The Concept and Process of Marketing (Coca-Cola case) - Essay Example

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The Concept and Process of Marketing September 14, Table of Contents Table of Contents The Concept and Process of Marketing 1 1 The Concept and Process of Marketing 1 Table of Contents 2 Table of Contents 2 1.1 Introduction 3 1.2 Consumers Needs and Wants 4 1.3 Customer’s Value, Satisfaction and Exchange Relationship 4 1.4 Evolution of Marketing, Marketing Orientation, Customer Orientation and Competitor Orientation, Efficiency and Effectiveness 5 1.5 Limitations of the Marketing Concept and Other Strategies 6 2.0 Market Audit of Coca-Cola Company 6 2.1 SWOT Analysis 6 2.1.1 Strengths 6 2.1.2Weaknesses 7 2.1.3 Opportunities 7 2.1.4 Threats 8 2.2.0 PEST Analysis 8 2.2.1 Economics 9 2.2.2 Social 9 2.2.3 Technology 9 2.3.0 Marketing objectives of Coca Cola 9 2.3.1 Target market and Market mix for Coca – Cola Company 10 2.3.1.1 Product. 10 2.3.1.2 Price 10 2.3.1.3 Place 10 2.3.1.4 Promotion 11 2.32 How Market Orientation can yield competitive advantage for Coca cola. 11 2.33 How Coca-Cola can make use of relationship marketing 11 2.34 Desired quality service 12 2.35 Service and customer care 12 2.36 Customer retention 12 2.37 Consumer profitability. 12 2.38 Narrow marketing focus 13 References 14 1.0 The Concept and Process of Marketing 1.1 Introduction The marketing concept involves an attempt by a business to establish the consumer’s requirements with an intention to deliver goods and services which meets the consumer’s expectations. As Silk (2006, p.7) observes marketing refers to all the business efforts geared towards creating and exchanging value with the customers. In essence, the marketing process is the link between the producer and its consumers. However, the marketing process is not confined to the transaction or exchange aspect of the producer-consumer’s relationship. Instead it covers even the social aspect of such a relationship before, during and after an exchange have taken place. In the process, the business cultivates the consumers trust and loyalty. In this respect O’Shaughnessy (1992, p.4), refers to marketing as all the activities that links up the organizations with the buyers users, sellers and all other entities that influences its products. Therefore, it is clear that marketing entails not only ensuring the products corresponds with the consumer’s needs, but the business gains social and political acceptability. Marketing can also be defined as a process through organization creates effective channels of exchanging of goods and services with their customers, through coordination of the four P’s of marketing, which are product, price, place and promotion. Marketing therefore involves identifying a product that can satisfy a given consumer need, determination of its price, determination of an effective distribution channel for the product to reach the customer, and finally designing ways to inform the potential consumers about the product (Wysong and Flores, 2008, p.54). 1.2 Consumers Needs and Wants Consumers are motivated to buy goods and services by their specific wants and needs, a consumers needs are those items that every person requires for survivor such as clothes, food and shelters. The consumer’s wants refers to those items that a person would consider buying after fulfilling his or her needs, which may include a car, going for holiday among others. However, a want can easily translate into a need when a person desperately wants an item. However, Hartline and Ferrell (2010, p.184) warns that referring to needs as necessities is simplistic since the definition of a need is subjective. Therefore, in this respect, a need occurs when a consumer’s level of satisfaction is below the desired level while a want is a desire of a given product to cater for a need (Hartline and Ferrell, 2010, p.184). As stated earlier, a consumer will buy goods and services primarily to satisfy his or her wants and needs. Therefore, it is prudent for a business to understand the needs, which can be satisfied by its products. As Hartline and Ferrell (2010, p 184) explains, a business that establishes and understands the basic needs met by its product, is able to stratify markets as per the needs. Furthermore, such a business can design marketing strategies that are relevant and effective to a given market segment. The marketing strategies designed this way can easily transform needs into wants for a given product. Though there are, products that can be marketed based on fulfilling needs in most cases marketing strategies should focus on meeting wants rather than a need. 1.3 Customer’s Value, Satisfaction and Exchange Relationship For a customer to commit himself or herself to buy a product there must be a set of benefits that he or she anticipate to derive from it. Consequently, the value attached by the consumer to a given product constitutes all the benefits anticipated as promised by the seller. Such value can be termed to as either objective or perceived value. The objective value includes all the benefits that a product offers even when they are not apparent to the consumer while perceived value is the benefits offered by the product from the consumer’s perspective (Silk 2006, p.152). On the other hand, customer satisfaction is an assessment by the consumer on a given product its consumption. If according to the consumer the product met his or her needs and wants as per the expectation, customer’s satisfaction is attained and possible repeat purchase may happen. Marketing processes are intended to create customer’s value and increase the level of customer’s satisfaction. To achieve this feat marketers have expanded their mandate from inducing the consumer to buy a product into cultivating a long-term relationship. 