Snake Oil or Sugar Water?
Dear Web Business-Builder,
When it comes to marketing strategy blunders, pretty much everybody remembers the nosedive failure of New Coke, right?
But what most people don’t know is the fascinating story behind the story, and the valuable lesson it reveals …
Coca-Cola was invented by Dr. John Pemberton, an Atlanta pharmacist, on May 8, 1886.
Pemberton brewed the mixture in his backyard in a three-legged brass kettle. The original ingredients were lime, cinnamon, coca leaves, and the seeds of a Brazilian shrub.
The concoction was originally intended as a nerve and brain tonic. People seemed to get a buzz off it, and it quickly became popular. Coca-Cola was soon served at pharmacy soda fountains far and wide.
The company thrived, dominating the cola market with virtually zero serious competition for decades while its nearest competitor, Pepsi, repeatedly flirted with bankruptcy.
In the thirties, Coke had a chance to buy Pepsi’s assets at a ridiculous fire sale price. Management sneered. Pepsi survived, and by the mid-forties began to prosper.
So much so, that by the early eighties, Coke was about to lose a marketing trump card to Pepsi.
Coke had been losing market share since the end of the Second World War, declining from 60% at that time, to just 24% in 1983.
Pepsi was winning the cola marketing wars with ads that showed blindfolded people taste-testing Coke and Pepsi, and then testifying their preference for Pepsi.
These ads were very effective because many of the people who said Pepsi tasted better were died-in-the-wool Coke drinkers. Seeing their fellow Coke drinker’s shock and dismay in discovering they actually preferred the taste of Pepsi was very persuasive.
Coke drinkers found themselves running down to the corner store to buy Pepsi so they could take the challenge too. Some became converts who then turned their friends on to the Pepsi challenge, and the campaign spread virally.
Pepsi was about to claim that not only did it taste better than Coke (as proven in blind taste tests), but that it was actually more popular. This would have added even more fuel to Pepsi’s already serious challenge to Coke’s market dominance.
Coke was also losing market share to new market entrants who catered to the rising consumer preference for diet, citrus, and caffeine-free beverages, while Pepsi’s marketing strategy was continuing to win new customers.
Better taste was the main thrust of their advertising. Why else would anybody drink such an otherwise worthless mixture of ingredients? It seemed true. People really did prefer the taste of Pepsi.
This fact was further borne out by the runaway success of Diet Coke. Coke actually developed it from the ground up to taste more like Pepsi, rather than simply replacing the sugar content of the original recipe with artificial sweeteners.
All of the evidence pointed to Coke having a taste problem with the original recipe. Coke had, in fact, been working in secret for years on a new one.
Drawing on the success of Diet Coke, Coke’s marketing strategy called for the modification of that recipe to a sugar-based drink. They felt they could finally turn the tide by introducing “NEW Coke,” based on that formula.
In pre-launch blind taste tests, people thought the New Coke tasted sweeter and smoother than the original. Extensive research revealed that people preferred the New Coke to both the original Coca-Cola recipe and Pepsi.
New Coke was the solution,
but what to do with the original?
If they kept both on the market, it was a sure bet Pepsi would be able to claim it was more popular than both! And a marketing strategy that promoted both a new and an old Coke would only confuse the public and dilute the brand.
So the original recipe was dropped.
What happened when New Coke was introduced?
It bombed completely, and utterly! Here’s the brilliant tag line they used to introduce it. “The Best Just Got Better, Coke Is It!” Gee, that looks like a winner.
People hated the New Coke, many without even having to taste it. And they were incensed that the original had been “stolen” from them.
Within a week, thousands of stunned and outraged Coke drinkers flooded the company’s toll-free number, threatening to switch to Pepsi. In one bizarre communiqué, a retired Air Force officer explained how he had wished to be cremated and interned in a Coke can, but was now reconsidering.
One hundred years and countless millions of dollars in advertising had made Coca-Cola a part of people’s very identity. Drinking Coca-Cola wasn’t about taste at all.
It was about mental association.
Emotional Opium!
The act of raising that funny looking spiral bottle to your lips … the cane sugary fragrance that followed … the sharp carbonated bite that set your throat ablaze with each vigorous swig. For many people, the whole experience was anchored deeply to fond, albeit sometimes even imaginary memories — memories that had been reinforced repeatedly by Coke’s marketing.
