Coca-Cola’s management believed that the introduction of New Coke would completely destroy Pepsi’s competitive strategy. In fact, Pepsi’s own management initially believed that this was a masterstroke by Coke.
Firstly, the New Coke product was to be positioned as new, exciting, modern and young; directly confronting the “Pepsi Generation” campaign and stealing Pepsi’s market positioning.
Secondly, the New Coke product tasted better which would stop the Pepsi Challenge taste-test advertising. In fact, Coke had plans to run their own taste-tests and run their own TV commercials in order to win back lost customers.
Therefore, you can see why Coke’s management was so confident, as they believed that they had boxed Pepsi into a corner and destroyed their competitive strategy, as highlighted in the following perceptual map.
Alternative Product Options to Consider
You need to consider whether if and how Coca-Cola should launch a new product or whether there are better non-product solutions to their competitive battle with Pepsi.
Here are the different approaches to a new product to consider.
A. Develop a NEW product
1. Launch the new product as a replacement for Coke (as they did first) or
2. Launch the new product under Coke brand in addition to Coke (as they did later) or
3. Launch the new product under a new brand name (as a multi-brand strategy) or
4. Slowly change the Coke formula over time to become New Coke (without consumers noticing) or
5. Undertake market testing of the new product first (before a full launch)
B. Do NOT develop a new product
1. Increase promotional activity and spend
2. Increase in-store promotions and discounting
3. Increase retailer penetration
4. Reposition the Coke brand
5. Attempt to reposition Pepsi
6. Try something else (your own ideas)
C. Do nothing different
1. From the above list, what would be the best option for Coke to pursue in 1985?
2. If you decided to introduce some form of new product, how would you position the new product relative to both Pepsi and any remaining Coke products?
3. If you decided to reposition the Coke brand outline your positioning goals. If you decided NOT to modify the product mix, outline why this approach would be successful given that Coke has already implemented many of these marketing tactics.
4. Outline why your proposed competitive strategy will be successful in this aggressive period of the Cola Wars.
5. In what ways, do you think, that Pepsi may respond to your proposed strategy?