Standardization and Differentiation of Coca-Cola Products - Assignment Example

Lecturer: Presentation: Part A: Whether Coca-Cola standardizes or differentiates its products Standardizationis the approach in which companies to homogenize their universal business activities such as maintaining the characteristics of their manufactured goods, advertisement, and the marketing processes. On the other hand, differentiation involves creation of a difference in the appearance of a company's products in order for them to acquire unique characteristics different from those of competitors. It is usually meant to make the goods more appealing to customers. It also generates an aspect of value in the products, thereby increasing the competitive advantage of a company (Wilson M S, Gilligan C, 2005 pp.76-78). Coca-Cola is one of the multinational companies which have adopted differentiation as a way of maintaining the company's competitive advantage. It has achieved the desired loyalty for its brands in the market. In order to achieve product differentiation, it employs several methods including; branding, advertising, attractive packaging and promotion. The Company makes use of branding to give its products names and appearance which are unique. The Cola products have branded names for example Coca-Cola, Coke, New Coke, C2, C2 Cola, Coke Zero and Simple C2 which gives the consumers a variety of products to choose from. This has made consumers to have brand loyalty compared to other brands from competing companies. In any circumstances, Coca-Cola products can be identified easily through the unique trademark. This trade mark protects the products from being sold to consumers illegally. The trademark has also made product marketing easier since it is uniquely simple for customers to remember than most brands of the same nature from other companies. Advertising is also another method that the company uses uniquely to constantly inform the customers about the importance of purchasing the products. Through advertisement, the company informs customers of the unique characteristics of its products such as improved quality, reduced prices e. t. c. It uses creative slogans to impress the consumers, encourage and instill confidence in them in regard to the products. These slogans include; "Things Go Better with Coke", "Stop here for a Coke", "The favorite drink for ladies when thirsty, weary, and despondent" and others like "Quench your thirst with Coke". Television and radio advertisements have been in use for a long time. They are uniquely presented in order to enhance remembrance in the consumers. Advertisement campaigns have also been held world wide especially the one which strikingly targeted for the youth dubbed "Things Go Better with Coke" and "I'd Like to Buy the World a Coke" involving some popular musicians who modified songs for the name Coke to feature in them. These were largely used in radio and television commercials and were largely successful. Attractive packaging is another unique feature of the company's products. It uses an array of bright colors which are distinctive and attractive to the customers. This makes the company's products to be easily recognized by consumers especially when arranged on the shelves of supermarkets or in a fringe. At the same time, the retailers are usually supplied with refrigerators for packing Coca-Cola products. This was one of the unique features which created a notable difference between these products and those of other companies especially where the demand for cold drinks is usually high. Few of the competing companies had such creativity until recently. The crates and the vehicles used to transport the products have a characteristic red color with a sign of Coca-cola prominently appearing on part of the outer surface. More over, there are retail containers which are usually positioned at strategic positions where demand for refreshment is high. These containers are usually painted in the unique color. Recently, the company has developed huge retail containers which resemble a large bottle of coke. All these artistic characteristics are usually visible from a distance, and consumers can be assured of where to get a drink of Coca-cola. These are just some of the unique adverts that the company uses amongst many others such as huge billboards along highways, news letters e. t. c. Promotion has been used extensively and distinctly in the company's marketing activities. Consumers are usually given an equal chance of participating in the products promotion. It comes in many different ways. Many involve a situation where customers fill in raffle tickets after purchasing the company's products. They are then selected randomly and given prizes depending on the raffle tickets which are usually different depending on the value of the purchase. Due to its uniquely large market share and hence huge capital, the company is able to offer high value prizes compared to competitors. Trade shows are also commonly used where consumers gather at a common place to meet with the company's marketing team. Consumers participate in various activities organized by the marketers such as Coca-cola drinking competition, dancing, comedies and such events after which the winners get prizes with labels of the company's trademark. The company also employs a variety of promotional activities such as sponsoring major events such as soccer and athletics. Part B: Whether it would be Beneficial to do this and why Product differentiation is usually beneficial to the company in many ways. These include; Maintenance of its consumer base through the use of branding which has protected the identity of the products from imitation by competitors. Product identification in the retail shops and supermarkets is made easy since the customer asks for a particular product of a certain amount which costs a specific price. The consumers' expectations are met through branding since they usually attach a certain quality to the brand. This instills confidence and a feeling of safety in them. Due to the brand acquiring the loyalty of consumers, the prices of the products are not challenged by competitors who sell their products at a lower price. This brand insistence has largely contributed to the company's profits. While advertising, consumers usually recognize the characteristic trademark which is the company's brand name. They are therefore capable of identifying it amongst other products. Due to the regular need for the company's products by consumers who have approved the product quality, branding is useful in order for them to differentiate the product from those of competitors. When the company launches new products, it is usually easy to advertise them with the use of the trademark which is generally recognized by the consumers. Without a particular brand name, consumers usually hesitate to purchase a new product due to the absence of confidence in the producer, no matter whether it is of good quality. On the other hand, attractive packaging has been proved through research to influence the human brain in regard to decision making, especially on purchasing. In the study it was established that, "Eye-catching packaging motivates particular areas in the brain which are usually connected to processing affirmative feelings" (Kroll, M., P. Wright, and R. Heiens 1999 p 376). Consumers are motivated towards purchasing products which have been attractively packaged and displayed. They usually feel contented with attractive packaging by associating it with superior quality. The inclination which develops in the mind tends to