Table of Contents
2
Introduction..............................................................................................................3
PESTLE Analysis of the macro-environment..............................................................4
SWOT Analysis.....................................................................................................5
BCG Matrix...........................................................................................................6
SPICC..................................................................................................................7
Suppliers...........................................................................................................7
Publics..............................................................................................................7
Intermediaries....................................................................................................7
Competition.......................................................................................................8
Customers, consumers and markets....................................................................10
Soft Drinks Market............................................................................................10
Table 1: Soft Drinks UK Market Segmentation......................................................11
Market for smoothies.........................................................................................12
Table 2 : Forecast of UK retail sales of smoothies, 2001-11....................................13
Table 3 :Brand manufacturers sales of the smoothies market, 2001-06.....................14
Table 4 : UK value sales of smoothies by type, 2001-06.........................................15
Table 5: Consumption of fruit and vegetable juice 2002-2006..................................17
Table 6: Consumption of drinks – 7-14-year-olds, 2001-05.....................................17
Marketing Mix (4Ps)................................................................................................19
Product..............................................................................................................19
Price..................................................................................................................21
Table 7 :Average prices of soft drinks in the UK in £ per litre, 2001-06......................22
Place.................................................................................................................22
Table 8: UK retail sales of smoothies, by type of outlet, 2001-06..............................23
Promotion...........................................................................................................23
Action Plan............................................................................................................26
Appendix 1.............................................................................................................27
Appendix 2.............................................................................................................27
Appendix 3.............................................................................................................29
References............................................................................................................30
Bibliography...........................................................................................................35
Bibliography
3
Introduction
The Coca-Cola Company was established in 1886. It owns four of the world’s top 5
nonalcoholic sparkling beverages brands. The Coca-Cola Company operates with
more than 2,800 products in more than 200 countries. One of those countries is
Great Britain. (The Coca-Cola Company Website)
SWOT Analysis2
Political • Growing recycling awareness
Strengths Weakness • Green consumerism trend
• One of the EU founder states • Use less water and energy for
➢ •World’s
No tariffs on brands,
leading drinks and
suchfood (Free
as Coca- ➢ Unbalanced portfolio (In 2006, Coca-Cola
production
Trade
Cola, Fanta Zone)
and Diet Coke Company used 290 billion liters of
• UK has not introduced the Euro. ➢ Lack of product diversity Legislation
water for their beverage
Stillrecognition
➢ Brand has its Pound Sterling
production)
water 3 litres of water • Smoking ban creates new on-trade
• VAT on food is 0%, otherwise ➢ Lack of bottled
17,5% to Interbrand, highest brand
➢ According necessary to make 1 litre coke opportunities for soft drink
•value
Duein to increasing
2007 obesity among
(65,324$m) ➢ • reliant
Heavily Reduce on waste
carbonated drinks companies
children, the UK government • Environmentally friendly • UK Soft Drink Regulations
banned fizzy drinks from primary
➢ Availability ➢ Disasters like Dasani water
packaging • Food Standard Agency (labeling,
schools
➢ Market failures Sprite 3G hygiene, packaging etc.)
