New Coke 25 years later: was it all just a brilliant conspiracy?

Yesterday, 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, two things struck me: First, 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:

Brand strategy isn’t a cold, abstract business decision made by far-away executives. It’s personal! THEY WERE MESSING WITH MY COKE!!

Ah the good old days - when a company could just change its brand without fear of consumer backlash...
Ah the good old days – when a company could just change its brand without fear of consumer backlash…

A brief history of New Coke

For those of you who were too young in 1985 to remember – or maybe you 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 nine kid in a Hewey Lewis and the News concert t-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.
(emphasis mine)

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.

Jumping the FailWhale: Twitter’s biggest problems

This morning’s Twitter outage, symptoms is only one of the many problems facing brand Twittter. Back in June, order early in my Twitter career (yes, the Twitterverse is turning quickly my friends) I blogged about this – No Twitter Brand, what are YOU doing? But now that I’ve had time to think about this some more (thanks for the outage Twitter!), I’ve got some more thoughts – all of which require more than 140 characters.

Aquatic superstar rising (falling?)... Just one of the great fanart images at www.failwhale.com.
Aquatic superstar rising (falling?)... Just one of the great fanart images at www.failwhale.com.

Over the next week or two, I’ll deal with 3 major brand credibility problems Twitter is facing, followed by a set of solutions I’ll modestly put forward. 

The Jumping the Failwhale series: Twitter’s biggest problems

  • Problem 1: Brand Promise: (in this post – see below) the free ride will have to end, and the real owners of the Twitter brand will not be pleased.
  • Problem 2: Brand Character: (coming soon) Twitter feels more “Social” and less like serious “Media”. Basically, the boss ain’t buying it, and unless something changes, he may be right.
  • Problem 3: Brand Personality: (coming soon)Despite the fresh, breezy cartoon-graphics, the kids aren’t twittering. Twitter is fast becoming an old people’s brand and the problem is hard-wired into the product.
  • Solutions:  (coming soon) My 10 Recommendations to save Twitter.

Problem 1: Brand Promise. The free ride will end.

A Brand Promise is the implicit set of expectations a brand builds up in the mind of its customers over time. And just like a real-world promise, the owner of the promise (and indeed the brand itself) is the person to whom the promise is made: the customer. Twitter carried by whales

The promise of Twitter 

Twitter users have come to value, and expect, a free, open online community accessible to all with 1) an Internet connection and 2) enough time to cultivate a Twitter brand of your own.

The problem with this is that of course, the party can’t go on like this forever. There are real world implications to the scale of Twitter’s success. Yup, I mean big crashes like this morning. But more to the point: money / revenue / filthy lucre / a basic business model. This is of course a no-brainer, because it’s a problem with all Social Media. Facebook, MySpace, Twitter, YouTube, and a thousand other online communities and services have built their huge audiences fast on the same implicit promise.

Try it, use it forever, and pay nothing – with no ads – all of these are very attractive hooks to get people in. But having set those expectations in customers’ minds, no one should be surprised if they feel betrayed if you suddenly try to “monetize” their “eyeballs”. Oh, they’ll understand. But this isn’t about rational thought; it’s about a broken promise.

I can hear the objection: “but we never said it would be free forever”. Doesn’t matter. Your actions led them to expect it would be free forever, which in their mind is the same thing.

A summer-friendly analogy

Imagine that one day I mow my neighbour’s lawn, then laugh off any payment he might offer by saying “that’s what neighbours do”. Don’t you think it would make him happy and strengthen our neighbourly bond? Probably. As long as he didn’t suspect my motives.

Which leads me to the following week, when I tell him “I’ve decided that the price of gas being what it is, you either have to pay me a dollar to do it again, or listen to a 5 minute pitch for my business.” 

He’ll understand. He might even recognize that it’s a really good deal I’m offering. But do you think he’d be happy about it?

