Market Analysis of Coca Cola

Market Analysis of Coca Cola Jump to: PEST Analysis | SWOT Analysis Coca-Cola, corporation nourishing the global community with worlds largest selling soft drink since 1886. Its nations top soft drink brand, with the best bottling network. It is the largest marketer of non-alcoholic beverages in the world. In India, Coca Cola was the leading soft drink till 1977 when govt. policies necessitated its departure. It returned to India in 1993 after a 16 year hiatus and made significant investments to ensure that the beverage is available to more and more people, even in the remote and inaccessible parts of the nation. In the minds of worlds consumers the brand has assumed an iconic status. Coca Cola was initially advertised as a remedy for headache and exhaustion. It has been advertising on television for 50 years. COCA COLA INDIA (CCI) Leading player in the Indian beverage market A fortune 500 company in India (73rd position) Coca Cola India with PepsiCo forms Duopoly Includes 24 company-owned bottling operations Came back in 1993 and acquired local brands (Ibef, 2010) (Coca Cola India, 2010) 2. COMPANY BACKGROUND Marketing Coca Cola in India-The post-liberalization period in India saw the comeback of Coca Cola but Pepsi had already beaten Coca-Cola to the punch, by creatively entering the market in the 1980s period by way of a joint venture. In a way Pepsi benefited the Coca Cola by developing the Indian soft drink market in the early years of liberalization .The only disadvantage was that CCI in 1993 applied the American way of life approach in selling its product on the contrary, Pepsi targeted the youth. (Coca Cola India, 2010) 3. The Marketing tools: The Marketing Environment 3.1-The Macro Environment- PEST Analysis of Coca Cola (P)OLITICAL ANALYSIS- Political variables have very little effect on the CCIs selling and production behavior. There are few exceptional things like the environmental protection laws they somewhat effect the industry of coca cola. The state government of Kerala released a report on March 22, 2010 holding Coca Cola responsible for causing pollution and water depletion in a state of Kerala and made it liable for Indian rupees 216 corer for damaged caused as a result of the companys bottling operations. To deal with this problem the company has made proper adjustments in plant and applied the proper way of wastage management. The companys production also gets effected by the elections and military take over because in the day of election any countries production in any field is declined. (E)CONOMICAL ANALYSIS- Inflation in any country is not good from its production point of view. So, coca cola is no exception. Its impact on coca cola is highly negative. In a country like India where there is a high rate of unemployment, CCI directly employs approximately 6,000 people and indirectly creates employment for more than 1,25,000 people in related industries. Its among the countries top investors having invested more than US$ 1 billion in India in the first decade and further pledged another US$ 100 million in 2003 for its operations. (S)OCIAL ANALYSIS- CCI in partnership with the NGO, Bharat Integrated Social Welfare Agency (BISWA) has launched a program to build awareness on micro-nutrient malnutrition (or Hidden Hunger) in the bottom of the socio economic pyramid population in India. They are constantly working to keep their product environmentally and socially beneficial to the communities they serve. Their community water programs are designed to support healthy watersheds and sustainable programs to balance the water used throughout their production process. CCI has been awarded the Social and Corporate Governance Award for Best Practices in Corporate Social Responsibility in 2009. All India Division COBOs are now ISO 14001 certified. (T)ECHNICAL ANALYSIS- The CCI uses the more advanced technology in its production process. Computers have become the basic needs these days and it is giving the way of other industries to come to new technologies and into a new world of business. Computers can increase the efficiency of its business and the latest coke vending machine will now employ the use of (user friendly) touch screen technology. SWOT ANALYSIS OF COCA COLA (S)TRENGTHS Brand Ambassadors-focused target marketing by launching appropriate brand ambassador for the target market. Diverse Product Portfolio. Extremely Recognizable Brand. Improved Quality Control. Heavy Investment. Bottling System. (W)EAKNESSESS Reduced Consumer Purchasing Power. Issues for Health Care. Environmental Destruction. (O)PPORTUNITIES To serve a large geographic diverse area Brand recognition Sponsorships (T)HREATS Substitutes Heath Consciousness Consumer preferences Stiff Competition 3.2-The Micro Environment The micro environment represents those elements over which the marketing firm has full control in order to reach its target market i.e. the 4 Ps, which it can use in order to gain information that will better help it in its marketing operation. MAJOR COMPETITORS Coca cola major competitors is Pepsi as its portfolio includes- PEPSI 7UP NIMBOOZ MIRINDA SLICE MOUNTAIN DEW After CCI it covers the 2nd largest market share % of the soft drink industry in India (Pepsi Co India, 2010) Consumer Behavior- The two factors that dictate the Consumers decision-making