➢ •Relationship
Ofcom introduced
with new regulations
the Coca-Cola
on
CompanyTV advertisement on food and • EC legislation on food and drink
➢ Consumers perceive Coca-Cola as an labeling2
Economic
➢ Operation focused on the developed unethical company
•markets
Economy rose by 0.6% in Q4 2007
➢ Lack of innovation, mainly variants
• Employment rate increased to Social
➢ Advertising
74.8% ➢ Highly focused on The Coca-Cola
• Average earnings including • Growing and aging population
➢ Extensive distribution capacity and Company
bonuses rose by 3.7% in the year • Consumer show a preference for
strong production network healthier soft drinks
to January 2008 ➢ Shift in consumption
• UK consumers take a compensatory
➢ •Launch
Consumer
of CokePrice Index
Zero, annual the
respectively
➢ Mature market attitude towards dietary habits
inflation
whole was 2.5% in February
Zero range
• Obesity, especially among children
2008 (2.2% in January 2008)
➢ •Recycling Technology • Strong economy boosts
On 7th Zone (Pilot programme)
of January Bank of England
discretionary spending among UK
reduced its official Bank Rate to
• Introduction of lighter-weight consumer
5.25%
bottles
• Innocent is lobbying the
1 For more information on VAT and EC legislation • More efficient production machines
see Appendix 1 • New vending machines
2 See Appendix 2 for more detailed information
5
Opportunity Threats
BCG Matrix3
SPICC
Suppliers
Coca-Cola tries to strengthen and develop the relationship between the company and its suppliers; thus Coca-Cola has developed
the Supplier Guide Principle Program for their direct suppliers. Additionally, Coca-Cola expects their suppliers to fulfil the Code of
Business Conduct for Suppliers, Workplace Right Policy and Human Rights Statement. Furthermore, Coca-Cola tries to operate
locally where possible. (CCE Website & The Coca-Cola Company Website)
Publics
Coca-Cola attaches great important on promoting a positive image of its products and activities, spending a huge amount on
advertising. However, Coca-Cola is still perceived as an unethical company by many activist groups e.g. Killer Coke and Coke
Watch. (Waronwant Website)
Intermediaries
In order to distribute all products CCE works with a variety of customers, namely:
• Organisations – schools, universities, pubs, clubs, cinemas, cafes, restaurants and workplaces
9
• Wholesalers
The relationship with these companies has always been mutually beneficial. All those businesses are valued highly by CCE. (CCE
Website)
Competition4
Coca-Colas largest competitor in Great Britain is Britvic Plc. Britvic is the franchise of PepsiCo in the UK.
Britvic
• Britvic has a strong and diverse portfolio, especially in fruit juices/juice drinks and carbonates.
• Britvic has important distribution deal with PepsiCo, which ensures high share in carbonates sector
GlaxoSmithKline
4All information is retrieved either form Mintel Intelligence Report or Global Market Information Database. Detailed list can be found in the
reference list
10
PJ Smoothies
AG Bar
Innocent
Coca-Cola changed its strategic direction, by presenting itself as a “total beverage” company, in an attempt to distance itself from a
reliance on carbonates. In 2006, the company continued its above-the-line campaign promoting all its brands together, with the
purpose of communicating to the consumer that it is more than just a carbonates manufacturer. (Global Market Information Database)
According to Mintel Market Intelligence Reports, the soft drink market can be divided into:
• Carbonates
• Fruit Juices
• Juice Drinks
• Sports Drinks
• Smoothies
13
£m % £m % £m % £m % 2000-
06
Juice & juice 2,09 24. 2,47 21. 2,84 24. 3,095 25. +48.0
drinks 1 7 3 9 6 4 9
Bottled water 1,14 13. 1,58 14 1,70 14. 1,733 14. +51.0
8 6 2 0 5 5
Energy & 615 7.3 940 8.3 1,04 9 1,125 9.4 +82.9
stimulant drinks 9
Carbonates 4,57 53. 5,39 54. 5,72 50. 5,856 47. +28.1
0 9 3 6 7 3 9
(Mintel Reports)
14
As consumer turn more and more to healthy eating and especially the pursuit of 5-A-day fruit and vegetable consumption, the
market for smoothies is experiencing continuing rates of exceptional growth. (Mintel)
As Coca-Cola has no smoothies in its product rage, this would be a great opportunity to follow the trend.
• The young 15-19 and 25-34 age groups are the main consumers 5 of smoothies. Those groups should be considered as the
target group.
(Mintel)
(Mintel)
£m % £m % £m % £m % 2001-03 2003-06
Total 21.5 100 41.4 100 79.0 100 134.0 100 +93 +224
(Mintel)
19
£m £m £m 2001-05
Total 21.5 100 41.4 100 79.0 100 134.0 100 +523.3
Total 6.3 100 11.4 100 24.0 100 46.0 100 +630.2
(Mintel)
21
20 20 20
02 04 06
% % %
Drunk in last 12
months:
58. 56. 56.
