Annual Marketing Plan for Coca Cola Company - Report Example

Marketing Plan (in a report format) annual marketing plan for Financial Year for a product, brand, service or organisation of your choiceContents Contents 2 Executive Summary 5 Current Marketing Situation 5 Market Overview 5 Market demographics and needs 6 Market trends and target market growth 6 SWOT analysis 6 Strengths 6 Weaknesses 7 Opportunities 7 Threats 7 Competitive and industry analysis 8 Product overview 8 Environmental analysis 9 Macro environmental factors 9 Economic factors 9 Political Factors 9 Social factors 9 Technological 10 Legal factors 10 Micro environmental factors 11 Customers 11 Competitors 11 Suppliers 11 Competitive strategy 11 Marketing Strategy 12 Mission 12 Marketing objectives 12 Financial objectives 12 Target markets 13 Positioning 13 Marketing Mix 13 Product 13 Pricing 13 Promotion 14 Channel 14 Internal marketing 14 Marketing research 14 Financials 15 Sales forecasts 15 Marketing expense budget 15 Break-even analysis 15 Profit and loss analysis 16 Controls 16 Implementation 16 Marketing organisation 16 Contingency planning 16 References 17 Bibliography 20 Appendices 21 Executive Summary Coca Cola is world’s leading beverage company with commendable market share in its control. The company came out with Diet coke to cater to the change in consumer buying behaviour that is looking for healthier options. Coca Cola faces many macro and micro environmental factors which are critical for the success of the company. This report takes a look at the above factors along with the strategy adopted by the company in launching the product. This report further looks at the marketing budgets, income statement, revenue forecast and break even analysis. Current Marketing Situation Market Overview Global beverage industry is expanding and eight countries like France, Italy, Germany, Canada, Russia, Japan, US and UK generated around $ 291 billion is sales in 2010. Among them US leads with a market share of 43% and resulting is sales of around $ 125 billion. By 2015, the soft drinks market in US is predicted to exceed $ 127 billion (ReportLinker, 2014, p. 1). The soft drink industry includes juices, smoothies, bottled water, concentrates, ready-to-drink tea and functional drinks. These drinks are made on a carbonated water base with added sweeteners and flavours (Shachman, 2004, p. 41). There are three major players in the global soft drink market, PepsiCo, Coca Cola and Cadbury Schweppes. PepsiCo has 19 brands under its name and brings over $ 1 billion retail sales per year while market leader Coca Cola sales more than 3,500 products worldwide in over 200 countries and employs around 140,000 individuals (Euromonitor, 2014, p. 1). Market demographics and needs In US soft drink market remains strong since water and juice markets decline. Due to global recession, the industry continues to feel the effect of it and thus the consumer confidence remains low. Thus in order to move forward the companies has to concentrate on product innovation to lure the consumers back. Consumers have evolved their lifestyle and are conscious of the health (Heckman, Sherry and Mejia, 2010, pp. 303-309). Thus there is widespread awareness of health related issues like diabetes, obesity and thus they look at the soft drinks slightly. They also represent huge potential for markets like juices and energy drinks (Coca Cola, 2014, p. 16). Market trends and target market growth According to MarketLine, the global soft drink market which comprises of soft drinks, energy drinks, sports drinks, etc. is expected to grow more than $ 62,000 million in 2015. Energy drinks is the leader in the global soft drink market with nearly 60% stake in it. More than 38% of the global soft drink market is represented by Americans. The market leader of this category is PepsiCo which generates more than 24% of the overall market volume. In 2014 it is expected that global carbonated soft drink market will produce over 197 billion litres which indicates a growth of 10% in five years. Coca Cola leads the global beverage market by 42 % and Americans represent over 54 % of the world market (Interpack, 2014, p. 1). SWOT analysis Strengths Coca Cola has a global reach and in present in over 200 countries. It is presently the number one beverage brand in terms of sales and reach. It has a range of brands under its name like Fanta, Limca, Maaza, Coca Cola, Kinley etc. The company has employee strength of over 1,50,000 globally. It has a strong financial condition and efficient and strong supply chain network which ensures availability of their products in even the remote places. The company has a strong brand presence through marketing and advertising by well-known brand ambassador. It is engaged in active CSR activities in the field of education, carbon footprint, water conservation, health etc. It has long association with