Coke Marketing Plan

Executive summary

Giant soft drink company Coca-Cola has come under intense scrutiny by the investors due to its inability to effectively carry out its marketing program. Consequently it is seeking the help of new Marketing Company to develop a professional marketing plan which will help the business to achieve its objectives more effectively and efficiently, and regain their iron fist supremacy on the soft drink industry. When establishing a new marketing plan every aspect of the marketing plan must be critically examined and thoroughly researched. This consists of following four major areas:

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• Situation Analysis
• Marketing Objectives Market Strategies
• Implementation,
• Evaluation, Monitoring and Control

Once Coca-Cola will have carefully analyzed these areas and have examined the industry in general the most suitable marketing strategies will be selected and ‘external threats and opportunities’ will be monitored and internal efficiency will be revised accordingly.

Situation analysis

History of the product/brand

The organization that we have selected is The Coca-Cola Company which is “the largest manufacturer, distributor and marketer of soft drinks in the world” (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K).

The company offers over 400 products/brands in more than 200 countries (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K). The product selected is their soft drink called Coca-Cola. Their mission statement and vision are given below: Mission everything we do is inspired by our enduring mission:

• To Refresh the World... in body, mind, and spirit.
• To Inspire Moments of Optimism... through our brands and our actions.
• To Create Value and Make a Difference... everywhere we engage.

Vision

To achieve sustainable growth, we have established a vision with clear goals.

• Profit: Maximizing return to shareowners while being mindful of our overall responsibilities.
• People: Being a great place to work where people are inspired to be the best they can be.
• Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and satisfy peoples’ desires and needs.
• Partners: Nurturing a winning network of partners and building mutual loyalty.
• Planet: Being a responsible global citizen that makes a difference.

Market analysis

Changes occurring in the organization’s macro- and micro environments have revealed a number of risk factors that have an influence on Coca Colas business, sales and consumer acceptance. Firstly, increased awareness about health issues has given rise to obesity concerns in relation to the consumption of Coca Cola (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K). This may reduce the product’s demand. Secondly, water which is a major ingredient of Coca-Cola is becoming a scarce commodity and its quality is deteriorating due to pollution etc.

This can increase the products production costs. Thirdly, a major portion (approximately 83 % in 2006) of The Coca Cola Company’s business comes from its bottling partners to whom it sells its concentrates and syrups. Consequently, maintaining good relations with the bottling partners is essential for the business. The bottling partners financial situation also affects Coca Colas business.

Increase in cost of energy(electricity, natural gas etc) and raw materials(high fructose corn syrup, sucrose etc) can have a negative impact on the product’s profits. Unfavorable political and economic conditions in the local as well as international markets can have an adverse effect on the company’s profits . Unfavorable weather conditions like unusually long spells of winter cold can decrease the demand for the product.

Product evaluation

Product Life cycle

The product life cycle comprises of five stages: product development, introduction, growth, maturity and decline (Kotler et al. 2006, p. 314). 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. In this regard, Coke has the advantage of it’s establishment of a strong brand name. Furthermore, cost management, product differentiation and marketing have become more important as growth slows and market share becomes the key determinant of profitability.

SWOT Analysis

SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a technique that consists of examining the current activities of the organization- its Strengths and Weakness- and then using this and external research data to set out the Opportunities and Threats that exist.

Strengths

• Coca-Cola has been a vital part of world culture for a very long time.
• The product's image is loaded with over-romanticizing which has not failed to move people.
• The Coca-Cola image is displayed on a variety of items like T-shirts, hats etc.
• This extremely powerful 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 and enjoyment" (Allen, 1995).
• Coca Cola enjoys a large amount of customer acceptance as compared to it’s main competitors (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K).
• Coca-Cola's bottling system is also one of their main strengths. It enables them to conduct business on a global scale and at the same time maintain a local approach.
• The bottling companies are locally owned and operated by independent business people who have been authorized to sell products of the Coca-Cola Company.
• Coca Cola does not have outright ownership of its bottling network, its main source of revenue is the sale of concentrate to its bottlers (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K).

Weaknesses

• Weaknesses for any business need to be both reduced and monitored in order to effectively achieve productivity and efficiency in their business. This applies to Coke as well.
• Although domestic business as well as many international markets are prospering (volumes in Latin America were 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 Fortune magazine, "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 adverse effects on the teeth which causes health concerns among the consumers. It also has got sugar due to which continuous or excessive drinking of Coca-Cola can cause health problems like diabetes.

