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Student Names & McGill ID BRILLANT, Aïsha 260194236 CHENG, Chin-Yun 260014110 JOLIN LESSARD, Audrey 260180785 LEBLANC, Geneviève 260188501 MURCIA, Nicolas 260177704 NGUYEN, Jean-Louis 260078995 TIAN, Yu 260177360
Course Information Marketing Management I MCGR 352, Section 005 Professor: Constantina Kavadas
Marketing Plan Part 1: Market and Consumer Profile
Date of submission: Wednesday, March 29th, 2006
The following marketing plan forms the basis for the introduction of an innovative new product by the Coca-Cola Company. The analysis allows us to outline the best strategies to follow for the achievement of the company’s strategic goals. “Bubble Buzz” will be marketed as a unique functional drink while striving to reinforce the company’s status as the leader in innovation and successful product launches. The marketing strategies will enable to reach a market size of an estimated 8,688,300 people (targeted) with a forecasted sales growth prospect of 7.3% over the next 4 years ($243,029.47 profits), while satisfying the needs of the still-unserved market for ready-to-drink bubble tea. Success will be reflected by a sizeable capture of market shares within this market, while strategically carrying the company up to the top spot as the market leader in the functional drinks segment of soft drinks. Export potential will be considered in China.
Brief description of the company The Coca-Cola Company’s core undertaking is to benefit and refresh everyone it reaches. Founded in 1886, we are the world’s leading manufacturer, marketer, and distributor of non-alcoholic beverage concentrates and syrups, which are used to produce nearly 400 beverage brands that make up for our wide portfolio. Our corporate headquarters are established in Atlanta, and we are 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 specialty drinks, while ranking number one in value for the ready-to-drink tea sector (ref.1, p.1). 3
Brief description of the new product, & strategic role in the future position of the company
“Bubble Buzz” will be a bottled beverage and will be positioned as the only ready-to-drink Bubble Tea product available on the market. The beverage will have a green tea base with enhanced fruit flavors (passion fruit, strawberry and lime) as well as tapioca pearls. It will bring an entirely unique drinking experience to its consumers. It will present itself as a funky and unusual alternative to traditional tea while providing the great taste of authentic fruit juice in an attractive and convenient packaging. The strategic role of Bubble Buzz for The CocaCola Company is centered around three objectives: • To stay at the forefront as the market leader in innovative product introductions and successful product launches; • To strengthen and satisfy the needs of the more adventurous Generation Y consumers with a new eye-catching and FUNctional product; • To become the market leader in the functional drinks segment with increased market shares.
INDUSTRY ANALYSIS Consumption: The sales volume for the functional drinks segment (ref. D2) in Canada has reached $342.2 millions in 2004 for a volume of 125.9 million liters (ref.2). This product segment has shown a steady growth since 1999: an increase of 13.5% over a period of 6 years (Appendix A). The consumption rate per capita in 2004 has reached
Profitability & future growth potential: In 1993.5). Trends: Through the early 1960s. healthier and more sophisticated products (ref. sports drinks) as well as bottled juices and water (ref. Coke & Nestea) and acquisitions (e. Coca-Cola and Pepsi responded by expanding their offerings through alliances (e.6).4). The growth of this particular market is largely due to a slow shift in consumer trends.7% of the total soft drinks sales in 2004 (Appendix B). but also by focusing efforts on portfolio diversification. Coke & Minute Maid). smoothies.g. which represents a 4.0% in volume consumption by 2009 (ref. estimates are forecasting a growth of 7. the volume sales of carbonated soft drinks has declined due to a large proportion of consumers who are opting for the trend towards healthier alternatives in the functional drink segment (energy drinks. New flavor introductions and health-conscious formulations have been launched in an attempt to offset the decline in carbonated soft drink sales (ref.94 liters. Concentrate Producers earned 29% pretax profits on their sales. milk & juice drinks. while bottlers earned 9% profits on their sales. In the 1980s and 1990s.0% increase compared to 1999 (ref. however. Companies have been actively engaged in new product developments in order to counter the growing concerns about negative health impacts of high-fructose drinks.7). Today.3. while the soft drink industry’s value has increased in 2004. 5 .3).4). other beverages (from bottled water to tea) became more popular. The functional market is expected to show sustained growth and consumer interest in the future years as consumption shifts to trendier. but also to increase the demand in a market where product offerings are quickly maturing (ref. soft drinks were synonymous with “colas” in the mind of consumers.3% in sales and 11.g. While the functional drinks sector only accounts for 3. for a total industry profitability of 14%.
