Podcast Summary: “New Coke and the Marketing Blunder of the Century”
Podcast Information:
- Title: Nudge
- Host: Phil Agnew
- Episode: New Coke and the marketing blunder of the century
- Release Date: August 11, 2025
- Description: Nudge is the UK's #1 marketing podcast, breaking down the hidden psychology behind what we do and why we do it. No BS, just smart, science-backed insights that actually work.
1. Introduction to the New Coke Saga
The episode opens with Phil Agnew setting the stage for one of the most infamous marketing missteps in history—the introduction of New Coke by Coca-Cola in the 1980s. Phil poses the question that has puzzled marketers for decades: why did Coca-Cola, despite dominating the soda market with a 65% share, decide to alter the flavor of one of the world's most beloved beverages?
Quote:
“There’s never been a better Coke introducing the greatest taste discovery in a hundred years.” — Phil Graves, 00:32
2. The Pepsi Challenge and Shifting Consumer Preferences
Phil Graves, a consumer psychologist and author of Consumerology, delves into the origins of the New Coke debacle. He explains the intense competition between Coca-Cola and Pepsi during the 70s and 80s, highlighting Pepsi’s strategic move—the Pepsi Challenge.
Quote:
“Their taste test results. They came up with the suggestion that actually more people preferred Pepsi over Coke.” — Phil Graves, 01:00
The Pepsi Challenge involved blind taste tests where consumers were asked to choose between Pepsi and Coca-Cola without knowing which was which. The results consistently favored Pepsi, with approximately 57% of participants preferring its taste over Coke’s.
Quote:
“Pepsi is much better. It’s delicious. Sit down. Nice and smooth.” — Consumer Psychologist, 01:40
3. Coca-Cola’s Radical Response: Introducing New Coke
Faced with declining market share, Coca-Cola’s executives made the unprecedented decision to reformulate their flagship product. This decision was unprecedented, as it marked the first significant change to Coke’s formula in its 99-year history.
Quote:
“Including entertainingly led by one guy who I think worked in PR...” — Consumer Psychologist, 05:41
Coca-Cola invested heavily in marketing the new formula, spending the equivalent of $88 million today in just over two months. The company launched a nationwide advertising campaign directly challenging the Pepsi Challenge, asserting that the new formula was superior.
Quote:
“And consumers went nuts. But not in a good way. There was this massive backlash against it.” — Consumer Psychologist, 05:03
4. The Backlash and Rapid Withdrawal of New Coke
Contrary to Coca-Cola’s expectations, the introduction of New Coke was met with intense consumer backlash. Loyal customers felt betrayed by the brand they had trusted for nearly a century. Organized campaigns emerged, with consumers demanding the return of the original formula.
Quote:
“Please don’t change the taste of Coke.” — Host, 11:33
Groups formed, petitions were signed, and in some cases, class action lawsuits were threatened. The emotional attachment to the original Coca-Cola formula proved to be a powerful force that overshadowed any purported taste advantages of New Coke.
Quote:
“Within three months, after all of that development, all of that research, all of that asking consumers what they thought in blind tests, New Coke was withdrawn from the market.” — Phil Graves, 07:35
5. Analyzing the Failure: Flawed Market Research and Branding Missteps
Phil Graves argues that Coca-Cola’s reliance on traditional market research methods was fundamentally flawed. While blind taste tests indicated a preference for New Coke, these studies failed to capture the deeper emotional and psychological connections consumers had with the original product.
Quote:
“The problem wasn’t just with Coke’s research process. It was that no research of this type could have ever delivered a reliable, accurate answer.” — Phil Graves, 07:19
He explains that market research often overlooks the unconscious factors that drive consumer behavior, such as brand loyalty, nostalgia, and the overall sensory experience associated with a product.
6. The Role of the Unconscious Mind in Consumer Behavior
A significant portion of the episode is dedicated to exploring how unconscious biases and heuristics influence purchasing decisions. The guest, Phil Graves, emphasizes that consumers often rationalize their preferences post-purchase, attributing their choices to logical reasons rather than innate emotional responses.
Quote:
“Behavior is truth. So what were people doing? Well, you already had a 65% market share... when you see Coke, you'll pick it up and you're gone.” — Consumer Psychologist, 09:11
The discussion includes studies on misattribution, where external factors unconsciously influence consumer perceptions and behaviors without their explicit awareness.
Notable Study:
- Love on the Bridge: An experiment where men interviewed by an attractive woman on an unstable bridge were more likely to request her phone number, attributing their heightened emotions to attraction rather than the precarious setting.
Quote:
“They come up with purely rational reasons for behaviors that are largely unconscious...” — Phil Graves, 17:58
7. Misattribution and Its Consequences
The podcast delves into various studies demonstrating how individuals misattribute their feelings and actions to incorrect sources. For instance, in a study where a thief was clearly visible during a fake crime, 84% of participants incorrectly identified an innocent person as the perpetrator.
Quote:
“Our memories are fallible and our ability to recall our behaviour accurately is just as bad.” — Phil Graves, 24:58
These insights highlight the limitations of traditional market research techniques, which often rely on self-reported data that may not accurately reflect true consumer motivations.
8. Revisiting the New Coke Story with New Insights
Revisiting the New Coke episode with the lens of consumer psychology, Phil Graves posits that Coca-Cola failed to account for the non-tangible elements that made the original formula iconic. Branding elements such as the packaging, color, and brand heritage played a more significant role in consumer preference than mere taste.
Quote:
“When subjects were shown the familiar design of a Coke can before they tasted the Coke, a different area of the brain became involved and the results changed significantly.” — Phil Graves, 27:00
This revelation underscores the importance of holistic brand management, where every sensory and emotional touchpoint must align with consumer expectations and inherent brand values.
9. Lessons Learned and Takeaways
The episode concludes by summarizing the critical lessons from the New Coke fiasco:
- Emotional Attachment: Brands are not just products; they embody emotional connections that transcend functional benefits.
- Limitations of Market Research: Traditional methods may fail to capture the subconscious drivers of consumer behavior.
- Holistic Branding: Successful branding requires a comprehensive approach that integrates all sensory and emotional elements of the consumer experience.
- Behavioral Observation: Understanding consumer behavior necessitates observing actual actions rather than relying solely on self-reported data.
Quote:
“The real lesson from the New Coke debacle isn’t just that a major brand can make a mistake. It’s that Coca Cola relied on a rational model of consumer behavior that doesn’t reflect how people actually think or act.” — Phil Graves, 22:19
10. Conclusion
Phil Agnew wraps up the episode by emphasizing the enduring relevance of the New Coke story in contemporary marketing. The episode serves as a cautionary tale about the perils of ignoring the deeper psychological and emotional factors that influence consumer loyalty and brand perception.
Final Quote:
“My likes and dislikes are largely driven by unconscious factors, and if I'm ever asked to explain these unconscious reasons, I'll probably give a totally unreliable answer.” — Phil Graves, 27:00
Listeners are encouraged to reflect on their own purchasing behaviors and consider the unseen forces that shape their choices.
Additional Recommendations: Phil Agnew also recommends the podcast “Creators Are Brands,” hosted by Tom Boyd, which explores how storytellers build brands online—a perfect complement for listeners interested in further understanding brand dynamics.
Subscribe for More Insights: To stay updated with future episodes that delve deeper into consumer psychology and marketing strategies, listeners are encouraged to subscribe to the Nudge newsletter at nudgepodcast.com.
This comprehensive exploration of the New Coke episode highlights the intricate interplay between consumer psychology, branding, and market research, offering valuable lessons for marketers and business professionals alike.