Case Example — Coca-Cola Zero

As implied by its name and slogan, Coca-Cola Zero has no calories and it tastes like Coca-Cola. Launched in June 2005 it is hailed by The Coca-Cola Company as its most successful product introduction since Diet Coke.

Over the course of its development and launch, extensive research was conducted to evaluate and validate this ground-breaking product. In one key initiative, Nielsen employed three different analytics platforms in the U.S., to study the launch. The research findings are summarized as follows (Exhibit 22.14):

  • Data from the Nielsen retail panel revealed that the launch was well executed. The brand’s distribution was very strong, and it was heavily promoted within stores.
  • Though sales were promising, they were driven primarily through trial purchases.
  • Homescan, the Nielsen consumer panel, revealed that repeat purchases were relatively weak.
  • Importantly, both custom research and consumer panel data indicated that the brand’s source of growth was coming from Diet Coke.

The latter two factors, i.e., low repeat purchases and the cannibalization of Diet Coke, were a source of concern.

Repeat purchasing is crucially important for the longevity of a FMCG product. Such a product can succeed only if it develops a strong base of regular consumers.

Low repeat rates suggest that the people who tried the product did not like it. This occurs typically due to two possible scenarios. Either the product has some shortcomings, or it is not reaching its intended target segment.

To understand the danger signals one must appreciate that Coca-Cola Zero was launched in response to consumers’ desire for healthier, low calorie drinks. Colas in general, are not perceived as healthy. Consequently their share of throat has declined, and Coca-Cola has been cannibalized by healthier beverages, including varieties that were launched by The Coca-Cola Company.

The launch of Coca-Cola Zero was therefore intended to reclaim lapsed Coca-Cola drinkers as well as stem any further erosion of the brand. It was not another diet cola — Diet Coke consumers were not the target market.

Dieting is of greater interest to some consumers, particularly women. Many of these consumers preferred Diet Coke and were accustomed to its taste. Not surprisingly, when they tried it, Coca-Cola Zero did not appeal to their senses.

The consumers that The Coca-Cola Company was most interested in targeting through Coca-Cola Zero included individuals who were concerned about their health and weight, and who did not like products that were associated with dieting. They tended to be either current or lapsed regular Coca-Cola drinkers. So to target them it was important to communicate the brand’s proposition — real Coca-Cola taste and zero calories.

Exhibit 22.11   Coca-Cola Zero was initially launched in white cans and bottles.

Exhibit 22.12   Coca-Cola Zero black labels first debuted in New Zealand.

Promoted initially with the “Everybody Chill” tagline, custom research highlighted that Coca-Cola Zero advertising was primarily reinforcing a cool trendy brand image. The “real taste” and “zero calories” messages were not well communicated as can be gauged from the launch advertisement shown in Exhibit 22.13.

Exhibit 22.13   The Coca-Cola Zero launch advertisement.

Exhibit 22.14   Summary of research findings and recommendation.

Moreover, the white cans and bottles that Coca-Cola Zero debuted in (see Exhibit 22.11), were associated with feminine-leaning diet drinks. Coca-Cola Zero needed a more masculine look and message.

The lack of clarity in communication led to purchases by non-targeted consumers, i.e. the Diet Coke drinkers. On the other hand, the consumers that the company was most interested in pursuing were not enticed to try the new product.

For the launch period in particular, Coca-Cola Zero needed a campaign that better targeted these consumers. It is in this context that the Coca-Cola Zero boxer ad shown in Exhibit 22.15 was created and aired.

Exhibit 22.15   The Coca-Cola Zero Boxer ad.

Coca-Cola New Zealand pioneered the black packaging shown in Exhibit 22.12. It was a safe bet — the All Blacks, New Zealand’s national rugby team, is legendary, and black is the nation’s favourite colour.

Soon after the launch in New Zealand, the U.S. and other markets switched labels from white to black.

These revisions to the brand’s communication strategy clearly differentiated Coca-Cola Zero from Coca-Cola and Diet Coke, and eventually cemented its success. A decade after its introduction, the brand is sold in about 160 countries across the globe.

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