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Running head: CASE STUDY: THE PEPSI REFRESH PROJECT Case Study: The Pepsi Refresh Project Emily

M. Kamischke Elon University

Author Note Emily M. Kamischke, Masters of Interactive Media, Elon University Correspondence concerning this article should be addressed to Emily Kamischke, ekamischke@elon.edu

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Abstract This study aims to describe the successes and failures of the Pepsi Refresh Project and corresponding implications for other corporate social responsibility (CSR) projects seeking to employ information and communications technology (ICT) competitions, crowdsourcing and social media narratives as a means for production of ideas or tasks. The Knight Foundations (2009) seven key components of ICT competitions will be used as a framework to review the project and from there analysis of the project will take place using industry information and reviews. Lastly, implication for other ICT competitions will be discussed. Overall, this study explores the Pepsi Refresh Projects effect on sales and corporate loyalty of consumers for the PepsiCo brand through consumer corporate trust generation.

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Case Study: The Pepsi Refresh Project

The purpose of this investigation is to complete a case study of the Pepsi Refresh Project and from it devise high impact practices for its application to other corporate social responsibility (CSR) projects. The Pepsi Refresh Project was started in February 2010 using dollars annually used for Super Bowl advertising by PepsiCo and instead directed towards a grant-funding program to find solutions in betterment of communities (Pepsi, 2011a). The project utilized crowdsourcing for both submission and judging. The study will use The Knight Foundation's (2009) seven key components of information and communications technology (ICT) competitions to break down the project and discuss crowdsourcing in the literature review. The case study will be completed using industry information and data. Implications will be derived from the case study data and from various studies done on CSR, ICT competitions, social media narratives, and cross-channel marketing.

Literature Review PepsiCo describes the Pepsi Refresh Project on their webpage as, Pepsi is giving away millions each month to fund refreshing ideas that change the world, one community at a time. Heres how it works: You have an idea to refresh your community. You invite people to get behind your idea and vote for it. If your idea is approved, Pepsi will help you make it happen with funding from a Pepsi Refresh Project grant. Sound complicated? It isnt. You dont have to have a project chosen, or even submit one to help refresh the world. Voting for ideas you like, commenting on someone elses idea, Liking the Pepsi Refresh Project on Facebook, or even just drinking Pepsi

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products with Power Vote codes can have a positive effect for your community (PepsiCo, 2011b). The project aims to provide funding for those who have identified a problem and solution within their local community. These ideas range from community centers to funding for dance groups to Halloween costumes for those who cannot afford them. There are specific grant cycles and the funding categories range from $5,000 to $50,000. Once the submissions for each month are compiled voting starts on the ideas. Each category has a different amount of grants awarded and the top voted submission in that category win the grant. In total, Pepsi is awarding up $1. 2 million each grant cycle (20- $5000, 15- $10000, 15 - $25000, and 10 - $50000) (PepsiCo, 2011b). The project uses crowdsourcing both for the idea generation and the idea selection, which creates two filters for submissions. Crowdsourcing as a term was coined in 2006 in a Wired magazine article entitled, The Rise of Crowdsourcing written by Jeff Howe. His first definition is as follows, Simply defined, crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined, and generally large, network of people in the form of an open call. This can take the form of peer-production when the job is performed collaboratively, but is also often undertaken by sole individuals. The crucial prerequisite is the use of the open call format and the wide network of potential laborers (Howe, 2006). Since this inaugural use the term, the concept has been employed across business types and platforms for a variety of purposes. It is now considered a technique to solve problems, complete projects, and compile resources.

