Some advertisers (e.g. cigarettes) use enigmatic words or images, which can take some time to understand. This helps prevent boredom and involves people more deeply in the message. On the other hand you can also risk obscuring the actual product itself.
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Design/Lay-Out – Good design is important. Again, simplicity is the key. If you invest in the production of a good, eye-catching logo, it can be used over and over again in advertisements, like the Coca-Cola logo.
This will save on design costs in the future, especially if you also commission standard layouts from the designer, which can be used in a variety of situations. Also, standard designs will have a reinforcing effect on your audience.
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Appropriate Image – Do not adopt and inappropriate image. It is possible to produce advertising that is highly effective but reaches the wrong people or worse, gives the right people the wrong impression. This is a waste of money. A quality operation may choose a restrained, professional image. A creative consultant may look more arty. A discount store could benefit from direct and attention-grabbing adverts with the word “sale” made prominent.
Ansoff’s Matrix
Another person who has developed this theory further, by outlining a product-market mix, is Igor Ansoff. Ansoff’s Matrix looks not just at the management of a product portfolio but also widely at market developments and opportunities. The Matrix matches existing and new product strategies with existing and new markets.
This is an example of an Ansoff’s product-market matrix.
The Matrix suggests five alternative marketing strategies that hinge upon whether the product is new or existing and whether the market is new or existing.
The five strategies are as follows:
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Consolidation – implies a positive and active defence of existing products in existing markets.
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Market Penetration – suggests a further penetration of existing markets with existing products. This will involve a strategy of increasing market share within existing segments and markets.
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Product Development – involves developing new products for existing markets.
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Market Development – entails using existing products and finding new markets for these. Better targeting, market research and further segmentation will identify these new markets.
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Diversification – will lead to a move away from core activities. This might involve some form of integration of production into related activities.
(Here I would put my name and
address)
The Coca Cola Company
Coca Cola Enterprises LTD
Uxbridge
UB8 1EZ
1st September 2001
Dear Sir/Madame,
I am a student at Buttershaw High School, in Bradford, currently studying Business, and as part of this course, I am required a Marketing assignment. The aim of the assignment is to create a new product in the market.
So far in my assignment, I have decided to bring out a new flavoured Fanta out. I have been on your Coca-Cola web page and the information has been really useful, but I would also like some information about the product, Fanta, itself. I hope you could help me out.
I would be grateful if you could provide me with the following information; like how you decided on a price for them; some more statistics, please, on Fanta; how much you sell in a year; advertisement methods; posters if possible and labels as well as tops of each Fanta bottle.
It would be really grateful if you could provide me the information listed above. It would also be grateful if you could add some extended information about the product, Fanta, which I might have missed out.
Thank you.
Yours Sincerely
Nazima Hussain
(This is a template of the actual letter that I have sent to The Company).
Product Packaging
Introduction
Packaging is an important component of most products. Whatever products you sell, packaging is essential to ensure that products arrive at their destination without damage. Packaging is also used to establish brand image and to provide essential information about products
You also need to be aware of environmental issues such as packaging waste and recyclable packaging. At the most basic level, the packaging needs to adequately contain and protect the product. It also needs to allow for easy handling and storage.
Transforming Resources
The illustration below shows how manufacturing operations convert inputs into finished outputs.
Coca-Cola’s bottlers and canners are concerned with a range of processes involved in transforming resources into the bottles and cans of drink that we are familiar with.
There is a difference between transforming resources and transformed resources:
- The transforming resources are the managers, employees, machinery, and equipment used by The Coca-Cola Company and its franchisees.
- The transformed resources are the materials (the cans, bottles, liquids, etc.) and the information, which are processed to create the finished product.
Packaging at Coca-Cola
For many years, Coca-Cola was produced in glass bottles. Because of the high cost of distributing bulky bottles, they had to be manufactured close to where the bottling took place. Today, this is no longer so important since new packaging methods have revolutionised the process.
