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Marketing Strategy Plan of Coca-Cola in China
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Coca-Cola in China“Think Local, Act Local”
Product: Coca Cola Regular
Cranfield University 21/10/2010 Module : MSP
Presented by learning team 2: Ansuha Bhat Mohammad AladalhRita BatalhaTina LaiVictor Zhang
Is _1. Mission Statement2. Corporate Objectives3. Value in Use4. Buying Criteria5. Consumer Segment6. Perceptual Map7. PESTLE Analysis8. Porter’s Five forces9. BCG Matrix10. Market Attractiveness11. Critical Success Factors12. Directional Policy Matrix13. Marketing Strategies: 4 Ps14. Marketing Strategies: CSF15. Assumptions16. New product17. Conclusions
Agenda
Mission Statement
Coca Cola will constantly strive to provide a quality range of flavoured drinks for all individuals tastes and lifestyles in China.We will maintain sustainable growth and attractive returns, through the development of a profitable product line and our operational excellence.
Corporate Objectives
We aim to increase our sales in China by 15% using our effective strategy, "think local, act local“ by 2015Establish 3 new manufacturing firms in the rural areasIncrease market share by 5% in 2015 by targeting a new segment of customer through a new product which will cater their needs Exceed USA and become the second largest market in terms of per capita consumption of Coca-Cola products by 2020
Value-in-Use
Product
Service
Experience Surround
qualitytaste
Social responsability
ingredients
Value-in-use:
Hapiness and fun
Refreshing
Just for taste
Social gathering
Sense of belonging
Enjoyment
Special Offers
Complementary product
I feel close to my idol!
Packaging
& labelling
Buying Criteria
Motivators factors
Brand affinity*
Taste
Health awareness*
Packaging
Hygiene factors
Refreshing
Affordable
Convenient location
Quality
Consumer Segment
Who are we talking to?
Generation Y(http://en.wikipedia.org/wiki/Generation_y)
Generation Y comprehends a group of people born aged between 15-35 years old. They have divided into subsequent trends, such as the Fashionists and Techno lovers.
Consumer Segment
Genuine:Ting is a marketing student with 27 years old . She loves Coca Cola more than her
mother.
Drinks Coca-Cola on daily basis and she would hardly change it for another
brand.
Being fit its important, but it is not a requirement. She preferes to be updated about the latest trends in fashion or arts.
In good shape:Zhang is a young professional with 34
years old. He is very active and practice several sports.
He is not a big fan of carbonated drinks, prefers natural juices or sports drinks.
He is very rational. Brands does not mean anything to him, however he
prefers to consume local brands than international.
Consumer Segment
Brand Consumers:Hong and Li are two best friends both at
18. For them Coca-Cola represents celebration/ party and a feeling of
closeness with their idols.
They see sports as hobbies and not a requirement for being fit.
They drink Coca-Cola in parties ,when they go to cinema or go shopping.
Light on the pocket:Chen is a mid-age adult who cares how
much is going out of his pocket.
He neither cares for brands and health.
He would prefer Coca-Cola to other health drinks because it would turn out
cheaper.
Perceptual Map
high brand affinitylow brand affinity
high health awareness
low health awareness
Genuine
Brand Consumer
In good shape
Light on the pocket
Consumer Insights - survey
Female44,75%
Male55,24%
Who are they?
18-35: 53,73% 35-50: 34,33%
>50: 11,94%
How old they are?
< 2 bottles55%
Weekly consumption*
6-7 bottles11%
> 8 bottles12%
3- 5 bottles22%
*330ml
PESTLE Analysis
What changes in government policy have a big impact on the way
Coca-Cola operates?
Politcal Factors
What social and cultural aspects affect the customer needs?
Social Factors
What changes in the technological environment
affects the production levels and the business in
general?
Technological Factors
What significant legal changes may affect
Coca-Cola’s behaviour?
Legal Factors
What environmental factors can affect the
consumer’s insights and choices?
Environmental Factors
What economic factors effect Coca Cola’ ability
to generate income?
Economical Factors
PESTLE Analysis
Political Bureaucracy, corruption and a lack of transparency are key obstacles to conduct a business in China Tax incentives are offered to foreign investors as part of the "open door" development strategy Lack of coordination between central and local authorities • Lack of federal structure • Investment climate to be insecure
PESTLE Analysis
Economic Favorable government policies (Free-market economy)• Developing the capital markets • Undertaking significant bank reforms
Rising unemployment • In 2008, almost 70% of job seekers were unemployed• 11 million people were laid off and are now without
jobs
PESTLE Analysis
Social Quality of lifestyle is increasing as the increasing of purchasing power and education level Decline in poverty, per capita income was $6,500 which is one of the highest in Asia in 2009 One child policy to reduce population rate and decrease the pressure on the resources of the country
PESTLE Analysis
Technological Larger number of R&D institutions: • Coca-Cola opened its $90 million Innovation and
Technology Center in Shanghai, 2009• China produces the second largest number of science
and engineering graduates The increasing awareness of technology. (E.g. new bottle, new label, design etc.)
