How Pepsi Won New Customers with Community Grants

With its Refresh Project, Pepsi has used community grants to win brand loyalty from a new generation of buyers.With the expansion of charter schools and public/private partnerships, community development is becoming more and more privatized -- and more dependent on corporate giving.

But while companies send millions of dollars to charities, museums and educational programs, they rarely succeed in linking their generosity to their mainstream public image. With an ever-increasing distrust of Corporate America eroding the relationship between consumers and companies, corporate giving offers a tantalizing -- and largely untapped -- opportunity to cultivate brand loyalty.

That's where Pepsi's (PEP) Refresh Project, which has just reached the end of its first year, has made inroads. The campaign illustrates one way that big, faceless companies can reestablish personal relationships with their customers.

Crowd-Sourcing and Advertising

For the most part, corporations tend to focus their giving on established charities, many of which have nothing to do with the company's core business or its target market. By comparison, the Refresh Project underwrote an eclectic array of community-based projects, ranging from building playgrounds to providing prom outfits and from supporting animal shelters to funding high-school bands.

To determine which proposals received money, Pepsi turned to its own customers, asking them to nominate and vote for their favorites. In the process, the Refresh Project effectively turned its grant hopefuls into an army of brand evangelists, driving community members to the program's website -- and to stores.

According to Melisa Tezanos, communications director for Pepsi Beverages America, the key to publicizing the program lay in Pepsi's tagline, "Choice of the next generation." While the "Pepsi Generation" theme dates back to the mid-1960s, the Refresh Project was partially based in the idea of bringing the advertising in line with the company's corporate giving. To do so, the project targeted the "millennial generation" born between 1980 and 2000. Also called "Echo Boomers," millennials are noted for their extensive use of social media to fuel community involvement. The Refresh Project tapped into that tendency by aggressively marketing the Refresh Project to the young consumers.

As Tezanos notes, the marketing soon paid off, generating 1.6 million monthly visitors to the project's website. What's more, customer involvement has extended beyond the site: "When millennial consumers became aware of the project," she says, "their purchase intent went up, and so did their direct engagement with Pepsi."

Building Trust with Good

One hurdle that Pepsi faced was its own corporate identity. In 2008, when the company underwent its controversial logo change, it conducted extensive polling. In the process, it uncovered an interesting statistic: 66% of those polled thought that ideas that move communities forward come from within the communities themselves, not from traditional authority structures.

The question, then, became how to use this distrust of traditional power structures to sell a soda that's produced by a sprawling Fortune 500 conglomerate. The company's answer led it to partner with Good, a progressive media group that tries "to encourage the collaboration of individuals, nonprofits and businesses in order to move the world forward," according to co-founder Max Schorr.

One of the group's divisions, Good projects, works with companies to -- in Schorr's words -- "align their strategies with social impact for the public good." The group saw the Refresh Project as a good opportunity for collaboration and brought its experience in grassroots development to bear on the partnership.

A Fundamental Alignment

By targeting groups and individuals that had never received grants before, the Refresh Project created a viper's nest of logistical problems, including figuring out how to reach an audience, how to determine a proposal's viability and how to distribute the funds. Good set up a structure for the program, aided in community development, produced video and Internet content to help promote it and, in the months since the Refresh Project has gotten off the ground, also has helped measure its impact.

Did Good have any reservations about working with a corporate giant like Pepsi? Pepsico CEO Indra Nooyi played a major role in overcoming Good's concerns, Schorr says. "Listening to her, it seemed like Pepsi's fundamental strategy was aligned with Good's philosophy, 'doing well by doing good,'" he says. Beyond that, he notes that Pepsi's impressive resources were attractive to the group: "The Refresh Project puts resources to work in a positive way. It shows what a company can do by lining up a brand, consumer desires and cultural impact."

Schorr also points out that Refresh has become its own best advertisement: "In the beginning, there was public distrust and skepticism, but we've had over 300 grantees, and the program has taken on a life of its own."

Moving Beyond the Millennials

The millennials who the Refresh Project initially targeted for projects ended up becoming strong advocates of the brand, Pepsi's Tezanos notes. "When young people set out to promote their projects, in order to get grants, they get very creative," she says. "They reach out to the community to vote for their ideas. In so doing, they bring the community along."

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The project has also improved relationships within the Pepsi value chain, as people from bottlers to retailers have gotten involved, she adds. By funding "bottler's grants," retailer-based initiatives and other programs, Pepsi has used the program to shore up its internal relationships, as well as its connection to the larger community.

The Refresh Project is a promising development for the company -- and for the communities that it has helped, Tezanos says. "We are trying to encourage democratic empowerment, optimism and good ideas. We wanted the Refresh Project to give millennials a way to directly impact their communities, rather than relying on government and business figures for change." Increased community involvement and individual empowerment: that's something to get bubbly about.

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