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The year was 1985.  Coca-Cola, the once dominant cola brand in the U.S. since World War II, had been steadily losing market share to Pepsi-Cola.  Consumers were starting to prefer the sweeter, more syrupy taste of Pepsi, and Coca-Cola was at a loss as to how to stem the tide.

Panicked, Coca-Cola executives had an idea: change their long-standing formula to a sweeter, more Pepsi-like flavor, thereby throwing away their core brand strength in an attempt to chase fickle consumer tastes.

Blind taste tests showed that the new product did well; focus groups went fairly well, though there were a few very negative respondents in almost every group.  Everything seemed good to go with what they called "New Coke."

The product launch was a disaster.  While many consumers did like the new flavor, Coca-Cola's core customer base hated it.  In fact, they viewed it as an almost personal betrayal.  That negativity soon spread, making it fashionable to oppose the new offering.  After all, if one wanted to drink a Pepsi, why not simply buy a Pepsi?  Pepsi marketers, of course, cut Coca-Cola no slack, pounding their rival into the ground because of Coca-Cola's obvious imitation of their own product.  

Eventually, Coca-Cola was forced to quickly abandon New Coke, and reintroduced their original product line under the name "Coca-Cola Classic" (though in the reoffering, the product had been irreversibly degraded by substituting corn syrup for cane sugar in order to cut costs in the United States).

Coca-Cola executives were stunned by the negativity.  They had been losing market share; people seemed to like Pepsi better; and New Coke tested well.  What had gone wrong?

What had gone wrong is that Coca-Cola had abandoned their core market strengths: Coca-Cola was associated with tradition, family, stability.  People drank Coke not only for its taste, but for emotional reasons.  They had a core emotional attachment to the brand, as one would for a loving parent.  When Coca-Cola changed to be more like Pepsi, it abandoned the core elements that made consumers trust and love the brand.

The only difference between Coca-Cola and the Democratic Party is that Coke only needed one opportunity to wise up and learn its lesson, while the Democratic Party continues to roll out its own New Coke every decade or so.

Much has been said about the ramifications of the new so-called "spending freeze", both from a policy and political angle.  Robert Cruickshank, Paul Krugman and Nate Silver have been excellent in describing the negative effect that calling for spending cuts in the midst of a recession will have on core Democratic Party branding--regardless of the actual extent of the freeze.  Ultimately, the problem is that whether the freeze is a minor gimmick or a major policy initiative, its optics are equally bad.

But Obama is not the first Democrat to make this sort of grievous error.  Democrats walked down the Republican-lite path in the 1980s as a response to the election of Ronald Reagan and the rise of the Movement Conservatives.  The eventual result was the brand-killing organization known as the Democratic Leadership Council.  When the Clintons' healthcare reform efforts failed, Bill Clinton devastated the Party by officially declaring that "The Era of Big Government is Over", and running a presidency focused on school uniforms and other petty political minutiae.  When George W. Bush decided to invade Iraq in the wake of 9/11, Democrats utterly betrayed their reputation for responsible governance and diplomacy by rubber-stamping whatever Republicans decided to do in the name of national security.

Of course, as with Pepsi's humiliation of Coca-Cola in the wake of the New Coke fiasco, Republicans never respond to these Democratic overtures toward conservatism with anything but contempt and stronger attacks.

Any competent branding consultant could tell Democrats the solution to their problem in a heartbeat: stop killing your own brand by chasing ephemeral marketing research results.  Market and opinion research is good for new companies deciding on brand strategies, and for established companies making tactical marketing decisions.  Unless conducted in the most exploratory and psychologically subtle way, it should not drive the core branding of long-established companies.  The same goes for long-standing political parties.

There is no doubt that in all the cases of Democratic self-abnegation and self-flagellation, opinion polls and focus groups among crucial swing voters and conservative Democrats will have shown them to be theoretically smart, savvy moves to please voters.  And there is little doubt, as Nate Silver says, that Obama will gain a small bounce in the polls from proposing a spending freeze.  But that gain will be fleeting and momentary; the damage to the Democratic brand, on the other hand, will be long-lasting, and make it harder for Democrats to succeed using their own core principles in the future.

The Democratic Brand, particularly in this brand new world of unlimited corporate personhood, stands for the power of the people against the predation of big business and tyrants great and small.  Our argument goes something like this:

Government is good.  It belongs to the people, and it should serve the people, who are otherwise at the mercy of unsavory interests that have little concern for their life, liberty or happiness.  We the people have a common interest in ensuring that all of us have the same opportunities to succeed regardless of the circumstances of our birth.

Everything Democrats do from a tactical point of view, from the most conservative to the most progressive, should be in the service of promoting these core values.

Unfortunately, Obama's pandering promise to cut government spending in the face of a Great Recession doesn't just ignore the lessons of history in a futile effort to please deficit hawks; it runs completely contrary to core Democratic branding.  If Democrats wish to reign in deficit spending, the proper way to do so is to promise to go after corporate tax cheats, while ending egregious corporate welfare subsidies to big oil, big agri-business and other entities that swallow more taxpayer dollars than all of America's inner cities combined.  And then if there are wasteful government programs to cut, do so quietly, touting the success of your deficit reduction efforts afterward.  Such moves would play to core Democratic strengths, reframe deficit reduction in a light that favors Democrats, and give Republicans little to latch onto in opposition.

Instead, Democrats seem doomed to an eternity of New Coke rollouts.  Whoever is advising them would have been fired long, long ago in the rough and tumble world of Madison Avenue, where a brand's success is measured ultimately by the bottom line.

Originally posted to thereisnospoon (David Atkins) on Tue Jan 26, 2010 at 12:55 PM PST.

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