Do Real Men Drink Diet Coke? And who will drink Coke Life?
Coke is one of the most powerful global brands. They have 42% global market share of the soft drink category, with Pepsi second at 28%. Coke is a fairly simple brand to study and look at its evolution from an undifferentiated strategy to a multi-segment strategy. It is important to look at the famous formula change of coke in 1985 as part of our study. To grow in the beverage industry, Coke continually optimizes their product mix in soft drinks, and adds brands and technology that are relevant to consumers as trends and habits change in the world of non-alcoholic beverage consumption. Coke has significant ownership stakes in Honest Tea to appeal to a more health and environmentally conscious consumer; and Green Mountain Brewing (maker or Keurig coffee makers) to enter the coffee market and DIY market. Our study today will look at the Coke brand family. Coke started with one product, with an undifferentiated segmentation strategy, and changed to a multi-segment strategy as the brand evolved and market needs changed. There are also 2 articles about the Cola wars and Coke’s growth strategies and challenges in your Harvard Business Review Course pack. You should read them as well.
Diet Coke – 1982
Diet Coke was introduced as a “diet drink” targeted primarily to women, in 1982.
New Coke – 1985
Soft drink consumption per capita has been declining for over 10 years. Coke-branded soft drinks are still a strong cash cow in their product portfolio. Coke has worked to optimize the Coca-Cola product line via relevant segmentation and line extension of this powerful brand. Consumer preferences for lower-calorie, healthier, better tasting drinks has been a consistent trend. Coke has answered with a number of beverage company acquisitions, new products and optimization of the Coca-Cola branded product line.
The Coca-Cola Company knows it has to be creative if it’s going to sell more soda after sales dropped two years in a row in 2005 and 2006. Morgan Stanley analyst Bill Pecoriello explains, “Consumers are becoming ever more health-conscious, and the image of regular carbonated soft drinks is deteriorating rapidly.” In an attempt to appeal to consumers concerned with nutrition, Coke introduced Diet Coke Plus in 2007, a sweeter version of Diet Coke fortified with vitamins and minerals. But what they really needed was a way to reach young male consumers, and Diet Coke Plus, marketed with tag lines like “Your Best Friend Just Got Friendlier!” wasn’t going to do it.
A few new products appealed to certain male demographics, such as Coca-Cola Blak, a cola with coffee essence created for older, more sophisticated consumers who are willing to pay more. However, research showed that there was still a big demographic hole to fill as young men between the ages of 18 and 34 were abandoning the Coca-Cola brand altogether. They didn’t want all the calories of regular Coke, but they weren’t willing to make the move to Diet Coke, either, which has traditionally been marketed to women who want to lose weight.
Katie Bayne, chief marketing officer for Coca-Cola North America, says that the men who weren’t put off by the “feminine stigma” of Diet Coke often rejected it anyway because of its aspartame-sweetened aftertaste. “What we were seeing before Zero launched was that more and more young people were interested in no-calorie beverages but weren’t going to sacrifice taste,” Bayne said. “So when they got interested in no-calorie, they were like, ‘Forget it, I’m not going to Diet Coke.’
Coke Zero – 2005
Testing showed that the name “Coke Zero” would be an effective way to sell a low-calorie cola to men without using the word “diet.” And advances in artificial sweeteners made it possible for Coke to finally create a product that tasted more like the “Real Thing.” So expectations were high when Coke Zero was introduced in 2005 with a big marketing push, including a commercial that remade the famous 1971 “Hilltop/I’d Like to Teach the World to Sing” ad—this time with rapper G-Love on a rooftop singing that he’d like to teach the world to “chill.” Unfortunately, the commercial didn’t catch on, and neither did the product it was selling.
Despite disappointing sales in the U.S., however, Coke Zero was an immediate hit in Australia, selling more than three times the number of cases expected during its first year on the market. In the U.S., the packaging was white and silver, making it difficult for consumers to see the difference between Coke Zero and Diet Coke. In Australia, the bottles and cans were black, making the product stand out on the shelves and look more like the “bloke’s Coke” it was intended to be.
The U.S. marketing team took notice and reintroduced Coke Zero with a black and silver label in 2007. Coca-Cola is now investing more money in Coke Zero than any other brand its size, and it was the most successful soft drink launched in a decade.
Most recently Coke has introduced Coke Life. A stevia sweetened, mid-calorie formulation to compensate for decreasing revenues in artificially sweetened drinks, appealing to a different market segment.
In addition to the videos and text here, there are 2 articles in your HBR course pack to use for this case.
SOURCES: Jerry Adler, “Attack of the Diet Cokes,” Newsweek, May 14, 2007; “Coke’s New ‘Coke Zero’ Faces Tough Going, UPI NewsTrack, June 13, 2005; Duane D. Stanford, “0: That’s Zero. As in No Calories,” The Atlanta Journal-Constitution, March 20, 2007; “Coca-Cola Co.,” MMR, October 30, 2006;
Videos with case:
New Coke – 1985
1. Describe the specific type of consumer that the Coca-Cola Company is targeting with each of the following products: Diet Coke, Coke Zero, and Coke Life. What types of benefits sought, usage rates, demographic & lifestyle segmentation is each product’s target consumer most likely to include? (10 pts) (Chapter 8, p 133-140)(Harvard Business Review Articles – Cola Wars Continue) This could be answered with a table.
2. Coke is sold in many restaurants. What type of buyer is the restaurant community as identified in chapter 7 (pages 120-121), business to business marketing? What is the buying situation most likely encountered when purchasing Coke for a chain restaurant. (Page 128).
3. According the video “Choice, Happiness and Spaghetti Sauce” with Malcom Gladwell, what was the product strategy error made in the introduction of “New Coke” in 1985? Research the New Coke introduction further, (much has been written about this case) what consumer research process errors were made as well? (10 pts)
4. Do you think Diet Coke could have been repositioned to change consumers’ perceptions of it enough to be considered a drink equally appealing to men? Why or why not? In other countries, Diet Coke is called “Coke Light” Would this be a more universally appealing position? Why or Why not? (5 pts)
5. Global growth has been a key strategy for Coke, and one way they have been successful in winning the Cola Wars, discuss their strategy for global growth and distribution and obstacles they faced. (pages 80-86 – Harvard Business Review Article.)(6 pts)
Formatting: Provide a word document, in 11 pt. Calibri or like font. Double space, use 1 inch margins. Please set up like a series of short answer questions. Repeat the question, (single spaced) then state your answer. Cite sources within the text.
Length of submission should be approximately 2 pages.
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