sponsorships, international sports events etc. (Ferrell and Hartline, 2012). Weaknesses Reports of presence of pesticides in their beverages have damaged their brand image. Coca Cola has not diversified into food and snack industry. The company is in constant competition with aerated drinks market from its main rival Pepsi Co. The company is legally bounded to disclose negative information about the products on its labels (Fine, 2009, p. 31). Opportunities Coca Cola has the resources to reach untapped market and countries. The company can acquire other companies to reduce competition and increase their market share. Coca Cola can market and popularise less known products. The company has the opportunity of expanding their product portfolio by diversifying into snacks industry. Growth in beverages consumption in emerging markets like India, China etc. can help them increase their profitability. With increasing demand for healthy food Coca Cola has the opportunity to come with new healthy products like Diet Coke (Schnaars, 1998, p. 51). Threats Presence of Strong competition from Pepsi Co is a constant threat for them. Recent global economic meltdown, inflation and instability all affects the profitability of the company. Coca Cola has to comply with different government norms and regulations in different countries. Increase of health consciousness among their customers is also affecting their profitability (Shankar, Carpenter and Hamilton, 2012, p. 82). Competitive and industry analysis The overall profitability, growth rate and market size are commonly used to evaluate the soft drink industry. The market size of the soft drink industry is changing. This sector is dominated by three major players, Coca Cola, PepsiCo and Cadbury Schweppes. Apart from these players there were other smaller players like National Beverage Company, Cott Corporation which makes up the remaining market share (Fifield, 2012, p. 121). The competition in the soft drink industry is immense and it is difficult for a new company to enter this industry since they will not be able to compete with the established players. This industry is affected by many macro environmental factors which will lead to change. Thus mergers and consolidation has been prevalent in the soft drinks market and it has resulted in many firms exiting the industry and re-entering it (Nash, 2000, p. 152). Product overview Diet Coke is aimed the making the product for the health conscious customers. It is a refillable bottle which is aesthetically styled to appeal to fitness or sports audience. This product is made using sustainable sourced materials. Coca Cola is the first to offer this new product feature and thus it acts as a competitive strategy for them. There has been a further improvement in the product which creates the impression that the company cares about satisfying their customers and any material technology improvements in the future will enhance the product’s appeal to them. Each eight ounce serving of Diet Coke provides a healthy source of Vitamin B3, vitamins B6 and B12, magnesium and zinc. Again the packaging of the product is very interesting and it continues the diet coke theme of coloured bands on the label. The label design features the metallic elements as the background. Environmental analysis Macro environmental factors Economic factors Presence of unfavourable general economic conditions like economic slowdown or recession negatively affects the consumer demand for, affordability of, some of their beverages in their flagship market. A difficult economic conditions make the consumers seek reduce discretionary spending by moving away from their beverages to lower priced products of other companies or forgoing purchases of their products. Coca Cola has faced softer consumer demand of their beverages in United States which reduced their profitability and negatively affected their overall financial performance (Park, Park and Schweidel, 2014, pp. 212-219). Political Factors Unstable political conditions like governmental changes, civil unrest in certain of their international markets can undermine the global consumer confidence and reduce the purchasing power of the consumers and thus reducing the demand for their products. Political activism could result in product boycotts which can reduce demand of their products (Reeve, 2002, p. 241). Presence of US trade sanctions against countries like Syria, Iran and significant increase of acceptance of transactions for commerce within such countries by financial institutions can make it impossible for Coca Cola to continue make sales to bottlers in such countries (Jain and Griffith, 2011, p. 212). Social factors Consumers are now becoming health conscious. They are focusing on health problems linked with sugar carbonated drinks which are linked to bad teeth and child obesity. There was exposing on Coca Cola about child labour in El Slavador