The Failure of New Coke and the Success of Toyota’s Decisions

Corporations make a decision at one point to establish a ‘function’ that may have different names, is located in different areas or departments of that corporation, and may have different reporting lines! In its core, that ‘function’ has the task to provide data, information and insight to support decision making!

As the professor mentioned in the video lecture, Analytics can provide the input in the decision-making process that determines a company’s direction. The failure of New Coke and the success of Toyota’s decisions give us big lessons.

The failure case of New Coke

32 years ago, in 1985, Coca-Cola company launched New Coke. It was smoother and sweeter than original one. Unfortunately, customers didn’t like New Coke. One poll showed only 13 % of customers liked new one. Some angry customers launched grassroots campaigns to make the company to bring back the original one. Coca-Cola was number one soda company at that time, but Pepsi was gaining ground and cutting into Coke’s market. After all these pressures, Coca-Cola company decided to return the taste.

Why this happened? I would like to say it is because the company misread public’s references. When the company conducted a market research, they tested the New Coke formula on 200,000 subjects, which led the company thought they could win the “Cola wars” in a soda market. However, the researchers of the company ware wrong. They didn’t know that their customer made purchasing decisions based on habit, nostalgia, and loyalty. The original Cola was a part of their identification, which the researchers didn’t realized. Moreover, researchers only focused on the physical like taste and branding. They didn’t consider the original Cola had symbolic significance to American customers. As a result, the company could realize that a market research isn’t just about physical components or numbers but it includes feeling and attitude toward the brand.

The success case of Toyota’s Lexus

In the 1970s, the image of Toyota Motor Corporation(TMC) in the United States was a cheap car maker. However, in 1983, a chairman of TMC decided to build a luxury vehicle to compete with other luxury car companies such as Mercedes Benz and Cadillac. This decision has brought to an incredible success. The reason that TMC could succeed in a luxury car market was TMC’s brilliant methodical marketing strategy. The company conducted a number of researches to become a quick learner. They spent lots of money to study other luxury automakers. Furthermore, the company has concluded that they need to have different strategies between their country Japan’s competitors and U.S. rivals. As a result, the company built a separate brand and channel.

The potential current state an analytical function

In order to make informed decisions, companies need business analytics(BA) because BA is a useful tool to gain insights about data-driven decision making. BA techniques include two main fields. First one is basic business intelligence. With business intelligence, a company can examine historical data that shows its past performances. The second field is related to deeper statistical analysis. In order to predict the past or future performances, a company uses predictive analytics by applying statistical algorithms. In addition, a company also use other advanced analytics skills like cluster analysis so that they can create a target marketing technique.

Reference

- Joe Benjamin. (June, 2015). Market Research Fail: How New Coke Became the Worst Flub of All Time. Retrieved from http://www.business2community.com/consumer-marketing/market-research-fail-new-coke-became-worst-flub-time-01256904#rlrCV9R0cRylsJ3V.97

- CENTER ON JAPANESE ECONOMY AND BUSINESS (September, 22, 2005). THE SECRETS OF LEXUS’ SUCCESS: HOW TOYOTA MOTOR WENT FROM ZERO TO SIXTY IN THE LUXURY CAR MARKET retrieved from

- Margaret Rouse. (2010). Business Analytics(BA). Retrieved from http://searchbusinessanalytics.techtarget.com/definition/business-analytics-BA