Opportunities

• Brand recognition is a vital factor affecting Coke's competitive position.
• Coca-Cola's brand name and reputation is well known across 94% of the globe.
• The major issue over the past few years has been to get this brand name introduced to as many emerging markets as possible.
• Changes in packaging have also affected sales and industry positioning, but on the whole the public has remained unaffected by the launch of new products.
• Coca-Cola's bottling system enhances the company’s prospects of growth opportunities around the world.
• This strategy gives Coke the opportunity to serve a large and diverse geographic market.

Threats

• At present, the threat of new competitors in the carbonated soft drink industry is not very substantial.
• On the other hand, the threat of substitutes is a very possible threat.
• The soft drink industry has a strong hold, but consumers have a lot of options available to them.
• Possible substitutes that continuously put pressure on both Pepsi and Coke include tea, coffee, juices, milk, and hot chocolate.
• This pressure has increased a lot during the last few years owing to increased health awareness.
• Even though Coca-Cola and Pepsi control nearly 40% of the entire beverage market, health concerns can adversely influence product demand. Of course, both Coke and Pepsi have already diversified into these markets, allowing them to have further significant market shares and offset any losses incurred due to fluctuations in the market.
• Consumer buying power is another key threat in the industry.
• The rivalry between Pepsi and Coke has produced a very slow moving industry in which management must be sensitive to and timely respond to the changing attitudes and demands of their consumers or risk losing market share to the competition.

Competitor analysis

Coca Cola competes in the non-alcoholic beverages segment with various firms including PepsiCo Inc, Nestle, Cadbury Schweppes plc, Groupe Danone, Kraft Foods Inc etc (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K). Specific beverages that Coca Cola competes with in Pakistan include Pepsi, RC Cola, Makka Cola and Amrat Cola. Competitive forces affecting Coca Cola’s business include pricing, advertising, product promotion programs, innovative ideas, production techniques, bottling, brand and trademark development and protection (The Coca Cola Company 2007, 2006 Annual Report on Form 10-K).

Marketing objectives

The marketing objectives section will indicate targets to be achieved across several marketing decision areas. 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.

Coca Cola Marketing Objectives

• The goals and objectives that are set by the company are firstly to put the Coke the Classic segment back on the growth path.
• In terms of volume, the company wanted to sell 8 million 8 oz. cases and by the end of the previous year the company had actually sold 7 million cases, but the target was 6 million 8 oz cases.
• The distribution goal is to achieve 40% numeric Distribution within 4 weeks of re-launch, currently it is 35. 55%.
• And in terms of share, the goal was to get and regain 65% of market within one year. Currently it is 60% of the market share.
• The recent performance of the business unit has been impressive and the company wants the coming years to be even more beneficial.
• To survive the current market war between competitors
• To increase the size of the worldwide Coca Cola enterprise by 20%, currently it is 10%.
• To increase awareness of the product on the market by increasing advertising.
• To achieve a 30% return on capital employed by August next year, current return on capital is at 20%.

Marketing strategies

Selecting target market

Target Market is defined as “A set of buyers haring common needs or characteristics that the company decides to serve”. Once the situation analysis has completed, and the marketing objectives determined then the company’s attention turns towards the target market. As we know that the soft drink market is very large, and a product cannot be for all the people, so the company must choose which of the market segments have the greatest potential for its products. The target market is where Coca-Cola focuses its marketing efforts as it feels this is where it will be most productive and successful.

The target market for Coca-Cola is very wide as it satisfies the needs for many different consumers, ranging from the healthy diet conscious consumers 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 most people of different age groups consume the Coca-Cola product. This market is relatively large and is open to both genders. A marketing organization can adopt one of the three market-coverage strategies:

• Un-Differential
• Differentiated
• Concentrated

The most apparent method used by Coca Cola is with no doubt the differentiated marketing method as Coke satisfies a range of different markets. Diet coke satisfy’s the weight consciousness, regular coke, sprite, fanta, coffee, iced tea etc for average user group. Each product of beverages satisfies a particular group of people. Differentiated Marketing is defined as “A market coverage strategy in which a marketing organization decides to target several market segments and designs separate offers for each”.

