The Real Lesson of New Coke

Powerful Essays
The Real Lesson of New Coke:
The Value of Focus Groups for Predicting the Effects of Social Influence
By Robert M. Schindler n April 1985, the management of Coca-Cola Co. announced its decision to change the flavor of the cotnpany 's flagship brand. The events that followed from this decision, as well as the faetors which led up to it, have been reviewed, discussed, and extensively analyzed in the popular press, the trade press, and in marketing textbooks. Two books and at least two marketing cases have been written on the events surrounding the flavor change decision. Also, a well-known, but somewhat older Harvard Business School marketing case deals with some of the key events which led up to the decision. Despite the extent of this attention, more can be learned from this dramatic pieee of marketing history. Pepsi began communicating these findings to consumers through "Pepsi Challenge" television ads .showing taste tests where Coca-Cola drinkers expressed preferences for a cola which was then revealed to be Pepsi, This campaign contributed to Coca-Cola 's slow, but steady decline of market share in the soft-drink category. This erosion was most apparent in foodstore sales, which reflect consumer preferences more directly than do vendingtiiachine or fountain sales. By 1977, Pepsi had actually pulled ahead of Coke in foodstore market share. Although publicly expressing a lack of concern about the Pepsi Challenge advertising, Coca-Cola 's managetnent privately was quite worried because blind taste tests by the company 's own market research department had confirmed Pepsi 's claims. Secretly, Coke 's management began researching the possibility of reformulating Coca-Cola to respond to the apparent changes that had occurred in consumer tastes. By 1984, researchers had arrived at a new formula for Coke whieh, in blind taste tests, beat Pepsi by as much as six to eight percentage points. In addition to beating Pepsi, cola drinkers chose this new formula over the



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