1.4 Evolution of Marketing, Marketing Orientation, Customer Orientation and Competitor Orientation, Efficiency and Effectiveness Marketing evolved after World War II there were more products and buyers could afford to be selective. Most customers wanted products that met their specified needs and chose them from many products in the market. These needs were not met immediately and companies started asking themselves what the customers wanted and how they could achieve it. This led to production of better products that as a result led to companies trying to woo customers to buy their products by marketing them (Berkowitz 2010, p. 13). Considering the increase in companies producing the same product, competition was experienced, and companies had to devise ways of countering it, through marketing orientation, which ensures that efforts are directed towards meeting the needs of the consumer. Competitor orientation evolved as firms started working towards being the best in the market. This led them into trying to get information on what their competitor are up to so that they can try to be better than them. While efficiency evolved from firms trying to reduce costs of marketing programs. It is a method of marketing where firms deliver marketing programs at the lowest costs possible. Effective marketing involves delivering the required results. It evolved from firms trying to deliver effective marketing programs without trying to reduce costs. 1.5 Limitations of the Marketing Concept and Other Strategies One major limitation is the sales concept where companies are just trying to make sales and can end up compromising the quality of their products. Companies should use societal concept where they put more emphasis on caring for the society’s wellbeing. 2.0 Market Audit of Coca-Cola Company Coca-Cola Company manufactures distribute and markets non-alcoholic beverages. With its headquarters in Atlanta Georgia Coca-Cola is one of the world largest players in the soft drink market with Coca-Cola as its flagship product. The company has growing in reaps over the years and intends to continue its expansion program, already the company operates in more than 312 countries. Over the years, the company has managed to stamp its authority in the ultra-competitive soft drink market. In the process, it has experienced success and failure in equal measure including the flopped attempt to venture in bottled water in UK. 2.1 SWOT Analysis 2.1.1 Strengths Coca-Cola is the market leader in soft drinks and its brand name has a worldwide appeal, moreover, its flagship product is recognizable in many parts of the world. Its logo is displayed on billboards, t-shirts and in an assortment of other items. Coca-Cola has adopted a unique bottling arrangement, which allows the company to operate globally ease. Furthermore, since local operators own the bottling plants the company is able to tap on the local knowledge and offer its product in different context. Therefore, in this arrangement it generates revenue by selling concentrate to the authorized bottlers. The company is also involved in social responsibility especially in sponsoring sports such as football in various parts of the world and other sporting events including the Olympic. By engaging the community, the company has continued to raise the profile and the company’s brand name. Its financial muscles have enabled the company to sustain a massive advertising campaign especially during festive seasons such Christmas. 2.1.2Weaknesses Coca-Cola products have been associated with health issues, among those that have dogged the company includes allegations of the addictive nature of Coca-Cola, its effect on the teeth of the consumers and a recent allegation that one of the components of its product may predispose consumers to cancer complications. As a world leader in the soft drink market, many upcoming competitors also target the company. Furthermore, its failed attempt in venturing into bottled water has blotted its otherwise good reputation. 2.1.3 Opportunities It is a world acclaimed brand, which makes it easy to be known in all corners of the world, translating to a big customer share. The trust and loyalty cultivated over the year offers the company an opportunity of introducing new products in the market since any product associated with Coca-Cola can be easily acceptable. The recognition of the Coca-Cola brands has aided the company wither away the effects of demand to use environmental friendly packages. Since Coca-Cola brand is trusted, change of package has not affected the customer’s altitude towards its product. 2.1.4 Threats Despite the company’s brand being popular globally, substitute poses a real threat. Such as tea, juices and Pepsi are among non-alcoholic drinks that are used as substitutes of Coca-Cola. The health issues, which have been cited relating to Coca-Cola products, may result in such substitutes eating into the company’s market. Coca-Cola Company can therefore apply the SWOT marketing strategy to improve its performance. This can be done through exploiting its strengths, specifically its strong financial resources and its popularity worldwide to expand its market in areas that it has not reached already. Weaknesses such as health issues should be addressed accordingly. For instance, Coca-Cola can choose to add vitamins and essential body minerals to its drinks, to raise its nutritional value, and also ensure that their drinks are free from any health hazards. Any opportunity that arises (like a possibility of introducing a new product or investing in a fresh market) should be exploited. 2.2.0 PEST Analysis Coca-Cola Company faces a threat from external environment, and this is because some factors outside the firm can have impact on performance, strategies and goals of the company 2.21 Political Government policies, like banning of junk food sale in school canteens in UK, can have effects on sale, and the company should counter this by looking for fresh markets to sell their product. Government policy on taxation will affect the amount of disposable income available to potential consumers. Moreover, another issue that may affect the company’s image and performance includes the environmental friendly packaging. 2.2.1 Economics The soft drink market has consistently grown over the years with an almost 21% between 2001 and 2005 with Carbonates dominating the market with a market. Therefore, in this respect the Coca-Cola company’s product continues to be relevant and the favorite. 2.2.2 Social The sugar contents of the Coca-Cola products reduce its appeal to the healthy conscious consumers. Apart from possible reduction of sales, the company marketing strategies hinged on advertisement may be affected as advertising of junk food is banned. 2.2.3 Technology Digital Coke music is being used to appeal to the younger generation increasing, besides, new technology is being used to produce fancy and environmental bottles. 