Strategic Marketing Plan Used by Coca Cola to Launch Minute Maid Mango Fruit Juice - Case Study Example

An Investigation into the Strategic Marketing Plan used by Coca Cola to Launch Minute Maid Mango Fruit Juice Executive Summary This study is done to examine the strategies used by Coca cola to communicate its products to the potential customers (Dickinson, 1969). Marketing is an aggregate function directed at providing products to satisfy the customer’s needs efficiently than the competition, keeping in view the organizational goals. Strategic marketing has become a very complex affair where customer has the upper hand to make the organization to attain its objectives. The mantra of effective marketing of Coca cola products lies in the systematic and professional approach towards satisfying the customer demands (Dickinson, 1969). This Multinational Corporation has set up a research and market intelligence wings to remain competitive and innovative to ensure customer satisfaction and market growth is reached effectively within the expectation of the organization. Table of Contents Page Numbers Executive Summery…………………………………………………………….2 Introduction……………………………………………………………………4 Product Life Cycle……………………………………………………….........5 Product Development Phase……………………………………………………6 Growth Phase…………………………………………………………….........7 Maturity Phase…………………………………………………………………7 Decline Phase………………………………………………………………….7 Decline Phase………………………………………………………………….7 Market Pioneer…………………………………………………………………8 Repositioning…………………………………………………………………..8 Cost Reduction…………………………………………………………………8 Sources of Competitive Advantage Available for Pioneers……………………9 Market leader's Growth Strategies…………………………………………….10 Strategic Options……………………………………………………………...12 Competitive Advantage………………………………………………….……13 Strategic Options………………………………………………………………13 New Economy Markets………………………………………………………..14 Organizational Structure……………………………………………………14 Matrix Organization………………………………………………………..15 Marketing Plans…………………………………………………………….16 Cost Benefits Analyses…………………………………………………….17 SWOT Analyses…………………………………………………………….17 Summary of the SWOT Analyses…………………………………………..18 Marketing Metrics………………………………………………………….19 Marketing Audit…………………………………………………………….19 Conclusion…………………………………………………………………..20 Introduction This study sought to examine the strategies used by Coca cola to communicate its products to the potential customers. Marketing is an aggregate function directed at providing products to satisfy the customer’s needs efficiently than the competition, keeping in view the organizational goals. Strategic marketing has become a very complex affair where customer has the upper hand to make the organization to attain its objectives. The mantra of effective marketing of Coca cola products lies in the systematic and professional approach towards satisfying the customer demands. This Multinational Corporation has set up a research and market intelligence wings to remain competitive and innovative to ensure customer satisfaction and market growth is reached effectively within the expectation of the organization. These strategies provide opportunities for the organization to respond to the numerous hick ups within its operating environment. The company’s strategy consists of the business approaches and initiatives it undertakes to attract customers’ attention to fulfill their expectations, to withstand competitive pressures and to strengthen its market position. These strategies also enable manufacturers to seize strategic initiatives in order to maintain a competitive edge in the market (Porter, 1990). The competitive aim is to impress its customers because the Minute maid success is determined by its responsiveness to the customer demands. The presence of real Mango pulp offers an unmatched consumer experience when the bottle is chilled, shaken and opened for drinking. There are several types of Minute Maid juices each aimed at different consumer preferences among them: low-acidic, pulp sugar free etc. The non-carbonated beverage market that includes pure juices and fruit based drinks has an estimated growth rate of more than 20% annually. Product Life Cycle PLC is used to map the lifespan of a product consisting of five major steps: Product development, product introduction, Product growth, Product maturity and decline step. This phases can be split to smaller ones based on the product and must be considered when introducing a new product in the market since they dictate the product sales performance. Product Development Phase This phase begins when company finds and develops a new product idea. It involves translating various pieces of information and incorporating them into a new product which then undergoes several changes during development, before it is exposed to the target customers via test markets. Those products that survive the test market are then introduced into real market place through the introduction phase. This is the phase of spending with absolute no return. Introduction Phase This includes the product launch with its requirements to getting it launch in such a way that it will have maximum impact at the moment of sale. This is the money sinkhole stage whereby large expenditure on promotion and advertisement is common. The