Marketing Plan for New Coca Cola Drink

4788 words (19 pages) Essay

1st Jan 1970 Marketing Reference this

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The following marketing plan is for the introduction of the innovative product line extension of the pioneer beverages company Coca-Cola. The Coke Buzz Tea is fresh and innovative product which will enhance the revenue of the company. The following analysis will allow in outlining the best practises to achieve the strategic goals outlaid by the company.

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The mix of marketing strategies will facilitate to achieve market share of an estimated 8,688,300 people (target) with a growth of 7.3% as forecasted in 4 years. This will capture the unserved market for ready-to-drink Coke Buzz Tea. The success in the sales growth with this product line extension will bring company to apex position and will tag the company as a market leader in the functional soft drink.

Situational analysis

Under the situational analysis the changes of trends in beverages industry are thoroughly examined. The SWOT analysis is done to get a clear picture of micro environment variables. Under the industry analysis, the opportunities for an innovative product are discussed

Marketing plan

In the marketing plan all the research work and marketing strategy is listed. The pricing, promotion and place strategies are in accordance with the ongoing Coca-Cola strategy. The strategies are critically revised to add more value in the balance sheet of the company

Financial analysis

Under the financial analysis breakeven point calculations are done and also incorporated the expected sales growth and revenue figures.

Company description

Founded in 1886, we are the world’s major marketer, manufacturer and distributor in non-alcoholic beverages syrups and concentrates, which are consumed in the production of nearly 400 beverages brands that contributes our wide portfolio. We are operating in more than 200 countries with our head office established in Atlanta. We are at the second position in functional and specialty Asian drinks. The Coke Buzz Tea will help the company to achieve the top most position in the ready to drink tea sector.

Product description and strategic role in future of the company:

Coke Buzz Tea will be a canned and bottled beverage and it will be positioned as the only “ready-to-drink tea” product available in the market. The product will bring entirely unique experience with the base of green tea enhanced with the fruit flavors such as strawberry, passion fruit and lime. Customers will feel fresh and energetic after sipping this delicious tea. It will pose itself different than the traditional tea while offering the delicious taste of fruit juices in convenient and attractive packing. The strategic role of the Coke Buzz Tea in for Coca-Cola is focused on three objectives:

Grow to be a market leader in the functional and ready-to-drink sector with increased market share.

To attract the Gen-Y consumers and satisfy their needs with an eye catching and FUNctional product.

To stay at the front position as the market leader in innovative product development and successful product launches.

SITUATIONAL ANALYSIS

INDUSTRY ANALYSIS

Consumption

The sales amount for the functional drinks sector in Canada has approached to $342.2 million in 2004 for a volume of 125.9 million liters. This product division has shown a steady growth since 1999: raise of 13.5% over a phase of 6 years. The consumption rate per capita in 2004 has risen to 4 3.94 liters, which represents a 4.0% increase compared to 1999. The increase of this particular market is mainly due to a slow shift in consumer trends.

Trends

Through the early 1960s, soft drinks were one and the same with “colas” in the mind of consumers. In the 1980s and 1990s, however, further beverages (from bottled water to tea) became more accepted. Coca-Cola and Pepsi responded by expanding their product offerings through coalition (e.g. Coke & Nestea) and acquisitions (e.g. Coke & Minute Maid), but also by keeping their focus on the portfolio diversification.

Today, while the soft drink industry’s importance has amplified in 2010, the volume sales of carbonated soft drinks has declined due to a large share of consumers who are more attracted towards the trend of healthier drink options in the functional drink segment(smoothies, energy drink, sport drink, milk and juice drinks).

Companies have been actively involved in new product developments in order to defy the growing concerns about harmful health impacts of high-fructose drinks, but also to enlarge the demand in a market where product offerings are rapidly maturing. New flavor introductions and health-conscious formulations have been introduced in an attempt to offset the rejection in carbonated soft drink sales The functional market is predictable to show sustained growth and consumer concern in the future years as consumption shifts to healthier, trendier and sophisticated products.

Profitability & future growth potential

In 1993, Concentrate Producers grossed 29% pretax profits on their sales, while bottlers made 9% profits on their sales, for an entire industry profitability of 14%. While the functional drinks segment only accounts for 3.7% of the whole soft drinks sales in 2004, estimations are forecasting a growth of 7.3% in sales and 11.0% in volume consumption by 2010 (ref.4).

SWOT ANALYSIS

STRENGHTS

Effective strides in new markets

Coca-Cola has aligned with several companies (such as the joint venture with Nestlé) in order to boost the ability to react to demands and variation in the markets of coffee, iced tea and juices. The developing markets are more complex than the developed markets. They require more marketing and product awareness.

Strong existing distribution channels

Coca-Cola has global operations and is well recognized in its distribution channels (such as store retailers or vending machines). Therefore, a new product launch can usually rely on the existing distribution structure in order to reach the greater part of its target market while requiring no major supply / delivery enlargements.

Brand strength

The Coca-Cola Company is the biggest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world. The Coca-Cola brand is unarguably recognizable brands in the 200 countries where it trade its products. The well established and strong brand name is one of the bases for the company’s competitive benefit on several of its core markets.

