This document is related to marketing and its various concepts. It is about the external environment in which a product or brand operates, the marketing mix and the overall marketing applications and environment.
In order to illustrate the application and how these things affect practically, a real world brand has been selected and all these concepts applied and analysed with respect to the particular brand. The assignment illustrates how marketing principles, tools and methods are employed within an organisation and how effective these strategies and actions prove to be. The brand selected for the purpose of analysis is Coke of which around 260 million products are sold every year in UK.
You are to select a consumer product/brand that has a large market in the UK and research its associated marketing programme and environment.
The Brand-Coca Cola
Coca-Cola is a worldwide global brand that exists in more than 200 countries. It is known for making carbonated soft drink generally known as Coke. Coke has been the top most consumer brand in UK throughout and was the leader in 2009 and 2010 as well (Source: The Nielsen Company). Coke is produced by the Coca Cola Company that also makes drinks for sports, juices etc. Coke is made from the extracts of coca leaves. The origin of the brand is United States. Coke is the industry leader and has the largest market share in United Kingdom and world over (Daily Mail, 2010). The company is involved in both related and unrelated diversification. Coke is a range brand that in turn has a product line under it in the form of diet Coke, Coca Cola Vanilla, Coca Cola Cheery, Coca Cola Zero and also comes in the flavours of coffee, lemon and lime.
The greatest focus on the brand is on the health aspect of its customers and this is the reason that the brand has decided to move towards the production of products made from natural raw material instead of synthetic ones (Daily Mail, 2010). The motto of the brand is to provide its consumers with life full of happiness and refreshing moments. It aims to provide the best value for people’s money in the form of a quality and tasteful product at affordable price. The brand provides employment opportunities to many people around the world thus adding values to their lives and improving their lifestyles and living. The brand has a proactive and learning approach.
Part ‘1’- The product/brand’s macro and competitive environments
The macro environment consists of the overall external environment in which a product, brand or company exits. It consists of all the external forces which affect the performance of a brand or product but are not under control such as the overall political factors, cultural state, environmental factors etc. For this, the PESTAL analysis is used to study, understand and analyse the forces existing in the external environment and their overall affect. PESTEL analysis stands for political, economic, socio cultural, technological, environmental and legal forces that exist in the external environment and are uncontrollable that affect the firm externally. Research has claimed that organizational scanning technique is linked with improved organizational performance (Newgren, et al, 1984; Dollinger, 1984; West, 1988; and Murphy, 1987). The first component of environmental change, complexity is defined as a measure of heterogeneity or diversity in many environmental sub-factors such as customers, suppliers, socio-politics or technology (Lane & Maxfield, 1996:217; Chae & Hill, 1997:8 and Chakravarthy, 1997:69). Since complex and turbulent environments can be desirable, but since many businesses are uncertain about how to cope with such situations, it makes sense to identify ways to handle such environments. Many believe that identifying a causative link between environmental variables and management action is not possible because of the complexity of variables and the chaotic nature of environments (Winsor, 1995:181). However, recent research has stressed the inter-relationship between an organisation and its environment (Polonsky, Suchard & Scott, 1999:52). Organisations co-exist and co-evolve with their environments and therefore are able to influence the environment to a greater extent than previously thought (Brooks & Weatherston, 1997:13). Organisations shape their environments by influencing their industries or collaborating with each other, thereby gaining some control over some part of their environments. The environment is thus not completely determined by external forces, but can also be influenced by the organisation (Anderson, Hakansson & Johanson, 1994, in Ford, 1997:229).
Competitive environment consists of the factors affecting the competitive position of the firm. It consists of the competition a product or brand faces in terms of both; direct and indirect competitors, suppliers, buyers etc. For this, Porter five forces model best suits to analyse the effect and present situation of the competitive position of the firm. There is continuing interest in the study of the forces that impact on an organisation, particularly those that can be harnessed to provide competitive advantage. The ideas and models which emerged during the period from 1979 to the mid-1980s (Porter, 1998) were based on the idea that competitive advantage came from the ability to earn a return on investment that was better than the average for the industry sector (Thurlby, 1998). Porter (1980a) defined the forces which drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business.
You are required to write a report on the product/brand’s macro and competitive environments, so what you have presented is not required. You have written a literature review/essay on PESTEL and PORTER, both covering about 500 words. Not needed. You are only required to go straight into the product’s macro and competitive environments. Even though it is recommended to insert a bit of theory, it does not have to own its own chapter, or be composed of about 500 words in a 3,000 word report.
