Marketing and Promotion Mix:
____________________________________
Product
Doctor John Pemberton, a civil war veteran and an Atlanta pharmacist, invented CocaCola in 1886. In his search for a headache medicine, he concocted the Coca-Cola formula. He
combined his Coca-Cola syrup with carbonated water and first sold it to the public at the soda
fountain in Jacob’s Pharmacy in Atlanta. Now, a century later, Coca-Cola is the number one
carbonated soft drink consumed around the world. Over 10 billion gallons of the syrup have
been produced and distributed to over 200 countries.
Coca-Cola has continued to outperform its competitors, which makes the company the
leader in the carbonated soft-drink business. The Coca-Cola Classic formula has proven to be
the consumer favorite. According to Beverage Digest, the Coca-Cola Co. was ranked the #1
company and Coca Cola Classic the #1 brand in its special issue: “Top 10 U.S. carbonated soft
drink companies and brands for 2002”:
Top-10 CSD Companies
2002
Rank
1
2
3
4
5
6
7
8
9
10
Top-10 CSD Brands
2002
2002
2002
Companies
Market Share Rank Brands
Market Share
Coca-Cola Co.
44.3
1 Coke Classic (Coke)
19.3
Pepsi-Cola Co.
31.4
2 Pepsi-Cola (Pepsi)
12.6
Dr Pepper/Seven Up (Cadbury)
15.0
3 Diet Coke (Coke)
9.0
Cott Corp.
4.2
4 Mt. Dew (Pepsi)
6.4
National Beverage
2.3
5 Sprite (Coke)
6.2
Big Red
0.4
6 Dr. Pepper (Cadbury)
5.9
Red Bull
0.1
7 Diet Pepsi (Pepsi)
5.5
Monarch Co.
0.1
8 7UP (Cadbury)
1.7
Carolina Beverage (Cheerwine)
<0.1
9 CF Diet Coke (Coke)
1.7
Private label/other
2.2
10 Diet Dr Pepper (Cadbury)
1.1
Source: www.beverage-digest.com
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It is crucial for Coca-Cola to continue to be aware of what consumers want and need.
However, loyal consumers of the brand have not favored drastic changes to the original CocaCola formula. Almost immediately after the introduction of a “New” taste for Coca-Cola in
1985, consumers rejected it. Quickly, the company returned to its original formula and called it
Coca-Cola Classic. This example illustrates that the consumer holds a great deal of influence
within the company.
The product life cycle (PLC) for Coca-Cola is a well established brand in its maturity
stage. It has a short repurchasing cycle (RC) because the product is consumed frequently.
Therefore, media reach and frequency must be high in order for Coca-Cola to maintain its
number one market standing.
Price
Coca-Cola products are sold in many variations, with prices that range from $0.99 for a
2-liter bottle to $5.99 for a 24-pack of 12 ounce cans. Even this big brand must stay competitive
in price, since companies like Pepsi-Cola and Cadbury (Dr Pepper) are becoming uncomfortably
close in the ranks. Usually, these top three companies stay fairly close in price to each other.
The following chart compares prices for Coca-Cola Classic, Pepsi, and Dr Pepper at three local
supermarket chains:
Supermarket Prices
Stater Bros.
Ralphs
Vons
12-Pack 2-Liter 12-Pack 2-Liter 12-Pack 2-Liter
Price Price Price Price Price Price
Coca-Cola Co.
$3.99
$1.25
$2.66
$1.25
$3.99
$0.99
Pepsi-Cola Co.
$3.00
$1.25
$2.66
$1.25
$3.99
$0.99
Dr Pepper
(Cadbury)
$3.99
$1.25
$2.66
$1.25
$3.99
$0.99
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The three maintain almost exactly the same sale price for items of the same size, but at
one of the supermarkets, Pepsi’s 12-pack is priced almost $1.00 lower than Coca-Cola. With this
data we can see one of the tactics Pepsi-Cola uses to try to be competitive.
