean, like, you know, penetration drive growth because ultimately you got to drive trial and all trial is penetration. Right? And I think this is where we get maybe a bit too intellectual around the science of growth. The science of growth is probably a lot simpler than we make it out to be. You know, the science of growth is you build brands in relevant categories through distinction, storytelling, all of that. But as long that is useless if no one's trying your product a la if you're not building penetration, and if you're building penetration in a category that's building penetration, then it's a win win. Now, the goal at the end of the day of any marketer or business is, you know, I want to build more penetration. I want to be the driver of penetration of a category. But when you're not, you still need the category to grow for you to grow. And you know, how brands grow. Going to Byron Sharpe is all about, you know, he talks about. It's not about loyalty. You know, almost all categories are somewhat of a repertoire category. Even the most prestige category are still repertoire, you know, in some ways. And I think this idea that you can build a brand, you know, you can create a category of brand, Gatorade did it. You could argue Poppy has done it. You can argue lots of brands have built categories. But once you build a category, it's actually a lot harder to build penetration and to build relevance and to build. To build equities, because you now are the category or you now need to keep innovating to actually make the category either broader, more users, or more relevant. And so I use that.

[A]

I'm sorry to interrupt, but is that a place where in fact, competition can in fact serve you? Absolutely, yeah.

[B]

Look, I mean, competition is a great thing. And without competition, you know, on one hand, you think about what inspires the emotional part. Like, marketers spend a lot of time trying to convey emotion, to push emotion out. The emotion house has to be inside. And competition is a human natural, like human nature. Competitive spirit is a good thing. Wanting to go out there and win, wanting to go out there and actually do something different, to have that trick play in a game, you know, the tush, push, those type of things, that is actually. That's innovation. Those little things are innovation. And why are you innovating? Yes, you're innovating to win, but you're win against who? And ultimately there are competitors. And it doesn't always have to be the big competitor. I mean, the beverage category, the foods category, the retail apparel category, there are so many competitors. And this idea of one more and this idea of getting another point of penetration, this idea of building the category through penetration, if there are others along the journey with you, it's a win, win. Now, of course, we all want to have more than the other guy, but I think this idea of penetration is king. And this idea of brands grow through driving penetration is what's important. Now, the point back to the mug example is mug is building penetration with a cohort that may not be drinking some of our other products or may be looking for a differentiated product proposition or flavor or just likes the dog on a can. I think this idea of penetration, you have to look at penetration through different lenses. And this is, I think the other thing we all trap, we all fall into is we need to de average what we do.

[A]

What's that mean?

[B]

We look at things in total. Am I growing penetration at a total US level or around the world? I want to know am I growing penetration in Des Moines or with Gen Z or with Hispanics or with mothers with kids, depending on the product portfolio? I need to look at penetration differently because it's the building blocks to growth. It's one plus one equals three kind of equation. I think this idea, if you can de average the drivers of growth, figure out which are the most important for growth based on your consumer target, then I think you can actually differentiate your portfolio and exponentially drive growth versus competition.

[A]

I was sitting with Joe Marchese who was on an earlier episode of the show the other day, and he said. He said something to me that I hope Joe I'm getting right. But he said the average answer to all the questions is not the answer to your point.

[B]

100%. 100%. And I think winning with Gen Pop isn't always winning. It is winning on the absolute terms.

[A]

I mean, but that, that too brings up a point that given that we're getting to time, I'll let you decide if we. We. We spend more time on it. But gem pop is many pops, right?

[B]

I don't even know what it is.

[A]

Yeah, exactly. It's, you know, we. Too many times we still mark it as if our demography were homogenous. I love this example I saw the other week when Ozzy Osbourne sadly died. And it was a perfect illustration of kind of the fallacy of demography, which is, you know, you have Ozzy and Prince Charles. What do you got? You got two white guys in their 70s, incredibly wealthy from London or Britain or. Yeah, I don't know where Ozzy was born. Same demography. Pretty different psychographically because I think only one of them has eaten a bat's head and it was Prince Charles for those one. Just kidding. Okay. I want to ask you to crystal ball a little bit.

[B]

Yeah.

[A]

We just talked about emotion. We've been talking about emotion, we've been talking about brand. Such obviously so important fundamental. Right. If I don't feel anything for your brand and I feel something for the other one, and I think the products or services are fundamentally good enough, I'm going with the one I feel something for in this LLM era, in this coming agentic era. And you may not think it's an inevitability so provide whatever caveats you want. Do you think brands become more or less important in a cat, In a broad CPG category like yours, where bots are buying for bots? Yeah. And we're marketing two machines. What. What's the role of brand in that moment?

[B]

Yeah, I think. I think we need to stop thinking of whether it's AI or bots or whatever as the enemy. We have to think of as enablers. If you think. Think about the basic facts of AI and algorithmic intelligence, the inputs of all that is actually human intelligence. There's certain behaviors, certain activities, certain data points that have informed a bot or a AI algorithm to produce something.

[A]

Right, but to your earlier point, by definition, algorithm is the average of averages, right?

[B]

It is the average of average. But how you prompt it, if we're getting into the science of AI will then define how it de averages, Right. It will allow it to kind of, you know, determine what is the best output. But again, all the inputs started with human beings, whether it was the product, whether it was behavior, a piece of work, a piece of art. I think that too often we worry that AI and technology are going to ruin the consumer experience, the brand experience. They're going to replace advertising and creatives. The reality is the inputs to all of those things were actually created by human beings, by the ad agency, by brands, by people. And we need to understand better how we harness that as an enabler versus treat it as the enemy. That sounds like a bit of fluff, but I think the point being is that it's not about AI as an output. It actually should be considered as an input, I think, about the creative process. When I was in Cannes, I did a few talks with Seal because we worked with him on Mountain Dew and he talked about songwriting. And, you know, in the old days, he'd be riffing with a friend and, hey, what do you like that lyric? And what do you like? Do you like that riff and that chord structure, whatever it is. And now he might just use ChatGPT or some other AI to bounce ideas.

