Marketing planning and forecasting sales potential

In order to set the right goals, marketers must be able to forecast future sales and market size trends.

According to Euromonitor, the market size (and therefore the potential) for soft drinks in the Netherlands will continue to increase in the next four years. This can be seen in the graph to the left. In order to estimate the sales potential then, the break down approach will be used – which is based on market potential and general economic data. (Euromonitor International, 2016)

(Euromonitor International, 2016)

The table above shows the brand share of Coca-Cola in the Netherlands. It has been stable at almost 8%. To estimate the sales for the year 2017, it can be assumed that the brand share will remain the same. Therefore sales potential = share * market potential (0.08 * 2800 mln litres) = 224 mln litres. (I was a bit confused with this question, as it asks for potential – but shouldn’t potential mean in the future?, so I have chosen 2017 instead)

A marketing plan should be written for the Dutch market for Coca-Cola because it is essential to have a ‘road map’ for implementing strategies and achieving objectives in this market. Additionally, a marketing plan makes participants aware of problems, opportunities, and threats in this market. Lastly, it assists in ensuring that the Coca-Cola Company is customer focused, conscious of market and competitive movements, realistic in its expectations, and prudent in its use of resources. More benefits of producing a marketing plan are to serve the ‘best’ target customers, beat competition, maximizing returns, and minimizing threats. (Dibb, Ferrell, Simkin, & Pride, 2012)

If I were asked to develop a sales forecast for Coca-Cola for the years 2016, 2017, and 2018, I would use trend analysis – which is a form of time-series analysis. This is suitable as it is based on historical sales data over a period of many years, and is done in an unbiased, scientific way (unlike executive judgements or surveys). The disadvantage though, is that historical data may not give a true picture of an underlying trend. Another disadvantage is that there is a risk in assuming that factors that caused demand in the past will persist into the future. Also, the further out the forecast is, the greater the possibility of error is.

References

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

Euromonitor International. (2016). Brand Shares (Global - Historical Owner) | Historical | % breakdown. Retrieved October 12, 2016, from Euromonitor International database: http://www.portal.euromonitor.com.saxion.idm.oclc.org/portal/statistics/tab

Euromonitor International. (2016). Market Sizes. Retrieved October 12, 2016, from Euromonitor International database: http://www.portal.euromonitor.com.saxion.idm.oclc.org/portal/statistics/tab

Marketing in international markets and globalization

Generally, international marketing refers to marketing activities performed across national boundaries. In order to partake in this, companies with necessary resources and skills have to develop an interest in expanding their businesses beyond national boundaries. (Dibb, Ferrell, Simkin, & Pride, 2012)

Coca-Cola is one of the products that have been involved in international marketing. Right now, it is globally marketed with operational reach that encompasses more than 200 countries worldwide. (The Coca-Cola Company, 2016)

The table to the left displays the highest brand shares of Coca-Cola from the Coca-Cola Company in some of the countries it operates in, in 2015. (Euromonitor International, 2015) The differences in shares alone already indicates that there are different product positioning in countries. One of the market entry strategies of this company is licensing – a system in which a licensee pays commission or royalties on sales or supplies used in manufacturing. For instance, in Zimbabwe, United Bottlers have the license to make Coke. (Food and Agriculture Organization of the United Nations, 2016) The Coca-Cola Company also has a strategic partnership with Aujan Industries Company in the Middle East and a joint venture with Nestlé and Beverage Partners Worldwide. (The Coca-Cola Company, 2016)

International turmoil can also affect international marketing. Britain’s exit from the EU – also known as the Brexit – created panic in global stock markets. Consequently, stock prices of soda giants Coca-Cola and PepsiCo fell by 2.6% and 2.4%, respectively. (Bailey, 2016) Furthermore, Coca-Cola has significant international operations which exposes the company to currency fluctuations. The fall of the pound, therefore, may have a substantial impact to the value of the Coca-Cola product and its fiscal performance. (Bailey, 2016)

