Pest Analysis for Pepsi-Cola - Essay Example

?Pest analysis for Pepsi Cola Compile marketing audits 1 Appraise the processes and techniques used for auditing the marketing environments. A marketing audit consists in covering a firm’s marketing goals, environment, system, strategies and organization. Marketing audit undergoes three main processes. These are as follows: a) Setting the scope and objective – first, an auditor in collaboration with the company’s officers has to assess the nature of marketing operations and determine the value of the marketing audit. Once company officers are mutually convinced about the benefits of a marketing audit, both parties have to work together to decide on the coverage, objectives, depth, report format, data sources and the time taken to do the audit. In the case of Pepsi Cola Company, first of all the global market share needs to be determined. The pricing system in this case is determined by the local Pepsi Cola bottlers. Moreover the company also maintain standards for evaluating the quality of the product. However, in order to compete with Coca Cola they have to first strategize ways and means to improve sales, performance measurement of the product, type and level of compensation and finally the addition of new sales personnel. b) Collecting data – The second step consists in collecting relevant data. Here, Pepsi Cola has to find data regarding the volume of sales generated by its rival company in order to plan the means to improve sales activities. The auditor and the firm’s officers need to collect private and published data on the industry. Also suppliers need to be contacted who in turn can contact wholesalers in order to furnish additional market data. One of the main responsibilities of auditors is to suggest plausible ways to improve the marketing consensus. c) Report preparation and presentation – The marketing auditor prepares notes for verbal and visual presentation depending on the data collected. The initial presentation consists in showing the main findings from the data, reiterating the objectives of the marketing audit and accordingly present possible suggestions and recommendations. Then the final report is presented which is evaluated and debated by the company’s officers. 1.2 Apply environmental and technical auditing techniques in a given situation. The process to find out whether the practises and operations conducted in an organization are in compliance with the regulatory requirements is environmental auditing. A technical audit is an objective and systematic examination which strives to assess whether the environmental data collection process comply with the project plan. It also finds out whether the processes predefined by the project plan is effectively implemented and whether these are enough to meet the quality goals of the project. (EPA, 2000). In the Pepsi Cola company extreme care is taken that the operations conducted are in compliance with the regulatory requirements. In order to provide excellent quality attention is given to details like packaging, advertising and marketing the product. Also the bottling and manufacturing process follows quality control processes and each Pepsi Cola bottle undergoes testing and inspection. The company follows mechanisms which prevent any foreign body from entering the bottles. Moreover such containers are thoroughly rinsed and cleaned and then quickly filled through a high speed devise. Examine the main barriers to marketing planning. 2.1 Identify the main barriers to marketing planning. The preparation and implementation of a marketing plan may face ten main barriers. These are as follows: a) A confusion which may result between strategy and the marketing tactics. b) Sometimes the market plan may lead to the isolation of the marketing function from that of operations. c) There may be confusion between the concept of marketing and the functions of marketing. d) Organisational hindrances e) Inadequate in – depth analysis may be a major hindrance to marketing strategies and plans f) There may be confusion between the output and the marketing processes. g) If the marketing personnel lack the skill and knowledge required then it may result in a hindrance to the marketing plan. h) Marketing planning needs a systematic approach. A major hindrance to this is an unsystematic approach which is undertaken by marketing personnel. i) Objectives need to be prioritised depending on the level of importance. If the objectives are not prioritised then it may hinder the marketing planning. j) Sometimes corporate cultures may be a major hindrance to the marketing planning process. 2.2. Suggest how organizations may overcome barriers to marketing planning. In order to successfully develop and implement a marketing plan, organizations need to overcome the barriers to marketing planning. They may do the same by following the below mentioned ten guidelines. a) The first barrier mentioned is that confusion may arise between strategy and marketing tactics. In order to overcome this barrier, organizations first need to strategise the marketing planning which should ideally cover a period of three to five years. After this has been written and agreed upon, a one year operational marketing plan should be formulated. b) The second barrier mentioned is that marketing planning may result in isolating the marketing function from operations. Marketing should be customer focused. It is recommended that sales