The rise and fall of new coke:what's the problem

In 1985, the Coca-Cola Company made a classic marketing blunder. After 99succesfull years, it set aside its longstanding rule-“don’t mess with mother cook”-and dropped its original formula coke! In its place came new coke with a sweeter smoother taste.

At first, amid the introductory flurry of advertising and publicity, new coke sold well. But sales soon went flat, as a stunned public reacted. Coke began receiving sacks of mail and more then 1500phone calls each days from angry from consumers a group called “old cola drinkers” staged protests, handed out T-shirt, and threatened a class action suit unless Coca-Cola brought back the old formula. Most marketing experts predicted that new coke would be the “Eddies of the eighties.” After Olney three months, the coca cola company brought old coke back. Now called “coke classic,” it sold side by side with new coke would remain its “flag ship” brand, but consumers had a different idea. By the end of 1985, classic was outselling new coke in supermarket by two to one.

Quick reaction saves the company from potential disaster. It stepped up efforts for Coke classic and slotted new coke into a supporting role. Coke classic again became the company’s main brand –and the countries leadings soft drink. New coke became the company’s “attack brand” –its Pepsi stopper-and ads boldly compared new Coke taste with Pepsi’s. Still, new coke managed only a 2 percent market share. in the spring of 1990,the company repackaged new coke and relaunched it as a brand extension with a new name coke II. Today, coke classic captures more than 20 percent us soft drink market; coke II holds a miniscule 0.1percent

Why was new coke introduced in first place? What went wrong? Many analysts blame the blunder on poor market research.
In the early 1980s, although coke was still the leading soft drink, it was slowly loosing market to Pepsi for years, Pepsi had successfully mounted the “Pepsi challenge” a series of televised taste testes showing that consumers preferred the sweeter taste of Pepsi. By early 1985, although coke led in the overall market, Pepsi led in the super market sell by 2 percent (That doesn’t should like much, but 2 percent of the huge soft drink market amounts to more than $1 billion in retail sales!).Coca kola had to do something to stop the lose of its market share, and the solution appeared to be a change in coke’s taste.

Coca-cola began the largest new product research project in the company history. It spends more then 2 years and $4 million on research before settling on a new formula. It conducted some 200,000-taste tests 30,000 on the final formula alone. In blind tests,60 percent consumers chose the new coke over the old and 52 percent chose it over Pepsi. Research shows that new coke would be a winner and the company introduced it with confidence. So what happened?
Looking back, we can see that Coke defined its marketing research problem narrowly. The research locked only test; it did not explore consumer’s feelings about dropping the old Coke and replacing it with a new version. It took no account of the intangibles-Coke’s name, history, packing, cultural heritage and image. To many people, Coke stands alongside baseball, hot dogs, and apple pie as an American institution. Coke’s symbolic meaning turned out to be more important to many consumers than its taste. Research addressing a broader set of issues would have detected these strong emotions.

Coke’ managers may also have used poor judgment in interpreting the research and planning strategies around it. For example, they took finding that 60 present of consumers preferred New Coke’s taste to mean that the new product would win in the marketplace, as when a political candidate wings wit 60 percent of the vote. But it also meant that 40 percent still linked the original formula. By dropping the old Coke, the company trampled the taste bunds of the large core of loyal Coke drinkers who did not want a change. The company might have been wiser to leave the old Coke as a brand extension, as it later did successfully with cherry Coke.
The Coca-Cola Company has one the largest, best managed, and most advanced marketing research operation in America. Good marketing research has kept the company atop the rough-and-tumble soft drink market for decades. But marketing research is far from an exact science. Consumers are full of surprise and figuring them out can be away fully tough. If Coca-Cola can make large marketing research mistake, any company can.