Marketing research case study 4

  • Category:
    Marketing
  • Document type:
    Case Study
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    867

Coca-Cola Re-invents its Marketing Strategy

CASE STUDY: COCA-COLA RE-INVENTS ITS MARKETING STRATEGY

Introduction

Arguably, the Coca-Cola company remains the top firm across the world in beverage production. According to Dasilva (2010) the company has been in existence for more than 130 years during which the company has paid out colossal dividends to its shareholders thereby cementing its effectiveness and longevity as a profit making business enterprise. Being the world’s most recognizable trademark – distributing more than 500 brands globally — the company enjoys presence in more than 200 countries providing a range of diverse products. Consequently, the protection of the Coca-Cola brand, reputation and image remains an important undertaking by the company’s top management. The company’s brand is pegged on its mission of refreshing the world by way of inspiring moments of happiness and optimism among its clientele. This is further compounded by its vision which lies in serving as framework for a roadmap and guidance in each and every aspect of its business in pursuit of sustainable growth.

The Emergence of Pepsi

Its, however, important to note that things at the giant beverage company have not always been rosy. In the late 1960s, when Pepsi company was rolled out, the gigantic Coca cola company started to stumble (Fournier, 2016). The Campaign idea adopted by Pepsi was the brainchild of a survey conducted by one Bob Stanford who chose to engage the individual consumer preference with the two products. At the end, Pepsi carried the day with a 52% margin compared to Colas 48%. As a result, Pepsi enjoyed unrivaled taste preference over its arch-rival Coke and consequently won the legal rights to claim product superiority. Through aggressive local campaigns, Pepsi’s market share rose from a mere 6% to 14% in a span of a few months (Dasilva, 2010). The emergence of Pepsi generation breathed fresh air into the market by appealing to the spirit of idealism, vitality and youthfulness which was well in tandem with the psyche of the growing population of baby boomers. The approach employed by Pepsi in shifting the attention from the product to the user was in itself a game changer with seismic effects. The Coca-Cola company sought to bring out the image of its product consumers as young right from the heart, active and vital in building the global economy. So popular was the new advertising ideology that it captured the imagination of many people’s minds and even dominated the 1975 elective campaigns across the US. The phrase ‘Pepsi Generation’ appeared to rhyme very well with the people as it captured the diverse needs of a nation recovering from the effects of Vietnam War, Watergate Scandal and one of the worst economic recessions in the US history.

Coca-Cola Woes

Sensing a threat in its consumer base, the Coca-Cola company had to drastically change its marketing approaches or face a staggering losses. According to Fournier (2016) the Coca-Cola company took up the challenge immediately and charged Pepsi with misleading advertisements. In addition, the Coca-Cola company chose to conduct its own survey with regard to customer tastes for the two products. To its surprise, the survey results confirmed what Pepsi already knew, even the diehard Coke customers agreed that Pepsi tasted better! To make matters worse, the new strategies adopted by Coke to counter the influence of Pepsi seemed to play into the latter’s hands. One of the strategies that failed to add up was dubbed ‘One Sip is not Enough’ (Figura, 2014). Later, when Coke chose to air its own taste tests, the only preference margin for its product over those of rival Pepsi was 4%. The company was so astonished with the results such that it could not share them via national advertising channels. Bad news continued to trickle in as industry forecasts showed declining sales volumes. By the end of the year 1983, Pepsi had successfully managed to claim a third of Coke’s market share.

Coca-Cola Bail Out

After the retirement of Paul Austin, the new manager, named Robert Goizueta, unlike his predecessors who were averse to change, he chose to disrupt the status quo (Fournier, 2016). He chose diversification of the existing products to suit changing consumer needs. One of the new products introduced under his watch was Diet Coke in the year 1982. The new product quickly rose up the sales ranks to become preferred choice in the diet segment of the entire soft drink industry and also the third-best selling beverage after Coke and Pepsi. Buoyed by the new developments, Coke continued with product diversification with regard to the market fragmentation which saw the company introduce caffeine-free coke for its customers. The company was also getting increasingly convinced of the need to continually change its tastes to suit the ever-changing consumer demands. Subsequently, the company invested heavily in research and development of new tastes for its products which saw it regain its market share in a span of five years. This started with the introduction of new coke in 1985.

References

Dasilva, J., 2010. CSR Case Studies: Coca-Cola. Kenan Institute Asia

Figura, S., 2014. The Coca-Cola Company Transforms its Global Supply Chain with Connected Learning. Harvard Business Review

Fournier, S., 2016. Introducing New Coke. Harvard Business School