Examine the current marketing orientated strategies utilised by Coca-Cola and explain the nature of its business orientation
Market Orientated thinking theory
Market orientated thinking is a theory which looks at how an organisation considers its customers’ needs when creating marketing and sales strategies concerning the products and services they offer. This strategy focuses on discovering and meeting the demands of its customers (Jobber & Lancaster 2015: 77). Unlike other marketing strategies, a market orientated plan focuses on establishing selling points for existing products, with market orientation attempting to tailor its products and services to meet the demands of its customer segment (Line & Wang, 2017).
Many academics argue that a market orientated approach offers many benefits, with the key advantage being that an organisations product is more likely to meet the needs of their target market (Jobber & Lancaster, 2015: 77; Line & Wang, 2017). When a company meets the needs of its target market, they are more likely to purchase a product and create brand loyalty (Jobber & Ellis-Chadwick, 2016: 112). However, this traditional view on market orientated thinking is seen as limited, with Moll, Montana, Guzman and Parellada (2010) arguing that now contemporary organisations must also not only meet the needs but also emphasise the quality, safety and technological advantages of the product.
True success within a contemporary marketing environment relies on an organisation understanding the importance of all elements of modern market orientated thinking. While products must start with the demands of the market. To truly succeed they must also harness efficiency and quality in the final production when delivering the final product to the target market (Jobber & Ellis-Chadwick, 2016: 113).
Coca-Cola current market orientated strategies
An organisation which successfully uses market orientated thinking is the Coca-Cola Company who understands the current needs and wants of their customers. Established in 1886, the American company grew to become one of the leading soft drink manufacturers in the world (Coca-Cola, 2017). As of 2017, the Coca-Cola Company manufacturers and licenses products in over 200 countries, with approximately 1.5 billion bearing the trademark of the company (Coca-Cola, 2017). With revenues over $35 billion, the Coca-Cola Company is heavily invested in ensuring their brands meet the ever-changing customer demands of the global market and remain competitive with rival soft-drink manufacturers (Coca-Cola, 2017).
One of the key areas of consumer change for Coca-Cola is the UK market. Currently within the UK the Coca-Cola Company sells twenty different brands of soft-drink to a large customer segment (Coca-Cola, 2018a). Coca-Cola Company is the market leader in the UK market within the soft-drink category, so their main market strategy is to defend their market share. Jobber and Ellis-Chadwick (2016: 121) states that this takes the strategy of defending a current position and offensively creating counter-measures against rival manufacturers. This comes at a time where Coca-Cola faces difficulties not only from the competition, but from increasingly health conscious consumers and an enforced UK-wide sugar tax (Nicolaou, 2018).
To combat these difficulties the Coca-Cola Company have invested over $50 million into sponsorship of the 2018 Russia World Cup to help engage with audience (Rains, 2018). By building ‘front-of-mind’ strategies, brand builds relationships which has the results of ensuring unaided brand-awareness over rival brands (Kotler & Keller, 2015: 378). All of which has allowed Coca-Cola to defensively maintain their relationships with its consumers and aid in understanding their needs and wants from the brand.
In terms of taking offensive counter-measures as market leader, the Coca-Cola Company are expanding into the ever-growing energy drinks market. As part of a $2 billion acquisition, Coca-Cola Company acquired the Monster Energy drinks brand (Paton, 2014). Part of a £540m market, Monster Energy has seen a 112% growth as the UK becomes one of the fastest growing markets for energy drinks (Wells, 2018). By strengthening their portfolio, the Coca-Cola company strengthens their flanks and offensively expands into new markets to meet the news of new customer segments (Kotler & Keller, 2015: 379).
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Current UK soft-drinks market
The UK soft-drinks market is going through volatile change as health becomes a key issue in the government attempting to tackle obesity through a controversial ‘sugar tax’ (Mintel, 2017). This further adds to a currently fragile market where customers are moving away from carbonated soft-drinks towards flavoured water and juices (Mintel, 2017). In 2018 the current ‘full-sugar’ drinks market shrunk by 0.5% due to the sugar tax and rising consumer awareness of health issues (Mintel, 2017). In 2017, the UK consumption of bottled water grew by 7%, along with over half the drinks market now being either low or zero calorie beverages (Corbin, 2018). As a result, UK consumers are demanding their favourite soft-drink brands in low sugar form.
