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Coca Cola Case Study

 

Coca Cola Case Study

 

Introduction:

The purpose of this paper is to present a strategic marketing decide to identify and evaluate new business opportunities for Coca Cola Amatil, a number one beverage manufacturer based in Australia. The analysis will begin with a quick background of the corporate including company mission statement and business objectives. It will be followed by a comprehensive marketing research examining the corporation’s market competitiveness and structure, market size, projected growth trends, competitors, influencing environmental factors and target market. The paper will then analyze the anticipated new opportunity and would continue to formulate a marketing strategy which can seek to explore various significant aspects concerning optimum utilization of the new business prospect. Break-Even analysis also will be presented of the projected product alongside an account of the changes within the business operations which will be made for incorporating the business requirements for the new product.

 

 Coca Cola Amatil: Background

 

Coca Cola Amatil is one among Australia’s leading and oldest business corporations, which was established in 1989 as a result of a grand re-organization of Amatil Limited. The multinational business is especially supported manufacturing and distributing alcohol-free beverages and snack foods. With its headquarters in Australia, the corporate also operates in New Zealand, Indonesia, South Korea, Papua New Guinea, Fiji and is that the largest producer of Coca Cola trademarked products with primary specialize in Asia-Pacific region (About Coca Cola, n.d.). The company produced own products, manufacture, market and sell the products of Coca Cola Company across its region.

 

Mission:

 

§  To refresh and revitalize the planet in mind, body and spirit.

§  To inspire through our activities and makes, moments of Positivity and hopefulness.

§  To build value and make a difference wherever we participate.

 

Objectives:

 

Coca Cola Company seeks to introduce the quality in every field of the business. The firm aims to:

o   Serve as a workplace where individuals are inspired to offer in their best.

o   Create and introduce a variety of beverage brands that satisfies customers’ wishes and wishes.

o   Develop a robust and efficient network of consumers and suppliers to reinforce value.

o   Optimize enduring returns to shareowner's while listening of our overall responsibilities as a company citizen.

o   Be a highly operative, efficient and fast-growing organization.

 

Market Analysis

 

Market Background:

 

According to the council of Australian Food Technology association and Institute of Food Science and Technology (1988, p. 333), the Australian non-alcoholic beverages industry has been growing steadily, with 2.3 percent increase in overall production within the year 2000 which amounts to 2.25 billion liters. However, within the recent years, sales of customary carbonated soft drinks have dropped as more and more customers become health conscious and move faraway from high-calorie sugary drinks. Soft drinks and other alcohol-free beverages manufacturers have also sensed the consequences of intensifying competition from private-label beverage makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation within the industry.

The Soft Drink and Beverage manufacturing industry is primarily concentrated in the eastern Australian states, close to the foremost population centers, according to Soft Drink market research report published in IBIS World (2012). New South Wales alone has 34.6% of such establishments, while Victoria is home to 11.5% and Queensland to twenty .5%. The report shows that Victoria’s share of total beverage producing firms has declined over the past few years due to enhanced investment in facilities in other regions of the country.

 

Market Size:

 

Coca Cola Amatil is that the leading and largest provider of alcohol-free beverages and Coca Cola trademark products because it covers an enormous market segment. The annual revenue at the present is $3 Billion and consistent with the estimates, the yearly profit is predicted to extend by 1.8 percent. (See Appendix 1).The market conditions for beverage companies in Australia are encouraging and it still features a huge potential to grow more. The market if considered within the realm of retail sales industry, has reached an estimated value of $239.5 billion in 2011, representing an increase of 1.3 percent from 2010 (IBIS World, 2011).

 

Market Growth:

 

Today, Australia is commercially assisted by both outsized multi-plant companies and by persistent dynamic and robust regional bottlers that are innovative and manufacturing products for both the domestic and foreign markets. A forceful and ever-changing alcohol-free beverages industry is crucial for both our economic and social well-being because it provides the extensive range of liquid refreshment that meet people’s nutritive needs and social occasion. At present, the beverage industry produces an interesting wide collection of beverages, from the normal carbonated soft drinks and fruit juices to sports, energy and other formulated beverages, and a booming bottled water market (Australian beverages, 2004).

On the opposite hand, the rapid and stable growth of the retail trade is due to the strong position of the Australian dollar and inspiring employment conditions. This economic stability has reduced the value of retail goods that are imported. Hence improved employment and economic conditions has led to raised purchasing power and positive consumer behavior (IBIS World, 2011).

 

Key Competitors:

 

Since now Coca Cola Amatil manufactures variety of beverages aside from cola like lemon drinks (sprite), drinking water (Mount Franklin) and Orange drinks (Fanta). The company faces competition from tea and occasional offerings by Nestea and from smoothies and juices produced by companies like Boost.

 

 

Environmental Factors

 

1-Internal Rivalry:

There is an intense rivalry among the highest market players; Coca Cola, Nestle and Pepsi which comprises of a robust concentration of roughly 43 percent of the market. However, the remainder of the market is sort of fragmented. There is a substantial degree of rivalry among these competitors because they operate internationally with a good network of bottlers (San Francisco Chronicle, 2012).

 

2-Consumer Buying Power:

 

Because of the absence of influential supermarket chains in CCA’s markets like Fiji, the buying power is considerably low. Meanwhile, in markets like Australia and New Zealand that has sturdy supermarket chains like Coles, Woolworths, Progressive and Foodstuff, the buying power of consumers is relatively high.

 

3-Supplier Power:

 

Apparently, the supplier power seems to be absent because most of the inputs are supplies and are readily available. Yet, a vital issue that needs to be monitored and evaluated in the mounting commodity prices of necessary production input. CCA possesses the essential evading strategies well in situ to combat increasing commodity prices. This stabilizes the supplier power that input suppliers and packaging manufacturers may need within the industry.

