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Jun 12, 2006

Marketing plan Coco Cola

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Executive summary

Giant soft drink company Coca Cola has come under intense scrutiny by investors
due to its inability to effectively carry out its marketing program. Consequentl
y it is seeking the help of Polianitis Marketing Company Pty Ltd to develop a pr
ofessional marketing plan which will help the business achieve it s objectives mor
e effectively and efficiently, and inevitably regain there iron fist reign on th
e soft drink industry.
When establishing a re-birthed marketing plan every aspect of the market
ing plan must be critically examined and thoroughly researched. This consists of
examining market research, auditing business and current situation (situation a
nalysis) and carefully scrutinising the soft drink industry and possibilities fo
r Coca Cola in the market. Once Coca Cola have carefully analysed the internal a
nd external business environment and critically examined the industry in general
the most suitable marketing strategies will be selected and these strategies wi
ll be administered by effectively and continually monitoring external threats an
d opportunities and revising internal efficiency procedures.
Situation Analysis
Market Analysis:
The market analysis investigates both the internal and external business
environment. It is vital that Coca cola carefully monitor both the internal and
external aspects regarding it s business as both the internal and external enviro
nment and their respective influences will be decisive traits in relation to Cok
e s success and survival in the soft drink industry.
Internal Business Environment
The internal business environment and its influence is that which is to
some extent within the business s control. The main attributes in the internal env
ironment include efficiency in the production process, through management skills
and effective communication channels. To effectively control and monitor the in
ternal business environment, Coke must conduct continual appraisals of the busin
ess s operations and readily act upon any factors, which cause inefficiencies in
any phase of the production and consumer process.
External Business Environment
The External business environment and its influences are usually powerful force
s that can affect a whole industry and, in fact, a whole economy. Changes in the
external environment will create opportunities or threats in the market place C
oca cola must be aware off. Fluctuations in the economy, changing customer attit
udes and values, and demographic patterns heavily influence the success of Coka
Cola s products on the market and the reception they receive from the consumers.
SWOT Analysis:
SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a tec
hnique much used in many general management as well as marketing scenarios. SWOT
consists of examining the current activities of the organisation- its Strengths
and Weakness- and then using this and external research data to set out the Opp
ortunities and Threats that exist.

Strengths:
Coca-Cola has been a complex part of world culture for a very long time. The pro
duct's image is loaded with over-romanticizing, and this is an image many people
have taken deeply to heart. The Coca-Cola image is displayed on T-shirts, hats,
and collectible memorabilia. This extremely recognizable branding is one of Coc
a-Cola's greatest strengths. "Enjoyed more than 685 million times a day around t
he world Coca-Cola stands as a simple, yet powerful symbol of quality and enjoym
ent" (Allen, 1995).
Additionally, Coca-Cola's bottling system is one of their greatest strengths. It
allows them to conduct business on a global scale while at the same time mainta
in a local approach. The bottling companies are locally owned and operated by in
dependent business people who are authorized to sell products of the Coca-Cola C
ompany. Because Coke does not have outright ownership of its bottling network, i
ts main source of revenue is the sale of concentrate to its bottlers.
Weaknesses:
Weaknesses for any business need to be both minimised and monitored in order to
effectively achieve productivity and efficiency in their business s activities, Co
ke is no exception. Although domestic business as well as many international ma
rkets are thriving (volumes in Latin America were up 12%), Coca-Cola has recentl
y reported some "declines in unit case volumes in Indonesia and Thailand due to
reduced consumer purchasing power." According to an article in Fortune magazine,
"In Japan, unit case sales fell 3% in the second quarter [of 1998]...scary beca
use while Japan generates around 5% of worldwide volume, it contributes three ti
mes as much to profits. Latin America, Southeast Asia, and Japan account for abo
ut 35% of Coke's volume and none of these markets are performing to expectation.
Coca-Cola on the other side has effects on the teeth which is an issue for healt
h care. It also has got sugar by which continuous drinking of Coca-Cola may caus
e health problems. Being addicted to Coca-Cola also is a health problem, because
drinking of Coca-Cola daily has an effect on your body after few years.
Opportunities:
Brand recognition is the significant factor affecting Coke's competitive positio
n. Coca-Cola's brand name is known well throughout 94% of the world today. The p
rimary concern over the past few years has been to get this name brand to be eve
n better known. Packaging changes have also affected sales and industry position
ing, but in general, the public has tended not to be affected by new products. C
oca-Cola's bottling system also allows the company to take advantage of infinite
growth opportunities around the world. This strategy gives Coke the opportunity
to service a large geographic, diverse area.
Threats:
Currently, the threat of new viable competitors in the carbonated soft drink ind
ustry is not very substantial. The threat of substitutes, however, is a very rea
l threat. The soft drink industry is very strong, but consumers are not necessar
ily married to it. Possible substitutes that continuously put pressure on both P
epsi and Coke include tea, coffee, juices, milk, and hot chocolate. Even though
Coca-Cola and Pepsi control nearly 40% of the entire beverage market, the changi
ng health-consciousness of the market could have a serious affect. Of course, bo
th Coke and Pepsi have already diversified into these markets, allowing them to
have further significant market shares and offset any losses incurred due to flu
ctuations in the market. Consumer buying power also represents a key threat in t
he industry. The rivalry between Pepsi and Coke has produce a very slow moving i
ndustry in which management must continuously respond to the changing attitudes
and demands of their consumers or face losing market share to the competition. F
urthermore, consumers can easily switch to other beverages with little cost or c
onsequence.
Product Life cycle:
When referring to each and every product or service ever placed before the consu
mer i.e. in the long term all the existing products and services are dead. For e
.g.:- Replacement of Ford Cortina ( a highly successful car) by Ford Sierra, the
replacement of sierra by the Ford Mondeo and the replacement of the old Mondeo
by the new Mondeo in 2001. So every product is born, grows, matures and dies. So
in the commercial market place products and services are created, launched and
withdrawn in a process known as Product Life Cycle.
To be able to market its product properly, a business must be aware of the produ
ct life cycle of its product. The standard product life cycle tends to have five
phases: Development, Introduction, Growth, Maturity and Decline. Coca-Cola is c
urrently in the maturity stage, which is evidenced primarily by the fact that th
ey have a large, loyal group of stable customers.
Furthermore, cost management, product differentiation and marketing have become
more important as growth slows and market share becomes the key determinant of p
rofitability. In foreign markets the product life cycle is in more of a growth t
rend Coke's advantage in this area is mainly due to its establishment strong bra
nding and it is now able to use this area of stable profitability to subsidize t
he domestic Cola Wars.
Insert the picture of the product lifecycle