6 .2. Coca-Cola Co is second with 32. which is until now unexisting. Coca-Cola is leading with 43. The current market for traditional Bubble Tea is fragmented. PepsiCo is the current market leader with 60. see Appendix D1). as well as Snapple’s and Hawaiian Punch (owned by Cadbury/Schweppes). opportunities and threats) Strengths Brand strength Effective stride in new markets Results of operations Strong existing distribution channels Opportunities New product introductions Brand is attractive to global partners Explanations in APPENDIX C Weaknesses Reliant upon line extensions Reliant upon particular carbonated drinks Brand dilution Entrance into difficult non-core categories Saturation of carbonated soft drink segment Threats Strong competition Potential health issues Free trade COMPETITION Coca-Cola’s top competitors for the soft drinks industry are PepsiCo (31.8% of market). since the marketing roll-out will initially emphasize on product awareness and both sales channels do not reach or serve the same market (retailing vs. since the distribution is restricted to local outlets and selling points such as counters and small Bubble Tea shops in scattered locations across Canada.8% (ref. Sobe (owned by PepsiCo). represent about 48% of the total market (ref.5% of the market shares in 2004. which combined. direct competition from these local players is not anticipated. It is anticipated that the following brands could potentially compete with Bubble Buzz in the functional drinks market: Brisk. Bubble Buzz will launch into a currently unserved subset of that market (RTD “Ready-To-Drink” Bubble Tea). However. Lipton Iced Tea. In the functional drinks sector.SWOT ANALYSIS (Strengths and weaknesses. Bubble Buzz also creates a potential situation for cannibalism with Coca-Cola’s very own brands of iced tea and other functional drinks.9).7% of the total soft drinks market.6%) and CadburySchweppes (15.
counter/restoration). A strong distribution system already exists with Coca-Cola. fun drink with a sense of belonging within peer consumer groups) – (ref. Barriers to entry: Business practices Manufacturing Due to the number of competitors. Further data concerning competing market shares and distribution channels are available in Appendix D(1-3).6). 10). 7 . a growing interest for healthier / beneficial products for the “mind and body” (ref. it will Producing bottled Bubble Tea requires be hard to prevent imitation behaviour sizeable capital investments for the (especially from PepsiCo) specific needs of the manufacturing chain (from ingredients to final packaging Risk of competing with emerging specifications) private labels (e.72% over the next 9 years (2015) for the 10-29 years old subsets (ref.g. Segment trends: The current trends include a shift away from junk foods and carbonated drinks. the trend towards the availability of on-the-go products for those with an active lifestyle. as well as the trend for personalization through customization (or for beverages. Segment growth potential: Statistical reports anticipate a segment growth of 1. since partnerships and channels are already in place.127). This will facilitate the product’s reach into its target market. through variety-seeking in a wide introduction of flavours – ref. p. Refer to Appendix E.12). President’s Choice) The marketing campaign to make this Given the wide array of brands unknown brand popular requires more (saturation in the soft drink market). to be established within the Functional Drinks sector Segment needs: The product will cater to both physiological needs (hydrating and nutritional value) and social needs (perception of a social. it promotional expenditures than a becomes a challenge for Bubble Buzz to traditional brand extension stand out TARGET MARKET Segment identification: RTD (Ready-to-drink) bottled Bubble Tea.11.
688.600 L).300 (329. Refer to Appendix E. 8 .Size of the segment (population): 8.
Native. active life.999 to 4. cool. regular user (current user through existing bar-shops) None. and adapted strategies for all geographical groups 5000-19. with adapted strategy for Asian consumers already familiar with Bubble Tea Renting apartment/condo.000+ Urban. quick maturation with modern products Most of them dependent on parents. CEGEP and University All: Asian. sweet. functional packaging. Funky & eye-catching bottle. weekly basis Non-user.000 Students. importance of school. no major responsibilities. highly influenced by peer groups. High school. variety of flavors. other. new workers. inclined for differentiation and sophistication. Black. studying age and young adults) Male and Female All under $30. unique drinking experience. refreshing. very tolerant towards multiculturalism and internationalism (open-minded). 9 . young professionals Elementary 4th grade. living with parents (Highly discretionary in personal spending) Brand conscious. healthier alternative to heavy-sugar drinks. for hip & young people. work and social life COMMUNICATION BENEFITS -Nutritional information -Informational text on history of product FUNCTIONAL BENEFITS -Healthier than soft drinks -Convenient. West) 10-29 years old (teenagers.000. White. premium-priced. medium. aspects of play (tapioca pearls. strong Lifestyle Benefits sought Usage rate User status Loyalty status Positioning strategy: The only RTD bottled bubble tea available.SEGMENTATION VARIABLES AND BREAKDOWNS FOR CANADIAN CONSUMER MARKET OF BUBBLE TEA MAIN DIMENSIONS VARIABLES BREAKDOWNS Region Area size Density Climate Age Gender Income Occupatio n Education Race Home ownership Personality Nationwide (all provinces and territories) with emphasis on urban / metropolitan areas. daily-basis. new and unusual. suburban All (East. new graduated. anchored in popular culture. easy to take out PERCEPTUAL BENEFITS -Quality/Premium price -Social standing/good-looking Seasonal (peak in summer). oversized colored straw).
