Design a Marketing Metrics System for a Commercial Organisation - Coca-Cola - Essay Example

? Design a Marketing Metrics system for a commercial organisation Executive Summary Marketing is the nucleus of any business and the acquisition of customers becomes the focus of the business. If there is no marketing, then all logistics and operations are of no use as the revenue needs to flow. “Marketing may once have been regarded as more an art than a science. Executives may once have cheerfully admitted that they knew they wasted half the money they spent on advertising, but they didn’t know which half. Those days, however, are gone.” (Farris et al., 2006). The authors have aptly summarized the difference between yesteryears and the current day marketing where it has become a science rather than an art. Art and skills are definitely required but the scientific factor is a much needed factor. Here comes the metrics portion of the marketing activity. “A metric is a measuring system that quantifies a trend, dynamic, or characteristic. In virtually all disciplines, practitioners use metrics to explain phenomena, diagnose causes, share findings, and project the results of future events” (Farris et al., 2006). The executive summary gives a comprehensive and compact picture of the importance of Marketing Metrics in today’s business world. If the marketers are unable to quantify their projections they would not even know what they are looking forward and then all planning and marketing activity becomes vague. By quantifying it is meant that marketing requires numbers like percentage of customers requiring their products, judge the change in market conditions, explain customer habits and purchase trends. All the quantitative measures can be put in the form of metrics which will define the future course of marketing activity in an organization. This marketing metrics is being done for Coca Cola who needs no introduction in the beverage market where they have a huge presence for decades. Even though Coca Cola has established its brand over the years but still it requires a dynamic marketing team to work round the clock to ensure that it reaches out to its customers in a market which is volatile and can change in a matter of no time. Therefore marketing metrics is required to constantly analyze the changes in trend, the purchasing habitat of people, customer tastes, and inclination to reward systems or accumulation of points on coca cola consumption. The report also emphasizes the background of the company, its non financial resources and its financial resources. The non financial resources include market share, customer relationship management, awareness, competitor analysis, product lifecycle and customer satisfaction. The financial resources include Sales and Revenue as well as the Return on Investment (ROI). A lot of planned marketing metrics is done by Coca Cola Company so that it can stay competitive in the market. Marketing metrics involves quantitative analysis based on which important business judgments are made and the marketing managers needs to be spot on and accurate in this analysis to use it to the good effect of the organization as a whole. Introduction Marketing metrics is a complex phenomenon and corporate like Coca Cola needs a range of metric to come to a definite and logical analysis. To achieve the marketing metrics a range of parameters and phenomenon needs to be derived and appropriate data input and analysis needs to be done. Customer satisfaction survey is one of the key input areas where customers quantify their satisfaction level. Similarly trend analysis is done with customer survey which gives an insight to the company as to the market trends and habits of the consumers. This section gives a comprehensive insight into the method and manner of producing a marketing metric which would serve the purpose of getting quality and quantitative information of the market situation which will enable the marketing department to come to marketing decisions based on analysis. “The challenge, of course is knowing what to measure and exactly how to measure it. That is where Marketing Metrics comes in. It is the most comprehensive and authoritative guide to defining, constructing and using the metrics every marketer needs today” (Kotler et al., 2007). It is also stressed in this section that companies like Coca Cola have a huge marketing overhead where they need to have financial discipline and optimize their resources to achieve desired output which can be possible through metrics. Proper trained professionals should be appointed who know how to build metrics depending on multi parameters. Literature Review The phase of globalisation of markets has presented organizations with new challenges in the form of increased competition and growing need to achieve competitive advantage. The focus of firms have made a radical shift from generalist management theories and perception to an increased level of specialization that helps organizations develop innovative strategic approach to improve sales and profits (Chandon, 2004). The need for a deeper understanding of each level of operation and improved knowledge capabilities are necessary to guide efficiency and achieve better results in terms of increased market shares, customer acquisition, profitability and production process. While strategic planning and execution in each department depends on the flow of information and knowledge related to specific units, performance in marketing area is driven by a number of internal and external factors that play a vital role in promoting market shares. Over the years the focus of organizational strategies has been on identifying the key parameters influencing market performance and sales (Farris et al., 2006). Marketing success is measured in terms of tangible performance and range of data that support the viability of products and strategic approach taken by organizations. These measures and parameters form the marketing metrics that help organizations quantify value and trends defining industry operations. Farris et al (2006) define metrics as “a measuring system that quantifies a trend, dynamic, or characteristic” thus making it possible to quantify results and performance. Marketing functions and operations within organizations focus on customer acquisition and retention for increased market share. Over the past few decades the trends in marketing management and strategy planning have shifted from conventional marketing approach that dealt with strengthening of supplier and retail relationships to a more customer-centric approach. Estimating and evaluating the firm’s market performance is not an easy task given the wide range of parameters influencing industry trends and complexities