Strategic Marketing Planning Report - Coca-Cola Beverages Pakistan Ltd

8/9/2019 Strategic Marketing Planning Report - Coca-Cola Beverages Pakistan Ltd.

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STRATEGIC

MARKETING

PLANNING

1/13/2015 Submitted to Mr. Ekhlaque Ahmed

By Abdul Moiz, Tooba Iqbal, Delshad Karanjia, Syed Faizan Abbas.


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Executive Summary

The report is about the Coca-Cola Pakistan now knows as Coca-Cola Beverages Pakistan

Limited, the report is about the extensive findings of the company since its inception in Pakistan

which comprises of Business Scope, External Analysis, Internal Analysis and development of a

Strategic Marketing Plan. It gives an overview of the Beverage Industry in Pakistan and specially

the ready to drink market which major chunk belongs to carbonated soda drink market. The

different method of External and Internal Analysis helped us to formulate the action plan; the

report is based on material information as well as some parts are also developed on the basis of

assumption due to non-availability and confidentially of the information.


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Acknowledgement

First of all, we’d like to thank ALLAH SWT for giving us the strength to carry on this project

and for blessing us with many great people who have been our greatest support in both personaland professional life.

We also take this opportunity to express our profound gratitude and deep regards to our course

instructor & mentor Mr. Ekhlaque Ahmed for his exemplary guidance, monitoring and constant

encouragement throughout the course of Strategic Marketing Planning.

We’d also like to thank specially Mr. Bilal Parekh former auditor at CCBPL and the entire

CCBPL crew who supported specially Ms. Ushba Taseer (RSM).


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Letter of Transmittal

Dear Mr. Ekhlaque Ahmed

We’d like to inform you that as per requirement of our SMP course we

were required to complete a report and presentation on the “Strategic

Marketing Planning” of a corporate.

Working on this project has been very insightful for our practical life aswell as studies. Your guidance really helped us to work out on this

report. Your feedback will further enhance our capabilities and reduce

the missing areas in the report.

Sincerely,

Abdul Moiz, Tooba Iqbal, Delshad Karanjia, Syed Faizan Abbas.

15112 10478 10045 11862


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Beverage Industry in Pakistan

Beverage industry in Pakistan comprises of many different players that contribute to the industry

whether it is tea that isn’t in form of liquid form or a milk drink out of these two, carbonatedsoda drinks stand on second level which contributes towards the beverage industry and there are

different set of competition is going on within the industry. The overall industry produces

various kinds of juices, soft drinks, colas, syrups, milk and other beverages, with over 200 units

across Pakistan the amount of cases is estimated to between 400-500 Million cases with an

annual growth of around 10-15 per cent, has the potential to double its size in the next 3-5 years,

if the government's taxation policies towards this industry are corrected. There are 36 beverage

plants in the country and this is one industry, which is very well organized. Job oriented in

nature, the beverage industry employees over 500,000 people directly and indirectly and also

supports many other up/down stream industries such as crown corks, glass bottles, plastic shells,

sugar, transport, advertising and media, P.E.T bottles, concentrates etc. due to this industry a

huge number of outlets/shops are supported to generate wide-spread economic activity in the

country

The above chart doesn’t include non-formal products like lassi, satu, Rooh Afza etc.

Sales

Tea CSD Juices Other


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CSD Industry in Pakistan

It won’t be wrong to say that the major chunk of beverage industry in Pakistan is covered by Tea

followed by Carbonated Soft drinks that include PepsiCo covering three different bottlingfranchises in Pakistan whereas the global leader Coca Cola operates directly under the name of

CCBPL “Coca Cola Beverage Pakistan Limited” owned by the bottling unit Coca Cola Icecek –

Turkey, however there are some domestic competitors that rarely even make up the 0.5% the

market share. PepsiCo is the leading producer and revenue generator in the field with over 12

plants across Pakistan divided into eight different franchises which include Pakistan Beverages

Pvt. Limited for Sindh region and Punjab Bottlers Pvt. Limited in Punjab, these two franchise

cover major part of bottling and sales, in 2012 PepsiCo generated an aggregated revenue of

around Rs. 82 Billion making Pepsi the largest food and beverage brand in Pakistan disclosed by

PepsiCo’s Asia region executive Mr. Qasim Khan. (Farooq Tirmizi, Tribune, 2012)

Since the inception of the Pakistan foreign investment was never a question and both PepsiCo

and Coca Cola stepped in to cover the huge untouched market which had potential grow:

In a recent interview Mr. Riazullah Khan – Country Manager Coca Cola said “According to

industry estimates, the CSD beverage industry’s revenue is about Rs185 billion. Coca-Cola is

one of the leading beverage companies, with a market share in the heavy double digits.” (Khan,

2014) Prior to that Wall Street Journal in 2010 claimed the following share between the two Cola

Kings in Pakistan, (Wright, 2010)

Pepsi

65%

Coca Cola

35%

Market Share in Pakistan


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The Coca-Cola Company

Founded in 1886, the Coca-Cola Company is the world’s leading manufacturer, vendor, and

distributor of nonalcoholic beverage concentrates and syrups. The company’s corporateheadquarters is based in Atlanta, with local operations in over 200 countries around the world.

Although Coca-Cola was first created in the United States, it rapidly became popular wherever it

went. The first international bottling plants opened in 1906 in Canada, Cuba and Panama, soon

followed by many more. Today, Coca-Cola has a portfolio of more than 3,000 beverages. Coca-

Cola has 92,400 employees worldwide. More than 70 percent of our income comes from outside

the U.S., but the real reason we are a truly global company is that our products meet the varied

taste preferences of consumers everywhere. (Coca Cola Company, 2014)

The company today in Atlanta is now absolutely limited to producing the concentrate, which is

licensed and sold to the partners of Coca-Cola, in the Coke language these partners are often

called Coca-Cola bottlers, these bottlers hold exclusive contracts with the company and are given

rights to produce and distribute in the specific countries and sometimes even in certain regions.

The product is developed by the concentrate which is highly secret and with fresh water and

sweeteners product is ready to reach the customers by certain channels of distribution. These

concentrates are sold for soda fountains to major restaurants and food service providers across

the globe.

