Coca-cola spearheads a marketing revolution

What with pesticide residues in India, race discrimination lawsuits in the US and revelations of embarrassing dishonesty in relationships with key customers such as Burger King, the great Coca-Cola company seems to have become extremely accident-prone.

With public comments such as “people will not feel good about Coca-Cola the brand if they don’t feel good about Coca-Cola the company” behind him, chief executive Doug Daft now has a mountain to climb in terms of reputation.

But don’t let that distract you from other important developments at Coca-Cola, especially on the marketing front. From differentiated packaging and trademark icons like the contoured bottle and the Coke ribbon, through the globalisation of brands to recognising the power of sponsorship, Coca-Cola has a long history of being ahead of the pack when it comes to marketing. So when its chief operating officer declares: “We’re thinking about marketing in a radically different way,” perhaps the rest of us should sit up and take note.

Steven Heyer’s starting point is the usual litany of challenges: media fragmentation, proliferation and the declining cost-efficiencies of traditional advertising, the erosion of mass markets, the empowerment of consumers via easier access to richer information, their growing wish for customisation and personalisation, and so forth.

Put together, he concluded in a recent speech (coca-cola.com/presscenter/viewpoints), “the magnitude and urgency of change isn’t evolutionary – it’s transformational.” It’s taking Coca-Cola’s marketing “away from spots in pods, away from broadcast TV as the anchor medium… away from discrete media of any and all types, and away from traditional relationships with agencies”.

The big question then: where is it taking Coca-Cola’s marketing to?

Heyer seems to be making three main points. First, we are moving towards an experience economy, where the value and role of each product or service is judged by how effectively it helps to create, enrich and facilitate valued experiences. To promote your own product effectively, it’s often best to embed it within a range of much broader, richer experiences and to help make these experiences available to as many people as possible. “Experience-based, access-driven marketing is our next frontier,” said Heyer.

While the Coca-Cola product stands for physical refreshment – slaking thirst – the Coca-Cola brand can and should stand for refreshment in all its potential meanings: mental, spiritual and physical. The more refreshing experiences Coca-Cola can help to provide access to, the more effective it will be in driving sales of the physical product.

Second, we are also moving towards an information-driven networked age. An age where the ideas and emotions that engage and connect people and spark new experiences are one of the most prized drivers of value: “Ideas that bring entertainment value to our brands and ideas that integrate our brands into entertainment”.

Such idea-creation and -distribution is “taking on the same urgency that controlling the means of production once did,” argued Heyer. For brands to prosper they must create, facilitate and tap into the power of ideas.

Third, most companies’ true wealth-creating potential is cramped and stifled by a product-obsessed, make-and-sell myopia. If you focus too much on what comes out of the end of your sausage machine, you can easily overlook the potential of the machine itself. Ultimately, it’s the company’s overall capabilities – its skills and know-how, infrastructure, technology, financial and other resources – that create value, not just the product, or the brand.

A company’s true value-creating potential is therefore only realised when it places these full capabilities at the disposal of its customers and business partners. Thus, speaking to an audience of advertising agencies, media owners, film, music and video game executives and other creative types, Heyer suggested: “You should view us as a partner and resource, not just a source of revenues.”

Coca-Cola’s television ads could be used to promote a pop star, film or sporting event while also advertising a soft drink. Its gargantuan distribution systems could also be used to distribute tickets, CDs or DVDs – or perhaps even medicines – as well as soda. Its packaging could be used as a direct-response marketing vehicle for all manner of products and events. So while Coca-Cola pays media companies for advertising slots, film companies for product placements and so forth, perhaps these same companies could – or should – be paying Coca-Cola to promote their wares. “Our goal: to become as critical to your marketing as you are to ours.”

In this way, argued Heyer, the Coca-Cola Company could work with a wide range of marketing partners to create and offer a wider range of richer experiences in a way that “reverses the buyer-seller zero-sum game to improve everyone’s economics”.

This in turn requires new relationships and attitudes. “In this new marketing world we need to look at one another not in terms of how much we can pay, but in terms of what can do and make together… We destroy one another’s value when it’s just about money – the dollar-only based model is not sustainable.”

This is potentially revolutionary stuff. To be sure, Heyer would be the first to admit it’s still very early days. And as usual with Coca-Cola, there are some ways in which its strategy works much better for it than for others. There are not many brands with Coke’s resources, reach or close links to entertainment, for instance.

But step away from the particulars, and the general formula begins to make sense. Promote your product or service by embedding it within, and facilitating improved experiences; seize the high ground by focusing on the ideas that drive these experiences; and work as hard as you can to form partnerships with other organisations, deploying each others’ resources to best effect to maximise both sides’ potential.

Adapted carefully and applied well, this general formula could apply as much to financial services, motoring, health or utilities as to soft drinks and films. While Coke struggles very publicly on one front of corporate reputation, it might be quietly inventing the future on another front: consumer marketing. This is a definite case of “watch this space”.