Cristiano Ronaldo replaced the coca-cola with the water, during the press conference. Coca-Cola’s share took a hit and the company lost around 4 billion dollars in market capitalization.
Let’s have a look at certain past events which led to the decline of the share value.
On April 2, 1993, Phillip Morris announced a 20% cut on their Marlboro cigarettes to counter the competition from the generic competitors, which were eating into their market share. The result was a sharp decline of 26% and the share value of other branded consumer products like coca-cola fell as well.
The slash of the price was considered by the investors as the end of the era for brands. The day is remembered as Marlboro Friday. Fortune magazine deemed the day as “the day the Marlboro Man fell off his horse”. It was one of the worst days for the brands and especially for Phillip Morris. But Since that day Marlboro Man has got up and did just fine.
In Feb 2019, when Nike shoes worn by a rising superstar broke down during a game, Nike lost around $1.12 billion as the stock went down by 2% in premarket and remain down by 1.1% at $83.95. Today on 17th June 2021 the share price of Nike is at $130.40.
In Jan 2021 fortune faced an even bigger fiasco when their brand ambassador Saurav Ganguli suffered cardiac arrest. Fortune simply took all the ads off the air. Fortune built a larger narrative around the cause and when Saurav Ganguly was fine, he came back as the brand endorser.
And now Coca Cola is again facing a situation that has led to the decline of its market value.
A group of neuro scientist conducted a blind and non blind taste test of coke and Pepsi. Scientists put a long plastic tube into the mouth of each participant and put them under fMRI scanner. As participants received a drink they were also shown the picture of the brand. Scientists wanted to study the activity in the brain.
When the subjects were shown the picture of Pepsi the part of brain associated with strong feelings of emotional connection was stimulated. But with coke this activity was even higher as yet another part the brain was activated. To cut the Long story short all the positive associations the subjects had with Coca Cola got refreshed, i.e. its logo, name, color, memories etc.
People in general have short memory. They will forget this viral incident also, the way they forgot several others. Moreover just because Ronaldo switched the bottle of coke with water are we going to switch to water while drinking Jack Daniels or will switch to water while eating momos. A temporary loss of market capitalization does not signify the loss of brand equity.
Is this incident so powerful that it is going to overshadow the conscious and subconscious associations that the brand has built with over 120 years of marketing effort?
By Pushkar Sharma (Co-founder of Media Arch Inc, Visiting Faculty of Marketing at SOMTU, APEX)