just after World War II, the market share for The Coca-Cola Company's flagship beverage was 60%. By 1983, it had declined to under 24%, largely because of competition from Pepsi-Cola. Pepsi had begun to outsell Coke in supermarkets; Coke maintained its edge only through soda vending machines and fountain sales through fast food restaurants, concessions and sports venues where Coca-Cola had purchased captive "pouring rights".Market analysts believed baby boomers were more likely to purchase diet drinks as they aged and remained health- and weight-conscious.Therefore, any future growth in the full-calorie segment had to come from younger drinkers, who at that time favored Pepsi and its sweetness by even more overwhelming margins than the market as a whole. When Roberto Goizueta took over as CEO in 1980, he pointedly told employees there would be no sacred cows in how the company did its business, including how it formulated its drinks.
Market research Edit
Coca-Cola's most senior executives commissioned a secret effort named "Project Kansas" — headed by marketing vice president Sergio Zyman and Brian Dyson, president of Coca-Cola USA – to test and perfect the new flavor for Coke itself. It took its name from a famous photo of that state's renowned journalist William Allen White drinking a Coke; the image had been used extensively in its advertising and hung on several executives' walls. The company's marketing department again went out into the field, this time armed with samples of the possible new drink for taste tests, surveys, and focus groups.The results of the taste tests were strong – the sweeter mixture overwhelmingly beat both regular Coke and Pepsi. Then tasters were asked if they would buy and drink it if it were Coca-Cola. Most said yes, they would, although it would take some getting used to. A small minority, about 10–12%, felt angry and alienated at the very thought, saying that they might stop drinking Coke altogether.Their presence in focus groups tended to skew results in a more negative direction as they exerted indirect peer pressure on other participants.the surveys, which were given more significance by standard marketing procedures of the era, were less negative and were key in convincing management to move forward with a change in the formula for 1985, to coincide with the drink's centenary. But the focus groups had provided a clue as to how the change would play out in a public context, a data point that the company downplayed but which was to prove important later.Early in his career with Coca-Cola, Goizueta had been in charge of the company's Bahamian subsidiary. In that capacity, he had improved sales by tweaking the drink's flavor slightly, so he was receptive to the idea that changes to the taste of Coke could lead to increased profits. He believed it would be "New Coke or no Coke",and the change must take place openly.He insisted that the containers carry the "New!" label, which gave the drink its popular name.
Official launch Edit
New Coke was introduced on April 23, 1985. Production of the original formulation ended later that same week.The press conference at New York City's Lincoln Center to introduce the new formula did not go over very well.Reporters present had already been fed questions by Pepsi,which was extremely worried that New Coke would erase all its gains.
Despite New Coke's acceptance with a large number of Coca-Cola drinkers, a vocal minority of them resented the change in formula and were not shy about making that known — just as had happened in the focus groups.of these drinkers were Southerners, some of whom considered the drink a fundamental part of regional identity. They viewed the company's decision to change the formula through the prism of the Civil War, as another surrenderto the "Yankees".Company headquarters in Atlanta started receiving letters expressing anger or deep disappointment. Over 400,000 calls and letters were received by the company, including one letter, delivered to Goizueta, that was addressed to "Chief Dodo, The Coca-Cola Company". Another letter asked for his autograph, as the signature of "one of the dumbest executives in American business history" would likely become valuable in the future. The company hotline, 1-800-GET-COKE, received over 1,500 calls a day compared to around 400 before the change.Coke hired a psychiatrist to listen in on calls and told executives some people sounded as if they were discussing the death of a family member. They were, nonetheless, joined by some voices from outside the region.