Marketing of Coca Cola during the Olympic Games - Assignment Example

Individual Report: Coca Cola The purpose of this report is to answer three distinct questions that relate to Coca Cola. The format that this paper will utilize is to first identify the question and then address the answer. Q#1) Consider the demographic profile of a range of UK Audiences for the Olympics. Choose a new product which Coca Cola could create to target this audience during the Olympics. Explain why your proposal would be successful. There is little question that the London Olympics will bring with it a tremendous amount of people who desire to watch the Olympics. There are three major identifiable target audiences of the Olympic Games which are youngsters between the ages of eight and sixteen, teens & adults between seventeen and forty years of age and adults between the ages of forty one and sixty. One of the most important target audiences would be teens and adults that embrace a healthier lifestyle, and as such it is the case that a soft drink could be developed to match the needs of this demographic. A few considerations should be made as to what people would be looking for. Should a drink be made no-calorie, mid-calorie or standard-calorie? If designing a drink around health benefits one is naturally inclined to desire a no-calorie drink however this may draw attention from consumers who are opposed to using aspartame or other non sugar based sweeteners. Moreover the company does not want to draw comparisons with their last mid calorie drink launch ‘Coke Blak” which more or less was a ultimately withdrawn from the market owing to the fact that he company had a poor marketing strategy and the product generally had a displeasing taste. In this regard the company could look to a full calorie beverage but the question remains as to how a healthy image could be promoted? In this regard, Coca-Cola should look to creating a natural version of its drink which has all of the same properties of its current beverage but without using high fructose corn syrup, preservatives, colouring and utilizing naturally sourced ingredients. From this perspective the company can compete head on with Pepsi-Raw but it can still be promoted as a healthy alternative to most soft drinks. Why this proposal would be successful is two fold. Firstly this product satisfies a need in the market owing to the fact that most soft-drinks and energy drinks are either saturated with standard sweetning agents or with sugar substitutes where there has been very little presence of a ‘all natural’ soft drink. Moreover this product could appeal to a generation of people that are still interested in treating themselves to a soft-drink yet do not want to drink all of the related chemicals assuming an effective marketing and promotion strategy is employed. Q#2 What determines the PeD for Coca Cola at a major event like the Olympics? All candidates should know the main determinants, such as the number of perceived substitutes, the proportion of income spent on the good, whether it is a necessity, and so on and so forth. But in addition the best candidates will know that the context matters, in this case we have the Olympics, it is held in the summer, the purchasing will be facilitated and advertised to coincide with this event. The issue of what factors affect the price elasticity of demand at a major event such as the Olympics is related to several factors Firstly, it is the case that the more and closer substitutes available the higher the elasticity is likely to be. In the soft drink context it is the case that the relatively low price and vast array of alternatives means that people can easily switch from one product to another. Upon a quick examination of a shop in great Britain one recognizes a plethora of different soft drinks such as Pepsi products, energy drinks such as red bull, and traditional drinks such as ginger beer and dandelion & burdock. Without question most people consider soft drinks to be a fast moving consumer good. And whilst it may be the case that some people are likely to spend a much higher portion of their income in soft drinks one could argue that a soft drink does not represent a significant portion of one’s income. According to the BBC the average household income is approximately £32,000 and the price, and the average soft drink costs between .50p and £2 so from this perspective one could conclude that the product is relatively price inelastic. In terms of necessity one could make the argument that if a person had a severe blood sugar deficiency or was dying of thirst, a soft drink would in-fact be considered necessary however outside of these two contexts there is little question that a soft drink represents a luxury good. Overall one could conclude that from this perspective, the product would be considered relatively inelastic. One final major consideration would be brand loyalty. Whilst it may be the case that many consumers are not necessarily brand loyal, many frequent consumers may indeed have a strong brand loyalty. Moreover it may be the case that many people have a preference for one product over another. This may override sensitivity to price changes and make the product more price inelastic. Overall one could make the argument that a Coca-Cola based soft drink is a relatively inelastic product. Q#3) With the aid of a diagram (or diagrams) discuss the likely effects of advertising Coca Cola. All candidates should know that the aim is to shift the demand curve to the right, which all candidates should be able to draw using a comparative static partial equilibrium supply and demand diagram. In addition, the best candidates will realise that it should reduce PeD too, and that this can be discussed or even to some extent incorporated in the diagram(s). It is the case that the goal of an effective marketing/advertising campaign is to directly increase the demand of a product. As such one would see a general rightward shift on the demand curve. As indicated in the diagram below. However, one could argue that the supply is not static in the production of soft drinks, as the supply curve would also shift to the right creating a new equilibrium at the original (P1) point, yet while still increasing the quantity demanded from Q1 to Q2. However with a relatively inelastic supply curve one would recognise a more straight line diagonal demand curve rather than a traditional (Elastic) curve. Read More