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MSc Marketing

Marketing Management

London School of Business and Finance

Assignment onCoca-ColaMarket

Plan For product line Extension.

Student Name: ISHTIHAR KHAN

Registration No. : M1002508

Tutor Name: Kate Walsh

Date: 07-05-2010

Words Count: 3700

Email: [email protected]


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Contents:

Exclusive summery:--------------------------------------------------------------------------------------3

Situation Analysis:------------------------------------------------------------------------------------4

Market Analysis:---------------------------------------------------------------------------------4

Internal business environment:-----------------------------------------------------------------4

External business environment:----------------------------------------------------------------4

SWOT analysis:----------------------------------------------------------------------------------4

Porters Five Force:------------------------------------------------------------------------------5

Product Lifecycle:--------------------------------------------------------------------------------8

Marketing Strategy:---------------------------------------------------------------------------------------9

Target Market:----------------------------------------------------------------------------------10

Product Line Extension:-----------------------------------------------------------------------10


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Exclusive Summary:

Coca Cola has come under intense scrutiny by investors due to their inability to effectively

carry out their marketing program. It is therefore to help the Polianitis Marketing Company

Pty Ltd, a professional marketing plan that will help the company achieve the goals

effectively and efficiently develop, and govern necessarily represent an iron fist on the soft

drink industry.

When setting up a re-marketing plan birthed every aspect of the marketing plan needs to be

examined critically and thoroughly researched. This test consists of market research, auditing,

and the current situation (situation analysis) and careful control of the soft drink industry and

possibilities forCoca Cola in the market. AfterCoca Cola have carefully internal and

external business environment and critical analysis examines the industry in general, the most

appropriate marketing strategies are selected and these strategies through effective and

continuous monitoring of the external threats and opportunities and review of the

effectiveness of internal administration processes be.

i-e

What changes occurred in the same brand?

Why the changes occurred in the product?

Why those were important?

How can bring those?

Where to maximise production?


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Situation Analysis:

Market analysis:

The market analysis examines both the internal and external business environment. It is

important that Coca-Cola carefully monitor both the internal and external aspects of the IT

business and the internal and external environment and their respective influences important

characteristics in relation to the success ofCoca-Cola and survival in the soft drink his

industry.

Internal Business Environment:

The internal environment and its influence is that which to some extent within the company

has no control. The most important attributes in the internal environment include efficiency in

production, with management skills and effective communication channels. For effective

control and monitoring of the internal business environment, Coke must conduct ongoing

assessments of the business operations and willingly to all the factors that cause inefficiencies

act in every phase of production and consumer process.

External Business Environment:

The external environment and their influences are generally strong forces that affect an entire

industry and can, in fact, a whole economy. Changes in the external environment create

opportunities or threats in the market Coca Cola has to be aware off. Fluctuations in the

economy, changes in customer needs, attitudes and values, and demographic patterns strongly

influence the success ofCoca Cola products on the market and the reception they receive

from consumers.


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SWOT analysis:

SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a technique

that is used heavily in many general management and marketing scenarios. SWOT consists of

examining the current activities of the organization, its strengths and weaknesses, and then

using this and external research data exist include the opportunities and risks.

Strengths:

Coca-Cola has been a complex part of world culture for a very long time. The product is the

image of over-romanticizing loaded, and this is an image many people have taken deeply to

heart. The Coca-Cola image is displayed on T-shirts, hats and memorabilia collectors. This

extremely recognizable branding is one of the greatest strengths of the Coca-Cola. "Enjoyed

more than 685 million times a day is the World ofCoca-Cola as a simple but powerful

symbol of quality and enjoyment" (Allen, 1995).

In addition, Coca-Cola bottling plant is in operation one of its greatest strengths. It allows

them to conduct business on a global level, while simultaneously maintaining a local

approach. The bottling companies are locally owned and operated by independent business

people who sell the right products of the Coca-Cola Company. Because Coke is no absolute

ownership of its bottling network, its main source of income, the sale of concentrate to its

bottlers.

Weaknesses:

Weaknesses of each company must be minimized and well controlled to achieve effective

productivity and effectiveness in their business activities Coke is no exception. Although

domestic business as well as many international markets are growing and thriving (volumes

in Latin America by 12%), Coca-Cola has recently reported some "declines in unit case

volumes in Indonesia and Thailand due to reduced purchasing power of consumers."

According to an article in the magazine "Fortune", "In Japan, unit case sales fell 3% in the


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second quarter of [1998] ... scary because while Japan generates around 5% of global volume,

they pay three times as much profit. Latin America, Southeast Asia and Japan account for

about 35% ofCoke's volume and none of these markets are to perform to expectations.

