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Class Assignment MK 612

Coca-Cola replaced its original cola formula with a new one in 1985 in response to Pepsi's "Pepsi Challenge" marketing campaign, which showed that consumers preferred Pepsi in blind taste tests. Coca-Cola conducted extensive consumer research that indicated people preferred the taste of the new formula. However, when launched, consumer reaction was overwhelmingly negative. Complaints flooded in, and sales slumped. Coca-Cola then re-introduced the original formula as "Coca-Cola Classic" to join the failed "New Coke" product. The incident taught Coca-Cola that its cola brand represented more than just taste - it was an iconic American product strongly tied to consumers' nostalgia, heritage

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67 views2 pages

Class Assignment MK 612

Coca-Cola replaced its original cola formula with a new one in 1985 in response to Pepsi's "Pepsi Challenge" marketing campaign, which showed that consumers preferred Pepsi in blind taste tests. Coca-Cola conducted extensive consumer research that indicated people preferred the taste of the new formula. However, when launched, consumer reaction was overwhelmingly negative. Complaints flooded in, and sales slumped. Coca-Cola then re-introduced the original formula as "Coca-Cola Classic" to join the failed "New Coke" product. The incident taught Coca-Cola that its cola brand represented more than just taste - it was an iconic American product strongly tied to consumers' nostalgia, heritage

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GEORGE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Class Assignment MK 612

Do this assignment in group of not more than 3, and submit through email [email protected] by 26th
January 2023

January 2023

Read the following case and answer the questions posed

One of the classic marketing mistakes occurred in April 1985 when Coca-Cola replaced its flagship cola
brand with a new formula. The motivation behind the change was primarily a competitive one. Pepsi-
Cola’s “Pepsi Challenge” promotion had posed a strong challenge to Coke’s supremacy over the cola
market. Starting initially just in Texas, the promotion involved advertising and in-store sampling
showcasing consumer blind taste tests between Coca-Cola and Pepsi-Cola. Invariably, Pepsi won these
tests. Fearful that the promotion, if expanded nationally, could take a big bite out of Coca-Cola’s sales,
especially among younger cola drinkers, Coca-Cola felt compelled to act.

Coca-Cola’s strategy was to change the formulation of Coke to more closely match the slightly sweeter
taste of Pepsi. To arrive at a new formulation, Coke conducted taste tests with an astounding number of
consumers—190,000! The findings from this research clearly indicated that consumers
“overwhelmingly” preferred the taste of the new formulation to the old one. Brimming with confidence,
Coca-Cola announced the formulation change with much fanfare.

Consumer reaction was swift but, unfortunately for Coca-Cola, negative. In Seattle, retired real estate
investor Gay Mullins founded the “Old Cola Drinkers of America” and set up a hotline for angry
consumers. A Beverly Hills wine merchant bought 500 cases of “Vintage Coke” and sold them at a
premium.

Meanwhile, back at Coca-Cola headquarters, roughly 1,500 calls a day and literally truckloads of mail
poured in, virtually all condemning the company’s actions. Finally, after several months of slumping
sales, Coca-Cola announced that the old formulation would return as “Coca-Cola Classic” and join “New”
Coke in the marketplace (see the accompanying photo).

The New Coke debacle taught Coca-Cola a very important, albeit painful and public, lesson about its
brand. Coke clearly is not just seen as a beverage or thirst-quenching refreshment by consumers.
Rather, it seems to be viewed as more of an American icon, and much of its appeal lies not only in its
ingredients but also in what it represents in terms of Americana, nostalgia, and its heritage and
relationship with consumers. Coke’s brand image certainly has emotional components, and consumers
have a great deal of strong feelings for the brand.

Questions

a) What are the mistakes that Coca-Cola made in introducing new Coke? (3 Marks)
b) What Coca-Cola would have done in order to avoid the mistake made? (3 Marks)

c) What advantage that Coca-Cola could have taken from the mistake committed? (4 Marks)

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