Moreover, the marketing position of Coca-Cola can be affected by government regulations. One example is the Federal Trade Commission Act in the United States which emphasizes fair methods of competition and consumer protection. (Federal Trade Commission, 2016) There is also a law in California – known as Proposition 65 – which requires companies to inform the citizens about exposures to chemicals that cause cancer, birth defects or reproduction harm by putting warnings on their products. (Government of California, 2016) In UK, there is a product liability ad safety law which states that it is the responsibility of the producer, manufacturers, and distributors to provide information on product risks, monitor safety, and take action if a safety problem is found. (Government of the United Kingdom, 2012)

International marketing is indeed a complex marketing activity. Companies willing to go beyond their domestic market must take into consideration many aspects (like government regulations) and further analyze the foreign environment they would like to enter.

References

Bailey, S. (2016, June 28). Why Soda Giants’ Stocks Fell on Brexit News. Retrieved October 12, 2016, from Market Realist website: http://marketrealist.com/2016/06/stocks-soda-giants-fell-brexit-news/

Bailey, S. (2016, June 28). Will Brexit Impact Soda Giants’ Fiscal 2016 Performance? Retrieved October 12, 2016, from Market Realist website: http://marketrealist.com/2016/06/will-brexit-impact-soda-giants-fiscal-2016-performance/

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

Euromonitor International. (2015). Brand Shares (Global - Historical Owner). Retrieved October 12, 2016, from Euromonitor International website: http://www.portal.euromonitor.com/portal/statistics/tab

Federal Trade Commission. (2016). Federal Trade Commission Act. Retrieved October 12, 2016, from Federal Trade Commission website: https://www.ftc.gov/enforcement/statutes/federal-trade-commission-act

Food and Agriculture Organization of the United Nations. (2016). Chapter 7: Market Entry Strategies. Retrieved October 12, 2016, from Food and Agriculture Organization of the United Nations website: http://www.fao.org/docrep/w5973e/w5973e0b.htm

Government of California. (2016). Proposition 65. Retrieved October 12, 2016, from Government of California website: http://oehha.ca.gov/proposition-65

Government of the United Kingdom. (2012, October 9). Product liability and safety law. Retrieved October 12, 2016, from Government of the United Kingdom website: https://www.gov.uk/guidance/product-liability-and-safety-law

The Coca-Cola Company. (2016). 2015 Annual Report on Form 10-K. Retrieved October 6, 2016, from The Coca-Cola Company website: http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/investors/2015-annual-report-on-form-10-k.pdf

The Coca-Cola Company. (2016, September 20). Responsible Marketing. Retrieved October 6, 2016, from The Coca-Cola COmpany website: http://www.coca-colacompany.com/stories/responsible-marketing

The Coca-Cola Company. (2016). Who We Are. Retrieved October 12, 2016, from The Coca-Cola Company website: http://www.coca-colacompany.com/careers/who-we-are-infographic

Business Marketing

The difference between the consumer and business market is that the latter’s target customers are not consumers, or private individuals, or households – its target customers are other businesses and organizations that purchase products and services in order to resell or provide another kind of service. (Dibb, Ferrell, Simkin, & Pride, 2012, p. 178)

Coca-Cola is definitely not just in consumer markets, but also in business markets. Coca-Cola is sold to reseller markets: both wholesaler and retailer markets (i.e. Jumbo, Albert Hein, Plus in the Netherlands). Furthermore, it is also sold in institutional market, for example Saxion University, and other schools, museums, hospitals, and more public-sector bodies. This is to provide goods (in this case, drinks) to students and/or members of each sector.

Business purchases are categorized into three: new task purchase, modified rebuy purchase, and straight rebuy purchase. For Coca-Cola, straight rebuy purchase will be most likely applicable for other businesses, as purchases are done routinely under the same terms of sale. This also requires little additional information therefore re-ordering can be done relatively quicker than the first two types of purchasing mentioned. (Dibb, Ferrell, Simkin, & Pride, 2012, p. 188)

