3. 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
4. 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 )
5. 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…
7. 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
8. 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.
9. 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?
10. 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?
11. Or did they really fail, after all?
“… we’re not that smart, and we’re
not that dumb”!!!
