Bussiness – Christopher Siewert's Blog

Coca-Cola’s Biggest Failure?

In the early 1980s Pepsi was gaining market share mainly due to its Pepsi Challenge marketing campaign. Thus Coca-Cola changed the Coke formula to taste sweeter and more like Pepsi. In 1985 they stopped production of regular Coke and replaced it with this new formula, labeled as “New Coke”.

The decision to replace old Coke with New Coke can be explained using marketing strategy discussed in class. If New Coke was introduced as another variety of Coke, consumers might view it as just an improved version of Coke. Thus, the sales of New Coke will come at the expense of Coke, not from the market share of the competition.

However after the replacement, New Coke was a major failure. Sales were minimal and people protested the change. Within 3 months old Coke was reintroduced as “Classic Coke” and New Coke was phased out.

New Coke’s failure shows the power of marketing. Coca-Cola convinced the public that Coke is part of the “American life” and created loyal Coke drinkers. Even though people statistically preferred the taste of New Coke, there was a nostalgic emotional attachment to the original Coke. Classic Coke quickly gained market share after its reintroduction, and became #1 again in 1986.

References

Schindler, RM. (1992). The real lesson of New Coke: the value of focus groups for predicting the effects of social influence. Marketing Research, December, 22-27.

Gladwell, M. (2005). Blink: the power of thinking without thinking. New York: Little, Brown and Co..

Pictures are hyper-linked to original websites.

External Links for More Info

http://www.snopes.com/cokelore/newcoke.asp

http://www.thecoca-colacompany.com/heritage/cokelore_newcoke.html

Business Ethics Case – Karachi Factory Fire

The Ali Enterprises garment factory in the Karachi area of Pakistan was an accident waiting to happen with its poor fire safety standards. It had stacks of flammable clothing and chemicals stored next to each other and only one fire exit to reduce building costs. Proper fire fighting equipment was not present at the factory and no evacuation plan was provided. Then on Sept. 12th, 2012 almost 300 workers were killed when the factory caught on fire.

This is not an isolated incident. Many other factories across the country have equally poor safety standards, and experts say it is due to a lack of “enforcement of the law. Industrial standards are disregarded to minimize cost as inspectors are paid to look the other way.” – Syed Shoaib Hasan, BBC News, Karachi

Thus we must ask ourselves whose job it is to ensure safety standards are met. If the government is not enforcing the regulations, it falls to the company. However this can be a tough management decision when trying to keep profits high while staying competitive and providing the cheap clothing that consumers around the world desire.

Visit http://www.bbc.co.uk/news/world-asia-19566851 for more information.