The New Coke Marketing Fiasco Draft 3

7/30/2019 The New Coke Marketing Fiasco Draft 3

1/22

Introduction

Battered by competition from the sweeter Pepsi-Cola, Coca-Cola decided in 1985 to replace

its old formula with a sweeter variation, dubbed the New Coke. Coca-Cola spent $4

million on market research.

Blind taste tests showed that Coke drinkers preferred the new, sweet formula, but the launch

of New Coke provoked a national uproar. Market researchers had measured the taste but

had failed to measure the emotional attachment consumers had to Coca-Cola.

There were angry letters, formal protests and even lawsuit threats, to force the retention of

The Real Thing. Ten weeks later, the company withdrew New Coke and reintroduced

its century-old formula as Classical Coke, giving the old formula even stronger status

in the marketplace.


2/22

Coca-Cola: A name synonymous to American

culture

The Coca-Cola Company (NYSE: KO) is an American multinational beverage corporation

and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups.

[2] The company is best known for its flagship product Coca-Cola, invented in 1886 by

pharmacist John Stith Pemberton in Columbus, Georgia.[3] The Coca-Cola formula and

brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in

1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500

brands in over 200 countries or territories and serves over 1.7 billion servings each day.[4]


3/22

New Coke History

Background

Just after World War II, the market share for the Coca-Cola Company's flagship beverage

was 60%. By 1983 it had declined to under 24% because of competition from Pepsi-Cola.

Pepsi had begun to outsell Coke in supermarkets; Coke maintained its edge only through soda

vending machines and fast food restaurants.[1] Market analysts believed baby boomers were

more likely to purchase diet drinks as they aged and remained health- and weight-conscious.

Therefore, any future growth in the full-calorie segment had to come from younger drinkers,

who at that time favored Pepsi and its sweetness by even more overwhelming margins than

the market as a whole.[2] When Roberto Goizueta took over as CEO in 1980, he pointedly

told employees there would be no sacred cows in how the company did its business,

including how it formulated its drinks.[3]


4/22

Market research

Coca-Cola's most senior executives commissioned a secret effort named "Project Kansas"

headed by marketing vice president Sergio Zyman and Brian Dyson, president of Coca-Cola

USA to test and perfect the new flavor for Coke itself. The company's marketing

department went out into the field, armed with samples of the possible new drink for taste

tests, surveys, and focus groups.

The results of the taste tests were strong the sweeter mixture overwhelmingly beat both

regular Coke and Pepsi. Then tasters were asked if they would buy and drink it if it were

Coca-Cola. Most said yes, they would, although it would take some getting used to. A small

minority, about 10-12%, felt angry and alienated at the very thought, saying that they might

stop drinking Coke altogether. Their presence in focus groups tended to skew results in a

more negative direction as they exerted indirect peer pressure on other participants.[5]

The surveys, which were given more significance by standard marketing procedures of the

era, were less negative and were key in convincing management to move forward with a

change in the formula for 1985, to coincide with the drink's centenary. But the focus groups

had provided a clue as to how the change would play out in a public context, a data point that

the company downplayed but which was to prove important later.[6]

Management also considered, but quickly rejected, an idea to simply make and sell the new

flavor as yet another Coke variety. A new variety of Coke in competition with the main

variety could, if successful, dilute Cokes existing sales and increase the proportion of Pepsi

drinkers relative to Coke drinkers.

Early in his career with Coca-Cola, Goizueta had been in charge of the company's Bahamian

subsidiary. In that capacity, he had improved sales by tweaking the drink's flavor slightly, so

he was receptive to the idea that changes to the taste of Coke could lead to increased profits.

He believed it would be "New Coke or no Coke",[7] and the change must take place openly.

[5] He insisted that the containers carry the "NEW!" label, which gave the drink its popular

name.[8]


5/22

Official launch

To hear some tell it, April 23, 1985, was a day that will live in marketinginfamy...spawning consumer angst the likes of which no business has ever seen.

