Marketing and Promotion Mix
When making decisions about the marketing and promotion mix for a brand such
as Coca-Cola, it is imperative to discuss the marketing mix of that brand, also known as
the 4 P’s – product, price, place, and promotion. The first element to be considered is the
product. Coca-Cola became a registered trademark in 1886 by Dr. John S. Pemberton in
Atlanta, Georgia, and was being sold all over the United States by 1895. In this case,
Coca-Cola is a product that has reached the maturity stage. This product is relatively
well known, and relatively well positioned in its market. Being ranked number one for
soft drink consumers, according to beveragedigest.com as, well as having the highest
market share for this last year. There is no need to try and educate the public about the
product. The main aim is not to reach more of the target audience, but to have a higher
more consistent frequency among that audience. The repurchase cycle among the
average user is one week. It is important that advertising reflect this repurchasing cycle,
by having point of purchase advertising as well as advertising through the one-week
repurchasing cycle.
The next area that needs to be discussed in the marketing and promotion mix is
the price of the product compared to its competitors. The largest competitor to the CocaCola Company is Pepsi. In all areas researched, the difference in price between the two
companies was negligible, approximately five cents difference in a 12-pack and one cent
difference for a two litter. It is obvious that price is not an issue of concern to the
marketing and promotion mix.
Coca-Cola is distributed internationally, and is found and desired by consumers
just about everywhere. Coca-Cola is available in all types of markets and stores
1
including supermarkets and convenience stores, as well as fast food restaurants and
mega-stores such as Target and Wal-Mart. When researching the amount of shelf space
given to Coca-Cola compared to its competitor Pepsi, the numbers come out to be the
same. This may be due to the stores’ indifferent natures, but it is detrimental to CocaCola if it is not outreaching its competitor. It has also been found that at certain times of
the year either product can be found to have more “end-of-aisle” displays, since the store
promoting the sale of each brand apparently rotates throughout the year. What this
means, is that at certain times the competitor is more in the reach of the consumer.
Out of all four components of the marketing and promotion mix, the sales
promotion program is the most important component to focus on. For a company such as
Coca-Cola, promotion is necessary to keep its product in the eye of the consumer.
According to the Coca-Cola website they have developed six strategic priorities:
1. Accelerate carbonated soft-drink growth, led by Coca-Cola.
2. Selectively broaden our family of beverage brands to drive profitable growth.
3. Grow system profitability and capability together with our bottling partners.
4. Serve customers with creativity and consistency to generate growth across all
channels.
5. Direct investments to highest-potential areas across markets.
6. Drive efficiency and cost effectiveness everywhere.
In order for the Coca-Cola company to achieve and maintain the areas of strategic
development that they have listed, it is important that the promotions for the product
include: point of purchase displays, contests, and coupons. It is important to have point
of purchase displays when trying to promote the product since it has been determined that
2
the shelf space allocated to this product is not giving it an advantage over its competitors’
products. The point of purchase display will help to promote the product to our target
audience when it is not on an end of aisle display and may need extra help getting the
consumer’s attention. It is also a good promotional tool to have frequent contests that get
the consumer’s attention. Many consumers that are straddling the line between our
product and our competitor’s product may be swayed to purchase Coca-Cola in hopes of
winning a prize. The last area of promotion that should be used is the distribution of
coupons. Since the cost of our competitor’s product is so close to our own, a coupon
offered through a magazine, newspaper, point of purchase display, and other areas may
not only entice consumers to purchase our brand, but it may also help to shorten the
repurchase cycle of the target audience.
Consumer, Market, Environment
Consumer Demographics
Coca-Cola is the most well known product throughout the world. The
demographics used to segment those users of Coca-Cola located in the United States are
as follows: age, race, income, education, employment, household size, gender and
lifestyle.
