New Coke Case study

By
Group 6
 Introducing Our Team
Group 6

Rishika Joyjeet Gautam Deepak

Abhishek Rohit Sabika Teena

 01Case study Background
➢
➢ Old Coke Brand Map & Brand Position
➢ What Went Wrong
➢ Pepsi VS Coke
02➢ Pepsi Brand Map
The Agenda ➢ New Coke Launch
➢ New Coke Brand Map
➢ Old VS New Coke
➢ Lessons Learnt
➢ The Solution

04
 Brief Background ❏ In 1985, Coca-Cola completely withdrew their flagship product from the
market and replaced it with a “new” Coke in the US

❏ However, within a few days of traditional Coke being withdrawn and

replaced by “new” Coke, there was a backlash from consumers and the
media, and their brand image was damaged.
Why was the new
Why
coke such a failure ?? ❏ Many consumers saw Coke as a cultural icon and were angry that it was no
longer available.

❏ Primarily due to media and consumer lobby group pressure, within 80 days
Coke re- introduced “Coke Classic” and offered two Coke variations along
with “new” Coke. Today they no longer offer “new” Coke in the US market
 World War II

Understanding The Brand

Map of The Old Coke

Social Drink
The Red Santa
Family Drink

Strong Taste

Classic America
Happiness & Joy

It is the real thing

Coke’s position in 1985
Coke was being outsold by Pepsi in segments where
consumers had a choice of the brands, such as supermarkets

Overall, their market share was surely and steadily

declining in a declining market (down from 24.3% in 1980 to
21.7% in 1984)

Coke had increased their advertising and promotional

spending from $50m to $200m in recent years. Their $200m
promotional budget was 1/3 more than Pepsi’s spend of
$150m), but failing to stop Pepsi’s gains in market share

Coke were running more aggressive sales promotions and

discounting in stores (to reduce the impact of the Pepsi
Challenge advertising). To offset this discount, Coke started
to increase prices to their captive customers (such as the
fast-food chains)

Coke’s own market research was indicating that “taste” was

the main reason for their erosion of market share
 What led Coke a
leading brand to launch
the New Coke ?
 Pepsi’s Brand Map

Edgy, Blue Energy, Sweeter

Rebellious
Pop
Culture,
Rock N New Generation
Roll, Music

The Coca-Cola product was the traditional market leader in the cola
category.
They had achieved success through a strategy of outsourcing
manufacturing and logistics to licensed bottlers, strong retailer
relationships, and building a very strong brand.
In its early years, Pepsi positioned itself as a discounter and sold its
product for half the price of Coke in a larger bottle.
This positioning had some impact with budget-conscious households
and helped Pepsi become the “at-home” drink, while Coke remained
the social drink.
To reinforce their perceived higher product quality, one of Coke’s
slogans was “it’s the real thing”. Because of this initial relative
competitive position, Coke believed their product was superior and
that they had an entitlement of being the market leader.
Whereas Pepsi always saw themselves as the challenger and tended
to be more aggressive in their marketing tactics as a result.
● Pepsi reintroduced “the Pepsi Generation”
advertising campaign in the early 1970’s. Pepsi had
run briefly this advertising campaign in the early
1960’s. Its reintroduction was driven by John Sculley,
who would later go on to run Apple and sack Steve
Jobs.
● The Pepsi Generation advertising, along with the
tagline “The Choice of a New Generation”, helped
position the Pepsi as modern, young, innovation and
energetic. At the same time, it was designed to
reposition Coke in the minds of the consumers as
old, tired and boring.
● Occasionally deals were struck, at a university or
college campus for example, for the university to
switch to Pepsi if they won. Needless to say, Pepsi
consistently won all the Pepsi Challenges – usually by
a narrow margin.
● This period – 1970s and 1980s of aggressive
promotions and comparative advertising between
Coke and Pepsi is now referred to as the “Cola Wars”.
The cumulative impact of all these marketing
activities by Pepsi against Coke were designed to
reposition the brands in the minds of the consumers,
as shown in the following perceptual map.
 Pepsi MJ Collaboration

Pepsi Sponsors Michael Jackson

Pepsi signed Michael Jackson to make two TV

commercials and to sponsor his concert out just
before “Thriller” took off – which became the
biggest selling album of all time. The deal was
struck for $5 million, which doesn’t sound like a
lot of money today, but around that time the
Rolling Stones tour only received $500,000 for
their sponsorship deal. This was an extraordinary Billie Jean Concert Sponsorship
amount of money to be paid to a celebrity for a
sponsorship deal in the early 1980’s. Although not
part of the original deal, Michael offered his
biggest song, Billie Jean, to be reworded and used
in the Pepsi TV commercial as he didn’t like the
song Pepsi was planning to use. He was involved
in editing the TVC.
 Impact on Soft Drink Market Share

