analysis | Not the product, but the idea: Why New Coke failed with consumers.

New Coke.

Nothing else continues to evoke such fear and wonder in the world of marketing than these two words. It was an unmitigated disaster, a cautionary tale of poor planning whose very mention conjures powerful images of corporate hubris gone awry.

The quintessential marketing failure of the 1980s, New Coke was a popular name for a product heralded as the reformulated replacement of Coke, one designed to appeal to changing consumer tastes and counter sliding market share. But its eventual failure and phaseout raised an uncomfortable question the soft drink behemoth, The Coca-Cola Company, had never before confronted:

What were they selling?

For much of its nearly one hundred and thirty year history, The Coca-Cola Company proved a safe, if not conservative bet for investors. But in the mid to late 70s, a slide in marketshare, in conjunction with inattentive management, a litany of distractions, and aggressive advertising from its eternal rival Pepsi had pushed executives to consider launching a new product. Executives concluded that the taste of Coca-Cola was in need of an update. Up until its disastrous launch, New Coke was by-the-books marketing exercise: Thomas Oliver writes in his book "The Real Coke The Real Story" that after extensive research and engineering, New Coke performed well in focus groups, and consumers in blind taste tests had agreed the new product was better. But when released to the market, the backlash was as immense as it was swift.

A textbook exercise in new product development had just become a textbook example of marketing failure.

Everyday wisdom holds that New Coke failed because the company tried to fix what wasn't broken. Its failure is often attributed to poor consumer research and testing, corporate hubris, and shoddy marketing, a stumble that its rivals at Pepsi did not hesitate to capitalize on. "We think the lesson is pretty clear," writes Abbey Klaasen of Advertising Age. "Don't tinker with success. Or at least think very, very carefully before you do." Phil Edwards of Vox writes that New Coke failed not just due to cultural differences between northern and southern American states, abrupt advertising switches, and marketing mismanagement, but also because of an unappealingly sweet taste. "The working theory is that consumers enjoyed the sweeter taste of Pepsi and New Coke in small doses, but in larger quantities (like a two-liter bottle or full can), the extra sweetness was more polarizing."

However, marketing experts disagree.

The failure of New Coke lay not so much in inept consumer-facing marketing and testing, but in their failure to recognize what they were actually in the business of selling.

It wasn't the concoction of carbonation, water, and sugar in a Contour bottle. It was the emotional connection.

"A soda that tasted good was nice, but Coca-Cola really offered value on the basis of its strong, favorable, and unique brand associations: America, friendship, nostalgia, and the like," writes marketing lecturer Dan Turner of the University of Washington. "In changing the formula, the company walked away from all of these sources of value, and customers reacted strongly, emotionally, and in a predictable fashion." Years of exclusive deals and placements created an intimate connection between Coke and the American life's most emotionally powerful moments. It was the go-to drink at ball games, toasted between father and son. It was the beverage served at McDonald's during a stopover on the family road trip. It was the special treat served during pizza parties at school. It was the perfect compliment to popcorn during the latest Hitchcock movie.

(c) The Coca-Cola Company 2015

What Coke was really selling was a physical, tangible link to those memories, to the subconscious feelings of happiness associated with those times. Even if you couldn't remember whether the movie starred George Peppard or Cary Grant, you remembered the carbonation, the sweetness, the fizz. It's why themes of happiness and special occasions feature so prominently, even on their newer advertisements. People were not necessarily opposed to the taste, but to the very idea of changing Coke, writes Thomas Oliver. "Goizueta and his team underestimated the significance of Coca-Cola to the American people and saw only indistinctly that Coke is as American as Babe Ruth and baseball, as mom and apple pie. And that there are some things you just don't change."

By introducing New Coke, the Coca-Cola Company had broken an unchanging link to the past, something consumers viewed as a sacrosanct reminder of a happier, simpler past (a notion the company cemented through marketing). The introduction of New Coke, and most importantly the discontinuation of the "Classic" formula, created a backlash because consumers felt as though the company was tampering with those inviolable memories. "It didn't matter how good new Coke tasted," writes Thomas Oliver. "what these people resented was the audacity of Coca-Cola in changing the old taste."

"Apparently these consumers knew more about the Coca-Cola Company and its key product than the company itself. They understood that people felt strongly about Coke and that any substitution would be rejected—an insight the crack executive team at the Coca-Cola Company was late to come by."