Yesterday, sales in five more brand strategy lessons from the Princess Bride I used New Coke as an example of how customer research can occasionally lead branders astray. But thinking about it, visit two things struck me: First, healing that April 23, 2010 will be 25 years since the launch of New Coke. Second, I turn forty tomorrow, so that spring day in 1985 was when my fifteen-year-old self realized for the first time: branding isn’t a cold, abstract business decision made by far-away executives: it’s personal.
A brief history of New Coke
For those of you who are too young in 1985 to remember – or were bricked up into the walls of a desert hermitage during the 1980’s (and who can blame you really?) here’s a brief blow-by-blow of events around this seminal consumer branding event.
- Pre-history to present – Coca-Cola launches, and retains market leadership, in the soft drink market. Fortunes are built on dark, bubbly sugar water.
- 1975 – Pepsi launches the Pepsi Challenge – a campaign of blind taste tests in which consumers really did choose Pepsi over Coke for the most part.
- 1975-1985 – Coke market dominance gradually slips – mostly under pressure from Pepsi. Coca-Cola executives realize that the threat is serious, and it seems to them that taste is a key battlefield.
- Early 1985 – rumours circulate that Coca-Cola is testing a new formula. And indeed they are. Thousands of consumers choose the new sweeter flavour in blind taste tests like those used in the Pepsi Challenge. No one tests whether the taste actually influences the purchase decision when users are aware of the brand.
- April 23 1985 – To great fanfare (followed by an enormous “thud”), chairman and chief executive officer Roberto Goizueta announces New Coke to the world as a better tasting alternative to the old Coke that was still dominating the world’s brandscape.
- Supporting “the Cos”: In an act of selfless, heart-warming altruism, Bill Cosby brings his considerable charm to bear on the issue telling the world that he personally prefers the new taste.
- April 23 1985 – Meanwhile in Ottawa Canada, a pencil-necked grade niner in a Hewey Lewis & the News baseball shirt hears the news. And although prior to this, he has only been an indifferent cola consumer, the news wallops him with an odd mixture of horror and deep personal indignation. At lunch, he and his friends talk in whispers and look to the sky for other signs of impending apocalypse.
- The Canadian Broadcasting Corporation broadcasts this scathing critique of the move. Check out the footage of the press conference “tasting”, the video message to retailers, and the response from Pepsi in which they declare victory in the Cola wars and give employees a celebratory holiday.
- May, June 1985 – Stories circulate in the press of wide-spread hoarding of Coca-cola. Anecdotes like this one (of many) from the Coca-Cola Heritage site give a sense of the real urgency and panic that many consumers felt.
When the new Coke came out, I borrowed my friend’s pick-up and went to a club store and bought three pallets of regular Coke. It took two trips to get the Coke home. I had enough Coke to last me through the crisis, but I had to repair the floor in my spare bedroom – because of all the weight, the floor had sunk. It was well worth it.
- Petitions are circulated, rallies are held, activist groups like the “Society for the Preservation of the Real Thing” and “Old Cola Drinkers of America” are formed, and Coca-Cola is swamped with angry response:
By June 1985, The Coca-Cola Company was getting 1,500 calls a day on its consumer hotline, compared with 400 a day before the taste change. People seemed to hold any Coca-Cola employee – from security officers at our headquarters building to their neighbors who worked for Coke – personally responsible for the change.
- July 11, 1985 – Coca-Cola announces that they will be offering the old formula in parallel with the New Coke – which they call “Coca-Cola Classic”. There is widespread rejoicing.
In the decades that followed of course, New Coke became Coke II and then quietly disappeared as “Coca-Cola Classic” became the name for standard Coke again.
- 2007 – In Canada, the “Classic” was quietly dropped, but it remains on American packaging – albeit in smaller and smaller letters.
Brilliant conspiracy or colossal blunder?
