Marketing and Promotion Mix

When making decisions about the marketing and promotion mix for a brand such

as Coca-Cola, it is imperative to discuss the marketing mix of that brand, also known as

the 4 P’s – product, price, place, and promotion. The first element to be considered is the

product. Coca-Cola became a registered trademark in 1886 by Dr. John S. Pemberton in

Atlanta, Georgia, and was being sold all over the United States by 1895. In this case,

Coca-Cola is a product that has reached the maturity stage. This product is relatively

well known, and relatively well positioned in its market. Being ranked number one for

soft drink consumers, according to beveragedigest.com as, well as having the highest

market share for this last year. There is no need to try and educate the public about the

product. The main aim is not to reach more of the target audience, but to have a higher

more consistent frequency among that audience. The repurchase cycle among the

average user is one week. It is important that advertising reflect this repurchasing cycle,

by having point of purchase advertising as well as advertising through the one-week

repurchasing cycle.

The next area that needs to be discussed in the marketing and promotion mix is

the price of the product compared to its competitors. The largest competitor to the Coca-

Cola Company is Pepsi. In all areas researched, the difference in price between the two

companies was negligible, approximately five cents difference in a 12-pack and one cent

difference for a two litter. It is obvious that price is not an issue of concern to the

marketing and promotion mix.

Coca-Cola is distributed internationally, and is found and desired by consumers

just about everywhere. Coca-Cola is available in all types of markets and stores

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including supermarkets and convenience stores, as well as fast food restaurants and

mega-stores such as Target and Wal-Mart. When researching the amount of shelf space

given to Coca-Cola compared to its competitor Pepsi, the numbers come out to be the

same. This may be due to the stores’ indifferent natures, but it is detrimental to Coca-

Cola if it is not outreaching its competitor. It has also been found that at certain times of

the year either product can be found to have more “end-of-aisle” displays, since the store

promoting the sale of each brand apparently rotates throughout the year. What this

means, is that at certain times the competitor is more in the reach of the consumer.

Out of all four components of the marketing and promotion mix, the sales

promotion program is the most important component to focus on. For a company such as

Coca-Cola, promotion is necessary to keep its product in the eye of the consumer.

According to the Coca-Cola website they have developed six strategic priorities:

1. Accelerate carbonated soft-drink growth, led by Coca-Cola.

2. Selectively broaden our family of beverage brands to drive profitable growth.

3. Grow system profitability and capability together with our bottling partners.

4. Serve customers with creativity and consistency to generate growth across all

channels.

5. Direct investments to highest-potential areas across markets.

6. Drive efficiency and cost effectiveness everywhere.

In order for the Coca-Cola company to achieve and maintain the areas of strategic

development that they have listed, it is important that the promotions for the product

include: point of purchase displays, contests, and coupons. It is important to have point

of purchase displays when trying to promote the product since it has been determined that

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the shelf space allocated to this product is not giving it an advantage over its competitors’

products. The point of purchase display will help to promote the product to our target

audience when it is not on an end of aisle display and may need extra help getting the

consumer’s attention. It is also a good promotional tool to have frequent contests that get

the consumer’s attention. Many consumers that are straddling the line between our

product and our competitor’s product may be swayed to purchase Coca-Cola in hopes of

winning a prize. The last area of promotion that should be used is the distribution of

coupons. Since the cost of our competitor’s product is so close to our own, a coupon

offered through a magazine, newspaper, point of purchase display, and other areas may

not only entice consumers to purchase our brand, but it may also help to shorten the

repurchase cycle of the target audience.

Consumer, Market, Environment

Consumer Demographics

Coca-Cola is the most well known product throughout the world. The

demographics used to segment those users of Coca-Cola located in the United States are

as follows: age, race, income, education, employment, household size, gender and

lifestyle.

Coca-Cola was originally created as a syrup to be sold to soda fountains, where it

would be mixed with soda water and served to patrons, typically teenagers and young

adults. And just as it was created for the younger generation, that’s where it’s popularity

has remained, with the 18-24 year-old age demographic. However, Coca-Cola’s volume

potential is highest for 25-34 year-olds.

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Regarding race, Spanish speakers have the highest index rating among Coca-Cola

users, with Blacks as a close second; only one rating point below.

In terms of income, households falling in the $50,000 - $59,999/year income

bracket are the heaviest users of Coca-Cola. In terms of occupation, households with

three or more persons living in them are the heaviest users of Coca-Cola. And

households with children ages 2-5, 6-11 and/or 12-17 years old all have the same market

share index. This statistic informs us that Coca-Cola should target children with some of

their campaigns since children seem to have an effect on the amount of Coca-Cola

purchased.