and takes a closer look at the nutritive information label. but he also heard them talk about this brand new product that Coca-Cola just launched. He stops at a convenience store next to the gym. since he perceives “Bubble Buzz” as a high-quality. Today. And he instantly recognizes the brand. On his way to school. He knows that this is a bottle of Bubble Buzz. He grabs a bottle. while listening to his favourite music that he downloaded to his iPod. Bob wakes up at 6:30AM every morning.85 Age: 20 Occupation: University Student Country: Canada Needs: Healthy lifestyle/Social belonging People: Roommate/Friends/Family Places: Clubs/Coffee shops/University/Gym Activities: Basketball Team Due to his active and quick-paced life. he always has his Puma shoes on. He also previously saw Bubble Buzz ads when he surfed on his favourite websites. Bob usually likes to work out before he has to head to University. Bob knows he is thirsty and he feels the need for something very refreshing. That way. functional product. After having called his friends with his new Samsung camera phone. Standing in front of all the choices in the beverages aisle. because not only does his other friends often drink it. he feels he has more energy and feels ready to confront his busy day attending courses and getting things done. He is very pleased to see that the new drink is more nutritive and definitely healthier than the other soft drinks that were available on the shelves next to it.CUSTOMER ANALYSIS Profile: Name: Bob Thomson Date of Birth: 25. and of course. one particular bottle catches his sight. The higher price of the product doesn’t bother him.03. he leaves his apartment and goes to his gym by metro. 10 . he puts on his trendy Lacoste Polo and Diesel Jeans.
and because he likes to try new products on his own. He liked that the beverage was so unusual. Projected profits will be $243. Bob will continue to buy Bubble Buzz for its good taste.47 (see financial projections). 11 . since he had such a great experience with the first one. Plus. or carbonated soft drinks. yet refreshing. The drink surpassed many of his expectations. He attends all of his classes. Based on the aforementioned analysis. One to quench his immediate thirst. he sees it is the coolest trend right now. the Coca-Cola Company will regain increased market shares and claim its targeted situational position of market leader in the functional drinks segment as well as keeping its long-standing consumer recognition for innovative and successful product launches in diversified markets. and so when he exits the store. he always hangs out with his friends.029. he thinks this bottle is worth the price. Upon implementation of the marketing plan. Bubble Buzz appears to be a profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. and another one that he wants to save for later in the day. Because of his busy schedule. he puts the second bottle in his backpack. He has no doubt about it. He sees that the packaging is so convenient and easy to carry. Thus. A lot of them are drinking from different “Bubble Buzz” flavours. he decides to buy two bottles. He opens his second bottle. Bob prefers to save time as much as he can. During his break.which is manufactured by a well renowned company. and also because at his age. Because of his inclination towards more sophisticated tastes. he did not feel like simply buying bottled water.
Marketing Plan Part 2: Marketing Strategy 12 .
Features promoting the website. o Trade name: Bubble Buzz™. Augmented product o Nutritional information. Health benefit of a green tea base (ref. Status (social drink). funky. aspect of play. The actual product o Packaging and labeling: see figure below o Branding: colorful. etc. ready-to-drink format. healthy. to establish a wide brand recognition through the capture of market shares in the functional drinks segment. Coca- 13 . p. cool.11. catchphrases such as “Think outside the Bubble” and “Get Your Buzz”. “sales [will] begin immediately and the benefits of the purchase are readily understood” (ref.17) Marketing considerations o Product life cycle: Bubble Buzz is a low-learning product. a Coca-Cola product o Brand personality: energy. Since Bubble Buzz is prone to product imitation. funny. prominent Bubble Buzz logo written in modern font.The objectives of the marketing plan are strategically centered around 3 criteria: to create a strong consumer awareness towards a completely new bubble tea product from CocaCola. and to become the top market leader in that particular segment within the forecasted sales figures.301). functional. consistent. round shaped. original. innovative and accessible soft drink reputation. o Brand equity: Coca-Cola provides a quality. PRODUCT STRATEGY The core o Bubble Tea beverage in a pre-bottled. With a strong marketing campaign.
o Bubble Buzz follows the practice of product modification (ref. Bubble Tea will now become a widely available drink in multiple retailing (distribution) channels. Consumer demand 2. p. o Product class: Food & beverage Soft Drinks Functional Drinks (refer to Appendix D2 for a break-down of the functional drinks market).304): Coca-Cola is introducing an existing beverage (bubble tea) but redefines the drink with a new.11. more convenient package. PRICE STRATEGY The price strategy that will be undertaken should consider the following aspects: 1. The product lifecycle 14 . which is currently feasible thanks to the company’s high manufacturing capacity.Cola’s strategy is to broaden distribution quickly.
The main characteristic however is product differentiation. Consequently. Coca-Cola’s intention to position Bubble Buzz as a unique. It ensures a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly and it also brings a certain prestige to the product. the higher the value’’. Potential substitutes Customer demand Customer demand is a crucial factor which is driven by tastes. the minimization of the nonmonetary costs to customers should also be include along with awareness of the product (notably by advertising) and value (benefits) . 15 .3. income and availability of others similar products at a different price (mentioned later in the potential substitutes section). For a lot of consumers. The product lifecycle The company should take advantage also to the fact that the newer the product and the earlier in its lifecycle the higher the price can usually be. innovative and attractive product gives it a certain control over Bubble Buzz price. Potential substitutes Coca-Cola is constrained by the monopolistic market in which it competes. Other constraints (See Appendix M) PROMOTION STRATEGY Objectives: • To initiate strong awareness about the launch of Bubble Buzz throughout Generation Y (10-29 years old) consumers as well as their parents. value and price are highly related: ‘’the higher the price. To be able to implement higher pricing though.