But along the way home from their corporate Waterloo, a strange thing happened: Coca-Cola actually accomplished what they had set out to do in the first place: “to re-energize its Coca-Cola brand and the cola category in its largest market, the United States.” Coke sales surged, consumers breathed a collective sigh of relief, and Pepsi resigned itself to a seemingly permanent runner-up position in cola sales.
So of course, many conspiracy theorists have emerged claiming that Coca-Cola had planned this all along. But as they publically say on their Web site: “The company didn’t set out to create the firestorm of consumer protest that ensued”. Of course, they do try to put a positive spin on this bottle (with a little kiss of revisionism at the end):
The return of original formula Coca-Cola on July 11, 1985, put the cap on 79 days that revolutionized the soft-drink industry, transformed The Coca-Cola Company and stands today as testimony to the power of taking intelligent risks, even when they don’t quite work as intended.
So here’s the real thing
That phrase “taking intelligent risks” doesn’t capture the enormous arrogance, ignorance, and shocking naïveté that went into the decision in the first place – and doesn’t capture the huge embarrassment and sense of crisis within the Coca-Cola company, or the tsunami of indignation that swept consumer society at large.
To sum up: New Coke made the corporation look really, really dumb. (But we forgave the brand).
Their big mistake (and it was a mistake): they treated the launch of a new formula as a problem that could be solved with product research, business logic, and a big ad campaign. In other words, they acted as if they had the right as a company to make such decisions, and we the customers would obviously be grateful.
The huge branding truth that became clear to this pencil-necked Hewey Lewis Fan:
Coca-Cola didn’t own their brand; I did.
Lessons for branders:
1) Respect the owners of your brand – your customers.
Yes, you own your “formula”, but they own the expectations and experiences built up over time – which are ultimately far more important than your brilliant launch plan.
2) Freedom’s just another word for everything to lose.
Coca Cola didn’t win because of New Coke, they won in spite of it – and because they were smart about getting out of it. For 99.9% of brands, a misadventure like this would be fatal.
Jim @smashadv says
Wow. Great post Dennis. I remember The New well. But I never considered it this way. Growing up in the South, everything’s a Coke.
Guy 1: “You want a Coke?”
Guy 2: “Yeah”
Guy 1: “What flavor?”
So The New looked really stupid to us. I never considered the bounce that Coke (Classic) received when that formula returned. But now I do.
Nancy Bernard says
The smart move was saying, “oops” and taking it back. This is what Bill Clinton didn’t do, and it cost him. This is what G W Bush didn’t do, and it cost him. This is what all kinds of people do every day, and it costs them. The US Dept of Commerce says that companies that make mistakes, admit them, and correct them, earn more brand loyalty than companies that never make mistakes. It seems people trust an honest mistake more than perfect performance. So, if Coke II wasn’t a deliberate strategy, it at least proves that point.
Dennis Van Staalduinen says
You’re absolutely right. Anyone can dig a hole. The trick is getting out with grace… the great Tylenol cyanide scare is an example of this. An event like that would kill many brands, but they reacted quickly and effectively to pull product off the shelves, address concerns in a meaningful way, and win confidence back.
Brian Seel says
If you read Sergio Zyman’s thoughts on New Coke in his first book, “The End of Marketing as We Know It”, he references one focus group, where one respondent asked, “Are they going to take away my Coca-Cola? They better not take away my f*&# Coca-Cola”.
Being a market researcher, maybe I am biased, but it seems like a good market researcher, permitted by marketing to ask the right questions (like what happens if we take this formula you like, but put it in a Coke can), who is listened to by marketing can help avoid situations like this one.
It may only be one comment from one respondent, or that one nugget in a series of groups that gives you the answer, but a professional researcher can give you that kind of insight.
Dennis Van Staalduinen says
Great point, and an excellent example.
Sorry if I sounded a bit too much like I was bashing customer research – absolutely not! A big part of my practice at Brandvelope is about teaching / convincing / browbeating my clients to *really* listen to the voice of their customers. And as you said, that’s all about good research which boils down to “asking the right questions”.