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The Coke Less is More STRATEGY

Coke Resizes, Broadens Less-Is-More Strategy

American brands are starting to use some disturbing history as pretense for what kinds of marketing tactics they believe may work in a troubled U.S. economy. Coca-Cola has been doing that lately by offering a greater variety of small beverages sizes and lower price points in the American market — an idea with its origins in the success of a similar gambit in Mexico in the wake of its 1994 peso devaluation and economic crisis.
Coke plans to announce this week the launch of a 12.5-ounce, 89-cent bottle, broadening its menu of smaller alternatives to its traditional 20-ounce single-serve bottle, according to the Wall Street Journal.
Last year, Coke rolled out a 16-ounce, 99-cent alternative to the 20-ounce size. The company also plans on slashing prices of its existing 7.5-ounce "mini" cans in supermarkets by about 20 percent, to $2.99, the report adds. The smaller packages carry lower sticker prices, but of course, higher margins for Coke because the consumer pays more per ounce.
Of course, there are more precedents for this move than Coke's own experience in a troubled Mexican market. Coca-Cola's strategy also mimics the success that Kraft and a number of major American CPG food companies have been having in developing and promoting 100-calorie packs. These packages make "dieting" easier for the brands' customers by limiting their consumption — theoretically, at least. And they also carry higher margins than standard larger packages.
It's also a savvy move because it's yet another way for soda companies to blunt the attacks by the increasingly vocal forces who would like to slap all manner of new taxes on the purchases of carbonated soft drinks. Aren't smaller "serving sizes" an easier way to get Americans to cut back on their consumption than taxing them for the privilege?
In any event, it's hardly a surprise that there's also an element of competition with Pepsi in Coke's new move. A PepsiCo marketer, in fact, told the Journal that such "price-package architecture is absolutely core to what we do."
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