The trouble with market research is that it is presented as a robust and objective source of factual information. The truth is, of course, that it doesn't always live up to that lofty ideal. As anyone who has been involved with market research will tell you, "objective truths" often depend upon interpretation, and even minor variations in methodology can produce wildly different results.
The classic example of the dangers of relying on supposedly "scientific" market research findings came in the early 1980s with the disastrous attempt to launch a new, improved flavour of the world's favourite brand, Coca-Cola.
The company was becoming increasingly concerned that it was losing business to arch rival Pepsi. Its share of the soft drink market had been shrinking for decades, from 60 per cent just after World War II to under 24 per cent in 1983. Pepsi at the time was running an advertising campaign called the Pepsi Taste Test comparing the two and seemed to have by far the preferred flavour.
". . . objective truths" often depend upon interpretation . . .
Never one to sit on its laurels, Coke conducted its own research. Sure enough after spending $4m on 200,000 "blind taste" tests, it confirmed Pepsi's findings. Consumers did, indeed, prefer the taste of Pepsi. So the Coca-Cola company urgently started developing New Coke with a sweeter more citric taste – just like Pepsi.
After two years of extensive consumer research in conditions of military secrecy, it finally came up with the perfect new product. Coke then developed an advertising campaign befitting the launch of a new version of the world's greatest brand. After spending tens of millions of dollars, it ditched the 99-year-old original formula and launched New Coke in April 1985.
It was a catastrophe from day one. Coke received over 40,000 letters of complaint and over 6,000 calls a day to the company's "0800" phone number. After only 87 days, the company responded to the public's demands and humiliatingly re-introduced the original Coke formula.
. . . it had failed to realise that the Pepsi Taste Test (PTT) was not an accurate reflection of how drinks are really consumed.
Despite spending millions of dollars on years of development, Coca-Cola had made three fundamental research errors. First it had failed to realise that the Pepsi Taste Test (PTT) was not an accurate reflection of how drinks are really consumed.
The PTT consisted of asking customers to take a sip of Coke, take a sip of Pepsi and then say which they preferred. Pepsi being sweeter and cleaner won hands down. But no one in real life just takes a sip – they drink a whole can. Over the course of a whole can, Pepsi's sweetness becomes cloying and Coke's more sophisticated flavour has time to come through. If Coke had given consumers a whole tin to drink instead of a sip, it would have obtained very different results.
. . . we never asked if they liked it and whether they would buy it . . .
Then it compounded its folly by concluding from the research that just because consumers said they preferred New Coke to both Pepsi and old Coke, it would sell better. "In the interests of secrecy, we never asked if they liked it and whether they would buy it," a Coca-Cola executive later ruefully admitted.
Lastly they had ignored the power of the Coke brand. The company had spent a century persuading Americans that its product was an integral part of their lives, their very identities. Consumers may not have owned the brand, but they certainly had an emotional investment in it – they were stakeholders. American consumers saw the change as a violation of their identity and they were not prepared to stand for it.
The moral of the story is that what seems on the face of it a rigorously scientific process can harbour all sorts of preconceptions and assumptions. Unless you are alert to them, they can make your research not just inaccurate but actively damaging to your business.
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