The VC Case

Coca-Cola Goes Vanilla Again

By Carla Campbell

 

Preface

Vanilla-flavored cola from the Coca-Cola Company has had an uneven journey throughout the last few years.  It is an interesting story and is the basis for this case study written by former UT graduate student, Carla Campbell. 

 

About ten years ago, in response to strong competitive moves, Coca-Cola began aggressively exploring flavored drinks.  One of the company’s moves was the introduction of Vanilla Coke in 2002.  While experiencing strong early sales, the company pulled the plug on the line extension in 2005, acknowledging that while a hard-core group of consumers enjoyed the taste, not all of the marketing elements worked well together.  In other words, it was time to rethink Vanilla Coke.

 

However, in May 2007, the Coca-Cola Company decided to bring back its vanilla-flavored line extension, calling it “Coca-Cola Vanilla.”  The new product was introduced along with a Coca-Cola Vanilla Zero version as well. For this case study, we are going to be concentrating only on the Coca-Cola Vanilla reintroduction and not the Zero extension.

 

In this case, we are asking you to once again step back in time (for only about three months) to help Coca-Cola with the development of its initial message/creative strategy for Coca-Cola Vanilla.  Best of luck……..Coca-Cola Vanilla certainly needs it.  It is very challenging to resurrect previously “failed” line products.

 

The Story of Vanilla Coke

 

Background

Prior to reviewing the Vanilla Coke story, let us review some background about the company itself.  Coca-Cola is the leading producer and marketer of soft drinks.  The company markets four of the world’s top five soft drink brands, including Coca-Cola, Diet Coke, Fanta, and Sprite.  Through the world’s largest distribution system, consumers in nearly 200 countries enjoy Coca-Cola products at a rate of more than 1 billion servings each day.  The company’s flagship brand is one of the most universally identifiable products.  In a 1995 study of symbols, the Landor organization found that the Coca-Cola name is the most widely recognized commercial symbol in the world, and the expression “Coca-Cola” is second only to “OK” as being widely recognized.

 

The Coca-Cola Company has enjoyed a long and successful history; however, it has made mistakes.  Fierce competition and category saturation contributed to financial woes experienced in Coca-Cola’s beverage and soft drink divisions.  Though success has not always come easy or cheap, Coca-Cola has maintained a large loyal consumer base.  As an icon in America and around the world, the company can be credited for listening to and catering to the requests and needs of its consumers.  This is why its attempt to launch new flavors must be carefully considered to ensure not only acceptance by the target market but continued loyalty to the brand.

 

The Cola War:  Coke vs. Pepsi

While Coke and Pepsi are the major league players in the soft drink competition and by far have seen the most success, both have struggled in competition with each other.  Both Coke and Pepsi have begun to talk less about “brands” and more about “trademarks.”  For instance, in a letter, Pepsi North America president Gary Rodkin refers to “Pepsi trademark” and cites Diet Pepsi, Wild Cherry Pepsi, and Pepsi Twist among products “sharing the Pepsi banner.”  Coke bottlers state that Cherry Coke would be more tightly integrated with “Coke trademark.”  The future for product introductions would likely be an attempt to build trademarks with an array of line extensions such as Mt. Dew Code Red, Pepsi Twist, Diet Coke with Lemon and Vanilla Coke. 

 

One industry executive suggests that the beverage world is looking more and more like the auto industry by saying, “Several decades ago, there were a few, and a very few, individual items for sale under the Chevy and Ford names.  But now, look.  There are sedans, compacts, sports cars, SUV’s, vans, etc…. Don’t be surprised to see our industry go the same way, at least to a degree.” 

 

The year 2002 was expected to be a busy one for Coke with many upcoming product innovations.  It was trying to reciprocate the blow that Pepsi gave the company last year, taking more market share away from the leader.  Pepsi was also expected to roll out new products, but at a much slower pace because of an active year in 2001 with the introduction of Mt. Dew Code Red, Sierra Mist, etc.  Each company was expected to battle it out for increases in market share.  Coca-Cola, though maintaining a strong lead, would have liked to have seen a reversal from the pattern of the previous year’s figures, as shown in the following table. 

