Branding blunders: Lessons from the ‘New Coke’ marketing disaster

Branding blunders: Lessons from the ‘New Coke’ marketing disaster

Even the biggest and most-recognised companies in the world can get branding wrong - as MyCustomer.com explores in its new series on branding blunders. First up, is Coca-Cola's ill-fated 'New Coke'.

By Louise Druce, editor

Think of Coca-Cola and the words ‘brand disaster’ hardly spring to mind. But even the biggest and most well-loved companies in the world can get it wrong from time to time, as the soft drinks giant found to its detriment when it launched the ill-fated New Coke back in 1985.

With logo and formula origins dating back to the 1880s, Coca-Cola enjoyed the number one spot in its market for decades until arch-rival Pepsi-Cola upped the ante in the 1960s. By the 70s and 80s, the ‘Pepsi Generation’ was born, with superstars such as Michael Jackson fronting massive advertising campaigns targeting younger consumers and the company pitting the rivals against one another in taste tests by asking people to take the ‘Pepsi Challenge’.

It proved a lucrative move. Whilst Coca-Cola was still clinging on to the number one spot in the market, Pepsi rapidly gained new customers - so much so that by 1983 Coke’s market share was at and all time low, with no amount of counteractive advertising seeming to halt the Pepsi onslaught. To add insult to injury, Diet Coke - also gaining fast favouritism with consumers and ranked in third place behind the two major rivals - was noted for having a similar taste to its rival.

Taste seemed to be the one barrier standing in Coca-Cola’s way so, understandably, the company decided the time might be right to change the drink’s formula. It wasn’t a decision taken lightly, however, being the first change to the soft drink for 99 years and conducted with military-like efficiency and shrouded in secrecy.

Out with the old – in with the classic

On 23 April 1985, New Coke was officially launched, with chairman Roberto Goizueta heralding it as "smoother, rounder yet bolder." All those things it may have been, but New Coke wasn’t "it", with consumers, who found the new brand hard to swallow. It wasn’t that the majority thought it tasted bad – tests proved that nearly 200,000 of those surveyed by Coca-Cola actually preferred the new flavour. What the company hadn’t bargained on was the affection, affiliation and loyalty consumers had for the original brand.

Almost as soon as it hit the shelves, protest groups sprang up around the US and stories abounded of 'old coke' being sold on the black market for a rumoured $30 a case. Even Bill Cosby, at the time one of the most famous faces on US TV, couldn’t convince consumers that Coke tasted better than ever before. According to the company, Goizueta even received a letter addressed to ‘Chief Dodo, The Coca-Cola Company’, and the whole fiasco was deemed “the marketing blunder of the century”.

Coca-Cola company president Donald Keough admitted: "The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure the deep and abiding emotional attachment to original Coca-Cola felt by so many people." Just three months later, it was pulled from the shelves.

Arguably, its biggest mistake was trying to introduce a product that it wasn’t sure its customers wanted. The taste might have been different but what people identified with most was Coca-Cola’s rich history and the nostalgia they had for the brand. The company had always sold itself on being the original and ‘the real thing’ but was now giving them something else.

Some conspiracy theorists insist it was simply a marketing ploy by Coca-Cola to whip up fresh interest in its brand. The company vehemently denies this but the lesson is still a powerful one - take away a brand people love yet take for granted and suddenly their passion is re-awakened. However, it’s also harsh lesson in the strong-arm of the people if you consider Coca-Cola spent millions on re-branding and advertising New Coke, only to shell out more to start all over again.

Still, by admitting it got it wrong and going back to the old formula – or ‘Classic Coke’ as it was then re-branded - Coca-Cola retained its loyal customers and gained new ones simply from the furore the whole fiasco generated. It also learned a few lessons itself in brand allegiance. "We set out to change the dynamics of sugar colas in the United States and we did just that, albeit not in the way we had planned," Goizueta confessed 10 years later.

"But the most significant result of 'New Coke' by far was that it sent an incredibly powerful signal – we were really ready to do whatever was necessary to build value for the owners of our business."
 

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Comments

Coke introduced "New Coke" as an interim product hoping people would not realize the difference between real sugar and corn syrup if they let a little time elapse. Best case - New Coke catches on - everyone is happy. Worst case - they move back to "Classic" formula with corn syrup, the public is duped, and coke is happy. It was all a ploy to move to the cheaper sweetner.

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