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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

3.94 liters, which represents a 4.0% increase compared to 1999 (ref.3). The growth
of this particular market is largely due to a slow shift in consumer trends.
Trends: Through the early 1960s, soft drinks were synonymous with “colas” in the
mind of consumers. In the 1980s and 1990s, however, other beverages (from bottled
water to tea) became more popular. Coca-Cola and Pepsi responded by expanding
their offerings through alliances (e.g. Coke & Nestea) and acquisitions (e.g. Coke
& Minute Maid), but also by focusing efforts on portfolio diversification. Today,
while the soft drink industry’s value has increased in 2004, 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, smoothies, milk & juice drinks, sports drinks) as well as
bottled juices and water (ref.5). Companies have been actively engaged in new
product developments in order to counter the growing concerns about negative
health impacts of high-fructose drinks, but also to increase the demand in a
market where product offerings are quickly maturing (ref.4). New flavor
introductions and health-conscious formulations have been launched in an attempt
to offset the decline in carbonated soft drink sales (ref.6). The functional
market is expected to show sustained growth and consumer interest in the future
years as consumption shifts to trendier, healthier and more sophisticated products
(ref.7). Profitability & future growth potential: In 1993, Concentrate Producers
earned 29% pretax profits on their sales, while bottlers earned 9% profits on
their sales, for a total industry profitability of 14%. While the functional
drinks sector only accounts for 3.7% of the total soft drinks sales in 2004
(Appendix B), estimates are forecasting a growth of 7.3% in sales and 11.0% in
volume consumption by 2009 (ref.4).

SWOT ANALYSIS (Strengths and weaknesses, 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

Coca-Cola’s top competitors for the soft drinks industry are PepsiCo (31.6%) and
CadburySchweppes (15.8% of market), which combined, represent about 48% of the
total market (ref.9). Coca-Cola is leading with 43.7% of the total soft drinks
market. In the functional drinks sector, PepsiCo is the current market leader with
60.5% of the market shares in 2004. Coca-Cola Co is second with 32.8% (ref.2, see
Appendix D1). Bubble Buzz will launch into a currently unserved subset of that
market (RTD “Ready-To-Drink” Bubble Tea), which is until now unexisting. It is
anticipated that the following brands could potentially compete with Bubble Buzz
in the functional drinks market: Brisk, Lipton Iced Tea, Sobe (owned by PepsiCo),
as well as Snapple’s and Hawaiian Punch (owned by Cadbury/Schweppes). Bubble Buzz
also creates a potential situation for cannibalism with Coca-Cola’s very own
brands of iced tea and other functional drinks. The current market for traditional
Bubble Tea is fragmented, since the distribution is restricted to local outlets
and selling points such as counters and small Bubble Tea shops in scattered
locations across Canada. However, direct competition from these local players is
not anticipated, since the marketing roll-out will initially emphasize on product
awareness and both sales channels do not reach or serve the same market (retailing


A strong distribution system already exists with Coca-Cola, since

partnerships and channels are already in place. This will facilitate the product’s
reach into its target market. Further data concerning competing market shares and
distribution channels are available in Appendix D(1-3).

Barriers to entry: Business practices Manufacturing  Due to the number of

competitors, 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.g. 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), 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, 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, fun drink with a
sense of belonging within peer consumer groups) – (ref.11, p.127). Segment trends:
The current trends include a shift away from junk foods and carbonated drinks, a
growing interest for healthier / beneficial products for the “mind and body” (ref.
10), 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, through variety-seeking in a wide introduction of flavours –
ref.6). Segment growth potential: Statistical reports anticipate a segment growth
of 1.72% over the next 9 years (2015) for the 10-29 years old subsets (ref.12).
Refer to Appendix E.

Size of the segment (population): 8,688,300 (329,600 L). Refer to Appendix E.



