New Coke Fiasco

Brief History

April 23, 1985

Coca Cola announced reformulation of Coke

July 11, 1985

Reinstating old coke as Coca Cola Classic

Pepsi’s blind taste tests suggested

that America preferred Pepsi

over Coke

Coke was loosing market share

Coke was considered an old brand, whereas Pepsi was young

and energetic

Business Environment

So how did coke handled this difficult situation?

Gain the lost Market Share

Beat Pepsi

Revamp Brand

Strategy

Sweeter Taste

Cool Packaging

Advertisement Campaign

Plan

Coke’s Reaction

And what about Customer Reaction??

Customer’s ReactionA man wrote to Mr. Goizueta asking for his autograph — because, in years to come, the signature of "one of the dumbest executives in American business history" would be worth a fortune.

When the taste change was announced, some consumers panicked, filling their basements with cases of Coke®.

A man in San Antonio, Texas, drove to a local bottler and bought $1,000 worth of Coca-Cola.

Protesters at a Coca-Cola event in downtown Atlanta in May carried signs with "We want the real thing" and "Our children will never know refreshment."

Back to Classic

Introduced within 77

days

Classic Coke

outsold New Coke

Coke gained market

share from Pepsi

Coca Cola Classic to Coca-Cola

in 2009

New Coke line

terminated in 1992

Old Formula

for loyalists

And what about Customer Reaction??

So what went wrong?

Backlash

CustomersResistance to

ChangeStrong American

ValueBrand associated to

culture

Coca-ColaBiased Market

ResearchLow confidence in

Brand Attribute based war

Misalignment of competencies

Coke’s Strength - Association with History

Coke’s Strength - Association with Culture

ResonanceInvolvement, Community, Attachment

JudgementInnovation,

Loyalty, Leader, Superiority

FeelingHappiness, Sharing, Celebration, Family,

Self respect

ImageryHappiness, Moments, Christmas, Social, Fun

PerformanceRefreshment, Unique

Flavour, Reference of Colas, Energy, Tasty

SalienceEverywhere, American Values, Fresh Drink, Happiness, Thirst Quencher, Lovermark

Misalignment of Strength

Attack

Strength

War Zone

ResonanceInvolvement, Community, Attachment

JudgementInnovation,

Loyalty, Leader, Superiority

FeelingHappiness, Sharing, Celebration, Family,

Self respect

ImageryHappiness, Moments, Christmas, Social, Fun

PerformanceRefreshment, Unique

Flavour, Reference of Colas, Energy, Tasty

SalienceEverywhere, American Values, Fresh Drink, Happiness, Thirst Quencher, Lovermark

Coca-Cola to New Coke

100 years of relationship with American Values

Deterioration of Brand Equity

New packaging and taste means lost attachment, So basically a new brand

Learnings

Product Perception is more important than Product

Emotional attachment to brand can be irrational

Imitation doesn’t provide competitive advantage

Listen to your customers

Prevent biases in Market Research

Align competition and competencies well

Disclaimer

Created byHiteshwar Gaur, IIM Lucknow

under

Prof. Sameer Mathur, IIM Lucknow