Coca-Cola on the other side effects on the teeth, which is an issue for health care. It can also

cause permanent sugar by drinking Coca-Cola got health problems. When addicted to Coca-

Cola is also a health problem, because the drinking ofCoca-Cola has a day to your body after

a few years.

Opportunities:

Brand recognition is the key factor in Coke's competitive position. Coca-Cola brand is also in

94% of the worldwide known. The main focus in recent years has been to get the name brand

even more popular. Packaging changes have also affected sales and industry positioning, but

in general, the public tend not to be affected by new products. Coca-Cola bottling plant in

service also allows companies the advantages of infinite growth opportunities to take over the

world. This strategy gives Coke the opportunity to a large geographic, diverse service area.

Threats:

Currently, the risk of new viable competitors in the carbonated soft drinks industry is not very

strong. The threat of substitutes, but is a very real threat. The soft drink industry is very

strong, but consumers are not necessarily married to it. Possible substitutes that continuously

put the pressure on both Pepsi and Coke include tea, coffee, juices, milk and hot chocolate.

Although Coca-Cola and Pepsi almost 40% of the total beverage market control, could meet

the changing health-consciousness of the market have a serious influence. Of course, both

Coke and Pepsi have already diversified into these markets so that they have further

significant market shares and offset any losses incurred because of fluctuations in the market.

Purchasing power of consumers is also a key threat to the industry. The rivalry between Pepsi

and Coke has only a very slow movement of the industry in which management must


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continuousl spond to t changing attitudes and demands ofthei customers respond or

face losing market share to competitors. In addition, consumers can easil switch to other

beverages with little effort or effect.

Porters Fi e Force:

Defining an industry

An industry is a group of multiple companies, so there marketing products are close

substitute for each other (e.g. automotive industry, the travelindustry, mobile industry, TV

industry etc).So there are some industries are week and some are more profitable. Thus here

the question arises that why some are more profitable? Butif we will study the dynamic

structure of competition in an industry, then we will answerthe above question.

The more useful most analytical model for measuring the nature of competition in an industry

is Michael Porter's Five Forces model, described in the following:

Porter explains thatthere are five forces that determine industry attractiveness and long term

profitability ofthe industry. These five competitive forces are given in following diagram:

(Marketing Management by K Porter)

Rivalry of

competitions

Bargaining power

of

Bargaining power

of buyer

Threats of entry Threats of

substitute


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Barriers to enter or threat of new entrants:

If new organization is entering into the industry the existing industry faces the challenges of entering

the industry or entry barriers facing. The threat of new entrants in this case wants large capital cost, to

compete in the automotive industry. It will take long time to get a place and reputation in the minds of

consumers.

Threat of substitutes:

There are many substitutes forCoca Cola such as Pepsi, Diet Rite Cola, juice, Milk, Coffee

etc. Thus, the threat of substitutes forCoca Cola is high.

Bargaining power of buyers:

Here is the bargaining power of buyers is high because the consumers are kings and they will

concentrate over efficiency, price, quality and then to decide. Due to the environmental issues

on the industry, buyers have the last word with sufficient substitutes are available.

Bargaining power of supplier:

COCA COLA has long relationship with suppliers. The producing industry requires raw

materials - labor, components, and other supplies. If the suppliers are powerful, then they can

apply an influence on the producing industry, such as the selling of raw materials at a high

price to gain some of the industry's profits.

Rivalry competition:

The COCA COLA has direct competition for its products, so this purposes it implies market

segmentation to give more concentration to target market. Rivalry competition in the industry

highly available in developed countries.


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Product Li ecycle:

(http://tutor2u.net/business/presentations/marketing/default.html)

To be able to sellthe product properly, businesses must recogni e the productlifecycle ofthe

product. A typical productlife cycle has five phases:Development, Introduction, Growth,

Maturity and Decline. Coca-Cola is currently in the process of maturity, which is first and

foremost by the factthatthey occupied a large, loyal group of stable customers.In foreign

markets the Coke's advantage in this area primarily because ofits establishment strong

branding and itis now in a position to use, this area of stable profitability to supportthe

domestic Cola Wars.

CocaCola


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Marketing Strategy:

Objectives are the main thing which tries to reach the business target.

Objectives need to use SMART criteria.

The SMART can be summarized below:

Specific - the objective should specify what is to be achieved.

Measurable - an objective should be capable of measurement - so that it is possible to

determine whether (or how far) was reached.

Achievement - are you trying it?

Relevant - objectives should be relevant to the people responsible for their achievement.

