Marketing Managementand Evaluate Current Trends

Question: Discuss about the Marketing Managementand Evaluate Current Trends. Answer: Industry trends Growth The global growth rate of the company Coca Cola during 2016 is 2.5% (Coca-Cola, 2017). The growth rate of group earnings of Coca cola along with its bottling partner Coca Cola Amatil Ltd is 3.2% (Coca-Cola, 2017). The earnings before interest and Tax (EBIT) to $ 326.5 million indicate the progress of the companys shareholder value proposition. Net cash flow of the company is increased to $ 331.7 million along with cash realization of 98.1%. Till July 2015, the trading revenue and total revenue of the company are respectively $ 2449. 7 million and $ 2497.7 million. The company has observed 5.4% EBIT increment in New Zealand and Fiji. However, in Australia EBIT is declined by 1.9% (Coca-Cola, 2017). The revenue growth rate of Coca Cola Australia is also declined by 2.2%. It has increased the pressure in channel mix and caused a shift in category mix from sparkling to beverages, driven by water. For this reason, the company has started to reinvest in brand development in Australia to su pport the leadership position in Australian market and to enhance its business capabilities (Coca-Cola, 2017). Profitability There is a table given below to describe the profitability of the company Coca Cola. Profitability 2012 2012 to 2013 2012 to 2014 2012 to 2015 2012 to 2016 Tax Rate % 23.06 24.8 23.6 23.31 19.49 Net Margin % 18.78 18.32 15.43 16.60 15.59 Asset Turnover (average) 0.57 0.53 0.51 0.49 0.47 Return on asset 10.86 9.74 7.80 8.07 7.36 Financial leverage (average) 2.63 2.71 3.04 3.53 3.78 Return on equity % 28.00 26.03 22.36 26.31 26.85 Return on the invested capital 14.27 12.53 9.86 10.63 9.53 Coverage of interested 30.75 25.79 20.31 12.22 12.10 Table 1: profitability comparison of Coca Cola from 2012 to 2016 (Source: Coca-Cola, 2017) Macro environment (PESTLE factor) Political The business operation of Coca Cola is affected by political factors both in US market and in foreign market (Australian). Urde and Koch (2014) stated that Australia is liberal-capitalistic democracy. There are certain political factors that make business of Coca Cola profitable for Australian market. They are such as stable and open government, favorable tax system, availability of world-class infrastructure and competitive business cost. Economic The business of the company Coca Cola is significantly affected by the economic factors that are beyond the control of the company. These factors are such as rate of interest, exchange rate, cost of labors and many others. The global financial crisis of 2007- 2009 is one of the major economic factors that affected most of the companies of all industries. However, Kwak and Kim (2013) argued that the financial crisis had affected Coca Cola lesser compare to other organizations. Operating margin of the company remains in frontline (22%) despite of the crisis. Slack (2015) argued that inflation rate is of the major economic factors that affected the global business of Coca Cola. However, economic condition of Australia is favorable for the business of Coca Cola for various reasons: 1) Continuous economic growth of the country 2) ease of doing business index (10th rank) 3) contained rate of inflation 4) very low rate of public debt 5) stable and strong financial system 6) minimal restriction to open market Social Health concerns of Australian customers related with obesity and pursuit of healthy lifestyle are the major social factors that affected the business decisions of Coca Cola in recent years (Kiel, 2014). It has been found that the consumption of soft drinks in Australia is declining during the past decade (Gupta Pirsch, 2014). One the other hand consumption level of sport drinks and bottled water had been increased. In addition, such as multi-cultural society has majorly influenced the business of the company in Australia. In order to meet the demands of customers belong to different cultures, the company has launched different types of products such as Normal Coca Cola, Diet Coke, Coca Cola Zero and Ginger Coca-Cola and many more (Solomon, 2014). Technological Technological aspects have also affected the business of Coca Cola significantly. Australia is one of the most technologically developed countries in the world. The number of internet users in Australia during 2008 was 2.09 (Weinstein, 2014). This number will almost become double by 2020. In terms of availability of energy sources it can mentioned that Australia is the fourth highest producer of coal in the world (Sharma Lambert, 2013). In addition, numbers of government incentive and funding programs like RD Tax Incentive and Innovation Investment Fund (IIF) have make business of Coca cola profitable in Australia. Legal In order to enhance business operation in Australia, Coca Cola has to take care of the fair competition act (Competition and Consumer Act 2010). They also have to take care of the