All users
8 0 3
Ever drink:
Fizzy drinks 93 92 88
* 11-14s only
Taken from the Youth TGI survey of around 6,000 youths aged 7-19
(Mintel)
23
Marketing Objectives
A marketing strategy is the means by which an organisation sets out to achieve its marketing objectives. (Weeks 2007, p. 393) There are
many different objectives for companies. However, if the objective is growth, the Ansoff’s growth matrix (see Fig. 1) suggests four
different possibilities.
Product
Market
New
Current
Diversification
Market
Product
Market
Penetration
Development
24
In the case of Coca-Cola diversification or concentric diversification would be the possible growth and as the corporate objectives
are clearly set to expand the product portfolio and to lead the soft drinks and beverage category in which Coca-Cola competes.
(Euromonitor)
The new SpecificMeasurableAchievableRealisticTimed marketing objective for Coca-Cola Great Britain is to introduce smoothies in the UK
and to gain 1% of the market within 12 months of its launch.
Actual
product
Core
benefit
Design
Seasonal flavours
26
No sugar
No water
Branding
Branding has become so strong that today hardly anything goes unbranded. Brand names help consumers identify product which
might benefit them; they also tell the buyer something about the product quality. Consumers who always buy the same brand know
that they will always get the same features, benefits and quality. (Kotler & Armstrong, 2004, p.285)
Packaging
27
Packaging is an important part of the product which not only serves a functional purpose, but also acts as a means of
communicating product information and brand character. (Weeks, 2007, p.580)
The primary function of the package is to contain and protect the product, however, the package needs to grab the consumer’s
attention and involve them with the product. (Weeks, 2007, p. 581)
The smoothies should be distributed in many different packages, namely 1-litre cartons, 250ml bottles as convenient portable
formats are more and more demanded, and other formats including 330ml, 500ml and 750ml as well as 90g pouches and
multipacks of small cartons for lunch boxes. Almost 50% of the new product launches in 2005 were 250ml bottles, as well as the
smaller multi-packs for children (Mintel)
Labeling
Labels may range from simple tags attached to products to complex graphics that are part of the package. The label can identify
the product or brand, promote the product and also describe several things about the product. (Kotler & Armstrong, 2004, p.288)
Furthermore, food labeling is now of growing importance in the UK as can be seen by the increase in those who avoid foods with
artificial additives. (Mintel)
28
Price
Pricing is one of the most important elements of the marketing mix, as it is the only mix which generates a turnover for the
company. Pricing a product too high or too low could result in a loss of sales. Pricing should consider external influences like
competitors, demand and price elasticity, customers and consumers, channels of distribution and internal influences like costs,
marketing objectives and organisational objectives.(Weeks, 2007, p.612, 618)
Furthermore, it is very important to get the launch price right, as it is difficult to change the price later.
Coca-Cola should consider the strategy of price skimming in order to establish a quality brand image. If the initial price is too high, it
can be slowly lowered until an appropriate level is found. (Weeks, 2007, p.626)
In 2005, the average branded 1-litre bottle or carton was sold at £2.99. The smaller 250ml bottles were retailed at £1.75, which
pushed up the average price per litre. However, it has to be taken into consideration that PJ Smoothies are repositioning with a new
strategy to open up the market. A recent survey revealed that 42% of consumers said that the price was the biggest barrier to
consumption. The PJ Smoothies are now priced at 99p for 250ml and £1.99 for 1 litre. (Talkingretail.com)
Initially, the price for the product should be at £3.19 for the 1-litre pack and at £1.79 for the 250ml bottles. The average price
suggests psychological pricing, whereas the £3.19 suggests more quality and product difference.