Coca-Cola was originally created as a syrup to be sold to soda fountains, where it
would be mixed with soda water and served to patrons, typically teenagers and young
adults. And just as it was created for the younger generation, that’s where it’s popularity
has remained, with the 18-24 year-old age demographic. However, Coca-Cola’s volume
potential is highest for 25-34 year-olds.
3
Regarding race, Spanish speakers have the highest index rating among Coca-Cola
users, with Blacks as a close second; only one rating point below.
In terms of income, households falling in the $50,000 - $59,999/year income
bracket are the heaviest users of Coca-Cola. In terms of occupation, households with
three or more persons living in them are the heaviest users of Coca-Cola. And
households with children ages 2-5, 6-11 and/or 12-17 years old all have the same market
share index. This statistic informs us that Coca-Cola should target children with some of
their campaigns since children seem to have an effect on the amount of Coca-Cola
purchased.
In the adult population, Coca-Cola is most popular among men, and more
specifically, single men. However, there is significant volume potential for married
persons, and Coca-Cola could therefore prospectively increase their sales volume by
marketing more towards married persons ages 25-34.
Coca-Cola Consumer Profile: Age
MRI Data
Base: Adults
Total US
'000
A
'000
B
% Down
D
Index
Rank
AxD
All Adults
187756
18-24
25-34
35-44
45-54
55-64
65 or over
18-34
18-49
25-54
Rank
52504
100.0
100
-
5250400
24565
43511
40062
26903
21657
31057
8897
13929
11922
6335
5341
6080
16.9
26.5
22.7
12.1
10.2
11.6
130
114
106
84
88
70
1
2
3
5
4
6
1156610
1587906
1263732
532140
470008
425600
3
1
2
4
5
6
68076
122914
110477
22825
38195
32186
43.5
72.7
1.3
120
111
104
1
2
3
2739000
4239645
3347344
3
1
2
4
Coca-Cola Consumer Profile: Household Size
Base: Adults
Total US
'000
A
'000
All Adults
187756
1 Person
2 Persons
3 or More
MRI Data
B
% Down
D
Index
Rank
AxD
Rank
52504
100.0
100
-
5250400
-
24116
59868
103771
5871
15155
31478
11.2
28.9
60.0
87
91
108
3
2
1
510777
1379105
3399624
3
2
1
Any Child in Household
77162
23390
44.5
108
-
2526120
-
Under 2 Years
2-5 Years
6-11
Years
12-17 Years
15433
30344
34738
4473
9371
10643
8.5
17.8
20.3
104
110
110
4
1
1
465192
1030810
1170730
4
3
1
34185
10552
20.1
110
1
1160720
2
Market Analysis
As the following Category Development Index (CDI) and Brand Development
Index (BDI) tables will show, the overall region of the South has a significantly high
BDI, with the specific segment of the South East showing high CDI in addition. CocaCola’s brand position in both of these regions is noteworthy, and therefore an increase in
advertising is not necessary in this region at this time. The West Central region has a low
BDI, but an average CDI. This means that there is room for growth in this region, and
through promotion and an increase in advertising, Coca-Cola’s sales could potentially
amplify. The New England region of the United States has both a low CDI as well as a
low BDI. Therefore it can be concluded that any expenditures put into advertising in this
region would most likely not result in an increase of sales.
County size D has both a CDI as well as a high BDI. This indicates that an
increase in advertising spending is not necessary for Coca-Cola, in regions of this size, at
5
this time. County size A has both a low CDI and a low BDI, but has the greatest volume
potential for both the category and the brand. Therefore, with advertising targeted
specifically at this marketing region, there is achievable growth in counties of this size.
However, because such a low CDI and BDI already exist, expenditures invested into
advancing the Coca-Cola brand are recommended to be at a minimum.