PESTLE Analysis
Legal Increasing importance of anti-monopoly law: • The acquisition of Huiyuan by Coca-Cola failed
Facilitation of (Foreign Direct investment) FDI:• Clear and fast procedures and processes for foreign
investments Reporting and accounting standards;• Only a very small group of certified accounting
professionals• Lack of modern financial reporting
PESTLE Analysis
Environmental Increasing the importance of environmental policies:• State Environmental Protection Administration • Inspection of industrial companies on a regular basis• Coca Cola will be inspected and supervised regularly
to make sure that it meets the environmental standards in its industrial operations
Porter’s Five Forces
Rivarly among existing competitors
Threath of new entrants
Bargaining power of suppliers
Bargaining power of
buyers
Threath of substitutes
Threath of new entrants: WEAK
• Brand Image / Loyalty: Coca-Cola has consolidate brand equity and loyal customer
• Retailer and super markets shelf space:Retailers require significant margins for the shelf
space they offer
• Advertising SpendsEg. In 2008, Coca-Cola invested €81.2 million in
the Beijing Olympic
• Substantial fixed cost
Bargaining power of buyers: WEAK
• Individual consumer may have little power over the companies
• Wholesalers, distributers and retailer may have certain power over Coca-Cola
• Coca-Cola also has its own well-developed distribution channel in China
Threat of substitutes: STRONG
• There is a number of other soft drinks can easier substitute Cola. Eg. tea
• The increasing health awareness has lead to the trends of healthy drinks, such as milk or
flavored juice
• Consumers have more choices than ever before
Bargaining power of suppliers: WEAK
Availability of the ingredients on the Chinese market
Eg. Such as aspartame which many often is substitute for saccharine
Fluctuations in market price: Eg. Market turbulence increases Coke’s
vulnerability to price fluctuations
Rivalry: STRONG
Pepsi taste: Pepsi has a similar taste with Coca-Cola
Pepsi marketing: has more successful marketing strategy in China than Coca-Cola
Future Cola: has its advantage in coverage in rural areas where Coca-Cola has failed to step
into
BCG Matrix
HIGH LOW
HIGH
LOW
Mar
ket G
row
thMarket Share relative to competitors
Light on the pocket
Genuine
Brand Consumers In good shape
Market Attractiveness
MAFs Weights
Score/weighted scoreAbove Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Genuine In good shape
Brand Consumer
Light on the
pocket:Market Size 25
Volume Growth 25
Profit margin 30
Risk 20
Totals 100 4,1 5,4 6,1 3,95
82
20,5
41,2
20,4
61,5
61,5
20,6
91,8
71,75
51,25
72,1
51,0
51,25
41,0
30,9
40,8
Critical Success FactorsProduct-market: Genuine
Relative Business Strengh: 0,5
C.S.F.C’s Weights
Score/weighted scoreAbove Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola Regular
Future Cola
Pepsi Substitutes
Just for Taste 10
Price 10
Brand affinity
30
Health Awareness
30
Promotions 20
Totals 100 6,7 4,3 5,5 6,2
90.9
30,3
92,7
41,2
81,6
20,2
40,4
3 0,9
41,2
71,4
80,8
30,3
82,4
41,2
40,8
7
40.4
6
72,1
6
Critical Success Factors Product-market: In good shape
Relative Business Strengh: -2,25
C.S.F.C’s Weights
Score/weighted scoreAbove Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola Regular
Future Cola
Pepsi Substitutes
Just for Taste 15
Price 10
Brand affinity
20
Health Awareness
40
Promotions 15
Totals 100 4,45 3,15 3,9 6,7
30,45
50,5
71,4
31,2
60,9
20,3
60,6
3 0,6
31,2
30,45
30,45
50,5
51
31,2
50,75
7
30,3
5
93,6
5
1,05
1,0
0,75
Critical Success Factors Product-market: Brand Cons.