Place
Today, Coca-Cola is a brand internationally known and recognized. Placement of
product has been a major contributor of the brand’s success. Available in 200 markets, CocaCola products can be purchased almost anywhere in the world. Coca-Cola is easily distinguished
by its classic red color and unique packaging. On supermarket shelves, the competition among
the top companies has intensified. The soft drink giants must keep their products at the top of the
consumers’ mind and in front of them around every corner. The tables below compare shelf and
end-of-aisle placement of Coca-Cola, Pepsi, and Dr Pepper at the supermarkets mentioned
earlier:
Shelf Space
Stater Bros
Ralphs
Vons
Coca-Cola Co.
4
4
5
Pepsi-Cola Co.
6
5
6
Dr Pepper
(Cadbury)
4
3
5
Coca-Cola and Pepsi-Cola have a significantly different approach to product placement
on supermarket shelves. Pepsi is making sure that its product is visible to consumers walking
down the soft drink aisle. Coca-Cola has brand-loyal customers, but if they are exposed to a
competitor’s product enough times they may be tempted to try it. This is especially a concern
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because Pepsi has the highest number of shelf space at certain supermarkets. It also has much
lower pricing at these locations.
End-of-Aisle Displays
Stater Bros
Ralphs
Vons
Coca-Cola Co.
2
3
2
Pepsi-Cola Co.
1
3
2
Dr Pepper
(Cadbury)
1
2
2
The end-of-aisle comparison was more promising for Coca-Cola. Here, Coca-Cola has a
higher number of displays, keeping the product available for a quick or last-minute pick-up by
the consumer.
Promotion
Coca-Cola is one of the world’s most valuable brands, largely due to their ability to
properly market their product. Promotion is crucial for the brand; it must maintain the iconic
status it has created for itself. The company is much more than the products themselves. With
its advertising and marketing campaigns, Coca-Cola has become a cultural icon.
Sponsorship has been a successful way for the company to expand its exposure. CocaCola is associated with the most prestigious events around the world. For instance, Coca-Cola
has sponsored the Olympics since 1928 when they first traveled with the United States Team to
the Amsterdam Olympics. In 1978, Coca-Cola began a sponsorship for the Federation
International Football Association (FIFA) World Cup. Celebrity endorsements are another great
way of keeping consumers aware of the Coca-Cola brand. Although celebrity endorsement can
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be expensive, the financial profit of association with the right celebrity can be very beneficial to
the brand.
Also, more basic promotions are extremely important in keeping the Coca-Cola brand in
the consumer’s mind. Coupons, outdoor advertisements, contests, and direct mailers have
proven to work. These forms of promotional advertisements will have a stronger impact if used
between high and low advertising periods. The key for Coca-Cola is to maintain its brand image
and continue to keep the consumer aware of its products. With consistent promotion, this
leading manufacturer, marketer, and distributor will continue to control the market.
Consumer, Market, Environment:
_______________________________________
The Consumer Environment
The consumer demographic profile for Coca-Cola varies greatly due to the popularity,
accessibility and recognition of the product. The following is an analysis and description of the
consumer demographic profile for Coca-Cola. An analysis of the product’s usage, demographic
concentration, consumer characteristics such as income, age, employment status, etc. is carefully
analyzed.
The tables that follow contain calculated rankings and volume potential (VP) estimates
for the demographics mentioned above using Mediamark Research, Inc. data (MRI) from spring
1994.
Column A = Users
Column B = % of Users
Column D = Index
Column AxD = Volume Potential
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Table 1 – Age of the Consumer
Age
A
(‘000)
18-24
25-34
35-44
45-54
55-64
65 and
over
17381
28605
24378
14750
10989
12242
B
% of
Users
16.0
26.4
22.5
13.6
10.1
11.3
D
Index
Rank
AxD
(VP)
Rank
123
114
105
95
88
86
1
2
3
4
5
6
2,137,863
3,260,970
2,559,690
1,401,250
967,032
832,456
3
1
2
4
5
6
According to the table above, age category 25-34 is the best recommendation since it has
a high index (114) and the highest volume potential (3,260,970). Age category 18-24 is also
good because it has the highest index (123) and a high volume potential (ranked #3 at
2,137,863). Given the popularity of Coca-Cola and its established wide customer appeal, it is
safe to consider that the combination of these two age groups, 18-34 is the best overall
assessment of the potential consumer target.
