Coca-Cola Amatil Marketing Mix - Case Study Example

Running header: Marketing Assignment Student’s name: Instructor’s name: Subject code: Date of submission: INTRODUCTION Coca-Cola Amatil operates in the beverage industry. The industry has the ANZSIC code of 1211 and is mainly dominated by two soft drink makers’ i.e Coca Cola and Pepsi. Coca-Cola amatil is among the top five coca cola bottlers worldwide and is one of the largest manufacturer and bottler of ready to drink beverages in the Asia Pacific region. The company employs around 15000 people and has a customer base of that exceeds 265 million people. The company manufactures, distributes and sells a diversified portfolio which h includes water, energy and sports drinks, carbonated soft drinks, flavored milk, and fruit juice, packaged ready to eat fruit and vegetable products as well as fruit juice. In addition to beverages, Coca Cola Amatil also distributes premium spirits including Makers Mark and Canadian Club. The company operates in five countries including New Zealand, Australia, Papua Guinea, Fiji and Indonesia. The company’s major shareholder is the Coca-Cola Company which has a thirty percent shareholding with two of its directors sitting on Coca Cola Amatil’s board. Coca Cola Amatil has its headquarters in Sydney and is listed on the Australian Stock Exchange and has a capitalization that exceeds 8 billion dollars in addition to being one of the top 50 listed companies in the stock exchange. COCA COLA AMATIL’S PRODUCT PORTIFOLIO The company’s product portfolio include global leading brands of Coca-Cola, coke zero, diet coke, sprite, fanta, pump PowerAde and glace’au among other coca cola company’s beverages. The above brands are bottled and distributed by the company in the five countries listed above with license from the Coca cola Company. Coca-Cola Amatil also manufactures and distributes other brands including Kirks, Mountain Franklin and Deep Spring. Its premium spirits portfolio includes Canadian Club, Jim Beam Famous Grouse and Makers Mark. COCA COLA AMATIL’S OPERATING ENVIRONMENT Internal environment a) Distinctive capabilities The company enjoys distinctive capabilities such as architecture; innovation and reputation which enable it carry out its processes in a manner superior to its competitors. Through this for instance, the company has successfully introduced new products that are of higher quality compared to those of its competitors. The company also commands a strong reputation in relation to its competitors thus earning it goodwill that ensures it remains consumers’ favorite brand. The company also has a structure that enables it to be run in line with its objectives. Its structure is such that it outsources distribution from individual distributors hence enabling it to manage its operations without having to deal with numerous market dynamics. b) Intangible resources The company has intangible resources including intellectual, goodwill and technical resources. The company through its parent comp any The Coca Cola company enjouys enormous technical resources hence its technical expertise in production of its products which have been vital in fostering Coca Cola Amatil’s goals. Its technical and intellectual resources have been behind its numerous flavors in soft drinks. The company thus uses this expertise as a competitive advantage against its competitors. The company also enjoys customer loyalty and goodwill which serves as its internal strength as its products have always enjoyed undying loyalty from consumers. The company has also ensured brand visibility thus ensuring that many consumers access its products whenever and wherever they are. c) Tangible resources These include human, physical and financial resources. As stated above, Coca Cola Amatil possesses and manages many physical resources. The resources include equipments and buildings. Coca-Cola Amatil owns production plants in the countries it operates hence ensuring that its costs of production are maintained low. As such, the company is able to offer high quality drinks at low prices. Owning equipments ensures the company avoids leasing or renting equipments thus ensuring cost of production is kept low. The company also has a strong financial position and a strong capital base as stated above enables the company to carry on its production activities without major financial problems. As such, the company is able to avoid unnecessary debt financing. Coca Cola Amatil also has a motivated work force. The workforce serves as a major force in driving the company’s beverages into shelves and eventually to consumers. The company invests heavily in employee training and development which is a vital factor in ensuring the employees deliver high quality work. The company’s marketers are also motivated to ensure that customers buy the company’s products bearing in mind that the company offers impulse products and not necessity ones. External environment a) Political environment The company operates in the food category under FDA where the government plays a major role in regulating the manufacture of such products. Failure to operate within the set standards and regulations could lead to fines and penalties from governmental regulating authorities. As such, the