The Coca-Cola charts sport a smile—global sales volume and net income rose by four per cent in the third quarter of 2012. The brand seems to have received some help from missteps by PepsiCo. By diversifying into health foods, Pepsi has taken its eye off its area of core competence and the underlying message that Pepsi appears to be sending out is an almost apologetic one.
Coca-Cola, on the other hand, has moved on aggressively. So how does the company manage to keep turning in such good numbers?
“By researching the human condition,” says Stan Sthanunathan, vice-president of marketing strategy and insights at Coca-Cola.
Ask him to elaborate (for the connection between ‘the human condition’ and a product that Steve Jobs called ‘sugar water’ is difficult to make), and the answer comes straight off the bat. “By that, I mean that we should understand people as people, as opposed to people as consumers,” says Sthanunathan.
Marketers often fall into this trap because that’s where they see commercial opportunity, he says. “If you like Coke while you consume it, that is all to the good, but then we ask the next question, ‘How do we connect Coke, in such an emotionally enriching way, that you always feel good about it, not just when you drink it?’”
People are consumers for a particular product category, say beverages, for only half an hour in a day. The other 23.5 hours, as human beings, they have needs, wants, preoccupations and tensions. This, says Sthanunathan, is where the Coca-Cola strategy comes in—using those feelings to create a strong connection between the brand and the human being. It may not translate immediately into consumption, but it translates into connections.
Perhaps the consumption will follow later? “When the consumption happens, it will be consumption with a bond,” he says. “Consumption for its own sake leads to commoditisation of the brand. Once it’s a commodity, the consumer will go for the cheapest option on the day.”
But how exactly does a cola company make that connection? (It’s easier for a brand such as Apple, which makes what is seen as an important part of one’s life.) And the human condition is a vast area; where does one begin?
Coca-Cola has a market research study, Sthanunathan explains, called the Consumer Beverage Landscape, conducted every three years across 55 countries. Earlier, the company would segment the market into nine different need states (a need state is the primary purpose for purchase—the driver—such as hunger and health). But all of this had been constructed around the ‘understanding consumers as consumers’ mindset. Coca-Cola set out to change that; instead, it said: “Let’s understand human motivations.” This resulted in segmenting people into 10 core human motivations.
In so doing, the company began to understand the tensions around some of those human motivations. For example: a human motivation, important to Coca-Cola, is ‘belonging’, the desire for affiliation. People were saying, ‘I want to belong, but there is way too much negativity around.’ ‘I actually want to reach out, but there is always suspicion.’ ‘Every newspaper is full of bad news.’
In response, Coca-Cola questioned whether the world was really a more negative place than it used to be. As it dug deeper, it discovered that this was probably a misplaced tension. So it began to gather the facts, which it in turn built on in its commercials.
The campaign is variously called ‘Chorus’, ‘Reasons to believe’ and ‘Believe in a happier tomorrow’.
Sthanunathan explains, “So we try to understand the human condition, in all the strategic studies that we do. We try to understand the doubts and the tension. Then we leverage it and find a role for the brand and insert it.”
There are, of course, other crucial components to success in the marketplace. “Execution in the market is important; all the details, like the right packaging for the right occasion, need to be correct.
“We have improved significantly in terms of execution over the past few years. But the broader forms of communications have made a difference because happiness is a universal truth. So, once we identified that, when we started providing a multidimensional lens to that core called happiness, the brand suddenly started connecting with people.
“Our brand love score, which is a key matrix that we use internally to understand how well our brands are doing, has never been higher.”
But, while the campaign theme is happiness right now, that could change tomorrow.
“We have to keep adapting, keep evolving… For instance, we are now going deeper into studies about human perception. The methodologies we use today and five years ago are dramatically different. Facial coding (a scientific system to read human facial expressions) was not even there in the research bassinet; today we use it extensively. If we ask a consumer to comment on an ad, every consumer instantly becomes a creative judge. But we don’t want his opinion as a critic—we need his reaction as a consumer. The Q&A technique will become less significant over a period of time, might even become obsolete”
But, then, how does one read the consumer’s mind? “We are investing in biometrics—facial coding is just one of them. Understanding the neurological responses to stimulus is another one. We do eye tracking regularly.”
So Coca-Cola is moving into more reliable areas of research, in order to “understand what works and what doesn’t, and to get even better at it every day”—even if some techniques sound like excerpts from a sci-fi story.
Connecting ‘sugar water’ to happiness and ‘the human condition’ within the consumer’s mind, is a sizable marketing challenge. Coca-Cola has accomplished it in conditions that, while not hostile, are certainly no longer cola-friendly. It will be interesting to watch how Coca-Cola navigates its way into the future.
Alby Anand Kurian teaches marketing at the Management Development Institute of Singapore.