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Coca-Cola in Great Britain

Live On The Coke Side of Life

Table of Contents
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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
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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)

Coca-Cola Great Britain (CCGB) is responsible for marketing 21 brands which


contain over 100 products to consumers in Great Britain. CCGB is also responsible
for developing new brands, extending existing brands and protecting Coca-Cola
trade marks in GB. Furthermore, there is also the Coca-Cola Enterprise Ltd. (CCE)
which is the local bottler. CCE is responsible for the manufacturing, distributing,
sales and trade marketing of the brands of CCGB throughout Great Britain.
Together, CCGB and CCE form the so-called “The Coca-Cola System”. (CCBC Website)

This report provides a marketing audit on which a marketing objective is based.


Finally an action plan for 14 months is provided.
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PESTLE Analysis of the macro-environment1 Environment

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
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➢ Sponsoring of sport events

Opportunity Threats

➢ Growing bottled water market ➢ Mature market - Decline in carbonated


drinks
➢ Fast growing markets for pure juices/fruit
juices, and especially for smoothies ➢ Intense competition

➢ Growing market for healthier drinks ➢ Own labels

➢ Recycling initiatives ➢ Consumers are increasingly concerned


about health and obesity
➢ Possible acquisition of Highland Spring
and other possible acquisitions ➢ School ban on carbonates

➢ Smoking ban ➢ Fear of benzene in diet drinks

➢ Aging population ➢ Consolidation of retail

➢ Healthy drinks in schools ➢ Acquisition activities of rival companies

➢ Challenging cost environment

BCG Matrix3

3Based on information from Global Market Information Database


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Powerade Functional Drink Five Alive Fruit/Vegetable


Drinks
Minute Maid Fruit/Vegetable Oasis Fruit/Vegetable Drinks
Drinks
Malvern Bottled Water Capri Sun Fruit/Vegetable
Drinks (CCE)
Kia-Ora Fruit/Vegetable Drinks Appletizer Carbonates(CCE)
Sprite Carbonates Coke Zero Carbonates
Dr Pepper Carbonates Lilt Carbonates
Schweppes Carbonates Fanta Carbonates
Diet Coke Carbonates Coca-Cola Carbonates
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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:

• Retailers – ranging from large supermarkets to corner shops, etc.

• Organisations – schools, universities, pubs, clubs, cinemas, cafes, restaurants and workplaces
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• 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

Brand Market Market share in respective market for 2006

Pepsi Carbonates 10.8%

Tango Carbonates 2.1%

J2O Juice Drinks 6.7%

Fruit Shoot Juice Drinks 12.3%

Tropicana Fruit Juice 21.5%

• 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

Brand Market Market share in respective market for 2006 (for

4All information is retrieved either form Mintel Intelligence Report or Global Market Information Database. Detailed list can be found in the
reference list
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Ribena) and for 2007 (for Lucozade)

Lucozade Sports Drinks 59.5%

Ribena Juice Drinks 13.8%

• Company owns two of the most well-known drinks brand in the UK


• Both brands hold strong share in the respective market

PJ Smoothies

Brand Market Market share in respective market for 2006

PJ Smoothies Smoothies 18.7%

• Cut prices in 2008


Danone Waters

Brand Market Market share in respective market for 2006

Volvic Bottled water 15.7%

Evian Bottled water 13.7%

• Is in a good position due to the two top-selling brands


• Tap water is very popular among those people after the age of 55 years

The Red Bull Company

Brand Market Market share in respective market for


2007(estimated)

Red Bull Energy and Stimulant Drink 42.5%


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• Flagship global brand with one single core brand


• Lack of variety and single sector focus

AG Bar

Brand Market Market share in respective market for 2006

Irn-Bru Carbonates 4.1%

• High brand loyalty for carbonates brand Irn-Bru


• Extended portfolio (bottled water)
• Irn-Bru’s main strength is through impulse channels
• Irn-Bru performed less well in supermarkets

Innocent

Brand Market Market share in respective market for 2006

Innocent Smoothies 61.9%

• Dominates the UK smoothies market


• Beat first mover PJ Smoothies
• Known for having a strong ethical and sustainable business stance
• Donates 10% of its profits to charities in countries where it sources fruit.

