In response to Pepsi’s challenge, Coke did its own taste tests and found out that Pepsi was preferred. This
led Coca-Cola to do the one thing a leader should never do – change a product people consume a lot of.
The new formula was introduced to the entire market without any test marketing. Now the “real thing”
was no longer the real thing; and in one stroke, Coca-Cola had undermined its own position.
The “New Coke” led to an outburst from the public with their loyalties to the original formula.
Management listened. The original formula was reintroduced as “Coca-Cola Classic,” giving Coke a new life
cycle.
It is important for Pepsi to create an image that could never be confused with Coke’s. For twenty years,
Pepsi positioned itself as the “leading edge” soft drink and called their consumers the “Pepsi generation”.
The overall effect of Pepsi’s efforts was to steadily erode Coke’s leadership.
Coke still currently leads Pepsi in sales, but no one knows for how long. We do know two things: both
companies have always targeted youth and both portray their products as providing pleasure.