Strategic Marketing- Coca Cola - Essay Example

?Running Head: STRATEGIC MARKETING- COCA COLA Strategic Marketing- Coca Cola [The of the will appear here] [The of the will appear here] [The name of the Professor] [Course] Introduction Coca-Cola is one of the leading food and beverage country with a geographical reach that extends to over 200 countries around the world. Coca-Cola manufactures, distributes and sells over 3,500 non-alcoholic beverages that range from drinking water to sports drinks. Coca-Cola is world-known for their soft drinks and most popularly its namesake Coca-Cola. The main product that Coca-Cola sells is its carbonated drinks such as Coca-Cola and its different variations that include Diet Coke, Coke with lime, Coca-Cola Blak and Coca-Cola Orange. The Coca-Cola Company began as J.S. Pemberton Medicine Company that sold medicinal products such as Cough syrup and hair dye. Later the co-founder of Coca Cola, Dr. John Pemberton, a pharmacist, discovered the formula for Coke, quite by accident. Soon J. S. Pemberton Medicine Company became Coca-Cola and began to operate as a beverage company. The revolutionary taste of Coke soon became a preferred taste for the consumers and Coke became a symbol of ‘Open Happiness’. The beverage industry is one the most growing industries as consumers’ preference has gradually shifted from drinking water to soft drinks and even to energy drinks. Thus Coca-Cola faces immense competition from other beverage industries, with the top competitors being Dr. Pepper Snapple Group, Inc., Nestl and Pepsico, Inc. (Yahoo Finance, 2011). In this report, we will develop a marketing plan for 2011-2012 for Coca-cola to be presented to the board of directors at Coca-Cola. The marketing plan will discuss the current position of Coca-Cola in the market, using marketing audit that analysis both the micro and macro environment for the company. MARKETING AUDIT MACRO ENVIRONMENT- PESTLE ANALYSIS Political Factors With the growing consumer awareness towards the food and beverage industry, many have become concerned over the power and impact of junk food over the children and teenagers. Coke has been easily termed as junk food that contains empty calories which contribute towards the number of obese in the world. With the consumer concern growing, governments may be forced to take action against Coke and other junk foods. Since Coke is an international brand, there is always concern over the growing instability in certain countries which has been on the rise in the last few years. Since Coke is originally an American brand, it is impacted by the growing Anti-American sentiment in the Gulf and certain Asian countries. However, with globalization on the increase, Coke can benefit from emerging and developing markets where demand for Coke will increase even higher. Economic Factors The unmarked recession that began after the US war against terrorism has not just impacted America but also the rest of the world. As the recession continues to take hold, the buyer power of the consumers is greatly reduced. Consumers are moving from luxury items to items of necessity and even at that, they are looking for discounts and bargains. The instability and period of near war that is prevalent in many countries including London, also impacting buyer power and preference of the consumer. Also with the escalating oil prices, production and transportation costs have gone up considerably higher which has resulted in increased prices of the product. The same product is now available at higher prices and at a time of recession. However, the advantage for Coca-Cola is that their manufacturing plant is located in every city where they market their product which considerably decreases transportation costs. Socio-Cultural Factors The recent focus on health and nutrition has led consumers to consider buying carbonated and other drinks that negatively impact their health. Thus there has been a decrease in the demand of traditional Coca Cola products, that are carbonated drink, among the consumers especially baby boomers. The consumer are also becoming diet conscious and for this reason they are shifting their preferences towards diet coke and bottled water that contain relatively less sugar and calories. Technological Factors Technology has played an important role in expanding and changing the industries of today. For the beverage company, technology has contributed by increasing the production to a surprisingly high rate. With the demand for Coke increasing around the world, production had to be increased and the new machinery has helped in this arena. Technology has also helped in creating new products and innovations of the same products so that the new products align with the changing consumer preferences. Also with new products, new kinds of packaging can be introduced which allows for maintaining and even increasing the consumer interest in the product. Technology has also allowed for the creation of new media, that is, the internet. Through the internet, the reach of Coca Cola has improved and Coca-Cola can now market to the young generation through the internet. Internet allows for better marketing and advertising opportunities. It is also through technology that Coca-Cola has effectively been able to tap into the global market and especially in countries such as Japan and Brazil where the demand for Coke products is higher than that of the American market. Legal Factors Coca-Cola is able to enjoy all the legal rights that corporate countries around the world are able to benefit from. The legal system allows Coca-Cola to prevent its formula from being used by its competitors through patent laws. Environmental Factors Environmental laws dictate that organizations have to comply with the mandatory environmental law and take up any voluntary environmental practices. By voluntarily developing environmental best practices, organizations can hope to influence consumer preference towards the company and its product. Since Coca-Cola