government regulations related with duty taxes. Mehta et al. (2015) stated that in general business law of Australia is very flexible for all companies. That makes business easier for Coca Cola. The company has followed some stages to enter the Australian market. They are such as: 1) Registration as foreign company 2) Obtaining business premises in Australia 3) Informing government about the source of finance 4) exchange control Environmental The environmental factors that Australia is concerned about are such as recycling, depletion of resources and pollution (Cui, 2015). The company has already taken some environmental friendly initiatives such as recycling of plastic bottles used for their products. It makes business easier for Coca Cola in Australia. Table 2: PESTLE analysis of the company Coca Cola in Australia (Source: Hollensen, 2015) Market Segments overall Market segmentation allows companies to define the proper products for dissimilar type of consumers. Normally, Coca Cola Company does not have a particular target market and is addressed to everyone. However, the main consumers of Coca Cola are 18-25 years old people (Wilkinson, 2013). On the other hand, the secondary target market of the organization is 12-18 years old people. The organization does not have any specific product for 12-18 years old people; however, the organization was able to reach them though partnerships such as restaurants and fast food centers, for example Mc Donalds. Therefore, it can be said that the core target audience of Coca Cola is youngster or youth (Gengler et al., 2017). The strategy of the organization related to targeting does not depend on the gender, but both the genders like this product that provides an advantage for the organization. Coca Cola Company and its marketing team focus on each consumer as they believe that each consumer is a potential customer of the organization. All age group is targeted by the organization; however, the most potential age group is 18-25 that covers nearly 40% of the total age segments. The organization also does not target people from any specific life style. However, people with busy life style and mobile generation (youth) are considered to be the most paramount part of Cokes consumers (Cross et al, 2015). In terms of occupation the organization does not target people from specific occupations; however, their targeted consumers are mainly students and family oriented people. Involvement of primary segment towards decision making While making any decision, the Coca Cola Company follows some steps related to their primary consumers. The steps are hereby mentioned below. Problem recognition: The management of Coca Cola always figures out the needs of its consumers before taking any type of decision. Consumer trends change rapidly. Coca Cola company always find out the changing needs of the consumers and then the management take decisions to address those changed needs. Evaluation of alternatives: Consumers consider several things before selecting product for them (Cui, 2015). The questions such as is this really the product for me? and Do I need different product? arise in the mind of a consumer. Then the consumers consider price, quality and other factors about a product before buying it. The management of Coca Company always considers these factors before taking any business related decision. Conducting campaigns: A Gallup poll was published by the State of the America Consumer that shows that only 5% consumers are influenced by the social media advertisements. Most of the soft drinks companies are using social media marketing advertisement strategies to communicate with the Australian customers. However, Coca Cola is not only using social media marketing but has also conducted campaigns to communicate with the customers (Hollensen, 2015). For example, the company developed a campaign, which was extremely successful in Australia. Competition It has been found that the soft drink company Coca cola has major competition with PepsiCo in every market including Australia. There is a table given below to compare the strengths, weaknesses, opportunities and threats for both the companies. SWOT analysis Coca Cola PepsiCo Strengths 1) The company has strong brand image. It is considered as the top five leading brands all over the world (Alt Iversen, 2017). 2) The company has adopted brand based bottling strategy. 3) Coca Cola hold 47% total volume sales in carbonates (Cross et al., 2015). 1) PepsiCo also has strong brand image. It is the second bestselling soft drink company in the world (after Coca Cola). 2) Constant product innovation is one of the major strengths of the company (Gengler Mulvey, 2017). 3) The company uses aggressive marketing strategies by using famous celebs in its advertisements. 4) Large portfolio of products is another major advantage of the company. Weaknesses 1) Carbonate market in Australia and all over the globe is decreasing (Wilkinson, 2013). 