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"coca cola united states" Discussed on The Marketing Rescue Podcast
"I knew it was old but I didn't realize one hundred thirty one years noted I and it actually began in a Soda Fountain of all things in downtown Atlanta. Eighteen eighty six. Oh that's cool which I think is also interesting because today. The distribution of fountains is massive. But that's actually the first time coke was served in in fact. It was may eighth year. That John is Hambleton Creative Coca Cola and serve the Jacob's pharmacy. We're a long ways from those days when the Burger counter at the pharmacy was the social gathering. Alright yeah we sure are and a fun fact about this. During the first year only nine drinks a day were sold which is roughly eight thousand. Two hundred eighty five drinks for the entire year so to put it in perspective today consumers across will enjoy nine hundred nine thousand four hundred coke products every second nineteen thousand four hundred per second. That's crazy crazy a massive jump. That is a message. While it's a hundred and thirty one years. They had to run that some time to build up to the but this number would not be in a reality if this story that we brought to unpack that really unfold way that it did. Yeah that's right. Basically coke made a series of really good decisions after one really bad one and that became essentially a textbook marketing rescue. Then I think for most people coca-cola's such an iconic well-of brand. I mean I know it is for me growing up That you don't think of words like the worst marketing disaster in history in relation to Coca Cola so Nico I know you love storytelling. We're both super into it. And I think this is such a great story because it shows even the biggest the best companies in the world with the most sophisticated and polished marketers can get it wrong from time to time and co currently found this out when it launched new coq back in nineteen eighty five but importantly that doesn't have to be the end of the story when things go wrong and researching. This episode was really really fun because most of the research and continent books and all the opinions of artists talks about. This is the biggest marketing failure to dates. But the way that we think about is one of the biggest rescues and the no you need a failure to have rescue sure but to your point this was based on a bad decision but the decisions after that it was just really really smart and bold. So let's start so let's at the scene in one thousand nine hundred ninety. Five Pepsi launched a campaign called the Pepsi Challenge and throughout this whole picture. China's campaign is a blind taste of the two different products. The tooth and Sodas Pepsi and Coke and in the United States. It started to show that people actually preferred Pepsi or Coca Cola Listing Yup and in this campaign you can Imagine Pepsi. Mock disliked greater sure as a result of this. Betsy started gaining ground over Coca Cola United States. There's a lot of chipping away slowly but surely over coca-cola's market share in Nineteen eighty-five cookie-cutter share laid over the chief competitor in the flagship market the US and they flagship products. Coke started slipping for fifteen consecutive years. That's a long in steady slide. Sure is so the customer Wayne as coca-cola started dipping right the board and the CEO and the executive team. They noticed so in desperate times calls for desperate measures so they announced in Nineteen eighty-five that they can a yank the hundred year old recipe of Coca Cola and introduced a new product called nuke. Wow so they're not introducing a new product. They're literally just completely pulling the old one absolutely and at this time the Coca Cola sat in a press release this is the surest moved the company has ever made and they launched us with a massive integrated full three sixty ad campaign so when new. Coq Launches Robert goes at a coke. Ceo and chairman said quote. Some may choose to call this. The boldest single marketing move in the history of the packaged goods business. We simply call it. The surest move ever made. Coca-cola President Donald Keough echoed the certainty. I've never been as confident about a decision as I am about. The one we're announcing today so cokes market research team had gone through this massive research project in which they conducted over two hundred thousand taste tests that confirmed that subjects preferred new coq over both the one hundred year old recipe and over. Pepsi. So this is really critical right. They they get this data that tells them that this new coq would outperform both of those two pieces and two hundred thousand tests. That's pretty are. That's not a small sample size. And so this is the point in the story where things really start to get interesting. As a few critical of mistakes were made so I the taste tests were done with just a few ounces of soda but that's definitely not how people especially Americans because we have to do everything big in America How we consume products especially soda so we drink it in twelve sixteen thirty to an even sixty four ounce big gulp servings so you know a much sweeter more sugary drink which was what the new coq recipe was like maybe okay in small doses in those two ounce servings that they served in the taste tests but in large amounts you know that could actually become a turn off if you're having a drink of large volumes of very sweet sugary tasting fluids. So what you're saying. Is that an abundance of quantitative research and Miss Thought on the whole qualified the quantitative side the behavioral side right. Yeah so they did have some qualitative research but had some holes in it and it wasn't taken as seriously as the quantitative research because of the fact that the quantitative research was so large. The sample size was so large as two hundred thousand taste tests versus a couple of small focus. Groups is reason they were so confident or this coach we just heard. Is that as any good marketer? They made these decisions on big data and boy. They