PESTEL analysis for Coke
Figure 1 on the below shows the forces affecting a firm externally.
Figure: 1 ( shell-livewire.org)
Coke comes in the food category of consumer products. Favourable state policies and a stable government with no war, unrest is necessary for the production of Coke. A sound governmental policy is necessary so that the necessary infrastructure facilities, investment opportunities, skilled labour and manpower, technology advancement, distribution ease, resources and access to raw materials is possible and the necessary plant and production set up can be installed and executed properly. Changes in governmental regulations regarding production, policy regarding transfer of money across countries etc affect the company and all of these are determined by the political state. The ability to enter into strategic alliances also depends on the political conditions set by the state.
A strong economic environment with low interest rates, high GDP growth rate gives boost to any business and is helpful in generating sales and profits. Same is the case with Coke. If the overall economic environment in which a brand exits is healthy, growing and developing, the consumers have high demand, more disposable income and thus they spend more on consumer products which means more business for Coke. This also involves less spending on R&D by Coke and more innovative products can be introduced. It also helps to achieve economies of scale and scope. This also means better chances of business and penetration in emerging markets.
As Coke is a family brand that is meant for people of all ages, gender, occupation, lifestyle etc it is bought equally by individuals and families. Particularly, in countries where there is a broad family structure, it is consumed more and so is by youngsters and teenagers particularly by students. As the world is seeing more and more societal changes for example more women joining the work force, students living outside their homes etc, Coke has seeing tremendous growth as it is a time saving, quality and tasty beverage. People’s view regarding health is also changing dramatically and they are becoming more health conscious day by day. That is why Coke came up with and introduced Diet Coke meant for people who are diet conscious, have some health related issues such as diabetes or are generally more aware about healthy food products. Another evidence of changing societal and cultural aspects is that Coke has decided to come up with alternative to synthetic elements used in Coke. One such element is sodium benzoate which is addictive in nature and is the major constituent of Diet Coke. Research showed that this element is primarily responsible for damaging DNA in of yeast cells and causing children to become hyperactive. In light of increasing pressure, Coke has decided to come up with natural elements and stop suing this particular material in all its products including Diet Coke and Sprite.
Advancements in technology help a business in improving its functions, management, processes, distribution network, marketing techniques etc. It helps save both cost and time and exert less effort. Technology is also a vital part of Coke and has led to advancements in its marketing practices and techniques as Coke now makes use if the internet and indulges in e-commerce, m-commerce etc. which has become a medium of advertising and selling. Technology also helps in effective supply chain management for Coke and integrates all the functions and processes of the brand. Technology also helps to innovate and make products more appealing and attractive to customers. Technology has led to introduction and advancement in machinery which has enabled Coke to produce more number of products and thus fulfil the increasing demand conditions. Coke CCE UK employs state of the art technology which produces quality products in no time. It produces Coke cans faster than bullets come out a machine gun.
Every brand has to look up towards the safety of the society and environment it operates in. It has to adhere to universal environmental laws and regulations. Coke is no exception in this regard and works actively towards the betterment and protection of society. The production of plastic bottles and cans are an example of this as they are bio degradable and easy and safe to dispose off. It also participates in corporate social responsibility and conducts various activities that focus on creating awareness, education, improving social welfare and providing facilities and benefits to the people and society and climate protection. That is why it pays special attention to the need and importance of recycling and disposal of its products. In order to preserve the natural resources and climate, Coke has constantly been reducing the amount of water used in its products in an effort to preserve water.
Like all other industries, Coke also has to adhere to legal procedures and regulations set by the government. Without abiding to these laws and regulations, Coke cannot carry out its business. These include accounting principles, transparency and reporting standards, taxation laws, and foreign firm restrictions as all these form part of the legal environment and is mandatory for all firms operating in the industry to abide by. So changes in any of these things also affect Coke and the way it does its business.
There is no actual evidence, or reference that supports any of your analysis. They seem like something a non academic would write by having known Coke all their life. In order to present a good quality work, you must present “ good range of issues identified; evidence of clear thought and subject perception.”, When writing such, I would recommend looking for actual evidence of PESTEL from the company’s annual reports. There is always talks on their political issues (you should have spoken about Saudi there), and when doing such, you should reference appropriately, so the writer knows your arguments are well justified and have been obtained from somewhere.
Porter five forces model for Coke
This model is used to access the competitive position of the brand and see where it stands relative to its competitors.
