The "New Coke" debacle of 1985 - Epic Fails in History #2
Omar Abedin
Country Manager KSA at Platform01 Consulting, helping CEOs of GCC-based companies build high-value businesses through practitioner-led strategy and financial consulting services.
April 23rd marked the 32nd anniversary of arguably the biggest blunder in branding that the world had ever seen up to that point.
It is a story of desperation, blindness, arrogance and ultimately, of humble reversal.
"To hear some tell it, April 23, 1985, was a day that will live in marketing infamy... spawning consumer angst the likes of which no business has ever seen."
The Coca-Cola Company, on the New Coke announcement.
The story of Coca Cola's epic fail starts, predictably enough, thirty years earlier, in a world recovering from a War that tore everything apart. In this world, Coke had 60% share, and ruled the soda category. Fast-forward to the early 1980s, however, and the picture had changed dramatically. Coke's share was now just 28%, and Pepsi, with it's aggressive "Pepsi Challenge" campaign was snapping at it's heels. Diet Coke, launched in 1982, had also become a huge success, and ironically, made things tougher for regular Coke by squeezing the cola category.
When Roberto Goizueta took over as CEO in 1980, he pointedly told employees there would be no "sacred cows" in how the company did its business, including how it formulated its drinks.
Coke execs were desperate. Research told them that consumers preferred the sweeter & smoother taste of Pepsi. (That also explained the success of Diet Coke to an extent.) They decided to develop an entirely new flavour, and they tested it extensively in blind taste tests - and it outperformed both Pepsi and the current Coke formula. New Coke was launched in April 1985 with much fanfare.
[Donald R. Keough, president, right, and Roberto C. Goizueta, chief of Coca-Cola, made a toast with New Coke in 1985. Credit Associated Press.]
Unfortunately, while the launch itself was well-planned and executed, the company had declined to mention during the consumer testing that the new Coke was planned as a replacement to the existing Coke. So, when the New Coke was unveiled as such, the company found itself at the center of a firestorm of controversy.
Millions of people expressed their outrage. There were marches in several major US cities. Pepsi took out a full page ad in the New York Times thanking Coke for shooting themselves in the foot. And just three months later, Coke reversed their decision to cancel the old Coke and brought it back as Coke Classic.
This means the decision to bring it back was almost instantaneous - it just took 3 months to execute it from a logistics standpoint.
All the rationales behind having two products in the Cola category went out of the window, and the two Cokes sat together on the shelf. In 1992, in a strategy now known as "Doubling Down", the company officially re-branded the New Coke as Coke II.
Keep in mind that by this time, the entire world - including most of Coke's senior management - knew that this product was a dud. Still, the company went through this expensive re-branding exercise because the CEO and his coterie of ivory tower strategists could not - would not - believe the reality that was starting them in the face. Finally, a decent time after Goizueta passed away in 1997, Coke II was removed from the line-up in 2002.
Let's take a look at a summarized timeline of Coke's new product launches over the past 100+ years:
Source: www.businessinsider.com
The reality is that Coke has had only one thing going for it over the past decades and that is
CONSISTENCY
... in product, in brand image, in packaging, even in communication.
Every time they have departed from what Coke stands for, what it represents in the minds and hearts of their consumer, they have gone wrong. And for a company that has launched literally 3 new products in the last century, this should be a cautionary tale.
At the same time, a company where the senior management does not make an extraordinary effort to stay in touch with ground realities -by personally riding sales trucks, delivering orders, talking to customers - and not just by reading reports and listening to presentations about those things - it is a recipe for disaster.
When will Coke stop mucking about with packaging graphics changes, can size changes and other cosmetic nonsense, and start reinventing the company? Coke needs to stand for something else, something more, because as sure as cigarettes cause lung cancer and large sugary drinks cause obesity and drive multiple health problems, this company is destined to end unless a new way forward can be found. Maybe not today, maybe not even in ten years, but soon enough.
And that is a really depressing thought.
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About the author: Omar is passionate about brands, and loves to learn from history. He also believes that consistency over time is a critical driver of long-term brand success. Omar's book on branding basics is available here:
Feel free to buy a copy and send pdf versions to everyone you know :)
References:
https://www.snopes.com/cokelore/newcoke.asp
https://en.wikipedia.org/wiki/New_Coke#Backlash
Senior Energy Analyst, ConocoPhillips
5 年There's an interesting analysis of this debacle in the book Blink by Malcolm Gladwell in which he argues about Coca-Cola's market research into finding why Pepsi was gaining market share by conducting a blindfolded test on which drink tastes better, now obviously how Coke was positioned you would never want it's users to drink blindfolded! I
Data Analyst at EY (MENA)
5 年whats made once in the market and which is again going successful why they chose to play with it?
Student at Shaheed Zulfikar Ali Bhutto Institute of Science and Technology
5 年Consistency is the key to a successful brand which pepesi has done
MBA Graduate | Manager at DM Clinical Research
5 年Coke to remain steady is something that the customers want! Creativity is right however only till the extent that it sticks to its unique essence.
the nature of branding is that company even if you do R&D, after a product launch or testing you cannot predict minds of customers, likewise the case with Coca cola who tried to make a new product launch and ended up doing Re-branding again and continuing with the same product. adapt to change but remaining consistent with all strategies and work is most important.