Advanced bottling and canning technology makes Coca-Cola cans and bottles very light but extremely strong. The Company has invested a lot of time and money in research and development to ensure the most effective life cycle impact of its packaging.
By using the minimum quantities of materials in packaging, the cans and plastic bottles are simple to crush or to reprocess at the end of the initial life cycle.
What Sort of Packaging Do You Need?
The nature of the product will determine the level of packaging. Every product will need some sort of tertiary packaging for transit such as pallets or corrugated boxes. Some products will need secondary or grouped packaging whereby products are packed together in multipacks or in dispensing units to meet market requirements.
Finally, some products, particularly perishable items will require primary packaging, which includes product details, instructions for use, etc. Whatever the requirements, make sure the choices complement each other, for example, strong primary packaging can be transported using less robust tertiary packaging.
If I were to package my product then I would use also use primary packaging, and transport it in tertiary packaging.
Environmental Issues
Environmental issues are very important to the packaging industry. The main idea behind it all is to encourage an environmentally friendly approach to packaging. Examples of environmental initiatives include:
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Packaging Innovation – Packaging is a key point of differentiation and a source f competitive advantage for Coca-Cola. However, it is not simply designed to be distinctive and attractive. Customers and consumers must have confidence in the environmental integrity of the packages offered.
In 1991, Coca-Cola pioneered a plastic soft drink container made with recycled content – the first of its kind in the world. Two years later, another breakthrough was achieved with the introduction of a ‘multi-layer’ package, which sandwiches recycled material between virgin plastic. This package is now available in a number of markets.
Consumers have responded enthusiastically to recycled-content bottles as an affirmation of the recycling actions they take at home. This comes as no surprise – Coca-Cola has used aluminium and steel cans and glass bottles containing recycled content for many years.
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Source Reduction – Coca-Cola Great Britain has led the soft drink industry with a source reduction process known as light weighting. Over time, Coca-Cola has significantly reduced the amount of raw materials needed to produce packaging.
In 1993, for example, the company shaved over four millimetres off the necks of aluminium cans, reducing the company’s aluminium usage in the US alone by estimated 20,000 tons per year.
In addition to making lightweight primary packaging, the company also looks for opportunities to reduce the raw materials used to make shipping cases, ingredient bins, and other secondary packaging.
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Education – in conjunction with the overall aim of providing education and training, Coca-Cola has provided a range of materials covering environmental issues, whether independently or with other organisations.
These include a comprehensive environmental guide for schools, produced by the RSPB with the Council for Environmental Education; recycling packs, with Waste Watch; and packaging texts through the Industry Council for Packaging and the Environment.
In addition, The Coca-Cola Youth Foundation sponsors Eco-Schools, organised in this country by Going for Green.
Manufacturing Coca-Cola
Introduction
Primarily, Coca-Cola (and other soft drinks by The Company, e.g. Fanta) is manufactured by franchisees that are the world’s leading bottling and canning companies. The Coca-Cola Company strictly controls this franchise business.
Soft drinks manufacture is a competitive business. Manufacturing techniques are continually improved. This helps meet the highest quality standards for its products using the most cost effective production techniques. For example, very small changes in the shape of the can could save a canning factory millions of dollars in production costs.
Manufacturing Coca-Cola
Introduction
Primarily, Coca-Cola (and other soft drinks by The Company, e.g. Fanta) is manufactured by franchisees that are the world’s leading bottling and canning companies. The Coca-Cola Company strictly controls this franchise business.
Soft drinks manufacture is a competitive business. Manufacturing techniques are continually improved. This helps meet the highest quality standards for its products using the most cost effective production techniques. For example, very small changes in the shape of the can could save a canning factory millions of dollars in production costs.
Manufacturing Coca-Cola
Introduction
Primarily, Coca-Cola (and other soft drinks by The Company, e.g. Fanta) is manufactured by franchisees that are the world’s leading bottling and canning companies. The Coca-Cola Company strictly controls this franchise business.