motivate the consumers to believe that the products will satisfy their desires. Attractive packaging usually helps to maintain customers as well as attract new customers. With the rising awareness on the importance of environmental protection, consumers tend to buy products which do not pollute the environment through containers which are difficult to dispose. Coca-cola usually packs most of its products in re-usable bottles as well as in recyclable cans. This helps to build confidence in the consumers who are sensitive to environmental pollution. On the other hand, consumers are usually sensitive to the nature of the products that they purchase. Packaging the products in transparent containers allows them to assert that the product they are purchasing is exactly what they would like to. This is because they can identify the features of Coca-Cola, especially the color (The Ethical Insight team 2005). Effective promotion strategies have been proved to be an asset for the company. It raises the value of the Coca-cola products for a short period of time, but it is essential in mobilizing customers to purchase the products. The marketing team is also presented with a chance to meet with the customers which enables them to collect first hand information in regard to the product quality improvement. Customers air their views concerning their level of satisfaction and the way in which they would like the company to present its products. This is beneficial to the company in the sense that it can use this information to improve its production strategies to suit consumer desires (Richard J. S and Gary J. B 1995 pp. 45-47). Marketers take advantage of sales promotion to revitalize the desire to purchase products which they might have stopped purchasing due to a particular shortage in them. Consumers can adequately be informed about the source of a particular problem which demoralized them to stop buying the products as well as the ways which have been used to mend the deficiencies which occurred earlier. Promotion raises the competitiveness of the company through the incentives that the customers receive. In a promotion event, customers can purchase goods at a lower price which encourages them to continue purchasing the products. In the case of a new brand from the company, it presents the marketing team with a chance to attract new customers who may end up becoming loyal to the other company's brands. Most of the customers are compelled to purchase the available products in an unplanned manner. Since retailers usually sell a combination of products from different companies, it is necessary to boost their confidence through promotion in order for them to feel that the producer still commands loyalty amongst consumers. It makes them stock more of the product when they understand that its consumers are many. Excitement is usually created in regard to the product through promotion. The events of the promotion exercises usually compel the consumers to purchase especially if they are not sure of a repeat of the occasion. Product differentiation is therefore beneficial to the company (Philip Kotler 2006 pp. 89-92). Part C: Whether this is a Necessary Step to take The differentiation strategy is a way of improving the competitiveness of a business through offering products in the market that are more eye-catching to the consumers. Value addition in order to make the goods a bit different from those of competitors is significant in increasing sales hence profitability of the business. The use of this strategy requires intensive market research in order to establish consumer preferences. This makes the Coca-Cola Company to focus on market research, which in turn has attached benefits such as identification of the best marketing mix in the course of research which helps to attract more customers. Innovation is also an important tool in this strategy (Brassington F, Pettitt S, 1999 pp. 66-68). This ensures that the company invests in innovation, which improves its production capacity. Since the company offers products of superior quality, the market share is increased due to more customers preferring Coca-Cola to other products. The understanding created amongst the consumers in regard to the products creates a readily available market for the company's products, thereby justifying expansion in the production volume. This has enabled the company to establish in many countries due to the increased demand for its products. Competition is one of the major factors that have led to the collapse of many companies globally. A company that is unable to compete usually produces at a loss making it unable to finance its inputs. Since there will always be competition in almost every market segment, it is necessary for a company to take initial measures to cope with any impending threats in the market system. It has been and it remains necessary for Coca-Cola to ensure that competitors do not acquire an upper hand in the market due to its laxity in implementing some of the simple and beneficial activities such as product differentiation. More over, products become less vulnerable to changes in the competitors market strategies such as reduction in prices due to the confidence and loyalty that the company attracts from consumers. The realization of the customers that Coca-Cola products are unique makes it possible for the company to launch new products, as well as collaborate with other companies willing to sell their products through Coca-Cola's trademark such as the case of Sprite. The uniqueness of a product even makes customers to be willing to pay even more to get it. More over, acquiring of unique features may be through advertising or through real product features and therefore it is easy to acquire than any other process that can be used to counter competition. Differentiation assists the company to reduce elasticity of prices due to increased brand loyalty. This allows the reduction of the need to be a low cost producer; thereby allowing the company to raise its profit margins. The features are usually made worth a premium which the consumers are usually willing to pay. This has led to a constant maintenance of prices of Coca-Cola products. Michael Porter (1980 p. 39) argues that "A business which uses a differentiation approach incurs some extra costs". High costs of advertising and promotion of differentiation in products are foregone by the company. However, these are usually considered to be investments since the company eventually reaps some benefits from them. On the other hand, competitors may be tempted to imitate the differentiated Coca-Cola products which the consumers easily notice, causing them to dislike them. This makes the company's products to acquire even more loyalty among its consumers. Product differentiation is therefore a necessary step to take in the marketing approach of the Coca-Cola Company. Bibliography 1. Brassington F, Pettitt S, 1999. Principles of Marketing, 4/E, FT Prentice Hall. 2. Kotler, P. 2006. Marketing Management 12th Ed, FT Prentice Hall. 3. Kroll, M. Wright P. and Heiens R. 1999. The Contribution of Product Quality to Competitive Advantage. Strategic Management Journal, Vol. 20, 375-84. 4. Porter, M. 1985. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. 5. Richard J. S and Gary J. B. 1995. Principles of Marketing: A Global Perspective, Cincinnati, OH: South-Western. 6. The Ethical Insight team 2005. Corporate Responsibility Report 2005: Creating Trust by Living our Values, viewed on 22 Mar. 2009 at, 7. Wilson M S, Gilligan C, 2005. Strategic Marketing Management, CIM/Elsevier. Read More