Friday, April 20, 2012

A Fundamental Shift In Pop Culture

The soft drink industry can be a fickle business, and bold attempts at innovation are often met with rapid failure.  Even the biggest, more powerful companies struggle with this challenge, and Coca-Cola is no exception.  Coke's epic 1985 "New Coke" reformulation is still a textbook case of marketing gone awry.

Give it some thought--can you name the last time a brand new, truly ground-breaking soda flavor hit the market and actually stuck? A decade after New Coke's funeral, the flame that was Surge, another Coke product, burned brightly in the late 90s, then quickly lost its fizz.  After it's launch in 1996, Surge looked like it was making a run at Pepsi's citrus powerhouse, Mountain Dew.  Yet by the end of 2001, Coke had shut down production of canned and bottled Surge, and the final drops of sweet, sweet citrus--in fountain-syrup form--dried up the following year.  The marketing teams at Coke were back to the drawing board...

These days, the soft drinkers of the world don't seem too willing to branch out and try new flavors.  Every "innovative" new Pepsi and Coke product in the stores is some weak variation of Pepsi, Coke, Diet Pepsi, or Diet Coke.  Remember all those Super Bowl ads for Pepsi Max? Regular Pepsi with more caffeine.  Pepsi Throwback?  Regular Pepsi with real sugar.  And don't get me started on all those sad twists on diet soft drinks: Pepsi One, Coke Zero, Dr. Pepper 10...the list goes on and on.  Are those ten calories in Dr. Pepper really going to convince men that it's okay to drink diet soda?  I doubt it...and I still don't understand how a successful product launch begins by aliening half of your customer base. But I work in finance, not marketing...

Day after day at the office, I find myself sitting with coworkers in the cafeteria, listening to one person after the other finish off a can of soda, then complain, "I'm still so parched!  If only I had another half ounce of pop!"  And when it's not the portion size, they start complaining about how much trouble they have holding onto the can!  When will it stop?!

Well, it looks like it ends today. After all the wheel-spinning in the soda industry over the past ten years, I can confidently say that the marketing teams at Coca-Cola have overcome their bad case of bottlers' block and broken the mold with a product they recently sent into the marketplace.  Just today, I heard a radio ad for a new drink that will solve all of my coworkers' problems and more: the 89¢ Coke 12.5oz bottle!  Unnecessary flavor experiments are a thing of the past; let the package size proliferation begin!

Genius!  It's no wonder the big consumer goods companies hire armies of high-priced MBAs to market their products--mere mortals can't some up with ideas like this.  One of the big-shots at Coke offered the following sound-byte for the launch of 12.5oz Coke, which targets convenience-store shoppers: "The new package holds tremendous appeal for traditional gas ‘n go consumers and less frequent in-store shoppers, such as females and white collar professionals.  While the design will capture shoppers’ attention at the cold vault, the comprehensive immediate consumption strategy behind it will captivate operators."

At the risk of sounding like a naive finance guy, I have my own opinions on the prospects for 12.5oz Coca-Cola. The Coke guy went on to talk about the allure and value of the below-a-dollar price point.  Yet gas stations already have that...a 32oz fountain Coke costs ~60¢ at a lot of convenience stores.  Where's the value in paying a little less and getting a lot less?  Good thing people suck at math...maybe the 12.5oz offering is nothing more than a ploy to make the cost-per-ounce that much tougher to calculate by throwing fractional ounces into the mix.

But moving beyond the price, it's important that we don't lose sight of the fact that this is America, and when it comes to vehicles, junk food, and sugary beverages, less is not more.  Bigger is better; it's just simple evolution:

 By the time that kid reaches adulthood, he'll have to cut the roof off his car:

When that radio ad sparked my interest in 12.5oz Coke and I went online to learn more, my search turned up a brilliant one-liner on some blogger's Twitter feed: "New Coca Cola 12.5 oz Handheld! Uh, yeah. That's called A CAN OF COKE. Thanks, marketing team."  I'm glad I'm not the only one who has trouble admiring the innovation.  

But if you disagree with me and can't wait to shell out 89¢ for 12.5oz Coke, please be careful.  Read those labels closely, because there are a lot of look-alikes out there, which, coincidentally, also happen to be authentic Coke products.  Don't grab the 20oz bottle, avoid the 16oz bottle, and whatever you do, don't be fooled by the 12oz bottle, or you're going to find yourself in a sad, thirsty search for that last half ounce.

Best of luck to you.  It's a complicated world.

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