Up until now the general consensus has been that, while Coca-Cola might be in a bit of trouble, its marketers were one of the major reasons to keep the faith and it was assumed they would steer the company through the tough times ahead.
There seems little doubt that Coca-Cola (the brand) is starting an irrevocable decline as global tastes swing away from sugar, artificial sweeteners and fizzy drinks. Coke will always be Coke but it will become a fraction of its former self in the years ahead. That’s a problem for The Coca-Cola Company because, despite a wide product portfolio, it remains far too dependent on Coke for its profits.
Around a third of the company’s total corporate worth can be attributed to the brand value of its number one product. That was once a big tick in the company’s favour, but with sales on the slide and promotional activity the only way to support Coke’s continued volumes, the company looks wobbly. There is no harm in being a one-trick pony, but when the trick starts losing its magic you have a problem.
A lot of the issues of a declining brand have been offset by the heroic brand management skills of the army of top-flight marketers working at Coca-Cola. They might be flogging a soon-to-be-dead horse, but nobody has flogged better or harder than the marketers at Coke. A smart blend of communication, innovation and consolidation has enabled the company to buy time as it looks to diversify into new offerings.
But the Diet Coke relaunch in the US this month raises some tricky questions. Much of the marketing around it does not just look strange, it looks entirely at odds with the successful approach that Coke has been using to soften its decline thus far. For starters, there is the troubling decision to target ‘millennials’.
“Millennials are now thirstier than ever for adventures and new experiences, and we want to be right by their side,” explained Rafael Acevedo, the man in charge of the brand refresh. “We’re contemporising the Diet Coke brand and portfolio with sleek packaging and new flavours that are appealing to new audiences.”
Cue a clichéd ad with achingly unkempt, multicultural 20-somethings being wacky and diverse while extolling the excellent new flavours.
Too much has already been written about why millennials fail almost every test of market segmentation so I will not bore you (again) with the same message. The only genuine advantage of millennials is that when you encounter a company that claims to be targeting them you know you are in the presence of a sub-optimal, strategy-by-the-numbers marketing team. The idea that Coca-Cola, once the vanguard of 20th-century marketing, would stoop so low makes me sad.
Then there is the weird brand architecture disjuncture. Two years ago we were told that Coca-Cola was embarking on the “biggest strategic change in the history of the company”, with a global brand consolidation that saw it switch from running each of its Coke products as a separate entity to a branded house approach in which the focus switched to the Coke master brand.
Accompanying this was a single campaign in which different Coke products were presented as little more than product variants. “We are reinforcing that Coca-Cola is for everybody,” Coke’s former CMO Marcos de Quinto said at the time. “Coca-Cola is one brand with different variants, all of which share the same values and visual iconography.”
The One Brand strategy was a clever way for Coke to get more bang for its marketing buck. Promoting one master brand rather than three or four separate sub-brands would have cut costs substantially, thereby retaining profits despite the declining volumes. But that’s not what is happening with Diet Coke now, which is clearly back to being a very separate sub-brand with its very distinct and significantly more expensive promotional activity.
And the single “visual iconography” that the One Brand strategy promised is also out the window. The new Diet Coke cans look very different from the rest of the Coke offer.
The design principles behind 2016’s One Brand presented the suite of Coke variants with the same distinctive assets and recognisable format centered on the Coca-Cola red Pantone colour and circular disc shape (see above).
“The unification of the brands through design marks the first time in our 130-year history that the iconic Coca-Cola visual identity has been shared across products in such a prominent way,” James Sommerville, vice-president of global design, explained at the time.
But the new design for Diet Coke renders it almost completely separate in size, shape, colour and codification from the master brand (see below). It’s almost as if the marketing team at Diet Coke missed the One Coke memo and continued to operate like it was 1998, not 2018. James Sommerville was once again on hand as global design head, this time to deliver the opposite sentiment to his One Brand message two years earlier.
Sommerville waxed lyrical about how the new design would “demonstrate progressive change and innovation with a look that would appeal to a consumer seeking bolder flavors”. So much for that iconic visual identity then.
— Diet Coke (@DietCoke) January 10, 2018
It’s easy to sneer at such small details. Cynics might point to the fact that both designs are cans with the Coke logo on them. But in this strategic volte face in terms of targeting, architecture and design there is a genuine risk that Coke’s marketers are losing the plot too.
This is a time for less product, more focus and improved profits. Nothing is going to save Coke from the category-induced apocalypse ahead. The earlier, smarter strategy of focusing on the master brand appeared to embrace that reality and plot a slower and more graceful decline for Big Red. This new, more radical approach to Diet Coke appears at odds with that more realistic strategy and opens up the possibility that Coke isn’t just a big brand with big issues, it might also be a company without the marketers to manage the challenge.
Professor Mark Ritson will be teaching the next Marketing Week Mini MBA course from 24 April 2018. To book your place, sign up at marketingweek.com/mini-mba.