Crisis Management and Strategies
Coca-Cola Case Summary
The Coca-Cola Company started on May 8, 1886 when Dr. John Stith Pemberton who was a local pharmacist in Atlanta, Georgia invented the syrup for Coca-Cola. He carried a jug of the new sweet syrup down the street to the local Jacobs’ Pharmacy for anyone who wanted to sample the mysterious liquid. At Jacobs’ Pharmacy most customers deemed it excellent and it was put on the shelf and sold for five cents as a fountain drink. All across Atlanta gas stations and grocery stores started advertising Coca-Cola as the drink of choice for their customers. Starting in 1886 Coca-Cola sold on average nine drinks a day up until 1887. (www.thecoca-colacompany.com). Since then Coca-Cola has came a long ways. Pemberton sold portions of the business to numerous partners, but right before he passed in 1888 he sold the rest of the company to Asa G. Candler. Candler gave the company a face with introducing the Coke “bottle”, but then sold the Company to Ernest Woodruff for 25 million. From there it has grown into an even more notorious company. However the Coca-Cola Company has seen it’s fair share of problems.
The company first came out with a new flavor, and consumers rallied against it, forcing Coca-Cola to come back out with its famous Coca-Cola Classic. Its most recent crisis however is the My Coke Rewards program. This program is known as a customer loyalty program, and it allows customers to earn prizes for redeeming codes on certain beverages. Customers can get codes on 14 different brands Coca-Cola, Coke Zero, Diet Coke, Sprite, DASANI, POWERADE, Minute Maid, Fanta, Barq’s, Fresca, Pibb, Mello Yello, Nestea, and Seagrams. They can find these codes under caps, inside 12 packs, and on multi-pack wraps. When you join the program you can get rewards, enter sweepstakes, get offers and promotions, earn extra points, get email updates and mobile alerts. After you earn the points from the fourteen brands, you can spend those points on rewards, sweepstakes, instant win, MCR Points Plus, customers can support a good cause, or donate to a school. Since the start of this program in February customers have done nothing but complain about the program. Instead of this being known as the My Coke Rewards Program, many have been referring to it as the My Coke Rewards Scam. Registered members complained that the “top rewards” were unreachable. A second complaint was that when people would create a wish list, by the time they were able to collect enough points to purchase their special items, the items were already gone. A consumer in St. Louis, MO elected to file a lawsuit against Coca-Cola. Her reasoning is that the My Coke Rewards program might push kids to drink enough soda to “die or even become obese”. A frustrated customer also posted on twitter that he was having a difficult time redeeming the points for the program.
The threat to the Coca-Cola Company because of this program is evident. One of the customers who were upset about the program said that it made him want to drink Pepsi. The Coca-Cola Company is so much more than just a soft drink to many of its customers. To many people it’s a past time that they have enjoyed for years and years, for others it’s a chance to remember a childhood memory. It’s also an example of the American Dream. If Coca-Cola were to damage its reputation because of the My Coke Rewards program, the company would lose a lot of customers. Coca-Cola has a great soft drink, but most people love the brand so much because of its reputation and what it means to them sentimentally. The company would take a big hit in sales if the company’s reputation were changed to one that tried to take advantage of its customers. (www.chiefmarketer.com)
- Coca-Cola adjusted the point values on rewards so that the highest point value is 26,000 for prizes like the cruise for two, a five-day U.S. destination vacation or a walk-on movie.
- The Company began emailing members to let them know when wish items were being exhausted.
- In response to the lawsuit, Coca-Cola explained that members could purchase Diet Coke, as well as Coke Zero. The Company also explained that members do not have to drink all of the coke they purchase either.
- The head of social media for the company posted an apology on the frustrated customer’s Twitter and assisted him in receiving the prize. (www.chiefmarketer.com)
- After the frustrated customer on Twitter received the prize, he changed his Twitter avatar to a photo of himself holding a Coke.
- The customer that was frustrated about the wish list was still frustrated with Coke even after they sent email notifications out. He explained that “even if your 400 points short, an email notification does not help you out much”.
- The lawsuit against Coca-Cola for pushing kids to drink the product was presumed dropped.
- After the highest point value was dropped to a number that was more reachable Williamson explains, “ninety-nine percent of the prizes can be redeemed for less than 5,000 points and 83% can be obtained with less than 100 points. The program has rewarded 300,000 prizes”.
I think that the My Coke Rewards program still might be a problem for the company and I would suggest running it for a limited amount of time. I think that Coca-Cola was doing as much as they can to please their customers with there complaints. The decision that the head of social media for the company posted on the frustrated customers twitter was a very good choice. Not only did it please the customer, but it also gave the customer and everyone else watching the message that Coca-Cola is down to earth and will communicate with customers on a casual level. It makes someone feel like they have a friend looking out for them, rather than a company trying to take advantage of them. The company used the apologia theory quite often, but I think they were smart to do also. They simply apologized for the inconvenience and tried to fix the complaint. Coca-Cola is a very prestigious company and I believe that they will remain that way if they keep up this type of customer service.