debacle of new coke
DESCRIPTION
A look into th debacle of new coke and understanding of the American psyche behind it.TRANSCRIPT
THE DEBACLE
OF
NEW
{1985}
Venkatesh KBS
April 1985
Production of Old Coke stopped
Launch of New Coke
New Coke faces customer wrath
July 1985
Relaunch of Old Coke as Coke Classic
Topic Under Consideration
The Trigger…
1970’s : ‘Pepsi Generation’
great ads: youth & vitality
1980’s: ‘Pepsi Challenge’
blind taste test
The Trigger…
The previous 15 years saw Coca-Cola's market share remain flat while Pepsi's continued to climb.
Coke's market share fell from 24.3 in 1980 to 21.8 in 1984.
Coke was trailing in supermarkets by 1.7 percent, which represented a third of coke's total sales
Coke was in danger of becoming the #2 soft drink
With aging baby boomers increasingly concerned about their weight and turning to non-sugar drinks, most growth in the sugar segment was expected to come from the teen drinkers.
Brand personality
Pepsi
RebelliousSportyExploringEnergeticYouthful
Laid-backSophisticationArchetypicalStatus-quoTradition
PROJECT KANSAS
By April 1983, Coke’s top brass decides to explore the possibility of a reformulation.
Study conducted over a period of about 2 1/2 years between 1983 and 1985
Cost about $4 million
191,000 blind taste-tests in 13 cities
Only 30,000 to 40,000 of these involved the specific formulation that was eventually introduced
THE DETAILS
Market Research
‘New ingredient added’
Would you be upset?
Would you try the new product?
Result:
10 to 12% would be upset, half of which would get over it strongly favourable/unfavourable
55% favoured New Coke above old version & above Pepsi
CROSSING THE RUBICON
September 1984
The technical division brewed a formula of Coke that beat Pepsi in blind taste- tests, by as much as 6 to 8 points. Before, Pepsi had beaten Coke by 10 to 15 points. This was an 18-point swing.
After After 9999 years with essentially the same years with essentially the same taste, Coca-Cola decided to switch to a new, taste, Coca-Cola decided to switch to a new, high-fructose corn syrup, to make Coke taste high-fructose corn syrup, to make Coke taste sweeter and smoother--more like its arch sweeter and smoother--more like its arch
rival, Pepsirival, Pepsi.
New Coke was introduced on 23
April 1985…
THE REACTION
Media: ‘marketing blunder of decade’81% awareness within 24h, 150 million trial5000 calls a day + > 40,000 lettersHere's a sample:"…like spitting on the flag" "I couldn't have been more surprised if someone had told me that I was gay.""Changing Coke is like God making the grass purple or putting toes on our ears or teeth on our knees." "…they violated my freedom of choice. It's as basic as the Magna Carta, the Declaration of Independence. We went to war in Japan over that freedom."
THE REACTIONS
Problem: Coke lost market share
despite :
$100 million more advertising
2 times more vending machines
More shelf space
Competitive price
BEATING THE RETREAT
‘…we heard you, original taste is back.’
At a July 11, 1985 press conference, two Coca-Cola executives announced the return of the original formula.
…the real thing
What Went Wrong With The Research
Coke's research did a pretty good job of predicting consumer response, at least initially.
When the reformulation was first introduced, the consumer response was favorable.
But by the end of May 1985, it had begun to change.
It was this that Coca-Cola had not anticipated.
"It is this change in consumer opinion, and only this change, that Coke's market research had failed to predict."
RESEARCH @ FAULT?
The conflict between the focus group and the survey of individuals is crucial. “Initially people made individual decisions, and most at least acquiesced to the change. But as the majority of the population had the opportunity to be stimulated by the media reports and other social interactions with angry Coke loyalists, most changed their minds.” Given the 10%-12% figure from the quantitative survey, a typical 8-12 focus group is likely to have at least one angry loyalist. The focus group results showed that, exposure to the views of angry Coke loyalists is likely to sway the others in the group.
DIFFERENT SELF-IMAGES
Actual Self-Image
Ideal Self-Image
Ideal SocialSelf-Image
Social Self-Image
ExpectedSelf-Image
Possessions Act as Self-Extensions
By allowing the person to do things that otherwise would be very difficult
By making a person feel better
By conferring status or rank
By bestowing feelings of immortality
By endowing with magical powers
WHY THE HUE & CRY
Consumer Patriotism
The pairing of a product with a national symbol
National identity salience
Feeling closelyRelated to the
nation
Higher positiveattitude towards
the product
Daily Subtle Reminders of Ones National Identity and Its Related Consumer’s Response Model
AM AMERICAN INSTITUTION
Coca-Cola is the "sublimated essence of all Coca-Cola is the "sublimated essence of all America stands for--a decent thing, honestly America stands for--a decent thing, honestly made, universally distributed, conscientiously made, universally distributed, conscientiously improved with the years." improved with the years." -- William Allen White, Pulitzer Prize-winning editor of the Emporia (Kan.) Gazette, 1938.
