?oca Cola International
The first company I would like to discuss here is Coca Cola International. Coca Cola International is a famous company known well for its carbonated drink Coca Cola. This company has a huge customer database and is ranked at number one in the International market of beverages (Pendergrast, 2000). The issue faced by Coca Cola regarding consumer behavior was when they decided to re launch the Coke. The problem was that Coca Cola was losing market share to their neck to neck competitor Pepsi Cola International. To respond to this they decided to change the taste of the Coke, which was a daring step taken by the management as Coke was a very old brand and people were used to it. The idea came in to their mind when during a survey they found out that if a new taste would be introduced by Coke people would like it. The problem here was that a clear majority had voted for a new taste for Coke which led the management to take a decision to change the formula for Coke. Well the problem started after the new Coke was launched.
People abruptly got the change in the taste and complains were received in huge amounts. Sales of Coke started to decline and the company management was in shock again. The company started to focus on where things went wrong. They had conducted a research which had positively supported the decision but now things were going wrong. The company then found out that the company research was based on random sampling and the respondents were a very few among the large customer base of Coca Cola. Apart from that it wasn’t necessary that the respondent was a loyal consumer of Coca Cola or Pepsi Cola (Schiffman and Kanuk 2006). Coca Cola responded to this issue effectively and efficiently though they suffered huge losses. The changed Coke was re launched by the name of New Coke and later Cherry Coke and the old taste of Coke was restored. Rather than helping Coca Cola International in their global competition this whole incident reduced their market share and made them lose their important consumers in some important markets. Coca Cola then made sure they do not repeat this mistake again. Coca Cola is currently the market leader but still they are losing market share to their competitor Pepsi Cola. The mistake made by Coca Cola management was a direct result of their ill planned strategy, which is a very important and integral part of any organization. They made a very important decision in very less time.
The second company that would be discussed by me in this paper is Whirlpool. Whirlpool is a famous Electronic company which deals in many kinds of home appliances and electronics. Whirlpool’s most famous for its washing machines and dryers. Its name was changed and kept after one of its washing machines named Whirlpool. The company originated from United States and enjoyed a good time in terms of market share and sales until the Japanese entered the United States market. During the era of 1990 and 2000 things started to change in the appliance industry of United States. The Japanese had entered the market, disposable incomes were high, there were a number of electronic manufacturers in the US market and the consumer behavior towards electronics was changing at a fast rate. The non Japanese companies were slow to react towards this change in consumer preferences. The norm in the American society was that each and every one could afford electronics and the size of the houses was getting smaller. The non Japanese companies apart from the Swedish company Electrolux AB were all from US. There names were Maytag, General Electrics and Whirlpool (Snyder and Duarte, 2008). The problem started when all of these local companies started to realize that their sales and market shares are going down. The Japanese had long researched the market of US before entering it. The first signs of Japanese were seen in 1991 but they did not enter the US market until 1999. They studied the consumer preferences and behavior in great depths and came up with small appliance. The Japanese reduced the size of their electronics while coming up with the same technology and designs. In contrast the local companies while being closer to the consumer did not recognize this as they were more towards operational approach of producing electronics.
The consumer side was completely overlooked and ignored. Whirlpool which was a leading company in the local market started to lose control of the situation as they lost sales and market share. They finally realized that the simple differentiating factor is the size of the electronics which is much smaller of Japanese products as compared to Whirlpool products. Whirlpool than started manufacturing smaller sized products and also tried to expand in the International market to overcome the losses of losing market share and sales in the US. Whirlpool was too slow to react to its competitors. It focused more on the operational and manufacturing side of the organization completely forgetting how important the consumer in a highly competitive market is. They still lived in a imaginary market which was dominated by the producer forgetting that the market demographics were quickly changing as the consumer had more options. The Japanese on the other hand were quick to react and capitalized on the situation.
Both the cases were very different and interesting. The Coca Cola International Company was worried about losing the market share and wanted to be innovative with their product. A change in the original taste of the product though was never a right thing to do. It was a very big decision taken quite lightly by the management of Coca Cola International. If such a decision had to be taken a more in depth and enhanced approach should have been used and the change should not have been implemented so abruptly. Understanding the consumer psychology was very important and should have taken a longer time. In the case of Whirlpool it was even worse as the company did not learn a lesson from its mistake. Rather than concentrating back on the local market they entered the International market to relieve their sorrows which was another failure as they failed to make an impact in the markets they entered. They could not penetrate the European market and they failed in Asia. The cases highlight the fact that Consumer Behavior is an important aspect of business (Hoyer and MacInnis 2008). In a market where satisfying your consumer is the foremost activity it is highly important to understand consumer behavior and demographics. A successful company always focuses on its consumers and tries to get closest to them in terms of their preferences and behavior.
Hoyer W. D., MacInnis D. J. (2008) Consumer Behavior. South-Western College Pub;
Pendergrast M. (2000) For God, Country, and Coca-Cola: The Definitive History of the Great American Soft Drink and the Company That Makes It. Basic Books;
Schiffman L., Kanuk L. (2006) Consumer Behavior.Prentice Hall;
Snyder N. T., Duarte D. L. (2008) Unleashing Innovation: How Whirlpool Transformed an Industry, Jossey-Bass