company must spend a lot of money and get only a small portion back as payoff. In this phase the distribution arrangements are introduced either by hiring external contractors or outsourcing the entire distribution process. Pricing should also be considered during this phase. Product pricing usually follows one or two well-structured strategies. Early customers will pay a lot for something new in order to maximize the sinkhole experienced during product development. Later the pricing policy should be more aggressive so that the product can become competitive in the market. A pre-set price is used to maximize profits at the early stages of the product in the market. However this demands very good information of the market and what the consumer is willing to pay for the introduced product. Marketing strategy is a successful introduction phase which results from formulation of a proper marketing by use of a market research to establish the customer requirements on design, servicing, and packaging of the product (Pearce and Robinson, 1997). A customer can tell the company what features are appealing and how the product will become handy and useful. In this way Coca cola is able to know what to expect from the customers and competitors. A marketing mix may also be useful in terms of defining the targeted audience during promotion and advertising of the product in the introduction phase. Growth Phase This phase offers satisfaction of seeing the product take-off in the marketplace. It is the appropriate time to focus on increasing the market share. If the product has been introduced into a virgin market or into an existing market, then it is in a position to command the market share easily. Coca Cola Company must show all the product offerings and also differentiate its product from those of the competitors. It must engage on frequent modification process of the product to discourage competitors from gaining the market share by imitation. Promotion and advertising continues, but it is oriented to the task of the market leadership and not creating product awareness (Carl and Zeiththami, 1984). This can be done best via external promotional contractors. This is the time to cover all the market places efficiently and improve product availability. Cost efficiency, time to market, pricing, and discount policy are major factors in gaining customer loyalty and confidence. Maturity Phase This is the stage when the market is saturated with the basic product, and all the competitors are represented in terms of an alternative product. It is the period of the highest returns to a product. A company that has achieved its market share goal enjoys the break even period, while the followers must rethink their market positioning in the market place. During this period new brands are introduced even when they compete with the companies’ existing products. This is the time to extend the life of a product (Rechard and Borges, 1998). This is the phase where the Minute maid mango juice introduced into the market competes with other similar products such as Minute maid Guava, orange and Pineapple flavors. The minute Maid mango flavor has been initially made available in 200ml returnable glass bottles. This latest innovation after Minute Maid orange is targeted at the young people who are on the lookout for a naturally refreshing juice drink (Pearce and Robinson, 1997).There is stiff competition from Pepsi products in the market segment for fresh fruit juices which has been in the market for a quite a long time. At this point pricing and discounting policies are often changed in relation to the competitor’s policies. Promotion and advertising scope changes from getting new customers to product differentiation in terms of quality and reliability. A successful product maturity stage is extended beyond anyone’s timely expectations due to efficient distribution using multi distribution channels that offers back up distribution ways. Decline Phase There is dilemma as that increases the complexity of the decision to withdraw a product from the market. Often companies retain high prices for the declining products in order to increase the profit margin and slowly discourage the remaining customers from buying it. Sometimes it is difficult for a firm to conceptualize the decline signs of a commodity since the marketing bodies are usually too optimistic due to big success coming from the maturity phase. This is the time to start withdrawing variations of the product from the market that are weak in their market position (Pearce and Robinson, 1997). This must be done carefully though because it is not apparent which product variation brings in revenues. Prices must be competitive and promotion should be pulled back at a level that makes the product visible while retaining the loyal customer. Distribution is narrowed while the alternative channels should be abandoned to avoid the sale of the product. Market Pioneer It is very important for the company products become the pioneers in the market to capture high revenues which comes in the market at the mature stage. Cost Reduction Minute maid fruit works closely with the local farmers in the new markets. This is aimed at obtaining high quality raw materials such as fruits for