What the New Coke debacle can teach your business about analytics

Published January 8, 2014 at 6:40 am

Few companies have a greater built-in marketing edge than Coca-Cola. Not only is the popular brand one of the longest-standing in its market, it also has vast financial resources and a strong cultural resonance. In addition, Coke has access to a large amount of research about its potential consumers and how best to target them.

The New Coke fiasco shows that having that data without the attendant insight is a recipe for disaster.

In 1984, the company was still leading the market but was feeling strong pressure from top competitor Pepsi. The Pepsi-Challenge, which pitted the two beverages against each other in blind taste tests, had led to a successful campaign for the challenger. Coca Cola felt pressure to reestablish its dominance, and sought to tinker with the taste of its iconic soft drink.

After months of tinkering, they found a lighter taste that mirrored that of Pepsi. Research suggested that it was exactly what the people wanted, and executives presumed that the combination of their strong brand and the new flavor would be impossible to top.

When it launched in 1985, it was a disaster. Nobody wanted to buy the new soda, and millions of dollars were lost before the company pulled their novel drink off of shelves.

The lesson is clear. It simply isn’t enough to use research to copy your competitors. Brand continuity is an important part of marketing, and if you radically change your entire strategy, potential customers might balk. Instead, use data to figure out best how you can position your own product — not just copy somebody else’s.