which altered the consumer behaviour of the buyer as consumers now have increased interest in the source of manufactures of the products with regards to environment and fair trade. Consumers are becoming more interested in environment friendly packaging and are inclined to purchase goods sporting the Fairtrade logo (Ferrell, Lukas, Schembri and Niininen, 2012, p. 251). Technological Technology relates to the products and processes of the company for their production, packages used for their products, equipment used in their business, design and operation of the various processes and certain quality assurance software. Thus Coca Cola has technology in built into every operations and change to failure of one process will lead to disruption in the service. Coca Cola has licensed some technology to their suppliers and other parties (Kotler, 2008, p. 213). Legal factors Coca Cola has to follow rules and regulations of the country in which they operate. For example the company is subjected to income tax in US and in other economies in which they generate net operating revenues. Any increase in income tax rates will reduce their after-tax income from affected jurisdictions. Coca Cola earns a substantial portion of their income in foreign countries. Further proposal in reforms of US tax laws will significantly impact the way the US multinational corporations are taxed on foreign earnings. Several of these proposals could adversely impact their income tax expense and cash flow. The company is also subjected to many taxes and duties which are not based on income known as indirect taxes which includes excise duties, import duties, property taxes, value-added taxes, payroll taxes etc. (Lilien, Rangaswamy and Bruyn, 2013, p. 214). Micro environmental factors Customers Worldwide financial crisis have made consumers shift to cheaper alternatives. The consumers are spending less on luxury items and more on smaller ones. Through effective advertising campaigns the customers are targeted appropriately (Marshment, 2009, p. 142). Competitors Coca Cola is the market leader in the beverage segment. The company is well aware of the activities of its competitors and hence they actively respond to market changes to gain from it. The differentiation strategy of Coca Cola is good. Suppliers Coca Cola believes that the supply chain is an important component of their processes and leads of growth. Coca Cola expects that their suppliers conduct business in an ethical manner. Competitive strategy Coca Cola has designed five strategic priorities designed to crate long term sustainable growth of their company. Their priority is to accelerate sparkling growth which is led by Coca Cola brand (Rust, Lemon, Zeithaml, 2004, pp. 109-112). They have strategically expanded their profitable portfolio. They have increased their investment in media by maximising their productivity. They have aimed to win at the point of sale by unlocking the power of the Coca Cola system. They gave invested into their next generation of leaders (Nwankwo and Gbadamosi, 2011, p. 312). Marketing Strategy Mission The overall mission of the company is to refresh the World in terms of mind, body and spirit. The company wants to inspire moments of optimism through their actions and brands. They look to create value and make a difference everywhere they engage. Coca Cola is expanding the Diet Coke range with new healthy soda which includes Vitamins B6, B12, Zinc, Niacin, Magnesium which will be marketed as Diet Coke plus. This product will appeal to an ever increasing market for healthier drinks (Coca Cola, 2013, p. 31). Marketing objectives The marketing objectives of the company are to enhance the consumer awareness of and thus increase the consumer preference of their brands. Through successful marketing investments the company wants to produce long term growth in unit case volume, increase per capita consumption and sell their products in worldwide beverage sales. The company wants to create and implement integrated marketing programs both locally and globally which are designed to increase the consumer awareness of and product appeal for their brands (Cravens and Piercy, 2006, p. 152). In emerging economies the focus is to invest in infrastructure programs which will drive volume by increased access to consumers. In such market their focus is on differentiating their brands (Coca Cola, 2010, p. 1). Financial objectives To obtain strong cash flow position through consistent good performance and lower investment requirements. Attain a long term average growth of 15 % in earnings per share and reducing the dividend pay-out ratio to 30% over time. The company wants to target an annualized savings of $ 350 million to $ 400 million. Target markets For Coca Cola every customer who is thirsty is a potential customer. The company targets all age group but they mainly target the age group from 18-25 years of