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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"We set out to change the dynamics of sugar colas in the US, and we did exactly that - albeit not in the way we had planned."

- Roberto Goizueta, Chairman & President, Coke, after the 'New Coke' fiasco.

Introduction

On April 23, 1985, Coca-Cola, the largest aerated beverage manufacturer of the world, launched a sweeter version of the soft drink named 'New Coke,' withdrawing its traditional 99 years old formula. New Coke was launched with a lot of fanfare and was widely publicized through the television and newspapers.

Coca-Cola's decision to change Coke's formulation was one of the most significant developments in the soft drink industry during that time. Though the initial market response to New Coke was satisfactory, things soon went against Coca-Cola. Most people who liked the original Coke criticized Coca-Cola's decision to change its formula.

They had realized that the taste of New Coke was similar to that of Pepsi, Coca-Cola's closest competitor, and was too poor when compared to the taste of the original Coke. Analysts felt that Coca-Cola had failed to understand the emotional attachment of consumers with Coke - the brand. They felt that Coca-Cola had lost customer goodwill by replacing a popular product by a new one that disappointed the consumers.

As a result of consumer protests to New Coke and a significant decline in its sales, Coca-Cola was forced to revert back to its original formula ten weeks later by launching 'Coke Classic' on July 11, 1985.

Roger Enrico, the then CEO of Pepsi commented on the re-introduction of Old Coke in these words: "I think, by the end of their Coca-Cola nightmare, they figured out who they really are. They can't change the taste of their flagship brand.

They can't change its imagery. All they can do is defend the heritage they nearly abandoned in 1985." By 1986, New Coke had a market share of less than 3%.

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