Coke had no choice but to bring back the original recipe, amid a huge fanfare of publicity, as though it were the second coming.
Immediately Coke’s switchboards lit up like Christmas trees. Over the next several days, over eighteen thousand calls of gratitude came pouring in. One caller said she felt as if a lost friend had returned home.
The comeback of the original recipe drove Coke’s stock price into the ozone — to the highest level in twelve years! Coke drinkers everywhere wept syrupy tears of joy and gratefulness at the miraculous redemption of their beloved caustic black glop.
What a hullabaloo about nothing. Sugar water.
For heaven’s sake!
Incredibly, from that point forward the tide turned. Pepsi’s clever ads lost their effectiveness. And Coke maintained the pole position. But the story doesn’t end there …
Years later, a few enterprising neuroscientists decided to conduct their own taste tests — but with an interesting twist. They put the tasters in MRI machines so they could monitor the blood flow inside of their skulls while they drank.
They sent either Pepsi or Coke gushing down a long tube into the taster’s pie holes. Sometimes they were told which glop was coming. Sometimes they weren’t. When they knew what was coming, a particular part of the brain that deals with working memory and associations lit up. And it lit up more brightly with Coke than with Pepsi — proof positive that branding works!
The real attraction of Coke was not in the taste — not at all. It was in the symbolism. Coke symbolized the energy of youth. Drinking Coke identified you as hard driving, someone who worked and played for keeps, living life to the fullest.
So what can we learn from this story?
Well for me, the most interesting aspect is the sway that drama and spectacle have over people. There’s a reality TV flavor to all this, isn’t there?
Pepsi could have easily quoted some stat about how 3 out of 4 people or whatever it was prefer the taste of Pepsi in blind taste tests. But they dramatized it. They tickled our primal competitive nature and made an entertaining game of it. They showed real Coke drinkers experiencing the shocking realization that they did indeed prefer the taste of Pepsi.
And then there was the amazing drama of betrayal and redemption that followed when Coke pulled the plug on the original recipe. This was priceless theater and perhaps the biggest take-away selling gambit in marketing history. Overnight, the perceived value of the original recipe went through the roof!
At the end of the day, who was the real marketing genius?
The common lesson in all this is the power of spectacle to draw attention to your offering and create sustained interest in your sales message.
How will you use it?
Until next time, Good Selling!
Daniel Levis
Editor, The Web Marketing Advisor
THE TOTAL PACKAGE
Daniel Levis is a top marketing consultant and direct response copywriter based in Toronto, Canada and publisher of the world famous copywriting anthology, Masters of Copywriting, featuring the selling wisdom of 44 of the “Top Money” marketing minds of all time, including Clayton Makepeace, Dan Kennedy, Joe Sugarman, John Carlton, Joe Vitale, Michel Fortin, Richard Armstrong and dozens more! For a FREE excerpt visit http://www.SellingtoHumanNature.com
He is also one of the leading Web conversion experts operating online today, and originator of the 5R System (TM), a strategic process for engineering enhanced Internet profits. For a free overview of Daniel’s system, click here.
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12 Comments »
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Comment by DK Fynn | Direct-Response Copywriter — October 15, 2008 @ 1:13 pm
Wow, this is a very thought-provoking and informative post. I never knew the story like this.
To be sure, there’s a very powerful lesson here abut the effect of branding, but we, as small business owners, have to exeercise caution.
The thing we have to remember is that companies the size of Coke and Pepsi are just that–large companies. They’re companies that have the seemingly inexhaustible budgets for large-scale image advertising.
However, I think Dan Kennedy would agree with me that as small business owners (as small direct-response business owners), we any branding that takes place will be more of an accident than an deliberate effect. That is, any branding that will occur will happen because we are direct-response marketers, using direct-response methods, rather than deliberate image- or brand- advertising.
Comment by Kathy Smith — October 15, 2008 @ 2:20 pm
Sip. Sip. Hooray! Thanks for the insightful lesson, Daniel!
Comment by Daniel Levis — October 15, 2008 @ 2:33 pm
Yes DK, you are right, however, I would disagree with the word "accidental". A better word would be "incidental". Direct response advertisers need to think about branding too. If you look at Dan Kennedy’s marketing, the branding that takes place as a result of creating a direct response is very deliberate.
Comment by Wayne Altman — October 15, 2008 @ 4:08 pm
Interesting story for sure. More than a couple good lessons here. Coke should have crushed Pepsi when it had the chance.
