Don't envy the cola kings. After a century of hawking similar-tasting sugar water, Coke and Pepsi have been locked in tit-for-tat marketing battles in recent years, trying to score the coolest summer giveaway or best "recall" ratings for Super Bowl ads, and spending millions on high-end production and media buys, merchandise, and movie ticket tie-ins. And then consumers just go back to buying whichever two-liter soda is on sale in any given week.
This pattern doesn't bode well for so storied an institution as Coca-Cola, which rightly lays claim to the most recognizable brand in the world. Loyalists aside, we're talking about a consumer base - in this case, household gatekeepers, teens, and young adults - that has in general become conditioned to purchase on price and sheer volume, especially in the conventional packaged goods arena. Whether it's the skate punk slamming a 20-ounce bottle or a mom stocking up with a 30-pack of cans for the price of a case, beverage buying has become a commodity game. And commodity is the historic enemy of brand.
Coke wants to change this. Aiming to show more profits to Wall Street after a rocky 1999 (most notably when Coke suffered a 22 percent stock decline in the third quarter, its peak summer season), the company has hiked the price of the magic syrup it sells to its bottlers, an increase destined to be passed on to consumers. And to get even more out of its golden elixir, the company and bottlers have tested a down-shift from 20-ounce bottles to 15-ouncers, but at the same $.75 to $1.00 price. These are the first steps in a 2000 initiative to reestablish a true brand marketing model: charging a premium for a product of implicit value above others in the market. Now Coca-Cola must convince consumers that the brand is worth it.
It's no small challenge, considering the consumer milieu in which the softdrink giants now find themselves, including a wildly proliferating spectrum of choices and brands, many offering consumers a little something extra for their dollar, from memory-enhancing ginkgo biloba and stress-busting St. John's wort to something-or-other-accino. Whatever the placebo value of the New Age concoctions, Coke and Pepsi face a world in which plain old cola just seems a bit, well, plain old.
Coke's mandate for the millennium is to make a splash with its most valuable brand asset, its hour-glass bottle. The plan is the next step of a push begun in 1995 to separate Coke from the rest of the six-packs by getting the product out of the same torpedo-shaped containers that every other soda comes in and back into Coke's classic curvaceous contour bottles, albeit plastic versions, for the most part, and in various sizes.
Pushing the iconolatry up a notch, Coke has also scrapped its "Always Coca-Cola" bottle-cap logo in favor of what the company characterizes as more splashy, Pop Art "sensation graphics." Taking the place of the "Always" tag line is "Enjoy," a simpler, almost nostalgic exhortation that has actually been part of Coke collateral material for years. And starting this month, Coke will hand out samples of those cute little 8-ounce glass bottles, the ones we see in special-edition Christmas gift packs and reams of ads from the company's past, at high-traffic events and locations - sports events, malls, and the like. Ultimately, Coke wants us to pay up for the privilege of drinking Big Red, whether it costs $1 for the new 15-ounce bottle or $1.69 for a contoured 2-liter, already available in some markets.
It's a start. But will consumers gulp? Making over the icon and putting the classic glass bottles back in circulation may have a certain retro appeal with Coke's younger drinkers. But asking people to trade up to premium prices (or down on volume) can be risky, says Jane Rinzler Buckingham, president of New York City research firm Youth Intelligence. "Kids like bigger for their dollar, whether it's a bag of Doritos, a bottle of soda, or a Snickers bar," she says.
And moms and other gatekeepers are even more discerning and sensitive to sticker shock. Not only have they been conditioned to the virtually endless price specials, they've been drawn into the haggling mentality at the supermarket by store club cards and insurgent online entities such as Priceline.com. With all of those resources, many just stock up and then wait until the next sale inevitably comes along.
"Pantry loaders are going to be less impressed" with Coke's make-over, says Doug Barton, senior vice president at Targetbase Marketing, a relationship marketing and management firm. But, he contends, "Kids are the ones who are really image conscious - the brand advocates willing to pay to carry just that bottle. Low-teen to high-teen, those folks are not that price sensitive. It's more about `what's in my hand when my friends see me.'"
And kids are showing an increasing propensity toward brand loyalty, not to mention their ongoing fascination with all things retro. Coke hopes to fuel that fire with its classic bottle redux. But what about the switch to the 15-ouncers? "Kids are becoming more brand loyal, more loyal all around," Rinzler Buckingham agrees. "The flip side is, because of that sense, they know when they're being ripped off. They value that much more the few things in the past they can count on. It's why thrift store clothes and Nick at Nite are so big with them. That's why a company like Coke needs to walk a fine line between heritage and just being old."
Coke has said that it is willing to sacrifice volume sales - actual liters of liquid moved - for dollar sales. It's icon has proven a winner year after year, and certainly will continue to reinforce the brand. But ultimately, Coke faces an evolving marketplace in which consumers react more and more to brands that offer them something more than just stuff for a onetime transaction - be it the New Age fortification of Snapple Elements or SoBe, or the guaranteed lower checkout tape of Priceline. Iconography might maintain a brand's image, but, as heritage-heavyweight Levi Strauss & Co. can attest, it doesn't necessarily guarantee consumers will keep coming back for more, or more often.