Industry Overview, Beverages - Non Alcoholic Carbonated Drinks.

University Degree Business and Administrative studies

GSBS6021 Consumer Behaviour Individual Assignment

Industry Overview

Beverages - Non Alcoholic Carbonated Drinks

According to AC Nielsen, beverages dominate the list of fastest growing food and beverages categories in the global market place. While water (still and carbonated) was the leading food and beverages product, carbonated beverages experienced 6% of growth rate (2000-2001). Soft drinks consumption worldwide is growing by around 5% a year, according Global Soft drinks 2002. Averagely, the market grew by 5% - 6% per year. The zenith’s 2002 global soft drinks report indicates that carbonates are the biggest soft drinks sector with 45% of global volume. Besides that, the report also shows that North America is the largest soft drinks market with a 27% volume share in 2001 and the fastest growing countries were Asia, East Europe and the Middle East. Zenith Research Director, Gary Roethenbaugh commented that the highly populous and rapidly emerging markets, such as China and India, consumption in Asia is projected to overtake that of North America in 2006.

The overall sustainable growth of soft drinks in the beverages market provides marketer and manufacturer of non alcoholic carbonated soft drinks tremendous opportunity as well as challenges to realize the full potential of the market. To capitalize on the opportunities of the growing market, successful marketers concentrate effort to learn more about their consumers. Most of the time, marketers focus mainly on understanding the consumer decision making process, however, the internal and external influences that affect the overall decision making is also equally important.

Consumer Decision Making Process

Although consumers of a particular group may be similar in appearance and speaks the same language, that does not always mean they have the same product needs, preference and shopping behaviour. Therefore marketers need to develop a deeper understanding of the psychological, personal, social and culture of the consumers. These are the characteristic that influences the consumers’ response towards the marketing stimuli which will then affect the consumer decision making process.

Most marketing and consumer behaviour books suggest that consumers go through a five-stage decision making process in any purchase. Based on the diagram illustrated in Diagram 1, it is important that marketers consider the whole buying process rather than just the purchase decision as it may be too late for a business to influence the choice made. In most cases, customers pass through all stages in every purchase, however, in more routine purchases, for example toothpaste, household cleaning detergents, customers often skip or reverse some of the stages.

For example, a student buying his/her favourite soft drink would recognize the need, in this case thirst and go right to the purchase decision, skipping info search and evaluation.

Cultural Factor

Country of origins, cultural heritage, language and recent histories, all influences beverage consumption. Successful marketers use these factors to drive decisions about product assortment and marketing in order to appeal to the target market.

Culture is the most basic cause of a wants and behaviour. Growing up children learn basic values, perception and wants from the family and other important groups. Marketers of non alcoholic ...

This is a preview of the whole essay

For example, a student buying his/her favourite soft drink would recognize the need, in this case thirst and go right to the purchase decision, skipping info search and evaluation.

Cultural Factor

Culture is the most basic cause of a wants and behaviour. Growing up children learn basic values, perception and wants from the family and other important groups. Marketers of non alcoholic carbonated beverages should always spot “cultural shift” which might point to a new product that might be wanted by customers or to increase demand.

For example, the cultural shift in Malaysia towards greater concern about health and fitness has provided an opportunity to Coca-Cola Light. During the Coca-Cola Light in Kuala Lumpur, Mr Reiner Becker, Country Manger of Coca-Cola Malaysia, said that Coca-Cola Light is intended to be a great-tasting light beverage for consumers currently drink other beverages such as water, tea and juices. (www.prdomain.com/companies/c/coke/news_release.html)

“Malaysian consumers told us they want to treat themselves, yet they also want to take care of themselves,” said Becker. “Coca-Cola Light was developed to address this trend. It’s got great taste, no calories and imagery that appeals to people who treat themselves as priority.”

Each culture contains “sub cultures”, which are groups of people with share values. Sub-cultures can include nationalities, religions, racial groups, or groups of people sharing the same geographical location. Sometimes a sub-culture will create a substantial and distinctive market segment of its own.

For example, the “youth culture” has quite distinct values and buying characteristics from the much “older generation”. Pepsi uses celebrities like Siti Nurhaliza in Malaysia and F4 in Taiwan for its advertisements to influence the younger generations’ attitude.

Social Factor

A consumer’s buying behaviour is also influenced by social factors, such as the groups to which the customer belongs and social status.

Coca-Cola has segmented its consumer into 4 groups which consists of the fashionable brand conscious consumer, average consumers, peer pressure consumers and coke addicts. Based on the 4 segments, the fashionable brand conscious consumer and peer pressure consumers clearly sets the example of group influenced purchased decision. The fashionable brand conscious consumers are generally in their twenties, who are universities students or make up the working class, drive fast cars (or would like to), they socialize with friends, go to parties and dance clubs. They are carefree and are freestyle. When they buy Coca-cola, they buy image, they buy fashionable drink that exudes coolness. On the other hand, the peer pressure consumers tend to be the late majority teenagers who purchase Coca-cola because their friends do it or they do not want to appear daggy purchasing a Sarsi or Sprite. They are less likely to request for Sprite or Sarsi instead of a Coca-Cola when purchasing a value meal at McDonalds for fear of dagginess. (www.coke.com)

In a group, several individuals may interact to influence the purchase decision. The typical roles of an individual are initiator, influencer, decider, buyer and user. In the case of carbonated beverages, because it is a low involvement product, most of the time its target consumers could play all the roles at the same time.

