Coca-Cola Co.

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John Pemberton placed the first newspaper ads for his new product, Coca-Cola, in 1886. But he was in poor health, and the following year sold most of his interest in the nonalcoholic patent medicine. Asa Briggs Candler, an Atlanta druggist, was able to consolidate ownership of the product in 1891.

Mr. Candler hired the Massengale Agency in 1895 to handle Coca-Cola advertising. Massengale's first campaign for Coca-Cola featured upper-class ladies and gentlemen drinking Coca-Cola in elegant surroundings. The agency also distributed coupons for a complimentary glass of Coca-Cola as well as a variety of novelties—such as fans, clocks and calendars—that displayed the Coca-Cola trademark. In 1899, the marketer began to franchise its bottling operations.

In 1906, the company opened its first non-U.S. bottling plant, in Havana, and moved its account to D'Arcy Advertising Co., which continued as Coca-Cola's agency for 50 years. D'Arcy maintained the "pleasantness" theme of Massengale's earlier ads but by 1910, the images of people in its Coca-Cola ads shifted subtly to appeal to Americans across class, gender and age groups.

New packaging innovations

In 1919, following World War I, the first European bottling plant opened in Paris, and Mr. Candler sold Coca-Cola to a group led by Ernest Woodruff, whose son, Robert, took over the company in 1923. In the 1920s, bottling—which had been introduced in 1894—became a critically important packaging innovation, and in 1923, the marketer tested what became one of its most powerful merchandising tools: the six-bottle cardboard carton. By the end of 1928, Coca-Cola in bottles outsold the fountain drink.

In 1929, D'Arcy introduced an important new campaign for Coca-Cola, "The Pause That Refreshes," the success of which led Advertising Age in 1999 to rank it No. 2 on its list of the top ad campaigns of the 20th century.

At the outbreak of World War II, Coca-Cola had bottling facilities in 44 countries; when peace returned in 1945, the soft drink was poised for worldwide growth. From the mid-1940s until 1960, the number of countries with bottling operations nearly doubled.

In 1948, the company copyrighted the term "Coke" for the first time, in the slogan "Where there's Coke, there's hospitality." Coca-Cola's advertising over the next two decades essentially ignored the social realities of the war in Korea and later, Vietnam, as well as the Civil Rights movement. The soft drink continued to be presented as a pleasant reward in an idealized, harmonious world.

From 1950 to the '70s, Coca-Cola Co. experienced its most dramatic changes since the advent of bottling. With better and bigger packaging, the marketer began to employ a retail-oriented strategy focused on price, size and value. The company also moved into TV advertising, airing its first commercial in 1950. In 1953, Coca-Cola Co.'s ad spending reached $30 million.

In 1955, William Robinson and H.B. Nicholson became president and chairman, respectively, and the following year Coca-Cola Co. replaced D'Arcy with McCann-Erickson. At the time, the account was valued at $15 million.

In 1960, the company began to offer Coca-Cola in 12-ounce metal cans that had originally been developed for the armed forces. Three years later, "Things Go Better With Coca-Cola" was introduced in the form of a jingle sung in Coke spots by such groups as the Supremes, Jan & Dean and the Moody Blues. It went on to become the theme of several campaigns.

The 1970s

After 10 years of "Things Go Better," Coca-Cola changed its ad strategy, in 1970 launching "It's the Real Thing," ranked No. 53 on Advertising Age's list of the century's best ad campaigns. The jingle that accompanied the effort was itself ranked No. 9 among the top 10 jingles of the century. One spot in the campaign, "Hilltop," featured children of different nationalities walking together in formation on an Italian hilltop, photographed from the air.

During the 1970s, the company faced aggressive competition from Pepsi-Cola Co. To counter "The Real Thing," Pepsi introduced "The Pepsi Generation," associating Pepsi with youth and free spiritedness; the marketer also began its "Pepsi challenge," which invited consumers to compare Pepsi and Coke for themselves in blind taste tests.

In 1979, Coca-Cola countered with "Mean" Joe Greene in a TV spot with sentimental appeal. In the spot, a dispirited Mr. Greene tossed his jersey to a young admirer, who shared his Coke with the Pittsburgh Steelers football player. "Have a Coca-Cola and a smile" debuted as the tagline of this spot. Later Coca-Cola efforts, however, including "Coke Is It" (1982) and the worldwide "Always Coca-Cola" from Creative Artists Agency (1993), were more successful in winning market share. In 1981, Roberto Goizueto, who was credited with many of the company's successes over the next two decades, became chairman-CEO of the company.

In May 1963, Coca-Cola had introduced its first low-calorie soft drink under the brand name Tab. At the time, Coca-Cola executives feared they would dilute the value of the Coke trademark if the brand was used on more than one product. Almost two decades later, however, the company reversed its thinking, debuting Diet Coke in the U.S. in 1982 with the tagline "Just for the taste of it." Nothing in the spots referred to the fact that the drink was low in calories. The campaign was created by SSC&B:Lintas Worldwide, which handled Diet Coke in all English-speaking countries. By the end of 1983, Diet Coke had become the best-selling diet soft drink in the U.S., and by 1984, it was the third most popular soft drink overall, outperforming 7UP.