 

Flavor Innovations

Coca-Cola was looking for new ways to sell and diversify a century-old product with formula spin-offs.  Coke executives stated, “we’ve always got a number of things in development.”  The issue then, was how to market effectively the items that make it past development and would be accepted into the Coca-Cola family of beverages.  The last major alteration to the original formula came in 1985, when Cherry Coke was introduced.  Since that time, it has performed considerably well.  Ironically, this was also the same year that New Coke, a sweeter version of the original, was launched and failed due to consumer outrage.  The 99-year old traditional recipe was once again adopted under a new name, Coca-Cola Classic, to satisfy demand. 

 

Vanilla Coke was a line extension of Coca-Cola and was available in the same bottle and can configuration and sold for the same prices as Coke.  “There seemed to be a lot of consumer interest in the notion of vanilla,” stated Chris Lowe, Coke’s senior vice president of worldwide brands and marketing.  “When we put it in product form, the consumers came away and said ‘This tastes super’.”  Though focus groups liked the product, Mr. Lowe commented that it was too soon to predict the profitability of the product among consumers.  At the time, he described the taste as a “little bit smoother than Coca-Cola Classic, with just a hint of vanilla.”

 

Testing has shown that the public was interested in the new vanilla flavor.  “Consumers were excited about the idea of Vanilla Coke, and we are pleased to give them what they want,” said Doug Daft, chairman and CEO of The Coca-Cola Company.  Excite.com conducted its own poll, and of 12,502 participants, 38% were very interested, 28% somewhat interested, 25% not at all interested, and 3% weren’t sure while 7% didn’t care.

 

Mr. Steve Hutcherson, vice-president for Coke Classic, claimed that research showed that teenagers liked the product.  The practice of adding vanilla to the soft drink in soda fountains appeals to older generations, as well.  “It has a broad range of appeal all the way from teens to young adults and adults,” said Chris Lowe.  “Vanilla seems to cross the generational gap the same way that Coca-Cola does.”

 

This vanilla-flavored introduction was of major concern for the company, because Coke is such an icon and the mess that resulted from the introduction of New Coke was regarded as an act not to be repeated.  It was under the same pressure from Pepsi that Coca-Cola made the decision to alter its original soda and replace it with a sweeter one.  The change sparked outrage in America where generations had been bombarded with advertising convincing them that Coca-Cola was an integral part of life, similar to baseball and apple pie. 

 

Vanilla Coke continued the company's leadership in flavor innovation in the cola category, first with Diet Coke in 1982, then Cherry Coke in 1985, Diet Coke with Lemon in 2001, and then Vanilla Coke. Prior to the intro, Doug Daft, chairman and CEO, called the introduction of Vanilla Coke "very exciting news that will continue to grow our business, in line with our company's priority to accelerate the growth in carbonated soft drinks, led by Coca-Cola."

Vanilla Coke was introduced in the United States in mid-May 2002, and in Canada in late May. The company supported the rollout with television, radio and outdoor advertising.   In accordance with market research, Vanilla Coke was aimed mainly at young adults, people in their late teens and early 20s, Lowe said. At the same time, he explained, a mainstream soft drink brand must target a broad swath of consumers, and Vanilla Coke will do that.

 

With Vanilla Coke, the company hoped to replicate the success of rival PepsiCo’s Code Red, a red version of its Mountain Dew soda.  Analysts say such line extensions typically offer an easy method of enhancing sales. 

 

Though the introduction of Vanilla Coke was officially announced in April 2002, there was still speculation of a Sprite line extension later in the year. Executives at Coke noted the likelihood of such, but downplayed the word “Red Sprite.”  Coke did file for trademarks on “Sprite Remix” and “Remix”, which indicated the possible names that the company planed to use for the new formula.  Pepsi also applied for a trademark on “Mountain Dew Blue Shock,” however, contrary to the speculation that this would be an addition to Code Red, trademark filing indicated that the product would be a frozen beverage.  Pepsi executives reassured that cola innovation would be seen from Pepsi, but did not state specific product line extensions.  Bottlers did not expect major innovation for Cadbury’s carbonated products.  The only noted change would be an introduction of caffeine-free Sun Drop.  Cadbury’s focus in 2002 was on building Dr. Pepper and returning it to growth.

