Coca-Cola Company’s New Product Marketing Plan

Target Market

As earlier stated, the Coca-Cola Company is in the process of developing a new product known as Bourbon Coke, an alcoholic product that will only be available to those above the age of 18 and hence, will be sold alongside other alcoholic products. Sales will be carried out in social places frequented by adults such as bars, pubs, and related places. This is an abrupt shift from tradition as Coca-Cola products have always been sold anywhere and to people of all ages, therefore, marketing Bourbon Coke will be quite a challenge from the beginning but with effective marketing strategies, the product will soon have a competitive advantage and will compete fairly among other well-established alcoholic brands in the market.

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There are many people who do not like idea of buying their favorite alcohol brands, and again having to buy a bottle of Coca Cola for a mixer, and would rather buy a brand that is already mixed to the required ratio such as Jim Beam’s bourbon coke, our product is the solution and will target this group of customers. It will have a primary target of those aged between the ages 25 and 39 though other persons above 18 years will be targeted.

Our main competitor, Jack Daniels, manufactures bourbon coke that is 6% alcoholic, therefore, we have decided that our brand shall have an alcohol content of 4%. Firstly, this will enable consumers to focus on the Coca Cola taste due to the low alcohol percentage and this will appeal to the female clients and even younger customers. Secondly, the low alcohol level will reduce the disorderly behavior and accidents associated with drunk revelers and finally, this will lower the production costs, hence lower market prices.

Environmental Factors

Various environmental factors will affect the process of marketing Bourbon Coke into markets around the world. These can be either internal or external factor.

Internal Factors

The major internal factors that will influence the performance of our product are organizational culture, economics, technology, and leadership.

As stated in our vision on technology, we will continue to provide premier services by using technology to enhance our efficiency and use existing technology to improve on the quality of Bourbon Coke (The Coca-Cola Company, para. 5). Coca cola Company has always been a market leader in the application of advanced technologies in the production of its various beverage brands. In order to continue with this trend even in the alcoholic products industry, we shall continue using the existing technology available in the company and promote innovation from our employees and other stakeholders.

The management shall ensure that quality, for which we have been known for many years is maintained throughout the production processes, thereby guaranteeing that the final product is of the highest quality. In order to achieve this, the company is in the process of installing new and modern manufacturing equipment that will ensure we maintain our position as a market leader.

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External Factors

The current economic environment will greatly affect the production and marketing of Bourbon Coke. The economic environment is very dynamic and complicated, experiencing fluctuations from time to time because of external factors such as inflation and government legislations. Having recovered from the recent global economic downturn, the economy is as not as vibrant as it was before the recession, therefore the marketing process will have to be very aggressive.

The economic factors will affect, among others, the cost of production, and this will subsequently determine the pricing of the product. The price will have to be of a competitive nature: we shall use a penetration pricing in the initial stages before making a final switch to a competitor based pricing or a skimming pricing as will be deemed appropriate. Competitor based pricing will be applied in markets where our competitors, Jack Daniels and Jim Beam, are popular, in order compete effectively.

Marketing shall also be carried out with regards to the demographic pattern of the markets. Europe is the world’s largest market for alcoholic beverages followed by North America, hence to achieve the desired market recognition, aggressive promotional campaigns will be carried out in these markets, and these will target areas with a large percentage of the targeted age group (25-39).

Government regulations shall immensely determine the marketing of Bourbon Coke as some countries and regional blocks restrict the promotion and sale of alcoholic products, these will have to be taken into consideration.

Other factors that will affect the marketing strategy adopted include competitors, political conditions and the social forces such as the media.

Goals & Objectives—launch and 3-Years Financial Performance

Product Launch

After a successful manufacturing process, the next most critical part will be the launch of Bourbon Coke. The launch process will address all the aspects crucial to begin mass production, plan and implement marketing strategies, obtain the required documentation, prepare the sales and support workforce (both internal and external), among other vital activities.

At the launch of the product, the marketing team has decided that samples of Bourbon Coke will be given to people to try before making a commitment to purchase it. This strategy could help the customers acquaint themselves with the product and will be carried out in a majority of the market blocks. Another promotional plan that will be adopted is the sale of mini bottles and packs, this will give our potential customers a chance to try out the product in smaller portions and if they are satisfied, will have the confidence to buy Bourbon Coke in larger quantities. This will also enable us to get customer feedback from different markets and, if necessary, make the required adjustments before embarking on a complete product launch.

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Marketing Strategies and Programs

Strategic planning is the practice of developing and sustaining a strategic balance between the firm’s goals and abilities and its shifting marketing opportunities. It depends on developing a straightforward company vision, supporting the goals, a clear business portfolio and organized functional strategies (Armstrong & Kotler, p. 79).