The Coca-Cola Company, on the New Coke announcement[13]

New Coke was introduced on April 23, 1985. Production of the original formulation ended

that same week.

The press conference at New York City's Lincoln Center to introduce the new formula did

not go over very well. Reporters present had already been fed questions by Pepsi,[12] which

was extremely worried that New Coke would erase all its gains. Also, Goizueta's description

of the new taste, given his background as one of the company's flavor chemists, was less than

impressive:

[It's] smoother, uh, uh, rounder yet, uh, yet bolder...[14] a more harmonious flavor.[15]

Goizueta defended the change by pointing out that the drink's secret formula was not

sacrosanct and inviolable. (As far back as 1935, Coca-Cola sought kosher certification from

an Atlanta rabbi, and made two changes to the formula so that the drink could be certified

kosher [and, incidentally, halal and vegetarian] and also kosher for Passover.[16])

But Goizueta also refused to admit that taste tests had in any way led the company to make

the change (which he called "one of the easiest decisions we have ever made"[17]) to avoid

giving Pepsi any credit,[13][18] yet gave no other real reason for the change, further

alienating reporters who had already heard from Pepsi representatives in advance on this very

issue.[12] A reporter asked whether Diet Coke would also be reformulated "assuming this is a

success," Goizueta curtly replied, "No. And I didn't assume that this is a success. This is a

success."[15]


6/22

The emphasis on the sweeter taste of the new flavor also ran contrary to previous Coke

advertising, in which spokesman Bill Cosby had touted its less-sweet taste as a reason to

prefer Coke over Pepsi.[19]

Nevertheless, the company's stock went up on the announcement,[20] and market research

showed 80% of the American public was aware of the change within days.[21]


7/22

Early acceptance

While it is widely believed today that the new drink failed almost instantly, at the time that

was not the case. The company, as it had planned, introduced the new formula with big

marketing pushes in New York [21] and Washington, D.C.. Sales figures from those cities,

and other regions where it had been introduced, showed a reaction that went as the market

research had predicted. In fact, Coke's sales were up 8% over the same period the year before.

[22]

Most Coke drinkers resumed buying the new drink at much the same level as they had the old

one. Surveys indicated, in fact, that a majority liked the new flavoring.[23] Three-quarters of

the respondents said they would buy New Coke again.[22] The big test, however, remained in

the Southeast, where Coke was first bottled and tasted.

Backlash

Despite New Coke's acceptance with a large number of Coca-Cola drinkers, a vocal minority

of them resented the change in formula and were not shy about making that known again

just as had happened in the focus groups. Many of these drinkers were Southerners, some of

whom considered the drink a fundamental part of regional identity.

Company headquarters in Atlanta started receiving letters expressing anger or deep

disappointment. Over 400,000 calls and letters were received by the company,[20] including

one letter, delivered to Goizueta, that was addressed to "Chief Dodo, The Coca-Cola

Company". Another letter asked for his autograph, as the signature of "one of the dumbest

executives in American business history" would likely become valuable in the future. The

company hotline, 1-800-GET-COKE, received 1,500 calls a day compared to 400 before the

change.[13] A psychiatrist Coke hired to listen in on calls told executives some people

sounded as if they were discussing the death of a family member.[25]

They were, nonetheless, joined by some voices from outside the region. Chicago Tribune

columnist Bob Greene wrote some widely reprinted pieces ridiculing the new flavor anddamning Coke's executives for having changed it. Talk show hosts and comedians mocked of


8/22

the switch. Ads for New Coke were booed heavily when they appeared on the scoreboard at

the Houston Astrodome.[21]

Pepsi took advantage of the situation, running ads in which a first-time Pepsi drinker

exclaimed "Now I know why Coke did it!"[28] However, Pepsi actually gained very few

converts over Coke's switch, despite claiming a 14% sales increase over the same month the

previous year, the largest sales growth in the company's history.[22] The most alienated

customers simply refused to buy New Coke rather than switch to Pepsi,[29] or purchased

large amounts of remaining old Coke, including one Texan who spent $1,000 on his hoard of

the old formula.[13] Coca-Cola's director of corporate communications, Carlton Curtis,

realized over time that they were more upset about the withdrawal of the old formula than the

taste of the new one.[30]

