Critical Analysis on New Coke market research failure

Question

Assessment brief:
The primary purpose of this assessment is to:

Help you develop and demonstrate your skills in the use of project management concepts, principles, theories and arguments during project management execution, monitoring, controlling and closing processes.
Demonstrate your understanding of the real application of control systems.
Analyse and argue what type of control systems will enable better or worse project outcomes.

Assessment brief:
Choose and research and a real-life failed project e.g. that failed to meet the deadline, exceeded the allocated budget etc.

Ideally, you or someone you know should have worked on the failed project for direct reference
Otherwise search for a project in the industry of your interest or expertise.
Discuss and finalise your choice of the (failed) project with your tutor in week 7 tutorial.

Be original in your choice, i.e. avoid stereotypes like Sydney Opera House, Apollo 13, Queensland Health Payroll system…

Assessment brief: scope
Based on your research,

Analyse the project context, issues and control systems applied during the execution phase.
Find out the causes of its failures and analyse the control systems applied.
Critically evaluate the effectiveness of applied control systems and stakeholder’s management.
Make recommendations for how its failure could have been avoided.

Answer

1. Introduction
1.1. Introduction to the "New Coke Project"
In the year 1985, “New-Coke” was introduced in the soft drink industry. But due to some competition with the low-calorie containing soft drinks it encounters New Coke market research failure and started losing its market shares. Also, ''New-cola'' beverages were famous back then. It was also observed that the recipe for that product was not something that customers would choose over Pepsi that was their competitor. After initiating some "blind taste tests", it was indicated that they needed to boost up their recipe to make it much preferable to the consumers. After replacing they faced the maximum "advertising disaster" ever. And also were receiving thousands of thousand phone calls questioning to replace their old "Coca-Cola" in the market again. So, it was obvious that they had come through a lot of difficulties over a bad decision but thought to improvise it as it is quite impossible to re-establish a new product with a different formula at once. They decided to improvise their product’s recipe. This is how they decided to introduce the “New Coke Project”.

1.2. Overview of the Project
Initially, they used "granulated sugar" to prepare the previous coke syrup. But to modify the product's taste, they decided not to use powdered sugar syrup. They replaced that ingredient with "high fructose corn syrup". That might have improved their new product's taste but it did not turn out to be a good plan for consumers. As taste is the only factor they paid attention to, they did not bother to focus on the health impacts of the products. It was seen that their new recipe contained more sugar than their old coke recipe. So the modified product or the "New Coke" which was a reformulation of their previous recipe turns out to be aNew Coke market research failure.

1.3. Project Snapshots

memory examine in os assignment

2. Issues and Problem with the New Coke market research failure

a. The "New Coke" issue with Pepsi Pepsi introduced the "Pepsi Challenge" in the year 1970. It was being preferred in the American countries and gained a lot of popularity. Gradually the profit margin of Coke started to decrease due to the sweeter taste of Pepsi compared to Coke. Another reason was the advertising issue. Te great pop star "Michael Jackson" was advertising for Pepsi which gained much attention for the young generation. Also, the use of "hip advertising music" was another advantageous point for the Pepsi Company.

b. Market Issues Due to the increased popularity of Pepsi, the "Coca-Cola" company planned for conducting a "market research" to understand the preferences of the customers with more attention. After the research completion, it was analyzed that the sweeter taste of "Pepsi" is responsible for lowering the popularity of Coke. Now the Coca-Cola Company started developing a newly formulated product containing more sugar than Pepsi and the old Coke. They also conducted over 0.2 million "blind taste" researches and also "focus group" market researches for confirming the popularity of their new product in the future days.

Coca-Cola launched New Coke to the market on 23 April 1985. They expected that it will regain the popularity of the brand and will reverse their fortune. They also stopped the old Coke production at the same time.