Existing rivalry among firms
Rivalry among existing firms is high as Coke has both direct and indirect competitors. The industry is generally regarded as duopoly and the small firms are not significant. The biggest competitor of Coke is Pepsi which enjoys the same kind of image, brand loyalty, customer base and geographic reach as Coke. Both of these brands compete head to head with each other and thus rivalry is intense among them. They mostly compete on the basis of differentiation and advertising and not on pricing strategies. Competition between them is at a global level as both are multinationals.
Figure: 2 below shows the five forces model.
Figure: 2 Source: Marketingteacher.com
Bargaining power of buyers
The major buyers of Coke not only include end customers who buy from retails stores, vending machines etc but also include restaurants, fast food chains, cafes in schools, colleges and universities. Thus, the bargaining power of buyers is high as there are many buyers of the product.
Bargaining power of suppliers
The bargaining power of suppliers is low because the raw materials that Coke requires are general and easily available such as sugar, caffeine etc. Switching costs from one supplier to another are also very low. Threat of forward integration is low as well.
Threat of substitute products
Threat of substitute products is high in the form of both direct products and in the form of other non alcoholic drinks like; Pepsi and indirect substitutes such as water, tea, juice, energy drinks, coffee etc. Switching costs are also low. Also, all the products are almost the same in terms of value and pricing. Thus, product for product substitution, generic substitution and related substitution are all there in this industry.
Threat of new entrants
Threat of new entrants is low due to several barriers to entry. Firstly, it involves huge capital investment setting up bottling plants, machinery etc. The market is already mature and saturated with market leaders. Coke has achieved economies of scale and scope. Its ingredients are rare, valuable and difficult to imitate. Customers are very brand loyal and it’s difficult to have the same brand image and equity as Coke. Coke has agreements with distributors and suppliers in every region and no other company can enter into agreements with them. Also, for a new entrant it’s not easy to spend so much on advertising campaign the way Coke does as it has a strong financial muscle.
Just like I wrote in relation to PESTEL. You show that you do have an understanding of relevant theories as they have been incorporated accurately. However, the main issues you are analysing are not necessarily backed up with evidence, which may then affect the student. How do you know they have substitute products, except for what you can readily think ofHow do you know they are actually substitute productsWho told you soWhat new substitute products have come up recentlyWhat recent issues have they had with suppliersWhat are the current strategiesWhere are the referencesWhat are the new most recent threats to Coke?
Part ‘2’ – The marketing programme elements (marketing mix elements) currently employed
Marketing mix or the 4 P’s or 7 P’s of marketing refers to the tactics and strategies of product, price, placement, people, processes, physical evidence and promotion of a brand. These are all part of the marketing plan and help create brand image, equity and loyalty among the target market segment. It defines how a product or brand is positioned. traditional market research and traditional marketing mix models are too simplistic to understand complex marketing situations, as such models assume linear relationships between mix variables and the resultant outcomes (McGlone & Ramsey, 1998:248 and Tedesco, 1998:5). Since the simplistic approaches recommended by traditional theories can be dangerous, marketers should consider the overall environmental position when designing their strategies and adopt non-traditional marketing methodologies (Wollin & Perry, 2004:568). The classic 4Ps of marketing have been questioned as inadequate (Van Waterschoot & Van den Bulte, 1992:91), and developed further into the 7Ps of Booms and Bitner (in Zeithaml & Bitner, 2003:24) and of Christopher et al. (in Palmer, 1994:32). However, the 4Ps is still the most common model of the marketing mix (e.g. Kotler & Keller, 2006:19)
I have a feeling that if I did have the time to count, the number of actual theories (that were not requested for) would exceed the actual company analysis (that was requested for).
Marketing Mix of Coke
Coke is a non-alcoholic, soft carbonated drink that is made from the extracts of coco leaves. It has a distinguishing taste and is of great quality and taste. Apart from the regular Coke, it also has other variants such as Diet Coke, Coca Cola Vanilla, Coca Cola Zero, and Coca Cola Cheery along with special types of Coke that comes in lime, coffee and lemon. The concentrate which is the sole of the product is manufactured by the company itself and then sold to licensed bottlers who later produce the finished product by making a mixture of the concentrate, sweeteners and water. It is then poured into cans and bottles and sold. The brand name is well known, famous, recognised and recalled by virtually everyone in UK and around the globe.
