ASB: New Product Management 9014NPM - New Coke Forum Post Analysis

This assignment analyzes the failure of Coca-Cola's "New Coke" product launch in 1985, examining the crucial role of market research and concept testing. The analysis focuses on the flaws in the market research conducted, highlighting the lack of understanding of consumer preferences and the emotional attachment to the original brand. The assignment discusses the importance of proper concept testing in evaluating consumer feedback before a product launch, and how Coca-Cola's failure to do so led to the disastrous outcome. The post also delves into the strategic options available for product line replacement, such as butt-on replacement, and how Coca-Cola's choice of this method, without considering customer expectations and competitive environment, contributed to the product's failure. The analysis emphasizes the significance of understanding the impact of "originality" on consumer behavior and the need for thorough market research and concept testing to avoid such pitfalls. The assignment uses academic sources to support the claims and offer a comprehensive understanding of the New Coke failure.

New Product Management
9014NPM
AQF Level 9
ASB
Forum Posts – New Coke
Word count: 1624
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Table of contents
1. Introduction...................................................................................................................3
2. Forum Post 1 – Topic 1 - 4.............................................................................................3
3. Forum Post 2 – Topic 5 – 7............................................................................................4
4. Forum Post 2 – Topic 8 – 10..........................................................................................6
Reference list........................................................................................................................7
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1. Introduction
Coca-Cola Company 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
brands globally. Coca-Cola was initially offered as the fountain beverage at Jacob’s
Pharmacy. The Company serves a global market as a beverage organization. “New Coke” is
the product that failed after its launch in 1985. Original Coke brand was already popular and
worth fair competition with Pepsi. The decision to terminate Original formula was irrational.
Coca-Cola underestimated the power of its original brand leading to a widespread boycott in
the US.
2. Forum Post 1 – Topic 1 - 4
The first concept emerging from the background and relevant to post 1 is “market
research”. This concept applies to topic 2 and hence appropriate for post 1. In the text, poor
customer knowledge is highlighted. It is outlined as one of the “barriers to the generation of
the idea.” Because there was insufficient or inadequate market research, this is a concept
that I have included in this first post. Market research is the activity or action of collecting
info regarding the preferences and needs of the consumers. According to Crawford and Di-
Benedetto (2015), the first phase of new product process entails the identification and
selection of the relevant opportunities.
According to Sharp (2017), market research encompasses collecting and analysing the info
relating to a prevailing or a potential. This will include the buyer behaviour; customer needs
as well as how the customers perceive offering of the organization and its rivals. Kotler and
Keller (2016, p. 121) held that useful market research allows the organization to acquire
timely, accurate as well as actionable info regarding competition, consumers, and their
brands. A successful product launch is thus a product of a marketing insight discovery and
implication understanding as it offshoots a brand growth. Suitable market research by Coke-
Cola would have guaranteed a complete knowledge of its old consumer's buying behaviour
besides their needs about the public perception of the original brand.
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There was hence a marketing research failure as Coca-Cola failed to carry out adequate
research into the perception of the public of the original brand, despite carrying out the
surveys, taste tests, focus group and segmentation. This is because taste testing results
were only subject to systematic bias with the majority of such tests being done blind. Hence
taste was the single factor under assessment and therefore never paid attention to the
packaging of the drink. Moreover, the research on approached the consumers in Atlanta
thereby skipping the other states regarding segmentation. Surveys entailed simple closed-
ended questions and were never likely to unearth the deep feeling by consumers about
Coke. Indeed, wrongly framed question generated wrong outcomes that are hence proving
fatal to the New Coke.
Regarding Focus Groups, Coke’s solely deviation from the standard sequence in the market
research was that the company’s qualitative survey of individuals seemed to have been
carried out prior instead of after the focus groups. Coke also errored by generalizing the
focus groups yet it was well-known to them that for the US, the focus groups outcomes
always vary from region to region. This led to conflicting outcome between those of surveys
and focus groups. The market researcher also failed because it never took into account, the
buying patterns of consumers. The firm gave all responses same weight when assessing
consumer opinions despite the 80/20 rule. Proper application of this rule would have
ensured the company understood the investment that generate greatest outcome. They
would have then estimated the cost linked to less productive techniques. This would have
improved the organization’s marketing efficiency and returns.
3. Forum Post 2 – Topic 5 – 7
The identified concept relevant to post two is the “market research and it associated
relationship to concept testing” relevant to topic 5. Concept testing is the act of ascertaining
or testing the consumers’ feedback to an ‘idea’ before the actual product/brand is launched
or introduced in the market. This process is designed to allow businesses to focus on the
development and improvement of commodities and set priorities to obtain a larger market
share (Vaquero, Martín, Reinhardt & Gurtner, 2016). It leads to easier and greater
acceptance by new brand launch consumers. It helps the organization effectively channelize
the time, labor and effort despite limited market research, including growth and marketing
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resources in the new brand development. This helps in broad analysis and evaluation of the
promotional, advertising, packaging and the strategic concepts. Adequate market research
during concept testing stage offer sufficient comprehension of consumer’s needs/wants,
and buyer’ behaviour guaranteeing suitable brand name choice. This would have helped
consumers to fathom the real nature of the new brand. Moreover, it would have helped
them understand the characteristics of the products as well as similar prices thereby
effectively competing as feasible against the Pepsi’s established- and extremely trusted-
sustained competitive brand.
