Group7 Marketing Plan Final Assignment 4 Jan'10

8/8/2019 Group7 Marketing Plan Final Assignment 4 Jan'10

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Lim Veron Nardy ()-M987Z210

Yoseph Kaburuan ()-M987Z213

Sermsri Chirawongaram()-M987Z220

Lee Po Kun ()-M9870114

Nguyen Thi Hong Duy ()-M987Z218

Pham Thi Nguyet ()-M987Z241

Group 7

Marketing Plan


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New Product from Coca Cola CompanyNew Product from Coca Cola Company


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Outline :Outline :

I. Executive Summary.II. Company Description.

III. Situation analysis in Taiwan.

A. Industry Analysis.

B. Target Market.C. Positioning Strategy.

IV. Market Strategy.

A. Market Objective.

B. Marketing Program.

V. Financial Project.

Conclusion.

Reference.


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` Bubble Buzz will be marketed as unique functionaldrink while striving to reinforce the companys status asthe leader.

` The marketing strategies will enable to reach a marketsize of an estimated 7 million people (targeted) with aforecasted sales growth prospect of 15% over the next 4years.

` Success will be reflected by a sizeable capture of marketshares within this market, Export potential will beconsidered in China.

I. Executive Summary.I. Executive Summary.


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II. Company DescriptionII. Company Description

1. Brief description of Coca Cola Company1. Brief description of Coca Cola Company2. Brief description of the new product and strategic2. Brief description of the new product and strategic

role in the future position of the company.role in the future position of the company.


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1. Brief description1. Brief description --

` The Coca-Cola Companys core undertaking is to benefit andrefresh everyone it reaches.

` Founded in 1886, we are the worlds leading manufacturer,marketer, and distributor of non-alcoholic beverage

concentrates and syrups, which are used to produce nearly 400beverage brands that make up for our wide portfolio.

` Our corporate headquarters are established in Atlanta, and weare holding local operations in over 200 countries around the

world.` Our activities cover all sectors of the beverage industry. We are

the second leading player in functional and Asian specialtydrinks, while ranking number one in value for the ready-to-drink tea sector.


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2. Brief description of the new product and2. Brief description of the new product and

strategic role in the future position of thestrategic role in the future position of the

company.company.

` Bubble Buzz will be positioned as the only ready-to-drinkBubble Tea. The beverage will have a green tea base with

enhanced fruit flavors as well as tapioca pearls. The strategic roleof Bubble Buzz focuses on three objectives:

1.To stay at the forefront as the market leader in innovative productintroductions and successful product launches;

2.To strengthen and satisfy the needs of consumers with a new eye-catching and functional product;

3. To become the market leader in the functional drinks segmentwith increased market shares.


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III. Situation Analysis in TaiwanIII. Situation Analysis in Taiwan

a. Industry Analysis.Consumption analysis.

Trend analysis.

SWOT analysis

Strengths

Weaknesses

Opportunities

TreatsBarriers to entry

b. Target MarketSegment identification

Segment needs

Segment trends

c. Positioning strategy


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a)a) Consumption analysisConsumption analysis

` According to BIA, Taiwan's beverage market was worthalmost US$1.5 billion in 2006 which represented 3.1percent growth over 2005. Tea products were most

popular, with sales of more than US$600 million or 42percent of the total market.

` A Web site of the privately run Food Industrial Researchand Development Institute indicated that 32 beverage

manufacturers launching new products in 2006 focusedon tea drinks and out of 327 new "ready-to-drink"products were introduced, 119 were tea drinks,

predominantly green, milk and fruit-flavored teas.


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b)b) Trend analysisTrend analysisy Through the early 1960s, soft drinks were synonymous with colas in the

mind of consumers.

y In the 1980s and 1990s, however, other beverages became more popular.Coca-Cola and Pepsi responded by expanding their offerings throughalliances.

y Today, while the soft drink industrys value has increased in 2004, thevolume sales of carbonated soft drinks has declined due to a largeproportion of consumers

y Companies have been actively engaged in new product developments in

order to counter the growing concerns about negative health impacts ofhigh-fructose drinks, but also to increase the demand in a market whereproduct offerings are quickly maturing.

y New flavor introductions and health-conscious formulations have beenlaunched in an attempt to offset the decline in carbonated soft drink sales.


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c.c. SWOT AnalysisSWOT Analysis

StrengthsStrengths

Brand strength

Effective stride in new markets

Results of operations

Strong existing distributionchannels

WeaknessesWeaknessesReliant upon line extensions

Reliant upon particular carbonated

drinks

Brand dilution

Entrance into difficult non-corecategories

Saturation of carbonated soft drink

segment

OpportunitiesOpportunitiesNew product introductionsBrand is attractive to global partners

ThreatsThreatsStrong competitionPotential health issuesFree trade


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Strengths.Strengths.

