Editorial Comment July 25, 2002


The subject was a newspaper article about the Coca Cola Co., generally regarded to have shrewd management. Following is a transcript of the student questions and Mr. Knowitall's answers.

Q: The newspaper article says Coca Cola has been drained of talent by their downsizing in recent years and is looking for marketing muscle to put the fizz back into their brands. Will they be able to replace that talent and find the marketing muscle they need?

A: No they will not. There is no "talent" in the consumer marketing community. As pointed out in my prior published work, marketing people flatter themselves when they speak of the talent and muscle in their ranks. The best Coke will be able to do is hire new employees who will do what marketing people always do, namely, try different things until the boss likes what they are doing. Whether or not that gets the job done is open to question.

Q: Coke decentralized marketing in the past few years and, in the process, fired more than 200 people. Was that a good move?

A: Coke was not hurting for money. So the lives of 200 people were ruined on the whim of some muckety muck who came to work in a bad mood one day. It is because of inhumane executives of this stripe that communism was invented.

Q: A Coca Cola executive says that Coke obviously has lost its way in ads for the Coca Cola brands. Do you think they have?

A: That is nonsense. Advertisements for Coca Cola have pretty much paralleled ads for all soft-drink companies. They are infantile, emotional appeals that have nothing to do with the product. In my own case, I choose a soft drink based on taste, and no advertisement has ever made me prefer one brand over another.

Q: Coca Cola executives say they are disturbed by two years of lackluster sales. What should they do about that?

A: Lackluster sales? Coca Cola and its ancillary brands already account for nearly 44% of all soft-drink sales worldwide. How much is enough? What percent of the market would they like to have?

Q: To restore what it calls its luster, Coca Cola is looking outside the company for marketing talent. Will that plan work?

A: Looking outside the company? What a marvelous way to destroy morale and block promotions for deserving people currently on board.

Q: The company is said to be casting about for a way to restore the robust earnings growth that made Coke stock a choice investment in the 1990s. Coke management is shooting for a minimum of a 5% annual increase in revenue as a long-term goal. Can they get that growth?

A: Coca Cola increased its sales 4% last year. Once more I'll ask, how much is enough? These guys need to get a grip. Do they understand the ramifications of a constant 5% compounded growth rate? It is unsustainable.

Q: The head of a consulting firm says that Coke is off the radar screen, compared to Pepsi. Is he right?

A: When anyone thinks of a soft drink, the first name that pops into their head is Coca Cola. I don't call that being off the radar screen. What you see here is more nonsense from a consultant trying to stir up business by frightening Coke executives into retaining him.