Analysis of Coca-Cola's New Coke Product Failure and Lessons Learned

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This report analyzes the failure of Coca-Cola's 'New Coke' product launch in 1985. It explores the critical reasons for the product's failure, including lack of consumer demand, flawed product design, poor timing, inadequate market research, and a lack of product uniqueness. The report also examines the new product management concepts relevant to the failure, such as product development strategies, speed, and team processes. It highlights the importance of market research, understanding consumer needs, and proper product planning. The report also suggests alternative strategies Coca-Cola could have employed to avoid the product's failure, such as focusing on consumer feedback and competitive analysis. The report concludes with recommendations for future product launches and emphasizes the need for businesses to learn from past failures to improve their product management strategies.
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Coca Cola Organization and new product failure 1
COCA COLA ORGANIZATION AND NEW PRODUCT FAILURE
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Executive summary
The presentation on this research paper examines some of the reasons that led to the
failure of ‘New Coke” by Coca Cola Company in the international market. It concentrates on
presenting some issues that lead to New Coke to be the product that failed after its launch in the
marketplace in 1985. Besides, the ideas presented in this paper illustrate some of the new
concepts in product management that remain to be relevant or contributing to the new product
failure of New Coke by Coca Cola Company. Moreover, ideas presented in this investigative
paper illustrates some of the ideas that the management of Coca Cola Company should have
done differently by its management to overcome cases of product failure in the marketplace. The
presentation shows that conducting of market research for the introduction of “New Coke” in the
marketplace remains to be essential in eliminating chances of product failure. From the
discussion, there is a need for the Coca Cola Company to focus on the application of
downgrading or splitting channels as a way to eliminate cases of “New Coke” failure in the
global market.
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Coca Cola Organization and new product failure 3
Table of Contents
Introduction......................................................................................................................................4
Background information..................................................................................................................4
New Coke Product Failure...............................................................................................................4
Lack of demand...........................................................................................................................5
Flawed product............................................................................................................................5
Poor timing..................................................................................................................................6
Poor planning...............................................................................................................................7
Lack of uniqueness of the product...............................................................................................7
Product deficiencies.....................................................................................................................8
New Product Management Concepts...............................................................................................8
New product development strategies and speed..........................................................................9
New product development team and processes.........................................................................10
What should have been done differently by the organization?......................................................11
Failure of product to fulfill needs and wants of the consumer..................................................12
Launching product at the appropriate time................................................................................13
Concentrating on the most vital rule of thumb for growing current customer acquisition........14
Learning from competitors........................................................................................................14
Conclusion and recommendations.................................................................................................15
Lists of References........................................................................................................................16
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Coca Cola Organization and new product failure 4
Introduction
The idea of bringing the new product to any company just like Coca-Cola needs extensive survey
along with preparation. Nevertheless, it is clear from different extensive research conducted on
Coca-Cola that only one in four products in the development pipelines ever make it to consumers
(Crawford & Di Benedetto 2015, p. 11).
Background information
Coca-Cola was created by Dr. John S. Pemberton in 1886 in Atlanta, Georgia. It is the most
popular and largest selling soft drink in history and the most acknowledgeable brand globally.
The Company serves a global market as a beverage organization. Coca-Cola presented
reformulated Coca-Cola, frequently alluded to as "New Coke," in 1985 denoting the main recipe
change in 99 years. The organization didn't set out to make the controversy of consumer
complaint that followed; rather, Coca-Cola proposed to re-invigorate its Coca-Cola mark and the
cola class in its biggest market, the United States. Conversely, the original Coke brand was
already popular and worth fair competition with Pepsi.
New Coke Product Failure
There are various vital reasons why the “New Coke” produced by Coca-Cola failed in the
market right after its launch in 1985. All these reasons are the vital concern to inventors as well
as entrepreneurs who need to achieve success in the international marketplace (Vaquero et al.,
2016, p. 1011). Therefore, some of the critical reasons for new product failure by Coca-Cola
include; lack of demand, inadequate marketing investigation, flawed product, lack of product
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Coca Cola Organization and new product failure 5
uniqueness, poor planning, unfortunate timing, together with lack of knowledge on targeted
market (Linnander et al., 2017, p. 6). Moreover, other key reasons for the new product failure by
“New Coke” include marketing uncertainty and timing of new product introduction, targeting of
the wrong group with the product, using weak positioning strategy, along with over-optimism
about the marketing plan that can lead to unrealistic forecast (Kahn 2013, p. 3). All these reasons
make the company to be considered as one of the most significant brand failures of all times that
resulted in a marketing mishap.
