Coca Cola Markting Project

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Management On Coca Cola

The Partial Requirement for The Fulfillment of the MBA Degree

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TABLE OF CONTENTS

Topics Introduction Vision of coca cola Mission Statement of coca cola Value of coca cola Objective of coca cola Goal of coca cola History of Coca Cola Coca Cola in Pakistan Today of coca cola Market Conduction Market Position Organizational Hierarchy Board of directors Financial data

Page # 12 13 13 14 14 17

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16 18 19 20 21

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Business Portfolio and Growth Strategies of Coke Portfolio Portfolio analysis SWOT analysis Five forces applied on coca cola Growth strategy Marketing Environments Microenvironment Macro environment Competitive environment Rivals \ competitor Competitive advantage Market Segmentation & Positioning Strategy Market segmentation Coke segmentation strategy

Positioning Product Strategy Level of coke as a product Branding

24 27 29 32(a,b) 33 36 40

44 44

45

48 48

51 53

53

-6Product Line Decisions Advertising Advertisement Objective Setting of advertising budget Advertising Strategy Advertisement Media Recommendations & Conclusions

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56

56

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56 58

Executive Summary:

T

he Coca-Cola Company is a global business enterprise and one of two main soft drink sellers. Study of this report helps the reader to know that how Coca-Cola has achieved its current market position. This report enlightens those factors that company has adopted during its long journey of 52 years in Pakistan. This report includes the introduction, micro and macro environment factors affecting coke, segmentation and positioning strategy and advertising methods that company uses and much more. The reader of this report can expect that after having complete study he/she can certainly have a broader view of the operations of Coca-Cola in Pakistan. Like who are the competitors, what are the problems that company facing in expanding its business etc. In Pakistan Coca-Cola is very much a local business and company has provided this region with 51 successful years of service. The dedicated service that company has been providing has made the company the proud holder of several most widely recognized brands in the world. This report study gives reader the idea about operation of coke in Pakistan.

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INTRODUCTION

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Vision of coca cola

To achieve sustainable growth, we have established a Vision with clear goals: •

People: Being a great place to work where people are inspired to be the best they can be.

•

Planet: Being a responsible global citizen that makes a difference.

•

Portfolio: Bringing to the world a portfolio of beverage brands that anticipate and satisfy peoples' desires and needs.

•

Partners: Nurturing a winning network of partners and building mutual loyalty.

Profit: Maximizing return to shareowners while being mindful of our overall responsibilities

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MISSION STATEMENT

OF

COCA-COLA:

M

ission statement is a statement of organization’s purposes that what it wants to accomplish. In order to achieve mission of increasing market share and maintaining good relations with our customers all over the world, we wish to create value for all the constraints we serve, including our consumers, our bottlers, and our communities. The Coca Cola Company creates value by executing business strategy guided by four key beliefs: • Customer is king; Customer demand drives everything we do. • Brand Coca Cola is the core of our business. • We will serve consumers a broad selection of the nonalcoholic ready-to–drink beverages they want to drink through out the day. • We will be the best marketers in the world. Everything we do is inspired by our enduring Mission: • • •

To Refresh the World...in body, mind, and spirit. To Inspire Moments of Optimism...through our brands and our actions. To Create Value and Make a Difference...everywhere we engage.

VALUE

OF COCA COLA

We are guided by shared Values that we will live by as a company and as individuals: • • •

Leadership: “The courage to shape a better future” Passion: “Committed in heart and mind” Integrity: “Be real”

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Accountability: “If it is to be, it's up to me” Collaboration: “Leverage collective genius” Innovation: “Seek, imagine, create, delight” Quality: “What we do, we do well”

OBJECTIVE

OF COCA COLA

The company has sales based objective .Every thing else (marketing plan, advertising plan, production etc.) is derived from this objective. Currently the company‘s objective is to “Increase the volume of sales up to the maximum level as much as possible during the current fiscal year.” The company sets its objective keeping in view the past performance, Historical trends, current market position, economic condition, macro environment and micro environment factors, social values, market size and growth rate ,future expectations and predictions.

GOALS

OF COCA COLA

All CCBPL plants setup their own goal to achieve the objective. The company goal is “To increase sales volume and gain market leadership in Lahore.”

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HISTORY

OF

COCA-COLA:

C

oca-Cola Enterprises was established in 1986 is a young company by the standards of the Coca-Cola system. Yet each of its franchises has a strong heritage in the traditions of Coca-Cola that is the foundation for this Company. The Coca-Cola Company traces it’s beginning to 1886, when an Atlanta pharmacist, Dr. John Pemberton, began to produce CocaCola syrup for sale. However the bottling business began in 1899 when two Chattanooga businessmen, Benjamin F. Thomas and Joseph B. Whitehead, secured the exclusive rights to bottle and sell Coca-Cola for most of the United States from The Coca-Cola Company. The Coca-Cola bottling system continued to operate as independent, local businesses until the early 1980s when bottling franchises began to consolidate. In 1986, The Coca-Cola Company merged some of its company-owned operations with two large ownership groups that were for sale, the John T. Lupton franchises and BCI Holding Corporation's bottling holdings, to form Coca-Cola Enterprises Inc. The Company offered its stock to the public on November 21, 1986, at adjusted prices of $5.50 a share. On an annual basis, total unit case sales were 880,000 in 1986.In December 1991; a merger between Coca-Cola Enterprises and the Johnston Coca-Cola Bottling Group, Inc. (Johnston) created a larger, stronger Company, again helping accelerate bottler consolidation. As part of the merger, the senior management team of Johnston assumed responsibility for managing the Company, and began a dramatic, successful restructuring in 1992.Unit case sales had climbed to 1.4 billion, and total revenues were $5 billion at the year-end. Presently The

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Coca-Cola Company is the largest soft drink company in the world. Every year 800,000,000 servings of just "Coke" are sold in the U.S alone.