Relative Business Strengh: 1,30
C.S.F.C’s Weights
Score/weighted scoreAbove Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola Regular
Future Cola
Pepsi Substitutes
Just for Taste 20
Price 10 2
Brand affinity
30
Health Awareness
10
Promotions 30
Totals 100 6,9 4,4 5,6 3,9
71,4
0,2
92,7
20,2
82,4
40,8
30,3
41,2
30,3
61,8
51
30,4
61,8
30,3
72,1
40,8
30,3
30,3
40,4
72,1
Critical Success Factors
C.S.F.C’s Weights
Score/weighted scoreAbove Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola Regular
Future Cola
Pepsi Substitutes
Just for Taste 10
Price 30
Brand affinity
10
Health Awareness
10
Promotions 40
Totals 100 6,6 6,8 6,1 4,2
40,4
72,1
40,4
50,5
83,2
30,3
82,4
40,4
50,5
83,2
40,4
72,1
30,3
50,5
72,8
40,4
20,6
30,3
50,5
62,4
Product-market: Light on the pocket
Relative Business Strengh: -0,2
Directional Policy Matrix
HIGH LOWHIGH
LOW
Mar
ket A
ttac
tiven
ess
Relative Business Strenght
Light on the pocket
In good shape
+2 -2
3
4
5
6
7
01 -1
Brand Consumer
Genuine
Marketing objectives
Genuine: Increase revenue by 5% in 3 years
In good shape: Increase sales by 3% in 3 years
Brand Consumer: Maintain market attractiveness by 4% in 3 years
Light on the pocket: Increase market share by 2% in 3 years
Directional Policy Matrix “future”
HIGH LOWHIGH
LOW
Mar
ket A
ttac
tiven
ess
Relative Business Strenght
Light on the pocket
In good shape
+2 -2
3
4
5
6
7
01 -1
Brand Consumer
Genuine
+ 5%
- 4% + 3%
+ 2%
New segment 1
New segment 2
Marketing Strategies: 4 Ps
Element Current Future
Product Coca-Cola Coca-Cola
Price Competitive pricing Competitive pricing
Promotion Internet, Sponsorship, Press Internet, Sponsorship, Press
Place Cities and large towns- Vending machines; outlets, bars,
cafés, restaurants, supermarkets
Cities and large towns (the same)Rural areas - local stores
Segment: Genuine
Marketing Strategies: 4 Ps
Element Current Future
Product Coca-Cola + Pepsi Coca-Cola
Price Competitive Competitive
Promotion TV, internet, events sponsorships, outdoors, press
TV, internet, outdoors, press, sampling activities
Place Vending machines; retailers, supermarkets, pubs, cafés, restaurants
Vending mahines; retailers, supermarkets, pubs, cafés, restaurants..
Segment: Brand Consumer
Marketing Strategies: CSF
Segment: Genuine CSF: Brand Affinity Score: 7 (current) 8 (objective)
Description of Strategy
Increase revenue by 5% from this segment.
Actions to achieve the
strategy
1) Increase brand affinity and make taste more differentiable from other carbonated drinks
2) Get feedback on what this segment wants and is looking for
Responsability Market Research, Marketing and R&D
Approx. cost Meddium
Marketing Strategies: CSF
Segment: Brand Consumer CSF: No change Score: N/A (current) N/A (objective)
Description of Strategy
1) No change in CSF’s since we want to maintain the relative business strength
2) Decrease in market attractiveness (maintain revenue)
Actions to achieve the
strategy
1) Reduce cost on TV advertising and celebrity endorsement2) Target mutual branding with ohter big brands
Responsability Marketing
Approx. cost Low/Meddium
Marketing Strategies: CSF
Segment: In good shape CSF: Health Awareness Score: 3 (current) 5 (objective)
Description of Strategy
This segment is a very profitable one as it promises returns. Increase relative business strength and thus, profits by 3% in 5yrs.
Actions to achieve the
strategy
1) Introduction of a new product to cater to this segments' health and taste needs.
Responsability Marketing, Operations and Market Research and the whole company
Approx. cost High
Marketing Strategies: CSF
Segment: Light on the pocket CSF: Promotions/Price Score: 7/7 (current) 8/8 (objective)
Description of Strategy
Increase revenue from his segment by 2% in 5yrs.
Actions to achieve the
strategy
1) Promote Coca-Cola with other brands/items on a regular basis2) Increase bulk packaging in off-trade sales
Responsability Finance, Marketing and R&D
Approx. cost Meddium
New Product
Coca-Cola TeaThe taste of coke with the goodness to tea!茶
Coca-Cola Tea
Features: Coca-Cola FlavourCaffeine FreeHot drinkTea bags
Needs: Who is our target?Tea lovers; Health conscious segment ; Coca-Cola Fans; What is the consumer’s needDrink a non-carbonated drink with Coke flavour
Benefits:HealthStress ReliefCloseness with Chinese culture
茶
Assumptions
Corruption and bureaucracy in China may affect Coca Cola in the near future. Increase in purchasing power of the people will lead to increased sales of Coca Cola. Inflation in prices may not affect sales of Coca Cola as we are assuming purchasing power of people will also increase Anti-monopoly law affecting ban on further acquisitions. New entrants, both local and international, will not be able to compete with Coca Cola's growing markets. Shift of industries to the rural areas will increase markets and thus market share for Coca Cola.
Conclusions1st Coca-Cola aim provide a quality range of flavoured drinks and exceed USA in per capita consumer of Coca-Cola products
2nd The genuine segment is the most profitable. We intend to maintain the market attractiveness and increase the business strenght
3rd The brand consumers required huge investments, so we intend to invest less in promotions (reducing market attractiveness) and maintain the business relative strengh and revenue
4th The good shape segment provide negative cash flows despite the market is growing. We want to increase the market attractiveness and relative business strenght, by introducing the Coca-Cola tea product
5th The light on the pocket segment experienced low market growth and relative market share. Despite that, we believe that we can increase in market attractiveness and business strenght by investing more in off-trade promotions and synergies
Thank You.Let’s discuss!