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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
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
4). smoothies.3). Coke & Nestea) and acquisitions (e. Concentrate Producers earned 29% pretax profits on their sales. other beverages (from bottled water to tea) became more popular. while bottlers earned 9% profits on their sales. Coca-Cola and Pepsi responded by expanding their offerings through alliances (e. Today. Companies have been actively engaged in new product developments in order to counter the growing concerns about negative health impacts of high-fructose drinks. soft drinks were synonymous with “colas” in the mind of consumers. however. which represents a 4.94 liters.g.4).7). while the soft drink industry’s value has increased in 2004. New flavor introductions and health-conscious formulations have been launched in an attempt to offset the decline in carbonated soft drink sales (ref.g. Coke & Minute Maid).0% increase compared to 1999 (ref. 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. In the 1980s and 1990s.5). but also to increase the demand in a market where product offerings are quickly maturing (ref.3% in sales and 11. estimates are forecasting a growth of 7. Trends: Through the early 1960s. Profitability & future growth potential: In 1993. The functional market is expected to show sustained growth and consumer interest in the future years as consumption shifts to trendier.0% in volume consumption by 2009 (ref.7% of the total soft drinks sales in 2004 (Appendix B). but also by focusing efforts on portfolio diversification. healthier and more sophisticated products (ref. The growth of this particular market is largely due to a slow shift in consumer trends. While the functional drinks sector only accounts for 3. 5 . sports drinks) as well as bottled juices and water (ref.6).3. for a total industry profitability of 14%. milk & juice drinks.
8% of market). since the distribution is restricted to local outlets and selling points such as counters and small Bubble Tea shops in scattered locations across Canada.7% of the total soft drinks market. represent about 48% of the total market (ref. Lipton Iced Tea. In the functional drinks sector.6%) and CadburySchweppes (15.SWOT ANALYSIS (Strengths and weaknesses. 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. see Appendix D1).5% of the market shares in 2004. 6 . Bubble Buzz will launch into a currently unserved subset of that market (RTD “Ready-To-Drink” Bubble Tea).9). PepsiCo is the current market leader with 60. which is until now unexisting.2. Bubble Buzz also creates a potential situation for cannibalism with Coca-Cola’s very own brands of iced tea and other functional drinks. Coca-Cola Co is second with 32. direct competition from these local players is not anticipated. 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. which combined. Sobe (owned by PepsiCo). It is anticipated that the following brands could potentially compete with Bubble Buzz in the functional drinks market: Brisk. The current market for traditional Bubble Tea is fragmented. However. as well as Snapple’s and Hawaiian Punch (owned by Cadbury/Schweppes).8% (ref. Coca-Cola is leading with 43.
Segment growth potential: Statistical reports anticipate a segment growth of 1. a growing interest for healthier / beneficial products for the “mind and body” (ref. 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.6). Refer to Appendix E. since partnerships and channels are already in place. Segment trends: The current trends include a shift away from junk foods and carbonated drinks.g. 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. p. through variety-seeking in a wide introduction of flavours – ref. 7 . 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). Barriers to entry: Business practices Manufacturing Due to the number of competitors. fun drink with a sense of belonging within peer consumer groups) – (ref. Further data concerning competing market shares and distribution channels are available in Appendix D(1-3).72% over the next 9 years (2015) for the 10-29 years old subsets (ref.127).11. 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.12).counter/restoration). 10). as well as the trend for personalization through customization (or for beverages. the trend towards the availability of on-the-go products for those with an active lifestyle. This will facilitate the product’s reach into its target market. A strong distribution system already exists with Coca-Cola.