Soft drinks manufacture is a competitive business. Manufacturing techniques are continually improved. This helps meet the highest quality standards for its products using the most cost effective production techniques. For example, very small changes in the shape of the can could save a canning factory millions of dollars in production costs.
The production of Coca-Cola involves two major operations:
- Creating the packaging material
- Bottling and canning the finished drink.
To produce the world’s best-known product, The Coca-Cola Company has to employ the highest quality processes and establish standards, which guarantee the production of a standardised product, which meets consumers’ high expectations each and every time they drink a bottle or a can of Coca-Cola.
In order to guarantee these standards the Company has had to develop a close relationship with its franchisees based on a mutual concern for quality. Total Quality Management lies at the heart of this process involving a continuous emphasis on getting quality standards right every time and on continually seeking new ways to improve performance.
Guaranteeing the Quality of the Product
The manufacture of Coca-Cola is carried out by a set of processes called continuous flow production. On a production line, a process is continually repeated and identical products go through the same sequence of operations.
Continuous flow production takes this one step further by using computer-controlled automatic equipment to produce goods 24 hours a day.
The Company and its franchisees use Total Quality Management procedures that encourage everyone in the plant to think about quality in everything they do.
Every employee sets out to satisfy customers and places them at the heart of the production process. By continually seeking to improve every aspect of production, employees are able to eliminate problems.
Throughout the production process, quality control personnel monitor the product and take s test samples. To guarantee that there are no errors, quality control inspectors take statistically selected samples at the end of the production line.
Using chemical analysis, these inspectors can guarantee that the product meets the exact specifications; they also check that there are no faults in the packaging. A ‘fill height detector’ uses an electronic eye to ensure that the cans are filled to the right quantity. Cans that are not properly filled are rejected.
Preparing to Fill Cans
Cans are delivered in bulk to a canning plant. At this stage the cans are shaped like an open cup ready to receive the liquid drink. They are not fully formed because the ring pull end has still to be fitted.
After they have been inspected to check that there are no faults, each can goes through a rinsing machine to make sure it is clean and ready for filling.
Preparing the Drink
Coca-Cola consists of a concentrated beverage base and a liquid sweetener, which are combined to form the syrup from which the drink is made. The Company ships the concentrate to bottling and canning plants where the franchisees mix it with sugar and local water.
The water is passed through filters to make sure it is absolutely pure. Carbon dioxide, which makes it fizzy, is also delivered to the canning plant where it is stored and then piped into the manufacturing process through a carbonator and cooler
The Company specifies what equipment franchisees will use to carry out these processes. Samples are taken regularly for chemical analysis, and staff make frequent spot checks to ensure that plants are maintaining the Company’s standards of cleanliness and quality.
The Company provides its franchisees with the most up-to-date technology available and many of them use the latest computer technology and statistical process control methods.
Filling the Cans
A rapid filling process combines the packaging and the finished drink. Every minute hundreds of cans pass along an automated production line and are filled with a precise amount of Coca-Cola.
As the cans move along the production line, they are seamed to include the ring pull end and produce the finished can. The ends are inspected to make sure they are smooth and do not have any gaps or leaks.
An individual code is stamped on the cans so that each one can be traced back to the point and time of production. A date code ensures product freshness. The cans now look like those you will see in the shops.
Packing the End Products into Cases
The canners then prepare the cans for distribution to retailers such as supermarkets, shops, and garages. A machine called a case former creates the casing that protects the cans as they are sorted onto pallets
The cans are sorted temporarily in a warehouse before large distribution trucks collect them.
Bottling Coca-Cola
The bottling process, whether in glass or PET (plastic), is very similar. Each plastic bottle starts as test-tube size and is blown up like a balloon into the final bottle shape.
Whereas franchisees receive cans that already have the logo and any promotional details on them, bottlers apply the labels from large reels once the bottles have been formed.
At the end of the bottling line, bottles are automatically sealed with a cap immediately after they have been filled.
