pepsi case study

1. Regina Collins
Dr. Norbert Elliot
PTC 642
21 February 2009
{ Corporate Communication Case Study }
PepsiCo’s Communication Strategy During Product
Tampering Scare
In June of 1993, numerous reports of product tampering were
reported involving
PepsiCo’s popular Diet Pepsi drink. This case will examine
PepsiCo’s response to this crisis
through the use of strategic crisis communication.
We will see the history of PepsiCo ,,, In 1891 Caleb Bradham
opened a drug store in his home town in North Carolina. He
developed a recipe for a new fountain drink and, in 1893, sold it as
“Brad’s Drink”,In 1898, Name became “Pep Cola” from a out of
business company , name became Pepsi-cola in 1902. By 1907,
there were 40 Pepsi-cola bottling plants and “100,000 gallons of
syrup that year.”

2. After World War I the Pepsi-Cola company declared
bankruptcy. Then wall Street broker named Megargel tried but
unsuccessful. Finally, in 1931, a candy executive purchased Pepsi-
Cola after perceiving that he was snubbed by the Coca-Cola
Company, thus beginning the cola wars. By 1936, Pepsi-Cola had a
two million dollar operating profit, and by 1941 the Pepsi-Cola
Company went public and was listed on the New York Stock
Exchange.
On June 10, 1993, a complaint filed that a consumer found a
needle inside a Diet Pepsi can , followed by a second complaint
next day. Although PepsiCo executives were concerned that these
reports could be false, they nevertheless investigated the complaint .
The FDA announced that the syringes were not contaminated and
stated that consumers should drink that after pouring in glass , just to
be safe. And also reminded that false complaints carried a
“maximum penalty of a $250,000 fine and five years in prison”.
Third tampering report was filed on June 13, this one in New
Orleans, PepsiCo realized that this was becoming a national media
story. But was positive that the reports were hoaxes . PepsiCo set out
to prove to their constituencies that these allegations were false.
PepsiCo was entering their peak sales season, Memorial Day
to Labor Day, when the tampering incidents were reported. The
news media was creating panic among PepsiCo’s constituencies by

3. frequently displaying a visual of a Diet Pepsi can that it could bring
“AIDS or hepatitis .
As company was sure about their product so ,They implement
a plan to acknowledge their customers, distributors and investors
about reality and to calm fears and save their image and product line.
Richard Bierck states, “A firm’s failure to respond
effectively in the face of public scrutiny can be more destructive
than the emergency itself.” Product tampering is particularly
damaging for manufacturers ,because Consumer confidence in the
product and the brand name can be destroyed quickly and may take
years to overcome.
PepsiCo created a crisis team included employees from all the
major divisions: scientific and regulatory affairs, manufacturing,
public affairs, sales, marketing, and legal counsel. With goal to
“ensure consumer safety and security while protecting
[PepsiCo’s] 95-year old trademark and maintaining a positive
image,”
On the first two complaints of syringes , PepsiCo considered
it a regional issue. PepsiCo’s local management worked with their
regional bottler to check the product line . When third syringe was
reported , PepsiCo realized that this was becoming a national issue .
PepsiCo determined that it was almost impossible that these

4. tampering reports could be genuine. The real problem was how to
stop the false reports and how to communicate to the public that
there was no danger.
A company’s reaction to a crisis is based on a thorough
understanding of the problem . Rebecca Madeira, Vice President of
Public Affairs, became the crisis coordinator for the Diet Pepsi
emergency. Her immediate concern was to determine whether or not
the public was at risk. Once the FDA had tested the first two
syringes and found that there was no risk of contamination, PepsiCo
and the FDA together decided that there was no need for a product
recall. In the meantime, PepsiCo researched employee records,
shipping and customer inventories, and consumer complaints . Based
on their research and on the statistical improbability of such
tampering occurring in numerous bottling plants over the span of
several months, management and employees at PepsiCo were
confident that the syringes reportedly found in their soda cans were
not the result of product tampering but of fraudulent complaints.
PepsiCo wasted little time in assembling their crisis
management team and establishing a crisis center . By Monday, June
14, PepsiCo’s crisis management team was gathered room at New
York headquarters. In addition to Mr. Weatherup and Ms. Madeira,
other members of the crisis team included Public Relations Manager
Ann Ward, Dr. Jim Stanley , and Andrew Giangola. Mr. Weatherup
was chosen as the spokesperson during the crisis because of his
knowledge.

5. The media was creating a panic among consumers with its
sensationalized display of a Diet Pepsi can with a syringe. PepsiCo’s
crisis team used same media to deliver their own message to
consumers. PepsiCo’s media messages were so effective , after Mr.
Weatherup’s first television appearances, news began to use words
such as “copycat” and “hoax” On Tuesday, June 15, PepsiCo asked
one of their vendors, to produce a video news which showed how
each can was prepared .The most powerful VNR was which showed
a woman inserting a syringe into a can of Diet Pepsi . PepsiCo
also made Mr. Weatherup available for interviews with news and he
assured all that PepsiCo’s products were safe,network shows as well
as CNN’s Larry King Live that evening .Within 11 days, the Diet
Pepsi crisis was over. The FDA had made several arrests for filing
false tampering reports .
PepsiCo wanted to thank their constituencies for supporting
them throughout the crisis . On the weekend of the Fourth of July,
PepsiCo printed coupons in newspaper ads that said, “Thanks
America.” In all, sales of Pepsi and Diet Pepsi were dropped about 2%
during the crisis but rebounded after the Fourth of July .
The crisis management team determined that the most
effective method for communicating with PepsiCo’s constituencies
was through the very media that was reporting the hoaxes. PepsiCo
took a situation that could have proved devastating to their corporate
image and product line and instead emerged from the crisis

6. “stronger and more united than ever,”
REVIEW :
This case was filed in June 1993 , Of a syringe which was
found in a Diet Pepsi can , PepsiCo did not take this matter serious ,
Although not on the same type of case which filed next day .
This was a alarm for the company , that to handle the
matter and to save the fame and name of them , which they had
achieved after a long crisis and many stages , and also save the 95
years old trademark and maintain the positive image often negative
media intention .
But they thought that regional manager will look after the
matter , But when third report filed Pepsi-Co and F.D.A. got
serious ,and media was displaying visuals , that could be risky for
the name and fame of The Pepsi-Co .
Pepsi-Co took bold step that was surely very good , they
created a crisis plan including experienced members more over they

7. decided to fight against the crisis with the same media .
The leader of the committee him self came in front of the
media to ensure the people about purity and surety of their product ,
and this wise decision was most effective that media was thinking of
both sides now . Crisis team also released the video of preparation
process of their product and a video , in which a lady was inserting a
syringe in the drink can .
Taking help of media was a wise decision because media
and broad casting were good supply agents to interact with the
people . and at last after very much struggle the case was solved with
in less than two weeks time period . The responsible were arrested
and fined .
We can say that they did not catch the problem earlier so
this turned bad ,, if they taken it seriously after at least second
report ,, issue would have been solved but being late given the
chance to media and we had seen that how the crisis was solved with
the media and broadcasting which were proved very much powerful
and helpful ,, these are important in every field of life but specially
in Public Relations .