688. Refer to Appendix E.Size of the segment (population): 8.600 L).300 (329. 8 .
new and unusual. Funky & eye-catching bottle. regular user (current user through existing bar-shops) None. no major responsibilities. premium-priced. High school. strong Lifestyle Benefits Usage rate User status Loyalty status Positioning strategy: The only RTD bottled bubble tea available. daily-basis.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. Native. aspects of play (tapioca pearls. refreshing. very tolerant towards multiculturalism and internationalism (open-minded). new workers.999 to 4. cool. young professionals Elementary 4th grade. suburban All (East.000 Students. highly influenced by peer groups.000. anchored in popular culture. unique drinking experience. studying age and young adults) Male and Female All under $30. 9 . West) 10-29 years old (teenagers. functional packaging. oversized colored straw). inclined for differentiation and sophistication. and adapted strategies for all geographical groups 5000-19. Black. for hip & young people. other. new graduated. work and social life COMMUNICATION BENEFITS -Nutritional information -Informational text on history of product FUNCTIONAL BENEFITS -Healthier than soft drinks -Convenient. healthier alternative to heavy-sugar drinks. quick maturation with modern products Most of them dependent on parents. medium.000+ Urban. importance of school. easy to take out PERCEPTUAL BENEFITS -Quality/Premium price -Social standing/good-looking Seasonal (peak in summer). White. variety of flavors. with adapted strategy for Asian consumers already familiar with Bubble Tea Renting apartment/condo. living with parents (Highly discretionary in personal spending) Brand conscious. sweet. CEGEP and University All: Asian. active life. weekly basis Non-user.
Bob knows he is thirsty and he feels the need for something very refreshing. Bob wakes up at 6:30AM every morning. Bob usually likes to work out before he has to head to University. but he also heard them talk about this brand new product that Coca-Cola just launched. he feels he has more energy and feels ready to confront his busy day attending courses and getting things done. He knows that this is a bottle of Bubble Buzz. He stops at a convenience store next to the gym.CUSTOMER ANALYSIS Profile: Name: Bob Thomson Date of Birth: 25. because not only does his other friends often drink it.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. That way. one particular bottle catches his sight. After having called his friends with his new Samsung camera phone. The higher price of the product doesn’t bother him. On his way to school. functional product. he always has his Puma shoes on. since he perceives “Bubble Buzz” as a high-quality. Standing in front of all the choices in the beverages aisle. he puts on his trendy Lacoste Polo and Diesel Jeans. and takes a closer look at the nutritive information label. And he instantly recognizes the brand. and of course. 10 . He also previously saw Bubble Buzz ads when he surfed on his favourite websites. while listening to his favourite music that he downloaded to his iPod. He grabs a bottle. Today. he leaves his apartment and goes to his gym by metro. 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.03.
11 . he always hangs out with his friends. yet refreshing. and also because at his age. he puts the second bottle in his backpack. he did not feel like simply buying bottled water. He sees that the packaging is so convenient and easy to carry. Thus. One to quench his immediate thirst. and another one that he wants to save for later in the day.029. Based on the aforementioned analysis. and because he likes to try new products on his own. He liked that the beverage was so unusual. He opens his second bottle. since he had such a great experience with the first one.which is manufactured by a well renowned company. Plus. He has no doubt about it. He attends all of his classes. Projected profits will be $243. Bob will continue to buy Bubble Buzz for its good taste.47 (see financial projections). he thinks this bottle is worth the price. or carbonated soft drinks. and so when he exits the store. he decides to buy two bottles. 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. Because of his inclination towards more sophisticated tastes. Bob prefers to save time as much as he can. A lot of them are drinking from different “Bubble Buzz” flavours. Bubble Buzz appears to be a profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. The drink surpassed many of his expectations. Upon implementation of the marketing plan. Because of his busy schedule. During his break.
Marketing Plan Part 2: Marketing Strategy 12 .
Health benefit of a green tea base (ref. Status (social drink).11. round shaped. funky. catchphrases such as “Think outside the Bubble” and “Get Your Buzz”. functional. ready-to-drink format. consistent. aspect of play. funny. and to become the top market leader in that particular segment within the forecasted sales figures. p. o Trade name: Bubble Buzz™. etc. prominent Bubble Buzz logo written in modern font. The actual product o Packaging and labeling: see figure below o Branding: colorful. Since Bubble Buzz is prone to product imitation. original. o Brand equity: Coca-Cola provides a quality.17) Marketing considerations o Product life cycle: Bubble Buzz is a low-learning product. PRODUCT STRATEGY The core o Bubble Tea beverage in a pre-bottled. “sales [will] begin immediately and the benefits of the purchase are readily understood” (ref. a Coca-Cola product o Brand personality: energy. healthy. Features promoting the website. to establish a wide brand recognition through the capture of market shares in the functional drinks segment. With a strong marketing campaign. cool. Coca- 13 . innovative and accessible soft drink reputation. Augmented product o Nutritional information.301).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.
