Lexible Market Strategies of Coca-Cola and Uniqueness of Its Products - Case Study Example

Lecturer: presented: Executive Summary Organizations dealing in consumer products are usually faced with the problem of establishing the desired recognition of their products to potential consumers. This is a major drawback since in order for a company to market its products effectively; it has to ensure that the consumers are adequately informed regarding the benefits of purchasing and using its products. In order to improve competitiveness of a company in a particular market segment, it is important for the business to develop the appropriate market strategy which should be carefully thought out and developed from extensive market research. The company should understand the potential customers for its products in order to make an informed decision regarding the best marketing mix to employ. This is usually significant in satisfying customer desires. Coca-Cola Company has been successful in the use of marketing techniques for its products. It has been able to dominate the beverage market through its flexible market strategies and uniqueness of its products which satisfy consumer demands. Methodology The research involved the use of existing literature on marketing from journal articles and books as well as publications from the Coca-Cola Company archives. The relationship between the information gathered from the company archives and other marketing publications was analyzed, while carefully identifying the significance of the theoretical marketing models in the success of the company. This was followed by an analysis of the capability of the company to put the theoretical models in to practice. Introduction This report contains information which is significant to companies that wish to develop an effective marketing strategy. It discusses the important of marketing to organizations, and how the various theoretical marketing models can be utilized in order for an organization to effectively market its products. Various aspects of marketing have been discussed in detail. These include marketing strategy, marketing mix (the 4Ps), market segmenting, targeting and positioning (STP). These have been discussed in relation to Coca-Cola Company which is one of the most successful beverage companies that enjoy an enormous global market share. The company’s marketing strategy has been discussed extensively, indicating the significance of marketing in the profitability of organizations. In conclusion, the effectiveness of marketing is highlighted, as well as recommendations that can be adopted by companies. Marketing Marketing is the process in which products are exchanged between the producers and the consumers with the goal of satisfying their requirements. The producer’s needs are to earn profits from selling the products. In order to achieve this, he has to ensure that the products he offers in the market are satisfactory to the consumer. Through the process of marketing, the producer is capable of establishing the potential market for the products. He is therefore in a position to offer goods and services which meet the consumer expectations. At the same time, he has a chance to inform the customers regarding the organization and its products, the usefulness of the products and their availability in the market. Through marketing, the producer convinces the consumers on the importance of choosing the products over other similar products from competitors. It instills confidence in the customers and makes them understand that their money was not wasted on purchasing the commodities from the organization. According to Semenik, Richard J. and Bamossy, Gary J. (1995 pp. 36), “Marketing is the process of developing, informing, distributing as well as exchanging goods and services”. The products or services offered must have a value attached for the consumers. Farese, Lois, Kimbrell, Grady, and Woloszyk (1991 pp. 67) view marketing in a broader perspective; It is seen as a complex interconnection between several processes, which are interdependent with several other business functions. The functioning of the marketing system can be enhanced through the use of a variety of methods. Coca-cola is one of the companies which have thrived in business through effectively marketing its products. The company’s marketing plan was significant in helping its management to identify the potential customers for coca-cola products. The company has been able to attract many consumers due to the satisfaction that they get from the products (Kotler, Philip, and Armstrong, Gary 1993 pp. 34-36). Effective marketing has enabled the company to establish facilities for production worldwide. Currently it markets its products in more than 200 countries without severe competition. Marketing has enabled the company’s products to be recognized internationally. An example of this recognition is the renowned as ever-present bottle of Coke. The company has established strongly in many countries and capitalizes on the strength of being the most well known product globally (Murphy, Verity Jan. 8, 2003). The company’s market value hit a high of $150 billion by the end of 1997. It has been able to dominate the market globally for beverage products. This is because consumers of its products have been instilled with confidence through marketing. The most important aspect of marketing in the company is its effective marketing strategy (Julia Casteleiro and Alisha Garfinkel 1999 p. 11). Marketing Strategy Marketing strategy is the practice that is developed by an organization in order to enable it to focus its scarce resources towards capitalizing on the available opportunities. This improves the profitability of the business as well as improving its ability to compete in the market. It is usually focused on improving consumer satisfaction in order for the company to create a