Orange Coke
Marketing Plan: Part 1 – Market and Consumer Profile
Danielle Elwell, Keila McCarty, Lesley Poberezny
12/6/2010
Elwell, McCarty, Poberezny 1
Orange Coke
Executive Summary
The Coca-Cola Company has the opportunity to introduce an innovative new product: Orange Coke.
After analysis, we’ve outlined the best tactics to achieve the company’s strategic goal of maximizing
long-term return to shareholders. “Orange Coke” will be marketed as a unique high-energy soda
crossover while reinforcing the company’s status as the leader in innovation and successful product
launches. The marketing strategies utilized will enable us to reach a market size of an estimated
58,565,227 people (targeted) (Appendix H) with a forecasted sales growth prospect of 5% (Geller, 2010)
over the next 3 years (approximately 4 billion dollars profit) (Geller, 2010), while satisfying the needs of
the flavored soda market. Success will be reflected by a sizeable capture of market shares within this
market, while strategically placing the company as a market leader in the energy drink/carbonated
beverage segment of soft drinks.
Company Description
Brief description of the company
The Coca-Cola Company’s important undertaking is to refresh the
world (Mission, Vision, and Values, 2010). The Coca-Cola Company
was founded in 1886 and is headquartered in Atlanta, Georgia. They
manufacture, distribute, and market nonalcoholic beverage
concentrates and syrups worldwide. The Coca-Cola Company also offers fountain syrups, syrups, and
concentrates, such as flavoring ingredients and sweeteners. It markets its nonalcoholic beverages
primarily under the Coca-Cola, Diet Coke, Fanta, and Sprite names. The company sells its finished
beverage products primarily to distributors, and beverage concentrates and syrups to bottling and
canning operators, distributors, fountain wholesalers, and fountain retailers (Profile, 2010).
Brief description of the new product & strategic role in the future position of the company
“Orange Coke” will be a canned beverage and will be positioned as the new
and exciting flavored carbonated energy drink - soft drink hybrid available
on the market. The beverage will have an orange flavor added to the Coke
just like Cherry Coke. The most popular flavor launch of 2009 was orange
(Beverage World, 2010). While Coke currently has Full Throttle, Rehab, and
Tab Energy in the energy drink segment, Orange Coke will be a healthier
alternative, using more natural fruit juices but maintaining the punch upon
which energy-drink users have come to rely. It will also bring an entirely
different drinking experience to loyal Coca-Cola consumers. By presenting
itself as a new alternative to traditional Coke, many consumers who wouldn’t normally try an energy
drink will purchase Orange Coke. We may regain other consumers that currently view Coke as
“outdated” with its appeal to the 15-29 demographic. We chose this target age group because they are
the young, energy driven consumers who, whether studying for an exam, playing video games, or
adjusting to work a schedule, will get hooked on the flavored energy drink. The strategic role of Orange
Coke for the Coca-Cola Company is centered around three objectives:
 Stay at the forefront as the market leader in innovative product introductions and successful
product launches
 Strengthen and satisfy the needs of the Generation Y consumers with an eye-catching product
 Become a market leader in the energy drink segment with increased market shares
Elwell, McCarty, Poberezny 2
Orange Coke
Situation Analysis
Industry Analysis
As Orange Coke will be poised at the juncture between carbonated drinks and energy drinks, the
numbers are more likely to resemble those of a new soda product launch. The sales volume for the
carbonated drinks segment in the United States has reached 9416.1 million cases in 2009 for a total
market share volume of 13,919.3 million gallons (Appendix A). This product segment showed a decline
from 2007 to 2008, but a little rise from 2008 to 2009: a decrease of 3.1% and then a rise of .8% over a
period of three years (Beverage World, 2010). Refer to Appendix B.
The annual consumption rate per capita in 2008 reached four hundred twelve (412) 8-ounce drinks
(3,296 oz.), which represents a 6 can per person increase compared to 1998 (Coca-Cola Consumption,
2009).
Trends
Through the early 1960s, soft drinks were synonymous with ‘colas’ in the mind of consumers. In the
1980s and later, however, other beverages became more popular. Coca-Cola, Pepsi and Dr. Pepper
responded by expanding their offerings through alliances and acquisitions, but also by focusing efforts
on portfolio diversification. Soft drinks may have been the stars of the drink world in the past, but their
popularity has been challenged by the ever expanding array of other available options as well as
negative news about their health effects (2009 Drink Trends, 2008). Soft drink sales remained flat from
2001 to 2006 and are projected to decline as much as one percent by 2011 (2009 Drink Trends, 2008).
The energy drink segment, however, has increased from 26.3 million gallons in 2001 to 354.5 million
gallons in 2009 (Appendix C) (Beverage World, 2010). Today consumers are looking for healthier
options or more bang for their buck. According to this year’s Beverage World magazine, Crush, an
orange flavored carbonated soda, has gained the most market share this past year, increasing its sales
by 375.1%. The readiness of the market to drink an orange flavored soda/energy drink hybrid should
bode well for Orange Coke.