Customers, consumers and markets


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Soft Drinks Market

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

• Energy and Stimulant Drinks

• Smoothies
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Table 1: Soft Drinks UK Market Segmentation

200 2003 2005 2006 %


0 (est) chang
e

£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

Sports drinks 39 0.5 98 0.9 137 1.2 150 1.3 +284.6

Smoothies 8 0.1 43 0.4 79 0.7 134 1.1 +1,575


.0

Carbonates 4,57 53. 5,39 54. 5,72 50. 5,856 47. +28.1
0 9 3 6 7 3 9

Total 8,4 10 10,5 10 11,5 10 12,093 10 +42.8


71 0 29 0 38 0 0

(Mintel Reports)
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Market for smoothies

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.

Facts about the market for smoothies:

• Between 2001 and 2005 retail sales of smoothies increased by 267%

• Untapped market, 31% of the adult population buy smoothies

• 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.

• Smoothies are most popular in London and the South

• Introduction of one-litre pack boosted sales, and in-home consumption

• Market is segmented into fruit, dairy and functional smoothies

5 For more information on buyers and non-buyers of smoothies see Appendix 3


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• Market penetration is rising

• Market is led by Innocent and PJ Smoothies

• Expenditure on fresh fruit and vegetables has increased

(Mintel)

Table 2 : Forecast of UK retail sales of smoothies, 2001-11

Volume At Current At 2006 prices


Prices

m litres Index £m Index £m Index

2001 6.3 19 21.5 16 22.6 17

2002 9.4 28 31.8 24 33.1 25

2003 11.4 34 41.4 31 42.6 32

2004 12.4 36 46.0 34 47.0 35

2005 24.0 71 79.0 59 79.8 60

2006 (est) 34.0 100 134.0 100 134.0 100

2007 (fore) 48.9 144 151.8 113 149.5 112


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2008 (proj) 58.7 173 175.3 131 169.8 127

2009 (proj) 71.0 209 204.9 153 195.0 145

2010 (proj) 85.0 250 218.3 163 203.9 152

2011 (proj) 97.3 286 235.28 176 215.5 161

(Mintel)

Table 3 :Brand manufacturers sales of the smoothies market, 2001-06


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2001 2003 2005 2006 % change % change

£m % £m % £m % £m % 2001-03 2003-06

Innocent 3.5 16 11.2 27 47.4 60 83 62 +220 +641

PJ Smoothies 8.6 40 14.1 34 14.3 18 25 19 +64 +77

Own-label 9.0 42 14.9 36 15.8 20 23 17 +66 +54

Others 0.4 2 1.2 3 1.5 2 3 2 +200 +150

Total 21.5 100 41.4 100 79.0 100 134.0 100 +93 +224

(Mintel)
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Table 4 : UK value sales of smoothies by type, 2001-06

2001 % 2003 % 2005 % 2006 (est) % % change

£m £m £m 2001-05

Fruit 15.7 73 31.9 77 63.2 80 107.2 80 +582.8

Dairy 5.2 24 6.6 16 7.9 10 10.7 8 +105.8

Functional 0.6 3 2.9 7 7.9 10 14.7 11 +2,350

Total 21.5 100 41.4 100 79.0 100 134.0 100 +523.3

2001 % 2003 % 2005 % 2006 (est) % % change


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m litres m litres m litres 2001-06

Fruit 4.7 75 9.3 82 20.6 86 39.6 86 +742.6

Dairy 1.4 23 1.4 12 1.7 7 2.8 6 +100.0

Functional 0.1 2 0.6 5 1.7 7 3.7 8 +3,600

Total 6.3 100 11.4 100 24.0 100 46.0 100 +630.2

(Mintel)
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Table 5: Consumption of fruit and vegetable juice 2002-2006


Base: adults aged 15+

20 20 20
02 04 06
% % %

Drunk in last 12
months:
58. 56. 56.
All users
8 0 3

Heavy users 5.0 5.3 6.1


11. 12. 13.
Medium users
6 5 4
40. 38. 36.
Light users
2 1 8

41. 44. 43.


Non-users
2 0 7
Taken from the TGI survey of around 25,000 adults
(Mintel)

Table 6: Consumption of drinks – 7-14-year-olds, 2001-05


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Base: youths aged 7-14 20 20 20


01 03 05
% % %

Ever drink:

Fruit juice & fruit 84 85 86


drinks
Flavoured milk 63 61 56

Fizzy drinks 93 92 88

Bottled water 42* 53* 74

* 11-14s only
Taken from the Youth TGI survey of around 6,000 youths aged 7-19

(Mintel)
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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
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Figure 1 Ansoff’s growth matrix

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.