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, and adapted strategies for all geographical groups 5000-19,999 to
4,000,000+ Urban, suburban All (East, West) 10-29 years old (teenagers, studying
age and young adults) Male and Female All under $30,000 Students; new graduated;
new workers; young professionals Elementary 4th grade, High school, CEGEP and
University All: Asian, Black, White, Native; other; with adapted strategy for
Asian consumers already familiar with Bubble Tea Renting apartment/condo, living
with parents (Highly discretionary in personal spending) Brand conscious, anchored
in popular culture, inclined for differentiation and sophistication, very tolerant
towards multiculturalism and internationalism (open-minded), quick maturation with
modern products Most of them dependent on parents, no major responsibilities,
highly influenced by peer groups, active life, importance of school, work and
social life COMMUNICATION BENEFITS -Nutritional information -Informational text on
history of product FUNCTIONAL BENEFITS -Healthier than soft drinks -Convenient,
easy to take out PERCEPTUAL BENEFITS -Quality/Premium price -Social standing/good-
looking Seasonal (peak in summer), daily-basis, weekly basis Non-user, regular
user (current user through existing bar-shops) None, medium, strong


Benefits sought

Usage rate User status Loyalty status

Positioning strategy: The only RTD bottled bubble tea available. Funky & eye-
catching bottle, functional packaging, premium-priced, cool, new and unusual,
unique drinking experience, aspects of play (tapioca pearls, oversized colored
straw), variety of flavors, sweet, refreshing, for hip & young people, healthier
alternative to heavy-sugar drinks. 9
CUSTOMER ANALYSIS Profile: Name: Bob Thomson Date of Birth: 25.03.85 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, Bob wakes up at 6:30AM every morning. Today, he puts on his trendy Lacoste
Polo and Diesel Jeans, and of course, he always has his Puma shoes on. After
having called his friends with his new Samsung camera phone, he leaves his
apartment and goes to his gym by metro, while listening to his favourite music
that he downloaded to his iPod. Bob usually likes to work out before he has to
head to University. That way, he feels he has more energy and feels ready to
confront his busy day attending courses and getting things done. On his way to
school, Bob knows he is thirsty and he feels the need for something very
refreshing. He stops at a convenience store next to the gym. Standing in front of
all the choices in the beverages aisle, one particular bottle catches his sight.
And he instantly recognizes the brand. He knows that this is a bottle of Bubble
Buzz, because not only does his other friends often drink it, but he also heard
them talk about this brand new product that Coca-Cola just launched. He also
previously saw Bubble Buzz ads when he surfed on his favourite websites. He grabs
a bottle, and takes a closer look at the nutritive information label. 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. The higher
price of the product doesn’t bother him, since he perceives “Bubble Buzz” as a
high-quality, functional product,

which is manufactured by a well renowned company. Plus, he did not feel like
simply buying bottled water, or carbonated soft drinks. Because of his inclination
towards more sophisticated tastes, and because he likes to try new products on his
own, he thinks this bottle is worth the price. Because of his busy schedule, Bob
prefers to save time as much as he can. Thus, he decides to buy two bottles. One
to quench his immediate thirst, and another one that he wants to save for later in
the day. He sees that the packaging is so convenient and easy to carry, and so
when he exits the store, he puts the second bottle in his backpack. He attends all
of his classes. During his break, he always hangs out with his friends. A lot of
them are drinking from different “Bubble Buzz” flavours. He opens his second
bottle, since he had such a great experience with the first one. He liked that the
beverage was so unusual, yet refreshing. The drink surpassed many of his
expectations. He has no doubt about it. Bob will continue to buy Bubble Buzz for
its good taste, and also because at his age, he sees it is the coolest trend right

Based on the aforementioned analysis, Bubble Buzz appears to be a profitable and

innovative product with a strong outlook for market share presence and segment
growth opportunity. Upon implementation of the marketing plan, 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. Projected profits will be $243,029.47 (see financial

Marketing Plan Part 2: Marketing Strategy

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, to establish a wide brand recognition through the capture of market
shares in the functional drinks segment, and to become the top market leader in
that particular segment within the forecasted sales figures.


o Bubble Tea beverage in a pre-bottled, ready-to-drink format.

The actual product o Packaging and labeling: see figure below o Branding:
colorful, aspect of play, round shaped, prominent Bubble Buzz logo written in
modern font, catchphrases such as “Think outside the Bubble” and “Get Your Buzz”.

o Trade name: Bubble Buzz™, a Coca-Cola product o Brand personality: energy,

funky, cool, functional, original, funny, healthy, etc. o Brand equity: Coca-Cola
provides a quality, consistent, innovative and accessible soft
drink reputation.

