Introducing New Coke

Rhick | Ritika | Rohan | Sangeeta | Shrinivas | Krishna

Group C7
  Coca-Cola was the market leader in the cola cold-drink
industry
 Pepsi, a new entrant was constantly challenging Coca-Cola for
the top spot
 Pepsi labelled itself as a genuine cola drink for the youth

Background  Pepsi introduced the Pepsi – challenge: a taste preference test

where the participants were blindfolded
 Through this, Pepsi emerged as a clear winner
 To counter Pepsi’s move, Coke launched a sweeter version
named 'New Coke’, withdrawing its successful 99 years old
formula.
 • Alternate beverages • High Entry barrier • Pepsi – biggest
available – high threat hence low threat of new competitor
• Tea competitor • It had sweeter taste and
• Coffee • Customers are brand captured the youth
• Fruit Juices loyal segment in market

Competitive
Threat of Threat of new
rivalry within
Substitutes competitors
the industry

Porter’s 5
Forces • Bargaining power of
consumers is very high
because there is
• Input involved water,
sugar and production
cost (bottling etc.)
minimal cost switching

Bargaining Bargaining
power of power of
consumers suppliers
 Resonance
• Consumer involvement, community, attachment

Judgements
• Innovative, loyalty, leader, superiority

Feeling

Brand Equity
• Happiness, sharing, celebration, unity, family and friends, self-
respect

Performance

Model • Refreshment, unique flavor, energy, tasty

Imagery
• Happiness, moments, Christmas, fun

Salience
• Omnipresent, American Values, sharing happiness

Reference: https://cokevspepsibm2013.wordpress.com/2013/12/07/kellers-brand-equity-model/
  ‘Within an arm’s reach of desire’
 Coca-Cola had a pervasive distribution system: through petrol
pumps and machines
 Coca-Cola primarily focused on the follows attributes:

Customer  Price
 The value created
Insights:  Preference

Coca-Cola’s  Penetration

Strategy - Rise  They made it a part of an average American’s life by relating

Coca-Cola to the culture and way of living
 Coca-Cola explored newer avenues to expand their reach e.g.
World War II
  Pepsi wanted to target the young generation or as they called it
– ‘Pepsi Generation’
 Pepsi’s promotional activities featured personalities who
represented the American youth
Pepsi’s Strategy  Pepsi introduced ‘The Pepsi Challenge’ which consisted of a
blind taste test with consumers.
 These were filmed and the reactions of loyal Coke drinkers that
chose Pepsi were shown as “reality advertising”.
  Coca-Cola’s first position was being threatened
 It was being associated as an old brand
 Coca–Cola inferred that the product and not the perception was
Coca-Cola’s main problem

concern &  Launched ‘New Coke’; production and distribution of old

counter Coca-Cola was stopped

 Coca-Cola promoted ‘New Coke’ by establishing that they had
understood the consumers of America supported by strong
market research
  Majority of Coca-Cola’s consumers were angry with the
company’s steps
 They boycotted the new coke and sent letters and hate
Customer messages to the company

Insights:  The consumers were mainly hurt because there was a historical
association that Coke had established with the American
Coca-Cola’s culture and by withdrawing the old product, Coca-Cola was

Strategy - Fall taking away this history

 Coca-Cola failed to penetrate the young population as their
promotional activities featured personalities from relatively
older generation and the young generation could not relate to it
  Issued a public apology
 Chairman Roberto Goizueta uttered the famous “We have heard
Coca-Cola’s you” comment

salvaging act  Re-introduce the old coke as ‘Coca-Cola Classic’

 Multiple promotional events were held for the relaunched
classic coke
Thank You!