Cokes Product Strategy of Developing Healthy Beverages - Research Paper Example

?The Coca-Cola Case Study Table of Contents Introduction 3 Question 3 Question 2 4 Question 3 5 Question 4 6 Question 5 7 Conclusion 8 Reference 9 Introduction The Coca-Cola Company is one of the oldest manufacturers and sellers of soft drink beverages mainly include the cola drinks. Dr. John Pemberton developed the Coca-Cola® syrup on May 8, 1886 and this the foundation day for Coca-Cola Company. Since its inception, the cola drink became one of the most famous and largest selling non-alcoholic beverages. The rapid popularity of cola drink of Coca-Cola Company had led to expand its market in international boundaries and in every international market its performance has been applaudable. With the passage of the company kept introducing many innovative beverages other than cola drinks. In the process, the Coca-Cola Company was led by a number of efficient decision makers like Roberto Goizueta and Warren E. Buffett who have contributed towards the value growth of the company. This paper mainly deals with case of Coca-Cola Company when it was led by the veteran Mary E. Minnick, the “Executive Vice President and President of Marketing, Strategy and Innovation” (Forbes, 2011). Based on the given case study, multiple aspects like innovations and product development strategy and in this process the role of Mary E. Minnick will be discussed. Question 1 Describe and evaluate Coke’s marketing and innovation strategy transformation designed to position the company on the cutting edge of consumer trends. During 1980s and '90s, the Coca-Cola Company was the global leader of non-alcoholic beverage company and had portrayed itself as one the best blue chips companies. This was the phase when the company was led by the team of Roberto Goizueta and Warren E. Buffett. However, after this immediate period of glory, it faced a threat from the key rival PepsiCo Inc. PepsiCo was founded in 195 by Donald M. Kendall with the similar concept of cola drink (PepsiCo, 2011). Within the next ten years of its inception, it gained significant amount of market share and as an effect, Coca-Cola Company lost higher percentage of market value. In such situation, it became very necessary to position the company on the cutting edge of consumer trends by implementing an effective set of marketing and innovation strategies. By the time Mary E. Minnick joined Coca-Cola, the competition took place on a global level and for success in global markets, and understanding of culture was one of the key factors for developing globalized marketing and innovative strategies. Minnick realized that the innovations like merely by repackaging and slightly changing the flavors would not be helpful. In the process of innovative marketing strategy, multiple innovative product developments were the key factor for the company. The innovation strategies were basically meant to counter against the products the two key non-carb rivals Snapple and Gatorade. Moreover, during 1990s, Coca-Cola focused to generate revenues by introducing innovative products other than cola drinks. Besides, the marketing strategy also involved of cultural aspects of each region. It offered different products for different markets and also the promotional and campaigning activities were also very specific as per the culture of markets. Question 2 Critically evaluate Coke’s product strategy of developing healthy beverages. During 1990s, the product strategy of Coca-Cola was the major activities to cope with intensifying competition. Product development strategy during the time of Minnick took a new attempt as there were significant product development took place in the existing production as well as in new products. During this period, more than 1000 new beverages were introduced and the main theme behind these new products was the ‘health’; for example, diet drinks like Coca-Cola Zero, coffee-flavored cola etc were launched for male market segment. However, such products were not capable of offer major benefits to the company for longer period of time. Perhaps, the true essence of product development in terms of health perspective was identified by Minnick when she focused on meeting the needs to consumer rather than competition. The consumer health related needs mainly included mental renewal, health and beauty, hunger and digestion etc. Inventing drinks that meet all these needs of consumer had not able to become possible. However, she was able to bring certain products that met some of the needs regarding the health and beauty. In the mean time in many of regions like Istanbul the image of Coca-Cola became of a sugar-laden junk that should be avoided. Then, the company introduced a number of diet coke aiming to offer the major health concern for women like weight management, skin care, and detoxification. The product development strategies of Coca-Cola during the time of Minnick more innovative and customer needs oriented. Moreover, the company was also facing crisis as people perceived as manufacturer and seller of junk beverages. The focus on health for product develop was very effective but these products were able to bring long term gains. Therefore, constant product development addressing the health issue was required. Question 3 Examine the underlying logic of Mary Minnick’s emphasis on understanding why people consume beverages. This case study of Coca-Coca Company