Brand strength.

` The Coca-Cola brand is unarguably one of the mostrecognizable brands in the 200 countries where itsells its products. The strong brand name is one ofthe basis for the companys competitive advantageon several of its core markets.

Effective strides in new markets.

` Coca-Cola has partnered with several companies inorder to increase the ability to react to demands and

changes in the markets of iced tea, coffee and juices.


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Results ofoperations.Results ofoperations.

In 2008, Total revenues approximately $31.9billion, an 10.7% increase from 2007. Grossprofit totaled $20.6 billion in 2008. Thecompany generated $8,446 million from itsoperating activities and re-invests heavily intoits business. The ability to generate significantcash flows is one of the its key

strengths.


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2008 2007 2006 2005 2004

Revenue 31,944.0 28,857.0 24,088.0 23,104.0 21,742.0

Total Revenue 31,944.0 28,857.0 24,088.0 23,104.0 21,742.0

Cost ofRevenue, Total (11,374.0) (10,406.0) (8,164.0) (8,195.0) (7,674.0)

Gross Profit 20,570.0 18,451.0 15,924.0 14,909.0 14,068.0

Operatingexpense (12,124.0) (11,199.0) (9,616.0) (8,824.0) (8.370.0)

Operating Income 8,446.0 7,252.0 6,308.0 6,085.0 5,698.0

OtherExpense/Income (1,007.0) 621.0 270.0 605.0 524.0

Income Before Tax 7,439.0 7,873.0 6,578.0 6,690.0 6,222.0

Tax (1,632.0) (1,892.0) (1,498.0) (1,818.0) (1,375.0)

Income After Tax 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Net Income Before Extra. Items 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Net Income 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Source: http://finance.aol.com/financials/theSource: http://finance.aol.com/financials/the--cocacoca--colacola--company/ko/nys/incomecompany/ko/nys/income--statementstatement

Income Statement of Coca Cola Company 2004Income Statement of Coca Cola Company 2004--20082008


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Strong existing distribution channelsStrong existing distribution channels

Coca-Cola has operationsworldwide and is well establishedin its distribution channelsTherefore, a new product launchcan typically rely on the existingdistribution system in order toreach the majority of its target

market while requiring no majorsupply / delivery developments.


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Weaknesses.Weaknesses.

Relying upon line extensions

y Coca-Cola is relying on brand extensions increase sales in specificlines, particularly its long-time carbonated soft drink.

Reliant upon particular carbonated drinksy The long-time presence of Coca-Colas beverage has established this

particular line as a flagship product. While the core Coke productsbring a solid base of sales and loyalty to the company, consumers

expectations also become more and more anchored and single-lined.


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Brand dilution.` The tremendous amount of brands and new product being

introduced could diminish the value and differentiating strengthof each product that is being manufactured.

Entrance into difficult non-core categories.` The Coca-Cola Company is a truly global multinational busines

giant. While some categories of products are distributed in manareas of the globe geographical needs already require that theseglobal brands are heavily adapted to their target region.Saturation of carbonated soft drink segment.

` Difficulty increase in the soft drinks segment to innovate and

create new products due to a lot of brands available .` Analysis of the industry has shown that growth in the soft drinks

market becomes difficult and challenging when the conditionsand consumer trends cause a market demand that stays stagnant


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Opportunities.Opportunities.

New product introductions.

` The functional drinks market is one that particularly allowsmore innovation opportunities and gives greater freedom forcreativity in the design, production, manufacturing,distribution, promotion and retailing choices and processes.

Brand is attractive to global partners.

` Coca-Cola enjoys a strong purchasing power over its suppliers,and also attracts large partnerships with various levels of

consumer reach.` Existing brand awareness also provides an international playing

field for powerful marketing strategies.


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Threats.Threats.Strong competition.

` Coca-Cola is competing in a global market that is characterized by anoligopoly between several competitors. The fight for market sharesand sales in crowded markets becomes a complex one.

Potential health issues.` Over the last few years, concerns over health issues have risen in the

media through an expanded and ever-growing network of knowledgeoutputs .

` The move of the younger generation towards a healthier lifestyle callfor careful planning and decision-making in new productdevelopments.

Free trade .` Large international competitors can come out with comparative

advantages.` Trade organizations are also faced with public pressure which can

disrupt operations in one or more areas of the company.


