the coca
TRANSCRIPT
The Coca-Cola Company
AN OVERVIEW
Vision, Mission & Objectives:
From our heritage to our mission to the people who bring our products to
thirsty consumers, The Coca-Cola Company is a part of lives everywhere.
We constantly monitor our performance; where we are today and where
we're going tomorrow. Our mission is to maximize shareowner value over
time.
In order to achieve this mission, we must create value for all the
constituents we serve, including our consumers, our customers, our bottlers
and our communities. The Coca-Cola Company creates value by executing a
comprehensive business strategy guided by six key beliefs:
Consumer 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 throughout the day.
We will be the best marketers in the world.
We will think and act locally.
We will lead as a model corporate citizen.
The ultimate objectives of our business strategy are to increase volume,
expand our share of worldwide nonalcoholic ready-to-drink beverage sales,
maximize our long-term cash flows and become economic-value-added by
improving economic profit..
The Coca-Cola system has more than 16 million customers around the world
that sell or serve our products directly to consumers. We keenly focus on
enhancing value for these customers and helping them grow their beverage
businesses. We strive to understand each customer's business and needs,
whether that customer is a sophisticated retailer in a developed market or a
kiosk owner in an emerging market.
There are nearly six billion people in the world that are potential consumers
of our Company's products. Ultimately, our success in achieving our mission
depends on our ability to satisfy more of their beverage consumption
demands and our ability to add value for our customers. We achieve this
when we place the right products in the right markets at the right time.
COMPANY PROFILE
Introduction: (International)
The Coca-Cola Company is the world's leading manufacturer, marketer, and
distributor of nonalcoholic beverage concentrates and syrups, with world
headquarters in Atlanta, Georgia. The Company and its subsidiaries employ
nearly 31,000 people around the world. Syrups, concentrates and beverage
bases for Coca-Cola, the Company's flagship brand, and over 230 other
Company soft-drink brands are manufactured and sold by The Coca-Cola
Company and its subsidiaries in nearly 200 countries around the world.
By contract with The Coca-Cola Company or its local subsidiaries, local
businesses are authorized to bottle and sell Company soft drinks within
certain territorial boundaries and under conditions that ensure the highest
standards of quality and uniformity.
The Coca-Cola Company stock, with ticker symbol KO, is listed and traded
in the United States on the New York Stock Exchange. Common stock also
is traded on the Boston, Cincinnati, Chicago, Pacific and Philadelphia
exchanges. Outside the United States, Company common stock is listed and
traded on German and Swiss exchanges.
The Company's operating management structure consists of five geographic
groups plus The Minute Maid Company. The North America Group
comprises the United States and Canada. The Latin America Group includes
the Company's operations across Central and South America, from Mexico
to the tip of Argentina. The Greater Europe Group stretches from Greenland
to Russia's Far East, including some of the most established markets in
Western Europe and the rapidly growing nations of Eastern and Central
Europe. The Africa and Middle East Group encompasses the Middle East
and the entire continent of Africa. The Asia Pacific Group has operations
from India through the Pacific region including China, Japan, and Australia.
The Minute Maid Company, the Company's juice business in Houston,
Texas, is the world's leading marketer of juices and juice drinks. The Minute
Maid Company's products include Minute Maid Premium Orange Juice with
calcium, Minute Maid Premium Lemonade Iced Tea, Minute Maid Coolers,
Hi-C Blast and Five Alive.
The Coca-Cola Company has a commitment, more than a century old, to
social responsibility through philanthropy and good citizenship. The
Company's reputation for good corporate citizenship results from charitable
donations, employee volunteerism, technical assistance and other
demonstrations of support in thousands of communities worldwide.
The Coca-Cola Company continues to sponsor the world's most exciting
sports events, including World Cup Soccer, the National Football League,
National Basketball Association, NASCAR, the Tour de France, the Rugby
World Cup, COPA America and numerous local sports teams. The Coca-Cola
Company has sponsored the Olympic Games since 1928.
The products of The Coca-Cola Company touch lives everywhere. Our core
brands have made an impact around the world; brands such as Fanta,
Sprite and of course, Coca-Cola, are available and recognized in many
countries. Each of our other brands is distributed in one or more countries,
and is tailored to the cultures and tastes of those consumers. So wherever
you are, you're sure to find a Coca-Cola product to enjoy.
The Coca-Cola Company is a business that's recognized all over the world.
But we're also a local operation, a source of commitment in nearly 200
countries. Simply check out the profiles for a few examples of how we're
enriching the lives of people everywhere. Some of our most satisfying work
is done in the community around us. The Coca-Cola Foundation is one way
we work to support education and advancement at the local level. Within
this section, you'll learn how we help people around the world refresh their
hopes and dreams through education.
History:
Brand History In the World
YEAR NAME1886 COCA-COLA 1960 FANTA 1961 SPRITE 1963 TAB 1966 FRESCA 1972 MR. PIBB 1974 SUGAR-FREE SPRITE 1979 MELLO YELLO RAMBLIN' ROOT BEER 1982 DIET COKE 1983 CAFFEINE-FREE COCA-COLA
CAFFEINE-FREE DIET COKE CAFFEINE-FREE TAB
SUGAR-FREE SPRITE RENAMED DIET SPRITE 1984 DIET FANTA 1985 CHERRY COKE
COCA-COLA WITH A NEW TASTE COCA-COLA CLASSIC
1986 DIET CHERRY COKE 1987 DIET MELLO YELLO 1990 CAFFEINE-FREE COCA-COLA CLASSIC POWER-ADE 1992 "NEW" COKE, RENAMED COKE II NESTEA 1994 FRUITOPIA 1995 BARQ'S 1997 SURGE CITRA
Over the Years…….
Coca-Cola Beverages Pakistan Ltd.
In 1960, when Coca-Cola started its business in Pakistan, it operated
through franchised bottlers, who had a great deal of autonomy in carrying
out business within the regions allotted to them. Coca-Cola always had
problems with licensing of these bottlers. According to Coca-Cola’s
representatives, these bottlers acquired licensing for bottling operations as
a side business, as compared to Pepsi, which had complete control over all
its operationsin Pakistan. The Coca-Cola Company played an advisory role
in Pakistan till 1990, when a new strategy was formulated for operations in
the entire South Asian region, monitored by Coca-Cola, Singapore.
At present, the company divided the country into seven operational regions,
which are:
Karachi
Hyderabad
Rahim Yar Khan
Lahore
Gujranwala
Multan
Faisalabad
In addition to these regions, licensed bottlers are performing operations in Islamabad and
Peshawar.
MARKETING ENVIRONMENT (CCBPL)
Macro Environment:
o Demographics:
The first macro-environmental force that marketers monitor is population because people
make up markets. Marketers are interested in the characteristics and movements of
population. Therefore, people at Coca-Cola monitor this integral macro-environmental factor
with great attention.
Pakistan being the seventh most populous country in the world with one of the highest
population growth rate of 2.8% proves to be real test for marketers. A mix bag of people
belonging to different ethnic, racial and religious background with ever changing
demographic characteristics, are the target market of Coca-Cola Pakistan.
Soft drinks are a product, which are non-peculiar and undifferentiated to any particular race
or class. Hence, they are easily acceptable within the masses without any cultural biases.
The Pakistani population has a current growth rate of 2.3% (1996). This percentage was even
higher around 5 to 7 years ago. This means that while a huge number of people are just about
in their teenage, the other lower age segment will reach their teenage in about 10 years time.
This shows that Coca-Cola and other soft drink companies have a huge potential market
coming up. This trend poses a great opportunity for the manufacturers of impulse products,
that is soft drinks.
Karachi, Lahore, and Islamabad are the main urban areas in the country with the highest
population and best infrastructure. These urban areas are a major market for these soft drink
products. One reason is the high growth rate (which is as high as 4.0% in Karachi.) Another
reason is the relatively higher income of people living in the urban areas, which makes soft
drinks not that expensive a buy. Besides, the good infrastructure and media facilities give an
added advantage. In fact at Coca-Cola, the management has divided the urban-rural split to
80 - 20 level - that is 80% of the marketing strategy is targeted towards the urban population
centers while only 20% is targeted towards rural areas.
Population growth rate:
With the current population of 145 million people and an annual
population growth rate of 2.3%, Pakistan becomes eligible to be a major
sales generating country in South Asian region after India. An
unexplored potential target market.
Population age mix:
As a matter of fact, 60% of Pakistani population is of below 25 years of
age. This constitutes of the target market for Coca-Cola. Coca-Cola’s
beverages are targeted for the teenagers and people in there twenties
who can be attracted towards a brand which is known as a thirst
quencher that is there for more than a century.
Occupation:
Occupation refers to the general overview of how the population earns
its living. In most of the developed countries there is a general trend of
industrial occupation based population, whereas for the developing
nations the economies are agrarian. In Pakistan 65% of population is
dependent upon agricultural sector. This is a large untapped market or
poorly catered by local brands.
Education:
Literacy can clearly be termed as the measure of the country’s
development indicator. Unfortunately in Pakistan, the literacy rate is
around 36%, one of lowest in developing countries. This makes a large
proportion of population simply inaccessible. Communicating to them is
not only costly but changing their attitudes towards new want satisfying
products is very difficult as they are usually hostile to new believes and
habits. (Ariel is doing a fine job targeting rural and lower-middle class by
promoting through depicting Ariel as a product of their own e.g. may
apne bachoon ko…).
Geographical shifts in population:
The increasing rate of rural to urban migration is changing the composition of both rural and
urban population centers. People in developing countries like Pakistan resettle in urban
centers, as they perceive of these places as opportunity generators for better economic well
being. There spending usually vary from those who are already living in cities. The better
analysis of this segment is very critical as they can later be turned into loyal customers due
their high potency of habitual consumption patterns.
