Executive SummaryExperts define brand as a product, service or a concept that conspicuously differentiates it fromthe products, services or concepts belonging to the other competitors. The main idea behindcreating a brand image of any product or service to communicate to the consumers about itsimportance and usefulness. Branding, therefore, is the process of creating and disseminating theimage and identity of a particular product or service (Graeff, 1997). The process of branding inturn is conducted by marketing. So, in that sense marketing becomes one of the most importantactivities undertaken by any company in order to activate the consumers and make them loyaltowards their brand. However, sometimes the marketing strategies do fail and as a result thebrand image of the products or services gets badly hit and the customers subsequentlydiscontinue using them. In the following report, we have discussed about the Coca Cola BrandFailure and various aspects of customer loyalties towards coca Cola’s original product becauseof which New Coke could not become successful. The research conducted by us includeddifferent sources of data, questionnaire for different people followed by the findings andrecommendations.Background InformationThe success story of Coca Cola is not hidden from anyone as it is still being considered as theworld’s most recognized brand. A few decades earlier, marketing experts believed that theconsumers had begun more cola-conscious, while the firms didn’t quite see that. It happenedbecause of the fact that an intense marketing competition was started between the two giantsPepsi and Coca-Cola. The rivalry between these two companies got bitter more and more as it
was battle of perception for them in order to establish supremacy over each other (Pitta & PrevelKatsanis, 1995). By the year 1981, the topmost position of Coke was starting to look vulnerable.It was not only losing its market share to arch-rival Pepsi but to some of the other drinks whichwere produced by Coca-Cola itself like Fanta and Sprite. As soon as the Diet Coke became arunaway success, it also proved to be a double-edged sword as it made the sugar cola marketshrink. Subsequently, Coke’s market share had declined to all-time low of just under 24%.Problem DefinitionThe difficulty was that Coca Cola ineptly underestimated the value of its first brand and themarketing problem ensued in 1985 when Coca Cola decided to stop manufacturing its popularsoft drink brand and replaced it with New Coke (Haig, 2003). The majority of the consumersdecided to snub the new product as soon as they heard the announcement made by the companyregarding the same. This joint decision is still being called as the biggest marketing blunder of alltime. It became clear to the management of Coca Cola that they were left with no choice but tobring back the original brand as well as formula. By observing what happened with the strategyof Coca Cola, marketing experts explained that the time, money and skill that spent in customerresearch regarding New Coke could not measure the deep emotional connect to the originalproduct on the part of the customers. This passion and attachment for the original Coca Colacaught the management of the company by surprise. It was a great learning for Coca Cola thatthe marketing is lot more than the product itself.This brand failure of New Coke to establish its significance in the minds and hearts of theexisting customers can be attributed to their brand loyalty. So, there are a number of factors that
contribute to the brand loyalty, which in turn require a clear understanding of evaluations,attitudes as well as intentions that influence customer behavior (Lau & Lee, 1999). The factorsinfluencing loyalty are as follows: 1.Satisfaction: It can be termed as a gateway towards becoming a loyal customer of acompany or product. It is an obvious fact that if any service or product being used bycustomers is satisfactory then he/she will most likely use it again. It is always characterizedby quality and expectations, which are necessary ingredients for loyalty. So, it seems thecustomers were highly satisfied with the original Coca Cola that they did not want to go forthe new product.2.Trust: once a customer starts feeling satisfied with the product or service by using it againand again, a natural trust develops in him. So, this feeling of trustworthiness for the brand is astrong factor that impacts brand loyalty to a great extent. In view of this fact, the Coca Colacustomers must have a deep trust for the product.3.Brand Image: it is indeed a powerful factor that impacts the brand loyalty in two differentways. Firstly, consumers associate themselves with the brands according to their preferences.Secondly, people tend to consider their opinions as different and it allows them to evaluateand value the symbols and compare them with their own. So, the brand image of Coca Colaand hence the original product worked both ways for the customers.4.Commitment: According to the marketing experts, commitment can be defined in manyways – a strong desire for maintaining a strong relationship, a pledge with which two partiescontinues their relationship or an absence of competitive offerings (Morgan & Hunt, 1994).So, the customers of Coca Cola as well as the original product both were fully committed to
each other, of course until New Coke was introduced, that generated a strong loyalty by thecustomers towards the product of Coca Cola.5.Word of mouth: As per some marketing experts, one of the most important signs regardingloyalty is that the customers frequently recommend the products or services to others as well.The fact that the person is putting his reputation at stake by referring the product to othersindicates his feelings of strong loyalty. 6.Importance of relationship: loyalty sometimes also gets driven by strong desire to maintainworking relationships that the customers think of them as meaningful in their own ways. So,the consumer-brand relationship that was seen between original Coca Cola and its customerswas that of a high degree of loyalty. Research ObjectiveThe objective behind this research was to study the conception of framework that links thedifferent dimensions of brand loyalty to capture different category of customers, which wasclearly ignored by the management of Coca Cola. In other words, this research study discusses asto what were the factors that contribute to the loyalty of customers towards original Coca Cola. Methodology
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