and marketing personnel should report to a common superior and the reporting head should not be a person from a high management level like Chief Executive Officer or Managing Director. c) Marketing is an attitude of the mind and not a series of mechanical functions. Marketing in other words needs to accommodate all organizational functions in order to satisfy the demands of the customer. d) In order to avoid barriers cropping up due to organizational functions, it is recommended that that the activities of a company should be targeted around the customer groups. Excellent marketing planning should be first developed and implemented in Strategic Business Units (SBU) as without this there may be limited value to corporate marketing planning. e) In – depth research and analysis must be conducted for successful marketing planning. Marketing audit is mandatory for successful marketing planning. f) In order to avoid confusion between output and process a SWOT analysis should be conducted which should emphasize on each component which is of supreme importance to the future of the firm. The SWOT analysis should focus on key factors and the marketing planning should be made on the basis of results and recommendations from the SWOT analysis. g) All marketing personnel responsible for the strategic business unit should have the required skill and knowledge to do the job perfectly. h) All organizations should develop and follow a systematic process which entails adhering to the guidelines of a written process and a common format for marketing planning. i) Depending on the impact to the firm, all goals must be prioritised and depending on the level of urgency resources should be allocated. j) Culture leaders should actively participate and support the marketing planning. Also an appropriate marketing strategy should be adopted with the prime consideration to the phase of the organizational life line. Before formulating a marketing plan this phase should be evaluated. (McDonald, 1992). Formulate a marketing planning for a product or a service. 3.1 Explain the need to be innovative in the market or services. Innovation is a change which helps in benefiting a firm and its customers. An organization which develops and implements a fundamentally new way to serve and reach out to its customers is said to have achieved an innovation. The act of introducing something new is innovation. Innovation is an extremely complex factor and its success largely depends on effective and systematic management over a plethora of activities. An organization may adapt either one or all approaches to innovation; namely product innovation, process innovation and market innovation. Market innovation is to enhance the marketing mix and how to serve them. The second innovation can be improving the mix of offers or product innovation and the third is changing and enhancing the internal operation which is process innovation (Johne, 1999). Nowadays companies face severe challenges which are due to competition, globalization, changing demands of the customer and introduction of new technologies. In order to remain in the market firms need to place innovation as one the most important competitive strategy. Technological breakthrough has spurred innovation in almost all organizations. Take the case of banks. Almost all banks have introduced a new facility of withdrawing cash from ATM machines. This is a major innovation which has been made in order to facilitate the customer needs and to give them optimum satisfaction. In order to remain in the market organizations need to introduce new services and products. This will help them to develop an entirely new market. An excellent example of providing excellent service is that of FedEx’s introduction of overnight express delivery. Another innovative way to remain in market is the development of an entirely new product of service by an organization. For example, the development of the environmental friendly hotels by leading hotel chains is an innovative service which helps in building an entirely new market. Introduction of new services which provides better services at a lower cost is also innovation. For example the concept of e – learning is one which has helped in connecting people all across the globe at the same time. Innovation is necessary as it helps in improving and making necessary changes to a new service or products (Ottenbacher & Harrington, 2010). Take the example of Kellogs. This was initially introduced as a health food. Today, this comes in a variety of flavours and tastes which has been developed to suit the needs of the consumers. 3.2 Identify and assess techniques for developing products. Globalization and fierce competition has accelerated the need to concentrate on the techniques to develop new and innovative products and services to suit the needs of the consumers. In order to develop a new product firms need to follow certain techniques related to the design of the product, manufacturing process that the product needs to go through, information technologies that needs to be involved in developing the product, organizational techniques and the involvement of the supplier in trying to get the resources for product development. An assessment criteria needs to be undertaken which must take into consideration the success rate of new products, time to market it, compare the percentage change in products which are in the market for less than three years, satisfaction of the consumer, frequency of launching a new product, quality and cost of the new product and market share. (Palacois & Gonzalez, 2002). 