Discuss About The Cybernetic Communication Model Advertising?
Coca-Cola Company has been facing a challenge in the reduction of its sales volumes due to decline in the demand for its products. The slowing down in demand of Coca-Cola products has been due to health concerns about its products. The habits of consumers are changing and they are becoming more and more concerned about their health which means that the future of the company and majority of its products is now at stake. The company, therefore, aims at developing a new brand of drink called Fruity Cola. The drink will be manufactured using natural organically grown fruits of different varieties. The brand will be premium and it is expected to become a sensation in the market. This is because the products will not only a health concern but also it offers consumers very many health benefits. This report analyzes the marketing plan the company is planning to use to market its products globally. The marketing strategy explains the strategies to be undertaken by the company to help introduce the new product to the market and achieve the desired sales volumes (Lamb, Hair& McDaniel,2012). The first section of the report evaluates the background of the soft drinks industry to help get an understanding of the level of competition and the factors that underline success in this industry. The report also contains a SWOT analysis of the company in order to identify the strengths and weaknesses of the company. This is followed by an analysis of the external marketing environment with factors such as culture and demographics being discussed. The possible market segmentation for the new product is done to help market the product better. Marketing mix for the company helps to identify the prices of the products and the distribution channels that will be used to distribute the product.
The players in this industry mostly produce canned or bottled soft drinks. Some of them are carbonated soft drinks and others are still like bottled water. The soft drinks processing industry in Australia is very competitive and there are very many players in this industry. The soft drinks industry has experienced modest growth since the year 2012. There are also many factors that have constrained the growth of this sector such as changing consumer behavior and increasing health concerns related to the products in this industry. There has also been stiff competition between players in this industry. This has brought a price war whereby the industry players try to outdo one another based on pricing and therefore the prices for the products end up being too low. This has reduced the profit margins for this industry to very low levels. The soft drinks industry is focusing its attention to energy drinks and sports drinks that are becoming popular in the product. Real fruit juices which are manufactured from farm inputs are also in high demand. The growth in the demand for these products has supported the growth in the soft drinks industry. Thus, therefore, means that the companies that are able to develop new products which may be either sports drinks or fruit juices will be able to conquer this industry. Over the next five years, the revenues in this industry are expected to grow by 0.7%.The expected revenues for the soft drinks industry in the 2016-2017 year are expected to reach $4.2 billion(Ellis, 2010). This is an expected decline of 0.3% due to price competition which is resulting in much lower prices. The changing social trends have also affected the demand for soft drinks with most health-conscious consumers moving away from sugary drinks to zero sugar products. The future for this industry, therefore, lies in energy drinks and sports drinks as well as fresh fruit drinks which are considered healthier. Some of the external drivers that are key to this industry include demand from supermarkets and groceries. Most of the output from this industry is sold in supermarkets. Increased demand from grocery stores and supermarkets will lead to increased revenues for this industry. The other key driver for this industry Is demand from fast food services which accounting for a significant portion of the industries total sales volumes. The disposable income of households also drives demand in this industry. Higher disposable incomes enable more spending for products such as soft drinks and therefore affecting the industry revenues positively.
A SWOT analysis of Coca-cola shows the strengths weaknesses, opportunities and threats that the company is exposed to. The main strength of coca cola is its promotion strategies. Coca-cola undertakes aggressive promotion of all its products. Coca-cola marketing mainly targets people of all ages while its competitors like Pepsi mainly focuses its marketing on children.
The company designs a message that resonates well with the targeted customer. The other strength of the company is its distribution system. The franchised distribution system is very strategic for coca cola since it enables the company to focus on production and marketing (Sahaf, 2008). The bottlers and other partners concentrate on distribution, bottling and merchandising.
Coca colas new product development is also another major strength. The company is able to respond to consumer needs, tastes and preferences and is able to develop a new product for each market segment (Yuece,2012). The administrative control of the company also helps in proper coordination of its activities globally.
The main weakness of coca cola is its low product diversification. This is very noticeable when compared to its competitor Pepsi. Pepsi has diversified into snacks market segment with the launch of its Lays and Kurkure products (Mennen,2010). Coca-cola has remained focused on soft drinks industry and does not venture into other unrelated businesses.
Healthy concerns by consumers are given the sugar levels in the products of the company is a major weakness for coca cola. This, therefore, means that the company needs to keep on innovating products that are healthy and that are able to meet consumer needs. Since the company mostly depends on carbonated drinks business, it has to keep on innovating since sales of carbonated drinks are falling drastically (Rajagopal,2012).
There are various opportunities available for coca cola exploit. One of these opportunities is diversification which will enable the company to raise more revenue and spread risk further.
The company can also invest in manufacturing of fruit juice which is gaining favor among consumers due to their health benefits (Bidgoli, 2010). Coca-cola also has an opportunity to invest further in developing countries such as in Africa where there is unexploited market potential.
