Marketing Strategy for coca-cola.
NAME
PRAVIN ARICHANDRA
COURSE
UNIT: 3
With
ROY .M. WOOD
A
for
Terms of Reference:
* How the strategy is based on the principles of marketing
* How you used sources of primary and secondary marketing information
* How you analysed the marketing context and decided on an appropriate strategy
* How you would develop a coherent mix of strategies to meet consumer needs
* An evaluation of the reliability of the different marketing models used
Terms of Procedure:
Definition of marketing
'Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.'(Chartered Institute of marketing)
or
'Marketing is a total approach to business that puts the customer at the centre of things.' (Channel 4 and Yorkshire TV's 'The Marketing Mix')
or
Marketing is selling goods that don't come back, to people who do' (Baker)
Marketing strategy a part of the marketing management process:
The marketing management uses marketing strategies so that they can meet the customer's needs. The marketing strategy involves pricing, advertising, branding, packaging, publicity, public relations (PR), sales promotion methods, merchandising, and distribution. The marketing management uses all these strategies so that they can sell their product to the customer. They do it by making their product look different to their competitors using the Marketing Strategy.
I will state a written plan for my strategy. The strategy, which I am doing, is for Coca Cola Company taking the product Coca-Cola. I will also make a verbal presentation of one aspect of my strategy in front of the class.
Sections of my Strategic Report:
My report will contain all these following strategies through which I will be marketing my product. The sections are as follows:
* The Product
* Distribution
* Promotion
* Customers
* Market
* Competitors
* PEST Analysis
* SWOT Analysis
I) Product: Product is the range of goods or services that the organisation offers to the marketplace. Decisions have to be made about quantities, timing, product variations, associated services, quality, style and even the packaging and branding. The product, which I have chosen for the Coca Cola Organisation, is Coca-Cola..
II) Distribution: Distribution is delivering of your product to the place where it is convenient for the customer to get it. No customer would travel to buy a single product, which is 50 miles away from his/her house. This is where the distribution strategy comes into play. The distribution process starts from the company's warehouse to the retail outlet, shops, restaurants, pubs, vending machines etc.
III) Promotion: Promotion is done so that people are aware of the product. This awareness is brought by advertising on T.V., Radio, Newspaper, Billboards, Direct mail, internet, etc.
IV) Customers: Customers are the one who buy the company's product. If the customers don't buy your product then you can't sell your product in the market. So to sell your product you should know who your customers are, so that we can target the market according to the customers who will buy the product.
V) Market: Market is the place where there is buying and selling of product. Markets are segmented .i.e. the market is divided into distinct group of buyers who may require different products or marketing mixes. All buyers have unique needs and wants. Still it is usually possible in consumers markets to identify relatively homogenous portions or segments of the total market according to shared preferences, attitudes, or behaviours that distinguish them from the rest of the market.
Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter.
Market positioning is the process of formulating competitive positioning for a product and a detailed marketing mix.
VI) Competitors: competitors are the firms which compete against you. The competitors have similar product but they differentiate their product through advertising, branding, technology, etc
VII) PEST Analysis: The micro environment consists of the forces close to the organisation that affect its ability to serve its customers - the company, suppliers, customer markets, competitors and publics. It comprises all those organisations and individuals with which a business interacts.
The macro environment consists of the wider forces that shape society - demographic, economic, natural, technological, political and cultural forces. It is concerned with general forces in the environment which may one day affect a company in its micro environment.
There are a number of models for prescribing general environmental factors. One in common use in the UK is PEST which stands for:
* Political
* Economical
* Social
* Technological
VIII) SWOT Analysis: SWOT analysis is a technique much used in many general management as well as marketing scenarios. SWOT consists of examining the current activities of the organisation - its Strengths and Weakness - and then using this and external research data to set out the Opportunities and Threats that exist. SWOT stands for Strengths Weaknesses Opportunities Threats.
The product, which I am campaigning, is Coca-Cola. Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. Created in Atlanta, Georgia by Dr. John S. Pemberton, Coca-Cola was first offered as a fountain beverage by mixing Coca-Cola syrup with carbonated water.
Coca-Cola was registered as a trademark in 1887 and by 1895 Coca-Cola was being sold in every state and territory in the United States. In 1899, the company began franchised bottling operations in the United States.
History of Coca Cola Company:
A man named Dr. John Pemberton introduced the Coca-Cola Company in Atlanta, Georgia back in 1886 (Coca-Cola.com). For five cents consumers could enjoy a refreshing glass of Coca-Cola. An "Atlanta entrepreneur named Asa G. Candler acquires ownership of the company for $2,300. Within four years, his merchandising flair helps expand consumption of Coca-Cola to every part of the nation".9 In 1928 Coca-Cola makes their first world appearance through the sponsorship of Olympic games. Now the Coca-Cola Company has the most established brand name in the world with branches in nearly 200 countries. The organizations main headquarters have not changed since it has been founded; the headquarters are still located in Atlanta, Georgia. The Coca-Cola organization and its branches employ nearly 30,000 people around the world and it controls over 160 soft-drink brands around the world. "In fact approximately 70 percent of Company volume and 80 percent of Company profit come from outside of the United States, according to its website."(www.cocacola.com)
Task 3
(I) THE PRODUCT
I.1 What is my product?
The products that I have chosen is Coca-Cola also know as Coke. Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. Created in Atlanta, Georgia by Dr. John S. Pemberton, Coca-Cola was first offered as a fountain beverage by mixing Coca-Cola syrup with carbonated water.
Coca-Cola was registered as a trademark in 1887 and by 1895 Coca-Cola was being sold in every state and territory in the United States. In 1899, the company began franchised bottling operations in the United States
I.2) Annual Sales for Coca-Cola
Income Statement Summary
FY End
2/01*
FY End
2/00
FY End
2/99
FY End
2/98
FY End
2/97
Total Sales
$20,092
$20,458
$19,805
$18,813
$18,868
Cost of Sales
N/A
$6,874
$6,030
$4,917
$5,389
Gross Profit
N/A
$13,584
$13,775
$13,896
$13,479
The annual sale for Coca-Cola has doubled now, then it was 10 years ago. In 1990 the annual sales for Coca-Cola was $10,261. As you can see over a period of 10 years the sales has doubled, this is due to advertising, marketing, increase in population, increase in competition, and increase in life style of people.
I.3) Is it new or established?
The Coca-Cola Company started to globally brand their product in 1928 when the company sponsored the Olympic Games. The world started to recognize their brand through this hidden advertisement scheme. Coke realized that there was a potential market that was not mixed-up with many competitors, and had high demand for the product they were selling. Coca-Cola has established itself by examining the market and noticing the competitive realities. Executives in the company discussed the major opportunities that lay outside of the United States market. Coca-Cola began their attempts to build brand loyalty in Argentina. The company's product establishes instant brand loyalty in Argentina, the people of Argentina insisted on their soft drink over other competitors. Coke executives created a global branding vision and acted on their visions. The company wanted to have the worlds most effective and pervasive distribution system. It acted on this decision by increasing distribution of their soft drink as the demand of their product in that country increased. The company's headquarters communicates their vision by maintaining and building their brand equity in the United States. The company does this by keeping American customers aware of their product through advertisements on television, promotional gimmicks, satisfying consumer demand, or through heavy distribution. The other branches see the main headquarters and try to duplicate it themselves in their countries market. The Coca-Cola Company and its different branches, have kept a similar branding strategy in every global location they market their products.
