Posted by Jack Brown on Mon, Nov 16, 2009 @ 03:02 PM
In the current CNBC documentary on the Coca Cola Company entitled: "Coca-Cola: The Real Story Behind the Real Thing," the focus is Coke's urgent campaign to reinvent itself after years of losing ground to arch-rival Pepsi in the race to develop new blockbuster beverages. What makes the documentary particularly compelling is Coke managements' candid admission that they had taken their eye off the ball by becoming complacent and by living on the brand's past glory. With this mea-culpa came admissions of marketing blunders, the most famous of which was the "New Coke" debacle.
The year was 1985. Coke faced an onslaught by its archrival Pepsi, which was threatening to dethrone Coke as the leading cola brand with an effective marketing campaign called "The Pepsi Challenge." The campaign, which was featured on television, showed consumers preferring Pepsi's sweeter taste in blind taste tests to Coke, even among Coke drinkers. As an aside, these blind taste tests had consumers taking only a small mouthful of both Coke and Pepsi, rather than consuming a normal 8 or 12oz serving of each. Subsequent arguments have been made that with small servings, the sweetness level is more pronounced and responded to positively, whereas in larger servings, the aftertaste becomes more important. On this basis, many researchers believe larger serving tests would have resulted in an equal preference.
Facing this onslaught, Coke, under the leadership of its then CEO Roberto Guoizueta, began testing alternate formulas that were higher in sweetness level than the original Coke formula. This produced a formula which, when tested among both Coke and Pepsi drinkers, was preferred in blind taste tests to the existing formulas of either Coke or Pepsi. In a move criticized by many as one done in a state of panic, Mr. Guoizueta announced before a New York media audience that Coke's 99-year-old formula was being replaced by a new, sweeter formula, and it would be named "New Coke." The results were immediate and devastating. Consumers were outraged, and what followed was essentially a consumer rebellion. Three months later, Roberto Guoizueta formally announced the return of the original formula, renamed "Coke Classic."
As a marketer, what are the lessons to be learned from Coke's experience? Is it to never change the "original formula" of an iconic brand? Would Tide detergent, certainly an iconic brand, still be the market leader if Procter & Gamble had not continually updated and improved upon its original formula... and aggressively marketed these improvements? Wouldn't most leading brands have languished if they had not kept constantly improving their consumer experience, and marketing these improvements? Certainly the answers in most cases would be no. One could argue that developing a formula that beats both your current formula and that of your competitor, as Coke did, is a win. Traditional marketing would encourage you to generate trial of this new formula, and watch your brand share grow. So, what makes Coke different?
Coke is a "Me" brand. So is Budweiser. So is Marlboro. These brands, and brands like them, are "Me" brands because they are part of "My" self-image and reinforce who I am, much as a designer label does. If you change these brands, then you're trying to change me ... and I may not want to change. Subsequent research by Coke revealed that they had totally underestimated the emotional bond that consumers had with their brand. They realized you needed consumer permission to make changes to their "Me" brand.
In contrast, Tide and most other packaged goods brands are "Performance" brands. These brands don't require permission to make changes. In fact, consumer demands dictate that changes be made continually to improve performance, or they will seek out other brands that they perceive to perform better. You can establish trust and loyalty with these brands, but very seldom are there the emotional ties associated with "Me" brands. However, whether you are marketing a "Me" brand, or a "Performance" brand, you must view these brands through the eyes of the consumer. You may own the brand, but your consumers are stakeholders, and as stakeholders they have definite expectations. and as we've seen with Coke, they may even have an emotional bond with the brand. Understanding these expectations and the extent to which there is an emotional bond can give you permission to make changes, but in their absence, you run the risk of creating the next Coke debacle.