WEAKNESSES

Relying upon line extensions

Coca-Cola is relying on brand expansions increase sales in specific lines, particularly its long-time carbonated soft drink products (i.e. the introduction of Vanilla Coke assisted maintain sales for the core Cola beverages). However, there is a major risk of cannibalizing existing sales in the long term (for example, Bubble Tea might deter on sales for iced tea).

Reliant upon particular carbonated drinks

The long-time existence of Coca-Cola’s Coke beverage has conventionally promoted this particular line as a flagship product. The core coke products have gained strong loyalty from customers and have solid basis of sales. The brand is more and more anchored as a single line carbonated drinks which may have taken away the freedom to diversify in other non carbonated products.

The Coca-Cola Company is a strictly global multinational business giant. Most of its products are shipped to many areas of the globe. These products have adapted to the geographical requirements Furthermore, many smaller and diversified product lines are more or less accepted in one particular region over another.

Therefore, the course of diversifying the production and marketing all products engage costly investments. These capital necessities typically increase as the product becomes heavily focused (for example to market a coke bottle in Japan is less difficult due to the worldwide recognition of the bottle rather than the ‘Qoo’ in the same country, as the Qoo is the newest non carbonated drink introduced by Coca-Cola in 1999)

OPPORTUNITIES

New product introductions

The functional drinks market is one that predominantly allows more opportunities, innovations and gives greater freedom for creativeness in the production, design, distribution, manufacturing, promotion and retailing choices and processes.

Brand is attractive to global partners

Because of the size of the company and broad portfolio base, Coca-Cola has strong purchasing power over its suppliers, and also draws large partnerships with various levels of consumer contact (e.g. McDonald, movie studio promotions, promotions in universities, sponsorship agreements, etc.). Existing brand awareness also offer an international playing field for powerful marketing strategies.

THREATS

Strong competition

Coca-Cola has a tough competition in the global market. Though the number of the competitors is less but to capture the bigger share in the crowded market will be a tougher one.

Potential health issues

The current drift of consumer and consumers groups’ consciousness towards goods and services is both beneficial and threatening for companies in the food and beverages business. Over the last few years, concerns over health concerns have risen in the media through an extended and ever- growing network of “knowledge outputs” (TV channels, journals, internet). The shift of the younger generation towards a healthier standard of living needs a careful planning and decision- making in new product developments. Large companies can also straightforwardly become the target of consumers’ apprehension.

Target market

Segment identification: RTD (Ready-to-drink) bottled Coke Buzz Tea, to be established within the Functional Drinks sector.

Segment needs

The product will accommodate to both social needs (perception of a social, fun drink with a sense of belonging within peer consumer groups) and physiological needs (hydrating and nutritional value).

Segment trends

The current trends include a move away from junk foods and carbonated drinks, a rising interest for healthier / beneficial foodstuffs for the “mind and body”, the trend towards the accessibility of on-the-go products for those with an active lifestyle, as well as the inclination for personalization through customization.

Conclusion

Based on the aforementioned analysis, Coke Buzz Tea appears to be a profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. Upon execution of the marketing plan, the Coca-Cola Company will reclaim increased market shares and claim its targeted situational place of market leader in the functional drinks section as well as keeping its long-standing consumer appreciation for innovative and successful product launches in diversified markets. Projected profits will be $243,029.47.

Objective

The objectives of the marketing plan are focused on the three main criteria:

To establish a wide brand recognition through the capturing of market share

Making consumers more aware regarding the Coke Buzz Tea product from coke.

To attain a market leader position in the functional drink sector

PRODUCT STRATEGY

The core

Bubble Tea beverage in a pre-bottled and pre canned, ready-to-drink format.

The actual product

Packaging and labeling: see figure images.jpg

Branding:

Colorful, aspect of play, round shaped, prominent Buzz logo written in modern font, catchphrases such as “Think outside the Bubble” and “Get Your Buzz”.

Trade name:

Coke Buzz Teaâ„¢, a Coca-Cola product Brand personality: oomph, funky, cool, purposeful, original, funny, healthy, etc.

Brand equity:

Coca-Cola provides a consistent, quality, accessible and innovative soft drink reputation.

Augmented product

Nutritional information, Status (social drink), Features promoting the website, Healthy drink with an advantage of a green tea base.

Marketing considerations

Product life cycle

Coke Buzz Tea is a low-learning product. With a strong marketing promotion, “sales [will] begin immediately and the paybacks of the purchases are readily understood”. Since Coke Buzz Tea is prone to product imitation, Coca- Cola’s strategy is to widen distribution rapidly, which is currently possible, credit to the company’s high manufacturing capacity. Coke Buzz Tea pursues the practice of product line extension.

PRICE STRATEGY

The price strategy that will be undertaken should consider the following aspects:

1. Consumer demand

2. The product lifecycle

3. Potential substitutes

Customer demand

Customer demand is a vital factor which is driven by flavor, income and availability of others alike products at a different price (mentioned later in the potential substitutes section). For a lot of customers, value and price are much related: ”the higher the price, the higher the value”. As a result, Coca-Cola’s intention to position Coke Buzz Tea as an exclusive, innovative and attractive product offer it a certain control over price.

The product lifecycle

The company should take benefit also to the fact that the newer the product and the in advance in its lifecycle the higher the price can typically be. It ensures a high profit margin as the early adopters get the product and the firm seeks to earn development costs quickly and it also carry a certain prestige to the product.

http://www.sabertek.co.za/images/ProductLifeCycle.png

PROMOTION STRATEGY

Objectives:

To create strong awareness about the launch of Coke Buzz Tea among the Gen-Y (10-29 years old) consumers and their parents. This is very essential to win the market share against the main competitor PepsiCo.

