The Real Thing for Coke and Other Product Brands shows how Coke is confronted with truly reinventing itself and how it can transform by addressing the root causes of its failure to meet shifting markets. Coca-Cola looks to be descending the slide to irrelevance, as aptly analyzed by Adam Hartung in Forbes. He is on the money when he points to Coke’s unwillingness to change (thus far), and its lackluster financial results. Its executive team is relying on the usual financial legerdemain instead of addressing the root causes of its challenges and the transformation they demand. I’ll outline those here.

CMOs of traditional brands appreciate the significance: for years the world’s “most valuable brand,” Coke epitomizes product brands and its current travails portend the fate of many others that are behind Coke in the queue.

Product Brand Coke Tries to Personalize

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Coke’s situation, in which “The Real Thing” has become undeniably flat, shows that customers are no longer thrilled by products that aren’t meaningful or helpful. Coke has long lost its wholesome image, and “Americana” has been transforming away from the Norman Rockwell age of Coke’s prominence. The questions are, “How can Coke become relevant?” and “What is relevant now when commoditization is rife and markets fragmented?”

Sidebar (photo right): What’s worth more to customers, their names or the liquid? Coke looks to be trying to capitalize on “social” by personalizing bottles with first names.

The glass is half full. It is hard for me to imagine a more exciting time to be in business because thriving requires prolonged creativity and discipline, and most markets will be unrecognizable in twenty years. Here I’ll use Coke as a proxy for brand digital transformation before referring to more resources for a deeper dive.

The Knowledge Economy and the Post-Product Age

First off, we are rapidly entering the post-product age, and most brands are tied to products or services managed like products. Bear with me a minute because it’s key to understanding the root challenge of product brands. The crisis is that products themselves have largely commoditized, so the puck has moved to customer experiences. These are bigger and more powerful than the “customer experience” when interacting with the brand.

To start, all brands need to question the product concept: the product oriented Industrial Economy is not king anymore. It has reigned supreme, and all “advanced” economies of the world today have gotten there by using industrial prowess which has used scale to create value. The Industrial Economy was born in an era of material scarcity. Human existence (490,000 of our 500,000 years) meant owning few things because things were made by hand and were costly. Therefore, machine made things were inherently valuable for generations. This is also the root of the current “world economy’s” challenges.

The Industrial Economy now produces a fraction of the value it did before—because production has outstripped consumption worldwide, and that trend is accelerating. We can mechanize production, but product consumption is less scalable.

This means that we are faced with a profound economic shift. This is somewhat analogous to the change from the Agrarian (agriculture) Economy to the Industrial Economy, except it’s more extreme. The Knowledge Economy is about “experience” and meaning. People increasingly don’t lack things (obviously this varies around the world, but overall it’s true), so they are shifting their focus to doing meaningful things and having more fun with minimum friction. Think of Henry Ford’s arrogance, “The customer can have any color he wants as long as it’s black.” It epitomizes the height of the Industrial Economy.

People have always used products to have better experiences, but until now they had few people with whom to share their experiences. Think of the mom talking about using cotton/poly thread for those gathers. The Dad with changing the oil of the truck he uses for plowing. Digital social has changed the game because people can now talk with each other about the specific outcomes they want when they use products. They can geek out with other people about very specific situations in which they strive to do meaningful things and in which they use products. Their focus is the “value” of using products, not the products themselves.

But what are brands doing? Repetitiously talking about product “features” that have long ceased to be innovative. They are cementing their irrelevance by promoting themselves and product features. Like Coke, they need to pivot to experience.

Customers have always bought holes, not drills, but now they are talking around specific holes for exacting reasons in individual situations. As users, people are outcomes focused not product focused. That means “my outcome.” Their discussions in digital social venues magnify and accelerate this trend. They care about specifics of their unique situations, not general product knowledge.

The Real Thing—How Can We Pivot?

Digital social conversations offer the secret for how any brand can be meaningful and helpful, but brands need to start listening. All brands need to get way more granular in their research and actions. And they need to get way more honest.

How Coke Could Approach Digital Transformation

Coke has ethical and trust issues that most brands don’t, so it needs an extra step to get to The Real Thing. If your brand doesn’t have a conflict of interest in its core business, skip to the next section.

  • Get honest about its conflict of interest, which would transform what people think about the brand. Obesity is becoming a global problem, and many of Coke’s products compound the health problems of packaged foods in general. Coke needs to stop waffling and admit that probably many (most?) of its customers need to drink less Coke (including diet, which contains several artificial ingredients, and their fruit drinks are only incrementally less harmful).
  • The company needs to find a way to win by aligning with customers’ welfare; until it does, it will have questionable integrity and will continue to lose trust and profit. Management has to put Coke’s customers’ health ahead of its shareholders’ profits. This is a perceived trade-off, but one could make the argument that Coke’s stock would become more valuable when they address the integrity issue.
  • Many product brands don’t recognize the challenge of actually hurting customers; they have simply lost relevance. In Coke’s case, it will undoubtedly have to pivot away from its core products and reinvent its business—beyond the differentiation into fruit drinks.
  • To keep this post from becoming a paper, I’ll assume that most readers’ brands don’t have conflicts of interest on Coke’s scale.

How All Product Brands Can Approach Digital Transformation

Most brands face commoditization and fragmenting markets, which bring low profit or growth. Here’s how to pivot to experience.

  • “The Real Thing” is realizing that concrete, meaningful outcomes drive the “value” that the brand helps customers create. Product features are of secondary interest, so marketing messages need to reflect this change.
  • Experiment with transitioning communications away from product and brand features toward customer outcomes. This can be an incremental shift during which you test for best results.
  • Recognize that “content marketing” will provide short-lived value because it uses marketing automation to incrementally improve the relevance of legacy mass communications. It is still product focused.
  • Conversations with real individual customers are “content” now because they are real. Since “people like me” are driving or participating these conversations, other customers trust them more. The brand needs to focus on empowering people in these conversations. This can happen quickly and inexpensively when it’s done very efficiently based on robust due diligence.
  • Use the experiential social media checklist in Go to Where Your Customers Are. It will help you identify the right customers to engage.
  • Understandably, most marketers don’t like the idea of interacting with individuals because it feels inefficient. However, as outlined in Go to Where Your Customers Are, interacting with individual customers about their outcomes is very efficient due to technical and behavioral aspects of digital social networks.
  • At a deeper level, most brands need to revisit their core assumptions and rediscover their raison d’être. This is easier than it may sound once they connect with what their most profitable customers are trying to do when their product makes the biggest impact. It is an attitude shift, but it’s very powerful. Today, brands are focused on selling. They need to shift to helping their best customers, very visibly. When they do this, they will boost profits.
  • Think about yourself; do you like to be “sold to” or “marketed to”? Selling and marketing puts the brand’s agenda ahead of the customer’s. When products were scarce, people put up with it, but they are increasingly intolerant. The brand landscape will be unrecognizable in ten years, even fewer in some markets, for this reason alone. In the digital social age, brands that empower people will absorb the profit in their markets. Apple is a current example.
  • You can do this, now. Carpe diem.