Marketing Objectives

The objective is the starting point of the marketing plan. Objectives should see
k to answer the question 'Where do we want to go?'. The purposes of objectives i
nclude:
-> to enable a company to control its marketing plan.
-> to help to motivate individuals and teams to reach a common goal.
-> to provide an agreed, consistent focus for all functions of an organization.
All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic,
and Timed.
Specific - Be precise about what you are going to achieve
Measurable - Quantify you objectives
Achievable - Are you attempting too much?
Realistic - Do you have the resource to make the objective happen (men, money, m
achines, materials, minutes)?
Timed - State when you will achieve the objective (within a month? By February 2
010?)
1.Market Share Objectives:
To gain 60% of the market for soft drink industry by September 2007.
2.Profitability Objectives:
To achieve a 20% return on capital employed by August 2007
3. Promotional Objectives
To increase awareness of the product on the market.
4. Objectives for Survival
To survive the current market war between competitors.
5. Objectives for Growth
To increase the size of the worldwide Coca Cola enterprise by 10% .

Selecting Target Market

Once the situation analysis is complete, and the marketing objectives determined
, attention turns to the target market. The soft drink market is very large, and
the business cannot be all things to all people , so it must choose which market s
egments have the greatest potential. The target market is the group of customers
on whom the business focuses attention. The target market is where Coca Cola f
ocuses its marketing efforts as it feels this is where it will be most productiv
e and successful. The target market for Coca cola is very wide as it satisfy s the
needs for many different consumers, ranging from the healthy diet consciousness
through Diet Coke to the average human through its best selling drink regular C
oke. Most Coke products satisfy all age groups as it is proven that most people
of different age groups consume the Coca Cola product. This market is relatively
large and is open to both genders, thereby allowing greater product diversifica
tion.
There are four broad ways which Coca Cola can segment its market:
-> Mass marketing
-> Concentrated marketing
-> Differentiated marketing
-> Niche marketing
The most apparent method used by Coca Cola is with no doubt the differentiated m
arketing method as Coke satisfy s a range of different markets. Diet coke satisfy s
the weight consciousness, regular coke, sprite, fanta the average human, coffee
, iced tea etc. Each group of beverages satisfy a particular group of people but
majority the average human.

