The Coca-Cola Company and chunky marketing

Coke_2 The pressures are extraordinary.  Coke is still more profitable  than Pepsi, but Pepsi has pulled even with Coke in market value (at $103 billion).  Ten years ago, Coke was three times bigger.  The value of the Coke brand has declined 20% since 1999. 

Superficially, the problem for the Coca-Cola Company looks like a long tail one.  In the beginning, there was a one cola, and it’s name was Coca-Cola. Now the CSD (carbonated soft drink) category has differentiated within and exploded without. 

Consumers are flocking to a new breed of coffees, juices, and teas — all categories where Coke has historically been weak. For the longest time, Coke seemed in denial, more fixated on reversing the stagnation in soda than investing in the alternative beverages that consumers were clamoring for.

Clearly, the Coca-Cola Company (TCCC) needs to be more things to more people, but not many more things.  The trick is to be each of these things with ferocious intensity.  So when they did  Fruitopia, it would have been better not to do it in that half hearted "if only this were a soda" way.  Fruitopia needed to be sold as if it were a tiny start up not an obligation. 

Fragmenting markets do not, in this case, demand the product and management of long tail diversity.  It just looks that way.  (And it must look that way to corporations that spend a lot of time selling one or two brands millions of times a day.)  The real problem is not extensity, it’s intensity.  The problem is not the new diversity of the marketplace.  It’s the old single mindedness of the producer. 

Yes, a new culture is upon us.  But the real challenge is the old cultures that still prevail within the corporation.  It may be possible to cultivate lots of diversity within the corporation but I suspect that "skunk works" strategies will be called for.  The corporation will have to multiply itself.  The most deeply rooted "we are one organization" models will have to be denied.  In order to muster that ferocity of committment from which great brands spring, it will be necessary to engage in new acts of disorganization.  Yes, the marketplace is more various.  But this does not require long tail strategies.  It only means that the corporation becomes more various, too.

References

Anonymous.  2006.  Queen of Pop: Meet Mary Minnick.  BusinessWeek. August 7, 2006.  here.

5 thoughts on “The Coca-Cola Company and chunky marketing

  1. edward cotton

    Grant,

    Ten years ago, I told the CMO of a drinks company, that they weren’t in the drinks business, but instead in fashion. He agreed, but told me he couldn’t turn his culture around to become that kind of company.

    It’s tough to turn around the tanker.

    Ed

  2. Peter

    It is interesting, Grant, that you say that “Fruitopia needed to be sold as if it were a tiny start up not an obligation”, and you say this at the 25th anniversary of the launch of the IBM PC.

    IBM tried twice to develop PC operating system software internally — once using the cumbersome structures and mainframe-mindset people of its existing software division, and once by establishing an internal “start-up”, a new group run at arms length from the existing s/w group. Neither worked, and the company was forced to go outside to an actual start-up, Microsoft, to get its operating system.

  3. mark schraaad

    I think the gains of Pepsi that alowed it to match Coke says more about the power of brand parity and excellent execution. The power of brand differentiation (which is much more interesting to stratigize, create, and execute) can easily be overestimated in a severely commoditized market.

  4. mark

    Cultural diversity is a two sided coin. There are many cases where having a seperate culture in a division has lead to a “company within a company” syndrome. IN the case of Salomon Brothers in the ’80s, that enabled the bond trading division to justify itself acting outside of the law.

    Maybe the problem is more fundemental and simple: change management. It means a company throwing off system that were supposed to “guarantee” results, and start taking more risks.

  5. Anonymous

    Ed, brilliant, and that raises the possibility of a kind of swatch strategy, where the brand now stands for a steady stream of variation. This is not long tail, because the corporation, the brander still has to design the vector most precisely. Thanks, Grant

    Peter, I was indeed thinking of the PC when I mentioned the skunk works (and I guess it is the most spectacular example). Thanks, Grant

    Mark S., interesting, I have the following though that if this were truly a commoditized market we would all be drinking generic, store brand Coke and Pepsi. But certainly, it is true that execution counts for lots here, and if a Swatch model is in the works, it will count for even more. Thanks, Grant

    M. good point, when people set off to reinvent the world, the ability of the corporation to prevent Enron-type problems is challenged. And yes it would be great if we could come up with a change management model that would work here, but how do you create a single system to create all the diversity of product needed to speak to new diversity of consumer taste and preference? Skunk word diversity seems more promising, some how. Thanks, Grant

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