Assignment Marketing Principle

Department for Business and Management Studies Marketing Principles Coursework Assignment

BTEC EDEXCEL LEVEL 5 HND IN BUSINESS

UNIT 4: MARKET PRINCIPLES

DATE: 17/07/2013

Submitted by Elena Diana

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TABLE OF CONTENTS

INTRODUCTION……………… 3

TASK 1.…………………………. 4

TASK 2.…………………………. 6

TASK 3………………………….. 8

TASK 4………………………….. 11

CONCLUSION…………………. 14

REFERENCES…………………. 15

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INTRODUCTION

Invented in 1886 by John Pemberton, Coca Cola recipe has a long history behind. In this days

Coca Cola brand is recognize around the world. Everyone can identify the brand from products

such as: Fanta, Sprite, Diet Coke or Dr. Pepper. During the years the company come up with

different slogans for the products such as: “Coke is it”, “Catch the Wave”, “ Can’t Beat the

Feeling” or “ Enjoy Coca Cola” which is today’s slogan.

Other packages than the traditional 6.5-ounce bottle contour were introduced for the first time in

1950. Consumers could buy the drink on large 10, 12 and 26-ounce versions. Fanta, Fresca, TaB

and Minute Maid were introduced in 1960 as new products.

During the years the company has been successful and has became an icon of the American

culture.

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TASK 1

Task 1a.

The Chartered Institute of Marketing defines marketing, as is the management process

responsible for identifying, anticipating and satisfying customer requirements profitable.

According to The American Marketing Association marketing is defined as an organizational

function and set of processes for creating, communicating, and delivering value to the customers

and for managing customer relationship in ways that benefit the organization and its

stakeholders.

Hassel (2012) defines marketing as a social and managerial process by which companies create

value for customers and build strong customer relationship in order to capture value from

customer return.

What these definitions have in common are the satisfaction of customers wants and needs, the

creation of value in return and create relationship with customers. Also in these definitions it is

noticed how important is the management in marketing.

Marketing process is about identifying customers needs bringing in the market products to

satisfy these needs following these important steps: analyzing the situation, developing

marketing strategy, making decision in terms of marketing mix, implementing and controlling

the market process and strategy.

Company Coca Cola analyzes the situation very carefully studying the internal and external

factors in the business. The company is using SWOT model for internal situation and PEST

model to monitor external factors that could provide opportunities or challenges.

After the situation analysis is complete, Coca Cola develops a marketing strategy that includes

marketing analysis, identify the customers and how to use the 4 Ps.

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Marketing mix decisions is most important stage of marketing process for Coca Cola. This is

where the marketing tactics for each product are determined.

Implementing is the process of turning plans into actions and involves all the activities that put

the marketing plan to work.

Monitoring and controlling allows the business to check for variance in the budget and actual.

This is important because it allows Coca Cola to take the necessary steeps to meet the marketing

objectives. Coca Cola’s three tools to monitor the marketing plan are: sales analysis, market

share analysis, and marketing profitability analysis.

Task 1b.

According to BusinessDictionary.com marketing concept is the management philosophy where

the companies goals are best achieved through identification and satisfaction of customers stated

and unstated needs and wants.

A company can satisfy customers’ needs by choosing from the next five orientations:

1. Product Orientation. It is focused on product with higher quality to make profit.

2. Production Orientation. It is focused to produce in mass production for profit.

3. Sale Orientation. It is focused on sales technique to make profit.

4. Market Orientation. It is focused on market research to found what customer need and

then developing products to make profits.

5. Societal Orientation. It is to identify the public and focused on them and makes profits.

Coca Cola is market orientated because the company’s products Coke Zero and Diet Coke were

introduced on the market after the company did market research to find what people liked and

want. Coca Cola is more focused on younger generation but also on the adults. The consumers of

Coca cola are not limited to drink only coke, they can choose from a variety of juices and

mineral waters. Therefore Coca Cola has to be market orientated to satisfy customers’ wants and

needs and keep making profits. The advantages for being marketing orientated are identifying the

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customers’ needs and then satisfied those needs. One of the disadvantages using marketing

orientation is that it is possible that customers give a false need impression because sometimes

costumers can be confused of what they want.

