Launching Reformulated Coca Cola - Essay Example

Topic which I have selected for my critical essay is Perspectives to the company decision in the 1980s to launch reformulated Coca Cola and approach to the loss of sales .This topic has very important dimensions which I will discuss in the essay. A top company in the market with growing shares in the market and millions of consumers who are loyal to the company and give a remarkable success to the company made a mistake and faced a huge loss in terms of revenue and customer satisfaction. Essay structure consists of basic introduction to the topic and detailed discussion of the perspectives which can affect the outcome of the company. Critical analysis of the essay with different aspects discussed in the perspectives section and conclusion of the essay is covering all the points of the essay. Introduction Coke was invented by Dr. Ruben Pemberton back in 1886 .Coke was a huge success over the 1980’s and a new invention achieved a very good response. There was a marketing war between two companies name Pepsi and Coke with same product nature. These two companies in a race of making their brand more popular were trying to gain and maintain their market share, on one hand Pepsi company was trying to defeat its rival coke which is far ahead from it when it comes to market share or brand power, because coke was the first company to introduce the soft drink contains flavor of coca leafs and cocoa bean so it created and maintained its product positioning successfully but when Pepsi cola came it created competition in the market and was getting closer to it through different marketing campaigns which tested the brand power of coke in the market and after intense distribution of coke when consumers had a choice they start buying Pepsi. Now Pepsi was gaining market share by target marketing and was becoming popular in the targeted market. Coke had to do something otherwise would have left behind so they thought of new product development to gain the share in doing so they failed but may be they brought they brand loyalty from their customer and unwillingly somehow succeeded in countering Pepsi and maintained their premium image of brand. The actual Reformulation Coca Cola slowly lost market shares and this was an alarming situation for the Coca Cola company and they had to something to in order to save the company’s reputation. Management of Coca cola started to look for solution or alternative way through which they could save image of the brand so re-launching of Coca Cola and by 1984 researchers came up with a new formula for Coca Cola and they launched new Coke with investment of US$4,000,000. New blind test took place and after a very vast research on the sample taste results and competing the new taste with the old Coke and Pepsi. In 1985 finally new Coke with a new formula was launched. In addition to busting Pop, cola users decided this particular completely new formulation on the aged Cola formulation through 55% for you to 45% within blind tastes testing in addition to faithful Cola users decided this on the aged Cola formulation through 53% for you to 47%. Within tastes testing the location where the refreshments have been referred to as "new Coke" in addition to "old Cola, " cola users favored the new formulation on the aged formulation through 61% for you to 39% so this blind taste test gave not very impressive results. Customer Retention Customer retention is main motive of any organization and every brand is successful because of the consumers so if customers are loyal and honest towards the specific brand then success is must. The assessment on the services or products good quality supplied by a profitable business which steps just how dedicated it is customers are generally. Consumer preservation studies are typically indicated as a percentage connected with long lasting consumers, plus they are vital that you a profitable business due to the fact satisfied retained customers are likely to spend more, cost a smaller amount in addition to help to make beneficial referrals to be able to completely new prospects. When coca cola re-launched people wanted to point out to this company of which their preferred soda belonged and this brand was more than a regular drink but it was good inseparable part of their day-to-day lives. Chairman Roberto C. Goizueta may have a good laugh about it nowadays that it was a good experience of going into a big loss, losing so many loyal customers and stake holders was a very big deal at that time but now its really not much of a deal because Coca cola after realizing changed the new formula and now is back in the market with full boom but for customer it was a something they could relate to and the sudden disturbance amongst customers was due to the unexpected change without intimation and change of appearance of the bottle and that unique taste which was different from other soft drinks. This shows that customer retention is very important. Customer retention at any point cannot be ignored because at the time of the launch success can only be measured by the response rate and this response rate can only be measured by consumption so for any company consumer retention is as important as the product and in the re-launching Coca Cola lost many of the loyal customers. Competitive Market Pressure Any company’s operations can be ranked on the basis of market value and competition with other companies. Company cannot work in a vacuum but interaction with the competitors in the market of the products and brands. Every company is struggling to gain customers and expand shares in the market, fighting for the most number of consumers and expanded