Product Development Failure: New Coke
Background
Initially introduced in Atlanta Georgia in 1886.Coca Cola is one of the most predominate soft drinks of all time. The successes of Coca Cola were not without failures. The reformulation of Coke’s flagship may have been one of the worst product failures of all time. However, this disaster may have begun stemming way before the introduction of New Coke. Coca Cola had been battling with Pepsi Cola since Pepsi’s introduction in 1903. Until just after World War II, Coca Cola had a commanding 60% market share1. Pepsi’s superior management decisions and marketing mix with the aging of the baby boomers enabled them to close the gap in the soft drink market segment. As the baby boomers got older and more health conscious coca cola began to lose market share. Pepsi, which was already the favorable product for the younger less health conscious soft drink users, began to target more niche markets such as the African American market. However, one of the big contributors to closing the market share gap was selling at a lower, market penetrating, price during The Great Depression by selling 12 oz bottles for a nickel while Coca Cola continued selling 6 oz bottles for the same price. Pepsi, adjusted better to their external environment by delivering value to their customers and Coca Cola suffered because of this2. Coca Cola felt that their time was running out with much of their brand loyal customer base aging and Pepsi controlling the younger more favorable segment. Pepsi’s youth focused positioning was getting better and better especially with their “Pepsi Challenge” marketing campaign in 1975. This campaign aimed to develop the belief that this is now the ‘Pepsi Generation’. This campaign was extremely successful because it called Coca Cola the reigning market leader out on it’s taste. Pepsi heavily marketed the results of this challenge to the public in exclamation that the Pepsi Generation has finally arrived3. Coca Cola tried firing back with an ad campaign
Initially introduced in Atlanta Georgia in 1886.Coca Cola is one of the most predominate soft drinks of all time. The successes of Coca Cola were not without failures. The reformulation of Coke’s flagship may have been one of the worst product failures of all time. However, this disaster may have begun stemming way before the introduction of New Coke. Coca Cola had been battling with Pepsi Cola since Pepsi’s introduction in 1903. Until just after World War II, Coca Cola had a commanding 60% market share1. Pepsi’s superior management decisions and marketing mix with the aging of the baby boomers enabled them to close the gap in the soft drink market segment. As the baby boomers got older and more health conscious coca cola began to lose market share. Pepsi, which was already the favorable product for the younger less health conscious soft drink users, began to target more niche markets such as the African American market. However, one of the big contributors to closing the market share gap was selling at a lower, market penetrating, price during The Great Depression by selling 12 oz bottles for a nickel while Coca Cola continued selling 6 oz bottles for the same price. Pepsi, adjusted better to their external environment by delivering value to their customers and Coca Cola suffered because of this2. Coca Cola felt that their time was running out with much of their brand loyal customer base aging and Pepsi controlling the younger more favorable segment. Pepsi’s youth focused positioning was getting better and better especially with their “Pepsi Challenge” marketing campaign in 1975. This campaign aimed to develop the belief that this is now the ‘Pepsi Generation’. This campaign was extremely successful because it called Coca Cola the reigning market leader out on it’s taste. Pepsi heavily marketed the results of this challenge to the public in exclamation that the Pepsi Generation has finally arrived3. Coca Cola tried firing back with an ad campaign