TASK 2

Task 2a

For this task to analyze the macro and micro environmental factors for Coca Cola organization I

will use the PEST and SWOT models.

PEST analysis.

1. Political factors can support or not Coca Cola. For example, if government is increasing the

taxes the company must to increase their price and this can reduce substantially the profits.

2. Economical factors. In times of recession can influence the consumer may not buy the Coca

Cola products and this can decrease the profit.

3. Social factors. More and more people try to live a healthier lifestyle and this can negatively

impact the non-alcoholic industry. Because of the high sugar and caffeine many see content

Coca Cola as unhealthy thereby consumers will not buy it and profits will decrease.

4. Technological factors. Technology helps the company to produce and sell the products more

efficiently by advertising on television and with faster lines of production.

The micro environmental factors analysis is done using the SWOT model.

1. Strengths. Coca Cola is easily recognized everywhere, is a Brand and the company has good

financial resources.

2. Weaknesses. One of the company’s weaknesses is the making of unhealthy products.

3. Opportunities. Growing coke demand in new markets. Increase demand for drinks like Diet

Coke.

4. Threats. Competitors who make and sell healthier soft drinks than Coca Cola. Longer droughts

and strong dollar.

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Task 2b.

Hassell (2012) defines marketing segmentation as a process of dividing marketing into distinct

groups of buyers who have different needs, characteristics, or behaviors.

The advantages for using market segmentation are a better understanding of customers needs and

saving organization resources.

Segmentation is done geographic, demographic, psychographic, and behavioral.

- Geographic segmentation. Coca Cola make products are made for any country and any region.

- Demographic segmentation. Coca Cola targets different life style and ethnic groups. One

example is the product OASIS, a juice made for younger adults between the ages 20 to 30.

- Psychographic segmentation is based on lifestyle, level of education or social class of people.

- Behavioral segmentation is about what actions the consumers will take in regards to Coca Cola

products.

Based on the above explanations Coca Cola is using all four segmentation types.

There are three different target methods for a segment and these are:

1. Undifferentiated - targeting all segments the same.

2. Differentiated – different targeting for different groups

3. Concentrated – targeting one specific particular segment.

Based on the above, Coca Cola is using the differentiated targeting method and undifferentiated

targeting methods. Undifferentiated target is for regular Coke product while Diet Coke targets

consumers who want to be on a diet or keep a diet.

Task 2c.

There are four factors that influence buyer behavior and these are:

1. Social factors. Friends or family can influence a customer buying behavior.

2. Cultural factors. Social class and consumer culture influence what the customer may need.

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3. Psychological factors. Motivation, learning, beliefs and attitudes could change how a customer

sees a product.

4. Personal factors relates to age, occupation, personality and self-concept.

Positioning strategy is based on product use, product user, price and quality, product features,

product class, competitor, benefit and cultural symbol.

- Positioning by price-quality. This strategy is used to show that at higher prices mean

higher quality. Other firms use a the strategy where they show higher quality for a lower price.

- Positioning by product user. This strategy is associated with a product in a particular

class. Using a celebrity to market a product is a strategy many firms use.

- Positioning by culture symbol. This strategy consist in identifying something that is

very meaningful to people and competitors are not using. Companies can associate the brand

with a symbol.

- Positioning by competitors. This strategy consists in making consumer think that your

product is better than competitors.

Because of the high sugar and caffeine content, some consumers associate the company with

drinks that are unhealthy. To change the perception of those consumers, Coca Cola should

reposition the company by promoting more drinks like Diet Coke and Coke 0 as healthier for

them.

TASK 3

Task 3a.

The development of a new product requires to follow these following named stages:

Idea generation,

Screening,

Business analysis,

Product development,

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Test marketing

Commercialization.

Coca Cola is using marketing research for the development of a new product. The company is

analyzing the market to see what the consumers need and want first and then they develop a new

product. Elements like distribution, advertising, product taste and packaging are take in

consideration before launching the product.

- Through market research Coca Cola is looking at the needs of customers for generating new

product ideas. The company research will generate lots of products ideas. In the case o Cola 0

the market need was for a healthier product.