Augmented product o Nutritional information, Status (social drink), Features

promoting the website, Health
benefit of a green tea base (ref.17)

Marketing considerations o Product life cycle: Bubble Buzz is a low-learning

product. With a strong marketing
campaign, “sales [will] begin immediately and the benefits of the purchase are
readily understood” (ref.11, p.301). Since Bubble Buzz is prone to product
imitation, Coca-

Cola’s strategy is to broaden distribution quickly, which is currently feasible
thanks to the company’s high manufacturing capacity.

o Product class: Food & beverage  Soft Drinks  Functional Drinks (refer to
D2 for a break-down of the functional drinks market).

o Bubble Buzz follows the practice of product modification (ref.11, p.304): Coca-
Cola is
introducing an existing beverage (bubble tea) but redefines the drink with a new,
more convenient package. Bubble Tea will now become a widely available drink in
multiple retailing (distribution) channels.

PRICE STRATEGY The price strategy that will be undertaken should consider the
following aspects: 1. Consumer demand 2. The product lifecycle

3. Potential substitutes Customer demand Customer demand is a crucial factor which
is driven by tastes, income and availability of others similar products at a
different price (mentioned later in the potential substitutes section). For a lot
of consumers, value and price are highly related: ‘’the higher the price, the
higher the value’’. Consequently, Coca-Cola’s intention to position Bubble Buzz as
a unique, innovative and attractive product gives it a certain control over Bubble
Buzz price. To be able to implement higher pricing though, the minimization of the
nonmonetary costs to customers should also be include along with awareness of the
product (notably by advertising) and value (benefits) . 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. 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.
Potential substitutes Coca-Cola is constrained by the monopolistic market in which
it competes. The main characteristic however is product differentiation. 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. 15

To win market shares over our top functional drinks competitor, PepsiCo.

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.” Concepts: • • • “Think outside the bubble”: Be Bold, Be
Original, Be Different, Be Yourself. “A good spirit in a good body.” “For the out-
of-the-ordinary individuals who like to challenge themselves.”

Media selection:
Before choosing the appropriate medias, it is important to note that Generation Y
consumers only give partial attention to media. However, they can be reached
through integrated programs. They are typically using more than one communication
media at a time; a behaviour that is often called “multitasking”. This group of
consumers doesn’t give its full attention to one single message, but rather uses
continuous partial attention to scan the media. Marketers can still communicate
with Generation Y by using a variety of targeted promotional tools. Another
important tactic to reach our target market is through “Viral” or “Buzz”
marketing, which Coca-Cola will heavily use in this campaign (campus, contests).

Advertising: Refer to APPENDIX H for detailed explanations Output Examples

Television MTV, Much Music, VrakTV, YTV Radio MIX96, CKOI 96.9, 94.7 FM,
Universities Magazines For girls: Cosmo, Elle For boys: Sports Illustrated (or
Kids edition) Internet Banners on select websites (gaming, sports, etc.) Official
promotional website: Outdoors Billboards and prints in select
areas including:  Campuses, transportation (bus, metro, stations)  Tourist
areas in high seasonal periods  Outskirts of key cities in geographical reach

Others Personal selling Public relations Publicity

Not relevant Direct contact with retailers, sales kit strategies to be explained
later in the text. Stands or special displays and events in schools, malls, sports
events (i.e. 2008 Beijing Summer Olympic Games), sponsorship activities
Conferences, press releases (print and online), buzz marketing through TV coverage

Promotional Mix: Consumer oriented: • Contests: “Win another Bubble Buzz flavour”,
“Uncover a secret code underneath the
bottle cap and win sporting goods and electronics by logging on the website”, “Win
a trip for the 2008 Olympics in Beijing”. (Arguments: It will increase consumer
purchases and encourage consumer involvement with the product).

Samples: distributed in supermarkets, school/universities. Samples are a way to

avoid product resistance since people are not used to find bubbles in their
drinks. Arguments: It will encourage new product purchases and it represents low
risk for consumers since they get it for free. They have nothing to loose by
trying it.

