Welcome to the Marketing Rescue Podcast, the weekly show where we unpack epic marketing failures to brand rescues and comebacks. In this episode, Nico Coetzee and Chad Childress, co-founders of KPI Agency, are discussing “the worst marketing disaster in history” – New Coke. Did you know Coca-Cola is 131 years old? Today, consumers enjoy 19,400 Coke products every second. Coke made a series of excellent decisions after one terrible one. Even the biggest and best companies in the world can get it wrong from time to time.
In 1975, Pepsi launched the Pepsi Challenge. Through the campaign, it showed that people preferred Pepsi over Coca-Cola. Pepsi started to gain market share, and Coke started to slip. In desperate times, the company decided to ditch its original recipe and release New Coke. The market research team conducted a massive project and found that subjects liked New Coke over the original recipe and Pepsi. However, the taste tests were done with just a few ounces of soda, rather than a standard serving size. Plus, the company did not take into account the personal connection people have with their brand.
April 23, 1985, New Coke launches. It’s a day that will live in marketing infamy. Their confidence was super high, despite departing from what made them the most iconic brand in the beverage industry. Their stock went up, and 80% of the American public was aware of the change within a couple of days. Over the next 79 days, Coke received over 40,000 calls, letters, and loads of complaints from their bottlers. Seventy-nine days later, Coke realized the only right thing to do was bring Coca-Cola back.
What was Pepsi doing this whole time? They ran several campaigns mocking Coke. Pepsi benefited in the short-term; they saw a 14% sales jump. However, in the long-run, the Coca-Cola market share outgrew Pepsi. Pepsi won the battle but lost the war. Even though Coke didn’t realize it at the time, they are a lifestyle brand. At the end of the day, emotions beat logic. The only way to defeat another lifestyle is to provide a more attractive lifestyle by helping people build a personal identity. The market research went wrong because they never took into account the emotional connection people had with the brand. Overall, Coke learned to fail forward. Stay tuned as Nico and Chad talk about bringing New Coke back.
Enjoy the show!
We speak about:
- [02:50] The history behind New Coke
- [10:10] The launch of New Coke
- [15:30] Bottlers are complaining
- [18:00] Bringing the original Coca-Cola back
- [19:30] What was Pepsi doing?
- [24:15] Customer engagement
- [26:20] Coke’s marketing rescue
- [28:00] Bringing New Coke back