An example from my practice

We dealt with this issue last year while I was acting Vice President of Marketing at CoursePark.com – an online learning management network. We played around with a number of options, from totally free access (like Facebook or Twitter), to pay-per-use, or just a low-cost subscription. Our solution in the end: give users a free-forever option, but a) be very clear what the limits were, b) set clear prices on the commercial e-learning content we sold through our library, c) give them an expanded range of capabilities for free in exchange for sharing their content with the rest of CoursePark, and d) make it easy and transparent to allow them to upgrade to the “enterprise” version for larger programs / more support / more member controls.

The bottom line

Be careful what you promise (even implicitly); your customers will hold you too it.
If you’re building a business, people are cool with that – if they know your motives in advance.
If you have built expectations that you can’t sustain, don’t assume that you can change the rules at will. You will pay for it.

Nutella: accidental brand or cult sensation?

A Twitter conversation last night instigated by Olivier Blanchard and carried on ad nauseum elsewhere, sales reminded me of a long-time guilty pleasure: Nutella. Just typing the word makes me salivate – and I have to restrain myself from running upstairs to slather some of that rich hazelnutty goodness on melba toast. And apparently I’m not alone: in additon to Twitter fetishists, Nutella has 3.5 million fans on Facebook.

French Vs German Nutella

So why all the nuts?

Hagelslag
Dutch Hagelslag: The chocolate-on-bread option I grew up with.

I didn’t grow up with Nutella. As a Dutch-Canadian kid, if we wanted chocolate on bread, by golly, we just put chocolate on bread. “Hagelslag” (pronounce the g as if you are lightly hacking up a small furball) or “chocolate hail” or just “sprinkles” were always available at my Oma’s house. My first Nutella purchase came as a student, when my room-mate had to have it in the house, and I in turn have had my own jar on the shelf ever since. And now, although we don’t let the kids have it (far too precious), my pregnant wife is currently making sure we stay stocked up.

But I wasn’t conscious of where it comes from (Italy), or its fascinating history, which Wikipedia has done a much better job of than I could manage in a blog post. Basically, it comes from a war-time innovation by Pietro Ferrero to produce a cheaper alternative to chocolate using cocoa and the hazelnuts that were plentiful in that region. Nutella in its present form emerged in 1964, with 179,000 tons produced in Italy every year.

Building a fan base

But I can’t remember seing an ad for Nutella, and can’t recall a single in-store promotion or Point-of Purchase display. It was always just there on the shelf alongside the Peanut Butter, calling “Dennis! DEEEENNNNISS!”. <more saliva> But I digress.

Apparently Ferrero does do some advertising – particularly in Europe, as in this nicely toned French ad that promises that Nutella will give you the energy of a child. But according to this site, Ferrerro USA only spent $300,000 on advertising in 2008.

It’s interesting that the positioning is built around “energy” and “youthfulness” rather than being explicitly “healthy”. In Canada, Nutella labels feature a boy kicking a soccer ball to highlight their support for amateur soccer, while in Italy, the connection with futbol was made even clearer in one commemorative package (right).Soccer jar

But in the UK, the “energy” positioning has gotten Nutella into hot water as misleading for a product that contains so much sugar and fat (thanks to @kaitli for the tip!).

The secret to Nutella’s long term success seems to be consistency, living up to the promise by just being there, and by the affectionate devotion of its fans who carry a craving for that taste well into their adult lives. And not just consumption, but even geeky fixation.

Just do a quick YouTube search on Nutella, and you’ll find hundreds of fans geeking out on all aspects of the product. Check out this clip from a German television show that compares the consistency of French Nutella with German Nutella in agonizing (and entertaining) detail. But note that when they actually call Ferrero in this clip, the brand-er doesn’t do much to help the geeks in question with their free advertising.

So the question for you DIFFER brand geeks: what should Ferrero be doing to capitalize on all these nuts who obviously want to help them spread the love? Social Media campaigns? More traditional media advertising? Just staying out of the way? Looking for your comments as always.