Target Market and Industry Trends of Coca Cola - Assignment Example

COCA-COLA MARKETING PLAN Coca-Cola is the world’s leading beverage company, which lately has been associated with the loss of reputation anddeparture of key investors. In the paper, we will analyze the marketing mix, stakeholder analysis, brand and positioning analysis of Coca-Cola in order to find its strengths and weaknesses in global marketing strategies. TABLE OF CONTENTS 1. Introduction………………………………………….4 1.1 Target Market………………………………4 1.2 Industry Trends…………………………….4 1.3 Yearly Marketing Budget………………….4 2. Marketing Mix……………………………………….4 2.1 Product………………………………………5 2.2 Price………………………………………….5 2.3. Placement…………………………………...5 2.4 Promotion…………………………………...6 3. Stakeholders Analysis………………………………..6 3.1 Customers……………………………………6 3.2 Competitors………………………………….7 3.3 Company……………………………………..7 3.4 Community…………………………………..7 4. Brand and Positioning Analysis……………………...7 4.1 Positioning Map ……………………………..7 4.2 Market Segments……………………………..8 4.3 Competitors…………………………………..8 5. Conclusion……………………………………………..9 6. References……………………………………………..10 1. Introduction Coca-Cola is a US multinational beverage company offering non-alcoholic beverages, which dominated the soft drink market in 20th century and is recognised as marketer, retailer and manufacturer. The company was bought in 1889 by Asa Candler and is headquartered in Atlanta, Georgia, U.S. 1.1 Target Market Coca-Cola offers more than 500 brands in 200 countries serving 1.7 billion each day. The target market of Coca-Cola is not restricted to any area, gender or age. In fact, it is globally present and serves homes, offices, bars and restaurants; it identifies with youngsters, while is also targets the older age groups. 1.2 Industry Trends The brand has widely promoted innovative marketing ideas, research and development and it became famous for acquisitions of Minute Maid (1960), Thumps Up (1993), Barq’s (1995) and Odwalla (2001). 1.3 Yearly Marketing Budget The total revenue of the company in 2010 was U.S $ 35.119 billion. The operating income was $8.449 billion and net income was U.S $11.809 billion. Total assets of the company are U.S $72.921 billion. 2. Marketing Mix The strategies of Coca Cola Company are as follows: To promote the slogan of affordability, availability and health benefits. Keeping pace with changing demands and adapting to regional market needs to determine future needs. Regular assessment of business plans. Providing training and establishing goodwill in the market Engaging partners in the team and adapting to local culture. The selling concept was exemplified in the thinking of Coca-Cola former vice president Sergio Zyman who said “the main objective of marketing was to sell more stuff to more people more often for more money to gain more profits.” (Yoffie and Wang, 2002) 2.1 Product Coca Cola uses two varieties - one with sugar and another for all users. The product packaging incorporates the contour bottle design and the dynamic ribbon, shape and form. The bottle sometimes includes the native language of the region and it is designed in the same size as the beverage bottles or cans. Pepsi is the main rival of Coca Cola and many local brands compete with Coke in various regions as well. Coca-Cola produces more than 35,000 beverages. The company uses multi-brand marketing strategy, offering a wide range of beverage products to ensure customers a wide choice. The major brands launched are Coca-Cola, Fanta, Sprite and Diet Coke. Diet beverage was launched in 2001. Moreover, fruit drinks, coffees, teas and other forms of drinks were also introduced. Mineral water Kinley was launched soon afterwards (Dawar and Dai, 2003). Additionally, syrups and concentrates are also part of the product line up. For health conscious customers, energy drinks such as Powerade have been launched too. 2.2 Price Coca Cola are packaged into 2 litres, 1.25 litres, 600 ml and 300 ml packages and these are also available in 375 ml aluminium cans. Coca-Cola favoured differentiated pricing model. Meet-the-competition pricing and psychological pricing models are used, which is suitable for varying customer segments and there are many products in a range of prices (Yoffie and Wang, 2002). Pricing Method Meet- the- Competition- Pricing - Coca Cola bottles can be priced above, equal to, or below the competitor’s price. In 2009, 7.5 ounce can was introduced, and price reduction was announced in September 2011, when the eight packs was launched at a price of $2.99, and the 12.5 ounce bottle was sold for 89 centres. The 16 ounce was sold for 99 cents. Physiological Pricing - The price varies depending on the place, where it is bought. The price of a two litre Coke costs $2, but when it is on sale it can be bought at $.99 .The price varies in a fine restaurant, vending machine and a fast food outlet. Produce Size Prices - The price varies depending on the product size - Coke, Fanta, SpriteCoke, PowerAde 2L , 1.25L and bottle 600mL ,bottle 300mL, bottle 375 x 30 cans, 375 x 18 cans are priced at $2.57, $1.35 ,$2.10 , $1.30, $17.87, $12.98 . Pricing Strategies - The products are sold close to convenient stores such as petrol stations. The pricing is set according to the place where the soft drinks are sold and these stores usually sell Coca Cola at fixed price. 