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net ----------------------------------joeydaprof Jun 12, 2006 Marketing plan Coco Cola ----------------------------------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. To 4. To Promotional Objectives increase awareness of the product on the market. Objectives for Survival 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 productthe 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. www.vustudents.net