had a lot of big data. Your two hundred thousand sample. Yeah exactly but market research isn't just a numbers game right so it's kind of like when you go to the doctor. They don't make a diagnosis in most cases. Based on a single number on your tests they might run a whole panel of twenty different tests to figure out what all of your different levels are of different chemicals or biomarkers in your blood. They'll do a physical exam right. They'll look at your lifestyle and open up your chart and look at your medical history so in medical terms. It's called diagnosing. Whole person diagnosing the whole entire bottle so they actually had conducted some focus groups and surveys and in the focus groups. Ten to twelve percent of testers felt angry and alienated at the thought of changing the recipe so significantly that they actually said they might stop drinking coke because of it and these people were also really influential in the focus groups exerting kind of like indirect peer pressure on the other participants and influencing them a little bit interesting. Yeah but the surveys. They ran were far less negative. Yeah the service lacked the social dynamic right if you think about us the feeling towards the brand or the brand affinity. It's like looking at a puzzle and this is a few pieces missing and you making informed decisions based on what you're seeing. Yeah Yeah So. This is actually when they had three different choices to make essentially right so based on the data they were seeing. They could either completely replace old product with the new better tasting. Drink war keep the existing drank and roll out in additional drink with a different name. Kinda like what they did with cherry coke and diet coke or lastly they could take a gradual phased approach over time to it right so like most business situations. This was super complex during this time as well cookie-cutter was actually in the middle of various lawsuits from the bottlers over the surp- pricing policies. And Cook was very worried about them. Cannibalizing though and sales and obviously about Pepsi potentially taking advantage of oldest shirt so that any began launching a variety of additional flavors like diet coke three years before nineteen eighty two and when they were launching. Cherry coke at the same time. A new coke in Nineteen eighty-five. They will just worried. It's going to be to disrupt for them to have both at the same time right. Yep So this is before the massive amount of flavors that we have today right if you walk into any grocery store th as a whole coke fridge basically yeah back then it was like coke was the only game in town at least from Coca Cola. And that's actually a really important new wants here. Is that the insights were not actually wrong. Both Pepsi's taste test as well as coaxed tests and surveys confirmed it. The data set was just kind of an incomplete piece of the puzzle. That didn't factor in the power of the fact that humans are social animals right and we have very deep cultural and emotional attachments. And so that's really easy for us to see now because the impact of social media but it wasn't so obvious in the eighties so what happens next is actually really big. It's April Twenty. Third Nineteen eighty-five when new. Coq Launches in the Coca Cola Company's own words quote to hear some tell it April twenty third nineteen eighty five was a day that will live in marketing infamy spawning consumer angst the likes of which no business has ever seen kind of it kind of happened right here. We are thirty five years later. Still arguing about us. Very amazing very prophetic statement. So the emphasis on the sweeter taste is a new flavor also ran very contrary to all the previous coke advertising. In which for example spokesman Bill Cosby had touted cokes? Less sweet taste as a reason to prefer it only Pepsi. Another big lesson year no yards brand and why people care about you and make sure that you don't forget that yeah like you said. Their confidence was super high in spite of the fact that they were departing from what made them the most iconic brand in the beverage industry and granted. You know they were going through this slow decline and there was kind of a lack of interest in Cola and Soda Category in general at the time but you know the fear of competitor creeping up on you in gaining ground powerful. Absolutely so in. Mark Pendergrast Book for God country and coca-cola the definitive history of the great American soft drink and the company that makes it. He recounts that on the day. New Coke launched. They had a press conference at New York. City's Lincoln Center. That was pretty difficult since Pepsi had actually very cunningly fed questions to reporters before the press conference but if you think about it that's like preparing for an interview you interview the questions beforehand right. They should have known something was going to happen over there. Yeah exactly gotta come prepared for the worst right so one of the reporters asked whether Diet Coke would also be reformulated quote. Assuming new coke is a success to which the which the CEO Gazeta curtly replied. No and didn't assume this is a success. This is a success so the company stock went up on the announcement and market research actually showed eighty percent of the American public was aware of the change within days. It is prudent credit. If you think about the majority of companies will sell the left arm to get eighty percent of the American hundred fear of new product launch within a span of a couple of days. It's trivial remarkable. Yeah it's just amazing and the backlash was equally as remarkable. Despite the fact that most people buying new coq were kind of like buying it out of curiosity to try the new flavor and there is actually kind of overall in a fairly warm initial reception to coke but over the next seventy nine days coke received forty thousand calls and letters including one letter delivered to go to the CEO that was addressed to quote chief. Dodo of the Coca Cola Company so the company hotline one eight hundred get coke.