” “For the out-of-the-ordinary individuals who like to challenge themselves. Elle For boys: Sports Illustrated (or Kids edition) Internet Banners on select websites (gaming. stations) Tourist areas in high seasonal periods Outskirts of key cities in geographical reach 16 . Message: The promotional outputs will convey the clear message that “Bubble Buzz is a healthy drink for sporty and young people who simply enjoy taking care of their body and life.) Official promotional website: www. This group of consumers doesn’t give its full attention to one single message. Universities Magazines For girls: Cosmo. contests). YTV Radio MIX96. they can be reached through integrated programs. CKOI 96. sports. Advertising: Refer to APPENDIX H for detailed explanations Output Examples Television MTV. PepsiCo. Much Music. it is important to note that Generation Y consumers only give partial attention to media. However. Another important tactic to reach our target market is through “Viral” or “Buzz” marketing. Be Yourself.BubbleBuzz. transportation (bus. They are typically using more than one communication media at a time.” Concepts: • • • “Think outside the bubble”: Be Bold. “A good spirit in a good body. Marketers can still communicate with Generation Y by using a variety of targeted promotional tools. metro. which Coca-Cola will heavily use in this campaign (campus.• To win market shares over our top functional drinks competitor. etc.9.ca Outdoors Billboards and prints in select areas including: Campuses. but rather uses continuous partial attention to scan the media. Be Original. Be Different. VrakTV.7 FM. 94. a behaviour that is often called “multitasking”.” Media selection: Before choosing the appropriate medias.
Arguments: It will encourage new product purchases and it represents low risk for consumers since they get it for free. school/universities. IMC (integrated marketing communication) Target Audience: • Intermediary: personal selling will be more often used 17 . 2008 Beijing Summer Olympic Games).e. Trade oriented: Allowances and discounts: case allowance (Arguments: The “free goods” approach will be used so it can encourage retailers to buy more of the product to get a certain amount for free). Arguments: It is also a mean to increase product trial and provides a good product visibility. Other considerations: • • Scheduling of the advertising: Pulse scheduling (promotional presence year-round. • Samples: distributed in supermarkets. They have nothing to loose by trying it. Others: In subsequent years. “Win a trip for the 2008 Olympics in Beijing”. sales kit strategies to be explained later in the text. malls. press releases (print and online).Others Personal selling Public relations Publicity Not relevant Direct contact with retailers. engage in product placement in TV shows or movies. Stands or special displays and events in schools. • • • Point-of-purchase: in supermarkets (to reach the parents of generation Y). Samples are a way to avoid product resistance since people are not used to find bubbles in their drinks. • Cooperative advertising: to encourage retailers to buy our product and to maintain our high level of advertisement that consumers expect from Coca-Cola. sports events (i. (Arguments: It will increase consumer purchases and encourage consumer involvement with the product). sponsorship activities Conferences. but emphasized and intensified before and during summer). “Uncover a secret code underneath the bottle cap and win sporting goods and electronics by logging on the website”. buzz marketing through TV coverage Promotional Mix: Consumer oriented: • Contests: “Win another Bubble Buzz flavour”.
770 18 . PLACE (DISTRIBUTION STRATEGY) Bubble Buzz will be distributed through these channels: supermarkets. or in other words achieve 11.17*(1-11.964.56+25.001 based on our target market.124 * 36% = $214.124 (refer to Appendix J) 1 $1.124* 38% = $226.17 Break-even: (113. Expected Costs: COGS: $597.64 O/H: $597.• Ultimate consumer: Coca-Cola will use more of mass media because the amount of potential buyers is large.000 = 11. The potential profits can up to $1. multiple grocers. independent food stores.9% In one year.676.9% of the functional drink market share. vending machines.907.12 Expected Revenues (total) = $597.9%)*1.000 = $1. convenience stores.36 / 328. direct sales.914 bottles of Bubble Buzz. After this point.33) / 1.770.914 / 1.17 towards the profits.000 = $1. every bottle Coca cola sells will generate average $1.914 (bottles) Market share: 118. per bottle = 382.000.000.17 = 118.030.159.M.030. Requirement for success analysis: C. it will break even. if Coca-cola can sell 118.453. discount stores.
Our entry-strategy for entering China is through licensing. it is going to benefit our sale there. especially in China. Soft drinks industry is one of the fast growing industries in China. With a total population of 1.75% ) 3.714. 19 .China is the target country we’re going to expand our product. RTD tea. Reasons: 1. It is relatively low risk when compared with direct investment there. it is a good chance for us to enter into this market. absolute expenditure on food and non-alcoholic beverages is expected to increase from 1.015. Bubble tea was originated in Taiwan. We have already provided licenses for manufacturing our products in China (licensing the bottlers and supply them with our syrup required for producing). it became one of the most popular beverages sold in tea stores on the streets due to the similar taste and similar cultural background.777 billion in 2005 to 2. 5.39% to 25. Therefore. Reasons: 1. 2.154 billion in 2010 (though the proportion of consumer expenditure on this part is decreasing from 28.453 million. 4. Since we are the top sponsor for the upcoming Beijing Olympic in 2008. and Asian speciality drinks and bottled water have shown a sharp increase during 1998 to 2003. Soon after its introduction in China. compared with the total population of Canada---304.000 in our target market (age 10 to 25 years old). 2. So. especially fruit/vegetable juice. added in one or two more products in our production chain would not be that difficult. With more opportunities to expose to the public.313.000 in the end of 2005 and 327. there definitely is a great potential worth to work on. It is low cost to export our new products there since we can maintain lower labour cost and lower material cost if we produce our products locally.
