New Coke Case Study

When Ted Levitt posed the question, “What business is it in?” he was blurring the distinction between “industry” and “market.”  Rather than limiting corporate scope, this question challenges companies to look beyond their immediate material product or service and examine the spectrum of ways they can (and should) target the greater public appeal.

Coca-Cola is in the beverage industry and in the market of appealing to nostalgia and personal emotional connections to its international patronage.  Coca-Cola’s “business” is to offer a sweet, fun, memory-inspiring portable beverage that inspires nostalgia for a carefree time gone by.  Coca-Cola is a sense-memory product that relies on a perception of indulgence and comfort.

From its beginnings as “"Pemberton's French Wine Coca," in 1886, Coca-Cola’s brand building strategy relied heavily on appealing to the national emotion and current conviction of any given time period.  “"Pemberton's French Wine Coca" was advertised as a “nerve tonic,” good for alleviating morphine addiction.  When the nation turned to temperance,

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Pemberton reinvented the brand appeal by advocating Coca-Cola as a non-alcoholic enjoyable substitute.  Likewise, the ingredient cocaine was removed in response to the public sentiment.  In 1904, the name Coca-Cola appeared, in essentially the same script format as is used today.  By generally maintaining visual continuity, Coke achieves a connotation of timelessness.

Coke’s meanings all stem from an emphasis on wholesomeness and small town Americana images.  This was best captured during the Great Depression, when Coca-Cola used the slogan “The Pause that Refreshes” paired with a seemingly carefree Everyman heading to work.  This contradiction in marketing and real life worked for Coke, which did not suffer a devastating economic impact as a result of the depressed country.

Coke began its Santa Claus campaign in the 1920s, but it was artist Haddon Sundblom’s now classic 1931 image of a jolly old man in a bright red suit that solidified the connection between Coke and “The Most Wonderful Time of the Year.”  The iconic figure of the generous and loving figure of comfort matched with Coke’s image as a drink for every good American citizen.  Latching onto the cultural and emotional connection of Christians to St. Nick proved critical to Coke’s attempts to forever connect with the rosy yester-year.

This strategy is not replicable in today’s marketing environment.  Socially, the target audience(s) is too polarized for a specific iconic image, particularly an over-commercialized figure associated with a specific religion.  Post Cold-War America is less responsive to over-romanticized images, and given the divisive nature of religious images in the secular marketplace, the response Coke garnered in 1931 would not be the same for a new, less acculturated product.

Coke’s advertising stresses brand engagement, emphasizing consumer loyalty and a positive personal image that is common to “Coke drinkers.”  The advertising capitalizes on the cultural desires for conformity, connection to a greater social idea, and purchase with a common and “more desirable” past; these impulses are satisfied by images and well-crafted slogans or jingles.

Coke’s visual art/image campaign directly taps into a level of communication that transcends language barriers.  Their choices reflect strategic attempts to align with patriotic, socially commendable images, including well-known and powerful entertainment luminaries who may have commanded additional financial support.

When Hollywood influences fashion, language, behavioral or religious trends, it is widely considered the natural order of the beautiful, wealthy elite modeling correct behavior for the lower, coarser classes.  In contrast, marketers are perceived to be embodying the unethical pursuit of money when they more overtly sell the same trends.  In our consumer-driven culture, however, marketers are fulfilling the edicts of capitalism more legitimately than celebrities.

In contrast to Coke, Pepsi cast itself as the youthful drink: fresh, light, and savvier than antiquated Coke.  Slogans targeted a specific young adult market, and advertising featured pop stars and current sports celebrities.  It was a threat to Coke, though it became much more of a threat due to Coke’s reaction.

Coke had built its reputation on core stability, and in response to a legitimate competitor, Coke radically violated the very principles that kept it at the top of the beverage market.  Coke could have reemphasized its history, it’s longevity, it’s fidelity to the taste generations of consumers appreciated and expected; consumers had proven over the years that while other products may gain popularity, Coke would remain a solid choice in the market.

Both Keough and Goizueta assumed that change meant positive progress, and that if Pepsi was succeeding at any level, it was because consumers craved something radical.  The advent of calorie counting led to the boom of diet drinks, and Goizueta had already enacted a shift in corporate philosophy by green-lighting Diet Coke.  In the framework of the Coca-Cola advertising history, these assumptions were directly violating all of the brand building work.  New Coke philosophically undermined what the meaning makers intended.

This case reveals that powerful brand meaning is a double-edged sword:  if a product hinges its campaign on comforting emotional continuance, there will be a logical backlash against change, even in the name of positive progress.  This case demonstrates the role of brand loyalty in the negative light; that is, the consumers’ “passion” (as Keough suggests) can work swiftly against a favored product due to years of brand meaning cultivation.

New Coke failed because it directly conflicted with the brand meaning that executives had worked for decades to confirm in the public consciousness.

Keough is correct, but the statement is misleading to some extent.  Research demonstrated that people didn’t reject the taste of New Coke:  people resented a perceived betrayal by what they were encouraged to believe was the most moral and patriotic of beverage-producing companies.  Coca-Cola’s original, consistent and effective marketing succeeded only too well, effectively destroying the New Coke campaign.

Emotional attachments may not be quantifiable within traditional statistical methodology, but Coke had significant data to support the effectiveness of their nostalgia connection to inform them of the customer’s product loyalty.  The customers were simply behaving in the way Coke had spent nearly a century urging them to.

Bibliography

1. Fournier, Susan. 1999. Introducing New Coke. Harvard Business Review

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