Wednesday, April 01, 2009

New Coke and Damn Yankees

I had a good discussion on brands on the way to seven springs with Suede Shizzle and decided to look into what the dealio was with the roll-out of new coke (and answer the question of did they bother investing in research to test reaction).

What I found on Wikipedia was simply fascinating. Coke did do a fair amount of market research before rolling out the new formula. Coke did not successfully foresee the big picture, nor consider the implications of deviating from their original brand promise. Let me try to summarize…

Coke wanted to attract younger buyers to help beat Pepsi in the Cola wars of the 80s and the decided to refine the formula as a means to do so. The new formula was sweeter than both the old coke and pepsi (pepsi traditionally being sweeter that old coke). It was important to attract younger consumers as they speculated, and rightly so, that as consumers age, they become more concerned with health and calories (and thus more likely to switch to diet versions, which were a much smaller part of the pie back then). At the time the younger audiences preferred the sweeter taste of Pepsi.

This move also had to be fueled, at least in part, to the taste tests that pepsi was doing and consistently beating coke. Although that method is often criticized as being flawed, as it is a sip test, and people will prefer more intense flavor in smaller volume (i.e a sip) as opposed to a full serving. Furthermore, Coke had smartly reframed this in previous ad campaigns featuring Bill Cosby. In these ads, the Cos said he preferred Coke because it was less sweet. As a result, the new formula sandbagged that whole campaign and marked a 180 shift in how the brand promoted itself, which is never a good thing.

But back to new coke, Coke did a number of studies, including focus groups in surveys to measure reaction to the new formula. The net result was positive, especially in the surveys. The focus groups, however, did reveal a small set (10% or so) of consumers STRONGLY opposed to the switch. This was sufficient enough for Coke to feel confident to make the switch and they began rolling out new coke.

New coke was not the instant flop that we tend to remember. Sales data show that many old coke drinkers were quick to adopt the new version and consume in equal quantity. However, just as in the focus groups, there was a very displeased and very vocal minority. These people were often southerners who considered coke as a part of the regional identity, and viewed the cola war like the civil war (considering the NY based Pepsi to be the Yankee enemy). Changing the formula to be more like Pepsi was a slap in the face and when Coke hired a psychiatrist to screen calls, the found that the tone of the callers was not unlike those mourning the death of a family member. Pretty soon, hating on the new formula became a bandwagon and folks started piling on, regardless of whether or not people actually liked the product.

Soon enough coke got tired of the drama and brought the old formula back.

Check out the full article on Wikipedia when you get a chance.

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