Discuss about the Innovation in Food and Beverage Industry.
The report provides a detailed evaluation of marketing mix and overall marketing strategies of Coca Cola. The purpose of the report is evaluate how marketing mix elements of Coca Cola are performing. It is certain that Coca Cola has a wide range of products; however, the evaluation has only been done for the product –Coca Cola. To perform the evaluation of marketing mix of Coca Cola, target consumers and locations where the product is being distributed has also been reviewed in the report. The report ends with providing suitable enhancement strategies against each marketing mix element with the evaluation of the contemporary issues impacting the business.
The Coca Cola Company provides carbonated soft drink products, which is originally intended as a patient medicine. The product was invented in the 19th century and the firm was established in 1886, within a few decades, the brand was able to gain a maximum popularity compared to other brands in that time period. According to the last financial year, the revenue recorded for 2017 is around USD 35,867 million (The Coca-Cola Company 2018). Coca Cola’s marketing strategies and packaging have a strong impact on its operation, which is evidenced by the fact that the brand dove headfirst into the unchartered water of brands journalism by reconsidering its corporate website as the dynamic digital magazines as well as owned media channels.
The product Coca Cola is known as the most popular and highest selling soft drink in Australian’s market history and the most recognizable brand in the world. This product was patented in 1887 as well as was registered as the trademark in 1893 and then by 1895, the product was being sold in every state of Australia and some other parts of the world (The Coca-Cola Company 2018). This product gained popularity after the franchised bottling operation in United State and then it started to expand internationally. The major ingredients of Coca Cola includes Carbonated Water, high fructose, corn syrup, Caramel colour, phosphoric, caffeine and phosphoric acid. This product was sold in small can containing a stipulated amount and in a bottle of 200mg.
As put forward by Weinberg and Pehlivan (2011), segmentation enables the brand to define the appropriate products for different kinds of consumers. It is observed that Coca Cola does not target any particular segment but flexibly create its strategy by developing new product. When it comes to age of the consumers, it is important to note that Coca Cola does not have any particular target and it is addressed to everyone. However, the main consumers fall under the age category between 12 to 30 years. Even if there is no particular product or communication for less than 12 or more than 30 but the brand succeed in approaching them with the help if partnership such as restaurants and McDonald (De Mooij 2013). Thus, the core target audience of Coca Cola is the youth and the youngster.
The product is an object that an organization produces on a wide scale in a particular volume of units. According to Mintz and Currim (2013), when marketing a particular product, it is necessary to think of what customers actually want from the product and what needs does the product meet or satisfy. Most the most important fact require to considered, is the brand including any costly feature that the customers will not actually use. In the case of Coca Cola, no penetrative thought is required to identify the products because Coca Cola has a vast range of products with the figure around 3300, but Coca Cola is probably the oldest and highest selling item among all Coca Cola’s products. In this context, Barkay (2013) commend that most of the beverage brands, for example, Starbucks first, manufactures the product and then develop strategy to approach customers while Coca Cola observe people’s reaction and behaviour and then the product is manufactured. Furthermore, Chen (2012) commented that the product item should provide a minimum range of performance, otherwise, the effective work on other elements of the marketing mix will not do well. However, it is an undeniable fact Coca Cola is the highest selling product in the world due to its unchangeable and lasting quality.
The price is usually referred to the value that is usually put or set for particular product; hence, Yasanallah and Bidram (2012) mentioned that it generally depend on the cost of production, segmentation, targeting and the capacity of the market to pay. However, some brands tend to use pricing as demarcation to distinguish itself from others and improve the image of the product. In the cased of Coca Cola, the pricing is developed in accordance with the market as well as the geographic segment. As the product is highly demanded by the young adults and youth such as high school and college goers, the price is less –AU$ 3.36, so that these unemployed youths can afford. As put forward by Adeyemi and Salami (2010) for each particular product of Coca cola has competitor’s pricing and PEPSI is the major competitor of Coca Cola. Here, Karnani (2014) also mentioned that soft drink and beverage is an oligopoly market; thereby, should be a mutual balance between the sellers in the market. Thereby, none of the products of Coca Cola charge high price.