In the adult population, Coca-Cola is most popular among men, and more

specifically, single men. However, there is significant volume potential for married

persons, and Coca-Cola could therefore prospectively increase their sales volume by

marketing more towards married persons ages 25-34.

Coca-Cola Consumer Profile: Age MRI Data

Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 52504 100.0 100 - 5250400

18-24 24565 8897 16.9 130 1 1156610 325-34 43511 13929 26.5 114 2 1587906 135-44 40062 11922 22.7 106 3 1263732 245-54 26903 6335 12.1 84 5 532140 455-64 21657 5341 10.2 88 4 470008 565 or over 31057 6080 11.6 70 6 425600 6

18-34 68076 22825 43.5 120 1 2739000 318-49 122914 38195 72.7 111 2 4239645 125-54 110477 32186 1.3 104 3 3347344 2

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Coca-Cola Consumer Profile: Household Size MRI Data

Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 52504 100.0 100 - 5250400 -

1 Person 24116 5871 11.2 87 3 510777 32 Persons 59868 15155 28.9 91 2 1379105 23 or More 103771 31478 60.0 108 1 3399624 1

Any Child in Household 77162 23390 44.5 108 - 2526120 -

Under 2 Years 15433 4473 8.5 104 4 465192 42-5 Years 30344 9371 17.8 110 1 1030810 36-11 Years

34738 10643 20.3 110 1 1170730 1

12-17 Years 34185 10552 20.1 110 1 1160720 2

Market Analysis

As the following Category Development Index (CDI) and Brand Development

Index (BDI) tables will show, the overall region of the South has a significantly high

BDI, with the specific segment of the South East showing high CDI in addition. Coca-

Cola’s brand position in both of these regions is noteworthy, and therefore an increase in

advertising is not necessary in this region at this time. The West Central region has a low

BDI, but an average CDI. This means that there is room for growth in this region, and

through promotion and an increase in advertising, Coca-Cola’s sales could potentially

amplify. The New England region of the United States has both a low CDI as well as a

low BDI. Therefore it can be concluded that any expenditures put into advertising in this

region would most likely not result in an increase of sales.

County size D has both a CDI as well as a high BDI. This indicates that an

increase in advertising spending is not necessary for Coca-Cola, in regions of this size, at

this time. County size A has both a low CDI and a low BDI, but has the greatest volume

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potential for both the category and the brand. Therefore, with advertising targeted

specifically at this marketing region, there is achievable growth in counties of this size.

However, because such a low CDI and BDI already exist, expenditures invested into

advancing the Coca-Cola brand are recommended to be at a minimum.

CDI Marketing Region: Regular Cola Drinks, Not Diet

Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 108345 100.0 100 - 10834500 -

New England 10397 5166 4.8 86 7 444276 7Middle Atlantic 33199 18548 17.1 97 4 1799156 2East Central 25537 14982 13.8 102 3 1528164 5West Central 28708 16120 14.9 97 4 1563640 4South East 35150 22359 20.6 110 1 2459490 1South West 20457 12739 11.8 108 2 1375812 6Pacific 34307 18432 17.0 93 6 1714176 3

BDI Marketing Region: Coca-Cola Classic

Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 52504 100.0 100 - 5250400 -

New England 10397 2460 4.7 85 6 209100 7Middle Atlantic 33199 8107 15.4 87 4 705309 4East Central 25537 6609 12.6 93 3 614637 5West Central 28708 6472 12.3 81 7 524232 6South East 35150 12537 23.9 128 2 1604736 1South West 20457 7948 15.1 139 1 1104772 2Pacific 34307 8370 15.9 87 4 728190 3

CDI County Size: Regular Cola Drinks, Not Diet

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Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 108345 100.0 100 - 10834500 -

County Size A 77485 42814 39.5 96 4 4110144 1County Size B 55756 33141 30.6 103 2 3413523 2County Size C 26850 15836 14.6 102 3 1615272 4County Size D 27665 16553 15.3 104 1 1721512 3

BDI County Size: Coca-Cola Classic

Base: Adults Total US A B D Rank AxD Rank '000 '000 % Down Index

All Adults 187756 52504 100.0 100 - 5250400 -

County Size A 77485 21370 40.7 99 4 2115630 1County Size B 55756 15657 29.8 100 2 1565700 2County Size C 26850 7476 14.2 100 2 747600 4County Size D 27665 8001 15.2 103 1 824103 3

Environmental Constraints

Both internal and external environmental constraints have the potential to either

hinder or help the success of Coca-Cola.

The most significant external factor regarding Coca-Cola’s success is the weather.

