Improving Decision Making in the Coca-Cola Company - Case Study Example

Improving Decision Making The Situation In 1985, Coca-Cola Company made a major marketing blunder with its introduction of the New Coke. It can be recalled that the business organization dropped its original Coke formula and reverted to the New Coke in response to the tight competition with its major rival, Pepsi. According to the blind tests administered by the company, the sweeter taste of Pepsi is more preferred by customers. Even though Coca-Cola leads the industry in terms of market share, its competitor is substantially gaining control.

During that period, supermarket sale of Pepsi is 2% higher than Coca-Cola. Thus, in an aggressive effort to battle head on with Pepsi, the company thought that the most viable solution is to change and improve the taste of Coke. Thus, the company reformulated and created the New Coke. In a double-blind test conducted by the company, it appears that 60% of consumers prefer the new taste of New Coke to Pepsi (Kotler and Armstrong 2001). Thus, Coca-Cola dropped its classic formula and introduced New Coke as its flagship brand.

The introduction of New Coke, together with the flurry of advertising and publicity bolstered the sales of the product. However, the succeeding month saw the failure of the company as sales went flat and Coca-Cola began receiving complaints from angry customers. These customers staged protests and threatened to file a suit against the company (Kotler and Armstrong 2001). Thus, three months after its introduction to the public, the New Coke was repackaged as an extension brand while the old formula was named Coke Classic and was retained as the flagship brand.

What Went Wrong The experience of Coca-Cola which is discussed above has become a classic marketing tale documenting the mistakes that managers can make in their decision making process. The failure of Coca-Cola can be largely attributed to two factors namely, narrow definition of its marketing research problem and poor judgment in interpreting the research planning strategies around it (Kotler and Armstrong 2001). Managers became narrow-minded and myopic in diagnosing the problem that Coca-Cola was facing.

Instead of looking at all the factors which may be influencing the buyers in their purchases, these managers only look at the taste of the product. Their research has focused only at the taste ignoring the customers' feelings about dropping the product. It turned out that Coke's symbolic meaning in the United States is more important than taste. Coca-Cola's managers also failed to use wise judgment in the introduction of the New Coke. Even though their decision of dropping the old Coke is warranted by the 60% acceptance rate of the new formula, they did not anticipate that the 40% might still like the old Coke better.

Conclusion Decision making process must not be too narrow to overlook some of the important factors and details. As the situation of Coca-Cola shows us, managers should always avoid hasty generalizations and marketing myopia. In the business environment, decisions should always be grounded on all the factors affecting performance. Focusing on one aspect only will yield a one-sided and inadequate decision.ReferencesKotler, P. & Armstrong, G. (2001). Principles of Marketing. New Jersey: Prentice-Hall