Message:

The promotional outputs will convey the clear message that:-

“Coke Buzz is a healthy drink for active and young people who simply enjoy taking care of their body and life.”

“Think outside the buzz”: BeBold, BeOriginal, BeDifferent, BeYourself.

“A good spirit in a good body.”

Media selection:

Before selecting the appropriate medias, it is significant to note that Generation Y consumers only give partial consideration to media. However, they can be reached through incorporated programs. They are typically using other than one communication media at a time; a behavior that is commonly called “multitasking”. This set of consumers doesn’t give its complete attention to one single message, but rather uses continuous fractional attention to scan the media. Marketers can still communicate with Generation Y by means of a variety of targeted promotional tools. Another vital tactic to reach our target market is through “Viral” or “Buzz” marketing, which Coca-Cola will greatly use in this campaign (campus, contests).

Advertising:

PROMOTIONAL MIX

Consumer oriented:

Contests:

“Win another Coke Buzz Tea flavor”, “Uncover a secret code beneath the bottle cap and win sporting goods and electronics by logging on the website” (Arguments: It will boost consumer purchases and encourage consumer involvement with the product).

Samples:

Distribution of samples in supermarkets, school/universities and near theaters. Samples are a technique to avoid product resistance since people are not used to find bubbles in their drinks.

Arguments:

It will encourage people to buy the new Coke Buzz Tea and it signifies low risk for customers since they get it for free. They have nothing to lose by trying it.

Point-of-purchase: In supermarkets (to reach the parents of generation Y).

Arguments: It is also a way to increase product trial and provides a good product visibility.

Trade oriented:

Allowances and discounts:

Case allowance (Arguments: The “free goods” approach will be used so it can push retailers to buy more of the product to get a certain amount for free).

Cooperative advertising:

To cheer retailers to buy our product and to sustain our high level of advertisement that consumers anticipate from Coca-Cola.

Other considerations:

IMC (integrated marketing communication)

Intermediary: personal selling will be more often used.

Ultimate consumer: Coca-Cola will use additional mass media because the amount of possible buyers is large.

PLACE (DISTRIBUTION STRATEGY)

Coke Buzz Tea will be distributed through these channels:

Convenience stores

Supermarkets

Independent food stores

Multiple grocers

Discount stores

Vending machines

Direct sales.

FINANCIAL MEASURES

Requirement for success analysis:

C.M. per bottle = 382,159.36 / 328,000 = $1.17

Break-even: (113,453.56+25,676.33) / 1.17 = 118,914 (bottles)

http://www.mirrorservice.org/sites/home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/BreakEvent.gif

Market share: 118,914 / 1,000,000 = 11.9%

In one year, if Coca-cola can sell 118,914 bottles of Coke Buzz Tea, or in other words achieve 11.9% of the functional drink market share, it will break even. After this point, every bottle Coca cola sells will generate average $1.17 towards the profits. The potential profits can up to $1,030,770.001 based on our target market.

Expected Costs:

COGS: $597,124 * 36% = $214,964.64

O/H: $597,124* 38% = $226,907.12

Expected Revenues (total) = $597,124

1 $1.17*(1-11.9%)*1,000,000 = $1,030,770

CALCULATIONS

Based on Coca-Cola’s previous financial statements, we will see the

Average COGS/Revenues for year 2005, 2004, and 2003 is 36%4.

Operating Costs /Revenues = 38%5

Moreover, since our target market are 1,000,000 cans annually assuming Coca-cola maintains its market share in functional drink 32.8%, we predict our sales as 1,000,000 * 32.8% = 328,000 bottles.

We use the ratio of average capital expenditures / net operation income for North America

to estimate the fixed cost we need for producing Bubble Buzz in Canada: 4.3%6 of the

total revenue.

Task 3

The Coke Buzz Tea is a product line extension for the well established Brand Coca-Cola. The company has won the award of the most valuable company and always at the first place in providing the full value for the money. The Coke Buzz is the extension in the product line but it offers the same commitment for the value for the money as the other Coke products are offering. As the starting price of the Coke Buzz is kept little higher than the existing products. This can be compensated by justifying the nutrition content and the uniqueness of the product. The freshness of the green tea and the delicious taste of the fruit flavors will let consumers enjoy the full value of their money.

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The advertisement has a vital role in the success of the product. As there is a neck to neck competition between Coke and Pepsi. So Coke needs a strong advertisement to backup the launch of the product. In the marketing plan I have discussed the promotion process which is very diversified. This product is clearly targeting the young generation, which may be students, college students, young employees, athletes and few old people who like to change the conventional tea with something exciting. This age groups is not limited to a single advertisement media. So a proper mix of advertisement media is required.

Critical reflective learning is the learning technique with which students or the learner brings the theoretical knowledge into practical use. With the help of the reflective learning individuals grow in term of knowledge, social and professional skills. In the course of MBA the reflective learning process plays very critical role. Sometimes even in organizations, the managers fail to possess reflective learning skills. The reflective learning bridges the gap between what we have learned in the school and what we need to stay in business.

