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Lesson #3: Find What Works and Stick With It
Article Overview: Coca-Cola executives in the 1980s would have done well to follow in the example of its founder. In growing his company, Candler understood the importance of not messing with perfection. As an increasing number of copycat beverages found their way onto the market, Candler might have changed the shape of his bottle, or altered his marketing message, but he never once made the crucial error that his later successors would: after creating the perfect drink, he never again changed its secret recipe. Candler knew that in an increasingly competitive industry, it was important to stand out, and to keep customers on their toes, but he did not dare mess with what he saw as excellence. After all, if it was not broke, why fix it?
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Lesson #3: Find What Works and Stick With It
Coca-Cola executives in the 1980s would have done well to follow in the example of its founder. In growing his company, Candler understood the importance of not messing with perfection. As an increasing number of copycat beverages found their way onto the market, Candler might have changed the shape of his bottle, or altered his marketing message, but he never once made the crucial error that his later successors would: after creating the perfect drink, he never again changed its secret recipe. Candler knew that in an increasingly competitive industry, it was important to stand out, and to keep customers on their toes, but he did not dare mess with what he saw as excellence. After all, if it was not broke, why fix it?
In 1985, Coca-Cola Company executives made one of the biggest errors in both marketing and overall strategy of arguably any other large corporation to date. In their $4 million attempt to create a Diet Coke, the company in fact stumbled upon a new formula for its original Coke. Sweeter and smoother than its predecessor, the new Coke was given positive reviews in taste tests. In an instant, the company decided to pull its old Coke off the market to be replaced with this newer version.
Coca Cola’s market share had fallen 2.5 percent in the four years before this decision was made. Each percentage point represented a loss or gain of $200 million. Company executives were struggling to find a way to recoup that loss and, ignoring the experience of its founder, decided to make the first flavour change in the company’s history.
On April 23, 1985, the Coca Cola Company held a press conference at the Lincoln Centre, where it announced before 200 reporters that the old Coke was no more. Within 24 hours, 81 percent of the American population had heard the announcement. In the following week, the company was sent over 40,000 letters of complaint and was flooded with more than 1,000 calls each day from customers who were shocked and outraged at the decision. Within six weeks, the company’s 1-800 number was jammed by over 6,000 calls a day. One man, who had wanted to be cremated and interred in a Coke can, even said he was now reconsidering as a result of the switch.
When Pepsi heard their competitor’s announcement, they declared it a victory. In a letter to media outlets nationwide, Pepsi CEO Roger Enrico wrote, “After eighty-seven years of going at it eyeball to eyeball, the other guy just blinked. Coca-Cola is withdrawing their product from the marketplace, and is reformulating brand Coke to be more like Pepsi.” Candler had worked hard to maintain his drink’s original formula, and to keep that recipe a secret. In one afternoon, his successors had wiped out a century of history, and the American public was furious. The company’s market share even fell from a high of 15 percent to a low of 1.4 percent.
What would the Coca-Cola Company do now? Admit its founder had been right and revert back to its original formula, or continue down its ruinous path? Eighty-seven days after the new Coke was introduced, the old Coke was brought back on the market. “We have heard you,” the company claimed.
Many critics wondered whether the whole stint was simply a public relations campaign to rouse public interest in both the new and old Cokes. “The truth is we are not that dumb and we are not that smart,” responded the Coca-Cola president.
After the comeback of the old Coke, the company’s stock prices rose to their highest level in twelve years. Yes, customers needed to be kept on their toes, but that could be accomplished through the introduction of such other products as Vanilla Coke, Sprite, and Fanta. Candler had been right all along; once you find what works, you stick with it.
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Article Tags: 1980s, american population, beverages, coca cola, coca cola company, coca colas, company executives, diet coke, lesson 3, letters of complaint, lincoln centre, market share, new coke, overall strategy, percentage point, predecessor, secret recipe, successors, taste tests, toes
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