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, CocaCola'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%.
MIT-SOB PGDM- 31st Batch (Sem-I)
BACKGROUND NOTE Dr. John Pemberton, an Atlanta-based pharmacist, developed Coke's original formula in 1886. It was based on a combination of oils, extracts from coca leaves (cola nut) and various other additives including caffeine. These ingredients were refined to create a refreshing carbonated soda. Pemberton's bookkeeper, Frank Robinson, suggested that the product be named CocaCola. He also developed the lettering for the brand name in a distinctive flowing script. On May 8, 1886, Coke was released in the market. It was first sold by Joe Jacobs Drug Store in the U.S. The first advertisement of Coke appeared in "The Atlanta Journal' dated May 29, 1886. Pemberton took the help of several investors and spent $76.96 on advertising. Initially, he could sell only 50 gallons of syrup at $1 per gallon. To make the drink popular, it was served free for several days - only after this that the drink gained people's acceptance.
After Pemberton's death in 1888, Asa Candler, his friend and a wholesaler druggist, acquired a stake in the company. Coca-Cola's sales soared even without much advertising and as many as 61,000 servings (8 ounces) were Sold in 1889. This made Candler realize that the business was profitable. He decided to wind up his drug business and be associated with Coca-Cola full time. As the business expanded.
Candler also invested a higher sum in advertising the drink. By 1891, Candler bought the company for $2.300. In 1892, he renamed it as Coca-Cola and a year later. Coca-cola was registered as a trademark. Only Candler and his associate Robinson knew the original formula. It was then passed on by word of mouth and became the most closely guarded secret in the American industry. Though occasional rumors spread that cocaine was an ingredient of Coke’s formula, authorities mentioned that this was not true.
By 1895, Coke was made available in all parts of the US, primarily through distributors and fountain owners. Coke was advertised as a drink, which relieved one of mental and physical exhaustion, and cured headache. Later, Candler and Robinson repositioned Coke as a refreshment drink.
MIT-SOB PGDM- 31st Batch (Sem-I)
In the beginning of the 20th century, manufacturing firms in the US were criticized for...
Please join StudyMode to read the full document