In the course of Marketing Management, I have leaned the various marketing tools, techniques, concept and theories. In the starting the course module was very easy and according to my prior experience of sales assistant. Before the MBA course I was working as an efficient sales executive in a multinational company. Though my background was not supporting the role I was working in. but my strong communication and social skills bought success and perks during my job tenure. To add more skill set under my CV and to gain the insight of the corporate world, I chosen the business study.

During the first few weeks of Marketing Management course I was very amused to see the simple marketing techniques but having critical affect on the revenues. The mode of teaching was mainly through slides and case studies. This helped in the implementation of the theories and various concepts in on the real time companies. The course started with a slow pace and I was able to gain the basics of the marketing. The aim of the module was to provide future managers an understanding of the key theories that underpin the study of Marketing, as well as an opportunity to analyze and evaluate the marketing strategies of successful and ‘not-so-successful’ businesses.

The module started with the 4p’s of marketing and phillip kotler reaserch work. I have gained the sense of importance of the Place, Promotion, Price and Product. To make any product successful, there should be a proper strategy for the marketing mix. In the preceding week I came to know the various aspects of the buying behavior of the consumers. The adoption process sounded very interesting in creating hype for the product. I learned how adoption levels vary among the consumers and came to know the various classes of the consumers. After gaining the insight of the concept the course was advanced to the product life cycle. This helped me in the understanding of the processes involved in the birth phase of the product to the decline of the product and how the marketing mix changes with the life cycle.

Week 4 and 5 revolved around the segmentation of the market and how to capture the target market. Though I had little knowledge of the market segmentation and the target market due to my past job. The addition to my knowledge was the techniques used to segment the market. Earlier I was not sure how the companies segment their markets but the study of demographic, geographic, behavior descriptors made me aware of the causes of segmentation. But sometimes I got confused as there are some companies whose products are same for all buyers e.g. Coca-Cola, and Pepsi. Although they produce different products but the basis of their sales is still the old flavor drink.

I had very fascinating moment when I studied Michel Porter’s generic strategies. I found the practice use of the generic strategies when I writing my project report. These strategies found very helpful in the positioning of the product in the market. After studying the half of the course I was bit confused in the fit between the preference of the market segment and current positioning of the product. For this I did a personal research and wrote a positioning statement to guide development and implementation of marketing strategy. After this revision I was able to grasp the concept of the final decision on where a product will be placed, OR where a current product will be repositioned to within the market.

Learning of the Forecasting technique was a very new thing for me. This concept was totally practical and had mathematical touch. This was the only topic I faced in module in which I touched the calculator. Along with the course work I learned the concept of forecasting techniques with my own research. The six techniques took long time to learn. In the same week I learned the importance of the market research techniques. These were very helpful for me to grow socially. I found them very interesting as they need a direct contact with the customers.

The thing that disappointed me in the course module is the affective use of the technology in the market segment. The module was not equipped with the technologies that help in the real time marketing environment. I felt to do self study in this field but the burden of the study and work restricted me to go beyond the course module. Though I kept myself updated with the use of internet and various marketing magazines. In the course work I read about the client contact management system ACT. In the ACT system the Advertising companies have the salespersons contacts in the ACT database and they offer information on the last ad they purchased. This helps the sales person be more effective in their sales and try to sell products (advertisements) they know the customer will be interested in purchasing.

By the week 6 I gained the basic and advanced knowledge in the module. Week 7 was little difficult for me to understand. The positioning process was very confusing for me as it involved lot of research and practical knowledge. For this purpose I took help from my friends who were working in the supermarkets and big grocery stores. The term positioning was very new to me as I had never encountered with this process during my job. The positioning task had many steps as I learned:

Select the target market

Set the promotional objective

Set the promotional budget

Design the promotional mix

Carry out a research to find out if the promotional objectives met

This was the scene when I had to implement my all marketing knowledge which I had learned in the course.

Week 8 study was more practical than the article. In that week I practiced many real time problems which a manager can face or the issues which can arise in the marketing division or in the whole organization. In that particular lecture I came to know the ethical issues associated with the marketing practice. Though in the lecture very limited knowledge was given on that topic but the lecturer was able to convey the importance of the topic.

After the week 8 I assessed myself on the basis of the knowledge I earned in the module and found that I become sound in theoretical part but I found difficulties in relating the concepts with the real time scenarios. This was due to the less number of assignments given in the module description. Though the final assignment which needed a lot of research and cleared most of the quarries. But the module needs to be revised as there should be a proper assignment is required in the middle of the course work, so that students will able to attach themselves with the practical world at very early stage. I felt the major drawback in the course module is the involvement of the students. There was negligible number of the seminars given by the students. This kept me at back end in term of confidence to speak in front of the whole class. There were no debates or maybe there wasn’t any weighting to the debate, that’s why nobody cared about them.

At the end of the reflective learning process I am still not comfortable with the technological advancement in the sector of the marketing. I have very limited knowledge about the tools used by the managers in the real world. I thought to attend a seminar to overcome the limitation of my knowledge but then I realized it would be better if the college admin will add this as activity in the course module.

My personal assessment revealed the shortcomings in my presentational skills and analytical skills. To overcome the hurdle I made proper strategy for which I joined the study groups in the libraries and started to read case studies. The other tools which helped in the reflective learning are the journals, magazines, TV, internet and the various seminars.

