Channel players and physical distribution

The retailers – one of the channel players – are businesses that purchase products for the purpose of reselling them to the ultimate consumers, the general public, often from a shop/store. They occupy a highly demanding and a very important position in the marketing channel as they function as the link between manufacturers and consumers. (Dibb, Ferrell, Simkin, & Pride, 2012)

As mentioned in last week’s review questions, retailers all over the world partake in the distribution of Coca-Cola. One of them is Jumbo – the 2^nd top ranking retailer in the Netherlands with over 580 stores. (Veraart Research, 2016) The store here in Deventer has a good shopping atmosphere, with Christmas decorations and complete with relaxing music to enhance the shopping experience. The shop has a yellow theme to represent Jumbo and its name.

Coca-Cola is located in the second aisle from the left, which can be very easy to see when walking in the store. I believe that Coca-Cola is placed at a very easily accessible spot (end of the shelf) as it is one of the best-selling soft drinks. 

Furthermore, Coca-Cola Classic (in white outline) alone occupies 1/8ths (12.5%) of the shelf for all soft drinks while all the Coca-Cola drinks combined has 30%. Jumbo’s own brands (in yellow outline) also has 12.5% of the soft drink shelf. Pepsi only fills 6.25%.

In theory, retailers will tend to devise their own market strategies in order to make adequate financial returns while ultimately striving to give satisfaction to the consumer. (Dibb, Ferrell, Simkin, & Pride, 2012) This is the reason why Jumbo has equal share of space for Coca-Cola Classic and their own-label brands. 

Another store that retails Coca-Cola is Albert Hein in Deventer. It also has music and decorations, however, in my opinion the atmosphere is not as good at Jumbo’s. Also, Jumbo presents Coca-Cola in a more attractive manner. In this store, Coca-Cola is located at the very left side where it can’t be easily seen when walking into the store. 

 Compared to Jumbo, Albert Hein allocates less space for their own-label soft drinks (outlined in blue) and an even lesser space for Pepsi. However, Coca-Cola has more facings and share of space here in Albert Hein. See table below. It can then be deduced that Coca-Cola is a better seller than AH’s own label brands.

Product	No. of facings		Share of Space
	Jumbo	Albert Hein	Jumbo	Albert Hein
Coca-Cola Classic	34	46	12.5%	28%
Pepsi	17	15	6.25%	2%
Own label	36	29	12.5%	10%

Transportation, packaging and communication are all connected in relation to Coca-Cola. Firstly, communication is involved when a retailer place purchase orders for Coke products either by mail, telephone, text, fax or computer. The manufacturer will then package the products in an appropriate manner, depending on the quantity the retailer has ordered. For instance, 1.5 L bottles / small cans can be packed in 6’s and can be sold for a promo/lower price. This will then make transportation by truck to the retailers (i.e. loading and unloading of Coca-Cola products), as well as displaying them in the store, considerably easier.

References

Dibb, S., Ferrell, O., Simkin, L., & Pride, M. (2012). Marketing Concepts & Strategies (6th ed.). Cengage Learning EMEA.

Veraart Research. (2016). Top Retailers in the Netherlands. Retrieved December 14, 2016, from Retail-Index website: http://www.retail-index.com/Countries/ToprankingretailersintheNetherlands.aspx

Marketing channels

Usually referred to as the ‘place’ in marketing mix, distribution is an essential part of marketing as this involves activities that make products available to customers where and when they want to purchase them. Consequently, choosing the right channels of distribution is a major decision in developing marketing strategies. (Dibb, Ferrell, Simkin, & Pride, 2012)

Distribution channels of Coca-Cola

Figure 1 Overview of the supply chain of Coca-Cola

 (Hu, 2016)

Ø  Manufacturer à Consumers

This characterizes the short direct movement of Coca-Cola product from the manufacture to end users, done through E-commerce – the use of the Internet for marketing communications, selling, and purchasing. (Dibb, Ferrell, Simkin, & Pride, 2012) This is evident in their ‘Share-A-Coke’ e-commerce operations wherein consumers were able to customize their own Coke bottles with their own names and order them via shareacoke.com; these bottles are then specifically delivered to the right shipping address of the consumers. (Moye, 2015) Through this channel, The Coca-Cola Company fulfills all the financial functions (buying and selling), logistical functions (sorting, accumulating, transporting, and allocating), and commercial functions (standardizing transactions, collecting information, assorting, promoting, and providing customer service).

Ø  Manufacturer à Retailers à Consumers

Coca-Cola is distributed through this short indirect channel. Retailers are independent parties that act as intermediaries buying large quantities of Coca-Cola from its manufacturers in order to sell them to end users in retail. The manufacturer are then responsible for the logistical functions while the retailers (e.g. supermarkets and convenience stores) focus on the financial functions such as buying and selling and commercial functions such as standardizing transactions, assorting, and perhaps promoting.

Ø  Manufacturer à Vending machines à Consumers

This is similar to the previous one, however, this channel cannot provide customer service nor collect information. The complexity is low as no negotiations with retailers concerning shelf-space or channel conflicts will arise. These vending machines can be also used for promotion.