Pepsi should have stopped making that nasty tasteing beverage. LOL
Coke was brilliant by "taking away" the old recipe, people really did freak out. Hoarding cases of Coke, and writing letters, and editorials. There is a book about the whole thing I remember reading "Cola Wars" some interesting stuff.
Comment by Marcelino Latorre — October 15, 2008 @ 5:48 pm
wow powerful stuff..
Comment by CoCreatr — October 15, 2008 @ 7:50 pm
Great lessons and a laugh to be had, Daniel, from just watching your vivid description of the "syrupy … caustic black glop … wars." I think to pull off publicity stunts like this you need a worthy opponent, some sparring partner with a similar level of brand recognition . This is not for everyone.
Maybe the Seven-Up "uncola" approach? Wonder how this might work out for small business…
Comment by SSaw — October 15, 2008 @ 11:00 pm
People love to sold out according to their imagination. For me, it’s the lesson in this story. Both big and small marketers must admit this lesson to their marketing efforts.
Be blessed….
Comment by Seth Chong, Online Copywriter — October 16, 2008 @ 12:46 am
This is amazing. Thanks for such a close-to-impossible writing Daniel.
Comment by Terry Dickson — October 16, 2008 @ 1:01 pm
Yikees it was a good reading and you guys have the best handle writing this way drawing people to your business. Good work. Now my interest is learning from you PRO’S. Now I am DEAF what does that mean???? I no HEAR, How do I hear?? Using my eyes as my ears. So please whatever you create help me get started and boost my sales where I could help 35 million deaf and hard of hearing fols all over good old USA.
Thank You all
Terry
Comment by Terry Dickson — October 16, 2008 @ 1:03 pm
OOPPSS See why I need you folks. Smiling I see my fols should have been folks. Sorry for the glitch
Terry
Comment by JANICE TRUPPE — October 16, 2008 @ 3:39 pm
THAT’S NOT THE WAY I REMEMBER IT AT ALL, AND WE ARE BIG COKE DRINKERS BEFORE AND AFTER. IN FACT WE BOUGHT UP ALL THE COKE WE COULD FIND AND WE HAD 3 LEFT WHEN THEY BROUGHT THE COKE BACK. IT WAS THE TASTE FOR US IN FACT THE CURRENT COKE DOESN’T EVEN TASTE THE SAME AS THE ORIGINAL BUT IT’S NOT TOO BAD. AS FOR THE PEPSI CHALLENGE IT’S FIXED. I TOOK IT A FEW YEARS AGO THEY GIVE YOU FLAT WARM COKE AND FRESH COLD PEPSI TO TASTE IF YOU ARE NOT A DIEHARD COKE DRINKER YOU WILL PICK THE PEPSI NO DOUBT, BUT MYSELF AND MY HUSBAND WILL PICK THE COKE EVERY TIME. I WILL ADMIT THE PEPSI WHEN SERVED THROUGH A DISPENSER IS BETTER THAN THE BOTTLE.
Comment by Rabbi of Response — October 18, 2008 @ 6:44 pm
And the moral is…
get the people buying from you, to appreciate what you have to offer…
on an EMOTIONAL level!
You can easily accomplish this by doing unexpected things that no one else in your industry does!
Go the extra mile for your clients and distinguish yourself as head over heals against any competition.
Here’s a real life example:
The first time I walked in to Walmart was in Pennsylvania.
It was about 1 am in the morning, and my Dad wanted to introduce me to Walmart, which I had never been to prior to this experience.
As we walked in to the warm store, straight out of the chilling cold, Pennsylvania night, we were greeted by a little old lady who came right up to us and greeted us as if we had just entered her home, and made us “feel” as if this was the most hospitable place on earth!
She was energetic and warm! And a real pleasure to meet!
I’ll NEVER forget that experience!
The thing is, you can duplicate the same experience in your business simply by engaging your clients on an emotional level by genuinely letting them feel appreciated.
If this is accomplished in a truly genuine manner, their experience with you will be truly memorable and it will cause them to develop a subconscious emotional dependence to get more - of the same warm, positive interaction, that we all love to take part of whenever we communicate with people!
I’m talking really good vibes!
This kind of WOW experience is your personal branding that you can implement even on a shoe string budget. All you have to change… is your attitude!
I hope this helps you!
Sincerely,
Ron Redner
“The Rabbi of Response”