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Vinay Kumar, profile picture
Uploaded byVinay Kumar
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New coke

Coke introduced New Coke to compete with Pepsi on taste, despite Coke's strong brand equity and cultural symbolism. This ignored that taste was never the main issue, and played into Pepsi's strategy of using taste tests to show Pepsi was better. Consumer reaction showed symbolic value was more important than taste. Coke quickly withdrew New Coke, but it was a case of short-sighted marketing myopia as they failed to recognize they were more than just a beverage. While initial data showed New Coke beating Pepsi, Coke may have rushed its decision to withdraw so quickly without more advertising or patience for consumers to adjust.

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INTRODUCING NEW COKE A GROUP 9 PRESENTATION
Brand Equity Model shows the superior position enjoyed by Coke…
SWOT Analysis shows Coke’s situation… STRENGTHS OPPORTUNITIES • Positive customer-based brand equity • Younger generation, the untapped • Deeply imbibed in the American culture market • Huge loyal customer base • Build on their considerable loyal base • Horizontal Growth – Diversification WEAKNESSES THREATS • Too much emphasis on legal issues • Complacency towards competition, • Loss of focus; failed diversification never been tested against a rival attempts • Fragmented leadership; no strong leader
Leadership High earnings / high potential Niche Low earnings / high potential (Differentiation / Relevance / Energy) DEREK Energized Brand Strength DEREK Declining DEREK High earnings/ low potential Eroded Seriously challenged New DEREK DEREK Unfocused DEREK Brand Stature ( Esteem / Knowledge )
NEW COKE INTRODUCED…  PEPSI’s reaction – Epitome of good marketing strategy, and making the most of an opportunity (crafting strategy)  Consumer Reaction – Difference between taste tests and actual reactions – extent of COKE’s symbolic value  Retraction by COKE – Sales went back up…
What went wrong?
Should they have leveraged their symbolic value, rather than playing Pepsi’s game (taste)?  Strong & Loyal Customer base, emotional connect.  Taste was never the focus, or for that matter, the issue  Pepsi focused on taste – “Pepsi Challenge” campaign Published results of Blind Taste Tests  Coke played into Pepsi’s hand, by competing on taste  Coke tried to compete with Pepsi on their turf  Pepsi ensured customers saw this as Coke admitting defeat
Was this a case of Marketing Myopia?  Coke was a “national institution” of America  Coke was a symbol of American culture rather than just a refreshing drink  Coke should have realized they were more than just a beverage for the American people.  Changing the taste (even to improve it) was a short- sighted strategy.
Did Coke rush their decision to withdraw?  Initial decision was to wait out till the end of the year  Early June - New Coke beating Pepsi in Blind Taste Tests  Mid June – Sudden downturn, Pepsi overtakes New Coke  July 11 – Coke is back!!  “…only 1% of those who did not like the reformulation were switching brands…” – was the situation as drastic as it was perceived to be?  2 months – Is it enough for people to get used to a new drink after 80 years of the same taste?
Should Coke have gone for more advertising?  Pepsi was aggressively advertising “Coke admits defeat”  Coke cut their advertisement budget in half  Should they have gone for more Aggressive Marketing, to divert attention from Pepsi’s strategy?  Or did they have to reduce the exposure of their brand?
Or did they really fail, after all? “… we’re not that smart, and we’re not that dumb”!!!
THANK YOU