Coca-Cola: Marketing Policies and Processes

Introduction

For any organization selling any kind of product, Marketing is extremely important. Marketing helps make the potential customers aware of the presence of the product in the market. And once a product is well established, it helps ensure that the product never leaves the customers consciousness. However, right type of marketing is also important in order for a product to become successful. Wrong kind of marketing can actually alienate the customers while under or over marketing can prove to be counter-productive. For marketing to be successful, the marketing department of an organization and indeed the organization as a whole must understand the customers’ need and their likes and dislikes and market the product accordingly. This requires a certain marketing orientation to be present throughout the organization since the marketing department cannot do much if it does not get the right kind of support from the rest of the organization. This essay shall discuss the importance of marketing orientation of an organization, study the key elements of a marketing plan and critically analyze how successfully these are being used by the world’s leading carbonated drinks company, Coca Cola.

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Marketing Orientation

The success of any organization’s marketing plan depends on its marketing orientation. Market orientation is a philosophy that focuses on meeting the needs or wants of customers through its products (www.businessdictionary.com). Marketing orientation is also sometimes referred to as consumer orientation. However, according to Hadcroft (2007), “market-oriented firms require a careful balance between customer- and competitor-centred sources of competitive advantage, so as to be less susceptible to the risks of myopic customer orientation.”

Most businesses are focused on production rather than sales and marketing. Production is scientific and quantifiable while marketing is more intuitive (Barry, 2004). Hence it is difficult to develop a marketing orientation and most businesses concentrate on production. In such firms, marketing is left to the small marketing department whose job it is to sell the company’s product to the customers, who may or may not be interested in the product. In such a scenario, selling the product becomes an uphill task and even the best written marketing plan can fail to come up with results.

Every firm in this world is in the business of making money and the best way to make money is to have satisfied customers. Firms with a marketing orientation are those which understand that they are in the business to satisfy customers. The world is constantly changing and so are the needs of the customers. Hence, any marketing plan needs to examined and re-examined frequently to keep up with the changing times. A successful market plan incorporates customer’s feedbacks and opinions and its goal is to build the business around the needs of the customer rather than try to change customer’s need according to the company’s products.

Such customer orientation becomes even more difficult for a company like Coca Cola. Started in 1886, the company had just one brand in the first seventy years of its existence. Coca Cola was successfully despite not being customer oriented. Instead of creating a product that satisfied customer’s need, they created a product and than created demand for it. Coca Cola’s success lay in its aggressive advertising. As early as in 1890s, Coca Cola’s first president, Asa Candler used aggressive marketing to turn an invention into a business. He gave away coupons for complimentary first taste of Coca Cola and the distributing pharmacies had the Coca Cola brand pasted on everything including the clocks, urns, calendars and scales (www.coca-cola.com). This aggressive marketing has been the hallmark of the coca cola brand ever since. As Kramer (1999) points out, Coca Cola’s success has been its ability to create and nurture brand symbols and slogans and reinforce it feel good marketing. Coca Cola is just carbonated sugary water, yet the company’s marketing efforts have transformed it into a “brand that promises to make the world a better place” (Kramer, 1999). At Coca Cola, marketing orientation has taken on a completely different meaning.

Marketing Plan

A good marketing plan is one which provides an organization with a clear direction on how to channel its marketing efforts in the coming years. Entreprenuers.com gives a handy list of all the key ingredients of a good marketing plan. According to them, besides talking about the future, a good marketing plan should also give an incisive look into the company to all readers. So the planner must understand and have thorough knowledge of the company’s finances, products, competitors, distribution channel and market. If the product is being sold in more than one market, then it is important to know the preferences of people in different countries, market trends and other useful demographic information. The marketing planner must also carry out strategic interviews with salespeople to understand the needs of the customers.

Once all this information is incorporated into a marketing plan, the planner should next carry out an objective SWOT analysis of the company. This could include things such as market trends, competition and demographics. Of course, any marketing plan is incomplete without a detailed discussion of the 4 Ps: Product, Price, Place and Promotion. These should be planned keeping the target audience in mind.

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The Price is often the most important factor in the marketing mix. The simplest way of coming up with price is to come up with the cost price of the product and add the profit you desire. In this method, the company decides beforehand the minimum price it is willing to accept for it product. However, pricing is not so easy. There are a number of other factors which decide the final price of a product. If a company’s targeted audience is the rich people, for example the customers of Chanel, it would make sense to give the clothes a premium pricing. A low price would erode the brand value. Besides if the customer is willing to pay a higher price, it would make sense to make as much profit as possible. On the other hand, the customers of Marks and Spencer would not be willing to pay such a high price and so the company would have to price its product accordingly. Besides the target customer, a lot of other factors have to be considered while deciding the right price of the product. If there are a number of competitors in the market, it can result in a price war and a company may be forced to lower its price. In such a scenario, in order to remain competitive, a company may decide to remove certain frills from its product. For example, budget hoteliers like Travelodge do not have hotel restaurants which helps them offer lower room rates to its customers (Deboo, 2009). Similarly, during hard times, as during an economic downturn, customers are not willing to pay a premium and may move to a lower priced product. In such times, a product has to decide whether it will retain its high-end price tag and risk losing customer or lower the prices and risk eroding brand value. Thus coming up with the right price is not always an easy decision.