o Bubble Buzz follows the practice of product modification (ref. Bubble Tea will now become a widely available drink in multiple retailing (distribution) channels. p. which is currently feasible thanks to the company’s high manufacturing capacity.304): CocaCola is introducing an existing beverage (bubble tea) but redefines the drink with a new. o Product class: Food & beverage Soft Drinks Functional Drinks (refer to Appendix D2 for a break-down of the functional drinks market). The product lifecycle 14 . PRICE STRATEGY The price strategy that will be undertaken should consider the following aspects: 1.11. Consumer demand 2. more convenient package.Cola’s strategy is to broaden distribution quickly.
Other constraints (See Appendix M) PROMOTION STRATEGY 15 . 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.3. Potential substitutes Customer demand Customer demand is a crucial factor which is driven by tastes. Coca-Cola’s intention to position Bubble Buzz as a unique. The main characteristic however is product differentiation. innovative and attractive product gives it a certain control over Bubble Buzz price. Consequently. the higher the value’’. value and price are highly related: ‘’the higher the price. the minimization of the non-monetary costs to customers should also be include along with awareness of the product (notably by advertising) and value (benefits) . 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. To be able to implement higher pricing though. For a lot of consumers. Potential substitutes Coca-Cola is constrained by the monopolistic market in which it competes. income and availability of others similar products at a different price (mentioned later in the potential substitutes section).
They are typically using more than one communication media at a time. This group of consumers doesn’t give its full attention to one single message. “A good spirit in a good body. YTV Radio MIX96.” Media selection: Before choosing the appropriate medias.7 FM. Advertising: Refer to APPENDIX H for detailed explanations Output Examples Television MTV. Another important tactic to reach our target market is through “Viral” or “Buzz” marketing. VrakTV. contests). Elle For boys: Sports Illustrated (or Kids edition) Internet Banners on select websites (gaming. Be Original. However. Be Yourself. it is important to note that Generation Y consumers only give partial attention to media. a behaviour that is often called “multitasking”. sports. Universities Magazines For girls: Cosmo.) Official promotional website: www. etc.BubbleBuzz. Much Music.Objectives: • • To initiate strong awareness about the launch of Bubble Buzz throughout Generation Y (10-29 years old) consumers as well as their parents. they can be reached through integrated programs. 94.” “For the out-of-the-ordinary individuals who like to challenge themselves. which Coca-Cola will heavily use in this campaign (campus. CKOI 96. To win market shares over our top functional drinks competitor.ca 16 . Marketers can still communicate with Generation Y by using a variety of targeted promotional tools. Be Different. but rather uses continuous partial attention to scan the media. PepsiCo.9.” Concepts: • • • “Think outside the bubble”: Be Bold. 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.
• Cooperative advertising: to encourage retailers to buy our product and to maintain our high level of advertisement that consumers expect from Coca-Cola. buzz marketing through TV coverage Promotional Mix: Consumer oriented: • Contests: “Win another Bubble Buzz flavour”. metro. but emphasized and intensified before and during summer). Stands or special displays and events in schools. Arguments: It will encourage new product purchases and it represents low risk for consumers since they get it for free. Other considerations: • Scheduling of the advertising: Pulse scheduling (promotional presence year-round. “Win a trip for the 2008 Olympics in Beijing”. • • Others: In subsequent years. press releases (print and online). 2008 Beijing Summer Olympic Games). sales kit strategies to be explained later in the text. Arguments: It is also a mean to increase product trial and provides a good product visibility. • Point-of-purchase: in supermarkets (to reach the parents of generation Y). engage in product placement in TV shows or movies. 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).e. (Arguments: It will increase consumer purchases and encourage consumer involvement with the product).Outdoors Others Personal selling Public relations Publicity Billboards and prints in select areas including: Campuses. 17 . school/universities. sports events (i. sponsorship activities Conferences. transportation (bus. stations) Tourist areas in high seasonal periods Outskirts of key cities in geographical reach Not relevant Direct contact with retailers. • Samples: distributed in supermarkets. Samples are a way to avoid product resistance since people are not used to find bubbles in their drinks. “Uncover a secret code underneath the bottle cap and win sporting goods and electronics by logging on the website”. malls. They have nothing to loose by trying it.