Family Life Cycle:
Evolution from traditional joint family system to one-unit family in last
two decades in Pakistan has also changed family spending patterns. Now
families with working mothers are increasing in urban centers of our
country. Now families prefer to opt for convenience goods rather than
going through the hassle of preparing thing at home. This gives a hint to
marketers as they can target their products according to this changing
scenario.
Economic Conditions:
Country’s economic conditions not only directly effect Coca-Cola and
others companies
but indirectly too. The adverse effects of worsening economic conditions
in Pakistan are curbing foreign investment that can play as lifeline for
foreign firms like Coca-Cola. The weak economy automatically limits
purchasing power of consumers due to high inflation and growing
unemployment. Both of these phenomenon reduces consumer $ (or
Rupees) on which competitors can fight for there share in any market.
On the other side of the picture, the high marginal propensity to
consumption is a healthy sign, as consumers tend to spend major portion
of their income on consumption expenditure.
Income distribution in our country shows a great deal disparity.
Accumulation of wealth in a particular quarter of population clearly
indicates the high consumption segment, which can easily be targeted
but the major disadvantage can be this segment’s tendency of early
adopters or innovative habits. (Can they be loyal to Coca-Cola? May be
yes!)
Due to the highly uneven distribution of income within the urban and
rural population soft drinks become an affordable impulse good for
urbanites. The galloping inflation rate of 20% (unofficial) though worsens
the situation. Therefore soft drinks have a very elastic demand and a
reduction of even one rupee can lead to a substantial demand increase,
as was observed in the Cola Price War in 1996.
o Ecological:
Ever since Coca-Cola introduced its disposable glass bottles in 1995, Cola
and Pepsi have been contributing to the glass waste, which has created a
big garbage problem. Apparently none of the two companies are prepared
to call off the product. However they do talk of recycling the waste but very
little seems to be done about it.
Coca-Cola has started a Clean Up World campaign globally but so far it has
not initiated any such campaign in Pakistan.
Competition:
Only PEPSI! No, there is tough competition faced by both Pepsi and Coca-
Cola to win major market share of rural markets where substandard local
brands leads the way. If we only analyze the perspective of Cola War in
Pakistan, Pepsi is leading this with huge margin but Coca-Cola Beverages
Pakistan’s take over by Coca-Cola Singapore had a positive impact.
Currently Coca-Cola is penetrating into Pepsi’s market share at the rate of
around 2 to 3 percent annually. The growth rate of the potential market is
also increasing due demographic and other factors.
Competitor Analysis
International:
The Pepsi Cola Company traces its origins to August 1898, when Caleb D.
Bradham first devised and named the formula that was later used for Pepsi
(which was called Brad’s drink at that time). Pepsi-cola Company,
headquartered in Purchase, NY, is the global division of PepsiCo, Inc.
Today, Brand Pepsi, and other Pepsi-Cola North America Products –
including Diet Pepsi, Pepsi-One, Mountain Dew, Slice and Mug Brands –
account for nearly a third of total soft drink sales in the U.S., a consumer
market totaling around $56 billion. Available in 190 countries around the
globe, its other products include, ready to drink iced teasand coffees, via
joint ventures with Lipton and Starbucks.
PepsiCo, Inc. is among the most successful fast moving consumer goods
company with 1999 revenues more than $26 billion and 151,000 employees.
It is also the largest manufacturer and distributor of snack chips.
On the other hand, Coca Cola is the world’s leading soft drink brand. Its
principal arch-rival is PepsiCo, which is a conglomerate having a core
business portfolio in the soft drink industry, and diverse business portfolios
in the snack foods and fast foods industries. Coca Cola is the market leader
in the soft drinks industry in the USA and Europe. Pepsi is the runner-up
soft drink in these regions. However, in certain Asian regions, like Pakistan,
India, and the Middle East, Pepsi is the leading soft drink brand and Coca
Cola occupies the second position slot. Here is an extract from an article
written on the history of this aggression between Coke and Pepsi:
“Pepsi and Coke: The Battle between Colas”
By Alissa WilkinsonDecember 15, 1998
Today television commercials for Coke and Pepsi bombard us with images
of youth and beauty, family togetherness, fun and pleasure, celebrity, and
patriotism. Barbara Lippert, an Ad-week columnist, perhaps says it best:
"Soda pop imagery has become such a driving force in American culture,
that we forget the commercials are trying to sell something" (Consumer
Reports, 518). As we will see, today's promotions are much like yesterday's
advertisements. It all began in back of an Atlanta home owned by a druggist
named John Pemberton.
In the Beginning
In 1886 John Pemberton whipped up a refreshing elixir of coca-leaf and kola
nut extracts in back of his Atlanta home. By accident, his syrup was mixed
with carbonated, not plain, water. Coca-Cola is born. Six years later,
another druggist, Caleb Bradham of New Bern, North Carolina,
trademarked the name of a new cola concoction, Pepsi. Bradham called it
Pepsi in honor of the drink's supposed soothing effects on dyspepsia, or
upset stomach (Consumer Reports, 522). The battle between colas begins,
although slowly at first.
That same year, 1902, the first magazine advertisement for Coca-Cola
appeared in Munsey's, and it became obvious that the company would need
professional help in creating advertisements. In 1904, Asa Candler,
president of the Coca-Cola Company, appointed the Massengale agency in
Atlanta as the beverage's first advertising authority. The Massengale
agency tried to create an image for Coca-Cola by having the art in its ads
show people drinking the cola, and by attempting to carve out a sociological
niche for its characters: middle to upper class white Americans enjoying
themselves on outings. Somehow there were always refreshment stands in
the back of these scenes. At this point in time, Massengale advertised in
newspapers and magazines, but concentrated most efforts on streetcars and
billboards. (Dietz, 49).
Massengale slogans were generally too long, and the Coca-Cola Company
tried to curb this by hiring the W.C. D'Arcy agency to handle part of the
Coca-Cola account. Both ad agencies shared the responsibility and covered
their ads with testimonials. Eventually, the Massengale agency was booted
and in 1908 D'Arcy and fellow salesman Sam Dobbs dreamed up the idea
for the world's largest outdoor sign at the time. This billboard was erected
on the main line of the Pennsylvania railroad, between Philadelphia and
New York. It stood thirty-two feet high and showed a young man drawing
Coca-Cola syrup into a glass, as real water flowed out of the fountain. In
1909, because of the shining D'Arcy achievements, the Coca-Cola Company
was cited by the Associational Advertising Clubs of America as "the best
advertised article in America". The Coca-Cola Company was spending
$761,981.35 on advertising (Dietz, 56).
Meanwhile, Pepsi was tagging along. Its creator, Caleb Bradham, was busy
proclaiming Pepsi-Cola to be "exhilarating", "invigorating", and "Aids
Digestion". "Don't Forget to Purchase Pepsi at the Soda Fountain". In 1909,
Pepsi, too, had its own testimonial. The Coca-Cola company and D'Arcy
responded to Pepsi and a slew of other would-be challengers, some
amusingly called Coca Nola and Koke Ola, by inserting phrases such as
"Demand the Genuine" and "Accept No Substitutes" in their advertisements.
Coca-Cola's competitors repeatedly fail in sales (Dietz, 57).
Creating the "Image"
Between the years 1910-1916, the Coca-Cola Company implored the public
to avoid using "Coke" as a nickname for their soft drink. They did not want
their beverage to be associated with the drug cocaine, which had the same
nickname, and vigorously advertised "Coca-Cola". At the soda fountain,
Coca-Cola was served on distinct metal trays with "Coca-Cola" branded on
it, along with either a portrait of a young lady or a young man involved in an
"all-American" activity. These trays also covered the walls in the drug store.
The drink was served in glasses with "Coca-Cola" on them, a preview of
what was to come, because the company was already toying with the idea of
bottling the beverage as well as ways in which to package it (Dietz, 85).
Post World War I, sales for carbonated beverages were down. Pepsi, already
floundering in Coca-Cola's shadow, went bankrupt for the first time. Coca-
Cola and D'Arcy decided to reevaluate which segment of the American
public to target. They realized that one of the most important elements of
the success of Coca-Cola was product identification. The guy sitting there
with the glass of Coca-Cola was supposed to be aware that he was drinking
a Coke, however casual he appeared. The company also realized they would
soon need a new advertising perspective and some fresh ideas. Enter Archie
Lee.
Archie Lee, an up-and-coming entrepreneur, began working for the D'Arcy
agency on the Coca-Cola account in 1922, and created some of the most
memorable advertisements. He refined and polished the concept, which was
to constantly remind the potential customer that whatever was occurring,
that moment in time could be made more pleasurable by consuming a Coca-
Cola. His ads often consisted of good-looking women; his theory was that
the women in his ads should be in their mid to late twenties, an age that
younger people aspired to because of the charm connected with it, and an
age which older people liked to remember. He reasoned that these women
were attractive to both men and women, because women could see in the
pictures either things to emulate or criticize. Either way, they would notice
(Dietz, 108-111).
Graphic styles in ads for Coke, along with the rest of American commercial
art, changed at this time. Advertisements had evolved from the formal and
static art produced by anonymous artists for lithographers in the early days
of the century to the free-flowing illustrative styles produced by well-known
artists for use in large-circulation slick magazines in the 1920s and later.
We began to see less and less text to get the message across and more
intertextuality and image interpretation. Archie Lee's purpose was to
capture the spirit of America and to claim that central to the American
experience was the act of drinking Coca-Cola.