we will put more emphasis on the ads on the public transportation such as underground/subway system and bus service due to the more frequent use of the public transport service there. less sugary drinks. Also. So. with the information we gathered from the tea store in China2. Moreover. people in China are becoming more and more health concerned.50). 2 3 Appendix L (Prices in China) The change of currency: CAD$1= CNY$ 6. i. we will avoid using too many artificial colors as they are not appreciated as much as in Canada. We will make some changes in the ingredients used to appeal the local market. we will use more TV and Web advertisement there due to the highly exposed environment in China. since the outdoor display screen is quite popular in big cities. Naming the product: In order to be recognized and accepted more easily for the local market. Also.Changes to be made: 1. Promotion: In contrast to the radio ads in Canada. As we set our price sold in Canada $2. especially the amount of sugar and additives added in the drinks. Also. the price sold there would be 57.14%. about CAD$13.00. we will add in this product line.e. Develop other flavours that would attract the local market: Since milk based bubble tea sell better in China. it is about 57. we will also take advantage of it. it would be around $7 Yuen. 2. we need not only translate our product name but also make sure there’s not hidden unintended meaning that would damage our product. Price: Price sold in China is going to change to accommodate the local desire. Compared to the price sold in the bubble tea store ($ 3.88 20 . 3.14% of what sold in the tea store---$12 Yuen in China currency. 4. Then.
0 300.50 2004 4.959.1 324.0 50.8 324.0 Million Litres / Million $CDN 200.7 2000 117.9 342.2) Off-Trade Consumption Indicators (Functional Drinks) 350.7 166.8 8.2 161.10 859.1 9.9 307.0 250.3 296.0 100.2 286.481.9 296.20 385.0 327.00 551.1 2002 122.169.991.60 2001 4.828.60 763 327.896.0 0.994.613.5 275.20 2.6 8.4 1.4 2004 125.2 318.3 312.10 Off-Trade Sales of Soft Drinks by Sector (2004) Carbonates Fruit/vegetable juice Bottled water Functional drinks Concentrates RTD tea RTD coffee TOTAL .4 342.651.4 0.1 2001 119.60 447.1 186.879.2 APPENDIX B (ref.0 150.4 8.4) Off-Trade Sales of Soft Drinks by Sector: Value 1999-2004 C$ million Carbonates Fruit/vegetable juice Bottled water Functional drinks Concentrates RTD tea RTD coffee TOTAL 1999 4.5 257.454.40 2000 4.60 2.3 265 0.90 2003 4.0 Volum e Sales 1999 115.4 0.347.8 0.135.30 2.4 159.8 312.2 7.224.1 171.497.239.10 2.7 318.30 2002 4.60 666.938.726.90 2.9 8.APPENDIX A (ref.40 2.7 2003 124.7 193 234 0.
coffee and juices. an 8% increase from 2002.9 billion. The developing markets are more complex than the carbonated soft drinks. the introduction of Vanilla Coke helped maintain sales for the core Cola beverages).e.APPENDIX C (ref. particularly its long-time carbonated soft drink products (i. distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. there is a strong risk of cannibalizing existing sales in the long term (for example. Effective strides in new markets Coca-Cola has partnered with several companies (such as the joint venture with Nestlé) in order to increase the ability to react to demands and changes in the markets of iced tea. Results of operations In 2004. The strong brand name is one of the basis for the company’s competitive advantage on several of its core markets. net-operating revenues totaled approximately $21. Bubble Tea might deter on sales for iced tea).1 & 8) STRENGHTS Brand strength (see Appendix F for brand rankings) The Coca-Cola Company is the largest manufacturer. WEAKNESSES Relying upon line extensions Coca-Cola is relying on brand extensions increase sales in specific lines.3 billion in 2004.968 million from its operating activities and re-invests heavily into its business.16). The company generated $5. . a new product launch can typically rely on the existing distribution system in order to reach the majority of its target market while requiring no major supply / delivery developments. Therefore. The ability to generate significant cash flows is one of the its key strengths (ref. However. Strong existing distribution channels Coca-Cola has operations worldwide and is well established in its distribution channels (such as store retailers or vending machines). The Coca-Cola brand is unarguably one of the most recognizable brands in the 200 countries where it sells its products. Gross profit totaled $14.