Source: Mintel
Place
Distribution Channels
As Coca-Cola has sophisticated and fully developed distribution channels, it should make use of the existing channels to distribute
the smoothies. Those channels are:
• Multiple Retail
• Licensed
• Cold
• Wholesale
The multiple retail channel ranges from off-licence to forecourts, video stores, high street chains and corner shops to the UK's top
Grocery chains like Tesco, Sainsbury, Asda, Safeway, Somerfield, Waitrose, Morrisons, Co-op, Iceland & the continental
discounters.(CCE Website)
30
The licensed channel includes licensed wholesale (including Scottish Courage and Coors) and licensed retail (including pubs and
bars such as JD Wetherspoon, and high street restaurants such as Pizza Express). (CCE Website)
The cold channel is responsible for the key national account customers across a wide range of sub-channels including cinema,
theme parks, fast food, workplace, education, travel, health & fitness and hotels.(CCE Website)
The wholesale channel includes the Cash & Carry and Delivered Wholesale customers. (CCE Website)
Others* 12.7 59 22.4 54 31.4 40 50.9 +300.8 Not only the distribution channels are fully
developed at Coca-Cola but also its
Total 21.5 100 41.4 100 79.0 100 134.0 +523.3 logistics, of which Coca-Cola should make
use.
Coca-Colas logistics is made up of three distinct areas – Logistics Planning, Customer Logistics and Logistics Strategy & Analysis .
(CCE Website)
31
Promotion
The recommended promotion strategy for this product would be the pull strategy.
A promotion strategy that calls for spending a lot on advertising and consumer promotion to build up consumer demand. If the strategy is
successful, consumers will ask their retailers for the product, the retailers will ask the wholesalers, and the wholesalers will ask the
producers. (Kotler & Armstrong, 2004, p.483)
Advertising
Advertising is one of the most important promotion tools for Coca-Cola. In 2006, the company spent $2.6 billion on print, radio,
internet and television advertisement worldwide. (The Coca-Cola Company Website)
Advertising Message
Advertising Media
Television, print media, online media, outdoor and ambient media and sponsorship should be used to convince consumers to buy
the smoothies.
Television
Television’s impact can be high, as it not only intrudes into the consumer’s home but also offers a combination of sound, colour,
motion and entertainment that has a strong chance of grabbing attention and getting a message across. Television advertising does
present a tremendous communication opportunity, enabling a seller to communicate to a broad range of potentially large audiences.
(Weeks, 2007, p.712)
32
Initially, a nationwide TV campaign during breakfast and peak time should be started. After a couple of months Coca-Cola could try
to get product placements. Furthermore, reminder and reinforcement advertising should be used after a while to remind consumers
that the product exists.
Print Media
In order to target the consumer, ads should be placed in several health, food and lifestyle magazines. One example would be
Health and Fitness, Men’s Health.
Online Media
The ad could be placed on selected websites (banners etc.), like Facebook etc.
Coca-Cola could use the transport-orientated advertising media and place their ads on buses, metro and tube.
Sponsorship
33
Sponsored events would also be an effective promotional tool to create awareness and brand loyalty among consumers. Coca-
Cola has been a very successful global sponsor.
Consumer Promotion
Coca-Cola could use trade promotions to get retailers to carry the new product and consumer promotion like product sampling to
gain market share.
Price promotions should be used from time to time to encourage new consumers to enter the sector.
Action Plan
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Market Research
Research
Monitoring
Feedback
Product
Start production
Bottle Design
Label Design
Product Launch
Promotion
Create TV Spot
Create Print Ad
Create Online Ad
Create Outdoor and Ambient
34
Media
Create Trade Promotion
Run TV Spot
Run Print Ad
Product Placement
Run Online Ad
Run Outdoor and Ambient Media
Run Trade Promotion
Sponsored Events
Product Sampling
In-Store Promotion
Price Promotion
Distribution
Negotiate with Wholesalers
Negotiate with Grocery Multiples
Negotiate with Retailers
Negotiate with Vending
Distributors
Negotiate with Restaurants and
Pubs
Appendix 1
European Commission (EC) legislation, introduced in July 2007 but yet to be implemented, includes a list of approved health and nutritional
claims permitted on food and drink labelling. Manufacturers will need to ensure their claims on energy and functional beverages, in particular,
fall within the EC’s definitions.