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For the purposes of this study seven key components of information and communications technology (ICT) competitions will be employed to examine the framework of the Pepsi Refresh Project (The Knight Foundation, 2009). The seven key components were initially developed as an analysis of the Knight News Challenge, a five-year, $25 million dollar ICT competition. The first key component of an ICT competition as identified by The Knight Foundation is the Challenge Goal. Successful challenges have broad goals that cast a wide net for participants and often look to build a particular field by integrating multiple disciplines. The challenge goal of Pepsi Refresh is to fund refreshing ideas to bring positive change to communities, which being broad promotes innovation in submissions (PepsiCo, 2011a). The second component is marketing, which The Knight Foundation (2009) notes that competitions use their already existing networks primarily for marketing. PepsiCo used their regular marketing channels to market the project. Forgoing a Super Bowl advertising spot PepsiCo had previously held for years provided the first year of funding for the project. In addition, throughout the rest of the year PepsiCo used the project as its primary marketing theme on traditional media outlets (Raudenbush, 2011). Other networks used include PepsiCos social media outlets; these outlets are incorporated into the voting structure of the competition (PepsiCo, 2011a). The third component is the application process. This process often employs the wisdom of crowds for submissions (The Knight Foundation, 2009). Pepsi Refreshs application process is an ICT competition that employs crowdsourcing for submissions thereby opening them to the public for commenting through social media integration. The fourth component is the judging criteria. The Refresh Projects only criterion is making each application cycle themed in some way in order to focus the submissions. Other than that the voters are deciding upon their own criteria for judgment. The fifth component is the judging process. The Knight Foundation

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(2009) notes that this is perhaps the component that varies the most within ICT competitions, many rely on community input and some require in-person presentations of applicants. In the case of the Refresh Project, it is done solely using the input of the online community. Users logon to the Pepsi Refresh webpage using either their Facebook account or their user-made account. Once logged in users can vote on the projects they think should be funded. Each user has a maximum of five votes daily; in the second year, power votes were added using found codes on PepsiCo products purchased. At the end of each grant cycle the 20 ideas in the $5,000 category, the 15 ideas in the $10,000 category, the 15 ideas in the $25,000 category, and the 10 ideas in the $50,000 category with the highest votes receive the grant award in each category. The sixth component is the winners, which also includes the showcasing of those winners. The Refresh Project does this through a blog on the projects webpage, which is continually updated by winners posting on what they have accomplished using the grant funding from Pepsi. The final key component of ICT competitions as identified by The Knight Foundation (2009) is supplemental support. The Knight Foundation notes that many competitions look to create a community of winners. To better ensure follow through organizations look to provide supplemental support, including but not limited to mentoring, coaching, and facilitating business development opportunities. This is the only component that the Pepsi Refresh Project does not cover for its ICT competition. The only thing they provide that could be considered this is the community of winners that they have created through the process of submitting and judging. It is not explicitly evident to the winners that this community exists, but if they seek it out they could find connections to help them with implementation of grant money.

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Case Study PepsiCos efforts can be measured in two ways, the impact of the project on public good initiatives across the country and the impact on PepsiCo as a company. Impact on the company can be measured through marketing traffic, sales, and consumer perception. The projects impact on public good initiatives across the country has been far-reaching and large in scope. In total, 676 ideas have been funded through the Pepsi Refresh Project to date. This equals $21,350,000 in total grant money awarded by PepsiCo. This grant money was awarded to ideas submitted from 345 cities across 45 states in the United States. In these numbers include 189 improved schools, 93 improved parks, playground or outdoor facilities, 16 community centers built or improved, and 110 projects that without Pepsi Refresh funding would have been cut or scaled back significantly. In total 2,640,026 lives have been touched in some way; this includes 535,771 lives directly improved through Pepsi Refresh funding. Funds have been awarded to support US troops, support technology improvements in schools, bring music and the arts to communities, support youth programs, support small businesses, and in general uplift communities. The project has also generated $10,800,000 in grants and in-kind donations, which is more than 50% of the original investment of grants given by PepsiCo (PepsiCo, 2011c). These numbers show both the large and broad scope of the impact of the project. The money invested is large in sum, but has been distributed across the majority of the United States. The numbers of lives touched is perhaps the most meaningful statistic here and shows that the project is not just feeding money into programs, but making real impact on real lives. Overall these numbers show that the project in its first two years has made an impact on communities across the community.

