Marketing Objectives and Proper Marketing Strategies: Advantages of the Company - Book Report/Review Example

 Introduction ‘Marketing Planning’ is one of the most widely used marketing terms in the recent years. It is such an approach that makes the entire process of marketing more systematic and more effective. Marketing planning is very effective in keeping organizations aware of customer needs, updated with trends and much ahead of competitors. Organizations like BP, Dell, Cap Gemini, Nike, Masterfoods, Fujitsu, Unilever, Tesco etc. have chosen the approach of marketing planning and achieved their marketing objectives successfully. Proper marketing planning helps managers to utilise resources effectively and to minimise unexpected crises. The term, ‘Marketing planning’ is properly defined by Sally Dibb and Lyndon Simkin. According to them “marketing planning is a systematic process involving assessing marketing opportunities and capabilities, determining marketing objectives, agreeing target market and brand positioning strategies, seeking competitive advantage, creating marketing programmes, allocating resources and developing a plan for implementation and control.” (Dibb, & Simkin, 2008). A marketing plan can be defined as a blueprint or written document for the implementation and control of the marketing activities that are related to a specific marketing strategy of an organisation. This report is all about a marketing plan which is prepared for Coca Cola, one of the largest companies in the world. The marketing plan in this report is prepared on the basis of the SOSTAC format. However, only the first part (SOS) of the format is completed in this report. The first part which is SOS stands for situation, objective and strategy. In this report the business situation in the context of Coca Cola is properly analysed with various strategic tools. Then objectives are defined and strategies are developed on the basis of the analysis and objectives. Along with these the report also includes a brief overview of Coca Cola Company. Coca Cola Coca Cola, one of the largest beverage companies in the world, started its journey in late 18th century in US. Currently there are almost 200 countries where the products of Coca Cola are sold. There are over 3000 beverages that are produced and sold by the company. Approximately 92,400 people are working in Coca Cola. According to the company its people and its brands are the two most important assets. ‘Refreshing the world’ is the main mission of the company. The company is found to be associated with over 300 bottling partners. Coca Cola mainly produces concentrates, syrups and beverage bases (The Coca Cola Company, n.d.). On the other hand bottling partners are involved with production, packaging and distribution of the products throughout the world. Coca Cola’s customers include grocery stores, street vendors, restaurants, convenience stores, mass merchandisers, movie theatres, amusement parks and drug stores. The consumers of Coca Cola products are each and every common people around the world. Coca Cola is a financially strong organisation whose revenue in 2009 was almost 30.9 billion dollar. According to the 2009 annual report, the company’s total asset in 2009 was almost $48,671 million (The Coca Cola Company-a, n.d.). Marketing Plan Marketing plan for Coca Cola is prepared on the basis of SOSTAC format. In this format first the situation of the company is analysed, then marketing objectives are established and then strategies are adopted. Based on the strategies, tactics are developed. These are then implemented and properly controlled. Here only the first three steps are discussed. Situation Analysis Situation analysis of an organisation is referred to the analysis of the organisation’s macro and micro environment. Macro environment of Coca Cola can be analysed with the help of PEST analysis. PEST analysis means analysis of the political factors, economic factors, social factors and technological factors. PEST analysis in the context of Coca Cola is described below. Since Coca Cola is a US based organisation, the analysis is done considering the US environment. Political factors Political parties that are able to influence the business of Coca Cola are Democratic Party, Republican Party, Green Party, and Libertarian Party. Along with these parties there are many political pressure groups like environmentalists, labor unions, ethnic groups, business groups, churches etc. Moreover there is union that is capable of influencing any decisions regarding recruitment, salaries of workers, job cuts etc. It is found that Teamsters union represents almost 14,000 workers in the company. In 2007 the union protested against the company’s decision of reducing workforce by 5% (Kavilanz, 2007). Legal system of the country has also significant impact on the company’s business. Legal system in US is basically federal court system. There is different legal system in different states, but these systems are greatly influenced by English common law (Central Intelligence