Lack of demand
Coca-Cola developed “NewCoke” with the perception of receiving the high demand from
consumers, but in many cases, consumers may just reject the product. The outcome might fail by
failing to catch eyes of different targeted consumers even though it remains to be available in
different marketplaces (Rosenberg 2018, p. 2). People around the marketplace might have little
knowledge of the new product on offer leading to minimal demand for such “New Coke.” In
most cases, Coca-Cola finds it hard to continue with production of such products that receives
little demand from the targeted consumers (Crawford 2008, p. 9). In return for low demand by
consumers, the company undergoes the situation of little income from the produced new product
and as a result the product fails in the market (Powell & Gard 2015, p. 858). Lack of demand can
arise from distributors that fail to take new products to resell to retailers of consumers making
such products to fail in reaching marketplace efficiently. Furthermore, cases of reduced demand
from suppliers and distributors turn to be the significant factor that leads to failure of “New
Coke” produced by Coca-Cola.
Flawed product
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Coca Cola Organization and new product failure 6
Coca-Cola has an extended period managed to earn billions of dollars despite bringing to
the marketplace products that seems to be flawed according to the perception of several users
together with reviewers that include soft drinks. Coke has been able to pour millions of dollars
into marketing its “New Coke” that the company designed to replace the existing noncarbonated
beverages (Trott 2017, p. 2). Instead, targeted and esteemed consumers found the new product to
be flawed and replacing the current product to be tough. The perfect product arises since the
company had failed in conducting pre-market testing through the representative cross-section of
actual potential clients that assist its operations in avoiding such prospect pitfall (Karol & Nelson
2007, p. 7). Flawed product arises because the company in most cases produces the product
without having the appropriate understanding of the needs together with wants of targeted
consumers (Otero-Losada et al., 2015, p. 9). The targeting of the wrong market with “New
Coke” remains to be the fundamental reason why the product ended up in the market as a flawed
commodity leading to its failure in attracting revenue to the company as well as consumption by
many consumers.
Poor timing
The market success of any new coke product by Coca-Cola relies to a massive degree on
ability of the organization to launch new products at time when the demand of targeted consumer
is at its highest level. Cases of undue delay make New Coke to fail in attracting the huge number
of consumers in the international marketplaces (Mubayi 2012, p. 541). Besides, un-opportune
time might mean that the demand for the new coke product along with product demonstrated
during the phase of testing consumer might vanish by the time of launching of the product in the
commercialization era.
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Coca Cola Organization and new product failure 7
Poor planning
Poor planning can lead to product failure of new coke products by Coca-Cola if the
company fails to have the game-plan that carriers its operations through every phase as well as
aspects of the life of products. Therefore, there is a need for the company to focus on producing
new products that care for needs of targeted consumers (Gorchels 2012, p. 21). Moreover, many
forces are always at work that alters the requirements and wants of the clients for products. The
company needs to focus on various factors that affect buyers of “New Coke” by focusing on
changing business opportunities shortage of energy along with material and advancements in
technology (Farris et al., 2010, p. 19). Therefore, company management need to focus on the
market potential of the product together with the nature of competition that must be determinable
before introducing new products to the marketplace.
Lack of uniqueness of the product
All products that fail to satisfy the unique needs of targeted, as well as esteemed
customers of Coca-Cola, fail in achieving its objectives in markets. Such products that fail to
meet the particular needs and requirements of clients also fail to dislodge more established
available brands. Therefore, in the most cases management of Coca-Cola must focus on
comprehending the advantages of “New Coke” (Kahn 2013, p. 37). The lack of strategy of sound
communication that supports the introduction of “New Coke” leads to its failure in catching up
with other products as produced by competitive companies such as Pepsi. New Coke is bound to
fail if they fail to be perceived as unique by failing to satisfy the new function (Sharp 2017, p. 7).
Besides, if such products fail to meet the existing service in new ways by lacking the absolute
price and performance that can give it the advantage over the competitive products (de Chaves et
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Coca Cola Organization and new product failure 8
al., 2017, p. 68). The uniqueness of New Coke must remain to be distinctive in one way or the
other to ensure that it achieves enormous customer base that leads to massive profits to Coca-
Cola.
Product deficiencies
Most cases, technical product deficiencies in the introduction of New Coke remain to be
the standard causes of failure of such new products. Circumstances of product deficiencies arise
due to lack of achievement of best laboratory product by over-engineering a service that should
be offered by engineers together with product technocrats (Karol & Nelson 2007, p. 24). The
company as to focus on technical superiority as it is the primary concern that can help in
improving the quality of new product over competitors. The company fails in the launching of its
product since the focus on over-engineered products charges a lot to the firm and finally to the
consumers where competitors have the edge over the operations of Coca-Cola (Ponte & Richey
2014, p. 82). Therefore, technical deficiencies that cause New Coke failure in different targeted
markets along the market need to be removed but too much should not cost much money that can
have diverse effects in the operations of Coca-Cola.