deals with bottled products, it can adopt recycling methods that lessen the impact of the bottles on the environment. MICRO EXTERNAL ENVIRONMENT Opportunities The biggest opportunity for Coke is its extended product base. Coke has been able to enter into every category of beverage including bottled water. With customer preferences changing from the carbonated drinks, this allows Coke to capture its customers by offering a different kind of beverage. Emerging markets also provide a good opportunity for Coke to extend its market. Markets like Brazil and Japan have acquired the taste of Coke are demand more of its products. With the local market becoming saturated, Coke can invest in emerging markets where competition is still low and Coke can hope to develop a good image among the consumers. Also with its strong financial position, Coke can buy out the existing local competition in the foreign markets or develop mergers to gain insight into consumer preferences. The rapidly developing technology is yet another opportunity for Coke. Technology has helped developed new products for Coke including Coke Cherry and also maintains interest in old brands through improved packaging and marketing in new media, that is, internet. Threats Coke faces its biggest threat for its competitor, Pepsico. The products that Pepsico manufactures and distributes are quite similar to those of Coke. Added to this is the threat of Pepsico being able to quickly understand the changing consumer needs and develop products according to these needs. For example, the sports drinks offered by Pepsico have captured more than 80 percent of the market share in US. Pepsico is quickly catching up with Coke and this is a cause of great concern. Even as Coke launches new products, it does so after the compeitoters have introduced their product. ‘Coke launched Mello Yello only after Mountain Dew was successful’ (Rovell, 2006) The changing consumer attitude is another issue of concern. The demand for Coke has decreased greatly as consumers are adopting healthy lifestyles. Even though Coca Cola has come up with different products, it is still positioned in the minds of the consumers as the sellers of the carbonated drink-Coke. Certain schools have banned the selling of Coke and other carbonated drinks in their premises due to health risks and the increased hyperactivity in the children. This has impacted the sales of Coke considerably since teenagers are the biggest market for Coke and other carbonated drinks. These drinks are been replaced by fruit juices, bottled water and other healthy drinks. This quick replacement to other drinks also suggests that the beverage industry has become very saturated as all kinds of drinks are being introduced by the competitors and consumers can quickly change from one to the other. MICRO INTERNAL ENVIRONMENT Strengths In spite of the high competition that Coke faces from its competitors, it has still being able to develop a strong market position given its strategic advertising and long history. Coke has the biggest product range to offer to its customers and its geographical reach is also the greatest, expanding into more than 200 countries. This makes Coke one of the most recognizable brands in the beverage industry. The marketing and advertising of Coke is also its biggest strength. The new slogan by Coke, “Happiness of Life” has managed to develop a positive and optimistic image of the brand. Also this campaign was released at a time of recession when people has become pessimistic and Coke offered them a respite from their worries. Coke also enjoys a strong financial position that has led Coke to experiment and launch new products. The strong financial position of Coke allows it to invest in research and development. Market surveys can also be effectively carried out. Weaknesses Coke still relies on its carbonated drinks for the bulk of its profit. This is alarming given the changing attitude and preference of the consumers towards such drinks. Pepsico is quickly catching up with Coke and in the recent years Pepsico went ahead of the competition and Coke was reduced to being the fourth largest beverage company (Ferrell, Fraedrich, Ferrrell, 2010) Coca Cola has failed in its word-of-mouth promotion. While the current campaign for Coke is meant to improve the image of Coke, there is still negative publicity associated with the brand. This began when Coke products were found to be contaminated and the stock removed from shelves. For example, Coke’s Dasani water was found to contain bromate, a cancer-causing chemical that resulted in a lot of bad publicity for the company (Abrahams, 2011). Media was quick to associate the product with Coke. Later, Coca Cola was forced to admit that the highly priced bottled water was nothing but tap water; bottled and branded by Coca Cola. Added to this is the fact that this is not one lone incident where Coke would have had a chance to improve of its image but a couple of Coke’s other products were also found to be contaminated. MARKETING MIX Product The product base of Coca-Cola is very large including more than 200 brands. The main product for Coca-Cola is its carbonated drink including Coca-Cola, Sprite and Fanta. These drinks are packaged in different kinds and sizes to suit the need of the consumers. Coke was initially sold in glass bottles but later these bottles where modified in terms of the material used and the shape of the product. The shape of the Coca-Cola glass bottles and family pack is unique and has become a trademark for the company. Price Coca-Cola products are priced at highly competitive rates with that of its biggest competitor- Pepsico. These prices vary with the sizes of the products. The high demand for the product is due to the pricing of the product which is even less than that of bottled water. This makes consumers prefer Coke and other carbonated drinks over water. Place Coke is available in more than 200 countries of the world and this one reason for the success of Coke. Even