Our main target market is made up of people who use modern technologies such as the internet, mobile phones, television and radio among other channels. Therefore, promotion will mainly be carried out through these channels. Internet advertising has been on the rise and this, coupled with the increasing pace of internet penetration around the world, attests to its growing popularity as an advertising medium. Internet advertising will also provide a cheap yet effective method of advertising our product, it be will be carried out in the company website and other sites frequently visited by the target group, such as social networking sites. We shall also use mobile phone advertising, billboards, stadium perimeter advertising, local newspapers and magazines, and the radio and television.

Promotion will also be done through sponsoring of sporting events as has been shown by the success of Heineken in sponsoring golf and European football tournaments. We plan to sponsor football and rugby leagues around the world to increase product awareness, besides sports, we shall sponsor entertainment events where entrance will be guaranteed after the purchase of Bourbon Coke of a stipulated minimum size. This will also extend to selected sporting events and will help in expanding our consumer base and enhancing brand loyalty.

As earlier mentioned, free samples will also be given as a promotional tool.

Performance Evaluation (financial and non-financial)

Business is expected to pick up slowly as Coca Cola customers mostly associate the company with non-alcoholic products for which they are familiar with, however, the association of the product with their favorite mixer, Coca Cola, may help boost sales after a few months. The table below illustrates a three-year projection, including the amount that will be used in research and development (R & D). A carton of Jim Beam’s bourbon coke, made up of 375ml, 24 pieces cans, is sold for $81.99 in Australia while that sold by Jack Daniels goes for $89.99 (Liquor Home Delivery). We will sell our product at $79.99, a price that will enhance our competitive our competitive advantage.

Financial Performance

Table 1: 3-Year Profit and Loss Statement for Bourbon Coke
Year 1
$000,000)
Year 2 ($000,000) Year 3
($000,000)
Revenue 12,500 15,000 19,000
Cost of Sales 8,000 9,500 11,100
Gross Profit 4,500 5,500 7,900
Gross profit margin 36% 37% 42%
Operating Costs
Sales and distribution 1,010 1,260 1,900
Finance and administration
Advertising and promotion
600
650
570
800
500
700
Other overheads 895 970 1,000
Depreciation 210 235 200
Total Operating Costs 3,365 3,835 4,300
Operating Profit 1,135 1,665 3,200
Operating profit margin 9.1% 11.1% 16.8%
Interest 475 450 400
Profit before Tax 660 1,215 2,800
Taxation 255 455 800
Profit after Tax 405 760 2,000
Dividends 50 60 110
Retained Profits 355 700 1,890

Financial Evaluation (3 years)

The table shows a 3-year projection for the first three years of operation. In the first year, expenses will be high as we undertake promotional strategies and expand into new markets. This will lead to a value of $650 million for the first year, rising to $800 million for the second year and dropping to $700 million for the third year, as we shall have attained some level of market share.

This projection mainly targets customers between the ages of 25 and 39 and a secondary target of adults above 40 years and youths between the ages of 18 and 24. The total number of heads targeted worldwide is 30 million for the first year and rising to 200 million in the third year, representing a 3.33 % of the total population. This is only a projection as more than 25% (roughly 1.5 billion) of the world’s inhabitants consume alcohol and its products (WHO, pg. 16) while Coca Cola commands a market share of more than 20% in the world’s beverage market.

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Contingency Planning

The marketing strategy that has been discussed may fail to achieve its objectives, therefore, we have come up with a contingency plan that will be adopted in case of such an eventuality. The contingency plan includes more promotional strategies like gifts, Buy One Get One Free (BOGOF) strategies that will help in increasing the product knowledge among consumers. The company shall direct more funds towards the research and development (R & D) department in order to undertake more research programs to come up with a product that is more acceptable.

The pricing strategies will be adjusted with respect to the competitor’s pricing or other factors affecting the economy, for example, sales may dip due to a recession and this may call for a price reduction policy. Finally, the company may produce mini-packs to cater for the lower classes that are unable to afford the 375ml bottles.

Works Cited

Armstrong, Gary, & Kotler, Philip. Principles of marketing. Australia: Frenchs Forest, 2010.

Cravens, David W., & Piercy, Nigel. Strategic Marketing (8th Ed). New York: McGraw-Hill Book Company Australia, 2006.

Liquor Home Delivery. Jim Beam and Cola Cans, 2010.

The Coca-Cola Company. Press Center: News Release. 2009.

World Health Organization (WHO). Global Status Report on Alcohol 2004. Geneva: WHO Publications, 2004.

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