process are involvement and perceived risk. The consumer will follow the habitual decision making steps while purchasing coca cola. Habitual Decision Making Product Coca Cola Level of Involvement Low ( unimportant decision ) Perceived Risk Low ( simple , low-cost product ) Information Processing Respond to environmental cues ( shop signage or displays ) Learning Model Behavioral learning ( ad shows product in beautiful setting , creating positive attitude ) Needed Marketing Action Provide environmental cues at point of purchase , such as product display Fig 4.2 extended problem solving versus habitual decision making (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg151) In India the perception of the people regarding coca cola is that, they consider it as a drink which can quench their thirst as well as creates a sense of belongingness. Indias physical environment is suitable for the sale of soft drinks moreover during festive time sales are doubled. Thus the need of buying a soft drink falls in the first and third level of Maslows Hierarchy of Needs (Exhibit 1.) Situational Influences Physical environment Time Internal Influences Perception Motivation Learning Attitudes Personality Age groups Decision ProcessLifestyle PURCHASE Social Influences Culture Subculture Social class Group memberships Fig 4.4 Influences on Consumer Decision Making (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg151) SOCIAL MEDIA NETWORKS- Different aspects of social media, which CCI uses in order to communicate with its consumers. This in turn will increase Brand awareness Positive image for the brand 4 THE ORGANISATION MARKETING MIX- 4.1-PRODUCT- http://www.coca-colaindia.com/media/images/brand_logos_all.gif Major Brands of Coca Cola- Coca Cola Diet coke Thumbs Up Sprite Fanta Limca Minute Maid Pulpi Orange Maaza Kinley Minute Maid Nimbu Fresh Georgia Burn http://cdn.i.haymarket.net.au/Utils/ImageResizer.ashx?n=http%3A%2F%2Fi.haymarket.net.au%2FNews%2FCoca-Cola+India.jpegw=460 The product strategy includes decisions such as product design, packaging, branding, etc. Coca Cola brand consists of different packs and flavor. They promote all brands available in brand pack under their product strategy. 4.1.1-Packing Strategy Coca Cola products are available in different packing, in order to capture each and every segment. GLASS PET CAN FOUNTAIN 200ml, 300ml, 500ml,1000ml 500 ml, 1.5 L, 2 L ,2.25 L, 300 ml + 100 ml 330 ml Various Sizes 4.1.2 -THE STRATEGY PLANNING PRODUCT EMPHASIS EXISTING PRODUCTS NEW PRODUCT Existing MarketMarket penetration strategy (Coca Cola) Market EmphasisSeek to increase sales of existing products to existing markets Product development strategy (New Launches e.g. Burn) Create growth by selling new products in existing markets NEW MARKETS Market development strategy Introduce existing products to new markets Diversification strategy Emphasize both new products and new markets to achieve growth Fig 2.4The Growth Strategies (Solomon, Marshall, Stuart, Barnes and Mitchell, 2009, Pg 70) New Launch- CCI launches Burn, Minute Maid Nimbu Fresh and Maaza Milky Delite http://popsop.com/wp-content/uploads/maaza_milky_delite_01.jpg https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrmf1p_IEgs0LtGTamPASimXz4bVIBGmYI7jL-jQDG2OWfq-7_b2OFTya5XJq_rFj6UohPFb1-tn92FMIR1kdelHLal3nQexZUzfDZ6h4xZb58e8WfxWaGskXQtfaxLfx0Y7tKZ-2NA123/s1600/burn.jpg http://www.tribuneindia.com/2010/20100409/ls15.jpg 4.2- PRICE- Firms Pricing Strategies should be based on costs, demand or the prices of competing products. CCI, some time back, had initiated the first cola price war by launching small 200ml packs priced at Rs 5. On the other hand its competitor Pepsi India also reduced its prices of 300ml pack from Rs.8 to Rs. 6. CCI was able to reduce its price from Rs 7 to Rs 5 because it acquired a big glass bottle manufacturing facility which enabled it to offer small bottles at reduced process. PRICE STRATEGY- DIFFERENT PRICE IN DIFFERENT SEASON India is a country with diverse season, summer season is supposed to be a good season for beverage industry. During winters they reduce their prices to maintain their sales and profit. They usually reduce the prices of their pet bottles or 1 litter glass bottle. Even during festivals they offer different price schemes. 4.3-PLACE- 4.3.1DISTRIBUTION STRATEGY- Events- Cricket Matches, FIFA World Cup, World Cup Hockey, Common Wealth Youth Games, Cultural Festivals, Concerts etc. Urban Distribution Network Consumer Retailer Spoke Hubs Bottling Plant Rural Distribution Network 4.3.3-CCI KEY LOCATIONS (Coca Cola India, 2010) 4.4:- PROMOTION CCI follows the Pull Promotion strategy Coca Cola is the official beverage partner of the Common Wealth Games 2010 (CWG), because of which it enjoys exclusive marketing and supply rights for the beverage across its portfolio. CCI has undertaken the largest ever free product sampling program called Delhi celebrates a cultural fiesta where 5000 artists will perform. The companies association with the commonwealth games will provide the opportunity to enhance its brand value. These games will help consumers in connecting with the brand. When product is seen more in the market, they have good sales too because according to the experts the product which is seen more in the market sell more too. Types of Media which CCI uses Print Media Posters