Archie Lee, D'Arcy, and the Coca-Cola Company began conducting market
research in the 1920s to find out why people drank, and especially why they
drank soft drinks. Coca-Cola was the first major company to chart
automobile traffic flow so that billboards and signs could be placed on the
most heavily traveled areas (Dietz, 121). By 1929, the nation was floating in
Coca-Cola, and the Coca-Cola Company was floating in profits. It should be
noted that the company didn't hurt from the eighteenth amendment that
had been passed either--the nation could no longer wet itself down with
beer.
The Pepsi-Cola Company had been trickling along since its 1921
bankruptcy. In the mid-twenties, a Wall Street man named Roy Megargel
bought the company and made up the deficits out of his own pocket. Despite
this, Pepsi went bankrupt again in 1931. Megargel was not giving up. He
caught wind of an interested, sharp entrepreneur named Edward Guth, who
owned a number of candy stores throughout the country. The two men
joined forces and Guth replaced the Coca-Cola fountains in his candy stores
with Pepsi ones. The two encountered more failures in sales, until as a last
resort Guth experimented with bottling Pepsi in a ten ounce bottle and
selling it for a nickel, to Coca-Cola's six ounce bottle for ten cents. Sales for
Pepsi doubled and tripled. At last Coca-Cola has a viable competitor (Dietz,
130-134).
New Mediums, More Marketing
In the early thirties Coca-Cola was being plugged by celebrities and film
stars such as Greta Garbo and ironically Joan Crawford, who later married
the president of the Pepsi-Cola company. As Pepsi's sales skyrocketed,
D'Arcy began investigating ways in which his agency could use the new
medium, radio, to advertise for Coca-Cola. Despite his efforts, Pepsi beat
Coca-Cola to the punch and created the first ever fifteen-second-radio
jingle, aired in 1939. The jingle was so popular it was featured in jukeboxes
and played for free on radio stations (Dietz, 135).
By the late thirties, the Coca-Cola Company was spending 5.5 million
dollars per year on advertising in all forms. In 1941, as the United States
entered World War II, Coca-Cola's president vowed to see that "every man
in uniform gets a bottle of Coca-Cola for a nickel, wherever he is and
whatever it costs the company." The bottling plants followed the troops and
by the war's end the company had a network of bottlers established
worldwide (Consumer Reports, 523).
Coca-Cola broke through in radio in 1941. There was no way to expand the
market, since there was no way to satisfy the demand of a rationed society.
There was no new tin for billboards, and there was a ration on sugar. All
that could be done for Coca-Cola was keep the name in front of the public
electronically, in the softest of all soft sells, in a cushioned spot featuring
Big Band shows (Dietz, 160).
For the duration of the war, the soft drink battle remained between Coca-
Cola and Pepsi. Pepsi's sales faltered during World War II because of the
sugar rationing. Advertisements for Coca-Cola celebrated its success in the
war effort. Also at this time, Coca-Cola decided to give in to popular demand
and call itself "Coke", too.
After the war, in 1946, Pepsi found it could no longer afford to offer "Twice
as much for a nickel, too" because of inflation. By positioning itself for years
as the bargain cola, it had courted the least loyal of customers: the price-
shopper. When the price advantage vanished, so did many Pepsi drinkers.
Pepsi was left with an inferior image, and so it changed its formula and took
on the tougher task of changing its image (Consumer Reports, 523).
Around 1950, Middle America had changed, therefore, ads changed. This
was the start of the first Pepsi generation, which is arguably the longest-
running ad campaign ever, and Pepsi is branded as a drink consumed by
"those who think young". Their target is the young American woman, the
supermarket shopper and household cola buyer. To appeal to her, Pepsi
offers the first twenty-six ounce "hostess" bottle.
This was not a good time for Coke. An attempt to make a run on the Pepsi
constituency resulted in a series of magazine ads showing upwardly mobile
young adults in what were taken to be exotic, expensive locations. D'Arcy
floundered, replacing paintings with color photography, which at this time
makes people in photographs look like overripe oranges (Dietz, 166).
In 1955 the Coca-Cola Company severed its ties with D'Arcy and hired a
new advertising agency, McCann-Erickson. McCann promptly spent
$250,000 experimenting with color photography and discovered that
photographed food didn't look as bad as photographed people had. This
resulted in a series of ads of food with Coca-Cola placed next to it. Pepsi
was still outdoing Coke in sales by introducing new sizes, including smaller
bottles for vending machines (Dietz, 169).
Taste Is the Key
In the 1960s, it became obvious that whatever myths were built into the act
of drinking one brand of soft drink or another, they were all rationalized by
the consumer as a matter of taste. Consumers would not say they drank
Pepsi because it put them into a different sociological class than consumers
of Coke. They would say: "Pepsi tastes better." The taste test wars begin.
Coke's advertising agency, McCann, tried to come to terms with the newest
mass-market medium, television. The first television commercials for Coke
resembled Archie Lee's old magazine ads: they consisted of brief shots of
the different faces of America. Ads placed in youth magazines were
criticized for associating soft drinks with the drug culture that often
accompanied youth magazines at that time. McCann found an easy and
shrewd way into a youth market when it hired a bunch of rock performers
and had each of them sing the current Coke jingle in the performers' own
style, for radio air play (Dietz, 173).
In the 1970s, the soft drink companies became more corporate and began to
globally expand more. In 1975, spurred by market research showing
consumer preference for Pepsi over Coke in blind taste tests, Pepsi's district
manager set up in-store "Challenge Booths". Pepsi's sales immediately
improved, and Pepsi launched the Challenge nationwide (Consumer
Reports, 524).
In the 1980s, television was the primary medium in which consumers saw
soft drink ads. We were bombarded with celebrity endorsements, jingles,
product association, sweepstakes, clothing, and movie tie-ins. Pepsi kicked
it all off with its endorsement by Michael Jackson; other celebrity
endorsements for Pepsi included Fred Savage, Ray Charles, whose "You got
the right one Baby?Uh-huh" campaign turned into a nationwide frenzy, and
Madonna, among others. Coke's endorsers included Michael Jordan and
New Kids on the Block, while Paula Abdul and Elton John endorsed Diet
Coke. Diet Pepsi finished it off with endorsements from Michael J. Fox, Joe
Montana, and Billy Crystal.
"You are what your hero drinks" school of advertising became the
mainstream, and it was quite effective. The goal was to keep the soft drinks
in the public eye through sheer entertainment. Pepsi was associated with
the hip and the young, and Coke remained the all-American, wholesome-
imaged soft drink. Pepsi was "the choice of a new generation" and Coke
went with "Coke is it!" Ads still concentrated and targeted on the young
market (Sellers, 82).
New Coke/Old Coke
In 1985, on the evening of April 23, all three major network news programs
opened with the following flash: "Coke is changing its formula. The
company claims it stumbled across a better, sweeter recipe for the flagship
brand while developing Diet Coke. Pepsi responds that Coke is declaring
defeat in the Cola Wars and gives its employees a day off for victory
celebrations" (Consumer Reports, 525). This "New Coke" fiasco has since
been called the worst marketing blunder of all time, but led to unexpectedly
positive results for the Coca-Cola Company.
Roberto Goizueta, a native of Cuba, was appointed president of the Coca-
Cola Company May 30, 1980. Goizueta had started as a chemist with the
company and was one of few people who knew the secret formula of Coke.
Asa Candler had passed the secret on to his son Howard, who taught it to
Dr. W.C. Heath, the company's number one chemist. As each chemist
retired, he in turn taught his successor (Soda Fountain,
http://www.sodafountain.com/softdrnk/cocacola_rg.html).
Goizueta introduced Diet Coke in 1980 and presided over the "Coke Is It!"
campaign in 1982. He also had Coca-Cola buy Columbia Pictures in 1982
(product placement, anyone?). Columbia Pictures soon became a money
making machine for Coca-Cola with such hits as Tootsie and E.T. A few
years later in 1989, Columbia was sold to Sony for $3.4 billion. Goizueta
eventually became one of the most highly regarded of all CEO's, having
turned one of the world's most nonessential consumer products into a
money spinner with annual sales of $18.5 billion. (Perman). Goizueta is not
remembered for any of these accomplishments, but instead for the biggest
mistake in corporate history: New Coke (Soda Fountain,
http://sodafountain.com/softdrnk/cocacola_rg.html).
In 1984-85, Pepsi-Cola had been conducting the "Pepsi Challenge" taste test
nation-wide. The reported findings were that the majority of test-takers
preferred Pepsi to Coke, even when Coke conducted their own tests. Pepsi
used these tests for all they were worth and started walking away with
market share. Coca-Cola was under pressure, especially since Pepsi had
been beating Coke in sales since 1977. In response, Coca-Cola decided to
change their formula.
Fiddling with the formula put Coke fans on the warpath. In Seattle, retired
real estate investor Gay Mullins founded the Old Cola Drinkers of America
and set up a hot line for angry consumers. A Beverly Hills wine merchant
bought 500 cases of vintage Coke and sold them at a premium. Meanwhile,
back at the Coca-Cola Company, some 1500 calls a day and vanloads of mail
drove home the public's fury. Wrote one disgruntled consumer: "Changing
Coke is like God making the grass purple or putting toes on our ears or
teeth on our knees" (Consumer Reports, 525).
Coke got the message. After three months of lagging sales, it announced
that "Old Coke", Coca-Cola Classic, would join the "New Coke" on
supermarket shelves (Consumer Reports 525). Coke had failed to realize
that its soft drink has historical significance to consumers. Coca-Cola is a
tradition of sorts. Coke had also failed to realize the conditions of the "Pepsi
Challenge". People were given a swallow or two of each soda, the sweeter
choice being more pleasing to the taste buds, because that's how they work
(Soda Fountain, http://www.sodafountain.com/softdrnk/cocacola_rg.html).