C OKE H ISTORY

IN

P AKISTAN

“To provide Coca-Cola at arms ‘length”

T

he Coca-Cola Company began operating in Pakistan in 1953. Coke, Fantail and Sprite are the brands with whom Coca-Cola is operating in Pakistan. The Coca-Cola System in Pakistan operates through eight bottlers, four of which are majority-owned by Coca-Cola Beverages Pakistan Limited (CCBPL). The CCBPL plants are in Karachi, Hyderabad, Sialkot, Gujranwala, Faisalabad, Rahim Yar Khan, Multan and Lahore. The remaining two plants, independently owned, are in Rawalpindi and Peshawar. The Coca-Cola System in Pakistan serves 70,000 customers/retail outlets. The Coca-Cola System in Pakistan employs 1,800 people working constantly for the company. During the last two years, The Coca-Cola Company in Pakistan has invested over $130 million (U.S) and coke has successfully provided 51 years of dedicated service to its customers in Pakistan. Since the beginning of Coke Company the firm has been continuously changing its slogans and that’s a very creative idea to get the attention Of the customers. . Here we would like to include some of the popular slogans of coke since the coke journey started. • 1886 Drink Coca-Cola • 1908 Get the genuine • 1923 Enjoy thirst • 1934 When it's hard to get started, start with a Coca-Cola • 1942 The only thing like Coca-Cola is Coca-Cola itself • 1956 The friendliest drink on earth • 1963 Things go better with Coke • 1993 Always. Coca-Cola • 2001 Life is Good • 2003 Jo Chaho Ho Jaye Coca Cola Enjoy

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• • • • •

2004 Flight Of Delight 2005 Galay Delicious Taste 2006 Thanda matlab coca cola 2007 khaly pily jila coca cola 2008 Aja jashan mena ly

Today Today CCBPL is operated directly under the supervision of the Coca-Cola International based in Atlanta Georgia State___ USA .It owns 10 plants all around in Pakistan.

►

Karachi.

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Lahore.

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Gujerwala

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Rawelpindi

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Peshawar

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Hyderabad

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Faisalabad

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Sialkot

►

Rahimyarkhan

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Multan.

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Sahiwal

MARKET

MARKET

CONDITION

POSITION WORLDWIDE:

60% Coca-cola Pepsi Other 30% 10%

MARKET

POSITION IN

PAKISTAN: -

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., 10% ., 36%

Coca-Cola Pepsi Others

54%

MARKET

POSITION

World wide on global level Coca-Cola is the most popular brand and market leader and carry 60% of market share. In Pakistan due to above reasons Coca –cola is the market follower but still in a very strong and stable position holding 36% of the local market share with a growing and increasing market share every year. Growth rate in market share: unit case volume

2007 vs. 2006 GROWTH

2007vs 2006 Growth

5-Year Annual Growth

Net Operating Revenues

operating income

Africa

10%

6%

16%

6%

Eurasia

16%

13%

24%

38%

European

3%

2%

14%

16%

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Union Latin America North America

9%

6%

24%

22%

(1%)

1%

11%

1%

Pacific

7%

4%

7%

3%

Bottling Investments Worldwide

64%

N/A

53%

750%

6%

4%

20%

15%

ORGANIZATIONAL HIERARCHY: Organizational hierarchy of Coke with respect to marketing department is as Chairman Board of Governors Vice Chairman

Executive Vice Presidents

Vice Presidents

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Production Manager

Assistant MKT Manager 1

Supervisor

Marketing Manager

Assistant MKT Manager 2

Supervisor

Salesmen

Finance Manager

Assistant MKT Manager 3

Supervisor

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Board of Directors

(As of February 21, 2008)

(Back row, left to right)

James B. Williams Retired Chairman of the Board and Chief Executive Officer, SunTrust Banks, Inc. Alexis M. Herman Chair and Chief Executive Officer, New Ventures, LLC Sam Nunn Co-Chairman and Chief Executive Officer, Nuclear Threat Initiative Donald R. Keough Nonexecutive Chairman of the Board, Allen & Company Incorporated, And Nonexecutive Chairman of the Board, Allen & Company LLC James D. Robinson General Partner, RRE Ventures Herbert A. Allen President and Chief Executive Officer, Allen & Company Incorporated

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Ronald W. Allen Advisory Director, Former Consultant and Advisory Director, and Retired Chairman of the Board, President and Chief Executive Officer, Delta Air Lines, Inc. Peter V. Ueberroth Investor and Chairman, Contrarian Group, Inc., and Nonexecutive Co-Chairman, Pebble Beach Company (Front row, left to right) Bary Diller Chairman of the Board and Chief Executive Officer, IAC/InterActiveCorp, and Chairman of the Board and Senior Executive, Expedia, Inc. Cat hleen P. Black President, Hearst Magazines Donald F. McHenry Distinguished Professor in the Practice of Diplomacy and International Affairs, Georgetown University E. Neville Isdell Chairman of the Board and Chief Executive Officer, The Coca-Cola Company Not pictured: Jacob Walenberg Chairman of the Board, Investor AB, and Vice Chairman of Skandinaviska Enskilda Banken AB 1 Audit Committee 2 Committee on Directors and Corporate Governance 3 Compensation Committee 4 Executive Committee 5 Finance Committee 6 Management Development Committee 7 Public Issues & Diversity Review Committee

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Financial Data Year Ended December 31, (In millions except per share data)

2007

2006

2005

$28,857 10,406 18,451 10,945

$24,088 8,164 15,924 9,431

$23,104 8,195 14,909 8,739

254 7,252 236

185 6,308 193

85 6,085 235

456

220

240

Summary of operations Net operating revenues Cost of goods sold Gross profit Selling, general and admin exp Other operating charges Operating income Interest income Interest expense Equity income—net Other income (loss) — net Gains on issuances of stock by e. i Income before income taxes

668 173 — 7,873

102 195 — 6,578

680 (93) 23 6,690

Income taxes

1,892

1,498

1,818

Net income

$ 5,981

$ 5,080

$ 4,872

Average shares outstanding

2,313

2,348

2,392

Avg shares outstanding

2,331

2,350

2,393

Basic net income Diluted net income Cash dividends

$ 2.59 2.57 1.36

$ 2.16 2.16 1.24

$ 2.04 2.04 1.12

Closing market price on Dec 31

61.37

48.25

40.31

$142,289

$111,857

$95,504

Cash, cash equ and c.m securities Property, plant and equipment—net

$4,308 8,493

$2,590 6,903

$4,767 5,831

Depreciation Capital expenditures

958 1,648

763 1,407

752 899

Total assets

43,269

29,963

29,427

Long-term debt

3,277

1,314

1,154

Shareowners’ equity

21,744

16,920

16,355

Net cash provid by optg Actvty

$ 7,150

$ 5,957

$ 6,423

Per share data

Total market value of common stock

Balance sheet data

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BUSINESS PORTFOLIO AND GROWTH STRATEGIES OF COKE

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PORTFOLIO:

T

he businesses & products that makes up the company constitutes business portfolio. Coca Cola Company has a vast portfolio & it has a wide range of products. Here we will be focusing on the different flavors of the Coke only. 1. Coke Classic:

It was introduced in the 1886 by a pharmacist & was sold at a small scale. It was not a carbonated drink at the time of the launch but further development made it a fizzy drink & people start taking it as a beverage.