The Coca-Cola Company has eventually tried to introduce different type of Cokes over the years

which includes; Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-

Cola Zero, Coca-Cola Vanilla, and special versions with lemon, lime or coffee. In 2013, Coke

products could be found in over 200 countries worldwide, with consumers downing more than

1.8 billion company beverage servings each day.

Coca-Cola has always been under competitive edge globally, however there are some regions

where its market share is relatively low and PepsiCo have retained its huge market share. Since

the 1880’s both Coca-Cola and Pepsi have been under a cold war to get most sales across the

world and to build a distribution network that every land should be conquered on this plant.


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In 2014, Nasdaq reported that Coca-Cola have won the war after snatching significant market

share of global carbonated soft drink market. (StreetAuthority, 2014)

Pepsi28%

Coca Cola42%

Other 30%

Global Market Share CSD


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Coca Cola Beverages Pakistan Limited.

Coca-Cola came to Pakistan in 1953. Initially it was a different structure, now it is an altogether

new structure. In the start the company had franchise bottling system in Pakistan. As a part of itsdrive to enhance the quality, availability, and image of Coca-Cola products, The Coca-Cola

Company established a new Company in Pakistan in 1996, by the name of “Coca -Cola

Beverages Pakistan Limited” (CCBPL or Company). CCBPL is a part of Coca-Cola İçecek

which is sixth largest KO bottler in the World. It has a presence in ten countries including

Turkey, Kazakhstan, Kyrgyzstan, Azerbaijan, Jordan, Iraq, Turkmenistan, Tajikistan, Syria, and

Pakistan. CCI has 48% shares of CCBPL with Management Control. CCBPL started the process

of acquiring and investing in locally franchised bottling operations. This process was completed

in 2006 and, thereafter, all manufacturing and selling rights of Coca-Cola products are now with

CCBPL.

The Coca-Cola System in Pakistan serves over 200,000 customers/retail outlets. The Coca-Cola

System in Pakistan employs over 3.000 people working continuously for the company and over

8,000 indirectly associated with the company. CCBPL has 7 plants and 15 warehouses

throughout the country and serves a population of more than 170 million with a production

capacity of 120 million physical cases. CCBPL is a significant player in the growth of Pakistan’s

economy since it is one of the country’s top foreign direct investments in FMCG (Fast Moving

Consumer Goods) business and is one of the major tax paying beverages companies of Pakistan.

Coca-Cola Beverages Pakistan Limited after taking all over operations of all plants that were

partly owned by franchises implemented a distribution system which is still under

implementation and is being further extended.

Coca-Cola in Pakistan is consistently taking away Pepsi’s market share, by 1980’s the marketshare of Pepsi was above 80% which is now down to 65% according to report based in American

newspaper and currently Coca-Cola makes consumption of 15 bottlers per capita every year and

is set to be increasing. (Wright, 2010)


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Business Scope

In 1953 Coca-Cola entered in Pakistan, after nine years of Pakistan’s inception to provide the

most popular beverage of that era that was Coca-Cola and also to fulfil their mission to refreshthe world and to create value and make difference and after 60+ years the Coca-Cola is ready to

complete its 2020 vision. Not only that Coca-Cola had introduced its new offerings in the face of

Sprite, Fanta, Minute Maid, Kinley and believes to bring more of its brands in Pakistan.

Regions:

Coca-Cola Beverages Pakistan Limited currently distributes to most of the urban cities and many

rural areas via its new distribution system implemented for the first time after being centralized

less than one roof, however rural market isn’t the target market despite major chunk of

population relies on rural areas, and Coca-Cola internationally serves 200 countries with their

3000 products.

CCBPL have predefined 11 territories across Pakistan which includes; Karachi, Lahore,

Hyderabad, Multan, Rawalpindi, Peshawar, Rahim Yar Khan Etc.

Functions & Applications:

Coca-Cola Pakistan serves the beverage industry in Pakistan and it follows its mission to refresh

the world and to inspire the moments of happiness and optimism, Coca-Cola always have tried to

provide the quality beverage to its customers with consistent quality improvements

Customers & Users:

In Pakistan there are very few numbers of Coca-Cola products introduced and therefore some

products that are made for specific age groups aren’t launched in Pakistan due to it being not

fully mature market nor there is much awareness or demand, flavors of lime, vanilla and cherry

are available in many different countries that are specifically targeted towards children aged 4-

16. However Pakistan being a very young country where the average age of Pakistani population

is less than 36 which means that most of the population belong to youngers and therefore it’s

easy to target them .


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However its seen that all over Pakistan be it young or old seems to be a market for Coca-Cola

and all sort of carbonated soda drinks, juices and due to concern of water purity even providing

bottled water is increasing and nor the customers are gender specific.

Value:

From time to time Coca-Cola in Pakistan have carried out improvements and in order to create

shared value that is in the best interest of their valuable customers they abolished franchising

system and instead centralized due to the quality and availability concerns, not only that Coca-

Cola plants across Pakistan are considered one of the most modern bottling plants that provide

quality beverage, within the span of 2004-2014 the foreign investments worth $450 Million were

deployed in order to facilitate Coca-Cola system in Pakistan.

Coca-Cola believes in implementing new technologies time to time in order to enhance customer

experience as well as making sure that the product is available.

Future:

Coca-Cola Pakistan has always looked forward to enhance its product line and in due course

Coca-Cola might invest more in order to create plants and enhance availability and visibility of

products.

There are new flavors of Minute Maid in pipeline whereas new flavors of new introduced Fanta

might also be introduced looking forward at the maturity of the market. However the flavored

coke introduction might not be possible nor Coca-Cola might bring its snacks or energy drink

units due to low profit margins.

Business we are not in:

Coca-Cola is specifically a beverage company and 95% of the products internationally belong to

beverage divided intro sparkling, still and water category all comprises of no alcohol and the

remaining part belongs snacks like Task iris etc. Therefore the company isn’t not outside the

food business.