When Coca-Cola executives first announced the return of Old Coke,
competitors were overjoyed. They reasoned that Coke would suffer from
consumer confusion, diluted promotional efforts, and a lack of space on
retailers' shelves (Business Week, 58-59). Goizueta would no more admit to
failure than he would to drinking Pepsi, but he and other top Coke
executives were staggered by the public response to scrap original Coke.
"We knew some people were going to be unhappy, but we could never have
predicted the depth of their unhappiness", Goizueta said (Business Week,
60.)
"New Coke" became old news, and Coca-Cola Classic thrived, eventually
replacing "New Coke" altogether. Old Coke's comeback drove Coca-Cola's
stock to its highest level in twelve years (U.S. News and World Report, 12).
The threat of replacing the original formula with a new version ironically
turned out to be exactly what Coca-Cola needed to revitalize itself, and
renewed long-lost faith in brand-loyalty.
Global Expansion, Campus Monopolization, Online Advertising
Efforts
By 1989, Coke was spending more than $140 million and Pepsi was
spending more than $151 million on advertising, mostly for television ads
and celebrity endorsements. By 1990, Coke was enjoying global success.
Sixty-eight percent of its $8.6 billion in soda sales took place in 170
countries outside the U.S. Today, more than half of the world's soft drinks
are produced by Coke (Moreau, 32).
Throughout the 1990s, both cola companies have tried to expand more
internationally. Coke's international sales are outdoing Pepsi's, while Pepsi
has been outselling Coke at home. Pepsi owns three fast-food restaurant
chains: Taco Bell, Pizza Hut, KFC, and it also owns the Frito-Lay snack
company, which may explain why Pepsi's soft drink sales have lagged
behind Coke's of late. Pepsi has decided to spin off its three fast food chains
to enable it to concentrate on selling soft drinks internationally (Sheets, 32-
33).
Meanwhile, Coke and Pepsi have tried their hand at buying out universities,
monopolizing the soft drink sale to one company or the other. Youth
continues to be the colas' vital market; it has been proven that the tastes
young people acquire at college age often remain with them throughout
their lives. By striking corporate-like deals with universities, enabling only
one type of cola to be sold on an entire campus, the cola companies see the
youth as being held as a captive audience (Chidley, 63). The winners in
these cola wars are determined not by taste tests but by who has deeper
pockets, and the universities keep the silver.
Coke is aware of its lagging domestic sales, and aspires to swallow a huge
chunk of the U.S. segment in the near future. Under current CEO M.
Douglas Ivester's direction, Coke is pouring on the investment to attain its
goal of gulping 50% of the U.S. market by 2001. The plan is to make this
conspicuous brand ubiquitous by putting a Coke vending machine or retail
point within arm's length of every consumer (Perman). Coke is stepping up
its global omnipresence too, with plans announced December 11 to buy
Cadbury Schweppes beverage brands (Dr. Pepper, Crush, Canada Dry,
Schweppes) in more than 120 countries for about $1.85 billion (Advertising
Age, http://www.adage.com/news_and_features/deadline/index.html).
As internet popularity surges, both colas have made efforts to create
effective Web sites advertising their respective products. Pepsi's site is
geared more toward the young and energetic, whereas Coke's is laden with
information that appeals both to youth and to any generation. These two
Web sites adhere closely to the advertising patterns Coke and Pepsi have
established over the years. Information at these sites is fairly limited, with
concentration most focused on maintaining the attention of the web-surfer
and luring her/him into the world of soda pop culture.
Coke currently leads Pepsi in sales, but no one knows for how long, as these
two warring companies compete for the last consumer, the last dollar.
Throughout the entire historical tracing, two things have remained
constant: both companies have always targeted youth and both portray their
products as providing pleasure. Global expansion and campus domination
are two new facets for the colas to explore; it should be interesting to watch
unfold. Our televisions are so plastered with commercials for soft drinks
today that some viewers, especially the Gen-X'ers, don't even notice
anymore. As the World Wide Web's accessibility has increased, both colas
have taken their marketing attempts online, each site featuring multimedia
interaction and splash page graphics. The battle will continue, whether we
notice or not. We have become, pardon the pun, pop culture”.
Currently, in Pakistan, Pepsi is the market leader in soft drink industry and
Coca-Cola is the market challenger, completely as against the scenario
globally (internationally Pepsi holds around 23% of the market share as
against Coke’s 65%).
The respective market shares of both the soft drinks are given below:
MARKET SHARE (as of 1999)
Coca Cola Pepsi Others
Globally 65% 24% 11%
In Pakistan 30% 60% 10%
In Karachi 34% 56% 10%
Earlier on, however, Coca Cola used to be the market leader in Pakistan as
well, until 1987. Coca Cola’s management decided in the late 1980s that
they would shift from operating through franchisee bottlers to a single
anchor bottler. The bottlers were informed of this decision and were given a
deadline after which they were to cease their operations. This prompted the
bottlers to cut costs and maximize their short-term profits. The cost-cutting
led to a variation in the quality of Coca Cola sold all over Pakistan. Pepsi’s
quality, on the other hand, remained consistent and it started attracting
more of Coke’s consumers, who were disgruntled with Coca Cola’s lack of
quality. Hence, Coca-Cola’s market share started dropping.
Another peripheral reason for the fall in market share was Coca Cola’s
Jewish ownership. This was another setback for Coca Cola in Pakistan and
amounted in a lot of negative publicity for the company. Furthermore, Coca
Cola’s bottlers realized that their market share was falling and gradually
ceased their marketing operations in the country. This resulted in Coca Cola
withdrawing all its package sizes, except for the 250 ml returnable glass
bottle.
On the other hand, Pepsi took full advantage of Coca Cola’s weaknesses.
Pepsi intensified its marketing activities in Pakistan. It also worked on
strengthening its distribution system and extending its distribution network
all over Pakistan. Soon Pepsi took the lead from Coca Cola. Over a period of
time, they also introduced a number of package sizes. Pepsi further
strengthened its position in Pakistan by getting sports celebrity
endorsements, and associating itself with the birth of pop music in Pakistan,
by sponsoring pop groups and concerts.
Now, since 1996, Coca Cola has jumped back into the fray after a slump of
nine years. It has reentered the market with their sole bottlers, Coca Cola
Beverages Pakistan Limited. Already, Pepsi and Coca Cola have fought a
number of pitched battles against on another. Pepsi is aggressively trying to
defend its market share against Coca Cola’s promotional forays. Meanwhile,
Coca Cola’s market share has increased from 14% just two years ago to its
current 34%.
Social & Cultural Forces:
High persistence of core cultural values:
Belief in the core cultural values in Pakistani society is manifested by the
living patterns of every single individual. These values are passed down
from generation to generation and this is what that makes us different from
the western developed nations. Conducting business activities keeping
these core values in mind can be a detrimental factor for success and failure
in countries like Pakistan and 3rd world nations. (Why McDonalds can not
sell its beef burger in India?)
Existence of subcultures:
Pakistan is a mix bag of different subcultures from Pukhtoon to Punjabi,
Sindhi to Balochi. These all are further mingled with growing number of
population that migrated either at the time of independence or due to
Afghan conflict. These cultures require a close attention because of the fact
that these individually constitute of huge share of the market.
The true importance of this statement can be gauged from an incident that
occurred back in 1998 in the interior of Sind. What actually happened was
that some extremist Sindi elements raised their concern and protest over
the writing of Coke-Cola in Urdu. According to them Coke should either be
written just in English, or if Coke had to be written in a local language then
it should be nothing, but Sindi.
Changing cultural scenario:
World has become a global village and now the distances are bridged by
communication highways. This west meets east drift is influencing culture
and now an amalgamated shape is building up which is defining the future
of our society. The example that can be quoted over here is of growing
business of food franchising. The mass customization has already started to
cater to these changing cultural needs.
Other Factors:
As per a survey conducted by Coca-Cola, people in Pakistan love 3 things:
1) Cricket
2) Music
3) Movies
These three things are stated in order of preference. The Pak culture is
such that females mostly stay at their homes and males usually carry out
the outdoor jobs. Keeping this view, Coca-Cola has targeted teenage males
who have these pastimes. For this reason females are not their primary
target segment.
Another cultural change is serving drinks at marriage ceremonies. This has
substantially increased the overall sales of the soft drink industry. All firms
are coming up with new ideas to top this trend.
Political & Legal Forces
Pakistan, for the last ten years is going through the process of
democratization but successive failures lead it to politically unstable
country. This instability is reflected through the economic policies of
successive governments in both monetary and fiscal. The taxation policies in
our country changes monthly leaving no room for companies to evolve them
according to their long-term goals. The very recent deadlock between
traders and government over the issue of General Sales Tax is causing great
level of trouble for business community.
The government has imposed 12.5% general sales tax (GST) and 15% excise
duty on both Coca-Cola and Pepsi since 1993. Before 1993, the tax
regulations were better for the industry.
The beverage industry is very vulnerable to the tax regulations and the
macroeconomic changes imposed by the government. The subsequent
Rupee devaluation always results in an increase in the prices of
concentrate, packaging materials and other ingredients and this leads to
increased cost of production for the company.
Moreover, the beverage industry is affected by changing governments,
political turmoil and mini-budgets. All these occurrences increase the
operating costs of the company and since the price of the drinks is more or
less constant due to competitive pressure and elasticity of demand, the
company’s profits are eroded.
Technology
The changing role technology has affected Coca-Cola in very little manner. Except the adoption
of information technology in the company operations there is no significant change in the
production technology as yet. (We still prefer Classic Coke! Don’t we).