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Competition analysisCompetition analysis

Source: BeverageSource: Beverage--Digest.comDigest.com


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In 2008, Coca-Colas top competitors for the soft drinks industryare PepsiCo (30.8%) and Pepper Snapple (15.3% of market). Coca-Cola is leading with 42.7% of the total soft drinks market. Bubble

Buzz will launch into a currently unserved market which is untilnow unexisting.

Pearl milk tea is the most popular beverage in Taiwan; However, people

know that pearl milk tea is including very high calorie and that is notsuitable of people nowadays => seeking some beverage that lowercalorie => we have an idea that mix juice and pearl will give a flash

sense to consumer and healthier.

The current market for traditional Bubble Tea is fragmented, since thedistribution is restricted to local outlets and selling points such as counters

and small Bubble Tea shops (Yoyo) in scattered locations across Taiwan.


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d. Barriers to entryd. Barriers to entry

Business practices Manufacturing

Due to the number ofcompetitors, it will be hard toprevent imitation behavior(especially from PepsiCo)

Given the wide array of brands(saturation in the soft drinkmarket), it becomes a challenge forBubble Buzz to stand out

Producing bottled Bubble Tearequires sizeable capitalinvestments for the specific needsof the manufacturing chain (fromingredients to final packaging

specifications)

The marketing campaign to makethis unknown brand popular requiresmore promotional expenditures

than a traditional brand extension


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B. Target marketB. Target market

Segment

identification RTD (Ready-to-

drink) bottledBubble Tea, to beestablished withinthe FunctionalDrinks sector.

Segment

needs physiological

needs Social need

Segment trends

A shift way from junkfoods and carbonateddrinks to a growinginterest for healthier or

beneficial products for themind and body.


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Population In Taiwan 2009Population In Taiwan 2009

y 0-14 years: 16.7% (male1,996,905/female

1,844,611)y 15-64 years: 72.6% (male

8,416,300/female8,267,675)

y 65 years and over: 10.7%(male 1,183,382/female1,265,474)

Source: www.indexmundi.com/Taiwan/Demographics_profile.html


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Segmentation variables and breakdowns for

Taiwan consumer market of Bubble Tea

MAIN

DIMENSIONS

VARIABLES BREAKDOWNS

Geographicsegmentation

Region

Nationwide (all provinces and territories) with emphasis

on urban / metropolitan areas, and adapted strategiesfor all geographical groups

Density Urban, suburban

Demographic

segmentation

Age from 10-60 years old (teenagers, studying age, young

adults, and old people)

Gender Male and Female

Occupation Any kind of professionals

Race All Races


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C.Positioning StrategyC.Positioning Strategy

The only RTD bottled bubble tea available.

Funky & eye-catching bottle

Functional packaging,Premium-priced,

Cool, new and unusual, unique drinking experience,

Aspects of play (tapioca pearls, oversized coloredstraw),

Variety of flavors, sweet, refreshing, for hip & youngpeople, healthier alternative to heavy-sugar drinks.


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IV. Marketing StrategyIV. Marketing Strategy

A. Marketing Objective

B. Marketing Program

Product Strategy.Price Strategy.

Promotion Strategy.

Place (distribution) Strategy.


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The Objective of the marketing plan arestrategically centered around 3 criteria:

y To create a strong consumer awareness towards a

completely new bubble tea product from Coca-Cola,

y To establish a wide brand recognition through thecapture of market shares in the functional drinkssegment,

y And to become the top market leader thatparticular segment within the forecasted sales

figure.

A.A. Marketing ObjectiveMarketing Objective


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B.B. MarketingProgram.MarketingProgram.

The core:

` Bubble Tea beverage in a plastic bottle, ready-to-drink format.

The actual product` Branding: colorful, round shaped, prominent Bubble Buzz logo

written in modern font, catchphrases such as Think outside theBubble and Get Your Buzz.

` Trade name: Bubble Buzz, a Coca-Cola product

` Brand personality: energy, funky, cool, functional, original,funny, healthy, etc.

` Brand equity: Coca-Cola provides a quality, consistent, innovativeand accessible soft drink reputation.

Product Strategy:Product Strategy:


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Packaging and Labeling.Packaging and Labeling.


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Marketing considerations :Marketing considerations : Product life cycle:

Bubble Buzz is a low-learning product. With a strong marketingcampaign, sales will begin immediately and the benefits of thepurchase are readily understood. Since Bubble Buzz is prone toproduct imitation, Coca-Colas strategy is to broadendistribution quickly, which is currently feasible thanks to thecompanys high manufacturing capacity.