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Market Structure

Category CCBPL Pepsi

SparklingCoke Sprite

FantaPepsi 7up Marinda

Mountain Dew

StillMinute Maid

KinleySlice Aquafina

Energy Drink - Sting

Snacks - Frito Lays

Channel Structure - CCBPL

End UsersEnd Consumers

(Children, Teens,

Adults)

End Consumers (Children,

Teens, Adults)Masses. Wholesalers, Retailers

Application Discounted PriceB2B, B2C, Profit margin

(bulk buy)B2B, Profit Margin (bulk buy),

Products

Coke + Coke (Diet)

Sprite + Zero + 3G

Fanta (Org + Cit)

Kinley

Minute Maid (5FLV)

Coke + Coke (Diet)

Sprite + Zero + 3G

Fanta (Org + Cit)

Kinley

Minute Maid (5FLV)

Coke + Coke (Diet)

Sprite + Zero + 3G

Fanta (Org + Cit)

Kinley

Minute Maid (5FLV)

Purchaser proprietor/procure

ment dept.

traders, retailers

wholesalers, restaurants,

hotels, motels, dhabbas,

corporations, Institutions

Metro, Imtiaz & Hyper star.

CCBPL

Distributors

Key

Accounts

Mass Trade


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Market Size – Past 4 Years

PKR - Billions

Analysis:

Historical data indicates that still-beverage industry is gaining momentum and is under due

growth process, still includes juices, slush and drinking water.

However CSD’s market have had expanded significantly over a decade.

Consistent foreign investment by both PepsiCo and Coca-Cola amounted to over 1.5 Billion USD

within this decade which also resulted in better plants, distribution and marketing budget.

The major chunk of still beverages belongs to the mineral water specially Aquafina by PepsiCo

and Kinley by Coca-Cola, however low priced tetra packed juice by PepsiCo “Slice” have

significant lead over Minute Maid by Coca-Cola which is priced as twice as Slice.

The diet carbonated soft drinks have had significant increase over a decade due to health

concerns.

The introduction of both slim cans priced at Rs. 25/- are also growing at a powerful rate

contributing to the entire CSD market. The Non-returnable glass bottles 1L were finally discontinued by Coca-Cola in the end of 2013

that increased capacity for Pet bottles instead.

The industry saw 64% increase in half a decade of cases sold

Input: Still market percentage is way less


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Market Size – Future 4 Years

Assumptions:

The beverage industry as overall is growing at sheer pace of 10-15% which includes all sorts of

beverages.

The carbonated soft drink isn’t far behind and there is 7-8% growth every year with only two big

players in the market the domestic colas aren’t threats.

The beverage industry awaits more growth as both Coca-Cola and PepsiCo are infusing foreign

investments.

If the taxation policies are kept under control unlike the recent fiasco of bottling tax which

almost became reason for the closure of Pakola, whereas if the corporate tax and general sales

tax remain same or goes below a certain extent the growth shall continue.

The still industry could do better if certain new products are introduced that directly compete

with Nestle Fruit-A-Vitals and other juice boxes.

The increasing population is also increasing the growth of these beverages.

Beverages are now being associated with lifestyle therefore its usage will further extend.


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Product Life Cycle

Product Introduction Growth Maturity Decline

Sparkling – CC

Coke

Sprite

Fanta

Diet Coke

Sprite Zero

Fanta Citrus

Sprite 3G

Sparkling -- Pepsi

Pepsi

7up

Marinda

Mountain Dew

Diet Pepsi

Diet 7up

Still -- CC

Minute made

Kinley

Still - Pepsi

Slice

Aquafina

Analysis:

The still beverage is under a growth stage and yielding good sales despite competitors like

Nestle.

All CSD’s are in maturity stage however the sales are increasing at a consistent rate and will

double up within a decade.

Sprite 3G by Coca-Cola is under a decline after being launched twice (2005 – Launch, 2007 Re-

launch), couldn’t stand the competition of Mountain Dew which is doing very well.

However Fanta Citrus is looking more of a Sprite 3G replacement yielding more than budgeted

sales in Ramadan 2014.

.


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Competition Segment Matrix

Analysis:

The Segment of still market is a growing sector and is untapped.

Whereas Pepsi is capitalizes on it, However there is a major issue is that still market represents

Aquafina 19 Liter Mineral cans which Kinley doesn’t provide cheaper and gets higher sales.

Slice is relatively cheaper product and gets higher sales as compared to Minute Maid.

Input: Should introduce a competing product of Slice within the range


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External Business Factors

Every company today depends upon two aspects its internal business environment and the other

aspect that is external business environment, the external business environment is usually most powerful constraint that impacts the business and industry at large and sometimes to entire

economy. The changes in the external business environment either produce threats or give

opportunities for the business to excel and Coca-Cola should be well aware of the happenings in

the external environment which could either make or break the business within Pakistan.

Fluctuations in the economy, changing legislation and taxation rules, revolving foreign policies,

changes in customer demands, attitude, values and demographic pattern largely influence upon

the profitability of Coca-Colas market in the Pakistan...

Competition: The competition globally is divided into three parts in the carbonated soft drinks

industry leading the market is Coca-Cola following Pepsi and other companies like Dr. Pepper,

however in Pakistan the completion is only limited two companies, competition is an external

business environment which cannot be avoided but can be controlled

Political: If it can be stated that the political impact in the Pakistan is the biggest external

business factor that could influence a business is the political conditions of this country, Pakistan

suffers from massive turmoil’s in the politics which result in policies that could destroy aspecific business. Whereas specific city based threats for example Karachi, is one of the most

notorious cities that have wiped off some businesses out there. Whereas consistent chaos,

violence and changing polices resulting in an impact.

Legal: The legal issues in Pakistan are another external environment factor that could influence

the business, the recent implementation of capacity tax resulted in winding up of bottling of

Pakola. The capacity tax seriously threatened the existence business, however CCBPL have

attained a stay order on this tax and therefore isn’t currently liable to pay any such tax however ifthe stay order is revoked the company could come under serious threat, other legal issues also

include from pressure groups forcing the companies to act ethically for both environment and

labor however such watch groups haven’t developed yet in Pakistan at large. However legislation

changes does impact a lot.


