The Principles of Marketing - Case Study Example

Identify at least five "Coca Cola" products, e.g Diet coke and place them on a product life cycle curve. whether "Coca Cola" products you have identified are question marks, starts, cash cows or digs. The goal of a marketer is to produce products matching the needs and wants of the targeted market segments with the eventual objective to make profits. Products produced by different companies can be classified based on the product attributes. Products can be classified into the following categories: A) Durable products B) Non-durable products and C) Service products.1 Products of Coca Cola fall into the non-durable product category. Coca Cola offers more than 400 hundred brands in over 200 countries.2.The five brands of Coca Cola are as follows- 1. Fanta 2. Diet squirt 3. Sprite Flavors 4. Coca Cola C2 5. Diet Coke black cherry Vanilla Product life cycle can be explained as the different stages starting from the introduction stage to the decline stage that a specific product goes through. Product life cycle assessment is conducted to find out the current life cycle stage of the product. Life-cycle assessment aims to find out the environmental burdens throughout the whole life-cycle of a product starting from raw material procurement, production, use and finally to disposal.3 The product life cycle stages and current status of five brands of coca coal are descried below: Fanta: In the product life cycle, "Fanta" is in the "Maturity" stage. This brand is in "cash cow" category. Diet Squirt: Diet Squirt is in "Growth" stage. This is in "Star category" Sprite Flavors: Sprite Flavors is in "Maturity stage". This brand is in "cash cow" category. Coca Cola C2: In the product life cycle, "Coca Cola C2" falls under the "Decline" stage. This is in "Cash cow category" Diet Coke black cherry vanilla: This brand is in "Growth Stage". This is in "Star category". Consider the extension of product life cycle and the Jenkins customer growth matrix. Identify and discuss how Coca Cola might have applied these models to help ensure the continued success of Coca Cola products in the market place. Extension of product life cycle and Jenkins customer growth matrix might have been applied by Coca Cola for ensuring the continued success of the Coca Cola products in the market. It is being explained below. Existing customers-existing products: only a very few companies have a 100% share of customers share. Customers buy a product marketed by a variety of marketers. Only true-blue customers always buy the same product marketed by a specific company. Coca Cola could have trued to increase its share of customers' expenditure by increasing its sale among the potential consumers. As Coca Cola has already a wide distribution channel and global presence, by implementing this growth strategy Coca Cola could have expanded its client base. Existing customers-new products: This growth strategy calls for introduction of new products targeted at the existing consumers. A company has to be able to crate value through introduction of new products. Coca Cola could have introduced new products targeted at the existing consumers. A Coca Cola has a vast number of loyal consumers across the globe; Coca Cola could be taken advantage of its position in the existing consumers mind. Considering the image of Coca Cola and its current loyal customer base across the globe, implementation of this strategy could have brought positive results for Coca Cola by strengthening its bottom line. Existing products-new customers: This growth strategy requires expanding the current customer base through increasing market share. Coca Cola could have used this strategy considering its global presence as well as splendid brand equity. Attracting new customers to its wide array of brands could be easier for Coca Cola as its products are viewed as superior than its competitors' products. Furthermore, the existing heavy users could also have been utilized for marketing campaign in the form of WOM (word of moth). New products-new customer: This strategy calls for diversification. Coca Cola might have taken advantage of this strategy. Being the number of brand in the world, supporting a newly introduced product by extensive use of media is an easier job for a company like Coca Cola. As customers taste change over time, customers seek new products. It is especially true for the variety seeking customers. Hence, Coca cola might have considered this growth strategy. Evaluate the usefulness of marketing models in relation to the products of Coca Cola. Usefulness of product life cycle model: Product life cycle explains the movement of a product from one stage to the other. The measurement of a product life cycle is usually done by its sales over time. Henceforth, every product is always in a specific stage on the product life cycle at a given time. The assessment of product life cycle is of significance to a marketer. By assessing a products current location on the product life cycle, a marketer can formulate his future planning and strategy for that specific product. It is to be mentioned here that a product will not necessarily pass through all the stages on the product life cycle. A company might withdraw its product after a certain period of time for a number of reasons, for example, failure to fulfill the need of the targeted customer. So, product life cycle plays a very crucial role in finding the current life cycle position of a product Companies like Coca Cola. "Various writers have emphasized the value of product life cycle model as a basis for product planning and control Usefulness of BCG growth share matrix: A marketing manager can evaluate the businesses by conducting Portfolio analysis. It is a very important tool to measure and find out the performance of various businesses. It is reasonable for a marketing manger to put more sources into its more profitable businesses and invest less into weaker ones. A marketing manager has to find out the key businesses of the company which are known as strategic business units.4 The BCG growth share matrix is a very useful tool to measure and evaluate the performance of business. Companies like Coca Cola can make a very good use of this growth share matrix with a view to assessing the performance of each of its products sold in the market. As the brand "Fanta" is in falls in the "Cash cow" box, it means that "Fanta" is an established and successful brand. Hence, Fanta requires less investment to hold the market share. Being in "Cash Cow" box also means that "Fanta" has a low growth share. The same goes for "Sprite" and "Coca Cola" as these two brands are also in "Cash Cow" category. By applying Porter's five forces of competition model, assess the nature of competition in: a) The fine fragrance industry (Channel, Givenchy, Dior), b) The retailing of fine fragrance industry (Superdrug, Boots). Competition is at the center of achieving success or failure in any industry. Competition resolves