manufacturing process. The firm promotes the products to potential consumers through targeted advertising strategies such as billboards and transit signs to reduce the operation cost especially in foreign markets. Initial prices are lower than the subsequent prices in order to tap the consumers and create product awareness in the new markets. Repositioning This is a combination of sensory, rational and emotional benefits offered by a brand. Sensory benefits refer to taste, appearance aroma and so on. Rational refer to what the product does for the consumer such as source of vitamin C. Emotional benefits refers to the image of the consumer who uses products of a certain brand. Minute maids recent overhaul from changing the labeling on its orange juice cartons to new single serve containers has taken the new markets by storm. The company has unveiled new line of mango natural energy drinks, enhanced with yerba mate. The new ads and packaging have clear focus on health benefits. Minute maid fresh fruit juices especially the mango flavor has the nutritional goodness inherent in it and invokes the imaginary of whole fruit. Through its mark positioning statement, mango juice is said to be for people who want a juice drink, which is ideal for healthy living, hassle free refreshment anytime. The mango juice is also a good source of calcium, contains a full day’s supply of vitamins, and is made with real fruit and has low calories. Due to these elements, this product has been able to penetrate the new market places with a bang hence attracting many consumers. Pioneer Strategy Pioneer can be defined as the first entrant in a new market or the first appearance of a brand in a distinctly new product category (Robinson and fornell, 1985). Coca Cola Company is the pioneer of fresh fruit juices with the brand name of minute maid. Several pioneer strategies have been developed to maintain the market share by the pioneers. Sources of Competitive Advantage Available for Pioneers First Mover Advantage-The pioneer creates a new market and promotes the new products as his own such that the customer identifies the product with the brand (Doyle, 2000). Minute maid enjoys this dominance in the fresh juices especially the mango flavor which is fully associated with whole fruits. This company is able to sustain their market leadership with strategic moves and product innovations such as the different flavor varieties for the consumers. Mass Market-The pioneers brand can become the standard of reference customers use to evaluate other brands. Minute maid has successfully tied its offering to the choice preference of its largest consumer group (Klepper and Simons, 2000). Due wide range of flavors from minute maid, the followers have had difficult time trying to differentiate their offerings in ways that are attractive to the mass market segment. They have to target a smaller market opening instead. This program is geared to aggressively build product awareness and motivating the consumers to buy a certain product for trial on the assumption that they will make a repeat purchase and develop loyalty to the product. Skimming Price Strategy-This strategy involves setting high initial price of a product to recoup the investment related to its development and marketing. Minute maid uses theses price strategies to charge higher prices than what other firms is charging. Being the pioneer, minute maid has gained a lot of experience in the industry leading to lower cost per unit. Due to the firm enjoying economies of scale, minute maid can charge higher prices and reduce the marketing promotion costs in order to recover the product development cost. The Minute Maid managers do have a feel for the market place, to correctly estimate the price barriers for consumers and set the price differential accordingly. Market leader's Growth Strategies Flanker Strategy-Minute maid uses the flanker strategy for growth in the fruit juice industry. They are the market leaders but they keep on introducing new and newer products into the market (Klepper and Simons, 2000). To stay in the forefront of this market, Minute maid continually rejuvenates its consumers and their needs. Therefore, its market development strategy carefully defines its markets and expands its offering to meet the customer’s demands. The minute maid company has invested millions of dollars in developing different fresh fruit flavors for its customers in a responsive manner to the customer’s demands as opposed to reactionary methods. Market Expansion-This is a market growth strategy which introduces a new product to the market segment that currently is not served. Expansion opportunities may be either related or unrelated. The firm might sell to the existing customer’s; use the same distribution channels to the target markets that are similar to their current consumers (Doyle, 2000). Minute maid has been aggressively expanding and opening up new markets like Sri Lanka and supplying the most recent flavors such as orange and mango fresh juices. This has also been aided by the fact that the mother company is strategically positioned in the beverage products. Minute maid also offers wide range of products to its consumers leading to market expansion. The market expansion