NEW COKE : A “CLASSIC” MARKETING RESEARCH BLUNDER? The Failure of New Coke. . . . Coca Cola is responsible for one of the biggest blunders in marketing - New Coke. New Coke came out because in blind taste tests, people preferred Pepsi to Coke. The revelation was startling and Coca Cola decided that it was time to change their formula to make it sweeter like Pepsi. After months of tweaking theformula, doing blind taste tests, research and changing their packaging, New Coke was launched. The market research process. . . . . Spending millions of dollars and extensively measuring consumer opinion do not alone insure that a company has conducted reliable market research, as the experience of the Coca Cola Company proves. In 1985, the Coca Cola Company attempted to replace its longestablished Coke formula, after taste tests of 200,000 respondents indicated that consumers preferred a sweeter tasting Coke. Coca Cola’s market research failed to predict a high level of brand loyalty to the original formula, however. As a result, the company did not expect a consumer backlash against the new formula nor declining consumer interest in new Coke soon after its introduction on the market.How did Coca Cola misjudge the market so much after spending $4 million and more than two years to test a reformulation of Coke? According to some analysts, the company made serious methodological mistakes in constructing its taste tests. Also, Coca Cola failed to take adequate account of psychological aspects of brand loyalty which are difficult to gauge using normal marketing research. In tastetesting a new Coke formula, Coca Cola Company used three different formulations, which it tested against traditional Coke and Pepsi. Of the 200,000 consumers who took the test, however, only 30,000 or 40,000 actually tasted the new formula which was finally introduced. In addition, most consumers were not informed what they were tasting. In other words, most consumers simply had no idea thattheir preferences were helping the Coca Cola company to decide whether it should introduce a new formula for Coke. If informed of the full ramifications of their preferences- in other words, a vote for new Coke also meant choosing to get rid of the old, standard Coca Cola – perhaps many consumers, moved by an emotional attachment to the familiar drink, would have registered a preference for the oldCoke. As the taste tests were constructed, however, a majority of consumers, (about 53% versus 47%) who tasted both the old and new Coke liked the «new» Coke better than the original formula. This result was apparently instrumental in the company’s decision to use this new formula and replace the old one. Besides conducting the taste tests, the company also surveyed a different set of consumers tosee whether or not they favoured the Coke change, in concept. As some researchers have pointed out, however, this survey consisted of simple Yes/No questions and was not likely to reveal consumers’ deep seated feelings about Coke. Although consumers were asked to respond to «the idea of changing the formulation », they were not clearly advised that their responses might mean never being able totaste the old formula again. Under such hypothetical conditions, many consumers made a greater departure from tradition than they could in actuality.
IM CETYS 2007
Coca Cola’s marketing research also failed to consider consumer-buying patterns. Therefore, in assessing consumer opinions, the company gave all the responses equal weight despite the wellknown phenomenon, known as the «80/20rule» – that a small minority of purchasers usually account for the vast majority of purchasers in a product category. According to a survey done by Pepsi soon after the introduction of new Coke, this segment of the Coke loyalists overwhelmingly favoured an unchanged Coke formula. If Coke had weighted their responses appropriately, it is unlikely that the company would have gone ahead with the...
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