Segmenting markets   

Not all consumers or business customers share identical needs, product requirements, or buying behaviour. Marketers deal with this fact through market segmentation – one of the most fundamental parts of marketing strategy. This aspect consists of three steps: segmenting, targeting, and positioning. (Dibb, Ferrell, Simkin, & Pride, 2012)

Just like other companies, The Coca-Cola Company targets different market segment for their product Coca-Cola. They make use of demographic segmentation and take into account the following variables:

Ø  Age – Coca-Cola targets the youth (age 15-25) mainly as this group is the most active and therefore requires the most energy and refreshment.

Figure 1: Different sizes of Coca-Cola
Source: Coca-Cola

Ø  Family size – each society/country has different family sizes which is why Coca-Cola is bottled in various sizes such as 500ml, 1L, 1.5L, and 2L packs. This way, consumers can choose with ease which size is best suitable for their family.

Ø  Level of income – Coca-Cola is distributed in returnable glass bottles in low level income countries/places such as the Philippines whereas consumers with high level income are served with Coke in tins.

In regards to geographical segmentation:

Ø  Urban and sub-urban areas – Coca-Cola has distribution networks countrywide however these areas are more targeted as opposed to rural areas.

Coca-Cola also uses psychographic segmentation through the following variable:

Ø  Lifestyles – products from this company especially the classic Coca-Cola is presented to suit the modern lifestyle, which is characterized by busy people (always-on-the-go) and mobile generation. This is the reason why coke in cans are manufactured, to promote convenience.

The market is also segmented behaviorally (which relates to the way consumers behave towards the product). Variables include:

Ø  Volume usage – the market is divided into heavy, moderate, and light users. Coca-Cola then serve these segments through variations in packaging (e.g. 6 bottle pack of 1.5L, or 24 cans in a crate) This can also be influenced by holidays and other occasions

Ø  Benefit expectations – consumers often seek for promotions that include raffles or prizes which Coca-Cola implements through their labels/packaging. A great example is their campaign in the summers of 2013 and 2014 called Share a Coke where people can customize their own Coca Cola bottles with their name in it. This generated sales of more than 150 million personalized bottles. (Coca-Cola, 2014)

Figure 2 Some of the names from Coca-Cola's new marketing campaign Share-A-Coke. Source: Coca-Cola

The effectiveness of segmentation can be maximized when segments are measurable, substantial (large enough to be sufficiently profitable), accessible (easy to reach), stable (segments will be around long enough for marketing mix to be implemented), and useful (meaningful and are likely to enable company to improve marketing strategy and better satisfy target market). (Dibb, Ferrell, Simkin, & Pride, 2012)

The segments described above are easy to identify and measure through the use of marketing research (consumer panels or questionnaires/attitude surveys). Moreover, they are mostly easy to reach, and stable which is why Coca-Cola is able to carry out marketing strategies like promotion and aggressive advertising especially in relation to occasions such as Christmas. Lastly, each segment is useful and therefore helps The Coca-Cola Company to develop their marketing mix and expand their markets.

Bibliography

Coca-Cola. (2014). Share A Coke Names | Marketing Campaign. Retrieved November 21, 2016, from Coca-Cola website: http://www.coca-cola.co.uk/stories/share-a-coke#

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

Marketing Research    

In order to assist marketers solve particular problems or take advantage of marketing opportunities, marketing research is done. This is the systematic design, collection, interpretation and reporting of information. (Dibb, Ferrell, Simkin, & Pride, 2012) Moreover, marketing research is essential in building an understanding of customers, competitors, marketing trends and the marketing environment.

Market research suppliers

There are two kinds of marketing research suppliers – internal and external suppliers. The former consists of single individuals or committees or departments in the company who needs the research itself, while the latter includes independent businesses outside of the company that provides the service. (Renssen & Tartarin, 2016) One of these external suppliers is Nielsen – an organization that specializes in marketing research and solving problems in fields such as consumerization, innovation, marketing effectiveness, and sales effectiveness. (The Nielsen Company (US), LLC, 2016) Furthermore, Coca-Cola can purchase information from Nielsen’s consumer panel and retail measurement (which focuses on what shopper and consumers buy and how they behave) in order to implement effective consumer marketing solutions. Demand analysis services can also be useful to help establish a more innovative and successful market positions for Coca-Cola. (The Nielsen Company (US), LLC., n.d.) More benefits for Coca-Cola include tapping into areas of business such as brand perceptions, campaign effectiveness across media platforms, and also competitive intelligence.

Another marketing research organization is GfK who “turn market and user experience research into smart business decisions”. (GfK, 2016) Some of their products that The Coca-Cola Company may use for its Classic Coca-Cola are exposure effects (a solution that measures both reach per media and emotional response and provides a simple yet analytical set of actions); future of retail (to provide market insights based on intelligence about expectations and demands of today’s shoppers especially in the soft drink market); and user experience mapping. Moreover, information like purchase frequency, shopping behaviour, and price sensitivity can be generated from the consumer panels in order for Coca-Cola to analyze consumer behaviour and make decisions to improve their marketing strategies.

Short questionnaire to measure customer attitude towards Coca-Cola

1.    Name _________________

2.    Are you    __ Male? Or __ Female?

3.    Age:

a.    Below 18 years

b.    18-25 years

c.     25-35 years

d.    Above 35

4.    Do you purchase soft drinks?

a.    Yes, if so what is the brand? _________________

b.    No

5.    How familiar are you with Coca-Cola?

a.    Never heard of it

b.    I am aware but never used it

c.     Use it only sometimes

d.    Use it on a regular basis

6.    How did you first hear about Coca-Cola? (you can choose one or more answers)

o   TV

o   Radio

o   Magazine

o   Newspaper

o   Internet

o   Friend/Relative/Associate

o   Other ________________

o   Haven’t heard of it before

7.    When was the last time you used/bought Coca-Cola?

a.    Under a month

b.    1-6 months

c.     6 months – 1 year

d.    Not sure

8.    How often do you buy Coca-Cola?

a.    Once per week or more often

b.    2 – 3 times per month

c.     Once per month

d.    Once or twice a year

e.    Less than once a year

f.      Not sure

9.    Do you take advantage of special offers from Coca-Cola?
Strongly disagree  |  Disagree  |  No Opinion  | Agree | Strongly Agree

10. Overall, how do you rate the quality of Coca-Cola?
            Poor  |  Fair  |  Good  | Very Good | Excellent

11. What is it that you would most like to change about Coca-Cola?
_________________________________________________________________________________________________________________________________________________________________________________________________

12. Would you recommend Coca-Cola to someone else?

a.    Definitely not

b.    Probably not

c.     Not sure

d.    Probably

e.    Definitely

References

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

GfK. (2016). Market research and user experience research experts | GfK Global. Retrieved November 11, 2016, from GfK website: http://www.gfk.com/

Renssen, S., & Tartarin, T. (2016). Marketing Environment week 2.1 Ch 9: Marketing Research. Retrieved November 11, 2016, from Saxion website: https://leren.saxion.nl/bbcswebdav/pid-1463531-dt-content-rid-11069270_4/xid-11069270_4

The Nielsen Company (US), LLC. (2016). Solutions. Retrieved November 11, 2016, from Nielsen website: http://www.nielsen.com/ca/en/solutions.html

The Nielsen Company (US), LLC. (n.d.). Demand Analysis | Drive Profitable Growth | Nielsen. Retrieved November 16, 2016, from 2016: http://www.nielsen.com/eu/en/solutions/demand-analysis.html

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.