Figure: 3Source: marketingteacher.com
The product’s logo, design and colour are all well known and people associate themselves with this brand. It’s a symbol of lifestyle. The brand is among the highest equity brands. The product keeps on innovating to maintain its attractiveness and appeal. It comes in glass and plastic bottles as well as cans of different sizes and capacities in order to suit the needs of everyone be it individuals or big families, parties etc. Coke even comes as Coke Mini which is a can of 7.5 ounce. The brand is known for its great quality and taste. It gives special attention to the health and safety aspect of its consumers and that is why is moving towards the use of all natural elements used in production. The introduction of Diet Coke and focus on recycling and safe disposal of the product are also given great importance. The design of the bottle has a great appeal and is known as the Contour bottle. It is distinctive in nature and looks smart, hip and trendy. It serves to fulfil the physiological or basic needs of its consumers. Figure 3 above shows the elements of a marketing mix.
Coke is seen to be involved in competitive pricing in order to better compete with its competitor Pepsi but it does not compromise on quality. The price of Coke is fixed but it occasionally comes up with seasonal discounts and pricing, bundling, volume discounts, etc in times of holiday season or other such events. Coke does not indulge in discriminatory pricing however it offers wholesale pricing when selling to fast food chains such as McDonalds, restaurants etc.
A distribution channel is a non-linear system that can be stable, periodically oscillating, or chaotic (Priesmeyer, 1992:79). Distribution network of Coke is very extensive and that is why it is available everywhere. It makes sure that Coke is easily available to everyone by making use of supermarkets, retail stores, vending machines, restaurants etc. The company has contracts with distributors and suppliers and occupies the best shelf space in every store and market. It can be found everywhere. It works all over the globe by making use of franchising.
Apart from the Promotion subchapter below, no other marketing mix element has been reported with actual proof. Even the promotion subchapter below does not contain any references, therefore where did you get your information fromThey all seem to be based on the understanding of the writer and nothing else. This is an academic report, and as such needs market report. For instance Datamonitor, Mintel or KeyNote would have been very crucial in understanding the soft drinks market which Coke operates in, and thus assist you in conducting a better analysis.
Promotion has been the biggest success factor behind Coke. Coke spends heavily on advertising and is involved mainly in above the line promotion. Initially modes of advertisement were newspapers, radio, billboards and providing customers with free samples and coupons of Coke. Today, Coke relies mostly on television advertising as it has both high frequency and reach and involves both audio and visuals. Coke always comes up with new and innovative adverts and makes special advertisements for every region it operates in that are suited to the local culture and needs. Coke also has brand ambassadors and spends heavily on promotion. Coke makes use of glittering generalities which are very persuasive in nature. It is involved in the sponsorship of many events particularly related to youth and sports. The major events sponsored by Coke include Olympics, FIFA World Cup, Cricket World Cup and The Football League. Many movie and television serial producers also promote Coke in their productions.
Part ‘3’ – Your fully justified recommendations in respect of the revised marketingprogramme elements needed to improve market size and/or profitability
In light of the above analysis, there is no doubt that Coke is one of the biggest, strongest and most successful consumers brands present not only in UK but everywhere on this planet. It has a huge and loyal customer base and is the market leader.
But there are certain things that Coke needs to focus and improve upon in order to be more productive, efficient and earn more profit margins.
Firstly, it needs to work upon its brand image in certain countries such as Saudi Arabia and the parts of Middle East. In these parts of the world, Coke is banned and boycotted as Coke keeps on making timely investments in Israel. These countries only allow Pepsi to be sold within their premises and thus Coke is losing on a very big chunk of the market and Pepsi is making its strong hold there.
Secondly, it should focus more on its distribution channels and make them wider and more effective as Coke is still not widely and easily available as Pepsi.
Thirdly, it needs to work more on its advertisement campaigns as Pepsi has an edge over Coke in this aspect. Coke should also advertise and sell more through online channels and advertise on social networking websites such as Twitter, Facebook etc.
The company should make sure that the consumers are well aware about all its latest promotions and activities such as bundling offers, discounts, special offers, price cuts, timely offers etc. The company should also revise its segmentation strategy and form even small target market segments so it can better and effectively understand the drastically changing needs and wants of its customers and be able to fulfill and satisfy them.
Coke needs to diversify into other conventional and non conventional products thus engaging both in related and unrelated diversification (non-carbonated products) so that it has a broad and diverse portfolio of products and it can do this easily by making use of its brand name and equity.
Establishing a feedback mechanism is also very necessary.