2. Vanilla Coke: Smooth taste of vanillas was added to Coke to give a refreshing feeling. Since, it was Vanilla coke’s debut in 2002. Millions of people were curious what coke have brought for them. It was a refresher & soother for the thirst quenchers. Still, it was not a big success like Coke Classic.

3. Cherry Coke: Cherry coke is one of the favorite colas taste with a blast of cherry. This flavor was introduced for the cherry lovers so they can have cherry wherever they & whenever they are. Some things never change, other things get better. Like Cherry Coke.

4.

Caffeine free Coke:

Classic is what you really want to have. Caffeine free coke fits right in with your plan. It’s true refreshment, minimize the caffeine input to your body, & gives a refreshing effect.

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5. Diet Coke/Coca Cola Light:

Diet Coke was launched in 1982 which was the beginning decade of the fitness craze. A gala reception at the radio city Hall at N.Y.C celebrated the new drink on the scene. In just 1 year after its introduction it became the largest selling drink in America. It was one of the ideal drinks for the very fitness & health cautious people. Further flavors were added to the portfolio of diet coke which attracted the fitness crazy people to check the taste of it. a. Caffeine free Diet Coke: In 1983, Caffeine free diet coke was introduced for the people who were facing problems with the amount of caffeine present in the diet coke. The diet coke was ecoming more ideal for them as it was with less sweet & no caffeine. b. Diet Cherry Coke:

Then the new Diet Cherry Coke was introduced a new low calorie flavor craze began. Coca Cola company promoted Diet Coke with penguins & celebrities in its advertisement. They were having the slogans like “Just for the Taste of it” & “The Move is on the Diet Coke”. It was becoming a big hit. c. Diet Coke with Lemon:

When in 2001 the Diet Coke with Lemon was offered a new citrus taste sensation became a hit. It gave the people chance to have the taste of sweet coke with citrus lemon flavor. d. Diet Vanilla Coke:

When in 2002 the Diet coke was celebrating its 20th birthday Diet Vanilla coke was the product, which company came up with & it was birthday gift of Diet Coke to its consumers.

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E. diet Coke with Lime: 2004 was the year when Coca Cola company came up with Diet Coke with Lime, which brought a juicy new flavor of coke to its consumers.

A

PORTFOLIO ANALYSIS:

tool by which the management identifies & evaluates the various business that make up the company. Generally there are two approaches of doing the portfolio analysis & Coca Cola’s portfolio analysis is done with both the methods & the results are as follows: 1. BCG (BOSTON CONSULTING GROUP) APPROACH:

In the BCG approach, a company classifies all its Bus according to the growth share matrix.

Coke is one of the main product line of the Coca Cola company. It is the one which is giving maximum revenues to it by different products in this line. Here we have classified some of its major products in the BCG matrix on the basis of their fame & liking of the people.

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 Star: Coke Classic is the basic product through which the Coca Cola company got the fame. It is one product, which gives the maximum revenue from all over the world. It is one flavor, which has the maximum consumers all over the world. Coke has already worked a lot on it by launching new flavors in it, but still it is a product they can turn as famous as coke Classic. 

Cash Cow:

Coke Classic is one product, which the Coca Cola company can never think of stop producing. It is the one which make the coke company a huge success, it was one product which gives billions of dollars as revenue from world over. Whenever the company thinks of launching its product in a country the first product they launch is coke classic as they know that if don’t work here then nothing else can.  Question Mark: A product that is still not a big hit as it haven’t consumed much time yet. All the new flavors of coke are the examples of these question marks. In the above BCG matrix, Lime Coke & Cherry Coke are the two products mentioned as the question marks as they have not taken much time yet to get a hold of market & not even the large percentage of the people have tasted it. So it needs time to be fully tested by the company & the company needs to think whether it should continue the production or should divert to something new. 

Dog:

A product that has not worked good or a product which has been a source of loss. Vanilla coke is one product that was not a big hit. Even its not a long period which Vanilla coke has consumed but still there are signs that it wont be a success. So its better for the company to get rid of it.

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SWOT

ANALYSIS:-

Strengths: Single Established Company .

The biggest strength of Coca-Cola is that unlike other beverages, it has established itself as a single large company CCBPL with 10 plants in all major cities running directly under supervision of Coca-Cola international. So unlike to bottler system there is no conflict of decisions and policy. One policy adopted is for al plants throughout the country. Similarly one decision taken (e.g. price cuts+Rs.2/-) is implemented effectively and immediately in all plants all over Pakistan without argument. So you will find same prices, same quality, same schemes in all cities. Working Structure .

Coca-Cola’s organizational structure is of International standards, hence there are clear cut and well defined policies, procedures rules and regulations that

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have to be followed under all circumstances, hence working style is highly professional, and discipline is maintained. Human Resource .

The biggest strength of Coca-Cola is its Intellectual brain power of highly professional qualified and dedicated employees who put in all their efforts to satisfy their customers by providing the ultimate best of Coke. Proper Time Delivery.

The fixed time of delivery of Coke to retailers, shopkeeper’s etc punctuality is maintained which gives Coke an edge over all its competitors Brand Name, Symbol, and Bottle Shape .

These all are Coke’s strengths which give it an edge over its competitors. CocaCola bottle shape is so unique and stylish than even if the name is rubbed off people will still easily identify that its Coca-Cola bottle. Same is the case with its symbol and name which cannot be imitated and are so well known. The most known and spoken word in world after OK is “COKE”. Superior Product Quality :

Coca-Cola Company management never compromise on quality even if they have to spend a little extra in production. Bottle caps are one example. Examine and you will find that Coca-Cola brand caps (especially on liter bottles) and disposable bottles are superior in quality than those of others beverages). Quality in taste as well as bottle and caps and gifts which are offered doesn’t vary from city to city but is same throughout the company. Diet Coke:

Coca-Cola’s strength is that they are market leaders who successfully launched .Diet Coke to cater the needs of overweight and health conscious people and have been popular to a certain extent, their closest competitor also followed and launched their own diet beverages brand, but it never proved to be up to the mark and failed.

