1. Coca-Cola in China
“Think Local, Act Local”
Product: Coca Cola Regular
Cranfield University 21/10/2010
Module : MSP
Presented by learning team 2:
Ansuha Bhat
Mohammad Aladalh
Rita Batalha
Tina Lai
Victor Zhang
2. Is
_
1. Mission Statement
2. Corporate Objectives
3. Value in Use
4. Buying Criteria
5. Consumer Segment
6. Perceptual Map
7. PESTLE Analysis
8. Porter’s Five forces
9. BCG Matrix
10. Market Attractiveness
11. Critical Success Factors
12. Directional Policy Matrix
13. Marketing Strategies: 4 Ps
14. Marketing Strategies: CSF
15. Assumptions
16. New product
17. Conclusions
Agenda
3. Mission Statement
Coca Cola will constantly strive to provide a quality range
of flavoured drinks for all individuals tastes and lifestyles in
China.
We will maintain sustainable growth and attractive returns,
through the development of a profitable product line and
our operational excellence.
4. Corporate Objectives
We aim to increase our sales in China by 15% using our
effective strategy, "think local, act local“ by 2015
Establish 3 new manufacturing firms in the rural areas
Increase market share by 5% in 2015 by targeting a new
segment of customer through a new product which will
cater their needs
Exceed USA and become the second largest market in
terms of per capita consumption of Coca-Cola products
by 2020
7. Consumer Segment
Who are we talking to?
Generation Y
(http://en.wikipedia.org/wiki/Generation_y)
Generation Y comprehends a group
of people born aged between 15-35
years old. They have divided into
subsequent trends, such as the
Fashionists and Techno lovers.
8. Consumer Segment
Genuine:
Ting is a marketing student with 27 years
old . She loves Coca Cola more than her
mother.
Drinks Coca-Cola on daily basis and she
would hardly change it for another
brand.
Being fit its important, but it is not a
requirement. She preferes to be updated
about the latest trends in fashion or arts.
In good shape:
Zhang is a young professional with 34
years old. He is very active and practice
several sports.
He is not a big fan of carbonated drinks,
prefers natural juices or sports drinks.
He is very rational. Brands does not
mean anything to him, however he
prefers to consume local brands than
international.
9. Consumer Segment
Brand Consumers:
Hong and Li are two best friends both at
18. For them Coca-Cola represents
celebration/ party and a feeling of
closeness with their idols.
They see sports as hobbies and not a
requirement for being fit.
They drink Coca-Cola in parties ,when
they go to cinema or go shopping.
Light on the pocket:
Chen is a mid-age adult who cares how
much is going out of his pocket.
He neither cares for brands and health.
He would prefer Coca-Cola to other
health drinks because it would turn out
cheaper.
10. Perceptual Map
high brand affinitylow brand affinity
high health awareness
low health awareness
Genuine
Brand Consumer
In good shape
Light on the pocket
11. Consumer Insights - survey
Female
44,75%
Male
55,24%
Who are they?
18-35: 53,73% 35-50: 34,33%
>50: 11,94%
How old they are?
< 2 bottles
55%
Weekly consumption*
6-7 bottles
11%
> 8 bottles
12%
3- 5 bottles
22%
*330ml
12. PESTLE Analysis
What changes in
government policy have
a big impact on the way
Coca-Cola operates?
Politcal Factors
What social and cultural
aspects affect the
customer needs?
Social Factors
What changes in the
technological environment
affects the production
levels and the business in
general?
Technological Factors
What significant legal
changes may affect
Coca-Cola’s behaviour?
Legal Factors
What environmental
factors can affect the
consumer’s insights and
choices?
Environmental Factors
What economic factors
effect Coca Cola’ ability
to generate income?