Motivation

Most often, we human mislead ourselves when we attempt to explain our behaviour in our desire to act as retinal human beings. Sometimes we do not want to admit or even realise the real reason for our behaviour because it is, more often that not, irrational. Relating this back to marketing, it is clear that a brand or organisation has both an identity and a personality. When consumers are asked the reason why they buy a brand they will respond rationally and often describe the brand’s identity, such as the objective or explicit characteristics observed by the conscious thinking brain which are easily verbalised. However, a brand also has a personality, intangible traits that differentiate it from its competitors which we experience but cannot easily verbalise.

For example, most consumers initially cite taste as the reason why they consume a certain brand of cola soft drinks. However, during a blind taste test conducted by Pepsi to challenge Coca-Cola drinkers, most loyal consumers could not differentiate their favourite brand. The truth is that these consumers are motivated by a group cohesion, equality and bonding towards the brand.

Changes in Asia Pacific

The family unit is usually considered to be the most important “buying” organisation in society. It has been researched extensively. Marketers are particularly interested in the roles and relative influence of the husband, wife and children on the purchase of a large variety of products and services.

There is evidence that the traditional husband-wife buying roles are changing. Almost everywhere in the world, the wife is traditionally the main buyer for the family, especially in the areas of food, household products and clothing. However, with increasing numbers of women in full-time work the traditional roles are reversing. Besides, children also play an important role in influencing the buying decision making.

In relation to this, and as consumers lifestyles is becoming increasingly demanding, the non alcoholic carbonated industry has become more competitive. Manufacturers are introducing new carbonated drinks such as additional of flavours and attractive packaging to capture market share. For example, Pepsi has introduce the Pepsi Blue, a blueberry flavour drink in addition to its typical cola and diet cola drink, provides consumers additional choices and varieties.

The shopping and purchasing habits of consumers are also changing. People are working longer hours than before and as mentioned, many married woman with kids are also working. Today’s shoppers want convenience of longer opening and trading hours and Sunday opening which most of the supermarkets and convenience store are doing nowadays. However, the implication for these retailers to work hard in order to maintain customer loyalty made marketers of carbonated drinks to work even harder because more shopping trips means shopper have more opportunity to be disloyal to a brand. Besides, consumers purchasing habits now emphasize on value, convenience and variety.

Furthermore, with the advancement in technology, consumers especially the younger generation are buying soft drinks through SMS. Manufacturers who are not adopting this trend are losing opportunity. For example, Coca-Cola drinkers in Singapore are able to order Coca-Cola through sending SMS from their mobile phone and the mechanism work as a vending machine too.

With the recent September 11th case, many Muslims countries have conducted boycotts towards American brands. As such, brand like Coca-Cola has been affected in these Muslims countries.

As mentioned, cultural shifts towards greater concern in health and fitness may affect the demand for carbonated beverages because the increasing promotion of other health beverages such as cultured milk and traditional drinks creates greater competition.

The speed of these changes has created increased pressure on manufacturers and marketers. The challenge for the carbonated drinks marketer is to understand its affect on demand for their products. Everyday, consumers around the world make decision on whether to buy or not to buy a product or brand or opt for that of a competitor. Some are decides when and where to shop. A marketer’s advertising, direct marketing, merchandising, packaging and point of sale materials affects all these decisions, as are shoppers’ own motivations and feelings about the shopping occasion and experience. Thus, the promotional mix needs to be changed to attract consumers and maintain their loyalty towards their product.

Understanding human needs is critical for effective targeting marketing. However, these needs are not always detectable. The underlying motivations that most of the time marketers are not fully aware of helps maximise the potential of the brand if identified.

Conclusion

Understanding the changing needs of consumers and effective strategic marketing is critical to stay ahead. It is also important to understand brand relationship by exploring core needs of consumers and how consumers relate to the personality of a brand. For both manufacturers and retailers of carbonated beverages, success and failure is often a result of effective utilisation of market information to meet consumer needs and hence drive sales and profit.

Bibliography

Books

Kotler, P. and Armstrong, G., (1996), Principles of Marketing, 7th Edition, Upper Saddle River, N.j., Prentice Hall, Inc.
George, E. and Michael A., (2001), Advertising and Promotion, 5th Edition, McGraw-Hill Irwin
Neal, Quester, and Hawkins (2002), Consumer Behaviour - Implications for Marketing Strategy, McGraw-Hill
Arnould E., Price, Zinkhan. (2002), Consumers, 1st Edition.- International Edition, McGrawHill