• • •

Point-of-purchase: in supermarkets (to reach the parents of generation Y).

Arguments: It is also a mean to increase product trial and provides a good product
visibility. Others: In subsequent years, 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).

Cooperative advertising: to encourage retailers to buy our product and to maintain

our high level of advertisement that consumers expect from Coca-Cola.

Other considerations: •
• Scheduling of the advertising: Pulse scheduling (promotional presence year-
round, but emphasized and intensified before and during summer). 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.

PLACE (DISTRIBUTION STRATEGY) Bubble Buzz will be distributed through these

channels: supermarkets, convenience stores, independent food stores, discount
stores, multiple grocers, vending machines, direct sales.

Requirement for success analysis: C.M. per bottle = 382,159.36 / 328,000 = $1.17
Break-even: (113,453.56+25,676.33) / 1.17 = 118,914 (bottles) Market share:
118,914 / 1,000,000 = 11.9% In one year, if Coca-cola can sell 118,914 bottles of
Bubble Buzz, or in other words achieve 11.9% of the functional drink market share,
it will break even. After this point, every bottle Coca cola sells will generate
average $1.17 towards the profits. The potential profits can up to $1,030,770.001
based on our target market. Expected Costs: COGS: $597,124 * 36% = $214,964.64
O/H: $597,124* 38% = $226,907.12 Expected Revenues (total) = $597,124 (refer to
Appendix J)

$1.17*(1-11.9%)*1,000,000 = $1,030,770

China is the target country we’re going to expand our product. Reasons:
1. With a total population of 1,313,015,000 in the end of 2005 and 327,714,000 in
our target market (age 10 to 25 years old), compared with the total population of
Canada---304,453 million, there definitely is a great potential worth to work on.
2. absolute expenditure on food and non-alcoholic beverages is expected to
increase from 1,777 billion in 2005 to 2,154 billion in 2010 (though the
proportion of consumer expenditure on this part is decreasing from 28.39% to
25.75% ) 3. Soft drinks industry is one of the fast growing industries in China,
especially fruit/vegetable juice, RTD tea, and Asian speciality drinks and bottled
water have shown a sharp increase during 1998 to 2003. 4. Bubble tea was
originated in Taiwan. Soon after its introduction in China, it became one of the
most popular beverages sold in tea stores on the streets due to the similar taste
and similar cultural background. So, it is a good chance for us to enter into this
market. 5. Since we are the top sponsor for the upcoming Beijing Olympic in 2008.
With more opportunities to expose to the public, it is going to benefit our sale

Our entry-strategy for entering China is through licensing. Reasons:

1. We have already provided licenses for manufacturing our products in China
(licensing the bottlers and supply them with our syrup required for producing).
Therefore, added in one or two more products in our production chain would not be
that difficult.

2. It is relatively low risk when compared with direct investment there. 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, especially in China.

Changes to be made: 1. Price: Price sold in China is going to change to
accommodate the local desire. As we set
our price sold in Canada $2.00. Compared to the price sold in the bubble tea store
($ 3.50), it is about 57.14%. So, with the information we gathered from the tea
store in China2, the price sold there would be 57.14% of what sold in the tea
store---$12 Yuen in China currency. Then, it would be around $7 Yuen, about
CAD$13. 2. 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. 3.
Develop other flavours that would attract the local market: Since milk based
bubble tea sell better in China, we will add in this product line. Also, we will
avoid using too many artificial colors as they are not appreciated as much as in
Canada. Moreover, people in China are becoming more and more health concerned,
especially the amount of sugar and additives added in the drinks. We will make
some changes in the ingredients used to appeal the local market, i.e. less sugary

4. Promotion: In contrast to the radio ads in Canada, we will use more TV and Web
advertisement there due to the highly exposed environment in China. Also, 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. Also, since the outdoor display screen is quite
popular in big cities, we will also take advantage of it.