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WEAKNESSES: Limitation of resources:

This is the biggest weakness of Coke .They heavily depend on finance from the CCI (Coca-Cola International) based in USA. Consequently they are not able to supply as many freezers, coolers or finance sign and electronic bill boards as shopkeepers demand as does Pepsi which is the major reason why they lag behind.

Non –Availability :-

Coke is not available in small towns and in rural areas, reason being that the distribution channel of Coke is not large, is not extended owing to limitations of resources and lack of proper infrastructure. Formality of Rules and Regulations :

The organizational structure of Coke is too formal ( being supervised by CCI),so the lengthy processes of decision making and implementation through hierarchy system (i-e follow order from CEO to downwards) have to be followed and employees in Pakistan even (GM) is not allowed to take decisions to change even smallest of things like (Instruction on bottle) on their own .So many brilliant ideas to improve and boost sales remain locked up in employees brain as they are not allowed to work at their own free will.

OPPORTUNITIES: Coke currently holds about 36% market share in Pakistan. Pepsi leads by holding 54% of market share 10% to other small beverages e.g. RC- cola, Maka-Cola, Pak-Cola etc. So there is vast opportunity for Coke to capture 70% market share.i.e. 54% of Pepsi and 10% of others. Coca-Cola with International standards can increase its market share many folds with little efforts.

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Increasing distributing channels and infrastructure to ensure availability in small towns and areas. Line extension like Fanta, Coke, and Sprite in different flavors. Launch a new product it can do it successfully as it’s is well established, Company and has already positioned itself in customers mind (as those who provide the ultimate in taste and quality) so they are bound to try their new product as well.

THREATS: Major Threat :

Pepsi and its products as it is market leader so time to pose a serious threat to Coke. Potential Threat: New Entrants:

New entrants like Maka-Cola, Pak –Cola that can exploit anti Jewish and anti war sentiments, provoke nationalism sell at low price and thus can be a source of threat for Coke in future once they fully launch their product in Pakistani market so Coke management has to look out for them over time. Nestle Products:

Like juices, Milo cold coffee ,drinks, etc as well as Shezan products e.g. squashes, tetra pack juices are also sort of threat but not the direct threat for Coke because they provoke health consciousness and physical fitness .Although Coke has converted their attack on health issues by offering Diet Coke yet the threat isn’t over . However Coca-Cola can effectively counter their threat at any time by launching their own juice. Taxes (Govt.Laws and Policies):

The Coca-Cola management is not happy with the Govt. tax laws and policies. Being a multinational with whole plants in 10 cities it is under heavy tax .Imposition so much so that on single bottle revenue. It has to pay as much as Rs2.97/- as tax to the government.

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With the consequent result that Coca-Cola is the first beverage and 2nd highest tax paying company in Pakistan. It pays 33% on its total revenues.

GROWTH STRATEGY:

G

rowth is the main objective of every organization. They look forward for expanding & growing in different markets & making a variety in their product line. A company can identify their growth through the product-market expansion grid. The approach is known as ANSOFF. Coca Cola Company can also identify its expansion through the ANSOFF approach.

Market Penetration is the strategy, which every company has to opt when it reaches a maximum height of growth. Coca Cola in Pakistan is doing market penetration through the selling its products to the business buyer, who are huge multinational organizations like McDonalds, Subway, Dunkin Donuts & many more & they are also keeping the local market in focus. Fri Chiks, AFC, PFC are examples of the buyers in the local market. They are selling the Coca Cola as the only beverage in their restaurants. Market Development is exploring new markets for the products you are already selling. Many flavors of coca cola are not being sold in Pakistan. Coca cola can develop a new market if they introduce those flavors in Pakistan. Many people in Pakistan want a change in the beverage industry, as they are having the same flavors from many years. A company takes a risk when it do Product Development, there is a chance that it loose its customers or there will be a crowd of people demanding their product.

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Coca cola company can do product development by introducing the new flavors in Pakistan which are not sold anywhere in the world by the coke company. The company has to put large effort in that, as it has to conduct all market research & feasibilities for it. But there is also an opportunity for them as they know the market of Pakistan, that what the people here can afford & what taste they want. Diversification strategy is one which every company really want to practice. There are lots of chances of growth but the risk factor is also there. The company can manufacture products, which are not manufactured by it before. Coca cola is only dealing in beverages but it can also manufacture its own snacks item as the company name is known almost all over the world. So it can cash the name by producing the items, which are eaten with the beverages.

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MARKETING ENVIRONMENTS

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Marketing Environments:

T

he forces outside marketing that affect marketing management ability to develop and maintain successful relationships with its target customers. There are two types of marketing environments that may affect any company’s operation, Microenvironment and the Macro environment. Micro environment factors affecting coke:

First we consider the microenvironment factors. 1=Customers:

Recent survey shows that coke is the only product in the world with which more than 85% of the population is well aware of. All the companies have to keep updated study of their customers and in case of coke the company has always maintained excellent customer retention. Value of customers for coke can be understood by these factors that coke spends lot of efforts (financial and human resource) on customer research. For example, Coke knows through market survey that we put 3.2 ice cubes in a glass and one million of US population drinks coke with breakfast every day. This is how coke has been favorite drink of customers for centuries. Coke customers vary massively in terms of age. From kids to youngsters, from youngsters to elders and from elders to older, coke has always captured high customer attention from decades. We can divide coke customers in different categories. I: Consumer Market:

This is the group of consumer from where coke purchases are at the highest level because consumer market includes individuals and households. Households mostly buy coke for daily use in large number and purchasing by individuals is also the case of repeat purchase. Healthy consumer market is a big advantage for the company. II: Reseller Market:

Reseller market of coke is very large all over the world. This is the market, which buy the product from company and resell it at profit. In Pakistan McDonald is the biggest example of reseller of coke. McDonald purchases coke from the company and sell it with each fast food deal served at restaurant. The survey shows that each branch of McDonald located in Lahore sells approximately 500700 liters of coke daily to its customers.