 

Pepsi’s Climb to Fame

The first extension of Pepsi-Cola came in 1964 with Diet Pepsi.  The industry’s first diet drink, Diet Pepsi targeted mostly women who were fashion and health conscious.   The next product variation from Pepsi came in 1975 with Pepsi Light.  This version was a diet cola that had lemon flavoring added.  Ironically, this first venture with the lemon flavor did not see the success that is currently being enjoyed by Pepsi Twist and production was stopped after only a few promotions.  During the 1960’s Pepsi invested its future in the youth of America with the discovery of the purchasing power that the baby boomers held.  The company changed slogans numerous times in the following decades:

            “Now it’s Pepsi, for those who think young”       early ‘60s

            “Pepsi Generation”                                                1963

            “Taste that beats the others cold, Pepsi pours it on”1967

            “You’ve got a lot to live, Pepsi’s got a lot to give”     1969

            “Join the Pepsi people, feelin’ free”                      1973

            “Have a Pepsi Day!”                                             1976

            “Catch that Pepsi spirit”                                        1979

            “Pepsi’s got your taste for life”                             1981

 

Pepsi has also built strong advertising ties with those in the entertainment industry.  In the 1980s, Michael Jackson, Lionel Ritchie, and Michael J. Fox were part of the company’s marketing strategy.  In the 1990s Fred Savage, Billy Crystal, and Ray Charles were introduced into the mix.  Now the company is reaping profits from ads featuring Britney Spears.

 

Pepsi outsold Coca-Cola in store sales for the first time in 1976.  And though Pepsi put pressure on Coke in the mid-80s after acquiring the Burger King chain, the failure of New Coke led to the creation of several brand extensions that ultimately increased Coke’s market share.  Therefore, the battle for market share in the soft drink industry has shifted from allied brands, such as Mountain Dew and Slice or Mellow Yellow and Fanta, to extensions of the flagship brand. 

 

Through excellent placement and advertising, Pepsi has gained a solid reputation for quality and unique flavoring.  Pepsi has created a distinct personality for itself.  Though it appears that the company lives in the shadow of its leading competitor, Pepsi has a strong, loyal customer base and that along with flashy advertising, is likely to remain one of Pepsi’s most valuable assets for years to come. 

 

Coca-Cola’s Advertising History

Asa Candler, one of the early company owners of the Coca-Cola Company, is credited for emphasizing the power of advertising the brand.  Because the taste could not be described, he urged people to try the product.  The advertising produced under his direction also proved that appeal for a brand could be generated through lifestyles and philosophies or in other words, an image.  Throughout its history, Coca-Cola advertising makes an effort to convey quality, reinforce the brand’s identity by using the script lettering, the bright red and white color scheme, and the contour bottle.  The most successful aspect of the brand, aside from the beverage itself, is the lifestyle is conveys.  Available almost anywhere, its image as a happy sociable drink plays extremely well in most cultures.

 

Coke had not presented the public with a catchy verse in several years, and although it spent nearly $2 billion in 2001 advertising its various brands around the world, Coke saw its share of the critical North America cola market decline.  Meanwhile, PepsiCo was enjoying the returns of its Britney Spears lead ad campaign and a greater percentage of market share.  Both companies’ flagship colas, which together account for 1 in every 3 sodas sold in the U.S., lost share the previous year.  However, Coca-Cola was hurt the most, and Pepsi scored big with Code Red and Lemon Twist.  Advertising experts did not give Coke much credit.  “There’s nothing going on over there,” says marketing consultant Al Ries in Atlanta.  He gave Pepsi far better marks for “effectively using visuals like Britney Spears to reinforce Pepsi’s image that it was for the young generation.”  One source stated that “for companies that sell very similar sugar water, image is everything.”

 

Coke made some major changes in advertising for Coke Classic in 2001.  Executives decided to dump the “Enjoy” campaign in favor of a new tag line “Life Tastes Good”.  “Enjoy,” only lasted about a year, was preceded by “Always,” which ran from 1993 to 2000.  The new commercials were “slice-of-life” focused, harkening back to the feel-good ads of the 1970s.  One depicted four young adults riding a train, returning from a concert.  Three are asleep while one thinks about how great life is as he takes a Coke from his friend’s bag and drinks it.  The slogan, “Life Tastes Good” beat out other suggested lines such as “the magic within.” 

 

In the 1950s, the two campaigns launched were “The sign of good taste” and “Be really refreshed.”  Both used television to the fullest with a variety of formats including animation, stop motion, and live-action ads featuring such performers as the McGuire Sisters, Connie Francis, Emmett Kelly, Anita Bryant and the Brothers Four.

 

In 1963, the slogan “Things go better with Coke” was a huge success.   It was adapted to the youth market by allowing a number of popular music artists to modify and perform the song.  Radio commercials were recorded by the Supremes, Tom Jones, Moody Blues, and Ray Charles.