3.3 Make recommendations for pricing, distributing, communicating and product or service. The case study relates to a situation where Pepsi Cola wants to compete with Coco Cola. In order to get this achieved they need to develop an effective marketing mix wherein a lot of focus needs to be given on the product pricing, distribution and communication channels. The below mentioned guidelines will help in achieving an effective marketing mix for Pepsi Cola. a) In order to make effective comparisons it is very necessary that consistent and clear metrics is developed across business units, marketing campaigns and customer segments. b) The data collected needs to be understood and accordingly a strategy should be developed for pricing, distributing, communicating and the product. c) Firms should not limit themselves to traditional methods of marketing. In fact it is always good to experiment by changing the design of the product or may be introduce a new system of distribution and communication network. d) While making such recommendations one must always keep in mind the product brand and the revenues. e) Lastly it is recommended that the product is tried and tested first and then measures should be implemented to develop distribution and communication channels to market the product (Wise & Sirohi, 2005). 3.4 Specify measures to monitor and review marketing performance. Pepsi Cola needs to review and monitor the marketing performance from time to time since it is thinking of challenging Coca Cola. The marketing and promotion activities that are undertaken by Pepsi Cola needs to be reviewed and monitored. The outcomes of marketing activities like market results (awareness of consumer, brand value, market share and customer equity), financial results (profits, sales, capital return, cash flow) and customer measures (satisfaction of customers, lifetime value, retention rates and cross – purchase rates) needs to be evaluated from time to time. Also the marketing investments should be monitored to find out whether they are generating positive returns to the organization. Firms can relate specific marketing activities to specific intended results. Operational measures which track the efficiency of the internal marketing personnel should also be conducted. Another conventional set of measures which is followed by most companies is the creation and monitoring of marketing reports which helps to maintain a track of the marketing activities made by the company. All the above mentioned measures are taken as managers need to know that the funds available are spent wisely on marketing activities. (Raab, 2007). 3.5 Present a marketing plan for a product or service. Pepsi Cola needs to develop a comprehensive marketing plan in order to compete with Coca Cola. The first step in presenting a marketing plan is to perform a comprehensive marketing audit. Next step is to understand the customers’ product aspirations. This is a vital requirement for a successful marketing plan. Pepsi needs to find out what type of cold drinks the customer would like to have and needs to carry out market surveys to find out results. Also the company needs to track down on the type of consumers who purchase a particular product. Another important aspect that Pepsi needs to do is to woo new customers. This is a challenge as it needs all the marketing elements – location, pricing and sales to play the part. Pepsi needs to develop a marketing plan which will offer competitive prices and along with this offer special introductory price and /or discounts. Depending on the location the advertisement campaign needs to be carried out. A place where the customers do not have much awareness of the product rigorous campaigns needs to be carried out to promote and create product awareness. Lastly it is very important that Pepsi monitors its sales activities and practises from time to time. At the same time, the company needs to ensure that its sales and marketing personnel are highly skilled and motivated and are capable to achieve goals within given timelines. (Delaney, 1994). Examine ethical issues in marketing 4.1 Investigate two different organizations’ responses to ethics in marketing Ethics in marketing refers to conformation of standards and principles defining acceptable conduct in the market place. The importance of marketing ethics stems from the fact that all organizations need to prevent illegal behaviour and ethical misconduct on the part of employees. Some marketing ethics risks are over billing clients, fraud, deceptive sales methods, antitrust and price fixing. Take the example of Coca Cola. The company was alleged for contaminating its product in Belgium and hence had to lay off a number of employees. Mangers are responsible for the ethical decisions taken. Coca Cola in this case took punitive action against a number of employees. This is an organizational culture which seriously tries to curb malpractices that are performed in an organization. A firm which does not coerce its employees for ethical misconduct encourage the behaviour to be repeated. Take the case of Enron. This company encouraged misconduct by not trying to curb illegal behaviours. One of the most infamous business transgressions carried out in the previous decade is that of Enron. Organizations must adhere to marketing ethics and should try to curb the system to offer bribes, maintain fair practises by not coaxing clients to use redundant products and services and maintain honesty by not misrepresenting the capabilities and services (Singhapakdi, Sirgy, Lee & Vitell, 2010). 