Agency, n.d.). Economic Situation US economy is one of most important and largest economies in the world. In 2009 the country’s total GDP was 14.26 trillion dollars which is 0.35 trillion dollars lower than the previous year’s GDP. The GDP growth in 2009 was in negative (-2.4%) (Central Intelligence Agency, n.d.). Such decline in GDP and negative GDP growth of the country are mainly due to financial crisis that badly affected the country and its economy. The effects of recession are influencing the country and the business organizations that are operating in the country even today. Demand of almost all the products is decreased because of this recession as the purchasing capacity of people has gone down. Coca Cola is also affected by such a situation. In the final quarter of 2008 the company’s profit was reduced by almost 18% (Rel-UITA, n.d.). Moreover the company and its bottlers were facing huge problems due to increase in the price of almost all the important commodities like plastic, oil, corn, citrus etc. Social It is found that consumers are becoming more and more health conscious. A research that was conducted by AlixPartners, a business advisory firm, shows that more than 70% consumers do not want to increase their spending on soft drinks. In fact 74% said that they want to spend less or same on the soft drinks (Geller, 2010). People are found to be more interested in bottled juice, tea etc. Such findings are not encouraging for a cola giant like Coca Cola. As far as some social characteristics are concerned, in US almost 99% of total population is educated. As a result it is quite natural that they will be more conscious and knowledgeable about the harmful side of the cola drinks. In the country most of the people (almost 67%) fall in the age group of 15-64 (Central Intelligence Agency, n.d.). Hence the entire target age group of Coca Cola falls in this range. It is expected that these people will make more conscious purchasing decision in future and this will make the situation more challenging for Coca Cola. Technology Technological factor influence the company in the process of making the system more effective and efficient. In US organizations are found to be heavy users of advanced high end technology which is used to save valuable resources. As far as Coca Cola is concerned, it has enough financial capacity for implementing high end technology in its plants and offices. Micro environment of Coca Cola Micro environment of Coca Cola is comprised of its customers, suppliers, competitors etc. In order to analyze the micro environment of the company, it is very important to analyze both the industry as well as the company. The industry is analyzed by using Porter’s five forces model and the company is analyzed by using SWOT model. Porter’s five forces analysis There are five forces that greatly influence the overall structure of an industry. These forces are buyers’ bargaining power, suppliers’ bargaining power, threat of new entrants, threat of substitutes and rivalry among the competitors. Michael Porter, the famous management expert first identified these forces. Each of these forces is analyzed below in the context of Coca Cola and the industry that it operates in. Buyers’ bargaining power In soft drinks industry customers are referred to the grocery stores, street vendors, restaurants, convenience stores, mass merchandisers, movie theatres, amusement parks and drug stores (The Coca Cola Company, n.d.). Consumers purchase the final products from these customers. As a result they have major role to play in the system. Manufacturers found to be very much dependent on these customers as they work as intermediaries between the company and the consumers. Hence, these customers have significant bargaining power. However consumers certainly have significant amount of bargaining power as they have large number of choices. They have power of accepting or rejecting a brand. Moreover they are getting more and more health conscious and gradually shifting from cola drinks. Manufacturers are bound to consider such situation and come up with products according to the consumers’ choice. Apart from product features, consumers also have power to influence the pricing strategies of the companies. So, it can be said that consumers have significant bargaining power in the soft drinks industry. Suppliers’ bargaining power Suppliers play important role in this industry. Manufacturers are entirely dependent on the suppliers regarding various ingredients, machineries etc. When supplier is a big organization that is supplying such an ingredient or equipment which is not easily available in the market, then it is expected that supplier will have strong power to bargain. On the other hand if supplier is an individual who is supplying a very common material, then obviously the manufacturer will not be worried about his bargaining power. In soft drinks industry both type of suppliers are found to be present and the bargaining power vary accordingly. Threat of new entrants In order to operate successfully in the non-alcoholic