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Executive Summary:

The following marketing plan forms the basis for the introduction of an innovativenew product by the Coca-Cola Company. The analysis allows us to outline the best strategiesto fol low

for the achievement of the company’s strategic goals. “Bubble Buzz” wil l be marketed as aunique functional drink while striving to reinforce the company’s status asthe leader in innovationand successful product launches.The marketing strategieswil le n a b l e t o r e a c h a m a r k e t s i z e o f a n e s t i m a t e d 8 , 6 8 8 , 3 0 0 p e o p l e ( t

a r g e t e d ) w i t h a forecasted sa les growth prospect of 7.3% over the next 4 years

($243,029.47 profits),while satisfying the needs of the sti l l-unserved market for ready-to-dr ink bubb le tea. Success will be reflected by a sizeable capture of market shares within this market,w h i l e s t r a t e g i c a l l yc a r r y i n g t h e c o m p a n y u p t o t h e t o p s p o t a s t h e m a r k e t l e a d e r i n t h e fu

nctional drinks segment of soft drinks. Export potential will be considered in China.

Brief description of the company The Coca-Cola Company’s core undertakingist o b e n e f i t a n d r e f r e s h e v e r y o n e i t r e a c h e s . Founded in 1886, we are the world’s

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leading manufacturer, marketer, and distributor of non-alcoholic beverage concentrates andsyrups, which are used to produce nearly 400 beverage brands that make up for our wideportfolio. Our corporate headquarters areestablished in Atlanta, and we are holdinglocal operations in over 200 countries aroundthe world. O ur activit ies cover all sectors of the beverage industry. We are the secondleading player in functional and Asian specialtydrinks, while ranking number one invalue for the ready-to-drink tea sector (ref.1, p.1).3

3.94 liters, which represents a 4.0% increase compared to 1999 (ref.3). The growth of this particularmarket is largely due to a slow shift in consumer trends.Trends:

Through the early 1960s, soft drinks were synonymous with “colas” in the mindof consumers. In the1980s and 1990s, however, other beverages (from bottled water to tea) became morepopular. Coca-Cola and Pepsi responded by expanding their offeringsthrough alliances (e.g. Coke & Nestea) and acquisitions (e.g. Coke & Minute Maid), butalso by focusing efforts on portfoliodiversification. Today, while the soft drink industry’svalue has increased in 2004, the volumesales of carbonated soft drinks has declinedduet o a l a r g e p r opo r t i o n o f c on sume r s who a r e o p t i ng f o r t h etrend towards healthier alternat ives in the funct ional dr ink segment (energy dr inks,smoothies, milk & juicedrinks, sports drinks) as well as bottled juices and water (ref.5).Compani es ha ve been actively engaged in new product developments in order to counter the growingconcernsabout negative health impacts of high-fructose drinks, but also to increase the demand inamarket where product offerings are quickly maturing (ref.4). New flavor introductionsand health-

conscious formulations have been launched in an attempt to offset the declinein carbonated soft drink sales (ref.6). The functional market is expected to show sustainedg r o w th a nd c o n s um e rin t e re s t in the fu tu re yea rs as con sum pt i on sh i f t s to t re nd i e r , healthier and moresophisticated products (ref.7).

Profitability & future growth potential: In 1993, Concentrate Producers earned 29% pretax profits on their sales, while bottlers

earned 9% pro fit s on the ir sal es , fo r a tot al industry profitability of 14%. While the functionaldrinks sector only accounts for 3.7%of the total soft drinks sales in 2004 (Appendix B), estimates are

forecasting a growth of 7.3% in sales and 11.0% in volume consumption by 2009 (ref.4).5

SWOT ANALYSIS(Strengths and weaknesses, opportunities andthreats)S t r e n g th s W e a k n

e s s e s

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Brand strengthEffective stride in new marketsResults of operationsStrong existing distributionchannelsReliant upon line extensionsReliant upon particular carbonated drinksBrand dilutionEntrance intodifficult non-core categoriesSaturation of carbonated soft drink segment

O p p o r t u n it i e s T h r e at s

New product introductionsBrand is attractive to global partnersStrong competitionPotential healthissuesFree tradeExplanations in APPENDIX CCOMPETITION

Coca-Cola’s top competitors for thesoft drinks industry are PepsiCo (31.6%) and Cadbury-Schweppes (15.8% of mar ket ), wh ich combined ,

represent about 48% of the total market (ref.9). Coca-Cola is leading with 43.7% of the total soft drinksmarket.In the

Functional drinks sec tor, Peps iCo is t he curre nt market leader w ith 60.5% of the market shares in 2004. Coca-Cola Co is second with 32.8% (ref.2, see Appendix D1). BubbleBuzz will launch into a currently unserved

subset of that market (RTD “Ready-To-Drink”Bubble Tea), which is until now unexisting. It is anticipated

that the following brands could potentially compete with Bubble Buzz in the functional drinks market:Brisk, LiptonI cedTea , Sobe (owned by Peps iCo ) , a s we l l a s S n a p p l e ’ s a n d H a w a i i a n P u n c h (ow ned b yCadbury/Schweppes). Bubble Buzz also creates a potential situation for cannibalism withCoca-Cola’s very own brands of iced tea and other functional drinks.The current market fortraditional Bubbl e Tea is fra gmented, sin ce the dis tri bution is restricted to local outlets and selling pointssuch as counters and small Bubble Tea shops inscattered locations across Canada. However, directcompetition from these local players isnot anticipated, since the marketing roll-out will initially emphasizeon productawarenessa n d b o t h s a l e s c h a n n e l s d o n o t r e a c h o r s e r v e t h e

s a m e m a r k e t ( r e t a i l i n g v s .6

counter/restoration). A strong distribution system already exists with Coca-Col a, si nc e partnerships and channels are already in place. This will facilitate the product’s reach into

itstarget market. Further data concerning competing market shares and distribution channels areavailable in Appendix D(1-3).

Barriers toentry:B u s i n e s s p r a c t

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i c e s M a n u f a c t u r i

n g

Due to the number of competitors, it will be hard to preventimitation behaviour (especially from PepsiCo)

Risk of competing with emergingprivate labels (e.g. President’s Choice)

Given the wide array of brands(

saturation

in the soft drink market), it becomes a challenge for Bubble Buzz tostand out

Producing bottled Bubble Tea requiressizeablecapital investments for thespecific needs of the manufacturing chain(from ingredients to final packagingspecifications)

The marketing campaign to make thisunknown brand popular requires morepromotional expenditures than atraditional brand extension

TARGET MARKETSegment identification: RTD (Ready-t o-dr ink) bott led Bubble Tea, to be establi shed within the Functional Drinks sectorSegment needs: The p r oduc t w i l l c a t e r t o b o t hphysiological needs (hydrating andnutrit ional value) andsocial ne ed s ( pe rc ep t i on of a s oc ia l , fu n d r i nk wi th a s en se of belonging within peerconsumer groups) – (ref.11, p.127).Segment trends: The current trends include a shift away from junk foods and carbonateddrinks, a growing interest forhealthier / beneficial products for the “mind and body” (ref.10), the trend towards the availabil ity

of on-the-go products fo r those wit h an ac ti ve lifestyle, as well as the trend for personalizationthrough customization (or for beverages,through variety-seeking in a wide introduction of flavours – ref.6).Segment growth potential: Statistical reports anticipate a segment growth of 1.72% over the next 9 years (2015) for the 10-29 years

old subsets (ref.12). Refer to Appendix E.7

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