Coca-Cola has announced a major change in its marketing strategy: it is abandoning a 4-brand approach (Coca-Cola / Coca-Cola Zero / Coca-Cola Life / Diet Coke) for a single brand strategy (Coca-Cola) for marketing the four products. This new strategy launched in Britain and Spain will gradually include 11 countries, among them the USA.
The arguments used by the company to justify this change are symptomatic of failure: they claim that consumers have a hard time identifying the characteristics that differentiate the brands (e.g., 50% are unaware that Coca-Cola Zero contains no sugar or calories). We must therefore conclude that the significant marketing budgets allocated separately to the 4 'brands' do not help consumers to understand the differences between them! The company has therefore decided to streamline its brand portfolio to render its marketing outlays more efficient.
However, it is important to look beyond press releases and understand the market situation and the trend in Coca-Cola sales. The market for soft drinks is clearly in decline; consumers are becoming aware of the health risks of these drinks.
Coca-Cola has set itself a target: its products with lower sugar content and calories will represent 50% of its sales by 2020. But that's still a long way off! In the USA the Coca-Cola brand still represents almost 60% of sales, Diet Coke 32% and Coca-Cola Zero 18%. And the trend is very unfavourable to Diet Coke - global sales fell sharply:
In Britain the brand images of Diet Coke and Coca-Cola Zero are very weak:
So we see that, in a context where consumers are looking more and more for products that are good for health, the separate-brand strategy followed since the launch of Diet Coke in 1982 and Coca-Cola Zero in 2005 failed to really position Diet Coke, Coke Zero and (since 2014) Coca-Cola Life, in the marketplace. Consumers still do not understand the differences between them. Meaning that it has been a failure.
From a conceptual point of view this 4-brand approach in my opinion has been a fundamental mistake from the outset, since each one is implemented separately and does not bring value to the Coca-Cola brand itself. Here we touch upon one of the deviances in the marketing of American brands that favours an architecture Masterbrand / Sub-brands, while a European approach would be Masterbrand / Product line.
There should be only one Coca-Cola story - each product being at the service of the story and answering a different consumer expectation.
Now it remains to be proven that Coca-Cola's new approach will help to position the 4 products more successfully: the change of packaging, displaying the Coca-Cola name horizontally, colour codes, or the fact of now having to present the 4 products together - will they be sufficient to increase the sales of the 4 products? Do the last three really correspond to clearly identified consumer expectations?