Company dissatisfaction

Some Coca-Cola executives had quietly been arguing for a reintroduction of the old formula

as early as May.[35] By June, when soft drink sales usually start to rise, the numbers showed

the new formula was leveling among consumers. Executives feared social peer pressure was

now affecting their bottom line. Some consumers began trying to obtain "old" Coke from

overseas, where the new formula had not yet been introduced, as domestic stocks of the old

drink were finally exhausted.[36] Over the course of the month, Coca-Cola's chemists also

quietly reduced the acidity level of the new drink, hoping to assuage complaints about the

flavor and allow its sweetness to be better perceived (ads pointing to this change were

prepared, but never used).[37]

Finally the board of Coca-Cola changed their mind and decided to bring back the old Coke.

The president Donald Keough revealed years later in the documentary "The people vs Coke"

from 2002 that they realized that this was the only right thing to do when they visited a small

restaurant in Monaco and the owner of the restaurant proudly said that they had "the real

thing, it's a real coke" offering them a bottle of old coke.[40]

[edit]


9/22

Reversal

Coca-Cola executives announced the return of the original formula on July 10, less than three

months after New Coke's introduction. ABC News' Peter Jennings interrupted General

Hospital to share the news with viewers. On the floor of the U.S. Senate, David Pryor called

the reintroduction "a meaningful moment in U.S. history".[37] The company hotline received

31,600 calls in the two days after the announcement.[13]

The new product continued to be sold and retained the name Coca-Cola (until 1992, when it

was officially renamed Coca-Cola II), so the old product was named Coca-Cola Classic, also

called Coke Classic, later just Coke and for a short period of time it was referred to by the

public as Old Coke. Many who tasted the reintroduced formula were not convinced that the

first batches really were the same formula that had supposedly been retired that spring. This

is partially true because Coca-Cola Classic differed from the original formula, as all bottlers

who hadn't already done so were using high fructose corn syrup instead of cane sugar to

sweeten the drink.[41]

Theories behind the failure

The New Coke Disaster, so rightly proclaimed, cannot be attributable to one individual. In

most cases, when there is a disaster, natural or man-made, affecting a large-size population,

no sole individual, organization or government can be held accountable. We can only focus

on preparation for, and the prevention of disasters that are yet to come. Similar is true, in the

case of the New Coke product launch. Evidence would suggest that a mixture of factors

brought about such product failure, including but not limited to: a lack of a product

development process, competitive pressures, and perhaps poor judgment.


10/22

Underestimating the original brand

Undervaluing the response from the minority of focus

group

Misjudging public sentiment

Contradictory marketing message

completely misguided. As with many big brands, the representation was more significant than

the thing represented, and if any soft drink represented new it was Pepsi, not Coca-Cola

(even though Pepsi is a mere decade younger).

If you tell the world you have the real thing you cannot then come up with a new real

thing. To borrow the comparison of marketing guru Al Ries its like introducing a New

God. This contradictory marketing message was accentuated by the fact that, since 1982,

Cokes strap line had been Coke is it. Now it was telling consumers that they had got it

wrong, as if they had discovered Coke wasnt it, but rather New Coke was instead.

So despite the tremendous amount of hype which surrounded the launch of New Coke (one

estimate puts the value of New Cokes free publicity at over US $10 million), it was destined

to fail. Although Coca-Colas market researchers knew enough about branding to understand

that consumers would go with their brand preference if the taste tests werent blind, they

failed to make the connection that these brand preferences would still exist once the product

was launched.

Taste-test issues

The keys to having a greater understanding

Sensation transference

Most people make unconscious assessments of a product, service, or event not only based on

the item itself, but on secondary sensory input associated with the item, which all contribute


11/22

to one general impression - whether intended or not, accurate or not. Cheskin called this

"sensation transference".