Each organization has a group of people who make business-to-business purchasing decisions – this is called a buying center. For example, in an institutional market, there are the ‘buyers’ who are responsible for selecting suppliers and making negotiations. They are more commonly known as the purchasing managers. However, they may not be the ones using the products to be purchased therefore they must take into consideration the opinions of the so-called ‘users’. These people evaluate the product’s performance and make relevant suggestions as to whether the product is suitable for use or not. Moreover, there are people responsible for the flow of information between the two, such as secretaries and technical personnel – these are the gatekeepers. (Dibb, Ferrell, Simkin, & Pride, 2012, p. 190)

For an institutional market, such as Saxion University perhaps, the buying process is characterized by five different stages. Firstly, a problem may be recognized (there are not enough drinks to sell in the canteen) by one of the canteen employees or students. Normally, in the buying process comes the development of product specifications, but since the product to be purchased is drinks to resell to customers in the university then this stage may not be necessary. Then, the search for possible products and suitable suppliers are done by the buyer. A supplier analysis may be done. The fourth stage will be the evaluation of the products. Lastly, for Saxion, the buyers can chose whether to involve only one supplier (sole sourcing from a Coca-Cola distributor) or more suppliers (multiple sourcing from other drink distributors).

Most business customers, like producers, purchase products to be used in the production of new goods and services for their own customers, directly and/or indirectly. Consequently, the demand for business products are proportional to the demands for consumer products – also known as derived demand. (Dibb, Ferrell, Simkin, & Pride, 2012, p. 188) This applies to Coca-Cola as a business product. The buyer/purchaser will order a certain number of Coca-Cola bottles that will suffice with how many customers they can get. For example, in Saxion, Coca-Cola bottles will be perhaps equivalent to the number of students and employees they have. Moreover, the demand for cool drinks may be higher during the summer than in winter, therefore Saxion’s purchasing department may consider ordering more Coca-Cola bottles during the summer.

Bibliography

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

  

Consumer Buying Behavior

The social environment of the consumer can influence the use of a product. In the case of Coca-Cola, the consumer’s social environment is characterized by his/her family, friends, work colleagues and other social affiliations; this is either usually at home or out with friends. When the consumer is at home, depending on the age, close relatives might have an effect whether or not this product is consumed. If the person is a bit older, this has less of an effect on the consumer. When it comes to going out with family or friends, the consumer can be affected by what they might say about the product. The consumer might be pressured to either not drink the product or drink something else instead.

Moreover, the stages of the family life cycle may also have an impact.    
The traditional family life cycle consists of 6 stages:

•  single I – when a young adult leaves parents and lives by himself
•  Empty Nest I – a young married couple w/o children
•  Full Nest I – a married couple with children
•  Full Nest II – a married couple with more children
•  Empty Nest II – a married couple with children that live on their own
•  Single II – when one of the married couple passes away

Of course in reality this does not apply to every family, due to differences in culture, environment and/or situation. Nonetheless, Coca-Cola can relate to every stage in the family life cycle as it is a product that benefits any person. May it be for occasions or just quenching thirst, this is one of the most suitable and convenient drink, no matter the situation. 

Impulse buying will be most likely applicable to Coca-Cola, as this involves no conscious planning, but powerful urge to buy to quench thirst. First, the consumer will undergo stage 1 of the consumer decision-making process and recognize the problem as soon as he feels thirst. Then, an internal search will be done as the consumer searches his/her memory about which product he recognizes the most, which will presumably be Coca-Cola (as this is one of the widely known drinks). As soon as the consumer thinks of what he wants to buy, he will go to the nearest supermarket/store. There, he might evaluate the alternatives (other soft drinks that may be cheaper than Coca-Cola) and compare them price- and taste-wise but will still decide to buy the product as he is most familiar with Coke. He will then drink it and evaluate it as a good decision made. 

Below is an attitude scale which can be used to measure the consumer's attitude towards Coca-Cola.

Statement:	Strongly disagree	Disagree	Neutral	Agree	Strongly agree
Coca-Cola has an attractive packaging.
The taste of Coca-Cola beats every other soft-drink.
I would consider Coca-Cola as my first choice to buy soft drink.
I am getting a good value when I purchase Coca-Cola.
I would encourage friends and relatives to purchase Coca-Cola.
I would recommend Coca-Cola to someone who seeks my advice.
I would say positive things about Coca-Cola to other people.