Q.
In your opinion, what was the most significant challenge (or problem) that Coca Cola faced with the Pepsi Challenge? Ans. The most significant challenge faced by Coca Cola was in the late 1970s when the top executives of the Coca Cola actually paid less and less attention to the marketing and sales of their central product and they were making attempt on diversifications, and the competitor Pepsi during this period targeted the young generation by strong marketing strategy who were yet not emotionally attached coke and they did not realize the strategy of their competitors and thus ran into trouble.When coke management faced the Pepsi Challenge they tried to face the challenge by scraping the original Coca-Cola and introducing New Coke in its place and this created further trouble for them and this trouble was due to the Coca-Cola Company had severely underestimated the power of its first brand. Which Keough admitted “The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people.The passion for original Coca-Cola — and that is the word for it, passion — was something that caught us by surprise. It is a wonderful American mystery, a lovely American enigma, and you cannot measure it any more than you can measure love, pride or patriotism” Q.
What problem did Coca Cola management focus upon instead? Ans. Instead of focusing on the demographic of customers (younger generation) Coca Cola focused on the substance (the nature of the product itself).As success of Diet Coke showed, and as some executives believed, the market was leaning towards sweeter drinks, so they pointed to some research suggesting the distinctive tangy, acidic quality of the formulas as seen as harsh by some younger drinkers. Throughout most of the last century, Coca-Cola capitalized on its ‘original’ status in various advertising campaigns across the United States declaring: ‘The only thing like Coca-Cola is Coca-Cola itself.
It’s the real thing. ’ By launching New Coke, Coca-Cola was therefore contradicting its previous arketing efforts. If you tell the world you have the ‘real thing’ you cannot then come up with a ‘new real thing’.To borrow the comparison of marketing guru Al Ries it’s ‘like introducing a New God’. This contradictory marketing message was accentuated by the fact that, since 1982, Coke’s strap line had been ‘Coke is it’.
Now it was telling consumers that they had got it wrong, as if they had discovered Coke wasn’t it, but rather New Coke was instead. So it can be concluded that ‘marketing is a battle of perceptions, not product.Q. Where did the KEY competitive advantages lie for “classic coke” before the Pepsi Challenge? Ans.
Before the Pepsi Challenge the KEY competitive advantages for “classic coke” lies in personality and identity rather than product attributes like taste or sweetness, which is the power of Coca Cola brand, with more allusions to US heritage than any other. Another key competitive advantage lies in Coke’s more effective distribution which kept it ahead. For instance, there were considerably more vending machines selling Coke than Pepsi.