Cheskins innovative insight was that impressions created in customers minds, based on

experiencing products sensorially, transferred directly to concepts of value, price, quality, and

emotion. These, in turn, created and fulfilled expectations of satisfaction. Cheskins research

didnt always explain why these associations existed, but he confirmed that they did play an

important role in both customer choice and satisfaction.

Cheskins work was not just focused on appearance. Often his research led to understanding

that added value and changed the product or service offering in valuable ways. For example,

initially McDonalds operated burger-stands designed for walk-up service. Cheskins

research showed that these configurations were uncomfortable for families, particularly

women alone with their children, accounting for low sales to these customers. Cheskin was

able to show that tables, chairs, and a semblance of walls helped these customers feel safe

and comfortable visiting and eating on-site. Later, this understanding led to the

transformation of the burger-stands into restaurants. Research on color use and imagery, too,

led to the introduction of Ronald McDonald. It was these kinds of insights that Cheskins

research gave his clients that helped shape companies' strategies.

Some results of Cheskin and his teams research include:[citation needed]

The adoption of the spoon on Betty Crocker packages (leading to a doubling of sales)

The consumer flop of the Edsel automobile was predicted in a legendary article Cheskin

wrote before its introduction (triggering Henry Ford to hire him shortly afterward)

Uncovering the preference of American consumers for circles over triangles on packaging

Developing the first successful mainstream margarine (Imperial for Unilever)

The basic market research underlying the introduction of the Ford Mustang and the Lincoln

Continental

The development of the Marlboro Man and Marlboro packaging from what was previously a

womens cigarette

The creation of the Gerber Baby

Rounding the corners of the Fleishmann's Gin label to appeal more to women (who made up

nearly 40% of liquor store shoppers)


12/22

The transformation in the mid-1950s of the Duncan Hines cake mix package toward a more

'colonial' style to reflect American consumers' desire for both newness and tradition

Cheskins approach and successes won respect from corporate leaders at McDonald's, Ford,

Polaroid, General Mills, and many others. Henry Ford, Walt Disney, and Ray Kroc

personally engaged Cheskin on the basis of his innovative approach.

One famous Cheskin study involved the testing of identical deodorants in different packages.

Samples were mailed to users and told that the formulations were different. However, the

only difference between them was their packaging (three different colour schemes). As one

might expect from Cheskin's work, the trials showed that customers preferred one over the

others. In fact, some perceived one of the samples as so threatening that they reported rashes

and trips to dermatologists, yet had no trouble with the same formula in a different package.

It could be concluded that consumers are not aware of their reactions, that they are irrational,

or that this approach was 'preying' on consumers. However, there is more to this

understanding of how people behave. That people have admittedly strange reactions to

elements separate from product effectiveness is amoral; i.e., not right nor wrong.[citation

needed] It is not appropriate for companies or any other organization to cast judgement on

how consumers' brains work or how society affects consumers' perceptions and experiences;

instead, this is another mechanism that companies and developers of products take into

account in making decisions on how to meet their customers needs. Whether an organization

uses these understandings ethically or not is another question entirely. There is a fine line

between clear, motivating communication and propaganda.

Brand loyalty"Marketing battles take place in the mind of a consumer or prospect. That's where you win.

That's where you lose. Jack Trout, Big Brands, Big Trouble

The American Marketing Association defines brand loyalty as:

The situation in which a consumer generally buys the same manufacturer-originated product

or service repeatedly over time rather than buying from multiple suppliers within the category

(sales promotion definition).


13/22

The degree to which a consumer consistently purchases the same brand within a product class

(consumer behavior definition).[1]

In a survey of nearly 200 senior marketing managers, 69 percent responded that they found

the "loyalty" metric very useful.[2]

If Your Brain Has a 'Buy Button,' What Pushes It?

