An October 2008 Coca-Cola ad was meant to convince Australians that the carbonated beverage products will not make children fat. More, caffeine is no problem, nor should consumers worry about soft drinks – especially energy drinks – rotting one’s teeth anymore.
Atlanta-based Coca-Cola is the world’s biggest bottling company and owns 500 drink brands, both sparkling and still. In an attempt to increase its 43 percent market-share in Australia, Coca-Cola launched an ad campaign featuring actress Kerry Armstrong. The latter sold her motherly and wholesome image for the express purpose of making parents feel comfortable about their kids drinking Coke (see image below) and was featured in ads with copy like this:
“Myth. Rots your teeth.
Busted. ‘Coca-Cola’ has the same level of acidity as many other food and drinks. And, when you think about it, drinks like ‘Coca-Cola’ are swallowed quite quickly and the saliva in your mouth washes away the liquid. Dental hygiene is the key! Make sure you look after your teeth by brushing regularly and visiting your dentist. In fact, tooth decay is declining globally, even as soft drink consumption has increased. This all means there’s no real reason why you can’t enjoy ‘Coca-Cola’.”
Coke’ myth-busting advertising campaign backfires – view entire print-ad
The Australian Advertising Standards Bureau (an industry body) had approved the ad, but has subsequently come under fire for that decision. ACCC staff have also stated on the news that the bureau has failed in its duty to uphold the laws of truth in advertising.
The regulator issued a verdict on April 2 demanding costly corrective action. The verdict made front-page news around the globe within 24 hours.
On Friday, April 4, 2009 Coca-Cola South Pacific gave the ACCC court-enforceable undertakings to publish corrective advertisements in the Sydney Morning Herald, the Age, the Australian, the Courier Mail, the Adelaide Advertiser, the West Australian, and the Hobart Mercury, as well as on the company’s own website.
Plus, Coca-Cola South Pacific has been forced to review its compliance with Australia’s trade practice laws.
Does it matter?
Campaign costs = real cash spent. Besides publicly apologizing and making negative headlines, it is estimated that Coca-Cola paid Kerry Armstrong a fee of around $70,000 (€37’000); the corrective ads across Australia will cost another $200,000, plus the $50,000 paid to the ad agency.
Business ethics. Misinforming the public or taking the truth on a spin is a dangerous and unethical thing to do. The company’s PR folks are trying to spin a bad thing into something good, by doing things like having Gareth Edgecombe, managing director of Coca-Cola South Pacific (a wholly-owned subsidiary), be quoted by an Australian news reporter as follows: “We certainly did not intend our message to be misleading and we have been working with the ACCC to address its concerns…”
Brand management and corporate governance. “The key to building the socially good brand is a mindshift from silos to systems… from independence to interdependence.” To illustrate, leaving Coco-Cola South Pacific to pursue its own vision created an undesirable social impact that resulted in a form of self-sabotage of the company’s global image and reputation as a trusted brand.
Put simply, a brand is what the corporation tells us about itself or its product – Coca-Cola – and what it wants and aspires to be. Corporate governance should help reduce the risk of localized vision coming into conflict with, and damaging, the global brand.
Reputation management. Reputation is how people feel about a company, the other side of the coin being brand management. This ad campaign and the reprimand Coca-Cola got for it from the ACCC, as well as negative publicity in the media and online do not endear the company to consumers.
Bottom line
This case illustrates that Coca-Cola managers are having a hard time grasping the shift in zeitgeist. For Joe Six-Pack, fairness means that when companies communicate they do it properly and honestly, getting the trust they deserve in return. Coca-Cola missed the public’s thirst for fairness when it comes to what the company tells us about its products; it is time for its executives and other CEOs to realize that and act accordingly.
Some people claimed that the damage to the brand was priceless. We beg to differ. While quantitative and qualitative costs can be identified, Coca-Cola is a well-established brand. Considering its advertising and public relations muscle, the event will surely be forgotten in a few weeks.
This case illustrates that improving market share at any cost – such as not following truth in advertising – is no longer acceptable and could trigger another boycott of Coca-Cola products. The negative effect of this on the company’s stock price would not make investors happy. Though mistakes like this might result in bankruptcy for a small company, this will likely not put much of a dent in yearly earnings for the mammoth that is Coca-Cola.
Our question to readers is, do you feel that this event changed Coca-Cola’s reputation and will it will result in any other consequences? Please share your thoughts and insights on this important issue by leaving a comment. Thank you.
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