Introducing “The New Coke”

ePGP Batch 3: Group 3

Alok Paul
Akash
Akanksha
Adi Garg
 Introducing “The New Coke”

Invented by Pharmacist John Styth Pemberton, who used to sell medicines

like Triplex Liver Pills and Flower Cough Syrup.

1885
Birth of Coke Registered a trademark for French Wine Coca “Nerve tonic Stimulant” – it
contained Coca leaf and wine

Removed the wine and added caffeine and Kola nut flavour and name it
Coca Cola, packaged in used beer bottles and distributed to Soda Fountains.

He never thought this could be a refreshment drink but instead marketed it

as the Headache and hangover remedy.

It was an accident when a druggist found that syrup tasted best with
carbonated water and thus, the Coke was born.
 Introducing “The New Coke”

In 1888, Dr. Pumberton sold the bottling and distribution rights to druggist
Asa Grigs Candler for just $2300

Transfer of
Rights & Same year Pemberton also died and was buried in unmarked grave –
unfortunate to the inventor of worlds favourite Soda
Death
1892 – Candler promoted the drink as refreshment and organized the Coca
Cola Company.
FTC Charged the Coca Cola Company with the Antitrust law violation.

Candler started selling Coke in glass bottles which later became the
collector’s item today.

Introduced a Policy :Locked the ingredients in the locker and no more than 3
people at a time would know the secret ingredients
 Introducing “The New Coke”

In 1916, Candler left Coca Cola to run for elections and gave the control to
the relatives.
Relatives sold Coca Cola to Atlanta businessmen for $25 million
New Owners
Robert Winshop Woodruff – Under new owners, the Coca Cola became
& household for every American and the symbol worldwide.
Crisis
Woodruff family owns Coca Cola Company till date.
In 1992 – The company faces major financial Crisis due to untimely sugar
buying, increase in Syrup prices.
When Coca Cola tried to pass the debt to bottlers, it resulted in conflict
between Bottler and the company and they sued the company in revolt.
Share prices dropped to $18 FROM $40
Sales dropped from 18.7 million gallons to 15.4 million gallons
 Introducing “The New Coke”

Boss took initiative to improve bottler relations, new contracts to fix the
syrup price and adopted a policy “Lets stay together and earn together”

Changes Quality Control programmes to make consistent taste

Eliminated the “Sales” department and fired everyone, next day hired
everyone again in the new “Service” Department expanding job duties from
selling syrup to equipment installation, retail training and advisory roles in
bottler operations

Woodruff once said “I didn’t have VISION, I was just CURIOUS”

 Introducing “The New Coke”

1935 – Hollywood through movies started giving Coca Coca the free
publicity, they were seen gulping the Coca Coca in many scenes

New Reforms 1937 – PEPSI Acquisition offer was declined by Woodruff which proved to be
a mistake.
Pepsi would give tough competition to Coke in future

Till 1940 – Coke was the market leader, they thought they would never be
competed by any other brand.
 Introducing “The New Coke”

Gas station were adopted as major new distribution outlet.

New Advertisement: Advertising “Around the corner from anywhere”
Coke sold in bottles now was outselling Coke sold in fountains.
New Reforms Started in EUROPE and setup Foreign Sales Department – which gave profits
within 3 years
Till now Coke’s taste was same in Europe and America.
1923 - “Pause and Refresh Yourself” tag line was introducte which
eventually “the Pause that Refreshes” became the Synonym for next 20
years.
1930 – Coca Cola commissioned artist to paint beautiful painting for
comforting nostalgic appeal.
1931 – Haddon Sundblom painted the famous Coca Cola Santa Claus and
forever changed the way we imagine Santa now, Big, bright Red and Jolly
Santa Claus.
 Introducing “The New Coke”

