Since the launch of Coke Zero, I've personally picked up drinking Coke again. And I've seen others doing the same. And according to the Coca Cola press releases, Coke ZERO in Australia broke "all records for household penetration after just 8 weeks". "The combination of a great ‘Coke’ taste with Zero Sugar and the unique black packaging proved a huge hit – with colas seeing an uplift in sales of 19% after just eight weeks."
But what will be the ROI on the long term? According to the book "The 22 Immutable laws of marketing", line extensions very often cause long term volume and profit loss. These might be some reasons. Don't hesitate to complete them in a comment or via a post on your blog:
1. Very often the budget and resources (brand manager) come from the original brand. In this case, part of the budget might have come from the Coca Cola equity budget and brand manager.
2. Coke Zero further scatters the original (and strong) brand positioning of Coke: The real thing. Coke Zero doesn't taste nor sound like the real thing! Does it lift the whole Coke brand? What does it do back?
3. And what about cannibalization on Coke regular and Light? Did previous Light drinking men switch to ZERO? If the margins on Zero are higher Light, then cannibalization is not that bad.
4. The logistic chain got some extra SKU to take care of
5. A key strentgh of Coke is its great in-store experience. Before Light or Zero, the whole shelf was branded in red. Today, you also see grey and black colors.
The business risk is often higher than one might assume, especially in the long term. But the good thing is all ot these 5 arguments can be coped with.
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