THE NEW COKE
Battered by competition from the sweeter Pepsi-Cola, Coca-Cola decided in 1985 to replace its old formula with a sweeter variation, dubbed the “New Coke”. Coca-Cola spent $4 million on market research.
Blind taste tests showed that Coke drinkers preferred the new, sweet formula, but the launch of New Coke provoked a national uproar. Market researchers had measuredthe taste but had failed to measure the emotional attachment consumers had to Coca-Cola.
There were angry letters, formal protests and even lawsuit threats, to force the retention of “The Real Thing”. Ten weeks later, the company withdrew New Coke and reintroduced its century-old formula as “Classical Coke”, giving the old formula even stronger status in the marketplace.
1.Managers try to stimulate sales by modifying the four-Ps --- Analyze.
2. Customers are not always willing to accept an improved product --- Comment.
1985 - The Coca-Cola Company made what has been known as one of the biggest marketing blunder. They stumbled onto a new formula in efforts to produce diet Coke. They put forth 4 million dollars of research to come up with thenew formula.
The decision to change their formula and pull the old Coke off the market came about because taste tests showed a distinct preference for the new formula. The new formula was a sweeter variation with less tang, it was also slightly smoother. Robert Woodruff's death was a large contributor to the change because he stated that he would never change Coca-Cola's formula. Another factorthat influenced the change was that Coke's market share fell 2.5 percent in four years. Each percentage point lost or gain meant 200 million dollars. This was the first flavor change since the existence of the Coca-Cola company. The change was announced April 23, 1985 at the Vivian Beaumont Theater at the Lincoln Center. Some two hundred TV and newspaper reporters attended this very glitzyannouncement. It included a question and answer session, and a history of Coca-Cola. The debut was accompanied by an advertising campaign that revived the Coca-Cola theme song of the early 1970s, "I'd Like to Buy the World a Coke"
The change to the world's best selling soft drink was heard by 81 percent of the United States population within twenty-four hours of the announcement. Within a week of thechange, one thousand calls a day were flooding the company's eight hundred number. Most of the callers were shocked and/or outraged, many said that they were considering switching to Pepsi. Within six weeks, the eight hundred number was being jammed by six thousand calls a day. The company also fielded over forty thousand letters, which were all answered and each person got a coupon for the newCoke. Many American consumers of Coca-Cola asked if they would have the final say. When Pepsi heard that the Coca-Cola company was changing its secret formula they said that it was a decision that Pepsi tastes better. Roger Enrico, the president and CEO of Pepsi-Cola wrote a letter to every major newspaper in the U.S. to declare the victory.
Coca-Cola management had to decide: Do nothing or "buythe world a new Coke". They decided to develop the new formula.
1985 - July 10, eighty-seven days after the new Coke was introduced, the old Coke was brought back in addition to the new one. This was greatly due to dropping market share and consumer protest. The market share fell from a high of 15 percent to a low of 1.4 percent. This was said to be a classic marketing retreat. Coca-Colaexecutives admitted that they had goofed by taking the old Coke off the market. The Coca-Cola company's eight hundred number received eighteen thousand calls of gratitude. One caller said they felt like a lost friend had returned home. The comeback of old Coke drove stock prices to the highest level in twelve years. This was said to be the only way to regain the lead on the cola wars.