Profitability & Future Growth Potential
In 1993, Concentrate Producers earned 30% pretax profits on their sales, while bottlers earned 9%
pretax profits on their sales, for a total of industry profitability of 39% (Cola Wars Continue, 2006).
While the carbonated soft drink sector only accounts for 78% of the total Coca-Cola sales in 2009,
estimates are forecasting a growth of 5% in sales and 5% in volume consumption by end of 2010 (CocaCola Company, 2010).
SWOT Analysis
Strengths
Brand strength and loyalty
Results of operations
Strong brand image and awareness
Consumer loyalty
Effective advertising
Healthy and effective organizational structure
Strong existing distribution
Effective strides in new markets
Weaknesses
Brand dilution
Saturation of carbonated soft drink segment
Reliant upon line extensions
Elwell, McCarty, Poberezny 3
Orange Coke
Opportunities
New Product Introduction
Brand is attractive to global partners
High product quality
Investment in growth markets
Distribution and promotion nationally and globally
Distribution network in place and ready for new
product
(Explanations in Appendix D)
Threats
Strong competition
Free trade
Changes to the regulatory environment (food and
drug laws)
Raw material shortages
Competition
Coca-Cola’s top competitors for the carbonated soft drinks industry are PepsiCo (30.3%), Dr.
Pepper/Snapple Group (Cadbury-Schweppes ) (16.6%), and Cott Corp. (4.9%), which combined,
represent about 51.8% of the total market share (Beverage World, 2010). The top competitors in the
energy drink market are Red Bull, Monster Energy, and Rockstar Energy (Appendix E) (Beverage World,
2010). While we currently have Full Throttle on the market, it is currently in 9th position for market
share (Beverage World, 2010). Coca-Cola is leading with 42.7% of the total carbonated soft drinks
market share – it’s time we reclaim our name as the top beverage provider in the energy drink market as
well (Beverage World, 2010).
Orange Coke will launch into a competitive market of other flavored sodas. It is anticipated that the
following brands could potentially compete with Orange Coke in the carbonation drink market: Cherry
Coke, Diet Coke with Lemon, Diet Coke with Lime, Vanilla Coke, Wild Cherry Pepsi, and Fanta.
The current market for Orange Coke will be difficult to get into, but distribution is not going to be
restricted to just retails stores. Orange Coke will be in vending machines, grocery stores, and gas
stations. Direct competition from the other types of Coke is not anticipated, since the marketing roll-out
will initially emphasize on product awareness and both sales channels do not reach or serve the same
market. Similarly, it should fill its own niche and not erode a significant amount of market share from
Full Throttle. A strong distribution system already exists with Coke, since partnerships and channels are
in place. This will facilitate the product’s reach into its target market. Further data concerning market
shares and distribution channels are available in Appendix F and G.
Barriers to entry:
Business Practices
 Since there are a number of competitors, it
will be hard to prevent imitation behavior
(especially from PepsiCo and Dr. Pepper)
 Risk of competing with emerging private
labels
 Given the wide array of options for Coke, it
becomes a challenge for Orange Coke to
stand out
Manufacturing
 Producing canned Orange Coke requires a
large investment for the manufacturing
chain (ingredients to final packaging)
 The marketing campaign to make this new
brand popular requires more promotional
expenditures than a traditional brand
extension
Elwell, McCarty, Poberezny 4
Orange Coke
Target Market
Segment Identification
Orange Coke is to be established at the junction of the carbonated drink and energy drink sector. It is
our goal to compete in both markets, as the product will fulfill requirements of both sectors. Orange
Coke will be a flavored soda, but will also contain vitamins B and C, iron, caffeine, and Guarana for
energy and health.
Segment Needs
The product will cater to social needs where this fun, flavored drink will give those consumers the sense
of belonging to a group and the energy to take on the world.
Segment Trends
There is always a market for new flavors, but each does well only for a short time before people go back
to their core soft drink. Phillips of Cadbury-Schweppes said, “As an industry, we are getting better about
line extensions by only offering them as LTO [limited time only], thus pulling them off-shelf before the
novelty wears off,” (Holtz, pg 68). “Brand loyalty is a dominating factor in the energy drink category”
(Beverage World, 2010). Coke long ago established trust among its loyal consumers. Orange Coke
builds on that trust and fills a demand previously unrecognized by Coke’s current menu of beverages.
