The demise of New Coke

Identified a major marketing/advertising failure

April 23, 1985 Coke launched a new formulation of their famous beverage called New Coke. The product was described as being better tasting then the original. The new formula was developed over 2 years, and was extensively tested. In blind taste tests people preferred the taste of the new product over the old Coke and even over Pepsi. So in theory, this product should have been a huge success.

However, in reality, it could be seen as the biggest marketing failure of its time.
Possible reasons for Failure

The failure could be liked to the fact that Americans saw Coke as their national drink - it was as American as apple pie. When Coke changed the formula, people saw it as bad as someone burning the American Flag. People felt betrayed, hurt, and that they could not identify with the new product.

At the time, Coke stopped production of the original formula - and mass chaos erupted. People were hoarding cases of the old formula - and cases were even selling for $30. Coke set up a 1-800 number to deal with customer complaints and there is anecdotal evidence that people were describing the disappearance of coke a family member dying. (Oliver, Thomas; The Real Coke, The Real Story, Penguin, 1986; ISBN 0-14-010408-9; 163)

On July 11th, Coke pulled New Coke off the shelves, only 79 days after its introduction.

"We did not understand the deep emotions of so many of our customers for Coca-Cola," said company President Donald R. Keough.

Another reason for the failure could be seen as marketing confusion - for decades, Coke told people that Coke was an integral part of their lives, and part of their identity. Changing the formula was akin to to asking people to change their identity. Especially since coke has been marketing as part of the North American culture for 100 years.

Coke also changed their packaging. The soft drink producers spend millions of dollars a year on advertising to educate consumers about their brand - and they showcase their packaging. Changing the packaging could also be seen as one of the contributing failures.

Hypotheses for additional reasons for the failure based on understanding of consumer behavior and the concepts

I hypothesize that Coke did not do their homework - they did not actual ask consumers if they wanted a new product - a fundamental marketing error. As well. they should have asked people if they wanted to keep original coke on the shelves, and just offer new coke as a secondary product. By offering choice, it still allows consumer to control their destiny, but by removing the beloved original coke, consumer lose their choice. And consumer behavior shows that North Americans thrive on choice, and do not like to feel like they are being forced to buy a product.

I also think that another reason for the failure has to do with the fact that they were trying to compete with Pepsi by changing their formula. Perhaps if they would have focused their efforts on the current formula, they would have not wasted so many resources in this marketing flop.

References

http://www.msnbc.msn.com/id/7209828/

http://www.thecoca-colacompany.com/heritage/cokelore_newcoke.html

http://www.lawyerbizcoach.com/2006/06/08/why-new-coke-failed-knowing-your-customers-is-key/

http://www.icmrindia.org/casestudies/catalogue/Marketing/The%20Launch%20of%20New%20Coke%20-%20Marketing%20Case.htm#The%20Launch%20and%20its%20Aftermath

http://www.articlealley.com/article_5701_3.html