It was 1975, Coke was the 800lb gorilla in the soft drinks market holding the #1 position for decades. In came the new kid on the block, 80lb gorilla Pepsi. Hungry and willing to mix things up, small gorilla launched a bold revolutionary strategy – the Pepsi Challenge: a blind taste test between Coke and Pepsi.
Pepsi won, every time, by a significant margin.
Coke was unsettled, their market share had been slowly slipping for 15 consecutive years. They conducted their own blind taste test. The majority of 200,000 consumers that partook consistently chose Pepsi. Horrified with the results, Coke panicked.
NB. To make things worse for Coke, Pepsi launched their infamous ‘new generation’ ad with Michael Jackson in 1984 (remember those days?!).
‘New Coke’ was launched in 1985. The response was visceral. People were angry. 400,000 people wrote letters demanding that they change Coke back to the old recipe. Coca-Cola was getting 1,500 calls a day on its consumer hotline, compared with 400 a day before the taste change.
Behold the game changer.
As this was happening, Coke discovered that when the taste test was no longer blind and the labels were visible, Coke would win almost every time.
So how do you back yourself out of a huge marketing blunder?
Offer a choice.
This announcement was made in July 1985: “We’re bringing it back, the original taste of Coca-Cola returns as Coca-Cola Classic and soon America will have a real choice: the new taste of Coke or the original taste of Coca-Cola Classic.”
You already know which one won – the one you see on shelves today.
This is why Coca-Cola you buy today will either be labelled as ‘Coca-Cola Classic’ or have ‘Original Recipe’ on it.
The 80lb gorilla successfully intimidated and made Coke panic. They created a whole new product off the back of the competition with Pepsi.
How 800lb gorilla ‘Coke’ claimed back its authority_
- Launched a new product ‘New Coke’ (based on results of market research)
- Listened to feedback (and backlash) from existing loyal customers
- Made a comeback with their previous product
- Gave their customers a choice to pick the one they wanted (vs. Pepsi too)
- Listened again and kept the original product (which now seemed even better)
- Rebranded the original product to add more credibility – ‘Original recipe’, ‘Classic’
- Won the hearts of their customers once again (‘They listened, Classic Coke is back!’)
Branding is important. When you see the logos on the taste test, your brain reacts. Pepsi were able to take advantage of this in their blind test.
Coke teaches us that brand loyalty is irreplaceable, but neither is listening to market research that truly represents your target audience.
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