How has the Coca-Cola Company adapted their marketing orientated strategies to meet new UK business orientation?
Despite the Coca-Cola Company being market leaders in the UK (Coca-Cola, 2017). The company is suffering with the changing market conditions, which has led to changes in their strategies to meet the new demands from consumers. Firstly, Coca-Cola carried a survey in 2017 which was aimed at finding out their consumers latest needs and wants from the Coca-Cola range of soft-drink brands (Sims, 2017). Jobber & Lancaster (2015: 78) stated that a brand must always investigate the needs of their customers to discover new marketing opportunities, which drives the company. For the Coca-Cola Company, the survey presented several key trends which allowed the brand to continue to grow and defend against the rising UK soft-drink competition.
The first trend focused on was the UK’s market shift towards healthier soft-drink choices. Coca-Cola understood the importance of offering their beloved drink brands with zero-sugar and same great taste. However, the research demonstrated the brand confusion with consumers not understanding the zero-sugar options available to them. To raise awareness, the company redesigned their zero-sugar packaging and invested £1.5 million into a UK-wide advertising campaign (Nicolaou, 2018). Marketed as, ‘Because I Can’, which focuses on customers living their life unapologetically (Coca-Cola, 2018b). The company have adapted their marketing strategy to better reflect their promotional mix. The promotional mix now focuses on the new packaging with zero-sugar variants being featured in every advertising campaign to raise awareness. Milhart (2012) states that when a brand controls the advertising message, they have the advantage in being able to set out the argument for why their brand has superior value against the competition.
To help adapt their strategy to reflect the new focus on healthier products, Coca-Cola have branded all their products in the same style packaging. As of 2017, all brands from the Coca-Cola company are packaged in the same design, just with different colours to differentiate between the ‘full-sugar’ and ‘zero-sugar’ variants (Coca-Cola, 2018b). By reinventing a product or brand, it stimulates consumer demand when that product or brand traditionally reaches the sales decline phase (Milhart, 2012).
To counter-attack against the rise in botted water sales, Coca-Cola have diversified their strategy by offering Glacéau Vitamin Water which has zero sugar and calories (Coca-Cola, 2016). By targeting the market who still want a flavoured beverage, but healthier, the company has used a diversification strategy. This strategy allows for a brand to enter a new products growth phase and capitalise on gaining access to a new customer segment that their current product offering does not reach (Narver & Slater, 1990).
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Recommendation for Coca-Cola’s market orientated strategy and current UK segment
The two biggest threats to Coca-Cola’s strategy are the UK ‘sugar tax’ and continual poor brand awareness of the zero-sugar variants of Coca-Cola products. It is this reports recommendation for Coco-Cola to offer their zero-sugar variants at a promotional price, especially when considered with the Coca-Cola brand sponsoring events like the 2018 World Cup. An aggressive pricing strategy would undercut the rival brands and encourage their customers to try the new variants. A price-promotion creates a short-time incentive to create interest in a brands goods or service (Kotler & Keller, 2015: 280). However, Coca-Cola must be aware that an aggressive pricing strategy is risky, as once the promotion ends sales traditionally drop off (Narveer & Slater, 1990).
To avoid this, the second recommendation is for the Coca-Cola Company to work with the UK government in endorsing healthy events through sponsorship and participation. This demonstrates the brands market orientated strategy toward healthy living and offering a healthier choice in zero-sugar products. By using healthier focused events for their zero-sugar range, the company can create the ‘front-of-mind-message’ of associating healthy activities with the Coca-Cola brand and the product range they offer within the UK.
By continuing these strategies and listening to customers’ needs and wants, the Coca-Cola company can continue to market their products to the changing demand. However, the most important strategy for Coca-Cola is to always exceed the value offered by the rival brands and successfully using market orientated thinking to communicate the strengths of their brand and the innovations of their products to customers. This will continue to form a competitive advantage for the Coca-Cola brand in the volatile UK market.
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