THE DEBACLE

OF
NEW

{1985}

Venkatesh
Topic Under Consideration

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
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

Youthful Energetic Exploring Sporty Rebellious

Tradition Status-quo Archetypical Sophistication Laid-back

 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 99 years with essentially the same

taste, Coca-Cola decided to switch to a new,
high-fructose corn syrup, to make Coke
taste sweeter and smoother--more like its
New Coke was introduced on 23
April 1985…
 THE REACTION

Media: ‘marketing blunder of decade’

81% awareness within 24h, 150 million trial
5000 calls a day + > 40,000 letters
Here'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-
Ideal Self-Image
Image

Ideal Social Social Self-

Self-Image Image

Expected
Self-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

Daily Subtle Reminders of Ones National Identity and Its Related Consumer’s Response Model

Consumer Patriotism

The pairing of a Feeling closely Higher positive

National identity
product with a Related to the attitude towards
salience
national symbol nation the product
 AM AMERICAN
INSTITUTION

Coca-Cola is the "sublimated essence of all

America stands for--a decent thing, honestly
made, universally distributed, conscientiously
improved with the years."
-- William Allen White,
Pulitzer Prize-winning editor of the Emporia
(Kan.) Gazette, 1938.
CORE AMERICAN VALUES

Success

Materialism

Freedom

Progress
Core
American Youth
Values
Capitalism
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 EMOTIONAL
ATTACHMENT

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-2
The 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}
 PEARL HARBOUR
Nationalism 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 HARBOUR
Nationalism 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 matches
Sponsor parties at discotheques
Sponsor 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 yet
Don’t burn your bridges
Ineffectiveness 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