consists of carefully defined target market and the necessary offerings to meet its needs. Shake Out Stage-This is stage whereby the rate of exit increases leading to an eventual concentrated market due to competition and the instability of the market (Klepper and Simons, 2000). This stage is characterized by changes in strategy design of the company to revitalize the firm (Dickinson 2011). Minute Maid Company has a marketing strategy through positioning for each new and existing products progress through designing the products for specific market segment. Technological change is the spiral of firms’ advantages in the shakeouts (Simons, 2001). Strategic Options Competitive Advantage-Minute maid has been able to sustain its competitive advantage through its product designs which are appealing to the customers. Minute maid pulpy has been successful due the imaginary association with whole fruits. The brand also houses the special ingredients for the pulp juices at the expense of the competitors. The minute maid brand is highly preferred by the customers. This company has a competitive advantage over the others due to availability of sufficient resources for brand development and also enjoys the parental branch advantage. Transition-In the formative stage the rate of product innovation is higher than the rate of process innovation but over time the rate of process innovation increases sharply, thus reducing the structure of production cost, which eventually causes shakeout. Due to technological growth, Minute maid enjoys a rise to opportunities for developing high products at lower cost per unit due to the adoption of the latest efficient technology advancements. This company currently trends on cost improvements and design standardization of its products in order to survive in the market. Mature Markets-This is the stage of leveling off after competitor’s entry into the market and the number of potential customers’ declines. The consumers are the repeat purchasers and intense competition causes profit to fall until only the fittest players survive. The companies may decrease the prices of the products in order to counter competition. Strategic Options Extended Use-Strategies to extend the maturity of products are developed in order to remain competitive by modifying their target markets and their offerings. Minute maid mango juice targets the young people who are health conscious in terms of calories intake and a good source of calcium for proper bone formation. Increased Penetration-Minute maid has a wide range of variety of fruit flavors juices for the customers such as Apple, Orange, Mango and Tropical flavors (Doyle, 2000). This offering has led to increased market penetration. Low initial prices are often combined with advertising, coupons and special incentives to increase awareness of the product and consumers to try it. It also uses direct distribution channels from the manufacturers, wholesalers, retailers and end user to minimize bureaucracy and product hoarding by unscrupulous business men. Declining Markets-In this stage, changes in consumer preferences, technological advancements, and alternatives that satisfy the same consumer needs can lead to a decrease in demand. At this stage the companies try to reduce their promotion expenditure on this products, reduced distribution channels and high prices to gradually discourage the loyal customers. Strategic Options Harvesting-The product entails gradually reducing all costs spent on it, including investments made in the product and marketing costs. By reducing these costs, the company hopes that the profits from the product will increase until their stock runs out. Niche-Another option for the company is to delete the product from its offerings. The company might choose to sell the brand to another firm or simply reduce the prices drastically in order to get rid of the entire remaining inventory. New Economy Markets-In the last decade; the world trade big wings have tremendously changed due to emergence of young lucrative markets especially in the Fareast. This has opened up new opportunities for globalization of products to meet the ever changing customer tastes and preferences (Landes and David, 1998). Digital Products-The new digital products have enormous benefits to the pioneers due to relatively modest fixed costs and low marginal costs of production leading to economies of scale. Minute Maid Company has been able to develop other brands for consumer’s satisfaction. Through the Television advertising the company can reach to consumers even in areas with no outlet stores. Consumer exposure to similar media and economies of scale of the minute maid parent company has led to increase in cosmopolitan consumers for the minute maid fresh fruit juices. Internet-The internet proliferation plays a major role in enhancing brand relationship and corporate reputation, by providing customers with a new degree of interactivity with the brand and speed up relationship building process with consumers. Through social networking minute maid company can engage the consumers in the new market economy to establish their tastes and preferences. The management can also research on the business environment in the new market before venturing