If three is a crowd, what happens when there are four in the mix?

In a risky move reminiscent of the “New” vs “Classic” Coke marketing disaster of 1985, Coke has released a fourth version of Coke into the market place to complement it’s existing stable of Coke, Diet Coke and Coke Zero

Coke_fours

Coke Life has been released to provide consumers with a natural alternative to the existing Diet Coke and Coke Zero range without the full sugar hit of standard Coke. While on the surface this appears to be a new market segment to tap into, is this really new consumers being added to their market share or just the same people buying a lower calorie alternative? Using the STP Model, Coke is aiming towards a new segment not covered by it’s existing product range but I for one am not certain this segment exists other than in a survey response form.

 

The calorie reduction is only 30% compared to the standard Coke recipe so don’t be fooled – this is still not a “healthy“ drink to be consumed daily. The sugar reduction has been achieved by using Stevia to retain sweetness and in a blind taste test Coke appears to have succeeded on this front. In the ongoing war between Pepsi and Coke, Pepsi has of course released their own version called Pepsi True in an almost identical olive green can so any new sales will be hard fought over. Both companies are clearly attempting to pitch for a healthy, environmentally friendly look with olive green colours and tree leaf highlights in advertising material.

Ingredients

With a continuing demand for functional beverages from consumers, Coke life could be seen as an ideal product to meet the demand for guilt free soft drinks but may miss the mark entirely. Coke already owns multiple beverage brands aimed at the health conscious consumer such as Mount Franklin (water), Powerade (sports drinks), Mother (energy drinks) and Vitamin Water. The sugar content of Coke Life compared to standard Coke has been reduced by 30% but all this really means is that a soft drink that is very unhealthy to consume has now become slightly less unhealthy, reminiscent of Low Tar tobacco products. In the modern world where consumers can compare product reviews on their phones while shopping and mandatory ingredient and calorie labelling on product packaging this may not be enough to encourage the switch from an alternative soft drink.

 

In an interesting move, Coke has also pitched Coke Life as a Premium brand with the pricing set slightly above standard and diet varieties once discounting has been allowed for. This means not only is the consumer being asked to pick the product because of a relatively minor healthy benefit, they also have to pay for the privilege in a strategic move by Coke to signal a high quality product. The combination of high price with a low perceived benefit over standard Coke or competing full sugar soft drink could lead to a slow decline in sales as the initial rush of test purchases tapers off and repeat purchasers have to rationalise the reason for the extra cost to their weekly shopping.

Coke-Life

Looking at the product in a different light, with soft drink volumes dropping year on year since 2004. Coke life may be a strategic stop-gap product to shore up declining sales while transitioning their customers onto alternative, truly healthy options already available and owned by the Coke parent company. If this is the case, the Coke Life product and brand could be a useful tool to ensure competitors remain loyal to the overall Coke branding rather than having them defect to a competitor. Long term brand loyalty would not be an issue since Coke Life would be a gateway product to another segment so as long as the overall Coke brand and image is not damaged, it could be classed as a Marketing and sales success by it’s own eventual failure. Coke has stated that they plan to shift 50% of their sales to low or no calorie products by 2020 and Coke Life may be the tool to achieve this while ensuring the existing customer base is not eroded by competitors such as Pepsi, with their Pepsi True product.

 

Overall, there have been mixed reviews to the product in it’s first year in the market both from a taste perspective and financial analysis. It may not have been a complete crash and burn failure like in 1985, but it is far from a shining success story The next 12 to 18 months of sales data along with performance reviews and future sales forecasts from Coke management will provide an interesting insight into the ongoing soft drink market wars for the consumer dollar

 

Author: Andrew Kingstone 215477263

Links Referenced:

Rachid Haoues,  CBS NEWS April 23, 2015

http://www.cbsnews.com/news/30-years-ago-today-coca-cola-new-coke-failure/

 

Lisa Magloff, retrieved 20 July 2016

http://smallbusiness.chron.com/premium-pricing-strategy-1107.html

 

Daisy Coyle, Foodwatch 01 May 2015

http://foodwatch.com.au/reviews/item/product-snapshot-coke-life-vs-coke-regular-a-side-by-side-taste-test.html

 

Leonie Roderick on 13 Oct 2015, Marketing Week

https://www.marketingweek.com/2015/10/13/coke-life-one-year-on-sales-success-or-marketing-gimmick/

 

Annmarie Hanlon, December 17, 2013

http://www.smartinsights.com/digital-marketing-strategy/customer-segmentation-targeting/segmentation-targeting-and-positioning/

 

MARCH 27, 2015 News.com.au

http://www.news.com.au/finance/business/tough-times-for-coke-and-pepsi-as-us-sales-of-soft-drinks-decline-for-10th-year/news-story/de97273c284b453cabf0f6e52e816b79

 

 

 

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