The higher the temperature, the more people tend to drink Coca-Cola. However, in

colder weather, people tend to want something warm to drink. Therefore, during an

extremely long or intensely hot summer, Coca-Cola stands to profit more. On the other

hand, if the winter season is exceptionally long or cold, it could prove to be a financially

disappointing year for Coca-Cola.

Another external factor that could hinder Coca-Cola’s success, would be either

the introduction of a new product, or the running of a successful advertising campaign by

one of Coca-Cola’s competitors.

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As far as internal factors are concerned, Coca-Cola needs to be sure that they have

sufficient funds to meet current advertising expenditures. They also need to be sure that

their advertising planners don’t overspend or underestimate the allotment of advertising

funds. Failure to comply with these criteria could potentially result in an unsuccessful

campaign.

Competitive Assessment

Coca Cola’s Market share for 2002:

2002 Rank Companies 2002 Market Share

1 Coca- Cola 44.3

2 Pepsi- Cola 31.4

3 Dr Pepper/ Seven Up 15.0

4 Cott Corp. 4.2

5 National Beverage 2.3

6 Big Red 0.4

7 Red Bull 0.1

8 Monarch Co. 0.1

9 Carolina Beverage <0.1

10 Private label/ other 2.2

2002 Rank Brands 2002 Market Share

1 Coke Classic (Coke) 19.3

2 Pepsi- Cola (Pepsi) 12.6

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3 Diet Coke (Coke) 9.0

4 Mt. Dew (Pepsi) 6.4

5 Sprite (Coke) 6.2

6 Dr Pepper (Cadbury) 5.9

7 Diet Pepsi (Pepsi) 5.5

8 7UP (Cadbury) 1.7

9 CF Diet Coke (Coke) 1.7

10 Diet Dr. Pepper (Cadbury) 1.1

Competitive Advertising Spending and Media Mix

Coca Cola and Pepsi (our nearest competitor) are spending almost identical

amount of money on advertising. They both spend mostly on magazines (24 mil vs. 25

mil respectively), network television (150 mil vs. 190 mil), spot television (89 mil vs. 62

mil), syndicated television (27 mil. vs. 13 mil), and cable T.V. (50 mil. vs. 50 mil.). All

forms of radio and newspaper are very rarely used, if ever. I cannot conclude that these

would be highly successful media to use due to market research indicating that radio and

newspaper ads are ineffective with non- alcoholic carbonated beverage consumers.

Magazines have proven to be a major factor in soft drink advertising. With Coca-

Cola spending 24 1/2 million dollars + a year in this media, it is obvious that Pepsi better

follow suit. The similarities in money spent in magazine advertising leads us to believe

that these two heavyweights watch each other very closely. However, the magazine

money is just a drop in the bucket of either’s overall advertising budgets.

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Television is, and always will be the most important media for the soft drink

industry. With almost 320 million being spent yearly, Coca- Cola must know that T.V.

commercials are the best way to reach their customers. Look for this trend to continue.

Everything can be said about a catchy song or a tear- jerking moment played out for us

over the screen.

With each company spending around 6 million yearly on outdoor ads, the

conclusion to be made is that this market is an untapped resource. Imagine the sight of a

dramatic sports play with Coca- Cola red and white as the back- drop. Billboards at

popular vacation destinations could bridge that critical link between great memories and

Coca- Cola.

Expect astronomical dollar amounts to be paid for television time in the future.

The goose has laid the golden egg for Coca- Cola and will continue to do so for a very

long time. I would like to see more outdoor advertising used, as I feel that this is a highly

emotional appealing media.

Marketing Objectives

Coca Cola Classic is currently upholding one of the top positions in the

competitive beverage market; however, recent data shows that it has had a decline in its

market share between the fiscal years of 2000 and 2001. Based on this information, our

main marketing objective for 2004 is to stop the decline and create an increase of share

by 0.8%. The 0.8% increase will compensate for the –0.5% decline from 2000-2001 as

well as gain more share of the market for Coca Cola. We believe that this marketing

objective is important in order for the brand to remain on top.

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It is not an unrealistic goal to set. In the past years, Coca Cola has seen declines of

0.5% and 0.3%, so setting the goal of an increase of 0.8% is not asking too much.

Although the rise in popularity with other competing brands such as Pepsi Cola, Diet

Coke, Mt. Dew, and Sprite have caused Coca Cola to lose some of its market, it still has

the number one position. This is the reason why we feel that this brand is very capable of

a market increase.

We have decided to set a practical goal of a 0.8% increase instead of having

anything greater than that. It would be better to have a gradual rise. The marketing

objective is just enough to compensate for the lost of market in the past year as well as

gain 0.3% of the beverage market share.