Product class:Food & beverage Soft Drinks Functional Drinks.Bubble Buzz follows the practice of product modification. Coca-Cola is introducing an existing beverage (bubble tea) but

redefines the drink with a new, more convenient package.Bubble Tea will now become a widely available drink in multipleretailing (distribution) channels.


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Price Strategy :Price Strategy :

The price strategy that will be undertaken shouldconsider the following aspects:

Consumer demandThe product lifecycle

Potential substitutes


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Promotion Strategy :Promotion Strategy :

Objectives

To initiate strongawareness aboutthe launch ofBubble Buzz (10-60 years old)consumers.

To win marketshares over our

top functionaldrinks competitor,PepsiCo.

Message

The promotionaloutputs willconvey the clearmessage thatBubble Buzz is ahealthy drink forsporty and youngpeople who simply

enjoy taking careof their body andlife.

Concepts

Think outside thebubble: Be Bold,Be Original, BeDifferent, and BeYourself.

A good spirit in agood body.

For the out-of-the-ordinaryindividuals wholike to challengethemselves.


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Considerations for the promotion strategy :Considerations for the promotion strategy :a. Product life cycle of Bubble Buzz:

` Bubble buzz is at its Introduction stage; we thus must inform consumersin an effort to increase their level of awareness. Awareness is our primarypromotional objective. Then the following months after the launch ofBubble Buzz, in its Growth stage, Coca-Cola will have to persuade theconsumer to buy the product, to gain preference and to solidify thedistribution.

b. Product Characteristics:` Complexity

` Risk

c. Stage of Buying decision:` Our target consumer are at the pre-purchase stage: advertising is more

helpful at this stage instead of personal selling because advertising informsthe potential customer of the existence of the product and the seller, but inthis case the seller is already well known.


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Promotion Schedule in 2010Promotion Schedule in 2010

Step Output Period of time

1 Personalselling Feb to Sep

2 Radiospots Feb to Apr

3Magazines/Newspaper

ads Mid-Marto Jun

4 Televisionspots Aprto Sep

5 Sampledistribution Aprto Sep

6 Point ofpurchase Aprand Sep

7 Outdoors May to Sep

8 PublicRelations May to Sep

9 Roadshow Aug toendofSep

10 Publicity (Internet) All the time


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1.Personal Selling. 2. Radio Spots

y To make Taiwaneseretailers aware of Bubble

Buzz so they can order it intime for Summer time

y Radio is the most listenedmedia by students (based

on researches); the targetmarket would hear ourradio spot several times aday. This will ease the

recognition of Bubble Buzzin future promotion tools.



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3. Magazine/Newspaper Ads. 4. Television Spotsy The target market will

then match an image withthe name of the product

more easily. Therecognition of Bubble Buzzwill be faster.

y To send a widespreadmessage over Taiwan thatBubble Buzz is now

available. Critical step inthe promotion.



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5. Sample Distribution. 6.Point ofPurchase.

y To get potential buyers totry Bubble Buzz and to

create an addiction to it.

y Making a special sectionfor the Bubble Buzz in

Grocery store will help thenew potential buyers tofind our product faster andmore easily.



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7. Outdoors

8.Public Relation

y Putting products in specificplaces where people hang

out will create an increasedawareness of Bubble Buzz. y We will use special events

(sports and others) topromote Bubble Buzz and

also to get in touch withour potential market. Itwill allow Coca-Cola tointeract with our

Consumers.



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9. Road show

10.Publicity.When the summerwill come to itsend, we will use

contest to give asecond "push" tothe sales of theBubble Buzz.

Use of conferences and newsto make the general public

aware of the existence ofBubble Buzz.



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Projected Budget For PromotionProjected Budget For Promotion

Media Budget (NT) Notes

Television Commercial 10,000,000 expense for TV per 15 seconds = 500,000 NT

Radio 3,600,000 NT 400,000/month x 3 months x 3 stations

Internet 420,000 Yahoo.tw, 12 months x NT 35,000/month

300,000 Yahoo Messenger Taiwan 12 months x NT 25,000/month

240,000 Yam 12 months x NT 20,000/month

Road show 1,200,000 Taipei, Taizhong, Kaohsiung, Hualian= 4 x NT300,000/place during 2 months

Sales Promotion 6,800,000 2 months during road show activity, NT100,000samplings/place, Cost per 1 sample = NT 17

Other Media 20,000,000 Such as personal selling, publicity, public relation, etc

Total 42,560,000 However, this amount is subject to change.


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Place (Distribution) Strategy :Place (Distribution) Strategy :

Bubble Buzz will be distributed through these channels:

supermarkets,

convenience stores,independent food stores,

discount stores,

multiple grocers,

vending machines.