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Social and Culture: Coca-Cola is very careful in the application of its promotional campaigns

and introduction of its products in Pakistan, since the social and cultural environment of Pakistan

is very different as compared to other countries and is very conservative and any reminiscent

advertisements usually face a lot of negative reactions on the part of the consumer and

sometimes results in boycott of Products and ignoring of the brand usually. Social factors

comprise of consumer itself, its family and groups associated with it and its status. Family

members definitely affect buying behavior in such a way that if number of children is more in a

family than the elders, then the children choice can matter a lot at the time of soft drink purchase.

On other hand, sometimes people prefer to go for the product that demonstrates their eminence in

society at large. That’s the reason it results in impact, company targets younger generation which

had found its place to socialize online on social network, therefore to understand patterns online

is easier as compared to reality. The cultural on the other hand also results in an impact, if we

take a look fifty years ago, Pakistan was not about soft-drinks and colas it was more about

homemade beverages such as tea, lassi, satoo, juices, soup etc. But now it is becoming part of

our cultural no wedding in Pakistan goes without sharing a soft drink today and therefore it has

created and influence on culture and had get along well with cultural norms of Pakistan specially

in the urban areas.

Personal: Personal choice impact the buyer decision such as age of the byer, the customer life

cycle stage, personality, attitude, perception, occupation as well as norms. The biggest factor

usually in personal characteristics is the life cycle stages which explain that over the time line the

preference, taste and choice of an individual has been changing with a consistent rate. For

example: At the starting stage the potential customer isn’t aware of a soft drink but will be when

reaches to a new stage of its life and there will be a stage where the consumption will end. It is

also upon the way of thinking of an individual there are people who never drink these beverages

whereas for some it maybe because of their occupation which gives them purchasing power of

the product an individual with low salary would prefer a regular glass bottle of Coke over a 45

rupee can. Same goes with health concerns some would prefer a diet drink over a normal highly

carbonated drink


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Psychological: every person’s buying behavior is further influenced by major psychological

factors such as motivation, perception, and learning and self-benefits. Motivation is basically a

drive that’s sufficiently pressing a person to seek satisfaction of the need. Sometimes a person

has no intention to buy a particular product but what happens is that the group of people around

him motivates him motivates. If a person is highly satisfied with the taste of “diet coke”, he may

share his experience with another person and as a result the latter person might get motivated by

his opinion and end up buying “diet coke” In some cases, consumers have descriptive thoughts

and beliefs about something. It may change with the passage of time because mostly all the self-

beliefs are secondary and not the core ones.

Other: Other factors like the Government rules, regulations and technological advancements

have had no significant effect on the product and the company.


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Competitor Analysis

Customers: Coca-Cola Bottlers Pakistan have got some of very large buyers throughout Pakistan

that order massive quantity of cases one of them is McDonalds Pakistan who have cola fountainsinstalled in every branch which require Millions of unit cases annually just like there are

institutions such as Pakistan railways, whereas in the city of lights one of the most popular

restaurant B.B.Q tonight exclusively sells Coca-Cola products like these are so many exclusive

institutions, modern trades like Hyper star, Imtiaz, Metro etc. Despite these big customers there

is always a threat to lose them to an ardent competitor like Pepsi which is consistently sniffing

for any sort of loopholes whereas there are other factors such as bargaining power resulted in

further discounted price and lower margins.

Substitutes: There might be no viable competitor other than Pepsi in the carbonated soda drink

industry; however there are some substitutes that take away good share of carbonated soda

drinks. Nestle is one big example of it who have juices and nectars of two types: Fruit-a-Vitals

and Nes-Fruta, the former one is targeted for a premium market whereas Nes-Fruta competes

with the range of juices like Shezan, Froto, Slice etc. Other substitutes also include flavored

milk, ice coffee /tea and water as well.

Competitors:

Direct Competitors: Definitely the direct competition is from the market leader Pepsi in

Pakistan and which heavily enjoys 65% share between Coca-Cola and Pepsi in Pakistan, whereas

Coca-Cola is performing pretty well as compared to last two decades when their market share

was only 15% which has now risen up to 35%. There is no local competitor that could become a

threat because over the years many Cola’s tried to get in the market but miserably failed. The

scenario in the global market is almost opposite. Both PCI and CCBPL are engaged in price and

scheme wars, whereas the turf war of sponsorship has fueled over the years.


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Indirect Competitors: There are many indirect competitors such as Nestle, Shezan, Froto, and

Milo etc. however they never have been a threat to the soda companies because of a relatively

different segment, however these companies have ability to project a serious threat. Recently the

raising health issues and concerns related to diabetes and obesity have resulted in people

boycotting the highly carbonated soda drinks with these juices and dairy products.

Suppliers: Coca-Cola have authorized suppliers which work on contract based supply, this part

is divided into two parts one is raw materials that are used for making of beverage and other is

the concentrate that is imported from The Coca-Cola company based in Atlanta therefore there is

no significant threat posed by the suppliers. Serious concern is shown toward their material by

their procurement department and expired batches are also pulled away from market directly by

CCBPL, there were some issues before CCBPL was incorporated and there was franchising

system but the quality is way better as compared to their competitors.

New Entrants: Coca-Cola has never been afraid of new entrants in the market; the management

believes that entrants help in developing good competition. The competitors like Mecca-Cola

and Amrat Cola don’t pose such threats and these companies are like visitors that come and go,

they don’t hold threat to either Coca-Cola or Pepsi in Pakistan. However new entrants in shape

of alternative products always pose a threat to cut some hefty share of CSD’s.

Following is the list of all direct and indirect competitors:


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Distribution Shares & Company’s Positions

Analysis:

There always has been issue with Coca-Cola securing retail outlets across Pakistan.

CCBPL tries to fetch exclusive outlets; however they can’t keep up with consistent

stockings.

CCBPL also relies a lot on institutional sales, McDonalds all over Pakistan is one giant

fast-food chain that purchases cola for their fountains whereas BBQ Tonight in Karachi is

one of their biggest institutions of Karachi itself both are exclusive.

Modern trade includes all large scale super markets that came some years ago but are

gaining huge share in distribution system in beverage industry.

Key accounts include large retailers like depots, super stores and outlets that have

relatively high sales for example Naheed Superstore in Karachi for CCBPL.