large market share. This is because consumers determine the competitiveness of the company by accepting its products. Inefficiency in attracting and retaining customers is usually made simpler by a proper market strategy. Without it, such efforts normally become futile, which is one factor that leads to the failure of organizations which had initially established a strong market share. Coca-cola has been effective in ensuring that its demands meet customer expectations. The company has succeeded in developing a lasting association with consumers of its products. The marketing strategy is usually flexible, which has enabled the company to be responsive to the changing needs of customers. This has also helped the company to identify and establish in new markets globally. It has also been able to inform the consumers of its products on the advantages of using the company’s products over products from other companies (Michael J Baker, 2000 pp.36-41). The marketing strategy adopted by the Coca-Cola Company demonstrates the knowledge that consumers usually fall in various market segments or groups. Each group has characteristics that are unique to it and therefore it was an important decision to consider the ability to compete with others in the market. Market research helps a producer to identify the various gaps that have been left by other competitors. In order to improve its profitability, a company tries to fill these gaps thereby attracting more consumers since the major connection between the producer and the consumer is based upon consumer satisfaction (Jim Blythe 2006 pp.78-81). A marketing strategy which capitalizes on the producers strengths to satisfy the consumer’s needs is the best for effective marketing. For example in 1985, a research that was conducted amongst the consumers of Coca-Cola through taste tests indicated that the preference of the consumers was much towards sweet beverages. Its main competitor which was Pepsi was producing these kinds of drink and people liked it despite the confidence that they had in Coca-Cola. The company capitalized on its strong formula to change the taste of its brand. Research which was done soon after indicated that consumers preferred the new brand to the original coke or Pepsi. This made the product to match consumers’ needs. This is a marketing strategy which can be used by other organizations in order to boost their competitiveness in the market (Julia Casteleiro and Alisha Garfinkel 1999 pp. 12-14). Changes in the marketing strategy need to be accompanied by marketing activities which should be focused at awareness creation among the customers. Coca-cola used advertisements and other public relation activities in order to ensure that the consumers were adequately informed in regard to the changes in the taste of Coke. This was done through promoting the “New Coke”. It had also been established through research that customers extensively used the name Coke rather than Coca-Cola, hence the promotion of the name “Coke”. However, in all these activities, the company ensures that the costs are minimized in order to maintain the profit margin. A marketing plan is of utmost importance for an organization’s success in marketing (Julia Casteleiro and Alisha Garfinkel 1999 p. 6). The marketing mix Marketing mix is important in ensuring that the product offered in the market satisfies the desirable quality and at the same time consumers can afford to buy it. The use of marketing mix depends on the choice of the marketers and the kind of product that they intend to offer in the market. It is mainly used to create a difference between a company’s products with those of competitors. It helps a business to be successful through ensuring that all elements are right and balanced. The 4ps include; product, place, price and promotion. These are significant in improving the competitiveness of a business (Doyle P, 2006 pp. 66-71). Product involves customer satisfaction in order for them to continue purchasing the product for the business to make profits in turn. It is important to ensure that the value of the product is what the customers need. Making the product look attractive is one way of catching the attention of consumers. This can be done through attractive packaging of the product. The quality of the product should be satisfactory to consumers. It should be provide the desired benefits that are usually the driving force towards purchasing a particular product. The Coca-Cola Company is renowned for its zeal in consumer satisfaction. It has professionals involved in market research, who inform the management on the changes in customer desires as well as their reactions towards competing brands (Jim Blythe 2006 pp.33-38). Coca-Cola products are usually packaged in very attractive bottles and cans and their quality is unquestionable amongst the consumers. The company is always keen on the feedback from consumers and keeps reassuring them on the quality of their products. For example when the wrong information reached consumers regarding the presence of some amounts of cocaine in Coca-Cola drinks, the company moved fast to reassure the consumers on their safety. It has also been trying its best to fight the negativity which has time and again been spread by competing companies regarding the drink, such as portraying the Coca-Cola drink as a strong stain remover by Pepsi marketers and consumers (Michael J Baker, 2000 pp.36-41). The second most important aspect of marketing mix is place. It is significant since the movement of the product from the manufacturer to the consumer determines the availability of the product. In order for a business to be profitable, it has to ensure the efficient supply of its commodities to consumers. The channels of distribution are significant in ensuring that the customers get the commodity at the desired place at the right time. In order to satisfy