At Coca-Cola a lot of emphasis is given to product quality controls. In fact, the very reason why
the Coca-Cola Export Company shifted from franchisee bottlers to one single anchor bottler
CCBPL was the inconsistent quality of Coca-Cola all over Pakistan. Apart from the quality
control work carried out by CCBPL, the TCCEP also carrier out random quality checks once
every quarter. Also CCBPL has to send regular samples to its Atlanta head office for scrutiny
and record purposes. Out of all its acquired plants to date, Karachi has a quality maintenance
standard of 90% while the Gujranwala plant has achieved 100% quality control.
The Coca-Cola Beverages prides itself of being the trendsetters in bringing new and innovative
technological breakthroughs in the soft drink industry. At the start of its recent market onslaught
in Pakistan Coca Cola introduced the contour shaped bottle and newly styled caps on its
returnable glass bottles. Also it introduced the new plastic cap for its disposable bottles.
Microenvironment
o Market:
Market is considered the focus of the marketing strategies by any firm. The
real test for any product is its market success or failure and when we talk
about success, there can not be any better company then Coca-Cola. Coca-
Cola runs in the blood, over a century of success all around the world now
Coca-Cola is repeating its history in Pakistan. The steps involved in
evaluation of market as that of identification of customers as well as of their
needs and wants is of matter of hanging sword for any company. Coca-Cola
strategies’ designing reflects these key details with great importance.
The beverage market has been in a decline for the past few years because
of inadequate investment in the beverage industry. Pepsi enjoyed a real
monopoly in the beverage industry while Coca-Cola took the back seat. The
others impulse goods like ice creams & chocolates were enjoying growth in
their sales. So, the relative “ Share of Voice” of the beverage industry
shrank in comparison to other impulse goods firms.
Coca-Cola’s reentry into market has revitalized the industry by competing directly against Pepsi.
This led to subsequent increase in the relative share of voice of the beverage industry.
Coca-Cola is well aware of the fact that soft drinks are an impulse good and hence people do not
have any set brand loyalties. Therefore, there is always an opportunity for them to snatch away
customers from their competitors by making available a better augmented product.
o Suppliers:
For Coca-Cola, the supply of the main ingredients is of no problem, because
CCBPL only bottles Coca-Cola in Pakistan the liquid comes from Singapore.
The streamlined process involved in shipment of these is of great value both
in marketing and financial perspectives.
o Customers:
Ever since its recent entry into the market, Coca-Cola has identified youngsters as its main
customers. However, it practices differentiated marketing in the country and has therefore
identified other segments as well. Its major target segments for different packages are:
Youth 250 & 300 ml RGB
House wives 1.0 litre & 1.5 litre bottles.
Kids & Rural Mini bottles
However, due to the differences in the product tastes offered, there are
different major segments. These segments are:
Children & Youth (males) Coke
Females & rural consumers fanta
Adults 35 years and above Sprite
o Marketing Intermediaries:
Distribution network for any consumer goods company and especially the beverages companies.
Coca-Cola extensive network of intermediaries that work in a flow of 10 regions of the country
tries to give coverage to the complete potential market is very effective but still is in infant stage.
Pepsi’s leading edge over Coca-Cola is due to its well-established network of dealers and
retailers in the country. Coca-Cola fight to gain market share from Pepsi also depends upon
development of its distribution network.
Coke has the following distribution channels.
The Coca-Cola Export Company (TCCEC) that supplies the concentrate
and shares costs equally with Cola-Cola Beverages Pakistan Ltd. for
marketing and selling activities. Coke's advertising is handled by TCCEC
along with the advertising agency Orient-Mc Cann. TCCEC, the suppliers
of the concentrate, is in Lahore.
The next channel is the bottlers. In Pakistan, the bottlers of Coca-Cola
are Coca-Cola Beverages Pakistan Ltd. (CCBPL). They take the
concentrate from TCCEC and then carbonate, bottle and sell the finished
product to retailers and wholesalers in local markets, such as Karachi
and Hyderabad. CCBPL are the sole bottlers in Pakistan and they
represent their parent company Fraser & Neave Coca-Cola, Singapore.
The wholesalers are the next step in the distribution network. This is also
called indirect retailing. They provide transportation facility to retailers.
In Karachi, Coke distributors its product to 3300 wholesalers.
Retailers are a very important part of the distribution process. Coke
makes 57% of its sales to direct retailers which accounts for 5200 retail
outlets in Karachi. Total number of outlets in Karachi are 12,500 85% of
which is covered by Pepsi. It is evident that Pepsi has a better market
coverage and distribution. Coke has 80 trucks and Pepsi has 125 trucks.
To develop consumer taste for Coke, there are some restaurants that are
Coke-exclusive. These are:
1. New York Cafe
2. Coconut Groove
3. BBQ Tonite
4. Red Onion
5. Mr. Burger
o Publics:
Coca-Cola's marketing environment includes the following publics:
Financial Public
For the purpose of investment, Coca-Cola borrows a large amount of
funds from financial publics like local and foreign banks.
It is currently investing in 1 litre and 1.5 litre glass bottle for the purpose
of increasing the percentage of disposable sales.
Media Public
Coca-Cola's marketing environment comprises of media public like
newspapers, magazines, radio and television- these play an important
role in Coca-Cola's marketing and promotion strategy.
Media is a major promotion tool employed by the company to create its
image and to inform the consumer of discounts, deals or special
promotions.
Local and General Public
Coke's management keeps channels of communication open with regard
to the general public. The image that the local public has of Coca-Cola will
affect its sales and thus, it seeks feedback and is there to communicate and clarify its
position. It strives to protect its image as an environmentally conscious and socially
responsible company.
Internal Public
The workers, managers and board of directors- all are an asset for the
company. Coca-Cola has strong internal marketing worldwide and also in
Pakistan. Workers are informed by newsletters and are motivated by
paying high salaries and providing incentives.
Every employee wears a T-shirt, which says "To make it happen", and
they wear a company badge. These are a few ways in which they identify
with the company.
MARKETING STRATEGY: (CCBPL)
Business Mission
Coca-Cola's business mission in Pakistan is:
“ To become the market leader in the beverage industry in Pakistan
while providing in maximum customer satisfaction”.
Coca-Cola's business mission is clearly defined. It aims to increase its
market plan through brand awareness and high brand equity. Coca-Cola's
mission is market oriented since it wants to get “Profit through customers’
satisfaction”.
Marketing Objectives
Currently, in Pakistan, Coca-Cola is a market challenger. It wants to become
the market leader and its marketing objectives to achieve this goal are:-
To create an awareness in the market about the product.
To enhance sales by effective advertising campaigns.
Coca-Cola’s marketing objectives are in line with its business mission
in the case where increase in market share is concerned. However, it
is not focusing its marketing efforts on its main target market,
teenagers, to enhance sales and improve market share.
Instead, it plans to enhance sales and increase market share by increasing
the percentage of take home sales in total sales. It is currently investing its
resources in its 1litre (economy pack) and 1.5 liter (convenience pack)
bottle. Examples of marketing efforts in this direction include the
1) Ramzan promotion.
2) Twin pack offer
Because of this focus, sales have more than doubled in the past year.
The 1litre and 1.5litre Karachi market is equal to a measurement of 360,000
physical cases. 1 physical case is equal to 12 bottles.
o Marketing Strategy Audit:
Coca-Cola reentered the Pakistani market in 1994 as a market challenger.
The biggest issue after its entry into the market was to create brand
awareness and promotion. The company’s greatest opportunity for
popularizing the brand came during the Cricket World Cup in 1996. The
company started off by setting up a huge billboard on Sharea Faisal. Later,
Coca-Cola also clinched the co-sponsor status for the World Cup. It became
the official drink of the event and side by side, it also launched its campaign
called “The Coca-Cola Cricket Mania”. The highlights of this campaign
were:
1. The UTC (Under The Crown) competition was organized with big prizes
offered to the lucky winners.
2. “The Coca-Cola Giant Cricket Bat” which visited every major city in
Pakistan before reaching the venue of the final at Qaddafi Stadium,
Lahore.
3. Coca-Cola sponsored TV cabins set up at popular outdoor venues around
Karachi for giving the by-passers an opportunity to watch the match live.
The giant Coca-Cola bottle that was brought out on the field during the
drinks break was another very good way of getting exposure because it was
a unique idea and the Coca-Cola logo was very visible to the spectators. The
Coca-Cola company’s World Cup campaign was so popular that Pepsi felt
directly threatened by Coca-Cola’s successes. Pepsi then launched its own
World Cup campaign with the slogan “Pepsi, Nothing Official About It”. This
campaign was in direct comparison with Coca-Cola’s status of the official
drink of the 1996 World Cup. This campaign did have some effect on Coca-
Cola’s Cricket Mania campaign.
Right after the World Cup ended, Coca-Cola initiated the Cola Price War in
late 1996. This time Coca-Cola directly attacked Pepsi by providing a soft
drink of comparable quality at lower prices. The soft drink prices of both
Coca-Cola and Pepsi went as low as Rs. 2.50 for a 300-ml bottle. This
enabled Coca-Cola to increase its market share from a dismal 14 % before
1996 to 46 % during the Price War (1996).
The Cola Price War helped Coca-Cola accomplish some of its goals but not
without its cost. Coca-Cola gained the following benefits from this price
war:
1. Increased brand awareness of the Coca-Cola brand name and an
indication of its presence in the Pakistani market.
2. Consumers taste for Coca-Cola was developed. Many people who
wouldn’t have otherwise tried Coca-Cola now found it easier to do so.
3. Empty glass bottles were circulated extensively throughout the
marketplace. This is an essential requirement when a contract is
initiated with a new retailer.