Developing marketing mix

The marketing mix is probably the most crucial stage of the marketing planning process. It is also known as the 4 Ps of marketing. In 1964 Neil H. Borden published his article “The Concept of Marketing Mix” after which this term became popularized. This is where the marketing tactics for each product are determined. The marketing mix refers to the combination of the four strategies:

• Product Strategy
• Price Strategy
• Place Strategy
• Promotion Strategy

The most successful businesses have continually monitored and changed their marketing mix due to internal and external factors.

Product Strategy

A product can be defined as “Anything that can be offered to the market for attention, acquisition, use or consumption that might satisfy a want or a need. It includes physical objects, services, persons, places, organizations and ideas”. Businesses must think about products on three different levels, which are:

• The Core Product
• The actual product
• The Augmented Product

Coca Cola customers are buying a wide range of soft drinks. Consumers will buy the coke product because of the high standards and high quality of the Coca-Cola products.

The Coca-Cola also offer a help line and complaint phone service for customers who are not satisfied with the product or wish to give feedback on the products. Positioning 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 Franklins may try to compete they will still be seen as lower market from Coca-Cola. Positioning helps customers understand what is unique about the products when compared with the competition.

Branding

The popularity of the brand is often the deciding factor. Over the time Coca Cola has spent millions of dollars developing and promoting their brand name, resulting in worldwide recognition. 'Coca-Cola' is the most recognized trademark, recognized by 94% of the world's population. (Coca-Cola, Our Herittage)

Pricing strategy

Price is a very important factor in the marketing mix as it can affect both the supply and demand for Coca Cola. The price of Coca-Cola’s products is one of the most important factors in a customer’s decision to buy.

Price will often be the difference that will drive a customer to buy the one product over another, as long as most things are about the same. For this reason pricing strategies need to be designed with consumers and external influences in mind, in order to effectively achieve a stable balance 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 provides the business with a good level of profit.

Long before a sale was ever made Coca Cola had developed a forecast of consumer demand at different prices which without doubt determined whether or not the product came in the market. The pricing strategy a business will use will have to focus on achieving the marketing plan’s objectives and support the positioning of the product, and take external factors such as economic conditions and competitors in to account. As customer loyalty has established with Coca-Cola, it can now slowly raise the price of its product.

There has been a severe pricing competition between Coca-Cola and Pepsi products as each company competes for customer recognition and satisfaction. Till now it appears as if Coke has come up on top, although in order to gain long term profits Coke had to sacrifice 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

There are four major pricing approaches that can be used.

• Cost-based Approach
• Buyer-based Approach
• Competition Approach
• Relationship Approach

Over the years Coca-Cola 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 drink market. Now the Coca-Cola has become a market leader with 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 is working 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% on capital are the current objectives for 2007”.

Place and distribution strategy

The place P of the marketing mix refers to distribution of the product i. e. the ways of getting the product to the market. The distribution of products starts with the producer and ends with the consumer. One key element of the Place/Distribution factor is the respective distribution channels that Coca-Cola has elected to transport and sell its product.

Selecting the most appropriate distribution channel is important, as the choice will determine sales levels 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 Coca-Cola’s product n 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 your local corner shop, anywhere you go you will find the Coca-Cola products.

Promotion strategy

In today’s competitive environment, having the right product at the right place in the right place at the right time may still not be enough to be successful. Effective communication with the target market is essential for the success of the product and business.

Promotion is the P of the marketing mix designed to inform the market about who the company is, how good the product is and where they can buy it. Promotion is also used to persuade the customers to try a new product, or buy more of an old product. The promotional strategy is the combination of personal selling, advertising, sales promotion and public relations that are used in its marketing plan. Now days as most of the target market is most likely to be exposed by media such as 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 effective way of letting the customers to know about Coca-Cola Products. Coca-Cola also utilizes promotions such as contests, coupons, and free samples. These activities are an effective way of getting people to give the product a check.

Evaluation, monitoring & control

The goal of the marketing plan is to outline the strategies, tactics, and programs that will make the sales goals outlined in the coke business plan a reality by the end of the season.