CDI Marketing Region: Regular Cola Drinks, Not Diet
Base: Adults
Total US
'000
All Adults
187756
New England
Middle Atlantic
East Central
West Central
South East
South West
Pacific
10397
33199
25537
28708
35150
20457
34307
A
'000
B
% Down
D
Index
Rank
AxD
Rank
108345
100.0
100
-
10834500
-
5166
18548
14982
16120
22359
12739
18432
4.8
17.1
13.8
14.9
20.6
11.8
17.0
86
97
102
97
110
108
93
7
4
3
4
1
2
6
444276
1799156
1528164
1563640
2459490
1375812
1714176
7
2
5
4
1
6
3
B
% Down
D
Index
Rank
AxD
Rank
BDI Marketing Region: Coca-Cola Classic
Base: Adults
Total US
'000
A
'000
All Adults
187756
52504
100.0
100
-
5250400
-
New England
Middle Atlantic
East Central
West Central
South East
South West
Pacific
10397
33199
25537
28708
35150
20457
34307
2460
8107
6609
6472
12537
7948
8370
4.7
15.4
12.6
12.3
23.9
15.1
15.9
85
87
93
81
128
139
87
6
4
3
7
2
1
4
209100
705309
614637
524232
1604736
1104772
728190
7
4
5
6
1
2
3
6
CDI County Size: Regular Cola Drinks, Not Diet
Base: Adults
Total US
'000
All Adults
187756
County Size A
County Size B
County Size C
County Size D
77485
55756
26850
27665
A
'000
B
% Down
D
Index
Rank
AxD
Rank
108345
100.0
100
-
10834500
-
42814
33141
15836
16553
39.5
30.6
14.6
15.3
96
103
102
104
4
2
3
1
4110144
3413523
1615272
1721512
1
2
4
3
B
% Down
D
Index
Rank
AxD
Rank
BDI County Size: Coca-Cola Classic
Base: Adults
Total US
'000
A
'000
All Adults
187756
52504
100.0
100
-
5250400
-
County Size A
County Size B
County Size C
County Size D
77485
55756
26850
27665
21370
15657
7476
8001
40.7
29.8
14.2
15.2
99
100
100
103
4
2
2
1
2115630
1565700
747600
824103
1
2
4
3
Environmental Constraints
Both internal and external environmental constraints have the potential to either
hinder or help the success of Coca-Cola.
The most significant external factor regarding Coca-Cola’s success is the weather.
The higher the temperature, the more people tend to drink Coca-Cola. However, in
colder weather, people tend to want something warm to drink. Therefore, during an
extremely long or intensely hot summer, Coca-Cola stands to profit more. On the other
hand, if the winter season is exceptionally long or cold, it could prove to be a financially
disappointing year for Coca-Cola.
7
Another external factor that could hinder Coca-Cola’s success, would be either
the introduction of a new product, or the running of a successful advertising campaign by
one of Coca-Cola’s competitors.
As far as internal factors are concerned, Coca-Cola needs to be sure that they have
sufficient funds to meet current advertising expenditures. They also need to be sure that
their advertising planners don’t overspend or underestimate the allotment of advertising
funds. Failure to comply with these criteria could potentially result in an unsuccessful
campaign.
Competitive Assessment
Coca Cola’s Market share for 2002:
2002 Rank
Companies
2002 Market Share
1
Coca- Cola
44.3
2
Pepsi- Cola
31.4
3
Dr Pepper/ Seven Up
15.0
4
Cott Corp.
4.2
5
National Beverage
2.3
6
Big Red
0.4
7
Red Bull
0.1
8
Monarch Co.
