Premium-price Milk in the Company Coca-Cola - Essay Example

Premium-price Milk Introduction Coca-Cola, being the major company in the carbonation industry, is almost becoming a manufacturer of dairy products by getting a milk mustache. On Tuesday, the giant of the beverage sector made an announcement the minute maid division is starting to avail milk that is protein boosted using the Fairlife label at a premium price. The milk is planned to become available in the whole nation next month after the national advertisement campaign breaks. According to Coke, the milk, priced approximately $3.98 to $4.20 per a half gallon, is particularly cold-filtered for the purpose of making it to have extra 50% protein, 30% more calcium, and 50% less sugar than conventional milk. In the dairy case, the milk is also free of lactose, and it will be sold while cold. The production line aims at offering the milk in various versions such as whole milk, fat-free, chocolate, and reduced fat versions. 1) Explain clearly the NEED (S) that Coca Cola is addressing with its new product. The decision of producing this product came up when the Coca-Cola Company realized that the sales of carbonated drinks continued to decline in the United States. The first issue it aimed to address is the decline in sales of its original product. Another issue it aimed at addressing is the fact that it is produced at a time when most of the consumers are obsessed with all products protein. According to research by NPD Group research firm, approximately 71% of the consumers say that they want more of the proteins in their diet. 2) What is the intended TARGET MARKET? How (if at all) does if differ from Coca Colas traditional target market? The target market for the milk is the customers who want to have more proteins in their diets and drinks. It also targets the consumers who may be diabetic since it has very fewer amounts of sugar. 3) Analyze some of the key (macro and/or micro) ENVIRONMENTAL FACTORS that resulted in Coca Cola launching this new product. Note: for this, you will need to read the chapter that deals with the marketing environment. Steve Jones, who is the CEO of Fairlife, made a strong argument when he insisted that though Coca-Cola plays the part of distributing the milk, it does not take any role in the actual production of the milk and that it has nothing to be involved with what occurs on the dairy farms. He adds that people who have been referring to it as Coke Milk should not since it is actually not. The sole job of Coke, according to him, is the distribution of the milk and making sure that the milk is on the shelf. The market analysis and condition for the Coca-Cola’s Fairlife product seem to be somehow favoring while to some extent it is not so much on their side. The opportunity for the company after coming up with this product is that they have very limited competition since this is an uncharted sector. Again, having a good brand name globally, Coke expects to sell its milk product all over the world that will in turn favor the growth. According to John Sicher, who is a publisher and an editor of the trade magazine known as Beverage Digest, one beverage industry comments that this is a very good and favorable move for Coca-Cola. The reason behind his argument is that it makes some sense for the big beverage companies to venture into producing products that supply proteins. However, the negative part of the market is when the nutritionists are asked to air their views. This is helpful to the other consumers. For example, one nutritionist was unimpressed, and she says that milk is usually a beverage that is nutritious, and it, therefore, needs no more engineering. According to Rebecca Solomon, who is the director of clinical nutrition at a hospital known as Mount Sinai Beth Israel situated at New York City, she fails to see the reason regarding the improvement of milk by the soda industry. Also, according to Rumsey, there is no any reason for drinking this type of milk since if one needs more proteins they can be attained from a handful of almonds or by eating an egg (Hotwani Thosar and Baliga 120). He added that more calcium may be attained from more consumption of dark leafy greens but not the Frankenmilk. The experts do not support the idea of milk with low levels of sugar. Natural milk has plenty of wholesome lactose, unlike this type of milk that has processed sugars. Generally, the Fairlife milk has several alternatives and substitutes that are not in the form of beverages, and they are readily available, and they are cheaper than the milk. 4) What kind of growth strategy does this new product launch represent? (Note: Relate to growth strategies: Market Penetration, Market Development, Product development, Diversification). Clearly explain your choice(s). The company is using the market penetration strategy. This is the type of growth strategy where new products are availed in the market where they don’t exist. The type of product that the Coca-Cola Company is introducing in the market has never been in the market. 5) Analyze both ADVANTAGES and DISADVANTAGES (risks) of pursuing this strategy. When using this strategy, the advantage arises where customers buy more out of curiosity, and the sales may become stable after some time. The disadvantage is that the competition in the beverage industry may never allow this product to grow over time. Another disadvantage is that the sales may take long to rise as the production costs still remain the same which may lead to a decline of the product (Lane 115). Work Cited Coca Cola 2015. Coke gets into moo juice with premium price milk. Web Accessed on 11th June, 2015 http://www.usatoday.com/story/money/2015/02/03/coca-cola-coke-fairlife- milk-premium-milk-dairy-nutrition/22798261/ Lane, Vicki. "Measuring the Financial Value of Marketing Strategy with Excess Stock Market Return." International Journal of Risk and Contingency Management (ijrcm). 3.4 (2014): 1-16. Print. Hotwani, K, N Thosar, and S Baliga. "Comparative in Vitro Assessment of Color Stability of Hybrid Esthetic Restorative Materials against Various Children's Beverages." Journal of Conservative Dentistry : Jcd. 17.1 (2014): 70-4. Print. Read More