2.3. Placement The company sells the products to canning and bottling operations, fountain wholesalers, distributors and fountain retailers. These centres distribute it to retail outlets, corner stores, milk bar, restaurants, newsagents and petrol stations. The product moves from wholesaler and distributors to retail and corner stores, and, are bought by restaurants, petrol stations and hotels, which is bought by the consumers. Coca Cola uses both intensive distribution strategies and indirect distribution - Indirect Distribution - Coca Cola uses intermediaries for distribution and it does not sell its products directly to consumers. Intensive distribution strategies are used where the products are sold at retail outlets, shops, restaurants, petrol stations, schools and also from vending machines. 2.4 Promotion Coca-Cola promotes its beverage through print, events, TV commercials and also by getting associated to various sports events and youth functions. The main purpose of advertising is to increase consumer awareness through television advertisements, and the source helps the product to reach large audience. The TV ad for Coca Cola is “You Know you want it” and the older advertisement was “If you drink it, you get better of life”. Coca Cola also uses radio as the source of advertisement as it is a cheap source as compared to television. The company was benefited through involvement in celebrated games such as FIFA World Cup and Olympics, where millions watched these games. The association ensured substantial promotion of all brands of Coca Cola. In February 2003, Vanilla Coke was released in the market, which helped to provide huge profits and this helped the Coca Cola Company to strengthen the image of the business products. 3. Stakeholders Analysis Stakeholder analysis refers to the process of systematically gathering and assessing qualitative information to find out whose interest should be taken into account to develop a policy. The mission of Coca-Cola is to drive the business growth in selected profitable and innovative directions. 3.1 Customers Coca Cola produces soft drinks for all age groups. The primary target customer of Coca Cola is buyers in the age group of 13 to 24 and the secondary market buyers are in the age of 10 to 39 years. The diet Coca Cola brands are manufactured for consumer in the age of 25 to 39. PowerAde Sport water targets people who are fit and want to stay healthy. “Winnie the Pooh Sipper cap” targets children in age groups of 5 to 12 years. Coca-Cola spends heavily on research and development, which is specifically designed to fulfil customer’s needs. Coca-Cola understands customer motivations and desires, and this has helped the company to become the brand leader in the category of non-alcoholic beverage. In 1985, a sweeter version of Coca-Cola was launched in the market (Coke II) which was loved by tasters during R & D, but was disliked by buyers who were attached to the classic taste; this case of 1985 clearly demonstrates the emotional attachment of the loyal customers to the taste. 3.2 Competitors Coca Cola has been successfully operating since a century and is known worldwide. It owns a large share of cola segment which is approximately 85%. The contract of the company with bottlers has been under regular negotiation. The arch rival of Coca-Cola is PepsiCo which controlled 15% of the market in 1993, when Coca-Cola Company held 45% of the market share. PepsiCo got a foothold as new age drink in 1996. To counter the threat of Pepsi, Coca-Cola integrated certain aggressive strategies. However, Coca-Cola was questioned over aggressive marketing strategies in 1999 in French markets because the European countries are strict about the antitrust laws (Dibb et al, 2001). Pepsi and Virgin also accused Coca-Cola of using discounts and rebates to sell products. 3.3 Company The chairman of the board of company is Muhtar Kent who defined strategies to attain sustainable profitable growth for the company at a higher speed and improved effectiveness. The company is too big for one group and its largest individual shareholder is Berkshire Hathaway (holding 8% / 11 billion). When the company faced a series of allegations, it resulted in departure of key investors but the company retained its respect and was ranked third by PricewaterhouseCoopers survey for being the most respected company. Moreover, Coca-Cola Company was praised unanimously for its exceptional business ethics during economic setbacks and at the time of crisis. Currently, it has been trying to establish its position by launching quality products. The company paid $192.5 million to resolve a racial discrimination lawsuit in November 2000. Because of the settlement decree, the management was forced to improve practices to bring the company in top 10 for diversity (Annys Shin ,2004). 3.4 Community The Coca-Cola as brand has been adopting global marketing strategies but the marketing strategies are now no more uniform across the world. The business decisions are specifically designed to fit in with the regional culture and requirements of the local community. The company used different advertising slogans "Id like to buy the world a Coke," "The pause that refreshes," and "Coke is it". In 2001 the Wonderful Dream (Holidays are Coming), was recorded which came in the pop charts music in Germany at number 9. Coca Cola uses a variation of jingles to advertise at radio. 