- 34 III: International Market:

International market consists of those buyers who are in other countries. Coke is worldwide known product and every country where coke is been sold has a manufacturing unit of its own. Similar is the case in Pakistan. Coke manufacturing plants are in Karachi, Hyderabad, Sialkot, Gujranwala, Faisalabad, Rahimyar Khan, Multan and Lahore and these plants are producing the drink for the local use. So in Pakistan there are no international buyers of coke. Characteristics affecting Consumer Behavior:

Coke purchases are influenced strongly by cultural, personal, social and psychological characteristics. Cultural Factors: Every group and society has its own culture. Cultural factors affect coke purchasing massively. Different communities and group of people have reshaped Pakistan’s culture. In recent years the Bahar/Basant festival in Punjab specially has become important part of our culture in which sales of coke go very high. Soft drink is purchased in bulk for the parties and other occasions. Social Factors:

Social factors include consumer’s family, small groups and status. Family members can affect buying behavior in such a way that if number of children are more in a family than the elders, then the children choice can matter a lot at time of soft drink purchase. Parents most of the time, have to go according to kids choice and kids have more interest in cola drink as compared to the elders. On the contrary sometime people go for the product that shows their status in society. If a person has high status in society he or she might never go for disposable coke bottle instead they might prefer the CAN packing of coke. This change is due to the status matter. Personal Factors:

Buyer’s decision is also influenced by personal characteristics such as buyer’s age and life cycle stage, occupation, personality and self-concept. Age and lifecycle stage means that people taste and way of living changes with passage of time. Lets say in earlier stage of life if a person’s best choice for soft drink was Coke classic but as he proceeds with his life, way of thinking and style may change. He may not opt for classic coke any more and might be more interested in diet coke.

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Occupation matters a lot when consumer is indulge in buying. If consumer is a student by occupation he will certainly go for returnable bottle of 8 RS or may be disposable bottle of 15 RS but most probably not for the coke CAN which is high in price. Where as if the consumer is a business executive who is financially strong will prefer more the coke classic can or diet coke can. This change is mainly because of occupation. Psychological Factors:

A person buying behavior is further influenced by major psychological factors such as motivation, perception, learning and self-beliefs. Motivation is basically a drive that’s sufficiently pressing a person to seek satisfaction of the need. Sometimes a person has no intention to buy a particular product but what happens is that the group of people around him motivates that person. If a person is highly satisfied with the taste of Diet coke, he may share his experience with another person and as a result the latter person might get motivated by his opinion and may end up buying diet coke. In some cases consumers have descriptive thoughts and beliefs about something. For example if a health conscious person has a belief that diet coke is good for health, he or she is never going to go for classic coke because diet coke has maintained a clear position in the mind of that consumer. This is all about the self- beliefs and thoughts that might change with time because mostly all the self-beliefs are secondary and not the core ones. 2=Competitors:

All over world there are two soft drink giants, Coke and Pepsi. The competition between two companies has always been neck to neck. Both these companies keep on try to take lead in terms of pricing, packaging, promoting and placing. Pepsi is a world leader in convenient foods and beverages, with revenues of about $27 billion and over 143,000 employees. Pepsi brands are available in nearly 200 countries and territories. As we compare the products of these two competitors we come to know that Coke has two flavors in Pakistan that is coke plain and coke diet where as similar is the case with Pepsi as only these two flavors are available of Pepsi as well. So in this perspective both parties have equal strength. However competition is at its peak in terms of pricing. So many times we see that as soon as Pepsi lower downs the price of 1 liter pet bottle or disposable drink, Coke adjusts its price right away so that they may not loose their customers. Although both these brands have sufficient amount of buyers all over the world but still both the companies strive to achieve the market leader position. Coke even after 99 successful years in US still trying best to be more innovative. Coke manufacturers spent two years and 4 Million $ on research before settling on a new formula and finally came up with “sweeter new coke”

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and later on with “cherry coke”. Companies make all these efforts to give more customer value and satisfaction than its competitors. In Pakistan recently a few other beverages are also introduced such as MeccaCola and Amrat-Cola but currently these soft drinks are not a threat for coke due to their very low market share and secondly due to brand loyalty of customers for coke. 3=Intermediaries:

Marketing intermediaries help the company to promote, sell and distribute its goods to the end users. Intermediaries include resellers, distribution firms and marketing agencies. When we talk about coke, Coke Company in Pakistan as well as abroad has recognized the importance of working with their intermediaries. For example recently Coke signed ten years deal with US based company Wendy that it will provide coke to all the fast food chains located in US. Wendy in this case is a big example of intermediary for coke. In Pakistan other than various resellers, McDonald is one big party that is reseller of coke. Similarly there are thousands of private agencies (intermediaries) that are working for coke to distribute the product to the shopkeepers and retailers all over the country. Currently there are 46 distributors working in Lahore. Coke Company uses two techniques for distribution, direct distribution and indirect distribution. In direct distribution company uses no agencies or middlemen to distribute the soft drinks but company has its own system of distribution that include Company’s trucks and labor as well. The other way is indirect distribution in which company opts for various distributors that take the product from factory to the retailers and resellers. 4=Suppliers:

Suppliers always play an important role in any company’s operation. Suppliers provide resources and raw material that company requires to produce the goods and services. Coke company suppliers in Pakistan vary with respect to the raw material they provide. Following is a brief list of different suppliers of coke. • • • •

Balochistan Glass Limited provides glass bottles of all sizes that are used in bottling. Plato Bag Limited provides pet bottles with the labels. Labels are designed by the Packages Ltd. Saharan Mills Limited provides the quality sugar in hygienic packets. Vanillin Intercool Pakistan provides the machinery such as visicoolers and chest coolers for the chilled coco-cola.

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•

Dynamic Equipment and Controls (PVT) Limited provides industrial refrigeration solutions, dispensing equipments, complete bottle line and capping machines. Macro environment factors affecting coke:

Demographics:

Coca cola knows its people very well. It offers different flavors & packaging according to its customer’s taste. It offers following sizes & every size is targeting different slots of customers. 1. 2. 3. 4. 5. 6.

