Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site rochester.UUCP Path: utzoo!watmath!clyde!bonnie!akgua!whuxlm!harpo!decvax!genrad!panda!talcott!harvard!seismo!rochester!miller From: miller@rochester.UUCP (Brad Miller) Newsgroups: net.misc.coke Subject: classic coke Message-ID: <10569@rochester.UUCP> Date: Sun, 14-Jul-85 14:33:02 EDT Article-I.D.: rocheste.10569 Posted: Sun Jul 14 14:33:02 1985 Date-Received: Wed, 17-Jul-85 08:35:19 EDT Distribution: net Organization: U. of Rochester, CS Dept. Lines: 31 A lot of people seem to think coke had the reintroduction of their old formula 'up their sleeve' all along. The problem with this statement is that there are substatial costs incurred when changing the formula of a product, especially when it must contain a new designation (e.g. 'new'). These costs approach that of introducing a totally new product. The only advantage to giving it the older name is, of course, name recognition. However, to suppose that Coke would really risk alienating all of it's current customers if they really believed that there would be such an outcry at replacing the coke formula seems foolish. All of the pre-release market studies I saw indicated that coke felt that current customers would not reject the new flavor, but they would gain market share among pepsi drinkers. (Taste test statics ran roughly 35% of coke drinkers preferred the new coke, while 75% would drink it, 50% of pepsi drinkers preferred the new coke over pepsi.) So, one may ask, why did the stock go up on the news Coke would reintoduce their old flavor? SHELF SPACE!! Colas are sold based on the amount of shelf space they have at the retailer. By introducing a new product, Coke implicitly forces the retailer to make a decision on what other products they will have to reduce shelf space for in order to carry the original coke. Given that the new coke is performing adequately in most areas (there are some large exceptions) the dealer is unlikely to decrease shelf space for the old coke, so shelf space for other products, like the off brands and (they hope) pepsi products will decrease. Bottom line, more total sales, albeit less for any one part of their product line. (WSJ had an article about shelf space and its effect on third brands after the introduction of all the caffine free products by both Coke and Pepsi). Brad Miller