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The following marketing plan is for the introduction of the innovative product line extension of the pioneer beverages company Coca-Cola. The Coke Buzz Tea is fresh and innovative product which will enhance the revenue of the company. The following analysis will allow in outlining the best practises to achieve the strategic goals outlaid by the company.

The mix of marketing strategies will facilitate to achieve market share of an estimated 8,688,300 people (target) with a growth of 7.3% as forecasted in 4 years. This will capture the unserved market for ready-to-drink Coke Buzz Tea. The success in the sales growth with this product line extension will bring company to apex position and will tag the company as a market leader in the functional soft drink.

Situational analysis

Under the situational analysis the changes of trends in beverages industry are thoroughly examined. The SWOT analysis is done to get a clear picture of micro environment variables. Under the industry analysis, the opportunities for an innovative product are discussed

Marketing plan

In the marketing plan all the research work and marketing strategy is listed. The pricing, promotion and place strategies are in accordance with the ongoing Coca-Cola strategy. The strategies are critically revised to add more value in the balance sheet of the company

Financial analysis

Under the financial analysis breakeven point calculations are done and also incorporated the expected sales growth and revenue figures.

Company description

Founded in 1886, we are the world’s major marketer, manufacturer and distributor in non-alcoholic beverages syrups and concentrates, which are consumed in the production of nearly 400 beverages brands that contributes our wide portfolio. We are operating in more than 200 countries with our head office established in Atlanta. We are at the second position in functional and specialty Asian drinks. The Coke Buzz Tea will help the company to achieve the top most position in the ready to drink tea sector.

Product description and strategic role in future of the company:

Coke Buzz Tea will be a canned and bottled beverage and it will be positioned as the only “ready-to-drink tea” product available in the market. The product will bring entirely unique experience with the base of green tea enhanced with the fruit flavors such as strawberry, passion fruit and lime. Customers will feel fresh and energetic after sipping this delicious tea. It will pose itself different than the traditional tea while offering the delicious taste of fruit juices in convenient and attractive packing. The strategic role of the Coke Buzz Tea in for Coca-Cola is focused on three objectives:

Grow to be a market leader in the functional and ready-to-drink sector with increased market share.

To attract the Gen-Y consumers and satisfy their needs with an eye catching and FUNctional product.

To stay at the front position as the market leader in innovative product development and successful product launches.

SITUATIONAL ANALYSIS

INDUSTRY ANALYSIS

Consumption

The sales amount for the functional drinks sector in Canada has approached to $342.2 million in 2004 for a volume of 125.9 million liters. This product division has shown a steady growth since 1999: raise of 13.5% over a phase of 6 years. The consumption rate per capita in 2004 has risen to 4 3.94 liters, which represents a 4.0% increase compared to 1999. The increase of this particular market is mainly due to a slow shift in consumer trends.

Trends

Through the early 1960s, soft drinks were one and the same with “colas” in the mind of consumers. In the 1980s and 1990s, however, further beverages (from bottled water to tea) became more accepted. Coca-Cola and Pepsi responded by expanding their product offerings through coalition (e.g. Coke & Nestea) and acquisitions (e.g. Coke & Minute Maid), but also by keeping their focus on the portfolio diversification.

Today, while the soft drink industry’s importance has amplified in 2010, the volume sales of carbonated soft drinks has declined due to a large share of consumers who are more attracted towards the trend of healthier drink options in the functional drink segment(smoothies, energy drink, sport drink, milk and juice drinks).

Companies have been actively involved in new product developments in order to defy the growing concerns about harmful health impacts of high-fructose drinks, but also to enlarge the demand in a market where product offerings are rapidly maturing. New flavor introductions and health-conscious formulations have been introduced in an attempt to offset the rejection in carbonated soft drink sales The functional market is predictable to show sustained growth and consumer concern in the future years as consumption shifts to healthier, trendier and sophisticated products.

Profitability & future growth potential

In 1993, Concentrate Producers grossed 29% pretax profits on their sales, while bottlers made 9% profits on their sales, for an entire industry profitability of 14%. While the functional drinks segment only accounts for 3.7% of the whole soft drinks sales in 2004, estimations are forecasting a growth of 7.3% in sales and 11.0% in volume consumption by 2010 (ref.4).

SWOT ANALYSIS

STRENGHTS

Effective strides in new markets

Coca-Cola has aligned with several companies (such as the joint venture with Nestlé) in order to boost the ability to react to demands and variation in the markets of coffee, iced tea and juices. The developing markets are more complex than the developed markets. They require more marketing and product awareness.

Strong existing distribution channels

Coca-Cola has global operations and is well recognized in its distribution channels (such as store retailers or vending machines). Therefore, a new product launch can usually rely on the existing distribution structure in order to reach the greater part of its target market while requiring no major supply / delivery enlargements.

Brand strength

The Coca-Cola Company is the biggest manufacturer, distributor and marketer of non-alcoholic beverage concentrates and syrups in the world. The Coca-Cola brand is unarguably recognizable brands in the 200 countries where it trade its products. The well established and strong brand name is one of the bases for the company’s competitive benefit on several of its core markets.

WEAKNESSES

Relying upon line extensions

Coca-Cola is relying on brand expansions increase sales in specific lines, particularly its long-time carbonated soft drink products (i.e. the introduction of Vanilla Coke assisted maintain sales for the core Cola beverages). However, there is a major risk of cannibalizing existing sales in the long term (for example, Bubble Tea might deter on sales for iced tea).