age. They target both female and male individuals (Peter, 2012, p. 5). Positioning Coca Cola uses strategic positioning to have the same image around the world which makes it successful since it is viewed by many as part of daily life everywhere in the world. Such a perception of the brand leads to high degree of consumer loyalty and thus the purchasing decisions are automatic. Marketing Mix Product Diet Coke, also known as Coca-Cola Light in some countries is a sugar free soft drink launched in USA in 1982. It is refreshing, sugar free, tastes good and has only 1kcal per 250 ml serving. In America it became the major selling soft drink with low calories. This drink is available in range of delicious flavours. According to research more females like to drink Diet Coke everyday than any other soft drinks brand. Pricing Coca Cola will use penetrative pricing strategy which means it sets lower price to achieve dominant market share. This is done since the competitor pressure has forced customer sensitivity to price to be fairly high and thus profit margin is fairly low. Diet Coke will be charged $ 8.00 Promotion Coca Cola will use advertising, sales promotion, direct marketing, public relations for making diet coke know across the world. Coca Cola invest heavily into these segments. Channel Coca Cola will use their network of Company owned or controlled bottling and distribution operations along with independent distributors, bottling partners, retailers wholesalers etc. Service Coca Cola Company has a long history of providing world class customer service which demonstrates leadership in the marketplace which leverages the talent of their global workforce. Internal marketing Coca Cola will use internal marketing, like making the new product known to all the staffs and providing appropriate training to them. Internal marketing also includes marketing through Marketing research Pre-Launch: Coca Cola should do quantitative research on consumer perceptions about Diet Coke. For this purpose questionnaires should be given to 1000 customers who buys Coca Cola products and find out their needs and wants. Post Launch: The company should engage in quantitative research and present the same 1,000 consumers with the same questionnaires to find out of the new product has satisfied their needs and wants. Financials Sales forecasts The monthly sales forecast of Coca Cola from the month July 2014 to June 2015 can be seen from the appendix 1. It is found that Coca Cola achieved a revenue growth rate of 28 % during this period. Thus Coca Cola is registering a healthy growth rate with worldwide growth in revenues. Marketing expense budget Marketing expenses can be found in Appendix 2. It is found that the company is investing $ 645 million during the period for its marketing expenses. The maximum amount is spent in media and followed by promotional activities. This shows the intent of the company in enhancing the brand across the world. Break-even analysis The break even calculation is shown in Appendix 4. It is found that Coca Cola achieves a break even in 4579 units and the corresponding break even sales are $ 36,633 million. Thus the company is able to recover the fixed cost after 9 months. Hence Coca Cola is able to achieve break even before 1 year. Hence Coca Cola has been effective in implementing their strategy. Profit and loss analysis The Profit and loss analysis reveals that during 2014-15 the company has been able to achieve a net income of $ 7,640 million which is quite good. This is shown in Appendix 3. Controls Implementation Diet Coke is to be launched in a new bottle in July 2014 and it will take an estimated 2-3 months for the product to be launched on a worldwide scale. During this time advertising should focus on making the people aware of the product. 2 months after release sales promotion should be undertaken along with initial price reduction to increase any market share. The sales promotion should continue for 4-5 months after release to compete with the other competitors in the market. Marketing organisation Coca Cola should set the focus on measuring the effectiveness of marketing efforts. If the company had sent out around one million mail promotions and thousands of customers who have been included into market research must be tracked and response must be taken from them. Coke must observe that their campaign directly leads to the responses. Company should analyse the staff performance twice every year to keep track of their performance. Contingency planning Coca Cola should have a contingency planning. The company should make a try to open its distribution centres in developing countries and come with different varieties of Diet Coke. 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Marketing Strategy: a decision-focused approach, 5th ed. London: McGraw Hill Appendices Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Read More