Economical Factors
13. PESTLE Analysis
Political
Bureaucracy, corruption and a lack of transparency are
key obstacles to conduct a business in China
Tax incentives are offered to foreign investors as part of
the "open door" development strategy
Lack of coordination between central and local authorities
• Lack of federal structure
• Investment climate to be insecure
14. PESTLE Analysis
Economic
Favorable government policies (Free-market economy)
• Developing the capital markets
• Undertaking significant bank reforms
Rising unemployment
• In 2008, almost 70% of job seekers were unemployed
• 11 million people were laid off and are now without
jobs
15. PESTLE Analysis
Social
Quality of lifestyle is increasing as the increasing of
purchasing power and education level
Decline in poverty, per capita income was $6,500 which is
one of the highest in Asia in 2009
One child policy to reduce population rate and decrease
the pressure on the resources of the country
16. PESTLE Analysis
Technological
Larger number of R&D institutions:
• Coca-Cola opened its $90 million Innovation and
Technology Center in Shanghai, 2009
• China produces the second largest number of science
and engineering graduates
The increasing awareness of technology. (E.g. new bottle,
new label, design etc.)
17. PESTLE Analysis
Legal
Increasing importance of anti-monopoly law:
• The acquisition of Huiyuan by Coca-Cola failed
Facilitation of (Foreign Direct investment) FDI:
• Clear and fast procedures and processes for foreign
investments
Reporting and accounting standards;
• Only a very small group of certified accounting
professionals
• Lack of modern financial reporting
18. PESTLE Analysis
Environmental
Increasing the importance of environmental policies:
• State Environmental Protection Administration
• Inspection of industrial companies on a regular basis
• Coca Cola will be inspected and supervised regularly
to make sure that it meets the environmental
standards in its industrial operations
19. Porter’s Five Forces
Rivarly among
existing competitors
Threath of new
entrants
Bargaining
power of
suppliers
Bargaining
power of
buyers
Threath of
substitutes
Threath of new entrants: WEAK
• Brand Image / Loyalty: Coca-Cola has
consolidate brand equity and loyal customer
• Retailer and super markets shelf space:
Retailers require significant margins for the shelf
space they offer
• Advertising Spends
Eg. In 2008, Coca-Cola invested €81.2 million in
the Beijing Olympic
• Substantial fixed cost
Bargaining power of buyers: WEAK
• Individual consumer may have little power
over the companies
• Wholesalers, distributers and retailer may
have certain power over Coca-Cola
• Coca-Cola also has its own well-developed
distribution channel in China
Threat of substitutes: STRONG
• There is a number of other soft drinks can
easier substitute Cola. Eg. tea
• The increasing health awareness has lead to
the trends of healthy drinks, such as milk or
flavored juice
• Consumers have more choices than ever
before
Bargaining power of suppliers: WEAK
Availability of the ingredients on the Chinese
market
Eg. Such as aspartame which many often is
substitute for saccharine
Fluctuations in market price:
Eg. Market turbulence increases Coke’s
vulnerability to price fluctuations
Rivalry: STRONG
Pepsi taste: Pepsi has a similar taste with
Coca-Cola
Pepsi marketing: has more successful marketing
strategy in China than Coca-Cola
Future Cola: has its advantage in coverage in
rural areas where Coca-Cola has failed to step
into
22. Critical Success Factors
Product-market: Genuine
Relative Business Strengh: 0,5
C.S.F.C’s Weights
Score/weighted score
Above Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola
Regular
Future
Cola
Pepsi Substitutes
Just for Taste 10
Price 10
Brand
affinity
30
Health
Awareness
30
Promotions 20
Totals 100 6,7 4,3 5,5 6,2
9
0.9
3
0,3
9
2,7
4
1,2
8
1,6
2
0,2
4
0,4
3
0,9
4
1,2
7
1,4
8
0,8
3
0,3
8
2,4
4
1,2
4
0,8
7
4
0.4
6
7
2,1
6
23. Critical Success Factors Product-market: In good shape
Relative Business Strengh: -2,25
C.S.F.C’s Weights
Score/weighted score
Above Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola
Regular
Future
Cola
Pepsi Substitutes
Just for Taste 15
Price 10
Brand
affinity
20
Health
Awareness
40
Promotions 15
Totals 100 4,45 3,15 3,9 6,7
3
0,45
5
0,5
7
1,4
3
1,2
6
0,9
2
0,3
6
0,6
3
0,6
3
1,2
3
0,45
3
0,45
5
0,5
5
1
3
1,2
5
0,75
7
3
0,3
5
9
3,6
5
1,05
1,0
0,75
24. Critical Success Factors Product-market: Brand Cons.
Relative Business Strengh: 1,30
C.S.F.C’s Weights
Score/weighted score
Above Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola
Regular
Future
Cola
Pepsi Substitutes
Just for Taste 20
Price 10 2
Brand
affinity
30
Health
Awareness
10
Promotions 30
Totals 100 6,9 4,4 5,6 3,9
7
1,4
0,2
9
2,7
2
0,2
8
2,4
4
0,8
3
0,3
4
1,2
3
0,3
6
1,8
5
1
3
0,4
6
1,8
3
0,3
7
2,1
4
0,8
3
0,3
3
0,3
4
0,4
7
2,1
25. Critical Success Factors
C.S.F.C’s Weights
Score/weighted score
Above Diagonal line: Score out of 10
Below the digonal line: Multiply score x weight
Coca Cola
Regular
Future
Cola
Pepsi Substitutes
Just for Taste 10
Price 30
Brand
affinity
10
Health
Awareness
10
Promotions 40
Totals 100 6,6 6,8 6,1 4,2
4
0,4
7
2,1
4
0,4
5
0,5
8
3,2
3
0,3
8
2,4
4
0,4
5
0,5
8
3,2
4
0,4
7
2,1
3
0,3
5
0,5
7
2,8
4
0,4
2
0,6
3
0,3
5
0,5
6
2,4
Product-market: Light on the pocket
Relative Business Strengh: -0,2
26. Directional Policy Matrix
HIGH LOW
HIGH
LOW
MarketAttactiveness
Relative Business Strenght
Light on the pocket
In good shape
+2 -2
3
4
5
6
7
01 -1
Brand Consumer
Genuine
27. Marketing objectives
Genuine:
Increase revenue by 5% in 3 years
In good shape:
Increase sales by 3% in 3 years
Brand Consumer:
Maintain market attractiveness by 4% in 3 years
Light on the pocket:
Increase market share by 2% in 3 years
28. Directional Policy Matrix “future”
HIGH LOW
HIGH
LOW
MarketAttactiveness
Relative Business Strenght
Light on the pocket
In good shape
+2 -2
3
4
5
6
7
01 -1
Brand
Consumer
Genuine
+ 5%
- 4% + 3%
+ 2%
New segment 1
New segment 2
29. Marketing Strategies: 4 Ps
Element Current Future
Product Coca-Cola Coca-Cola
Price Competitive pricing Competitive pricing
Promotion Internet, Sponsorship, Press Internet, Sponsorship, Press
Place Cities and large towns
- Vending machines; outlets, bars,
cafés, restaurants, supermarkets
Cities and large towns (the same)
Rural areas
- local stores
Segment: Genuine
31. Marketing Strategies: CSF
Segment: Genuine
CSF: Brand Affinity Score: 7 (current) 8 (objective)
Description of
Strategy
Increase revenue by 5% from this segment.
Actions to
achieve the
strategy
1) Increase brand affinity and make taste more differentiable from
other carbonated drinks
2) Get feedback on what this segment wants and is looking for
Responsability Market Research, Marketing and R&D
Approx. cost Meddium
32. Marketing Strategies: CSF
Segment: Brand Consumer
CSF: No change Score: N/A (current) N/A (objective)
Description of
Strategy
1) No change in CSF’s since we want to maintain the relative
business strength
2) Decrease in market attractiveness (maintain revenue)
Actions to
achieve the
strategy
1) Reduce cost on TV advertising and celebrity endorsement
2) Target mutual branding with ohter big brands
Responsability Marketing
Approx. cost Low/Meddium
33. Marketing Strategies: CSF
Segment: In good shape
CSF: Health Awareness Score: 3 (current) 5 (objective)
Description of
Strategy
This segment is a very profitable one as it promises returns.