independent food stores.17 towards the profits. per bottle = 382.159. vending machines.M.124 * 36% = $214.33) / 1. discount stores.00 COGS 214.000.36 Fixed Costs : SG&A cost : 113.17*(1-11.000 = 11.001 based on our target market. or in other words achieve 11.964.17 Break-even: (113. every bottle Coca cola sells will generate average $1.• IMC (integrated marketing communication) Target Audience: • • Intermediary: personal selling will be more often used Ultimate consumer: Coca-Cola will use more of mass media because the amount of potential buyers is large.64 O/H: $597.159.64 C.000 = $1. The potential profits can up to $1. Projected Financial Performance Revenues $ 597.030.676.676.914 (bottles) Market share: 118.56+25. if Coca-cola can sell 118.030.47 Based on sales @ different channel’s price Based on weighted average percentage in past data Revenues . Expected Costs: COGS: $597. it will break even.000 = $1. PLACE (DISTRIBUTION STRATEGY) Bubble Buzz will be distributed through these channels: supermarkets.914 / 1. based on past data 4.453. based on past data CM – SG&A – Capital expenditures Requirement for success analysis: C.9%)*1. 382.000.9% In one year. direct sales.770.36 / 328.3% of revenue.12 1 $1.453.17 = 118.56 Capital expenditures : 25.9% of the functional drink market share.964.907.COGS Half of the O/H costs estimated.33 Profits 243. After this point.914 bottles of Bubble Buzz.770 18 . convenience stores.124* 38% = $226.M.029.124. multiple grocers.
75% ) 3. 19 .000 in the end of 2005 and 327. compared with the total population of Canada--304. absolute expenditure on food and non-alcoholic beverages is expected to increase from 1. Since we are the top sponsor for the upcoming Beijing Olympic in 2008. Therefore. Bubble tea was originated in Taiwan. it is going to benefit our sale there. We have already provided licenses for manufacturing our products in China (licensing the bottlers and supply them with our syrup required for producing).453 million.000 in our target market (age 10 to 25 years old). Soft drinks industry is one of the fast growing industries in China. Soon after its introduction in China.777 billion in 2005 to 2. it became one of the most popular beverages sold in tea stores on the streets due to the similar taste and similar cultural background. and Asian speciality drinks and bottled water have shown a sharp increase during 1998 to 2003. 2. Our entry-strategy for entering China is through licensing. With a total population of 1.714.154 billion in 2010 (though the proportion of consumer expenditure on this part is decreasing from 28. RTD tea. 4. Reasons: 1. With more opportunities to expose to the public. added in one or two more products in our production chain would not be that difficult. Reasons: 1.015. it is a good chance for us to enter into this market. especially fruit/vegetable juice. there definitely is a great potential worth to work on.124 (refer to Appendix J) China is the target country we’re going to expand our product.39% to 25.313.Expected Revenues (total) = $597. So. 5.
