Coca Cola Company's Market Segments, Logistical Flows, External Environment, and Internal Factors - Case Study Example

Case Study on marketing analysis Marketing System Literature Review A market is any platform that exists to provide an opportunity for the exchange of goods and services. Marketing provides an opportunity for stakeholders to endorse their products to customers in order to gain an edge over their competitors (Kasper & Piet 2000). As stated by Hanssens & Parsons (2003), any market has competition; it is considered that, even with minimal sellers, each participant has the uphill task of fronting their merchandise as the preferred product in the eyes of consumers. Monopolies are thought to be unsustainable since a business making supernormal returns from their investment in any one market segment will immediately attract new entrants. Most perceived hindrances to entry in a particular market segment are imagined, since investment in resources will freely flow between market segments (Becherer & Halstead 2003). Top management in companies also find it undermining when engaging in unhealthy or vicious competition for high end markets and appreciate the fact that both high end and low end segments are crucial for maximum profits (Wierenga 2008).Marketing systems play a great role in the process of buying and selling goods in a market. A marketing system is defined as a network of various human resources, from single individual entities, to groups, that pull together and jointly facilitate the availability of goods or services upon a customer’s request. These systems exist in any economy. The review of a particular market is essentially a review of its market systems, and the fulfilment of the obligations set out by the system to its member entities (Stavros & Winzar 2008). The main objective of marketing systems is to create distribution channels that serve as interactive platforms for buyers and sellers at all levels of the supply chain. These channels eventually result into networks in their own right, whose decisions, regardless of how small or insignificant they may seem to be, can have a major outcome in the whole marketing process. As noted by Lusch & Vargo (2006) marketing systems provide a crucial link between division of labour and specialization, two elements which result in the availability of a diverse selection of different type of goods and services available at the end of the distribution chain Due to the dynamic nature of existing markets, the structures or networks laid out by a market system normally evolve in the quest for the market system to become more purposeful, And the significance of the resultant system will depend on how successful it is in addressing eminent change. A marketing system can be divided into six categories according to the role played by each. 1. Exchange logistics-involves all logistics incorporated when merchandise changes hands, from transport infrastructure to communication empowerment. Process flows-these are elements influencing the general streaming of resources within the networks of a market system e.g. information, finance etc. Role specialisation and divisions of labour based on distinct resources-specialists in any one network have the ability to increase efficiency and volumes. This increases the total output of the whole system. 2. Sorting of products-assists in categorizing goods and services being offered into certain specific groups 3. The organisational factor that manages the coordination of all arms operating within a market system to ensure smooth transition between networks 4. Consumer needs-assists in identifying the needs of target markets for efficient execution of customer instructions. As further elaborated by Kasper & Piet (2000) the overall effect of these elements when working perfectly, is the smooth transition of goods and services from the seller to the buyer. Marketing systems are interconnected with the social dynamics and matrices that they exist in. A buyers’ satisfaction arises from the convenient acquisition and utilisation of a good or service. It also arises from the magnitude with which a customer feels integrated within the whole distribution process and with the community as a whole (Lilien & Rangaswamy 2004). Marketing systems not only contribute to consumer wellness, but they also assist in identifying areas where loopholes exist in distribution or networking channels, making them fundamental in all business sectors today(Kitchen & De Pelsmacker 2004). Case Study Questions When working on a marketing strategy, a company must answer certain fundamental questions about its operations, so as to identify their strengths and weaknesses. Some of these questions are: 1. How do internal and external environments affect a company’s productivity? Answering this question helps in appreciating the significance of isolating weaknesses within the company, and the advantages of evolving in tune with the external factors. 2. How can the company increase its output and meet consumer needs more efficiently? Accomplishing this would directly translate to more revenue for the company. What factors should the company consider when targeting a market? The strategy employed determines how the product is received by the market, and whether it is successful 3. How can a company grow its business? Sustainable growth secures a company’s future, and inspires confidence in business partners. The coca cola company and its environment The coca cola company started in 1886, in North America, and has grown to be the world’s leading Soft Drink Company. The various factors associated with their leading brand, coke, in its marketing system and strategies are as outlined below: They incorporate both the internal and external environment. Coca cola’s main hold on the internal environment is via an efficient production process through proper management and good communication skills within departments. The company tries to manage the external environment through constant awareness of issues affecting their product in the larger market. This greatly affects how coke is viewed by customers. Market segments When marketing coke, coca cola tries to influence consumer choice by addressing various issues such as economic, psychological and cultural factors, which normally influence market segments. Maintaining low coke prices keeps the brand competitive. Coca cola has succeeded in acquiring a wide target market mostly through mass and differentiated marketing, making coke appealing to a wide range of consumers. External environmental issues For the coke brand, the major external issues are normally economic inflations and fluctuations, dynamic customer expectations and attitudes toward the coke brand, and changing population patterns. Coca cola tries to stay aware of changes in any of these forces, and comes up with counter