CORE AMERICAN VALUES
SuccessSuccess
MaterialismMaterialism
FreedomFreedom
ProgressProgress
YouthYouth
CapitalismCapitalism
CoreCoreAmerican American
ValuesValues
CoreCoreAmerican American
ValuesValues
AM AMERICAN INSTITUTION
"...consumers have an emotional attachment to their soft drink brand..."
Coca-Cola was the quintessential representation of Americana. "Baseball, hamburgers, Coke – they're all the fabric of
America." When Coca-Cola announced that it would bring back Old
Coke, Democratic Senator David Pryor of Arkansas, called Coke's capitulation "a very meaningful moment in the history of America. It shows that some national institutions cannot be changed."
REASONS FOR EMOTIONALATTACHMENT
Coke considered part of American Culture
Part of Social Fabric
Strong Emotional Attachment
How they achieved this?????
ACHIEVING THE EMOTIONAL
ATTACHMNET
During 1910s associated itself with
the ideal AMERICAN GIRL
the American first love BASEBALL
During 1920s depicted the American Prosperity
Great Depression – showed a pleasant man having Coca Cola on his way to work, reminding people of the good old days.
Gave people hope and showed them what the perceived ‘Real America’ was.
Became an emotional buffer for them.
ACHIEVING EMOTIONAL ATTACHMENT
Showed happy scenes of ‘everyday’ American Life (Woman taking break from gardening )
They gave the people an ‘idealized reality’ which the people wanted to emulate.
Became associated with SANTA CLAUS, reassuring people that goodness still existed in the world
Became part of everyday life of America…
WORLD WAR-2The true nationalization
Reminded soldiers of comforts of home.Ads showed two smiling soldiers drinking Coca Cola, the
happy, no worries lifestyle image prevailed. The ad appeared tidy, neat, in order, and under control. As long as there was Coca-Cola, everything was fine.
Company convinced government Coke that as an alternative to alcoholic beverages, Coca-Cola would be a more desirable beverage for a commanding officer to give to his troops.
“It's the little things, not the big things that the individual soldier fights for or wants so badly when away. It's the girl friend back home in a drug store over a Coke, or the juke box and the summer weather. The average soldier wants to come home, get back in those old clothes, and do the things he always did.” { ALLEN,258} { ALLEN,258}
PEARL HARBOURNationalism Ignites
Company declares: "We will see that every man in uniform gets a bottle of Coca-Cola for five cents-- wherever he is and whatever it costs"
(Watters, 162).
PEARL HARBOURNationalism Ignites
The Coca-Cola company became a source of surging patriotism.
Company convinces government that Coke would provide a boost to soldiers’ morale
64 bottling plants behind Allied lines Entire bottling plants were shipped to the front lines
with other supplies As the battle front moved, so would the bottling company.When America went to war, Coca-Cola followed...
THE PROBLEM
Coca- cola did not understand consumer behavior issues
related to branding well enough to realize that what it was
measuring was not the prime reason why people choose
Coke!FATAL ERROR !!
Very accurate measurement of the WRONG thing…Focused on the product, not the brand.
Alternative I
Could have simply changed its campaigns to
give Coke a younger image. Sponsor football matchesSponsor parties at discothequesSponsor college events Advertise it as add-on to liquor especially the ones which youngsters drink
Alternative II
If Coke was determined to change the recipe, it could have done it without letting anyone know.
•Do not change the name•Do not advertise the new formulation•Introduce in a phase wise manner•Monitor the customer response in that territory •Let advertising expenditure remain constant & if the sales increase it will be because of the new product’s better taste
LESSONS LEARNT
How people’s self-image can become so tightly connected with a brand that changes to the brand’s image may be received as a personal assault.
Constituency analysis is extremely important because you never want to alienate or abandon your base.
Some things cannot be measured by taste tests, opinion polls, or market research.
Don’t try to fix something that is not broken yetDon’t burn your bridgesIneffectiveness of sheer advertising $Power of the media
“We did not understand the deep emotions of so many of our customers for Coca-Cola. It is not only a function of culture or upbringing or inherited brand loyalty. It is a wonderful American mystery, a lovely American enigma. And you cannot measure it any more than you can measure love, pride or patriotism." -President Donald R. Keogh
THANK YOU