It was proved as the worst decision by the company within a short period. The old Coke was withdrawn from the market and a huge dissatisfaction among the customers and media was created. The Coca-Cola Company started receiving numerous phone calls and letters about the customer dissatisfaction as they were not satisfied with the "New Coke."

c. Huge Financial Loss
There was another problem with the Coca-Cola Company that announced their decision to stop their old Coke and replacing it with the new one in the market. After this announcement, a large population of America decided to boycott New Coke, hence leads to New Coke market research failure. This was a joint decision by the company which was stated as "the biggest marketing blunder of all times." According to researches, it has been observed that the company invested more than 4 million dollars in developing this new product. Moreover, after deciding to discontinue the product they faced a loss of over 30 million dollars.

The company pointed the "market research" team for this issue which was conducted through a "blind taste" research and was not sufficient. People testing the "New Coke" were not aware of the brand and it hit their psychology to purchase the new product. The company was confident enough about their new product and so they have discontinued the old one. One of the reasons for New Coke market research failureis that the "New Coke" was much sweeter and the blind tasters guessed the soft drink as Pepsi as it tastes so. More or less after 79 days, the old coke was re-launched in the market as "Classic-Coke."

3. Explanation of Control System In the vast area of cold drinks or soft drinks industries, coca-cola had decided to bring a newer taste of their product that can make it different that from other ones. So, there came the "New Coke". As discussed in this project the consumers did not like the taste of their newly launched one so there was a great failure being faced by them. The "New Coke" is nothing but an unofficial name of our very well known "Coca-Cola", the renowned soft drinks company that is very much popular for their taste in the market whole over the world. It was introduced by the "Coca-Cola" company in April 1985 and 1992 they changed its name to "Coke II”.

The explanation for the range of control system used for cost:
"Coca-Cola" had faced a huge loss over its launching of "New-Coke" in the market and leads to New Coke market research failure. Researches showed that the control system they used may be the cause of the malfunction. One of the major activities to be done is the cost-cutting of the used control system. The automated control system may be used for manufacturing the product but to keep the proper effective cost to the product, one such control system is needed that can be properly handled by the manufacturers. In this kinds used of soft drink companies, SPS or “Subsea Production System” is used to collect the "hydrocarbon" from the "subsea" and circulate it to all the subunits of "on or offshore facilities". So, for that, the company needs to deduct the total cost, otherwise it may hamper the "field-development" financially.
Control system:
The Control system directs, manages, and controls the functionality of a device or system that can regulate the device according to the commands incorporated into it. It is comprised of some "control loops". A small machine to a large industry, a control system plays a vital part to accomplish the system with easier and proper use. It helps to reduce time and manpower. For that, a "feedback controller" is used in it. It has an input signal, a controller functioned by an actuating signal and finally, it is introduced to the plant to give an output. Like every mechanism it can also have an error but, to eliminate that an error detector is used in it that is attached after the input signal. It may be an open-loop control system or a closed-loop control system. Nowadays automated control systems are also used in such industries. There are a lot of control systems that are controlling the soft drink industries smoothly. Some of them are discussed below:
Modular diaphragm Valve System:
In this process control system, a diaphragm on-off valve controlling method is used. Other major process connections are also available in this system so, all of these machines can combine to give the possible match results to the system.
Analytical Transmitters:
It is necessary to maintain the pH level of the soft drink, as this is related to health issues. This control system has "integrated, sophisticated, easy to use controls into its pH indicators and conductivity transmitters". Also, it has used some newly designed sensors into it and "FDA" approved components with quality surface finishes.
Universal Hygiene Control Head: To make the environment cleaner and easy to use the software, it is must involve such a control system that can maintain proper hygiene so that, the chemicals used in making the product are of the accurate amount. For that, "Burkert" introduced a new fluid control system into their chapter. It consists of a range of ball, butterfly, and mix-proof valve controllers and an appropriate "IP class and chemical resistance" that makes the external surface smooth. So, no rupture on the outer surface can occur.
Radar level Transmitters:
It is a non-contact process control system that is used to continuous level measurement of liquid in the bottles or cans under "sanitary process conditions".
Full Bore Mag-flow meters:
To control the flow of liquid this control system has no competition. This is a batch control system that has an 8051 processor combined with a valve as its "actuating element".
Scope and quality:
Since the past few decades, beverage industries are doing incredible business deals throughout the world. In this time, it is necessary to maintain the quality of the product as it comes under the food industry. Supplying clean and standard quality can develop the scope of the industries as "food standards are body rulers". So, quality control is a must for the growth of the industries as it directly deals with the health of the consumers.

