Marketing Approaches and Market Segmentation - Coursework Example

Marketing Approaches Table of Contents Table of Contents 2 Introduction 3 Market Segmentation 4 Market Segmentation of Coca-Cola & Pepsi 4 Brand Positioning of Coca-Cola and Pepsi 5 Marketing Approaches of Coca-Cola 6 Marketing Approaches of Pepsi 6 Marketplace for Coca-Cola and Pepsi 7 Problems of Coca-Cola in the International Market 7 Problems of Pepsi in the International Market 10 Chances of Success in Market 10 Conclusion 12 References 13 Bibliography 15 Introduction In the 21st century, marketing has become one of the most common and stimulating tools for organisations. At present, the world economy is passing through tempestuous times, where effective marketing practices have been recognised by every organisation to survive and succeed (Blythe, 2009). During past few years due to intense competitive rivalry it has become challenging for organisations to sustain a strong position in the industry for long time. Certain organisations have prospered in implementing new marketing practices which have empowered them to accomplish astonishing development while others have succeeded in generating high volumes of sales and ongoing growth. Due to economic globalisation, the traditional marketing principles and practices have become obsolete and customer oriented marketing practices have grown to be popular for organisations. The marketing principles and practices are usually those activities which ensure stable growth for organisations. It has higher worth in terms of overall profitable flow of business (Kamei, 2000). The paper will describe the marketing concepts, principles and techniques in international business circumstances. Further, the paper will compare and contrast two leading organisations in the soft drink industry, Coca-Cola and Pepsi regarding different market oriented approaches they have taken. Market Segmentation Market segmentation is a vital marketing practice for any organisation to focus on a particular customer segment which willingly purchases the products and the services. Effective marketing segmentation can ensure highest return. In order to segment the market, organisations need to consider the products’ offerings (Business Resource Software, 2011). Market segment consists of customer groups with similar desires and requirements. It is the task of organisation to identify those groups which will be the target for selling the brands. Segmentation can be done in two ways namely mass marketing and targeted marketing. In mass marketing principle, organisations attempt to target whole market instead of a specific customer segment, and in targeted marketing organisations desire to earn income from a particular segment. Both companies, Coca-Cola and Pepsi follow targeted marketing. Their products are aimed for particular customer segments (Lamb, 2008; Jobber, 2010). Market Segmentation of Coca-Cola & Pepsi Coca-Cola can be regarded as one of the most successful soft drink brands, which has successfully segmented its market. The products of Coca-Cola target different customer segments. For example, one of its products named “Light Cola” was considered as ‘girlish’ and ‘feminine’ by customers, thus the company had developed “Coke Zero” which is targeted at male customer segment with high health awareness (Mittal & Et. Al., 2010). Similarly, Pepsi also provides ranges of soft drinks by targeting different customer segments, such as sport drinks and energy drinks are targeted for customers who are related with athletic activities and “Diet Pepsi” is targeted for people who are very much health conscious. In terms of geographical segmentation, both companies marketing practices are different in hot regions such as Asia, Africa, or Middle East in comparison to cold regions such as America or Europe. With respect to age, Coca-Cola mainly targets every age of customers, especially family segments and Pepsi generally targets their products to younger generations. In terms of psychographic segmentation, Coca-Cola seeks to appeal to subculture and focuses mainly on relationship, friendship, cheerfulness, and happiness. On the other hand, Pepsi signifies the brand as young, energetic, sportive, and amusement drink (Mittal & Et. Al., 2010). Gender is a very significant factor for any kind of segmentation. Due to the differences of tastes among males and females, both brands have developed different products for them (customers). For example, Coca-Cola, Coke-Zero and Thums Up are viewed as mannish drinks and Light Cola and Fanta is mainly targeted for female customers. In the same way, Pepsi is targeted for male customers while Mirinda and Slice are targeted for female customers due to their tastes (Mittal & Et. Al., 2010). Brand Positioning of Coca-Cola and Pepsi Brand positioning is a challenging task for any organisation and it should be accomplished carefully using every element of marketing mix. Positioning can be referred to as the ways a company describes and makes its place in the minds of the customers. Appropriate positioning can guarantee that customers have clear idea about the company which in turn develops a unique personality for the brand (Woodgrange Technologies Ltd, 2000; Jobber, 2010). In contrast to Coca-Cola, the positioning of Pepsi is much aggressive and innovative. Pepsi has successfully positioned itself as young spirit. Its