Pepsis not Pepsi

There is a great TED talk given by Malcolm Gladwell (link here) in which Gladwell talks about the findings of Howard Moskowitz, a psychophysicist who has made a career out of consumer preferences.

In the early 1970’s, Pepsi asked Dr. Moskowitz to determine which percentage of Aspartame it should put into Diet Pepsi to give it the right sweetness.  Dr. Moskowitz conducted a survey of consumers drinking Pepsi with anywhere from 8% to 12% Aspartame.  When the results came back inconclusive, Dr. Moskowitz was stunned: he had expected a traditional bell curve with preferences hovering around 10% or at very least a cluster of preferences hovering around a single percentage.  Instead, there was no single cluster; the data appeared random.

Dr. Moskowitz did not believe the data was random.  After considerable thought.  He hit on it.  The answer was that people did not prefer Pepsi.  They preferred Pepsis.

Moskowitz demonstrated this when he worked with Prego in the mid to late 70’s. At the time, Ragu held the dominant market share and Prego asked Moskowitz to come up with the right type of sauce to unseat its rival.  Moskowitz asked Prego’s kitchens to come up with a multitude of varieties of sauces and then conducted tests; what he found was that people did not prefer one specific sauce, but that they tended to cluster around 3 different sauce types:  plain, spicy and extra chunky.  Ragu and Prego both had plain and spicy.  Neither had extra chunky.  Moskowitz recommended Prego introduce extra chunky and all of a sudden its market share sky rocketed.  Walk down any grocery aisle of spaghetti sauces and you will most like see 30 to 40 varieties, within the same brand.

As Gladwell states, we owe Moskowitz three key ideas: 1) the importance of horizontal segmentation (we should not segment products by least complex or expensive to most complex or expensive, rather we should segment according to the variety of attributes it may possess); 2) the fact that he democratized taste, which was based on the fact that; 3) variability is key in gaining marketshare as opposed to coming up with the “perfect” product.

In one real sense, Moskowitz proved that individuals cannot be categorized into one platonic product category; rather they have different tastes, needs and desires.  As such, companies who want to gain marketshare need to consider variety and choice in their product offering.  They cannot just offer Pepsi.  They have to offer Pepsis.

This has important implications for any business.  Instead of just focusing the the “perfect”  or “cheapest”, Moskowitz/Gladewell tells us to focus on providing an array of different product flavors based upon consumer or business preferences.  If you want to maintain or grow share, you need to offer choice which gives the product selection back to the customer where it belongs.

What are you waiting for?  Pop your favorite beverage and get to it!