- Cola 0 was the result of screening many different ideas for a healthier drink.

- The company did a business analysis to determine the profit after the costs for Cola 0. Before

putting the product on the market CC researches the market, competitors and projected revenue

to determine if it will be profitably.

- Coca Cola, main interests for this prototype is how the product will taste and keeping the

texture and color the same as regular coke.

- For testing Cola 0 was supplied to a target market, mainly young males between 25-35.

- After it passed all stages it was decide to start production of Coca Cola 0.

Task 3b.

There are three different types of distribution channel for Coca Cola products to reach customers:

1. Producer – Wholesaler – Retailer – Consumer

This type of channel of distribution is the most common in business. Here the producer are

selling their products to the wholesaler, the wholesaler are selling the products to the retail and in

finally the retail are put the products into the market and selling to the consumers.

2. Producer – Retailer – Consumer

Here there is one intermediary, the retailer, which is buying products from the producers and

sells to the consumer.

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3. Producer – Consumer

This type of channel distribution is the simplest and more profitable because the producer is

selling the products directly to consumers.

Coca Cola’ products are reaching customers more through the first channel of distribution. The

company is selling the products to the large distributors which they are transporting the products

to the retailers and smaller distributors. The disadvantage for the company is that it makes a

lesser profit than if it was to use the other channels of distribution and for the consumer the

product can be a little too expensive. Coca Cola is also selling the product straightway to the

retailer using their own vehicle for transporting the products. The advantages are that retailers

are buying from producer and they can keep the price low and profits are bigger for the company

and retailer and a lower price for the consumer.

Task 3c.

There are three different strategies for pricing a product that a company can adapt:

1. Customer-based. The advantage of this strategy is that is based on what customer can

afford and the product will sell. The disadvantage of using this strategy is that the

customer can give false information and that they don’t know the cost of making the

product and the company can run at a loss. Coca Cola id doing research to find what the

customer can afford to pay for the product and set a price that anyone is willing to pay.

2. Competitor-based. The advantage here is the price is always set lower than that of the

your competitors and will attract their customers. The disadvantage is that the cost of

production of competitor in not known hence the company could make lesser profits than

competitors. Coca Cola is a strong brand and a big company with a immense capital that

can afford to keep product prices on the market at reasonable prices.

3. Cost-based. The advantage of this strategy is that is realistic and because it is based on

how much it cost to produce the product. The disadvantage is that the customer can find

the price higher than expected and the competitors can have a lower price hence the

company can run at a loss. Coca-Cola sets a price that satisfies everyone on the market

and the company as well.

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Task 3d.

Integrated marketing communication is a process where the five elements of promotional mix are

used together for promoting a company product or service.

In the 4Ps, advertising, sales promotion, personal selling, direct marketing and public relation are

elements that form the Promotion mix and are referred to as the marketing communication

elements. When all these five elements are used at one time this will become known as

Integrated Marketing Communication (IMC).

Coca-Cola is one of the first pioneers to adopt the IMC to get in touch with customers and look

for them wherever they may be. The company adapts the IMC in regard to things like the market,

the society, the potential and product positioning.

Through advertising the company is reaching customers worldwide and creates brand awareness.

Direct marketing is used when partnerships with restaurants and hotels and campaigning through

emails and now texting/SMS. The company has its own website. Through sales promotion like

“buy one get one free” Coca Cola products are distinguished in stores from other competitors.

PR is used through musical and movies events.

Cocal Cola is willing to be close to the consumers and to be part of their daily life and the IMC is

very relevant in achieving the company goals.

TASK 4

Task 4a

The four basic elements of the marketing mix are product, price, place and promotion. Today the

marketing mix was extended and now includes physical evidence, process and people.

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The product and the price in services marketing are intangible. Promotion for services can be

based on the extension of the original service. For example, extra nights stay for the same price

as the original stay. The place in marketing mix is where the services are consumed and the hotel

is the example. Physical evidence is referring at what is seen in the place where the service is

consumed. The process is how the services are carried out for the consumers. The people are the

employees who are delivering the service for consumers.

How consumer enjoys the service can be affected by all seven elements separately or together.