The company failed flat foot in its concept testing. This is because it only considered taste as
the single significant cause of Coke’s plunge in market share in the early 1980s and 1970s.
Thus, without understanding the relationship between market research and concept testing,
the company went ahead and developed New Coke” which was much sweeter than original-
formula Coke. Moreover, the Company only focused on nearly 200,000 blind product taste
test in the US where over 53% preferred the New Coke over Pepsi and original formula.
However, it was a big mistake for Coca-Cola to introduce New Coke and withdraw the
original formula from the market yet they had not done effective concept testing to
understand its connection to market research.
The flaws in the market research taste tests carried out accounted for the lack of a clear
association between concept testing and market research. Coca-Cola irrationally assumed
that taste was the driving force being the consumer buying behaviour without appreciating
the “originality.” The consumers were thus never informed that solely one product would be
marketed. Therefore, the consumers were never asked whether they would forego the
original formula for New Coke. This was a direct failure of the concept testing. Moreover,
the failure was occasioned by the fact that no one acknowledged the symbolic value, as well
as emotional engagement consumers, had with the original Coke. This, however, could have
been recognizing if useful concept testing would have been carried out during the market
research. Therefore, the bottom line here is that suitable variables which would impact the
problem solution were excluded in both market research and concept testing. This market
research is central. Correct market research by Coca-Cola would have helped the
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organization gain decision power in concept testing to realize that it was unnecessary to
forego the original formula.
4. Forum Post 2 – Topic 8 – 10
“Product line replacement” is the identified concept for this post. It entails substituting the
existing product/brand with a new one. This concept is suitable for understanding the
failure of the New Coke. This is because Coca-Cola was trying to replace the original formula
with New Coke which led to its failure. The question to be addressed is that, “How should
Coke have managed the replacement of the Original Coke with the New Coke. Various
strategic options were available to Coca-Cola. These options included butt-on productive
replacement; low-season switch; high-season switch; roll-in, roll-out; downgrading; and
splitting channels.
Butt-on product replacement is whereby an existing product is dropped immediately the
organization announces the replacement. From this definition, it is clear that Coca-Cola
settled for the first concept: butt-on product replacement. This is because when the New
Coke was launched, the company just withdrew the Original formula in the market.
However, Coca-Cola never fully understood the complexity associated with the decision on
when to launch a new brand. There was a need for the company to understand the three
critical forces: competitive environment, customer expectations, and the profit margins.
Only firms that consider all the three elements in planning the launch thrive like Intel. For
example, there was a heated up competitive environment in the soft drink industry
occasioned by Pepsi. The mistake done by Coca-Cola is that it never carefully considered the
expectations of the Original formula users which would help it concentrate on the
improvement of the Original brand rather than replacing it and withdrawing it entirely from
the market (Vaquero, Reinhardt and Gurtner, 2016).
From the above case, it was essential for Coca-Cola to undertake effective considerations of
the three elements in launching the New Coke. This is because it rushed into making a
decision that was not backed by careful considerations. After it was convinced that Pepsi
was increasingly gaining the market share, it never bothered to undertake valuable
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considerations to understand the best replacement method that could have worked while
still retaining the Original Formula. Coca-Cola would have used downgrading or splitting
channels. In the downgrading, the Coca-Cola would have continued with Original Formula
product alongside the New Coke, but with declined support.
These would not have led to the boycott of the product hence the failure and huge losses
incurred. Splitting channels would have also worked effectively by putting a new item in
different channels and even divert the current product into other channels. This would have
given the company enough time to understand the market and the needs of the old
customers. It would have thus ensured that the organization appreciates the effects of
“originality” on the consumer buying behaviour. This would be effective since it would have
saved both money and time wasted in the processes leading to the launch of the failed
“New Coke”. There was a need for Coca-Cola to understand impacts or the implications of
what the Company was engaging in before rushing to launch the New Coke and disbanding
Original formula.
Reference list
Crawford, C. M., and Di Benedetto, C., 2015. New products management. 11th edn, McGraw
Hill, New York.
Crawford, C.M., 2008. New products management. Tata McGraw-Hill Education.
Keller, K.L. and Kotler, P., 2016. Marketing management. Pearson.
Sharp, R., 2017. Knowledge, ideology and the politics of schooling: Towards a Marxist
analysis of education (Vol. 50). Routledge.
Vaquero Martín, M., Reinhardt, R. and Gurtner, S., 2016. Stakeholder integration in new
product development: a systematic analysis of drivers and firm capabilities. R&D
Management, 46(S3), pp.1095-1112.
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