4. Critical evaluation of the effectiveness of control systems, stakeholder influence and stakeholder management
4.1.Analysis of cost and/or schedule overruns
"New Coke' was the reformation of the old Coke and was first introduced in the market in April 1985. Due to the losses in market share with its top competitor Pepsi, Coca-Cola targeted to launch this new brand. The reason behind the loss was a reduction in the sale of "Diet Soft Drinks" and "Non-Cola Beverages." The company only conducted the blind taste research and it indicated that the people tasted it and preferred its sweeter taste which was quite similar to Pepsi. So on, the formula of Coca-Cola was changed through this research, and the "New Coke" was launched. However, the public reaction of America was negative toward this change and the new product was considered as a major New Coke market research failure. Within three months, the company again introduced the old formula which was named "Coca-Cola Classic" and it was a hit in the market. This failure has been pointed to the New Coke market research failure. Market analysis shows that the Coca-Cola company was holding the market share by 60 percent after the second world war. However, it was decreased by 24 percent by 1983. The main reason behind it was the competition with Pepsi-Cola soft drink.

Reasons	Description
Development cost overrun	To develop the "New Coke", Coca-Cola invested approx 4 million dollars which were an unexpected New Coke market research failure. At that time (1985) this amount was considered extremely high for which the company faced a huge cost overrun for this development issue.
Blind taste test	This is generally used as a market research tool to compare the product of a company with other competitors. It is generally used for testing food products or beverages (Van Doorn & Miloyan, 2018). In this case, people testing the product are unaware of the product brand they are testing. Based on this single research conducted by the Coca-Cola company for the "New Coke", they invested a lot of money to launch the product resulting in a huge cost overrun of more than 30 million dollars.
Schedule overrun	Conducting the blind taste market research for 2,00,000 (0.2 million) people was a lengthy process in which much time was spent by the market researchers. If the project was a success, the value of the research was noticed as a superlative one but it was not. Huge wastage of time was faced by the company and the marketers and it is a schedule overrun which was unexpected for the company.
Problem with focus group	In the market research processes, a group of people (6-10) are conducted to obtain feedback about the new product (O. Nyumba, Wilson, Derrick, & Mukherjee, 2018). The participants are recruited based on their purchase behavior and history. However, it does not apply to the larger population. Coca-Cola company arranged this focus group research method to get the feedback for their "New Coke". The result was satisfactory in this case but failed when the product was marketed for a larger population resulting in both time and cost overrun for the company.

4.2. Analysis of the project execution team
It is very clear that behind the New Coke market research failure, the marketing procedures and strategy of the project execution team were responsible. It should be considered that the project has been launched without proper customer analysis and market researches. There was a conceptual issue from the very beginning of the project about market analysis. Since this is an international product, the project team were needed to be more conscious about the marketing analysis of the project. Numerous phone calls and customer complaints were faced by the company after launching the "New Coke." This was proved to be an advantage for the other smaller competitors in the market to promote and sell their products. Based on a few kinds of research, it is not a wise strategy to launch a product that will cost millions of dollars resulting in ultimate New Coke market research failure (Lin, Chang, Fu, Yeh, Hsu, & Tsai, 2018).

