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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: 3472
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:
Business Definition: The Coca-Cola Company exi t to benefit and refresh allthe touches.
(The Coca-Cola Company 1, p. 1). To achieve this goal, the Coca Cola wants to use product
line Extension in its product, especially in Coke. The Coke brand ofthe company is the basic
ofthe company, so to introduce new products in the same product will encourage the
customers fortheir satisfaction. f Coca-Cola introduces Diet Coke+ (Lemon, G tea), then the
productivity, profitability, stability and sustainability factors may broughtin Coca-Cola
market. That are discussing later.
Business Mission:
y T f t w l ...y T i pi t f pti i ppi ...y T t v l iff .
(http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html).
Acting does maintain successful until and protect our brands, particularly Coca-Cola. By
adding a Coke with Diet Coke+ (Lemon, G tea) phenomenon is thatthe people, who are
suffering from fatness and diabetes, the West has turned to use in recent years (Preville, SP1),
the concentration of new generation to avoid from the fatness and diabetes and(new vine in
old bottle) will be introduce in the world marketing. Coca-Cola will gain to achieve the
occasion of new and growing market segment.
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Situation Analysis:
Coca Cola introduced more than 400 specific productlines and brand extensions, Coca-Cola
Company, is the largest and best-known beverage manufacturer, distributor and developer of
the world (Coca-Cola Company 3, a). The company offers bottled drinks, fountain syrups for
many ofits products.
Market analysis:
The market analysis examines both the internal and external business environment. tis
importantthat Coca-Cola carefully monitor both the internal and external aspects oftheits
business, the internal and external environment and their respective influences important
characteristics in relation to the success of Coca-Cola and survivalin the soft drink industry.
Internal Business Environment:
The internal environment and its influence is that which to some extent within the company
has no control. The mostimportant attributes in the internal environmentinclude efficiency in
production, with management skills and effective communication channels.For effective
control and monitoring ofthe internal business environment, Coke must conduct ongoing
assessments ofthe business operations and willingly to allthe factors that cause inefficiencies
actin every phase of production and consumer process.
External Business Environment:
The external environment and theirinfluences are generally strong forces that affect an entire
industry and can, in fact, a whole economy. Changes in the external environment create
opportunities orthreats 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
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influence the success of Coca Cola products on the market and the reception they receive
from consumers.
SWOT analysis:
SWOT stands for Strengths Weakness Opportunities Threats. SWOT analysis is a technique
thatis used heavily in many general management and marketing scenarios. SWOT consists of
examining the current activities ofthe organization, its strengths and weaknesses, and then
using this and external researches data existinclude the opportunities and risks.
Strengths:
Coca-Cola has been a complex part of world culture for a very long time. The productis 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 ofthe greatest strengths ofthe Coca-Cola. "Enjoyed
more than 685 million times a day is the World of Coca-Cola as a simple but powerful
symbol ofquality and enjoyment" (Allen, 1995).
n addition, Coca-Cola bottling plantis in operation one ofits greatest strengths. t allows
them to conduct business on a globallevel, while simultaneously maintaining a local
approach. The bottling companies are locally owned and operated by independent business
people who sellthe right products ofthe Coca-Cola Company. Because Coke is no absolute
ownership ofits bottling network, its main source ofincome, 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. 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 under developing
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countries where the per capita income is low. Coca-Cola on the other side effects on the
health, teeth which are an issue for health care. t can also cause permanent sugar which will
cause of diabetes. So due to the weaknesses the people are avoiding their selves from the use
of Coca-Cola.
Opportunities:
Brand recognition is the key factorin Coke's competitive position. Coca-Cola brand is also in
97% ofthe worldwide known. The main focus in recent years has been to getthe name brand
even more popular. Packaging changes have also affected sales and industry positioning, but
in general, the public tend notto be affected by new products. Coca-Cola bottling plantin
service also allows companies the advantages ofinfinite growth opportunities to take overthe
world. This strategy gives Coke the opportunity to a large geographic, diverse service area.
