A Disaster in Brand Research – New Coke
One of the most famous marketing disasters in history was the invention and implementation of New Coke by Coca-Cola. This 1980s cola mistake has become synonymous with awful business decisions. If a business strategist ever has a decision or idea likened to New Coke, they should probably start packing up their office and polishing their resume because a pink slip is fast approaching. While most people are aware of New Coke and its effects, not everybody knows why Coca-Cola made the decision that it did. While it proved to be a horrible decision, there was some (surprising) reason behind the company's decision.
Contrary to popular belief, Coca-Cola did not just switch their recipe on a whim. There were a number of valid reasons that contributed to the decision. Brand market research and dwindling market share in the face of competition were the prominent two. With regards to competition, Pepsi-Cola and its sweeter taste were stealing a great amount of Coca-Cola's market share. Coke was actually losing the overall battle in markets, relying on their advantage in restaurants and vending machines to maintain a narrow overall edge of Pepsi. Blind taste tests and effective advertising campaigns that highlighted these tests were showing that consumers actually preferred the taste of Pepsi over Coke. This was especially true amongst younger soda drinkers. Coke feared that as their advantage with older consumers continued to age, they would lose even greater market share in the coming years. As such, they made the decision that everything in the company was up for review, including the formula for their product. When Coke made the decision to tinker with their formula, the market research actually supported the decision. A series of blind taste tests showed that the public actually preferred the taste of new Coke (which tasted more like Pepsi than the original formula). This was tested thoroughly and the results were statistically conclusive.
With these results known, how could New Coke fail so miserably? Coke's biggest blunder was likely rolling out a full replacement. Instead of adding a new coach product line, they replaced their previous product completely. They greatly underestimated the brand loyalty of their current consumers, many of whom were outraged at losing the soft drink they preferred. While a random sample of drinkers showed that people preferred the newer (somewhat sweeter) taste, Coke neglected to recognize why their current consumers drank coke instead of Pepsi. They also put too much emphasis on the taste research and not enough on the brand research. Brand loyalty is a very real thing. Some consumers are going to be resistant to any change to their favorite products no matter what the market research tells the producing company.
Luckily, Coke stayed flexible and recognized their mistake instead of compounding it. They re-introduced their old formula as "Coca-Cola Classic" and combined it with better marketing and some savvy partnerships with restaurants and market chains. New Coke remained, but was eventually phased out over the next seven years. While Pepsi still owns a large share of the market, Coke's market share is actually higher today than it was prior to the New Coke implementation.
Questions and Answers
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