1/9/2018 MARKETING SEGMENTS AND DECISION MAKING Executive summaryThe research is presented here based on marketing segment anddecision making in the perspective of coca cola. The research study alsohighlights on several the macro factors that can influence the customers.
However, each company is aware of making proper business plan and takingeffective decision so that they can run the company for a long time. As cocacola is a leading giant company in beverage industry, the employees are moreaware of the factors so that they can meet all the needs. Table of Contents (1) Industry trends. 4(2) Market segments overall 103.
Involvement in Primary segmentation anddecision-making. 11(4) Competition. 12(5) Positioning map for organization considering the primarysegment with its involvement 14Reference list 16 (1) Industry trends a. Growth: Coca – Cola can be stated as a most popular, gold level softdrinks company. The business model of this company is tremendously strong. Inthe year of 1886, Mr. John S. Pemberton founded a most ordinary pharmacy, whichlater on converted to a far cry in today’s operation.
More than in 230 countriesit has successfully spread its business. A survey analysis conducted by softdrinks control board of Australia directs that, in every second around humanbeing consumes about 22,000 beverage of Coca-Cola. Another survey hold by thecompany directs that, from all of the warehouses daily 1.9 billion Coca – Colaproduct are dispatches. The main theory of such success is that, this worldfamous brand follows a diverse business model for its business operation(Solomon, 2014). The shareholders of coca cola are also facilitated by freecash flow as the company follows divertive business model. A survey analysisdirects towards that, in the last 5 years about 39 million dollar from the cashflow sector have returned back to the company. With the excessive cash return tothe company, it faced more and more profitability.
Additionally, one concept of business growth can bedescribed such that, company equally distributes the cash return to thestakeholder and the rest for purchasing share; so that, at the time offinancial crisis, company can get back the cash by selling the purchased share(Rezaei, 2015). Figure 1: Coca Cola Revenue Growth(Source: Solomon, 2014)b. Profitability: Main profitability related strategyof this company goes with the concept that, the company follows strategicpumping method to control its product cost. Apart from this some a bigpercentage are invested for advertisement and for employee promotion. Netvolume of total profit the company has already acquired 42% of the US market.
The method of non carbonate lineup has successfully expanded its profit. Forincrease the profit of the soft drinks company, it has taken entry in themarket field of fairylike component with milk. Apart from this Coca Colafollows the best alignment of operation, by changing its product qualitystructure following up consumer requirements.
Figure 2: Coca cola Profitability(Source: Rezaei, 2015)For in detail profitability analysisof the company the researcher have to analyze some of the terminology, with abrief discussion about them (Rice, 2014). ? Ratio: This ratio analysis goingwith two topics, first one is sales return and the other one is investmentreturn. Figure 3: Financial Ratio Analysis of financial year 2016(Source: Collier, 2015)? Gross profit margin: This factorsmainly put light on the available revenue percentage, comprises its expenditureand operating cover. Improved from 2014-2015 financial years to 2015-2016financial years, as directed in the next diagram. From the benchmarkingcalculation of penultimate financial year, 2016, it is fixed to 60.67%.
Figure 4: Gross Profit Margin of financial year 2016(Source: Collier, 2015)? Net Profit Margin: It is thefundamental indicator of profitability. The ratio of revenue and net income ofCoca cola is summarized in chart format in the nest figure. This indicator,slightly fall in the latest financial year compared to the previous year. Itcan be said that, it will not reach to the expected level even in the 2016-2017financial year (Karimi et al.
2016).From the benchmarking calculation of penultimate financial year, 2016, it isfixed to 15.6%.Figure 5: Net Profit Margin of financial year 2016(Source: Collier, 2015)? ROA: This is the total assets andincome ratio. The ROA of Coca Cola has upgraded in the financial year 2015 ascompared to its previous year. Unfortunately for the financial year 2016, boththe annual and the quarterly data shows that, as the deterioration occurred innet profit margin, assets return has also deteriorate.
From the benchmarkingcalculation of penultimate financial year, 2016, it is fixed to 7.4%.Figure 6: Return on Assets of financial year 2016(Source: Collier, 2015)? ROE: The equity analysis of thecompany shareholder is done in this section. From the latter given excel chartof Coca cola financial data shows that,though in 2014 it was slightly gone down, it has improved the last financialyear. From the benchmarking calculation of penultimate financial year, 2016, itis fixed to 28.3% (Karimi et al.
