Coca-Cola has already invested time and money creating a diverse portfolio of quality low-calorie beverages. The challenge now is to get more people to try them. But there’s probably something holding them back: fear of self-cannibalization. Step into a restaurant on the Upper West Side of Manhattan and the problem will be plain. You’ll see a round table with a family of four to the left, all drinking Coca-Cola. To the right, a new family is sitting down. Now imagine you’re a Coca-Cola executive and you have a new diet cola to sell. Who do you want to sell it to? Not the family that has already purchased a Coca-Cola beverage. Instead, you want the new family to try this new product. There is no real incentive to encourage Coke drinkers to try something new, because it would cost you money to encourage this change without yielding any new sales. If Coke drinkers changed to Diet Coke drinkers, they’re still only buying one beverage per meal. Why should Coca-Cola even bother changing their minds?
This kind of thinking assumes that most customers are “spending limiters.” As Denish Shah and V. Kumar of Georgia State University explain, these kinds of customers don’t actually buy more when you offer them new products—they just change what they buy. In short: it’s a waste to market to them. This way of thinking can permeate product strategy. It means in practice that if you have a new healthy product, you should look for new health-conscious customers, rather than existing ones. But this is a very narrow way of looking at people.
Someone with this perspective would see the average restaurant in black and white: those drinking soda, and those not drinking soda. The goal, then, would be simple: get the people not drinking Coke products to buy a Coke product at dinner. Marketing efforts in this case would target new customers, rather than current customers. But there’s another way to see the situation, one that offers a window into a new, healthier Coca-Cola strategy: instead of looking at the restaurant, one could, instead, look at the individual.
by Brendan Steidle
There is real business value in seeing people as more than what they drink at dinner. Let’s take one of the Coke drinkers at this imagined restaurant in New York, for example. Like everyone else at the restaurant, she will drink about 8 or 9 glasses of liquid everyday. The Coke at dinner only represents one of those glasses. That means that as a customer, she is only satisfying a little over 10 percent of her beverage needs with a Coca-Cola product. As much as marketers might like to label her as a “Coke drinker,” it’s just not accurate. She is also a water and milk and orange-juice drinker, a drinker of high-energy sports drinks and fine wine—even the occasional milkshake. Looking at the situation through this lens, your marketing efforts might yield better results not by targeting new customers, but existing customers who are being under-served during the rest of the day.
Let’s look at the numbers:
If you have a restaurant of 100 people, and 50 percent are drinking Coke products, then the most that your marketing efforts could ever yield are to sell another 50 beverages to those not drinking.
But, if you forget about the restaurant, and look at each person individually, you’ll see that each one has 8 beverages that you can sell to them throughout the day. If you market correctly, you could conceivably sell 8 beverages to those not drinking Coke at dinner, and 7 to those drinking Coke at dinner, or: 750 beverages.
To succeed in this second instance, however, you have to change the way you market beverages in the restaurant—or, to put it more precisely, you must change what beverages you market. After all, Coca-Cola may be the perfect beverage to compliment your burger, but it’s not very good when you’re jogging along Riverside Park. Coca-Cola knows this, which is why they’ve been smart to create a range of products that suit a range of applications—or jobs to be done—in your life. But it’s not as easy to reach people with these beverages, because most of the time, when you’re heading out the door for that jog, there isn’t someone handing you a menu of drinks to choose from.
The menu is a powerful instrument. We forget that one of the greatest marketing advantages for sugary drinks isn’t the $1 million Super Bowl commercial or the ten-story-tall billboard: it’s that drink menu at restaurants. The menu sets your expectations for what is appropriate with the meal. But there is no drink-menu when you’re running out the door on your way to work, or running down Riverside Park. That makes it harder for Coca-Cola to market its other—healthier—products to suit these non-menu applications.
What does this have to do with reducing obesity? A lot—because Coca-Cola already has the dinner market cornered—it’s reached saturation. To sell more products, Coca-Cola must sell them for those moments outside of the restaurant—in non-menu places. To get customers to drink Coca-Cola products outside of the restaurant, it may help to encourage customers to try these beverages inside the restaurant—when the menu is very much a factor. Here’s the idea: expose people to drinks like Powerade at their meal. How? Give it away for free.
Restaurants already give customers free-refills. Rather than refilling a Coke with another high-calorie Coke, the restaurant should offer customers a menu of healthy products to choose from for their refill. Imagine it: every time you finished your glass, you could indicate what cool new alternative to try next. It would be like a flavor adventure. People may even step out of their high-calorie comfort zone a little.
But wouldn’t this program get boring pretty fast? After all, there are only so many alternatives to try, right? Well, actually Coca-Cola’s own new ‘Freestyle’ fountain machines provide users with the ability to blend over 100 flavors and make hundreds of new combinations.
The company sees this as a great way for it to discover new and popular drinks that might one day make it to the grocery store shelf. So why not make this flavor shuffling possible at the dinner table? Why not make a difference—not in the size of cups, but the beverage-drinking experience?
Would this be a burden on restaurants? Only slightly, and they could surely make up for it by promoting the experience as something unique to try. It might even get water-drinkers to pay for a beverage for once. In fact, restaurants could sweeten the deal by developing their own special blend menu, either developed by management or inspired by patrons. Imagine it—a restaurant develops its own blend of low-calorie soda with a flavor you can’t get anywhere else. Or imagine if the flavor you selected lived on the menu with your name next to it—wouldn’t you bring your friends in to try it? Surely a program like this could be worthwhile for restaurants.
By limiting the free-refill options to healthy alternatives, Coca-Cola could send a subtle message that it is promoting moderation of full-calorie beverages and encouraging healthy living. Implementing the idea, however, will take some tact. People don’t like to be the subject of social engineering. It doesn’t work if restaurants act like this is designed strictly to improve health. It only works if Coca-Cola and restaurant managers are sincere in believing that this is a worthwhile experience in its own right—if it’s made to be a genuinely fun experience that just happens to also be healthier.
The Day Pack
How do you take this wine-tasting model out of the restaurant and into the home? Introduce day-packs: rethinking the 6 or 12-packs by combining a healthier mix of beverage options to serve customers throughout the day: a Minute-Maid, a bottle of water, a Diet Coke, a Powerade, and a Diet Fanta. You could develop a few different packs for different days; an afternoon spent hiking at the State Park would require more hydration options than a day at the office.
Similarly, the company could make it possible for people to create their own day-pack to serve the hydration needs they come across in their daily lives. Use this opportunity to introduce new flavors or blends based on specific jobs-to-be-done, even changing their names to suit the circumstance: “Rush” for the morning commute, for example. “Jog” for working out. “Refresh” for a healthy splash of fruit. Efforts like these can balance the beverage diet of consumers and change the way they think of quenching their thirst—considering not just this moment, but the harmony of flavors in the full week ahead.