On January 31, 1893, the trademark "Coca-Cola" was registered in the United States Patent Office. (Registration has been renewed periodically, as has the registration for trademark "Coke," which was granted in 1945.) As you can see that, this product is not new as it is well established.
I.4) Has it been developed, improved or marketed in another way recently
Coca Cola was improved and marketed like before this logo, there was a football picture and on that coca cola's logo was there in the place of the Coca-Cola cap.
I.5) What are the changes - how have the customers reacted?
The recent figures for the Coca-Cola Company show that it faced a loss of $324millioin. You can read this below.
ATLANTA, January 23, 2002 -- Coca-Cola Enterprises today reported a net loss for full-year 2001 of $324 million, or 75 cents per common share. 2001 results include a non-cash cumulative effect of a change in accounting principle totalling $302 million, or 70 cents per common share, related to the recognition of infrastructure payments from The Coca-Cola Company. These results also include previously announced restructuring and other charges as well as nonrecurring reductions in income tax expense.
I.6) Have sales changed
The sales for Coca-Cola today have doubled then the sales 10years ago. This is due to increase in population, increase in media, increase in advertising, increase in competition, etc. All this factors has lead to increase in sales for the Coca-Cola.
I.7) Pricing Policy
'Price' is a vitally important decision area because although it is a 'promotional' tool in many respects, it is the main source of income to the organisation. If prices are lowered for promotional purposes, the cash flow within the company, and its long-term profitability, could be seriously affected.
There are number of pricing strategies which can be used:
Long term objectives:
These objectives depends how the organisation wishes to position itself in the market place, or how it wishes to establish itself financially. Here are some examples:
* Making a profit, for the stakeholders and for future investment
* Pricing to keep competitors out
* Pricing which positions the company at the premium end of the market
* Pricing to maximise sales and become the market leader
Short term objectives
These are tactical, as in promotion and selling. Here are some examples:
* Skimming: - Charging high price for new products that at first have no competition, e.g.: Microsoft charged high price for their new product launched month ago. XBOX is similar to play station 2 but because of Microsoft a world recognised company in technology skimmed the price of its new product.
* Penetrating price: - When a new business is trying to break into an established market it may employ penetration pricing by setting a price below that of its competitors, and then raising it once when it gains an acceptable market share. Coca-cola at this stage does not have to worry about this pricing as it is already well established.
* Competitive pricing: - Coca-cola does not change price higher than that of their competitors. Their prices are similar to that of their competitors.
* Destruction pricing: - Knocking out the competitors by cutting prices, a process commonly known as price wars.
Prices are listed in Cyprus Pounds including VAT per bottle unless otherwise stated. Prices are subject to currency and market fluctuations, changes in duty and VAT as well as stock remaining unsold. Prices are subject to changes. Substitutions may be made with items of equal or greater value.
At this point of maturity, Coca-Cola uses a competitive pricing policy as it is an established product so it does not have to skim it or use penetrating price.
(II) DISTRIBUTION (or 'Place')
This is the fourth 'P' of the marketing mix.
* The manufacture of the product has to physically move it to where it is convenient for the customer i.e. to shops around the country.
* The provider of a service usually requires the customer to come to him i.e. the retailer, the leisure centre or cinema manager, the hotelier etc. So, a place or distribution is required.
II.1) How does the product reaches the customer?
People grab a moment of simple refreshment from Coca-Cola products millions of times every day. It's as routine as drawing a breath of fresh air.
It's so routine people may take for granted always having the quality products they desire when - and where - they want them.
Making certain those products are available is the job of Coca-Cola Enterprises Inc. They are the world's largest bottler of liquid non-alcoholic refreshment, with territory throughout much of Western Europe and most of North America. As the world's largest bottler, they produce, market, and distribute their products at the local level through mutually profitable partnerships with customers such as supermarkets, convenience stores, retail outlets, schools, and businesses of all kinds.
II.2) How widely available is the product
Because of their geographic diversity and the local nature of their business, they operate in markets with dramatically different consumer preferences, economic conditions, product delivery systems, retail trade customers, and marketplace opportunities. Yet, in spite of this diversity, their Company's operations are bound together by two key goals: creating the highest quality products possible and superior marketplace execution. The product is widely available in the market place,
Marketplace execution means making their products available everywhere a consumer may want one. It is done by dedicated people offering hands-on, face-to-face service to meet superior marketplace execution demands. They work shoulder to shoulder with their customers to create the most advantageous sales initiatives for their business through local, market-based programs.
To meet their customer's needs, they provide their front-line personnel with the training and tools necessary to deal with an ever-changing marketplace. These tools supplement the greatest strength of their employees: a steady commitment to superior marketplace execution. It helps their employees work consistently every day to meet the needs of each individual customer.
As they create demand for their products through superior marketplace execution, they manage the process of getting the product to the customer. The work begins in the early morning hours at United States warehouse employees assemble orders from the day before, and then place the products on delivery trucks and vehicles for distribution to their customers. In Europe, where delivery systems to their customers vary, warehouse employees load larger trucks for bulk delivery to customer warehouses, or load trucks for local delivery.
Often by 6 a.m., sales managers, account representatives, merchandisers, and drivers across the Company ...
This is a preview of the whole essay
As they create demand for their products through superior marketplace execution, they manage the process of getting the product to the customer. The work begins in the early morning hours at United States warehouse employees assemble orders from the day before, and then place the products on delivery trucks and vehicles for distribution to their customers. In Europe, where delivery systems to their customers vary, warehouse employees load larger trucks for bulk delivery to customer warehouses, or load trucks for local delivery.
Often by 6 a.m., sales managers, account representatives, merchandisers, and drivers across the Company are meeting at their sales centres to plan the day's efforts and discuss sales opportunities. Local delivery drivers will check their trucks and vehicles, making sure loads are correct. They then head to market using routes created the day before by dispatchers at each sales centre, routinely delivering 400 or more cases of product each day.
Once the product is delivered to the stores, the account representatives and merchandisers take the lead. Merchandisers work in larger stores making sure their products are available and displayed properly. Account representatives deliver marketing materials, organize their call lists, handle paperwork, and assist customers. Account representatives will call on 15 or more customers each day, working with those customers to help them grow their business. As they visit customers, they send in new orders, electronically or by phone, keeping the cycle of sales, production, and delivery moving forward.
II.3) How is product sold and delivered to the customers
Coca-Cola and its products are made available to consumers in a variety of locations, including grocery stores, recreational areas, and shops. Full service drivers check and stock vending machines on regular routes. Other drivers use tractor trailer trucks to deliver product in bulk, while throughout North America and Belgium, drivers use side loaded trucks to deliver 400 or more cases of product each day. In other European locations, delivery is handled by third-party distributors. Coca-Cola is also available to customers in local shops, restaurants, vending machines, supermarkets, school canteens, colleges, university's and official businesses.
Even in our Leicester College the coca cola truck delivers its products to our college canteen and also sees to it that the vending machines are filled.
II.4) Are customers satisfied with the way in which the product is made available?
The customers are very satisfied with the product available in the market. As Coca-Cola is sold everywhere where you go, you can buy them easily from the corner shops, vending machines, supermarket, grocery stores, restaurants, bars, pubs. You find Coca-cola every where. From the primary research the customers are very satisfied with way Coca-Cola is made available.
II.5) Are there other ways or means by which the customers may wish to obtain the product?
