Coca Cola's Strategic Planning, Product Pricing and Marketing Research - Case Study Example

: Coca Cola Report Summary of findings and recommendations Coca – Cola is one of the largest beverage producers and has maintained this despite the rise in its number of competitors. It has obtained a large market share world-wide with many African countries solely associating it with carbonated drinks. It has shown steady stability and profitability since its development. It has accomplished this through adept strategic planning, thorough marketing research and proper product pricing (Khan, 2009). The prudent running of Coca-Cola has seen it elbowing out a number of competitors and its securing of a large market share in numerous economies. It has also managed to identify with the consumers through its association with special occasions for instance the football World Cup. Although, Coca Cola is faring well it should be able to devise proper competition strategies as the beverage industry is growing exponentially. The number of brands in the market is also being much diversified. TABLE OF CONTENTS I. INTRODUCTION II. BODY A. Strategic Planning 1. Definition 2. Benefits and Limitations 3. Strategic planning process 4. Coca Cola and Strategic planning B. Marketing Research 1. Definition 2. Marketing research process 3. Coca Cola and Marketing Strategy C. Product pricing 1. Definition 2. Product pricing process 3. Coca Cola and product pricing III. CONCLUSION IV REFERENCES Coca Cola Report Introduction Coca Cola is among one of the biggest non-alcoholic beverage producers. It was started in 1892 and is located in Atlanta, Georgia. Its worldwide employee base is around 50,000 employees. The Company’s key business (approximately 86 of revenues) is in the production of syrups and soft drink concentrates (Sprite, Coca Cola and Diet Coke). The company also takes part in the sale of juice products such as coffees, Minute Maid, Water, teas and sport drinks such as Powerade (Khan, 2009). They have a brand base of around 400 which are sold in more than 200 countries. The company’s bottling network is also extensive. The network is constituted of 25 independently owned bottlers, 58 bottlers of which Coca Cola does not have controlling interest, 10 fountain and completed beverage operations and 7 of which Coca Cola has controlling ownership interest. The company sells syrups and concentrates to the bottlers and distributors. The company also helps the partners in their product and marketing distribution (Khan, 2009). The well being and profitability of a company is largely dependent on the production and market of its product. In light of this, companies employ strategies such as strategic planning, marketing research and ultimately product pricing. The aforementioned strategies require there to be constantly updated in accordance to the changing market and industry conditions. A company is therefore necessitated to perform audit analysis and thus determine the area which is in need of improvement. The analysis also determines the type of strategy that should be made use of to augment business operations, information made use of by people and lastly the gaps that exist in the functions and business goals. Strategic planning This is a disciplined creative process that is used in the determination of a means to transform a business from its current standing to a place in which a people would want it to be in the future (Mintzberg, 2005). The process entails an entire spectrum of things that an organization goes through that ranges from the core issues of the determination of who an organization is, what an organization does and what the corporate values are. The aforementioned issues are inter-related and connect the focus to the future with the activities that need to be done so as to propel an organization forward (Strong, 2005). Benefits and Limitations Strategic planning is beneficial since it aligns the entire organization that is resources, people and processes with a crystal clear, compelling and the sought after future state. It is disadvantageous since the future is uncertain and thus may differ in a huge manner from an organization’s expectations which might be the basis of an organization’s plan; there might be internal resistance of any formal planning that might emanate from organizational internal conflicts and unclear decision making procedures; planning is a tedious expensive process and the completed plan hinders future organizational choices and activities. Strategic planning process Strategic planning has three phases; strategic thinking, planning and tactical planning. Strategic thinking entails the formation of a foundation of values, vision and mission and also the formation of grand strategy. This phase uses up around 40-50% of the effort made use of in planning. The second phase; strategic planning delves into the company’s ability to obtain the future which it hopes for by putting its competitive landscape, the identification of its critical issues and the setting of its strategic objectives into perspective. The phase which is tactical planning entails focusing on the details required in implementation and ties people with strategic plans of action. Coca and Cola and Strategic planning Coca Cola Company recorded unprecedented success in the year 2002 due to the success of their strategy (Grant, 2005). This led the Company to obtain a status as the world’s leading Company in the year 2001. Coca Cola obtained its strategy’s success as; there was an increase in its world-wide volume by approximately 4 percent which was accompanied by robust international growth that was recorded at 5 percent. This was mostly reflected in the North American’s business. The per share earnings rose by 82 percent; there was a rise in common equity from 23 percent in 2000 to 38 percent; the increase in return on capital was recorded in 2000 at 16 percent and at 27 percent in 2001. The company also obtained free cash flow that came to $3.1 billion from the initial $2.8 billion in 2000 (Khan, 2009).    