beverage industry it is very important to have strong network of suppliers, bottlers and distributors. Moreover huge amount of capital and manpower are also crucial in order to survive in the industry. In such an industry it is very difficult for a new company to achieve success in the industry. Threat of substitutes Threat of substitutes is perhaps the biggest threat for the soft drinks manufacturers. The main reason behind this is significant change in consumers’ tastes. Today’s consumers are not very interested in soft drinks or cola drinks. They are more willing to spend money for health drinks, juices etc. As a result questions may arise regarding the existence of soft drinks after a decade. They may be substituted by other drinks that are produced in accordance to the changing tastes of consumers. Rivalry among the competitors The industry is famous for intense competition among two main players, Coca Cola and PepsiCo. The rivalry between these two players is better known as ‘Cola War’. According to a report published by Beverage-Digest, Coca Cola had almost 42% market share whereas its closest and biggest competitor PepsiCo has almost 31% share in the market (Sicher, J. 2008). These two players fight with each other on issues related to price, quality, distribution and bottler network, quantity and on various other things. SWOT Analysis A proper SWOT analysis of the company is expected to provide a clear understanding regarding the company’s internal strengths and weaknesses and external threats and opportunities. Strength The greatest strength of Coca Cola is its current market situation. Coca Cola is the market leader in the beverage market. It is far ahead of its major competitor PepsiCo. Another major strength of the company is the number of brands. There are almost 400 brands under Coca Cola. Almost 3000 beverages are there under these 400 brands (The Coca Cola Company-b, n.d.). Huge experience is another strong point of the company. It has been in the beverage industry since 18th century. As a result it has a market experience of almost two century. Coca Cola has been able to maintain an excellent relationship with its partners throughout the world. The company has partnership with large number of bottling plants all over the world. Coca Cola only supplies the syrups and concentrates; it is these bottling plants that actually produce the final products for the company. Another major strength of the company is that it has clear understanding regarding the needs and wants of its consumers. Weaknesses It has been found from various researches that most of the coca cola products are purchased by impulse. They are consumed without any proper planning. Another weakness of the company is that in some of developing countries like India, harmful pesticides have been found in coca cola products. Several social communities/ parties have raised their voices against coca cola. These incidents have certainly affected the brand image of Coca Cola. Opportunities Coca Cola has made partnerships with various sports events organizers. This is a great opportunity for the company to capture the global market specially the emerging countries. Developing economies are great market for sports drinks. Coca Cola has the opportunity of dominating the sports drinks market in the emerging economies like India and China. Threats Today consumers are becoming more and more health conscious. Gaining too much weight is considered as a major physical problem and any soft drinks including coke brands have been seen as one of the main reasons behind gaining extra weights. This is major threat for the company. Moreover coca cola is an old brand. In young community it can be considered as an old fashion to consume Coca Cola. Current global financial turmoil is another major threat. Purchasing power of the consumers has significantly reduced because of this turmoil. This has also affected the sales of the coca cola and this influence is more prominent in developed countries like US and European countries. Another major threat that the company faces is from its competitors specially PepsiCo. Intense rivalry between Coca Cola and PepsiCo is well known in the market as ‘Cola War’. Objectives While preparing a marketing plan it is very important to properly define the marketing objectives. These objectives will be based on the findings of the situational analysis. Objectives can be presented in a particular format which is called SMART. SMART SMART is the abbreviation of ‘Specific, Measurable, Attainable, Realistic and Time’ (Lancaster, & Reynolds, 2002). This actually means that marketing objectives need to be specific, attainable, measurable, time bound and realistic. As far as Coca Cola is concerned, it is found that its net operating revenue has dropped from $31,944 million to $30,990 million. Considering such result, main marketing objective of the company will be to increase its total sales in the global market. To be more specific, the main objective in this marketing plan will be to increase the sales by 15% and this objective