Price also often determines the quality of the product. A high priced product would be able to invest more in the quality. However, when customers start demanding lower prices, the company is forced to cut back on prices and this can hut the product. Similarly, a low priced product can mean smaller margins for the company and this can impact it promotions. Hence, the right price can make the difference between a product’s success and failure.

The marketing plan has to gel with the overall planning process and in fact should be incorporated into the organization’s plans, rather than be a separate plan, in order to be successful. As such, the marketing planner has to make his plan along with or prior to the overall planning process of the organization.

For over a century, Coca Cola’s marketing strategies has been exceptional. It is sometimes said that a good product, appropriately priced and distributed does not need any planning. However, in case of Coca Cola, the beverage has grown into the world’s leading beverage company and the most recognized and valuable brand solely on the basis of its marketing and promotion, especially when one considers the fact that Coca Cola is a totally non-essential product. As mentioned above, aggressive promotion has always been the distinguishing feature of Coca Cola. All the well known features of the brand, including the contoured bottle and the special script in which it is written, have been preserved for over a century. Yet the brand has had to constantly reinvent itself in face of changing times and competition and has had to adapt according to the preferences of consumers in different markets. While most of these changes were successful, some of these changes proved to be grand failures. Coca Cola’s success has been in leaving behind the bad experiences and moving on to acquire newer customers.

Coca Cola’s hundred year old history has not been without hiccups. Coca Cola’s best years were the years just after the World War II when its market share was as high as 52%. However, in face of tough competition from Pepsi, by the 1980s this had shrunk to 24%. In a bid to get back its market share, in 1985, Coca Cola had introduced a New Coke which proved to be a huge disaster despite carrying out extensive surveys and taste tests prior to its launch. Over the years, it has also changed its slogan, packaging, and graphics and other marketing communications, with the biggest change taking place in 1999 (Howard, 1999). All these changes, some successful and some not so successful, were part of Coca Cola’s marketing plans, which were changed to reflect changing customer preferences.

As Coca Cola expanded its business in over 200 countries, its marketing strategies had to adapt accordingly. When going global, firms have to often decide whether to standardize and benefit from economies of scale or adapt according to the local market for a better penetration. Sergio Zyman, Coca Cola’s former chief marketing officer believed that in order to think globally, a company must act locally (Vrontis & Sharp, 2003). As Coca Cola penetrated into these different markets, it adjusted its approach so as to be able to provide appropriate marketing and beverages to connect with its consumers. And in order to be successful, it meant carrying out extensive marketing research and coming up with marketing plans unique to each country.

For Coca Cola, the main adaptation has been in its marketing mix. Coca Cola has of course never had to worry about its distribution, as it floods the market with its product so that the consumer can find the beverage easily. However, considering the different levels of development in different countries, Coca Cola has had to offer its drinks at a price that the consumer’s in a particular market would be willing to pay. This would not have been possible has Coca Cola carried out all bottling activities in the US and than exported the product. The company was able to effectively overcome this price constraint by outsourcing the bottling plants to the local people, thus keeping the costs down. In Brazil, Coke has struggled as it has had to compete with not only Pepsi but also the local drinks, which meant that it has had to keep its prices low, affecting its profitability. To improve its profitability, Coca Cola went back to using glass returnable bottles in Brazil, which helped them lower their price and yet maintain their profitability (Gertner, Gertner & Guthery, 2005).

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Similarly, promotion has to keep the local conditions in mind. When Coca Cola entered India in the 1990s, Pepsi was already well established there and Coke’s promotions, which emphasized the red colour of the brand, did not strike a chord with the locals. While the advertisements succeeded in creating awareness about Coca Cola’s launch, it was unable to establish a brand name or stimulate interest in its product, the key objective of any promotional activity (Sherlock & Reuvid, 2005). In order to reach the consumers, Coca Cola had to hire Bollywood actors as brand ambassadors before it was able to give any serious competition to Pepsi.

Coca Cola’s Customer Communication

According to Sergio Zyman, Coca Cola’s former Marketing head, marketing is a science that positions the product in front of the targeted customers (Donaton, 1999). For over a century, Coca Cola has done a wonderful job of placing its product in front of its customers. No matter where the consumer is, they can always find coca cola and other carbonated beverages from the company. Flooding the market with its product is one way to communicate with the intended customers.

The company has always come up with new and unique ways of communicating with its customers. As mentioned above, some of Coca Cola’s most famous identifiable features have not changed since they were first introduced. The special script in which it is written, the contoured bottle and the secret formula have remained unchanged for over a century. While these have become the distinguishing features of the brand, Coca Cola has always used plenty of advertising to reach out to the customers and keep them interested in their product. Coke uses all channels of advertising to reach to its consumers. These include print media, TV, sponsorship of important events, and fliers.