Segmentation Variables and Breakdowns for United States Consumer Market of Orange Coke
Main Dimensions
Geographic
Segmentation
Demographic
Segmentation
Psychographic
Segmentation
Behavioral
Segmentation
Variables
Region
Breakdown
Nationwide with emphasis on urban/metropolitan areas, and adapted strategies
for all geographical groups
Area Size
Less than 4,000,0000
Density
Urban, Suburban
Climate
All
Age
15-29 years old
Occupation Students, new graduates, new workers, young professionals
Gender
Male and Female
Income
Under $50,000
Race
All: Caucasian, African American, Native American, Asian, European
Personality Brand conscious, anchored in popular culture, inclined for differentiation, very
tolerant towards multiculturalism and internationalism (open-minded), quick
maturation with modern products
Lifestyle
No major responsibilities, highly influenced by peer groups, active life
Benefits
Communication Benefits
Sought
 Informational text on product
 Nutritional Information
Functional Benefits
 Convenient, easy to take on the go
Perceptual Benefits
 Quality/Premium Price
 Social standing
Usage Rate Daily, Weekly, Monthly, Yearly
User Status Non-user, regular user
Elwell, McCarty, Poberezny 5
Orange Coke
Positioning Strategy
Throughout the promotion the theme will be “Experience Something New.” We will use an eye-catching
can and packaging, premium-priced, cool, new and unusual, refreshing orange flavor, for young adults.
Another option to differentiate and make the product appear “fresh” is to use the slogan “This ain’t your
grandma’s coke.”
Identification of Key Success Factors
The key success factors to rolling out Orange Coke are:
1. Strong brand image and awareness – People are more willing to try something with a name
they are familiar with.
2. Consumer loyalty – Many people who like Coke are going to try Orange Coke and customer
loyalty is an extremely important factor in gaining market share in the energy drink segment
3. Distribution and promotion nationally and globally – Coke is a wide-reaching company
known worldwide and will distribute and promote Orange Coke in all appropriate markets.
4. High product quality – Knowing Coke is a quality product will also aid in selling Orange Coke.
5. Investment in growth markets – As flavored carbonated drinks and energy drinks are
increasing in popularity, it follows for Coke to create a drink to fit this growing market.
6. Strong network of wholesale distributors – There will be no issue or worry about getting the
new product to market as Coke’s network of distributors and bottlers is very strong and
wide reaching.
Other success factors:
1. Effective advertising
2. Healthy and effective organizational structure
3. Distribution network in place and ready for new product
Conclusion
Orange Coke appears to be potentially profitable and an innovative new product with a strong outlook
for market share presence and growth opportunity across both the energy drink and carbonated
beverage segments. Upon implementation of the marketing plan, the Coca-Cola Company will regain
increased market shares and claim its targeted position as a market leader in the carbonated and energy
drink segments as well as maintaining its long-standing consumer recognition for innovative and
successful product launches in diversified markets.
Elwell, McCarty, Poberezny 6
Orange Coke
range
oke
Marketing Plan
Part 2: Marketing Strategy
Elwell, McCarty, Poberezny 7
Orange Coke
Marketing Objectives
The objectives of the marketing plan are centered on three criteria:
 Create strong customer awareness of Orange Coke as a new and distinct product from Coca-Cola
 Establish wide brand recognition through the capture of market shares in the Energy/Carbonated Soft
Drink (CSD) segment
 Become a top market leader in the segment within the forecasted sales figures.
Marketing Program
Product Strategy
The Core:
 Orange Coke is a pre-canned, ready to drink carbonated energy drink
The actual product:
 Branding: Can shaped, prominent Orange coke logo written in Coca-Cola style font, catchphrase
“Orange You Glad It is Coke?”
 Trade Name: Orange CokeTM, a Coca-Cola product
 Brand personality: Cool, original, healthy, functional, energetic
 Packaging and labeling: See photo below

Brand Equity: Coca-Cola provides consistent quality, innovation and accessible soft drinks.
Marketing Considerations
 Product Life Cycle: With a strong marketing campaign, sales will begin immediately. Since Orange Coke
is prone to product imitation, Coca-Cola’s strategy is to broaden distribution quickly, which is currently
feasible thanks to the company’s current distribution network and high manufacturing capacity.
 Product Class: Food & Beverage →Soft Drinks → carbonated/energy drink
 Product Modification: Coca-Cola is introducing a crossover beverage between a carbonated soda and an
energy drink, redefining both drink genres while improving taste. Orange Coke will become a widely
available drink in multiple retailing (distribution) channels.
Price Strategy
The price strategy will consider the following aspects:
 The product lifecycle
 Consumer demand
 Potential substitutes
Elwell, McCarty, Poberezny 8
Orange Coke
Product Lifecycle
The company should take advantage of the fact that products early in their life cycles are still novel and
consumers are willing to pay more for them. It ensures a high profit margin as the early adopters buy the
product and the firm seeks to recoup development costs quickly. Further, the higher price brings the perception
of prestige to the product. We will monitor our competitors’ pricing to ensure competitiveness. As such, pricing
will likely be lowered later on in the product launch.
Customer Demand
Customer demand is a crucial factor which is driven by tastes, income and availability of other similar products
at a different price. For a many consumers, value and price are highly related: the higher the price, the higher
the value. Consequently, Coca-Cola’s intention to position Orange Coke as a unique, attractive, and innovative
product affords us a certain amount of control over Orange Coke price.
