Is line extension a trap? The Coca Cola case (by Romina Giovannoli)
In 1958 Coca Cola, leader of the walnut extract drinks category, found itself facing a new challenge on the market: RC. Cola Company launches Diet Rite Cola on the market, the first diet product in the soft drinks sector. At the beginning, Diet Rite Cola was intended for diabetics or those who could not consume sugar, then in 1962 it positioned itself as a healthy drink aimed at a general public. The name Diet Rite Cola was chosen to recall the positioning of the drink; in fact it suggested that it was a light and healthy drink, which contained no calories, sugar or caffeine. Even the advertising of the time perfectly highlighted the positioning of the drink, underlining that it was suitable for both adults and children.
As a response to this attack on the market, Coca Cola Company decided not to extend the line by launching its own light version because as Al Ries and Jack Trout said "when you use the expression light, you are saying that the first product launched is not good . They are saying that the original product is unhealthy." Thus, Coca Cola Company decided to launch the new Tab brand in 1963 which had no reference to the Coca Cola brand. With the Beautiful People advertising campaign, Tab was positioned as the drink for beautiful, slim people who wanted to stay fit.
The commercials showed scenes of everyday life of attractive and happy people drinking Tab in various contexts such as work, sport, leisure and parties with the use of the jingle “Tab, what a beautiful drink. Tab, for beautiful people”:
https://www.youtube.com/watch?v=Go44og6fKO8
https://www.youtube.com/watch?v=Vs2xSD-CE6Y
But not only that, the campaign was also based on the concept of "one calorie", reiterating that the drink contained only one calorie per can, and that it was suitable for those who wanted to maintain physical shape. In commercials and print advertising he was shown with a glass that became slimmer when Tab was poured into it.
In 1969, the United States Food and Drug Administration (FDA) outlawed cyclamate, claiming it was potentially carcinogenic. So the Coca Cola Company had to change the Tab formula by replacing cyclamate with saccharin, another artificial sweetener. This change changed the taste of the drink, making it more bitter. Then, in the 1970s, following studies that linked saccharin with bladder cancer in rats, the Coca Cola Company was forced to put the words seriously harmful to health on the Tab can because the United States Congress had imposed products that contained saccharin a warning label. Despite this, Tab's sales did not decline to the point of being the best-selling diet drink in the 70s and 80s because it had managed to create a position in the minds of potential customers thanks to a massive marketing effort. Phenomenon perfect demonstration of the law of the mind, one of the twenty-two immutable laws of marketing by Al Ries and Jack Trout: “It is better to be first in the mind than first on the market. Being first in mind is everything in marketing. Being first to market only matters to the extent that it allows you to be first in mind” (Ries, Trout, 2016, p.27).
In 1963, PepsiCo also decided to launch, in response to Diet Rite Cola, Hello Patio Diet Coke, a diet drink positioned as an alternative to soda for diabetics.
A year later Hello Patio Diet Cola was transformed into Diet Pepsi.
The Coca Cola Company, seeing the great success of Diet Pepsi in the United States in 1982, decided to launch Diet Coke, marketed in Europe and other countries under the name Coca Cola Light, instead of modifying the outlawed Tab ingredients. .
As we have seen in this analysis, the Coca Cola Company, with the Tab brand, had come second on the market in the alternative diet drink category to Cola because the category had been invented by RC. Cola Company under the Diet Rite Cola brand. But despite not arriving first in the diet drink category as an alternative to Cola, it managed to enter the minds of customers first thanks to a strong advertising campaign, positioning itself as a diet drink for people who want to stay fit. This is because, as Al Ries and Jack Trout said, positioning is not what you do to a product, but what you do in the mind of the potential customer. It's how you position the product in your mind. This allowed Tab to resist when two of its ingredients were outlawed.
The Coca Cola Company with the Tab brand had not damaged its first Coca Cola brand because the two brands addressed two completely different target groups and did not cannibalize each other. It ruined the main brand when it launched Diet Cola because as Al Ries and Jack Trout said, the moment you start using words like diet, light you are going to damage the main brand by telling people that the first brand is unhealthy. In fact, Carl Carter, head of media and solutions for the connected consumer and innovation at IRI, noted that there has been a significant consumer shift towards Diet Coke, which has seen a significant increase in volume at the expense of the variant standard Coca Cola. For example, volume sales of Diet Coke increased from 11.47 million liters at the end of March 2018 to 11.49 million liters in mid-April of the same year. By comparison, Coca Cola sales fell from 9 million liters at the end of February to a low of 6.7 million liters in mid-April.
This indicates that, in the United States, regular Coke is actually losing market share to its Diet and Zero variants.
*Thanks to Frank Merenda for the material provided on his YouTube channel Otherwise Merriamo
Romina Giovannoli
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The article Is line extension a trap? The Coca Cola case (by Romina Giovannoli) comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/lestensione-di-linea-e-una-trappola-il-caso-coca-cola-di-romina-giovannoli/ on Sun, 17 Dec 2023 09:30:27 +0000.