Coca Cola also joined the Milliatary in the World War II aling with the GI’s
which made very famous
Woodruff declared that every men in the war should get Coke for just 5
cents, it doesn’t matter if company makes loss
World War
During the war the General’s requested the company to setup 10 bottling
II plants in North Africa and Italy to support war related distribution
Operation.
The Coca Cola representatives were know as Coca Cola Colonels
End of the War – almost 5 billion bottles were consumed
Black Market of the bottles started and it started selling at from $5 to $40
and to $4000 at an auction
1950 – Coke was outselling Pepsi by 2:1
 Introducing “The New Coke”

By 1955 the budget of Coca Cola was around $30 million dollars
They also sponsored some famous TV Shows
In 60s & 70s many more advertisements were done with new slogans like
Advertising “Things go better with Coke”
Strategies 1972 - Popular band “The new Seekers” recorded a song which sold about 1
million copies
Woodruff continued the company’s expansion and added few more
products under the umbrella like Minute Maid, Duncan foods, Sprite, Diet
Cola “Tab” and Fresca
Also, they renamed the Diet Tab Cola to “Coke” which surprisingly increased
the sale of Diet Tab to 12% - Coke name had become a symbol till now, as
per the earlier strategy to keep Coke for 1 product only, it was changed and
now Diet Coke was introduced.
 Introducing “The New Coke”

By Now, the management were paying less attention on the marketing of

the central product “Coke” due to several issues like with bottlers for higher
syrup prices, govt regulations, franchise model issues
Fall of the They also tried to diversify the company by taking over different brands like
Company AquaChem (water business), Preseto (plastic bags) Wine sprectrum – None
of these ever made to the shares of Coke which were used to purchase
them
New President, Donald Keough was busy with legal battles instead of hiring
a legal team – which he realised later.
Coke growth dropped from 15% per to year to 2% in the late 70s
The main fall
1980 – Pepsi outsells Coke for the first time by claiming 29.3% from Coke’s
29%
 Introducing “The New Coke”

At one point where Coca Cola was not able to focus on the central product
and was engaged in issue:
Pepsi started full fledged marketing and started “Pepsi Generation” to target
The PEPSI the young population.
Era
Pepsi also changed the strategy to focus more on the User and not the
Product.

“Pepsi Generation” became most studied advertising ideas in history.

 Introducing “The New Coke”

Creative head director Bob Stanford, conducted a hidden survey in which he

handed over 2 unmarked bottles of Cola and asked the customer which one
was better, People chose Pepsi by the margin of 52% to 48%, it was filmed
The PEPSI with hidden camera to prove the claim.

Challenge Coke reacted and claimed Pepsi was lying – Coke conducted its own taste
test which surprised them as people like pepsi more which proves pepsi
tasted better.
The Coca Coal had never did this test and protected the 100 year old secret
formula and followed a big mistake “it was not allowed”, they actually
didn’t know what people thought about Coke.
And Pepsi continued the challenge in other major cities were Coke hold was
stronger – and people liked Pepsi over Coke and in few cities Coke won but
by very less margin. So pepsi was for sure giving tough competition to the
market leader.
 Introducing “The New Coke”

We can see how the Loyalty of Coke was dropping but PEPSI’s loyalty was
rising from 4% to 11% and by seeing this, Coke had to to something:

Loyalty
& Robert Goizueta – becomes the Chairman of the company, and called a Five
Day worldwide manager’s conference to deliver message – the change in
New Genesis company to do things differently and who doesn’t adapt the change will be
left out. Motto “Ready, Fire, Aim” and thus the Coke changed its flavour first
time in 99years.

