Coca Cola as a brand is one of the most recognized brands in the world.

Before organizing any advertisement, promotional strategy, public relation event, or any other form of media event, Coca Cola undergoes various processes of understanding their consumers and tailor their event accordingly. An extensive market research is conducted which includes surveys, focus groups, in-depth interviews, online forums and blogs, and any other form of obtaining information which helps in knowing the consumer. Creating marketing campaigns tailored to the life of its consumers has made Coca Cola a successful brand and increased brand loyalty. But in 1985, Coca Cola was responsible for one of the most disastrous blunders in marketing, also known as the Coke Fiasco, by introducing a new product called New Coke.

FAILURE The rivalry between Coca Cola and Pepsi has been going on even before the introduction of New Coke. Since 1960s Coca Colas market share has been same, whereas the market share of Pepsi was increasing steadily. It later on repositioned itself as the brand of youth which turned out to be really successful. In places where consumers were free to choose their type of cola drink to purchase like supermarkets, convenience stores, etc, Pepsi won the battle, whereas in places with restriction of choice like restaurants, clubs, etc, Coke was winning the battle as it already existed in those markets. This declined the market share of Coke from 60% after World War 2 to 24% in 1983 (Mikkelson, 2007). Moreover, in 1982 Diet Coke was launched without considering segmentation, and it was liked by everyone. By 1984, it reached rank 3 after Coca Cola and Pepsi in terms of liking. Pepsi introduced the Pepsi Challenge where the consumers were blind tasted between Coca Cola and Pepsi and everyone preferred the taste of Pepsi. Since, the market share of Pepsi was constantly increasing, it was important for Coca Cola to react (Cashberry, 2006). Considering all the factors, it was concluded that the taste was the major factor behind the success of Pepsi, and also Diet Coke as it tasted similar to its rival and not to its parent drink. Therefore, in 1985 Coca Cola introduced a new product called New Coke retiring the old one as they did not want the effect of cannibalization. Immediately after the launch, people revolted against the New Coke. Coca Cola was considered as an integral part of the Americans life and it was considered as a part of their identity. The company had under estimated the number of consumers shifting from the old Coke to the new one. According to Michael Ross, majority compared the change of Coke to stomping the American flag (Ross, 2005). Coca Cola received more than 40,000 letters of complaint and more than 6,000 calls daily on its toll free number. Consumers started buying the old Coca Cola on the shelf in bulk, and even started selling it for hiked up prices (Building Brands, 2009). After 87 days, the company reintroduced the old formula by calling it the Classic Coke. People forgave the mistake of the company and in the end of 1985; surveys showed that Pepsi was the leader in the competition. But due to this fiasco, Classic Coke gained a lot of popularity and out sold New Coke and even Pepsi and helped in regaining the number one rank. People who liked the New Coke bought the Diet Coke as it was similar and New Coke was abandoned. The market share of New Coke reduced from 3% to 0.1%.

Reasons

Why?

~ In taste the

new

coke

was

slightly

distinct

from

the

original

one:

With an effort to come out with a diet version of the original coca-cola, sweeteners were added which made it comparatively more sweeter than the original one, was a bit less tangy (that is less tang was included) and was smoother than the original.

The difference in taste was a major reason for the failure of New Coke among the masses, tests done by their research and development department proved that the taste of the Coke was the reason it was losing its market share. During the blind taste test, people just took a sip of the cola and preferred a sweeter taste. But in reality they buy a can of 330 ml and they preferred the less sweet taste of old Coke.

~ Since Diet Coke was launched during that time, people considered it to be another variant of the parent beverage. Therefore, due to the wrong framing of questions for market research, they yielded wrong results which proved to be fatal.

~ Moreover, the new packaging isolated itself from its consumers. The association of the word new was related to Pepsi as it was comparatively new into the market and a brand of youth. The old Coke was considered a legacy and an integral part of the American culture. Therefore, the brand loyal consumers of Coke were finding it hard to associate the new change with Coca Cola.

~ Coca Cola had ignored the sentimental value which its loyal American consumers had towards the brand. During the overall launch of the product, Coca Cola had its complete focus on the product and neglected the emphasis on the brand.

~ What Coca-cola apparently neglected to take into account was that many of the 45% who preferred old Coke did so passionately. The 55% who voted for new Coke might have been able to live with the old formula, but many on the other side swore that they could not stomach new Coke.

~ Pepsi attacked with counter-ads, including a full page ad in the New York Times. To make matters worse, Pepsi launched advertisements in New York Times and other publications stating that Pepsi had won the cola war and has taken a lead due to the mistake made by Coca Cola. Coke did not react to this, as they were already pressurized by the consequences of the fiasco. Pepsi took advantage of the situation, running ads in which a first-time Pepsi drinker exclaimed "Now I know why Coke did it!" In all, the race of beating the fire, by bringing out the New coke in capturing more of the market shares lead the coca cola company to face great resentments. One of The reasons that accompany the loss of sales was the estimated decision that was made in regard for the whole USA populations, in consideration to their preferences, tastes, and choices. The company didnt rely on making the scrutinic market researches which added in the loss to a great deal. The brand would have gained success if the company had approached the marketing research department to get information about already liked percentages of customer loyalties to already existed brands and then initiating targeting markets.. Moreover, efforts should have been made in making the attractive and catchy brand name that matches with the life styles of the people and not just relying on adding new to the brand it should be like leaving the customers filled with exuberance when the hear it. Other than this the product should have been developed with some new energizing ingredients that makes it to distinguish from the substitutes already existed in the market carrying the same attributes, in order to make the innovation holding markets leading to rising sales and profits for the company. Following the above steps with efficacy and efficiency will help the company bring out the revised version of Coke in the market with a prolonged BANG accompanied by great success in establishing more of customer ship, attaining more of loyalty and adding more of goodwill to the brand name and tremendous sales.