Reliant upon particular carbonated drinks

The long-time existence of Coca-Cola’s Coke beverage has conventionally promoted this particular line as a flagship product. The core coke products have gained strong loyalty from customers and have solid basis of sales. The brand is more and more anchored as a single line carbonated drinks which may have taken away the freedom to diversify in other non carbonated products.

The Coca-Cola Company is a strictly global multinational business giant. Most of its products are shipped to many areas of the globe. These products have adapted to the geographical requirements Furthermore, many smaller and diversified product lines are more or less accepted in one particular region over another.

Therefore, the course of diversifying the production and marketing all products engage costly investments. These capital necessities typically increase as the product becomes heavily focused (for example to market a coke bottle in Japan is less difficult due to the worldwide recognition of the bottle rather than the ‘Qoo’ in the same country, as the Qoo is the newest non carbonated drink introduced by Coca-Cola in 1999)

OPPORTUNITIES

New product introductions

The functional drinks market is one that predominantly allows more opportunities, innovations and gives greater freedom for creativeness in the production, design, distribution, manufacturing, promotion and retailing choices and processes.

Brand is attractive to global partners

Because of the size of the company and broad portfolio base, Coca-Cola has strong purchasing power over its suppliers, and also draws large partnerships with various levels of consumer contact (e.g. McDonald, movie studio promotions, promotions in universities, sponsorship agreements, etc.). Existing brand awareness also offer an international playing field for powerful marketing strategies.

THREATS

Strong competition

Coca-Cola has a tough competition in the global market. Though the number of the competitors is less but to capture the bigger share in the crowded market will be a tougher one.

Potential health issues

The current drift of consumer and consumers groups’ consciousness towards goods and services is both beneficial and threatening for companies in the food and beverages business. Over the last few years, concerns over health concerns have risen in the media through an extended and ever- growing network of “knowledge outputs” (TV channels, journals, internet). The shift of the younger generation towards a healthier standard of living needs a careful planning and decision- making in new product developments. Large companies can also straightforwardly become the target of consumers’ apprehension.

Target market

Segment identification: RTD (Ready-to-drink) bottled Coke Buzz Tea, to be established within the Functional Drinks sector.

Segment needs

The product will accommodate to both social needs (perception of a social, fun drink with a sense of belonging within peer consumer groups) and physiological needs (hydrating and nutritional value).

Segment trends

The current trends include a move away from junk foods and carbonated drinks, a rising interest for healthier / beneficial foodstuffs for the “mind and body”, the trend towards the accessibility of on-the-go products for those with an active lifestyle, as well as the inclination for personalization through customization.

Conclusion

Based on the aforementioned analysis, Coke Buzz Tea appears to be a profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. Upon execution of the marketing plan, the Coca-Cola Company will reclaim increased market shares and claim its targeted situational place of market leader in the functional drinks section as well as keeping its long-standing consumer appreciation for innovative and successful product launches in diversified markets. Projected profits will be $243,029.47.

Objective

The objectives of the marketing plan are focused on the three main criteria:

To establish a wide brand recognition through the capturing of market share

Making consumers more aware regarding the Coke Buzz Tea product from coke.

To attain a market leader position in the functional drink sector

PRODUCT STRATEGY

The core

Bubble Tea beverage in a pre-bottled and pre canned, ready-to-drink format.

The actual product

Packaging and labeling: see figure images.jpg

Branding:

Colorful, aspect of play, round shaped, prominent Buzz logo written in modern font, catchphrases such as “Think outside the Bubble” and “Get Your Buzz”.

Trade name:

Coke Buzz Teaâ„¢, a Coca-Cola product Brand personality: oomph, funky, cool, purposeful, original, funny, healthy, etc.

Brand equity:

Coca-Cola provides a consistent, quality, accessible and innovative soft drink reputation.

Augmented product

Nutritional information, Status (social drink), Features promoting the website, Healthy drink with an advantage of a green tea base.

Marketing considerations

Product life cycle

Coke Buzz Tea is a low-learning product. With a strong marketing promotion, “sales [will] begin immediately and the paybacks of the purchases are readily understood”. Since Coke Buzz Tea is prone to product imitation, Coca- Cola’s strategy is to widen distribution rapidly, which is currently possible, credit to the company’s high manufacturing capacity. Coke Buzz Tea pursues the practice of product line extension.

PRICE STRATEGY

The price strategy that will be undertaken should consider the following aspects:

1. Consumer demand

2. The product lifecycle

3. Potential substitutes

Customer demand

Customer demand is a vital factor which is driven by flavor, income and availability of others alike products at a different price (mentioned later in the potential substitutes section). For a lot of customers, value and price are much related: ”the higher the price, the higher the value”. As a result, Coca-Cola’s intention to position Coke Buzz Tea as an exclusive, innovative and attractive product offer it a certain control over price.

The product lifecycle

The company should take benefit also to the fact that the newer the product and the in advance in its lifecycle the higher the price can typically be. It ensures a high profit margin as the early adopters get the product and the firm seeks to earn development costs quickly and it also carry a certain prestige to the product.

http://www.sabertek.co.za/images/ProductLifeCycle.png

PROMOTION STRATEGY

Objectives:

To create strong awareness about the launch of Coke Buzz Tea among the Gen-Y (10-29 years old) consumers and their parents. This is very essential to win the market share against the main competitor PepsiCo.