positioning has been developed as an inspirational drink for youth and new generation. The positioning of Pepsi was encouraged by target market segments which are mainly unexploited by Coca-Cola. Coca-Cola has tried to position the brand as ‘cheerfulness’ and ‘joyful’ drink and drink for all communities and cultural occasions. The brand personality of Coca-Cola reflects the positioning of the company (Mittal & Et. Al., 2010). Marketing Approaches of Coca-Cola Coca-Cola attempts to make a balance between inspiring and functioning approaches. In order to maximise the brand value Coca–Cola connects with the customers through digital technology. International business is an important method for Coca-Cola to endorse the brand and increase product range. As global marketing practices, Coca- Cola had sponsored the ‘2010 FIFA World Cup’, covering around 160 nations. In addition to this, Coca-Cola has also sponsored Olympic Games as a marketing activity in order to enhance the brand awareness. Coca-Cola extensively uses music as a key element of marketing success. Their ‘celebration mix’ has been released in above 150 markets throughout 17 nations. By this activity, Coca-Cola attempts to inspire the “moment of happiness” brand image (The Coca-Cola Company, 2010). Marketing Approaches of Pepsi Pepsi attempts to build a good reputation for its brand through several marketing programs. The programs of Pepsi let customers to enjoy the flavours of the brand. The marketing activity of Pepsi comprises of advertisements campaigns, contests, programs and innovation. In order to compete in the international market, Pepsi had efficiently exploited advertisement principles. The information technology acts as an enabler for Pepsi to enhance the efficiency of marketing operations and communicate with the customers. In comparison with Coca-Cola, Pepsi spends more money on marketing activities. Pepsi understands the power of marketing media and thus uses it to enhance its customer base. In the year 2010, Pepsi had expended almost 3.4 billion USD for marketing activities and out of it advertisements alone comprised of 1.9 billion USD (PepsiCo, 2010). Marketplace for Coca-Cola and Pepsi The international soft drink market is characterised by intense competition between two business giants Coca-Cola and Pepsi. In the mid 1970s, Coca-Cola was the leading brand of soft drinks industry. But between the years 1976 to 1978, the market share of Coca-Cola had dropped by 13% and Pepsi had found an opportunity to flourish in the market. The huge advertisements of Pepsi had captured the thoughts of people with its optimism and youth brand image. Through ‘Pepsi Challenge’ program potential customers had displayed a clear preference towards Pepsi brand. To counter against the tastes of Pepsi, Coca-Cola had introduced new flavours in the market. As a result, the sales of Coca-Cola again increased by 10% in the year 1985. By 1988, both brands became strong competitors for each other. While Coca-Cola had captured 40% of the domestic market, the share of Pepsi was 31% in that year (Wiley, 2005). Both companies had faced several problems in the international market which are as follows: Problems of Coca-Cola in the International Market Though Coca-Cola is a renowned brand in the world, it had faced several problems. In the year 2004, the growth of Coca-Cola was comparatively worse than previous years. The major problem confronted by the company was industrial problems. Customers became more aware of healthy drinks to avoid diseases such as obesity, which can occur due to ill effects of consuming excessive soft drinks. While Pepsi had extended their product line in other segments such as Juice, and Snacks foods, Coca-Cola remained slow to respond to key customers’ choices and engrossed on its flagship products. Coca-Cola was very unenthusiastic to expand its brand. Due to this attitude, Coca-Cola revealed the brand as only a soda company while Pepsi had successfully positioned itself as soda, beverage and snacks company (Wiley, 2005). One of the biggest problems faced by Coca-Cola was related to health issue in the European market. In the year 1999, Coca-Cola drinks were causing sickness to several people. As a result, a few brands of Coca-Cola were banned by several countries of European region. The company was losing 3.4 million USD in a day at that period. To counter the problem, Coca-Cola had acted aggressively and offered free Coke to almost 4.37 million families. Coca-Cola had also developed advertisement campaigns to reposition its brand in the European market (Wiley, 2005). The other problem faced by Coca-Cola was the pricing problem. In the year 2003, Coca-Cola had introduced C2 by spending 50 million USD. C2 was targeted for age group of 20–40 years, but the price was set at premium level. The ineffective pricing strategy led to dissatisfaction among customers and as a result C2 failed in the market. The other problem was regarding marketing approaches related to advertising. Coca-Cola was very conventional in spending on advertisement. The company had believed to gain sales without obligation through advertisement, which was a big mistake for Coca-Cola. As a consequence, the company had failed to draw the attention of youth consumer segment. In the meantime, Pepsi was pecking away the international market of Coca-Cola and the playing ground was