New Coke: A Classic Brand Failure ¥y wall think of Coca-Cola, Indand, with nearly 2 ost recognized brand.Yet in nk nnd replace Think of a brand success story, and you ma billionCoca-Cola drinks sold every single day, It Is the world’s m« 1985 the Coce-Cola Company decided to terminate Its most popular soft dri itwith a formule It would market ox Now Coke, To understand why this porantially Gt na happoning In the soft Brinks ig campatition batwasn sary to appreciate what w rowin the launch of New Coke decisionwax made, It is nec marketplace, Inparticular, we must take a closer look at the & prior to Coca-Cola and Pepsi-Colain the years and even decades ne, Although marketing, The relationship between the arch-rivaly had not been a healthy oF axpartshave belleved fora long time:that the compatition betwaen the two comparter had themsolvos rarely saw It like that, indeed, wer the use of the word a Ina legal battle o en ahead, made consumers more cola-conscious, the firms the Coca-Cola Company had even fought Pepsi-Col ‘cola’ in its name, and lost. Outside the courts though, Shortly after World War I, Timemagazine was already celebrat conquest of the world.’ In the late 1950s,Coke outsold Peps by a ratio of more ned itself as a youth brand one. However, during the next decade Pepsirepositio Coca-Cola had always bet ing Coke's ‘peaceful near- than five to This strategy was a risky one as it meant sacrificing its older customers to Coca-Cola, but ultimatelyit proved successful. By narrowing its focus, Pepsi was able to position its brand it became increasing! against the old andclassic image of its competitor. As drink of youth’ Pepsi managedto narrow the gap. In the 1970s, Coke's chief rival r stakes even further by introducing thePepsi Challenge — testing consumers blind on the difference between its own brand and ‘the realthing’. To the horror of Coca-Cola’s longstanding company president, Robert Woodruff, most ofthose who participated preferred Pepsi's sweeter formula. In the 1980s Pepsi continued its offensive, taking the Pepsi Challenge around the globe and heralding the arrival of the ‘Pepsi Generation’. It also signed up celebrities likely to appeal to its target market such as Don Johnson and Michael Jackson (this tactic has survived into the new millennium, with figures like Britney Spears ‘and Robbie Williams providing more recent endorsements). By the time Roberto Goizueta became chairman in 1981, Coke’s number one status was starting to look vulnerable. It was arket share not only to Pepsi but also to some of the drinks produced by the Coca- and Sprite. In particular the runaway success of Diet Coke ped to shrink the sugar cola market. In 1983, the year behind standard Coke and Pepsi, Coke’s Jy seen as ‘the aised the losing m Cola company itself, such as Fanta was a double-edged sword, as it hel Diet Coke moved into the number three position market share had slipped to an all-time low of just under 24 per cent. ecure Coke's supremacy. Goizueta’ first response to Something clearly had to be done to s the ‘PepsiChallenge’ phenomenon was to launch an advertising campaign in 1984, praising were fronted by Bill Cosby, at that Coke for being lesssweet than Pepsi. The television ads time one of the most familiarfaces on the planet, and clearly someone who was too old to be part of the Pepsi Generation. Theimpact of such efforts to set Coca-Cola apart from its rival was limited. Coke’s share of the marketremained the same while Pepsi was catching up. Another worry was that when shoppers had thechoice, such as in their local supermarket, they tended to plump for Pepsi. It was only Coke’s moreeffective distribution which kept it iderably more vendingmachines selling Coke than ahead. For instance, there were still consi Pepsi. Even so, there was no getting away from the fact that despite theElle Kennedy, Handout: Coke Case Stud) é swrr, 13/09/21 tasta the last thing Coca-Cola oud sitord ies voleve he aibur ena seas] | The problem, as Coca-Cola perceived it, came down tothe product itself As the Peps Chalenge nndhighghtedrllions efter ove Coke could always be dofeated when came down to ta:te.Thisseemed to be confirmed bythe access of Diet Coke which was closer to Pepsin terms of avout Soin what must hove been seen % 9 opieal step, COCa- Cola started working on new forrmlo. Aveo tater they had arrived at New Coke, Having produced its new formula, the Atanta-bosedcompany conducted 200,000 tate rests to see how i fared. The results were overwhelming. Not only did taste better than the origina but people preferred it to PepstCola as well However, if Coca-Cola was to stay ahead of Pepsi-Cola it couldn’t have two directly competingproducts on the shelves at the same time. It therefore decided to scrap the original Coca-Cola andintroduced New Coke in its place. The trouble was that the Coca-Cola company had severely underestimated the power of its firstbrand. As soon as the decision was announced, a large percentage of the US population immediatelydecided to boycott the new product. On 23 April 1985 New Coke was introduced and a few dayslater the production of original Coke was stopped. This joint decision has since been referred to as'the biggest marketing blunder of all time’. Sales of New Coke were low and public outrage was highat the fact that the original was no longer available. It soon became clear that