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External Trends

Analysis

The cola market is highly concentrated towards urban cities and emerging urban cities

same is the case with industries, both of the companies aren’t willing to take this

advantage/risk.

Due to raising inflation over the decade the company never had drop in price, however

margins were affected with certain tax policies and distributor/channel margins.

Coca-Cola recently have been involved in product customization internationally putting

their drinks into different categories of flavors in Cola, recently Coca-Cola attempted

regular glass bottles of Coca-Cola in Cherry and Lemon flavor for sampling and trial.

Minute Maid is premium offering priced at 45 PKR Regular Pet which is a success and

growing at a pace of recording sales of 5.2 Million unit cases in its 3rd

year ofintroduction.

The communication is playing vital role at today’s age especially in the form of Internet

and social media, both companies have established such social media brand pages to

communicate their offerings without any major cost as compared to traditional marketing.


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In this very fast moving consumer drinks distribution networks and channels usually acts

as game changers, both of these companies believe in continual improvements in this

field.

The technological trends are enhancing the plant production and efficiency and are being

adapted by both.


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Internal Analysis

SWOT

Strengths

Coca Cola is the best global brand in the world in terms of value and recognition. The brand

sustains a similar recognition in Pakistan

World’s largest market share in beverage and an increasing market share locally.

Strong marketing and advertising, with innovative platforms of consumer engagement such as

customized bottles and Coke Studio.

One of the most extensive beverage distribution channels, with efficient sales system that

ensures reach and also human resource development.

Global customer loyalty and local accessibility for the consumer

Bargaining power over suppliers due to strong relationships with bottling companies.

Strong institutional sales and accounts, for example lucrative tie up with McDonalds, BBQ

Tonight, and Fat Burger etc.

Weaknesses

Significant focus on carbonated drinks

Undiversified product portfolio locally unlike the biggest competition locally, Pepsi Co.

Negative publicity due to various pressure groups.

Brand failures or many brands with insignificant amount of revenues such as Sprite 3G.

Extensive presence and distribution ties of competing organization.

Opportunities

Bottled water consumption growth

Increasing demand for healthy food and beverage

Growing beverages consumption in emerging markets (rural)

Growth through acquisitions

Threats

Changes in consumer preferences

Water scarcity

Legal requirements to disclose negative information on product labels

Decreasing gross profit and net profit margins

Competition from PepsiCo, with stronger marketing and distribution.

Saturated carbonated drinks market


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SWOT

Strengths

Coca Cola is the best global brand in the world in terms of value and recognition. The brand

sustains a similar recognition in Pakistan

World’s largest market share in beverage and an increasing market share locally.

Strong marketing and advertising, with innovative platforms of consumer engagement such as

customized bottles and Coke Studio.

One of the most extensive beverage distribution channels, with efficient sales system that

ensures reach and also human resource development.

Global customer loyalty and local accessibility for the consumer

Bargaining power over suppliers due to strong relationships with bottling companies.

Strong institutional sales and accounts, for example lucrative tie up with McDonalds, BBQ

Tonight, and Fat Burger etc.

Weaknesses

Significant focus on carbonated drinks

Undiversified product portfolio locally unlike the biggest competition locally, Pepsi Co.

Negative publicity due to various pressure groups.

Brand failures or many brands with insignificant amount of revenues such as Sprite 3G.

Extensive presence and distribution ties of competing organization.

Opportunities

Bottled water consumption growth

Increasing demand for healthy food and beverage

Growing beverages consumption in emerging markets (rural)

Growth through acquisitions

Threats

Changes in consumer preferences

Water scarcity

Legal requirements to disclose negative information on product labels

Decreasing gross profit and net profit margins

Competition from PepsiCo, with stronger marketing and distribution.

Saturated carbonated drinks market


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Confrontation

Matrix

Opportunities

1) Bottled water

consumption growth

2) Increasing demand for

healthy food and beverage

3) Growing beverages

consumption in emerging

markets (rural)

4) Growth of international

and local restaurants/food

chains and franchises in

Pakistan

Threats

1) Changes in consumer preferences

2) Legal requirements to disclose

negative information on product

labels

3) Decreasing gross profit and net

profit margins

4) Competition from PepsiCo, with

stronger marketing and distribution.

5) Saturated carbonated drinks

market

6)Negative publicity from pressure

groups

Strengths

1) The brand sustains a strong

recognition in Pakistan.2) A gaining market share

locally.

3) Strong marketing and

advertising.

4) One of the most extensive

beverage distribution channels,

with efficient sales system

5) Local accessibility for the

consumer

6) Strong relationships withbottling companies.

7) Strong institutional sales and

accounts

8) Strong financial muscle from

global sales/parent company

S1, S2, S3: O1

Leverage recognition to push

Kinley

S4, S6: O2

Utilize strategic assets to

increase market share in still

and juices category

S7:O4

Increase sales via institutional

tie-ups

S1, S2: T1

Sustain consumer recognition and

market share with reinforcement

S3, S8:T2, T4, T6

S4, S5, S6, S7: T3, T5

Ensure maximum accessibility of the

product to compete with PepsiCo

Weaknesses

1) Significant focus on

carbonated drinks.

2) Undiversified product

portfolio locally.

3) Brand failures

4) Extensive competition in

distribution

W1, W2: O3

Explore other markets with

current product focus

W2,W3, W4: O4, O3

Increase focus on existing

products such as Kinley and

Minute Maid, push for current

portfolio in restaurant industry.

W1,W2, W4: T3, T4

Critical need to increase accessibility

and diversity to sustain margins.


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Relative Importance of Factors

Factor NumberAbsolutely

Critical

5

VeryImportant

4

QuiteImportant

3

Nice toHave

2

Notsignificant

1

Don’t

Want it

0

Price Yes

Product Innovation Yes

Product Quality Yes

Availability of stocks and

Outlet CoverageYes

Customer service/support Yes

Marketing/Communication Yes

Suggested Definitions:

Absolutely Crucial: Overrides most other considerations, wouldn’t consider supplier who doesn’t perform on

this factor.

Very Important: One of the first things we ask for, but we may be prepared to negotiate on it.

Quite Important: A negotiable item, but one when we attach considerable weight to.

