This time of the year is always the most exciting for me primarily for two reasons: 1) it’s the beginning of summer and 2) it’s NBA Playoff time. As a consumer and an NBA fan, the first brand that comes to mind when I think of these two things is Gatorade. And surely the intersection of summertime and athletic events no doubt screams opportunity for the brand manager of any sports drink.
What I have always found incredible is the sheer dominance of Gatorade over its competitors in this category despite the fact that an average consumer probably could not tell the difference in taste between Gatorade and its closest rival, Powerade. This rivalry is particularly interesting in light of the fact that PepsiCo often falls second to Coca-Cola in other categories, most notably carbonated soft drinks. In 2013, Coca-Cola had a 42% U.S. market share in this category, well ahead of PepsiCo’s 29%. Yet in the isotonics category (a scientific term to describe the concentration of sugar in sports drinks), PepsiCo has been the clear winner over Coca-Cola for years:
Powerade has indeed made strides in capturing some of Gatorade’s share, but hardly enough to erase such a significant lead. And I think the reason for this goes beyond simply Gatorade’s first mover advantage (i.e. being introduced 20 years earlier than Powerade). It has more to do with the way Gatorade has positioned its brand in the consumer’s mind.
When we purchase sporting goods of any kind, we often aspire to behave like our athletic role models. Athletic sponsorship of professional athletes serve not only as endorsements of product quality, but they also provide a subconscious fantasy of validation to the consumer. When a young teen wears a Jordan-branded pair of shoes over a private label brand to play basketball, he subconsciously feels like he is following the ritual of Michael Jordan himself: “Jordan is the greatest basketball player of all time. If I wear these shoes, I will belong in that category of basketball players.” I’m not saying wearing Jordans will make you as good as Michael Jordan, I am simply highlighting the psychological effect that athletic endorsements have on our purchases.
So you might be wondering: what does this have to do with Gatorade’s success? Well if we compare the athletes sponsored by Gatorade with those sponsored by Powerade, we begin to notice a significant difference.
When we talk about Gatorade athletes, we’re talking about MVP-caliber athletes, many of whom have eclipsed their respective sports by winning multiple accolades and/or setting world records: Sidney Crosby – 2007 NHL MVP and 2009 Stanley Cup Champion, Kevin Durant – 2013 NBA MVP and four-time scoring champion, Peyton Manning – SuperBowl XLI Champion and four-time NFL MVP, Serena Williams – 25 Grand Slam titles, Kerri Walsh and Misty May-Treanor – two-time Olympic Gold Medalists, Usain Bolt – world record holder in numerous track & field events.
Meanwhile, Powerade’s list of athletes include Chris Paul, Ryan Howard, Venus Williams, and Chris Johnson to name a few. These individuals, some of whom I had never heard of before this post, are all great athletes and all-stars, but certainly not the best of the best in their respective sports.
The only exceptions to Powerade’s mediocre athletic cast are Lebron James and Derrick Rose, two former MVP’s whom the brand is fortunate to have on board. However, such endorsements are insignificant in the face of a leading brand whose top athletes span a much wider selection of sports.
Furthermore, not only has Gatorade assembled a greater all-star cast, it has also preempted its competition by clinching its official sports drink status in some of the most popular professional sports leagues, including the NFL, MLB, NBA, MLS, and AVP. This has left Powerade as the official sports drink of other leagues such as the PGA Tour, NASCAR, and NCAA.
It’s clear from all of this that endorsements have a powerful effect on consumer behaviour and, ultimately, business results. Because of the strong psychological effect mentioned earlier, the quality of the endorsement becomes the quality of the product to most consumers. If you secure A-rated athletes, you get A-level results, and your competition is left with B-rated athletes and B-level results.
The state of the sports drink market as described is particularly unique in this way especially given the nature of fast-moving consumer goods. In the CPG world where short-term promotions are launched to gain or regain market share temporarily, long-term brand loyalty is often overlooked. Yet short-term promotions have the potential to achieve long-term results if they preempt the competition in a way that is largely inimitable. And that is exactly what Gatorade has done with its endorsements.