2.3.0 Marketing objectives of Coca Cola Marketing objectives are specific plans that the company has set to ensure that it improves its market share, its sales, its profits and also its corporate image. The objectives are important because they will lead to increased business performance for Coca-Cola. With marketing objectives, the staff of Coca-Cola will direct their efforts towards achieving the objectives, and this will create unity in direction. The marketing objective will provide a standard against which performance can be measured, and corrective actions taken. Some objectives for the Coca-Cola Company include achieving 60% market share for soft drinks in European market within the next two financial years, reducing the cost of production per unit by 10% so that profit can increase and to reduce the price of each unit by 5%, so as to make more sale. 2.3.1 Target market and Market mix for Coca – Cola Company The main consumers of soft drinks around the world are the youth, mainly because of their lifestyles, and their tendency to influence each other’s choice. Coca – cola can target this group, mainly those in colleges and institutions of higher learning. The youth can be targeted through application of Market mix elements, which are product, price place and promotion (Baker and Michael, 2010 p248) 2.3.1.1 Product. The company should do a research on products, to find out the preference in terms of taste, brand and packaging that can impress different group. Through this research it will be in a position to make better their products at the same time developing products that are accepted in the market. 2.3.1.2 Price The next factor to consider in marketing mix is the price, and Coca-Cola should to sell their soft drink a price that will be friendly among the youth. Therefore, this price should be a low price because some youths are unemployed and in high school, and also it should be able to generate enough revenue for the company. 2.3.1.3 Place In terms of place Coca-Cola should give preference to areas or places where the youth will buy their products with ease. The product should be easily accessed, at convenient places and time. As a matter of fact, Coca cola products are distributed all over the world in strategic places such as college canteens that are very convenient for this purpose (Baker and Michael, 2010 p248). 2.3.1.4 Promotion Coca-Cola should carry out promotion of their products, to create awareness to the youth about their product. Furthermore, if the product is new, free samples can be used to attract this group, and it can sponsor youth events, like music concerts and local games, to gain publicity. 2.32 How Market Orientation can yield competitive advantage for Coca cola. Market orientation strategy of marketing involves making decision based on what the consumer wants, consequently, Coca-Cola can make decisions regarding the products to manufacture, the packaging to use, the price to charge and flavors to add to their drinks based on what their consumers want. They will therefore satisfy the needs of the consumer, and sell more than their competitors by offering products that satisfies the consumer can create a competitive advantage for Coca-Cola, because the customers will prefer Coca-Cola’s products to those offered by the competitor. 2.33 How Coca-Cola can make use of relationship marketing Relationship marketing is a form of marketing that emphasize on the need of consumer satisfaction, and benefit of long term customers, as opposed to sale volume based marketing. In relationship marketing therefore, the long term benefit of a customer is valued, and so the firm will put efforts to retain customers. Coca-Cola can retain their customers through providing them with the desired quality of products. Thus, any complain from a customer on the quality or the health hazard of their product should be taken with the seriousness it deserves. 2.34 Desired quality service Customers usually buy products that satisfy their needs, are of high quality and will lead to satisfaction. Desired quality is simply offering products that meet the quality that the customer wants. Coca-Cola drinks have met these standards because of how they are packed with hygiene, they are not perishable and so they are not affected by deterioration of quality over time. 2.35 Service and customer care Customer care services are the effort put by companies to listen to customer enquiries, and responding to them. Coca- cola customers may have queries on how to purchase Coca-Cola products in bulk, how to have them delivered, the discounts expected in such arrangements, hence all these queries can be answered through customer care. 2.36 Customer retention Customer retention involves strategies to ensure that customers of a company’s product continue using the product for a long time. This can be done through making the customer satisfied, and offering the products they want. Coca-Cola maintains its customers by maintaining a good relationship with them, and devising ways to reward faithful customers. For instance, Coca-Cola has in the past used their bottles to conduct a lottery, whereby a faithful customer who manages to collect specific winning bottle tops gets the reward. 2.37 Consumer profitability. Companies undergo various costs in the process of advertising, consumer relations, and in the process of trying to increase their sales. Consumer profitability is the difference between the revenue that a company gets customers, and the cost they incur to get those customers (Raaij and Eric 2002, p 1). Coca- Cola Company should do the cost benefit analysis, in order to ensure that revenue incurred in the customer relation process is more than the costs incurred, and that such difference is significant. 2.38 Narrow marketing focus Narrow marketing involves a product with fluctuating prices in the market, which is usually as a result of change in demand or supply. A narrow marketing strategy involves a company not putting efforts to win new customers. The cost of narrow marketing focus is low sales, fluctuation in product demand. Coca–Cola Company can avoid this pitfall through adopting strategies to get new customers and using good customer relations to retain existing customers. 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