Also. since the outdoor display screen is quite popular in big cities. Develop other flavours that would attract the local market: Since milk based bubble tea sell better in China. less sugary drinks. it would be around $7 Yuen. we will add in this product line. we will also take advantage of it. Also. Naming the product: In order to be recognized and accepted more easily for the local market. we need not only translate our product name but also make sure there’s not hidden unintended meaning that would damage our product.14%. with the information we gathered from the tea store in China2. 2 3 Appendix L (Prices in China) The change of currency: CAD$1= CNY$ 6. As we set our price sold in Canada $2. We will make some changes in the ingredients used to appeal the local market. Moreover. about CAD$13.00.e. Promotion: In contrast to the radio ads in Canada. Then. Also.2. i. especially the amount of sugar and additives added in the drinks. 2. It is relatively low risk when compared with direct investment there. Changes to be made: 1. Price: Price sold in China is going to change to accommodate the local desire. 3. we will put more emphasis on the ads on the public transportation such as underground/subway system and bus service due to the more frequent use of the public transport service there. people in China are becoming more and more health concerned. we will use more TV and Web advertisement there due to the highly exposed environment in China. especially in China. 4.88 20 . Compared to the price sold in the bubble tea store ($ 3. it is about 57.50). So. 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.14% of what sold in the tea store---$12 Yuen in China currency. the price sold there would be 57. we will avoid using too many artificial colors as they are not appreciated as much as in Canada.
0 Volume Sales 1999 115.7 318.8 312.4 2004 125.1 2001 119.0 100.0 250.0 327.2) Off-Trade Consumption Indicators (Functional Drinks) 350.1 2002 122.1 324.0 150.0 300.0 50.4) .9 342.0 Million Litres / Million $CDN 200.0 0.7 2003 124.APPENDIX A (ref.7 2000 117.3 296.2 APPENDIX B (ref.
Off-Trade Sales C$ million Carbonates Fruit/vegetable juice Bottled water Functional drinks Concentrates RTD tea RTD coffee .
The strong brand name is one of the basis for the company’s competitive advantage on several of its core markets. WEAKNESSES Relying upon line extensions Coca-Cola is relying on brand extensions increase sales in specific lines. The company generated $5.968 million from its operating activities and re-invests heavily into its business.9 billion. However. coffee and juices.3 billion in 2004. . The developing markets are more complex than the carbonated soft drinks. 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. the introduction of Vanilla Coke helped maintain sales for the core Cola beverages). there is a strong risk of cannibalizing existing sales in the long term (for example. 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. distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Results of operations In 2004. The ability to generate significant cash flows is one of the its key strengths (ref.e.1 & 8) STRENGHTS Brand strength (see Appendix F for brand rankings) The Coca-Cola Company is the largest manufacturer. 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.APPENDIX C (ref. particularly its long-time carbonated soft drink products (i. Therefore. net-operating revenues totaled approximately $21.16). Bubble Tea might deter on sales for iced tea). Gross profit totaled $14. an 8% increase from 2002.
etc. 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. distribution. Furthermore. taking away freedom in the areas of line diversification and product modifications (taste. Entrance into difficult non-core categories The Coca-Cola Company is a truly global multinational business giant. promotion and retailing choices and processes. While the core Coke products bring a solid base of sales and loyalty to the company. 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. consumers’ expectations also become more and more anchored and single-lined. many smaller and diversified product lines are more or less popular in one particular region over another.Reliant upon particular carbonated drinks The long-time presence of Coca-Cola’s Coke beverage has established this particular line as a flagship product. While some categories of products are distributed in many areas of the globe (Coke. .). price). packaging. manufacturing. 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. production. geographical needs already require that these global brands are heavily adapted to their target region. 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). Therefore. These capital requirements typically increase as the product becomes heavily focused (for example. Powerade. And as we have seen. the process of diversifying the production and marketing each product involves costly investments. since the Coca-Cola brand is highly recognizable worldwide. Saturation of carbonated soft drink segment Due to the countless number of brands available on the market. it becomes increasingly difficult in the soft drinks segment to innovate and create new products that genuinely stand out from their competition.
Over the last few years. Burger King. Large companies can also easily become the target of consumers’ apprehension.Brand is attractive to global partners Because of the company’s size (including value. sponsorship agreements. 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). etc. THREATS Strong competition Coca-Cola is competing in a global market that is characterized by an oligopoly between several (but few in numbers) competitors. internet and so on).g.). Coca-Cola enjoys a strong purchasing power over its suppliers. Trade organizations are also faced with public pressure which can disrupt operations in one or more areas of the company. The fight for market shares and sales in crowded markets becomes a complex one. brand name and operating revenues) and wide portfolio base. 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. movie studio promotions. Issues arise when dealing with price competition and economic growth. . Existing brand awareness also provides an international playing field for powerful marketing strategies. Free trade In an era of globalization. and also attracts large partnerships with various levels of consumer reach (e. TV channels. concerns over health issues have risen in the media through an expanded and evergrowing network of “knowledge outputs” (journals.
