The Failure of the New Coke

Contents:

• Coca Cola

• Coca Cola Market Position

• Research Process

• Defining the problem and Objectives

• Develop the Research Plan / Collect the

information

• Research Results

• Analysis of the Failure

• Conclusion

Coca Cola

Think of a brand success story, and you may well think of Coca-Cola. Indeed, with nearly 1 billion Coca-Cola drinks sold every single day, it is the world’s most recognized brand.

Coca Cola Market Position• Coca Cola held no.1 marker position

for years

• Pepsi ‘the drink of youth’ was able to strongly position its brand against the old and classic image of its competitor Coca Cola

• By 1983, Pepsi had begun to outsell Coke in supermarkets.

• By 1983, Coca cola’s market share had declined to from 60% to under 24%.

As a result In 1985, the Coca-Cola Co. announced a decision that would rock the world. The old Coke formula would be taken off the market and replaced with a smoother, sweeter taste

Research DiagramDefine the problem and

research objective

Develop the research plan

Collect the information

Analyze the information

Present the findings

Make the decision

Defining the problem & Research Objectives

• Market analysts in the context of health- and weight- consciousness, believed that baby boomers were more likely to purchase diet drinks. Therefore, any future growth in the full- calorie segment had to come from younger drinkers, who favored Pepsi and its sweetness.

• Coke executives decided to develop a new formula and called it the NEW COKE.

Develop the Research Plan

Descriptive Research

• Surveys

Exploratory Research

• Focus Groups• Taste Tests

( 200,000 blind taste tests )

• Coca Cola performed market research for two years and spent $4 million to check the market acceptance for the taste of the New Coke

• Moreover, to confirm whether or not they favored the Coke change in concept

• a Majority of the selected consumers sample, (about 53% versus 47%) liked the «new» Coke.

• This result was apparently instrumental in the company’s decision to use this new formula and replace the old one.

Marketing Research Findings

After the official launch

The reaction of the American people was immediate and violent, causing three months of unrelenting protest against the loss of the original Coke.

The Question is

Was the marketing research at fault?

The launch strategy?

Or did Coke "just not get it"?

Marketing Research Failure• Coca-Cola failed to conduct adequate research into the public perception

of the original brand, despite the taste tests, surveys, segmentation and Focus groups carried out.

Taste Testing:• Taste testing results were subject to systematic biases. • The majority of the tests had been carried out blind, and therefore taste was the

only factor under assessment and didn’t pay attention to the drink's packaging for example

Segmentation:• In terms of segmentation, the research approached only consumers in Atlanta

skipping the rest of the states.

Marketing Research Failure Surveys:

• The surveys consisted of simple closed-ended questions and was not likely to reveal consumers’ deep feeling about Coke, wrong framing of questions yielded wrong results which proved to be fatal.

Focus Groups:• Coke's only deviation from the standard sequence in market research was that

the quantitative survey of individuals appears to have been done before rather than after the focus groups

• Coke generalized the focus group result, because as for US , focus groups findings often vary from region to region.

Marketing Research Failure

• The results of the focus-group phase and the survey conflicted. Although both the focus groups and the survey had provided indications that there would be consumer dissatisfaction, the survey results indicated that this dissatisfaction would be limited to a small segment of the market; the focus groups suggested the dissatisfaction would be widespread. The researchers trusted the survey, which comprised a large number of interviews spread over a wide, and presumably representative, area.

• Coca Cola’s marketing research also failed to consider consumer-buying patterns. Therefore, in assessing consumer opinions, the company gave all the responses equal weight despite the well known phenomenon, known as the «80/20 rule» – that a small minority of purchasers usually account for the vast majority of purchasers in a product category

Conclusion• The value of market research is capturing as complete a

picture as you can of your market BEFORE making a decision.