Pepsi and Coca-Cola Companies in Australia - Essay Example

?Executive Summary (ES not incl. in word count) Consumer is the person who buys a product for its own use. If a person purchases a good or service and it is consumed by either that person or his family such an individual is called a consumer in its entirety. Similarly, consumer behavior is the action taken by purchasing and consuming the product. The paper will discuss two brands; Pepsi and Coke in lieu of Australian background. It will throw light on consumer behavior theories and their application in practice to the marketing and branding of Pepsi and Coke in Australia. Various theories will be cited and discussed and then their practical application to Pepsi and Coke will be discussed. Introduction:  CONSUMER BEHAVIOR Consumer behavior is an enigma for marketers all over the world. Countless number of strategies and approaches has been designed by marketers to understand the reasons behind why buyers choose a certain product over another similar product. However, a concrete model or method describing consumer behavior which guarantees a positive response from the buyer in the form of purchases or repeated purchases is yet to be formed. Even consumers themselves do not know what factors influence them towards making a certain buying decision. Broadly it can be said that consumer purchases are influenced strongly by cultural, social, personal and psychological characteristics. 2. Company overview & history 2.1 Company 1 The Coca Cola Company is one of the world’s largest beverage companies which manufactures, distributes and markets non-alcoholic beverages and syrups. The company is popularly known for its premium brand, Coca Cola, and therefore also shares the same name. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 400 brands in over 200 countries or territories and serves 1.5 billion servings each day. (Press Centre: Coca-Cola) The mission stated by Coca Cola declares its purpose as a company and serves as a standard against which its actions and decisions are weighed. To nourish the world To inspire moments of optimism and happiness... To create value and make a difference. (Our Company: Coca-Cola) The ultimate objectives of its business strategy are to increase volume, expand its share of worldwide nonalcoholic ready to drink beverages sales, maximize its long-term cash flows, and create economic value added by improving economic profit. (Khan) In Australia, Coca Cola Amatil is the company which has been licensed to bottle and distrubute Coca Cola company soft drinks and beverages in other countries. It is considered as the largest non-alcoholic beverage company within the Pacific Rim. Coca Cola Amatil has expanded itself in the last six years. It has expanded itself to include a wide range of products comprising of water, fruit juices, energy drinks, sports drinks, vegetable products, coffee and water. In August 2006, it ventured into the business of spirited beer brands. It ventured into a joint business with SABMiller and from April 2007, it became the seller and distributor of the products of Maxxium. 2.2 About Pepsi Co Pepsi Co is a Fortune500 company. It is a global American corporation with its headquarters based in Purchase, Harrison and New York. It has vested interests in manufacturing, distribution and marketing of grain based snack foods, beverage s and other products. The company was found in 1965 when the Pepsi Cola Company and the Frito Lay Company were merged. PepsiCo has immensely expanded itself and its product range since then. It now has an expanded namesake product Pepsi and various other beverage brands to its credits. The company has been immensely successful in terms of revenue generation. In 2009 along PepsiCo’s product lines generated sales were 1 billion dollars each and the company products were distributed in 200 countries round the globe. The net revenues across the globe were $ 43.3 billion and based on these net revenues PepsiCo was named as the second largest food and beverage business in the world. In America it is considered as the largest food and beverage business. The CEO of PepsiCo since 2006 has been Indri Krishnamurthy Nova. He has employed over 3 laky people world as of 2010. Schweppes has been licensed for the distribution of Pepsi in Australia. It is considered to be one of the best known and most loved drinks of that region and the world. Today PepsiCo is considered as one of the largest beverage companies in the world. 3. Product-brand overview 3.1 PRODUCTS of Coca-Cola Coca Cola Company offers a portfolio of more than 3300 products in over 200 countries. (Our Company: Coca-Cola). There are different brands of the Coca Cola Company, which are currently in use throughout the world. This company not only deals in the carbonated drinks but also other drinks. While launching its product, the marketing team considers the culture of the country. (Khan) MAJOR BRANDS OF COCA COLA COMPANY Coke Sprite Fantail Diet coke Coke classic Minute Maid Kinsley These are some of the most widely known brands that are commonly available all over the world. In 2009, Coke Zero was launched and it was the most successful product launch and within a span of few months, the drink was widely available in more than 130 countries. 