Time Bound - objectives should be set with a time frame in the head. The periods must also

be realistic.

Objectives for Growth:

To increase the size ofCoca Cola enterprise by 15%.

Market shared objectives:

To gain 80% of the market for soft drinks industry by September 2010.

Promotional Objectives:

To increase availability for every one in the market.

Profitability objectives:

To achieve a 25% return on capital employed by August 2010.

Objectives for Survival.

Target Market:

Situation analysis is completed, if the marketing objectives attend the target market. Soft

drink market is huge market and business in the world, so to fulfil the customers desire and

to improve capital gain, the market segmentation important. After that we take potential for

selection. Target market is a group of people and customer focused by business.


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Coke's target market is very satisfactory as is the variety of consumer needs, the average

person eating a healthy consciousness of Diet Coke, regularCoke drink, cherry max Coke. It

is proven that most people consume Coca-Cola products in the other age groups, most of

Coke products satisfy all ages. This market is relatively large and is open to both men and

women, to allow further diversification of products.

Product Line Extension:

Adding depth to an existing product line by introducing new products in the same product

category, product line extensions give customers greater choice and help protect the company

from a side attack by a competitor. This type of acquisition of your company through new

products or services to sell.

The Coca-Cola introduced the following:

PRODUCTS LINE EXTENSION

Coc

-Cola Coca-ColaCherry,Coca-Cola Zero, dietCoke, caffeinefree

dietCoke, dietCokeCherry, dietCokeCitrus Zest.

Sprite Sprite ZERO

FantaOrange FantaOrange Zero, Fanta Icy Lemon, Fanta FruitTwist,

DrPepper DrPepper Zero

Oasis OasisSummer Fruits,OasisCitrusPunch,Oasis Extra Light

Peachand Passion fruit,Oasis Extra LightSummer Fruits,

OasisSummer Fruits (375ml),OasisCitrusPunch (375ml)

Kia-OraOrange Kia-Ora NASOrange, Kia-Ora Mixed Fruit, Kia-Ora NAS

Mixed Fruit


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Schwe

es Schwe

es Indian

onic Wate

Schwe

es Abbey Well,

Schwe es Sli line Indian

onic Wate , Schwe es

Canada

y Ginge

Ale,Canada

y diet Ginge

Ale,

Schwe es Bitte Le on, Schwe es Sli line Bitte

Le on, Schwe es Ginge Bee , Schwe es Soda Wate ,

Schwe

es

sschian, Schwe

es Le

onade, Schwe

esdiet Le

onade, Schwe

es

ange J

ice, Schwe

es

ineapple J

ice, Schweppes

in

G

ape

it, Schweppes

Sweetened Gape

it, Schweppes

omato J

ice Mix,

Schweppes Cranberry and

aspberry

e

ce No Added

S

gar, Schweppes

range and G

ava

e

ce No Added

S gar, Schweppes BlackcurrantCordial, Schweppes Lime

Cordial, Schweppes range Cordial, Schweppes

eppermintCordial

5 Alive 5 Alive Berry Five Fruit Blend,5 Alive

ropicalFive Fruit

Blend

Minute Maid Minute Maid

range &

assion Fruit, Minute Maid Apple &

Mango, Minute Maid 100% ure range Juice

owerade

owerade Berry and

ropicalFruits,

owerade

range,

owerade Cherry,

owerade aqua+ Lime,

elentless

elentless In

erno,

elentless Juiced Energy,

elentless

Juiced Energy Berry, elentless Energy Shot

Malvern Malvern Still Mineral Water, M: Sparkling Mineral Water

Advantages are the following:

To avoid the need for R & D investment (time, money and staff).

Their broader product range could attract new customers looking for a solution.


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Sales of new products to existing customers contribute to global growth rate.

It eliminates a potential competitor depends (of course depends on the degree of similarity

between the existing and new product lines).

There are four major ways to segment the market of Coca-Cola:

Mass marketing.

Intensive Marketing.

Marketing differentiation.

Niche Marketing.

The most obvious way, clearly differentiate Marketing methods used by Coca-Cola and

satisfaction is the range of different markets. The Diet Coke for the diabetic people, regular

coke, Sprite, Fanta for an average person. And (the products which are mentioned in above

table) each group of beverages satisfy the specific group.

Positioning:

The Company is focusing on the market segments to develop its target market. Its product

can be developed the positioning strategy. Positioning is the process of image creation of the

product, to keep in the minds of consumers in versus of other competing products.

