It was 1980-something… What “New Coke” Can Teach Us About Market Research

A version of this post was included in my super-fun weekly email for marketers with tips, tricks, and stories.

Sign up for emails and never miss out on the fun!

We often talk about the ROI market research gives in terms of sales or revenue—when identifying new audiences and properly positioning your products and marketing to expand to new grounds. However, market research can help you save just as much as you earn—in terms of money, sure, but also something much more valuable: brand reputation. 

Anyone reading this old enough to remember New Coke? Even if you don’t remember it, you must have heard of it. The 1985 disaster that cost the beverage giant much more than money. Call it tuition for Coca-Cola, perhaps, because as a result of this launch, they learned an expensive lesson in not messing with a winning template when they announced a change to their century-old formula. 

GIF from giphy.com

This announcement has been called everything from “the marketing blunder of the century” and “the biggest gamble in consumer goods history. As a result, there are crucial marketing lessons to pick from the story of the New Coke marketing flub. 

On April 23, 1985, Coca-Cola Company CEO Roberto Goizueta revealed his company’s latest “invention” to a crowd of journalists. Declaring their newest cola drink to be “smoother, rounder, yet bolder,” Mr. Goizueta did not realize that Coca-Cola’s decision to launch a “New Coke” in a vacuum would trigger a storm rougher, more amorphous, and fiercer than anyone had seen before. 

The backlash and public outcry that followed Goizueta’s announcement was immediate. While Coca-Cola’s board was toasting to the avalanche of sales–which they presumed would pour in after their clever launch-Coca-Cola shares began to dip on the New York Stock Exchange, while Pepsi’s skyrocketed. But that was just the beginning.

The phones at Coca-Cola started ringing off the hook with angry calls. It started at 5,000 calls a day and shot up to 8,000. 

“I don’t think I’d be more upset if you were to burn the flag in our front yard,” one livid customer called in to say. 

Protesters registered their disappointment with the brand by emptying the contents of New Coke into the sewers, retailers started hoarding bottles of “old Coke” left in circulation, and lawsuits were even filed.

If you’re hearing the details of this story for the first time, you will blame Coca-Cola for making such a risky move without proper market research. But that was hardly the case here. The company conducted multiple focus groups with nearly 200,000 consumers across Canada and the United States. So, where did this launch go wrong? And what lessons can marketers learn from the most incredible marketing flub of that century?  

How it Began

GIF from giphy.com

Although Coca-Cola was the bestselling soft drink on the market then, its closest rival, Pepsi, was quickly catching up. Consumer awareness and preference for Coca-Cola was quickly dipping, while that of Pepsi was rallying. 

Riding on the back of their popular taste test promo dubbed “The Pepsi Challenge,” many consumers realized they preferred the sweeter flavor of Pepsi. 

To Coca-Cola’s amazement, an in-house blind taste test also confirmed that Pepsi tasted better and was preferred by consumers. Coca-Cola executed a second and larger test with a focus group of close to 200,000 consumers to confirm the results of their internal test. Most of the participants still went with Pepsi.

For the first time in 99 years, Coca-Cola changed its secret formula, locked its original template in an Atlanta bank vault, and launched a sweeter-tasting “New Coke” to the market.

Mistakes and Lessons For Coca-Cola

Photo by jeshoots.com

Coca-Cola did their market research–an expensive, intensive study at that—so they had no reason to second-guess their decision, right? 

Wrong.

The company made a critical, erroneous assumption: that flavor was the biggest reason people buy one beverage over another.

Their focus groups were executed perfectly and clearly demonstrated that most people preferred a sweeter flavor in their colas. Where they got it wrong, however, was the moment they decided to ignore customer sentiment in their research.

While Coca-Cola had 200,000 reasons to believe that customers wanted a sweeter-tasting cola drink, a sentiment test would have revealed that consumers placed their familiarity, intangible nostalgia, and bond with classic Coke above anything else. 

The backlash was immediate and loud. And thankfully for Coca-Cola, they listened to the public outcry. The company reintroduced its original flavor as “Classic Coke,” while they slowly phased out New Coke in the following years. 

The silver lining in the New Coke fiasco was that Coca-Cola realized how loyal its consumers were to its brand. They discovered that the bond and loyalty of their customers transcends taste. So, hopefully, they’ve learned never to attempt “fixing” the taste of their product–ever again.

Lessons For Marketers

Photo by Vstretimsya Na Rassvete

First and foremost, the New Coke disaster reiterates not just how vital market research is but how vital the RIGHT KIND of market research is. Tactics are easy to learn—anyone can get people into a room and have them conduct a taste test. But tactics alone won’t yield the best results at any point in time. 

Great market research deep-dives into your market and goes beyond the surface. Without deeply understanding who your customers are, how they think, and how they process information and perceive brands, even the best tactics may fall flat and not produce the results you need for your brand.

Secondly, Coca-Cola’s bitter-sweet experience (pun intended) is a call to marketers to take a thorough approach to market research. Yes, product surveys are fine. Interviews are great too. But, as Coca-Cola found out the hard way, there are critical data points you can collect when you read between the lines and interpret results as a collective, rather than just read exactly what responses people say. 

Another thing to consider…Your marketing department may do a fantastic job with its research and customer personas. But being too close to the picture might cause them to miss some crucially sensitive data–just as Coca-Cola’s billion-dollar marketing team forgot to account for emotional drivers to buy a Coke that goes beyond flavor.

Seeking a second opinion from unbiased market research experts will always add to your research. The insights you get from a market research team looking in from the outside might shock you and save you from making marketing blunders of New Coke proportion. 

Ok, shameless plug time—if you ever feel you need an experienced market research company to vet your research for blindspots or to give second opinions that would help your business make bold and accurate business decisions, Bixa can help. Set up a time to talk today!

Want more of this marketing goodness?

***

If you liked this article, you might like my blog post on 4 Questions to Help B2B Marketers Understand the Mindset of A Buyer’s Journey

Sarah Weise is the CEO of award-winning marketing research agency Bixa and the bestselling author of InstaBrain: The New Rules for Marketing to Generation Z. For 15 years, Sarah has been a guide to hundreds of leading brands, including Google, IBM, Capital One, Mikimoto, PBS, and U.S. Army, to name a few. Sarah helps brands achieve a laser focus on their customers and build experiences that are downright addictive. She lectures at Georgetown University’s McDonough School of Business and speaks at conferences and corporate events worldwide.