SSRB (Standard size returnable bottle) LRB (Large size returnable bottle) NRD (Non-returnable/ Disposable bottle) PET (Plastic Bottle 500 ml) PET (Plastic Bottle 1.5 liter) CANS (tin pack 330 ml)

It targets its different sizes according to customers of different age groups & occupations. • • • •

•

SSRB is generally targeted to young children & people going to schools & universities. It is also targeted to the people of lower class. LRB & PET 1.5 liter is usually consumed by households &I s one of its economy packs. Disposable bottles are for the “on the go” people. As they don’t have the time to stand at a spot & drink the whole beverage. PET 500ml was introduced, on the basis of the analysis, which shows that people nowadays are in a trend to drink two 250ml coke bottles together. As Coca Cola is a company who knows its consumers very well, they introduced the 500ml Pet bottle. Business executives always expect something different for them form an organization, so Coke CANS were the answer to their expectation from coke.

Different flavors always attract different types of people. They are for the people who always want to try something new. • • •

Classic coke is the one suitable product who don’t want a change in their life or who don’t want to try something new. Keeping the people in view who are fitness oriented or who are health conscious, Diet coke is the solution for all their beverage problems. Vanilla Coke was introduced for the people who want a more sweetened beverage & who are looking for vanilla in everything they have.

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•

Cherry & Lime coke is targeted to the people who want something citrus.

Coca Cola launches its product after they study their customers in deep detail & conclude that what their customers really wants from them. Consumers always welcome Coca Cola’s product, as they know that Coca Cola is the one who knows them the best. Cultural factors:

When there is an event or an occasion Coca Cola is always there for its customers. Coca Cola & Cricket:

Pepsi is one of the biggest official sponsors of cricket & is also the official drink of cricket. Coke is there, giving Pepsi a tough time. Coke has sponsored eight Pakistani cricket players. Coca Cola is targeting cricket as it is one the famous & growing all over the world. Coca Cola & Musical Concerts:

When you think of Pakistani Punjabi bhangra, Abrar-ul-Haq is the first name you think of. Coca Cola is the official sponsor of Abrar. Coke sponsors almost all of the concerts of Abrar. In most of the hoardings, billboards & TV commercials of coke, we see Abrar performing & promoting coke. Junoon is a known name all over the world. Coke targeted its customer through music celebrities & ask them to perform in their concerts & commercials. You see Junoon performing a desire of having a coke is rite in you. Coca Cola & Food Mela:

This is the century when food industry is at its boom. Coca cola organizes food melas for the people. In Karachi, coke treated thousands of people by bringing 50 bustling restaurants all together in one area. All those restaurants were offering coke as the only beverage in the food mela. Coca Cola & Basant:

Basant is one of the biggest event in Lahore. Coke was the official decorator of Lahore hired by PHA. Coke has promoted its products so much with relevance to basant that at basant whenever you want to drink something chilled, the first name you think of is Coke. It is there in the mind of the people that “Where there is Basant there is Coca Cola”.

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Coke in Ramzan & Eid:

Eid & Ramazan is one of the holy events of muslims. Coke earns its great revenues in the month of Ramazan & at the time of Eid. It offers new packaging or great discount offers also special offers at Eid. Political factor:

Political factors usually effects company working on the international level doing imports & exports. Coke usually performs its operations in the local market. • • • • •

Coke is not usually affected by government regulations & deregulations as no major changes occur in the food laws. Coke is a very environmental friendly product. From the caps till the labels on the PET bottles, everything is recyclable. Depreciation of currency generally has no major effects on Coke they really don’t do imports& exports on large scale. They try to be local market oriented, they keep at least one company owned plant in a country. Sudden changes in political conditions in a certain country doesn’t effect much on Coke, as it is a purely consumer product. Pressure groups tried to de-market Coke in Pakistan by spreading the rumors that the revenue collected from coke goes to the Jewish lobby.

Economic factors:

Economic factors do affect a company in negative & positive manner. Coke is not an exception here, it is affected if there is inflation in the country & as a result coke increases its prices. Pepsi is always waiting to take a competitive edge. The increased price is a high negative effect on coke. Coke has employed 1800 workers in the last two years & huge amount of revenues have been collected from Pakistan. The economy worldwide was disturbed by the incident of September 11th,2001. The disposable income of the people of Pakistan is increasing day by day & coke that was thought as a luxury good is now becoming a necessity. Social factors:

Coke, a customer oriented company, always take steps for the welfare of its consumers. The recyclable products used in manufacturing coke helps save people’s environment. Coke is also helping the needy & knowledge seeking people with fewer resources by providing them books, scholarships & opportunities to work. Coke

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has launched a program in Gujranwala, Pakistan where it provides basic education to children. Coke has also launched programs to increase awareness about the conservation of water & natural resources, climate changes, waste environment education & recyclable products. Technological factors:

Technology in any field is effecting the development of that industry at a high rate. Beverage industry is also affected by the technological factors but in a positive manner. The new methods of filling the bottles, the refrigeration methods, the disposable bottles, the PET bottles all made so much changes to the Coke which is one of the giants in the beverage industry. Coke is adopting all the new technologies available. Coke is being supplied with the refrigerators, visichest coolers & many more for keeping the bottles chilled, as they claim in the subcontinent "thanda matlab Coca Cola". Coca Cola Company got the technology of dispensers so they give Coke to people that is as fresh from the fountain. Coca Cola Company has opted the technology for the usage of PET bottles, which are also environmental friendly. Coca Cola Company opted the recycling method to keep its environment clean & also to have the soft corner in people's heart. Coca Cola Company is producing new packaging sizes with differentiated packaging with the help of new technology everyday. Demand Management:

Every organization keeps a desired level of demand for its products. Demand for products change timely. At any point there may be no demand, adequate demand, irregular demand or too much demand. Regarding coke there are two different techniques to tackle with the demand management. Increase the Demand:

Companies want to increase the demand for their products. Penetrating in the market by lowering the price, giving discount offers and offering special packages help companies to ultimately increase their demand of the product. Coke follows the same strategy. Company keeps on adjusting its price structure to attract more and more customers. More over special packing of coke are introduced at different occasions and festivals. This helps further in increasing the demand of this soft drink.