2) The over-complex relationship with bottling partners and the existing distribution system used by the company is not efficient for non-carbonates. 1) Carbonate market in Australia and all over the globe is decreasing (Wilkinson, 2013). Just like Coca Cola, it is also the major concern for the company PepsiCo. 2) The company is only able to attract young people (Wilkinson, 2013). Opportunities 1) The total volume of soft drink in Asia Pacific and Oceania region is forecasted to increase by 455 within 2020 (). The company can enhance their distribution strength in these regions to grab larger market share. 2) With the inclination of health concern, the company can used products like Minute Maid Light and Minute Maid Premium to get sustainable position in the mind of customers (Coca-Cola, 2017). 1) PepsiCo can focus on producing drinking water due to inclining consumer concern. 2) PepsiCo can increase production of healthier beverages 3) PepsiCo can start to emphasize on functional drink industry. 4) PepsiCo can increase focus on Asian beverages and RTD Tea production (Shao Bao, 2015). Threats 1) Development health concern society all over the world including Australia is a major threat for the company. 2) Some products of the competitor PepsiCo such as Aquafina, Gatorade and Tropicana have grater brand image compare to the products of Coca Cola (Coca-Cola, 2017). 3) Negative publicity in Western Europe and Protest in India has severe impact on the global business performance of Coca Cola. 1) Increasing health and obesity concerns 2) The competitor Coca Cola has increased its spending behind marketing and innovation to $ 400 million globally. It can be considered as a major threat for PesiCo (PepsiCo, 2017). Table 3: SWOT comparison of Coca Cola and PepsiCo (Source: created by author) Positioning map for organization Taking into consideration of the primary segment in Australia and their level of involvement in the decision making process and competition with PepsiCo, a positioning map for the products of Coca Cola has been developed for the Australian market place. There is chart given below to describe the positioning of the Coca Cola products. Figure 1: Positioning map of Coca Cola and PepsiCo in Australia (Source: Gengler Mulvey, 2017) This positioning map has been developed depending on two major variables. They are such as modern preference vs traditional preference and low sugar rate vs. high sugar rate. It has been found that the company Coca Cola has mainly targeted youngster within the age group of 18- 25. They mainly target fun loving youth generation with busy lifestyle. It has been found that this target segment of customers have two types of taste preferences. They are such as traditional taste preferences and modern or new taste preferences (Gengler Mulvey, 2017). On the other hand, due to the increase of busy lifestyle, consumers of Coca Cola are becoming more health and calorie conscious. It gives rise to two types of sugar rate preferences. Fun loving young generation prefer to have high sugar rate in their soft drinks. On the other hand, youths leading busy lifestyle and conscious about their health prefer to have soft drinks with low sugar rate. Depending on these two variables, a positioning map has been developed. The four quadrants of this market positioning maps (from top right hand corner) are such as 1) modern soft drinks with high sugar rate, 2) modern soft drinks with low sugar rate 3) traditional soft drinks with low sugar rate and 4) traditional soft drinks with high sugar rate. Depending on the taste and their sugar value, different soft drink products of Coca Cola and its competitor PepsiCo have been placed in the positioning map. From the positioning map it has been found that none of the products of Coca Cola can be placed in the first quadrant (modern soft drinks with high sugar rate). However, one the products of PepsiCo named as Pepsi Next can be placed in the first quadrant of this positioning map. One of the products of Coca Cola named as Coke Zero and two products of PepsiCo named as Diet Pepsi and Pepsi Max can be placed in the second quadrant. These products are highly popular among the youths of Australia, who are used to live healthy life style. These products are also known for their innovative taste among the primary segment of customers of Coca Cola. There is only one product of Coca Cola named as Diet Coke can be placed in the third quadrant. This product is popular for its traditional taste of coke along with low sugar rate. On the other hand, two of the classical products from both the two soft drink companies like Coke Classic and Pepsi can be placed in the fourth quadrant. Gengler and Mulve y (2017) stated that, these two products are well known for their classical taste and high rate of sugar value. References Alt, J., Iversen, T. (2017). market segmentation, and preferences for redistribution.American Journal of Political Science,61(1), 21-36. Coca-Cola,. 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