Threats:
Currently, the availability of Diet Coke+ (Lemon, G tea) is notintroduced by the popular
rivalry competitors, which have great name e,g. Pepsi. The soft drinkindustry is very strong,
but consumers are not necessarily married to it. Possible substitutes that continuously putthe
pressure on both Pepsi and Coke include tea, coffee, juices, milk and hot chocolate. Although
Coca-Cola and Pepsi almost 45% ofthe total beverage market control could meetthe
changing health-consciousness ofthe market have a serious influence. Of course, both Coke
and Pepsi have already diversified into these markets so thatthey have further significant
market shares and offset any losses incurred because of fluctuations in the market. The
consumeris a king is also the key threats to the industry. So consumers can easily switch to
other beverages with little effort or effect. But when Coca-Cola is introducing the productthe
consumertrend can be move to the Coca-Cola beverage, because the product will be
beneficial and health friend.
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Product Lifecycle:
(http://tutor2u.net/business/presentations/marketing/default.html)
To be able to sellthe product properly, businesses must recognize 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. n 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. So in this case when Diet Coke+ (Lemon, G tea) will come to the
marketi-e the new productin the existing productin the existing market will be more
beneficial forthe development process of Coca-cola, because it will change the people taste,
the focus on the quality ofthe product will encourage the people to purchase.
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 whatis to be achieved.
Measurable - an objective should be capable of measurement.
Achievement - are you trying it?
Relevant - objectives should be relevantto the people responsible fortheir achievement.
Time Bound - objectives should be set with a time frame in the head. The periods must also
be realistic.
Objectives for Growth:
The present market boundary of Coca-Cola is wide because itis in maturity stage, but here it
will concentrate atlow cost and great satisfaction. So it willtry to use the productline
extension, which will reduce cost with great satisfaction.
Market shared objectives:
With introducing the Diet Coke+ (Lemon, G tea) the market shares of Coca-Cola will
increase from 80% (in 2010) to (infinity).
Promotional Objectives:
t willincrease availability for every one in the market.
Profitability objectives:
t willincrease on capital employed.
Objectives for Survival.
t will encourage the industry to survive in future.
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Target Market:
Situation analysis is completed, ifthe marketing objectives attend the target market. Soft
drink marketis huge market and business in the world, so to fulfilthe customers desire and
to improve capital gain, the market segmentation is important. Afterthat we take potential for
selection. A 'target market or target Audience is the market segment which a particular product is
marketed to. It is often defined by age, genderand/or socio-economic grouping. Market Targeting is
the process in which intendedactual markets are defined, analyzedand evaluated just before the
finaldecision to enter is made (http://en.wikipedia.org/wiki/Target_marke).
Coke's target marketis very satisfactory as is the variety of consumer needs, the average
person eating a healthy consciousness of Diet Coke, regular Coke drink, cherry max Coke.
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+ (Lemon, G tea) forthe diabetic
people and adults. n addition will say thatit will cover all rage of people.
Positioning:
The Company is focusing on the market segments to develop its target market. ts product
can be developed the positioning strategy. Positioning is the process ofimage creation ofthe
product, to keep in the minds of consumers in versus of other competing products.
Positioning helps customers to understand that whatthe speciality in the products is? Coca
Cola created plan for more positions thattheir products will be the greatest advantage in their
target markets. Coca Cola has positioned based on the process of positioning by a direct
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comparison and have positioned their products to benefittheirtarget 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. Now-a-days the psychology of people is to fit
their body slim to avoid themselves from sugar mix and caffeine mix drinks. Wheneverthe
Diet Coke+ (Lemon, G tea) willintroduce, then the demand forthe product will be very high
and the market share of Coca-Cola will be increased.
