THE LAUNCH OF NEW COKE

1.The launch of new coke turned out to be a nightmare for Coca-Cola . Discuss the marketing implications of introducing New coke. Was it necessary to reformulate New coke?

The primary reason which led to the introduction of the New coke was that Coca Cola was losing its market share drastically due to decrease in sales, As a solution to this problem the management decided to reformulate its taste.

The launch of the New coke ignited high sales initially; the reason for this was that the consumers were excited to try out the new product. As consumers tasted the product they were dissatisfied by the new sweeter taste which was totally against the consumer expectations and hence resulted in low demand and subsequent decrease in sales.

The drink had a legacy of over 99 years and was associated with its loyal consumers to a very great extent; some were emotionally attached to the extent that they preferred coke next to god. Reformulating such a product would surely affect the consumer preference or attitude towards this particular brand.

Since consumers were dissatisfied about the reformulation they still preferred the original coke and hence this resulted in rise in speculative demand for original coke. Some marketers took advantage of this situation and sold the original coke illegally at exhobirant prices. This resulted in opportunity loss for the company.

The brand image was diluted between brand loyalists, they were emotionally disturbed and condemned the decision to reformulate, and the company had lost its goodwill and trust within the masses. Most loyalists preferred to switch the brand as they found New coke to be a “Me Too” product and did not find much differentiation between Coke and Pepsi.

All this had led to further decrease in sales and brand equity. Coca Cola was forced to revert back to its original flagship taste and old formulation and hence it launched Coke Classic in 1986 to regain its loyalists, equity and sales.

If Coca Cola had not reformulated the New Coke, then it would have been wiped out away from the market in less span of time. Competitors would have taken over and enjoyed 100% monopoly in the market. The Loyal consumers would have felt detached and worthless for killing such a flagship brand, I might have resulted in agitation and rebellious nature of the consumers and could not have regained the trust and goodwill associated with the brand.

2.What other types of research methods would have been helpful to the company in providing consumer insights? Discuss.

Coca Cola had conducted focus group interviews, market survey and blind tests.

Other methods that could have been used are:

Delphi method and expert opinion method, wherein experts from the industry brainstorm views suggestions and ideas which can provide information.

Personal interviews using structured and unstructured questionnaires which can provide feedback both on qualitative and quantitative aspects.

Story/slogan completion method which provide insights regarding the consumer views and associations.

Sales wave research method through which the consumer behaviour towards a particular attribute or factor can be inferred.

Regression analysis to understand the cause and effect relationship. Time series and trend cycle to understand the consumption pattern.

A mixture of these method or individual methods based on the discretion of the management would have been helpful to provide consumer insights.

3. A marketing blunder or a ploy?

Based on my discretion I would consider Coca cola’s decision to reformulate its content as a marketing blunder,

Every business faces the threat of risk, but no business would take risk to experiment on its flagship brand, In the case of Coca cola it existed alone for the reason coke was its successful brand, this brand has developed a legacy for about a century, and no company would want to experiment with such established legacies.

The company’s decision to reformulate the content was due to decreasing sales, which it had lost to Pepsi for various reasons, Pepsi had invested in advertising and as a competitor reaction, coke had also invested in advertising at a higher average, despite the efforts it saw a drastic downfall in the sales and equity, the next favourable decision according to the management was to reformulate the mixture based on the result of the blind test which was a type 2 error. Despite the responses of the loyal consumers which were contradictory to their own statements and most loyalists were against the idea, the management executed the decision. This undoubtedly shows it was a blunder.