Thought Leaders
Coca-Cola's C2: Anatomy of a New Product Launch

When Javier Benito stepped in as President, U.S. Retail Division and Chief Marketing Officer at Coca-Cola North America, he faced a race against time. He needed to develop a lower-carb, lower-sugar cola and get it to market while his number-one competitor, Pepsi, was working on a similar product. He also had to wrestle with the specter of the "New Coke" debacle that still hovered over any new product launch in the company.

The product was critical to the company's future. Coke faced a "huge business impact" as its 66 million customers who drank Coke daily began to reduced the number of servings they drank each day. "Overall, this category [soda drinkers] was growing by 0.5% while the population was growing by 1%, which is not a good formula for a company like us," Benito said. "As the leading brand, you have the responsibility to grow your category. This is the only way to create sustainable business."

Strategies for a Successful Product Launch

The product was successfully launched within this tight time frame. What are some of the lessons for new product launches? Among the strategies that lead to success are:

• Starting with strong consumer insights: Coca-Cola focused on market research at every stage of the process. "The great thing about marketing is that the answers are out there with the consumers and the trade," Benito said. "If you're smart and look for them, you'll find the solutions." By studying consumers, the company focused sharply on its target market. "We studied the markets and found that of those 66 million customers who drank Coke daily, half didn't care about the amount of calories; and of those who wanted reduced calories, 52% of them preferred Coke Classic, and the remainder preferred Diet Coke. We found a very high level of dual consumption of regular Coke and Diet Coke, and we decided our new product would target this segment of dual consumers," Benito said.
  
  
• Developing clear goals and positioning: Benito came up with a clearly articulated goal that the new product would meet: to fulfill the unmet needs of the cola consumers who wanted to lower their sugar intake. Specifically, the new product targeted 25- to 35-year-olds with a psychographic profile of wanting to feel healthy, who have an evolving sense of responsibility and the desire to be on the move.
  
  
• Sweating the details of product refinements: In addition to understanding what customers want, the company also had to deliver products that could meet these desires. Integral to developing C2 was understanding consumers' preferences for various artificial sweeteners. "We did consumer tests on different sweeteners," Benito said. "Because of the significant aftertaste with one predominant artificial sweetener, we knew we had to get rid of it. He set a rigid benchmark, and after failing to reach it, Benito turned to his R&D department to come up with a [proprietary] blend of three sweeteners. This delay caused some concern, especially with Coca-Cola's top competitor releasing its own low-carb product. Still, Benito believed in meeting his benchmark, and his steadfastness paid off. In early consumer tests of their tri-blend sweetener, they exceeded their goals for consumers who rated it as "better than expected."
  
  
• Creating individual branding while recognizing tradition: In extending the product line of an established brand, the question of the relationship between the new brand and existing brands is extremely important. While a brand such as Diet Coke directly references the company's flagship brand, the reference of the C2 brand was more subtle. Benito also decided not to leverage the Tab brand since it had such a narrow number of users and he believed that Tab didn't have a strong enough brand identification, although launching an entirely new brand was more expensive.
  
  
• Developing the right packaging: Since Coca-Cola's creation of its classic hourglass bottle, packaging has been crucial to the company's branding and marketing. This new launch was no exception. How should this edgy new brand be marketed? After realizing his first choice for packaging was impossible to produce within his timeframe, Benito broke a few norms and boundaries by coming up with a dark label on the standard contour bottle using the Coca-Cola wave. Again, after testing with consumers, the response to the packaging was very positive.
  
  
• Making waves in communications: For the consumer communications strategy, Benito used a two-stage advertising campaign and made sure advertising reached all outlets — television, radio, billboards, and the Internet. The first ads were developed to generate awareness, while the second wave of ads focused on what the brand was all about — lower sugar and fewer carbs. Ads were placed at the same time on all major networks the night before the launch. On the day of the launch, consumers could access, via MSN, clips of the television commercials. More than 10 million bottles were given out as samples at specially designed events.

Even with a solid marketing strategy, launching new products is always a risky proposition. Both Coca-Cola's C2 and PepsiCo's low-carb Edge have been slower to take off than expected, leading to questions about the market for these products in between diet and regular cola. Coke executives have noted, however, that C2 has drawn many customers back to colas from water and noncarbonated drinks.

Even successful new products often have unpredictable trajectories, and never more so than in today's markets. Making key decisions in launching a new product — knowing which customers to target, the unique aspect of the product that will appeal to these customers, creative branding, and good messaging — are much more difficult in a very crowded and rapidly changing marketplace, said Wharton Professor Jagmohan Raju, academic director of Wharton's Essentials of Marketing program. "What was a success now is not the same as what was a success before," he said. "Companies today need to be right the first time."

• Essentials of Marketing
  
  
• Competitive Marketing Strategy

• Wharton Executive Education
  
  
• The Wharton School

This month's articles:

• Thought Leaders
  Coca-Cola CMO Javier Benito discusses strategies from the recent launch of C2.
  
  
• In the Classroom
  Wharton Professor David Reibstein looks at ways to link marketing to financial metrics.
  
  
• Career Reflections
  L'Oreal USA President and CEO Jean-Paul Agon remembers the "bet" management took on him early in his career.
  
  
• Wharton Leadership Conferences
  Top executives and other experts explore how to lead with "creativity and conviction."
  
  
• Education à la Carte
  Improve your skills in marketing and other areas through upcoming programs.