There are a number of Key Performance Indicators KPI’s that are needed for the measurement/evaluation of the performance they can be given as, The monthly and the annual revenue generation, then the amount of expenses incurred in a month or in a year, then the increased level of customer satisfaction and ensuring the brand loyalty. For complying with these scenarios the advertising efforts made by the company the strength of the distribution channels, the launch of the new products and the pricing will be measured. The possible increase in growth of the target market also depends on all these efforts made by coke.

The people who are responsible for the monitoring and control of the marketing plan involves, the Marketing Executives, Sales Managers, Media Managers, Market Research Departments, and the Product Managers. Some activities must be carried out for precisely and closely evaluating the effectiveness of the strategies and tactics for example the gathering and structuring of data regarding market, product, customer and the pricing trends, then the generation of daily sales report should be maintained and then in the end continuous reconfirming of the marketing budget and activities by the managers of different divisions

Financial Forecasts

Financial forecasts are predictions of future events relating strictly to expected costs and revenue costs 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 estimates from individual salespeople to sell to work out a total for the whole business. Once these costs and revenues are forecasted, management can then decide which combination of marketing mix strategies 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 its people, organizational structure and company culture into a cohesive program that supports the marketing plan. For its further success, Coca Cola must impose several key changes. Production needs to be on time and meet the quota demanded from wholesalers. It must also be efficient so as not to build inventory stocks and inventory prices. The marketing needs to be motivated and knowledgeable about 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 ensure the 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 transport already being arranged.

Monitoring and controlling

Monitoring and controlling allows the business to check for variance in the budget and actual. This is important because it allows Coca Cola to take the necessary actions to meet the marketing objectives.

There are three tools Coca Cola should use to monitor the marketing plan. They are the following: Sales Analysis The 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 retail supermarkets to small corner stores. This gives its products maximum exposure to customers at their convenience. Market Share Analysis Market share analysis compares Coca Cola’s business sales performance with that of its competitors.

Coca Cola looks to increase its market share by over 60%. With the changes Coca Cola is 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 Analysis

This 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 of these three tools can help Coca Cola determine any emerging trends, such as the need for a different product. Comparing these results with actual results gives the business an idea on when to change.

Market Research

When attempting to implement a new Marketing plan a business must address its target market and conduct 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 problem and then gather the appropriate information to solve the problem.

There are 3 types of information a 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 a product 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 problems 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 choice such as psychological factors, Socio-Cultural factors, Economic factors and Government Factors.

• Psychological Factors: such as motivation, perception, lifestyle, personality and self concept, learning, and attitudes influence the consumer’s behavior towards a product and Coca Cola has addressed this issue by introducing Diet Coke to satisfy health conscious lifestyles.
• Socio-Cultural factors: such as culture, subculture, socio-economic status, family and reference groups influence the consumer’s behavior towards a product.
• Economic factors: such as Disposable income and discretionary income. Coca Cola has addressed this 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 consumer spending and choice.

References

1. Alberto, J. (2007). Strategy Moves. Pearson Education. pp. 145-150 Coca-Cola. (n. d. ). Coca-Cola Company. Retrieved 07 03, 2007, from -: http://www. thecoca-colacompany. com/index. html
2. Coca-Cola. (n. d. ). Our Herittage. Retrieved 07 01, 2007, from The Coca-Cola Company: http://www. thecoca-colacompany. com/brands/index. html
3. Kotler, P, Adam, S, Brown, L & Armstrong, G 2006, Principles of Marketing, Pearson Education Australia, China , pp. 125, 331
4. Johnson, M. (n. d. ). Marketing, Market Planning, Market Objectives. Retrieved 07 03, 2007, from Tutor 2 U: http://www. tutor2u. net/business/marketing/planning_setting_objectives. asp
5. Kotler, P., Adam, S., Brown, L., & Armstrong, G. (2006). Priciples of Marketing. China: Pearson Prentice Hall, pp. 330-350
6. Kotler, P., Adam, S., Brown, L., & Armstrong, G. (2006). Principles of Marketing. Pearson Prentice Hall, pp. 245,249
7. NetMBA. The Marketing Mix. http://www. netmba. com/marketing/mix/.
8. NetMBA Business Knowledge Centre. The Coca Cola Company 2007, Mission, Vision & Values. Retrieved July 05, 2007, from http://www. thecoca-colacompany. com/ourcompany/mission_vision_values. html
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