The Launch of New Coke


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Case Details:

Case Code : MKTG034
Case Length : 10 Pages
Period : 1985 - 2002
Pub Date : 2003
Teaching Note : Available
Organization : Coke
Industry : Food, beverages and Tobacco
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

The Rationale

Soon after becoming CEO, Goizueta concluded that the obsession about increasing the market share was futile for Coca-Cola and in certain businesses, the return on capital employed (ROCE) was actually less than the cost of capital. As a result, he sold Coca-Cola's non-performing businesses such as wine, coffee, tea, industrial water treatment and aquaculture...

The Launch and its Aftermath

Coca-Cola launched New Coke in April 1985 with the punch line 'Catch the wave.' This change in Coke's formula was publicized through the television and newspapers. The company said that the introduction of New Coke conformed to its efforts to be innovative in its marketing strategies and establish good customer relationships.

The announcement reached more than 80% of the American population within twenty-four hours. The launch of New Coke elicited mixed reactions from the public...

New Coke - What Went Wrong?

Analysts attributed the failure of New Coke due to several factors. Some felt that Coca-Cola had failed to understand the consumers' emotional attachment with Coke. Reportedly, their attachment with the brand was so strong that one of them went to the extent of wishing his bones and ashes to be preserved in Coke cans after his death...

A Marketing Blunder or a Ploy?

Notwithstanding the negative consumers' response, some media reports claimed that Coca-Cola's act of launching New Coke was actually a deliberate marketing ploy to make people develop a stronger liking of original Coke after they tasted a low quality version of the drink.

Coca-Cola used cane sugar and corn syrup for the sweet taste of New Coke. During early 1985, Coca-Cola ran short of cane sugar stocks, but had sufficient stocks of corn syrup. Cane sugar was sweeter and more expensive than corn syrup...

Exhibits

Exhibit I: Reactions After The Launch of "New Coke"
Exhibit II: Stock Price Movement of Coca-Cola's Share
Exhibit III: Global Market Share of Coca-Cola and Pepsi (2001)
Exhibit IV: New Coke Re-Launched as "Coke II"


 

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