Sunday, January 21, 2007

Conservatives copy the Goizueta maneuver

Steve at Far and Wide cuts right to the bone of the Gnu™ Conservative Eco-Energy Efficiency Initiative which, while many people are calling it EnerGuide II, I prefer to label EnerGuide Classic.

Most people would probably shrug their shoulders at the name of a Cuban immigrant to the United States, Robert Goizueta. His is just not a household name, but the company he ran for 16 years certainly was and under his supervision it became "one of the world's most sophisticated and powerful marketing organizations". If you had invested $1000 in his company on the day he took over as chairman in 1981 it would have been worth $62,000 by the time Goizueta died in 1997.

Goizueta took over a company which was starting to suffer. It was on the borderline of being unprofitable. The board of directors shunned any form of risk. Further, the company had become bound-up in the traditions and culture of 89 years of existence. Goizueta, sometimes without fully considering the consequences, set out to shake things up and create a new culture.

He was going to transform Coca-Cola™.

Coca-Cola had once had a strangle-hold on the soft-drink market. It's nearest competitor, Pepsi™, had a market share equal to 20 percent that of Coca-Cola's. That was until 1984 when Pepsi took the lead in sales. The Coca-Cola company found themselves in the minority position with only 21.6 percent of the market share compared to Pepsi's 22.8 percent. Coke was "thundering in" and Goizueta had a plan to turn the situation around. Unfortunately, he was headed down the wrong road.

The formula for Coca-Cola had been around for 99 years in 1985. Goizueta, on the basis of blind taste tests, reformulated the Coke recipe to taste more like the "now popular" Pepsi and rebranded it New Coke.

The North American market rejected the New Coke formula. Many found it too sweet while others simply insisted that they liked the old formula much better. Still others could not understand why Coca-Cola, with a proven flavour, would try to copy something different. There were differences in the colas and Coke's traditional market was not pleased. Coke had become a knock-off of what Coke drinkers felt was an inferior product. The public had an attachment to good-old, comfortable, Coca-Cola. There was an emotional attachment which Goizueta had not anticipated and New Coke simply did not meet the public's need for a product which spoke to their need for stability and tradition. Goizueta had tried to fix something that was not broken and it was costing The Coca-Cola company a fortune in lost sales and popularity. Goizueta, working from an ideology of change had impulsively committed a huge blunder.

In less than a year, Goizueta brought back the "old" Coke formula. But rather than just admit the mistake, withdraw New Coke from the market and re-introduce Coca-Cola under its old name and brand, he made up for his previous mistake with a stoke of simple genius: He created Coca-Cola Classic.

It took off, and Goizueta milked the publicity from his error. Coca-Cola Classic became a marketing miracle. Goizueta had given the public what they really wanted: good old-fashioned Coke; a drink they were comfortable with.

If there is anything strange about the Coke Classic phenomenon it is that nothing really changed. The Coca-Cola people drink now is the same Coca-Cola people have been drinking for over 100 years. There's nothing different - except the marketing and the packaging. It wasn't better than the "old" Coke - it was the "old" Coke. And we loved it!

Goizueta dropped his ideology of change in favour of a new course of action. He retained the traditional products, introduced new ones and diversified the Coca-Cola company by exploring different products. But the stuff which made Coke a success, stayed.

The Conservatives do not have a Robert Goizueta in their midst. They have not had any form of epiphany with respect to the environment. Their re-branding of the former Liberal EnerGuide program is based on public opinion polls. The similarity between the Conservatives and the near-disastrous blunder of the introduction of New Coke is that the Conservatives saw that their trash and burn policy was making the public uncomfortable. They had created a vacuum and the public noticed that the Conservatives had eliminated a valuable program - period. There was nothing "better" to replace it and that made people uneasy. The Conservatives watched their numbers start to fall. To make matters worse, they had no new ideas with which to replace a program they had hacked. They then, unwittingly, carried out Goizueta's, now famous, maneuver. They brought back the old program with new packaging.

Where the Conservatives now fail is that they are still an ideology-driven bunch. That has not changed. Where Goizueta openly admitted his mistake over New Coke, the Conservatives are unable to muster the courage to get past their ideology to make the same kind of admission with regards to canceled environmental programs. They are trying to make the EEEI sound like their idea and something completely new. Where Goizueta never tried to insult the intelligence or instincts of the buying public, the Conservatives most certainly will. Canadians can see right through this.

And, where Coca-Cola long ago recognized that the cornerstone of the company's success lies with the retention of successful products, even though the market share may not be as high as they would like, the Conservatives, if they ever get a majority government, will dump EnerGuide Classic as quickly as they re-introduced the former Liberal program. Count on it - it goes to their ideology.


If you'd like to see what the Conservatives would do with this bit of lemonade they think they have manufactured, especially if they have the chance to form another government, this is more along the lines of how they'll behave. It's just so... fitting.

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