Marketing failure: New Coke

Guest post by Dan Turner, senior lecturer in marketing, associate dean for masters programs and executive education at the UW Foster School of Business

New Coke is—for my money—the most epic new product fail in marketing, more so than the DeLorean, Apple’s Lisa and Newton, Sony’s Betamax, and even the Edsel.

Many people have selective memories about the Coca-Cola Company’s decision to launch the product and the initial consumer reaction. Coke’s market share had been falling for years, and consumers overall expressed a strong preference for Pepsi over Coca-Cola in blind taste tests. The new, improved, sweeter formulation of Coke tested extremely well, with more people preferring the New Coke formula over both “old” Coke and Pepsi.

In a naïve way, it made perfect sense for the Coca-Cola Company to improve their product, making up for a known deficiency versus a focal competitor. In fact, sales analysis trends immediately following the product launch showed significant gains for the Coca-Cola Company. In informal blind taste tests, Seattle retiree Gary Mullins, founder of Old Cola Drinkers of America, failed to distinguish between old and new Coke or expressed a preference for the latter.

Of course, we know the rest of the story. The public revolt ensued shortly thereafter, and it had little to do with the taste of the soda. In launching the new version of Coke, the Coca-Cola Company had a made a fundamental error in forgetting the source of the value it was truly offering consumers.

A soda that tasted good was nice, but Coca-Cola really offered value on the basis of its strong, favorable, and unique brand associations: America, friendship, nostalgia, and the like. In changing the formula, the company walked away from all of these sources of value, and customers reacted strongly, emotionally, and in a predictable fashion.

The silver lining for the Coca-Cola Company rested in the fact that the re-introduced product, Coca-Cola Classic, created a firestorm of marketing communications activity, reminding consumers why Coke was so great in the first place and dramatically communicating the value of the brand.

See 15 Cautionary Tales: Failed Marketing Campaigns for more information.