In 1985, the Coca-Cola Company has seen market share decline for its flagship product for the past 15 years. The soft drink company discovered that consumers prefer a new recipe to Pepsi and even old Coke after performing blind taste testing with over 200,000 people. Coca-Cola launches ‘New Coke’ with an all-star commercial campaign that summer. The product bombs. Badly. Consumers clamor for the classic formula, which Coca-Cola quickly brings back.
How could Coca-Cola, which decidedly did its homework in terms of tasting, fail so spectacularly? The issue is that Coke consumers slurp the soda down for more than taste. Coca-Cola forgot that every time someone pops the top, they’re drinking from a well of emotion.
Are you Asking the Right Questions?
Coca-Cola used the wrong tool to answer the wrong question. Instead of asking customers which cola tasted better, it needed to pursue the “why” of customers’ buying habits. Many participants had grown up with Coke and had an emotional connection with the product and brand. Caught up in taste tests, researchers had neglected to consider customer habits, nostalgia, and loyalty.
Market research is more than a numbers game. As Coca-Cola learned, failing to understand the broad range of customer motivations, triggers, and emotions can lead to a corporate black eye.
The power and prevalence of market research have only grown since 1985. Companies in the United States are expected to spend $16 billion on market research in 2017. By 2020, that number will have more than doubled, yet marketers’ skepticism of their own conclusions will be at an all-time high. Only a quarter of marketers thought they were employing the correct tools and processes this year, down 8% from last year.
Skeptical business leaders often blame the tool or the person administering the tool. But more often than not, the real culprit is a mismatch between the tool and the questions in need of answers.
Choosing Tools for Insights
To look into the variety of elements that go into a customer’s “why,” you’ll need the correct tools. Just as turning a screw with a chainsaw isn’t a good idea, marketers need the correct instruments when gathering customer data.
Business leaders and marketers often turn first to surveys — or methodological cousins like taste tests, in Coca-Cola’s case — due to their ease and affordability. But surveys rarely reveal why customers behave the way they do. Of course, cold, hard facts have their place. Adding more figures to the mix, however, would not change the fact that two out of every three CEOs feel disconnected from their customers. Today’s CEOs are having difficulties understanding the sources of motivation, emotions, ideas, and concerns that drive their customers’ purchasing decisions.
When it comes to tapping into customers’ hearts and minds, the key is qualitative research. Conversations held in focus groups and in-depth interviews equip company leaders with insights ranging from customer pain points to product satisfaction.
What makes conversations so valuable? Think back to New Coke. Are customers buying based on convenience, necessity, nostalgia, or something else? No figure or one-directional response can uncover that.
Quantitative techniques like surveys and qualitative tools like focus groups both have a role to play when it comes to customer insight. The idea is to start by having talked to gain a sense of the situation.
Had Coca-Cola first held a focus group to understand consumers’ relationship with the beverage and their reactions to its potential discontinuation, it could have contextualized the taste test. Learning how much of a role taste plays in the broader purchase decision likely would have led Coca-Cola researchers to assign less weight to consumers’ flavor preference for the new formula.
How might Coca-Cola have made the most of surveys? It could have learned when they crave a Coca-Cola, how often customers choose other colas over Coca-Cola due to taste, or how much they’d be willing to pay for a new product. None of those answers are helpful, however, without first understanding why people buy Coke in the first place.
What’s more, surveys could have helped Coca-Cola save money. Instead of surveying 200,000 people, it could have surveyed a 10th as many and then extrapolated its findings. Then, it could have followed up with that same group after rolling out New Coke to track the broader market’s satisfaction.
As Donald R. Keough, then-president of the Coca-Cola Company, stated after the 1985 New Coke debacle, “We did not understand the deep emotions of so many of our customers for Coca-Cola.” Employing just one research tool was Coca-Cola’s mistake. Had it started with customer conversations, it would have realized New Coke wasn’t such a sweet idea after all.