Benchmarking

In April of 1985, the world was introduced to New Coke. A corporate faux pas that would go down in history as one of the greatest marketing flops of all time; a what-not-to-do case study taught in business schools across the country.

As the tale is told, the Coca-Cola leadership team was nervous about losing market share to competitors. This anxiety was amplified by the PepsiCo marketing campaign – The Pepsi Challenge, a blind taste test that concluded consumers preferred Pepsi to Coke. The powers at be at Coca-Cola wanted to innovate, and they wanted to give the customer what Coca-Cola thought they wanted – New Coke, a sweeter flavor, a more Pepsi-like beverage.

It was no more than three months later that the company, Coca-Cola, reintroduced their classic flavor re-branding it with the “Coca-Cola Classic” moniker.

This soft drink story is the perfect example of the collateral damage caused by misleading benchmarks. Today we will talk about how benchmarking in investing can sometimes lead to similar woes.

Links mentioned in this episode:

• http://thoughtsonmoney.com
• http://thebahnsengroup.com