As put forward by Luan and Sudhir (2010), the place is usually referred to the point of sale and in every sector attracting the consumers and making it easy for them to buy is the major aim of good distribution strategy. Hence, Khan (2014) also mentioned that the retailers tend to pay premium for the appropriate location and even the major strategy of effective successful retail business is location. It is identified that Coca Cola is always a step ahead with respect to distribution of its product. As there is a growing popularity of Coca Cola, the brand targets small, medium and large size firms selling beverage product. There are thousands of small corner shops selling Coca Cola in the interior areas of the market. Such market coverage always helps the brand to lead ahead in the market. It is particularly observed that the growth of sales of Coca Cola is reflected on the sales generated through the distribution channel like restaurants and little corner shops. For example, almost 31% of total sales of Coca Cola in Sydney came from the small and medium size restaurant chain (The Coca-Cola Company 2018).
This particular product is referred to all the activities undertaken to make the product familiar to the buyers. So, this may include advertising, word of mouth, press reports, CSR and commission award to the business (Cuganesan, Guthrie & Ward, 2010).When it comes to promotion and advertising, Coca Cola has been observed to be using all available strategies. Firstly, the brand has a strong and continues involvement in social media channels such as Facebook, Twitter and YouTube. Apart from the involvement in digital media, Coca Cola creates other promotional strategies by associating the brand with the life style and behaviour of people. In the recent time, the brand has observed that people in each nation or market are fond of music which is culture; thereby, to use this culture as the strategy, the brand launched Coke Studio music which creates original music and the brand gains exposure from several markets such Australia, US and other Asian nations (Barkay, 2013).
Coca Cola also leverage the festivals and events to make advertising content, for example, in Christmas, they include the content of the festival to promote the product.
As put forward by Yasanallah and Bidram (2012), the aspect “Process” of marketing mix usually represent the activities, procedures, protocols and many more through which the product is eventually to the consumers. Kusumawati et al., (2014) mentioned that as products and services are the actions for or with the buyers, a process could involve a series of steps and activities to fulfil its eventual outcome. Coca Cola monitor its product process with the sophisticated control equipment as well as testing programmes to meet growing the expectation of the consumers. The technology is applied to each section of product processing. The production cycle of the product usually starts with sugar, fruit juice, flavour and concentrate beverage. Thereafter, the finished goods are packaged with PET, glass bottles, metal cans and bags (De Mooij, 2013). Another significant characteristic in Coca Cola’s product process is the collection of customers’ feedbacks. This man the feedback from customers help the brands clarifies the required tightening in the process with the purpose to meet customers’ needs and expectation. Coca Cola considers delivery system and the flexibility of the employees as the significant elements in successful delivery of the product. The brand uses its broad distributional network to supply its products to all little, small and medium size shops.
As put forward by Kim and Hyun (2011), the physical evidence within the marketing mix approach is referred to a particular platform in which the product or the service could come from the communication between an employee as well as the consumer which is integrated with a tangible commodity. To enhance its physical evidence, Coca Cola took a great initiative such as decorating a particular section of a shopping mall where its products are kept. This cold store place is eye catching because customers get attracted. In addition to this, Coca Cola provides its own refrigerators with the brand logo and liquid splashing over the refrigerator to the small corner shops. The long distribution network also plays the role of creating an effective physical evidence- all its supplier and distribution vehicle are designed with brand name and logo; thereby, one can easily identify the brand. Furthermore, it is also identified that people working in the organizations such as employees at the manufacturing plant wearing the T-shirt of the brand. The people in the supply chain network, especially, those who are working in the outfield wear T-shirts provided by the brand only.