Potential substitutes
Pricing for Orange Coke must be set while taking into account that pricing too high can attract competitors to
undercut our prices in hopes of getting a cut of our potential profits. Having a higher price could make
customers aware of the additional benefits and the higher quality of Orange Coke. While the carbonated
beverage market has high barriers to entry, Coca-Cola’s competitors could easily imitate Orange Coke. It is
extremely important for Orange Coke to distinguish itself quickly in this easily-copied market (Appendix J).
Promotion Strategy
Objectives:
 Initiate strong awareness of Orange Coke throughout Gen Y (15-29 year olds) consumers as well as their
parents.
 Win market shares over their drink competitors such as PepsiCo and Red Bull.
Message: The promotional outputs will convey the clear message that “Orange Coke” is a new carbonated
energy drink for young people who simply want to have fun.
Concepts:
 “For the out-of-the-ordinary individuals who like to challenge themselves.”
 “A good spirit for a good body!”
 “This ain’t your Grandma’s Coke!”
Media Selection: Choosing the appropriate Media is important to find for Generation Y consumers since they
only pay attention to certain media. They typically use more than one communication media at a time, a
behavior that is often called “multitasking.” This group of consumers does not give its full attention to one
single message, but rather use continuous partial attention to scan the media. Marketers can still communicate
with Gen Y by using a variety of targeted promotional tools. Another important tactic to reach our target
market is through viral marketing, which Coca-Cola will heavily use in this campaign.
Elwell, McCarty, Poberezny 9
Orange Coke
Advertising: (Appendix K thru M)
Output
Television
Radio
Magazines
Internet
Outdoors
Personal Selling
Public Relations
Publicity
Examples
ESPN, FOX Affiliates, NBC Affiliates, ABC Affiliates,
Cable Network Stations
All stations, sponsoring of some specific radio
station events
Cosmo, Elle, Sports Illustrated
Banners on websites, Promotional website would
be on the Coca-Cola website, social networking
sites
Billboards in select areas:
 Tourist areas
 Campuses
 Highways
 Near gas stations and rest stops
Contact with retailers, sales kits
Special displays at events (e.g. sports events),
schools, malls
Press releases (online and print), TV coverage,
conferences
Promotional Mix
Consumer Oriented:
 Contests: “Orange You Glad It Is Coke?” Find a secret code underneath the pop top and enter the code
in on the Coca-Cola website to see what prize you have won.
 Samples: Distribute to schools and universities, gas stations, grocery stores. Samples of the drink are a
way to avoid product resistance. It will encourage product purchases and it shows low risk for
consumers since they get it for free. They have nothing to lose.
 Point-of-Purchase: Have samples when leaving the grocery store to reach the parents of the target
market. It will increase visibility of the new product.
 Product Placement: Use the drink in TV shows or movies.
Distributor Oriented:
 Advertising: Encourage retailers to buy the product and maintain the expectations that Coca-Cola
provides to consumers.
 Allowance and discounts: Case allowance – free goods approach will be used to encourage retailers to
buy the product and they will get a certain amount for free.
Other Considerations:
 Schedule of Advertising: Promotional presence year-round
 Integrated marketing communication
Elwell, McCarty, Poberezny 10
Orange Coke
Target Audience:
 Coca-Cola will use the mass media to reach the majority of their large market
 Word of Mouth: Friends telling friends about the new product
 Social networking sites will also be utilized to publicize the launch (i.e. Facebook)
Promotional Budget
Our anticipated marketing budget will begin at 5% of anticipated gross profit. Once Orange Coke is established
within the market, we should be able to scale back each year to around 3%. The marketing schedule for the first
year can be found in appendix K.
Distribution Strategy (Place)
Orange Coke will be distributed through:
 Grocery stores
 Schools
 Vending Machines
 Gas stations
 Direct sales (bars and restaurants)
To gauge our results, we’ll monitor sales, which will determine both percentage of market share gained and
profit, as well as compare our yearly results to determine if our initiatives are effective.
Pro Forma for Coca-Cola (5 years) (Appendix P)
2010
Net operating
revenues
Cost of Goods Sold
Gross Profit
Selling, general and
administrative
expenses
Operating Income
EBIT
Taxes (35%)
Net Income
2011
2012
2013
2014
$ 641,337.00
$ 801,671.25
$ 1,042,172.63
$ 1,354,824.41
$ 1,761,271.74
$ 229,598.65
$ 411,738.35
$ 237,936.02
$ 288,601.65
$ 513,069.60
$ 296,618.36
$
$
$
375,182.15
666,990.48
385,603.87
$
$
$
487,736.79
867,087.62
501,285.03
$ 634,057.83
$ 1,127,213.91
$ 651,670.54
$
$
$
$
$
$
$
$
$
$
$
$
281,386.61
281,386.61
98,485.31
182,901.30
$
$
$
$
365,802.59
365,802.59
128,030.91
237,771.68
$
$
$
$
173,802.33
173,802.33
60,830.82
112,971.51
216,451.24
216,451.24
75,757.93
140,693.30
475,543.37
475,543.37
166,440.18
309,103.19
Elwell, McCarty, Poberezny 11
Orange Coke
Financial Projections (Appendix N thru P)
Contribution Margin per can
Revenue – COGS = Contribution Margin
$641,337-$229,598.65 = $411,738.35
Contribution Margin/Revenue = CM per can
$411,738.35/$427,000 = $.97
Break-Even
Overhead/CM per can
$237,936.02/$.97 = 245,294 cans
Market Share
# of Cans at Break Even / 1,000,000 = Market Share
245,294/1,000,000 = 24.5%
In one year if Coca-Cola can sell 245,294 cans of Orange Coke, or in other words achieve 24.5% of the energy
drink/carbonated market share, it will break even. After this point, every can Coca-Cola sells will generate an
average $.97 towards the profits. The potential profits can be up to $732,3501 based on our target market.