The only other way of obtaining Coca-Cola now is through the taps. This is the only other way of coke to be delivered easily and directly to the customers. The customers obtain their product when they ask their manufactures. They get every thing in time so they don't have any other ways of obtaining their product.
(III) PROMOTION
Promotion consists of a number of techniques which create awareness of the products and persuade the potential customer to make the buying decision. It involves all communication with actual and potential consumers.
These techniques include
* Advertising: - The most persuasive possible selling message to the right prospects (markets) for the product or service at the lowest possible cost.
To maintain its image Coca-Cola spends $1 billion annually on its advertising.
The Coca-Cola Company enlists experts from numerous advertising agencies in the creative, media planning and buying, research, and sales promotions arenas. These talented professionals work closely with the Company's internal marketing and media teams. Because these agencies work exclusively on advertising, The Coca-Cola Company chooses not to accept advertising and promotion ideas from the general public.
Since 1993, the Company has employed the services of dozens of advertising agencies for its worldwide brands. These agencies have areas of expertise that directly align with the strategic needs of the brands to which they are assigned. The multiplicity of agencies and media reflects the company's determination to use the best resources available to communicate most effectively with consumers.
In implementing a campaign, the Company makes use of the most current technological advances as well as traditional media, taking into consideration the most appropriate and accessible media for reaching targeted consumer group. Among the many media used are television, radio, newspaper, outdoor and theatre.
These are the slogans of the Coca-Cola for the last century.
Their current advertising theme is "Coca-Cola enjoy". Although there have been many memorable themes throughout the years:
904
" Delicious and Refreshing" first introduced in 1904
929
"The Pause that Refreshes" first appeared in 1929
950's
"Be Really Refreshed" first appeared in the 1950s
963
"Things Go Better with Coke" first appeared in 1963
969
"It's the Real Thing" was first used in 1942 and was then revived in 1969
976
"Coke Adds Life" first appeared in 1976
978
"Have a Coke and a Smile" first appeared in 1978
982
"Coke is it" first appeared in 1982
1989
"You can't beat the Feeling" first appeared in 1989
993
"Always Coca-Cola" first appeared in 1993
2000
Coca-Cola enjoy
2001
Coca-Cola enjoy
* Branding: - Branding is a method of identifying one product or service from another by creating a name, term, design or symbol (logo) which is unique to that product or service in your line of business. It creates an image which differentiates the product in the consumer's minds from the products of competitors.
Coca-Cola brand has 94% recognition in the world. Coca-cola has its unique logo which can be identified by 94%population in the world.
* Packaging: - Packaging is often used to appear as part of 'product policy', but over the years it has become a major aid to promotion and 'product presentation'. Packaging is for promotion it attracts the shopper's attention, especially at the 'point of sale'.
The Coca-Cola Company moves with the times, and is the forefront of packaging innovation. Over the years, it has pioneered the development of lightweight, convenient packaging and innovations such as six-packs, litter-free ring-pulls, and vending technology.
The brands are packed to suit all requirements from single cans (150, 330 and 500ml) and 500ml contour bottles for drinking on the move, to multipacks and 1.5, 2 and 3 litre PET bottles for family consumption; fountain or dispensed products are supplied in such outlets as fast food companies.
* Publicity or public relations: - Publicity is gained by being 'newsworthy' (exciting). This is not under the control of the marketing team. It depends upon what others say about the product or organisation. Kotler says that publicity is the "non-personal stimulation of demand for a product, service or business unit by planning commercially significant news about it in a published medium or obtaining favourable presentation of it upon radio, television or stage that is not paid for by the sponsor". The difference between advertising and publicity are:
a) Advertising is a known cost for an agreed amount of contact with the market. Publicity tends to be non-controllable, often unplanned.
b) Publicity has far greater impact in that it appears to come from a third person, and is thus more believable. If the press favourably review something good about Coca-Cola, it will sell more than any advert could achieve. A bad review will do the reverse.
c) Publicity catches readers off guard, whereas when they read an advert they know they are being sold to.
d) Advertising allows the reception of the message several times, whereas publicity has the limited life of a news story.
e) Both advertising and publicity can dramatise the product to create interest.
* Sales promotions: - A sales promotion may be defined as 'an attempt to create interest in and stimulate sales of a product or service by a non-standard activity in a limited period of time, or with a controlled amount of product ('while stocks last')'. Sales promotion is a link between advertising and direct selling. It gives the advertiser an extra benefit to draw to the consumer's attention, persuading them to go to the shops, and it allows the manufacturer's sales person to revitalise the interest of the retailer by having something new to discuss or offer. Many, but not all, sales promotions generate activity at the point of sale, i.e. the retail shops, supermarkets, grocery stores, etc. There are two types of promotion:
) Trade promotion - manufactures promoting to retailers and wholesalers. Types of trade promotion include Quantity discounts (if more than a stated number of items per period are ordered by a buyer, a discount or prize is given). For e.g.:- when you buy a one Coca-Cola bottle of 2-ltr priced £1.19p you get the second one for £0.80p i.e. you get a discount of £0.39p. Also when you buy Coca-Cola cans in a pack of 6 you get the other pack free. This sales promotion makes the customers buy Coca-Cola then its competitor's products. Tailor-made promotions linked to one store, i.e. the manufacture puts on a special display free of charge in the shops. For e.g. Coca-Cola displays in the supermarkets about the products being discounted.
2) Consumer Promotions:- The object of a consumer promotion is for the seller to raise the long term level of sales by offering some added value to the purchase of a product in the short term. For e.g.:- money off this or the next purchase or two for the price of one, coupons or sample delivered through door, competition with attention-gaining prizes, free gifts, reward points.
* Merchandising: - In a shop or a retail outlet, the merchandiser is in charge of the presentation of the products and of the store itself. His or her job involves making the environment so attractive that the consumer wants to make a purchase and to call again. A merchandiser or salesperson employed by the manufacturer visits retailers to offer advice on presentation of his own company's product i.e. to set up displays.
Each differs from others but all, or all of them thought relevant to a given situation, is used to create a unified product image and an image the organisation, the 'corporate identity'
III.1) How is the product currently being promoted?
"Coca-Cola Company is also working to change customer perceptions created by deeply discounted promotional offers. By focusing promotion on a variety of packages, such as 2-liter PET, and multi-pack can combinations, they continue to move away a confidence on 12-pack cans to a multi-package strategy. This provides attractive prices for consumers while enhancing profits for their customers and the company."
III 2) Is there any evidence to suggest that current promotional policy is effective?
The change in sales due to the promotion methods are the evidence of the promotional policy is effective for Coca-Cola. Due to its promotion policy the sales have risen for Coca-Cola in 2002. the sales in 2001 had decreased due to competition. But due to the new promotional policy the sales have risen again for Coca-Cola.
(IV) CUSTOMERS
(IV.1) How many customers does your product have?
As Coca-Cola has the most recognised brand name in the world with 94% recognition in the world. Coca-Cola system has millions of customer's around the world who sell or serve Coca-Cola to customers. Customers for Coca-Cola include retail outlet, restaurant, or other operation that buys coca cola products and in turn, sells or serves these products to consumers. It also includes retail shops, grocery stores, drug stores, petroleum outlets, mass merchandisers, off-licence shops, pubs, hotels, convenience stores, schools, colleges and business of all kinds, etc. These customers are all over in the 200 countries where Coca-Cola is sold.
(IV.2) Which segments of the markets are being targeted?
