New Coke

Powerful Essays
Topics: Pepsi, Cola
Table of Contents

Topics Page No.

1. Introduction 1
2. The Reformulation 2
3. How had the Coca-Cola management got it so wrong? 3

4. Were there less drastic alternatives? 5

5. Understanding your Loyal Customer 6

6. Conclusion 7

Reference 8

1. Introduction

Coke was invented by Dr. John Pemberton, an Atlanta pharmacist and his three-legged brass pot all the way back in 1886; by 1985 Coke was closing in fast on its centennial anniversary. (Cook, 2002) Coke along with the legendary chairman Roberto C. Goizueta had witnessed a remarkable set of accomplishments during the 1980's. There were some creeping problems, however. The 87-year old rivalry between Coca-Cola, the traditional market leader, and Pepsi Cola, the perennial runner up, took an unexpected turn in the mid-1970s. Pepsi's consumer research had discovered in blind taste tests that a majority of consumers preferred the taste of Pepsi over that of Coke. In fact, even a majority of loyal Coke drinkers were reported preferring Pepsi in the tests. Pepsi began communicating these findings to consumers through "Pepsi Challenge" television ads, during those days, showing taste tests where Coca-Cola drinkers expressed preferences for a cola which was then revealed to be Pepsi. (Schindler, 1992)

By 1977, Pepsi had actually pulled ahead of Coke in food store market share. (Schindler, 1992) Coke's lead had dropped from a better than two to one margin to a mere 4.9 percent lead by 1984. (Bastedo & Davis, 1993) Coke was clearly in danger of becoming the Number-Two soft drink. In April 1985, the management of Coca-Cola Co. announced its decision to change the flavour of the company's flagship brand. The events that followed from this decision, as well as the factors which led up to it, have been reviewed, discussed, and extensively analyzed in this report.

2. The Reformulation

The Pepsi Challenge campaign had contributed to Coca-Cola's

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