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The Pepsi Refresh Project has also had an impact on the PepsiCo brand. Traffic numbers of the Pepsi Refresh website are staggering. In 2011 alone, over 82 million votes were logged. In average, each month saw 1. 6 million unique visitors to the website and over 89,100 comments were posted on the site. In addition to on site traffic, the project increased social media traffic for the PepsiCo brand. In 2010 PepsiCos Facebook page garnered over 3. 5 million likes and their Twitter page gained 60,000 followers (Seabrook, 2011). In total the Pepsi Refresh page has seen over 17 million unique visitors (Beverage World, 2010). This increase in social media following cannot be solely attributed to the Pepsi Refresh Project as they were done on the main social media sites for PepsiCo, but the integration of social media in the project can be linked to an increase of the following of these sites. From these numbers one can see that the project did increase traffic for Pepsi as a brand and that traffic on the projects site was high. According to sales numbers, the Pepsi Refresh Project has not had an immediate positive effect on sales. In the first nine months of 2010, sales for the company fell 9.8 percent (Beverage World, 2010). Coupled with declining sales is the fact that PepsiCos biggest competitor, Coca-Cola, saw less of a decline in sales over the same time period. Sales as an indicator of success in the beverage world should not be solely relied upon, as sales throughout the industry have been on a steady decline over the past few years (Esterl, 2011). In a response to sales numbers, PepsiCo in 2011 recommitted itself to traditional marketing campaigns, dropping Pepsi Refresh as its main campaign and also reinitiating Super Bowl ads for that year (Esterl, 2011). In response to these sales numbers, Massimo dAmore, chief executive of PepsiCo Beverage Americas, said to Beverage World (2010), It has worked for us, noting that

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knowledge of the project increases intent to purchase Pepsi. His sentiments are supported by Forbes list of most reputable companies, published in 2010, which places PepsiCo fifth on the list, with a 4.5% increase in reputation from 2009. This is compared to Coca-Cola, who is listed at 24. It should also be noted that the top 25 are not close in score, in fact the two are separated by 4.34 points on the scale. Lastly, Coca-Colas score also increased over the previous year, but only by 2.5%. This shows that since the Refresh Projects inception, PepsiCos reputation as a company has surpassed that of its closest competition. Other signs that Pepsi believes in the project, in 2011 they announced the expansion of the program globally to Europe, Latin America, and Asia as a global branding platform (Zmuda, 2011). In a recent study conducted by Raudenbush (2011) looking at Pepsi Refreshs impact on the corporate social responsibility (CSR) and consumer perception of PepsiCo as a whole. Raudenbush states: Through probing into the interviewees perceptions of PepsiCo and their meaning making of the grants and voting process, this study advances our understanding of how the corporations stakeholder efforts impact the stakeholders themselves. As was stated above, while a few interviewees felt their opinions of PepsiCo remained the same in light of the campaign, none reported a diminished attitude and most reported a significantly more positive perspective. This indicates that, at least to some extent, the campaign met the needs of the stakeholders (Raudenbush, 2011, pg. 101). Raudenbush employs the stakeholder management theory to discuss the implementation of the project. Stakeholder management theory stresses the importance of corporations understanding the needs and concerns of their stakeholders and suggests that in order to ensure long-term success, the corporation must adjust their corporate priorities to align with those need

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(Raudenbush, 2011, pg. 101). From Raudenbushs conclusions and the use of the stakeholder management theory, it can be concluded that PepsiCos efforts are directed towards long-term effect and consumer loyalty rather than short-term sales boosts. The project has also had a positive effect on the consumer perspective of PepsiCo.

Implications There are several implications to be learned from the Pepsi Refresh Project and applied to other attempts at CSR projects employing crowdsourcing and ICT competitions. The most prominent implications include: 1. Marketing should be linked to the corporate identity, not the product. 2. Crowdsourcing can produce creativity. 3. Creating a community through social media integration creates a more dynamic campaign. 4. User-initiated contests facilitate motivation for participation. 5. Cross-channel marketing can be successful, if supplemented.