By SANDRA BLAKESLEE

New York Times

19 October 2004

Knowing what brand you are buying can influence your preferences by commandeering brain

circuits involved with memory, decision making and self-image, researchers have found.

When researchers monitored brain scans of 67 people who were given a blind taste test of

Coca-Cola and Pepsi, each soft drink lit up the brain's reward system, and the participants

were evenly split as to which drink they preferred. But when the same people were told what

they were drinking, activity in a different set of brain regions linked to brand loyalty overrode

their original preferences. Three out of four said that they preferred Coca-Cola.

The study, published in the Oct. 14 issue of the journal Neuron, is the first to explore how

cultural messages penetrate the human brain and shape personal preferences.

Circulating in draft form over the last year, the study has been widely discussed by

neuroscientists and advertisers, as well as people who worry about the power of commercials

in determining consumer behavior.

At issue is whether marketers can exploit advances in brain science to make more effective

commercials. Is there a "buy button" in the brain?

What drives brand loyalty? The psychology behind human behavior as it pertains to brand

selection can be both rudimentary and complicated at the same time. We will explore this

conundrum by investigating noted authors' insight into the realm of brand preference. By

unveiling current research and opinions of experts, a convergence of ideologies will advocate

techniques in order to deepen current and potential relationships. Methods will be introduced


14/22

which evoke the use of our five senses to evaluate, develop, and drive a deeply-rooted brand

preference. Let's begin by understanding how we interact with our surroundings.

Communications Model

To better understand the process of preference, let's first look at a basic communications

model. The five components of this model are sender, medium, filter, receiver, and feedback.

On a daily basis, we are exposed to messages (sender/medium) via our radio, television,

billboards, Internet, mail, and word-of-mouth. Although these messages are pervasive, we

continually screen out (perceptual screen) or ignore content that has little or no relevance to

us. All messages are coded patterns and sensations colors, sounds, odors, shapes, etc. Those

messages deemed recognizable, or a basis for a relationship, are decoded and stored in our

memory (filter/screen). A successful convergence between sender and receiver will result in

some type of response to a brand's compelling message (feedback).

Stored experiences in our long-term memory are connected through a series of nodes and

networks. An example could be all the associations you might have with the word Starbucks

including coffee, rich aroma, relaxing, sofa, earth tones, etc. As presented by Shultz and

Barnes, "This node and connection process, called spreading activation, makes every person

different (Strategic Brand Communications Campaigns, 1999). Since we all have different

experiences, connections, and relationships, this supports a theory that the consumer, not the

organization, owns the brand.

Brand Loyalty Defined

You learn that creating customer loyalty is neither strategic nor tactic; rather, it is the

ultimate objective and meaning of brand equity. Brand loyalty is brand equity. Daryl Travis,

Emotional Branding

So, what constitutes brand loyalty? According to Bloemer and Kasper, brand loyalty implies

that consumers bind themselves to products or services as a result of a deep-seated

commitment. To exemplify this point, they rendered a distinction between repeat purchases


15/22

and actual brand loyalty. In their published research, they assert that a repeat purchase

behavior "is the actual re-buying of a brand whereas loyalty includes "antecedents or a

reason/fact occurring before the behavior.

Bloemer and Kasper further delineate brand loyalty into "spurious and "true loyalty.

Spurious loyalty exhibits the following attributes:

Biased

Behavioral response

Expressed over time

By some decision-making unit, with respect to one or more alternate brands

A function of inertia

True brand loyalty includes the above, but replaces inertia with a psychological process

resulting in brand commitment (Ref: Journal of Economic Psychology, Volume 16, Issue 2,

July 1995). Next, let's turn to how this psychology plays out in the branding process.

Brand Positioning

"A strong brand position means the brand has a unique, credible, sustainable, and valued

place in the customer's mind. It revolves around a benefit that helps your product or service

stand apart from the competition. Scott Davis, Brand Asset Management

Organizations seek to develop and project brand perceptions based on internally driven

needs and goals. In Jack Trout's book "Differentiate or Die, he presents evidence that

supports his theories on consumer behavior and interpretation. Although these concepts seem

self-evident on the surface, organizations tend to ignore these immutable laws in their daily

branding activities.