0 2004 60.1 0.5 32.2 & 5) D1. Off-Trade Company Shares of Functional Drinks by Value 2000-2004 % off-trade value rsp QTG Canada Inc (PepsiCo) Coca-Cola Ltd Monarch Co.8 1.2 32.2 0.5 1.0 2003 59.1 0.8 1.4 5.7 100.5 33.1 0.0 D2.1 0.4 100.3 1 0. Functional Drinks Sectors (Segmentation) by Value.2 0. The South Beach Beverage Co GI Energy Drinks Corp Snapple Beverage Group Private label Others TOTAL 2001 56.8 2.0 2002 58.2 7.8 1.7 100.1 58.8 3.4 32.APPENDIX D (ref.1 0.2 0.1 0.9 0 0.2 0.8 1. Functional Drinks Sales by Distribution Format (2004) Distribution Channel Supermarkets/hypermarkets Independent food stores Convenience stores Discounters Direct sales Vending Others Total % Sales 30. 2005 *Based on United States report D3.5 1 0.1 4.4 100.8 0.9 100 .5 5.8 1.
.000 cans (355mL volume) MARKET SIZE: 8.997 1.595 Total yrl consumption (soft drinks – Liters) 7.157 2.009 2. 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.185 2000 2.877 1. Euromonitor International as at January 1st Functional Drinks: Consumption growth (Liters) from 1998 to 2003: 0.600 L ≈ 1.436.583 Total (Canada) = 32.438 2015 1.14 & 15): Total Canadian (10-29yo) Soft Drink Yearly Consumption (L) # Male 10-29yo Yrl Consumption (soft drinks) (Population) (Liters) 4.300 people 329.12 Market size calculations (ref.000 L is approximately equivalent to 1.891 ≈ 8 million Liters Total Canadian (10-29yo) Functional Drink Yearly Consumption (L) 8.426 2.980 2.111 2.963 2.741 2010 1.103.348 2.961.800 # Female 10-29yo (Population) 4.500 4.938 2.000 L x 4.000.124 2.241 National statistical offices.858.891 1.000.096 2.06 per year Projected consumption (Liters) in 2005: 4.600 L 329.228 2.12) Population by Age: 1990-2015 '000 1990 10-14 yrs 15-19 yrs 20-24 yrs 25-29 yrs TOTAL Source: Note: 1995 1.APPENDIX E (ref.264 2.12% (functional drink market share) = 329.070 2.868 2.068 2.688.056 2.529 8.000.076 2005 2.251.209 8.000 cans The market size represents our targeted pool of consumers.296 Yrl Consumption (soft drinks) (Liters) 3.
13) .APPENDIX F (ref.
APPENDIX G .
16) .APPENDIX H (ref.
16) .APPENDIX I (ref.
12 Note about expected costs: O/H costs include operations overhead and general and administrative overhead. Expected Costs: COGS: $597. we estimate half of the O/H costs as irrelevant costs.742+20.024 Revenues ($) 151.739+85+7. & direct sales.548 Others $2.676+6. we predict our sales as 1.8%. 4 5 From table 1: (8.964.536 Independent Stores 1. independent food stores.50 Sales (%)7 30. personnel.907.890+480+7. since our target market are 1.520 387. Expected Revenues: Supermarket Price ($) 1.00 59% 193.287+573) / (23. which is normally relevant cost. 2004. data processing management and similar common services performed outside the activity.000. accounting. we will see the average COGS/Revenues for year 2005.857) = 38% 6 From table 2: (265+247+309) / (6. Similarly. Operating Costs / Revenues = 38%5 Moreover. space and other activities related to headquarters management. equipment. and discount stores. which are irrelevant.3% 7 From table 3 .040 Total 100% 328.000 * 32.000 cans annually assuming Coca-cola maintains its market share in functional drink 32.104+21. The latter includes salaries.104+21.857) = 36% From table 1: (8.776) / (23.000 bottles.8% Sales ($) 101. 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: 4.000.742+20.8% = 328.124 Note: “Independent stores” include convenience stores.124* 38% = $226. vending machines. legal support. The former is generally associated with the recurring management or support of the activity. Because there is no enough data to show the ratio of these two parts.674+7.157) = 4.000 597.APPENDIX J CALCULATIONS Based on Coca-Cola’s previous financial statements.423+6.2% 33.195+7. “Others” include multiple grocers.124 * 36% = $214.75 10.456 58.3%6 of the total revenue. and 2003 is 36%4.64 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).