Innocent is lobbying the Government, with the British Soft Drinks Association (BSDA) backing, for the VAT on fruit juices and smoothies to be
cut from 17.5% to 5% in reflection of their positive contribution to the health debate. Fruit juice volume sales have suffered since late 2006 as a
result of volatile raw material costs, according to BSDA, with the price of orange juice doubling since 2004.
35
Appendix 2
SWOT Analysis
Strengths
Relationship with The Coca-Cola Company – Coca-Cola Enterprises Inc's strength lies in its
powerful relationship with The Coca-Cola Company. The Coca-Cola Company's expansive
portfolio of brands in carbonates and their brand equity are the cash cow of Coca-Cola
Enterprises. The Coca-Cola Company's rapid expansion in non-carbonates also gives
Coca-Cola Enterprises a wider platform to operate in the soft drinks industry.
Operation focused on the developed markets – Coca-Cola Enterprises's territories are well
established economies which offer strong purchasing power and stable economies.
Therefore, the company operates in a relative predictable and well regulated environment,
which is beneficial to setting up of long-term strategies and planning.
Distribution capacity – Coca-Cola Enterprises has extensive distribution networks and large
production capacity which allows the company to win business deals over rival companies.
Weaknesses
Consumption shift – Coca-Cola Enterprises's cash cow business remains carbonates, and
consumers' consumption shifts have negatively affected volume growth.
36
Maturity of the market – Coca-Cola Enterprises's territories are developed soft drinks
markets and the consumption is rather saturated in these markets, meaning that the
potential growth in total consumption can be limited.
Opportunities
Healthy drinks in schools – many schools in developed market have started to ban or
restrict the consumption of carbonates within the school premises. This is a challenge for
Coca-Cola Enterprises's carbonates business; however, it has also opened a new door for
the company to develop juices and water.
Threats
Consolidation of retail – the retail industry is in the process of consolidation and players are
armed with increasing purchasing power, which potentially can squeeze Coca-Cola
Enterprises's operating margin. Negotiation with these retail giants is an ongoing challenge.
Acquisition activities of rival companies – rival bottlers and brand owners are actively
acquiring non-carbonates companies thus posing a potential threat to Coca-Cola
Enterprises's market shares.
Appendix 3
Buyers and non-buyers of smoothies, by gender, age, socio-economic group, marital status, lifestage, presence of children, Mintel’s Special
Groups, working status, tenure, region, ACORN category, technology usage, newspaper readership, commerical TV viewing, supermarket
usage, household size, and terminal education age, June 2006
Somerfield 33 67
Technology users: Tesco 35 65
Internet users 38 62 Waitrose 41 59
Satellite/cable/digital TV 33 67 Any discounter eg Aldi, Lidl, 26 74
Netto
Daily newspapers:
Broadsheet readers 40 60 Household size:
Mid-market tabloid readers 30 70 1 person 29 71
Popular tabloid readers 33 67 2 people 22 78
3 people 34 66
Commercial TV viewing: 4 people 43 57
Heavy (5+ hours/day) 30 70 5+ people 42 58
Medium (2-5 hours/day) 32 68
Light (0-2 hours/day) 31 69 Age finished full-time
education:
Supermarket usage:
Asda 34 66 16 or under 5 95
Co-op 30 70 17-18 24 76
Iceland 32 68 19-20 34 66
Marks & Spencer 32 68 21+ 39 61
Morrisons 28 72 Still studying 46 54
Sainsbury's 34 66
39
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Mintel Market Intelligence Report – Adult Soft Drinks – UK- January 2006
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2006
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