"The Coca-Cola Company seeks to provide refreshment for all the people on the earth". Coca-Cola is being targeted on all the age group. From age of five to the old aged people everyone are being targeted by the Coca-Cola Company. These segments of the marketing are being targeted by the mass advertising, sponsorships, helping the community, marketing, etc. All the age group are being segmented in different ways of advertising.
(IV 3) How is your product positioned?
Cola is currently in the maturity stage, which is evidenced primarily by the fact that they have a large, loyal group of stable customers
Furthermore, cost management, product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability. In foreign markets the product life cycle is in more of a growth trend Coke's advantage in this area is mainly due to its establishment strong branding and it is now able to use this area of stable profitability to subsidize the domestic "Cola Wars".
(IV 4) How do customers perceive your product?
As Coca-Cola is well known and has 94% recognition around the world people observe it as a sign of prestige. For the people of the third world countries Coca-Cola is a substitute for water. Coca-Cola has loyalty of its consumers towards it. Coca-Cola is the most recognised trademark in the world and the second most widely understood phrase after OK.
(IV 5) How often customers purchase the product?
An average person drinks Coca-Cola at least once a week. The company sells over one billion servings a day.
V MARKET
(V 1) Product sales
Coca-Cola measures their sales volume in two ways: 1). Gallon sales and 2).unit sales of finished products. Gallon sales represent volume of concentrate syrups which the company sells it to their bottling partners. Unit sales represent the amount of finished products sold by the company and their bottle partners to their customers.
The annual sales for Coca-Cola for year ended December 31 was $20,458 (millions). For the past 10 years the annual sales for Coca-cola has doubled until now. This increase in sales is due to increase in population, increase in advertising, increase in marketing and awareness of the product.
Coca-Cola sales for the last 10 years are as follows: (In millions)
2000
999
998
997
996
995
994
993
992
991
990
Net sales
$20,458
$19,805
$18,813
$18,868
$18,673
$18127
$16264
$14,030
$13,119
$11,599
$10,261
Cost of Goods sold
$6,204
$6,009
$5,562
$6,015
$6,738
$6,940
$6,168
$5,160
$5,055
$4,649
$4,208
Gross
profit
$14,254
$13,796
$13,251
$12,853
$11,935
$11,187
$10,096
$8,870
$8,064
$6,950
$6,053
For the year 2000 annual unit case sales totalled 3.8 billion (24 eight-ounce servings, or 192 ounce per case)
(V 2) How big is the market- is it growing or declining
The Coca-Cola has a global market and is growing all the time. The Coca-Cola Company wants to take their product to each and every person around the world. The market is divided into North America Group, Latin America Group, Europe and Eurasia Group, Asia Pacific Group, and Africa and Middle East Group.
The North America Group includes unites stares and Canada, the Latin America Group is Venezuela, Colombia, Chile, Argentina, Brazil and Mexico.
The Europe and Eurasia Group are Central Europe division, southeast Europe division, Italy, France, Eurasia division, Great Britain, Spain and Germany.
The Asia Pacific Groups are Indonesia, Korea, Thailand, India, Australia, Philippines, China and Japan.
The Africa and Middle East Group are Northern Africa Division Southern Africa Division and Middle East and North Africa Division
(V 3) What is the share of the market?
Coca-Cola has 47% of the market share all over the world, PEPSI-cola has 23% and 30% market share is covered by the other drinks. Coca-Cola has a massive market share and an incredibly strong brand, appealing to all of the market. Over the past 10 years, Coca Cola's market value has increased to over $55 billion from approximately $6.7 billion. The key markets for Coca-Cola are Japan, Spain, Australia, South Africa, and America
U.S Market: US are Coca Cola's biggest market. 20% of Coca Cola's operating income comes from US.
European Union: - EU is Coca Cola's second biggest market region in terms of both revenue and operating income. Coca-Cola held 47% of the EC soft drink market in 1992 and Germany, France and Benelux/ Denmark groups performed from 2 to almost 3.5 times better than the industry as a whole. Germany, Spain and Italy account for over 60% of Coca Cola's total unit case sales to the EC. Coca-Cola has about 55% of the soft drink markets in Italy and Spain.
Northeast Europe/Africa: The NEA division account for only 8% of Coca Cola's total operating income. Poland, Hungary and Romania have been among the best performers in this region.
Canada and Pacific: The Pacific is the most profitable region for Coca-Cola, accounting for almost 30% of operating income. Japan is the very best market for Coca-Cola. In the pacific region 42% of unit case sales are in Japan. China represents the largest potential market and no.1 recipient of Coca-Cola system. India, Malaysia and Indonesia are the long term market plan for Coca-Cola.
Market Share for Coca-Cola
Share
Year 2000
Coca-Cola
20.3
Pepsi
3.9
Diet coke
8.6
Mountain Drew
7.1
Sprite
6.5
Dr Pepper
6.2
Diet Pepsi
4.9
7UP
2.0
Minute Maid Orange
.5
Others
29
VI COMPETITORS
(VI 1) How many and who are they
Non-alcoholic beverage is highly competitive. Competition exists among many beverages, including soft drinks, isotonic, tea, tea drinks, juice, juice drinks, water, milk and milk drinks. Competitors also includes bottlers and distributors of beverages marketed and advertised at international, national, regional and local levels, as well as chain store and private label beverages.
Some of the non alcoholic beverages which compete with Coca-Cola are Pepsi, virgin-cola, Diet Pepsi, Dr Pepper, mountain drew, 7up, and others. The highly competitive drink to Coca-Cola is the world's no.2 soft drink Pepsi.
(VI.2) Which product compete with Coca-Cola
The competitors for Coca-Cola are virgin-cola and the no.2 soft drink in the world Pepsi. Pepsi has a big enough market share to challenge Coca-Cola. They have best balance of promotion, communication to their target audience through celebrities. Virgin cola is not that good as Pepsi. However, promotions are not innovative or prominent enough. Virgin cola is not that big threat to Coca-Cola where as the Pepsi is.
For the past few years Coca-Cola has had one main brand competitor (PepsiCo) that has been keeping the Coca-Cola Company on its toes. Donald M. Kendall founded the Pepsi Company in 1965, this information given by the Pepsi Company website. The Pepsi Company's main headquarters are in N.Y; it was moved there in 1970. Pepsi's mission is to PepsiCo's overall mission is to increase the value of its shareholder's investment. They do this through sales growth, cost controls and wise investment of resources. The company's commercial success depends upon providing a fair return to its investors while adhering (staying) to the highest standards of integrity.
(VI.3) How does your product differentiate itself from the competition?
The brand name of the product, the logo of the product. Coca-Cola has 94% recognition in the world. Coca-Cola does not need to advertise its adverts with the help of celebrities where as Pepsi adverts are promoted with the help of celebrities. The taste of Coca-Cola is different from that of Pepsi. Coca-Cola has its consumer's loyalty towards its brand. The advertising also plays its role in peoples mind. As the advertising for coca-cola is such that it makes a place in consumers and they want to have that product. Also coca-cola is a prestige name for some people as well. They don't drink any other drinks then coca-cola.
(VI 4) What is the pricing policy of the competition
Pricing policy for Pepsi: providing quality products at the lowest possible price is Pepsi's main concern in pricing policy. In some country a 2 litre bottle of Pepsi cost 99 cents a decade ago and still does today. They do this by expanding their use of inexpensive and recyclable plastic bottles. Pepsi across their entire system has been cutting overhead and re-engineering their manufacturing process in order to keep their prices competitive in the market. Their policy is to limit any price increases to the retail trade to the lowest possible extent. (http://www.pepsi.com/current/index.html)
(VI.5) How is the product distributed
Pepsi Co makes its product widely available in the market. Most of their sales are through their own direct store distribution systems, when they take their products to stores and put them on the shelf. Their system reaches hundreds and thousands of outlets, from the tiniest bodega to the mightiest club store and they get bigger every year. Their direct store distribution gives them the ability to merchandise their products for maximum appeal to consumers.
