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Market Research Fail: New Coke campaign



What led to the creation of New Coke?


Ever since the 1950s, Coca-Cola had always been the largest shareholder of the cola market, with more than 5x the sales Pepsi had. However, in the 1970s, Pepsi started gaining popularity due to its clever marketing campaigns; advertising with celebrity spokespeople and poking fun at Coke for being a beverage for the older generation. Also, many Coca-Cola fans switched to Pepsi because of its slightly-sweeter taste. By the 1980s, Coke lost their top spot in the soda market and had only 24% of the market share. In an attempt to restore sales after observing a dip in demand against Pepsi, New Coke was introduced in April, 1985.


Coke decided to re-formulate their Classic Coke to better suit the taste buds of the consumers. After conducting a blind taste test with 200,000 subjects, results concluded that New Coke was winning at least half the votes against Classic Coke and their rival, Pepsi. Results were so convincing that the company ended Classic Coke’s production completely even pulling them out of shelves, and started to launch New Coke into the market.


The ultimate result? Dreadful.

Coca-Cola received nearly 400,000 letters and phone calls from people who hated the new Coke.



Why didn’t New Coke work out?


Despite having 200,000 subjects performing a blind taste test for New Coke, showing results that benefits the idea of New Coke, it still failed terribly. The company overlooked the fact that there were many underlying factors that will affect buyers' preference other than the taste of the drink itself.


Consumers make purchases not solely based on taste; the decision is made in relation to their loyalty, habits and its sentimental value with the brand itself. And with the sudden change in taste, consumers lost their identification and relation with the brand. Hence the New Coke left them confused, and really angry.


Which explains the 400,000 angry letters and calls


The company neglected the reasons of why consumers were still purchasing Coke despite a surge in popularity of Pepsi. It is through the Pepsi and Cola Wars that made consumers find a reason to stay with either brands, and change in formulation took it away for the loyal Coke fans.


In the end, they brought back the old formulation of Coke and renamed it Classic Coke, and recalled the disastrous New Coke and it all worked out in the end.


Conclusion


Who did the fingers point to? Everyone looked at the market research team, but who could blame them? The results achieved from 200,000 subjects seemed rather convincing.

There might be a better way of introducing New Coke to the public, instead of putting a halt to the production of Classic Coke, Coca-Cola could have produced and introduced New Coke to a smaller audience and observed the response. Probably still might receive a backlash, however the damage would have been a lot lesser.


Traditional market research sure got its loop holes, market research wasn’t just a play and initiation with numbers. Traditional market research was just not good enough to provide a proper understanding of consumers.

With the rise of Neuroscience-backed market research, it can help us further understand consumers to a different and clearer level.