Numbers are a funny thing and are often misunderstood. When misunderstood more damaging consequences to not laughing at a bad joke can occur.
Coke decided to launch ‘New Coke’ in the 80’s. The reason for this strategic move was due to Pepsi implementing blind taste testing (Coke Vs Pepsi). Pepsi came out on top of these ‘tests’ giving their product an edge and putting Coke’s management into a flurry.
After 99years with essentially the same taste Coke decided to launch ‘New Coke’ adopting a flanker strategy. This resulted in a sweeter taste to be more like Pepsi, preceded by a top secret $4million survey of 190,000 people where Coke’s management ending up seeing this:
When looking at these numbers leading to the launch of ‘New Coke’ their paranoid management made two massive errors. Firstly they failed to understand the loyalty of their customers (overcome via market segmentation), as the 45% of the 190k sample that preferred the taste of the current Coke taste did so passionately.
Secondly they misunderstood the context in which the results were conceived and the taste tests that resulted in Coke’s CEO stating “I have never been as sure of a decision in my life as I am that New Coke will beat Old Coke”. Would you have been this sure after $4million of research with these results?
The results turned out to be false as the taste test had flaws. When taking a ‘sip’ of a drink in these tests you will almost always prefer the sweeter drink opposed to when you are drinking a whole can, as the sweeter drink Pepsi understood this so took advantage of it and derailed Coke.
Coke’s management were pressurised after 75 days to bring back the original formula. The lesson here is always looking at numbers in context; ensure you come out with a much stronger strategy as Coke did in 1985 to use numbers advantageously from number related jokes to business strategy.