Expected Costs
Cost of Goods Sold: $641,337 * 35.8% = $229,598.65
Overhead: 641,337 * 37.1% = $237,936.02
Expected Revenues
Total Expected Revenue = $641,337 (See Appendix P)
1
$.97*(1-24.5%)*1,000,000 = $732,350
Elwell, McCarty, Poberezny 12
Orange Coke
Appendix A
Carbonated Soft Drink (CSD) Consumption Volume (In Cases)
Company
Coca-Cola Co.
PepsiCo
Dr. Pepper Snapple
Cott Corp
National Beverage
Hansen Natural
Red Bull
Big Red
Rockstar
Private Label and
other
Total Industry
2009 Cases
(million)
3947.0
2815.3
1541.5
461.4
254.2
87.7
68.0
48.8
37.4
154.8
2008 Cases
(million)
4107.6
2960.4
1471.2
448.0
247.5
79.0
67.2
43.6
40.2
156.3
2007 Cases
(million)
4241.1
3082.8
1491.3
476.6
243.9
76.5
63.9
42.4
41.0
160.3
2006 Cases
(million)
4357.5
3167.5
1512.9
520.9
249.4
58.6
53.7
31.4
42.4
163.5
9416.1
9621.0
9919.8
(Top-10 CSD Companies and Brands, 2010)
Appendix B
US CSD Consumption (Volume in Millions of Liters, 2006-2009)
Year
2006
2007
2008
2009
Volume in Millions (Liters)
53,099
51,476
48,829
48,845
Volume in Millions (Liters)
54,000
52,000
50,000
Volume in Millions
(Liters)
48,000
46,000
2006
2007
2008
2009
10157.8
Elwell, McCarty, Poberezny 13
Orange Coke
Appendix C
US Energy Drink Volume (Volume in Millions of Gallons 2001-2009)
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
Volume in Millions (Gallons)
26.3
39.7
59.5
93.5
160.8
242.7
335.7
353.8
354.5
Volume in Millions (Gallons)
400
350
300
250
200
Volume in Millions
(Gallons)
150
100
50
0
2001 2002 2003 2004 2005 2006 2007 2008 2009
Appendix D
Strengths
Brand strength and consumer loyalty (See Appendix I for brand rankings)
The Coca-Cola Company is the largest manufacturer, distributor, and marketer of nonalcoholic beverage
concentrates and syrups in the world. The brand is undoubtedly one of the most recognizable brands in the 200
countries where it sells its products. The strong brand name is one of the bases for the company’s competitive
advantage in several of its markets.
Strong brand image and awareness
Coca-Cola is recognized in more than 200 countries where they sell over 3,300 different products. Daily they sell
1.6 billion servings (Growth, Leadership, and Sustainability, 2010).
Elwell, McCarty, Poberezny 14
Orange Coke
Effective strides in Results of operations
In October 2010, net operating revenues totaled approximately $24.6 billion, a 5% increase from 2009. Gross
profit totaled $16.2 billion by October 1, 2010. The company generated $7,290 million from its operating
activities and re-invests heavily into its business. The ability to generate significant cash flows is one of its key
strengths.
Effective advertising
When thinking of Coke advertising campaigns you may not remember too many. Coke does not need to spend
much money on advertising, so it simply doesn’t. If you think back to past campaigns there will be many you
should remember; maybe the polar bears, or “I’d like to buy the world a coke,” or perhaps the iconic Santa with
coke print ads?
Strong existing distribution channels
Coca-Cola has operations worldwide and is well established in its distribution channels. A new product launch
can typically rely on the existing distribution system in order to reach the majority of its target market while
requiring no major supply.
Effective strides in new markets
Coca-Cola has partnered with several companies in order to increase the ability to react to demands.
Healthy and effective organizational structure
Coca-Cola looks at their global business and thousands of employees as a ‘global team.’ They see their core
assets as their brand and their team (Growth, Leadership, Sustainability, 2010). In looking at the different
branches of the company as one, and not as competition, they are able to grow and maintain a healthy
sustainability, with minimum erosion of each other’s market shares.
Weaknesses
Brand dilution
The existing brands and new product being introduced by the company could diminish the value and
differentiating strength of each product they manufacture. Additionally, each new product introduced could
steal market share from existing Coca-Cola products.
