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Segmentation And Positioning In The Soft Drink Industry Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 1333 words Published: 1st Jan 2015

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The main purpose of this paper is to have an understanding of the Turkish Soft Drink Industry especially to coke. The Coca-Cola Company is in the main focus but the competitors, PepsiCo and Yildiz Holding, are as much important.

Between the years 1960 and 1990, consumption of soft drinks have been highly increased contingently with grow of population. Even though most of the soft drinks are regarded as unhealthy the consumption is doubled thorough these 30 years (Muris et al., 1993). Marketline (2012) explains soft drink market as it is composed of retail sale of bottled water, carbonates, concentrates, functional drinks, juices, ready to drink tea and coffee and smoothies. Coleman(2009) claims that, the success of carbonated soft drink industry is due to innovation in flavoring, extravagant marketing campaigns and constant adherence to consumer fads in manners of health trends or society’s acceptances.

Turkey has been increasingly growing in the soft drink industry, during the 2007-2011 period and the carbonates are the largest segment with 56.8% of total market value (Marketline, 2012).

The strengths of the industry are the size of the market due to the country’s high population (especially high young population), dynamic private sector economy, substantial tourism income, and favorable climate (as drinks are generally consumed at hot weather) (Burnaz & Topcu, 2003). On the other hand the main problems of the beverage industry are the economic instability and legislation problems (high taxes and advertising bans) especially on the alcoholic beverage sector (Burnaz & Topcu, 2003).

If we focus specially on the cola industry, we can see that there are 3 major cola producers: Coca-Cola, PepsiCo and Yildiz Holding. Coca-Cola is the leader of this market with a share of 28.8% market volume, followed by PepsiCo (10,2%) and Yildiz Holding (8,3%) (Marketline, 2012).

In 1965, Coca- Cola Company entered to Turkish Market (Burnaz & Topcu, 2003) with working in the areas of manufacturing, distribution and marketing. The company also provides not sparkling beverages. The most profitable products of the company are Coca-Cola, Diet Coke, Fanta and Sprite. High proportion of the products is bottled in cans, glass and plastic bottles. Even same product has different ways of bottling which reaches to customer. From the global perspective there are different Cokes with different syrups such as Cherry Coke, Vanilla Coke but not all of them are active in Turkey.

PepsiCo is engaged with snacks and beverage industry. Comparing to Coca-Cola there are less international sparkling products run in Turkey. Only Pepsi types( Pepsi-Coke, Pepsi Light, Pepsi Max and Pepsi Twist) are available others are local brands as Yedigün and Fruko which are added to company by merging with Tamek Company.

On the other hand Yildiz Holding is a higly prestige company which operates mostly in biscuits and chocolate. They joined the cola industry with launching Cola-Turca in the July 2003. They had advantage of production and distribution but they had lack of information about cold soft drinks marketing (Burnaz & Topcu, 2003).

Process of Segmentation

The process of segmentation starts with understanding the needs of the customer. Companies segmentation strategy has to go along with its mission and current state. Segmentation, in genereal, helps firms to have a better understanding of the each segments customer profile.

Coca-Cola Company is making the segmentation in terms of geographic, demographic and psychographic. It operates through six business segments: North America, Eurasia and Africa, Europe, Latin America, Pacific and Bottling Investments (Marketline, 2012). In each segment there is a traditional habit and understanding these habits and culture is important for Coca-Cola to reach customer. This culture includes religion, holidays, special days and so on. The bottling segment runs in five different continents. Demographic segmentation is divided into three parts: Youth (10-19), Young Adult (20-24), Adult (25-35). Youth consists the majority of consumers and the type of coke is not necessarily important. Young Adult and Adults prefer diet coke more. Psychographic segmentation is about the lifestyle of the customers. Self- value and self-concept of customers is associated with the product as a self image of being “cool”.

A well known story which belongs to Coca-Cola is about Coke Zero. Diet Coke was already in the market for customers but men found it too feminine to use. So the company developed a less feminine new product for male customers who want to drink coke with no sugar.

Pepsi is segmenting market in several ways. The company is using demographics most of the time, which means age, income and family size. The range of 20-35 is the common user. Psychographic segmentation is nearly the same to Coca-Cola, being cool and youthful. Behavioral segmentation contains occasions as parties, benefits as taste loyal customers and new users.

Cola-Turca was developed by Yildiz Holding to fight with Coca-Cola and Pepsi. It was successful at the beginning but the marketing campaign was not enough to hold it together. Cola-Turca was the only local brand which got famous enough to compete with Coca-Cola Company and PepsiCo. But the segmentation process was different. It wasn’t trying to sell values of youth of coolness and it didn’t have any specific target group as the leading companies had. It was a symbol of nationalism but it lost value because it couldn’t compete anymore.

Choice of the Target Market

The consumer market amounts to a total of 6.3 billion people, and thus there is great demand for an enormous variety of goods and services, especially as consumers differ from one another in that of age, gender, income, education level, and tastes (Saeidinia et al.,2012)

Actually, every individual is a potential customer for Coca-Cola Company. The primary target is on the group with age 13-25 and the secondary group is 10-39. The target group doesn’t differentiate by gender. Life-style is usually busy, school/ university oriented or fast business life. In Turkey especially, Coca-Cola 2.5L bottle is usually associated with constant happy family life. The nature of the drink is fun and entertainment loving. The young generation is the target because it associates energy and youth with Coke.

Positioning

Coca-Cola Company is in the Soft Drink Market over a hundred years and keeping its position quite safely. The former chairman of Coca-Cola Company states that the company takes its strength from being global. So as a company this much known in all entire world, brings up new marketing strategies. In order to think globally the company must act locally says the former chief marketing officer. So Coca-Cola is paying attention to cultural attributions of each region and prepares a strategy among it. For example, during the Ramadan month Coca-Cola symbolizes togetherness in a long table of family and friends at the minute of breaking the fast. In the commercials it’s seen as Coca-Cola is the only thing that we cannot give up.

Experiences, personal preferences differ among individuals in different locations. Using these differences for the company’s benefit is Coca-Cola’s power. And this power which helps to Coca-Cola keep its position is also supporting profitability and effectiveness of the company.

Evaluating Porter’s 5 Forces Model for Coca-Cola is not giving any unexpected results. Coca-Cola holds high dominance in the market which highly prevents new entrants. Main competition is between small number of big players, buyer and supplier bargaining is low. So according to these evaluations it’s likely that Coca-Cola will remain its power for a long time.

 

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