marketing plan coco cola

8/3/2019 Marketing Plan Coco Cola

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Marketing plan Coco ColaUploaded by joeydaprof (2101) on Jun 12, 2006

Executive summary

Giant soft drink company Coca Cola has come under intense scrutiny by investors due to its inabilityto effectively carry out its marketing program. Consequently it is seeking the help of Polianitis

Marketing Company Pty Ltd to develop a professional marketing plan which will help the businessachieve its objectives more effectively and efficiently, and inevitably regain there iron fist reign onthe soft drink industry.

When establishing a re-birthed marketing plan every aspect of the marketing plan must be criticallyexamined and thoroughly researched. This consists of examining market research, auditing businessand current situation (situation analysis) and carefully scrutinising the soft drink industry andpossibilities for Coca Cola in the market. Once Coca Cola have carefully analysed the internal and

external business environment and critically examined the industry in general the most suitablemarketing strategies will be selected and these strategies will be administered by effectively and

continually monitoring external threats and opportunities and revising internal efficiency procedures.

Situation Analysis

Market Analysis:

The market analysis investigates both the internal and external business environment. It is vitalthat Coca cola carefully monitor both the internal and external aspects regarding its business as

both the internal and external environment and their respective influences will be decisive traits inrelation to Cokes success and survival in the soft drink industry.

Internal Business Environment

The internal business environment and its influence is that which is to some extent within thebusinesss control. The main attributes in the internal environment include efficiency in the

production process, through management skills and effective communication channels. Toeffectively control and monitor the internal business environment, Coke must conduct continualappraisals of the businesss operations and readily act upon any factors, which cause inefficienciesin any phase of the production and consumer process.

External Business Environment

The External business environment and its influences are usually powerful forces that can affect awhole industry and, in fact, a whole economy. Changes in the external environment will createopportunities or threats in the market place Coca cola must be aware off. Fluctuations in theeconomy, changing customer attitudes and values, and demographic patterns heavily influence the

success of Coka Colas products on the market and the reception they receive from the consumers.

SWOT Analysis:

SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a technique muchused in many general management as well as marketing scenarios. SWOT consists of examining thecurrent activities of the organisation- its Strengths and Weakness- and then using this and external

research data to set out the Opportunities and Threats that exist.


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Strengths:Coca-Cola has been a complex part of world culture for a very long time. The product's image is

loaded with over-romanticizing, and this is an image many people have taken deeply to heart. TheCoca-Cola image is displayed on T-shirts, hats, and collectible memorabilia. This extremelyrecognizable branding is one of Coca-Cola's greatest strengths. "Enjoyed more than 685 million

times a day around the world Coca-Cola stands as a simple, yet powerful symbol of quality andenjoyment" (Allen, 1995).Additionally, Coca-Cola's bottling system is one of their greatest strengths. It allows them toconduct business on a global scale while at the same time maintain a local approach. The bottlingcompanies are locally owned and operated by independent business people who are authorized to

sell products of the Coca-Cola Company. Because Coke does not have outright ownership of itsbottling network, its main source of revenue is the sale of concentrate to its bottlers.

Weaknesses:

Weaknesses for any business need to be both minimised and monitored in order to effectivelyachieve productivity and efficiency in their businesss activities, Coke is no exception. Althoughdomestic business as well as many international markets are thriving (volumes in Latin Americawere up 12%), Coca-Cola has recently reported some "declines in unit case volumes in Indonesia

and Thailand due to reduced consumer purchasing power." According to an article in Fortunemagazine, "In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary because while

Japan generates around 5% of worldwide volume, it contributes three times as much to profits.Latin America, Southeast Asia, and Japan account for about 35% of Coke's volume and none of

these markets are performing to expectation.Coca-Cola on the other side has effects on the teeth which is an issue for health care. It also has

got sugar by which continuous drinking of Coca-Cola may cause health problems. Being addicted toCoca-Cola also is a health problem, because drinking of Coca-Cola daily has an effect on your bodyafter few years.

Opportunities:Brand recognition is the significant factor affecting Coke's competitive position. Coca-Cola's brandname is known well throughout 94% of the world today. The primary concern over the past fewyears has been to get this name brand to be even better known. Packaging changes have also

affected sales and industry positioning, but in general, the public has tended not to be affected bynew products. Coca-Cola's bottling system also allows the company to take advantage of infinitegrowth opportunities around the world. This strategy gives Coke the opportunity to service a large

geographic, diverse area.