Saturation of carbonated soft drinks
It becomes increasingly difficult in the soft drinks segment to innovate and create new products that stand out
from their competition. Growth in the soft drink market becomes challenging when a growing market demand
is divided up among product segments and offerings with in them.
Relying upon line extensions
Coke is relying on brand extensions sales to increase in specific lines, particularly its long time carbonated soft
drink products (e.g. the introduction of Vanilla Coke which helped maintain sales for the core Coke beverages).
Opportunities
New Product Introduction
The carbonation soda market is one that particularly allows more innovation opportunities and gives greater
freedom for creativity in the design, production, manufacturing, distribution, promotion, and retailing choices
and process.
Elwell, McCarty, Poberezny 15
Orange Coke
Brand is attractive to global partners
Because of the company’s size (including value, brand name and operating revenues) and wide portfolio base,
Coca-Cola enjoys a strong purchasing power over its suppliers. It attracts large partnerships with various level of
consumer reach. Existing brand awareness also provides an international playing field for powerful marketing
strategies.
High product quality
Products used are high quality and regulated to reflect the importance of the formulas of the beverages.
Investment in growth markets
Besides Coca-Cola participating in charitable giving, they invest in markets and third world countries that have
potential for growth and/or have begun to enter developing nation status.
Distribution and promotion nationally and globally
Coca-Cola is the number one most recognized brand globally. There are tiny villages in Africa and other
locations around the world that receive Coke product via bicycle-cart delivery.
Threats
Strong competition
Coke is competing in a global market that is characterized by an oligopoly between several competitors. The
fight for market shares and sales in crowded markets becomes a complex one.
Free trade
In an era of globalization, larger international competitors come out with comparative advantages (the constant
fight to remain the first in market). Issues arise when dealing with price competition and economic growth.
Trade organizations are faced with public pressure which can disrupt operations in one or more areas of the
company.
Changes to the regulatory environment (food and drug laws)
Any changes to food and drug laws, such as the ban of an ingredient, could potentially crush the company.
Changes being made to the recipe would cause a loss as most people would not agree with the change to the
new drink.
Raw material shortage
From ingredients for the beverage to the aluminum cans and plastic bottles could cause a threat to the bottom
line of the company. If a shortage occurs, meeting demand will be a vital part of bringing the product to market.
When current practices must be replaced, it often comes at great cost. For the distributors, money could be lost
in more expensive practices such as bottling which in turn, affect the bottom line of the parent company. If the
bottlers do not make money, they will not produce and supply will not meet demand.
Elwell, McCarty, Poberezny 16
Orange Coke
Appendix E
Top 10 US Energy Drinks (US Dollar Sales and Growth, 2009)
Company
Red Bull
Monster Energy
Rockstar Energy
NOS Energy
Java Monster
Monster Energy XXL
AMP Energy
Double Shot Energy
Full Throttle
Monster Khaos
Millions of US
Dollars
$1,890.8
$879.7
$387.0
$171.2
$163.1
$159.4
$141.0
$132.2
$106.7
$63.6
Percent Change from 2008
+1.8
+10.2
-8.5
+24.5
-10.0
-22.9
-13.0
+93.1
-2.7
-13.5
Appendix F
US Liquid Refreshment Beverage Categories
(Volume in Millions of Gallons, Growth and Share)
Category
Carbonated Soft
Drinks
Bottled Water
Fruit Beverages
Sports Drinks
Ready to Drink Tea
Flavored/Enhanced
Water
Energy Drinks
Ready to Drink
Coffee
Total
Millions of
Gallons
13,919.3
Market Share
Growth
Share Point Change
48.2%
-2.3%
+0.4
8,435.3
3,579.2
1,157.8
901.4
460.0
29.2%
12.4%
4.0%
3.1%
1.6%
-2.7%
-3.7%
-12.3%
1.2%
-12.5%
+0.1
-0.1
+0.4
+0.1
-0.2
354.5
51.5
1.2%
0.2%
0.2%
-5.4%
0.0
0.0
28,859.0
100%
-3.1%
0.0
Elwell, McCarty, Poberezny 17
Orange Coke
3.10%
1.60%
1.20%
0.20%
4.00%
Carbonated Soft Drinks
Bottled Water
Fruit Beverages
12.40%
48.20%
Sports Drinks
Ready to Drink Tea
29.20%
Flavored/Enhanced Water
Energy Drinks
Ready to Drink Coffee
Appendix G
Leading US CSD Companies
(Share, Share Point Change and Growth of Volume, 2008 – 2009)
Company
2008 Share
2009 Share
42.7%
Share Point
Change
-0.7
Growth
2008/2009
-3.8%
Coca-Cola
Company
PepsiCo, Inc
Dr. Pepper
Snapple Group
Cott Corp
National Beverage
Big Red
Carolina Beverage
All Others
43.3%
31.2%
15.5%
30.3%
16.6%
-0.9
1.1
-5.1%
+4.8%
4.7%
2.6%
0.3%
0.1%
2.3%
4.9%
2.8%
0.3%
0.1%
2.3%
0.2
0.1
0.0
0.0
0.1
+1.0%
+2.7%
+12.0%
0.0%
+1.2%
2008 Share
2.60%
0.30%
0.10%
2.30%
Coca-Cola Company
PepsiCo, Inc
4.70%
Dr. Pepper Snapple Group
15.50%
43.30%
Cott Corp
National Beverage
31.20%
Big Red
Carolina Beverage
All Others
Elwell, McCarty, Poberezny 18
Orange Coke
2009 Share
2.80%
0.30%
0.10%
2.30%
4.90%
42.70%
16.60%
30.30%
Coca-Cola Company
PepsiCo, Inc
Dr. Pepper Snapple Group
Cott Corp
National Beverage
Big Red
Carolina Beverage
All Others
Appendix H
Market size calculations (Age Distribution, 2000)
Total U.S. (15-29 yrs) Soft Drink Yearly Consumption
Population
Yr. Consumption (Ounce Servings)
Male: 29,877,578
1800 12 oz. servings per year per person
Female: 28,687,649
1200 12 oz. servings per year per person
Total Market Size: 58,565,227
Total Consumption: 3000 12 oz. servings per year
per person
The yearly consumption of 12 oz. servings per year is an assumption based on the 12-29 year old statistics that
were found at the Global Healing Center website.