● Pepsi started out selling Coke in the “free-choice” channels,

such as supermarkets, grocery stores and drug stores as
early as 1977. Pepsi was consistently closing the market
share gap on the market leader, with Coke’s market share
fell from 24.3% to 21.8% (down 2.5%) from 1980 to 1984.
● Coke was able to maintain its market share lead because of
its distribution and retailer relationships (e.g., with
McDonald’s and other fast-food chains, extensive numbers
of vending machines, relationships with restaurants, hotels,
cinemas, airlines and so on).
● But Pepsi’s taste preference was impacting these contracts.
For example, the Burger King chains switched from Coke to
Pepsi in 1983. And to add to the concern of a falling market
share for Coke, the overall soft drink market was in slight
decline.
• Coca-Cola’s management believed that the introduction of New
Coke would completely destroy Pepsi’s competitive
strategy. In fact, Pepsi’s own management initially believed
that this was a masterstroke by Coke.

• Firstly, the New Coke product was to be positioned as new,

exciting, modern and young; directly confronting the “Pepsi
Generation” campaign and stealing Pepsi’s market positioning.
The New
• Secondly, the New Coke product tasted better which would
stop the Pepsi Challenge taste-test advertising. In fact, Coke
Coke
had plans to run their own taste-tests and run their own TV
commercials in order to win back lost customers. Strategy
• Therefore, you can see why Coke’s management was so
confident, as they believed that they had boxed Pepsi into a
corner and destroyed their competitive strategy, as
highlighted in the following perceptual map.
▪ The New Coke Brand Map

Young
Energetic
Better Tasting
Exciting
New
Modern
The New Coke Strategy

Linked To The AD
 Old V/S New Coke

Promise of value : “The Coke Side of Promise of value : Great new taste
Life” (open happiness, joy, social)

Target Market : Mostly older Target Market : Tapping into

generation (it represented tradition) younger generation , teens,
millennials
Brand Positioning : The Real Coke
(representing the Real American Brand Positioning : Change for the
History) best

Issues : Targeting the younger Issues : Losing the existing fans/

generation (teens) loyalist
 What Went Wrong ??

In 1985 Coca cola withdrew the flagship Coca Cola and introduced the New Coke.
The new coke lasted for only 79 days and went down in history as America’s
greatest marketing failure.
They focused on the product , not the brand
They had neglected the emotional value of Coke to the American Public
They asked the wrong questions, so their research provided irrelevant answers
As one Coca-cola official said at the time “ we betrayed a national trust”. Why ?
Because they never thought to ask American consumers how they would feel
about a change to Coke , whether or not they want a new Coke
 Old Coke is back !!
On July 11 1985 , Coca-Cola executives walked onto stage to make apology and offer reparations to the public.
“The original coke was coming back as Coca-Cola Classic”

Consumer Reaction :”God does work in

mysterious ways, and I thank him for
answering my prayers to bring back the
real Coke
I feel like a lost friend returning home”
Lessons Learnt

✓ Don’t alienate your base. The 10% did not come around – the
converse happened ; they showed the rest of the market how
dissatisfied they should be – the behavior caught on.
✓ Some things can’t be measured by taste tests, opinion polls or
questionnaires
✓ Change is always resisted
▪ What on earth brought us to the decision to bring back
the classic taste which we so calmly abandoned back in April
1985? The simple fact is that all the time and money and skill
poured into consumer research on the new Coke could not
measure or reveal the deep and abiding emotional
attachment to original Coca-Cola felt by so many people…
the passion for original Coca-Cola - and that is the word for it:
Coke is it!
passion. Something that caught us by surprise. It’s a
wonderful American mystery and you cannot measure it any
more than you can measure love, pride or patriotism. This is
the twist to this story that will please every humanist and will
probably have the Harvard professors puzzling for years.
 Alternate Product Options
Launch New Product

New Brand Name Gradual Formula Change Market Testing

Launch the new product Slowly change the Coke Undertake market testing
under a new brand name formula over time to of the new product first
(as a multi-brand strategy become New Coke (before a full launch)
(without consumers
noticing) or

Add Taste Range

Launch the new product

under Coke brand in
addition to Coke (as they
did later)
 Alternate Product Options
No New Product Launch

Promotion Discount Retail

Increase the promotion Increase in-store Increase retail penetration

spend promotion and discounting

Pepsi Reposition

Try and reposition Pepsi Reposition the Coke brand