In this new series title “No Day is Leg Day” we will be taking a look at companies that failed to do their legwork, and hence, suffered an embarrassing product launch or some other kind of unfortunate goof-up.
Let's kick the series off with the granddaddy of all product launch fails, Coca-Cola (NYSE: CCE) and “New Coke.”
First, some perspective.
The Origins of Disaster
In the early 1980s Coca-Cola faced stiffening competition from soft drink makers such as Pepsi-Cola (NYSE: PEP). Coke’s share of the market place had fallen from well over 50 percent in the years after World War II, to under 25 percent by 1983. The company knew it had to do something drastic.
Coke was getting clobbered in in the marketplace and, under CEO Roberto Goizueta, decided to take the ultimate leap of faith: reformulate its classic formulation to try to create a taste that appealed more to the younger crowd.
New Coke was born, though it had not yet been given that unfortunate title. In its early development, through testing – which included numerous market surveys and focus groups - and even into its early launch, the product was to simply be a replacement for the original Coke. Big mistake.
Pepsi: Self- Declared Winner of the "Cola Wars?"
As Coke prepared to launch the new formulation to the public, Pepsi got wind of the plot and decided to make a move of its own. While Coke anxiously planned the official launch for April 23, 1985, Pepsi pre-empted Coke’s announcement with a company-wide holiday and a full page ad in the New York Times newspaper that proclaimed Pepsi had won the so-called “Cola Wars.”
This ingenious marketing strategy apparently swayed the opinions of many in the media, who took a decidedly skeptical view of Coke’s new formulation in subsequent months.
Backlash and Customers Digging In
Though most people in the American public took to the new, “bold” taste of the new Coke formulation, a very vocal minority complained – loudly. They wrote letters and flooded the company’s hotline – yes, there was a Coca-Cola hotline in the 1980s – with calls. Many former Coke drinkers, especially in the South, refused to drink the new formulation of Coke, and didn’t care much for Pepsi either. So they just stocked up on the old formulation of Coke and decided that they would be done with cola all together when it ran out.
It was perhaps this Southern insurrection which finally led to a break: After just 77 days on the market “New Coke” was toast.
After the New Coke debacle, Coca-Cola spent some time licking its wounds, but the company was not simply going to give up on the new formulation completely. In response to the firestorm regarding New Coke, Coca-Cola returned to its older formulation and titled it Coke “Classic.” But the company reintroduced the New Coke formulation in 1992 under the uninspiring moniker Coke II. This, too, failed to really catch on, and the drink quickly fell out of favor with consumers.Within a decade, Coke II was completely discontinued, and the vestiges of “New Coke” were relegated to an unfortunate experiment in soft drink history.
It can be argued that Coke did in fact do its legwork before launching New Coke. But even if this were to be granted, the kind of legwork it did was all wrong. This left New Coke standing on teeny-weeny baby legs, too weak to contend with the muscular Coke Classic.
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- Consumer Discretionary
- New Coke