2016).Figure 7: Return on Equity of financial year 2016(Source: Collier, 2015)? Operating Profit Margin: Secondaryanalysis of profitability is calculated in this section taking help fromcompany annual revenue. From the later given analysis, it can be noticed that,the profit margin has increased in 2015 rather than 2014; but unfortunately theprofit margin has lowered in the current financial year 2016 (Greenfield, 2016).From the benchmarking calculation of penultimate financial year, 2016, it isfixed to 20.6%. Figure 8: Operating Profit Margin of financial year 2016(Source: Collier, 2015)c. Macro Environment (PESTLE)The soft drinks global empire has snatchesaway the first place due to effective customer serving technology. In the next,some factors are given for macro environment analysis of the company.
Political Factors ? Sometime changes of taxation policy affect its business. ? Pricing policy are affected due to expansion of non alcoholic business ? Political alliance for entering in business market. Economical Factors ? Low cost loan is too much helpful for business expansion. Company took loan to upgrade its research and development sector (Luo et al. 2016). ? Product handling method sometime faces a failure due to economical changes ? Out marketing from US the company acquired 70% of its income Social Factor ? US inhabitants pay more attention to their health, compared to others. ? Coca cola has expanded its business for non alcoholic product ? Baby boomers population are targeting towards healthier drink, a threat to Coca Cola.
Technological Factor ? Company efficiency increased due to promotional program, marketing advertising. ? Packaging design acts as a core competency of the company ? In Europe Company has founded a lot of factories and warehouse, helpful for business operation. Legal Factor ? The company follows strict regulation of different food controls of different country (Hoewe and Hatemi, 2017). ? The warehouse store production technology is made abiding by the rules of government. Environmental Factor ? In winter season due to extreme lowering of temperature the company faces problem due to absence of distilled water, which is the main ingredients of soft drinks. ? Sometime environmental laws affect its manufacturing. Table 1: PESTLE Analysis(Source: Hoewe and Hatemi, 2017)(2) Market segments overall a. Major Market Segment Geographic segmentation Targeted towards different lifestyle, sex, ethnic groups and age group ? ‘Oasis juice’ is for young adults in the age 20 to 30 ? ‘Coca cola’ is for mass age ? ‘Diet cola’ is for adults in the age 40 to 60 ? ‘Coca Cola Zero’ is for calorie lessening ? ‘Powerade sports’ is for 13-27 age ? ‘Minute Maide’, the healthy drink is for baby and 60 plus age Demographic segmentation ? Two types of division.
First one is for under 25, second one is for 40 plus ? Different drinks for male and female ? Income variation ? Low level: returnable glass bottle ? High level: coke in tins Psychographic segmentation ? Educational level differs a lot. ? Flex and banner advertisement is for the high educational society (Hoewe and Hatemi, 2017). ? Celebrity endorsement is for low educational level.
Table 2: Major Market Segmentation(Source: Figure 9: Coca Cola Market Segmentation(Source: Rice, 2014)b. Primary and Secondary Target MarketThe company faces total revenue of176 billion dollar in the year of 2016, as reported by its financial datasheet. ‘Product line-up’ is the main strategy of the world famous company.There are more or less 20 soft drinks brands are present in market. Out ofthem, 14 brands are static brands of soft drinks. Coca cola brand have acquiredthe best portfolio of non carbonate soft drinks. The company has set itsprimary target market towards the people who are greater than the age of 12years and lesser than the age of 40 year (Reddy et al. 2016).
It is a fact that, 35% of total inhabitants are underthe age of 12; but the fact is that, for that type of people healthy drinks areneeded. Therefore the company has made its ‘Minuter Miad’ and ‘Georgia Coffee’respectively for the young and adult age of people and thus set a secondarytarget market towards them. 3. Involvement in Primary segmentation anddecision-making Many factors can influence the behaviour of the customer,though depending upon the requirements of the customers the companies oftenlaunch new products.
The companies need to consider all the major factors thatcan influence customer behaviour. The company takes decision-based on thecustomer experience and preference. However, decision-making is a vast part ofthe profit and image of the companydepends on it. The involvement level reflects the effort and engagement of theemployees.
To make a fair decision, the employees of coca cola are involved inthe decision-making and they are contributing a major part in decision-making (Rezaei, 2015).In the process of segmentation, the company did not engageits consumers. Segmenting products into ranges is an essential part as thisalso helps to acquire more consumers and it is helpful in attracting newcustomers.The consumers mainly focused on getting quality product atlow price. The company inspires itsemployees to take part in all the decision, as it is helpful for a buyer. Highinvolvement may lead to social risk and psychological risk.Low involvement decisions are normally straightforward andless risky. The consumers are not involved much in decision making too.
