Coke Rewards Loyal Consumers

Discussion
Mar 02, 2006
George Anderson

By George Anderson


Coca-Cola wants to keep its loyal customers loyal and the beverage manufacturer has launched the largest rewards program in its history to help it achieve just that.


The new program, dubbed My Coke Rewards, will launch with unique codes under the caps of 20-ounce Coca-Cola Company brand beverages. Consumers can then go online to www.mycokeawards.com to create an account and enter their code. Every time they get a new code from drinking a Coke product, they add it to their account. When consumers have collected enough points, they can redeem them for rewards from Adidas, Delta, Kodak, Blockbuster, Sony, Hilton, BlueFly.com, Spafinder and others.


Katie Bayne, senior vice president, Coca-Cola Brands, Coca-Cola North America, said in a released statement, “My Coke Rewards is unique in its ability to truly personalize the consumer’s experience with Coca-Cola. The program allows us to tap into our consumers’ passions and tailor their online experience to offer them what they really want.”


To further tailor the experience, Coca-Cola has added a bilingual component to the program. Spanish speakers will be able to choose a Spanish language option on the rewards site to manage their accounts.


Coca-Cola will support My Coke Rewards with television, radio and cinema commercials, online and print advertising and in-store point-of-sale. 


Moderator’s Comment: Will My Coke Rewards have a positive impact on total consumption of Coca-Cola brand products? Will the success (or not) of the program
have a direct correlation with consumer brand loyalty for Coke products?

George Anderson – Moderator

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12 Comments on "Coke Rewards Loyal Consumers"


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James Tenser
Guest
14 years 11 months ago

The loyalty challenge is pretty steep for brand marketers of low-cost products. Soft drinks are somewhat commoditized, so any activity that establishes involvement with the brand may be valuable. On the other hand, with slender margins in the category, the value of offered incentives must be modest.

Incentives like these may influence purchase behavior for the duration of the program without creating feelings of true loyalty among the customer base. How long before Pepsico matches the ante?

On the positive side, Marlboro applied a similar principle when it offered coupons on cigarette packs that could be accumulated toward branded “gear” during the 90s. The free gym bags and jackets were not only brand emblems, they created point-savings goals that amounted to a “switching cost” for program participants. The program may have helped Marlboro to consolidate its share position, but one wonders whether it created more of a lasting loyalty connection than the nicotine did.

Tim Smith
Guest
14 years 11 months ago

As a Diet Pepsi drinker I might switch for a few weeks if I felt I had a really good chance to win something of value. I would switch back when contest is over as I prefer Diet Pepsi over Diet Coke. Another response indicated Pepsi would move to match; great, but I think many consumers feel they have little or no chance to win. Banking codes to build points is fine but if you have to drink 750 sodas to get anything decent…

Don Delzell
Guest
Don Delzell
14 years 11 months ago
About 10 years ago I did an analysis of rewards programs for a major frozen foods manufacturer. Here is what we found at that time: 1. The vast majority of prizes were redeemed by consumers who described themselves as “highly loyal” to the brand prior to the promotion. 2. The net increase in consumption, self expressed, amounted to approximately 5% on an annualized basis. 3. Consumption patterns reverted to pre-program levels within one month of the end of the promotion. 4. A significant number of non-brand loyal consumers who were frequent purchasers of the category switched during the promotion. Immediately after the promotion, they reverted to their previous disposition of price-opportunity buying. In a distinct research project, it was found that the perceived value of the reward relative to the effort needed to obtain had to have a multiple in excess of 5 times. Translated, this means that the item redeemed needed to be perceived as worth 5 times the effort expended to redeem. The amount spent in product purchases was not significant. The “effort”… Read more »
Jeff Weitzman
Guest
Jeff Weitzman
14 years 11 months ago

Promotions work if they’re done right, and the under-the-cap code gambit has been rockin’ the internet for years now. Here’s a tip if you try it, btw: make point redemption an auction process instead of a straight points-for-purchase. If you price merchandise with points, you create a currency, and you have to regulate your “money” supply to control costs. If you let people bid points for prizes, you can have a fixed amount of inventory and let the “currency” float — the more points out there, the higher the bids will be against a fixed cost of inventory. The beauty is, people like participating in auctions and it makes the promotion even more fun and engaging than a straight online store.