driving consumer behaviour. Hence a deeper understanding of marketing trends and behaviour is required for effective strategic planning and market performance. The essential factors driving market shares are product value, customer needs, pricing, competitive products and promotion strategies (Lamb, Hair & McDaniel, 2009). The figure below illustrates the key marketing metrics that relate strongly to customer perceptions, market share and competitive analysis (Farris et al., 2006). Market shares of products and services can be measured in terms of revenue, sales quantity, and comparative assessment with main competitors. Besides these factors, the performance of products and services is also assessed through the extent of brand awareness, market penetration, customer satisfaction, and customer requirements. It is important to note here that the success of any product or service in the market is directly proportional to the extent to which it meets the needs and requirements of the customers (Farris, Bendle, Pfeifer, & Reibstein, 2008). Fig – Marketing metrics (Source: Farris, Bendle, Pfeifer, & Reibstein, 2006) Arikan in his works on Marketing Metrics (2011) emphasizes the impact of brands on customer perceptions and sales of products and services. The principle driving the sales of products and services is the extent to which the brand has registered in customer minds and creates a positive impression of good value for money. The brand awareness and positioning strongly relates to customer experience of the company products and the extent to which it meets the emerging needs of the targeted consumer segment (Kotler, 2007). Coca Cola – Company background The history of Coca Cola dates back to 1886, by Civil war veteran and Atlanta based pharmacist John Pemberton. It has close to 400 brands are found in almost 200 countries. In the year 2004, the coco-Cola company’s annual revenue was close to $21.9 billion. It was ranked among the top two leading companies in the industry along with its competitor PepsiCo. The annual revenue of Pepsi Co was $29.2 billion. Coco-Cola Company presents itself as the world market company which caters to producing things which would be amazing for everybody (Coca Cola website, 2011). The real motto of the company to achieve profit, and in that process it is ready to pass through all the hurdles and will work endless to reach the aim by expanding itself as much as possible. It will leave no stone unturned to reach this aim and will work continuously and points to grab any opportunity which comes its way. Their company has even gone to establish a relation with Nazis in Germany and also hasn’t hesitated to market their product among the schoolchildren in United Sates (Esterl, 2011). The brand name which the company bears , the marketing techniques, the craziness of the Coco-Cola products among the people, specially the youths, the advertisements etc. has helped the company to still run successfully and create and carry the brand name and the market standard (Coca Cola website, 2011). Market share According to statistics, Coca –Cola Company constitutes about 7.0 percent share of the soft drink market, followed by Pepsi-Cola and Diet Coke with 9.9 percent market share. In the year 2010, Coke was sold 1.59 billion cases, Diet Coke and Pepsi sold 926.9 and 891.5 million cases respectively according to the market share (Accuval, 201). Fig - Soft drinks market share (Source: Accuval, 2010) Customer life time value There is fact which needs to be considered at this point of time is the increasing popularity of coke as compared to the cola products. Coke with its tremendous marketing skills and advertisements has made the customers keen to buy the product more and more. People now have a tendency to keep buying the coke products. Owing to the storing advertising methods and marketing techniques, coke has been able to create a brand name and equity. The long lasting effect of the advertisings and the marketing has created such an impact in the minds of the people, that it is altered by any immediate advertisement or campaign or any negative feedback. The so called life time value by the customers is spreading like a virus where Coco-Cola is trying to reflect. In the latest retro move, it is trying to project the same .They have now put themselves in a series of marketing and the marketing channels, which will make use of the experience of its 125 years of production. Some people may be fascinated to taste their latest product at least with a view of providing an honest feedback about the product (Chakrapani, 2007). Customer relationship management Coke has developed a new pattern of marketing, where it would make the companies or the school or the colleges to drink coke compulsorily. It would tie up with the schools in North America, which would into dealing where only the coke products can be sold. By doing this even they are shelling out money to concerned authorities. It is also offering huge amount of money to take contract of many universities and colleges to do the same. It has also entered in too many cross advertising contracts with many companies. By adopting these measures the companies wants to have a huge number of consumers and will have the advertisements displayed on the major public junctures like hallways , the scoreboard of the sports events etc. Though most the soft drinks are declared as unhealthy especially for the children, as a result of which coke has also been criticized for trying to addict the young ones and the school going children with coke. With campaigns and articles published in the newspaper, many are trying to create awareness amongst the parents and the children, to eradicate the practice of supplying coke in the school (Girard, 2005). Brand awareness The Coca Cola brand awareness is one of its key strengths that draw global attention of consumers. The strong brand image has helped the company in retaining its market leadership across different countries. The key factor driving the success of brand equity of Coca Cola is its strong customer oriented sales and marketing approach that has helped customers distinguish the Coke experience from any other beverage in the market (Moore & Pareek, 2010). The brand has been successful in creating strong and favourable association with its consumers through aggressive promotion and marketing campaigns. Competition Pepsi is the main competition faced by Coca Cola that has a strong brand presence and leading market shares in some geographic areas. Most of the customers don’t really bother about the type of soft drink they are offered too, it can be Pepsi or Coke; they much and more go according the concept of drinking whatever is sold cold. The extent to which all these companies