0.1
9
Carolina Beverage
<0.1
10
Private label/ other
2.2
8
2002 Rank
Brands
2002 Market Share
1
Coke Classic (Coke)
19.3
2
Pepsi- Cola (Pepsi)
12.6
3
Diet Coke (Coke)
9.0
4
Mt. Dew (Pepsi)
6.4
5
Sprite (Coke)
6.2
6
Dr Pepper (Cadbury)
5.9
7
Diet Pepsi (Pepsi)
5.5
8
7UP (Cadbury)
1.7
9
CF Diet Coke (Coke)
1.7
10
Diet Dr. Pepper (Cadbury)
1.1
Competitive Advertising Spending and Media Mix
Coca Cola and Pepsi (our nearest competitor) are spending almost identical
amount of money on advertising. They both spend mostly on magazines (24 mil vs. 25
mil respectively), network television (150 mil vs. 190 mil), spot television (89 mil vs. 62
mil), syndicated television (27 mil. vs. 13 mil), and cable T.V. (50 mil. vs. 50 mil.). All
forms of radio and newspaper are very rarely used, if ever. I cannot conclude that these
would be highly successful media to use due to market research indicating that radio and
newspaper ads are ineffective with non- alcoholic carbonated beverage consumers.
Magazines have proven to be a major factor in soft drink advertising. With CocaCola spending 24 1/2 million dollars + a year in this media, it is obvious that Pepsi better
follow suit. The similarities in money spent in magazine advertising leads us to believe
9
that these two heavyweights watch each other very closely. However, the magazine
money is just a drop in the bucket of either’s overall advertising budgets.
Television is, and always will be the most important media for the soft drink
industry. With almost 320 million being spent yearly, Coca- Cola must know that T.V.
commercials are the best way to reach their customers. Look for this trend to continue.
Everything can be said about a catchy song or a tear- jerking moment played out for us
over the screen.
With each company spending around 6 million yearly on outdoor ads, the
conclusion to be made is that this market is an untapped resource. Imagine the sight of a
dramatic sports play with Coca- Cola red and white as the back- drop. Billboards at
popular vacation destinations could bridge that critical link between great memories and
Coca- Cola.
Expect astronomical dollar amounts to be paid for television time in the future.
The goose has laid the golden egg for Coca- Cola and will continue to do so for a very
long time. I would like to see more outdoor advertising used, as I feel that this is a highly
emotional appealing media.
Marketing Objectives
Coca Cola Classic is currently upholding one of the top positions in the
competitive beverage market; however, recent data shows that it has had a decline in its
market share between the fiscal years of 2000 and 2001. Based on this information, our
main marketing objective for 2004 is to stop the decline and create an increase of share
by 0.8%. The 0.8% increase will compensate for the –0.5% decline from 2000-2001 as
10
well as gain more share of the market for Coca Cola. We believe that this marketing
objective is important in order for the brand to remain on top.
It is not an unrealistic goal to set. In the past years, Coca Cola has seen declines of
0.5% and 0.3%, so setting the goal of an increase of 0.8% is not asking too much.
Although the rise in popularity with other competing brands such as Pepsi Cola, Diet
Coke, Mt. Dew, and Sprite have caused Coca Cola to lose some of its market, it still has
the number one position. This is the reason why we feel that this brand is very capable of
a market increase.
We have decided to set a practical goal of a 0.8% increase instead of having
anything greater than that. It would be better to have a gradual rise. The marketing
objective is just enough to compensate for the lost of market in the past year as well as
gain 0.3% of the beverage market share.
With Coca Cola Classic’s lost in market share, the main objectives marketing
must focus on is stopping the decline. It needs to direct its attention in the prevention of
losing current users to the competition instead of seeking other prospects. By doing this,
Coca Cola Classic will no longer lose its share of market, and over time, it will
automatically see an increase.
Advertising Objective
The advertising objective for this coming fiscal year will be focused on
maintaining Coca Cola’s well-established reputation among its heaviest users as well as
reaching to consumers that may soon turn into heavy users of Coca Cola Classic.
According to demographic research mention in a previous section of this report, Coca
Cola is very popular with the age group of 18-24 and 25-34. We can focus in on this
11
demographic group and use advertising to encourage them to continue heavy use of the
Coca Cola brand. This is an excellent group to target because it holds 36.3% (68,076,000)
of the total US population that consumes Coca Cola. Advertising can also attempt to
reach out to the cola consumers between the ages of 34-44. By doing so, the advertising
will be able to affect 57% of the total US cola consumers. These is a good way of
maintaining Coca Cola’s top position in the cola market and prevent the brand from
losing any current users.