Marketing mix:
Marketing mix is probably the mostimportant stage ofMarketing Plan. The marketing mix
refers to the combination ofthe 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:
t can cause the supply and demand for Coca Cola. The price of Coca Cola products is one of
the mostimportant factors in the decision ofthe customerto buy. The price is becoming able
a customerto push the products to buy. Forthis reason, the pricing policy must be designed
with consumers and external factors to achieve effectiveness and stable balance between
revenue and cost, to coverthe production costs.
Pricing strategies and tactics
The pricing strategy of a company will be used to focus on the achievement ofthe marketing
plan. There are five strategies available to business:
Market skimming pricing.
Penetration pricing.
Loss leaders.
Price Points.
Discounts.
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If Coca-Cola introduces the productthen this is necessary to concentrate overthe price for
the product, e.g. ifthe product price will high then consumertrend may be move to another
side, and the new entrance willtakeover overthe market.
Promotion:
Before the Diet Coke+ (Lemon, G tea) entrance, itis important forthe company to use
promotion strategy. Promotion strategy is used to convince the customers to a new product.
Promotion is the combination of:
Personal selling.
Advertising.
Sales promotion.
Public relations.
The Coca-Cola is using this strategy forits marketing plan. Above the line activities relates to
the mainstream media:
Advertising through common media such as television, broadcasting, transport, billboards
and newspapers and magazines.
Because most ofthe targetis mostlikely to media such as television, radio and magazines are
exposed, Coca Cola has used this as the mostimportant form of support forthe extensive
range of products. Although advertising is usually very expensive, itisthe 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 over people.
Product:
The companies have aboutthe products on three differentlevels:
Who think the core product?
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The core productis the phenomenon of whatthe consumeris actually buying and
what benefits it offers. According to the psychology oftoday people (to keep
themselves fit and slim) the productis more beneficial.
The product itself.
The real productis the sharing and features that deliverthe core product.
Consumers will buy the product because ofthe high standards and high quality of
Coca-Cola.
The increased product.
The increased productis 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 orto give feedbackto the products.
Place and distribution:
Coca-Cola may be selected from fourtypes of sales strategies,intensive, selective, exclusive
and direct sales. Itis the popularity of Coca Cola product on the marketthatthe business in
the past, the method ofintensive distribution as the productis available at every outlet
possible surrender. From supermarkets at railway stations to yourlocal service shop around
the corner where you go, you'll find the Coca Cola products.
Physical Distribution Issues:
Coca Cola has a number ofissues 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.
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Coca Cola have to try to furthertheir operations more efficient channels of distribution
equilibrium.
Market research:
The new plan for marketing, the business must be dealt with in the target market and the
behaviour ofthe relevantinformation to secure a new plan for marketing. When conducting a
market research, a company must first define the problem and then gatherthe necessary
information to troubleshootthe problem. There are three types ofinformation that a company
can derive its problems.
* Exploratory research.
* Descriptive research.
*Casual Research.
Coca-Cola uses allthree types of research for solving its problems.
Factors affecting the choice of consumers:
Psychological factors: such as motivation, perception, lifestyle, personality and self concept,
learning, and attitudes affect consumer behaviourtowards a product and Coca-Cola can be
addressed this problem by introducing Diet Coke+ (Lemon, G tea) to satisfy the
psychological factors of people.
Socio cultural factors: such as culture, subculture, socio-economic status, family and
reference groups influence consumer behaviourtowards a product.
Economic factors: such Coca-Cola impacts by maintaining a low price to the price ofits
products.
Government Factors: such as the new regulations, inflation, interest rates affect all
consumer spending and choice.
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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 ofthe annual sales expected future
events and future costs.
There are five major marketing expenditures:
Research funds.
Product development costs.
Product costs.
Promotional costs
Distribution costs.
Sales and earnings forecasts are the mostlogical method of complex forces. This includes
estimates from individual sales representatives to sellthe entire business to workthe total.