can actually increase the demand depends on the abundant availability also. So the motto of these companies can be to increase the availability so that it becomes somewhat compulsory for anyone to go for it. This is again a method adopted by the Coco-Cola company as publicity. The mechanic and the company persons pay a regular visit to the shops to check if the freezers and the refrigerators need any repairing. If so they would replace or repair them at one go. Coco-Cola is providing freezers and cooler to the shopkeepers and the retailers. This is again a mode of their advertising and marketing technique. The mechanics and the company personals would pay a regular visit to these shops to check if the freezers and the refrigerators are working fine or no, if not they would immediately change or replace it. Customer satisfaction The mission of the coke is to maximize the profit over time. In order to achieve that it follows the six marketing strategies: treating everyone with respect to everyone whom they are dealing with which includes the customers, the communities to which they serve, the company who supply bottles of different shapes and structure. The company wants to supply a non alcoholic drink, which everyone can cherish irrespective of the time and place. They wish to thick and act according to the local needs, want to serve and act as a role model of the corporate citizen, they want to be the best marketing company and marketers as well, they make and supply the drinks as per the consumer demand, as the consumer demand increase their production also increases. They always realize that Coco-Cola is the center or the business. They aim to increase the business, enhance the share of the world wide sell of the non alcoholic drink, and increase in the cash flow. They also want to participate towards the contribution of the revenue to the government thus enhancing the world economic growth as well (Girard, 2005). Product lifecycle The company has an extensive range of products that cater to the taste buds of different consumer segments. While the younger generation prefer the carbonated drink segment, the more health conscious consumers prefer the diet coke. The variety of products adapt itself to emerging trends and local taste preference to ensure increased longevity and demand for the product over a longer period of time. Sales and revenue The total sales of Coke have increased by 4.8 percent in the year 2011 accounting for the sales of 645.9 million unit cases. The revenues increased by 18.1 percent in the year 2011 reporting total revenue of $1.9 billion (Coca Cola Annual Report, 2011). Balance Scorecard Emerging trends and innovative measures are re-defining strategic management approaches to accommodate more sophisticated tools that can help in measuring the accuracy of performance in marketing field. Mark Jeffery in his works on data driven marketing (2006) observed that “in marketing, measuring only sales revenue is like driving a car by looking only in a rear-view mirror, because sales measures what has happened in the past. What is needed is a balanced set of metrics, or scorecard, similar to the complete set of sensory inputs when driving a car” (p62). The balanced scorecard conceptualized and designed by Kaplan and Norton can be applied to measure marketing performance using specific metrics to evaluate brand awareness, customer satisfaction, revenue growth, and competitive assessment. The balanced scorecard has been defined by Smith (2011) as “a management tool that provides senior executives with a comprehensive set of measures to assess how the organization is progressing toward meeting its strategic goals.” The application of this tool in marketing can greatly enhance its accuracy and reliability in predicting results and evaluating the effectiveness of strategic plans. Each marketing campaign can apply specific metrics that help the organization in co-relating the effectiveness of the marketing campaign with defined marketing objectives. Limitation The report has highlighted the role and significance of marketing metrics in creating and delivering value to organizational marketing strategies through the application of some of the key metrics to a multinational company like Coca Cola. The analysis was based on the availability of data and facts from online sources. While the benefits of marketing metrics principle and application are plenty as evidenced in the report, the key limitation lies in implementation phase. Managers and executives find it difficult to monitor results and performance on an ongoing basis with the help of these metrics owing to failure to identify vital parameters that indicate the effectiveness of results (Moore & Pareek, 2010). Conclusion Marketing activities have two primary goals – attracting new customers and retaining existing customers through increased customer satisfaction. Coca Cola has successfully managed to retain its brand leadership over the years and has carved out its market presence in different countries across the globe. However, the success of its marketing efforts indicates the need to strengthen its market analysis and understand changing customer preferences in order to retain its market leadership position. The beverage industry faces intense competition from global players that are focusing on the emerging health conscious customers who seek variety in terms of flavours, quality and novelty of products they experience. Innovation in product design can continue to retain its market shares and improve prospects of acquiring new customers. Customer experience and satisfaction are the key marketing metrics that will drive the business growth model of Coca Cola. References 1. Accuval 2010, Carbonated soft drinks: is demand fizzing out?, available from http://www.accuval.net/insights/industryinsights/detail.php?ID=142 2. Arikan, A. 2011, Multi channel marketing- metrics and methods for on and offline success, John Wiley & Sons. 3. Chakrapani, C. 2007, Measuring customer lifetime value, ROI of Marketing and Research. 4. Chandon, P. 2004, Note on brand audit: how to measure brand awareness, brand image, brand equity, and brand value, INSEAD report. 5. Coca Cola website 2011, Company Statements, available from http://www.thecoca-colacompany.com/dynamic/press_center/yyyy/mm/entry_basename/ 6. Esterl, M. 2011, Pepsi thirsty for a comeback, available from http://online.wsj.com/article/SB10001424052748703818204576206653259805970.html 7. Farris, P.W., Bendle, N.T., Pfeifer, P.E., Reibstein, D.J. 2006, Marketing metrics, Wharton School Publishing. 8. Farris, P.W., Bendle, N.T., Pfeifer, P.E., Reibstein, D.J. 2008, Marketing metrics, Wharton School Publishing. 9. 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