A CASE ANALYSIS OF THE NEW COCA-COLA:

WHAT WENT WRONG?

• In 1985, The Coca-Cola Company replaced its original Coke formula with a new
version, infamously known as "New Coke."
• It aimed to reinvigorate the brand and gain market share.
• Despite the buzz, New Coke turned out to be a commercial disaster
• This presentation will focus on the specific aspects that led to the project's failure,
quantifying the losses and dissecting the contributing factors.
• Aim:
• to identify the concrete reasons for New Coke's failure and propose alternative
solutions.
BACKGROUND

• The early '80s saw a shift in consumer preferences towards more diversified
tastes, including diet sodas and non-cola beverages.
• Coca-Cola was losing market share to competitors like Pepsi, who were
succeeding in appealing to younger consumers (Oliver, 2019).
• One of the main goals was to revitalize Coca-Cola's brand image.
• Another objective was to increase market share and fend off competitors
(Thompson, Strickland, & Gamble, 2021).
BACKGROUND (Cont’d)

• Blind taste tests suggested that consumers preferred a sweeter taste, similar to
Pepsi.

• Market research indicated a need for change, though it later became evident
that it had not adequately gauged consumer attachment to the original formula
(Smith & Doe, 2022).

• Sales were declining, and Coca-Cola's brand perception was seen as outdated.

• The need for a drastic move was seen as critical for reviving the brand and
regaining market share (Kerzner, 2018).
SCOPES AND OBJECTIVES

Scope of the New Coke Project Objectives of the New Coke Project
•Product design and taste •Enhance Customer Satisfaction

•Market Expansion •Increase Market Share

•Brand Preservation •Outperform Competitors

•Competitive Advantage •Maintain Brand Loyalty

 COKE AND PEPSI MARKET SHARE PRIOR TO
NEW COKE INTRODUCTION
Coke Pepsi
28.4
26.2
23.9
21.7
17.4 17.9 18.8
17

1970 1975 1979 1984

OBJECTIVES OF THE NEW COKE PROJECT
(Cont’d)
RESOURCES AND OVERALL FUNDING
Resource Category Resource Description
Product Formula Technical division developed a sweeter flavor
Market Research Interviews with almost 200,000 consumers
Marketing and Advertisement Promotional Materials ; TV, Radio, print or sponsorships
Production Facilities Manufacturing equipment and facilities
Skilled production staff

Funding Category Budget Allocation

Market Research $ 4,000,000
Marketing and Advertisement $ 10,000,000
Monitoring and Evaluation $ 2,000,000
Contingency and Recovery $ 5,000,000
Total $ 21,000,000
PROJECT MILESTONE
RESEARCH AND DEVELOPMENT

• This work package aimed to develop and test a new formula for Coke that would
appeal to consumers and compete with Pepsi.
• The main deliverables were a new formula and a market research report.
• The main milestones were the selection of the new formula and the validation
of the new formula through taste tests and surveys.
• The estimated cost was $4 million.
• The roles and responsibilities were assigned to the R&D department of Coca-
Cola and an external consulting firm.
MARKETING AND BRANDING

• This work package aimed to launch and promote the new product as New Coke
and create a positive image and awareness among consumers.
• The main deliverables were a marketing plan, a branding strategy, and a media
campaign.
• The main milestones were the announcement of the new product and the
distribution of the new product to retailers and consumers.
• The estimated cost was $10 million.
• The roles and responsibilities were assigned to the marketing department of
Coca-Cola and various advertising agencies.
MONITORING AND EVALUATION

• This work package aimed to monitor and evaluate the performance and feedback
of the new product in the market and identify any issues or problems.
• The main deliverables were a monitoring system, a feedback mechanism, and an
evaluation report.
• The main milestones were the collection of sales data and the analysis of
consumer reactions.
• The estimated cost was $2 million.
• The roles and responsibilities were assigned to the sales department of Coca-Cola
and an external market research firm.
CONTINGENCY AND RECOVERY

• This work package aimed to prepare and implement a contingency plan in case of
any negative outcomes or risks from the new product launch.
• The main deliverables were a contingency plan, a recovery strategy, and a crisis
management team.
• The main milestones were the identification of potential risks and the execution
of the contingency plan if needed.
• The estimated cost was $5 million.
• The roles and responsibilities were assigned to the executive management of
Coca-Cola and an external public relations firm.
THE PROJECT TIMELINE
The project timeline was from January 1984 to July 1985, witha total duration of 18 months. The
project budget was $21 million, which was allocated among the four work packages. A work
breakdown structure (WBS) of the project is shown below:
WP1: Research and Development WP3: Monitoring and Evaluation
│ ├── D1.1: New formula │ ├── D3.1: Monitoring system
│ ├── D1.2: Market research report │ ├── D3.2: Feedback mechanism
│ ├── M1.1: Selection of new formula │ ├── D3.3: Evaluation report
│ └── M1.2: Validation of new formula │ ├── M3.1: Collection of sales data
│ └── M3.2: Analysis of consumer reactions