The different channels of distribution for Pepsi are supermarket, retail shops, mass merchandise, clubs, drugstores, vending machines, convenience stores, gas stations, restaurants, etc.
(VI 6) How do they promote their product?
Pepsi Co promotes and markets its brands internationally through various channels of communication like media, T.V, radio, newspaper, internet, sponsorships in sports, banners, displays in the supermarket, etc. It also promotes it products to carious competition with a eye catching prizes. It gives discounts to the customers who buy their product e.g. buy one get one free.
(VI 7) Is there product in different market segment?
Pepsi is in different market segment as Pepsi is being targeted on all the age group. Whether upper class, middle class or lower class. Its targeted at working class and non working class as well.
VI 8)How do they position their product?
Pepsi are at a maturity stage it produces a lot of cash for their company and it has a high market share below Coca-Cola. It is the no.2 drink in the world. It had a low growth rate as it had covered mist of the market. It need less investment to hold market share as it is recognisable by most of the people. It gives cash to the company to invest in other product.
(VI 9) What are the sales of their product?
In the year 2000 the net sales for Pepsi was $20,438 (In millions) and there was an increase of 8% in the annual sales. Annual sales for Pepsi for 5 years from 1996 to 2000 are as follows:-
Year
Net sales
(In millions)
2000
$20,438
999
$20,367
998
$22,348
997
$20,917
996
$20,337
Pepsi Cola has 23% of the soft drink industry case sales of the Pepsi co
(http://www.pepsico.com/) Annual report
(VI 10) What market share does it have?
US, Australia, Japan and Western Europe were the dominant markets but the growth has showed down dramatically but they are still important market for coke and pepsi. Other international markets have now become the hotspots for Pepsi. These markets are Eastern Europe, Mexico, china, Saudi Arabia and India.
Pepsi has 37% global market share operating in 190 countries.
(VI 11) Difference in design, quality, availability.
At every level of Pepsi Cola Company take great care to ensure that highest standards are met in everything they do. In their product, packaging, marketing and advertising, they strive for excellence because they think their customer deserves better quality products. They promise to work towards improvements in all areas of their organisation.
In their manufacturing and bottling process, strict quality controls are followed to ensure that Pepsi Cola products meet the same high standards of quality that customers expect from them. They also follow strict quality procedures during manufacturing and filling of their packages. Each bottle and can goes through inspection and testing process. Containers are rinsed and quickly filled through a high speed, state of the art process that helps prevent any foreign material from entering the product. Additional quality control measures help to ensure the integrity of Pepsi Cola products throughout the distribution process from warehouse to store shelf.
Pepsi Cola local bottlers determine which products to pack and sell in their territory based on local consumer demand and other market factors.
(VI 12) How do they promote their product
Pepsi has a big enough market share to challenge Coca Cola. They have their best balance of promotions, communicating to their target audience through celebrities like Robbie Williams, David Bekham, Britney Spears, etc. The Pepsi chart also helps in promoting as the youth like music. Pepsi is gaining the football market from Coke. Pepsi also promotes on internet, newspaper, through sponsorships, radios, etc (http://www.pepsi.com/current/index.html)
Pepsi also promote its products in the supermarkets by keeping discounts like buy one get one free. It also keeps competition with great prizes which catches the eye of the consumer.
VII PEST ANALYSIS
The PEST analysis examines changes in a marketplace caused by Political, Economical, Social and Technological factors.
P Political change, from one party to another in control- for example the rise in private healthcare and privatisations under Conservative governments.
Political Analysis for Coca-Cola
Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws.
The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the expected results described in their underlying company's forward statement:-
* Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.
* Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors.
* Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders.
* Their ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well they are able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.
E Economic change, for example a recession creating increased activity at the lower ends of product price ranges. Rate of interest rises depressing business and causing redundancies and lower spending levels.
Economic Analysis for Coca-Cola
Last year the U.S. economy was strong and nearly every part of it was growing and doing well. However, things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth. On Monday 26, the government officially declared that the U.S. has been in recession since March. (CBS Market Watch. " U.S. Officially in a recession." Rex Nutting. [nov 26,2001]. www.cbsmarketwatch.com)
However, because of aggressive action by the Federal Reserve and Congress it will be short and mild. The economy will return to sustained, positive growth in the first half of 2002.
Future Outlooks
The Federal Reserve is doing all that it can help the economy recover. They have cut the interest rate ten times this year. The rate now lies at a 40-year low of 2%. Lowering the interest rates will ultimately excite consumer demand in the economy. Companies will expand and increase use of debt as a result of the low borrowing rates. Coca-Cola can borrow money for investing in other products as the interest rates are low. It can use the borrowing on research of new products or technology. As researching for new products would cost less the Coca-Cola Company will sell its products for less and the people will spend as they would get cheap products from Coca-cola.
Before the attacks on September 11, 2001, the United States was starting tot see the economy recover slightly and it is only just recently that they achieved the economic levels. Consumers are now resuming their normal habits, going to the malls, car shopping, and eating out at restaurants. However, many are still handling their money cautiously. They believe that with lower inflation still to come, consumers will recover their confidence over the next year.
The non-alcoholic beverage industry has high sales in countries outside the U.S. According to the Standard and Poor's Industry surveys, "For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, and Germany." These markets will continue to play a major role in the success and stable growth for a majority of the non-alcoholic beverage industry.
S Social change involves changing attitudes and lifestyles. The increasing number of women going out to work, for example, led to the need for time-saving products for the home.
Social Analysis for Coca-Cola
Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water and diet colas instead of beer and other alcoholic beverages. Also, time management has increased and is at approximately 43% of all households. (http://www.cdf-mn.org). The need for bottled water and other more convenient and healthy products are in important in the average day-to-day life.
Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall and in the healthier beverages.
T Technological change - creates opportunities for new products and product improvements and of course new marketing techniques- the Internet, e-commerce.
Technological Analysis for Coca-Cola
Some factors that cause company's actual results to differ materially from the expected results are as follows:
* The effectiveness of company's advertising, marketing and promotional programs. The new technology of internet and television which use special effects for advertising through media. They make some products look attractive. This helps in selling of the products. This advertising makes the product attractive. This technology is being used in media to sell their products.
* Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry and you can bin them once they are used.
* As the technology is getting advanced there has been introduction of new machineries all the time. Due to introduction of this machineries the production of the Coca-Cola company has increased tremendously then it was few years ago
* CCE has six factories in Britain which use the most stat-of the-art drinks technology to ensure top product quality and speedy delivery. Europe's largest soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990. The Wakefield factory has the technology to produce cans of Coca-Cola faster than bullets from a machine gun.
VII SWOT ANALYSIS
SWOT stands for Strengths Weakness Opportunities Threats
SWOT analysis is a technique much used in many general management as well as marketing scenarios. SWOT consists of examining the current activities of the organisation- its Strengths and Weakness- and then using this and external research data to set out the Opportunities and Threats that exist.