Table 2 – Household Size
Household
Size
A
(‘000)
1 Person
2 Person
3 Person or
more
11768
31232
65345
B
% of
Users
10.9
28.8
60.3
D
Index
Rank
AxD
(VP)
Rank
85
90
109
3
2
1
1,000,280
2,810,880
7,122,605
3
2
1
Data from this table indicates that the highest potential exists in the “three persons or
more” category because it has the highest index (109) and the highest volume potential (ranked
#1 at 7,122,605), making this category the best target market under the “household size”
category.
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Table 3 – Marital Status
Marital
Status
A
(‘000)
Single
Married
Other
Parents
Working
Parents
27385
62738
18221
41039
30438
B
% of
Users
25.3
57.9
16.8
37.9
28.1
D
Index
Rank
AxD
(VP)
Rank
114
98
90
111
109
1
4
5
2
3
3,121,890
6,148,324
1,639,890
4,555,329
3,317,742
4
1
5
2
3
The table above illustrates that under the category of “marital status,” those who report to
be in the “married” group show a high index (98) and the highest volume potential (ranked #1 at
6,148,324). Also, the “single” category is a good consideration because it has the highest index
(114) and still a high volume potential (ranked #4 at 3,121,890).
Given all the above consumer data and sales potential considerations a high profit
potential lies with:
18- to 34-year-olds
Single and Married
Households of 3 or more
Market Analysis
In order to maximize sales and profits, it is necessary to identify high sales potential
market segments based on current consumer information. The following is an analysis of
marketing regions and county sizes of Coca-Cola users:
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Table 4 – Marketing Region
Marketing
Region
A
(‘000)
New
England
MidAtlantic
East
Central
West
Central
Southeast
Southwest
Pacific
D
Index
Rank
AxD
(VP)
Rank
5166
B
% of
Users
4.8
86
6
444,276
7
18548
17.1
97
4
1,799,156
2
14982
13.8
102
3
1,528,164
5
16120
14.9
97
4
1,563,640
4
22359
20.6
110
1
2,459,490
1
12739
18432
11.8
17.0
108
93
2
5
1,375,812
1,714,176
6
3
The table above shows that the Southeast marketing region has the highest volume
potential (ranked #1 with 2,459,490), however, considering the popularity of the brand and the
product recognition that has been shown on a national level, not to mention a global level. Any
market which shows an index above 100 is sure to have a favorable product usage, especially
areas like the Southeast, the Southwest and the East Central.
Given all the above marketing data and sales potential considerations, a high profit
potential lies with:
Mid-Atlantic region
Pacific region
West Central region
Environment
Given the popularity of Coca-Cola, there is reason to conclude that there exists a limited
number of environmental constraints pertaining to the sale of this product. Being a preferably
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cold beverage, Coca-Cola sales are higher in warmer/hotter seasons of the year, making spring,
and especially summer, periods of higher consumption. High volume Coca-Cola users, however,
are not as affected by environmental change and use the product consistently year-round.
Advertising for Coca-Cola that is intended to attract new or more frequent users would be
more effective in high concentrations during the warmer/hotter seasons. Advertising campaigns
that focus on the joy and satisfaction of a cold Coca-Cola amid the heat of the summer months
can attract new product users.