shares in the market, this is the rule of business from decades and every good company follows these market rules. For surviving in the market and competing with the rivalries in the growing market is really difficult so for that reason every company focuses on the rapid innovation and hasten market deregulations. In this advance globalization competition has increased in market because of so many different companies in the market so to prove one company it has to be unique , up graded, innovative, different and costumer supportive. This exactly was the scenario which Coca Cola faced and at that time their decision making ability was the most important for surviving in the large market where Pepsi was rising and with innovation and uniqueness Pepsi was grabbing most of the customers of Coca Cola. Future prospects were not considered by Coca Cola neither they considered the stance of stake holders and loyal customers, all they were concerned was Pepsi was growing in market which Coca Cola company was really worried about. Coca Cola planed a strategy to face the growth of Pepsi in the market and their response competitive to market pressure was not very impressive, this was the decision making point where they made a wrong decision by re-launching the New Coke which turned out to be a failure because consumers didn’t support the new version of their older drink so basically Coca Cola company didn’t handle the market pressure in a good way because instead of defending their original product they added flavor to the product in competing with other company copied their taste and added new flavor to their existing taste. Tasting tests and other campaigns were launched in order to respond to the competitiveness of the market against an emerging competitor. In market the only way to survive is better decision making power, right decision at right time, handling market pressure, dealing with emerging market power and responding to every pressure with confidence to bring innovation to the marketing strategy and customer satisfaction. Marketing strategies Market strategy can be defined as a companys tactic of which combines all its promoting objectives into just one complete program. A fantastic marketing strategy should be attracted by survey and also concentrate on the proper solution mixture to experience the utmost income possible and also support the business enterprise. The marketing strategy may be the foundation of any promoting program. The heart of any business success stands on its advertising. The majority of areas of company are based upon successful advertising. The complete advertising umbrella insures advertising, promotion offers and sales. Relation with the costumer also comes under the umbrella of marketing. Marketing and advertising is really a process where a product or service can be released and endorsed for you to potential customers. Company might introduce the very best products in market and product is way better than any other product in the market , however none of your potential customers would likely be aware of the item. Right time and right marketing is like a backbone for the product launch and this is the point where Coca Cola failed and faced a huge loss and criticism. When we talk about Pepsi they clicked the right button by challenging Coca Cola and before that doing a marketing research. Change on the globes best selling soft drink seemed to be read through 81 % on the United Expresses people within twenty-four hrs on the statement. Just a full week on the change, 6000 phone calls a day, more than 40,000 letters of complaint and outcry of thousands of people was result of the poor marketing research done by Coca Cola. Another marketing stunt by Pepsi was that when they heard that Cola Cola is changing the formula of the drink, head of Pepsi wrote a letter to the newspaper and declared they have won the challenge and Coca Cola is changing the ever famous, most selling drink’s formula. Right marketing plan can make a product successful whereas wrong marketing research can simply ruin the product’s impact in the market. A major loophole was the right marketing at the time of launch, when an existing product is replaced with a new formula and market research which was done for the launch wasn’t very impressive so at that time a very effective marketing plan was required to spread the word of New coke being introduced to bring a change in the market for the good. Press conference in April 1985 to announce the New Coke was a major setback for the company as the satisfactory reason for bringing in market the new formula and replacing the existing most famous drink. Critical Analysis Coca Cola miscalculated the scenario in the market and spent round about $4milllion in duration of more than 2 years to the market so much after spending $4 million and more than two years to test the new formula and spending such huge amount on testing the new formula and making methodological mistakes in carrying out blind taste tests. Clear failures of brand loyalty and in flavor examining a whole new Pepsi method, Coca used about three various products, that tested in comparison with old Coke and. In the two hundred thousand people were part of the test and only 30 to 40 thousand actually tried the new form of coke which was recently introduced so a huge amount was wasted because people were not part of this new research which was conducted for the launch of new Coke. Another blunder which Coca cola did was not informing the consumers that they tasted the new Coke and should it be introduced or the older version was better so consumers were not even informed about this test. Results presented by company i.e. 53% versus 