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COMPETITIVE ENVIRONMENT Buyers/Customers

Coca-Cola has there major and large customers in the market, food street 60,000 cerates /year, MacDonald’s 40,000 cerates/year and Pakistan Railways who buy 50,000 cerates /year. However, these three customers being large and powerful are in an influential and bargaining position they can demand discount or others facilities like (boards sign/freezers/coolers etc.) and impose a threat to switch to their closest rival and competitor Pepsi. Substitutes

Nestle products like juices, coffee, mineral water etc. and Shezan juices are substitutes of Coke for health conscious people and other fresh juices.

Rivals/Competitors Direct Competitors

The direct competitor of Coca-Cola is Pepsi and that of CCBPL is PCI (Pepsi cola international) there is always ongoing tuff competition between these two arch rivals with Pepsi leading with 54% market share and Coke gradually growing and catching up 36% market share in Pakistan. However on global level the situation is reverse. Both companies often engage in price cut wars, prize scheme wars and sponsorship wars to win over each other customers. Indirect Competitor

These include Nestle and Shezan juices who do not pose a threat to Coke as yet but has the potential to do so as it is exploiting the natural aspect and health issues more and more to make people conscious about physical fitness Coke has launched “Diet Coke” to counter the physical fitness demands.

Buffering and Smoothing

For beverages like Coke the buffering and smoothing policies doesn’t matter and they don’t apply anymore because Coke remains in demand all the year round in festivals, parties, events, meetings sports etc.

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Suppliers

Coca-Cola has authorized suppliers and which do not pose a threat to it. Any how Coke does have a quality check procedures in its plants to ensure that they get the right kind of ingredients from suppliers. For example

If market has low quality carets of bottles by chance, they call their sales mangers to lift up all the stock from the market then inquired from the quality inspector. They take strict notice of that .and don not take materials from that company again if that default is due to the ingredient contains by it. New Entrants

Coca-Cola is not afraid of competing .it doesn’t fear loosing its share to MakaCola or other new entrants. The company management believes that new entrants provoke healthy competition, which will provide Coke with a challenge to hold on to its loyal customers. Besides it will take a lot of effort on the part of new entrants like Maka- Cola, Pak-cola to fully launch its product in Pakistan and capture or even motivate people to switch on to their new product from Coke.

COMPETITOR

ADVANTAGES: -

Brand Name, Symbol, Bottle shape.

Brand name, symbol and bottle shape are distinctive features of Coca-Cola which give it an edge over its competitors. (Even with out name people can easily identify Coke’s, fanta’s, and sprite’s bottle from crowd.) They can not be copied or imitated by others. Diet Coke:

Coca-Cola has successfully addressed to the needs of its health conscious overweight customers with the launch of diet Coke. Its competitor has yet to come up with and counter diet Coke properly.

- 43 Snatching Away Customers:

In the market Coke has been able to snatch large customers like Food Street, Pakistan Railways, McDonald’s, as well as Sponsorship events (basant, eid, concerts etc.) from Pepsi mainly due to its superiority in the following areas. Cost: It

is very economical, justifies performance,

Quality:

No quality compromise, get the best all over Pakistan at any cost.

Innovation:

new ideas for billboards design, sponsorship, changing their slogans time to time, according to the needs of the market. Speed:

On time delivery in all over the Pakistan.

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Market Segmentation & Positioning Strategy

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Market segmentation:

D

ividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes. In evaluating different market segments, a firm must look at three factors: • • •

Segment size Segment growth Segment structural attractiveness and company objectives and resources.

There is no single way to segment a market. The market has to try different segmentation variables, alone and in combination, to find the best way to view the market structure. Target Marketing:

This is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. After evaluating different segments, the company must now decide which and how many segments it will target, because buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Ideally, then, a seller might design a separate marketing program for each buyer. There are three types of market segments. • • •

Undifferentiated marketing. (Mass Marketing) Differentiated marketing. (Segmented Marketing) Concentrated marketing. (Segmented Marketing, small segment) Coke segmentation strategy:

Coca cola servers its products using mass marketing technique, which obviously falls in undifferentiated marketing, and undifferentiated marketing means no segmentation, but there are minor factors on which we can say that the coke segments its products and then targets the customers somehow. These factors are as follows. Geographic Segmentation: Internationally:

Coke segments its products country wise and region wise, here the most important thing is the taste and the quality, it varies according to the taste and the income level of the people in that country, i.e. Third world counties are given low quality taste.

- 46 Climatic:

In coke marketing, main idea is to serve it cold, so we can say that, they focus more on hot areas of the world, i.e. middle east etc and there sale increase in summer. Locally:

In Pakistan the coke segments more in urban and suburban areas as compare to rural. Demographic Segmentation: Age:

Internationally coke has segments the small children introducing tastes like vanilla, lime and cherry, they focus children from 4-12. Coke specifically target more young people than older. Family type:

Coke introduces its economy pack, and that’s how they focus family and groups. “A question to ‘Amer pasha’ Country Manager” Question:

Pepsi is targeting exactly the same market, and music is also a part of their brand image, so where does the differentiation lie in your approach? Answer:

Pepsi’s brand personality is different, ours is about togetherness, about ‘us’. Coke will always show activities, where people get together to enjoy moments of togetherness with our brand. Our research indicates that youngsters love to get together, and it is when they are enjoying themselves, that will consume coke. For Pakistani youth, socializing with friends and family is ‘core’ behavior in their lives. Coke’s brand personality is also about togetherness. Income:

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Coke segments different income levels by packaging. Like for small income people it has small returnable glass bottle, for middle people it has non returnable bottle and for higher income people it has coke tin. Psychographics Segmentation:

All psychographics variables the social class, lifestyle, occupation, level of education and personality, coke segments everyone, but again its there packaging which is different for different consumers.

Behavioral Segmentation Occasions:

Thanks to the Coca-Cola Company the local festival of Basant has become and international event and an identity of the culture of Pakistan. Over the year the annual spring festival of Basant has taken on mega proportions. Previously restricted largely to the walled city, the festivities now flood every nook and corner of Lahore. The credit for making the celebrations available to almost everyone largely goes to The Coca-Cola Company. In 2003, Coke was once again nominated as the official sponsor for the Basant festival bye the parks& horticulture authority, Lahore for the fourth year running. In these four years, the company has played a pioneering role in making the Basant festival a major social and culture event in Pakistan. (“The News” on 50th anniversary of the Coca-Cola in Pakistan.) Benefits Sought:

Sometimes, for the promotion strategy of coke, they introduce prizes in the top cover. So they segment people by benefit sought, i.e. by giving them prizes.

