Millennium Marketing Research®
Tom Schori DBA Millennium Marketing Research®, 808 Ironwood, Normal IL 61761, 309-532-8466

CocaCola: Latest icon to have serious flaws?

By Thomas R. Schori, Ph.D., and Michael L. Garee, Principals,  Millennium Marketing Research, 808 E. Ironwood, Normal, IL 61761-5239. Tel. 309-532-8466 -

There seems to be an irresistible tendency for people to view huge, international companies, many of which have taken on icon status, as somehow being quite different from virtually all other companies. It is supposed that employees of these revered companies are in so many ways far superior to those mere mortals employed by other, lesser companies, that their management teams are, ipso facto, far more enlightened and the epitome of business savvy.

Nothing, of course, could be further from the truth, as was amply illustrated not so very long ago at international giant Texaco. A recent case in point concerns another international giant, the Coca-Cola Company, perennially on lists of the "best companies to work for," which has been hit with a federal racial discrimination lawsuit.

According to the allegations contained in the lawsuit filed by four plaintiffs (three current employees and one former employee), the World’s largest soft drink company has systematically engaged in unlawful discrimination against black employees in pay, promotion, performance evaluations and terminations.

Coke’s response to the lawsuit?

"The Coca-Cola Co. was built over time by people of all races, colors and creeds," M. Douglas Ivester, the company’s chairman and chief executive officer, said. "Discrimination. . .is not tolerated. If discrimination is alleged, we investigate it. If we find it, we act to stop it. Our goal is the fair, equitable and honest treatment of all of our associates. While we believe this lawsuit is without merit, we take these allegations seriously."

Be that as it may, and with no intention whatsoever of prejudging the company, ostensibly at least, the evidence cited by the plaintiffs in the lawsuit doesn’t exactly paint a very flattering picture of the company and the manner in which it seems to treat some of its black employees. The lawsuit makes these allegations:

  • There was an average gap of $19,211 in salaries between white and black employees at the company’s Atlanta, GA, headquarters in 1995. By 1998, that gap has increased to $26,830.
  • The highest percentage of black employees is to be found in the lowest pay grades, with fewer than 15% of blacks among the professional/managerial, director and/or vice presidential levels.
  • Black senior managers tend to be most concentrated in the non-revenue-producing and less-powerful divisions. For example, just two black senior managers were in Global Marketing, and just one in Information Systems, Office of the Chief Financial Officer and Technical Operations. Three were in Corporate Affairs (Public Relations) and ten in Human Resources.

The source for this apparently damning data? Data allegedly published by the Coca-Cola Company itself as late as 1998.

As this is being written, the four plaintiffs have petitioned a federal judge to grant their suit to "class-action" status, in order to include as many as 1,500 other salaried, black employees of the company.

Why do we devote this week’s column to an article that seems to be more of a legal issue than a marketing or research issue? Simple. Everything that has an impact on a company’s image has a direct relationship to its marketing effectiveness, the ultimate appeal of its products and services to customers and prospective customers. This kind of publicity, this kind of notoriety, if shown to have even the least bit of credibility can¾and usually does¾create a long-lasting, negative impression that no amount of public relations or credible marketing strategies and tactics can soon overcome.

If the company is indeed found guilty of the allegations of racial discrimination¾and, at this time, that remains a very big IF¾the impact will be felt very directly and very immediately and have a long-lasting, quite deleterious effect on "the bottom line."

Maybe Coca-Cola has a reasonable, logical defense against the allegations. Or, perhaps it can offer some logical explanation based upon statistical anomalies associated with demographic characteristics. We certainly hope so. But, for the time being, troubling questions linger.

To be sure, as this lawsuit progresses, or even if it’s settled out of court (as oftentimes has happened in recent similar cases), answers to many troubling questions undoubtedly will be forthcoming. In the meantime, it appears¾and we do stress appears¾that the Coca-Cola Company may simply be the latest example of a major company shown to be run not by "super-human" management, but rather, by people just like those we all have run into sometime during our working lives. People who can be and often are very short-sighted, prejudiced and continue to do downright stupid things day in and day out¾until they are caught and then everybody else in the company ends up having to take the "heat" for their actions!

Here’s hoping we’re wrong.