marketing strategy strategic blunders case study coca cola

1. NO NAME MATRIC NO.
1 AMANDA BERNICE A/K PETER JOHN REMEK EFC140110
2 ARTISHAH BINTI SEHARING EFC140113
3 ERNA BINTI ZAKARIA EFC140120
4 NUR HAFIFAH BT MOHD HALIM EFC140199
5 SITI FAIRUZ BINTI MOHD SAIDI EFC140218
CASE STUDY:STRATEGICBLUNDERS –COCA
COLA
GROUP 20
EPFE 5107 LEADERSHIP & STRATEGIC MANAGEMENT

2. 1886 Original recipe of Coca-Cola was invented by a
pharmacist named John Pemberton from
Atlanta.
The soda fountain was rising in popularity as a
social gathering spot led him to create a soft drink
that could be sold at soda fountains .
Frank Robinson registered Coca-Cola's formula
with the patent office, designed the logo with the
slogan, "The Pause That Refreshes”
1888 Dr. Pemberton died and majority of the interest sold to
Atlanta businessman, Asa G. Candler.

5. STRATEGIC BLUNDERS
COCA COLA – NEW COLA

6. The Coca-Cola Company decided to terminate its
most popular soft drink and replace it with a
formula it would market as New Coke.
The American public's reaction to the change was
NEGATIVE and the New Coke was a major
marketing failure.
Reintroduction of Coke’s original formula, re-
branded as "Coca-Cola Classic" resulted in a
significant gain in sales and saved Coke’s sale
numbers
1987
1985

7. 1. Reformulation of Coca-Cola by introduced a New
Coke failed to take adequate account of
psychological aspects of brand loyalty of
customer to the original or old Coke.
Coca-cola has made serious methodological mistakes in constructing
its taste tests of market research. From 200,000 consumers who took the
test, only 30,000 or 40,000 actually tasted the new formula & they were not
informed what they were tasting a new formula of coke.
Therefore most consumers had no idea of their preferences as loyal
coke customer are loyal to the taste of old and original coke. They were
not clearly advised that their responses might bring to the termination
taste of the original and old Coke formula.

8. 2. Coca Cola’s marketing research also failed to
consider consumer-buying patterns.
According to a survey done by Pepsi soon after the
introduction of new Coke, the Coke loyalists overwhelmingly
favoured an unchanged original Coke formula.
The Coca-Cola Company focused more on Coke’s physical
properties than its symbolic character. The company failed to
realise that many consumers identified themselves closely with
Coca-Cola Company.

9. 3. Coca-Cola Company also made a mistake by
failing to note that many U.S. consumers strongly
favour continuity and tradition over novelty
(Preferred original taste of old coke).
According to one well-known breakdown of the American
population into consumer types the largest single group
consists of those who like stability more than change.
For years, Coca-Cola Company had successfully gone after this
group by appealing to its members’ traditional values.
Reformulating Coke was like a slap in the face to those for whom
Coke represented familiarity and tradition.

10. 4. Coke was outspending Pepsi on advertising ($100
million per year) however Pepsi’s advertising is
more effective.
Coca-Cola advertising has historically focused on
wholesomeness and nostalgia for childhood.
Coca-Cola advertising is often characterized as "family-friendly"
and often relies on "cute" characters (e.g., the Coca-Cola polar
bear mascot and Santa Claus on Christmas.)
Pepsi focus on celebrities choosing Pepsi over Coca-
Cola, supporting Pepsi's position as "The Choice of a New
Generation“.
IMPACT OF
NEW COKE BLUNDER

11. • Coca Cola market share
– 1980: 24.3%
– 1984: 21.8%
• April, 1985 introduction of New Coke
– PepsiCo recognized Coca Cola’s mistake and
responded with by the “They changed my Coke”
advertisement
• May, 1985 Pepsi became No.1
• Summary of 1985 soft drink market share:
– New Coke 15%
– Coke Classic 5.9%
– Pepsi 18.6%.
1. Coca Cola Sales
Dropped

12. • Replacement of original coke was too upsetting for
consumers
• Backlash:
 Angry letters and phone calls (60,000 calls/day)
Stockpiling in the black market (USD$30/case)
 Addicts imported products from outside of USA
(Canada & Asia)
Protest groups — such as the Society for the
Preservation of the Real Thing and Old Cola Drinkers
of America established

