The Launch of New Coke New

THE LAUNCH OF NEW COKE

Submitted by:- Naveen Kumar pgfb0925 Pearl Juneja pgfb0928 Pragya Jaiswal pgfb0929 Shashank pgfb0938 Shishir pgfb0939 Tushar Mittal pgfb0951

QUIZ

Q.1. In which Journal the first advertisement of Coke was appeared?

Ans: “The Atlanta Journal”

Q.2. Who suggested the name Coca-Cola first?

Ans: Frank Robinson

Q.3. Who knows the original formula of Coke?

Ans: Candler & Robinson

Q.4. Who was the 10th President of Coca-Cola?

Ans: Paul Austin

Q.5. In which year Coca –Cola face tough competition?

Ans: In 1970

Q.6. In which year Coca-Cola launched New Coke?

Ans: April 1985

Q.7. Coca-Cola re-launched New Coke by which name?

Ans: Coke II

INTRODUCTION• On April 23, 1985, Coca-cola launched a

sweeter version of the soft drink named ‘New Coke’, withdrawing its traditional 99 year old formula.

• Though the initial market response to New Coke was satisfactory, things soon went against Coca-Cola.

• Because of consumer protests to New Coke and a significant decline in its sales, Coca-Cola was forced to revert back to its original formula.

BACKGROUND NOTES

• The original Coke was developed by John Pemberton in 1886.

• It was based on a combination of oils, extracts from coca leaves & various others additives including caffeine.

• On may 8,1886 coke was released in the marked.

• The first advertisement of the coke appered in “Atlanta Journal” on may 29, 1886.

• Pemberton spend huge amount on advertising

& sell 50 gallons of syrup at $1 per gallon.

• To make the drink popular it was served free

for several days – after this, drink got acceptance.

• After the Pemberton’s death, his friend “Asa Candler” & a wholesaler druggist acquired stake in the company.

• Positioning of coke:- In 1895 coke was advertised as a drink which relieved one of mental & physical exhaustion & cured headache.

• Repositioning of coke:- later coke was repositioned as a refreshment drink.

• it was found that coke contain caffeine in it, in a huge amount which is injurious to health. Due to which it was criticized & a case was registered against coke, which was settled outside the court & coke agreed to reduce amount of caffeine by 50% in coke.

• In 1991 company was sold to Ernest Woodruff,who took a major decision of establishing foreign department to make coke popular overseas.

Continued…

• Problems faced in establishing foreign department:-

It has to rely on local bottles who did not promote the product sufficiently.

Govt. regulation Trademark registration language & culture

COMETITOR

• By soft drink sales in the US had risen to 200 drinks per capita,& coca cola’s market share had risen to 41% against Pepsi 24%.

• In 1970 Pepsi advertisement budget exceeded coca cola’s.

• Due to the rise in Pepsi sales coca cola market share declined.

• 1978 Pepsi was found to be beaten coca cola in supermarket sales because of its dominance in vending machine.

THE RATIONALE• Goizueta’s ‘focus strategy’ could not stop

the decline in Coca-Cola’s market share, which fell from 24.5% in 1984.

• Coca-cola’s distribution wider than Pepsi, which had enabled it to be the leader in the soft drinks industry yet in 1984 Coca-cola’s overall market share had dropped from 9.8% in the early 1970 to 4.9%.

• This became a major cause of worry for the top management of coca-cola.

• During the middle of 1983, the idea of reformulating 99-year old Coke formula struck Goizueta.

• The purpose was to increase Coca-Cola’s market share as well as to defend its position as the market leader.

• A thorough market research was conducted which included interviews with about 2,00,000 consumers.

• In some cases, response was contradictory.

• After Blind taste test it was discovered that many people preferred Pepsi to Coke because Pepsi was sweeter.

• Coca-Cola felt that the sweeter taste would appeal more to teenagers and youth, it decided to launch a sweeter version of Coke, the taste would be similar to Pepsi.

• Coca-Cola also conducted a Focus group research that revealed that many people were willing to try New Coke.

• Both the surveys (Focus group and Survey research) indicated consumer dissatisfaction and their results were contradictory to each other.

• Coca-Cola ignored it and decided to launch New Coke based on results of the blind taste tests.

The launch and its aftermath

• Coca Cola launched new coke in April 1985 with the punch line “Catch the Wave”. This change in coke’s formula was publicized through the TV and news papers. The announcement reached more than 80% of the American population within 24hr.

• The initial response to the product was encouraging with distributors reporting a fairly wide acceptance of it. Analyst come up with a reason that people had not tasted the new coke so, there is curiosity to taste the new coke that is why the sales went up initially.

• Slowly consumer found that its taste is similar to that of Pepsi and the sales starts declining, and distributors began to accept less stoke of new coke, later they did not stoke any because of poor consumer response. A majority of Coke lovers criticized the company’s act of changing the 99 year old formula.

• Some old coke lover said that original coke had a unique taste that was stronger than new coke. One of the coke lover also said that company has spoiled the 99 year old soft drink and betrayed the nations trust. By the end of May 1985, the scenario had worsened with consumer response at its lowest.

• After the launch of new coke, Coca Cola received thousand calls per week from the coke drinkers most of whom informed that they are going to replace Coke with Pepsi as there is no difference between them.

• Due to the protest and significant decline in the market share from 15% at the time of launch to 1.4%, Coca Cola was forced to revert back to its original formula, ten weeks later, by launching “Coke Classic” on 11th July, 1985.

Model of Consumer Behavior

Model of Consumer BehaviorMarketing and

Other StimuliMarketing andOther Stimuli

Buyer’s Black BoxBuyer’s Black Box

Buyer’s ResponseBuyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Characteristics Affecting Consumer Behavior

Buyer’s Decision Process

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

Factors Affecting Consumer Behavior:PsychologicalFactors Affecting Consumer Behavior:Psychological

Psychological Factors

MotivationMotivation

PerceptionPerception

LearningLearning

Beliefs and Attitudes

Beliefs and Attitudes

New Coke what went wrong?

1. Analyst attributes the failure of new coke to several factors. Some felt that Coca Cola has failed to understand the consumer’s emotional attachment with coke. The attachment with the brand was so strong that one of the coke lover went to the extent of wishing his bones and ashes to be preserved in coke cans after his death. But after the launch of new coke, he said he did not want to be associated with coke anymore. Another consumer said God and Coke is the two important things in his life.

• Analysts also felt that people had a high regard for Coca Cola because of its innovative ideas, excellent products launch and the importance it accord to people and the environment. Also, Coca-cola was the pioneer in recycling plastic bottles.

• Some analyst felt that the findings of the market research group were erroneous and late. The research is either in an inappropriate manner or was interpreated incorrectly.

Continued…

• According to analyst the research could not have measured the type of consumer feelings that were evoked from reformulation. Coca cola carried out individual interview first then undertook the focus group testing.

A MARKETING BLUNDER OR A PLOY?

SLOGANS• 1904:- Delicious & refreshing• 1908:- Good till last sip• 1922:- Thirst knows no seasons• 1924:- Refresh yourself• 1938:- Pure drink of natural flavors• 1942:- Thirst ask nothing more• 1942:- The only thing like coca-cola is

coca-cola itself • 1956:- coca-cola makes good things

taste better• 1987:- You cant beat the feeling• 2000:- Enjoy

MARKET SHARECOKE CLASSIC

Pepsi Cola

Diet coke

Mountain Dew

Sprite

Dr. Pepper

Diet pepsi

7 up

Caffeeine Free Diet Coke

Barq's Root Beer

MARKET SHARE OF COCA-COLA & PEPSI

•Thank you…..