New Coke and Other Business Blunders
We are all familiar with the consumer packaged goods (CPG) powerhouse, Coca-Cola. Coca-Cola has an extensive history in the CPG space, producing arguably the most iconic and recognizable CPG product in US history. From billboards to newspapers to TV and now social media, Coca-Cola bottles have been everywhere. They successfully built one of the world’s largest companies around a simple bottled soda and dominate the soft drink category with 45% of the market share. However, Coca-Cola hasn’t always been successful in the CPG space. Let’s see how they made themselves into the poster child of what NOT to do with a CPG product.
Success in the CPG industry is all about making things people want. Think about Coca-Cola: they understood that consumers wanted a refreshing, energizing soda. They knew their product filled a consumer need because it sold like wildfire when they launched it. They identified a gap in the market and filled it. But what happens when a brand stops making things people want? For Coca-Cola, Pepsi, and Life Savers, it meant launching a product that people didn’t want and handling the backlash that followed.
Although Coca-Cola has always been seen as successful, the truth is that its popularity has fluctuated. In the mid-80s, Coca-Cola’s popularity wasn’t what it is today. Pepsi was gaining on them and top executives at Coca-Cola decided it was time to pivot the business. They had built incredible brand awareness in their consumer base, but how could they leverage that awareness to stay relevant?
When New Coke was introduced in 1985, Coca-Cola made one of the most famous business blunders to date. They pivoted away from what people want in their launch of New Coke. New Coke was a reformulation of the original coke by making the beverage sweeter and more appealing to consumers who usually preferred the sweet taste of Pepsi. It was meant to push Coca-Cola past its fierce competitor, Pepsi. In reality, it set Coca-Cola behind Pepsi and estranged consumers from the product they had grown to love.
Consumers were so upset with the change that they launched campaigns nationwide to bring back the original coke. Petitions were signed, hotlines were set up, and consumers voiced their anger. Pepsi even poked fun at Coca-Cola, launching ads with a woman questioning, "Somebody out there tell me why Coke did it? Why did Coke change?" One poll showed that only 13% of Coca-Cola consumers enjoyed the New Coke.
Eventually, Coca-Cola had heard enough. On July 11, 1985, just 77 days after New Coke’s launch, Coca-Cola held a press conference and announced the return of the original formulation. Through the New Coke blunder, Coca-Cola learned a valuable lesson: impactful product launches and iterations should be based on what your consumers want, not what you think will be well received.
Coca-Cola isn’t alone. Many companies have tried to revitalize their popularity and enter new markets through pivots turned blunders.
Surprisingly, Pepsi didn’t learn from their competitors and found itself in a New Coke situation. In 1989, Pepsi rolled out their new soda, Pepsi AM. With 28% more caffeine than the regular Pepsi, recipe developers intended for consumers to replace their morning coffee with Pepsi AM. However, Pepsi AM still had 77% less caffeine than a cup of coffee. After a failed market test run, Pepsi AM was cut from production. People didn’t want to drink soda for breakfast, especially if it didn’t give them the needed energy to kick start their day. Pepsi estranged themselves from their loyal customers and wasted a ton of money on a product that consumers didn’t want.
Life Savers Soda
Life Savers, the candy brand known for their ring-shaped hard and soft candy, followed a similar path as Coca-Cola and Pepsi and launched a line of Life Savers-inspired soda. Developed in the 1980s, the Life Savers soda fared well in taste tests. When it hit the markets, consumers thought otherwise. Consumers were wary of buying the beverage, assuming the soda would be overly sweet and candy-like. Almost as soon as Life Savers soda was launched, it was cut from production. Life Savers attempted to break into a new market but didn’t have a firm grasp on what consumers wanted. This led them to spend money developing a product that consumers wouldn’t buy.
Through the examples of New Coke, Pepsi AM, and Life Savers Soda, we’ve seen the importance of making things that people actually want. Pivoting your brand can be a dangerous step in the wrong direction if you aren’t iterating towards products your consumers want. Before you make changes to your products ask yourself: What feedback have I already gotten on my product? And, what changes can I make to ensure this is something my core consumers want? Asking these simple, but effective questions can prevent costly reformulations that end in a blunder like New Coke, Pepsi AM, and Life Savers Soda.