Linking to corporate identity, not product In Raudenbushs 2011 study, beyond finding that the project had a positive impact on PepsiCos perception, she found that participants were confused by the campaign being linked to a carbonated beverage. From this Raudenbush concluded that corporations who seek to use CSR as a means of marketing should link their efforts back to the brand or the corporation itself rather than to the product they produce. This reduces confusion and brings more recognition to the brand or corporation itself. Raudenbush also suggests that corporations look to take their CSR

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one step further by implementing efforts that are directly related to what their corporation does. In this way PepsiCo should have continued their marketing of Pepsi carbonated beverages in a traditional manor and used the Refresh campaign as the main form of advertising for PepsiCo as a whole, making sure distinguish the two marketing campaigns.

Creativity, a product of crowdsourcing From the report produced by The Knight Foundation (2009) it is concluded that the majority of ICT competitions use crowdsourcing as a means for both generating submissions and as a judging process. It is been debated as to whether crowdsourcing is a means to promote real creativity. Groeger (2011) argues that crowdsourcing is good for finding singular solutions, but not for innovation and true creativity. The overall structure of the Pepsi Refresh Project allowed for true creativity and innovation with its open category format. Also the ability for participants to comment on ideas generated opened a dialogue that promoted innovation and collaboration. From this it can be taken away that ICT competitions should be implemented in such a way that promotes this dialogue and creativity, rather than limiting submissions and comments.

Creating community Heckadon (2010) iterates, It is important to remember that the main purpose of social media is not to sell, but to engage individuals and form a community. Pepsi Refresh successfully created a community through social media integration into the voting process. Proposers used social media as a means to promote their idea and generate votes. Likewise, voters used social media as a means to login to the refresh website, which in turn posted their votes to social media sites. In this way both forms of users incorporated their own networks into

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the Pepsi Refresh community in essence expanding the community as a whole, while also acting as engaged members of the community themselves. This is proven by the increase in social media followers on Pepsis social media sites and the high traffic on the Refresh website itself. Heckadon (2010) continues to write, Social Media can help brands be socially responsible by amplifying its message and informing an often cynical audience that the brand is tending to the greater good of the community, not just to its bottom-line. Marketers need to be honest if they desire to create an open community with customers, who can become a brands most vocal supporters and advance its mission. Beyond this, the community helped create a narrative that served to help shape PepsiCos identity as a firm. Millard, Hargood, and Weal (20110) write that, Much of the narrative that helps shape identity is outside of the control of the organization itself, and occurs in the wider world in communication and media, and increasingly in social media such as the Blogosphere and Twitterverse. Organizations that wish to manage their identity and reputation need to understand these narratives as they emerge, in order to respond to them either through engaging with the conversation, or changing the underlying behavior and activities that are motivating and driving them. From this future campaigns should focus on not only attempting to create this community, but also be transparent in communication to the community for the greatest return on investment and positive impact on consumer perception.

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Increasing participation through User-Initiated Contests Nickerson and Monroy-Hernandezs (2011) study on user-initiated contests explored whether or not they motivated user participation in production of solutions or products. For the purposes of this study, user-initiated contests and ICT competitions should be considered synonymous. It is posited that making the act of production a contest does increase motivation. Pepsi Refresh used this model to increase motivation through the judging process. By making this a competition, it not only increased motivation, but also increased the motivation of the idea creators to make their idea worthy of votes, therefore increasing motivation and innovation. In this way The Knight Foundation (2009) is further reinforced in its support of linking crowdsourcing and ICT competitions in order to increase the likelihood of success. From this it can be concluded that ICT competitions should employ crowdsourcing as a means of increasing motivation for participation as proven by the Pepsi Refresh Project.