The market size represents our targeted pool of consumers. Further analysis in the marketing plan will allow for
estimates of the forecasted sales in the market segment specific to the Carbonated Soft Drink.
Appendix I
Top 10 Global Brands Scoreboard
2008 Rank
2007 Rank
1
2
3
4
5
6
7
8
9
10
1
3
2
4
5
6
7
8
9
20
Brand
Coca-Cola
IBM
Microsoft
GE
Nokia
Toyota
Intel
McDonald’s
Disney
Google
2008 Brand Value
($ mill)
66667
59031
59007
53086
35942
34050
31261
31049
29251
25590
2007 Brand Value
($ mill)
65324
57091
58709
51569
33696
32070
30954
29398
29210
17837
% Change
2
3
1
3
7
6
1
6
0
43
Elwell, McCarty, Poberezny 19
Orange Coke
Appendix J
Pricing Strategy (Other Constraints)
The first possible constraint would be the regulations on pricing. After having taken all the important factors
into consideration, two price-level fixing approaches seem appropriate.
1. Profit-oriented approach: Target Profit
One of the central objectives of this project being to become the market leader in carbonated/energy drinks,
Coca-Cola is willing to stay among the top competitors, if not becoming the greater, by achieving a certain target
profit. This could be obtained by establish a price that will largely cover variable and fixed costs while bringing
tremendous profits.
2. Competition approach: Above Market
Competitors and potential substitute’s prices can also be part of the strategy. Having a higher price could make
customers aware of the additional benefits and the higher quality of Orange Coke.
Appendix K
Promotion Schedule
Step
1
Output
Personal Selling
2
Radio Spots
Period of Time
February to
September
February to April
3
Magazine Ads
March to June
4
Television Spots
April to September
5
Sample Distribution
April to September
6
Point of Purchase
April and September
7
Outdoors
May to September
8
Public Relations
May to September
9
Contest
10
Publicity
August and
September
All the time
Arguments
Retailers aware of Orange Coke to order in time
for summer
Target market would hear the ad several times
daily
Target market will match an image with the name
of the product
Send a widespread message that Orange Coke is
available
Potential buyers need to try Orange Coke and
create an addiction to it
Make a special section for Orange Coke in the
grocery store to show new potential buyers the
product
Put ads in places Generation Y would spend time
to create awareness
Use special events (sports) to promote Orange
Coke and get in touch with the potential market.
It will allow Coca-Cola to interact with Generation
Y consumers
Use a contest for a second push into the fall
season
Use of conferences and news to make the general
public aware of the existence of Orange Coke
Elwell, McCarty, Poberezny 20
Orange Coke
Appendix L
Justifications for Advertising selections
Television: Channels for teenagers and for young adults. Arguments – TV communicates with sight, sound and
motion, which is needed for Orange Coke. It is the only media that can reach the majority of the potential
market. Coca-Cola has the budget to cover the high costs of this media.
Radio: Is an already segmented medium. There are lots of stations that can be used and focused on. The
average university or college students surprisingly are heavy radio listeners and spend more time during the day
listening to the radio than watching network television.
Magazines: We should take advantage of the fact that magazines have become a very specialized medium.
Good color production is also an advantage that creates strong images which is the purpose of Coca-Cola with its
Orange Coke brand. Each magazine’s readers often represent a unique profile.
Internet: Online advertising is similar to print advertising in that it offers a visual message. It also has additional
advantages. It can use the audio and video capabilities. As we are targeting our ads to young outgoing people,
sound and movement may attract more attention from viewers and has the unique feature of being interactive.