Minds Can't Cope

Due to the shear volume of messages we encounter on a daily basis, the human mind can't

begin to cope with interpreting them all. Trout notes some statistics:

Humans tolerate constant daily electronic bombardment

Printed knowledge doubles every four to five years

4,000 books are published around the world every day

The world wide web grows by 1,000,000 pages each day!


16/22

You've watched 140,000 TV commercial by the age 18

Minds Are Limited

Perceptions are selective

Memory is highly selective

There is a physiological limitation to processing stimuli

A dramatic difference is needed in crowded category

How much of your message gets through the clutter depends

Minds Are Insecure

Minds are both emotional and rational

Purchasing decisions are really not known

Recallmind's remember things that no longer exist

What conclusions can we draw from these theories? During a recent speaking engagement, I

asked the audience if they knew the current tag line for United Airlines. They resoundingly

responded with "Fly the Friendly Skies! When I pointed out that United changed its tag in

1997 to "Rising and again in 2004 to "Its Time to Fly, they were astonished. Despite the

millions of dollars United spent on this ad campaign ("minds can't cope and "limited), the

audience only recalled something that didn't exist ("minds are insecure). When drafting your

brand positioning strategy, you may want to consider your previous message layering

activities and determine if your new value proposition enhances or conflicts in the minds of

your intended audience. Now let's turn to a technique to analyze brand perceptions.

Brand Molecule

"The functional, emotional, and social dimensions of the jobs that customers need to get done

constitute the circumstances in which they buy. Dr. Clayton Christensen, The Innovator's

Solution

A brand molecule, according to Hill and Lederer, is the process of identifying all

associations connected to your brand. In addition to understanding the type of connections,

you need to evaluate the importance of each association and how much weight it carries

independently.


17/22

By unfolding a brand molecule, the organization is able to view all possible connections,

either positive or negative, in its current state. By virtue of this analysis, you can achieve

greater clarity and insight into your positioning or re-branding process.

The McDonalds brand molecule, as portrayed in this pictorial, illuminates the basic

constructs of this process. Key elements of this model include: linking all brand associations

(emanating from the center), the importance of each (size), and how they relate to each other.

Once accomplished, you can begin the process of removing those associations that no longer

"fit and adding new identifiers in their place. This process provides the manager with an

opportunity to view the entire brand and affect change in a strategic manner.

A real-world example of this process was the recent transformation of Cadillac. In the late

80s and early 90s, sales for this brand were declining due to European and Japanese

penetration into the luxury car market. To reverse this erosion, the Cadillac group invested in

the brand molecule analysis to reinvent both the design and market preference. This brand

was meticulously assessed, disassembled, reassembled, and re-positioned in the late 1990s

from something grandpa drove into a fast, sexy, and desirable product. Today, you know

when a Caddy commercial is playing when you hear Led Zeppelin's "been a long time"

blaring through the speakers.

Sensory Approach

"Almost our entire understanding of the world is experienced through our senses. Martin

Lindstrom, Brand Sense

The most innovative brand research I've encountered recently was derived from Lindstrom

and his "Brand Sense concept. A precursor to his theory lies in three components, and when

combined, builds both loyalty and what he terms "smash ability. The constructs of his theory

reside in the following:

Sensory branding stimulates your relationship with the brand


18/22

Allows emotional response to dominate our rationale thinking

Offers different dimensions of a single brand

Ultimate goal: Strong, positive, loyal bond between brand and consumer so the consumer will

turn to brand repeatedly

Goal: Emotional engagement, match between perception/reality

The essence of Lindstrom's work lies in what he terms the "Six Sensory Steps. These

include (1) sensory audit, (2) brand staging, (3) brand drama, (4) brand signature, (5)

implementation, and (6) evaluation. Through this discovery method, an organization can

unveil aspects of its current offering or new avenues to exploit. This process, according to the

author, will enhance brand loyalty and deepen existing relationships.