Message:

The promotional outputs will convey the clear message that:-

“Coke Buzz is a healthy drink for active and young people who simply enjoy taking care of their body and life.”

“Think outside the buzz”: BeBold, BeOriginal, BeDifferent, BeYourself.

“A good spirit in a good body.”

Media selection:

Before selecting the appropriate medias, it is significant to note that Generation Y consumers only give partial consideration to media. However, they can be reached through incorporated programs. They are typically using other than one communication media at a time; a behavior that is commonly called “multitasking”. This set of consumers doesn’t give its complete attention to one single message, but rather uses continuous fractional attention to scan the media. Marketers can still communicate with Generation Y by means of a variety of targeted promotional tools. Another vital tactic to reach our target market is through “Viral” or “Buzz” marketing, which Coca-Cola will greatly use in this campaign (campus, contests).

Advertising:

PROMOTIONAL MIX

Consumer oriented:

Contests:

“Win another Coke Buzz Tea flavor”, “Uncover a secret code beneath the bottle cap and win sporting goods and electronics by logging on the website” (Arguments: It will boost consumer purchases and encourage consumer involvement with the product).

Samples:

Distribution of samples in supermarkets, school/universities and near theaters. Samples are a technique to avoid product resistance since people are not used to find bubbles in their drinks.

Arguments:

It will encourage people to buy the new Coke Buzz Tea and it signifies low risk for customers since they get it for free. They have nothing to lose by trying it.

Point-of-purchase: In supermarkets (to reach the parents of generation Y).

Arguments: It is also a way to increase product trial and provides a good product visibility.

Trade oriented:

Allowances and discounts:

Case allowance (Arguments: The “free goods” approach will be used so it can push retailers to buy more of the product to get a certain amount for free).

Cooperative advertising:

To cheer retailers to buy our product and to sustain our high level of advertisement that consumers anticipate from Coca-Cola.

Other considerations:

IMC (integrated marketing communication)

Intermediary: personal selling will be more often used.

Ultimate consumer: Coca-Cola will use additional mass media because the amount of possible buyers is large.

PLACE (DISTRIBUTION STRATEGY)

Coke Buzz Tea will be distributed through these channels:

Convenience stores

Supermarkets

Independent food stores

Multiple grocers

Discount stores

Vending machines

Direct sales.

FINANCIAL MEASURES

Requirement for success analysis:

C.M. per bottle = 382,159.36 / 328,000 = $1.17

Break-even: (113,453.56+25,676.33) / 1.17 = 118,914 (bottles)

http://www.mirrorservice.org/sites/home.ubalt.edu/ntsbarsh/Business-stat/otherapplets/BreakEvent.gif

Market share: 118,914 / 1,000,000 = 11.9%

In one year, if Coca-cola can sell 118,914 bottles of Coke Buzz Tea, or in other words achieve 11.9% of the functional drink market share, it will break even. After this point, every bottle Coca cola sells will generate average $1.17 towards the profits. The potential profits can up to $1,030,770.001 based on our target market.

Expected Costs:

COGS: $597,124 * 36% = $214,964.64

O/H: $597,124* 38% = $226,907.12

Expected Revenues (total) = $597,124

1 $1.17*(1-11.9%)*1,000,000 = $1,030,770

CALCULATIONS

Based on Coca-Cola’s previous financial statements, we will see the

Average COGS/Revenues for year 2005, 2004, and 2003 is 36%4.

Operating Costs /Revenues = 38%5

Moreover, since our target market are 1,000,000 cans annually assuming Coca-cola maintains its market share in functional drink 32.8%, we predict our sales as 1,000,000 * 32.8% = 328,000 bottles.

We use the ratio of average capital expenditures / net operation income for North America

to estimate the fixed cost we need for producing Bubble Buzz in Canada: 4.3%6 of the

total revenue.

Task 3

The Coke Buzz Tea is a product line extension for the well established Brand Coca-Cola. The company has won the award of the most valuable company and always at the first place in providing the full value for the money. The Coke Buzz is the extension in the product line but it offers the same commitment for the value for the money as the other Coke products are offering. As the starting price of the Coke Buzz is kept little higher than the existing products. This can be compensated by justifying the nutrition content and the uniqueness of the product. The freshness of the green tea and the delicious taste of the fruit flavors will let consumers enjoy the full value of their money.

The advertisement has a vital role in the success of the product. As there is a neck to neck competition between Coke and Pepsi. So Coke needs a strong advertisement to backup the launch of the product. In the marketing plan I have discussed the promotion process which is very diversified. This product is clearly targeting the young generation, which may be students, college students, young employees, athletes and few old people who like to change the conventional tea with something exciting. This age groups is not limited to a single advertisement media. So a proper mix of advertisement media is required.

Critical reflective learning is the learning technique with which students or the learner brings the theoretical knowledge into practical use. With the help of the reflective learning individuals grow in term of knowledge, social and professional skills. In the course of MBA the reflective learning process plays very critical role. Sometimes even in organizations, the managers fail to possess reflective learning skills. The reflective learning bridges the gap between what we have learned in the school and what we need to stay in business.