Threats:Currently, the threat of new viable competitors in the carbonated soft drink industry is not verysubstantial. The threat of substitutes, however, is a very real threat. The soft drink industry is very

strong, but consumers are not necessarily married to it. Possible substitutes that continuously putpressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate. Even though

Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness of the market could have a serious affect. Of course, both Coke and Pepsi have

already diversified into these markets, allowing them to have further significant market shares andoffset any losses incurred due to fluctuations in the market. Consumer buying power also represents

a key threat in the industry. The rivalry between Pepsi and Coke has produce a very slow movingindustry in which management must continuously respond to the changing attitudes and demandsof their consumers or face losing market share to the competition. Furthermore, consumers caneasily switch to other beverages with little cost or consequence.

Product Life cycle:

When referring to each and every product or service ever placed before the consumer i.e. in the

long term all the existing products and services are dead. For e.g.:- Replacement of Ford Cortina ( ahighly successful car) by Ford Sierra, the replacement of sierra by the Ford Mondeo and thereplacement of the old Mondeo by the new Mondeo in 2001. So every product is born, grows,matures and dies. So in the commercial market place products and services are created, launched

and withdrawn in a process known as Product Life Cycle.To be able to market its product properly, a business must be aware of the product life cycle of its


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product. The standard product life cycle tends to have five phases: Development, Introduction,Growth, Maturity and Decline. Coca-Cola is currently in the maturity stage, which is evidenced

primarily by the fact that they have a large, loyal group of stable customers.Furthermore, cost management, product differentiation and marketing have become more

important as growth slows and market share becomes the key determinant of profitability. Inforeign markets the product life cycle is in more of a growth trend Coke's advantage in this area ismainly due to its establishment strong branding and it is now able to use this area of stable

profitability to subsidize the domestic Cola Wars.Insert the picture of the product lifecycle

Marketing Objectives

The objective is the starting point of the marketing plan. Objectives should seek to answer the

question 'Where do we want to go?'. The purposes of objectives include:

-> to enable a company to control its marketing plan.-> to help to motivate individuals and teams to reach a common goal.-> to provide an agreed, consistent focus for all functions of an organization.

All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic, and Timed.

Specific - Be precise about what you are going to achieveMeasurable - Quantify you objectives

Achievable - Are you attempting too much?Realistic - Do you have the resource to make the objective happen (men, money, machines,materials, minutes)?

Timed - State when you will achieve the objective (within a month? By February 2010?)

1.Market Share Objectives:To gain 60% of the market for soft drink industry by September 2007.

2.Profitability Objectives:To achieve a 20% return on capital employed by August 2007

3. Promotional Objectives

To increase awareness of the product on the market.4. Objectives for Survival

To survive the current market war between competitors.

5. Objectives for GrowthTo increase the size of the worldwide Coca Cola enterprise by 10% .

Selecting Target Market

Once the situation analysis is complete, and the marketing objectives determined, attention turns tothe target market. The soft drink market is very large, and the business cannot be all things to allpeople, so it must choose which market segments have the greatest potential. The target market is

the group of customers on whom the business focuses attention. The target market is where CocaCola focuses its marketing efforts as it feels this is where it will be most productive and successful.


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The target market for Coca cola is very wide as it satisfys the needs for many different consumers,ranging from the healthy diet consciousness through Diet Coke to the average human through its

best selling drink regular Coke. Most Coke products satisfy all age groups as it is proven that mostpeople of different age groups consume the Coca Cola product. This market is relatively large and is

open to both genders, thereby allowing greater product diversification.There are four broad ways which Coca Cola can segment its market:-> Mass marketing

-> Concentrated marketing-> Differentiated marketing-> Niche marketingThe most apparent method used by Coca Cola is with no doubt the differentiated marketing methodas Coke satisfys a range of different markets. Diet coke satisfys the weight consciousness, regular

coke, sprite, fanta the average human, coffee, iced tea etc. Each group of beverages satisfy aparticular group of people but majority the average human.