strategies, like price change and resource reallocation. Internal driving forces in the company Maintenance of world class standards is the key intrinsic driving force in coca cola. Continuous systems checks in the operation of the business must be conducted and any inefficiency addressed. A detailed analysis of any strengths, weaknesses and opportunities must be done in all levels of marketing and management. Effective communication among the departments should be emphasized and any discrepancies acted upon. Coke’s marketing system can be illustrated with the model below implemented based on Layton’s Marketing System Model. Specialisation and divisions of labour This has the effect of increasing output while at the same time lowering unit production cost, which eventually empowers the company with price flexibility (Kasper & Piet 2000). Specialisation also results in the production of a superior product rather effortlessly. The coca cola company employs this concept through a well coordinated manufacturing, bottling packing and transportation departments. Coca Cola Company’s external environment This is mostly influenced by competition, politics, or even economical situation of the immediate market. Social and population factors may also affect the company externally. Social factors incorporate people’s attitudes and may be hard to forecast. Coca cola tries to influence coke’s perception to the public through vigorous advertising. The population patterns in the immediate target market is also important, since a product like coca cola may be popular within a particular age or race, while at the same time be poorly perceived elsewhere. Demographical knowledge assists the company to strategize on issues such as product mix and market activation locations (Hanssens & Parsons 2003). Economic and political factors normally go hand in hand. Consumer incomes, inflation and market recession influence the public’s purchasing power and thus Coca cola has to consider when evaluating prices. Changes in legislation in a country can also affect the company’s production process, such as the technology employed in all stages of the product production. Coca Cola Company’s internal factors As the leading soft drink manufacturer, coca cola constantly reviews issues within its internal environment that have an effect in its products performance in the market. Reviews are done on the company’s current market objectives, expected organisational resources, structural and cultural issues within the company. Sales volumes, market share and profit margins are vital in evaluating objectives and strategies. While reviewing the resources available for marketing operations, coca cola has to analyse the financial and human capability available for proposed strategies. The company’s culture and attitude towards marketing also has to be scrutinised, since this directly influences the ability of the marketing department to acquire necessary assistance (Govindarajan 2007). Process and logistical flows Coca cola has to strategically manage the streaming of resources from production to consumption, to facilitate efficient marketing. The crucial resources here are information and financing, which have to be availed in a timely manner (DeBonis 2003) Reaching target markets Various strategies have been adopted by coca cola while trying to appeal to consumers. The company tries to reach customers both in the stores and shops, and also outside the store, for example, through the internet and via the public media. After identifying its target market, the company tries to appeal to all categories of product users, from the early users to the laggards, who may be the last to purchase the product (Becherer 2003). Below is a proposed growth strategy that can be adopted by coca cola in its quest to achieve market dominance in counties where formidable competition, like Pepsi, controls a substantial market share. Research on market expectations and its effect on coca cola’s market share would provide enough information for future marketing strategies, which would involve the introduction of new brands into the market and thus raising quality standards of existing products. For coca cola, widening their product range would increase profit margins when some of their new products penetrate competitor’s niche markets, for example, launching soft drinks that are sugar free may be more appealing to diabetics and people who are keen on losing weight and maintaining their sugar levels. As coca cola expands, acquisition of new assets and property is inevitable. A lot of capital can be ploughed back into the business if the company seizes opportunities of buying out competition that opts to exit the market. This option is less expensive as opposed to acquiring new assets, and coca cola would also take advantage of existing networks and channels that have already been put in place by the exiting firm. These factors would eventually increase the company’s market share and the global strength of their products. Conclusion Companies today, when engaging in business, find themselves in an ever changing environment. Any emerging market is full of competition, and the dynamic world of information and technology is constantly changing the ways of doing business. Only through elaborate networks and channels, with strategies put in place to counter weaknesses while complimenting strengths, can a company survive. These channels can only be maintained through a marketing system, which harmonizes all logistics and avails a product to a customer conveniently. References Becherer, R & Halstead, DP 2003, Marketing Orientation in Smes: Effects of the Internet Environment, New England Journal of Entrepreneurship, Vol. 6 no. 3. pp. 34-56. DeBonis, JN, Balinski, EW & Allen, P 2003, Value-based marketing for bottom-line success: 5 steps to creating customer value, McGraw-Hill Professional, Sydney. Govindarajan 2007, Marketing Management: Concepts true Challenges And Trends 2Nd Ed, PHI Learning Pvt. Ltd, London. Hanssens, DM & Parsons, LJ 2003, Market Response Models: Econometric and Time Series Analysis, Springer, Canberra. Kasper, H & Piet, VW 2000, Services Marketing Management: An International Perspective, John Wiley & Sons, Sydney. Kitchen PJ & De Pelsmacker, P 2004, Integrated Marketing Communications: A Primer, Routledge, Sydney. Lilien, GL & Rangaswamy, A 2004, Marketing engineering: computer-assisted marketing analysis and planning, DecisionPro, Melbourne. Lusch, RF & Vargo, SL 2006, The service-dominant logic of marketing: dialog, debate, and directions, M.E. Sharpe, Canberra. Stavros, NK & Winzar LP 2008, Hume Relationship Marketing in Australian Professional Sport: an Extension of the Shani Framework, Sport Marketing Quarterly, Vol. 17 no. 4, pp. 34-56. Wierenga, B 2008, Handbook of Marketing Decision Models, Mc-Graw-Hill, London. Read More