Just-in-time
Just-in-time is when supplies for manufacturing processes are received just as they are needed, and the end product reaches the consumer just when it is wanted. Just-in-time reduces the need to carry large stock of materials or finished goods helping cash flow.
So in this case, canners and bottlers process vast quantities of materials each week. Receiving the raw materials and delivering the finished products involves a complex of actions.
The ideal solution is to make sure that inputs for the process arrive ‘just-in-time’ so they can be transformed into a finished product ready for transportation ‘just-in-time’ to meet the needs of the retailers.
At modern canning plants, the can maker is often located in an adjoining facility, with delivery through a ‘hole in the wall’ operation. The packagers are involved in sophisticated supply chain networks with the supermarket chains and other outlets to ensure that this process runs smoothly.
Canners and bottlers must ensure that they do not build up large stockpiles of cans waiting to be sold but they must also make sure that deliveries are not late. This is where they benefit from advanced information technology that rapidly relays figures about the demand for Coca-Cola.
For example, this demand usually rises in periods of hotter weather so the packagers need to plan increased production.
Canners and bottlers work closely with The Coca-Cola Company and other suppliers to provide a smooth running supply chain so that consumers are always within ‘an arm’s reach of desire’ and can always buy a drink when they want one.
Performance Feedback to Canners and Bottlers
In addition to each canner or bottler’s own quality assurance procedures, The Coca-Cola Company tests sample bottles and cans from each market regularly.
The results are then reported back to the packagers. This feedback helps The Coca-Cola Company and the franchisees to work together and identify opportunities for improvement.
Franchisees undergo constant training and retraining in quality assurance, and can always ask for help and advice about ongoing improvement.
Qualitative Data
With this technique, small groups of customers, selected according to a detailed profile, spend an hour or more with an experienced researcher discussing specific relationship and service issues and responding to predefined statements. Properly used, i.e. with participants properly selected, and the discussion conducted by a professional researcher and reported comprehensively, groups will give you a detailed understanding of how a cross-section of customers feel about these issues.
They also offer an opportunity to deal with subjective evidence in a positive and constructive way. If you are in a hurry to confirm an idea or identify a problem, groups probably provide the quickest turnaround time, often as little as two to three weeks. An additional benefit is that you really care and want to listen to their views, a feeling that is enhanced by their receiving payment for participation or – better – gifts of your products or services.
However, groups only give you the views of a few people, tens rather than the hundreds or thousands needed for a representative sample. So they won’t:
- Give you a continuous audit of standards and trends in their achievement
- Provide a benchmark against which to set relationship management standards
Groups may not be popular with staff if their positive benefits are not sold properly. Researching individual customers is one thing, getting them together to talk about your company and (as staff may see it) their role in it is another, so staff sometimes do resist helping recruit customers.
Quantitative Research
This involves running detailed questionnaires on many respondents. Questionnaires are usually structured, i.e. with carefully formulated questions mostly requiring specific answers, although room may be left for a broader range of responses. In some cases, e.g. for senior decision makers buying business services, questionnaires may be unstructured, with the interviewer working through a checklist of more open-ended questions. Questionnaire design is usually based on the results of group research, the last being used to identify the language your customers use in talking about you and the relationship you provide, and their key concerns.
This approach should be used if you want a large enough sample to derive a statistically valid result. If qualitative information is required, this can be drawn out through asking customers more detailed questions about why they respond in particular ways to particular questions.