As perthe employees of the coca cola, the consumers buy the product out of theirhabit. Especially, in the western countries, the products of coca cola are usedas the everyday product. (4) Competition a. Organization place in the marketSoft drinkindustries now become a major part of the global soft drinks and beverageindustry market. Many research scholars have done research on the soft drinkindustry. Coca-cola is a brand, which does not need any introduction due to itspopularity and customers demand.
To identify the changes in the beverageindustry, analyzing of macro factors is important. The soft drink industriesare engaged in manufacturing mainly non-alcoholic, mineral waters, and syrups (Shepherd etal. 2015).However, the newtrend of this century soft-drink battleground now turned into new market wherecompetition is even tougher than before. Besides, when in United States, Japanand in the states of Western Europe, the market growth of soft drink companiesslowed down dramatically, then also the coca cola and its other brands was animportant market. From the decades, the coca cola brand is satisfying itscustomers by providing new products; now India, Mexico, Saudi Arabia and Europebecome a hot spot for the two joint venture company Pepsi and coca cola.
The two companies startedworking as joint Venture Company to increase growth in the global beveragemarket. b. Strengths and weaknesses of the main competitorCoca-cola is knownas the beverage giant in the global market and it is a global brand. The iconiclogo of coca cola is familiar to the whole world. However, before working as ajoint venture, Pepsi was the competitor of the company.
As it was the leadingbeverage brand due to its position in the global market. It has offered adiverse product and the unique marketing strategies have made it the leader ofthe global market. The product offered by the company was highly popular due toadded unique flavor to it (Collier, 2015). Later on, due to the global financialturmoil, the company was facing the problem and then it affects the profit ofthe company heavily. This time, coca cola has also faced major problem due tochanges in customer preference. The existing and new customers are opting forhealth drinks in the place of soda.
Then coca cola has adopted many strategicchallenges. They have also added many low-calorie products to its product list.The strength of thecompany:? Largest market share? Customers are loyal to the company? Strong brand image? Extensive and strong distribution network? Company valuation is way too much high thanother companies? Advertising and investment ? Segmentation of productsWeakness of cocacola ? Product diversification is low ? Issues regarding water management? Customers are aware of the health ? High carbonate products With the passage oftime, the competition in the commercial beverage industry is most competitive.Their numerous companies are present which are well established.
To increasethe growth of the business the companies are moving their market into othergeographical areas and they are including different products into the existingproduct line like healthy juices, fruit drinks, and flavored waters. Though themain competitor is PepsiCo, the other major competitors are nestled, mondelezinternational Inc, DPSG, the Unilever group and many others.There some beercompanies are also there which are also included in the market competition withcoca cola. The company is competing with numerous local and regional companies.Besides, now some retailers are also developing their own store and they arecompeting with the giant companies to enter into the global market.
(5) Positioning map for organization considering the primarysegment with its involvement Segmentation of theproducts enables the brand to define various products accurately andappropriately as per the demand of the customers. Being the global brand in thebeverage industry, coca cola never targets for segmenting product in a specificway rather the company is looking for adopting innovative services, which help thecompany to bring new products. Generally, the company does not take a specifictarget which to be achieved but the company set their target in such a way sothat they can meet the preferences of the various customers. The main consumerof coca cola brand are the people aged between 12 to 30 (Karimi etal.
2015). However, there no specific product is available for thepeople who are less than 12. Still, the company has achieved to reach topposition through partnership, for instance with fast food restaurants such aspizza hut, dominoes and Mcdonald’s. The customers are also loyal to the companymainly the youngster or the youths.
As the leadingbrand in the soft drink industry, the company considers its all customers are apotential consumer. All age groups including the kids are being targeted as apotential customer but the age group of 18 to 25 is covering around 40 to 50percent of the total segment of age.Coca-cola is takingnew strategic policies to make the brand better. However, it has the competitiveadvantage, as 94 percent of people among all the population are familiar withthe brand. The company is aware of the brand image and they know what thecustomers want from them. Being the global icon, it never takes any competitorsin a low manner. The campaigns organized by coca cola also help in order toexpand the brand value in more than 50 countries.
Coca-cola, beingthe leading brand icon in soft drink industry has placed itself in the globalsoft drink market successfully. A vital question arises here does the companywill remain in the same position or it will move to other position. The companyhas adopted the basic principle of manufacturing products; the company followsthe principle act local but thinks global. To fulfill the need of the customers,the company keeps the same product for its customers, which is coke, besides itadded offers to the products (Solomon, 2014). The company use strategic positioning tomaintain same brand image everywhere they are operating. This is the mainreason of the success of the company. This perception helps the company toleads to a high degree of trust and loyalty.
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