The threats for Coca Cola Company include the intense competition from Pepsi and other manufacturers of soft drinks and bottled water. The stiff competition means that the market share of the company is under threat and this may lead to decrease in revenues for the company. Threat from substitute products such as tea and coffee due to the increasing health concerns among consumers.
The macro-environment factors that affect Coca-Cola Company are the factors that affect the company’s activities and operations and the company is not in control of them. Some of these factors include the culture of the people who the company sells its products to. Cultural and social has had a significant impact on coca cola. Culture plays a very important role in determining the consumer behavior. The consumption patterns of customers in Australia is changing since most of the people are becoming so conscious about the health implications of what they consume (Finne & Grönroos, 2009). The changes in cultural and social beliefs have affected the demand for the companies` products since the company sells in a society where there are cultural beliefs about the products being consumed (Blakeman, 2014). The culture of Australian consumers mainly didn’t emphasize on the health benefits of products being consumed. Australia is one of the countries where the weather is mostly hot therefore meant the demand for its carbonated products remained very high. In the recent past, there have been allegations of some of the products produced by the company have negative effects on human health such as causing cancer. The high levels of sugar in most of Coca-Colas products have also been blamed to cause problems such as diabetes and issue of weight. These factors have therefore contributed to changes in the culture of consumers. More and more consumers are wary of what they consume and therefore some of them are shunning sugary products and prefer to consume energy drinks or bottled water. Since the company cannot control the culture of the people, it has adopted its products to fulfill the needs of consumers (BALAKRISHNA, 2011). The company has produced bottled water and energy drinks such as Monster energy drink to help fill the gap that exists in the market. Coca-cola is still focusing on developing more products to help meet the needs of various consumers in terms of tastes and preferences.
Consumer demographics are factors such as age, gender, race, income levels, education levels, lifestyle and employment that are relevant in marketing the company’s products(Pride, Ferrell, Lukas, Niininen& Schembri, 2015). Age is an important factor in marketing for coca cola. The company identifies the age group that represents the majority of its consumers and targets most of its advertising to that target group. Coca-cola mostly targets young adults in its marketing efforts. The company has come up with a policy not to market its products to young children due to the high levels of sugar in its products. The lifestyle of people also helps in market segmentation and target marketing. People with a lifestyle of having fun and relaxing are more likely to consume coca cola’s products.
The economic environment is also important when marketing the new fresh fruit juice. The issues of inflation and the economic stability of the country is important in marketing a new product. The current economic environment of Australia is stable and will provide a good environment for the product to break through.
The political environment of Australia is stable. There are also currently no political issues surrounding the Coca Cola company and therefore the new Fruity juice cola is expected to perform well in the market.
The demographic environment which includes factors such as age,gender,marital status are important when marketing Fruity Cola,the new product under the coca cola brand. It helps in market segmentation to help in targeting customers such as young children who are discouraged from consuming the other products seen as unhealthy.
Coca-cola Company is a soft drinks manufacturing company that was started in the year 1886(In Banks, In Pelsmacker& In Okazaki, 2015).The company has dominated the soft drinks industry globally for the entire 20th century and continues to be a major global force in this industry. The company’s business model is the franchising model. It produces concentrates which it then sells to licensed Coca-cola bottlers worldwide. The bottlers mix the concentrates and bottle the products. They are also in charge of distribution. Coca-Cola has more than 400 brands under its portfolio. These brands range from carbonated drinks such as coke sodas, zero sugar brands such as Diet zero, C2 Cola, Minute Maid juices, Powerade sports beverage, energy drinks such as Monster energy drink and much more. The company seeks to increase its products in the healthy non-carbonated soft drinks brand category. This will help the company to fulfill the consumer needs better and to expand its revenue streams.
Fruity cola is a new brand of coca cola. The product will be made from real fruits that will be processed to produce the juice that will be packaged and distributed to the market. The product will be the most healthy product under the coca cola products since it has a nutritional value such as vitamin C and A. It is to be sold in 300ml and 500 ml bottles plastic bottles and cans.
The main outstanding core competence of Coca-Cola company is the companies strong brand. The company has cultivated a reputation over the years as the best carbonated soft drinks company in the world. The company has been able to maintain quality standards over the years and has been able to respond to the needs of consumers appropriately.
Another core competency of Coca Cola Company is its distribution system. The company makes concentrates which it sells to bottlers who are distributed strategically globally. The bottlers liaise with supermarkets, grocery outlets and shops to distribute the products to the final customer. Coca-cola products are available in most of the retail outlets and customers can obtain them easily at low prices.
Administrative controls are another core competence of coca cola. The company is well organized at the top and regional levels and hence making the running of operations much easier (Casillas& Marti?nez-Lo?pez, 2010). The marketing of the company is also made easier by the administrative controls.
The partners of coca-cola company include suppliers,customers and corporate partners who are engaged by the company to help complete its distribution cycle.The company has diverse suppliers and it ensures that its supplier base represents the diverse customer and consumer base. The companies` bottlers and distribution partners are the other corporate partners of coca cola limited.