Mail questionnaires have these advantages:
- They are more economical and convenient than personal interviews
- They avoid interviewer bias
- They give people time to consider their answers
- They can be anonymous
And these disadvantages:
- The questions need to be very straightforward if the response is to be valid
- Answers must be taken as final
- Respondents see the whole questionnaire before answering it
- It is impossible to be sure that the right person answers it
- Many recipients may not respond
- Non-response may lead to bias in results, because those not responding are different in some way from those responding (e.g. they may be less loyal customers)
- The higher the response rate, the more valid the result. But the only way to check this is by chasing up a sample of respondents
Response can be increased by:
- Using a covering letter explaining what the survey is doing, how the respondent’s name was selected and why the recipient should reply
- Telling the respondent the benefits of replying
- Explaining why the survey is important
- Enclosing a stamped addressed or business reply envelope
- Giving a premium for responding
- Following up
If the questionnaire is properly designed and administered to a representative sample of customers regularly, quantitative research will give a detailed and continuing view of:
- Perceptions: what relationship customers think they are actually in
- Satisfaction levels: how satisfied are we with it
- Tolerance: what service levels customers will tolerate within the relationship, and what level they won’t
- Desires: what customers would really like and where relevant, what they’d be prepared to sacrifice to obtain it (price, user costs, etc)
Analysis of responses will show how these are related to each other, and should also provide the key to:
- Relationship design, when analysed together with customer characteristics and ‘grossed-up’ to provide a picture of service demand for the whole market
- Standard setting
The Boston Matrix
Examining the life cycle of a product helps us to appreciate that products go through various phases from infancy to decline. Markets and their structures are changing all the time.
In recent years ‘niche marketing’ had been popular, particularly with the emergence of branding. Today, many organisations have spotted opportunities through the use of the Internet and other technologies to develop their markets.
Market share is important for business organisations. The Boston Consultancy Group (GCP) has argued that the faster the growth of a particular market, the greater the cost necessary to maintain position.
In a rapidly growing market, considerable expenditure will be required on investment in product lines and to combat the threat posed by new firms and brands.
GCP developed ‘The Boston Matrix’, which relates closely to product life cycles. They identify four types of products in an organisation’s portfolio.
This is an example of a Boston Matrix.
Now I am going to explain the four types of products.
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Stars are products that have successfully reached the growth stage in the life cycle. Although these products will also require a great deal of financial support, they will also provide high cash returns. On balance they will provide a neutral cash flow.
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Problem Children are products that have just been launched. This is an appropriate name because many products fail to move beyond this phase. Such products are often referred to as question marks.
Is it possible to develop these products and turn them into the stars and cash cows of the future? It might be but, first, they will require a lot of financial support and this will represent a heavy commitment.
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Cash Cows have reached the maturity stage in their product life cycle and are now ‘yielder’. They have a high market share in markets that are no longer rapidly expanding.
Because the market is relatively static, they require few fresh injections of capital; for example, advertising and promotion may be required to inject a little fresh life from time to time.
However, the net effect is of a positive cash flow. Cash generated by the cash cows may be used to help the question marks.
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Dogs are products in decline. These have a low market share in a low growing or declining market. As they generate a negative cash flow, they will usually be disposed of.
To maintain an effective portfolio development, it is important to have a balance of products at any one time. An organisation will require a number of cash cows to provide its ‘bread and butter’.
At the same time, it is important to develop the cash cows of the future by investing in the problem children (question marks). Fortunately, the stars should pay their own way. It is also important to identify the dogs and cut them out.
Products in the top half of The Boston Matrix are in the earlier stage of their product life cycle and so are in high growth markets. Those in the lower half of the matrix are in the later stages and so are in markets where growth will have slowed down or stopped.
What Is Marketing
Introduction
Marketing activities involved in getting goods from the producer to the consumer. The producer is responsible for the design and manufacture of goods. Early marketing techniques followed production and were responsible only for moving goods from the manufacturer to the point of final sale. Now, however, marketing is much more pervasive. In large corporations the marketing functions precede the manufacturer of the product. They involve the market research and product development, design, and testing.
Marketing concentrates primarily on the buyers, or consumers, determining their needs and desires, educating them with regard to the availability of products and important product features, developing strategies to persuade them to buy, and, finally, enhancing their satisfaction with a purchase.
Marketing management includes planning, organising, directing, and controlling decision making regarding product lines, pricing, promotion, and servicing. In most of these areas marketing has complete control; in others, as in product-line development, its function is primarily advisory. In addition the marketing department of a business firm is responsible for the physical distribution that will be used and supervising the profitable flow of goods from the factory or warehouse.
