Put every marketing theory to test

I was thinking about the "It’s a net Zero for Coke" post by Laura Ries:

I would like to bet that Coke has not been gaining any more customers with each additional brand they introduce.

Zero does zero for the Coke brand. It is just a further watering down of the Coke brand in the mind of the consumer. Pretty soon, Coke will be so watered down you might as well just call it Dasani.

I read a lot about positioning and divergence. It’s a great theory but do not assume that theory never fails when put into practice.

I had a strong feeling that Coca Cola Marketing Department know what they are doing. Coke would not make changes without a great deal of consideration beforehand. After all, Coca Cola tests its marketing campaigns. It does not launch new flavors all over the world at once. For example, in India the first phase of Vanilla Coke launch covered only 17 per cent of the population. Coca Cola must have received a great feedback before launching the product to its main markets.

Laura’s post does not contain any data on Coke sales, so I had to dig Google a lot. There is not much info about Coca-Cola Zero on the net yet. Let’s just take another Coke line extension, Vanilla Coke introduced in May 2002.

First of all, Vanilla Coke was a successful product. Why do I think so?

1. You need something new to make news.

New Coke flavor generated a lot of buzz about the company. People discussed the taste of the beverage a lot. Reports of the development of vanilla Coke have appeared in the Beverage Digest and the Atlanta Journal. Coca Cola got a lot of free advertising.

2. Coca Cola gained more customers:

According to the Danish Beverage Forum, the Vanilla Coke launch lured in 8 million new customers who were not previously Coca-Cola drinkers. What’s more, AC Nielsen figures show that 29% of U.S. households purchased the drink during its first year; that’s one of the strongest one-year showings ever for a new product (via TheMontleyFool).

Another quote:

Just one month after launch, the sales volume in Hong Kong exceeded expectations by 60% (Coca-Cola press release).

Vanilla Coke attracted teenagers. Teenagers are always after new things, not the "real thing". Coca Cola is wise enough to understand this:

"We’ve targeted ‘Hip Hop’ to appeal to teens as they seek out variety and cool new things like Vanilla Coke," said Chuenhathai Vuntanadit, Marketing Manager, Coca-Cola (Thailand) Ltd (source).

3. Coke’s shares went up:

Coke’s shares are at half the level they were in 1998 but have rallied since the beginning of the year. They have climbed from $44 to almost $53. The emphasis on new brand development and the fresh shake-up in Atlanta have impressed Wall Street, and both Credit Suisse First Boston and Lehman Brothers raised their ratings on the group last week. (Buzzle)

Vanilla fad is fading and Vanilla Coke goes away, leaving the room to other Coke drinks. Vanilla Coke made the Coke brand stronger, not weaker. People who liked Vanilla Coke will try Coke with lime or Coke Zero. I used to buy Coke or Pepsi depending on my mood. Now I buy Coke or Sprite (Coca Cola brand). It’s hard to return back to Pepsi after you really got used to Coke. I think new flavors are not a bad thing in the long run. Though every step must be considered thoroughly.

Don’t take me wrong: positioning can give great result. But line extension may be necessary to survive on the market. Think a lot, test everything and do not listen to any marketing consultants. They will not be in charge if you lose money. I will not be in charge if you fail. So the only way for you is to think for yourself. Think!