“Less is more” Ludwig Mies van der Rohe
A few days back I came across a really interesting report from CNN Money. This video was about a marketing strategy introduced in 2007 by The Coca-Cola Company in the US.
Soda companies, just like fast-food chain restaurants, have been struggling in recent times. The reason for that is, of course, the new health hype we all have (or trying to have). The trend hit hard the sugar industries and sales of products like sodas have been dropping since. Studies became public on how badly sugar affects our health. Documentaries like Fed Up, Supersize Me and Food Inc. showed some scary facts about what we eat and drink. A can of Coke contains sugar dosage enough for a whole day for a grown-up man. According to the World Health Organisation (WHO), the sugar consumption for a healthy grown-up man should be:
“Less than 10% of total energy intake from free sugars, which is equivalent to 50 g (or around 12 level teaspoons) for a person of healthy body weight consuming approximately 2000 calories per day, but ideally less than 5% of total energy intake for additional health benefits.”
A regular can of Coke (12 fl oz) contains around 9 teaspoons of sugar or 39g of the white sweetness. That means we are allowed a can of coke a day and no more sugar. This is almost impossible as a lot of the foods we consume contain sugar in some form too.
Not only that, but companies in the sugar industry tried to manipulate and lie about the health risk coming from their products. Suddenly these companies like The Coca-Cola Company, Pepsi Co, Nestle and so on are seen the same way tobacco companies were seen in the mid-’90s. The big bad guys telling lies on national TV, about their products not risking humans lives. Just to keep their cash flow from disappearing. It came to a point when people realised how bad tobacco is for us. Governments decide to regulate the prices and forbid advertising as part of the war against the smoke. Today the cigarette companies have decided to step away from the developed world and concentrate their market to the third world countries, where health awareness is not as popular. Now cigarette conglomerates are making more money than ever.
With sugar products being freely sold and advertised and no heavy regulations by governments are established (yet), the only damage taken by the producers is the people’s awareness. The market took another direction. Consumers are still willing to have sugar in their diet, but less. All soda producers first tried with a “diet” soda, or “zero sugar” soda to deviate the consumer and make them think that this is better. Have as much soda as you like, there is no sugar or less sugar. Well, turns out it is not good. Corn syrup and any other sugar substances are as bad.
What is left then? Well, if people want less sugar in their daily diet, give them less. Not only that, but people are also ready to pay a premium for less. This is how The Coca-Cola Company came up with a brilliant idea! They decided to listen to what the customers want. They looked at what the market is looking for. What are the consumers’ needs? Less consumption of sugar! It is really simple actually, but so are most great solutions to any problem. No new recipe or chemistry involved. They kept their legendary Coca-Cola taste, but start selling it in smaller cans. Not only that, but they also sell it for almost double the price!
What!? Yes! Such a simple clever move from their side. Here is how it makes sense. Let’s say you want to start a diet and lose some weight or quit smoking, or quit drinking. What is the first thing you would do? You would probably get rid of everything in your house that will affect your regime. Keep less junk food in the house. Out of side, out of mind. The same goes for soda products. Coca-Cola probably realised how people would go to the shop, they would like to have a can of coke, but they know it is too much. So the consumer would prefer to have no soda at all, then having a lot of it. What if there was a smaller size?! And there is the solution! Give the people what they want and they will be willing to pay more for it. Demand will always justify the pricing.
Here is how it works. In my example, I will use prices I have taken from the US Amazon(15 July 2016). I live in Ireland, so Amazon was the first place I found that I could compare prices in the American market.
Now, let’s do some math:
12 pack of 12 fl Oz or 144 fl oz for $4.68. Or in a more sensible language 4.26 litre for $4.68
8 pack of 8 fl Oz = 64 fl oz for $3.00. Meaning for $3.00 you buy 1.89 litres of soda.
So in the first case, an Oz of Cola is worth ¢3. In the latter situation, you will pay ¢5 for 1 Oz. Almost double the price for almost half the product!?
Looking at it sounds like only an insane person will take that deal. But it is actually the sensible people who want to stay healthy, where the target for that market is.
This is, in fact, a marketing strategy that has been around for a long time. Coca-Cola just worked around it and fit it to their current needs.
Think of bulk deals. They are exactly the same. The only difference is that, first was the original product and its packaging and after was the bulk deal. For example, you can buy a can of soda for a certain amount of money or you can get a six-pack for the price of four cans. Now it is a time when companies like Coca-Cola are taking the same road, just going the other direction. They have an original product, one that the consumer is familiar with and used to the packaging format. Now instead of making a bigger packaging for less money per oz, kilograms, millilitres or whatever measure you say, there is a trend to make a smaller packaging for more money. We are not allowed to blame them for trying to scam us. I say scam because on paper it does look like one. Pay more get less, sounds like a definition for a scam. Here though they follow their market trends. That is what their customers are looking for. If they are looking for it, they will be willing to pay a premium.
Personally, I see this as a smart move from Coca-cola. The people want their product, but not as much of it. So how would the soda producer satisfy their consumer’s needs, without losing profit and having to cut on jobs and eventually close factories? Yes, that is right, sell less for more money. Only time will tell if this will work, but by the looks of it, seems like the right decision.
In conclusion, we can say that the marketing strategy from The Coca-Cola Company is showing us that less can be more. More importantly, they are showing us how important it is to listen to what the customers want and needs are. Listen to what their needs are. How are they evolving with time and how the business should follow these trends? In no case, the company should try to change the trends. Companies should follow the trends the consumers are creating!