Competitive Assessment:
____________________________
The market share of Coca-Cola and its competitors was found in the 2002 edition of
Market Reporter. According to the Market Reporter:
Table 5 – Market Share of Soda Makers & Brands
Coca-Cola
Pepsi
Market Share of largest soda makers in 2002
#1 at 44.3%
#2 at 31.4%
Market Share of largest soda brands in 2002
#1 at 19.3%
#2 at 12.6%
As for the top soft drinks in convenience stores for 2002, Coca-Cola's market share was
18.7% (again at #1) and Pepsi's market share was 17.4%, again in 2nd place. For top soft drinks
in drug stores, Coca-Cola's market share was 20.7%, and Pepsi's was at 17.1%, still in the same
places. For the top soft drinks in mass merchandise stores, Coca-Cola's market share was 14.7%,
#1, and Pepsi's market share was at 14.2%, again at 2nd. We can see from this data that even
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though Coca-Cola is the #1 soft drink, Pepsi follows close behind. This shows that Coca-Cola
must still use all types of media to advertise and keep their rank as #1 soft drink.
Table 6 – Market Share of Sales Locations
Market share for:
Coca-Cola
Pepsi
Top soft drinks in convenience stores
18.7%
17.4%
Top soft drinks in drug stores
20.7%
17.1%
Top soft drinks in mass merchandise stores
14.7%
14.2%
As for the market share of soft drinks in North America, Coca-Cola came in at first with
42.4%, Pepsi in second with 33.1%. On a side-note, the soft drink market for Mexico had CocaCola's market share at an astonishing 68.0%, and Pepsi at just 18.4%, Coca-Cola of course being
first and Pepsi still trailing.
Table 7 – Market Share for North America
Market Share for:
Coca-Cola
Pepsi
Soft drinks in U.S. and Canada
42.4%
33.1%
Soft drinks in Mexico
68.0%
18.4%
Coca-Cola uses a variety of media outlets to advertise its product. Through the use of
many types of media outlets, Coca-Cola continues to dominate the soft drink market, having
50% control over this entire market.
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In 2000’s LNA/Media Watch, one can see where Coca-Cola spent their advertising dollars
and what media were used, as well where its top competitor, Pepsi-Cola, spent their advertising
dollars. For instance, Coca-Cola spent over $91 million for its total advertising, while Pepsi
spent just over $80 million. Both companies spent the most of their advertising dollars on
network television; Coca-Cola spent $45 million, while Pepsi spent $52 million.
For the second category of the most advertising money spent, Coca-Cola used $21
million for spot television; while Pepsi's second is cable TV networks with $14 million. This is
interesting because Coca-Cola's third category of spending is syndicated television with $13
million spent, and Pepsi's third category was spot television, with $11 million. This data shows
that Coca-Cola is using the better choice of spot television as opposed to cable TV networks such
as HBO and MTV. Coca-Cola's fourth category of the most spending is in cable TV networks,
while Pepsi's is national spot radio. Coca-Cola benefits by spending more money in spot
television than cable TV because, although many people watch cable, the majority of people in
the U.S. watch shows on basic TV networks. Some of the highest rated shows such as ER and
Friends are viewed on network TV. This gives Coca-Cola a high frequency rate of its product to
viewers at home.
Both companies had magazines as their fifth category of their spending, Coca-Cola with
almost $2 million in spending and Pepsi about $500,000. For the sixth media vehicle, Coca-Cola
spent $320,600 on outdoor advertising, while Pepsi spent $494,900 on syndicated television.
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Table 7 – LNA Media Watch
Coca-Cola
Pepsi
Total Advertising Dollars spent
$91 million
$80 million
Money spent on Network TV
$45 million
$52 million
Magazines
$2 million
$500,000
Outdoor Advertising
$320,6000
$494,900
After studying this data, it shows that Coca-Cola dominates the soft drink world because
of its heavy use of network television, as well as spot, syndicated, and cable television. Being
that Coca-Cola heavily focuses on its emotional appeal to its consumer, television has shown to
be the best choice for Coca-Cola's advertising dollars. Other reasons for using television is its
capability of showing product demonstration, as well as being able to effectively show a
reminder advertisement or a teaser advertisement. By using a reminder ad, Coca-Cola is gaining
high frequency. With a teaser ad, Coca-Cola is gaining high reach with its consumers.