Nice to Have: It could make the difference in a division, but is normally taken into account last.

Not Significant: Not normally taken into account at all.

Don’t want it: Would prefer a product without this feature

Synopsis: As one of the key players in the beverages market, Coca Cola’s, in Pakistani market, most critical

tangent to compete for market share is accessibility. The product presence and availability

therefore become absolutely critical.

Price has become a significant factor to compete on as beverage purchasing in Pakistan is not

only done on the basis of share of throat but also share of wallet. Cut downs, special seasonal

pricing are all commonly used mechanisms to maximize C2C sales.

The beverages industry relies heavily on bottling partners, government subsidization,

distribution partners and a key concern for the company in order to sustain its trend of gaining

market share is by ensuring the costs of maintaining these relationships are not volatile or

inconsistent.

Input: Ingenious ways to increase accessibility can create a sustainable positive impact on key

concerns; price, distribution and costs.


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Rating Against Customer Buying Criteria

QUALITY & PRICE This Business Comp A

Non Price

Attributes affecting WEIGHTAGE

Customer Choice %

PRODUCT RELATED 60%

1. Quality 10 9 9

2. Carbonation 10 9 9

3.Brand Image 10 8 9

4.Packaging / SKU 15 8 8

5.Taste 15 8 9

SERVICE RELATED 40%

1.Temperature (Chilled or Un-chilled) 10 8 7

2.Availability 30 5 8

TOTAL 100% 55 59

Has quality gone up/down (+/-)In past 4

yearsSame Same

Relative Price today (Rs.) 45-50/L 45-50/L

Relative Price 4 years ago 35-40/L 35-40/L

Rating Scale: 1 – 101 = Very Weak 10 = Very Strong

Learnings:

The choice of Coca Cola’s prime products, carbonated soft drinks, is made with an interesting

blend of factors at play. Whereas taste preference and brand loyalty are the strongest

contributors globally, in Pakistan both different product and service related factors come into

play.

The SKUs available and packaging are important considerations when it comes to purchasing.

Coca Cola has successfully managed to introduce consumer preferred SKUs in the local market

and be the initiator in this regard. Pepsi’s taste is slightly more close to Pakistani preference.

What is critical however is availability and also how it is available. Consumers don’t mind paying

a higher amount for an easy to access, chilled drink and this is the key success factor for Pepsi in

Pakistan due to its ground level extensive penetration. Coca Cola‘s strategic intent should

therefore reflect the addressing of this lagging.

Input: It is essential for Coca Cola to diversify from its heavy reliance on institutional sales in

Pakistan, which can be better possible if it becomes a brand for the masses.


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Customers Buying Criteria

Accessibility and being available for the masses needs foremost attention.

Consistency in taste and quality need to be sustained as they are helping in gain market share.

Service points need to improve to increase buyer value.

Distribution channels and access points need to be made part of the value chain

Better Taste/Carbonation Quality

Same Packaging/SKUBrand

Image/Communication

Worse Temperature Availability

10% 20% 30%

Improve

Fast

Question

its Cost

Attributes Im ortant to Customer

RelativePerform

anceRatin

Do not

sweat

Keep it up


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Impact of Issues on Strategic Profile

Issue NameProduct

Innovation

CompanyCredit

Policy

$ PriceConsumerPurchasing

Power

HighManufacturing

Cost

Customers ++ +++ +

Market segments + ++ +++ +

Products/Services + + +++ +++ +++

Strategic Management + ++ +++ +++ +++

Operations (Production/Logistics) + ++ +++

Technology +++ +++ +++

Distribution Channels +++ ++

Raw Materials, Energy + +++ +++

Organization Structure +++ +

+++ Critical ++ Very High Impact + High Impact

Learnings:

Like a typical FMCG company, purchasing power of the consumer is a very significant aspect which

needs to be addressed in most of the possible issues. For Coca Cola, all consumer oriented issues

become paramount for consideration and require the company to know their consumer inside out in the

rlocal context to be successful.

Input:

Ensure price and cost is coupled with value innovation to maximize buyer utility.

Consistency and avoidance of discrepancies in quality can assure gaining market share.

Connectivity with growing markets and households through targeted communication can help

increase sales.

Strategic intent of improving accessibility and distribution channels should be reflected in

system re-processing, development of partnerships and penetration tactics in order to compete

with Pepsi.

Segmentation needs to be aligned with a clear, futuristic objective to get the best results.


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Customer Profile

Demographics

Age: 5 – 70+

Gender: Male and Female both

Family: Cohesion families

Occupation: Usually associated to any occupation.

Religion: Muslims, Hindus and Christians etc.

Nationality: Pakistani

Psychographic

Social Class: lower, middle, middle-upper and upper-upper

Life style: Trendy, quality conscious, trying to differentiate themselves from others, family belongings,

Cultural and Heritage values, Pride, Patriotism

Personality: Elegant, simple, extrovert

Behavioral

Occasions: Eventually whenever they want to, religious events, life events, family time.

User status: Fan boys (hardcore users), normal users, non-users

Usage rate: usually higher when events arrive like Ramadan, Eid Al Adha, Peak of summer.

Readiness stage: intending to buy

Attitude towards product: Positive


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Where?: Cold drinks specially carbonated soda drink like Coca-Cola is available everywhere and

customers usually is able to buy from wherever he/she wants with over 200,000 retail outlets in

Pakistan the user finds maximum visibility of the product be it a short dhaba at truck adda or be it a five

star restaurant in Marriot.

When? :Whenever they realize the need of consuming one, however usually many customers buy at thestart of the month specially economy packs in their pre-month utility and food products, whereas many

buy on an occurrence of an event the most common is, any guest coming at home, the Coca-Cola is now

being aligned with Cricket, it’s been seen that the sales use to hike during Cricket tournaments in the

case of Pepsi, because it was aligned from the start of Pepsi offerings in Pakistan and it’s the world

longest sponsorship deal between Pepsi and PCB.

How?: Customers chose Coca-Cola in various ways but due to Pakistan being a mature country in terms

of consumption for carbonated soda drink beverages, there is no specific preference. Its dependent

upon the availability of the products, when the products of both Coca-Cola and Pepsi are available on a

same shelf the company tries to align the product with youth, lifestyle, fun, sports and music through

communication with both ATL and BTL.