Marketing Research The broad version of market research is referred to as Marketing research. Marketing research is the analysis of a specific market, the research of new products or their methods of distribution such as the use of the Internet (Strong, 2005). It is thus a function that correlates the consumer, customer and the overall public to the marketer via information. The information obtained is made use of in the identification of marketing problems and opportunities, in the generation and refinement of marketing actions in conjunction with the improvement of overall marketing. Marketing research provides the information that is made use of in information collection, data management, analysis and the communication of implications and findings. In a nutshell; marketing research is a means used in the research of an entire company’s marketing process. Marketing research process Marketing research is obtained by the utilization of a systematic approach which is as follows; the definition of the problem which entails the description of a specific problem, the method used in data collection for problem analysis, the selection of sampling method, the method used in the analysis of the collected data, a timeframe and budget decision, the seeking of permission to conduct marketing research, data collection, data analysis, the checking of errors and finally, report writing. Coca Cola and Marketing strategy Coca Cola’s 2002 marketing strategy was as stipulated; the acceleration of the growth of carbonated soft-drink, the selective expansion of the available brands to the market so as to drive the growth in profitability, capability and profitability growth of the system in conjunction with other bottling partners, the bid to provide customers with consistency and creativity so as to realize growth in all channels, direct investments in the highest potential markets in different markets and the drive of cost-effectiveness and efficiency in all areas (Khan, 2009). Product pricing The pricing of a product is a very vital issue that must be carried out with utmost care. This is due to the fact that the price accorded a product will directly influence the success of any business. Product pricing process The pricing process follows the following rules; the price put on a product must cover a product’s costs and profits, price of a product is directly proportional to costs that is for the costs of a product to be lowered then the costs have to be lowered, there should be frequent review of prices so as to ensure so as to reflect cost dynamics, profit objectives, response to competition and ultimately market demand (Kaden, 2006). There should be price establishment so as to assure sales. Before the price of a product is set, the costs of running the business should be taken into account. In the event the product or service price is not sufficient to cover costs then the cash flow will be negative and a business’ financial resources will be depleted and the business will ultimately collapse. The cost of running a business is achieved by the inclusion of property or equipment leases, utilities, salaries/wages, inventory, loan repayments, markdowns, employee discounts, desired profits, cost of goods sold and financing costs (Strong, 2005). It is very vital to add profit in cost calculation since profit is deemed as a fixed cost which operates in a manner similar to payroll or loan repayment. It is also not in a business’s interest to break even. Pricing decisions take a lot of time and require market research. This has pushed a number of businesses to only set prices at one particular time and “hope for the best”. This policy has a lot of loop holes as the profits made are elusive and not as high that could be projected. It has also been noted that there is a particular time that is required for price review (Strong, 2005). The following are among the required times; during the introduction of a novel product line or product, when the costs of a business change, when a decision is made for a business to venture into a new market, when competitors alter the prices of their products, when the economy is unstable; existence of recession or inflation, when there is a change in the sales strategy and when customers are obtaining more money due to an organization’s products or services. Product pricing entails the use of the following four methods; cost-plus pricing, competitive pricing, demand pricing and mark-up pricing. Coca Cola and Product Pricing The pricing of Coca Cola products is based on the following strategies; competition based pricing; the products are usually priced at a range that is equal or above the prices of its market competitors. Discount prices; the prices of its products are usually reduced during the festive period and other special occasions (Immonen, 2005). The following are threats encountered by Coca Cola during the pricing of their products. In the event Coke is viewed as a luxury product then the following is the tax rate system; 3% in the drafting of the budget, 27% to the government, 15% sales tax and 20% excise duty. In addition to the aforementioned taxes; coke is also required to pay for electricity costs. Then they have to spend a lot of money on distribution. The effect of these costs reflects on the product prices (Khan, 2009). The threats that exist during pricing are the pricing of competitors. For instance if Coca Cola sets a high price for coke in comparison to Pepsi then they will encounter a problem as consumers will go more for its substitute; Pepsi. Conclusion The proper running of any organization requires sound formulation and use of business strategies. The strategies made use of are in the running of an organization and the manipulation of the product. Strategic planning is the creative process made use of in the determination of a means in business transformation from its current standing to a place in which a people would want it to be in the future. It is the basis of the proper running of an organization. After the development of a product comes it is pricing which when did right factors in all the factors of production and the desired profit margin. It entails the use of the following four methods; cost-plus pricing, competitive pricing, demand pricing and mark-up pricing. After the product has been priced the comes marketing research which is a means used in the research of an entire company’s marketing process. This determines an organization’s competitors and ultimately serves to determine its market niche and ultimately its market share. Coca Cola is one of the world’s largest beverage producers since it has conducted all the necessary procedures needed in lean beverage production and ultimately its high profit margin. It has perfected its strategic planning, product pricing and marketing research. References Strong, B (2005). Strategic Planning: What’s So Strategic about It? Retrieved 14th May 14, 2010. Available at: http://net.educause.edu/ir/library/pdf/eqm0510.pdf. Khan, S.U (2009). Coca Cola Marketing Strategies. Retrieved 14th May 14, 2010. Available at: http://www.scribd.com/doc/10552013/Coca-Cola-Marketing-Strategies Mintzberg, H (2005). Strategy Safari: A Guided Tour through the Wilds of Strategic Management. Publisher: Princeton, USA. Grant, R.M (2005). Contemporary Strategy Analysis: Concepts, Techniques, Applications. Publisher: Princeton, USA Kaden, R.J (2006). Market Research Made Easy. McGraw Hill Immonen, L (2005)Product Lifecycle Management. McGraw Hill. Read More