it becomes increasingly difficult in the soft drinks segment to innovate and create new products that genuinely stand out from their competition. price).Reliant upon particular carbonated drinks The long-time presence of Coca-Cola’s Coke beverage has established this particular line as a flagship product. And as we have seen. Entrance into difficult non-core categories The Coca-Cola Company is a truly global multinational business giant. since the Coca-Cola brand is highly recognizable worldwide. Powerade. geographical needs already require that these global brands are heavily adapted to their target region. Saturation of carbonated soft drink segment Due to the countless number of brands available on the market. . Therefore. an analysis of the industry has shown that growth in the soft drinks market becomes difficult and challenging when the conditions and consumer trends cause a market demand that stays stagnant. While some categories of products are distributed in many areas of the globe (Coke. taking away freedom in the areas of line diversification and product modifications (taste. consumers’ expectations also become more and more anchored and single-lined. While the core Coke products bring a solid base of sales and loyalty to the company. marketing a bottle of Coke in Japan would be less difficult than marketing a bottle of “Qoo” in that same country – “Qoo” being a lesser-known non-carbonated drink which was one of CocaCola’s newest brand introduction in 1999).). the process of diversifying the production and marketing each product involves costly investments. manufacturing. etc. production. distribution. These capital requirements typically increase as the product becomes heavily focused (for example. Brand dilution The tremendous amount of existing brands and new product being introduced by the company could diminish the value and differentiating strength of each product that is being manufactured. Furthermore. promotion and retailing choices and processes. OPPORTUNITIES New product introductions The functional drinks market is one that particularly allows more innovation opportunities and gives greater freedom for creativity in the design. many smaller and diversified product lines are more or less popular in one particular region over another. packaging.
Issues arise when dealing with price competition and economic growth. Large companies can also easily become the target of consumers’ apprehension.g. Coca-Cola enjoys a strong purchasing power over its suppliers. sponsorship agreements. Trade organizations are also faced with public pressure which can disrupt operations in one or more areas of the company. . and also attracts large partnerships with various levels of consumer reach (e. movie studio promotions.Brand is attractive to global partners Because of the company’s size (including value. large international competitors can come out with comparative advantages (the constant fight to remain the first mover and market leader in a long-term spectrum). brand name and operating revenues) and wide portfolio base. THREATS Strong competition Coca-Cola is competing in a global market that is characterized by an oligopoly between several (but few in numbers) competitors. Existing brand awareness also provides an international playing field for powerful marketing strategies. internet and so on). concerns over health issues have risen in the media through an expanded and evergrowing network of “knowledge outputs” (journals. Burger King. The move of the younger generation towards a healthier lifestyle call for careful planning and decisionmaking in new product developments. Potential health issues The current trend of consumer and consumers groups’ awareness towards goods and services is both beneficial and threatening for companies in the food and beverages industry.). etc. TV channels. Free trade In an era of globalization. Over the last few years. The fight for market shares and sales in crowded markets becomes a complex one.
9 100 .8 1.2 0.8 1.4 100. 2005 *Based on United States report D3.1 0.0 2003 59.2 & 5) D1.4 100.9 0 0.3 1 0.1 4.8 1. Off-Trade Company Shares of Functional Drinks by Value 2000-2004 % off-trade value rsp QTG Canada Inc (PepsiCo) Coca-Cola Ltd Monarch Co. Functional Drinks Sales by Distribution Format (2004) Distribution Channel Supermarkets/hypermarkets Independent food stores Convenience stores Discounters Direct sales Vending Others Total % Sales 30.8 1.5 33.7 100.8 2. The South Beach Beverage Co GI Energy Drinks Corp Snapple Beverage Group Private label Others TOTAL 2001 56.0 D2.5 32.8 0.8 1.5 5.2 0.5 1 0. Functional Drinks Sectors (Segmentation) by Value.1 0.1 0.0 2002 58.2 0.2 0.1 0.4 32.APPENDIX D (ref.0 2004 60.2 32.8 3.1 58.1 0.1 0.7 100.4 5.2 7.5 1.
963 2.997 1.096 2.06 per year Projected consumption (Liters) in 2005: 4.APPENDIX E (ref.157 2. Euromonitor International as at January 1st Functional Drinks: Consumption growth (Liters) from 1998 to 2003: 0.14 & 15): Total Canadian (10-29yo) Soft Drink Yearly Consumption (L) # Male 10-29yo Yrl Consumption (soft drinks) (Population) (Liters) 4.438 2015 1.111 2.300 people 329.800 # Female 10-29yo (Population) 4.264 2.000 L is approximately equivalent to 1.348 2.296 Yrl Consumption (soft drinks) (Liters) 3. Further analysis in the marketing strategy plan will allow for estimates of the forecasted sales in the market segment specific to the RTD Bubble Tea drinks.000 cans (355mL volume) MARKET SIZE: 8.009 2.000 L x 4.877 1.426 2.070 2.583 Total (Canada) = 32.868 2. .938 2.12 Market size calculations (ref.500 4.103.000.12% (functional drink market share) = 329.000.436.595 Total yrl consumption (soft drinks – Liters) 7.209 8.961.891 1.600 L 329.688.858.600 L ≈ 1.741 2010 1.529 8.124 2.000 cans The market size represents our targeted pool of consumers.185 2000 2.056 2.076 2005 2.228 2.891 ≈ 8 million Liters Total Canadian (10-29yo) Functional Drink Yearly Consumption (L) 8.241 National statistical offices.980 2.000.251.12) Population by Age: 1990-2015 '000 1990 10-14 yrs 15-19 yrs 20-24 yrs 25-29 yrs TOTAL Source: Note: 1995 1.068 2.
13) .APPENDIX F (ref.
APPENDIX G .
16) .APPENDIX H (ref.
APPENDIX I (ref.16) .