4. Coca-Cola was established at par with Pepsi in the Pakistani market.
All these strategic and tactical moves by Coca-Cola helped it to enter the
market in real market challenger style. Gradually, Coca-Cola started making
inroads into the lives and lifestyles of Pakistanis in general and citizens of
Karachi in particular. With Coca-Cola’s successful entry, Coca-Cola is now
working on increasing its market share while Pepsi has been put on the
defensive. Both companies are currently busy designing strategies to
capture each other’s market share. Recently also, Pepsi directly attacked
Coca-Cola’s ‘Eat Cricket, Sleep Cricket, Drink Coca-Cola’ ( ESD) campaign
with its ad campaign ‘More Cricket, More Pepsi’ featuring two Indian
cricketers, Azharuddin and Jadeja.
Distribution Strategy
Coca-Cola and Pepsi both differ in their distribution methods. Coca-Cola has
a fleet of 75 to 80 trucks, which are owned by the company itself. In
contrast, Pepsi has a distribution fleet of 120 trucks, which are distributor-
owned and distribute for Pepsi on contract basis.
Another difference between the distribution strategies of Pepsi and Coca-
Cola is that since Pepsi distributes through independent distributors, it
doesn’t usually have its representatives to deal directly with the retailers. In
contrast, Coca-Cola has its own exclusive fleet of distribution trucks
therefore it practices personal selling with its retailers. Each truck has a
sales representative of Coca-Cola to deal with any requests and customer
queries. Coca-Cola hopes that this strategy of personal selling will benefit it
in the long run. Apart from this, Coca-Cola also has a help-line, which the
retailers can call for any help or assistance they might require
Budgets:
A company’s budget is the basis for materials buying, production
scheduling, personnel planning and marketing operations.
Resource allocation in Coke’s budget is based upon the following facts:-
70% of total sales and profits come from consumers below 25 years of
age.
Coke is the main product. Fanta and Sprite are supporting products.
Product Sales contribution
Coca-Cola. 55%
Sprite. 32%
Fanta 13%
Coca-Cola’s target market is the average urban consumer and the main
target market geographically is Karachi. Karachi is a lucrative market
for Coke and this is why majority of marketing activities and
distribution focus is on Karachi, which is the main market.
Resources are allocated according to:
1) Profitability of products in the product-line.
2) Distribution costs incurred and the market coverage required.
3) Main target markets or most profitable markets. Most marketing
activities are directed towards Karachi.
Marketing budget is around Rs100 million for Karachi annually and Rs 100
million for the rest of country. This confirms that the major market for Coke
is Karachi and maximum marketing activities are focused on Karachi.
Marketing expense is shared equally amongst the Coke bottlers and TCCEC.
MARKETING MIX
Product
The product line strategy adopted by Coke in Pakistan is “product line
filling”. In the US “Product line modernization” is carried out where better
styled cans are launched.
Coca-Cola is the main product and Sprite and Fanta are supporting
products. Coke is associated with Cricket, Music and Movies. Sprite is
associated with food and Fanta with fun. CCBPL does not plan to phase out
any products since they are directly positioned against Pepsi's brands.
At the same time, it will not introduce new products since there is no
market absorption. However, it will continue to introduce new packages
since the ‘contour’ and ‘dimple’ shaped bottles were a huge success.
Price
Coke's Pricing strategy is “competition based pricing”. Prices are based on
competitive criteria. If cost of production rises, sales volume is increased to
reduce fixed costs.
Coke also employed “segmented pricing” during the Cola War where coke
was selling for Rs.3 in low-income areas and Rs.8 in Clifton and Defense.
It carried out an effective pricing strategy in Ramzan when a 1 liter bottle
whose normal price was Rs.25 was selling for Rs.10. This discount
increased sales during the winter season.
Placement
Coca-Cola considers Karachi to be its biggest and most rapidly expanding market. To ensure
better distribution coverage, it has a fleet of 80 trucks. Coca-Cola has a routing System, which
helps it to cover large areas in the minimum possible time.
Coke directly covers high volume outlets which account for 75% of its sales. It covers small
outlets through wholesalers which account for 25% of sales.
The objective of distribution is 100% availability. To ensure maximum market coverage, Coke
has an arrangement with restaurants that are Coke-exclusive. These include:
1) New York Cafe.
2) BBQ Tonite
3) Coconut Grove.
4) Mr. Burger.
5) Red Onion.
It gives these places discounts and shares sales promotion costs.
It also has a fleet of 50 cycle venders that peddle chilled Coke, Fanta and
Sprite at all major public and shopping centers.
Position
Coke's advertising objectives are:
“Coke wants its commercials and advertisements to be direct,
powerful, effective and yet impressive enough to leave a long lasting
refreshing impact in the consumers’ mind.”
Coke aims to have a strong consumer pull. It employs several promotion
strategies such as sharing cost with retailers who promote their brand. It
also has a huge display at Metropole Hotel.
In 1992, Coke changed its advertising agency from Paragon to Orient-
McCann, since Paragon wasn't coming up to the company's expectations.
Advertising messages are well developed and received. The recent ad
campaign, “Eat Cricket, Sleep Cricket, Drink Coca Cola” (ESD campaign) is
a huge success with the sport of its target consumer segment, Cricket
lovers.
o Sales force
Sales force serves as a critical link between the company and its
customers. Coke's sales force objectives are:
1. To carry out sales for the company.
2. To know how to produce customer satisfaction.
3. Must be able to look at sales data, gather market intelligence
and give proper feedback.
4. Sales Force must be market oriented.
Sales force of Coke is well paid. They have a fixed salary and above that
they get commissions for the amount of sales that they make.
Coke has strong internal marketing. Its sales force is motivated and they
wear company badges, so as to identify with the company.
PRODUCT
Product Mix:
o Sprite
In 1961, a citrus-flavored drink made its U.S. debut, using "Sprite Boy"
as inspiration for its name. This elf with silver hair and a big smile was
used in 1940s advertising for Coca-Cola. Sprite is now the fastest
growing major soft drink in the U.S., and the world's most popular
lemon-lime soft drink.
o Fanta
The name "Fanta" was first registered as a trademark in Germany in
1941, when it was used for a few years for a soft drink created from
available materials and flavors. The name was then revived in 1955 in
Naples, Italy, when it was used for the "Fanta" orange drink we know
today. It is now the trademark name for a line of flavored drinks sold
around the world.
o Coca Cola
Developed in a brass pot in 1886, Coca-Cola is the most recognized and
admired trademark around the globe. Not to mention the best selling soft
drink in the world.
Market share of Coca-Cola in Pakistan is increasing for past few years
and this can be a result of the company strategy of acquisition of its
bottlers. For both Pepsi and Coke the unexplored segment of market that
usually represents the rural segment will determine the future for both
companies.
30%
60%
10%
Market share
Coke
Pepsi
Others
Coca-Cola has dominated the beverage market all over the globe for
decades, controlling 46% of the entire beverage market share at present.
What is it about Coke that has kept it alive for so many years—and still
going strong?
Product Levels:
For a marketer, a product is not just the physical, tangible good, but a
whole lot more. Almost all products comprise 3 levels:
The core product
The actual product
The augmented product
Augmented Product
Actual Product
Core Product
Coke as a core product is merely a carbonated drink to quench your thirst.
That is the core benefit that the consumers derive for consuming the
product.
However, it is not the core product that is marketed by the seller or
purchased by the customer. It is the actual product that matters. Actual
products have at least the following 5 characteristics:
Quality level
Features
Styling
Brand name
Packaging
Thus, for a consumer of Coca-Cola, a bottle of Coke is not just a drink, but
the quality, package, and image that it accompanies. This means that if a
drink that looked and tasted like Coke was being sold by a retailer in a low
quality packaging and under an unknown brand name, at the same price,
there is very little probability that a beverage consumer will buy that
product. The reason? It lacks the above characteristics. The new product
guarantees neither the quality nor the image nor the packaging nor the
brand name.
A higher level of product is the augmented product. These include after-
sales benefits that come with the product. For instance Coke as an
augmented product can include benefits such as recyclable NRBs and the
returnable liter bottles.
Product Classification:
Coca-Cola can be classified on the basis of two criteria—length of the
product life, and consumer shopping habits. In relation to life span, Coke is
a non-durable good. These are tangible goods, normally consumed in one,
or a few uses.
According to consumer shopping habits, Coke is classified as a
convenience good. These are consumer goods that the customer usually
buys frequently, immediately, and with minimum of comparison and buying
effort. Coke is an impulse good, and consumers generally do not have to
make a decision when buying it. It does not require any planning or search
effort. The product is generally placed where it is most easily accessible, for
instance just before the entrance of the outlet.
Product Attributes
o Market Segmentation & Target Market
The concept of market segmentation is based no the idea that the total
relevant market is made up of different group of customers who are
similar to each other in some ways that are important in the marketing of
a particular product or product line. These groups are called market
segments. Thus a market segment is a group of customers with similar
needs or wants that will be especially responsive to a given marketing
MIX; that is, certain product features, at a certain price or price range,
will respond to this MIX better than to any other MIX and better than
customers in any other segment will respond. In this way a company can
concentrate all its marketing efforts on those portions of the market that
it is best able to serve and the ones that offer the greatest potential
profits. The segment or segments that are selected for intensive
marketing efforts are known as target markets. The company’s entire
marketing program will be focused around these target markets.
The Coca-Cola Company has a semi-demographic segmentation
strategy, with two target markets:
Urban vs. Rural
Young adults vs. 30-45 year olds
For its urban market Coca-Cola is a beverage that carries an “official”
image along with being trendy and sporty. For the rural divide, it is a
drink that “refreshes”.
For the market segmentation based on the age structure, Coca-Cola
targets two segments—teenagers and Moms. Teenagers in the social
structure of Pakistan are considered to be between 15-24 years of age.
