As a researcher I’m often asked to demonstrate the value of market research. To illustrate that value allow me a quick question: Don’t you miss New Coke? Ok, probably not but I know I do. I’m surely in the smallest of minorities here, but as a lifelong Pepsi drinker, I rather liked Coke-si. Of course New Coke bombed and practically ruined Coke’s reputation as one of the world’s bullet proof companies. But why did it fail? And why in the world did the good folks at Coke put it on the market in the first place?
If you remember those old Pepsi taste test commercials that’s your answer, at least in part. It turns out they were true. The research, though spotty, showed people really did prefer the taste of Pepsi to Coke. And Coke knew it. Coke the perennial power house was losing market share to Pepsi and was at a loss as to what to do about it. Taking a good bit of what they learned while developing Diet Coke, which tasted a lot more like Pepsi than it did Coke, they developed New Coke which actually beat Coke and Pepsi by substantial margins in blind taste tests. The research showed they had a sure winner. And so they made a remarkable and nearly disastrous decision, abandon original Coke.
And we know the rest; New Coke caused a massive public backlash and Coke scrambled to get the old product back to the market place.
Things ended up turning out well for Coca-Cola, so much so that many people believe that the whole thing was some sort of super genius marketing plan aimed at drawing new attention to good old Coke.
The truth is much simpler.
Yes, Coke was losing market share and Pepsi really did beat Coke in taste test and New Coke beat them both. The reason why Coca-Cola abandoned Old Coke was due to the fact that Coke failed to ask their existing, loyal customers what they would do if they were completely deprived of their favorite drink. Moreover, Coke failed to think about what type of marketing they themselves had done over the years. The Cola Wars were in large part about how individuals chose to express themselves by what soft drink they liked. People had wrapped their identities around their favorite drink.
Coke had spent years and millions of dollars encouraging exactly this sort of behavior. But because of some poor thinking about the simplest of market research, the taste test, and more importantly NOT asking what their loyal customers would do if they were suddenly deprived of a small but oddly critical part of their identities, Coke nearly ruined their business.
And that’s the value of market research, capturing as complete a picture as you can of your market BEFORE making a decision.
