Coca-Cola’s Biggest Marketing Failure Teaches Us A Key Lesson in Life
By: Alice Vuong
Tags: Marketing, Branding, Life Lessons, Business

Coca-Cola’s Biggest Marketing Failure Teaches Us A Key Lesson in Life

Lesson of the day: Don’t reinvent yourself because you assume that’s what people want.

It’s my 8th birthday. The whole family is invited to celebrate — grandparents, aunts, uncles, cousins. The house is at full capacity during those special occasions. The adults would sit and chat at the dining table while us kids sat on the floor in a big circle. The feast was a treat in itself. Pizza Hut and KFC. It was always the same every year but I loved it because we rarely got pizza or fried chicken. It’s one of the reasons why, after almost 30 years, I still love Pizza Hut and KFC. Whenever I order from either one of those places, it always brings me back to those birthday parties.

You can’t underestimate those happy moments. I don’t always remember what we did at those parties, but I always remember the food. Those memories and the nostalgia that floods over me every time I have Pizza Hut or KFC is exactly why New Coke was a complete disaster for Coca-Cola.

What started off a “strong shot of alcohol mixed with cocaine and touted as a cure for most ailments” became one of the most iconic soft drinks in the world (minus the cocaine now). When you think of the classic soft drink, Coke always comes to mind. Coca-Cola owned much of the market share in the cola market and still does to this day. But in the late 1970s, Coke’s biggest competitor, Pepsi, was catching up.

Pepsi rolled out a legendary marketing campaign in 1975 that continued well into the ’80s — The Pepsi Challenge. People were asked to do a blind taste test in which they would taste test two cups of cola, one filled with Coke and the other with Pepsi. A large percentage of the testers preferred Pepsi at first sip. When Coca-Cola did their own Pepsi Challenge, they were shocked to find similar results.

Coca-Cola wasn’t going to take this lying down. Convinced that people preferred the taste of Pepsi over Coke, the company decided to reformulate Coke.

In 1985, New Coke was born…and died in a fiery crash that nobody could have ever predicted. They tested about 200,000 people in the US and Canadian market and most preferred the taste of New Coke over Pepsi and even their classic Coke.

Rather than selling New Coke and Classic Coke side by side, executives decided to discontinue Classic Coke and pull it off the shelves entirely.

Coke drinkers were furious.

As Goizueta and Keough celebrated and toasted each other with their New Coke in hand, Coca-Cola’s shares were dropping as PepsiCo’s rose. Coca-Cola was getting angry calls and letters by the thousands, at one point fielding 8,000 phone calls a day.

“I don’t think I’d be more upset if you were to burn the flag in our front yard,” one disgruntled drinker wrote to company headquarters.” At protests staged by grassroots groups such as “Old Cola Drinkers of America,” consumers poured the contents of New Coke bottles into sewer drains. One Seattle consumer even filed suit against the company to force it to provide the old drink.” (Source: History.com)

This is why New Coke failed

People actually liked New Coke, even choosing it over classic Coke during the taste tests. But for all the research and development that went into New Coke, Coca-Cola forgot to ask one important question:

“How would you feel if New Coke replaced the classic?”

Coca-Cola severely underestimated the power of tradition and consumer loyalty.

Consumers may not have rejected the idea outright when asked but there are deep psychological reasons why someone buys a product over another. It’s not simply the features or taste that people develop a loyalty to.

Changing the recipe of Coke undermined everything that Coke stood for — tradition, family gatherings, and even American culture. My family always preferred 7-Up and gingerale but we always had Coke at the table. Coca-Cola underestimated the power of nostalgia and the emotional connection that Coke had on its consumers. Coca-Cola failed to understand what drove people to buy Coke vs Pepsi. They wrongly assumed that people would flock to buy Pepsi because of the taste. But humans are more complex than what companies choose to believe.

No Coke lover, or at least very few, would make the switch from Coke to Pepsi regardless of how much they preferred Pepsi over Coke in the taste test. When people see Coke on the shelves of the grocery stores, they’re taken back to their childhood. That’s what people want when they make a purchase.

They eventually pulled New Coke off the market and replaced it all with the tried and true Classic Coke that everyone fell in love with in the first place.

If Coke had asked the right questions from the beginning, they wouldn’t have spent millions of dollars reinventing themselves and suffered a major marketing disaster. If they had done that, Coca-Cola would’ve known that Coke was already the best version of itself.