in it. There are dangers too in the internet. Brand theft has been on the rise through counterfeit brands. These fake brands can negatively impact on Minute Maid brand equity in the emerging markets. Organizational Structure In organizations, there are three levels of management such as top-level management, middle level and lower level management (Kramer, 1990). In most of these organizations, the managers at each level forms a pyramid hierarchy structure with many lower level managers, fewer level managers and fewest in top level. Top Level- The managers at this level are the senior executives of the company, and they make decisions affecting the entire firm by setting goals and directing the company to achieve them. They are ultimately responsible for the performance of the company, so, they must have a great wealth of experience in management to positively impact on the company. Middle Level- These are the managers who are below the top managers including General, Regional, and divisional managers (Tailan and Paul, 1998). They are responsible for carrying out the goals set by the top managers by setting departmental goal in their respective areas. They may also communicate upward, by offering suggestions and feed back to top managers because they are directly involved in the daily operations of the firm. This is valuable information used by the top level managers in decision making to improve the organization’s bottom line. Lower Level Managers- This is also called line managers and is responsible for the daily supervision of employees who actually produce the minute products (Robbin and Stephen, 1983). These managers do not set goals but they directly influence the execution of the goals set by the top management. Minute Maid Company keeps these managers well motivated for greater performance. Most of the employees at this level are promoted from the line positions but they must also have satisfactory levels of education. Matrix Organization This management structures combines both the functional and product departmentalization. They organize part of the minute maid company along the products lines and another around the functional lines to get benefits of both elements. This helps foster team building whereby the people assigned to manage a product group might have also representatives in the functional departments (Philip and John, 2001). At minute maid permanent matrix structures are used mainly in enduring aspects of business operations such as product lines. The brand manager is responsible for overseeing the development and production of a fresh fruit juice flavor, but the employees working on the product may also contribute to other products from time to time. This set up creates accountability, coordination and continuity for the whole products, while enabling the staff to be flexible in regard to production demands. The matrix has a cardinal advantage in that it facilitates the Minute maid company to respond quickly to the market environmental changes in order to effectively compete with other firms. The company can quickly determine if it has the necessary capital to develop a fruit juice product or take an advantage of an opportunity in another product. In addition to flexibility, matrix organizations such as Coca cola company results in efficient use of resources because highly specialized employees and equipment are shared between departments. The exchange of information is efficient due interdepartmental corporation in order to achieve a common goal (Doyle, 2000). The employees and managers are highly motivated which results in democratic decision making leading to higher levels of commitment to goals of the departments to which they belong. Marketing Plans Marketing plan is set of strategies to be used by a product to achieve the desired market share in the market place. The company operates a creative pricing strategy depending on where the products are purchased. This is because people are cutting down on costs which must bond well with the company pricing premium. At this time the Coca cola Company maintains a lower profit margin until the market as a whole improves. Cost Benefits Analyses. Price per unit Total cost per unit Profit margin Coca cola $1.37 $1.10 19.7% Retailers $1.69 $1.37 18.9% From the table above, Coca cola products are priced at an acceptable profit margin which includes the cost of raw materials, production costs and other fixed costs incurred in manufacturing process (Doyle, 2000). The retailers also operate at a profit margin in order to promote product distribution to the local markets. SWOT Analyses This analysis captures the major internal strengths and weaknesses as well as the external threat and opportunities, facing the Minute maid product of Coca Cola Company. Strengths Weaknesses High quality fresh juice products. Owned by the Coca Cola Company, the largest and the most successful Beverage Company. Strong distribution and marketing. Affordable pricing. Language barrier in new markets. Brand competition from other firms. Managerial Conflicts in foreign subsidiaries. Opportunities Threats Target the healthy living industry. Acceptable agricultural practices. Success of Coca cola brand. Complimentary marketing and shared costs. Fruits