Marketing Mix (4Ps)


Product
Augmented
Product planners need to think about the product on three levels (see figure 2) Each level adds more customer value.
product
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Actual
product
Core
benefit

Figure 2: The anatomy of a product


Based on Kottler & Armstrong, 2004, p. 279
Hill, 1997, p. 122

Core benefit Health benefit and quick, nutritious and portable


convenience

Facilitate the consumption of


fruit in a convenient format

Pleasant health treat

Actual product Brand name

Quality 100% fresh fruit

Packaging Bottles and cartons

Design

Features Different flavours (soft fruit


and exotic fruit)

Seasonal flavours
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Augmented product Guarantees No additives

No sugar

No water

Service Product hotline

Image Coca-Cola’s image for


healthy living

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)

A branding strategy according to Coca-Colas mission should be developed, namely:

The Coca-Cola Company Mission

• To refresh the world - in mind, body and spirit

• To inspire moments of optimism - through our brands and actions, and

• To create value and make a difference - everywhere we engage


(CCBC Website)

Packaging
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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)
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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.

Price skimming and competition-based pricing

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.

Table 7 :Average prices of soft drinks in the UK in £ per litre, 2001-06


2001 2002 2003 2004 2005 2006 (est)
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Smoothies 3.41 3.38 3.63 3.70 3.29 3.94

Juice drink 0.85 0.85 0.84 0.87 0.90 0.90

Fruit juice 1.20 1.22 1.23 1.23 1.23 1.22

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)
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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)

Table 8: UK retail sales of smoothies,


2001 2003 2005 2006 % by type of outlet, 2001-06
(est) change
* includes independents and convenience
£m % £m % £m % £m 2001-06 stores (Tesco Metro, Sainsbury’s Local are
included in grocery multiple figures)

Grocery 8.8 41 19.0 46 47.6 60 83.1 +844.3


multiples
Logistics

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)
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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

The advertising message for the smoothies should be product-oriented.

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)
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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.

Outdoor and Ambient Media

Coca-Cola could use the transport-orientated advertising media and place their ads on buses, metro and tube.

Sponsorship
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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.

In-store promotions should be taken into consideration.

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
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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.
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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

Heavy reliance on The Coca-Cola Company – Coca-Cola Enterprises's financial success is


dependent upon its relationship with The Coca-Cola Company which can make Coca-Cola
Enterprises susceptible to The Coca-Cola Company's brand performance. The hit rate of
The Coca-Cola Company's carbonates brand extensions can directly impact on Coca-Cola
Enterprises's operating profits.

Consumption shift – Coca-Cola Enterprises's cash cow business remains carbonates, and
consumers' consumption shifts have negatively affected volume growth.
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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

The Coca-Cola Company's acquisition activities – The Coca-Cola Company's commitment


in developing diet carbonates and expansion in non-carbonates provide good growth
opportunities. Additionally, Coca-Cola Enterprises can benefit from The Coca-Cola
Company's aggressive acquisitions in the non-carbonates sector and diversify the product
portfolio.

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.

Challenging cost environment – increased expenditure on energy, raw material and


packaging mix has also negatively affected the operating margin.
(Source: Global Market Information Database)
37

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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

Base: 1,047 adults aged 15+

Buyers Non- Children aged 5-9 46 54


buyers Children aged 10-15 38 62
% % Children any 0-15 41 59
No children 28 72
All 31 69
Special Groups:
Gender: ABC1 pre-/no family 56 44
Men 31 69 ABC1 families 49 51
Women 32 68 ABC1 third age 24 76
ABC1 retired 12 88
15-19 49 51
15-24 44 56 Working status:
20-24 39 61 Working 41 59
25-34 48 52 Full-time 38 62
35-44 42 58 Part-time 46 54
45-54 24 76 Not working 31 69
55-64 23 77 Retired 10 90
65+ 8 92 Tenure:
Owned outright 21 79
Social grade: Buying home 38 62
AB 39 61 Renting 34 66
C1 37 63
C2 27 73 ITV region:
D 23 77 London/South 44 56
E 17 83 London 43 57
South 41 59
Marital status: Anglia/Midlands 32 68
Married 30 70 South West/Wales 23 77
Not married 34 66 Yorkshire/North East 17 83
North West 24 76
Lifestage: Scotland 31 69
Pre-/no family 47 53
Families 41 59 ACORN group:
Third age 21 79 A Wealthy Achievers 30 70
Retired 9 91 B Urban Prosperity 42 58
C Comfortably Off 28 72
Age of own children: D Moderate Means 24 76
Children aged 0-4 44 56 E Hard Pressed 38 62
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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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