2. . if not becoming the greater. 1. This could be obtained by establish a price that will largely cover variable and fixed costs while bringing tremendous profits. Coca-Cola is willing to stay among the top competitors. 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 M Pricing strategy (Other constraints) The first possible constraint would be the regulations on pricing. Competition-approach: Above market Competitors and potential substitutes prices can also be part of the strategy. by achieving a certain target profit. Having a higher price could make customers aware of the additional benefits and the higher quality of Bubble Buzz. two pricelevel fixing approaches seem appropriate. 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.
This will ease the recognition of Bubble Buzz in future promotion tools. It will allow Coca-Cola to interact with our Generation Y Consumers. Critical step in the promotion. we will use contest to give a second "push" to the sales of the Bubble Buzz. the target market would hear our radio spot several times a day. To send a widespread message over Canada that Bubble Buzz is now available. The recognition of Bubble Buzz will be faster. When the summer will come to its end. 2 Radio spots February to April 3 4 5 6 7 8 9 Magazines ads Television spots Sample distribution Point of purchase Outdoors Public Relations Contest Mid-March to June April to September April to September April and September May to September May to September August to end of September . 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. 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 get potential buyers to try Bubble Buzz and to create an addiction to it.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). The target market will then match an image with the name of the product more easily.
10 Publicity All the time Use of conferences and news to make the general public aware of the existence of Bubble Buzz. .
in order to gain retailer’s cooperation in ordering and stocking the product. in its Growth stage. to gain preference and to solidify the distribution. 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. Product Characteristics: • Complexity: Bubble Buzz is more sophisticated than already existing functional and soft drinks. social or physical risk associated with Bubble Buzz thus Personal selling is less needed. Awareness is our primary promotional objective. p. Then the following months after the launch of Bubble Buzz . we thus must inform consumers in an effort to increase their level of awareness. We should thus use a little bit more of personal selling to retailers. Understanding and familiarity is different when compared with other comparable drinks. Consumers can eat and drink it which has never been experienced before. • Risk: there is no financial. . but in this case the seller is already well known. refer customers to the website or free 1-800 number for any questions or comments.478) For Intermediary: Push strategy. and create advertising on how to use bubble buzz than with other brands from the company. • Ancillary Services: No support or service are required after the sale. give more sample.APPENDIX O Other considerations for the promotion strategy Product life cycle of Bubble Buzz: Bubble buzz is at its Introduction stage. Stage of Buying decision: 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. Channel Strategy: (ref. Unlike most functional drinks. Coca-Cola will have to persuade the consumer to buy the product.11. it also requires a straw.
