How losing 90M $ led to one of the most iconic FMCG brand launches

    2018-02-09 with love and data podcast market research brandmarketing marketing

    This is the first episode of  "With love and data". My guest is somebody I really admire: Javier Sanchez Lamelas. Javier was responsible for the invention and worldwide rollout of Coke Zero in the early 2000s.

    Javier is also the author of the excellent book “Martketing: The Heart and Brain of Branding”. We had never met before, but one evening in Hamburg, we ended up having a five-hour conversation which completely reshaped my way of thinking about marketing.

    Coming up with the idea of Coke Zero

    The story of Coke Zero is a story of love and data. Around 2003, sales of Coca Cola went down in some countries, while remaining stable in others, even though branding, advertising and marketing were pretty much the same.

    Javier and his team started to delve into the data. The two main products at that time were Coke and Diet Coke. The problem was that people started to think more about calories and wanted a soft drink without calories. However, the taste of Diet Coke was too different to be perceived as a viable alternative to Coke. On the other hand, they couldn’t change Diet Coke because it had its own fanbase.

    "It was a product that I can describe as challenge and reward. Similar to Guinness beer. You don't like it but once you start liking it you really like it. It's called challenge and reward. Coca-Cola doesn't have any challenge and has a lot of reward and that's the reason why people instantly like it."

    The next idea was to introduce a new formula with half the sugar. Research showed it could work, but the product failed miserably. It was a compromise nobody wanted. They lost nearly 90 million dollars, despite market research having delivered promising results.

    "I made a huge fiasco by launching something called “Coca-Cola C2” back in 2005 I believe it was. I spent ninety million dollars in Japan and North America. It was a complete flop, it was a fiasco, it was a disaster. And then I realized that was a compromise that nobody wanted. It was a half sugar product and at the beginning I thought it was a great idea because it was similar to coke half the calories so you can still kind of make the transition. And in the research there was some sort of good indications that it could fly. Well, it was not the case. It was a complete disaster."

    With all this new-found wisdom, Javier asked his technicians to create a new recipe with zero calories, which was based on a Diet Coke experiment he conducted in Norway. This was the birth of Coke Zero.

    But as most great products can testify: the ease and simplicity of the finished product can obscure the blood, sweat and tears that went into achieving it. In the end, it was the result of strategy and research, combined with creativity and innovation. And this led to one of the most iconic products launched in the last 15 years.

    "It was also a little bit of creativity and innovation. But you have to have both. And you have to have behind you company that allows you to fail."

    Marketing is anything but advertising

    This is something we must not forget. Advertising people (including ourselves) tend to think that they can make or break a product. While the latter is true, the most important work happens way before the first treatment is written. For Javier, marketing starts with a product that is a high-quality product. No matter how much money you throw at it, if the product is not great , it does not make sense to spend any money on promoting it.

    "Don´t waste a single dollar of anything until the product has to be satisfactory. Satisfactory doesn´t mean to be perfect. It means it has to be better than competition and better than your promise."

    The process of perfecting the product is, according to Javier, not rocket science: “Taste buds don't lie.” And that means that you need to try it for yourself first and make sure it tastes good to you. And this process can be applied to any product, from mobile phones to cars.

    The next step is to research the consumer’s perception, because not everyone thinks the same way. You can start to doubt your own opinion. And sometimes the details that make or break a product are very subtle. That’s when testing comes into the picture. You only have a good product if consumers also like the taste. If they don’t like the product, you really start to endanger your brand when you start selling it to consumers.

    "People go on buy Cherry Coke it was the big novelty of the coca-cola company then try it and they say: this product is disgusting but it cannot be from coke I mean it's me I mean the product must be good. I had something wrong in my head at that day I need to try twice. So they try it twice. The entire population! And then make it drop completely. No repeat purchase."

    Once you’ve got that part right, the next step is to have the right pricing / value equation. No matter how good your brand is, people will never pay more for the brand than its perceived value. After figuring that out, you need to find a (visual) language and design to represent the product. And this is when an agency comes into play. But only then. Javier’s simple conclusion:

    "If you have a person that goes right to the advertising fire him."

    Market research should be a loop, not a chain

    The most important thing is the right technique. Asking the wrong questions can screw up the process completely. And a lot of misguided questions come from having the wrong motivation. Research must not be abused to further your politics. Too many people use research to promote their own ideas and screw up other people’s.

    "Research has to be a looping process, has to be used in a very precise way and has not to be abused."

    How to check if your marketing director is an idiot

    Before the rise of social media, it was very easy to use research to promote bad ideas, because once researched, it was very hard to question the results. This has completely changed. Today you can produce many different versions of a creative product and test them all on social media:

    "My recipe is forget about presearch. Let the experts do the work and social networks will tell you if you´re right or wrong. But instantly. It will be like a questions of two days. or three days. Maybe a week. but you will see if your marketing director is an idiot or a genius. Just wait a week."

    This means that KPIs used to measure marketing campaigns have changed. Shareability is a KPI that can result in real value.

    "But there is a couple of KPIs that are universal yeah which is: do people like, it do people share it, do people morph it and change it, do people own it?"

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