For example, People and Process can together affect the quality of the services provided to

customers. Although the extended marketing mix is more relevant to companies who make profit

from selling a service, the 7Ps are also important to companies who make profit from selling

goods to customers.

Task 4b

As explained above in task 4a there are 7 variables for service marketing and 4 elements for

product marketing.

Two segments of interest for this task are the hotel industry and railway industry.

Hotels offer the same type of service to all but the difference maker is what customers can

afford. Businesses can afford to pay more for the same accommodation as regular folks. But for

businesses the physical evidence will be different as in having the best room in the hotel, in term

of process business people have free access to other services that are not included in the price for

the regular people.

In the railway industry the product is the transportation service. In this type of industry the price

for the same services differs between regular consumer and business people. Companies offer to

transport people in economy and business class for different prices. In business class for higher

prices customers experience more space, free different types of drinks and better food selection.

In the economy class for a lower price the consumer experiences only the ride from point a to

point b.

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Task 4c

In the world of soft drink market Coca-Cola is positioned very well. Coca-Cola operates in more

than 200 countries employing around 30,000 people. Entering the international market has made

it possible for bigger profits.

Before entering the international market, Cola products were marketed only nationally. Some of

the advantages of producing, promoting and selling on a domestic market are:

- Dealing with one set of customers

- The company can use the same marketing or price strategies

- It requires less financial resources

- Dealing with one set of regulation

But there are also disadvantages in a domestic marketing such as limited access to raw materials

and labor and a small market.

International marketing presents different challenges for Coca-Cola such as:

- Dealing with different types of consumers with different tastes

- Requires more financial resources

- Language barriers

- Barriers such as tariffs and regulation of different countries

- Different climates

- Many competitors

Although it may be better to deal with customers in a domestic market only, entering

international markets Coca-Cola has profited more even though the company had to deal with

different challenges that were more complex and risky.

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CONCLUSION

For this assignment I did a lot of research to achieve all the points. The lecturer notes were very

useful to guide me on doing all tasks. During this assignment I learned how to apply the

marketing theory in practice using a company. By doing research about Coca-Cola I have

learned things which I didn’t know previously about this company. More importantly now I

understand what marketing is about.

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REFERENCES

Differences Between. (n/a). Difference Between Domestic and International Marketing.

Available: http://www.differencebetween.net/business/difference-between-domestic-

and-international-marketing/. Last accessed 12 Jul 2013.

USC Marshall. (n/a). The Marketing Mix: Product. Available:

http://www.consumerpsychologist.com/intro_Product.html. Last accessed 11 Jul 2013.

DOCSTOC. (n/a). Coca-Cola New Product Development & Product Life Cycle.

Available: http://www.docstoc.com/docs/104351503/Coca-Cola-New-Product-

Development--and-Product-Life-Cycle. Last accessed 11 Jul 2013.

Entrepreneur. (n/a). Product Development. Available:

http://www.entrepreneur.com/encyclopedia/product-development. Last accessed 11 Jul

2013.

Business Knowledge Resources Online. (n/a). Managing a Business. Available:

http://business.gov.in/manage_business/channels_distribution.php. Last accessed 12 Jul

2013.

Business Dictionary. (n/a). Dictionary. Available: http://www.businessdictionary.com/.

Last accessed 12 Jul 2013.

Coca Cola. (n/a). n/a. Available: http://www.coca-cola.co.uk/. Last accessed 12 Jul

2013.

Investopedia. (n/a). Dictionary. Available: http://www.investopedia.com/dictionary/.

Last accessed 11 Jul 2013.

Hassell, A (2012). Study Guide, Principles of Marketing. 14th ed. New Jersey: Pearson

Education. n/a.

Soft Drinks Cola War. ( 2012). Coca Cola distribution strategy. Available:

http://softdrinkcolawar.blogspot.co.uk/2012/12/coca-cola-distribution-strategy.html.

Last accessed 17 Jul 2013

Soft Drinks Cola War. (2012). Coca Cola Integrated marketing communications .

Available: http://softdrinkcolawar.blogspot.co.uk/2012/12/coca-cola-intergrated-

marketing.html. Last accessed 17 jul 2013.

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Assignment Marketing Principle