. Interactive media would offer Coca-Cola the opportunity to reach younger consumers who have developed a preference for online communication. Much Music. There are about 500 consumers magazines in Canada. 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. Concordia. sound and motion. Good color production is also an advantage that create strong images which is the purpose of CocaCola with its Bubble Buzz brand. malls. it can also use the audio and video capabilities.7 FM. There are over 900 radio stations in Canada. (Campus. Coca-Cola has the budget to cover the high costs of this media. It also has additional advantages . YTV Arguments: TV communicates with sight.ca) -Outdoor: Billboards in specific geographical area would allow us get a good reach and frequency. UQUAM. As we are targeting our ads to young outgoing people.502) We could also use of “Interactive radio” as Pepsi has already done in the past.9 FM University Radios (McGill. (p.bubblebuzz.) Arguments: Radio is an already segmented medium. which is needed for Bubble Buzz. Bus and metro stations) .503) -Magazines: We should take advantage of the fact that magazines have become a very specialized medium. Official Website (www. 96. It is a low cost and flexible alternative.. UDEM. -Radio: 94. UOTTAWA. 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. Each magazine’s readers often represent a unique profile. VrakTV.APPENDIX O Justifications for advertising selections -TV: channels for teenagers and for young adults: MTV. sound and movement may attract more attention from viewers and has the unique feature of being interactive. It is the only media that can reach 99% of the homes in Canada.
.22. Global Market Information Database (Euromonitor).oligopolywatch. Oct 03. 8. (Company Profile). 2006. Functional Drinks in the United States. Beverage Industry. Dec 2004. 95. prior year). Leading in a healthy direction. Mar 2005. COSGROVE. 12. Jamie. http://www40. 13. POPP. Frederick G. Beverage Industry. Oct 03. CRANE. Feb 2005. Functional Drinks Off-trade Sales in Canada (Country Report). The 2005 Soft Drink Report.ca/101/cst01/demo10a. (Company Profile).statcan. Accessed Feb 25.htm. Jul 22. Global Market Information Database (Euromonitor). Accessed via ABI/INFORM Global. Oct 03. Feb 08. Canadian Statistics – Population by Sex and Age Group. Accessed Feb 08. 2006. Feb 08. Marketing. 2006. 9.96. p. 3. 5. 2006. Datamonitor. The Coca-Cola Company. Consumer Lifestyles in Canada. 2006. 2005. 10. Accessed Feb 08. 2005. 2005. 6. 12. Datamonitor. 2006. Accessed Feb 08. 3. BERKOWITZ. Top 20 Global Brands. tea create a buzz. Interbrand. Accessed Feb 08. 2006. Sarah. Oligopolywatch. Statistics Canada. Accessed Feb 08. Jul 2005. BusinessWeek. KERIN Roger A. Steven W. HARTLEY. Vol. Accessed Feb 28. 11. Functional Drinks.16. Jul 20. 2005. 2006. 2006. 2006. THEODORE. no 7. Global Market Information Database (Euromonitor). 5th Canadian Edition.html. Accessed via ABI/INFORM Global. 2006. RUDELIUS. 2004 & 2005 (in billions and as a % increase/decrease vs.22. HANNAFORD. Surprising suggestions from teens. McGraw-Hill Ryerson. 2005. Accessed via ABI/INFORM Global. 2005. p. Retail Volume (Statistics).com/2003/04/21. Feb 08. Soft Drinks in Canada (Industry Report). p. 2006. p. Industry Brief. 4. Steve. Feb 28. Eric N. 2005. Feb 01. Jun 2005. Beverage Industry. Dec 2005. 2. 2006. Sarah. Accessed via eMarketer. 2. The Coca-Cola Co. http://www. Canada. Joanna. 7. 14. THEODORE. 96. 96.4. 2003. 15. Global Market Information Database (Euromonitor). Global Market Information Database (Euromonitor). Beverages I. Accessed Feb 07. Ranked by Brand Value. William.REFERENCES (Direct) 1. Modified Oct 27. RTD coffee. Accessed Feb 25. Beverage Industry.
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2004.OTHER CONSULTED REFERENCES 1.com/hello_tai_tai/bubbletea.24.geocities.com. 4. http://www.html. Boba Tea Direct LLC. 2006. Philip. KING. PREVILLE. Boba Tea Direct. Date N/A.bobateadirect. Accessed Feb 02. 2006. . Will bubble tea burst out across country or go bust?. Feb 08. 2. Accessed via Business Source Premier. New Age Beverages in Hong Kong. Accessed Feb 05. 3. 2006. Accessed Feb 06. Nation’s Restaurant News. Bubble Tea. http://www. 2006. Datamonitor. May 31. P. May 2004. Paul.
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