Positioning helps customers to understand that what the speciality in the products is. Coca

Cola to create planned for more positions that their products will be the greatest advantage in

their target markets. Coca Cola has positioned based on the process of positioning by a direct

comparison and have positioned their products to benefit their target audience. Most people

create the image of a product by comparing it with another product, well beyond the famous

battle between Coca-Cola and Pepsi products.

Marketing mix:

Marketing mix is probably the most important stage of Marketing Plan. The marketing mix


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refers to the combination of the four factors (price, promotion, product and place) that

make up the hub of a businesss marketing strategy.

Now we will discuss each element of marketing mix.

Price:

It can cause the supply and demand forCoca Cola. The price ofCoca Cola products is one of

the most important factors in the decision of the customer to buy. The price is becoming able

a customer to push our product to buy. For this reason, the pricing policy must be designed

with consumers and external factors to achieve effective, a stable balance between revenue

and cover the production costs.

Pricing strategies and tactics

The pricing strategy of a company will be used to focus on the achievement of the marketing

plan. There are five strategies available to business:

Market skimming pricing.

Penetration pricing.

Loss leaders.

Price Points.

Discounts.

But Coca Cola is using Penetration Pricing to hold in the market and won a market share. Its

product penetrated the marketplace. Once a customer is established as seen at Coca Cola, it

is then possible to slowly increase the price of his product. It has been a fierce rivalry

between sets Coca Cola and Pepsi products, such as any company in competition for the

customer recognition and satisfaction.

Promotion:

Promotion is used to convince the customers to a new product, or buy more to try out an old

product. Promotion is the combination of:


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Personal selling.

Advertising.

Sales promotion.

Public relations.

Which it uses in its marketing plan. Above the line activities relates to the mainstream

media: advertising through common media such as television, broadcasting, transport,

billboards and in newspapers and magazines. Because most of the target is most likely to

media such as television, radio and magazines are exposed, Coca Cola has used this as the

most important form of support for the extensive range of products. Although advertising is

usually very expensive, it is the most effective way to remember and exposing potential

customers Coca-Cola products. Coca Cola also uses below the line activities such as

sweepstakes, coupons and free samples. These activities are an effective attract people.

Product:

The companies have about the products on three different levels:

Who think the core product?

The core product is what the consumer is actually buying and what benefits it offers.

Customers buy a wide range ofCoca Cola soft drinks.

The product itself.

The real product is the sharing and features that deliver the core product.

Consumers buy the coke product because of the high standards and high quality of

Coca-Cola products.

The increased product.

The increased product is the additional benefits for consumers and customer services

provided. Coca Cola provides a helpline and complaints telephone service for

customers who are not satisfied with the product or to give feedback to the products.


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Place and distribution:

Coca-Cola may be selected from four types of sales strategies, intensive, selective, exclusive

and direct sales. It is the popularity ofCoca Cola product on the market that the business in

the past, the method of intensive distribution as the product is available at every outlet

possible surrender. From supermarkets at railway stations to your local service shop around

the corner where you go, you'll find the Coca Cola products.

Physical Distribution Issues:

Coca Cola has a number of issues related to the physical distribution of soft drink products

tested. The five components of physical distribution which Coca-Cola uses:

Order processing.

Warehousing.

Materials management.

Warehouse management.

Transportation.

Coca Cola have to try to further their operations more efficient channels of distribution

equilibrium.

Market research:

When attempting to implement a new plan for marketing the business must be dealt with in

the target market and the behaviour of the relevant information to secure a new plan for

marketing both different from the old and the good work. When conducting a market research

company you must first define the problem and then gather the necessary information to

troubleshoot the problem. There are three types of information that a company can derive its


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problems.

Exploratory research.

Descriptive research.

Casual Research.

Coca-Cola uses all three types of research for solve its problems.

Factors affecting the choice of consumers:

Psychological factors: such as motivation, perception, lifestyle, personality and self concept,

learning, and attitudes affect consumer behaviour towards a product and Coca-Cola has

addressed this problem by introducing Diet Coke to satisfy different lifestyles.

Socio cultural factors: such as culture, subculture, socio-economic status, family and

reference groups influence consumer behaviour towards a product.

Economic factors: such Coca-Cola impacts by maintaining a low price to the price of its

products.

Government Factors: such as the new regulations, inflation, interest rates affect all

consumer spending and choice.

Financial Matters:

Now we will discus the financial matters in the light of following heads.

1. Financial forecasts

2. Monitoring

1. Financial forecasts:

Financial forecasts are closely related to the expected cost of the annual sales expected future

events and future costs.


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There are five major marketing expenditures:

Research funds.

Product development costs.

Product costs.

Promotional costs

Distribution costs.