With Coca Cola Classic’s lost in market share, the main objectives marketing

must focus on is stopping the decline. It needs to direct its attention in the prevention of

losing current users to the competition instead of seeking other prospects. By doing this,

Coca Cola Classic will no longer lose its share of market, and over time, it will

automatically see an increase.

Advertising Objective

The advertising objective for this coming fiscal year will be focused on

maintaining Coca Cola’s well-established reputation among its heaviest users as well as

reaching to consumers that may soon turn into heavy users of Coca Cola Classic.

According to demographic research mention in a previous section of this report, Coca

Cola is very popular with the age group of 18-24 and 25-34. We can focus in on this

demographic group and use advertising to encourage them to continue heavy use of the

Coca Cola brand. This is an excellent group to target because it holds 36.3% (68,076,000)

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of the total US population that consumes Coca Cola. Advertising can also attempt to

reach out to the cola consumers between the ages of 34-44. By doing so, the advertising

will be able to affect 57% of the total US cola consumers. These is a good way of

maintaining Coca Cola’s top position in the cola market and prevent the brand from

losing any current users.

We believe our advertising goals are important because research from Beverage

Digest show that Coca Cola Classic’s share of market declined slightly from 2000-2001.

With our advertising objective that targets key demographics of current cola users, it will

guarantee that the brand will not lose any percentage of market shares in the next fiscal

year.

In order to achieve all of this, media expenditures will change so that we are

keeping up with the competition. Recent data shows that the number one competitor in

our market (Pepsi Inc.) has spent more money on magazines and network television. Our

advertising objectives are to match that amount if not exceed it; while at the same time,

not upset the budget too much. By running advertisements more frequently across

different medias and putting them up against competitors, there is a better chance of

increasing the repurchase cycle.

In addition to these advertising objectives, some attention can be given to

promotional media. Coupons and other sales promotions can help attract new consumers

to the product. While much of the media expenditures will be spent on maintaining

current users, some of the budget can be used for prospective users as well. Although

there will be little effort given to prospect users, there will still be a slight increase in

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market share. This can help boost Coca Cola’s productivity and continue its stand in the

top position of the cola market.

Advertising Creative Strategy

In keeping with the Coca Cola Company’s promise to “bring refreshment, value,

joy and fun” to its consumers, we have confidence that an emotional appeal would be

most effective with this product. The advertising creative strategy will focus on

continuing Coca Cola’s strong presence in the competitive beverage market by

acknowledging brand loyal consumers as well as reaching out to other potential

consumers. Coca-Cola Classic has been a well-established brand for over a hundred years

now; and therefore, little attention can be given to introduction and creating brand

awareness. The main focus will be on maintaining Coca Cola’s current consumers and

strengthening their loyalties in addition to persuading cola users to switch to Coca Cola

Classic.

To effectively connect an emotional appeal with Coca Cola’s loyal brand

consumers, the advertising creative strategy will use feel-good advertisements. The goal

is to link a sense of comfort and warmth with the Coca Cola Classic brand. We want to

reassure loyal consumers that Coca Cola has been there for them throughout the years

and will continue to do so for many more years to come. The use of television is the best

way to convey this message. Timeline commercials with images of Coca Cola Classic in

the past can bring positive feelings with the brand. The television commercials can depict

something as simple as a little girl drinking Coca Cola with her mother and her

grandmother, all of them laughing and enjoying a good time. This shows how Coca Cola

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Classic has been with them and their families for generations. Another media alternative

to target Coca Cola loyal brand consumers are magazines. The excellent use of color and

the long durability of this type of media would work best with the advertising creative

strategy goals.

The second part of the advertising creative strategy is to reach out to potential

Coca Cola consumers. The aim is to get current cola users to switch to our brand. We

believe that slice-of-life advertisements will be able to illustrate Coca Cola Classic as a

joyful and fun product. By placing the brand in a bright social context, consumers can

associate Coca Cola as having a better image that its competitors. The most successful

way of doing this is by outdoor media. The uses of billboards can the point across to

potential consumers in a quick manner. No need to have lengthy explanations because a

single image of Coca Cola in a satisfying social context can change a potential

consumer’s attitude about the product. Radio spots with the appropriate music and jiggles

can also change one’s attitude about the product.

The whole purpose of the advertising creative strategy is to continue to the well-

established reputation of Coca Cola Classic. By narrowing our media expenditures on

media that can best convey this message, the advertising campaign can be very

successful. We want to strengthen loyalties with current consumers; and at the same time,

persuade other cola users to switch to our brand. The advertising creative strategy

presents the different ways we can achieve this through the use of advertising media.

Since Coca Cola Classic has been a reputable brand for many years, we are confident

with our choice of advertising strategy and selling point; and therefore, we know that

Coca Cola Classic will continue it’s long dominance in the competitive beverage market.

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