Developing The Marketing Mix

The marketing mix is probably the most crucial stage of the marketing planning process. This is

where the marketing tactics for each product are determined. The marketing mix refers to thecombination of the four factors(price, promotion, product, place) that make up the core of a

businesss marketing strategy. In this step of the marketing planning process, marketing mix mustbe designed to satisfy the wants of target markets and achieve the marketing objectives. The most

successful businesses have continually monitored and changed their marketing mix due torespective internal and external factors and have monitored the external business environment in

order to maximise their marketing mix components.

Product:

Many Products are physical objects that you can own and take home. But the word product meansmuch more than just physical goods. In marketing, product also refers to services, such as holidaysor a movie, where you enjoy the benefits without owning the result of the service.

Businesses must think about products on three different levels, which are the core product, theactual product and the augmented product. The core product is what the consumer is actuallybuying and the benefits it gives. Coca Cola customers are buying a wide range of soft drinks. Theactual product is the parts and features, which deliver the core product. Consumers will buy thecoke product because of the high standards and high quality of the Coca Cola products. The

augmented product is the extra consumer benefits and services provided to customers. Since softdrinks are a consumable good, the augmented level is very limited. But Coca Cola do offer a help

line and complaint phone service for customers who are not satisfied with the product or wish togive feedback on the products.

Positioning

Once a business has decided which segments of the market it will compete in, developed a clearpicture of its target market and defined its product, the positioning strategy can be developed.Positioning is the process of creating, the image the product holds in the mind of consumers,

relative to competing products. Coca Cola and Franklins both make soft drinks, although Franklinsmay try to compete they will still be seen as down market from Coca Cola. Positioning helpscustomers understand what is unique about the products when compared with the competition.Coca Cola plan to further create positions that will give their products the greatest advantage in

their target markets. Coca Cola has been positioned based on the process of positioning by directcomparison and have positioned their products to benefit their target market. Most people create animage of a product by comparing it to another product, thus evident through the famous battlesbetween Coca-Cola and Pepsi products.

Branding


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It is often hard to say exactly why we buy one companys product over another. Companies such as

Nike and Adidas spend large amounts of money trying to win consumers away from theircompetitors who make products that are very similar. The popularity of the brand is often the

deciding factor. Over the time Coca Cola has spent millions of dollars developing and promotingtheir brand name, resulting in world wide recognition. 'Coca-Cola' is the most recognised trademark,recognised by 94% of the world's population and is the most widely recognised word after "OK".

Coca Colas red and white colours and special writing are all examples of world-wide trademarks.There are a number of branding strategies: Generic brand strategy, Individual brand strategy,Family brand strategy, Manufacturers brand strategy, Private brand strategy and Hybrid brandstrategy. Coca Cola utilizes the Individual brand strategy as Coca Colas major products are giventheir own brand names e.g Fanta, Sprite, Coca Cola etc although they maybe presented as different

lines they operate under the name of Coca Cola.

Packaging

Packaging, which is not as highly perceived by businesses, is still an important factor to examine inthe marketing mix. Packaging protects the product during transportation, while it sits in the shelfand during use by consumers, it promotes the product and distinguishes it from the competition.Packaging can allow the business to design promotional schemes, which can generate extra revenue

and advertisements. Coca-Cola has benefited from packaging the product with incentives andendorsements on the labelling as a promotional strategy to increase its volume of sales and

revenue.

Price:

Price is a very important part of the marketing mix as it can effect both the supply and demand forCoca Cola. The price of Coca Colas products is one of the most important factors in a customersdecision to buy. Price will often be the difference that will push a customer to buy our product over

another, as long as most things are fairly similar. For this reason pricing policies need to bedesigned with consumers and external influences in mind, in order to effectively achieve a stablebalance between sales and covering the production costs.Price strategies are important to Coca Cola because the price determines the amount of sales and

profit per unit sold. Businesses have to set a price that is attractive to their customers and providesthe business with a good level of profit. Long before a sale was ever made Coca Cola had developeda forecast of consumer demand at different prices which inevitably determined whether or not the

product came on the market, as well as the allocation of adequate money and resources to produce,promote and distribute the product.