Behaviour of channel members

Channel power is the ability to influence another channel member’s goal achievement therefore the product’s image can be influenced by the retail concept in which it is sold. (Dibb, Ferrell, Simkin, & Pride, 2012) There are times that some retailers (e.g. Albert Hein or Plus) over-emphasize their own products or other competing products (e.g. Pepsi) by allocating smaller shelf-spaces for Coca-Cola. Other times, the opposite happens which improves Coca-Cola’s image.

Distribution strategy of Coca-Cola

Coca-Cola uses both pull and push distribution strategies. The company promotes the product directly to end consumers through TV advertisements, social media and outdoor advertisements. Consumers then develop a strong demand for Coca-Cola, inducing them to order it from shopkeepers. The push policy is also used in which the Coca-Cola Company utilizes its sales force and trade promotion to encourage intermediaries – retailers and wholesalers – to carry, promote and sell Coca-Cola to end consumers. Lastly, Coca-Cola product is distributed intensively; this is effective to promote convenience to consumers, as they are able to purchase these in all available outlets.

References

Dibb, S., Ferrell, O., Simkin, L., & Pride, M. (2012). Marketing Concepts & Strategies (6th ed.). Cengage Learning EMEA.

Hu, J. (Director). (2016). Coca-Cola Supply Chain [Motion Picture]. Retrieved December 7, 2016, from https://www.youtube.com/watch?v=UBSOiHUctrY

Moye, J. (2015, August 10). Special Delivery: Inside the ‘Share a Coke’ e-Commerce Operation. Retrieved December 7, 2016, from The Coca-Cola Company website: http://www.coca-colacompany.com/stories/special-delivery-inside-the-share-a-coke-e-commerce-operation

Targeting and positioning

The second and third phases of market segmentation – targeting and positioning – present a framework for selecting both target markets and opportunities to pursue with an appropriate positioning strategy. (Dibb, Ferrell, Simkin, & Pride, 2012)

Marketers are aware that brands should be positioned based on the expectations and wants of their consumers. In order for them to research this, a questionnaire can be utilized.

Short Questionnaire

Name: ____________

Q1. What is your age? _______                     Gender:                       □ Male    □ Female

Q2. Rate the following attributes (1 to 3) based on their importance when purchasing soft drinks. (1 being most important and 3 being least important.

___ Availability                        ___ Price                     ___ Taste

*To answer the following, use this symbol: ü

Q3. Please rate the following soft drink brands on how much you have heard about them.

	Barely heard of them		Know something about them		Heard of them frequently
Coca-Cola	□	□	□	□	□
Pepsi	□	□	□	□	□
Fanta	□	□	□	□	□
Spa	□	□	□	□	□

Q4. Please rate the following soft drink brands based on availability.

	Never available		Sometimes available		Always available
Coca-Cola	□	□	□	□	□
Pepsi	□	□	□	□	□
Fanta	□	□	□	□	□
Spa	□	□	□	□	□

Q5. Please rate the following soft drink brands based on price.

	Very cheap		Affordable		Very expensive
Coca-Cola	□	□	□	□	□
Pepsi	□	□	□	□	□
Fanta	□	□	□	□	□
Spa	□	□	□	□	□

Q6. Please rate the following soft drink brands based on taste.

	Poor				Good
Coca-Cola	□	□	□	□	□
Pepsi	□	□	□	□	□
Fanta	□	□	□	□	□
Spa	□	□	□	□	□

Three people have been interviewed and their answers can be found at the end of this report. The information gathered is then turned into a perceptual map in order to visually depict consumer perceptions and prioritizing of brands and their perceived attributes.

According to the interviewees, taste and price are the top two attributes they always consider when purchasing soft drinks. These will then be the dimensions of the perceptual map. Furthermore, the size of the circles will depend on market share. All other data used can be found in the scoreboard at the end of this report.

Figure 1: Own perceptual map

It is evident in the positioning map to the left that some of the brands (Pepsi, Spa and Coca-Cola) overlap. There is less differentiation among the brands as there were only 3 people interviewed. More set of answers, say from 100 people, will yield different results. However, if we assume that this perceptual map represented the whole market for soft drinks then we can come to the conclusion that Coca-Cola is positioned as the most expensive brand, with taste that is better than average. Coca-Cola may then use this information in order to improve the taste of the product and/or lower the price.

Other perceptual maps made through different research have also been done. They focus on other characteristics such as the strength of caffeine, amount of sugar, and how modern/traditional the brands are.

Bibliography

Dibb, S., Ferrell, O., Simkin, L., & Pride, M. (2012). Marketing Concepts & Strategies (6th ed.). Cengage Learning EMEA.

Euromonitor. (2016, February 12). Soft Drinks in the Netherlands. Retrieved November 30, 2016, from Euromonitor database: http://www.portal.euromonitor.com.saxion.idm.oclc.org/portal/analysis/tab

Fripp, G. (2015). Example Perceptual Maps. Retrieved November 30, 2016, from Perceptual Maps website: http://www.perceptualmaps.com/example-maps/