Reference no: EM131938083

Question: 7up fails to strike gold in the cola market[1]

Seven-Up has struggled for years to properly position its flagship lemon-lime beverage and compete with the powerful Coke and Pepsi cola brands. To grow sales of the brand, it embarked on a brand extension program, introducing Cherry 7Up in 1987. Buoyed by its success - the product gained 1.7 percent market share in its first year - Seven-Up Co. decided to launch another new brand extension, 7Up Gold, in 1988. 7Up Gold was an amber-colored, spicy, caffeinated drink flavored with cinnamon, ginger, and lemon-lime, tasting something like a cross between ginger ale and Dr. Pepper. More robust, masculine, and darker than regular 7Up, the new product was intended to fill in the "missing link" in the company's product offerings. In many ways, Seven-Up executed a traditional introductory marketing program to launch the product. They first tested the flavor to ensure its consumer likability. They strategically selected a brand name that combined the established 7Up name - for re-assurance - with the "Gold" modifier to connote high quality (but which was intended to still be ambiguous enough to reflect its unusual taste). They backed the brand with a $10 million introductory advertising campaign. Initial network television ads used the theme song "Wild Thing" - as performed by the Troggs - and showed images of boisterous partygoers and drag-racing soda cans raising clouds of spray. The ads contained the tag line "The Wild Side of 7Up."

What went wrong? In the first place, the company chose to quickly introduce the product without any test marketing to understand consumer reaction to the marketing program as a whole. Unfortunately, as one Seven-Up executive stated,

"The product was misunderstood by the consumer. People had a clear view of what 7Up products should be - clear and crisp, and clean and no caffeine. 7Up Gold is darker and it does have caffeine so it doesn't fit the 7Up image."

Prophetically, the product failed to attract the lucrative teen market or an equally powerful group of consumers - mothers of young children.

Although sales initially looked promising, they quickly began to drop precipitously. Even more worrisome to Seven-Up management, sales of Cherry 7Up also started to slip, as 7Up Gold began to drain away advertising and marketing resources. With market share hovering at only one-tenth of one percent - well below its 1 percent target - Seven-Up was forced to discontinue the product.

What would you suggest for changes regarding the product inside the can? Please identify specific changes (e.g., flavor, color) and provide rationale. How does the market (segment) demand for a new flavor factor into this product decision?