Tailoring The Product
Merchandise generally similar in appearance, that is, in style or design, but varying in such elements as size, price, and quality is collectively known as a product line. Product lines must be intimately correlated with consumer needs and wants.
In order to develop a line effectively, marketing research is conducted to study consumer behaviour. Changing attitudes and modes of living directly affect the saleability of products. For example, the trend for informal dress has changed clothing styles dramatically. Also, a high-income economy triggers a demand for products very different from those selected in a declining business cycle.
The availability or lack or disposal income, meaning income over and above that spent for basic necessities such as food, shelter and clothing, affects the buying pattern for so-called luxury products. Similarly, the purchase of durable or long-lived goods, such as refrigerators, cars, and houses, may be deferred when the economy is declining and may increase rapidly in periods of prosperity. Staple products such as, food and clothing, tend not to be seriously affected by the business cycle.
The cycle of products require careful study. Virtually all product ideas lose in time the novelty that initially attracted purchasers of the merchandise. Manufacturers may also accelerate the obsolescence of a product by introducing new, more desirable features. Consumers today are conditioned to expect product innovations and tend to react favourable to new features. This has an important bearing on the usable life deliberately designed into a product, which in turn has a significant effect on the costs to the manufacturer and ultimately on the price to the consumer. Competition between manufacturers of similar products naturally accelerates the speed of changes made in those products.
Pricing The Product
The two basic components that affect product pricing are costs of manufacture and competition in selling. It is unprofitable to sell a product below the manufacture’s production costs and unfeasible to sell it at a price higher than that at which comparable merchandise is being offered. Other variables also affect pricing. Company policy may require a minimum profit on new product lines or specified return on investments, or discounts may be offered on purchases in quantity.
Attempts to maintain resale prices were facilitated for many years under federal and state fair-trade laws. These have now been nullified, thereby prohibiting manufacturers from controlling the prices set by wholesalers and retailers. Such control can still be obtained if the manufacturers wish to market directly through their own outlets, but this is seldom feasible except for the largest manufacturers.
Attempts have also been made, generally at government insistence, to maintain product-price competition in order to minimise the danger of injuring small businesses. Therefore, the legal department of the marketing organisation reviews pricing decisions.
Promoting The Product
Advertising, personal (face-to-face) selling, and sales promotion are the methods of inducing people to buy.
The primary objective to advertising is to resell the product, that is, to convince consumers to purchase an item before they actually see and inspect it. Most companies consider this function so important that they have allotted extensive budgets and engaged special advertising agencies to develop their programme of advertising.
By repeatedly exposing a consumer to a brand name or trademark, to the appearance or package of a product, and to special features of an item, advertisers hope to incline consumers toward a particular product. Advertising is most frequently done on television, radio, and billboards; in newspapers, magazines, and catalogues; and through direct mail to the consumers.
In recent years, advertising agencies have been joining forces to become giant agencies, making it possible for them to offer their clients a comprehensive range of worldwide promotion services.
As the cost of personal selling has risen, the utilisation of salespeople has changed. Clerks complete simple transactions. Salespeople are now used primarily where the products are complex and require careful explanation or customised application. For example, in the typical car sale, the salesperson’s activities generally centre on negotiating price and arranging terms of payment; the actual product has usually already been resold through advertising
The purpose of sales promotion is to supplement and coordinate advertising and personal selling; this has become increasingly important in marketing. Often it is necessary to work close with the dealers who handle the manufacturer’s products if the products are to move satisfactorily. Displays must be supplied and set up, and cooperative advertising programmes may be worked out.
Store clerks should be trained in knowledge of the manufacturer’s products. Often the manufacturer must provide the services such as installation and maintenance for a specified time period. On the consumer level, sales promotion may involve special inducements such as discount coupons, contests, a premium with the purchase of a product, or a lower price on the purchase of a second item.