Why? Coca-Cola is a global brand and a leader in the beverage industry, the preference of Coca-Cola in

Pakistan is divided into two parts, one is the availability prospect and other is the brand image among

people.


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Value Chain

Innovation in Communication

Coca Cola Pakistan has kept its communication strategy parallel to its global policy and ensuringall communication is aligned and connects with the consumers. Even if it is not for the masses,

the campaigns are massive, engaging and exciting to be involved in. Coke ads and activations,

not only create product recognition and solidify brand personality, but also increase buyer utility.

They have a product impact on sales.

Sales Force Empowerment

Coca Cola has managed to get a gaining share in the local market, due to its investment and

strategic focus on developing a strong and well equipped sales force. This specialized task force

of Coca Cola does not only support inbound and outbound logistics, but serve as the backbone

for the company’s operations, understanding and executing the consumer’s insights and partners’

concerns.

Quality Assurance

From ingredients, to packaging, to the operation technology, the paramount objective in all

aspects remains the upholding of quality Coca Cola promises as a legendary brand. The local

division of this multinational ensures that all legs of the value delivery process follow the

international standards and give the best, uncompromised product to the consumer. This

sustenance of quality is reflected in all functions and creates an assurance within the consumers

that they are getting the best in the world.

Packaging Technology

Coca cola’s packaging technology and SKU variety is not only a core strength but also addresses

various needs of the consumer base. From sharing quantities to individual units, Coca Cola caters

to all the demands or preferences the consumers may have and are also recyclable and re-usable,

therefore having a sustainable, cost effective impact. These SKUs also help target various

income groups and provide value for money to consumers, in turn enabling increasing buyer

utility. This technology promises higher margins and increase in sales, as apparent from the

recent customized bottles campaign


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Key Issues

Following are the key issues that were derived while doing the analysis of Coca-Cola Pakistan.

Market Share: The vision of the Coca-Cola Pakistan suggest that they want to be the market

leader in Pakistan, however they are stuck at the market share of 35% whereas the market of

Pepsi is in Pakistan is around 65%, which shows a huge gap between the two Corporates and it

can be said that the market share at this time is the biggest issue for Coca-Cola Beverages

Pakistan Limited in Pakistan which is growing at a slower rate, the company only had 10%

market share in 80’s and in around 34 years company have only managed to rack it around 35%

in the carbonated soda drink (sparkling market) as of today, there are many reasons that caused

the company to be stuck on this stage. This is also not fulfilling the global vision that is Vision

2020 which means that the goal won’t be reached if Pakistan Coca-Cola doesn’t reach this goal.

So this is the highest priority issue for the company currently we have thought be addressed

quickly as possible.

Distribution: The another high priority and key issue that falls in the ambit of issues that needs

to be addressed is the distribution system of the company, Coca-Cola Pakistan have had

consistently suffered distribution blows over the time and before its centralization it was even

more pathetic The company isn’t doing well in terms of distribution of our drinks, the retail

outlets aren’t satisfied with the distributors either, we have struggled for an in-house distribution

in past we cannot currently shift the option and we need to work out on third-party distribution

system. Globally, mostly successful franchise of Coca-Cola currently have a bottling plant plus

in-house distribution system but not in Pakistan not the largest of the competitor PepsiCo does

that in Pakistan. The distribution system that is currently under the ambit hurt in two ways one

with the loss of sales and other with the loss of retail outlets, when some sort of issue occurs the

customer and the retailer is also affected from the distributors end, distributors tend to claim

Coca-Cola need to increase their production capacity in some plants as-well, the other issue it

faced was slow stockings to its retail outlets across Pakistan. Many retail outlets complained that,


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despite being exclusive outlets for Coca-Cola they were out of stock for days and despite

requisition the stock wasn’t filled and they had no option to call to Pepsi distributors to give

them stock, due to this many of the exclusive retail outlets went from the hands of Coca-Cola.

Competition (PEPSI): The biggest issue in the industry of beverage industry is the stiff

competition, although Coca-Cola Pakistan doesn’t have any competitor except Pepsi Pakistan

when it comes to carbonated soft drink industry in a direct competition, however there are

indirect competitions that usually knock doors to take a good share of carbonated soda drinks,

there are aspiring domestic companies in Pakistan that could do damage in future such as Engro

Foods Limited by introducing a carbonated drink over the decades brands like Walls, Milk pack,

Froto, Tapal etc. were unchallenged and today after decades we could realize that they all are

under tough competition striving to sustain their growth and margins.

The competition from Pepsi isn’t repent able by Coca-Cola Pakistan and in this scenario if such

competitor enters Coca-Cola will be first to get affected by any such havoc, previously all soda

companies which entered were of small scale, if someone like Engro enters in such market it

Not enough products: When we talk about the key issues one of them is availability of less

products or introduction of less products in Pakistan, whatever the reason maybe, there are 3000

products of The Coca-Cola globally and only nine products are there in Pakistan, there are so

many segments that are not targeted, there are so many products that could be introduced,

whenever this question is asked related to introduction of products the reply is same the margins

are the issues and hence the products aren’t introduced whereas on the other hand Pepsi is trying

to capitalize every segment within the industry with his offerings of juices and energy drinks.

Our taste is not as sweet as people want: Globally Coca-Cola is loved because of its low

sweetened taste and in the 90’s the taste was changed and due to that there was big chaos and people wanted the same flavor back, whereas in Pakistan the biggest issue is that is the taste

people usually don’t like this taste and this seems a biggest stepping stone, we could do either by

introducing a new coke with a Pakistani sort of taste and re-brand as Coke classic with the same

old taste in this way the product portfolio will be enhanced too.


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Downtime: One of the major issue that company faces is the machine downtime issues across

Pakistan specially in Punjab based plants due to shortage of electricity and there is no self-

generated electricity plants therefore there is a lot of machine downtime due to that and due to

that product efficiency in cost creates a problem as well as labor is also paid while downtime

which also adds to the unit per cost.