13. • July 1985, “Old” Coke was sold alongside New Coke
(after 79 days) and re-named as “Classic” Coke
• 1986:
– New Coke collapsed to 2.3%,
– Coke Classic surged to 18.9%
– Pepsi held firm at 18.5%.
• 1987: Classic Coke became No. 1 soft drink
– Consumers became even more loyal to the
brand after it was temporarily taken away from
them.
• 1990, New Coke re-labelled to “Coke II” and taken
off the shelves
• 2009, “Classic” Coke became Coca Cola

14. 4. Coke was outspending Pepsi on advertising ($100
million per year) however Pepsi’s advertising is
more effective.
Coca-Cola advertising has historically focused on
wholesomeness and nostalgia for childhood.
Coca-Cola advertising is often characterized as "family-friendly"
and often relies on "cute" characters (e.g., the Coca-Cola polar
bear mascot and Santa Claus on Christmas.)
Pepsi focus on celebrities choosing Pepsi over Coca-
Cola, supporting Pepsi's position as "The Choice of a New
Generation“.
LESSON LEARNED

15. WHAT HAS THE COMPANY LEARNT?
1. Market Research Has To Be Conducted Or Interpreted
Correctly
• Coke’s extensive market research was unable to furnish the
management with the proper guidance in the reformulation decision.
• a “wrong-question explanation”
• did not make it apparent to the taste-test respondents
2. Marketing Is About Much More Than The Product Itself
• The blind taste test cannot measure the love the consumers felt for
Coke and the originality of Coke could also not be seen

16. 3. Go Back If There Is A Need
– Coca-Cola executives announced the conclusion to go back
to their original recipe less than three months after New Coke's
introduction.
– The company somehow ended up with a more profound bond
between the product and the consumers.
4. Implementation Should Not Be In A Haste
– The Pepsi Challenge test is called "sip tests", means that
drinkers were given small samples to try out. The flaw of this
test was that sometimes what people say they like in these
tests may not actually reflect what they will actually want or buy
to sit at home and drink.
– Coke would have succeeded had it chosen to change the
drink's flavor incrementally, without announcing that they were
doing so.

17. 1) Have courage to accept your mistake and
correct it
2) Customers are loyal for a reason, we need to
embrace that reason
3) Research is one of the most critical steps
before any decisions are made
4) Branding is actually not an easy task
5) Sometimes it is only best to stay true with who
you are
WHAT HAVE WE LEARNT?

18. 4. Coke was outspending Pepsi on advertising ($100
million per year) however Pepsi’s advertising is
more effective.
Coca-Cola advertising has historically focused on
wholesomeness and nostalgia for childhood.
Coca-Cola advertising is often characterized as "family-friendly"
and often relies on "cute" characters (e.g., the Coca-Cola polar
bear mascot and Santa Claus on Christmas.)
Pepsi focus on celebrities choosing Pepsi over Coca-
Cola, supporting Pepsi's position as "The Choice of a New
Generation“.
RECOMMENDATIONS

19. SWOT
Analysis
Competitive
Analysis
Decision
Making
Marketing
Strategy
Product
Preferences

20. Analyze current situation whether they need to
produce a new formula of New Cola as the best
decision.
By doing SWOT analysis, Coca Cola may know the
strength, weaknesses, opportunity and threat of each
alternative before considering them while making
decision in inventing new formula of New Cola.
Coca Cola may conduct an adequate market research
especially for the public perception of the original
brand of Coca Cola.
They also should take into account the symbolic
value of coke towards their loyal customers.
Coca Cola may run thousand of taste tests of New
Coke but do not stop the old Coca Cola recipe.
SWOT ANALYSIS
DECISION
MAKING

21. By doing competitive analysis, Coca Cola may
establish a unique product of New Cola and
therefore what attributes they may play up in
order to attract their target market.
Coca Cola may analyze the difference between
their old recipe compared with Pepsi-Cola as their
rival; analyze their main competitor and examine
the factors that cause the major difference of
their
products before they invent their New Cola.
COMPETITIVE
ANALYSIS
Coca Cola should considered the product preferences
and put it into account to ensure the new formula
(New Cola) will be successful compare to the previous
strategy where the preferences for sweeter
products diminish with use and was not taken
into account.
PRODUCT
PREFERENCES

22. While conducting the market research and taste
survey for the new formula of Coca Cola, the
marketing team should brief all participants about the
new product.
The Coca Cola team have to tell the participants that
by picking one cola, they would lose the other one.
MARKETING
STRATEGY
 Coca Cola may apply the 5Ps marketing tool which
includes Product, Price, People, Place and Promotion
to boost up their sales of New Cola.
By producing a creative and an interesting media
advert of New Cola compared to the original ads, it
may help to attract their customers and boost up the
sales.

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