Reasons	Description
Developers department	Compared to present days, budgeting 4 million dollars to modify the old coke was not a brilliant decision in the mid-1980,s. The project team decided to launch the new product that is not a new issue for any organization trying to take the business to the next level. The most unwise decision was the budget for developing the product which resulted in a major New Coke market research failure (Lin, Chang, Fu, Yeh, Hsu, & Tsai, 2018).
Marketing Department	The main role of this department is to promote the business and drive the sales of the company products. The other role of this department is to provide the necessary researches that should identify the customers of that specific product (Melton, Damron, & Vernon, 2017). For the "New Coke" product, the marketing department was a complete New Coke market research failure. They researched the product over 2,00,000 people and the report was satisfactory about the success of the project. Finally, it was not. So, the conflict arouses here about the research technique of the team which was completely wrong (Liu, Cheng, Wang, & Gao, 2016).
Distribution and availability issues	Pepsi always promoted its product to supermarkets and retail shops which increased the popularity of its products (Crawford, 2017), whereas Coca-Cola was not available in that manner at that time. There were a distribution and availability issues gradually increased for the company which is an important factor for the company to suffer the losses.
Announcements and customer emotions	Coca-Cola always announcing to the customers that "Coke was it" and "the real thing" over a long time. The "New Coke" eroded this methodology by modifying the formula and replacing the old Coke. They must have to think about the customers who are loyal and preferred the tradition from the very beginning. Coca-Cola was referred to as a brand and was stated as a "cultural icon" by numerous customers (Levy & Young, 2019). Discontinuation of the old coke hit the customer's emotions which is another reason for the New Coke market research failure.

4.3. Analysis of relationship between overruns and thestakeholders
Coca-Cola is an international company and the involvement of various stakeholders is a common issue for the company. These stakeholders of the company are management, developers, project team, the market research team, sales team, and the investors. The conflict between the stakeholders is a very common factor for an organization or company. The main cause of these conflicts is the difference in their interests. When the "New Coke" was failed to capture the market after millions of expenses, the company still invested money on the failed project. This responsibility goes to the stakeholders.

Reasons	Description
Scope issues	Changes in the scope during the project development caused several issues in the management team. During the project development, altering the choices frequently created numerous problems between the stakeholders leads to time and cost overrun too (Deng, 2018)
Disprove Change requests	It is a very common factor that during the development phase of the "New Coke" project, there is a requirement of various materials and equipment. This is required to meet the new product requirement which will be launched to the market. Problems with other stakeholders like money or human resource could hamper the supply of the required materials and equipment resulting in deterioration of the product quality (Adiguzel & Zehir, 2016).
Marketing research issues	It has been already discussed that the market researchers only conducted two types of researches such as the blind taste and "focus group" research which is not enough to forecast the success of a new product. The conflict between the stakeholders may be responsible for this research issue which is another critical factor for the New Coke market research failure (Irfan, Thaheem, Gabriel, Malik, & Nasir, 2019).
Communication and advertising issues	Unlike today, in the mid-1980's the communication and advertising method was traditional. It must be considered that there were no social media or millions of websites to advertise or popularize the "New Coke (Moran, 2016). The communication between all the stakeholders and the project development team needs transparency. Proper communication through organized meetings was not held properly between the stakeholders and other members. Improved communication always helps to sort out internal and external issues for an organization Reduced attention and lack of mutual respect between the stakeholders is an essential factor that limits and restricts the development of the project with several problems (Handley & McAllister, 2017)
Restriction issues	This could be a probable cause of the New Coke market research failure that the unwanted involvement of the other stakeholders in the development process could hamper the project. This limits the flow of work or the developer could not work freely with the innovative ideas to succeed in the new product (Crisafulli & Singh, 2017).