Marketing and Advertising Objectives:
_____________________________________________
Marketing Objectives
Currently, Coca-Cola Classic holds the number one position of the top ten brands of soft
drinks. Our foremost marketing objective is to concentrate on maintaining the current position in
the market and also set a realistic goal of increasing our market share from 19.3% to 21% over
the next fiscal year. Another objective is to increase the overall visibility of the product name
against the potential customers and the trade across the country. Other major objectives will be
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to maintain national coverage and to find and persuade new customers for our product. Realistic
goals of maintaining their brand and focusing on new target audiences will also be considered.
In order to meet these objectives, Coca-Cola will have to spend more money overall and
continue to reach their brand-loyal consumers. Currently, Pepsi-Cola continues to target at the
university level and in order for Coca-Cola to increase its market share they must begin to target
this audience. Coca-Cola’s segment markets its Sprite soft drink brand to teenagers and college
aged individuals, and that strategy has worked amazingly well. If Coca-Cola Classic uses
similar methods, they may be able to expand the market share in that category. Another way of
increasing the market share is through the expansion of Coca-Cola’s visibility throughout the
nation. More details will be explained in the advertising objectives.
Our main objective is simple: to continue Coca-Cola’s success. With the current world
circumstances, many companies have lost a great deal of their market share to cheaper and newer
competitors. In order to avoid this, Coca-Cola must continue to hold their number one spot
among soft drink users. This goal can easily be met if Coca-Cola continues to use their current
advertising methods and strategies.
Advertising Objectives
In order to increase the current market share to 21%, changes must be made to the
advertising objectives. Coca-Cola will have to increase the amount of money spent on network
television to surpass Pepsi-Cola’s amount spent last year. Although Coca-Cola is the #1 soft
drink brand, to keep this position strong Coca-Cola should try to bring up their network
television sales by spending at least $55 million.
Another advertising objective is to build brand preference for Coca-Cola to 30% for the
25- to 34-year-olds for the next fiscal year. In order to do this, Coca-Cola must increase their
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brand exposure. Additional spot and network television commercials during primetime and late
night will need to be purchased in order to increase the user rate. Another method will be to use
more outdoor advertising methods. This will not only help increase brand exposure, but also
help with brand recognition. These media will be increased to help further reach our 25- to 34year-old target market, because it is during these times that this group is most likely to be
watching television.
In addition to these methods, more money will need to be set aside for new markets and
weaker markets. As mentioned above, Coca-Cola should expand into local college campuses;
this would in turn take potential users away from Pepsi.
Advertising Creative Strategy:
___________________________________
For our creative strategy, the main focus will be an emotional appeal of the Coca-Cola
product. This is because with such a large company and well-recognized brand name, Coca-Cola
benefits more by appealing to the emotions of its consumers.
To gain this emotional appeal from our consumers, advertisements should be placed
heavily in all aspects of television. In the previous year, television advertisements made a
noticeable increase in Coca-Cola's sales. With the introduction of Vanilla Coke in 2002, 8
million new consumers were brought in and before that, diet Coke with lemon brought in 3
million new consumers. This gave Coca-Cola a 3% volume growth in the U.S. With the
introduction of Vanilla Coke, many types of television ads were produced. Coca-Cola used
different celebrity figures to endorse its new product and the further use of celebrities will
continue to help Coca-Cola increase its sales.
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People pay attention when they see a celebrity, and having the combination of a celebrity
and a great product together on television makes for the best creative strategy. Of course focus
will not only be on celebrity-endorsed commercials, but also show the consumer the satisfaction
and value they get while drinking Coca-Cola. This can be done by using a variety of
commercials, such as showing a family enjoying the product, or showing how a party can be
more fun with Coca-Cola. These and other techniques appeal to the consumer's emotions.
Other types of media that would be used to advertise Coca-Cola are magazines,
billboards, the Internet, and product placement. These will be further discussed in the media
recommendations.
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