and Stickers Material TV Commercials (TVCs) Billboards Holdings Banners Celebrities Getting shelves Sales promotion Placing the product at an eye catching position in the shops UTC scheme (Under the crown scheme) To keep the products in nice condition, company provides-Freezers, display racks, etc Facebook, Twitter, MySpace, YouTube, etc- CCI have their own and separate brands account on these social networking sites, where they directly gets the opinion of todays generation about the existing and new products. http://htmlimg2.scribdassets.com/7lva67i2vf9rsu8/images/19-f744e60085/000.jpg (Google, 2010) 5. THE SEGMENTATION, TARGETTING AND POSITIONING STRATEGY- 5.1-SEGMENTING STRATEGY CCI focuses on Demographic segmentation 1. Generational marketing CCI targets the youth of the country. Coca Cola started using Indian themes in order to appeal the Indian customers. They wanted to communicate with the youth. Considering that the Indian youth respected traditional Indian values coca cola created advertisements showing college students valuing their culture. This connection helped coca cola in creating its own personality with which Indian youth could relate itself and it resulted in the suitable positioning of the brand. 2.Gender- CCI have different product range for different genders like for males there is Coca Cola, Thumps up, for females they have Fanta, for kids they have Maaza. 3. Rural Market- The majority of Indian population i.e. (74%) lives in numerous villages scattered throughout the country. Estimates show that rural India accounts for 58% of Indian rural disposable income and 41% of middle class. 5.2-TARGETING STRATEGY Coca Cola commercials basically target on young generations, because they want to represent Coca Cola with the youth and energy. Rural Market is also a very attractive target- In order to reach to the rural India, CCI had also launched television commercials targeting at rural population. This market covers 80% of Indias new coke drinkers. 5.3 -POSITIONING STRATEGY CCIs Initiative in Indian Market- 5.3.1- Urban India- In order to target the metropolitan areas and large town audience, CCI captured the theme of Celebration and Joy of peoples, they showcases increasing social and economic status of the people in their television commercial (TVCs). This theme they applied for positioning their brand in urban market. Life ho toh aise (life as it should be) was very popular and successful tagline. 5.3.2.-Rural India- Under it they have tapped the local entertainment like fairs and local festivals They increased their TVCs on Doordarshan (the local channel), designed to target rural customers. Its all rural marketing initiatives were well supported by TVCs. In 2002 CCI launched Chota Coke (Mini Coke) at Rs 5considering the pocket size of rural consumers. CCI communicated this price cut message with the help of TVC featuring leading Hindi movies star Amir Khan in rural settings to enable proper brand association because large number of people inspire to emulate these celebrities. It will help in creating the right identity for the brand. Its tagline gained a lot of popularity Thanda Matlab Coca Cola (Cold Means Coca Cola) (You Tube, 2010) http://www.thaindian.com/images/stories/aamircoke.jpg Exhibit: Thanda Matlab Coca-Cola Advertising Campaign 6.-RECOMMENDATIONS- New Strategy- Rural market (MARKET IS CREATED AND NOT BORN) Rural consumers are inclined more towards the home made drinks like Lassi, lemonade etc. So, we need to target them when they are out of their home and will need something to quench their thirst. Rural India with the average income of Rs 100/day, consider coca cola whose average price comes around Rs 10, as a luxury product .Moreover soft drinks categories are undifferentiated in the minds of rural consumers. The good news is that the rural consumer market which grew 25% in 2008 is expected to reach US$ 425 billion in 2010-11 with 720-790 million customers. 1. As this market is not fully utilized, there lays a huge scope to reposition the brand in a more effective way to prove that CCI is the suitable brand meant for rural customers and there is a need to shift it from luxury item category to every day product category. 2. An appropriate marketing strategy is required, which is only possible by listening to consumers needs and requirements. Advertising Strategy- Looking at the tough competitors there is a need for aggressive marketing campaign. Announce a new campaign for CCI. In order to connect with the rural population, CCI should increase social welfare activities. Prior creating the ad ,following points should be kept in mind- Selecting an appropriate brand ambassador with which the rural population could relate itself with. Brand promotion by targeting folk and traditional culture. To think local we have to act local. Distribution Strategy- There is a need to extend CCIs distribution channel especially in rural sector. Creating an Extended Distribution channel available all over India, it will provide support to TV commercials. Branding Strategy- There is a need to restructure the communication channel, which will bring open and honest views of the people (public, media, employees, suppliers, state and national government, channels). It is the only solution to resolve the issues in a way that it benefits the Indian consumers as well as CCI.