Cross-channel marketing PepsiCo used the cross-channel marketing approach by connecting video content, social media, paid search, display ads, email marketing, and a mobile site (Martinez, 2011). This was successful in bringing more awareness to the project itself. Supplementing Raudenbushs (2011) argument that CSR campaigns should be linked to the overall corporate identity and not products themselves, it is noted that cross-channel marketing must be incorporated into marketing for the CSR campaign as an extension of the corporation. Additionally, cross-channel marketing is not a substitute for traditional marketing channels of the corporations product. This is further supported by the rise of corporate responsibility rankings coupled by a decline in sales for Pepsi products during the first year of the project.

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Conclusion This study looked to explore the successes and failures of the Pepsi Refresh project as a CSR campaign that employed crowdsourcing and ICT competitions. As a company reputation builder and successful, reciprocal public good project Pepsi Refresh was successful. It also successfully employed the practices of crowdsourcing and ICT competitions as laid out by The Knight Foundation (2009). The keys to success are the cross channel marketing strategy, creating the narrative of the contest, and building the community around the project. This builds an accumulation of good solutions to problems through the crowds filter as well as a lasting, loyal community of supporters. Further study can be done on how to successfully link the campaign to the corporate identity and how the community created by the social media integration responded to the project and if they continue discussion past funding cycles they are involved in.

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References (2010, December 16). PepsiCo seeing success with Pepsi Refresh Project. Beverage World. Retrieved from http://www.beverageworld.com/index.php?option=com_content&view =article&id=38699:pepsico-seeing-success-with-pepsirefresh-project&catid=3:dailyheadlines&Itemid=173 Esterl, M. (2011, March 17). Diet coke wins battle in cola wars. Wall Street Journal. Retrieved from http://finance.yahoo.com/family-home/article/112372/diet-cokewins-battle-in-cola wars Groeger, L. (2011, July 26) For creativity, just add crowd. Retrieved from http://www.wired.com/epicenter/2011/07/creativity-crowd/ Heckadon, D. (2010, December 27). Critical success factors for creating and implementing effective social media marketing campaigns. Retrieved from http://ssrn.com/abstract=1734586 Howe, J. (2006, June), The rise of crowdsourcing. Retrieved from http://www.wired.com/wired/archive/14.06/crowds.html Martinez, J. (2011, January). Every channel has its thorns. Customer Relationship Management, 15(1), 16. Retrieved from http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=ba02d71c3572-4f8b-b786bafbb3599869%40sessionmgr10&vid=1&hid=10 Millard, D., Hargood, C., & Weal, M. (2011). Social media and emergent organizational narratives. Retrieved from http://nht11.ecs.soton.ac.uk/papers/16-dmillard.pdf Nickerson, J., & Monroy-Hernandez, A. (2011, February 22). Appropriation and Creativity: User Initiated Contests in Scratch. Hawaii International Conference on System Sciences, IEEE Press. doi:10.1109/HICSS.2011.75

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PepsiCo (2011a). Pepsi Refresh Project. Retrieved from http://www.refresheverything.com PepsiCo (2011b). How it works. Retrieved from http://www.refresheverything.com/howit-works PepsiCo (2011c, July 7). Doing good one idea at a time. Pepsi Refresh Project. Retrieved from http://www.refresheverything.com/docs/Grants_Status_Fact_Sheet_7_22.pdf Raudenbush, J. (2011) An exploration of publics' understandings of corporate social responsibility, shared values, and the pepsi refresh campaign. Retrieved from Digital Repository at University of Maryland, http://hdl.handle.net/1903/11680 Seabrook, J. (2011, May 16). Snacks for a fat planet. The New Yorker. Retrieved from https://media.scoopreprintsource.com/CondeNast/5720CN_PepsiCo_051713.pdf The Knight Foundation. (2010, January 20). Media, information and communication contests: An analysis. Miami, FL:http://www.knightfoundation.org/publications/mediainformation and-communication-contests-analy Zmuda, N. (2010, September 7). Pepsi expands refresh project. Advertising Age. Retrieved from http://adage.com/article/news/pepsi-expands-refreshproject/145773/