Juice market and Energy Drinks: There are many segments that Coca-Cola currently lags

behind such as an economy juice that could match the price of other juices available in the

market as well as huge market of energy drinks, in the company’s global product portfolio there

are various energy drinks that are suited for different target markets and they could try brining in

the bottom of the line product if they believe economy is the case, with over 3000 products

globally, Coca-Cola have only bought nine products in Pakistan which is a setback, Pepsi has

capitalized in the snacks industry of Pakistan by brining Frito Lays to Pakistan whereas Coca-

Cola


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Marketing Plan

Strategic Intent:

1) To close the gap between market leaders and eventually eliminate the gap and conquer

the Pakistani beverage industry.

2) Developing and reshaping sustainable growth system continuously.

Competitive Innovation:

1) Building a unique and smart distribution and channel system that is effective for all

stakeholders and specially creates value for

2)

Enhancing efficiency by further automation resulting in increased margins and cost

cutting.


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Mission: Coca-Cola Pakistan exists to refresh the consumers, inspire moments of optimism

through our brands and actions as well as benefit all stakeholders, which we will do with highest

social responsibility and with uncompromising commitment towards quality of our products and

integrity in our operations

Vision: To become a market leader in ready to drink segment while adding best-in-class value to

all stakeholders.

Objectives:

1) People and Organizational Leadership: Build a highly capable organization and be the

employer of choice

2) Commercial Leadership: Profitably deliver superior value to consumers & customers at

the optimal cost to serve

3) Supply Chain: To be the best in class consumer demand fulfillment organization that

exceeds customer expectations highest in quality, lowest in cost, in a sustainable, socially

responsible manner

4)

Operational Excellence: Create a culture of Operational Excellence to support continuous

improvement of our business process and systems

5) Sustainability: Ensure the long term viability of our business by being proactive and

innovative in protecting the environment and be recognized as one of the most

responsible corporate citizens by all stakeholders


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Product Plan


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Pricing Plan

In a beverage market where only two companies powerfully, the price remains stagnant until the leader

some does something. The regular bottle price hasn’t be slashed since a decade or more, the prices has

always been inflated over the period of time whatever the type of bottle it may only special discount

comes up and the competitor usually replicates.

Usually Coca-Cola doesn’t steps up in any such promotions; Coca-Cola is a follower in this case.

Coca-Cola Pakistan doesn’t goes below RS 15 maximum on its regular 250ml bottle which is the lowest

paid the margin is confidential and is likely to between RS 7 which means the cost is around RS8-9.

Above are the margins on which the cases are sold to retail outlets, key accounts, institutions, modern

trade and depo’s on various rates. A regular bottle of Coca-Cola/Sprite/Fanta all sell on same rates with

specific rates were crate, retail outlets the price sold is around 17-18 Rupees, whereas depo’s are sold

for 15-16 Rupees.

If the operational efficiency is increase the six sigma is achieved and bottling plants have higher capacity

and further automation the price would significantly fall by some cents but would impact big on the

sales of Coca-Cola.


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Promotion Plan


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Channel Plan


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Action Plan

S

#Input Ref Pg.#

Strategy & Action

Plan

When &

WhereResults

1 Improve AvailabilitySWOT

Key Issues

24

38

Improving availability,

faster re-stocking2014-2015

Satisfied retailers, no-

stock outs.

2Enhance and Improve

Distribution System

SWOT

Distributor

Structure

Strategic Intent

24

22

34

Seek efficient and

experience distributors

re-launch in-house

distribution system

2015-

Market share growth

increases, untapped

outlets covered

3Bringing up new

products

SWOT

Product Plan

Key Issues

25

36

38

Launching juice priced

equivalent to Slice and

new Fanta flavors

2014-2015

Increasing market

share, choice for

consumer, brand

positioning.

4

Expanding to Rural

Markets - Only 5%sales belong to rural

areas of possible 112.9

Million rural population,

expanding and getting a

percent would

encourage millions of

sales

SWOT 25

Making distribution

structure deeper,

targeting accessible and

high potential rural

markets that are in a

stage of development.

2015

Our vision could be

fulfilled we could

become leader in ready

to drink industry.

5Increase production

capacity

Competitive

Innovation

Market Growth

34

14

The market growth of

future shows that the

production capacity

soon will wear off by

increasing demand – operational efficiency +

new plants.

2015-2016

Double the production

capacity, minimize the

cost per bottle

production by state ofthe art machinery.

7Forcing more

exclusive outlets

Distribution

Share

Competitor

Analysis

External Trends

22

20

23

Winning exclusive

outlets by marketing

support.

2015 Q1

More exclusive outlets

mean more sales and

more growth.

8Winning more

institutional sales

Distribution

Share22

Making contractual ties

with big restaurants,

expanding institutions

to newly launched

cafes, restaurants,

securing Kolachi life

restaurant.

2015

Institutional sales are

life support winning

important institutions

could be as useful as

winning BBQ Tonight.

9Killing loss making

productProduct Plan 36 Eliminating Sprite 3G Q1 2015

End the dilemma, the

product was never a

success.

10Cash in Cash to

Retailers

Dis. Share.

Competitor

Analysis

22

20

Give direct cash on

discounts to all regions

rather than stock at i.e.

2014-

Make retailers satisfied

and let them be away

from Pepsi.


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Works CitedCoca Cola Company, 2014. [Online]

Available at: http://www.coca-colacompany.com/careers/student-zone

[Accessed 15 November 2014].

Farooq Tirmizi, Tribune, 2012. Tribune. [Online]Available at: http://tribune.com.pk/story/493197/food-and-beverages-pakistan-among-pepsicos-top-

10-non-us-markets/

[Accessed 2014].

Khan, A. S., 2014. DAWN. [Online]

Available at: http://www.dawn.com/news/1092090

[Accessed 2014].

StreetAuthority, 2014. NASDAQ. [Online]

Available at: http://www.nasdaq.com/article/coke-vs-pepsi-by-the-numbers-cm337909

Wright, T., 2010. WSJ. [Online]

Available at: http://online.wsj.com/articles/SB10001424052748704720004575377190499667312

Documents

Strategic Marketing Planning Report - Coca-Cola Beverages Pakistan Ltd