In the 1970s, Coke’s chief rival, Pepsi-cola which had very recently positioned itself as a youth brand successfully, introduced the Pepsi Challenge.This challenge tested consumers' taste preference while being blindfolded.To utter dismay of Coca-Cola, most of those who participated in this challenge preferred Pepsi’s sweeter formula over Coca-cola's longstanding taste.
When Roberto Goizueta became chairman in 1981, Coke’s numero uno status was being seriously threatened, not just by the rival Pepsi-Cola but also by its owned brands like Fanta and Sprite. Americans had started to view coca-cola as a stout but slow and historic company and this was not doing any favour to the company. This opinion was largely created by the youth branding which Pepsi assumed and a seemingly feeble response from coca-cola to the pepsi's rising popularity.
Under tremendous pressure to act and stop this landslide, Coca-Cola committed the first mistake.Coca-Cola concluded that the problem was primarily due to the product and not product's perception. They started to believe that consumer preferences have changed and now sweeter is better.
Coca-Cola worked on a new formula and based on 200,000 taste tests which largely favoured the new formula over the old coke as well as the rival drink Pepsi-cola, Executives at Coca-cola were sure that it was time to turn the tides in their favour by introducing the new formula for coke. Thus, New coke was introduced.
Second mistake was to shut the production of the old coke altogether and hence the only coke offering from Coca-cola was the new coke.
When its customer found out that the new coke is a changed formula and hence a different taste and the legendary Coca-cola which by then had found its association with american culture and history was killed by the Coca-cola executives, things went berserk. A large population of US boycotted the new coke. Large number of hate messages and letters were received by the company. This decision since then is known as 'the biggest marketing blunder of all time'.
Coca-Cola went into damage control mode. Starting with a public apology and the famous "We have heard you" comment by the the Chairman, Roberto Goizueta. Eventually, Coca-cola had to bring back the old formula while the drink was branded as the "Classic coke".
As a result of this, the loyalty to the old coke (Now, classic coke) increased even more than the old coke and Coke was back to number one with reasonable lead.
Learnings from the marketing failure of New Coke -
When Roberto Goizueta became chairman in 1981, Coke’s numero uno status was being seriously threatened, not just by the rival Pepsi-Cola but also by its owned brands like Fanta and Sprite. Americans had started to view coca-cola as a stout but slow and historic company and this was not doing any favour to the company. This opinion was largely created by the youth branding which Pepsi assumed and a seemingly feeble response from coca-cola to the pepsi's rising popularity.
Under tremendous pressure to act and stop this landslide, Coca-Cola committed the first mistake.Coca-Cola concluded that the problem was primarily due to the product and not product's perception. They started to believe that consumer preferences have changed and now sweeter is better.Coca-Cola worked on a new formula and based on 200,000 taste tests which largely favoured the new formula over the old coke as well as the rival drink Pepsi-cola, Executives at Coca-cola were sure that it was time to turn the tides in their favour by introducing the new formula for coke. Thus, New coke was introduced.
Second mistake was to shut the production of the old coke altogether and hence the only coke offering from Coca-cola was the new coke.
When its customer found out that the new coke is a changed formula and hence a different taste and the legendary Coca-cola which by then had found its association with american culture and history was killed by the Coca-cola executives, things went berserk. A large population of US boycotted the new coke. Large number of hate messages and letters were received by the company. This decision since then is known as 'the biggest marketing blunder of all time'.Coca-Cola went into damage control mode. Starting with a public apology and the famous "We have heard you" comment by the the Chairman, Roberto Goizueta. Eventually, Coca-cola had to bring back the old formula while the drink was branded as the "Classic coke".
As a result of this, the loyalty to the old coke (Now, classic coke) increased even more than the old coke and Coke was back to number one with reasonable lead.
Learnings from the marketing failure of New Coke -
- Product perception is as important as product itself
- Never underestimate the emotions attached to a brand
- Imitating your competitors can never be a long-term strategy
- Save your market research from any possible biases
- Have courage to accept your mistake and correct it
Cheers,
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