 

Coke has keyed its advertising to the moods of society.  During the political uncertainty from Watergate, Coke created a reminder of positive values with the “Look Up America” campaign.  This upbeat slogan made a smooth and timely transition to the celebration of the country’s bicentennial in 1976.  “Coke adds life” emphasized refreshment and tried to show Coke as the perfect accompaniment to food, fun and leisure.

 

This image set the stage for “have a Coke and a Smile” which further emphasized the rewards in drinking Coca-Cola.  From this tagline, the Mean Joe Green ad, featuring the defensive lineman of that nickname from the Pittsburgh Steelers, emerged and won a CLIO award in the world’s largest advertising awards competition.  Also, in the 1970s, Coca-Cola was fortunate to have what has been described as the most memorable commercial in the history of television.  The famous “hilltop” ad debuted in 1971. The ad features young people around the world standing on a hilltop in Italy uniting in song.  It was part of the “it’s the real thing” series and is viewed as being a political message emphasizing peace and harmony among all people. 

 

The direct, positive statement “Coke is it” was meant to appeal to the forthright mood of America in the 1980s.  It played on previous themes stressing quality, the enjoyment, and especially the anticipation of drinking a Coca-Cola.  Ironically, the introduction of "New Coke" demonstrated in unexpected ways that after ninety-nine years, Coke had indeed become a part of American life. When the Coca-Cola Company introduced a new taste for Coke in North America in 1985, television advertising helped launch it. The public, however, demanded the return of the traditional drink so vehemently that the company was obliged to bring it back renamed as "Coca-Cola Classic."  With both the new Coke and Coca-Cola classic in the marketplace, The Coca-Cola Company needed two distinct ad campaigns. Introduced in 1986, the "Catch the Wave" campaign for the new taste of Coke strove to be youthful, leading edge, and competitive. For Coca-Cola classic, the "Red, White and You" campaign emphasized the drink's broad appeal and the emotional attachment it generated.  In surveys at the time, seventy-five percent of respondents said they considered Coca-Cola classic a symbol of America. The "Red, White and You" theme was a natural consequence.

 

In 1993, The Coca-Cola Company made a dramatic shift in its advertising by introducing the "Always Coca-Cola" campaign by Creative Artists Agency and later Edge Creative. The campaign was a diverse one with an initial run of twenty-seven commercials designed to appeal to specific audiences. The ads ran around the world and included a variety of innovative technical approaches, such as computer animation. One such commercial, “Northern Lights,” introduced what would become one of the most popular symbols of Coca-Cola advertising: the animated polar bear.  The polar bear was a considerable success, and went on to star in six commercials for Coca-Cola, including two ads for the 1994 Olympic Games in which it slid down a luge and soared off a ski jump. Bear cubs also made their debut for Coke in a holiday ad in which the bear family selects its Christmas tree.

 

From the “mean” Joe Greene football spots of the 70s and early 80s to the cuddly polar bears of the 90s, Coke’s main theme behind all their commercials is that drinking Coke is fun and the ads portray Coke as a happy part of life.

 

The Atlanta Journal-Constitution took a poll and of 1500 people and the results below indicate the slogans most favored.

 

39%     Always

23%     I’d like to buy the world a Coke

23%     Have a Coke and a smile

4%       Coke is it

4%       Enjoy

4%       Life tastes good

3%       The magic within

 

The company wanted to regain the association with better times and create an effective, long-lasting strategy for the brand.  Coke executives have conceded that recent advertising strategies have not lived up to the image of the brand.  A fresh campaign is greatly needed, especially as the company’s rival, Pepsi continued to roll out ads under the successful banner of “Joy of Pepsi”.

 

In 2001, Coke tied some of its marketing efforts to famed pop singer Christina Aguilera and the first movie from the Harry Potter children’s book series, in response to Pepsi’s Britney Spears and Bob Dole advertisements.  However, these attempts were not as successful as executives had hoped they would be.

 

The Atlanta-based company’s marketing plan for 2001 was a dramatic switch and included ads from new agencies and up to $500 million in extra marketing spending.  Because 2000’s advertising was uneventful, sluggish sales and heightened criticism resulted.  The upshot was that Coke went through 2000 without a strong marketing message for Coke Classic.  However, that was not a strong business strategy for a product that accounted for 60% of Coke’s total volume sales. 