New Product Management Concepts
Some new product management concepts are relevant or aided to the New Coke failure
since the development of the product is simple in concept. It remains to be the conversion of
needs of the market to the reality-based solution in operations of most companies such as Coca-
Cola. New product development creates the tangible from the intangible while it also
concentrates on the creation of new wealth (Mokhov&Ryabukhin 2018, p. 71). Therefore, the
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Coca Cola Organization and new product failure 9
success of construction of the new product by Coca-Cola’s hard work normally needs significant
resources, and the prospect for uninspiring outcomes or absolute letdown that is far superior than
someone will confess. Presence of such elevated danger of collapse of new products in the
market, it is essential for the company to understand and learn why the New Coke development
is vital to their operations in different communities globally (Paavel et al 2017, p. 282).
Therefore, some new product management concepts that are relevant or contributed to the New
Coke failure include new product development strategies, speed, and teams, along with
processes.
Figure 1: The Evolution from Concept to New Product (Crawford, CM & Di Benedetto, C 2015,
p.36.)
New product development strategies and speed
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Coca Cola Organization and new product failure 10
The company and its management must focus on the ideal plan of action designed to help
the operations of the company to achieve the long-term or overall objectives and mission during
the establishment of New Coke. The company ensures that the responsibilities for the New Coke
product strategies are shared among the design, management of product, along with its
development (Rankin 2017, p. 274). The ideas of shared development strategies for New Coke
have enormous impact on reducing the cases of failure of product around international
marketplaces. The design team for Coca-Cola can then have some input into the strategies
chosen, and they will be capable of influencing these set strategies with the research conducted
on needs and desires of consumers. The outcome of such surveys acts as the guide in
implementing the different approach that can fit the needs of the users of New Coke (Sainsbury
et al., 2017, p. 6). Moreover, speed to market New Coke remains to be a crucial factor towards
the achievement of success in the marketplace. There is a need for Coca-Cola management to
develop a new product development process than their competitors (Ultrich&Eppinger 2011, p.
9). There is a need by the administration to refine the process of designing New Coke to help in
the maximization of speed while protecting the experience of consumer that is the delicate
balancing act that must be entirely within the remit of designer.
New product development team and processes
There is a need for management of the company to concentrate on ideas that deal with the
development of the precise method for designing as well as developing new products. The
development of New Coke focuses on fitting specific circumstances that form a methodology for
the company working that remain to be understood and agreed to by all members of the product
development team that is likely to produce better results that products created with no formal
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Coca Cola Organization and new product failure 11
operational processes (Rosenberg 2018, p.2). The management team of Coca-Cola aims at
having some input into these processes and remains capable of negotiating modifications to
methods when they fail to produce expected optimal outcomes around global markets. Besides,
the management of Coca-Cola should concentrate on forming different teams to boost in the
process of developing new products that can suit desires and needs of consumers. The idea of
working with the team helps the company to conduct investigations around the market to
understand the ideal processes and activities to follow in the development of new products
(Wojdynski et al., 2018 p. 123). Besides, teams will tend to be highly creative and more
successful than groups of the more standardized nature. Therefore, the way teams within Coca-
Cola work continues to be critical in their success along with designing operations that deal with
the production of quality products that will successfully become accepted by many targeted
customers.
What should have been done differently by the organization?
Over the past few decades, Coca-Cola has made considerable progress in dealing with
cases of product failure by focusing on developing ideal marketing survey techniques. Factors
that lead to controlling of instances of New Coke failure in the market are many. Some of the
things that management should have done differently should have been the focus forming teams
to deal with cases of market surveys (Sainsbury et al., 2017, p. 10). Such recommendations could
have allowed management of Coca-Cola to concentrate on building survey departments to help it
in improving the success of New Coke in international marketplaces. While management is
responsible for usability, utility, along with the rest of the user's experience after several
recommendations would contribute to the success of New Coke development and some might be
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Coca Cola Organization and new product failure 12
outside the direct control of the company (Crawford & Di Benedetto 2015, p. 6). Some of these
factors that would have led to the success of New Coke include ideal market orientation process,
knowledge management, and use of advanced technology for advertisement, improving the
process, speed, team, and strategies of New Coke development. Concentration on ideal market
orientation would have helped management of Coca-Cola to concentrate on the philosophy that
focuses on discovering as well as meeting different desires and needs of its clients through its
product mix (Corliss 2016, p. 907). The appropriate focus on ideal research on consumer and
where appropriate, marketplace survey could have helped in developing high-quality consumer
experiences that will lead to the discovery of their needs and how to meet such requirements by
the management of Coca-Cola.