2 3

Appendix L (Prices in China) The change of currency: CAD$1= CNY$ 6.88

APPENDIX A (ref.2)
Off-Trade Consumption Indicators (Functional Drinks) 350.0 300.0 250.0
Million Litres / Million $CDN

200.0 150.0 100.0 50.0 0.0

Volum e Sales 1999 115.3 296.7 2000 117.8 312.1 2001 119.7 318.1 2002 122.1 324.7
2003 124.0 327.4 2004 125.9 342.2

APPENDIX B (ref.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 4,651.40 2,135.20 385.9 296.7 193
234 0.2 7,896.40 2000 4,726.30 2,239.60 447.3 312.1 186.5 257.4 0.4 8,169.60 2001
4,828.20 2,347.00 551.2 318.1 171.3 265 0.6 8,481.30 2002 4,991.10 2,454.60 666.8
324.7 166.5 275.4 0.8 8,879.90 2003 4,959.60 2,497.60 763 327.4 159.2 286.8 0.9
8,994.50 2004 4,938.90 2,613.10 859.4 342.2 161.9 307.4 1.1 9,224.10

Off-Trade Sales of Soft Drinks by Sector (2004)

Carbonates Fruit/vegetable juice Bottled water Functional drinks Concentrates RTD

tea RTD coffee TOTAL
APPENDIX C (ref.1 & 8)
STRENGHTS Brand strength (see Appendix F for brand rankings) The Coca-Cola Company
is the largest manufacturer, distributor and marketer of nonalcoholic beverage
concentrates and syrups in the world. The Coca-Cola brand is unarguably one of the
most recognizable brands in the 200 countries where it sells its products. The
strong brand name is one of the basis for the company’s competitive advantage on
several of its core markets. 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, coffee and juices. The developing markets are more complex than the
carbonated soft drinks. Results of operations In 2004, net-operating revenues
totaled approximately $21.9 billion, an 8% increase from 2002. Gross profit
totaled $14.3 billion in 2004. The company generated $5,968 million from its
operating activities and re-invests heavily into its business. The ability to
generate significant cash flows is one of the its key strengths (ref.16). Strong
existing distribution channels Coca-Cola has operations worldwide and is well
established in its distribution channels (such as store retailers or vending
machines). Therefore, 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. WEAKNESSES Relying upon line
extensions Coca-Cola is relying on brand extensions increase sales in specific
lines, particularly its long-time carbonated soft drink products (i.e. the
introduction of Vanilla Coke helped maintain sales for the core Cola beverages).
However, there is a strong risk of cannibalizing existing sales in the long term
(for example, Bubble Tea might deter on sales for iced tea).
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
the core Coke products bring a solid base of sales and loyalty to the company,
consumers’ expectations also become more and more anchored and single-lined,
taking away freedom in the areas of line diversification and product modifications
(taste, packaging, price). 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. Entrance into
difficult non-core categories The Coca-Cola Company is a truly global
multinational business giant. While some categories of products are distributed in
many areas of the globe (Coke, Powerade, etc.), geographical needs already require
that these global brands are heavily adapted to their target region. Furthermore,
many smaller and diversified product lines are more or less popular in one
particular region over another. Therefore, the process of diversifying the
production and marketing each product involves costly investments. These capital
requirements typically increase as the product becomes heavily focused (for
example, since the Coca-Cola brand is highly recognizable worldwide, 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). 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. And as we
have seen, 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. 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, production,
manufacturing, distribution, promotion and retailing choices and processes.
Brand is attractive to global partners Because of the company’s size (including
value, brand name and operating revenues) and wide portfolio base, Coca-Cola
enjoys a strong purchasing power over its suppliers, and also attracts large
partnerships with various levels of consumer reach (e.g. Burger King, movie studio
promotions, sponsorship agreements, etc.). Existing brand awareness also provides
an international playing field for powerful marketing strategies. THREATS Strong
competition Coca-Cola is competing in a global market that is characterized by an
oligopoly between several (but few in numbers) competitors. The fight for market
shares and sales in crowded markets becomes a complex one. 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. Over the last few years, concerns over health issues have
risen in the media through an expanded and evergrowing network of “knowledge
outputs” (journals, TV channels, internet and so on). The move of the younger
generation towards a healthier lifestyle call for careful planning and
decisionmaking in new product developments. Large companies can also easily become
the target of consumers’ apprehension. Free trade In an era of globalization,
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). Issues arise when dealing with price competition and economic growth.
Trade organizations are also faced with public pressure which can disrupt
operations in one or more areas of the company.
APPENDIX D (ref.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, The
South Beach Beverage Co GI Energy Drinks Corp Snapple Beverage Group
Private label Others TOTAL 2001 56.4 32.2 7.5 1.1 0.1 0.1 0.8 1.7 100.0 2002
58.2 32.4 5.8 1.1 0.1 0.1 0.8 1.4 100.0 2003 59.5 33.1 4.5 1 0.2 0.2 0.8 0.7 100.0
2004 60.5 32.8 3.3 1 0.2 0.2 0.8 1.4 100.0