 

4-Effect of Climate Events:

 

The recent floods within the Queensland and Victoria had significant negative effects on the food prices and agriculture supply system. Further destruction caused by Cyclone Yasi led to inflation and rise in interest rates had a robust impact on retail spending (IBIS World, 2011). After experiencing harsh economic circumstances, the Confectionary and beverage industry regained strength owing mainly to raised employment and currency condition.

 

5-Target Markets:

 

As a manufacturer and distributor of a various range of non-alcoholic beverages, Coca Cola Amatil operates in several markets. The company functions in consumer market intrinsically beverages are purchased and sold there. Additionally, the corporation also operates in intermediate markets as its offerings are distributed by means of shops like supermarkets. Being the producer of mass market products like fruit juices, smoothies and soft drinks, CCA also engages in mass-market, and at an equivalent time, in niche markets because it also manufactures products like drinks.

 

Evaluating New Marketing Opportunities

 

Coca Cola Amatil has experienced years of consistent growth and profit since its inception. At present, the corporate sells over one billion servings a day (See Appendix 2), however, CCA is additionally conscious of 47 billion servings that are sold by other competitors and it seeks to form optimum use of potential opportunities within the market.

 

Introducing New Brand:

The prospect of introducing a replacement flavored cola brand is very appealing and with right marketing strategy, such an innovation will create value and can bring fruitful leads to terms of revenue growth. The new product will offer a singular drinking experience to consumers and is predicted to reinforce brand loyalty. The new drink is going to be a bottled flavored bubble tea, an ingenious blend that might give the fizz of Cola and taste of flavored tea. Such an innovative offering will happen as a healthy, funky and weird substitute for other soft drinks and would appeal to the health-conscious population segment, which previously proved to be a tough market segment to target.

 

Marketing Strategy for the New Product

 

Product Development:

The new bottled beverage will have a playful, modern and funky branding and its brand personality are going to be characterized by healthy, unique and energizing drink. The new drink will have a robust brand equity and consumer base due to the prevailing widespread brand power of Coca Cola and other popular CCA’s products.

 

Product Positioning:

 

Since this innovative drink are going to be one among its kinds within the market, a robust and well-designed marketing campaign is predicted to end in big sales. The positioning strategy are going to be supported quick and wide-scale distribution activities since the merchandise is susceptible to imitation. CCA are going to be marketing an existing brand with modified taste and features. The brand is going to be positioned as a functional, revitalizing and healthy beverage in order that it can attract health-conscious consumers.

 

Market Penetration and Development:

 

The introduction of latest product would be a source of market pull because it might provide a competitive advantage to the corporate as CCA are going to be ready to target new markets (diet conscious population segment) and can serve the corporation’s need for doing green business. Innovative and attractive non-alcoholic flavored drink will give the corporate a big control over its prices.

 

Promotion Strategy:

 

The product is going to be promoted on the grounds of three factors; the demand for the merchandise, potential substitutes and merchandise lifecycle. The promotional activities will fundamentally be supported creating awareness and desire among the targeted consumers through employing different means of advertising and marketing like electronic media, online advertising, newspapers, billboards, sponsoring matches and events, and direct selling. The focus is going to be on launching the merchandise as a healthy, energizing and refreshing drink which will offer a singular drinking experience.

 

Industry Codes of Practice

 

The company will take under consideration the subsequent codes of practices while formulating its marketing strategy for the new product.

 

ADMA Direct Marketing Code of Practice:

 

According to the ADMA code, the member company must not enjoy any deceptive or false claims while completing its marketing functions and each piece of data regarding the product must be validated with given evidences. Therefore, CCA will have to validate its health and nutrition claims by making public its green tea base and other dietary aspects. Also, the marketing campaign which can include various modes of mass communication should be free from stereotypical messages and false claims (ADMA, 2005).

 

Free TV Australia – Commercial Television Industry Code of Practice:

 

CCA will need to carefully consider and abide by the provisions within the Commercial television industry code of practice while making use of Television advertising. The advertisements will need to be made keeping in sight the standards of broadcasting as set by the code. The marketing messages displayed on television shouldn't offend any culture, race of gender, shouldn't provoke negative feelings against the other person, group, nationality or ethnicity. Besides this, CCA will got to follow the commercial time buying procedures as provided within the clauses 1.16, 1.17 and 1.18 of the code (Free TV, 2010).

 

Australian E-Commerce Best Practices Model:

 

The model provides that the marketing content should be original and distinguishable from other material and businesses should be ready to support their marketing claims with authentic evidences. In case of private selling and email advertising, company has got to comply to the regulations presented in Spam Act 2003 (Australian govt. treasury dept., 2006). It will be the main target of CCA’s marketing efforts that the advertising material disseminated and therefore the message is appealing, original and free from any illegal or deceptive element.

 

Trade Practices Act:

Coca Cola Amatil would wish to determine relationships with suppliers, competitors, retailers, wholesalers and customers in light of the provisions made within the Act. The Trade Practices Act requires adequate steps to make sure consumer protection and promote fair trading

 

Break Even Analysis

 

Below given is the break-even analysis of a single unit of the proposed product.

·        Selling Price of one unit= $8.5

·        Fixed Cost = $3.5

·        Variable Cost = $1.5

·        Total Cost = $ 5

·        Sales revenue per unit = $3.5

·        Break-Even Point = Fixed Cost / Contribution margin

·        Contribution Margin = Sales revenue – Variable Cost= 3.1.5= 2$

·        Break Even Price = 3.5 / 2= 1.75 $ per unit.

 

 

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