needs be achieved by the end of the third quarter of the current financial year. This objective is specific and at the same time measurable as well. It can be measured by calculating the difference between the amounts of total sales in the final quarter of 2009 and the amount of total sales in the third quarter of 2010. It is time bound because it has to be achieved by the end of third quarter of 2010. Strategy Marketing objectives can be achieved by adopting proper marketing strategies. In the process of developing proper strategies, competitive advantages of the company will be mainly focused. Furthermore, Ansoff Matrix is going to be used in order to identify various strategic growth options. According to Steven Heyer, the chief operating officer of the company, “relevance and differentiation are the basis of our competitive advantage.” (Heyer, n.d.). In order to achieve the above mentioned objective Coca Cola’s strategy will be to focus on product differentiation and product relevance. The company will be launching new soft drinks in most of the developed and developing countries. These new drinks will be health-based soft drinks. There will be all those ingredients in these drinks that are generally found in a health drink or juice. A new fruit based sports drink will also be introduced. It will be totally free from any preservatives and it will be entirely different from the current ones. Various strategic options that are available to the company can be found out from Ansoff Matrix. [Source: Stone, 2001] The four strategic growth options are market penetration, market development, product development and diversification. In case of Coca Cola, market penetration will not be a very effective strategy as the company already has its strong presence in all the developing and developed markets. As a result it will be difficult to increase the share of existing products in the existing markets. As far as market extension is concerned, this will be an effective strategy for the company as there are still lot of opportunities in the developing countries like India, South Africa and Brazil. The best strategic option in the context of Coca Cola will be product development. The company can develop new products that are highly differentiated from its and competitors’ present product lines. It can come up with new health based cola drinks that will be free from any harmful chemical and any preservatives. These drinks will be sold to the existing customers who are located in the existing markets. The final option i.e. the option of diversification will be considered at the extreme situation of the company. Considering the current condition of the company, this strategy will not be the best option to choose. Coca Cola is one of the oldest companies in the beverage industry. It is the market leader as the company has more than 40% market share. PepsiCo, the biggest competitor of Coca Cola, started as a follower of the company. However, now it is the biggest challenger of Coca Cola. Hence, further steps will be taken in accordance to the above mentioned market situation. References Central Intelligence Agency, No Date, United States, World Fact Book, [Online] Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/us.html [Accessed on April 21, 2010]. Dibb, S. & Simkin, L. 2008, Marketing Planning: A Workbook for Marketing Managers, Cengage Learning EMEA Geller, M. 2010, Drink companies seen hurt as consumers cut back, Reuters, [Online] Available at: http://www.reuters.com/article/idUSTRE6380QC20100409 [Accessed on April 21, 2010] Heyer, S. No Date, A word from Steve Heyer, The Coca Cola Company, [Online] Available at: http://www.thecoca-colacompany.com/investors/annualandotherreports/2003/word.shtml [Accessed on April 21, 2010] Kavilanz, P. B. April, 2007. Union woes brewing at Coke bottling, CNN Money, [Online] Available at: http://money.cnn.com/2007/04/13/news/companies/coke_union/index.htm [Accessed on April 21, 2010] Lancaster, G. & Reynolds, P. 2002, Marketing: the one-semester introduction, Butterworth-Heinemann Rel-UITA, No Date, Coca Cola, Figures and results, [Online] Available at: http://www.rel-uita.org/companias/cifras_y_resultados-eng.htm [Accessed on April 21, 2010] Sicher, J. 2008, Beverage Digest, [pdf] Available at: http://www.beverage-digest.com/pdf/top-10_2008.pdf [Accessed on April 21, 2010] Stone, P. 2001, Make marketing work for you: boost your profits with proven marketing techniques, How To Books Ltd The Coca Cola Company, No Date, What Do We Do?, The Coca Cola System, [Online] Available at: http://www.thecoca-colacompany.com/ourcompany/the_cocacola_system.html [Accessed on April 21, 2010] The Coca Cola Company-a, No Date, Selected Financial Data, 2009 Annual Review, [Online] Available at: http://www.thecoca-colacompany.com/ourcompany/ar/pdf/2009_annual_review_Financial_Data.pdf [Accessed on April 21, 2010] The Coca Cola Company-b, No Date, Product List, The Coca Cola Company, [Online] Available at: http://www.thecoca-colacompany.com/brands/brandlist.html [Accessed on April 21, 2010] Read More