Case Analysis: Introducing New Coke
The Coca-Cola Company is perhaps one of the world’s oldest, most identifiable brands. Its deeply rooted heritage is closely associated with American culture (i.e., WWII, Baseball, Hollywood) and is usually within arms reach of a thirsty drinker. In the late 1970’s the company experienced a period of turmoil with animosity brewing amongst old executives focusing less on the brand and more on legal issues. Like the Barco executives, Coke’s management team fell asleep at the wheel, leaving the #2 competitor, Pepsi, open to make inroads on capturing market share. Pepsi adopted a fresh strategy of focusing less on the product and more on the user by unveiling their “New Generation” campaign along with disparaging remarks aimed at Coke in their “Pepsi Challenge” taste test. Drawn into the success of their competitor, Coke’s was forced to play defense and conducted their own research. Under pressure to perform, Coke’s research process held limitations that compromised the validity and reliability. Their major research flaw was not asking the right question and the context surrounding how the question was asked. “New Coke failed, not because people lied about how much they liked it, but because Coke’s marketing research did not place people in context of having only the New Coke, with the original Coke pulled from the market.” (Winer & Dhar p15) Market Research Details
Generalizability: Issue with New Coke Survey Results?
Overwhelming support for the new formulation
Reliability: Issues with Study Design?
Coke pursued execution of taste test on an identified versus blind basis ➢
taste is affected by other “cues” ; Management didn’t account for sensory / olfactory stimuli ➢
how they asked the question? ; research was indirect in asking the question (never really asked, “would you like this in place of your original Coke?)
Validity: Was the right hypothesis used / question asked?
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