Coca-Cola had little choice but to bring back its original brand and formula.’We have heard you,’ said Goizueta at a press conference on 11 July 1985. He then left it to thecompany’s chief operating officer Donald Keough to announce the return of the product. Keoughadmitted: The simple fact is that all the time and money and skill poured into consumer research onthe new Coca-Cola could not measure or reveal the deep and abiding emotional attachment tooriginal Coca-Cola felt by so many people. The passion for original Coca-Cola — and that is the wordfor it, passion — was something that caught us by surprise. Its a wonderful American mystery, alovely American enigma, and you cannot measure it any more than you can measure love, pride orpatriotism. In other words, Coca-Cola had learnt that marketing is about much more than the product itself. Themajority of the tests had been carried out blind, and therefore taste was the only factor underassessment. The company had finally taken Pepsi's bait and, in doing so, conceded its key brandasset: originality. 1880s it was the only product in the market. As such, it d name became the name of the product itself. status in various When Coca-Cola was launched in the invented a new category and the bran Throughout most of the last century, Coca- Cola capitalized on its ‘original’ advertising campaigns. In 1942, magazine adverts appeared across the United States declaring: ‘The only thing like Coca-Cola is Coca-Cola itself. It's the real thing.’ By launching, New Coke, Coca-Cola was thereforecontradicting its previous marketing efforts. Its central product hadn’t been called new since the very first advert appeared in the Atlanta Journal in 1886, billing Coca- Cola as ‘The New Pop SodaFountain Drink, containing the properties of the wonderful Coca-plant and the famous Cola nuts.'In 1985, a century after the product launched, the last word people associated with Coca-Cola was'new’. This was the companywer, 9/09/13 with more all lusions to US herita wee age than any other. Fifty r mieten vearspreviously, the Pulitzer Prize with the history of Us eee ou mProved with the years’ cocaeola Rede etoeentineiiedt Welcome Back to earth her ae amoUSIY greeting Apollo astronauts with asign reading To confine the brand’ \e brand's significance toa Beeenenathad 08 question of tata was therefore complste reptecentea with many bie brands, the representation was more significant than the thing | and if any soft drink represented ‘new It was Pepsi not Coca-Cola (eve though Pepsi is a mere decadeyounger). Pam. {hYeu fll the word you have the eal thing you cannot then come up with 9 new real thing” Toborrow the comparison of marketing gurl Resi’ ke Introducing New God’ ing message was accentuated by the fact that, since 1982, Coke's strap line hadbeen ‘Coke is it”. Now it was telling consumers that they had got it wrong, as if they had discoveredCoke wasn’t it, but rather New Coke was instead, So despite the tremendous amount of hype whichsurrounded the launch of New Coke (one estimate puts the value of New Coke's free publicity atover US $10 million), it was destined to fail Although Coca-Cola's market researchers knew enoughabout branding to understand that consumers would go with their brand preference if the taste tests weren't blind, they failed to make the connection that these brand preferences would still exist once the product was launched. Pepsi was, perhaps unsurprisingly, the first to recognize Coca-Cola’smistake. Within weeks of the launch, it ran a TV ad with an old man sitting on a park bench, staring at the can in his hand. ‘They changed my Coke,’ he said, clearly distressed. 'I can’t believe it’ However, when Coca-Cola relaunched its original coke, redubbed ‘ClassicCoke’ for the US market, the media interest swung back in the brand’s favour. It was considered asignificant enough event to warrant a newsflash on ABC News and other US networks. Withinmonths Coke had returned to the number one spot and New Coke had all but faded away. Ironically, through the brand failure of New Coke loyalty to ‘the real thing’ intensified. In fact,certain conspiracy theorists have even gone so far as to say the whole thing had been planned as adeliberate marketing ploy to reaffirm public affection for Coca-Cola. After all, what better way tomake someone appreciate the value of your global brand than to. withdraw it completely?0f course, Coca-Cola has denied that this was the company's intention. ‘Some critics will say Coca-Cola made a marketing mistake, some cynics will say that we planned the whole thing,’ said DonaldKeough at the time. “The truth is we are not that dumb, and we are not that smart.’ But viewed in the context of its competition with Pepsi, the decision to launch New Coke was understandable. Foryears, Pepsi's key weapon had been the taste of its product. By launching New Coke, the Coca-ColaCompany clearly hoped to weaken its main rival's marketing offensive. So what was Pepsi's verdicton the whole episode? In his book, The Other Guy Blinked, Pepsi’s CEO Roger Enrico believes the error ‘of New Coke 41 think, by the end of their nightmare, they proved to be a valuable lesson for Coca-Cola. figured outwho they really are. Caretakers. They can’t change the taste of their flagship brand, They can’tchange its imagery. All they can do is defend the heritage they nearly abandoned in 1985.”