They form the target market since this is the school/college going
population, and includes most of the actual consumers. In addition, this
is the age when children are most impressionable and for whom image
and fun is everything. Moms come under the age bracket of 28-45 years.
They are the decision-makers in a household and thus it is important for
them to be convinced that Coca-Cola is their beverage.
.
o Product Positioning:
The basic idea behind positioning is that any product or service can
distinguish itself from others by claiming some unique “position” in the
market. Position represents the image of the product—what the product
stands for, what it delivers especially well—as seen through the eyes of
the customer. According to one advertising executive:
To succeed in our over-communicated society, a company must
create a “position” in the prospect’s mind. A position that takes
into consideration not only its own strengths and weaknesses, but
those of its competitors as well.
Another executive offered the following definition:
Positioning is the basic selling concept used to motivate
consumers to select a given product over that of the
competition…. The greater the number and strength of
competitive brands, the greater the need for positioning to foster
distinction between a given product and all others in the same
product category.
Positioning can be done using any of the three strategies—in relation to
the competitor, in relation to the product class, or by price and quality.
Coke is positioned in relation to the product class. It projects itself
against not just its key rival Pepsi, but against all other beverages on which
the consumer may spend his beverage budget. However, some market
analysts do not agree with this view and believe that Coke is only positioned
at one end of the Cola War, with Pepsi at the other end. In view of this
opinion, Coke is positioned in relation to the competitor.
o Branding:
A brand is defined as “ a name, term, symbol, or design, or a combination
of them, which is intended to identify the goods or services of one seller
or group of sellers and to differentiate them from those of competitors”.
Brand Equity:
Brand equity comprises three elements:
Awareness+Loyalty+Association. A strong brand equity, although
intangible, is an asset for any organization. For the Coca-Cola Company,
its brand is one of its most important assets, with its brand equity worth
$36 billion.
Branding Strategies:
Branding strategies are a key element for both, the producer as well as
the middleman. These strategies decide the brand name that will be
marketed to the consumer.
a) Producer’s Strategy : The Coca-Cola Company markets the product
under its own brand name. Being a well-established brand in the cola
market, the Coca-Cola Company makes its product available to its consumer
with a brand name that the consumer can associate with high quality.
b) Middlemen’s Strategy: The wholesalers and retailers all carry only the
producer’s brand. Since the brand Coca-Cola has a very strong presence in
the market, the middlemen neither have the need, nor the finances and
other resources to brand the product under their own name.
o Packaging
“Packaging is the activities of designing and producing the container or
wrapper for a product”. For Coke packaging does not require a decision,
since there is a standard packaging policy that is followed by all
beverage manufacturers. Similarly, Coke is packaged in identical bottles
all over the world, including Pakistan. However, there is slight variation
in the 250ml bottles available in Pakistan. The original 250ml Coca-Cola
bottles are made with green tinted glass, where as the green tinge is
absent in the bottles manufactured in Pakistan. The reason for this
variation is only cost, which is one of the most important packaging
considerations. The green tinted glass is expensive to manufacture in
Pakistan. It would therefore increase the cost of production, and
consequently the price, which could be harmful for Coca-Cola’s sales.
o Labeling
Labeling performs any or all of the following three basic functions for a
marketer:
a) Identifies the product or brand,
b) Promotes the product, and
c) Describes the product.
It is essential that a label does not mislead customers, or fail to describe
an important ingredient, or fail to include needed safety warnings.
Therefore the seller must make sure their label contain all the required
information. Coca-Cola follows the brand labeling strategy, the label
only giving the brand name. However, it does give some precautionary
requirements on the label (e.g. “bottle for beverage use only”).
PRICING
A price represents the value of a good or service for both the seller and the
buyer. Coke engages in price planning which is systematic decision-making
regarding all aspects of pricing by the organization.
Coke provides its consumers with tangible and intangible value in the price
that it sets for the various categories of this product. It provides tangible
value by offering periodic discounts on its 1-liter and 1 ½ liter bottles
especially during special seasons like Ramazan and Eid. The intangible
value provided by Coke is the pride and the feeling of ‘being cool’ that
drinking Coke brings to the consumer.
Coke’s Prices
Serial number Size of Coke bottle Price
1. 250ml Rs. 8/-
2. 300ml Rs.9/-
3. Disposable Rs.12/-
4. I liter Rs.25/-
5. I ½ liter Rs.45/-
Relation Of Pricing To Coke’s Other Product Mix Variables:
The basic way in which Coke’s pricing relates to the other product mix
variables includes:
Since Coke is a convenience product, it does not have a high price.
This low price does not include any customer services. Thus Coke’s
low price and its inherent product nature prohibit the offering of any
customer service to consumers.
From the distribution perspective, the prices charged are high enough
to compensate them for their functions yet low enough to be
competitive with other brands at the retail and/or wholesale level. For
every Rs.8/- regular 250ml bottle of Coke, Rs.1 is given to the retailer
so as to provide him with an incentive to do profitable business on
behalf of Coke. However, the price is not prohibitively high as it is in
keeping with what Pepsi charges its consumers.
When costs change, Coke decides whether to pass on this price
increase to consumers or to absorb it tself. If the magnitude of the
price change is substantial, Coke decides to partially absorb the cost
itself and pass it on partially to consumers as has been witnessed by
the price increase in the 1 ½ liter bottle by Rs.5/-
Price Vs Non-Price Competition:
Coke engages in price and non-price competition. In price competition,
Coke influences consumer demand primarily through changes in price
levels. In so doing, Coke moves along the product’s demand curve by raising
or lowering its prices.
Price competition is a flexible marketing tool because prices can be
adjusted quickly and easily to reflect changes in demand, cost or
competitive factors.
Coke also engages, although to a lesser degree, in non-price competition
whereby it emphasizes factors other than price. In so doing, Coke attempts
to shift consumers’ demand by stressing the distinctive attributes of the
product – the fizzy taste, the ‘in’ thing, its ‘always’-there etc.
Factors Affecting Coke’s Re-pricing Decisions:
Coke’s price decisions are heavily dependent on external influences,
primarily competitive influences posed predominantly by Pepsi. This
contrasts with Coke’s product and promotion decisions, which are more
directly controlled by the company. A discussion of the factors is:
o Consumers
This means that relatively small changes in price bring about large
changes in quantity demanded. With Coke’s elastic demand, total
revenues increase when prices are decreased and total revenues go
down when prices rise. Coke is basically purchased by convenience
shoppers – people who value the availability of Coke at nearby locations.
This type of demand for Coke is based on two factors:
Availability of substitutes: Coke has many substitutes – directly Pepsi
and other cola drinks and indirectly white drinks and fresh and frozen
juices. Substitutes for Coke are also to be found within the Coke
company itself- thus Coke faces internal competition in addition to
external competition. This makes it more difficult for Coke’s price to
be raised since the subsequent gap in Coke’s consumption will be
easily and smoothly filled in by substitutes.
Urgency of need: Consumers feel no urgency of need when
purchasing Coke since it is hardly a life saving commodity. Since
there is no urgency of purchase, any price increases by Coke will
simply lead to delayed purchases, maybe no purchases or purchases
of substitutes. With price decreases by Coke, sales will expand as
consumers will be drawn from competitors or will move up the date of
their purchases to take advantage of these price reductions.
o Costs
For Coke the costs of the concentrate, labor, wholesalers, retailers,
advertising and other items have to be incorporated in the price of the
final drink. The major cost is incurred for the concentrate that has to be
imported from abroad. In addition, taxes have to be paid to the
government which again leads to cost increases. Out of every Rs8/-
bottle, Rs.4 is given to the government as taxes.
o Channel members
Channel member considerations also play a pivotal role in price setting.
Coke sets aside every Rs1/- out of Rs8/- to give to retailers. This may
seem like a very small sum but considering the volume of Coke’s sales,
the chunk which comes in the slot of retailers is substantial. Thus
channel cooperation is ensured.
o Competition
Competition is perhaps the most vital factor influencing Coke’s pricing. It
must price in accordance with Pepsi. If it raises prices, it seeks to lose
substantial market share since Pepsi is hardly likely to match the price
increase. If it lowers prices, again Coke stands to lose because there may
be a very high probability of the price cut not being matched by Pepsi.
Thus, Coke operates on the kinked dot of its kinked demand curve and
sets its prices in the typical way of a classical oligopolist.
Coke operates in a tightly controlled market-controlled price
environment which is characterized by a high level of competition,
similar products, and not very substantial control over prices by
individual firms.
PRICING OBJECTIVES:[
Coke’s pricing objectives are sales oriented whereby Coke is interested
in:
o Sales growth, and
o Maximizing market share
The Coca-Cola Company seeks to price Coke so as to achieve high sales
volume and expand its share of sales relative to competitors.
o Broad Price Policy:
Coke’s broad price policy sets the tone for the firm’s pricing efforts and
makes sure pricing decisions are coordinated with its choices regarding
its target market, image and marketing mix factors. Since, Coke’s pricing
objective is to achieve high sales volume, it engages in penetration
pricing. Here the company utilizes low prices to capture the mass market
for Coke. This is the proper strategy to use since the market is sensitive
to price, low prices discourage potential competitors, there are
economies of scale and a large consumer market exists. Penetration
price recognizes that a high price may leave Coke vulnerable to
competition.
PRICE STRATEGY
Coke utilizes a combined price strategy that mixes elements of a
cost-based price strategy, a demand-based price strategy and a
competition-based price strategy.
In a cost-based price strategy, Coke starts off with its costs and works
towards a selling price that also includes a profit margin. This strategy is
combined with a demand-based price strategy where Coke researches
consumer demand and measures the exact amount that consumers are
willing to pay for it. The price that is acceptable to the target market is
ascertained since Coke realizes that if a certain price ceiling is exceeded,
consumers will not make purchases. Finally, both these strategies are mixed
with competition-based price strategies where Coke sets its price in relation
to competitors. Since Coke faces intensive competition from Pepsi in
Pakistan it cannot afford to ignore this vital player when pricing Coke.