WP2: Marketing and Branding WP4: Contingency and Recovery

│ ├── D2.1: Marketing plan
│ ├── D2.2: Branding strategy
│ ├── D2.3: Media campaign
│ ├── M2.1: Announcement of new product
│ └── M2.2: Distribution of new product
├── D4.1: Contingency plan
├── D4.2: Recovery strategy
├── D4.3: Crisis management team
├── M4.1: Identification of potential risks
└── M4.2: Execution of contingency plan (if needed)
THE NEW COKE PROJECT WAS A FAILURE

• As soon as the decision of New Coke was announced, a large percentage of US

population immediately decided to boycott the new product.
• In addition, and a few days later the production of original Coke was stopped.
• This joint decision has since been referred to as ‘the biggest marketing blunder of
all time’. Sales of New Coke were low and public outrage was high at the fact that
the original Coke formular was no longer available.
• Within weeks of the announcement, the company was receiving 5,000 angry phone
calls a day and that number grew to 8,000 calls a day in the following months.
• Furthermore, On the New York Stock Exchange, shares of Coca-Cola dropped,
while those of its competitor rose.
REASONS FOR THE NEW COKE’S FAILURE
There are 4 main different reasons

1. Lack of consumer testing

• While The Coca-Cola Company did conduct extensive market research and consumer testing, the research
was focused on taste preference between Coca-Cola and Pepsi.
• However, it did not take into account the emotional attachment consumers had to the original Coca-Cola
formula.

2. Failure to understand consumer behaviour

• The Coca-Cola Company failed to understand consumer behaviour and the emotional attachment that
consumers had to the original Coca-Cola formula.
• Consumers had a deep emotional connection to the product and saw the change in formula as a betrayal.
REASONS FOR THE NEW COKE’S FAILURE
(Cont’d)
3. Failure to anticipating consumer rection
• The company had expected a positive response to the new formula, but instead, the response was
overwhelmingly negative.
• Consumers took to social media and other platforms to express their disappointment and dissatisfaction with
the new formula. The negative reaction was further amplified by the media, which covered the story
extensively.

4. Failure to listen to consumer feedback

• The company received thousands of complaints from consumers who were unhappy with the new formula.
However, the company did not respond to this feedback and instead, continued to promote the new formula
• This lack of response further angered consumers and led to an even greater negative response.
RECOMMENDATIONS
• Pay attention to customer feedback
The relationship between a company and its customers is its biggest asset.
In order to maintain customer loyalty, a company must always put its customers feedback first.
• Be careful when making changes to a successful product
When a product is as successful as Coca-Cola, there is always a risk involved in making any changes to it.
It is better to start small and gradually roll out any changes rather than introducing everything all at once
• The power of marketing
The original Coke had been so successful in part because of its iconic marketing campaigns. When Coca-Cola
changed the recipe, it also changed the taste of the drink, which made all of those marketing campaigns
outdated.
• Change is not always good
In this case, the company made a change that damaged its brand and cost it dearly in terms of sales and market
share. Sometimes, the best course of action is to just leave things the way they are.
CONCLUSION
• New Coke’s flawed market research failed to grasp the depth of consumer attachment to the
original formula.
• This analysis stresses the necessity of exhaustive market research to understand both explicit and
implicit consumer needs
• The need for effective risk management measures to foresee and mitigate potential project
downfalls is clearly highlighted
• New Coke stands as a warning against neglecting best practices in project management
• Our presentation highlights the essentiality of employing robust project management frameworks
and methodologies for better project outcomes
REFERENCES
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Bass.
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REFERENCES (Cont’d)

• History of new coke in timeline - popular timelines (n.d) populartimelines.com. Available at: https://populartimelines.com/timeline/New-
Coke (Accessed: 26 October 2023).
• Haig, M. (2011) ‘Chapter 2 Classic Failure’, in Brand failures: The truth about the 100 biggest branding mistakes of all time. London: Kogan
Page.
• Fripp, G. (2023a) New coke case study (part 1), Great Ideas for Teaching Marketing. Available at:
https://www.greatideasforteachingmarketing.com/new-coke-case-study/ (Accessed: 26 October 2023).
• Fripp, G. (2023b) New coke case study (part 2), Great Ideas for Teaching Marketing. Available at:
https://www.greatideasforteachingmarketing.com/new-coke-case-study-part-2/ (Accessed: 26 October 2023).
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american soft drink and the company that makes it. New York: Basic Books.
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coke
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learned-some-important-lessons-along-the-way
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flop
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