IV. Activity
Ex. 1. Choose a brand from the list below. Answer the following questions:
• What is the brand name?
• Is it a power brand?
• What do you think is the brand essence?
• What is your image of the brand?
• Can you describe the brand parity and its positioning?
• Can you say how the brand creates and maintains loyalty?
Examples of prominent brand names
The 2001 ranking of the 100 most valuable brands worldwide by Apple (computer):
Boeing (aerospace)
Coca-Cola (soft drink)
Columbia Records (recorded sound—since 1988 owned by Sony)
Ford Motor Company (automobiles)
McDonald's (fast food restaurant)
Microsoft (software)
Brands (European):
BP (petrol—UK)
Cadbury (chocolate—UK)
Ferrari (automobile—Italy)
Ikea (furniture—Sweden)
Lego (toys—Denmark)
Mercedes-Benz (automobile—Germany)
Nestlé (food—Switzerland)
Nokia (cell phones—Finland)
Brands (Japanese):
Canon
Honda
Sony
Toyota
Ex. 2 . Read the Coca-Cola case and speak about:
The reasons for the Coca-Cola company’s failure in the introduction “New Coke” brand?
A financial and strategic value of brands for the company.
One of the most important developments in brands after 1980 has been the realization among managers that established brands could represent a certain value for the company. Initially, this idea circulated only among financial analysts who saw strong brands as a guarantee of future income for the company. In the second half of the 1980s, the idea that brands have a value that should not be underestimated also caught the attention within marketing circles. The idea that a successful brand is one of the most valuable, if not the most valuable, possession of a company, is referred to by the term “brand equity”. From the perspective that brands not only represent a financial but also a strategic value for the company. The Coca-Cola case is discussed below.
The introduction of New Coke and Coca-Cola Classic
Coca-Cola (1886) and Pepsi-Cola (1898) are two cola brands originating in America, which have been involved in a so-called “cola war” since the Second World War. Via the Pepsi test, Pepsi-Cola managed to convince many consumers that the taste of Pepsi-Cola certainly was not inferior to that of Coca-Cola. Partly because of the increasing popularity of the somewhat sweeter tasting Pepsi-Cola, after 1960 the market share of COCA-Cola decreased slightly in terms of turnover from 22.5% to 21.8%. In terms of percentage this seems like a small setback, but in absolute terms the decrease of 0.7% meant a turnover decrease of almost $50 million! As a result of this downward trend, The Coca-Cola Company decided to introduce a sweeter cola on the American market under the name “New Coke”. Extensive blind product tests of 190.000 (!) Canadian and American consumers in the age group of 13-59 years showed that 61% of the people involved liked New Coke better than traditional Coca-Cola. On 23 April 1985 New Coke was introduced on the American market and the old Coca-Cola disappeared from shelves. Shortly after the company made the product change known, there was a rush for the old Coca-Cola and consumer protests became loud and frequent. These protests led, among other things, to the establishment of the “Old Coke Drinkers of America”, which quickly grew to an association with 60.000 members. The leader of this association, Gay Mullins, went to court against The Coca-Cola Company from Atlanta (Georgia). The “Old Coke Drinkers of America” not only accused The Coca-Cola Company of fraud because of the fact that it brought a new product on the market in an old package, but Mullins’ association also wanted to force The Coca-Cola Company to reveal the secret ingredient formula of Coca-Cola (this formula was seen as the property of the whole nation). These are a few quotes from the consumer protests:
Coca-Cola has denied us one of the fundamental rights guaranteed by the American constitution: freedom of choice.
Changing Coca-Cola would be like painting the White House green.
What ignoramus decided to change the formula of Coke?!?! The new formula is gross, disgusting, unexciting, and WORSE THAN PEPSI!!!
As a result of these protests, The Coca-Cola Company finally succumbed and reintroduced the old cola under the name Coca-Cola Classic on 10 July 1985. At the end of 1985, the turnover share of Coca-Cola in America was again more than 25%. In America, The Coca-Cola Company has exploited both Coca-Cola Classic and New Coke for some time; however, in Europe (and other parts of the world) New Coke was never introduced. At the time that The Coca-Cola Company brought both Coca-Cola Classic and New Coke on the market, Pepsi-Cola mockingly spoke of “Coke are it” instead of “Coke is it”. This New Coke case makes it clear that apparently for consumers there is a difference between a branded article and a product. Although more than half of the consumers questioned in taste tests indicated a preference for New Coke (the sweeter cola), the public was apparently not comfortable with the idea of tampering with one of America’s most prominent brands.
What was made clear by the reintroduction of the Classic Coca-Cola is that – despite the fact that consumers rated the new, sweeter cola higher in blind trials – the brand Coca-Cola had such an emotional value that consumers did not appreciate the branded article being changed. This incident made it clear that the brand experience of consumers can differ significantly from the product experience and that even one of the strongest brands in the world is in the end dependent on consumer acceptance. In essence, this case makes it clear that a brand can have a certain value for consumers that cannot be derived from the physical product itself.