Failure of product to fulfill needs and wants of the consumer
From the contexts of the textbook, ATAR model can be applicable in correcting cases of
New Coke failure around business community (Crawford, CM & Di Benedetto, C 2015).The
case of failure by New Coke arises because of failure of the product to satisfy needs and desires
of consumer need extensive market research. Therefore, the use of ATAR model by the
management of Coca-Cola is essential as it concentrates on developing appropriate ways of
reducing the chance of failure (Crawford & Di Benedetto 2015, p. 8). It help product managers
within the company to focus on the use of proper tools to assist in identifying preferences along
with attitudes to help in improving the desire of consumers to purchase New Coke and usage.
These tools that managers can use to boost the utilization of such devices by managers can range
from simple surveys of the marketplace to help in sophisticating conjoint studies along with
models of pre-test markets (Keller & Kotler 2016, p. 12). Besides, managers can concentrate on
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Coca Cola Organization and new product failure 13
the examination of the findings from different models before deciding to continue with the
development of new product, test market product, or focus on attempting full-scale
commercialization (Schneider & Hall 2011, p. 3). There inappropriate timing during the launch
of new Coke product remains to be the significant failure of establishment of product in different
market making Coca-Cola fail in its activities of producing such products. Therefore, appropriate
timing of launching, distribution, or production has its strategic advantages in the success of the
product of Coca-Cola in different markets as the target by management.
Launching product at the appropriate time
The process of concentrating on the ideal moment to launch New Coke can help Coca-
Cola to eliminate cases of product failure due to launching of the product at the wrong time. The
use of speeding product to market by the company can concentrate on tree different strategic
elements. These elements can be product innovation, new product process, along with portfolio
management. The use of speeding product to market by the company by management of the
Coke Company to re-launch their new product at the appropriate time with attractive features,
additional benefits, as well as promoting remains to be more aggressively during the process of
introduction to marketplaces (Collin et al., 2017, p. 9). Product innovation is an idea that helps
the organization to be successful in attracting enormous consumer base since they would have
understood the expectations and trends of markets. The need to understand different expectations
and ensuring that the company does not offer the opportunity to complain during the time of
launching New Coke remains ideal in becoming successful by attaining huge consumer base
(Crawford & Di Benedetto 2015, p. 6). Besides, new product process concentrates on the need of
careful analysis before the company concentrates on offering the product to distributors. The idea
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Coca Cola Organization and new product failure 14
of portfolio management helps the company to understand why their new product might fail to
outshine other available brands in the international markets.
Concentrating on the most vital rule of thumb for growing current customer acquisition
Coca-Cola and its management should focus on getting as many quality clients even
light, occasional consumers as quickly as possible. The idea of attaining more clients means that
the company will have increased sales of New Coke that will lead to more shares and with that
leading to the conversation between loyal and heavy consumers (Crawford & Di Benedetto 2015,
p. 6). The acquisition of new customers will have the vital attribute that every marketer in global
society need to leverage to word of mouth. Higher consumer base will help in understanding
different products that the company produces and it will then enable other consumers in the
market to know about such products. Therefore, the company and its management should focus
entirely on ideal ways of attracting and attaining huge consumer base over their competitors in
the market (Crawford 2015, p. 2). The company can focus on sending samples to attract the
enormous customer base. The examples can be applicable as representative of the real-world
situation by sending New Coke (Cova &D’Antone 2016, p. 176). The idea will allow
management to have different feedback from customers that will enable them to improve their
product before releasing to markets.
Learning from competitors
Coca Cola Company can ensure the success of New Coke in the different market by
learning how other dominant companies have been operating to remain advantageous around
marketplaces. The idea of borrowing operational ideas by management of Coca-Cola can ensure
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Coca Cola Organization and new product failure 15
that they learn from the mistakes as well as failures of existing companies towards ideas of
offering the improved product to targeted customers (Gorchels 2012, p. 4). Learning from other
dominant companies that deal with non-alcoholic beverages such as Pepsi will allow
management of Coca-Cola to conduct the market survey on the needs and wishes of clients that
deal with such products before its introduction to the market (Kahn 2013, p. 7).
Conclusion and recommendations
From this report analysis it is clear that for an extended period, Coca-Cola has lost
millions during its operations in the global marketplace because of the market research mistakes
during the production and launching of New Coke in the market. From the report it is evident
that fundamental concepts relevant to the new product failure in Coca-Cola include inadequate
analysis of the marketplace, product deficiency, lack of marketing efforts, high production costs,
production issue, poor timing of introduction, and competitive strength among other factors.
Inadequate analysis of market remains to be a key concept relevant to the New Coke failure in
Coca-Cola due to the inability of management to determine motives of buying, habits and
misjudgments as to what products the marketplace needed. Lack of marketing effort occurs due
to the inability of management of the company to offer sufficient effects of marketing that tend
to support the sales of the new product. Competitive strength concentrates on the strength of
Coca-Cola relative to other competitors such as Pepsi that offer similar products that can then
lead to failure of new products in the market.
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Coca Cola Organization and new product failure 16
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