How will the Coca-Cola avoid the big loss for launching a wrong

product?
(A Case Study regarding Commercialization: Test Marketing and
Launching of New Product)
by Rebecca Marian L. Aguilar
I.
 
Time Context
Despite a series of company reorganizations, Coke had failed to spur
growth andtheir sales were flat in 2004.
II.
 
Point of View
Unhappy with their lack of success, Coke’s board of directors asked 40
-year Cokeveteran, Neville Isdell, to return from retirement to help
right the ship. He identifiesthe problem immediately.Neville Isdell
returns in 2004 as the CEO of the company. He said, "We have lostour
vision. There is no clarity about where we are going and what we need
to do.We need to go back to our roots and start seeing ourselves as
more than acarbonated soda business. We are in a creative-service
business."
III.
 
Short Background of the Company
It's not surprising that Coca-Cola, probably the world's most
recognized product(and certainly its most popular soft drink) has
spawned a wide variety of popularstories about its origin, its effects,
and the ingredients used in Coke's famous "secretformula:" Most of
these tales, such as the ones about Coca Cola dissolving teeth,
it’s
 supposed contraceptive powers, or the assertion that 1985s New Coke
debacle wasa Machiavellian gambit to divert attention from a change
from the original formula,are baseless. But the most frequently heard
story, that Coca-Cola originallycontained cocaine, is, technically
speaking, true.Coca-Cola was invented in 1886 by John Pemberton, an
Atlanta, Georgia,pharmacist. Pemberton was actually trying to concoct
a headache remedy, but oncehe mixed his special syrup with
carbonated water, and a few customers tasted theresult, he realized
that he had the makings of a popular soda fountain beverage. Thename
Coca-Cola was coined by Pemberton's bookkeeper, Frank Robinson, who
alsowrote out the new name in the expressive script that has become
Coca Cola'ssignature logo.Though the Coca-Cola Company apparently
would rather not talk about theorigin of its name in detail, it's clear
that Robinson derived "Coca-Cola" from two ofthe drink's ingredients:
cola from the cola nut, and extract of coca leaf, also thesource of
cocaine. Cocaine was a common ingredient of nineteenth-century patent
 
medicines, and by the standards of the day Coca-Cola contained a
minusculeamount that probably had no effect on its consumers.Still, by
the early 1890s there was a rising tide of anti-cocaine sentiment,
andAtlanta businessman Asa Candler, who acquired the Coca Cola
Company in 1891,steadily decreased even the tiny amount of the drug in
the recipe. There is someevidence that the only reason Candler kept
putting even minute amounts of cocaextract in the drink was the belief
that to omit it entirely might cause Coca Cola, bythen besieged by
imitators, to lose its trademark. In any event, Coca-Cola wascompletely
cocaine free by 1929.The name Coke appeared in popular usage as a
short form of Coca-Cola justbefore World War I but was often applied
as a generic term to any cola drink (andused by Coca-Cola's
competitors, including the now long-defunct Koke Company)until 1940,
when the U.S. Supreme Court ruled that the name Coke
rightfullybelongs to the Coca-Cola Company.In financial circles, Coca-
Cola has been one of the strongest and most reliabletrading stocks,
showing a steady return in all of its years of existence but one.Warren
Buffet, one of the world's richest men, has always touted Coca Cola as
anessential in one's stock portfolio.
IV.
 
Statement of the Problem
For its biggest launch since Diet Coke, Coca-Cola identified a new
market: 20- to40-year-old men who liked the taste of Coke (but not
its calories and carbs) and likedthe no-calorie aspect of Diet Coke (but
not its taste or feminine image). C2, whichhad half the calories and
carbs and all the taste of original Coke, was introduced in2004 with a
$50 million advertising campaign.
However, the budget couldn’t overcome the fact that C2’s benefits
weren’t
distinctive enough. Men rejected the hybrid drink; they wanted full
flavor with nocalories or carbs, not half the calories and carbs. And the
low-carb trend turned outto be short-lived. (Positioning a product to
leverage a fad is a common mistake.)
Why didn’t these issues come
 up before the launch? Sometimes market researchis skewed by asking
the wrong questions or rendered useless by failing to lookobjectively at
the results. New products can take on a life of their own within an
organization, becoming so hyped that there’s
no turning back. Coca-
Cola’s
management ultimately deemed C2 a failure. Worldwide case volume
for all threedrinks grew by only 2% in 2004 (and growth in North
America was flat), suggesting
 
that C2’s few sales came mostly at the expense of Coke and Diet Co
ke. The companylearned from its mistake, though: A year later it
launched Coke Zero, a no-calorie,full-flavor product that can be found
on shelves
—and in men’s hands—
today.
V.
 
Areas of Consideration (SWOT Analysis)STRENGTHS
1. The number one beverages brand in terms of reach and sales2.
Popular subsidiary brands like Coca Cola, Fanta, Kinley, Limca, Maaza,
MinuteMaid, etc.3. Global reach with presence in over 200 countries4.
More than 500 brands on offer5. An employee strength of around
1,500,000 people globally6. Strong and efficient supply chain network,
ensuring that all the products areavailable even in the most remote
places7. Strong financial condition8. Strong brand recall through
advertising and marketing by associating withcelebrity brand
ambassadors9. CSR activities in the field of water conservation and
recycling, education, healthetc.10. Effective and efficient packaging
technique giving emphasis on recycling andreusing11. Long association
with international sports events, sponsorships etc.
WEAKNESSES
1. The presence of traces of pesticides in the cola beverages have
caused damage tothe brand image
2. Strong competition in the aerated drinks segment from Pepsi Co.
means constantfight over market share3. No presence in the snacks
and food industry
OPPORTUNITIES
 1. Increase its reaching untapped countries and market
2. Market and popularize the less known products
3. Acquire other companies
4. Diversify its product portfolio by entering into snacks industry to
compete withPepsi Co.
THREATS