Sales, earnings forecasts are the most logical method of complex forces. This includes

estimates from individual sales representatives to sell the entire business to work the total. Is

expected once these costs and revenues, a combination of strategy and marketing mix that

management can decide to provide the most profitable low-cost sales.

2. Monitoring:

Businesses can verify the actual distribution of the budget. It is important Coca-Cola because

it can take to meet the objectives of marketing necessary measures. There are three tools to

monitor the Coca-Cola marketing Plan:

1. Marketing Profitability Analysis:

This analysis, look at the cost of marketing and product profitability, sales territories,

market segments and sales people.There are three indicators to monitor profitability

of marketing, market research to sale, advertising to sale and sales representatives to

sales. The results of these three tools to help Coca Cola identify emerging trends, such

as the need for another product. Comparing these results with the actual results is to

the company an idea to change if they are.

2. Market share analysis:

Market share analysis to compare the performance of sales ofCoke's business

competitors. Coca-Cola looks to increase 70% over market share. Coca-Cola changes


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are ongoing and they aim to regain control of the iron fist of the market. College and

high school students living in age from a variety of target markets, man and woman.

3. Sales Analysis:

Sales down analysis will be suspended in order to identify weaknesses in different

areas of strength and total sales revenue of the business market segment. Sellers

small retail shop in the corner of the main Coca-Cola products vary depending on the

supermarket. This gives maximum exposure to customers at their convenience in their

products.

Controls:

The Committee will discuss with management, internal audit, and the independent auditors of

the Company's internal controls (with particular emphasis on the scope and performance of

the internal audit function), and discuss with the internal auditors the results of the internal

audit program. The Committee shall examine and discuss the Company disclosure controls

and procedures, and the quarterly evaluation of these controls and procedures by the Chief

Executive Officer and Chief Financial Officer. The committee examines issues related to

transactions with the person, Chairman of the Board (if he is an employee of the Company)

or the Chief Executive Officer or any holder of 5% or more of the common stock of

companies. The Committee is to examine the authority for the approval of such person in

connection with transactions and, if possible, to approve such transactions before they are

entered into.

Implementation:

Implementation is the process of turning the plan into action. Implementation depends on

how people blend of business; the program supports the marketing plan organize corporate


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culture and organizational structure. For further success, Coca-Cola needs to impose some

significant changes. Production must meet the demand from wholesalers and quotas on the

hour. The inventory stocks so efficiently, so you should not build a stock price. And

motivated marketing requires knowledge of the product. The focus should be promotion and

other forms of advertising to seduce to get the maximum amount of potential exposure to

product target market. Ensure the success of products in this store. Must be efficient product

distribution. This problem was already taken care of with convenient transportation to

commercial areas and traffic is already arranged.

Marketing Organization:

The Committee shall be determined by the board, assist the Board in discharging its

responsibilities with regard to supervising the financial affairs of the company.

Committee Membership

The committee is composed of no fewer than three members. The members of the Committee

of Directors shall be identified and removed by the Board. A majority of the members shall

constitute a quorum.

Committee powers and responsibilities:

1st The Committee will formulate a regular basis and recommend for approval of the Board

of Directors the financial policies of the company, including management of the financial

affairs of the company. The Committee for approval by the Board of Directors annual

budgets and such financial estimates are prepared, have what it thinks is right; supervision is

on the budget and have all the financial operations of the Company, then the dividend policy

of the Board of Directors and recommend to time. Time will report to the Board on the

financial position of the Company. All capital expenditure of the companies will be reviewed

by the Committee and recommended for approval of the Board of Directors. The Committee


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may set up the other committee of the Board of Directors or one or more of the authorized

officers of the Company, bonds, loans, investments and guarantees up to that particular

amount, or on such conditions as the Committee may, subject to the approval of the Board of

Directors and to open bank accounts and designate those persons authorized to carry out

checks, notes, drafts and other orders for the payment of money in the name of the company.

2nd The Committee will regularly evaluate the performance and are the authorized capital

expenditure.

3rd The Committee will also have a mandate to advise and support of internal or external

laws, preserve, accounting or other issues.

4th The Committee will provide regular reports to the Board.

5th The Committee may delegate authority and according to the subcommittees.

6th The Committee reviewed periodically to evaluate new and the adequacy of this charter

and recommend any proposed changes to the Board for approval.

7th The Committee shall review annually its own performance.

(http://www.thecoca-colacompany.com/investors/governance/finance.html)

References:

(Marketing Management by K Porter)

www.thecoca-colacompany.com

www.wikipedia.com

http://www.thecoca-colacompany.com/investors/governance/finance.html

(Allen, 1995)


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