Pricing Strategies And Tactics

The pricing Strategy a business will use will have to focus on achieving the marketing plansobjectives and support the positioning of the product, and take external factors such as economic

conditions and competitors in to account. There are 5 strategies available to business: Marketskimming pricing, Penetration pricing, Loss leaders, Price Points and Discounts. Over the years Coca

Cola has used Penetration Pricing as a way of grabbing a foothold in the market and won a marketshare. Its product penetrated the marketplace. Once customer loyalty is established as seen with

Coca Cola it is then able to slowly raise the price of its product. There has been a fierce pricingrivalry between Coca Cola and Pepsi products as each company competes for customer recognitionand satisfaction. Till now it appears as if Coke has come up on top, although in order to gain longterm profits Coke had to sacrifise short term profits where in some cases it either went under of just

broke even, but as seen it has been all for the best.Pricing Methods

Good pricing decisions are based on an analysis of what target customers expect to pay, and what

they perceive as good quality. If the price is too high, consumers will spend their money on othergoods and services. If the price is too low, the firm can lose money and go out of business.Pricing methods include: Cost based Pricing, Market based pricing and Competition based Pricing.Over the years Coca has lost ground here in its pricing but has regained its strength as it employed

the Competition-based pricing method which allowed it to compete more effectively in the soft drinkmarket. Leader follower pricing occurs when there is one quite powerful business in the market


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which is thought to be the market leader. The business will tend to have a larger market share,loyal customers and some technological edge, thus the case currently with Coke, it was first the

follower but through effective management has now become the leader of the market and isworking towards achieving the marketing objectives of the Coca Cola. Survival in the market place,

own 60 % of market share by 2007, increase further awareness of product and a return on 20% oncapital employed for August 2007.

Promotion:

In todays competitive environment , having the right product at the right place in the right place atthe right time may still not be enough to be successful. Effective communication with the targetmarket is essential for the success of the product and business. Promotion is the p of the marketing

mix designed to inform the marketplace about who you are, how good your product is and wherethey can buy it. Promotion is also used to persuade the customers to try a new product, or buymore of an old product.The promotional mix is the combination of personal selling, advertising, sales promotion and public

relations that it uses in its marketing plan. Above the line promotions refers to mainstreammedia:Advertising through common media such as television, radio, transport, and billboards and innewspapers and magazines. Because most of the target is most likely to be exposed to media suchas television, radio and magazines, Coca Cola has used this as the main form of promotion for

extensive range of products. Although advertising is usually very expensive, it is the most effectiveway of reminding and exposing potential customers to Coca Cola Products. Coca Cola also utilizes

below the line promotions such as contests, coupons, and free samples. These activities are aneffective way of getting people to give your product a go.

Place and Distribution:

The place P of the marketing mix refers to distribution of the product- the ways of getting the

product to the market.The distribution of products starts with the producer and ends with theconsumer.One key element of the Place/Distribution aspect is the respective distribution channels that CocaCola has elected to transport and sell its product.

Selecting the most appropriate distribution channel is important, as the choice will determine saleslevels and costs. The choice for a distribution channel for any business depends on numerous

factors, these include: How far away the customers are;

The type of product being transported; The lead times required; and;

The costs associated with transport;There are four types of distribution strategies that Coca Cola could have chosen from, these are:intensive, selective, exclusive and direct distribution. It is apparent from the popularity of the CocaColas product on the market that the business in the past used the method of intensive distribution

as the product is available at every possible outlet. From supermarkets to service stations to yourlocal corner shop, anywhere you go you will find the Coca Cola products.

Physical Distribution Issues

Coca Cola needs to consider a number of issues relating to the physical distribution of its soft drinkproducts. The five components of physical distribution are, order processing, warehousing, materialshandling, inventory control, transportation. Coca Cola must further try to balance their operations

with more efficient distribution channels.


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Order Processing- Coca Cola cannot delay their processes for consumer deliveries (i.e. delivery toselling centers), as this is inefficient business functioning and is portrays a flawed image of the

product and overall business.Warehousing and inventory control- warehousing of Coca Cola products is necessary. Inventory

control is another important aspect of distribution as inventory makes up a large percentage ofbusinesses assets. Choosing the correct and desired inventory measure that Jacksons sees as mosteffective is vital. Jacksons must remember though that there are factors involved with inventory

control that can hinder the products sales and customer perceptions (hazards, distribution fromstorage facilities, etc).Materials handling- this deals with physically handling the product and using machinery such asforklifts and conveyor belts. When holding products, then Coca Cola has benefited from purchasingor renting respective machinery.