APPENDIX J CALCULATIONS Based on Coca-Cola’s previous financial statements.742+20. we will see the average COGS/Revenues for year 2005.104+21.3%6 of the total revenue. Operating Costs / Revenues = 38%5 Moreover.3% 7 From table 3 . which is normally relevant cost.776) / (23.040 Total 100% 328.8% Sales ($) 101.907.000 cans annually assuming Coca-cola maintains its market share in functional drink 32. and discount stores. since our target market are 1. Expected Revenues: Supermarket Price ($) 1.024 Revenues ($) 151. Similarly. and 2003 is 36%4.423+6. We use the ratio of average capital expenditures / net operation income for North America to estimate the fixed cost we need for producing Bubble Buzz in Canada: 4.857) = 36% From table 1: (8.000 bottles. data processing management and similar common services performed outside the activity.000.8%.520 387.890+480+7. legal support. which are irrelevant. Because there is no enough data to show the ratio of these two parts.739+85+7.50 Sales (%)7 30. “Others” include multiple grocers.000 * 32. 2004.000 597.000. The former is generally associated with the recurring management or support of the activity.742+20. vending machines. independent food stores. we estimate half of the O/H costs as irrelevant costs.964.124* 38% = $226.124 Note: “Independent stores” include convenience stores.674+7.536 Independent Stores 1. equipment. we predict our sales as 1.75 10.12 Note about expected costs: O/H costs include operations overhead and general and administrative overhead.8% = 328.857) = 38% 6 From table 2: (265+247+309) / (6.124 * 36% = $214. space and other activities related to headquarters management. The latter includes salaries.676+6.548 Others $2. 4 5 From table 1: (8.00 59% 193.287+573) / (23.195+7.456 58. Expected Costs: COGS: $597. personnel.2% 33.157) = 4. & direct sales. accounting.104+21.64 O/H: $597.
APPENDIX K Population data for Export Potential analysis .
APPENDIX L Sample board of bubble tea prices in China (with price range from $10 to $15). .
Competition-approach: Above market Competitors and potential substitutes prices can also be part of the strategy. if not becoming the greater. After having taken all the important factors into consideration. Profit-oriented approach: Target profit One of the central objectives of this project being to become the market leader in functional drinks. APPENDIX N Promotion Schedule Step 1 Output Personal selling Period of time February to September Arguments To make Canadian retailers aware of Bubble Buzz so they can order it in time for Summer time Radio is the most listened media by students (based on researches). Coca-Cola is willing to stay among the top competitors.APPENDIX M Pricing strategy (Other constraints) The first possible constraint would be the regulations on pricing. two price-level fixing approaches seem appropriate. 1. by achieving a certain target profit. This will ease the recognition of Bubble Buzz in future promotion tools. Having a higher price could make customers aware of the additional benefits and the higher quality of Bubble Buzz. the target market would hear our radio spot several times a day. 2. This could be obtained by establish a price that will largely cover variable and fixed costs while bringing tremendous profits. Another constraint would be that Coca-Cola must not set a price that is too high because competitors will be attracted by potential profits and will follow by a lower price. 2 Radio spots February to April .
APPENDIX O Other considerations for the promotion strategy Product life cycle of Bubble Buzz: Bubble buzz is at its Introduction stage. and create advertising on how to use bubble buzz than with other brands from the company. Awareness is our primary promotional objective. To send a widespread message over Canada that Bubble Buzz is now available. We should thus use a little bit more of personal selling to retailers. Product Characteristics: • Complexity: Bubble Buzz is more sophisticated than already existing functional and soft drinks. give more sample.3 4 5 6 7 8 9 10 Magazines ads Television spots Sample distribution Point of purchase Outdoors Public Relations Contest Publicity Mid-March to June April to September April to September April and September May to September May to September August to end of September All the time The target market will then match an image with the name of the product more easily. it also requires a straw. Coca-Cola will have to persuade the consumer to buy the product. Putting adds in specific places where Generation Y hangs out will create an increased awareness of Bubble Buzz We will use special events (sports and others) to promote Bubble Buzz and also to get in touch with our potential market. to gain preference and to solidify the distribution. Unlike most functional drinks. • Risk: there is no financial. It will allow Coca-Cola to interact with our Generation Y Consumers. we thus must inform consumers in an effort to increase their level of awareness. refer customers to the website or free 1-800 number for any questions or comments. Stage of Buying decision: . Making a special section for the Bubble Buzz in Grocery store will help the new potential buyers to find our product faster and more easily. • Ancillary Services: No support or service are required after the sale. social or physical risk associated with Bubble Buzz thus Personal selling is less needed. To get potential buyers to try Bubble Buzz and to create an addiction to it. Understanding and familiarity is different when compared with other comparable drinks. we will use contest to give a second "push" to the sales of the Bubble Buzz. When the summer will come to its end. Use of conferences and news to make the general public aware of the existence of Bubble Buzz. Critical step in the promotion. Consumers can eat and drink it which has never been experienced before. Then the following months after the launch of Bubble Buzz . in its Growth stage. The recognition of Bubble Buzz will be faster.
For Ultimate consumer: Pull strategy: We want to direct our promotional mix at ultimate consumers in order to encourage them to ask retailer for the product. but in this case the seller is already well known. . p.11. in order to gain retailer’s cooperation in ordering and stocking the product.Our target consumer are at the pre-purchase stage: advertising is more helpful at this stage then personal selling because advertising informs the potential customer of the existence of the product and the seller.478) For Intermediary: Push strategy. Channel Strategy: (ref.
