Launch of new sweet coke and the market blunder created by coke to compete with Pepsi

1. PRODUCT MANAGEMENT CASE
STUDY ON
LAUNCH OF NEW COKE

2. Case Facts
In 1895 Coke was made available in all parts of the world and was
repositioned as a refreshment drink
By 1965 soft drinks market rose to 200 drinks per capita and Coca
Cola market’s share was 41% against 24% of Pepsi’s market share
In 1970 Coca Cola faced tough competition from Pepsi’s rising sales
In 1978 Pepsi was found to overtake Coca Cola in supermarket
sales.
In 1980 Roberto Goizueta became the new CEO of Coca Cola

3. Reformulation of Coke
Declining market share of Coca Cola from 24.3% in 1980 to 21.8%
in 1984 – loss of about $200 million for each percentage point
Goizueta reformulated 99 year old Coke’s formula
Market research and focus group research was conducted
The results of both the surveys were dissatisfaction
On the basis of blind tests “New Coke” was launched

4. Failure of “New Coke”
New Coke was launched in April 1985
It was promoted extensively through television and newspapers
It could not meet consumer expectations
It was perceived as a “me-too” product(tastes like two day old Pepsi)
Launch of “Coke Classic” in July 1985

5. Reasons for new product failure
I. No PIC used to give proper direction for a new product strategy’
Identifying opportunities- Pepsi’s sales exceeded Coca-Cola in 1984
Background-
Was there a need for a new product
The product should not have been a “me-too” product
The results of survey and market research showed dissatisfaction
among customers
Focus- Coke had a wide distribution network.
Goals/Objectives- To be the market leader in soft drinks market and
increase its market share

6. Guidelines-
 Customers were not willing to accept changes except for a few as
per the survey and market research results.
Emotional attachment with old Coke
Whether it would be new-to-market , new-to-world or new-to-company
product
Time to market
The product will increase the market share of Coca-Cola

7. New product development
 Concept generation/idea generation-
 Open innovation-collaborate with other companies
Idea screening and concept evaluation-
 Growth screen-will the new product help to increase its market share?
Category screening- whether the market is fragmented?
Strategy screening- The launch of the new product should help the
company achieve its objective which in this case is to increase market share
Development- Test marketing and market test
Launch the new product

8. Marketing Implications
After launch of New Coke , Coca Cola received 1000 calls per week
to inform that the customers were not satisfied.
Market share declined from 15% at the time of launch to 1.4%
after launch.
New Coke had to be pulled out of the market.
The combined share of New Coke and Classic Coke was less than
Pepsi’s market share.
Using taste tests was not sufficient to launch a new product

9. Was the launch of New Coke a deliberate
failure?
 After sufficient evidence from survey and focus group research of
chances of product failure , “New Coke” was launched
The launch of “Classic Coke” sales went up by 10 times recovering
all losses due to “New Coke”
Stock price increased by 35%.
Goizueta was rewarded with $1.7 million in salary.

10. Thank you