This brought major changes in the company along with Diversification by

Acquiring Columbia Pictures in Jan 1982, Diet Coke was also introduced the
same year which broke all the records and became the 3 rd most selling soft
drink after Pepsi at 2 and Coke at no. 1
 Introducing “The New Coke”

1983 – Pepsi dropped the “Pepsi Challenge” and brought in the famous
Michael Jackson as the spokesperson of Pepsi who rejected the Coke
Endorser role, they started a powerful campaign and new slogans like
Coke “Pespi, the choice of New Generation” it united the Pepsi challenge and
v/s Pepsi generation themes.
Pepsi By now, Coke was spending more than Pepsi in all the departments like
Marketing, Advertising, Distributions but still Pepsi was taking over Coke’s
sale by around $100 million dollars annually.
This is the time when Keough commented on the Pepsi’s strategy on
understanding the user’s taste and adoption of change which Coke never
did and it was the high time that Coke changes the taste according to the
demand.
 Introducing “The New Coke”

Brian Dyson – president of CC’s North America Division, commented

strongly about “importance of change and who those don’t change
Bold Step according to the time at one point wither and die”, I cannot sit and do
OF nothing about my product, if I do nothing it means I have given hopes, doing
nothing means you are locked out of doing what you do for every other
Project product, doing nothing cannot keep my product modern”
KANSAS
Kansas Project: Initiated to develop a taste which can simply beat Pepsi’s
taste – Sergio Zyman worked on the 25th floor office without secretary and
security to keep this project secretive.
 Introducing “The New Coke”

Under Project KANSAS, still secretive project, Coca Cola Marketing

Department conducted surveys
Survey 1. 2000 interviews in 10 cities
2. Storyboards and Mock Advertisement to share the reaction
&
3. Test v/s control experimental designs were introduced
Experiments 4. Questions were asked “Would you try new product”, “Would you be
upset”

Out of all the participants :

12% were upset, half of them were Ok and half were not, Pepsi drinkers also
showed interest in the new Coke which encouraged the findings.
 Introducing “The New Coke”

After working on the product for unlimited hours and hard work of
marketing department, Coca Cola Company

Results - Succeeded in creating the better Coke

- Conducted survey on 30-40,000 participants and new Coke won 55%
votes as compared to original Coke
- Beat the Pepsi by margin of 6-8 points
- $4 million and 2 years spent were spent of project KANSAS
- Challenge was considered “The biggest taste test ever”
- It estimated that new Coke will boost market share by 1% valued at $250
million in retail
 Introducing “The New Coke”

After the Biggest Taste Test ever, finally the New Coke was ready to be
launched but there was one more problem, what about the Original Coke?
What about the bottlers to add a new line in bottling plant, what about the
Intoducing Original taste if new is launched?
The There were risks of consumer disappointment but
NEW Coke Coke USA predicted that any backlash would disappear by mid-day, die hard
loyalists would have to chose Coke as they will not have any other option.
This proved out to be yet another mistake by the Coca Cola Company

To make people aware and like the New Coke, company initiated some
Marketing Strategies like:
New Songs with “Coke is it” were aired on television
New Rule: Never apply “New” work to the new Coke but was discarded in
dealer’s response as “New” derives more sales.
New design package with Silver and Red was created
 Introducing “The New Coke”

April 1985:
Press conference was to be conducted on Tuesday to launch new Coke, but
Pre Launch on Saturday the news was leaked and by Sunday the newspapers had the
& details.
Pepsi
John McCann, Vice President of the Public Affairs at PEPSI made a plan

PEPSI saw this and was shocked, they had 3 days to develop a counterattack
and they also decided to publish that “Coke was bringing down the product
and not introducing a new product” and the reason was Pepsi

Pepsi call around 200 press offices to Plan the Questions to ask Coca Cola
Company at the press conference
 Introducing “The New Coke”

After extensive Press conference and answering the Pepsi implanted

questions which Coke was not prepared for, there were headlines in the
next day newspaper which said
The “Coca Cola changing its secret formula”
Launch Day
“A new Coke”
“The Gods must be crazy”
“Unhappy Cocaphiles faces C day”
Cokes stock market shared dropped to by $1.85 to $70 and Pepsi’s raised by
$1.85 TO $53.75