Developing The Marketing Mix

The marketing mix is probably the most crucial stage of the marketing planning p
rocess. This is where the marketing tactics for each product are determined. The
marketing mix refers to the combination of the four factors(price, promotion, p
roduct, place) that make up the core of a business s marketing strategy. In this s
tep of the marketing planning process, marketing mix must be designed to satisfy
the wants of target markets and achieve the marketing objectives. The most succ
essful businesses have continually monitored and changed their marketing mix due
to respective internal and external factors and have monitored the external bus
iness environment in order to maximise their marketing mix components.
Product:
Many Products are physical objects that you can own and take home. But t
he word product means much more than just physical goods. In marketing, product
also refers to services, such as holidays or a movie, where you enjoy the benefi
ts without owning the result of the service.
Businesses must think about products on three different levels, which ar
e the core product, the actual product and the augmented product. The core produ
ct is what the consumer is actually buying and the benefits it gives. Coca Cola
customers are buying a wide range of soft drinks. The actual product is the part
s and features, which deliver the core product. Consumers will buy the coke prod
uct because of the high standards and high quality of the Coca Cola products. Th
e augmented product is the extra consumer benefits and services provided to cust
omers. Since soft drinks are a consumable good, the augmented level is very limi
ted. But Coca Cola do offer a help line and complaint phone service for customer
s who are not satisfied with the product or wish to give feedback on the product
s.
Positioning
Once a business has decided which segments of the market it will compete in, dev
eloped a clear picture of its target market and defined its product, the positio
ning strategy can be developed. Positioning is the process of creating, the imag
e the product holds in the mind of consumers, relative to competing products. Co
ca Cola and Franklins both make soft drinks, although Franklins may try to compe
te they will still be seen as down market from Coca Cola. Positioning helps cust
omers understand what is unique about the products when compared with the compet
ition. Coca Cola plan to further create positions that will give their products
the greatest advantage in their target markets. Coca Cola has been positioned ba
sed on the process of positioning by direct comparison and have positioned thei
r products to benefit their target market. Most people create an image of a prod
uct by comparing it to another product, thus evident through the famous battles
between Coca-Cola and Pepsi products.
Branding
It is often hard to say exactly why we buy one company s product over anot
her. Companies such as Nike and Adidas spend large amounts of money trying to wi
n consumers away from their competitors who make products that are very similar.
The popularity of the brand is often the deciding factor. Over the time Coca Co
la has spent millions of dollars developing and promoting their brand name, resu
lting in world wide recognition. 'Coca-Cola' is the most recognised trademark, r
ecognised by 94% of the world's population and is the most widely recognised wor
d after "OK". Coca Cola s red and white colours and special writing are all exampl
es of world-wide trademarks.
There are a number of branding strategies: Generic brand strategy, Indiv
idual brand strategy, Family brand strategy, Manufacturer s brand strategy, Privat
e brand strategy and Hybrid brand strategy. Coca Cola utilizes the Individual br
and strategy as Coca Cola s major products are given their own brand names e.g Fan
ta, Sprite, Coca Cola etc although they maybe presented as different lines they
operate under the name of Coca Cola.
Packaging
Packaging, which is not as highly perceived by businesses, is still an important
factor to examine in the marketing mix. Packaging protects the product during
transportation, while it sits in the shelf and during use by consumers, it promo
tes the product and distinguishes it from the competition. Packaging can allow t
he business to design promotional schemes, which can generate extra revenue and
advertisements. Coca-Cola has benefited from packaging the product with incentiv
es and endorsements on the labelling as a promotional strategy to increase it s vo
lume of sales and revenue.