In the course of Marketing Management, I have leaned the various marketing tools, techniques, concept and theories. In the starting the course module was very easy and according to my prior experience of sales assistant. Before the MBA course I was working as an efficient sales executive in a multinational company. Though my background was not supporting the role I was working in. but my strong communication and social skills bought success and perks during my job tenure. To add more skill set under my CV and to gain the insight of the corporate world, I chosen the business study.

During the first few weeks of Marketing Management course I was very amused to see the simple marketing techniques but having critical affect on the revenues. The mode of teaching was mainly through slides and case studies. This helped in the implementation of the theories and various concepts in on the real time companies. The course started with a slow pace and I was able to gain the basics of the marketing. The aim of the module was to provide future managers an understanding of the key theories that underpin the study of Marketing, as well as an opportunity to analyze and evaluate the marketing strategies of successful and ‘not-so-successful’ businesses.

The module started with the 4p’s of marketing and phillip kotler reaserch work. I have gained the sense of importance of the Place, Promotion, Price and Product. To make any product successful, there should be a proper strategy for the marketing mix. In the preceding week I came to know the various aspects of the buying behavior of the consumers. The adoption process sounded very interesting in creating hype for the product. I learned how adoption levels vary among the consumers and came to know the various classes of the consumers. After gaining the insight of the concept the course was advanced to the product life cycle. This helped me in the understanding of the processes involved in the birth phase of the product to the decline of the product and how the marketing mix changes with the life cycle.

Week 4 and 5 revolved around the segmentation of the market and how to capture the target market. Though I had little knowledge of the market segmentation and the target market due to my past job. The addition to my knowledge was the techniques used to segment the market. Earlier I was not sure how the companies segment their markets but the study of demographic, geographic, behavior descriptors made me aware of the causes of segmentation. But sometimes I got confused as there are some companies whose products are same for all buyers e.g. Coca-Cola, and Pepsi. Although they produce different products but the basis of their sales is still the old flavor drink.

I had very fascinating moment when I studied Michel Porter’s generic strategies. I found the practice use of the generic strategies when I writing my project report. These strategies found very helpful in the positioning of the product in the market. After studying the half of the course I was bit confused in the fit between the preference of the market segment and current positioning of the product. For this I did a personal research and wrote a positioning statement to guide development and implementation of marketing strategy. After this revision I was able to grasp the concept of the final decision on where a product will be placed, OR where a current product will be repositioned to within the market.

Learning of the Forecasting technique was a very new thing for me. This concept was totally practical and had mathematical touch. This was the only topic I faced in module in which I touched the calculator. Along with the course work I learned the concept of forecasting techniques with my own research. The six techniques took long time to learn. In the same week I learned the importance of the market research techniques. These were very helpful for me to grow socially. I found them very interesting as they need a direct contact with the customers.

The thing that disappointed me in the course module is the affective use of the technology in the market segment. The module was not equipped with the technologies that help in the real time marketing environment. I felt to do self study in this field but the burden of the study and work restricted me to go beyond the course module. Though I kept myself updated with the use of internet and various marketing magazines. In the course work I read about the client contact management system ACT. In the ACT system the Advertising companies have the salespersons contacts in the ACT database and they offer information on the last ad they purchased. This helps the sales person be more effective in their sales and try to sell products (advertisements) they know the customer will be interested in purchasing.

By the week 6 I gained the basic and advanced knowledge in the module. Week 7 was little difficult for me to understand. The positioning process was very confusing for me as it involved lot of research and practical knowledge. For this purpose I took help from my friends who were working in the supermarkets and big grocery stores. The term positioning was very new to me as I had never encountered with this process during my job. The positioning task had many steps as I learned:

Select the target market

Set the promotional objective

Set the promotional budget

Design the promotional mix

Carry out a research to find out if the promotional objectives met

This was the scene when I had to implement my all marketing knowledge which I had learned in the course.

Week 8 study was more practical than the article. In that week I practiced many real time problems which a manager can face or the issues which can arise in the marketing division or in the whole organization. In that particular lecture I came to know the ethical issues associated with the marketing practice. Though in the lecture very limited knowledge was given on that topic but the lecturer was able to convey the importance of the topic.

After the week 8 I assessed myself on the basis of the knowledge I earned in the module and found that I become sound in theoretical part but I found difficulties in relating the concepts with the real time scenarios. This was due to the less number of assignments given in the module description. Though the final assignment which needed a lot of research and cleared most of the quarries. But the module needs to be revised as there should be a proper assignment is required in the middle of the course work, so that students will able to attach themselves with the practical world at very early stage. I felt the major drawback in the course module is the involvement of the students. There was negligible number of the seminars given by the students. This kept me at back end in term of confidence to speak in front of the whole class. There were no debates or maybe there wasn’t any weighting to the debate, that’s why nobody cared about them.

At the end of the reflective learning process I am still not comfortable with the technological advancement in the sector of the marketing. I have very limited knowledge about the tools used by the managers in the real world. I thought to attend a seminar to overcome the limitation of my knowledge but then I realized it would be better if the college admin will add this as activity in the course module.

My personal assessment revealed the shortcomings in my presentational skills and analytical skills. To overcome the hurdle I made proper strategy for which I joined the study groups in the libraries and started to read case studies. The other tools which helped in the reflective learning are the journals, magazines, TV, internet and the various seminars.

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