4.2 Identify ethical issues in marketing. Organizations have to deal with key issues in product marketing. These may be related to providing bribes, falsely enhancing a product by carrying out extensive marketing campaigns and providing misinformation about the product in various advertising and marketing promotion activities. The organization along with the stakeholders defines the marketing ethics which should be followed by the organization. Other ethical issues in marketing may be honesty and fairness, discrimination, conflict of interests, committing frauds and privacy. Blockbuster Inc., has got a legal notice from the Attorney General in New Jersey for concealing terms associated with its No More Late Fees policy. Some common examples of ethical issues in marketing are misrepresenting materials in internal and external communications, pricing deceptions, antitrust, deceiving customers by telecommunications, market channel relationships and product liability. Organizations must practise a culture which values and conforms to certain ethical standards. Employees flouting ethics in an organization should be severely penalised so that the misconduct is not repeated. Coca Cola fired a number of its employees including the Chief Executive Officer in Belgium following allegations of product contamination. Targeting harmful products at vulnerable clients is another ethical malpractice conducted in marketing. Campaigning for products like alcohol and cigarettes without revealing its harmful effects is also an ethical issue in marketing. 4.3 Describe the implications of ethical issues on the marketing mix for an organization. Marketing personnel have to face a lot of ethical problems especially those related to application and planning the strategies for developing a product. Some common ethical issues may arise as the information printed on the product labels may be deceptive to the consumer. One of the most serious ethical issues is fixing the price of a product. Ethically speaking the product price should be proportionate to the benefit taken by consumers. But in case of a monopolistic market sometimes there is an unreasonable increase in price. Take the recent cases of the fuel price rise. This unreasonable fuel price has triggered a price rise in almost all essential products and services. Unethical practises can also take place in distribution channels. For example if the manufacturer is very influential, then it may force and monitor a retailer regarding the choice of retail location, selecting product mix, levy restrictions on alternative supply resources, minimum order size of product, procurement credits to clients, advertisement numbers etc. Firms may also follow ethical misconduct on product promotion mechanisms like advertisements and personal selling. Ethical misconduct in advertising can be performed by the customer / agent relationships and advertising message content. Other ethical issues in advertising may be in the form of mock – up sessions, demonstrations, advertisements to children and testimonials and endorsement by famous personalities. (Ozdemir & Tokol, 2011). The impacts of such ethical issues in the marketing mix can cause serious harm to the consumers. The firm if discovered to conduct ethical malpractices in product marketing is liable for persecution. References: Kotler, P., Gregor, W.T. & Rodgers III, W. H. 2005. “The Marketing Audit Comes of Age”. Retrieved on June 09, 2011 from http://academics.eckerd.edu/instructor/trasorrj/MN%20373/The%20Marketing%20Audit%20Comes%20of%20Age.pdf EPA, 2000, January. “Guidance on Technical Audits and Related Assessments for Environmental Data Operations”. Retrieved on June 09, 2011 from http://www.epa.gov/quality/qs-docs/g7-final.pdf McDonald, M.H.B., 1992. ‘Ten Barriers to Marketing Planning’, Journal of Business and Industrial Marketing, vol. 7, no. 1, pp. 5 – 18. Ottenbacher, M.C. & Harrington, R.J., (2010). Strategies for achieving success for innovative versus incremental new services, Journal of Services Marketing, vol.24, no. 1, pp. 3 – 15. Johne, A., (1999). Successful market innovation, European Journal of Innovation Management, vol. 2, no.1, pp. 6 – 11. Palacois, T.M.B. & Gonzalez, F.F.M. (2002). Assessing the validity of new product development techniques in Spanish firms, European Journal of Innovation Management, vol. 5, no. 2, pp. 98 – 106. Wise & Sirohi, (2005). Finding the best marketing mix, Journal of Business Strategy, vol. 26, no. 6, pp. 10 – 11. Raab, D.M., 2007, September. “Marketing performance measures”. Retrieved on June 10, 2011 from http://www.information-management.com/issues/20070901/1091621-1.html Delaney, J., (1994, November). Crafting a marketing plan that works. Black Enterprise, pp. 120 – 124 Singhapakdi, A., Sirgy, M.J., Lee, D. & Vitell, S.J., (2010). The effects of ethics institutionalization on marketing managers: The mediating role of implicit institutionalization and the moderating role of socialism, Journal of Macromarketing, vol. 30, no.1, pp. 77 – 92. Ozdemir, E. & Tokol, T. 2011. “Examining marketing mix from an ethical view: A field research on marketing executives”. 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