Coca Cola also carries out aggressive sales promotions such as coupons, “two at the price of one”, and competitions to pull sales. Coca Cola and other carbonated drinks sold by the company are also often sold in larger, more economical packs to boost sales. Such sales promotions are great to beat the stiff competition from Coca Cola’s arch rival, Pepsi.

Coca Cola also has a dedicated public relations department which ensures that the company and its products always remain in news and which helps reduce the impact of negative publicity such as contaminants found in coke bottle in Belgium (Ackerman, 1999). It is the PR department’s job to maintain the brand’s reputation. Reputation is based on all the messages that an individual receives about a brand (McGilligan, 2009), and the PR department’s effort can go a long way to ensure that most, if not all, of these messages are positive ones. Of course the PR department carries out its usual job of communicating with the various stakeholders carefully monitoring all communications coming out of the company. In all this respect, Coca Cola’s PR department is one of the best around. One example of Coca Cola PR was when in 2001, in response to increasing criticism about the coca cola’s nutritional value for school children, coca cola decided to end its strategy of requiring exclusivity from school districts in return from receiving additional revenues for school programs (King, 2001). Such announcements help negate negative publicity and show the company in good light.

In recent years, Coca Cola has also used Internet to reach out to its consumers. Online marketing can be done in many ways. The best known way is of course to the company’s corporate website. Coca Cola has an extensive network of websites which take care of all its important brands and markets. Most customers can visit these websites if they have any questions or need information about the company’s product. Coca Cola’s site also carry its latest TV advertisements, details of ongoing promotions and other public service advertisement to ensure a complete experience for customers visiting the site. Such corporate websites are a good way to communicate with customers and help improve the sales. Coke also uses only sponsorship of certain websites, such as online games sites, to reach out to its customers. Since 2007, the company has allowed WAP-enabled mobile phone users in Spain to receive videos of football games. Similar mobile phone marketing is used in several other markets (Humphries, 2009). Finally, online networking sites and blogs are also a good way to communicate to the consumers and Coca Cola has used this method as well. Technology is constantly coming with new ways to market a product. The latest trend is the microblogging site twitter.com. Adding twitter to the marketing mix can also help make targeted marketing pitch. And keeping a close track of what other’s write on the company’s twitter niche is good way to get feedback on the company’s products (Friedmann, 2009).

Thus we see that Coca Cola is using all of the latest as well as the more traditional methods of communicating with customers. With a company like Coca Cola, which is extremely aggressive when it comes to promoting itself and communicating with its customers, it is difficult to suggest ways to improve customer communications. However, coca cola’s online communications at present are quite limited and it is not using this strategy very well in the US. Considering that the US is the largest user of Internet, Coca Cola could become more aggressive in using internet as a mode of customer communication in the US.

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Coca Cola’s Promotion Policies

As noted several times in this essay, Coca Cola has an extremely aggressive promotional policy. They have a huge marketing budget and advertise their product in every available media. They also use sponsorships to give their products more visibility and use in-store promotions and promotional rewards to push sales. However, despite such aggressive marketing, Coca Cola is not doing as well as it was doing in the 1980s and 90s. In recent years, its sales have steadily fallen and they are unable to compete with non-carbonated beverages in an increasingly health conscious world (Foust & Byrnes). There are several reasons for this fall in sales and some of them are beyond the scope of this essay. However, a more targeted marketing would help Coca Cola regain at least some of its lost market share.

Coca Cola’s current promotional strategy is to inundate the consumers with its product through every possible media. Although a good strategy, it can sometimes be counter productive. Many of the standard channels of promotions are increasingly becoming ineffective are customers are getting overexposed to them. Immune customers no longer switch channels during TV adverts, no longer open direct mails and do not notice newspaper advertisements (Lord, 2003). Most web user has also become blind to banner ads and use pop blockers.

One way to counter this problem is through the use of niche marketing. Niche marketing is about targeting the customers who are most likely to be interested in your product rather than mass advertising that advertise to everyone (Hezar et al, 2006). In order to be successful in niche marketing, coca cola needs to carry out extensive surveys to understand who are their most loyal customers as well as who are mostly likely to become future customers. In an increasingly health conscious world, many older people are more interested in health drinks and energy drinks and coca cola has acquired a bad reputation. In such a situation, coca cola could also strategically position its various products to target different segments of customers. For example, it could target the diet coke towards the older more health conscious consumers while the classic coke could be targeted towards the teenagers and younger consumers. Such a niche marketing approach, as opposed to mass marketing could help the firm regain its market share.

Conclusion

Coca Cola is the most valuable brand of the world and it has achieved this status purely on the basis of its innovative marketing. The Marketing strategists at Coca Cola obviously knew what they were doing. However, the mass marketing method that the company has employed for over a century is slowly becoming outdated. In an increasingly individualist society, coca cola’s successful marketing strategy may need a revamp. The company also needs to make some bold decisions about its business, but that is beyond the scope of this essay. From a purely marketing point of view, investing in niche marketing may be a good idea for this most successful brand of all times.

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