consumers’ desires about place, the producer can make use of intermediaries such as; wholesalers, sales agents, distributors as well as the internet (Wilson M S, Gilligan C, 2005 pp.56-64). The Coca-Cola Company has perfected the distribution of its products world wide. Currently, the company produces more than 300 brands globally. The company makes use of franchise in the intermediary companies abroad. These companies are able to do local marketing in order to satisfy the local demand in their home country. There are some extra brands which it produces together with Coca-Cola which include the Diet Coke. The company ensures that all the brands are available in the intermediary companies. These companies ensure that the product is developed according to the specifications of the parent company and eventually distributed to all the retail outlets, vendors as well as food and beverage dealers. They also conduct sales promotions and advertisements in their home area (The Coca-Cola Company 2003). The third aspect of market mix is price. It is essential since the price of a good determines the capability of the consumers to purchase. The producer should be aware of the purchasing capability of the consumers. In order to be effective in pricing, the producers can do market research and compare their prices with those of competitors. The pricing strategy is important in order to ensure that the business does not make a loss due to inappropriate prices. Pricing should be designed such that minimum charges on goods will allow the consumers to afford purchasing them, while on the other hand production cost is reduced in order to maximize profits (Sunny Crouch 1996 pp.79-85). Coca-Cola products are usually sold at prices which are affordable to the consumers. The company’s marketing strategy is designed to suit a wide range of market segments. From the young to the old, the products are affordable, selling at a low of $ 0.6 per liter in many third world countries. The products are sold at a higher price in the middle in come and high income areas. In essence, this makes them affordable to an array of consumers, from low income, middle income and even the high income earners. This contributes largely to the company’s profitability (McDaniel and Gates 2007 pp.74-78). The last and equally significant aspect is promotion. It is significant in creating awareness and ensuring that customers understand the benefits of using a particular product. It encourages customers to purchase products from the organization. It also helps to build confidence amongst existing consumers as well as attracting new ones. The producer should have information regarding the consumers such as their purchasing power, shopping habits as well as the probable questions that consumers are likely to ask concerning the product. The producer learns the issues surrounding the product marketing while consumers get answers to most of the questions that they have always wanted to ask. They also air their views and inform the producer on their preferred quality, and the changes that they would like to be effected on the product. The style of promotion largely affects the outcome of the promotion. It should be timely so as to get the best outcome. Coca-Cola conducts promotion campaigns with the use of remarkable slogans for the consumers such as; “The refreshing pause”, “Stop here for a Coke” and others like “Quench your thirst with Coke”. The company also employs a variety of promotional activities such as sponsoring major events such as soccer and athletics (Jim Blythe 2006 pp. 23-26). Segmenting, Targeting and Positioning (STP) Market segmentation is the practice of diversifying the market in order to satisfy the different needs of customers. These differences necessitate the use of a variety of marketing strategies. These strategies are usually defined for every market segment that arises (Rielly, Edward J 2003 p.16). Coca-Cola has been successful in producing a variety of products to a variety of markets. Some of its products are packed in bottles which are mostly consumed at the point of sale while others are packed in cans. The cans are useful for people who go for expeditions since they are light and do not need to be returned to the retailer for recycling. There are even brands of coke that are designed to suit pregnant women lacking caffeine or sugar. For example in 2004, market research indicated that a group of Coca-Cola consumers were not pleased by the high sugar content beverages with carbohydrates and calorie. On the other hand, it was established that many others preferred the standard Coke with all these contents. This made the company to produce a variety of products in order to suit the market segments which arose. These included Coke C2, C2 Cola and simple C2 which had varying sugar and carbohydrate contents. In 2006, the company discovered a new market segment with consumers who preferred no sugar in the product. The company produced Coke Zero which contains no sugar, calories or carbohydrates in order to suit the new market segment. This segmentation has made Coca-Cola products to dominate the beverage market (The Coca-Cola Company 2003 pp. 27). Target marketing is the careful selection of the most appropriate segments for the business. These are usually the ones that it has the capacity of servicing. Targeting is significant in the marketing process since it helps the managers in the identification of the potential consumers. There are several types of target marketing. These include; Segmentation marketing, Niche marketing and Micro-marketing. They help a company to be focused in the production of goods depending on consumer desires, hence improving consumer satisfaction (Brassington F, Pettitt S, 1999 p. 67). Coca-Cola Company uses mass marketing which is also referred to as undifferentiated marketing. This involves an attempt to create demand in a