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V. FINANCIALV. FINANCIAL

PROJECTIONSPROJECTIONS


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Projected Income Statement 2010Projected Income Statement 2010

(in million NT)(in million NT)

Total Revenue (NT 25 @ 85,000,000 bottles 414 ml) 2,125.0

Sales disc. & Allow. (10%) 212.5

Net Sales 1,912.5

Cost of Sales (35.19%)-assume variable cost 673

Contribution Margin 1,239.5

Fixed Cost (38.23%) 731.1

Operating Profit 508.4

Other Expense / Income (1.96%) 37.5

Earnings before Tax 470.9

Tax Expense (assume 20%) 94.2

Earnings After Tax (Net Profit) 376.72


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Calculations :Calculations :Based on Coca-Colas previous financial statements:

Average Cost of Sales/Net Sales for year 2008, 2007, and 2006 = 35.19%.Similarly, Fixed Cost / Net Sales = 38.23%,Other Exp (Income) / Net Sales = 1.96%

y Number of people in Taiwan (15-64 years old) = 16,683,975

y Market share for Coca cola = 42,7% (in 2008)

Market share in number of people = 16 mio x 42,7% = 7,124,057 people

y Assuming in the first year every customer will consume 12 bottle/year =85,000,000 bottles (rounded)

Requirement for success analysis:

y C.M. per bottle = 673,000,000 / 85,000,000 = 7.92 NT

y Break-even: Fixed Cost / CMU = 731,100,000 / 7.92 = 92 million bottles

y In one year, if Coca-cola can sell 85 million bottles of Bubble Buzz, according to payback

period method,Coca cola will break even after one year one month.

I St t t f C C l C 2004I St t t f C C l C 2004 20082008


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2008 2007 2006 2005 2004

Revenue 31,944.0 28,857.0 24,088.0 23,104.0 21,742.0

Total Revenue 31,944.0 28,857.0 24,088.0 23,104.0 21,742.0

Cost ofRevenue, Total (11,374.0) (10,406.0) (8,164.0) (8,195.0) (7,674.0)

Gross Profit 20,570.0 18,451.0 15,924.0 14,909.0 14,068.0

Operatingexpense (12,124.0) (11,199.0) (9,616.0) (8,824.0) (8.370.0)

Operating Income 8,446.0 7,252.0 6,308.0 6,085.0 5,698.0

OtherExpense/Income (1,007.0) 621.0 270.0 605.0 524.0

Income Before Tax 7,439.0 7,873.0 6,578.0 6,690.0 6,222.0

Tax (1,632.0) (1,892.0) (1,498.0) (1,818.0) (1,375.0)

Income After Tax 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Net Income Before Extra. Items 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Net Income 5,807.0 5,981.0 5,080.0 4,872.0 4,847.0

Source: http://finance.aol.com/financials/theSource: http://finance.aol.com/financials/the--cocacoca--colacola--company/ko/nys/incomecompany/ko/nys/income--statementstatement

Income Statement of Coca Cola Company 2004Income Statement of Coca Cola Company 2004--20082008


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ConclusionConclusionBased on the aforementioned analysis, Bubble Buzz

appears to be a profitable and innovative product with a strongoutlook for market share presence and segment growthopportunity. Upon implementation of the marketing plan, the

Coca-Cola Company will regain increased market shares andclaim its targeted situational position of market leader in thefunctional drinks segment as well as keeping its long-standingconsumer recognition for innovative and successful product

launches in diversified markets. Projected profits will be NT377 million (see financial projections).


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Reference :Reference :

` The Coca-Cola Co. (Company Profile). Global Market Information Database(Euromonitor). Jul 20, 2005. Accessed Feb 08, 2006.

` COSGROVE, Joanna. The 2005 Soft Drink Report. Beverage Industry. Mar 2005;96; 3; p.22. Accessed via ABI/INFORM Global. Feb 08, 2006.

` The Coca-Cola Company. (Company Profile). Datamonitor. Jun 2005. Accessed Feb08, 2006.

` John W.Mullins,Orvill C. Walker Jr and Harper W. Boyd Jr,MarketingManagement,sixth edition

` Kotler et al, Marketing Management ,fifth edition

` www.Beverage-Digest.com

` http://www.netmba.com/marketing/market/segmentation/

` http://www.reuters.com/article/healthNews/idUSSYD5846120080815` Source: http://finance.aol.com/financials/the-coca-cola-

company/ko/nys/income-statement

` Source: www.indexmundi.com/Taiwan/Demographics_profile.html


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Group7 Marketing Plan Final Assignment 4 Jan'10