D2. Functional Drinks Sectors (Segmentation) by Value, 2005

*Based on United States report

D3. 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
2.8 1.5 5.9 0 0.1 58.9 100
APPENDIX E (ref.12) Population by Age: 1990-2015
'000 1990 10-14 yrs 15-19 yrs 20-24 yrs 25-29 yrs TOTAL
Source: Note:

1995 1,997 1,980 2,009 2,185

2000 2,056 2,096 2,070 2,076

2005 2,111 2,157 2,264 2,209 8,741

2010 1,963 2,228 2,348 2,438

2015 1,868 2,068 2,426 2,529 8,891

1,877 1,938 2,124 2,583

Total (Canada) = 32,241

National statistical offices, Euromonitor International as at January 1st

Functional Drinks: Consumption growth (Liters) from 1998 to 2003: 0.06 per year
Projected consumption (Liters) in 2005: 4.12

Market size calculations (ref.14 & 15):

Total Canadian (10-29yo) Soft Drink Yearly Consumption (L) # Male 10-29yo Yrl
Consumption (soft drinks) (Population) (Liters) 4,436,800 # Female 10-29yo
(Population) 4,251,500 4,858,296 Yrl Consumption (soft drinks) (Liters) 3,103,595
Total yrl consumption (soft drinks – Liters) 7,961,891 ≈ 8 million Liters

Total Canadian (10-29yo) Functional Drink Yearly Consumption (L) 8,000,000 L x

4.12% (functional drink market share) = 329,600 L 329,000 L is approximately
equivalent to 1,000,000 cans (355mL volume)

MARKET SIZE: 8,688,300 people 329,600 L ≈ 1,000,000 cans

The market size represents our targeted pool of consumers. 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.
APPENDIX F (ref.13)
APPENDIX H (ref.16)
APPENDIX I (ref.16)
APPENDIX J CALCULATIONS Based on Coca-Cola’s previous financial statements, we
will see the average COGS/Revenues for year 2005, 2004, and 2003 is 36%4.
Similarly, Operating Costs / Revenues = 38%5 Moreover, since our target market are
1,000,000 cans annually assuming Coca-cola maintains its market share in
functional drink 32.8%, we predict our sales as 1,000,000 * 32.8% = 328,000
bottles. 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: 4.3%6 of the total revenue. Expected Revenues: Supermarket Price ($) 1.50
Sales (%)7 30.8% Sales ($) 101,024 Revenues ($) 151,536 Independent Stores 1.75
10.2% 33,456 58,548 Others $2.00 59% 193,520 387,040 Total 100% 328,000 597,124

Note: “Independent stores” include convenience stores, independent food stores,

and discount stores. “Others” include multiple grocers, vending machines, & direct

Expected Costs: COGS: $597,124 * 36% = $214,964.64 O/H: $597,124* 38% =

$226,907.12 Note about expected costs: O/H costs include operations overhead and
general and administrative overhead. The former is generally associated with the
recurring management or support of the activity, which is normally relevant cost.
The latter includes salaries, equipment, space and other activities related to
headquarters management, accounting, personnel, legal support, data processing
management and similar common services performed outside the activity, which are
irrelevant. Because there is no enough data to show the ratio of these two parts,
we estimate half of the O/H costs as irrelevant costs.