We believe our advertising goals are important because research from Beverage
Digest show that Coca Cola Classic’s share of market declined slightly from 2000-2001.
With our advertising objective that targets key demographics of current cola users, it will
guarantee that the brand will not lose any percentage of market shares in the next fiscal
year.
In order to achieve all of this, media expenditures will change so that we are
keeping up with the competition. Recent data shows that the number one competitor in
our market (Pepsi Inc.) has spent more money on magazines and network television. Our
advertising objectives are to match that amount if not exceed it; while at the same time,
not upset the budget too much. By running advertisements more frequently across
different medias and putting them up against competitors, there is a better chance of
increasing the repurchase cycle.
In addition to these advertising objectives, some attention can be given to
promotional media. Coupons and other sales promotions can help attract new consumers
to the product. While much of the media expenditures will be spent on maintaining
current users, some of the budget can be used for prospective users as well. Although
12
there will be little effort given to prospect users, there will still be a slight increase in
market share. This can help boost Coca Cola’s productivity and continue its stand in the
top position of the cola market.
Advertising Creative Strategy
In keeping with the Coca Cola Company’s promise to “bring refreshment, value,
joy and fun” to its consumers, we have confidence that an emotional appeal would be
most effective with this product. The advertising creative strategy will focus on
continuing Coca Cola’s strong presence in the competitive beverage market by
acknowledging brand loyal consumers as well as reaching out to other potential
consumers. Coca-Cola Classic has been a well-established brand for over a hundred years
now; and therefore, little attention can be given to introduction and creating brand
awareness. The main focus will be on maintaining Coca Cola’s current consumers and
strengthening their loyalties in addition to persuading cola users to switch to Coca Cola
Classic.
To effectively connect an emotional appeal with Coca Cola’s loyal brand
consumers, the advertising creative strategy will use feel-good advertisements. The goal
is to link a sense of comfort and warmth with the Coca Cola Classic brand. We want to
reassure loyal consumers that Coca Cola has been there for them throughout the years
and will continue to do so for many more years to come. The use of television is the best
way to convey this message. Timeline commercials with images of Coca Cola Classic in
the past can bring positive feelings with the brand. The television commercials can depict
something as simple as a little girl drinking Coca Cola with her mother and her
13
grandmother, all of them laughing and enjoying a good time. This shows how Coca Cola
Classic has been with them and their families for generations. Another media alternative
to target Coca Cola loyal brand consumers are magazines. The excellent use of color and
the long durability of this type of media would work best with the advertising creative
strategy goals.
The second part of the advertising creative strategy is to reach out to potential
Coca Cola consumers. The aim is to get current cola users to switch to our brand. We
believe that slice-of-life advertisements will be able to illustrate Coca Cola Classic as a
joyful and fun product. By placing the brand in a bright social context, consumers can
associate Coca Cola as having a better image that its competitors. The most successful
way of doing this is by outdoor media. The uses of billboards can the point across to
potential consumers in a quick manner. No need to have lengthy explanations because a
single image of Coca Cola in a satisfying social context can change a potential
consumer’s attitude about the product. Radio spots with the appropriate music and jiggles
can also change one’s attitude about the product.
The whole purpose of the advertising creative strategy is to continue to the wellestablished reputation of Coca Cola Classic. By narrowing our media expenditures on
media that can best convey this message, the advertising campaign can be very
successful. We want to strengthen loyalties with current consumers; and at the same time,
persuade other cola users to switch to our brand. The advertising creative strategy
presents the different ways we can achieve this through the use of advertising media.
Since Coca Cola Classic has been a reputable brand for many years, we are confident
14
with our choice of advertising strategy and selling point; and therefore, we know that
Coca Cola Classic will continue it’s long dominance in the competitive beverage market.
15