following factors may cause Coca Cola Amatil’s results to significantly differ from its targeted results. Changing laws and regulations as well as changes in accounting standards, taxation and environmental laws both in Australia and foreign jurisdictions within which the company operates. Changes in beverage business environment which may range from pricing and competitive product pressures to the ability to maintain and gain shares of sale in the regional market as a result of competitors’ actions. -political conditions both at home and in the international arena. These may include civil unrest, capital transfer restriction and changes in governments and hence government policies. b) Economic environment The company has been flexible and willing to change in a bid to satisfy the ever changing customer needs thus enabling it exploit the economies of scale gained through its regional marketing which also makes its drinks appeal to local tastes thus earning the company an enormous profit yearly. The company‘s expansion over the years has enabled it benefit from various cultural insights and perspectives of the societies within which it operates. The company is also very committed to local markets and pays attention to different cultural requirements in a bid to remain competitive and develop new products to satisfy the markets. As such, the company enjoys more than 50% in the regional beverage industry with a substantial amount of income coming from outside Australia. Furthermore, with most economies recovering from the recession, there is now more consumption of the company’s products although the spending is still cautious. It is however expected that with full economic recovery as well as improved research, the company’s products will cost less and consumption will improve leading to greater profitability. c) Social environment External environmental factors greatly influence the company’s strategies in the regional marketing. Culture greatly influences people’s perceptions and preferences. As such, the company puts in a lot of effort in ensuring that its products suit customers’ tastes and preferences. Many Australians are increasingly practicing healthy lifestyles which have greatly affected the beverage industry since many now prefer diet colas and bottled water to alcoholic drinks. Consumers have also become more concerned with nutrition. As such, this is expected to greatly affect the beverage industry through increased demand. SWOT ANALYSIS STRENGTHS a) Single Established Company The company’s biggest strength is that it has established itself as a single large company with plants in the region’s major cities which directly run directly under the company’s restriction unlike its competitors. This means there is no conflict of policy and decision and one policy is adopted for all the five countries. One decision taken is effectively implemented immediately in all the company’s plants. As such, it is possible for the company to adopt same quality, same schemes and same prices throughout the region. b) Working Structure The company adopts an organisational structure that is of international standards with clear cut and well defined policies, regulations and procedure rules which are followed under all circumstances hence the company’s working style is highly professional while discipline is maintained. c) Human Resource Coca-Cola Amatil’s greatest strength lies in its intellectual brain power possessed by its highly qualified professionals and dedicated employees who are put in great efforts in satisfying the company’s customers through provision of ultimate best of coke. d) Proper Time Delivery The company has a fixed time of delivery of the company’s product to retailers and shopkeepers. Punctuality is maintained thus giving the company an edge over its competitors. e) Brand Name, Symbol and Bottle Shape These are strengths that give the company an edge over its competitors. The company’s bottles are uniquely shaped and stylish such that even if the name was to be rubbed off, people are still likely to identify with the bottle. Its name and symbol can not be copied and are well known. f) Superior product quality The company never compromise on product quality. For instance, its bottle brand caps as well as its disposable bottles are of superior quality than those of its competitors. In addition, the quality of tastes as well as gifts offered does not vary from one country to the other but is the same throughout the region. g) Diet Coke One of Coca Cola Amatil’s strengths is that it is a market leader who launched Diet coke in the region specifically for the overweight and health conscious people. The brand has been popular to a great extent and efforts by competitors to launch similar diet beverages have not been as successful. WEAKNESSES a) Formality of rules and regulations The company’s organisational structure is too formal implying a lengthy decision making and implementation process through a hierarchical process from the CEO downwards that has to be followed. The company’s employees are not allowed to make decisions even to change the smallest things such as instructions on a bottle on their own. Many brilliant ideas towards improving and boosting sales have remained locked up in the