PROMOTION:
“Promotion involves any technique, under the control of a seller, that can communicate
favorable, persuasive information about that seller’s product to potential buyers, either
directly or through others who can influence purchase decisions.”(William P. Dommermuth)
Coca-Cola’s Promotional mix in Pakistan:
Coca-Cola Export Corporation Ltd., which the manufacturer of Coca-Cola concentrates, and not
the bottlers over look the promotional strategies in Pakistan.
The positioning of Coca-Cola as thirst quencher and refreshment drink was promoted before 90s.
But now its image as Real Thing is highlighted through promotional campaigns. Coca-Cola
relies heavily on the following Promotional Mix:
o Advertising
The main thrust of promotion is through advertising and it is due the
reach and effectiveness these media’s to the target market (positioning
oriented promotion). The target market Coca-Cola that usually lives in
urban centers for the country have access to the following channels of
advertising
Television
Newspapers
Bill boards
These modes of advertising are in a sense exhausted by both Coca-Cola
and Pepsi. Television campaigns by Coca-Cola helped a great deal in
emphasizing the image importance amongst the target segment.
The print media is normally used for the Sales Promotion purposes.
Billboard is provided with new life by heavy advertising budgets. One of
such example is Hotel Metropole Bill- board.
Coca-Cola Advertising Campaigns:
Coca-Cola launches a new set of advertising campaigns on the regular basis after 2 years
time. It started with ‘Always Coca-Cola’ in mid 90s and ‘Eat Cricket, Sleep Cricket and
Drink Coca-Cola’ this theme was during hyped up time of world cup. Coca-Cola has
standardize its advertising theme in South-Asian region that too is due to development of
global communication technologies which has started the satellite war in this region. The
new theme goes like this ‘Jo Chahe Ho Jaye Coca-Cola’.
o Sales Promotion
Pakistani Cola war is filled with examples of sales promotion campaigns based on low prices
of both Pepsi and Coke. These campaigns usually start during the month of Ramadan or
winter season. The main focus of these campaigns is 1-litre and 1-1/2 litre packaged bottles.
Sales promotion in case of Pepsi is offered to its wholesalers and retailers. But Coca-Cola’s
sales promotion activities are focused around its valued customers. According to Coke’s
representatives: “benefits of sales promotion can only be transferred to end customers if
distribution network members are aware of their role in Promotional campaigns and this
developed by highly trained sales management team.”
o Endorsing Other Activities
Coke is one of the major contributors towards the growth of music industry in Pakistan. Coke
image was promoted through sponsoring music bands like Junoon, which is highly popular
among the core target market of Coca-Cola. Coke in Pakistan also made its way in Cricketing
world by becoming the official drink for 1996 world cup. Cricket in both India and Pepsi
dominated Pakistan but for the past few years Coke is becoming the major sponsor. The
cricket sponsorship is controlled by Coca-Cola Middle East.
Coke is one of the leading partners in foreign food franchise business development. The
partnership is extended to companies like McDonalds etc.
o COCA-COLA’S IMPLICIT ADVERTISING
Coke is now developing its image awareness in Pakistan through implicit Advertising. These
implicit advertising techniques are devised in a way that people start associating themselves
with Coca-Cola. Implicit advertising techniques devised by Coca-Cola are mentioned below:
Color of coke.
The shape of the bottle. (Particularly its jumbo packaging)
Font of Coca-Cola.
These implicit advertising supports the explicit advertising
campaigns carried out by coca-cola. The image
development process in Pakistan is based upon these
implicit techniques which are recognized all over the world
and represents the brand “Coca-Cola”.
DISTRIBUTION
Like any other company, Coke engages in distribution planning which is
systematic decision making regarding the physical movement of Coke from
the manufacturer to the consumer as well as the related transfer of
ownership.
Types Of Distribution Channel
Coke is distributed through an indirect channel that involves the movement
of Coke from the manufacturer to independent middlemen to consumer. The
chain of this indirect distribution takes the following form:
However, Coke is also distributed directly to approximately 600 large-scale
retailers. This is done because these retailers boast of large-scale
operations and the volume of business that they provide to Coke is large
enough to justify the expenses of direct distribution. This direct channel
takes the following form:
Manufacturer
Wholesaler
Retailer
Consumer
Manufacturer
Factors Determining Selection Of Distribution Channel
In selecting its distribution channel, Coke has kept in mind the following
factors:
o The Consumer:
Consumer characteristics are an important criterion for determining
which channel should be employed. Since the number of Coke consumers
is many, the channel of distribution is indirect. This is necessary since it
would be uneconomical and extremely inefficient for Coke to distribute
its product to such a large number directly. Also, the market segment
that consumes Coke is very large, technically defined by the Coke
company as consisting of MUMS – married with kids between 20-45
years, though a very heavy portion of the teenage market also consumes
Coke. To reach such a vast and not necessarily geographically
concentrated segment, Coke needed the services of distribution and
hence, a distribution channel.
o The Company:
The goals of Coke were an important factor in identifying this particular
distribution channel as the right one. Coke is The Coca-Cola’s Company’s
core product. Thus it is vital that it be readily accessible all the year
round and through a distribution channel that is neither so circuitous so
Retailer
Consumer
as to delay delivery and neither so short so as to become unfeasible for
the company. Also, the long-term strategic intent of the company with
regards to distribution is to make Coke the drink that is available
anywhere, anytime and all the time. To achieve, this long-term goal,
Coke selected a distribution channel that would ensure easy accessibility
and ready availability all the time for consumers. Also, Coke, even
though it can financially afford to have its own distribution channel, does
not have the expertise to make it work. Coke has been in the market for
a long time but has not developed its own distribution channel simply
because it was concentrating on its core competencies which do not
include distribution. It was more feasible, in a business sense, to let
someone else more experienced in this field do the job for them.
o The Product:
The unit value of Coke is not much- one regular bottle of Coke costs Rs.
9/- This low per unit cost does not justify Coke’s developing its own
distribution channel. If the price per unit was large, Coke may have
opted for direct distribution. However, indirect distribution is more
appropriate for a low cost, convenience consumer product like Coke.
o The Competition:
Competitor distribution channels also dictated what channel Coke should
choose. If Pepsi chose a shorter distribution channel than Coke, they
would have gained an advantage over Coke with respect to shorter lead
times and availability of the product in the market before Coke. Thus it
was essential to match Coke’s distribution channel with that of
competition.
o The Middlemen:
For Coke, the choice of middlemen was heavily dependent on the
financial standing of the middlemen. Obviously, it would not be a very
smart move if Coke were to choose channel members who were
financially weak. Also, the professional competence of these channel
members was also very important. Coke had to suffer in earlier years
because its channel members lacked professional competence and
expertise in their field. Also, it is important for Coke to give credit to
distributors. Thus, Coke chose those channel members who were
creditworthy and had a good past record where payments were
concerned. To provide incentives to distributors and retailers, Coke also
gives regular quantity discounts to them.
Intensity Of Channel Coverage
Coke undertakes intensive distribution by employing a large number of
wholesalers and retailers to meet its distribution aim of ease availability.
o Objectives:
Coke’s objectives in undertaking intensive distribution are to gain
widespread market coverage and channel acceptance. Also through
intensive distribution, Coke can accomplish volume sales and profits,
which is its core business strategy.
o Wholesalers and Retailers:
Coke distributes directly to 600 prime retailers who have large chains
and/or are organized on a large scale. Their accounts with Coke are large
enough to justify direct distribution. Indirectly, by way of its distribution
channel, Coke supplies its products to more than 20,000 retailers.
Through such intensive distribution and supply of products to such a
large number of retail outlets, Coke meets its long-term strategic intent
mentioned earlier. Coke is supplied to all kinds of retail points including
supermarkets, general stores, restaurants etc.
o Customers:
The purpose of using an intensive distribution strategy is to gain access
to final consumers. Final consumers are many in number and are
convenience oriented. Since Coke is a convenience product, consumers
will not undertake a very lengthy and detailed search of many stores to
look for it. Thus, through intensive distribution, it is made conveniently
available given the relatively elastic demand for it.
o Marketing emphasis:
Again the marketing emphasis is on final consumers who are reached
through mass advertising, electronic and print included.. Retailers make
use of POS material or advertising pamphlets in stores to attract the
attention of consumers. Also, in intensive distribution, Coke ensures that
the product is available in nearby locations. Again, since convenience
and ease of consumers is the name of the game, Coke ensures that its
product is available in all nearby locations and that it is never out of
stock especially at important occasions like Eid, Ramazan etc.
o Major disadvantage:
The major disadvantage of employing intensive distribution is the limited
channel control that it gives Coke. It is difficult to monitor and keep
track of the activities of over 20,000 retailers interspersed over a big
geographical area. Thus, the company must needs sacrifice a higher
degree of channel control in return for extensive distribution.
DISTRIBUTION STRATEGY
Coke makes use of a pushing strategy in distribution where the various
members in its distribution channel cooperate in marketing Coke. This is
possible only because Coke is a well-known product. Had Coke been a non-
entity, the channel members would have been totally unwilling to bear the
expenditure required to market the product. The manufacturers of Coke
obviously bear the major share of marketing the product. However, the
channel members do pitch in with a significant contribution so Coke does
have middlemen cooperation on its side.
o Physical Distribution:
The physical distribution of Coke from manufacturer to wholesaler is done
through trucks.
85 trucks go out per day to replenish the depleted stocks of wholesalers.
Manufacturer
Wholesaler Retailer
Consumer