How will the Coca-Cola avoid the big loss for launching a wrong product?

(A Case Study regarding Commercialization: Test Marketing and Launching of New Product)
by Rebecca Marian L. Aguilar

I. Time Context
Despite a series of company reorganizations, Coke had failed to spur growth and
their sales were flat in 2004.

II. Point of View

Unhappy with their lack of success, Coke’s board of directors asked 40-year Coke
veteran, Neville Isdell, to return from retirement to help right the ship. He identifies
the problem immediately.

Neville Isdell returns in 2004 as the CEO of the company. He said, "We have lost
our vision. There is no clarity about where we are going and what we need to do.
We need to go back to our roots and start seeing ourselves as more than a
carbonated soda business. We are in a creative-service business."

III. Short Background of the Company

It's not surprising that Coca-Cola, probably the world's most recognized product
(and certainly its most popular soft drink) has spawned a wide variety of popular
stories about its origin, its effects, and the ingredients used in Coke's famous "secret
formula:" Most of these tales, such as the ones about Coca Cola dissolving teeth, it’s
supposed contraceptive powers, or the assertion that 1985s New Coke debacle was
a Machiavellian gambit to divert attention from a change from the original formula,
are baseless. But the most frequently heard story, that Coca-Cola originally
contained cocaine, is, technically speaking, true.

Coca-Cola was invented in 1886 by John Pemberton, an Atlanta, Georgia,

pharmacist. Pemberton was actually trying to concoct a headache remedy, but once
he mixed his special syrup with carbonated water, and a few customers tasted the
result, he realized that he had the makings of a popular soda fountain beverage. The
name Coca-Cola was coined by Pemberton's bookkeeper, Frank Robinson, who also
wrote out the new name in the expressive script that has become Coca Cola's
signature logo.

Though the Coca-Cola Company apparently would rather not talk about the
origin of its name in detail, it's clear that Robinson derived "Coca-Cola" from two of
the drink's ingredients: cola from the cola nut, and extract of coca leaf, also the
source of cocaine. Cocaine was a common ingredient of nineteenth-century patent
 medicines, and by the standards of the day Coca-Cola contained a minuscule
amount that probably had no effect on its consumers.

Still, by the early 1890s there was a rising tide of anti-cocaine sentiment, and
Atlanta businessman Asa Candler, who acquired the Coca Cola Company in 1891,
steadily decreased even the tiny amount of the drug in the recipe. There is some
evidence that the only reason Candler kept putting even minute amounts of coca
extract in the drink was the belief that to omit it entirely might cause Coca Cola, by
then besieged by imitators, to lose its trademark. In any event, Coca-Cola was
completely cocaine free by 1929.

The name Coke appeared in popular usage as a short form of Coca-Cola just
before World War I but was often applied as a generic term to any cola drink (and
used by Coca-Cola's competitors, including the now long-defunct Koke Company)
until 1940, when the U.S. Supreme Court ruled that the name Coke rightfully
belongs to the Coca-Cola Company.

In financial circles, Coca-Cola has been one of the strongest and most reliable
trading stocks, showing a steady return in all of its years of existence but one.
Warren Buffet, one of the world's richest men, has always touted Coca Cola as an
essential in one's stock portfolio.

IV. Statement of the Problem

For its biggest launch since Diet Coke, Coca-Cola identified a new market: 20- to
40-year-old men who liked the taste of Coke (but not its calories and carbs) and liked
the no-calorie aspect of Diet Coke (but not its taste or feminine image). C2, which
had half the calories and carbs and all the taste of original Coke, was introduced in
2004 with a $50 million advertising campaign.

However, the budget couldn’t overcome the fact that C2’s benefits weren’t
distinctive enough. Men rejected the hybrid drink; they wanted full flavor with no
calories or carbs, not half the calories and carbs. And the low-carb trend turned out
to be short-lived. (Positioning a product to leverage a fad is a common mistake.)

Why didn’t these issues come up before the launch? Sometimes market research
is skewed by asking the wrong questions or rendered useless by failing to look
objectively at the results. New products can take on a life of their own within an
organization, becoming so hyped that there’s no turning back. Coca-Cola’s
management ultimately deemed C2 a failure. Worldwide case volume for all three
drinks grew by only 2% in 2004 (and growth in North America was flat), suggesting
 that C2’s few sales came mostly at the expense of Coke and Diet Coke. The company
learned from its mistake, though: A year later it launched Coke Zero, a no-calorie,
full-flavor product that can be found on shelves—and in men’s hands—today.

V. Areas of Consideration (SWOT Analysis)

STRENGTHS
1.The number one beverages brand in terms of reach and sales
2. Popular subsidiary brands like Coca Cola, Fanta, Kinley, Limca, Maaza, Minute
Maid, etc.
3. Global reach with presence in over 200 countries
4.More than 500 brands on offer
5.An employee strength of around 1,500,000 people globally
6.Strong and efficient supply chain network, ensuring that all the products are
available even in the most remote places
7.Strong financial condition
8.Strong brand recall through advertising and marketing by associating with
celebrity brand ambassadors
9.CSR activities in the field of water conservation and recycling, education, health
etc.
10. Effective and efficient packaging technique giving emphasis on recycling and
reusing
11. Long association with international sports events, sponsorships etc.

WEAKNESSES
1. The presence of traces of pesticides in the cola beverages have caused damage to
the brand image
2. Strong competition in the aerated drinks segment from Pepsi Co. means constant
fight over market share
3. No presence in the snacks and food industry

OPPORTUNITIES
1. Increase its reaching untapped countries and market
2. Market and popularize the less known products
3. Acquire other companies
4. Diversify its product portfolio by entering into snacks industry to compete with
Pepsi Co.

THREATS
 1. Health consciousness amongst people
2. Difficulty in complying with different government regulations and norms in
different countries
3. Inflation, economic slowdown and instability
4. Strong competition

VI. Alternative Courses of Action

Coca-Cola already had a big name in the industry they belong. However, they
must be very careful when it comes to taking risks in launching a new product
without making people want it.

1. Product Development– Coca-Cola innovated the C2 and introduce the Coke

Zero.
2. Product Concept – emphasizing the benefits or the contents of the product
could help to attract the consumers.
3. Test Marketing – Coca-Cola must perform this where the product and its
marketing plan are exposed to a carefully chosen sample of the population
for deciding if to reject it before its full scale launch.

VII. Conclusion and Recommendation

In conclusion, Coca Cola strategies are very well developed and executed a fact
that can be explained by the performance of the company. The company should
now invest more of products that are deemed to be healthy since the segment is
growing on an alarming rate.

In this case, I recommend to perform all the suggested courses of action but it’s
best to do the test marketing to know if the product will attract the consumers and
will achieve high sales and profit to cover the expenses if ever the product was
launched.