canning industry Government regulations; price ceilings on soft drink and juice products. Trade unions demands. High inflation rates in emerging markets. Economic recession in developed markets. Summary of the SWOT Analyses There are definitely risks associated with introducing new products to the market. The rate of inflation in many markets has been skyrocketing in the recent years (Amber, 2003). Governments have also taken the bipartisan approach to curb inflation by introducing price controls on imported products and other goods produced by foreign companies. Economic recession especially in EU has led to reduced demand as consumers are focused on cost cutting. There is also fierce competition from similar brands, language barriers in new markets and managerial conflicts in foreign subsidiaries in terms of ethnicity and tribal lines. The Coca cola brand has experienced tremendous growth over the years and it enjoys the economies of scale associated with expansion (Doyle, 2000). The minute maid product’s acceptance will be high, and the company can make well informed decisions based on the strengths and opportunities. Marketing Metrics These are the performance measures of a market based business striving to strive to achieve a profitable growth. In order to achieve growth, goals must be set by the management which must be achieved (Morgan, Clark and Gooner, 2002). An objective that passes through SMART is more likely to succeed because it is specific on what needs to be achieved. You tell the date of completion because it is measurable. The SMART objective is also achievable in its eventuality because it is realistic in terms of resources and time taken into account. The time scale helps in focusing on the tasks required to achieve the objective and it prevents procrastination of the task completion. Market Share- This involves retaining the current customers and ensuring that they remain loyal when making repeat and replacement purchases. Companies must stimulate demand in order to help speed up the overall market growth (Klepper and Simons, 2000).The market leader uses market share analyses to measure customer satisfaction. For example a market share of 68% indicates that the company is losing 32% of its customers annually. From these analyses Coca cola company steps up to improve the not only the physical products of its Minute maid brand, but customers perceptions of the brand as well. The company adopts marketing strategies to build selective demand of its products such as the sugar free fresh juices for with low calories. Marketing Audit This is structured analyses and review of your current marketing activities carried out through examination of your marketing strategies, tactics and objectives (Pearce and Robinson, 1997). It is also done to highlight the weak areas of the company and identify opportunities with a view to give a recommendation plan of things to do to improve the overall marketing performance of the company. Environmental audit- corporate mission of Minute maid is to offer unique and superior products to the customers and establish the link between the products it offers and its competitors (Della-piana and Low, 2005). This is to ensure that the company meets the needs evident in the environment, prevents others from meeting these needs better and create ways to meet the future needs of the consumers. The environmental assessment is carried out in three steps: by developing the basic understanding of that which influence the industry, Understanding the industry players well and finally integration of the findings into an environmental picture for growth of this brand. Organizational Audit- This involves the analyzing of the qualities and characteristics of the Coca Cola organization that influences what is achieved in terms of its strategies. This company has a well trained work force to enable it to focus on market expansion. The team work in this company plays a major role in gaining the competitive market advantage in the market place. Conclusion Coca cola company brand is the most successful in the world of non alcoholic beverages, concentrates and fresh fruit juices. The company has implemented proper market planning strategies for market penetration and dominance. The Minute maid brand was established under well set SMART goals which have been successfully achieved over the years (Porter, 1998). This company has distinct target market segments for all its products especially the fresh fruity pulpy mango, orange and pineapple which the consumers identify with in major markets in the world. A SWOT analysis was done when launching these products followed by an effective market audits to establish the deficiencies and understanding the set environmental goals for operations. References Porter E.1998. Competitive Strategy. Technique for Analyzing Industries and Competitors The Free Press Pearce, J. and Robinson, B. 1997. Strategic Management: Formulation, Implementation and Control. Irwin, Boston Landes M and David S,1998 .The Wealth and Poverty of Nations: Why some are so Rich and Some so Poor. New York. Dickinson K, 1969. Cash flow patterns as proxy for firm life cycle. The accounting Review Carl P. 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