SWOT Analysis for Coca-Cola
Strengths:
Coca-Cola has been a complex part of American culture for over a century. The product's image is loaded with over-romanticizing, and this is an image many people have taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. This extremely recognizable branding is one of Coca-Cola's greatest strengths. "Enjoyed more than 685 million times a day around the world Coca-Cola stands as a simple, yet powerful symbol of quality and enjoyment" (Allen, 1995).
Additionally, according to Bettman, et. al, (1998) Coca-Cola's bottling system is one of their greatest strengths. It allows them to conduct business on a global scale while at the same time maintain a local approach. The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company. Because Coke does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers (Bettman, et. al, 1998).
Weaknesses:
Although domestic business as well as many international markets are thriving (volumes in Latin America were up 12%), Coca-Cola has recently reported some "declines in unit case volumes in Indonesia and Thailand due to reduced consumer purchasing power." According to an article in Fortune magazine, "In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary because while Japan generates around 5% of worldwide volume, it contributes three times as much to profits. Latin America, Southeast Asia, and Japan account for about 35% of Coke's volume and none of these markets are performing to expectation (Mclean, 1998).
Coca-Cola on the other side has effects on the teeth's which is an issue for health care. It also has got sugar by which continuous drinking of Coca-Cola may cause health problems. Being addicted to Coca-Cola also is a health problem, because drinking of Coca-Cola daily has an effect on your body after few years.
Opportunities:
Brand recognition is the significant factor affecting Coke's competitive position. Coca-Cola's brand name is known well throughout 94% of the world today. The primary concern over the past few years has been to get this name brand to be even better known. Packaging changes have also affected sales and industry positioning, but in general, the public has tended not to be affected by new products (Allen, 1995).
Coca-Cola's bottling system also allows the company to take advantage of infinite growth opportunities around the world. This strategy gives Coke the opportunity to service a large geographic, diverse, area (Bettman, et. al, 1998).
Threats:
Currently, the threat of new viable competitors in the carbonated soft drink industry is not very substantial. The threat of substitutes, however, is a very real threat. The soft drink industry is very strong, but consumers are not necessarily married to it. Possible substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate ("Cola Wars", 1991).
Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness of the market could have a serious affect. Of course, both Coke and Pepsi have already diversified into these markets, allowing them to have further significant market shares and offset any losses incurred due to fluctuations in the market ("Cola Wars", 1991).
Consumer buying power also represents a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow moving industry in which management must continuously respond to the changing attitudes and demands of their consumers or face losing market share to the competition. Furthermore, consumers can easily switch to other beverages with little cost or consequence ("Cola Wars", 1991).
Task 4 Marketing Strategy
Product Life Cycle (PLC):-
"In long term we are called Dead." (J.M.Keynes).
When referring to each and every product or service ever placed before the consumer i.e. in the long term all the existing products and services are dead. For e.g.:- Replacement of Ford Cortina ( a highly successful car) by Ford Sierra, the replacement of sierra by the Ford Mondeo and the replacement of the old Mondeo by the new Mondeo in 2001. So every product is born, grows, matures and dies. So in the commercial market place products and services are created, launched and withdrawn in a process known as Product Life Cycle.
Development Launch Growth Maturity Decline
( Sales
( Profit
Stages 1 2 3 4 5
Product Life Cycle Stages.
The stage in the PLC also describes different appropriate promotion mix variations. Introduction utilises advertising and public relations to build awareness and personal selling to facilitate motivate channel members to carry it. In growth, the need for personal selling diminishes. In maturity, personal selling helps differentiate it again in distribution. In decline, sales promotion may be the most emphasised of the promotion mix tools.
) Product Development: - Development begins when the company finds and develops a new product idea. During development, the product has a cost but no sales. Development cost must be strategically weighed against the projected length of the product's PLC.
2) Introduction: - During the introduction of new products initial sales growth is slow as the market is just becoming aware of the product. Profits are usually non-existent at this stage due to heavy promotion spending.
3) Growth: - This stage is characterised by rapid market acceptance of the product and increasing profits.
4) Maturity: - In maturity there is a slow down in sales growth as the product has achieved acceptance by most potential customers. Profits may level off or decline as marketing costs increase to defend market share.
5) Decline: - In this period sales begin to fall off profits decline dramatically.
To be able to market its product properly, a firm must be aware of the product life cycle of its product. The standard product life cycle tends to have five phases: Development, Introduction, Growth, Maturity and Decline. Coca-Cola is currently in the maturity stage, which is evidenced primarily by the fact that they have a large, loyal group of stable customers.
Furthermore, cost management, product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability. In foreign markets the product life cycle is in more of a growth trend Coke's advantage in this area is mainly due to its establishment strong branding and it is now able to use this area of stable profitability to subsidize the domestic "Cola Wars".
BOSTON MATRIX
Products are positioned on the diagram according to one's share of the relevant market. The markets themselves are also analysed for growth rates.
H
I
G
H
Question Marks
o Low market share in a high growth market.
o Cash required to maintain or increase their market share to become stars; otherwise they should be phased out.
Stars
o Highly profitable
o Good market share
o High growth rate
o Growth stage of the PLC
o Rapid growth requires relatively heavy investment.
L
O
W
Dogs
o Low market share
o Low growth rate
o No longer profitable
o Decline stage of the PLC
o Need to be withdrawn.
Cash Cows
o Produce a lot of cash
o High market share
o Low growth rate
o Maturity stage of PLC
o Need less investment to hold market share
o Cash 'milked' to finance investment in other products.
LOW
HIGH
Question Marks:-
These are low market share in a growing market possibly a new product in a promising market or perhaps a product that is having difficulty in getting established.
Stars:-
These are often associated with the (strong) growth stage of the cycle (hence they are sometimes called rising stars). Sales are good, with the potential for market leadership. The market itself is expanding.
Cash Cows: -
These sell strongly with good market share, but in a mature market i.e. low growth. These products provide current profits and cash for the development of new products and/or shareholder dividends.
Dogs: -
These may be associated with a decline stage of PLC, and may be discarded if profitability declines further. Low market share may suggest falling appeal, or never having come up to expectations in the first place
Coca-Cola Company at this stage fits in the Cash Cows. As they produce a lot of cash and they have the highest market share (47% of the world market share) compared to its competitors. It has a high growth rate due to its variety of other brands and its mass advertising. As their profits are high they invest heavy money to advertise and to keep their product on the No.1 position.
In accordance with the BCG matrix, I would recommend the following strategies for Coca-cola products in each category:
Dog Strategy: Either invest to earn market share or consider disinvesting.
Star Strategy: Invest profits for future growth.
Question Mark Strategy: Either invest heavily in order to push the products to star status, or divest in order to avoid it becoming a Dog.
Cash Cow Strategy: Use profits to finance new products and growth elsewhere.
ANSOFF MATRIX
This is a future method of analysing product and market policies.
N
e
w
P
r
e
s
e
n
t
Market Development
Diversification
Market
Penetration
Product
Development
Present
New
* Market Penetration: - This is a basic growth area, i.e., continuing with existing products to gain a lager share of existing markets. Growth is unlikely to be great.
* Product Development: - Product Development means coming up with ideas for new products for existing markets.
* Market Development: - means searching for new markets for existing products.
* Diversification: - means developing new products with which to attack markets that are also new to the organisation. This is most risky if the competition is well established, but if the product type or market is new, it can have related ventures.
Coca-Cola is a well established company and its brand Coca-Cola is a well known brand with 94% recognition around the world. Coca-Cola has a 47% market share it has to develop new markets for which they don't have their share.