Price:
Price is a very important part of the marketing mix as it can effect bot
h the supply and demand for Coca Cola. The price of Coca Cola s products is one of
the most important factors in a customer s decision to buy. Price will often be t
he difference that will push a customer to buy our product over another, as long
as most things are fairly similar. For this reason pricing policies need to be
designed with consumers and external influences in mind, in order to effectively
achieve a stable balance between sales and covering the production costs.
Price strategies are important to Coca Cola because the price determines
the amount of sales and profit per unit sold. Businesses have to set a price th
at is attractive to their customers and provides the business with a good level
of profit. Long before a sale was ever made Coca Cola had developed a forecast o
f consumer demand at different prices which inevitably determined whether or not
the product came on the market, as well as the allocation of adequate money and
resources to produce, promote and distribute the product.
Pricing Strategies And Tactics
The pricing Strategy a business will use will have to focus on achieving
the marketing plan s objectives and support the positioning of the product, and t
ake external factors such as economic conditions and competitors in to account.
There are 5 strategies available to business: Market skimming pricing, Penetrati
on pricing, Loss leaders, Price Points and Discounts. Over the years Coca Cola h
as used Penetration Pricing as a way of grabbing a foothold in the market and wo
n a market share. It s product penetrated the marketplace. Once customer loyalty i
s established as seen with Coca Cola it is then able to slowly raise the price o
f its product. There has been a fierce pricing rivalry between Coca Cola and Pep
si products as each company competes for customer recognition and satisfaction.
Till now it appears as if Coke has come up on top, although in order to gain lon
g term profits Coke had to sacrifise short term profits where in some cases it e
ither went under of just broke even, but as seen it has been all for the best.
Pricing Methods
Good pricing decisions are based on an analysis of what target customers
expect to pay, and what they perceive as good quality. If the price is too high
, consumers will spend their money on other goods and services. If the price is
too low, the firm can lose money and go out of business.
Pricing methods include: Cost based Pricing, Market based pricing and Co
mpetition based Pricing. Over the years Coca has lost ground here in it s pricing
but has regained it s strength as it employed the Competition-based pricing method
which allowed it to compete more effectively in the soft drink market. Leader f
ollower pricing occurs when there is one quite powerful business in the market w
hich is thought to be the market leader. The business will tend to have a larger
market share, loyal customers and some technological edge, thus the case curren
tly with Coke, it was first the follower but through effective management has no
w become the leader of the market and is working towards achieving the marketing
objectives of the Coca Cola. Survival in the market place, own 60 % of market s
hare by 2007, increase further awareness of product and a return on 20% on capit
al employed for August 2007.
Promotion:
 In today s competitive environment , having the right product at the right
place in the right place at the right time may still not be enough to be succes
sful. Effective communication with the target market is essential for the succes
s of the product and business. Promotion is the p of the marketing mix designed
to inform the marketplace about who you are, how good your product is and where
they can buy it. Promotion is also used to persuade the customers to try a new p
roduct, or buy more of an old product.
The promotional mix is the combination of personal selling, advertising,
sales promotion and public relations that it uses in its marketing plan. Above
the line promotions refers to mainstream media:Advertising through common media
such as television, radio, transport, and billboards and in newspapers and magaz
ines. Because most of the target is most likely to be exposed to media such as t
elevision, radio and magazines, Coca Cola has used this as the main form of prom
otion for extensive range of products. Although advertising is usually very expe
nsive, it is the most effective way of reminding and exposing potential customer
s to Coca Cola Products. Coca Cola also utilizes below the line promotions such
as contests, coupons, and free samples. These activities are an effective way of
getting people to give your product a go.

Place and Distribution:

The place P of the marketing mix refers to distribution of the product-
the ways of getting the product to the market.The distribution of products start
s with the producer and ends with the consumer.
One key element of the Place/Distribution aspect is the respective distribution ch
annels that Coca Cola has elected to transport and sell its product.
Selecting the most appropriate distribution channel is important, as the choice
will determine sales levels and costs. The choice for a distribution channel for
any business depends on numerous factors, these include:
How far away the customers are;
The type of product being transported;
The lead times required; and;
The costs associated with transport;
There are four types of distribution strategies that Coca Cola could have chosen
from, these are: intensive, selective, exclusive and direct distribution. It is
apparent from the popularity of the Coca Cola s product on the market that the bu
siness in the past used the method of intensive distribution as the product is a
vailable at every possible outlet. From supermarkets to service stations to your
local corner shop, anywhere you go you will find the Coca Cola products.
Physical Distribution Issues
Coca Cola needs to consider a number of issues relating to the physical
distribution of its soft drink products. The five components of physical distri
bution are, order processing, warehousing, materials handling, inventory control
, transportation. Coca Cola must further try to balance their operations with m
ore efficient distribution channels.
Order Processing- Coca Cola cannot delay their processes for consumer deliveries
 (i.e. delivery to selling centers), as this is inefficient business functioning
and is portrays a flawed image of the product and overall business.
Warehousing and inventory control- warehousing of Coca Cola products is necessar
y. Inventory control is another important aspect of distribution as inventory ma
kes up a large percentage of businesses assets. Choosing the correct and desired
inventory measure that Jackson s sees as most effective is vital. Jackson s must re
member though that there are factors involved with inventory control that can hi
nder the products sales and customer perceptions (hazards, distribution from sto
rage facilities, etc ).
Materials handling- this deals with physically handling the product and using ma
chinery such as forklifts and conveyor belts. When holding products, then Coca C
ola has benefited from purchasing or renting respective machinery.
Transportation- transporting Coca Cola products is the one most important compon
ents of physical distribution. Electing either to transport the sports drink by
air, rail, road or water depends on the market (i.e. global, or domestic?) and
depends on the associated costs. The most beneficial transportation method for C
oca Cola would be ROAD if the product were moved around from storage to the cost
centers.
Implementing, Monitoring And Controlling
Financial Forecasts
Financial forecasts are predictions of future events relating strictly to expect
ed costs and revenue costs for future years. There are five major marketing expe
nditures, which include research costs, product development costs, product costs
, promotion costs and distribution costs.
Sales force composite is the most logical method in forecasting revenue. This in
volves estimates from individual salespeople to sell to work out a total for the
whole business. Once these costs and revenues are forecasted, management can th
en decide which combination of marketing mix strategies will deliver the most sa
les revenue at the lowest cost.
Implementing
Implementation is the process of turning plans into actions, and involves all th
e activities that put the marketing plan to work. Successful implementation depe
nds on how well the business blends its people, organisational structure and com
pany culture into a cohesive program that supports the marketing plan.
For its further success, Coca Cola must impose several key changes. Production
needs to be on time and meet the quota demanded from wholesalers. It must also b
e efficient so as not to build inventory stocks and inventory prices. The market
ing needs to be motivated and knowledgeable about the product. The forms of prom
otion such as advertising must be attracting and enticing to the target market t
o get the greatest amount of exposure possible for the product. This will ensure
the success of the product in the stores. Distribution of the product must be e
fficient. This problem has already been taken care of with convenient transport
routes to commercial areas and transport already being arranged.
Monitoring And Controlling
Monitoring and controlling allows the business to check for variance in the budg
et and actual. This is important because it allows Coca Cola to take the necess
ary actions to meet the marketing objectives. There are three tools Coca Cola sh
ould use to monitor the marketing plan. They are the following:
i. Sales Analysis
The sales analysis breaks down total business sales by market segments to identi
fy strengths and weaknesses in the different areas of sales. Sellers of Coca Col
a products vary from major retail supermarkets to small corner stores. This give
s the its products maximum exposure to customers at their convenience.
ii. Market Share Analysis
Market share analysis compares Coca Cola s business sales performance with that o
f its competitors. Coca Cola looks to increase its market share by over 60%. Wit
h the changes Coca Cola is currently undergoing, they aim to regain an iron fist
control of the market. Target market various age groups and lifestyles from hig
h school students too universities, and male or female.
Marketing Profitability Analysis
This analysis looks at the cost side of marketing and the profitability of produ
cts, sales territories, market segments and sales people. There are three ratios
to monitor marketing profitability; they are market research to sales, advertis
ing to sales and sales representatives to sales. The results of these three tool
s can help Coca Cola determine any emerging trends, such as the need for a diffe
rent product. Comparing these results with actual results gives the business an
idea on when to change.
Market Research
When attempting to implement a new Marketing plan a business must address its ta
rget market and conduct the relevant information to insure the new marketing pla
n both differs from the old and is better for the business. When conducting mark
et research a business must first define the problem and then gather the appropr
iate information to solve the problem. There are 3 types of information a busine
ss can gather to solve its problems.
->Exploratory Research which clarifies the problem an d searches for ways to add
ress it.
->Descriptive Research is used to measure and describe things like the market po
tential for a product and characteristics of the target market.
->Casual Research is used to test a hypothesis about a cause and effect relation
ship.
Coca Cola through its market research has addressed all three types of research
to define the problem raised by shareholders and gathered information to serve t
heir needs.
Factors Influencing Consumer Choice
When making decisions on products a business must look at factors that i
nfluence consumer choice such as psychological factors, Sociocultural factors, E
conomic factors and Government Factors.
Psychological Factors: such as motivation, perception, lifestyle, personality an
d self concept, learning , and attitudes influence the consumers behaviour towar
ds a product and Coca Cola has addressed this issue by introducing Diet Coke to
satisfy different lifestyles.
Sociocultural factors: such as culture, subculture, socio-economic status, fami
ly and reference groups influence the consumers behaviour towards a product.
Economic factors: such as Disposable income and discretionary income. Coca Cola
has addressed this side of the influence by maintaining a low price on the price
of its products.
Government Factors: such as new regulations, inflation, interest rates all influ
ence consumer spending and choice.