during the time of Mary Minnick offered a detailed study on the creative and innovative marketing approach by Minnick. Prior to her joining in Coca-Cola, the prevailing decision makers mainly focused on the pushing the sales of carbonated soft drinks. During this time, the carbonated drinks were also offered by the key competitors like PepsiCo and Snapple and market of carbonated drinks highly intensified. Her approach of the marketing had led to bring a number of innovative products on the cutting edge of consumer trends. Her innovative approaches for product developed were entirely out of the box. The prominent approach for product development was that she explored the consumers’ needs basically regarding health and beauty that diversified the company, and ultimately the company developed new segment of the market with lower competitions. In these entire process, she found and established new concepts that why people consumer beverage. Hence, she identifies ten basic health related needs for the target consumers. The beverages addressing the health related issues includes the drinks that cared for women’s skin, weights, figure etc. For the Japan market, she understood the potential of non-carb drinks and she introduced products like canned coffees called Real Gold, “Love Body, a tea marketed to calorie-counting women” etc and this led to generate higher revenues (Foust, 2006). Question 4 Discuss the underlying logic of the non-carb drinks strategy. The non-carb strategy for product development in the Coca-Cola Company was first introduced by Mary E. Minnick. Prior to this, the company mainly focused on the carbonated drink. However, after the entry of PepsiCo, the market of carbonated drink became highly competitive. Besides, many people also perceived the coal drinks as junk beverage affecting the health negatively. Minnick realized basic reason of underperformance of Coca-Cola and at same time she also realized underlying potentials of non-card drinks. She combined the people needs regarding health related concerns and potentials of non-carb drinks. The non-carb strategy for product development gave a new basis to people for consuming the beverages offered by Coca-Cola. Generally, the carbonated drink like Coke Classic was the major cash cow product that generated the largest percentage of revenues. On the other hand, there were certain markets where carbonated drinks performances were not up to the benchmark comparing to other regions. Japan and Istanbul were the two major markets where potentials of non-carb drinks were higher than carbonated drinks. In these markets, Minnick introduced non-carb drinks that met the health related needs of people. These non-carb products had been able to generate huge profit from these two markets and finally non-carb products also offered the Coca-Cola Company the benefit of diversification. Question 5 Compare and contrast the performance of Coca-Cola and Pepsi Coca-Cola was the pioneer and the only market leader in carbonated drinks until its key competitor, PepsiCo enter in the market. Within the next 10 years of Pepsi’s market entry, Coca-Cola faced denial from the market. Pepsi entered in the market with its cola drinks but it also realized the necessity of innovative product development to capture the marker share. Besides, Pepsi’s financial performance was also better and it started gaining trusts of investors with stable earnings growth and stock performance. During mid of 1960s, Coca-Cola markets 300% of the market size of Pepsi. By the next ten years, Pepsi grabbed nearly 50% of the market share of Coca-Cola. Therefore, it can be claimed that Pepsi entered in the market with better preparation and strategy to counter the prevailing market leader, Coca-Cola. The business strategy of Pepsi was very effective and innovative; for example, it collaborated with Starbucks for introducing new products like Frappuccinos; whereas, Coca-Cola kept trying to bring product development by merely repackaging the old products with new looks. Though, Pepsi was new comer in beverage market but it was first to understand potentials of non-carb market. However, the basic similarly between the Coca-Cola and Pepsi was that both of them mainly earned their revenues by selling carbonated drink. Conclusion This paper has discussed Coca-Cola’s innovative marketing strategy including product development strategy under the leadership of Marketing President, Mary Minnick. She joined Coca-Cola in 1983 and prior to this period, Coca-Cola faced its first crisis since its inception due to market entry of Pepsi who came with a set of effective innovative business and marketing strategies. In such situation, Minnick helped the company by introducing innovative product develop by focusing on peoples’ health related needs. In this process, she realized the potentials of non-carb products. The non-carb beverages that addressed the health related people needs helped to position the company on the cutting edge of consumer trends. Reference Forbes. (2011). Mary E. Minnick Profile - Forbes.com. Retrieved on September 21, 2011 from http://people.forbes.com/profile/mary-e-minnick/76642. PepsiCo. (2011). PepsiCo Our History. Retrieved on September 21, 2011 from http://www.pepsico.com/Company/Our-History.html. Foust, D. (August 07, 2006). Queen of Pop. Retrieved on September 21, 2011 from http://www.businessweek.com/magazine/content/06_32/b3996401.htm. Read More