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Positioning

T

he way the product is defined by consumers on important attributes, the place the product occupies in consumer minds relative to competing products.

Price More

Same

Less

More Benefits Same Less

Here if we talk about more price and more benefits, we can discuss Pepsi and Coke. As both are the market leaders and 90% market share of Pakistan beverage industry is secure by them & the rest 10% is secure by the rest. And we can also take Pepsi and Coke as challenger for each other as both of them provides more for same, more for less & same for less. As they are giving their customers more benefits for same price and also more benefits for less price with respect to different packaging sizes. Others colas like Macca Cola, Amrat Cola and Mountain Dew are offering same for same price and same benefits for more price. They are using followers strategy, as they follow the other market leaders and giving their customers same benefits for same price. Others colas like tha bottles (local colas) are offering less benefits for same price and less benefits for less price. As they have no existence in market and their products have no position or we can say very badly positioned in consumer minds.

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PRODUCT STRATEGY

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PRODUCT

STRATEGY

P

roduct: Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Levels of coke as a product

Core product:

Core benefit is that it fulfills the thirst. Actual product:

Design: Pet bottles, returnable glass bottles, economy packs. Quality: Quality differs with respect to country for example. Coca-Cola Can quality that is available in Middle East is certainly different as compared to Coke Can available in Pakistan. Product Classifications:

Coke is categorized as a convenience product, because the purchasing rate is very high and this is the product that is bought very frequently. Individual product decisions

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Brand

Product

Existing

New

Existin g

Line extension

Brand extension

New

Multi-Branding

New brands

Branding: a) Brand Equity:

As far as coke is concerned brand equity for the customers is very high. People are highly brand loyal.

b) Brand Strategy:

The following is the brand strategy of Coke Line Extension:

Line extension occurs when a company introduces additional items in a given product category under the same brand name. For example if Coke introduces new flavors and package size, it will be considered as line extension. Brand Extension:

Brand extension means using a successful brand name lets say CocaCola and then launching new product for example cherry coke. This was an example of brand extension. Multi-Branding:

It means introducing additional brands in the same category. For example CocaCola not only introduced coke as a brand but also sprite and Fanta. Diversification:

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It means introducing new product with the new brand name. It means diversification but this is something Coca-Cola has not adopted for as yet. Product Line Decisions: Product Line Length:

It means the number of products that company is offering. For example Coke, Diet Coke, Fanta , Sprite. Product Line Filling:

Product line filling means that earlier when Coca-Cola started it had only one flavor of coke available and that is classic coke but with the passage of time company filled the product line by adding diet coke, diet lemon etc.

Advertising

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Advertising:

T

he field of advertisement is one area where Coca-Cola has always emphasized. In year 2000 Coca-Cola unveiled the biggest advertising billboards in the history of Pakistan. Each unveiling was marked by entertainment and light shows watched by thousands of people. Similarly in July 2000 Coca-Cola launched its first under the crown promotion by the name of Dream Vacations in which the consumers could collect caps of promotional bottles of Coca-Cola like Sprite, Fanta and Coke. Advertisement Objective:

Type of advertising with respect to product life cycle that Coca-Cola adopts is reminder type. The reason behind this fact is that coke is such a product that is at the maturity level currently so for such a product companies mostly go for reminder type of advertisement so that they can penetrate more and more and same is the case with Coke. Setting of advertising budget:

Coca-Cola sets its advertisement budget on the basis of competitor based budgeting. Major competitor of coke is Pepsi and as coke realizes that Pepsi has increased its advertising budget, straight away Coca-Cola management plans to do the same so that they can compete in advertising department as well. Advertising Strategy:

Before creating advertising message the Coca-Cola Company gives lots of time to the factor that the message must gain customer attention. This is basically called “ Clutter Buster” means that only that advertisement will leave impact on customer mind that has some specialty or uniqueness in it. For example in India Coke current slogan “ Thanda Matlab Coca-Cola” has gained reasonable customer attention. Advertisement Media:

Coca-Cola Company advertises its products mainly coke through electronic media that includes Television, Radio and Internet as well. Moreover leading newspapers of Pakistan are also the targeted by coke for advertising. So we can say that coke not only uses electronic but print media for advertisement as well.

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RECOMMENDATIONS & CONCLUSIONS

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Recommendations:

A

fter completing our project we have come up with recommendations for the coca cola company, which are following.

• •

• • • •

following

Currently In Pakistan there are only two flavor of coke available, company can extend their portfolio by introducing new flavors. According to the survey, conducted by the international firm Pakistani people like less sweet cola drink. So for this coca-cola company should think about bringing a new product for example new diet flavors, in the market to fulfill the local need. Marketing team should try to increase the availability of Coke in rural areas. Now young generation has a trend to drink a coke 2 regular bottles at same time, so providing more satisfaction to them company should introduce ½ liter disposable bottle. Coca Cola Company should think about producing Coke Can locally as well because currently coke Cans are only smuggled from abroad and sold at high price. Company can capitalize on this factor. Currently two plants of coke are being run under private companies, one is in Peshawer and other in Rawalpindi. Company should plan to buy these plants as well so that customers can get equally good quality all over the country. This will help company to maintain quality control.

CONCLUSION

W

e have concluded from this detailed report that despite the fact Cocacola currently occupies the market leadership position overall but it does not guarantee that the company will sustain its position in the future as well. In Pakistan as compared to Pepsi, Coca-Cola has less number of consumers as Pepsi’s market share in Pakistan is approximately 58% where as coke market share is hovering about 32%, hence the conclusion is that CocaCola must enhance factors such as relationship marketing, innovation and technology specially in Pakistan to attain market leader position in this region as well.

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Five forces applied on coca cola

Traditional competition

► Prices of Pepsi brands ► Market share ► Promotional actions of competition

:

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► Light, diet coke, cherry coke a.o variations

Suppliers:

► Price and availability of ingredients on world market ► Quality speed safety traceability, flexibility of supply chain New entrants:

► New “look-a-like” manufacturers (foreign; global competition) Substitute products

:

► Fashionable new drinks, Red Bull, coffee, Belgian beer, ... ► Buyers/consumers: ► Consumer taste, fashion quality of perception, image: Is it “cool”? or: Is it “hot”?

► Combined purchase power of shops, bars, supermarkets