4.4. Analysis of possible actions for success

Possible Actions	Description
Avoiding Conflicts	This is a very important and essential step toward project success. Mutual discussion of the conflicts between the stakeholders should resolve the internal issues so that the whole team can prevent cost overrun and avoid delays to complete the project (Joosten, Basten, & Mellis, 2016).
Proper Market Research Technique	Blind taste is a common method for food and beverage researches and it was okay for the "New Coke". Moreover, other types of primary researches were needed to conduct as there was no way to conduct some of the secondary researches like the internet and social media in the mid-1980s. It could be interviews or telephone calls. Proper research should help the company to know about customer satisfaction and it was required to be conducted from the first phase of the "New Coke" development.
Continuing the "Old Coke"	The greatest mistake of the company stands here. Overnight discontinuation of the traditional coke in the market created a crowd dissatisfaction. Many customers use the same brand when purchasing or using a product. This could be called a psychological factor. This type of customer will never change its product brand, and this is another factor that the company ignored. Continuing the "Old Coke" with the new one instead of replacing it may result in the project's success.
Limiting Cost overrun	If the company would run both of the products then the loss may be prevented to some extent. The old coke was a running product without loss. The only problem was that the market share was decreased. The continued profit from the old coke may help the company to recover the loss which could limit the cost overrun for the company (Olaniran, Love, Edwards, Olatunji, & Matthews, 2017).
Proper "decision making"	The company should have to plan properly about the project from the very beginning. For example, Pepsi was using pop star "Michael Jackson" for the advertisement of their product which increased the sale and gained young generations' popularity. The stakeholders along with the marketing department were needed to plan something like that for the "New Coke." Probably it would be a wiser decision to promote the product.
"Proper Agreement"	Mutual agreement among the stakeholders and the project team was essential in this issue with a solution for the project problems (Qu, Ming, Qiu, Liu, Zhang, & Hou, 2018). Discussing these problems mutually in an organized way may enhance the completion of the project properly from the early development phase. Furthermore resolving this issue with the mutual and written agreement must enhance the workflow and the final success of the project (Aranyossy & Blaskovics, 2016)
"Resolving the worst situation"	The stakeholders and the "New Coke" project team members were needed to analyze the reason which was hiding behind the problems. Motivation from the higher management during the worst period of the company may help the project team to sort out some kind of strategy or plan to prevent the problem. Since it was teamwork, there was nothing to lose for an individual. Besides the stakeholders, the shareholders also needed to organize and plan for resolving the issue through which the situation may be improved (Elias, 2016).

5. Conclusion
This project is about the Coca-Cola company. It is an America based multinational beverage company having its headquarter in "Atlanta, Georgia." The company was holding over 60 percent of the market since the second world war. In the early 1970s, the "Pepsi Challenge" by the Pepsi company attracted much popularity in America and the market of Coca-Cola started to fall. Due to this reason, in the year 1985, the Coca-Cola company decided to launch its new product named as "New Coke" to beat the "Pepsi-Challenge." They had researched the market with the traditional "blind taste" method and "focus group" method to know to analyze the customer opinion. The "blind taste" method has been tested over 2,00,000 people to get gather the opinion about the product before launching (Ruan, 2016). However, the result was satisfactory and they launched their "New Coke" on 23 April 1985 and discontinued the old or traditional Coke overnight. Within a few days, the project was proved to be a major New Coke market research failureand the company has to suffer huge losses of near about 34 million dollars.

This assignment discusses the causes of New Coke market research failure and discussing the issues related to the New Coke market research failure. There are several issues like the development factors and the market research factors which have been cleared in this project. The major issues were also explained which resulted in a huge financial loss for the Coca-Cola company.

In the next chapter, the control system of the company is briefed which is necessary to develop this "New Coke" project. The various components like the "Modular Diaphragm", analytical transmitters, hygiene control, and radar level transmitters are discussed with its functions. The reason behind time and cost overrun has been given a clear picture that describes the probable causes of the New Coke market research failure. The other issues like the responsibilities of the execution team to the "New Coke" project is also been analyzed and cleared related to the present scenario. The issues with the developers and the marketing research team and the issues with the market research also have discussed in the assignment.

Moreover, there are some problems with the stakeholders also, the conflicts between them due to the difference of opinion, involvement into the development phases, lack of mutual understandings and respects for each other are also the possible causes of the New Coke market research failure has been cleared (Jalali & Jaafar, 2019).

These were the causes of the "New Coke" project issues which are already discussed in this assignment. Since every problem has some solution, it is the same here for this project. They were possible actions to achieve project success. The first issue for the company was to discontinue the old coke which created the most problem. Introducing the new coke alongside the new one would be better in this issue. This may not hamper the business for approx three months. Furthermore, the profit from the old coke may help to recover the investment as it was a running product.

Finally, Coca-Cola recovered its business and now the company is one of the global leaders of soft drinks and beverages.

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