They also have to develop new product for their existing markets. Coca-Cola has reached its maturity stage, they have to develop new product so they can sell them in the existing markets to make more profits. Development of new product would help them spread their risk and help them in having more sales as well.
Marketing Strategy
I am doing marketing strategy on Coca-Cola, the world's no.1 soft drink. Coca-Cola is at the stage of maturity where it produces a lot of cash/ profits for the company.
I did a primary research on Coca-Cola where I questioned 15 male and 15 females. They were in the age from 10 to 41 and over. The most preferred drink was Coca-Cola. 53.33% of consumers consume Coca-Cola and the other percentages of the consumers drink its substitutes. On an average one consumer consumes 1.33 of Coca-Cola a day and 9.29 a week. 83.33% of consumers like the taste of Coca-Cola, where as the others liked the packaging and price. Most of the consumers buy their coke from super markets and cash and carry stores. 90% of the people whom I gave the questionnaire said that the price for Coca-Cola is reasonable.96.67 people said that they were satisfied in the way Coca-Cola is made available to them. 100% of the consumers said that Coca-Cola is easily available in the market where ever they go.
From the secondary research I learnt more about the Coca-Cola, how it is distributed, promoted to the customers and taken in to the market even in the stiff competition of colas.
The PEST analysis showed me how changes are caused in the marketplace due to the Political, Economical, Social, and Technological factors.
Through SWOT analysis I learnt the Strength, Weakness, Opportunities, and Threats to the Coca-Cola and its company.
The Product Life Cycle shows that Coca-Cola is at a stage of maturity where it has slow down in sales growth as it has achieved acceptance by most of the customers
In accordance with the BCG matrix, I would recommend the Cash-Cow strategy for Coca-Cola. As it would be the best strategy in my view. I would invest my profits to produce new products and sell them in the market.
In accordance with the Ansoff Matrix I would develop new products for the existing market coming up with ideas for new products for existing market.
My marketing strategy is based on the principles of marketing mix. The marketing mix consists of four major elements.
* Product
* Price
* Promotion and
* Place
As you have seen from the primary and secondary research that the Life Cycle of Coca-Cola is at the maturity stage. It has slow down in sales growth as it has achieved acceptance by most potential customers. Profits may level off or decline as marketing costs increase to defend market share.
I will use my profits to invest in to new products in the existing market. I will be using the four P's of the marketing mix. They are Product, Price, Promotion and Place (distribution).
To launch any thing in the market I need a Product which is the first P of the marketing mix.
Product: Coco Milk
The product which I am going to launch is Coco milk a product of Coca-Cola. This product is made from Coca-Cola and milk. This drink is a healthy drink and will do well in future.
Price:
As this is the new product which I am launching in the market I will be using a penetrating pricing policy. As I will gain an acceptable market I will increase my price for my product.
Promotion:
I will be promoting my product with the help of advertising, branding, packaging, publicity/ public relations, sales promotions and merchandising
The advertisement for my product will be given a lot of attention. As the Drink Coco Milk is a healthy drink even children aged from year 1 can drink it. The slogan for my product will be "Coco Milk The milky way of drinking Coca-Cola"
As you can see the brand name of my product is Coco-Milk
Packaging of Coco-Milk will be in a red and white glass bottle with the similar logo of Coca-Cola.
As the product is too good we will get the publicity from the live public. Giving them free Coco-Milk and asking about the drink and giving those suggestions to the press.
As I will be using the penetrating pricing policy for my product the prices will be too low. But still if you buy one bottle of the Coco-milk you get the second one half prices.
Merchandising for my product will be done in super markets, restaurants, pubs as this would give more publicity and person contact with the customers. There would be proper display of the product in the stores and supermarket.
Place:
My product will be sold nationally in U.K. in every super market, stores, grocery shops, off-licence shops, etc. once my product is established in U.K. then I will launch it internationally.
Influences of Internal and External issues on the development of my marketing strategy.
The ability of any organisation to satisfy its customers needs is influenced by two factors:
* Internal factors
* External factors (Micro and Macro environment)
Internal Factors:-
The factors which influenced Coca-Cola in marketing strategy
> Objectives of the Coca-Cola: I had to look at the objectives of the organisation and had to make decisions according to them. As making profits is the organisations aim I had to look at the new product development as Coca- Cola was at a maturity stage and the only way to keep the profits increasing was introducing of new product.
> Stake holders :- Stake holders are the group of people or individual who are affected directly or indirectly by the performance of the organisation. The stake holders include employees or shareholders or external stake holders such as suppliers or customers. The employees who work with in the organisation also help in decision making as the step of introducing a new product can affect on their pay rates and working conditions.
> Organisational resources:- The production process, finance and human resources influences my strategy as they have a direct link with the product as I had to see how would be the production process for my new product. Finance influences as the new product development would require finance for developing and launching it. The human resource department influences my strategy as it has to look after the extra employees which I will be needing for the distribution of the product.
> Organisational Culture and structure: - Marketing decisions are taken within the context of the internal 'culture' of an organisation. This culture consists of the underlying values, attitudes and assumptions which an organisation adopts. It influences the way in which an organisation considers new ideas and options, how it reacts to events around it and how it structures itself.
The distribution of responsibility and authority within an organisation is an important part of its culture. The organisational structures which result influence all decision making, including marketing.
External Factors:-
External factors which influence marketing strategy are
a) Micro environment
b) Macro environment
a) Micro environment:-Marketing decision are affected by a number of external forces which operate close to an organisation which includes:
* Suppliers
* Intermediaries
* Customers and
* Competitors
Suppliers: - Suppliers are the people who provide the organisation with the necessary resources which are needed for to meet its customer's requirements. These include equipment, materials, premises and finance.
Intermediaries: - Organisations do not always deal directly with the consumer of their product or service. Intermediaries help in the process of selling and physically delivering products to customers. These intermediaries include sales agent, wholesalers and retailers.
Customers: - Customers are the people who buy the product of the organisation and the final consumer. If intermediaries comes between an organisation and the final consumers or 'end user' of the product, then these intermediaries may themselves become the customer who buys the product, then these intermediaries may themselves become the customer who buys the product. Marketing strategies can target the end user, by aiming to 'pull' the product through the trade.
Competitors:-organisations usually have to compete with other organisations for customers. The success of the organisation depends on their ability to satisfy customer needs better than their competitors.
b) Macro environment:- the marketing strategy also includes forces which have a more general impact on organisations. These are sometimes summarised as PEST.
* Political
* Economical,
* Social and
* Technological.
Political: - The political environment of laws, regulation and interventions by central and local government, political agencies and pressure groups influences marketing strategy. Intervene of government is for the betterment of the people and the businesses. The Intervene is to protect the consumer and to ensure full and fare competition.
Economical: - The economic environment affects how much the organisation has to spend and how they are likely to spend. Therefore it plays a significant role in determining the likely demand for products and services. Marketing is influences by: The local economy: - it is important when exceptional circumstances create significant variations to national trends.
National economic factor: - Interest rates, exchange rates, unemployment level and rates of inflation have implications on products and services in the market place. Marketing decisions involves making assumptions about the key statistics and evaluating the impact of any likely changes.
International economic factors: - they have longer term significance which are sometimes more difficult to evaluate. Changing growth rates in other national economies affect exports and imports, which in turn influence national and local economies.
Socio Cultural:- social and cultural forces conditions helps individuals translate their needs into the specific product and services which they want. This environment can be sub-divided in to demographic and cultural aspects.