4 5

From table 1: (8,195+7,674+7,776) / (23,104+21,742+20,857) = 36% From table 1:

(8,739+85+7,890+480+7,287+573) / (23,104+21,742+20,857) = 38% 6 From table 2:
(265+247+309) / (6,676+6,423+6,157) = 4.3% 7 From table 3
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).
APPENDIX M Pricing strategy (Other constraints) The first possible constraint
would be the regulations on pricing. 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. After having taken all the
important factors into consideration, two price-level fixing approaches seem
appropriate. 1. Profit-oriented approach: Target profit One of the central
objectives of this project being to become the market leader in functional drinks,
Coca-Cola is willing to stay among the top competitors, if not becoming the
greater, by achieving a certain target profit. This could be obtained by establish
a price that will largely cover variable and fixed costs while bringing tremendous
profits. 2. Competition-approach: Above market Competitors and potential
substitutes prices can also be part of the strategy. Having a higher price could
make customers aware of the additional benefits and the higher quality of Bubble
Buzz. 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 would hear our radio spot
several times a day. This will ease the recognition of Bubble
Buzz in future promotion tools.

Radio spots

February to April
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. The recognition of Bubble Buzz will be faster.
To send a widespread message over Canada that Bubble Buzz
is now available. Critical step in the promotion.
To get potential buyers to try Bubble Buzz and to create an addiction to it.
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.
It will allow Coca-Cola to interact with our Generation Y Consumers.
When the summer will come to its end, we will use contest to
give a second "push" to the sales of the Bubble Buzz.
Use of conferences and news to make the general public
aware of the existence of Bubble Buzz.

APPENDIX O Other considerations for the promotion strategy Product life cycle of
Bubble Buzz: Bubble buzz is at its Introduction stage; we thus must inform
consumers in an effort to increase their level of awareness. Awareness is our
primary promotional objective. Then the following months after the launch of
Bubble Buzz , in its Growth stage, Coca-Cola will have to persuade the consumer to
buy the product, to gain preference and to solidify the distribution. Product
Characteristics: • Complexity: Bubble Buzz is more sophisticated than already
existing functional and soft drinks. Consumers can eat and drink it which has
never been experienced before. Unlike most functional drinks, it also requires a
straw. Understanding and familiarity is different when compared with other
comparable drinks. We should thus use a little bit more of personal selling to
retailers, give more sample, and create advertising on how to use bubble buzz than
with other brands from the company. • Risk: there is no financial, social or
physical risk associated with Bubble Buzz thus Personal selling is less needed. •
Ancillary Services: No support or service are required after the sale; refer
customers to the website or free 1-800 number for any questions or comments. 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, but in this case the
seller is already well known. Channel Strategy: (ref.11, p.478) For Intermediary:
Push strategy, in order to gain retailer’s cooperation in ordering and stocking
the product. 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.
APPENDIX O Justifications for advertising selections -TV: channels for teenagers
and for young adults: MTV, Much Music, VrakTV, YTV Arguments: TV communicates with
sight, sound and motion, which is needed for Bubble Buzz. It is the only media
that can reach 99% of the homes in Canada. Coca-Cola has the budget to cover the
high costs of this media. -Radio: 94.7 FM, 96.9 FM University Radios (McGill,
UDEM, UQUAM, Concordia, UOTTAWA...) Arguments: Radio is an already segmented
medium. There are over 900 radio stations in Canada. 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.502) We could
also use of “Interactive radio” as Pepsi has already done in the past. (p.503)
-Magazines: We should take advantage of the fact that magazines have become a very
specialized medium. There are about 500 consumers magazines in Canada. Good color
production is also an advantage that create strong images which is the purpose of
CocaCola with its Bubble Buzz brand. Each magazine’s readers often represent a
unique profile. 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. It
also has additional advantages , it can also use the audio and video capabilities.
As we are targeting our ads to young outgoing people, sound and movement may
attract more attention from viewers and has the unique feature of being
interactive. Interactive media would offer Coca-Cola the opportunity to reach
younger consumers who have developed a preference for online communication.
Official Website ( -Outdoor: Billboards in specific geographical
area would allow us get a good reach and frequency. It is a low cost and flexible
alternative. (Campus, malls, Bus and metro stations)
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