company’s employees brains since they are not permitted to work at their own free will. b) Non availability The company’s products are at times unavailable in small towns owing to the weaknesses in the company’s distribution channel. This is associated with limitations in resources and lack of adequate infrastructure. c) Limitation of resources This is the biggest weakness for the company since the plants depend on the parent company for finances. As such, the company does not supply as many freezers, electronic bill boards and coolers as retailers would want. OPPORTUNITIES The company has the opportunity of increasing its current market share to more than 60% owing to its vast resources and the quality of its products. With the international standards the company applies in its operations, it can increase its market shares many times. This may be achieved through increased distribution channels and infrastructure in a bid to ensure availability in all areas as required by customers. The company should also perform line extension in other flavors of coke, sprite among others. The company could also increase its market share through introduction of new products since it’s well established and has already positioned itself in the minds of consumers. THREATS a) Major threats and new entrants Pepsi continues to pose a major threat to the company. In addition, new entrants are rapidly gaining market shares and this could be a threat to the company’s operations. As such, the company should come up with a strategy of overcoming the threat. b) Nestle products Manufacturers of juices, cold coffee, Milo, squashes and tetra pack juices such as nestle products are an indirect threat to Coca Cola Amatil as they promote health consciousness and physical fitness. Coca-Cola Amatil should therefore effectively counter the threat by launching their own similar products. c) Taxes and government laws and policies The company faces a threat from the ever changing government tax laws and policies. Being a big company, the company pays numerous taxes to the government which is likely to greatly affect returns. MARKETING OBJECTIVES The company’s ultimate objective is increasing volume of sales, expanding its share of regional non alcoholic ready to drink beverage sales, maximizing the company’s long-term cash flows and creating economic value through increased profit. As such, the company aims to supply everyone with their favorite drink and satisfy their needs and wants. This is aimed to eventually provide profit to the shareholders while increasing the market share.The company’s specific marketing objectives range from; i) Creating a service based company with a primary goal of exceeding customers’ expectations ii) Increasing the number of clients served by the company annually by at least 20% annually through superior performance as well as word of mouth referrals. iii) Developing a sustainable financial management company which generates value for the customer. iv) Staying at the forefront of the market as the market leader in innovative products introductions and successful product launches. v) Strengthening and satisfying the needs of the current generation Y consumers with new eye caching products. vi) Becoming the market leader in the functional drinks segment with increased market. Recommendations for improving the marketing objectives a) Consumer reality The company needs to properly analyze shifts in consumer reality. These changes may be occasioned by a number of factors including downturns in the economy, unemployment, new technologies and the recent increase in health related knowledge. Analyzing such changes will help the company better improve its marketing objectives hence ensuring sustained increases in sales. For instance, the company should come up with more diet drinks as well as fresh fruit juices owing to improved emphasize on healthy living. b) Marketing mix The company needs to ensure its marketing mix properly address the 4pa components. For instance, the company should ensure doubled distribution efforts in a bid to ensure its products are found wherever they are needed at all times. The company should also employ competitive pricing in a bid to attract and retain new customers. MARKET SEGMENTATION The company segments its customers based on the following lines; a) Geographic segmentation -the company has segmented its regional market based on geographies. Various divisions are created for major regions of the region and each head of a division reports to the headquarters. The divisions are accorded a lot of autonomy to run their operations. b) Place of consumption –Coca Cola Amatil segments the market based on the place of consumption of its products. Most consumption takes place in places such as railway stations, clubs, cinemas and restaurants as well as homes. c) Product type- the company also segments the market based on the type of products bought by consumers. This means that the market is divided into coca cola products and non coca cola products market. While the coca cola products form the bulk of the revenues currently, the non coca cola product s is gradually rising. d) Demographics – The Company also segments the market based on demographics such as age and income. MARKET TARGETING AND