4. Brand and Positioning Analysis Coke Brand enjoys a high profile global presence and Pepsi as its competitor is known for aggressive marketing strategies using celebrities such as Jimmy Carter and Michael Jackson. The brands such as Minute Maid and Minute Premium Heart Wise were positioned properly with Health Concerned market and its volume in Asia Pacific rose by 45%. PepsiCo’s Tropicana and Gatorade were strong brands offering health drinks. There were protests against Coke in India and negative publicity in Western Europe, while, buyers of Pepsi were concerned over obesity and health issues. Coca Cola increased marketing and innovation spending by $400 M. Coca-Cola’s brand personality reflects its positioning. Coca-Cola is now an integral part of the lifestyle of several customers, and the brand value and brand personality is clear in the minds of the buyers. The brand image plays a significant role in Coca-Cola’s positioning. Hence the changes in packaging can affect the industry positioning of Coca-Cola, which is popular across the world. Coca-Cola practices mass marketing and it has been selling Coke in a 6.5 ounce contour bottles, which includes carbonated water sugar, caffeine, phosphoric acid, caramel colour and natural flavourings. The logo was created in 1885, and equally famous is the contour bottle, which was also known as hobble skirt. The bottle shape gave it a different shape, which even if broken can be recognized. Market segmentation is defined as the condition of growth where core markets have already been developed on generic basis to the point of additional expenses for diminishing returns (Smith, 1956). It is believed, market segmentation is important foundation for successful marketing activities and strategies (Wind, 1978; Hooley & Saunders, 1993). Segmentation is based on the following: Price - Different container sizes at different prices were introduced. The bottling system of Coca-Cola was its greatest strength when it was launched globally. Its main source of revenue comes from the sale of concentrates of bottlers (Bettman, et. al, 1998). Health - Coca-Cola has been targeting buyers who suffer from diabetes and buyers searching for healthy options of soft drinks (Yoffie and Wang, 2002). Through market research, Coca-Cola found a niche in low calorie beverages and thus launched Diet Coke brand. Moreover, the subsequent variant of Diet Coke was planned to be called Coca-Cola Lite; however, since the name was considered feminine by male buyers, Coca-Cola renamed and launched it as Coke Zero, which has witnessed an increasing popularity with health conscious male customers. 4.1 Positioning Map Coca-Cola market segmentation of non-alcoholic beverages is to take full market coverage strategy through differentiated and undifferentiated strategies, where the firm lowers the cost to win price sensitive segments, and launches many brands to satisfy buyers of various age groups. Coca Cola is well known and recognised by 94 % of world population. PepsiCo - A dominating firm may look old fashioned as compared to a new entrant and Pepsi used this weakness and promoted Pepsi as a brand for the youth. PepsiCo used indirect competition by purchasing the fruit beverage Tropicana which had double the market share than its competitor Minute Maid (of Coca-Cola). In January 2006, PepsiCo for the first time gained a greater market share than Coca-Cola due to its strategy in snack foods and innovative marketing. The Coca Cola products used the method Meet- the- Competition- Pricing, in which, during Easter, Coca Cola soft drinks of 2L was priced at $1.68, while Pepsi was priced at $1.87. The 375 ml X18 was priced at $9.98 and Pepsi 375 x 24 was priced at $9.98. Coca Cola is mostly marketed during sale and special occasions, which helps to increase profits. Dr Pepper Snapple Group (DPS)- The sale of Dr Pepper Snapple Group (also known as Cadbury Schweppes Americas Beverages), is comparable to Coca-Cola in the U.S. but it is not as global as Coca Cola. 5. Conclusion Coca-Cola has a history of hundred years of business and the company successfully handled several crises. The competition in non-alcoholic beverage is high; and there are not many options to try alternative strategies. The Coca-Cola Company should rather try to develop strategic relationships with its competitors and focus on the emerging segment of health beverages, such as launching a better marketing strategy for its drink Powerade, to compete with PepsiCo’s market leading health beverage Gatorade. Coca-Cola Company has had a constantly growing market share and profits in the last few decades and was recognized as a global brand in 2010, but Coca-Cola also encountered a series of legal and ethical issues which had an impact on its financial profits. Hence a smart marketing strategy, taking into account all the aforementioned issues, will enable the prestigious Coca-Cola Company to retain it’s leading position in the coming decades. 6. References Annys Shin (2004). "Foundation Helps Sodexho Counter Discrimination Suit". Washington Post. Bettman, James R., Mary F. Luce, and John W. Payne (1998), Constructive Consumer Choice Processes, Journal of Consumer Research, 25 (December), 187-217. Dawar, N. and Dai, N. (2003) Cola Wars in China: The Future is Here. HBS Case,August 21, 2003. Hooley, G. J., and Saunders, J. A. (1993), Competitive Positioning: The Key to Market Success, Englewood Cliffs, NJ: Prentice Hall. Hughes, L.Q. (2002). Economies Take Root, Advertising Age, August 5, p.S-4 Smith, W. R. (1956), Product Differentiation and Market Segmentation As Alternative Marketing Strategies, Journal of Marketing, July, 3–8. Wind, Y. (1978), Issues and Advances in Segmentation Research, Journal of Marketing Research, 15 (August), 317–37 Yoffie, David B. and Wang, Y. (2002) Cola Wars Continue: Coke versus Pepsi in the Twenty-First Century, HBS Case Read More