single large market with the use of one marketing strategy. It is significant in reducing the cost of production and product development. The company reduced the target age from above 15 years to above 12 years in 2009. This was the age that market research found to be preferred by parents and other stakeholders. The company advertisements do not target children under this age. This has made advertisements more focused since they are specifically focused on populations with children of more than 12 years of age (Philip Kotler 2006 pp.34-41). Positioning strategies in marketing are significant in the profitability of the company. They involve the creation of a difference between the products offered by the business from other products in the same segment in order to manage competition from other businesses. Successful positioning of a product in a market segment requires marketers to ensure that they capitalize on the share of consumer options accomplished by the product that they offer in the market so that they can attain effectiveness and hence profitability in the long-run ((Wilson M S, Gilligan C, 2005 pp. 88-90). The addition of characteristics that satisfy customers’ desires as well as strategic advertisement aimed at improving the awareness of consumers are some significant positioning strategies which assist marketers to get the most out of the market share. Emphasizing on quality is an important positioning strategy whereby marketers offer deficiency-free commodities in the market as well as ensuring that design of the product and customer services satisfies the expectations of consumers (Churchill, Gilbert A., and Peter, Paul J. 1995 pp. 23-27). Coca-Cola’s marketing techniques have been changing since the company started expanding. This is because the marketing strategies are normally developed to suit the different marketing environments in various subsidiary regions. Initially, the parent company used to conduct all the marketing activities. However, this has changed allowing the subsidiaries to advertise, distribute and conduct promotion activities. The company has also intensified market research in order to identify the changing needs of customers. Through this, it is able to counter any competition which may arise in the beverage production industry. Initially, competitors in the industry were few. The main competitor was Pepsi, but more competitors have joined the market with a variety of products targeted at the same market. Competitors in the United States include PepsiCo (PEP), Cadbury Schweppes (CSG) and other smaller competitors such as Hansen Natural (HANS). They may turn out to be threats if Coca-Cola does not exercise flexibility in its marketing strategies to enable it to cope with the rising competition (Mark Pendergrast 2000 pp. 69-71). With the recent advancements in technology, the marketing techniques of the company have changed a great deal in order to utilize the new methods which are more efficient and effective in reaching customers. One such technological advancement is advertising through the internet. This has boosted the company’s marketing due to the wide coverage of the internet. Customers can also ask questions and get answers from the internet. Another change in the marketing strategy is that the organization recently begun negotiating with new companies which are beginning to establish in the market in order for them to co-operate with the company. This has made the company to move a major milestone in establishing networks globally whereby the collaborating companies conduct distribution, sales promotion as well as establishing production plants. The company is usually flexible in its marketing strategy and therefore there is a possibility of future changes in its marketing techniques in order for them to suit the rising competition and the changing consumer desires. Future technological advancement may also lead to a change in the marketing techniques (Murphy, Verity Jan. 8, 2003). Conclusion Marketing is an essential component of the operations in a business. The link between the producers and consumers is enhanced through marketing which is core to the profitability of a business. The market strategy of an organization enables it to utilize the available opportunities thereby facilitating its expansion capabilities. Segmenting, targeting and positioning are significant in ensuring that the company’s competitiveness in the market is enhanced through provision of products and services which correspond to consumer demands. Coca-Cola Company is the most successful company in the beverage industry, which could be attributed to the adoption of effective marketing strategies. Recommendations Companies should adopt a flexible marketing strategy in order to allow the necessary changes which make the business able to adapt to the changing market demands. The marketing mix to be adopted by the company should be determined after thorough market research in order for the company to develop the most appropriate combination of product, price, place and promotion (4Ps). Bibliography 1. Baker M J, Marketing Strategy and Management, Macmillan Business, 2000. 2. Blythe, J. Principles and Practice of Marketing, Thomson, 2006. 3. Brassington F, Pettitt S. Principles of Marketing, FT Prentice Hall, 1999. 4. Casteleiro J. and Garfinkel A. The Story Behind the Drink, Macmillan Business, 1999. 5. Edward R. Global Marketing, World Business, Haworth Press, vol. 3, 36-69, 2003. 6. Gilbert A. C. and Paul P. Marketing: Creating Value for Customers, Boston: Irwin, 1995. 7. Kimbrell F. L., Grady, and Carl W. Marketing Essentials. Mission Hills, CA: Glencoe/McGraw-Hill, 1991. 8. Pendergrast M. For God, Country and Coca-Cola, Basic Books, 2000. 9. Philip K. and Gary A. Marketing, an Introduction, 3rd ed. Englewood Cliffs, NJ: Prentice-Hall, 1993. 10. 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