Since this article can't possibly delve into all six steps, a cursory view of a few elements of

this process is provided next. Lindstrom's approach to brand loyalty stems from the use of our

five senses. In order to understand any brand, a sensory audit must be conducted to assess the

brand's leveraging of sensory touch points. This involves examining a brand's stimuli,

enhancement, and bonding capabilities. Lindstrom's point is simply the more sensory

components, the stronger the foundation of your brand.

Another area discussed is the synergy across sensory touch points. Lindstrom suggests we

use many senses when evaluating our surroundings, including brands. Returning to the

Starbucks example, one could view an encounter with this retailer in this manner:

Visual Unique logo on building, cups, and bags

Visual/Auditory Uniform and customer approach

Visual/Auditory/Touch Interior aesthetics (sofa, colors, wall paper, music)

Smell/Taste Distinct aroma of freshly ground coffee

When analyzing your brand, how strong are the links between each of your sensory touch

points? How interdependent are they? In the beginning of this article we mentioned

Lindstrom's term "smashability. This simply means how independent each sensory aspect is

and what is its ability to stand on its own? If you removed the Starbucks logo from the

building, would you still know the brand?

Conclusion


19/22

In order to understand the psychology of brand preference, we undertook this journey by

examining a basic communications model and the process of receiving/filtering messages.

Next we reviewed research that suggested a distinction between spurious and true brand

loyalty. Several truisms concerning how a brand is positioned in the marketplace revealed the

challenges with marketing to the human mind. Finally, we surveyed research that submits the

essence of brands is connected through our five senses. The culmination of this information

may help any organization facing brand loyalty issues with their constituents and provide

resources to uncover core issues.

Consumer impression vs. consumer expression

A lot of us remember when the role of the CMO was much simpler. Information flowed in

one direction: from companies to consumers. When we drew up our plans and budgets, the

key metric was consumer impressions: how many people would see, hear or read our ad?

Today the only place that approach still works is on Mad Men. Now information flows in

many directions, consumer touch points have multiplied, and the old, one-size-fits-all

approach has given way to precision marketing and one-to-one communications. Perhaps the

most consequential change is how consumers have become empowered to create their own

content about our brands and share it throughout their networks and beyond. It has changed

my role as the chief marketing and commercial officer at Coca-Cola, and the company's

approach to consumer engagement as we work to double our business by 2020.

In the near term, "consumer impressions" will remain the backbone of our measurement

because it is the metric universally used to compare audiences across nearly all types of

media. But impressions only tell advertisers the raw size of the audience. By definition,

impressions are passive. They give us no real sense of engagement, and consumer

engagement with our brands is ultimately what we're striving to achieve. Awareness is fine,

but advocacy will take your business to the next level. (I used to think that loyalty was the

highest rung on the consumer pyramid until I became the CMO of Allstate Insurance. There,

I saw clearly that so much business was driven through personal referrals and advocacy by

individuals for their agent.)


20/22

So, in addition to "consumer impressions," we are increasingly tracking "consumer

expressions." To us, an expression is any level of engagement with our brand content by a

consumer or constituent. It could be a comment, a "like," uploading a photo or video or

passing content onto their networks. We're measuring those expressions and applying what

we learn to global brand activations and those created at the local level by our 2,700

marketers around the world. For example, in our 24-Hour Live Session with Maroon 5, we

captured impressions (the number of online views) but gained tremendous insights from

expressions by our consumers their comments, input on the song that was being created

and what they shared with their networks.

So what are the keys to winning in this new era of empowered, engaged and networked

consumers? Here are some of the top "expression" lessons we've learned so far:

Accept that consumers can generate more messages than you ever could. Don't fight this

wave of expression. Feed it with content that touches consumers' passion points like sports,

music and popular culture. We estimate on YouTube there are about 146 million views of

content related to Coca-Cola. However, only 26 million views were of content that we

created. The other 120 million views were of content created by others. We can't match the

volume of our consumers' creative output, but we can spark it with the right type of content.