The soft drinks industry has very many players and they can’t be all analyzed. The main competitor of Coca Cola Company is PepsiCo (PEP), Dr Pepper Snapple, Coca-Cola FEMSA and S.A.B.Monster Beverage Corp. These companies engage in production of carbonated drinks and bottled water.The companies operate globally and their distribution system is very close to that of Coca Cola.
Coca-cola segments its market to help it reach all its target customers. The company segments its market based on various considerations. Geographical segmentation of is based on regions such as Europe, Middle East and Africa segment, Asia, and North America as well as the South American region. This helps the company to serve the geographical markets based on the tastes and preferences of consumers in this region.
The segmentation of the market by Coca-Cola enables brands and preferences of consumers to develop the products for different types of customers. Coca-cola adapts its marketing by developing new products depending on the market. Some of the factors it considers in targeting are age, Lifestyle, Occupation, Nature and customers consumption behavior depending on culture and social aspects. The company does not target consumers of young age in its current targeting and marketing strategies. This is because of the high sugar levels for most of Coca-colas products. Coca-cola also targets customers in various market segments depending on other demographic factors like income levels.
Coca-cola has positioned itself very strategically in the soft drinks industry in the world. The Coca-Cola brand sells in over 200 countries worldwide. Coca colas marketing slogan is “think global, act locally”. The company has therefore been able to maintain its core products and develop other products depending on the consumer needs, tastes and preferences in that particular market. Coca-Cola uses strategic positioning so as to maintain its global reputation and to keep its brand growing. Its positions itself as offering products that bring joy and happiness to consumers.
The coca cola company manufactures concentrates and sells them to bottlers who bottle and distribute the products. The companies` main product is the Coke soda which is the initial and historical product of the company. The new fresh fruit juice called Fruity cola is a new product under a new brand of coca cola. This brand aims at developing new products for customers that have health benefits to the consumer. Fruity cola will be manufactured by sourcing different varieties of fruits from various contracted suppliers. The company manufactures concentrates which will be sold to bottlers to process the final product. The product is very healthy and is focused on different market segments with that of children being the main target to compensate for decrease in sales of other products.
The carbonated drinks under the portfolio of the company include Sprite, Fanta, Coke diet; coke zero. The company also manufactures bottled drinking water. Sports drinks such as Powerade.The company has over 400 brands which are different in varying market segments (Baines & Fill, 2010). The product lifecycle for the coke products does not follow the normal stages of growth, maturity and decline. The companies` products do not undergo the normal stages of product development, growth, and decline since they have maintained the popularity all along.
Pricing of coca colas product is based on costs of production. The cost of producing the new Fruity cola is expected to be high since the product will be manufactured using naturally sourced ingredients. The retail price of the new Fruity Cola will be almost twice as high as the price of the other common products.The company sets its retail price after determining the price of producing and distributing the product to the final consumer. It sets a price that will be able to generate reasonable profits for the company (Bowen & In Ozuem, 2015). The bottlers are given the power and mandate to determine the prices of the products depending on the environmental factors that affect the industry. However, in most countries, bottlers maintain a uniform selling price but the retailers decide the prices of the products on their own.
The coca cola company uses the franchised distribution system. The distribution channels that have been used to distribute other coca cola products is the same one that will be utilized to distribute the new Fruity Cola. This is where the company licenses bottlers and sells the concentrate used to make the cola products to them. The company does not have direct control of its distribution system but it has put policies and strategies in place to ensure the distribution system is as efficient as possible (Armstrong, Adam, Denise & Kotler, 2014).
Coca-cola is very aggressive in its promotional activities. Apart from new product development, this is one of the strategies that highlight the company’s success over the years. The company will start promotion of the product by advertising the product in print and broadcast media.The companies` partners who are the bottler and the retailers will be given merchandise to create awareness on the new product by coca cola.
Coca-cola uses various promotion techniques. The new product will be promoted through various methods such as print media advertisement, broadcast advertising, internet advertising and social media advertising. The company uses social media advertising tools such as Facebook to reach young consumers (Friedmann, 2009).
Other promotional techniques that will be used by the company include sponsorship of local events and sporting activities and competitions such as the FIFA world cup and the Olympics which offers the company a lot of publicity. The company also engages in local sponsorship activities which help to promote its products. Road shows are also commonly used by the company.
Conclusion
With the changing social and cultural trends and perceptions, the consumption behavior of customers has also changed (Bothma, 2015). Customers are becoming more and more concerned about their health and are keen to avoid consuming products with high levels of sugar. This has resulted to decline in demand for coca cola carbonated drinks and an increase in demand for bottled water and energy drinks. This has prompted the development of the new product referred to as Fruity Cola that is manufactured using real fruits to make a juice that is packaged in 300ml and 500ml bottles. This paper analyzes the industry and competitors to determine the level of competition expected for the new product. Target marketing and segmentation are also carried out to identify the market segments that Fruity Cola will target. The report also has a detailed product mix analysis.
References
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