These are expected costs and revenues. The combination of strategy and marketing mix, can
managementto provide the most profitable low-cost sales.
2. Monitoring:
Businesses can verify the actual distribution ofthe budget.Itis important for Coca-Cola,
because it can meetthe objectives of marketing necessary measures. There are three tools to
monitorthe Coca-Cola marketing Plan:
1. Marketing Profitability Analysis:
This analysis, look atthe 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
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sales. The results ofthese three tools help Coca Cola to identify emerging trends, such
as the need for another product. Comparing these results with the actual results the
company has an idea to change ifthey are.
2. Market share analysis:
Market share analysis to compare the performance of sales of Coke's business
competitors. Coca-Cola looks to increase 70% over market share. Coca-Cola changes
are ongoing and they aim to regain control ofthe market. College and high school
students living in age from a variety oftarget markets, man and woman.
3. Sales Analysis:
Sales down analysis will be suspended in orderto identify weaknesses in different
areas of strength and total sales revenue ofthe business market segment.Sellers
small retail shop in the corner ofthe main Coca-Cola products vary depending on the
supermarket. This gives maximum exposure to customers attheir convenience in their
products.
Controls:
The Committee will discuss with management, internal audit, and the independent auditors.
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 ofthe internal
audit program. The Committee shall examine and discuss the Company disclosure controls
and procedures, and the quarterly evaluation ofthese controls and procedures by the Chief
Executive Officer and Chief Financial Officer. The committee examines issues related to
transactions with the person, Chairman ofthe Board (if he or she is an employee ofthe
Company) orthe Chief Executive Officer or any holder of 5% or more ofthe common stock
of companies. The Committee is to examine the authority forthe approval of such person in
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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
culture and organizational structure. For further success, Coca-Cola needs to impose some
significant changes. Production must meet the demand from wholesalers and quotas. The
inventory stocks are so efficient, so you should not build a stock price and motivated
marketing requires knowledge ofthe product. The focus should be promotion and other forms
of advertising to seduce and get the maximum amount of potential exposure to the product
target market. Ensure the success of products in store, must be efficient distribution.
Marketing Organization:
The Committee shall be determined by the board, assistthe Board in discharging its
responsibilities with regard to supervising the financial affairs ofthe company.
Committee Membership:
The committee is composed of no fewerthan three members. The members ofthe Committee
of Directors shall be identified and removed by the Board. A majority ofthe members shall
constitute a quorum (minimum number required for valid meeting).
Committee powers and responsibilities:
1st The Committee will formulate a regular basis and recommend for approval ofthe Board
of Directors the financial policies ofthe company, including management ofthe financial
affairs ofthe company. The Committee for approval by the Board of Directors annual
budgets and such financial estimates are prepared, have whatitthinks is right; supervision is
on the budget and have allthe financial operations ofthe Company, then the dividend policy
ofthe Board of Directors and recommend to time. Time will reportto the Board on the
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financial position ofthe Company. All capital expenditure ofthe companies will be reviewed
by the Committee and recommended for approval ofthe Board of Directors. The Committee
may set up the other committee ofthe Board of Directors or one or more ofthe authorized
officers ofthe Company, bonds, loans, investments and guarantees up to that particular
amount or on such conditions as the Committee may, subjectto the approval ofthe Board of
Directors and to open bank accounts and designate those persons authorized to carry out
checks, notes, drafts and other orders forthe payment of money in the name ofthe 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 ofinternal or external
laws, preserve, accounting or otherissues.
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 ofthis 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)
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References:
(The Coca-Cola Company 1, p. 1)
http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html).
(Coca-Cola Company 3, a).
(Marketing Management by K Porter).
www.thecoca-colacompany.com.
www.wikipedia.com.
http://www.thecoca-colacompany.com/investors/governance/finance.html.
(Allen, 1995).
(http://tutor2u.net/business/presentations/marketing/default.html).
(http://en.wikipedia.org/wiki/Target_marke).