 

Vanilla Coke’s Introduction & Fate

Fast forward to 2005.  Coca-Cola was initially satisfied with early consumer response to the introduction of the Vanilla Coke product.  However, the company soon realized that the consumer following was limited to a hard-core group of consumers, albeit incredibly loyal.  This dynamic was going to limit the appeal of Vanilla Coke over the long run, probably never allowing the extension to gain the broad following the company wanted and expected. 

 

The brand team at Coca-Cola was forced to accept that the advertising and perhaps some of the other marketing elements were simply not working out.  The advertising was did not seem to highlight the appeal of the vanilla flavor, the whole reason for the product.  The vanilla flavor was not presented in an appealing manner.

 

In 2005, Coca-Cola yanked Vanilla Coke from the shelves with hopes of revisiting the concept later.  In fact, the company never lost hope for a vanilla-flavored product.  Plans to bring back the product were in the works almost from the start.

 

Introducing New Coca-Cola Vanilla

For the reintroduction, the new product is now named, “Coca-Cola Vanilla.”  It comes in 12-ounce cans, 20-ounce bottles, 1.5 and 2 liter bottles and will be available at convenience stores and grocery stores.  To help kick off the introduction, a company spokesperson stated, on the day of the introduction, the following:

 

“To celebrate the occasion and kick off the Memorial Day weekend, Coca-Cola today created the World’s Largest Vanilla Coke Float at the new World of Coca-Cola attraction in Atlanta. A 15-foot-tall contour glass – filled with 2,850 gallons of Vanilla Coke and 7,200 scoops of DREYER’S/EDY’S Grand Vanilla Ice Cream – tipped the scales at 10 tons and set an official Guinness World Record in the “Largest Ice Cream Float” category. The Guinness World Record event helped launch a summer-long promotion with Dreyer’s Grand Ice Cream, Inc./Edy’s Grand Ice Cream encouraging consumers to add an “extra scoop of smooth” to their day by creating a Coca-Cola Vanilla float using DREYER’S/EDY’S SLOW-CHURNED Light Ice Cream or No Sugar Added Light Ice Cream varieties.”

The spokesperson further added, “The promotion will be supported through point-of-sale displays and merchandising in approximately 10,000 supermarkets across the U.S. In addition, an extensive marketing campaign, featuring in-theater advertising, out-of-home, online activation, point-of-sale advertising and sampling will support the reintroduction of Coca-Cola Vanilla.”

 

Your Assignment

You are to help Coca-Cola identify a creative strategy for the “launch” of Coca-Cola Vanilla……not the Zero product.  (Again, please embrace the notion of time travel, going back several months to a few years.)  Disregard any advertising that you have seen for this product.  Instead, use the information provided in this case in conjunction with the readings you have done about creative strategy to develop ideas for this new Coca-Cola line extension.

 

As always, your case report should begin with a problem statement and identification of the critical factors. 

 

Then you will add new material to the critical factors.  It will include two things.  First, are the objectives.  Write out the objectives in the same way that you did for the other cases based on objectives.  Make sure they have all four elements of a good objective.  Provide both direct and indirect objectives—at least one of each. Second, you will have a positioning strategy. The objectives and positioning you set should grow rationally out of the problem statement and critical factors.  You do not have to justify your selection of objectives and a positioning strategy. If you feel you need to justify them, do so in the additional comments section. But, again, it’s not required. As you work on alternative solutions you should keep the objectives and positioning in mind.

 

Then identify from 2-3 possible creative strategies that the company could use.  The strategies you select should be drawn from Dr. Taylor’s strategy wheel.  For example, for each alternative, you will start with a brief description of which segment(s) of the strategy wheel you will draw on (e.g. sensory/routine).  Then, you will provide a creative strategy statement that grows from that strategy decision (e.g. Coca-Cola Vanilla is the new taste that you can drink everyday).  Remember, a creative strategy is not a tag line.  A tag line or slogan is more fully developed (e.g. Have a Coke and a Smile).

 

After identifying the segment of the strategy wheel and formulating a strategy statement, evaluate the pros and cons of each alterative.  Then select the one you think is best and explain why. Suggest some tag line/slogan ideas for your selected alternative.  As always, you can use the additional comments section for anything you want to say that doesn’t fit into the basic case format.

 

Based on the guidelines for focus group and one-on-one interviews, projective techniques and concept testing, gather feedback from members of the target audience.  Let them guide you to choose the best creative strategy.  Results can be included under critical factors.  Be sure to include copies of all the materials used in your interviews in the appendix.