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