3.2 Brand 2 In Australia, Schweppes manufactures and distributes Pepsi. Products that it is distributing in Australia include the following: 1. Pepsi 2. PepsiMax 3. Pepsi Light 4. Pepsi Light Caffeine Free 4. Discussion of Consumer Behaviour theory 4.1 Social Influences on Consumer Behavior - The cultural Influence Consumer Behavior refers to the entire process of selecting, purchasing and consuming goods and services for his own satisfaction by the customer. Consumer behavior is dependent on various factors. The consumer selects the commodity that he wants to purchase and then makes his purchasing decision, depending on the amount of money that he can spend on the commodity. There are various other social, cultural, environmental and personal factors that influence consumer buying decision. Some of these factors are discussed here: Cultural Factors: Culture is the set of basic values and perceptions that are shared by a group of people, these behaviors are learned from one’s family or other established institutions. Every group has its own unique culture around which the member of that society learns to live and develop. It is the marketer’s job to study the culture and its shifts in order to discover new products that might become the need for people over a period of time Cultural factors such has buyer culture, sub-culture and social class have a major impact on consumer buying decision. A product that is very successful in the West may not be a guaranteed success in the East, owing to cultural differences and eventually preferences. Culture is a part of every society and represents the norms and values of that society. The influence of culture on buyer behavior varies tremendously from one country to another. Hence, marketers have to be very careful when doing their market research on different groups and regions. 4.1.1 Sub-Culture: Subculture is a smaller group of people within a bigger culture who are united in their life experiences and situations. Mostly subcultures are formed on geographic, racial and religious grounds which constitute of important market segments. With respect to each subculture the marketer often designs or modifies its products to meet their demand. The marketer, when marketing the product, considers the qualities or traits that dominate the particular subculture and uses that to promote its product effectively. A particular culture of a region or even a country is further divided into subcultures. Sub-culture is shared by particular group of people who have the same value systems based on common life experiences. There can be different sub-cultures on the basis of religions, nationalities, racial groups and geographic regions. For instance, there could be African consumers, African American consumers and Hispanic consumers. Marketers need to come up with products which are according to the needs of a particular sub-culture group. 4.2 Social Class and Consumer Behavior: Social class is a feature of every society present in a relatively permanent order, members share similar values, interests and behaviors therefore they are grouped together. It is a misconception that social class is characterized by income only, whereas this is not true. Apart from income, occupation and education are also important determinants. Social classes depict similar choices in clothing, automobiles, leisure activities, etc. Marketers further subdivide social classes into lowers, working class, middle class and uppers. These are society’s permanent and ordered divisions in which members share similar values, beliefs and ideas. This is important to the marketers because the consumer buying behavior of a given social class is similar. The social class is determined by age, occupation, income, education and various other variables. 4.3 Social Factors and their Influence on Consumer Behavior – The family; Reference groups; Role and Status: Groups and social networks have direct influence over the choices people make; therefore its power cannot be undermined by the marketers. People are often influenced by reference groups to which they do not belong which results in aspirations and hopes. Marketers expose the individuals to new lifestyles, behaviors and attitudes that in turn affect the consumer’s choice when making buying decisions. Mostly marketers employ the use of opinion leaders who because of their charismatic personality, famous profile or special skills possess more power of influencing people. For this reason celebrities and other famous people are appointed brand ambassadors as marketers are aware of their mass appeal. In today’s world social networks are an effective means to promote products on and build interactive customers relationships. Instead of using the conventional one way commercial method of advertisements, marketers are using these networks to forge interaction with their consumers.. There are various social factors that influence the buying behavior of consumers as well. Some of the most important social factors include: 1) Reference groups 2) Family 3) Role and Status Reference Groups: Reference groups influence a person’s attitude and behavior as well. The overall impact of reference groups varies across products and brands. For instance celebrities as endorses have an enormous affect on consumer buyer behavior. Similarly opinion leaders also influence consumer buyer behavior. Family Family members can strongly influence behavior as they are perceived to be the most important when it comes to buying decisions. This is the reason why marketers consider the roles and relationships between family members when marketing their products. Buying roles change as consumers evolve over time. Where, before parents or siblings have been providing advices on what to buy and what not to, with time that role tends to be filled by a person’s spouse. If the buying decision of a particular product is influenced by the wife then the marketers will try to target the women in their advertisement. Buyer