Interactive media would offer Coca-Cola the opportunity to reach younger consumers who have developed a
preference for online communication.
Outdoor: Billboards in specific geographical area would allow us to reach out to more potential customers. It is
a low cost and flexible alternative.
Appendix M
Implementation Plan
Product Implementation Plan
Pre-Launch Preparation
Conversation with Coca-Cola
about Orange Coke role out.
Manager and staff participate
to a 2-day seminar to discuss
the marketing strategy and its
implementation.
Acquisition of resources to
produce Orange Coke, ensure
production capacity
Build Orange Coke website
and launch it
Establish a monitoring
mechanism to track return on
investment
Shipping to local areas to
constitute the first stock
(wholesale/retail)
Jan
Feb
Mar
Go/No
Go
Launch
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Elwell, McCarty, Poberezny 21
Orange Coke
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Training of marketing staff by
focusing on sale strategy and
psychology
Provide support to local
wholesale and retail
companies, distributors to
advertise Orange Coke
Launch
Launch of Orange Coke
Promotion-Advertising
Campaign
(numbers are from steps in
Appendix K)
Post-Launch (monitor &
control)
Monitor and control (on a
weekly basis) cost
effective/efficient ratios to
interpret market share and
sales revenue compared to
forecast. Make use of
research to drive marketing
efforts, with a focus on new
customers. Establish a
monitoring mechanism to
track return on investment.
Refresh training of marketing
staff
Upgrade content of the
website
Control Point: collect sales
data, analyze it and adjust
production, advertising and
distribution depending on the
sales level. If sales are very
low, adjust advertising. If
sales do not reach new target
forecast, stop product
implementation
Launch
1, 10
2, 3
4, 5, 6
7, 8
Control
Point
9
Control
Point
Control
Point
Control
Point
5, 6
Control
Point
Oct
Nov
Dec
Elwell, McCarty, Poberezny 22
Orange Coke
Appendix N
Elwell, McCarty, Poberezny 23
Orange Coke
Appendix O
Elwell, McCarty, Poberezny 24
Orange Coke
Appendix P
Calculations
Based on Coca-Cola’s previous financial statements, we will see the average COGS/Revenues for years 2007 thru
2009 is 35.8%2. Similarly, Operating Costs/Revenues for the same years is 37.1%3. Moreover, since our target
market are 1,000,000 can annually, assuming Coke maintains its market share in energy drinks 42.7%, we predict
our sales as 1,000,000 * 42.7% = 427,000 cans.
We use the ratio of average capital expenditures/net operating income for North America to estimate the fixed
costs we need for producing Orange Coke in the United States, 5.36%4 of the total revenue.
Expected Revenues
Price ($)
Sales (%)5
Sales ($)6
Revenues ($)7
Supermarket
1.50
10.6%
45,262
67,893
Independent Stores
1.75
58.1%
248,087
434,152
Others
Total
2.00
16.3%
100%
69,601 427,000
139,202 641,337
Note: Independent stores include convenience stores, mass merchandisers, and drug stores. Others include club stores,
dollar stores, health-food stores, military and online retailers.
Expected Costs
Cost of Goods Sold: $641,337 * 35.8% = $229,598.65
Overhead: 641,337 * 37.1% = $237,936.02
Overhead costs include general overhead as well as operations, administrative, and marketing overhead. The
former is generally associated with the recurring management or support of the activity, which is normally
relevant cost. The latter includes salaries, equipment, space and other activities related to headquarters
management, accounting, personnel, legal support, data processing management, and similar common services
performed outside the activity, which are irrelevant. Because there is not enough data to show the ratio of
these two parts, we estimate half of the overhead costs as irrelevant costs.
2
From Appendix N: (11,088+11,374+10,406)/(30,990+31,944+28,857) = 35.8%
From Appendix N: (11,358+11,774+10,945)/(30,990+31,944+28,857) = 37.1%
4
From Appendix O: (458+493+344)/(8,191+8,205+7,761) = 5.36%
5
From Appendix Q: Looked at 2009 percentages for calculation
6
Sales Calculation: Total Sales * Sales Percentage
7
Revenue Calculation: Sales ($) * Price ($)
3
Elwell, McCarty, Poberezny 25
Orange Coke
Appendix Q
U. S. Energy Drink Market
Share of Volume by Distribution Channel (2004-2009)
Distribution Channel (Off-Premise)
Convenience Stores
Supermarkets
Mass Merchandisers
Drug Stores
All Other
2004
53.1%
8.1%
10.6%
2.0%
15.8%
2005
53.1%
10.1%
8.1%
2.2%
16.4%
2006
46.6%
10.1%
7.0%
2.0%
15.9%
2007
48.0%
10.0%
7.2%
2.0%
15.5%
2008
48.5%
10.3%
7.4%
2.0%
15.7%
2009
48.1%
10.6%
8.0%
2.0%
16.3%
Elwell, McCarty, Poberezny 26
Orange Coke
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