In perhaps one of the biggest self-inflicted wounds in business history, in 1985 The Coca-Cola Company (NYSE: KO) introduced what became known as “New Coke”. Losing market share to the better tasting Pepsi (NYSE: PEP), the company decided to take radical action. It discontinued selling its “old” Coke formula and launched a new, sweeter, better tasting version of the classic soft drink.
Now, this wasn’t a knee-jerk reaction. Before the change, the company spent a lot of time and money testing New Coke with consumers, who in taste tests, surveys and focus groups overwhelmingly said it tasted better than both the original and competitor Pepsi-Cola.
However, although the initial reaction to New Coke by most customers was positive, with the company’s sales rising after the introduction of New Coke, it quickly turned into a public relations disaster for the company.
In fact, the damage to the company’s brand and reputation proved so great that it soon backtracked and again started selling “old Coke” – renamed Coca-Cola Classic – a mere 78 days after the launch of New Coke.
Moccona does a New Coke
Since then, New Coke has served as a cautionary tale for companies planning changes to well-loved brands and products.
Yet it seems some companies and their marketing teams still haven’t got the message.
For example, a couple of years ago Arnott’s decided to change the recipe for its Shapes range of savoury biscuits. However, it was soon forced by irate customers to backtrack and again started selling Shapes made using the original recipes (unoriginally named “Shapes Originals”).
And more recently Douwe Egberts (which trades under the name D.E. Master Blenders 1754 NV) has changed its Moccona Classic Medium Roast coffee by giving it a “richer aroma”.
Having been a satisfied consumer of this coffee for a decade, I viewed this change with trepidation and so was unsurprised to find that the “now richer aroma” version is barely drinkable.
It appears I am not alone, as you can see here.
While I am generally sceptical of online surveys and polls due to the ease in which they can be manipulated, it would seem the sample data – out of 630 reviews of the product, 592 rate it “Terrible” with 16 rating it merely “Bad” – suggests Moccona has stuffed up.
And an admittedly small survey I took of friends and relatives confirms this view – all of them hate the “richer aroma” version.
Lessons for marketing teams
The New Coke and Shapes debacles plus Moccona’s more recent misstep offer some valuable lessons for marketing teams.
Regardless of whether your product is losing market share and regardless of whether the new version is better tasting, higher quality, more reliable, etc, marketers also need to consider the negative consequences of making big changes to a much-loved brand or product.
So as well as considering the amount of incremental sales from the new version of a product, company management and their marketing teams need to also consider whether these incremental sales will compensate for potential lost sales from existing customers. Particularly as existing customers are likely to be the most loyal and hence most vocal in criticising the company if they don’t like the new version.
Most importantly, though, human psychology also needs to be considered. Specifically, among our many emotional and psychological biases is an aversion to change. In the jargon it is called “status quo bias”: an emotional bias for the current state of affairs.
The Coca-Cola Company learnt this the hard way, finally realising that most customers were more upset about the withdrawal of the old formula than the taste of the new one.
And this was over a product (New Coke) that most customers nevertheless did think tasted better than “old” Coke.
Unfortunately for Douwe Egberts, Moccona Classic Medium Roast coffee with “new richer aroma” tastes much worse than the version it replaced.
So while this coffee product represents a much smaller portion of Douwe Egberts’ sales than Coke did when The Coca-Cola Company introduced New Coke, I hope Douwe Egberts reacts to the negative feedback from customers like me and reverts to the original version of Classic Medium Roast coffee.