According to Yasanallah and Bidram (2012), people in marketing mix may include people who are directly or indirectly involved in the trade of the product. This may include the customer contact employees who are the major of the organization as they convert the quality of the product. In the case of Coca Cola, the major key for development of its people for promoting the brand is quality motivation as well as the rewarding system. For people development, the brand Coca Cola differentiate both functional and non-financial incentives. The brand tends to encourage internal promotion such as recognition, education, achievement, challenges and responsibility. These activities certainly indicates that brand makes a large investment for people development as their people also act as the promotional element. On the other side, customers of Coca Cola also plays a great role in forming “people” element of their marketing mix; because the consumers (not the end users) buying the products are having a sustainable relationship with the brand. The consumers are using Coca Cola’s product, clothes, refrigerators, vehicles and all these help to promote the brand and its products.
This is an important element of marketing mix, as activities implemented for this element act greatly to influence customers. As Coca Cola is a large beverage brand, all its partners in the markets also have a strong brand presence. According to the consumer behaviour theory of reasoned action, when a large brand buys supplies from another large brand, people find confidence in purchasing (Kim and Hyun, 2011). Coca Cola’s major partners are McDonald’s, KFC, Red Rooster Australia and many large and small restaurants and even the airline organizations are also buying their beverage supplies from Coca Cola. So, the collaboration with such large brands help Coca Cola to keep its promotional activities in place.
The above mentioned analysis implies that marketing mix strategies of Coca Cola is effective enough to hold and sustain its existing and new market. As Coca Cola is one of the oldest organisations in the soft drink and beverage sector, all of its functional elements discussed here in the form of marketing mix, have strong impact on the market. Due to large market share and product range, the brand is able to implement all the discussed element but as beverage market has become dynamic and there is limited number of market players in sector, chances of appearing new players in the industry is comparatively high. Therefore, it is worth mentioning that the brand needs to modify its strategies specially the elements of marketing mix to deal with the coming market threats. The following are some of the suggestions developed for Coca Cola and supported with theoretical evidence.
Product: Even though Coca Cola has large variety of products but to remain sustainable, the brand needs to think of innovation. Huang and Sarigöllü (2014) mentioned that innovation helps the brand to stay away from market saturation. Therefore, Coca Cola needs to innovate its product; for example, the brand can pay attention to seasonal product. There are many nations or markets where summer is inevitable, targeting those markets, it has to manufacture a product that can be highly consumed during summer. For example, Asia is large market and summer is a major season there; so, the brand can manufacture glucose or a mixture of it by adding lemon water. This addition in the products will be embraced by the consumers because almost 60% of young adults tend to consume lemon water on regular basis during summer (Barkay, 2013). For example, in 2013, Coca Cola launched Minute Maid Nimbu Fresh water in some of the Asian nations like India (Tsarouhas, 2013). Thus, Coca Cola needs to take such new initiative as their product development strategy.
Price: As discussed earlier, the major purpose of Coca Cola is to serve the people falling under the age group of 12- 30 years old; thereby, any new product should not exceed this approach. Coca cola should use market pricing strategy for its any developed or new product. For example, they could set the price around $2.49, which should end in 9. This might influence the end users to consider cost under $2.50.
Promotion: Martinez (2013) commented that technology in its field has observed the highest advancement; therefore, all business including small and medium are shifting their attention to technology such as the digital media. The above the discussion on marketing mix implies that Coca Cola is using the social media platform to promote its products but their engagement in those channels are less compared to other brands who adopted social media channels. Therefore, the organization needs to increase up its involvement by publishing innovative advertising content on a regular basis.
Place: Price of beverage items is not high; thereby, the affordability of people living in urban areas and in the interior areas does not vary (De Mooij, 2013). The organization needs to focus on the interior areas of the market where people can buy the product due to unavailability. Therefore, the distributional channels of the organization should be broadening enough to access those interior areas.
Process: The current product processing of Coca Cola is effective to shorten the gap of communication in the product processing but the organization need to think of applying more innovative technology which could minimize the overall time from packing to placing the product in the store. Chen (2012) mentioned that cost minimization is an important factor in product processing and cost reduction is often positively reflected on the profits. Thus, to achieve this purpose, the organization needs to shorten the distance between manufacturing plant and distribution centre.