Develop content that is "Liquid and Linked." Liquid content is creative work that is so

compelling, authentic and culturally relevant that it can flow through any medium. Liquid

content includes emotionally compelling stories that quickly become pervasive. Similarly,

"linked" content is content that is linked to our brand strategies and our business objectives.

No matter where consumers encounter it, linked content supports our overall strategy. When

content is both "Liquid and Linked," it generates consumer expressions and has the potential

to scale quickly. An example of "Liquid and Linked" was our FIFA 2010 World Cup

program, which was the largest-ever Coca-Cola activation in history. More than 160

countries used a common World Cup Visual Identity System, a pool of television

commercials, and a common a digital platform. All were linked by the common thread of

celebration.

Accept that you don't own your brands; your consumers do. Coca-Cola first learned this

lesson in 1985 with the introduction of New Coke, but it's become even more important with


21/22

the growth of social media. As I write this, Coca-Cola's Facebook page has more than 25

million likes (fans). Our fanpage wasn't started by an employee at our headquarters in

Atlanta. Instead, it was launched by two consumers in Los Angeles as an authentic expression

of how they felt about Coca-Cola. A decade ago, a company like ours would have sent a

"cease and desist" letter from our lawyer. Instead, we've partnered with them to create new

content, and our Facebook page is growing by about 100,000 fans every week.

Build a process that shares successes and failures quickly throughout your company.

Increasing consumer expressions requires many experiments, and some will fail. Build a

pipeline so you can quickly replicate your successes in other markets and share the lessons

from any failures. For example, our "Happiness Machine" video was a hit on YouTube so we

turned it into a TV commercial, and we've replicated that low-cost, viral concept in other

markets.

Be a facilitator who manages communities, not a director who tries to control them. In 2009,

we launched Expedition 206. Consumers voted for the three people they wanted to see travel

the world as Coca-Cola Ambassadors, visiting most of the 206 countries where Coca Cola is

sold and driving an online conversation about what makes people happy around the world.

On every step of their 273,000 mile journey, the ambassadors blogged and created all the

content. Our role was to facilitate their journey, which was no small task. We had to give up

control of the content, so our ambassadors could share their own experiences. In an era of

consumer expressions, seek to facilitate and participate with communities, not control them.

Speak up to set the record straight, but give your fans a chance to do so first. Of course, not

every consumer expression will be positive. You have to be part of the conversation so you

can set the record straight when you need to. Even better, we've found that our fans make

online communities self-policing. When our Facebook site was targeted by an activist group

whose members posted negative messages, our fans responded with messages of support for

our company, and our fans challenged the use of the community for activist purposes.

Marketing has changed dramatically since Doc Pemberton poured the world's first glass of

Coca-Cola in 1886. On May 8th, 2011, Coca-Cola and our fans around the world will

celebrate our 125th anniversary. While I'll be curious how many impressions our activities

generate, I will look most closely to the expressions of our consumers as a better measure of

our success in keeping the world's most valuable brand relevant for the next 125 years.


22/22

Coca-Colas surprising turnaround

Conspiracy theories

Coca-Cola's sudden reversal on New Coke led to several urban legends and conspiracy

theories that have circulated in the years since to explain how a company with the resources

and experience of Coca-Cola could have made such an apparently colossal blunder.

The simplest was that the company had planned all along to reintroduce the old formula as a

ploy to reinvigorate interest in the product. There have been apocryphal tales of employees

seeing batches of the old formula continuing to be produced well after April, and others who

say that long before July they saw the graphics for the Coke Classic containers (which Coke

said at the time were hastily conceived and produced within a day, which raised someeyebrows as large corporations rarely do such momentous things with that much haste). The

company denies the accusation to this day.

Final thought

Conclusion

11. References

Documents

The New Coke Marketing Fiasco Draft 3