Transportation- transporting Coca Cola products is the one most important components of physicaldistribution. Electing either to transport the sports drink by air, rail, road or water depends on themarket (i.e. global, or domestic?) and depends on the associated costs. The most beneficialtransportation method for Coca Cola would be ROAD if the product were moved around from

storage to the cost centers.

Implementing, Monitoring And Controlling

Financial Forecasts

Financial forecasts are predictions of future events relating strictly to expected costs and revenuecosts for future years. There are five major marketing expenditures, which include research costs,

product development costs, product costs, promotion costs and distribution costs.

Sales force composite is the most logical method in forecasting revenue. This involves estimatesfrom individual salespeople to sell to work out a total for the whole business. Once these costs andrevenues are forecasted, management can then decide which combination of marketing mixstrategies will deliver the most sales revenue at the lowest cost.

Implementing

Implementation is the process of turning plans into actions, and involves all the activities that put

the marketing plan to work. Successful implementation depends on how well the business blends itspeople, organisational structure and company culture into a cohesive program that supports themarketing plan.

For its further success, Coca Cola must impose several key changes. Production needs to be on timeand meet the quota demanded from wholesalers. It must also be efficient so as not to buildinventory stocks and inventory prices. The marketing needs to be motivated and knowledgeableabout the product. The forms of promotion such as advertising must be attracting and enticing to

the target market to get the greatest amount of exposure possible for the product. This will ensurethe success of the product in the stores. Distribution of the product must be efficient. This problem

has already been taken care of with convenient transport routes to commercial areas and transportalready being arranged.

Monitoring And Controlling

Monitoring and controlling allows the business to check for variance in the budget and actual. This isimportant because it allows Coca Cola to take the necessary actions to meet the marketingobjectives. There are three tools Coca Cola should use to monitor the marketing plan. They are the

following:

i. Sales AnalysisThe sales analysis breaks down total business sales by market segments to identify strengths and

weaknesses in the different areas of sales. Sellers of Coca Cola products vary from major retailsupermarkets to small corner stores. This gives the its products maximum exposure to customers attheir convenience.

ii. Market Share AnalysisMarket share analysis compares Coca Colas business sales performance with that of its


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competitors. Coca Cola looks to increase its market share by over 60%. With the changes Coca Colais currently undergoing, they aim to regain an iron fist control of the market. Target market various

age groups and lifestyles from high school students too universities, and male or female.

Marketing Profitability AnalysisThis analysis looks at the cost side of marketing and the profitability of products, sales territories,market segments and sales people. There are three ratios to monitor marketing profitability; they

are market research to sales, advertising to sales and sales representatives to sales. The results ofthese three tools can help Coca Cola determine any emerging trends, such as the need for adifferent product. Comparing these results with actual results gives the business an idea on when tochange.

Market Research

When attempting to implement a new Marketing plan a business must address its target market andconduct the relevant information to insure the new marketing plan both differs from the old and is

better for the business. When conducting market research a business must first define the problemand then gather the appropriate information to solve the problem. There are 3 types of informationa business can gather to solve its problems.->Exploratory Research which clarifies the problem an d searches for ways to address it.

->Descriptive Research is used to measure and describe things like the market potential for aproduct and characteristics of the target market.

->Casual Research is used to test a hypothesis about a cause and effect relationship.Coca Cola through its market research has addressed all three types of research to define the

problem raised by shareholders and gathered information to serve their needs.

Factors Influencing Consumer Choice

When making decisions on products a business must look at factors that influence consumer choicesuch as psychological factors, Sociocultural factors, Economic factors and Government Factors.

Psychological Factors: such as motivation, perception, lifestyle, personality and self concept,learning , and attitudes influence the consumers behaviour towards a product and Coca Cola hasaddressed this issue by introducing Diet Coke to satisfy different lifestyles.Sociocultural factors: such as culture, subculture, socio-economic status, family and reference

groups influence the consumers behaviour towards a product.Economic factors: such as Disposable income and discretionary income. Coca Cola has addressedthis side of the influence by maintaining a low price on the price of its products.

Government Factors: such as new regulations, inflation, interest rates all influence consumerspending and choice

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