Coke needs to pay special attention to the markets in which its performance is declining such as Thailand and Indonesia and should try to penetrate more in the emerging markets which are the biggest market for consumer goods today.
The requirements were for “Your fully justified recommendations in respect of the revised marketingprogramme elements needed to improve market size and/or profitability” And as such, each recommendation you have provided should have been backed up with actual problems, and references to these problems. These problems should have been highlighted as the major threats of your market research, and not just brought up in the recommendations chapter. One of your recommendations is “establishing a feedback mechanism is also very necessary”. How is that justified in anywayWhy is it essential to establish a feedback mechanism, who said soAnd what makes you feel it is important. If it is you, then why should it be an actual recommendation for an organisation. There is a reason why we only have 14 writers out of up to 200 applications, and it is because we need to trust everyone to provide the best quality written work. I cannot risk damaging the reputation of our site Essays by sending this work to the client. I would hate to think of the consequences.
There is no doubt that Coke is one of the largest and most successful consumer brand in UK and globally. It occupies the largest market share and deals with external and internal pressures effectively. Its marketing plan and mix is very good and has helped to enable Coke to stay competitive and compete with Pepsi in the best possible and efficient manner.
As everything has pros and cons, a bright and dark side, some advantages and disadvantages; same is the case the Coke. There are some aspects on which Coke lags behind and they require its immediate attention if Coke wants to stay on the top and further increase its market value, market share and size and increase in profitability.
Aaker,D. (1991), Managing Brand Equity: Capitalizing on the Value of a Brand Name, Free Press, New York, NY.
Aaker, Jennifer (1997), “Dimensions of Brand Personality”, Journal of Marketing Research, 34 (3), 347-356
Amirkhan, J.H. (1990), “A factor analytically derived measure of coping: the coping strategy indicator”, Journal of Personality and Social Psychology, Vol. 59 No. 5, pp. 1066-74.
Batra, Rajeev, Donald R. Lehmann and Dipinder Singh (1993), “The Brand Personality Component of Brand Goodwill: Some Antecedents and Consequences” in Brand Equity and Advertising, ed. David A. Aaker, Alexander Biel, Hillsdale, NJ: Lawrence Erlbaum Associates, 83-96.
Ben Delaney, (2007), The Marketing Mix.
Chandy, R., Tellis, G. J., MacInnis, D., & Thaivanich, P. (2001), What to say when: Advertising appeals in evolving markets. Journal of Marketing Research, 38, 399–41
Dacin, P.A. and Smith, D.C. (1994), “The effect of brand portfolio characteristics on consumer evaluations of brand extensions”, Journal of Marketing Research, Vol. 31, May, pp. 229-42.
Davis, F.D. (1989), “Perceived usefulness, perceived ease of use, and user acceptance of information technology”, MIS Quarterly, Vol. 13 No. 3, pp. 319-39
Doyle, Peter (2001), Marketing Management and Strategy, 3rd edition, New York.
Fernandez, Colin (2008,. “DNA Damage Fear”. London: The Daily Mail.
Gerard J. Tellis. (2006), Modelling Marketing Mix, University of Southern California.
Hanssens, Dominique M., Leonard J. Parsons, Randal L. Schultz. . Market Response Models: Econometric and Time Series Analysis ,2nd ed. Kluwer Academic Press, Boston, M,2001.
Michael Porter, (1990), The Competitive Advantage of Nations.
Porter, Michael E.(1980) Competitive Strategy. New York: Free Press
Tellis, G. J. (2004). Effective advertising: How, when, and why advertising works. Thousand Oaks, CA: Sage
Terwiesch, C, 2005, Product Development as a Problem-solving Process. in S. Shane, Blackwell Handbook on Technology and Innovation Management, forthcoming
Simon , Kucher & Partners (2004), Power Pricing, WHU Koblenz.
Singh V., K. Hansen, R. Blattberg. 2006. Market entry and consumer behaviour: An investigation of a wal-mart supercenter. Marketing Sci. 25(5) 457–476.
Shankar, V., R. Bolton. (2004), An empirical analysis of determinants of retailer pricing strategy. Marketing Sci. 23(1) 28–49
Rajendran, K. N., & Tellis, G. J. (1994). Is reference price based on context or experienceAn analysis of consumers’ brand choices. Journal of Marketing, 58, 10–22
Wen-fei L. Uva, (2001), Smart Pricing Strategies, Department of Applied Economics and Management, Cornell University