Following the success of Diet Coke, Coca-Cola Co. continued to extend the Coca-Cola brand: Caffeine-Free diet and regular formulations debuted in 1983, Cherry Coca-Cola was introduced nationally in 1985, and Diet Cherry followed in 1986. Despite the success of Diet Coca-Cola, however, Coca-Cola's market-share against Pepsi dropped to a margin of 4.9% by 1984 and Coca-Cola sales trailed those of its archrival in grocery stores by 1.9%; its retail strategy seemed to be failing. Coke, however, continued to outperform Pepsi in institutional outlets, such as McDonald's and Burger King, and in international markets.

"New Coke"

Faced with this unsettling domestic competitive situation, Coca-Cola took a dramatic step. In April 1985, it introduced a new formula for Coca-Cola. The reformulation was sweeter, something Coca-Cola executives thought consumers who took the Pepsi challenge and preferred the sweeter Pepsi were telling them. The marketer planned to discontinue the old formulation in favor of "new Coke."

In retrospect, the decision has come be seen as one of the great marketing blunders of the 20th century. Consumer complaints reached as many as 1,500 a day and, by July, the marketer returned the old formulation to the market under the name Coca-Cola Classic. Coca-Cola President Donald Keough appeared in commercials to apologize to consumers for underestimating their passion for the original formula. After this expensive lesson, the company began to treat Coke as a "mega-brand," subsuming its various and growing extensions within one marketing concept.

In 1989, the company concluded a deal to make Coca-Cola the official soft drink of the National Basketball Association. It also signed an agreement with Major League Baseball and became the official soft drink of the National Hockey League. That same year, Coca-Cola unveiled its "Can't Beat the Real Thing" campaign, which was intended to incorporate elements of traditional Coca-Cola advertising in a fresh consumer appeal.

The following year, Coca-Cola signed a 16-year agreement with Walt Disney Co. to tie Coca-Cola products to the studio's films and to sell Coca-Cola products at Disney theme parks. Such a long-term commitment was risky, and some of the film tie-ins Coca-Cola subsequently found itself a part of were not successful.

Creative Artists Agency

In August 1989, Coca-Cola challenged the traditional agency-client relationship when it hired Michael Ovitz's Creative Artists Agency as a consultant, a move that agencies regarded as a threat to their control over creative work. Three years later, in 1992, Coca-Cola launched its first global advertising campaign, which used similar commercials in each country in which it had a presence.

Coca-Cola again shook Madison Avenue in October 1993 when it shifted $95 million in Diet Coca-Cola billings from Lintas to Lowe & Partners, another Interpublic Group of Cos. unit. It was the first major change in the otherwise stable Coca-Cola agency structure since 1955.

In 1993, Coca-Cola launched "Always Coca-Cola," creative for which had been handled by Creative Artists Agency. The campaign included an unprecedented 26 different TV spots. "Always Coca-Cola" is considered the epitome of the strategy of all-situations positioning, which attempts to nullify other brands' specific situational positioning. Advertising Age ranked it No. 86 on its list of the top campaigns of the century. Coke's popular polar bear characters first appeared in this campaign.

M. Douglas Ivester became chairman-CEO in 1997, following the death of Mr. Goizueto. Mr. Ivester, who had been president-chief operating officer, was blamed for undoing many of his predecessor's successes. Mr. Ivester's problems included his handling of health scare in Belgium that involved contaminated Coke, an unpopular price increase on Coke concentrate sold to the company's bottlers and the continuing slide in the company's market share. Under Mr. Ivester's leadership, however, Coca-Cola Co. became the U.S.' No. 1 marketer of bottled water after its acquisition in 1999 of Dasani and an agreement that year giving Coca-Cola U.S. distribution of Danone water.

In 2000, Douglas Draft became chairman-CEO, following Mr. Ivester's exitand he oversaw a massive restructuring, cutting 5,200 jobs and drove the marketer to "think local and act local." Throughout 2001, several officers in the succession pipeline resigned, including No. 2 Jack Stahl as well as Charlie Frenette, then the head of the European unit, while Brian Dyson returned as vice-chairman and chief operating officer.

Lemon-lime Sprite, another Coca-Cola brand, was the brightest spot for the company in 1997 and 1998, when its sales grew faster than any other soft drink in the U.S. Sprite's marketing strategy, developed with Lowe & Partners, sought to get consumers—especially the youth market—to ignore image and "Obey your thirst." The campaign began in 1995; in October 2001 Coca-Cola moved the account to Ogilvy & Mather Worldwide, New York.

In 2002, Coca-Cola moved the Coca-Cola Classic account to Berlin Cameron. In May of that year, the marketer acquired the branded soft-drink of Seagram from Diageo, including ginger ale, seltzer and club soda, and introduced Vanilla Coke. Coca-Cola owns Minute Maid (since 1960), as well as the Fanta, Fruitopia and Powerade brands.

In 2003, Big Red chopped another 3,700 jobs, including 1,000 in North America, as Steve Heyer joined the company as president-chief operating officer. He consolidated the operating units into one group. In May 2003, former employee Matthew Whitley sued Coca-Cola, alleging financial wrongdoing, which spurred federal investigations and the resignation by Tom Moore, then head of Coke’s fountain division. In December 2003, Jeff Dunn, president of Coca-Cola North America, resigned.

In 2004, Mr. Daft announced his retirement, a year shy of his planned five-year tenure. The company brought back former president and director Don Keough to the board, which said it would launch a search for the next chairman-CEO; Steve Heyer, widely considered to be the heir apparent, was the sole internal candidate.

For 2003, Coca-Cola Co. had worldwide earnings of $4.35 billion on sales of $21.04 billion. Ad spending in 2003 was $1.9 billion, according to the company’s annual filing with the Securities & Exchange Commission.

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