47% were based on the blind taste test and consumers were not informed of this change company was going to bring. Many consumers moved with Coke because they had this emotional attachment with the drink and company worked with their instrumental research results which were according to their will not the consumers. Pepsi cola was using marketing strategies and tactics to beat it well established rival coke. For that firstly Pepsi cola adopt the target marketing strategy and made Pepsi a drink for youth and the use product differentiation and made their taste better than coke and prove it by marketing tests and made the consumer realize that Pepsi was better than coke in taste that was business tactic to destroy the image of coke from consumer mind. But when coke realize that they were losing market share by the Pepsi cola and their existing product line like sprite, Fanta and diet coke people were preferring diet coke over coke because it was more closer to the taste of Pepsi so they decided to go for new product development and worked on the new product and after a long time brought out new product which was better in taste and conducted new product testing in the market and it was a success but how ever after the announcement people showed their brand loyalty and protested and coke has to stop the production and continue with the existing coke. The coca cola company had failed in research field and also failed to recognize their brand power and their product positioning in the market so by this marketing blunder they wasted their time and money in the new product development. From this marketing mistake we learn that we should find out what is the status of our product in the market and in consumer mind after this research if there is a real need of new product development or any other strategies only then we should implement. Conclusion After considering all the different perspectives of a very well known company Coca Cola and its re-launch of the existing product, we have discussed different aspects and how company faced a huge criticism and faced a huge loss, lost loyal customers and in 1985 when marketing was not much expanded. Now when competition is very high, all companies are in a race to win, marketing strategies have changed, traditional marketing is replaced with new strategies and much sharper brain storming strategies. My essay basically focused on the different reasons behind the great failure of a new product launch. I tried to cover all the aspects of the greater risk in innovation and the major reason of such failure was lack of interest in customers choice and demands, another reason is lack of interest in an innovation. Every company survives in the market on the basis of few main things. Very first is innovation which grabs customers because people go for products which have something different from others so innovation in products can make sure a huge success. Another central function is marketing, it involves bringing the right product at right time in the market and the best message through which word spread out in the market about the product is very important. Coca Cola faced criticism due to all the factors we have listed above. Ironically company‘s failure of New coke came with many conspiracies according to which this New Coke and its failure without any prior market research launch is all a pre- planned game to gain attention from consumers, stake holders and big giants of the market and to divert consumers attention from Pepsi which was growing rapidly in the market so there were many theories which came with the re-launch of Coca cola and according to top management of Coca cola “The truth is that we are not dumb, and we are not that smart”. To make money is easy but to make a good reputation and to be famous amongst majority of people and a huge market where all the big names are competing to get maximum shares and most of the loyal customers is the main purpose of every big company today so Coca cola either their re-launch was pre planned or actually mistake which gave big shock to the consumers as well as the management of the company. Instead of focusing on the customer demographics company should focus on the substance and quality then automatically customers will come in the package. Customer retention, competitive market pressure, share holders, globalizations, Customer attraction, new and innovative ideas, impressive marketing techniques and on the top quality of the product all of these are basic ingredients for a successful business and a long term success which can be achieved through strategic planning and implementing above mentioned key points. Coca Cola re-introduced the older plus popular coke after 87 days and proved that sticking to the product but different marketing style can get consumers. References Ellie Keneddy. SWIT, 13/09/11 “ New Coke: A classic Brand failure. Daniels, N., (2000) Accountability for reasonableness  Susan Fournier.Dec 17, 1999. “Introducing New Coke” Abbey Klaassen. Published on April 23, 2010 “New Coke: One of the Marketing Biggest Blunder Turns 25 Laurent Frésard and Philip Valta(February 2012) Competitive Pressure and Corporate Policies. Jason G. Cummins andIngmar Nyman(August 25, 2002) The Dark Side of Competitive Pressure Brandenburger, Adam and Ben Polak (1996). When managers cover their posteriors: Making the decisions the market wants to see. Milgrom, Paul (1988). Employment contracts, influence activities, and efficient organization design Couto, J. P. (2005)Determinants of the establishment of marketing activities. Dibb, S.(2002) Marketing planning best practice, The Marketing Review. 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