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In November, I wrote about how Gatorade’s 2009 re-branding as G has been a complete failure. G was an ill-conceived approach to slowing sales in 2007 and 2008. It damaged brand equity, confused consumers and didn’t reverse the trend of falling unit sales.

In the final paragraph of my last blog, I noted that PepsiCo CEO Indra Nooyi said the company is planning a “massive Gatorade transformation” for 2010. I recommended that Gatorade should follow the model of Coca-Cola when they decided to retire New Coke. By doing this, Coca-Cola admitted their mistake and moved on by hitting the reset button on their brand.

Initial details of PepsiCo’s 2010 “massive Gatorade transformation” have been made publicly known here, here and here. Gatorade’s brand strategy for 2010 seems mediocre. Although they are making some positive changes, other moves indicate that they still don’t understand how to successfully market their brand.

I commend Gatorade for shifting their philosophy in 2010. In 2010, they will redefine their target consumer. Their 2010 efforts will focus on the serious athlete that desires peak athletic performance. This is closely aligned with their origins. For many years, Gatorade has tried to widen their audience, and not succeeded. It is very difficult to be all things to all people, and a laser focus on a specific group of people is a strong strategic approach.

The best decision that Gatorade made for 2010 is to remove high fructose corn syrup from all of their products. A few years ago, Gatorade changed the sweetener from sugar to high fructose corn syrup. The nutrition value (or lack thereof) of high fructose corn syrup has been intensely debated in recent years (here, here and here). Many attribute high fructose corn syrup to causing higher rates of obesity. It is not smart strategy to use an ingredient that can be perceived as harmful to health, particularly when your target consumer is athletic and health conscious. This move gives Gatorade a competitive advantage over chief category rival Powerade. High fructose corn syrup is an ingredient in Powerade products other than Powerade Zero (low calorie version). It also falls in line with the Coca-Cola model of returning a product to the original formula.

Gatorade is planning to revamp their packaging, for both G and the lower calorie G2. Packaging was a key reason why Gatorade struggled in 2009. Consumers did not recognize the nebulous “G” packaging and had no perceptions of the meaning of the “G” brand. The decision to redevelop the packaging is correct. The execution is likely to be a failure. Recently, PepsiCo has redesigned the packaging on the Pepsi line of products and Tropicana. Both redesigns were poorly conceived and executed. There was such a strong backlash against the Tropicana redesign that PepsiCo quickly reverted back to the old packaging. With regards to Gatorade, the only acceptable package redesign is a reversion to classic Gatorade packaging. If the packaging does not resemble classic Gatorade packaging, they will be wasting time and money.

The worst aspect of Gatorade’s 2010 marketing strategy is the expansion of the product line. A product line extension should accomplish at least 1 of the following 2 things: expand the size of the market and/or expand the number of a brand’s product offerings that a given consumer purchases. Gatorade’s line extension will not accomplish either.  By adding the “Prime” and “Recover” beverages to the existing product line (G and G2), Gatorade now has at least 4 distinct segments of their product line. It is bound to cause consumer confusion.  Generally speaking, it is difficult for consumers to perceive how the brand’s multitude of products is going to benefit them. Because of this confusion, consumers are more likely to choose a simpler alternative. This strategic problem is augmented by the current economic climate. Asking the target consumer to adopt product line extensions in the worst recession since the Great Depression is a recipe for disaster. Through this decision, Gatorade is showing how out-of-touch they are with their target consumer.

Gatorade’s stubborn refusal to return to its roots and provide simplicity in its branding strategy will continue to damage brand equity and negatively impact revenue. In the first four decades of its history, Gatorade had all of the makings of an iconic brand. The product was consistent, as well as the overall themes of the marketing communication messages. Consumers perceived the brand as valuable in its category. This is similar to iconic brands such as McDonald’s, Nike, Budweiser, BMW and Crest. Coca-Cola also fits this description, with the exception of a period of temporary insanity in the mid 1980s. Coca-Cola remains the best precedent for Gatorade, but Gatorade continues to reject their methodology in restoring a classic brand after an ill-conceived revitalization.

David Mitchel, Norton Mitchel Marketing