9 FM University Radios (McGill.. The average University or college student is a surprisingly heavy radio listener and spends more time during the day listening to radio than watching network television (book p. Much Music. It also has additional advantages . Coca-Cola has the budget to cover the high costs of this media. sound and motion.502) We could also use of “Interactive radio” as Pepsi has already done in the past. malls.ca) -Outdoor: Billboards in specific geographical area would allow us get a good reach and frequency. UQUAM. (Campus. Bus and metro stations) . As we are targeting our ads to young outgoing people. Each magazine’s readers often represent a unique profile. 96. YTV Arguments: TV communicates with sight. VrakTV.503) -Magazines: We should take advantage of the fact that magazines have become a very specialized medium.) Arguments: Radio is an already segmented medium. it can also use the audio and video capabilities. Good color production is also an advantage that create strong images which is the purpose of CocaCola with its Bubble Buzz brand. Reaching: -Young girls: COSMO -Young women: ELLE -Young boys: Sports Illustrated for kids -Young men: Sports Illustrated -Internet: Online advertising is similar to print advertising in that it offers a visual message. Interactive media would offer Coca-Cola the opportunity to reach younger consumers who have developed a preference for online communication. UOTTAWA. It is the only media that can reach 99% of the homes in Canada.7 FM. which is needed for Bubble Buzz. There are over 900 radio stations in Canada.APPENDIX O Justifications for advertising selections -TV: channels for teenagers and for young adults: MTV. It is a low cost and flexible alternative. -Radio: 94.bubblebuzz. sound and movement may attract more attention from viewers and has the unique feature of being interactive.. (p. Official Website (www. There are about 500 consumers magazines in Canada. Concordia. UDEM.
The Coca-Cola Company. 2. Canadian Statistics – Population by Sex and Age Group. 2004 & 2005 (in billions and as a % increase/decrease vs.statcan. COSGROVE. William. http://www40. Accessed Feb 07. 14. 2005. Accessed via ABI/INFORM Global. Global Market Information Database (Euromonitor). Feb 08. Datamonitor. McGraw-Hill Ryerson. Accessed Feb 28. 5. p. 10. Jun 2005.REFERENCES (Direct) 1. 2006. p. Retail Volume (Statistics). Accessed via ABI/INFORM Global. 2005. prior year). 2005. Industry Brief. The Coca-Cola Co. Feb 2005. CRANE. THEODORE. 9.oligopolywatch. (Company Profile). Feb 08. Accessed Feb 08. 12. Eric N. Feb 28.16.4. Accessed via eMarketer. Jul 2005. Oct 03. 2006. no 7. Accessed Feb 08. 2006. BERKOWITZ. Canada.96. Beverage Industry. Global Market Information Database (Euromonitor). Oct 03. 2006. Jul 22. 12. 5th Canadian Edition. p. Ranked by Brand Value. Oligopolywatch. Statistics Canada. 15. Surprising suggestions from teens. Functional Drinks. 3. 2.html.ca/101/cst01/demo10a. 96. Datamonitor.22. 6. THEODORE. HARTLEY. 4. 8. p. Dec 2004. (Company Profile). KERIN Roger A. Mar 2005. Functional Drinks in the United States. 2003. Global Market Information Database (Euromonitor). 2006. 2006. 2006. Sarah. Sarah. 11. Accessed Feb 08. Steven W. Beverage Industry. Marketing. Modified Oct 27. 3. 96. Jamie. 2005. POPP. 2005. Beverage Industry. The 2005 Soft Drink Report. Accessed via ABI/INFORM Global. 95.22. Oct 03. 7. Beverages I. tea create a buzz. 2006. Functional Drinks Off-trade Sales in Canada (Country Report). Frederick G. Feb 01. Top 20 Global Brands. 2006. Accessed Feb 08. Vol. Leading in a healthy direction. Accessed Feb 25. Soft Drinks in Canada (Industry Report). http://www. BusinessWeek. Interbrand.htm. 2005. Accessed Feb 08. Joanna. Consumer Lifestyles in Canada.com/2003/04/21. Jul 20. RUDELIUS. Feb 08. Accessed Feb 25. . 2006. HANNAFORD. 2005. 2006. Steve. Dec 2005. RTD coffee. Beverage Industry. Global Market Information Database (Euromonitor). Global Market Information Database (Euromonitor). 2006. 13. 2006.
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4. Feb 08. . Paul.24. May 2004. 2004. http://www. Will bubble tea burst out across country or go bust?.bobateadirect. Philip.com.html.com/hello_tai_tai/bubbletea. Date N/A. Datamonitor. Boba Tea Direct.geocities. May 31. Accessed Feb 06. Accessed Feb 05. Nation’s Restaurant News. 3.OTHER CONSULTED REFERENCES 1. Boba Tea Direct LLC. 2006. 2006. Accessed via Business Source Premier. KING. 2. http://www. 2006. 2006. P. Accessed Feb 02. New Age Beverages in Hong Kong. Bubble Tea. PREVILLE.
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