David Livingston
Guest
14 years 11 months ago

Really now, you have to buy a 20 oz Coke? If I drank that much I would be burping all day. Then you have to go online and record the codes. And get what? Products you don’t really need anyway. Sounds like too much trouble and not enough rewards. The consumer is doing all the work. Airlines and grocery stores do all the work for you with their loyalty programs. What we will end up with is teens going through the trash at the convenience store to claim all the rewards.

Mark Hunter
Guest
Mark Hunter
14 years 11 months ago

Smart move by Coke. By using the 20oz as their delivery vehicle, they’re encouraging consumption plus moving the vending industry to stock 20oz instead of 12oz. By having consumers register on-line and enter their points, they’ll be able to create instant feedback and create a greater sense of community with their users.

Gwen Kelly
Guest
Gwen Kelly
14 years 11 months ago

My initial thought is that Coke’s loyalty program will be very successful at launch, but whether it has staying power will have to be proven. The consumer loves anything that is perceived as “free” and at the core, that is what drives many loyalty programs. The challenge seen here, as has been mentioned in earlier discussions, is whether this kind of program will bring in non-Coke product consumers in order to increase overall consumption of Coke products. That, for certain, will be the true measure of success for this program.

Irma Nykolyn
Guest
Irma Nykolyn
14 years 11 months ago

The My Coke rewards program will be a success. My six year old daughter has us buying GoGurt to see if she can win an iPod. She loves the GoGurt anyway, but it means we are buying it more often. When you like a product, and they start promoting rewards and gifts, you jump on the bandwagon faster.

I would buy more Coke to see if I can win a prize. It’s my favorite soda and I’ll buy more of it. All of the loyal Coke drinkers will also buy more in the pursuit of prizes. The question is, can it bring more non-loyal drinkers to the fold? It might not matter when consumption is up.

Camille P. Schuster, PhD.
Guest
14 years 11 months ago

For those people who are already loyal consumers, the rewards challenge may be effective. For those people who purchase whichever product is at the right price when they are shopping, this rewards program may sway consumers if the number of rewards they have to accumulate for the prize they want is worth paying the high price. If consumers figure it will take too long to get the rewards or if the price is so much higher that they might as well buy the other products they want on sale, then it won’t sway consumers. A big prize for an inexpensive purchase is likely to make consumers suspicious or frustrated if it takes too long to get the reward. In general, those who were loyal at the beginning will stay loyal in most cases and those who were not loyal will leave when the Pepsi lowers its prices or the next new promotion comes along. These kind of rewards have a history of generating sales but not building loyalty.

Bernice Hurst
Guest
14 years 11 months ago

Mark is absolutely right. Customers will be in it for the rewards and the ratio of reward to consumption will be the main criteria for success. That plus the attractiveness of the rewards – I’ve only glanced at the lower end of the scale and there was the usual selection of Coke branded merchandise. Tell me why I would spend money to offer myself to the company as a free advertising medium? Admittedly I go out of my way to avoid such activities in general, never knowingly wearing any item of clothing bearing the manufacturer’s logo or carrying a shopping bag advertising a particular retailer once I have got their goods home, so I am perhaps a teensy weensy bit atypical but I tend to agree with Mark that this is not the best way of building a brand that I’ve ever heard of.

Mark Lilien
Guest
14 years 11 months ago

If Coke gives away truly valuable gifts for drinking such a low price point product, how will it make money? If the required customer consumption to get a great gift is enormous, won’t that just alienate their audience? If the gifts have low perceived value, how will this be a great motivator? If this succeeds, isn’t it easy for competitors to copy? Coke and Pepsi’s success was built on great distribution and image advertising. How does this build any brand value? Forty years ago a cigarette brand, Raleigh, tried to build a niche business giving away coupons attached to each pack, redeemable for prizes. Another brand, Marlboro, came up with a cowboy image. Today, Marlboro is the most profitable cigarette brand in the world. When was the last time you heard of someone smoking Raleighs?

kanika maheshwari
Guest
kanika maheshwari
14 years 11 months ago

In my view, the loyalty program will be effective only for a short duration. People will become loyal only for the time the promotion is on. Also Pepsi’s loyal customer will not shift to Coke with this current program. This program is more attractive to teenagers rather than adults. The program will work only for a short period of time; they will have to reinvent new ideas to keep it interesting.

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