SEGMENTATION The above market segments are targeted using different ads. The company’s primary market consists of the young between 10 and 25 years of age while those between 25 and 40 years mainly compose its secondary market. The company mainly targets its products towards those who want strong flavor while the diet cola flavor and similar products are targeted towards the health conscious sub segment. Other non coca cola beverages are also used to target the segment and the young. The company positions its products as refreshing and thirst quenching. The products are positioned as bringing joy and are associated with having great times with friends and family while enjoying daily life. They are also marketed as being of consistent high quality. The strategies and the marketing objective Coca Cola Amatil’s market segmentation and positioning strategy is in line with its marketing objectives of increasing volume of sales, expanding its share of regional non alcoholic ready to drink beverage sales, maximizing the company’s long-term cash flows and creating economic value through increased profit. Through segmenting its market into various segments, the company is able to identify specific needs for specific segments and hence come up with quality products for meeting specific segment needs. As such, the company performs well in all the segments it operates in. in addition, the company’s positioning strategy is appealing to all classes of customers while ensuring that the company’s products are found wherever they are needed all the time. As such, the company’s strategy is successful in ensuring the company delivers quality products to their customer which ensures the company remains profitable in line with its objectives. COCACOLA AMATIL MARKETING MIX a) Product The company is a leading provider of quality soft drinks in the region. The company is not only a leading seller of Soda but also its diet coke brand is also a leading brand in the market. The company also has a number of brand variants in its pop category such as Sprite. The company has also been offering fruit juices and sports drinks. This is in addition to its wines and spirits category products. However, its main emphasis is on soft drink industry which has contributed to its ability to distinguish itself as a quality provider. b) Place The company’s distribution system is key element to its offering. Its products are packaged in cans and bottles and can be found in supermarkets and other retail stores across the region. The products are also found in various restaurants and can also be found in many vending machines placed in various buildings and businesses. This implies ease and convenience of getting the products which is vital to customer royalty. c) Pricing The company’s long-term pricing strategy is value oriented. However, fierce competition pressure has forced the company to maintain prices at affordable levels in a bid to appeal to its vast middle class market. Although there are risks associated with an organization’s adoption of a price driven strategy, the company has been able to have brief periods of price drops owing to its strong regional brand. d) Promotion Coca Cola Amatil spends over 750 million dollars annually on sales advertising and distribution in a bid to maintain its position in the industry leadership against its competitors. The company spends a substantial amount of its advertising budget on television advertising, magazine ads, online and social media. In addition, the company uses promotions at the retail stores in a bid to drive revenues during slow periods. Recommendations on marketing mix strategy a) Product- the company needs to increase its research due to the increased emphasis on healthy living. This will enable it come up with more dietary products which will enable it take advantage of this emerging market. The company also needs to venture in the production of fresh fruit juices and take advantage of its distribution channels to serve this market which competes with its products indirectly. b) Price- the company should endeavor to produce superior quality products in a bid to ensure its pricing strategy remains as stable as possible. This is because people will still pay for high prices if the products are of high quality. The company should also adopt different prices for different markets depending on the market’s ability to pay provided the minimum profit target is achieved. This is likely to attract more customers while ensuring high profitability. c) Promotion – the company should sponsor more promotional events in a bid to ensure increased familiarity with the brand. In addition, more efforts need to be put in advertising the non coca cola products since the market does not seem to associate them with the company. d) Place – the company needs o provide the distributors and retailers with more fridges and coolers. In addition, more distributors need to be appointed and where the cost of operation is prohibiting, they should be compensated in a bid to ensure that the brand is found in every place within the region. REFERENCES: Invest smart.com, Coca Cola Amatil Limited (CCL), Retrieved on 21 June 2013, From: http://au.investsmart.com.au/shares/asx/COCA-COLA-AMATIL-LIMITED-CCL.asp Read More