Physical Evidence: Coca Cola needs to work on its physical evidence, as they have been using the traditional process of offering T shirts and refrigerators. It is also identified that most of the markets of Coca Cola does not have a proper store or outlet. People buy products from the small outlets. Therefore, the organization needs to establish its own store where all its products are available.
People: The evaluation presented above indicates that as the people development initiative, the brand makes a large investment on its workforce development but the attention is less on customers. Therefore, to retain its key customers, Coca Cola needs to offer additional tangible benefits such as umbrella, cycle, t-shirts, watch, etc. Children are more responsive towards this offering, thus, the organization can pay attention to children.
Partnership: The present partnership initiatives of Coca Cola is effective enough to promote its products but sticking to some particular fast food brands is just mere solution, the organization should focus on the large chain hotels and restaurants where beverage is mandatory item.
It has been identified that Coca Cola’s CSR activities have a positive impact on the brand as well as its marketing strategies. Cola Cola releases its sustainability report of 2016-2017, which comprises of CSR programs as well as initiative engaged by the organisations. The report indicates that Coca Cola is determined to give back at least 1% of its annual income for charitable causes on an annual basis (Karnani, 2014). The following figure demonstrates the pattern and distribution of this allocated fund.
In addition to this, CSR report indicates that during the period of 2015-2016, Coca Cola is mentioned in 26 lists. The ethical channels of Coca Cola provides stakeholders a significant opportunity to inform the perceived violations of Code of Business Conduct, Workplace Rights or other violations in a most secure manner. In addition, it has also been identified that almost 94% of organizations owned facilities comply with Coca Cola Workplace Right Policy. Furthermore, Coca Cola in the recent time has announced its commitment to balance the use of water by 2020 and in 2015, Coca Cola has replenished an estimated amount of 68% of volume of its finished beverage as well as returned about 108.5 billion ltr of water overall water communities. So, all these initiatives of Coca Cola indicate that the organisation has a large contribution to the welfare of the society and its stakeholders. The accomplishment of all these activities enhance the brand image in the market and the consumers on the other hand tend to grow a state of reliability on the brands.
It has been identified that Coca Cola is an effective example of a product that had a very extending product life cycle since its exception. The product life cycle framework indicates that the brand has spent the majority of its life, mostly in the maturity stage. However, the sales report of 2016 creates a question of whether the product life cycle has entered the decline stage.
The Fortune.com discloses how overall sales of carbonated soft drinks declined for 11th consecutive year in the global environment. The decline of 1.2% of in 2015 was bigger than the decline recorded 0.9% in 2014 (Fortune.com, 2018). This figure indicates that fall in the demand especially for diet soda drink is more significant. Nonetheless, Tsarouhas (2013) mentioned that sales in decreasing in one market for one particular market such as USA does not mean that overall or the sales in the other market may fall.
An article conducted by Kim and Hyun (2011), indicates that the first quarter of 2016 followed the recent trends and global sales have now fallen for a number of quarters in a row. The major reason is stronger US$; however, sales revenue fell in nearly in all markets. Therefore, it can be mentioned that the Coca Cola entered the declines stage even though this stage would relatively far longer than other goods and services.
Conclusion
In conclusion, it can be mentioned that Coca Cola’s advertising and other promotional activities have significantly adopted the culture of the market. Unlike other brands, Coca Cola develops and designs advertising content by including the cultural trends for each market. In addition to this, it is worth mentioning that Coca Cola has come a long way from serving carbonated beverage in a pharmacy to a global scale business. The brand’s commitment to stay at the forefront of dynamic social values in enhancing marketing strategy has proved to be in their favour. Therefore, it can be mentioned that certainly the organization has developed all elements required to operate a multi-million and global enterprise. Nonetheless, further penetration to promotion and product development can help the brand to remain sustainable in the dynamic market place.
References
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