within the countries, Coke is available at every store and even within schools and educational campuses through vending machines. Vending machines have increased the sale for carbonated drinks since they are placed at strategic points. Promotion Coke also effectively promotes its products. The different brands in Coke are promoted through different advertisement. Since the products vary in taste and preferences, brands are advertised separately. The target market for the carbonated drinks of Coke is youngsters. While the advertisements are done separately, joint promotions are also done where consumers can win prizes by scratching the cap of Coke bottles. MARKETING PLAN Objective for Growth 1. Improve brand image and go away with the negative publicity attached with Coke; 2. Focus on non-carbonated and healthy drinks; 3. Develop more products that align with consumer trends. Gap Analysis of Objectives End State Current State Gaps/Action Consumers should have a positive image of the brand Products such as Dasani Water have created negative publicity for the brand 1. Create positive publicity through PR campaigns and apologize for the old practices 2. Create a code of ethics and standardized operating methods Develop strong products for non-carbonated drinks as consumer preferences are changing from carbonated to non-carbonated healthy drinks. Coca Cola relies on 85 percent of its profit on carbonated drinks. 1. Promote and market non-carbonated effectively. Coca-Cola should be the first to spot changes in beverage trend and come up with suitable products. Pepsico is the leader in spotting changing trends and comes with new products the quickest. 1. Market Surveys should be conducted to understand consumer preferences; 2. R&D facilities should be created for the purpose of developing new products. Implementation of Strategies Coca-Cola Company is the leading beverage company that faces strong competition from Pepsico. In the recent years, Coca Cola has decreased its promotional activities along with creating bad publicity for itself through certain products such as Dasani Water. Also Coke has failed to effectively expand its products to suit the changing customer needs. In order to improve this, three strategies have been recommended. The first strategy is to launch a PR campaign that aims at improving the image for Coca-Cola. But even before this Coke will have to develop and incorporate a code of ethical practices that is consistent in all the countries where it operates. These ethics will be voluntary and will improve the image of Coca Cola. Coca Cola will also have to develop international standards such as the ISO to improve its current position. Once these standards and ethics are incorporated, the next step would be to advertise this to the public. Coke has to develop an image as a caring and responsible brand as in the recent years Coke has lost not just its position as the leading beverage company but also its reputation. Once the PR campaign is moving in the right direction, the next step is to develop new products. Coke is struck in the market of carbonated drinks while its competitors are quickly developing products to suit the changing consumer attitude. Coke has to come up with new products before the consumers develop a taste of the competitors’ products. The marketing of the products would require that Coke develop a USP for these products. For example, for energy drink Coke could rely on the endorsement of sports celebrities. When Coke develops new products, it has to understand the changing consumer needs. Even if Coke enters a new market, it needs to research consumer trends and drinking tastes. This requires market surveys that need to be effectively translated into the research and development of new products. When entering new countries, Coke has to realize that there are certain tastes that are popular with the consumers. For example, the older Chinese population has a preference towards tea. For such consumers, Coke can launch iced tea and flavors of iced tea. BUDGET AND CONTROL The current advertising and marketing budget for Coke amounts to $2 billion but this marketing is still failing as Coke is unable to improve its brand image among the consumers. Under the proposed implementation plan, the biggest share of the budget will be allocated to the PR campaign. The reason for doing slow is the current brand image which will go even lower if adequate steps are not taken. Once the brand image is improved, Coke can brand its products using its trademark without the fear of bringing bad publicity to the new product. Thus, to start from the base, $1 billion will be allocated to the PR campaign. Once the PR campaign draws result, the next step will be to introduce new products. These products will depend on the existing consumer drinking preference such as iced tea for the Chinese market and sports drink for the sporty teenagers. Since the sports drinks require the endorsements of celebrities, it would be take a large part of the advertising budget. This is estimated to be $50 million. The current campaign of ‘Open Happiness’ have been quite successful and for this reason Coke will have to continue adapting this campaign to almost all advertising and marketing campaigns. This campaign will also aid the PR campaign where Coke can spread happiness by distributing pure safe water to draught ridden countries. References Abrahams, M. (2011). Studies reveal that water tastes like water. United Kingdom: Guardian. Retrieved from http://www.guardian.co.uk/education/2011/aug/08/bottled-water-taste-research Ferrell, O. C., Fraedrich, J. and Ferrell, L. (2010) Business Ethics: Ethical Decision Making and Cases, Ohio: Cengage Learning Rovell, D. (2006) First in thirst: How Gatorade turned the science of sweat into a cultural phenomenon, New York: AMACOM Division American Management Association. Yahoo Finance (2011) The Coca Cola Company (KO): Competitors. Retrieved from http://finance.yahoo.com/q/co?s=KO+Competitors Read More