Market Research: The Customer Is Not Always Right
There are many ways in which businesses can learn about customer satisfaction. Of course, sales are probably the best indicator of how well products and services are meeting market needs and wants. But they don’t tell the entire story. After all, companies with few competitors might have high sales figures even as customers complain about quality. (Certain cable providers come to mind.)
In more competitive industries, where substitute products abound, customer satisfaction is often measured in more qualitative ways. Companies might conduct surveys or host focus groups in order to better understand consumer purchase motivations and design products that tap into them. But do customers truly understand the why behind what they buy?
Coca-Cola refers to April 23, 1985, as a day that will live in marketing infamy. That was the day the soft drink giant released New Coke. For nearly a century prior, Coca-Cola reaped the rewards of its simple, sugary formula to sales of nearly $6 billion dollars. However, throughout the 1970s and into the early 80s, competitors like Pepsi were aggressively acquiring market share. Coke executives knew they had to do something to stay on top — they turned to their customers.
In late 1984, Coke product teams developed a new formula for Coca-Cola. Marketers took to the streets, conducting some 200,000 taste tests, a sample size that should satisfy even the most discerning statistician. Armed with a vision, a new product and overwhelmingly positive customer reviews, Coca-Cola released New Coke. It was an immediate disaster.
Customer backlash came pouring in via the Coke hotline. Between April and June of 1985, the company received about four times the usual phone center traffic; nearly all complaints about the new taste. After just 79 days, New Coke was being removed from shelves and replaced with a newly-branded reversion to the original recipe, called Coke Classic. (Fun fact: In 2011, 26 years after the debacle, Coke finally removed the word “Classic” from its marketing. It goes to show the lasting consequences of marketing missteps.)