in favour of it (Wiley, 2005). Problems of Pepsi in the International Market Besides Coca-Cola, Pepsi has also made certain mistakes while operating business in the international market. Pepsi was quite aggressive in nature and it attempted to expand its market base rapidly. In Argentina and Brazil, Pepsi had recklessly put all chips products to suppliers without proper checking. Instead of developing relationships gently and more cautiously such as Coca-Cola, Pepsi acted aggressively. It did not observe the overseas operations thoroughly enough and did not respond to the changing requirements of old suppliers. As a result, Pepsi lost the market of Venezuela (Wiley, 2005). The other problem of Pepsi was its insufficient learning from its past mistakes. Pepsi had been engrossed by the environment of Brazil which is suitable for soft drink business. Before Pepsi, Coca-Cola was already embedded in the leading position of soft drinks market in Brazil. Without considering the strength of competitor (Coca-Cola), Pepsi had tried three attempts to enter in the market of Brazil with its inappropriate advertising campaigns and all of them failed. So, it can be inferred that these efforts were unsatisfactory and insufficient to enter in the Brazilian soft drinks market (Wiley, 2005). Chances of Success in Market From the above discussion, it can be said that Pepsi stands the greatest chance of success in the marketplace. Coca-Cola had faced several problems in the international market, but Pepsi had not taken appropriate advantage of its rival’s condition. For example, in European market when the demand of Coca-Cola dropped significantly due to bad heath reputation of the brand, Pepsi was reluctant to take aggressive measures for strengthening its position in the marketplace. It had not taken the opportunity of success in the European market because of risk of decreasing demand of soft drinks. Therefore, Pepsi did not want to take advantages of the situation of Coca-Cola and were reluctant to use the competitive drives. On the other hand, Coca-Cola had also missed a few opportunities of success due to ineffective marketing practices. The major mistake for Coca-Cola in the market place has been the slow response to customers’ choices. For example, when customers’ became much concerned about healthy drinks, Coca-Cola had not responded accordingly. It had not developed new products according to customers’ requirements and was much passionate about its leading brands (Wiley, 2005). Conclusion In term of marketing practices, Coca-Cola and Pepsi have used different approaches. Coca-Cola has positioned itself as cheerful and joyful drink whereas Pepsi has positioned the brand as young spirit. Coca-Cola had not made proper use of the advertisements and thus it failed to appeal to the young customers’ segment and it targets its products for family and celebrations. Pepsi puts much emphasis on advertisement and sales promotions programs so that it can successfully capture the marketplace. To survive in the international marketplace, organisations need to understand the changing customers’ tastes and act accordingly. Coca-Cola’s market research was inadequate, but Pepsi had spent huge amount on market research. The main reason for success of Coca-Cola was due to large profit margin and careful strategy implementation. Unlike Pepsi, Coca-Cola acts slowly and prudently by understanding the marketing situations in order to avoid failure. Expansion in the international market necessitates tight control and close checking of approaches and strategies before implementation. References Blythe, J., 2009. Principles and Practice of Marketing. Cengage Learning. Business Resource Software, 2011. Market Segmentation. Center for Business Planning. [Online] Available at: http://www.businessplans.org/segment.html [Accessed November 26, 2011]. Jobber, D., 2010. Principles and Practice of Marketing. McGraw-Hill Education. Kamei, T., 2000. A 21st Century Approach to Marketing. Nomura Research Institute. [Online] Available at: http://www.nri.co.jp/english/opinion/papers/2000/pdf/np200019.pdf [Accessed November 26, 2011]. Lamb, C. W., 2008. Marketing. Cengage Learning. Mittal, A. & Et. Al., 2010. Analysis of Marketing Strategy of Coca Cola and Pepsico. Ludhiana University Business School. [Online] Available at: http://www.scribd.com/doc/20596818/analysis-of-marketing-strategy-of-coca-cola-and-pepsi [Accessed November 26, 2011]. PepsiCo, 2010. 2010 Annual Report. Performance with Purpose. [Online] Available at: http://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_Report.pdf [Accessed November 26, 2011]. The Coca-Cola Company, 2010. 2010 Annual Review. Advancing Our Global Momentum. [Online] Available at: http://www.thecoca-colacompany.com/ourcompany/ar/pdf/TCCC_2010_Annual_Review.pdf [Accessed November 26, 2011]. Woodgrange Technologies Ltd, 2000. The ‘Coca-Cola’ Brand & Sponsorship. The Irish Times. [Online] Available at: http://www.business2000.ie/pdf/pdf_5/coca-cola_5th_ed.pdf [Accessed November 26, 2011]. Wiley, 2005. Cola Wars: Coca-Cola vs. PepsiCo. Hartley. [Online] Available at: http://media.wiley.com/product_data/excerpt/16/04717432/0471743216-3.pdf [Accessed November 26, 2011]. Bibliography Golan, A. & Et. Al., 2000. Estimating Coke’s and Pepsi’s Price and Advertising Strategies. Journal of Business & Economic Statistic, 18(4). Read More