In the mid-1980s, the Coca-Cola Company made a decision to introduce a new beverage product (Hartley, 1995, pp. 129–145).
The company had evidence that taste was the single most important cause of co*ke’s decline in the market share in the late 1970s and early 1980s.
A new product dubbed “New co*ke” was developed that was sweeter than the original-formula co*ke.
Almost 200,000 blind product taste tests were conducted in the United States, and more than one-half of the participants favored New co*ke over both the original formula and Pepsi.
The new product was introduced and the original formula was withdrawn from the market. This turned out to be a big mistake! Eventually, the company reintroduced the original formula as co*ke Classic and tried to market the two products simultaneously.
Ultimately, New co*ke was withdrawn from the market.
What went wrong with co*ke's market research?
Two things stand out.
First, there was a flaw in the market research taste tests that were conducted: They assumed that taste was the deciding factor in consumer purchase behavior.
Consumers were not told that only one product would be marketed. Thus, they were not asked whether they would give up the original formula for New co*ke.
Second, no one realized the symbolic value and emotional involvement people had with the original co*ke.
The bottom line on this is that relevant variables that would affect the problem solution were not included in the research.
Check one of these old school co*ke commercials.
So what's the lesson?
Market research matters.
When done correctly you gain decision making power. If done incorrectly, it could end up costing your company millions.
FAQs
Almost 200,000 blind product taste tests were conducted in the United States, and more than one-half of the participants favored New co*ke over both the original formula and Pepsi. The new product was introduced and the original formula was withdrawn from the market. This turned out to be a big mistake!
How does Coca-Cola use market research? ›
Going against linear methods of collecting consumer data, Coca-Cola optimized their product and sales processes. The dispensing machines have become real-time sources of market research, allowing them to identify opportunity and weakness before taking to the shelves.
What marketing mistake did Coca-Cola make in the 1980's what happened as a result? ›
Final answer: The failure of New co*ke in the 1980s was primarily due to a change in its original formula and subsequent consumer backlash. Despite the company conducting extensive research before its launch, Coca-Cola customers did not favor the new taste, leading to its failure.
What are the strategic problems faced by co*ke? ›
The problems faced by Coca-Cola Company are high sugar harmful to health, increase in competitors, plastic bottle waste and water scarcity. These issues will lead to many negative impacts to social and natural environment.
What is market research with an example? ›
Many companies use market research to test new products or get information from consumers about what kinds of products or services they need and don't currently have. For example, a company that's considering starting a business might conduct market research to test the viability of its product or service.
What was the problem with Coca-Cola market research? ›
First, there was a flaw in the market research taste tests that were conducted: They assumed that taste was the deciding factor in consumer purchase behavior. Consumers were not told that only one product would be marketed. Thus, they were not asked whether they would give up the original formula for New co*ke.
What kind of marketing strategy is used by Coca-Cola? ›
The Coca Cola marketing strategy is built around product strategy. It includes various drinks designed to satisfy tastes that change over time. The Coca-Cola brand provides a wide variety of goods in addition to its famous soft drink.
What are the biggest challenges facing co*ke today? ›
The main trends facing Cola manufacturers are still dominated by health, packaging and environment, specifically reducing sugar content, plastic usage and waste and cutting CO2 emissions along with making further strides towards a circular economy.
What is the biggest challenge of Coca-Cola? ›
One such crisis involved allegations of product contamination, which sent shockwaves through the company and its consumers. Rumors started circulating that certain batches of Coca-Cola products were contaminated, raising concerns about the safety and quality of the beloved beverage.
What is the major problem in the Coca-Cola company? ›
Packaging. Packaging used in Coca-Cola's products has a significant environmental impact. The company is the single largest plastic polluter in the world, producing over 3 million tonnes of plastic packaging each year.
Example #1: National bank's A/B testing
You can learn what customers want by conducting experiments on real-life customer decisions using A/B testing. When you ensure your tests do not have any validity threats, the information you garner can offer very reliable insights into customer behavior.
How do you write a market research sample? ›
Here are the essential steps you need to take when doing market research:
- Define your buyer persona.
- Identify a persona group to engage.
- Prepare research questions for your market research participants.
- List your primary competitors.
- Summarize your findings.
Examples of consumer research in action include finding ways to improve consumer perception of a product, or creating buyer personas and market segments, which help you successfully market your product to different types of customers.
How do companies use market research? ›
Market research provides in-depth insights, allowing companies to better understand the market, identify customers' needs and preferences, discover how their brand is perceived in the market, and measure the impact of investments and strategies.
How much does Coca-Cola spend on research? ›
CocaCola annual research and development expenses for 2022 were $0B, a NAN% decline from 2021.
How does Coca-Cola gather information? ›
Coca‑Cola also uses “pixels” (sometimes called web beacons). Pixels are transparent images that can collect information about email opens and website usage across websites and over time. Cookies that Coca‑Cola sets in the Services are called first-party cookies.
Why does Coca-Cola fund scientific research? ›
Rigorous scientific research is essential to support our innovation efforts, but also ensures we offer products that are safe and meet global regulatory requirements, and allows us to address questions of public health and consumer interest.
