"Blindly Trusting Market Research May Ruin Your Brand"

This article is Lu Canwei's 40th original piece.

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Everyone knows Coca-Cola, right? Both Buffett and Munger have heavily invested in Coca-Cola. For those unfamiliar with Coca-Cola's history, you can check out my article "How to Improve Cognition?" which discusses several key historical points that Coca-Cola got right.

But today, I mainly want to talk about the worst marketing event in Coca-Cola's history, which reflects that we should not blindly trust the results of market research.

Kansas Plan

Since the mid-1980s, Coca-Cola's market share has been declining, while Pepsi's has been continuously growing. Influenced by the previous "Pepsi Challenge," Coca-Cola felt that their product's taste was no longer favored by consumers, and they believed people wanted a sweeter beverage.

After hastily concocting a new formula, Coca-Cola began conducting related market research. The results showed that 11% of Coca-Cola's loyal consumers disliked the new flavor. Since no one dared to explicitly announce that Coca-Cola was planning to change its formula, their tests would present an unrelated preliminary hypothesis. They deceptively asked survey participants if a new formula product from the company had been introduced in nearby cities and was widely popular, but the users were very angry that Coca-Cola's flavor was about to change.

Despite the resolute responses from the surveyed individuals, when asked which cola they usually drank, these people hesitated. Coca-Cola discovered that while it held a certain status in people's minds, it was not a necessity in their refrigerators.

In the fall of 1984, they finally developed the new flavor of Coca-Cola. They then conducted a survey and found that consumers who liked the new flavor outnumbered those who preferred Pepsi by 6%. Subsequently, Coca-Cola conducted a taste test with 191,000 consumers across 13 cities, and in various unbranded beverages, New Coke won over Old Coke by 61%.

Coca-Cola's management was greatly encouraged, and since they could not promote the new product as a replacement for the old one, the creative team could only improve the marketing plan that emphasized the "stimulating" and "sensational" effects of "This is Coca-Cola," along with promoting the new packaging.

Next, the management held a press conference, promoting that in blind taste tests, far more people liked the new flavor than the old one. When faced with reporters' doubts, the management arrogantly stated that they did not want to boast about the test results indicating that people thought Coca-Cola was better than Pepsi.

In the following week, thousands of calls flooded the customer service hotline daily, with all calls expressing anger over New Coke. Within a few days, 96% of Americans were aware that Coca-Cola had changed its flavor. By June, nearly 8,000 calls were made to the company each day, and in addition to complaint calls, the company received over 40,000 letters of protest daily. Coca-Cola's sales plummeted, and its brand image suffered greatly.

Ultimately, management decided to bring back Old Coke; New Coke had already been launched, and the old Coke was renamed Classic Coca-Cola.

So we can see how incredible the power of a brand is, and how shaking the core of a brand can cause tremendous damage to the brand itself.

Double-Blind Experiment

In the example above, both Pepsi and Coca-Cola's testing methods are called single-blind experiments. This involves using two cups, one filled with Pepsi and the other with Coca-Cola. The tester then drinks the cola and states which cup they prefer. A drawback of single-blind testing is that the tester may interact with the researchers, thus being influenced by them. For example, in psychological and social science experiments, the observer's subjective expectations often intentionally or unintentionally affect the behavior of the subjects.

Double-blind experiments avoid this issue by ensuring that even the researchers do not know which cup contains Pepsi and which contains Coca-Cola. Only after all treatments are collected and analyzed do the researchers find out which cola the testers drank; this process is called unblinding.

In Conclusion

Why am I writing about this topic today? When we first start developing a product, it's easy to fall into the misconception of having a product first and then looking for demand, rather than identifying existing demand before designing the product.

When we are designing a product, we may fall into another misconception: how to understand user needs. Many people might think of surveys; while surveys have some utility, they should only serve as one data source and cannot be fully relied upon. You cannot know if your survey is well-designed, such as whether it uses open-ended questions or if users fill it out deceptively.

I personally believe the most effective approach is to conduct as many interviews and observations as possible, supported by data. Of course, the most important aspect is the feel of the product. As a newcomer, I don't have much authority to speak on this.

However, you can refer to my previous article "Did You Know? Instant Decision-Making Can Be Trained," which discusses how to cultivate and train your intuition. As long as you continuously train your diverse thinking, I believe you will find the right product feel for yourself.

Finally, I leave you with a question:

When we were promoting our QR code ordering system in some restaurants, many owners were reluctant to use our product. Our product was connected to some cloud printers, which many shops did not have; they were still using their old printers. If it were you, what would you do? Feel free to leave a comment, or you can send "Printer" to learn about our solution at that time.

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