The paper "Coke's Brand Loyalty" is a perfect example of a case study on marketing. When the Coca-Cola company decided in April 1985 that it was losing out to its nearest competitor, Pepsi-Cola, it identified two factors that appeared to be causing this trend: the Pepsi-Cola product was sweeter in taste, and it was being marketed as the drink for younger people. Coca-Cola had been the market leader for a long time and had built up a customer base among older people but it felt under pressure to reach out to the next generation and secure its dominant place in the marketplace.
The failure of its campaign to replace the original formula with a new, sweeter one, teaches us two important lessons about marketing. First, the importance of brand loyalty must never be underestimated, and this is particularly true of brands that are iconic and have a long and successful history like Coca-Cola. Secondly, it is dangerous to base a whole product design and marketing campaign on a reaction to a perceived threat On the issue of the make-up of its formula, Coca-Cola used blind taste tests to determine which formula customers preferred.
A better set of tests would have been a combined blind test and a sighted test. In other words, Coca-Cola should have tested whether customer behavior changes when they can see the name on the label. Many people buy the brand, not the product because they identify strongly with their favorite brand and are very upset if it is changed or replaced (Fisher and Stye, 1985, 1). Another useful research method would have been focus groups that explore why people are attached to Coca-Cola, or to Pepsi-Cola.
The emotional connotations cannot be determined in simple yes/no questionnaires, and so more discussion and exploration in an open-ended focus group would have helped to understand the psychology behind Coca-Cola’ s customer behavior.