Die hard fans even tried to stock the Coke and also termed their life as BC
and AC – before change in Coke and After the change in Coke.
 Introducing “The New Coke”

After Initial Backlash: By Now, Coca Cola was getting 5,000 calls a day and
pounds of letters and they had to hire more staff to answer the question
“why was Coke changed”, they offered Coupon of 6pack Coke in response to
the letters so that people can try the new Coke.
Attitude
& 557 petitions were signed to bring back old Coke

Faith Old Coke Drinkers of America was founded to file lawsuit against Coke
But
By June “150 million” tried the new Coke and they were in favour of new
Coke
- New Coke was still beating Pepsi in blind taste test
- 75% returning customer rate was recorded
- Shipments to bottlers rose by 8% - highest levels in 5years
- Still hoping that New Coke will succeed
 Introducing “The New Coke”

Never gave up the Faith in the new Coke and were determent of not going
back to the Old Coke

Attitude Company had cut the advertisement cost to half to reduce exposure of the
new product and increased sampling program to increase trials
&
By late June, new Coke was all over USA, old Coke was gone and now Pepsi
Faith was beating New Coke in taste tests.
People were emotionally hurst as if their own family member had died,
Coke sale was slowing down again
But the management was having faith in the product and they had

“Lets wait and See” attitude

 Introducing “The New Coke”

In April, new Coke was announced – it was beating Pepsi as old stock was
still in the market, by June the old stock was evaporated and New Coke was
available in the country, Pepsi was beating the new Coke and sales was
going down.
Coke When Finally
Is back In July, apologies came in and finally the old Coke was being relaunched by
the name “Coca Cola Classic” and this the shares reached highest level in 12
years
New spread around and TV news headlines were “A very meaningful
moment in the history of America, some national institution can never be
changed”,
Received 18000 calls on July 11 (when announcement was made) but this
time the calls were to thank the show the love
 After 3 months of relaunching the Old Coke, it was outselling new Coke by
9 to 1 in some markets, fast food chains like McDonalds, Hardee’s switched
to old Coke
 Introducing “The New Coke”

In a survey, if Peps’s image were give 100 points, Coke’s image was 89 and
new Coke was at 120, New Coke was also elected “Product of the year” by
1986 stock reach all time high of $110 but by 198 the Classic Coke again
dominated over New Coke, Coke was back
Conclusion
So by the end it was concluded that there is no measurement to love, pride
or patriotism, launching new Coke was not dumb but it didn’t stand and win
the emotional love for the old Coke
 Introducing “The New Coke”

Product: Coke had become the patriotic brand, it owns over 500 different
brands and one of the most diverse product lines with over 3500 different
drinks, continuously expanding the portfolio according to customer’s needs
and adapt to lifestyle changes
Ps in
Price: Value Pricing strategy, the price is not too high to exceed customer
Marketing reach nor too low to deem it as cheap product, it has competitive pricing
approach to stay in line with Pepsi and price sensitive customer to switch
Place: having presence in over 200 countries, its wide distribution network
proves the importance of the “place strategy” for the company’s marketing
mix, in order to expand and gain a larger market share and increase its
revenue.
People: Coca-Cola has put in place numerous initiatives to ensure employee
wellbeing at the workplace, reward them and keep them motivated while
increasing productivity. The brand aims to create a working environment
where people are fully engaged by implementing teams such as ‘fun at
work’ or ‘live positively
 Introducing “The New Coke”

Promotion: Coca-Cola follows an aggressive marketing strategy through

multiple channels such as TV, radio, print or sponsorships. By sponsoring
Ps in major events, the company increases brand awareness, visibility and
Marketing customer loyalty

Process : Coca-Cola has adopted an integrated competitive supply chain

approach to optimise its operational infrastructure and ensure sustainability.
It has a number of processes including ingredient conveyance, equipment
washing, mixing and blending, filling, labelling, packaging, and warehousing.
It is considered a hidden process as it is not visible to customers.