“New Coke”: Armageddon in The Cola Wars
“New Coke”: Armageddon in The Cola Wars
In the early 1980s the Coca-Cola Company had a slight problem. It had twice as many vending machines as its nearest competitor, Pepsi, it dominated the fountain market (McDonald’s and other food chain outlets), it had more supermarket shelf space and it spent twice as much on advertising. And it was losing market share.
Worse, the reason was that people preferred drinking Pepsi, as taste tests proved, which led the corporate suits at Coca-Cola’s headquarters to one inescapable conclusion. After 100 years of using basically the same cola formula, Coke had to change.
Which it did, experimenting with countless different formulas until finally creating a sweeter Coke that convincingly beat Pepsi in taste tests.
The next step was extensive market research, including surveys and focus groups with more than 200,000 consumers, and all of the research was checked, re-checked and corroborated. Four million dollars was spent ensuring that American consumers really did love the new formula and would accept a change.
This led to Coke’s introduction of “New Coke,” this week (April 23) in 1985, supported by one of the most comprehensive advertising and public relations campaigns in Coke’s history.
And one month later sales were in the toilet. Americans complained that “New Coke” tasted like furniture polish. Some called it “Coke for wimps.” Dedicated Coke drinkers stockpiled “old” Coke and a black market for it developed. It was the most disastrous marketing decision Coke ever made, and it had the company’s executives scratching their heads. The research said “New Coke” was a winner. What went wrong?
In hindsight, Coke learned that market research doesn’t always tell the story, especially when the product in question is one of the most successful in history. It was one thing for members of a survey to say that, in theory, they would switch to the new product. It was something else entirely when it actually happened and those surveyed realized that one of America’s cultural institutions — in a league with hot dogs, apple pie, baseball and Old Glory — was being replaced. Changing a product is one thing, Coke’s executives learned, but you change a piece of Americana at your own risk.
And so in July of 1985 the Coca-Cola Company announced that it was restoring old Coke — now called Classic Coke — to its rightful place at the head of the company’s product line. And lo and behold, Coke’s market share then reverted to pre-1980 levels, even though it was the same product Pepsi had beaten in taste tests.
The moral of the story? Perhaps pop singer Joni Mitchell summed it up nicely when she sang, “Don’t it always seem to go that you don’t know what you got ’til it’s gone.”
© Kauffmann 2014