the suitability of a company's strategies and activities that plays role in achieving a company's objectives. Competitive strategy can be defined as the exploration for a favorable and useful competitive position among the competitors. The goal of competitive strategy is to establish an advantageous and sustainable position for the firm in the competitive environment. The most important criteria of a company's profitability is how attractive is the industry itself. The final aim of competitive strategy is to cope with and to change those rules in the firm's favor. In any industry the rules of competition are embodied in five competitive forces: the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among the existing competitors.5 A) Nature of competition in the fine fragrance industry: In light of the five competitive forces, we can say that in the fine fragrance industry in France, the suppliers of raw material who are also engaged in product development do not have a high bargaining power with the fragrance houses as the chance of winning a contract are one in ten. The salient reason is that the fine fragrance houses market only exclusive products that come with the aura of luxury and exclusivity. Since the fine fragrance houses like Givenchy, Dior, and Channel sell their products only in the up- scale market through a selective range of distributors, the bargaining power of the buyers are also not high as it would have been if their products were sold everywhere. It is also very important to note that the fine fragrance houses have high lobbying power for which they were allowed to keep on selling their products only through selective distributors. This lobbying power also proves the advantageous position of the fragrance industry. B) Nature of competition in the retailing of fine fragrance industry (Superdrug, Boots): In the retailing of fine fragrance industry, the distributors are selected to sell the products only if they meet the requirements set by the fine fragrance houses. So, it's evident that some retailers can not sell the products of fine fragrance houses as those retailers do not have the requisite location, ambience and so on. Hence, it can be said that these retailers sell only products targeted at the low-end customers. And these retailers could not sell the fragrances from the fine fragrance houses as they did not have the braining power. For instance, Superdrug was selling the products from the fine fragrance houses procuring from the grey markets. But subsequently Superdrug lost the battle and could not sell the fine fragrances. But, if we consider the retailer "Boots", we can see that they could sell the products of the fine fragrance houses as they met the requirements. 2. How does the launch of glow by J. Lo and use of celebrities by fine fragrance companies impact the competitive environment they face' The use of celebrities include Catharine Zeta-jones as the face of Arden beauty perfume, Sopie dhal for Yves Saint Laurent's opium perfume and Penelope for Ralph Lauren's Glamorous perfume. The celebrity endorsement is a common marketing phenomenon now-a-days. It goes without saying that the use of celebrity in advertisement has so far turned out to be effective. This is why a lot of companies across the globe use celebrities in their advertisements. Some companies also use brand ambassadors to promote their brands. Celebrities increases awareness of a company's product among its potential customer and Increases Company's image. The celebrity, who is endorsing the product, as a source should be "attractive" and "Credible". In addition, the celebrities' image and the image of the product should be the same which is known as "match-up hypothesis". It is believed that the image of the celebrity is transferred to the brand.6 So, a marketer has to be prudent in selecting celebrities for his her products. It stands to reason that using the right celebrity in a marketing campaign undoubtedly assists in building image for the brand as well as the image of the company. Thus, when Ja. Lo launched the product of a fragrance company, the personal image of Ja. Lo was, expectedly, transferred to the image of the product. As Ja. Lo has a positive image as a super singer and actress, it is reasonable to expect, the image of the product also increased positively. Customers usually use reference groups for taking purchase decision and the celebrities act as reference groups. 7 So, the appearance of Catharine Zeta-jones as the face of Arden beauty perfume, Sopie dhal for Yves Saint Laurent's opium perfume and Penelope for Ralph Lauren's Glamorous perfume has certainly helped the brands to build image. By enhancing the image of the brands among the competing brands through using celebrities, these brands have been successful in positioning themselves in the competitive environment. Therefore, celebrity endorsement can be an effective marketing tool for positioning a brand in the competitive environment. 3. If the selective distribution agreement for the fragrances is abolished, what will be likely effect on companies such as Channel, Yves Saint Lauret, Dior and Givenchy' A company can gain competitive advantage in the market through product differentiation and cost leadership. The fine fragrance companies are in an advantageous position because of their product quality and positioning of their brands. It's for sure that fine fragrance companies have been successfully able to position themselves in the market as exclusive brands. These brands have differentiated themselves among other competing brands not only by offering quality fragrance but also by using selected range of distributors which have fulfilled the necessary requirements set by them. But if the selective distribution agreement for the fragrances is abolished, the companies like Channel, Yves Saint Lauret, Dior and Givenchy will not be as profitable as they are now. As the ordinary retailer will charge a lower price, sale in the upscale departmental stores will go down. Moreover, the companies will loose their established differentiated position of being "luxurious" and "exclusive". If these fine fragrances are sold in all stores, these brands might also loose market share because the upscale consumers may stop buying the product as the products are no longer "exclusive". It is noteworthy that price sometimes is view as an indicator of quality. Reference list Brassington, F and Pettitt, S, (2003), Principles of Marketing, Pearson Education Limited, p. 270. Cox, W. E (1967), Product life cycle as marketing models, The journal of business, Vol. 14, No. 4. Joshi, S ( 2000), Product Environmental life cycle assessment using input-output techniques, Journal of industrial ecology, Vol. 3, No. 2 p. 95 Kotler, P; Armstrong, G; Saunders, J and Wong, V (2001), Principles of Marketing, Pearson Education, p.85 Solomon, MR (2002), Consumer Behavior: Buying, having, and being, Prentice Hall International, p. 231. www.virtualvender.coca-cola.com Read More