behavior is also affected by family members. Hence it is important for the marketers to know the relative roles of wife, children and husbands. If the buying decision for a particular product is dependent on wife within the family then marketers will have to come up with ways to target women. (Kotler) • Roles and Status A society comprises of a multitude of roles and statuses. Each person in the society commands a certain role and status. For instance a working women, enjoys two roles: of a mother and of an employee. Thus her buying decisions will be influenced by her role and status as well. Marketers need to know the roles and status that make the society to come up ways to target them. (Kotler) Roles and status are the person’s position in a group. A role consists of the activities that the person is expected to perform such as at home a person is expected to fulfill the role of a son, brother or father depending on the people around him. Each role gives the person a status which reflects the society perception towards that role. People mostly choose products according to their roles and status. A working woman would buy the kind of clothing that reflects her role and status. Therefore it is these roles and status that the marketer should focus on. 5. Application of Consumer Behaviour theory to brand 5.1 Analysis & discussion of The Role of Social Influences-The Culture on Coke As discussed before culture factors can have a strong impact on consumer buying behavior. These factors need to be kept into perspective when marketing a product in another country. Coca-Cola is present in over 200 countries world-wide. The culture of every country varies immensely and hence marketing for each country needs to be tailored differently. In Australia, there is this growing awareness amongst people for healthy drinking water, healthy drink and growing diet consciousness amongst the youth of that population. Coca Cola tailored its market according to the Australian culture and perception of the youth in that country. It came up with Coca Cola Zero or Coke Zero and its water product Mount Franklin. There were various reasons behind the emergence of these products. The Australian lifestyle had seen a major shift which led to the growth of this category. The primary reason for change were: 1. People are moving towards healthier lifestyle; some even moving away from carbonated drinks. 2. Growing diet consciousness leading to rising demand for Kilo Joule free beverage options 3. The willingness of the consumers to invest into these drinks. Even though Coke Zero campaign was an initial success but it was later subjected to immense ethical criticism. This demonstrates the ethical consciousness within Australians.It came out in the open that the product was being promoted by a fake front group. The campaign comprised of outdoor graffiti and spamming on online grounds. It was soon mentioned that all was fake. After the campaign was exposed, it was assailed as misleading and the Zero Coke Movement was established there on. 5.2 Analysis & discussion of Social Factors and their Influence on Consumer Behavior – The family; Reference groups; Role and Status to Pepsi Families, reference groups and the role and status of people can also impact marketing. It is important to take into account these factors before marketing a product. In Australia, celebrity figures make a major impact on consumer buying decision process. Celebrity figures from various fields for instance sports, music, films etc have been repeatedly used to endorse various products. In the reference group niche, in Australia celebrity figures like Nicole Kidman, Kylie Minogue and Steve Waugh have been repeatedly seen endorsing Pepsi. This is because of the huge impact that this reference group has on consumer behavior. Pepsi Marketing in Australia has been successful across the board. It is a popular drink amongst all circles of the population and precisely why the working class of Australia have found major vested interests in this drink. Australia was the second major market for the launch of Pepsi’s “Hit Refresh Campaign”. Through this campaign , Pepsi was marketing through huge formatted bill boards, in bus shelter, on street furniture and bus sides. Marketing was both outdoor and indoor and TV ads were linked with MTV, reflecting Australian population and the way they get influenced by music. Another remarkable move was the decision by Pepsi to drop its Super Bowl TV advertising slot in favor of a community based marketing approach aimed at creating dialogue. This signifies the influence of family circles and social networks on Australian consumers and their thought process. 7. General Discussion (implications for the brands of using these theoretical approaches, the benefits they strategically obtain, as well as commenting on why they differ in their approach). As can be seen from the discussion above, both brands make use of socio-cultural factors for marketing their brands. Most of their brand promotions rest on the environment around them. Coca-Cola uses the cultural factors to influence its marketing and branding. This helps Coke to strategically align its branding and marketing goals with the cultural influences and inhibitions in Australia. This speaks of why it chose to align its strategy with the cultural influences there. Same with Pepsi, Pepsi relied on achieving customer orientation. 8. Conclusion Marketing strategies that focus on customer orientation and differentiation may be just as successful as forming strategies based on branding or product features. 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