* The demographic structure of a society describes its human population in terms of a size, location, age, ethnic origin, occupation, sex and other statistical measures.
* The culture of a society is made up of a complex mixture of many beliefs, values, customer, habits, laws and understandings which are learned from parents and other members of society. Some of these cultural influences (for e.g. observing traditions such as birthdays, Christmas) are deeply engrained and take many years to evolve.
Technological:-Advances in technology affect the marketing in a number of ways:-
* Creation of new opportunities for products and services is the most obvious impact of technological change.
* Our consumption patterns and life styles evolve as a result of technological changes
* Marketing techniques have changed as a result of technological possibilities. New ways of gathering information has a significant impact on consumers marketing.
As you have seen all the internal and external factors which affect every organisation while planning their strategy. As these factors helps a marketing manager to make decision about his new products or his existing products. Therefore environmental influences are an important aspect of marketing decision process.
The internal influences for Coca-Cola organisation while planning its strategy were its position in the market. The culture of the business, how it works with the environment and the community. I had to look at the new product whether it was environmental friendly I had to take the decision of introducing the new product with the help of the directors and the staff working in the marketing team. I had to look at the finance team if enough money was available to launch the new product. To launch the new product I had to take help from the marketing department as they are going to advertise and do all the branding and promotion for the product. The product had to be tested with the staff having their decision on the taste of the product. I also had to look at the stake holders of the organisation. If I introduce a new product how is it going to affect their income. The expenditure on the new product has an effect on the income of the stake holders. As Coca Cola is a very large organisation with lots of money coming in through other sources like it has many other different products in the same market. This was nothing new for Coca Cola as they have over 200 other products in the market. I also had to look where should be the production process for the new product.
The External factors which influence the strategy are micro and macro environment. The micro environment which consist of suppliers, intermediaries, customers and competitors influence marketing strategy. For launching this new product I had to look the suppliers of milk, plastic and the production process. If the supply of the milk and other necessary equipments are available easily then the production won't take time. Distributing this product was my second part after that as where would I distribute and how would I distribute the product would there be any intermediaries or not. Who are the customers of the products? The customers for my product are supermarket, grocery stores. Off licence stores, post office, restaurants, canteens in the colleges and businesses, etc. As this is a big competitive market in which I am launching my product but due to unique product and different from soft drinks it would be more affective.
The macro environment which includes Political, Economical, Social and Technological factors also influences my strategy. In politics the government has some rules through which I have to go to launch my product, economically my product is launched at a stage where the interest rates are low in U.K. therefore consumers may borrow more and they have more money to spend which is good for the new product which I have launched. Socially it's a family drink and also a sporty drink which people of all ages can drink. The drink which I have launched can also be used for some special occasion like birthday parties. Technology is so advanced that the product can be preserved and kept for the use and it can be store for a period of time.
The above internal and external factors show that their influence in marketing strategy is of very important role. With the mixture of the influences of the internal and external factors a marketing strategy is planned.
Evaluation
How could I have improved my research.
I would have improves my research by giving more time towards it. I would have improves my research if in my primary research I would have gathered information from the retailers, supermarkets, etc. I would have gathered specific information from the consumers and the customers of Coca Cola. I could have gathered a quantity and qualitative data from the customers and consumers. If I would have studied more about the buying habits and the current trends of the people it would have been of great help in looking for which product to produce.
Getting more information from the primary research I would have had more idea about the customer's needs and the consumer needs. Researching more on primary research would give me more data to work on consumers and customers. It would have given me an idea to launch a new product or to continue with Coca Cola with promotions and advertising.
Problems raised in Boston Matrix, SWOT, and PEST analysis.
As Coca Cola in the product life cycle is at a stage of maturity. It has high sales with more cash coming in. using Boston Matrix I could come to a decision of investing my profits to finance new products. I could have invested my profits to earn more market share but instead I disinvested as Coca Cola had already gained maximum market share. Therefore for all these reason I invested my profits for development of new product in the same market.
In Ansoff I could not use market penetration as my product Coca Cola is already in the market with 94% recognition around the word and it is an existing product with great market share. Also people look forward to Coca Cola as a sign of prestige drink.
As Coca Cola is in most of the market there is less scope to develop markets. Diversification for Coca Cola at this stage can be risky as it is a beverage industry and has a very large amount of profits and sales coming in to the organisation. Product development for Coca Cola is the best way to keep its revenue coming from the new products profit in the existing markets.
The problem which occurs in the SWOT analysis for Coca Cola was its weakness. It is at a stage of maturity and there is no more market share to cover. The money coming from it is stable and is not much as it used to be. Introducing a new product solved my problem as this can bring income from the profits of the product and this will keep the flow of income coming in the organisation
There would be no political intervene of the government as the new product is a healthy drink and it wont harm people. As this drink is an environmental friendly drink there won't be any interference from the pressure groups as well. Economic conditions of Coca Cola are satisfactory and therefore it has no problem in spending its profits on its launching of its new product. But due to the disaster which happened on 11th of Sep 2001 there may be some problems in future. As the new product is to be launched nationally there won't be problems of exchange rates.
Social factors containing demographic structure and culture of the society. As the new drink is suitable for people of all ages, there is no problem in launching the new product as it would cover a wide market. This drink can be used as an energy drink in sports events or at parties or any special occasions. So the problem of having a drink to limited market is out of the way.
As the mixture of Coca Cola and milk is a bit silly but due to the technology it can be preserved for a period of time.
Balance of strategy in terms of 4 P's
The Four P's are
* Product
* Price
* Promotion
* Place
My new product is Coco Milk. This is being introduced by looking at the growth of the Coca Cola and the organisation as a whole.
The price which I have used to introduce the new product is penetrating price. As the product is new it won't have that recognition. But after the sales grow due to advertising and other promotion. Once the sales rise for the new product then the price will be set similar to those of the competitors.
Promotion of the product will be done with the help of advertising, branding, packaging, publicity/ public relations, sales promotion and merchandising. Using all these factors I will be promoting my new product.
Place:- The product will be launched nationally in the U.K. The product will be placed in supermarkets, grocery stores, hotels, restaurants, canteens, retail shops, etc. Once the product is well know and established I will launch it in Europe and then in Asian countries.
As from the above description of the 4 P's in my strategy I have used you can see my marketing strategy is well balance in terms of the fit of the 4 P's.
Useful module in the analysis
The most useful model used in my analysis was the Boston Matrix. The influences of growth and market share have been brought together into a matrix products are labelled according to their likely impact on an organisation's resources. The Boston Matrix emphasises the need for a balanced portfolio of products if an organisation is to grow and be self-sufficient in resources. Once the portfolio has been established it shows that there are four basic strategies for each product they are build, hold, harvest and diverse
Limitations of Boston Matrix
Limitation of this module is that the growth share of analysing product portfolio disputes the simplistic assumption that market share is always the key measure of products competitive position and that market growth is always the most important indicator of an industry's attractiveness. In particular it overlooks the large number of highly successful products which occupy niche positions in large markets and the diseconomies of scales are providing some services which weakens the value of a high market share
Limitations of Ansoff Matrix
It is used little in practice. Some managers have not heard of them, other do not understand them and some have tried them and found them wanting as management techniques. The tools are frequently misapplied and often too much is expected from them. They are intended as techniques which can help the product planning process, by providing ideas on the value on their own which can determine product strategy.
Pravin
Arichandra