[A]

Off as the collaborator.

[B]

As the collaborator, you know, and if you treat it as a collaborator or an enabler versus an enemy or a blocker to creativity, I think you get a hell of a lot more out of it. You know, if you think about concept development, you know, you can use AI to create concepts, but I actually think there's the people, Intervention, who make great ideas. You know, a concept is an idea. An idea is what you extract from it. And I think this idea that it will Take over and all of the doomsday theories around technology. We had those same conversations in the late 90s with the Internet. We had those conversations. Now it is different. I'm not saying it's different, but if we really step back from it and say, how do I harness it and leverage it as an enabler? We will be much smarter. And we have to start with understanding, well, what is it pulling off of? How is it coming up with these recommendations? If you think about it, bots, shopping bots, they're basically scraping past behaviors, reviews, all these different things to create recommendations. We used to call that word of mouth. It was what you heard from your friends and then you mentally said, well, I'm going to bring all these things together and I'm going to make a purchase decision. So I do think it is something that fundamentally changes probably more than any other technology intervention or disruption in the past hundred years. But like all the others before it, if we can use it as an enabler, a collaborator, then we can actually make our work better. I was having a conversation the other day and we were talking just about search and discoverability and we've designed our marketing materials in a way that makes it sometimes harder for bots and agents and all these things to know who we are. It's like putting up a wall on yourself.

[A]

Is that because they were designed before we had to think about what they were?

[B]

It's probably a combination of things like in the old days, just a meta tag, something, it was fine. But you need more than that. You need to be able to be read in an open environment as a brand, as a person, so that these new technology driven tools understand who you are, what you make, what you stand for, what your product tastes like, all of that, because they're going to spit out whatever they capture.

[A]

But, but I guess that's really my fundamental question, which is given the changes to discoverability, given the changes to shopping habits, and not demonizing anything but the reality of how some purchase decisions will be made, does that change? So let me actually, I'll tweak my question. Does that change how you build a brand in the future?

[B]

It's definitely not necessarily the what, but the how for sure. Yeah, right. Like what the brand stands for is, is what the brand stands for. What the product is, is what the product is. How you execute that in a world where an artificial agent is going to go out and try to define you has to be different, you know, and liken it to when we had to shift all of our comms to Mobile devices and rethink, you know, mobile first and all of this. It's that same basic behavioral change that as marketers we might make. You know, if an idea can't land in a way that can be read in this world of bots and agents, then it's probably not a good idea.

[A]

It's, it's an interesting point, which is to say that as much as things change, they kind of stay the same. And the first rule of marketing, like the first rule of comedy, is know your audience. And if in this, if in this moment, your audience is comprised both of the humans, it has non humans and bots. Yeah, you got to know both.

[B]

You got, you got to know both. And you've got to know. You know, just like you spend time understanding consumer behavior and doing research and qualitative and quantitative studies so that you can go really deep with the consumer, you also understand how the artificial world works. Yeah, because just like the consumer, hey, I know what the insight is around this certain consumer. Well, I know how this bot operates. So I want to market in a way that they capture the messages, the images, and in some cases the emotions. I mean, it's amazing what technology can do to actually capture brand tonality through a chatbot. Like you can create stuff, and what it's doing is just modeling behavior through past behaviors. And I think this idea of thinking about marketing to consumers, look, at the end of the day, the consumer is number one, first and foremost. I'm not going to build a team that's focused on just marketing to agents and bots and things like that. But if my marketing team doesn't think about how that consumer behavior is captured in this new world and also how our work can be relevant to that new world, then we're missing an opportunity. Because if I'm, if I'm just going to go search and use a bot to search or buy something, I need to make sure that I'm there. You know, just like I make sure I'm on shelf at Walmart. And I think this is a, this is this kind of fundamental mind shift. You know, I think we have to start thinking about the mind shift we have to create. It's not mark, it's not a new kind of marketing. The fundamentals marketing, you said earlier, they don't really change. It's not the what, it's the how we then apply them to the new consumer, the new channel or the new technology. And we've done that before. It's just over and over again. And this one's a little more complicated.

[A]

Yeah.

[B]

Which I think makes it a little bit harder, especially the older we get, the. The less we understand, I guess. So we need. We need a lot of smart people around us.

[A]

I can relate to that. I can't remember if I told you in. When I. When we sat in Los Angeles about how Seal and I almost came to fisticuffs.

[B]

Yeah. You can tell me about that. Yeah.

[A]

By the way, that wouldn't have ended.

[B]

Well for me, but he's a lovely human being.

[A]

It was a. It was a rough moment with that. Mark Kirkham, thank you so much for being here. This is really interesting. And. And I think. I think kind of, you know, the legacy of not just your portfolio of brands, but in particular, you know, Pepsi in. In the marketing, Parthenon. Right. Is. Is so important as an indication of what the future might look like. So thanks, man.

[B]

Yeah, I appreciate it. Really appreciate it.

[A]

And also thanks to our audience for being here. And you know where I'm going, because I always go there. If you like the show, please give it five stars. And if you like the show enough to give it 5 stars, please give it a review, because that's how other people find it, and that's how I feel good about myself. If it's a bad review, you can leave it out. Thanks for being with us. We'll see you next time.