Increase relative business strength and thus, profits by 3% in 5yrs.
Actions to
achieve the
strategy
1) Introduction of a new product to cater to this segments' health
and taste needs.
Responsability Marketing, Operations and Market Research and the whole
company
Approx. cost High
34. Marketing Strategies: CSF
Segment: Light on the pocket
CSF: Promotions/Price Score: 7/7 (current) 8/8 (objective)
Description of
Strategy
Increase revenue from his segment by 2% in 5yrs.
Actions to
achieve the
strategy
1) Promote Coca-Cola with other brands/items on a regular basis
2) Increase bulk packaging in off-trade sales
Responsability Finance, Marketing and R&D
Approx. cost Meddium
36. Coca-Cola Tea
Features:
Coca-Cola Flavour
Caffeine Free
Hot drink
Tea bags
Needs:
Who is our target?
Tea lovers; Health conscious segment ; Coca-Cola Fans;
What is the consumer’s need
Drink a non-carbonated drink with Coke flavour
Benefits:
Health
Stress Relief
Closeness with Chinese culture
茶
37. Assumptions
Corruption and bureaucracy in China may affect Coca
Cola in the near future.
Increase in purchasing power of the people will lead to
increased sales of Coca Cola.
Inflation in prices may not affect sales of Coca Cola as we
are assuming purchasing power of people will also increase
Anti-monopoly law affecting ban on further acquisitions.
New entrants, both local and international, will not be
able to compete with Coca Cola's growing markets.
Shift of industries to the rural areas will increase markets
and thus market share for Coca Cola.
38. Conclusions
1st Coca-Cola aim provide a quality range of flavoured drinks and exceed USA in per
capita consumer of Coca-Cola products
2nd The genuine segment is the most profitable. We intend to maintain the market
attractiveness and increase the business strenght
3rd The brand consumers required huge investments, so we intend to invest less in
promotions (reducing market attractiveness) and maintain the business relative
strengh and revenue
4th The good shape segment provide negative cash flows despite the market is
growing. We want to increase the market attractiveness and relative business
strenght, by introducing the Coca-Cola tea product
5th The light on the pocket segment experienced low market growth and relative
market share. Despite that, we believe that we can increase in market attractiveness
and business strenght by investing more in off-trade promotions and synergies
So on the next “X” minutes , we are going to talk about the subjects that we learn on the MSP lectures:
I am going to talk about: ... ; Ansuha Bhat: will talk about... ; Mohammad will show our aproach about: ....; Tina Lai will gives you some insights about: ....
And finally Victor will speak about ....
Starting with the mission statement our goal was to answer three characteristics that we considered fundamental. We are talking about: the purpose, the business and the distinctive competence. We believe that the mission of Coca-Cola it to constantly strive to provide a quality range of flavoured drinks for all individuals tastes and lifestyles in China.
This can include carbonated drinks but also non-carbonated drinks.
In order to achieve this mission, Coca-Cola will need to maintain:
» sustainable growth by maximizing in sales and provide profits to the company
» Attractive returns to shareholders, through the development of a profitable product line and operational excellence.
For us it is clear that the purpose is to maintain the market leadership; The business is soft drinks; And distinctive is profitable product line and operations (eg. Marketing, r&d, logistics… etc)
Next, about the corporative objectives we try to estimate what Coca-Cola want to achieve in the future.
To designed the Value-in-use, we first defined which benefits the customers can get when they drink Coca-Cola.
We assume that different customers can have different benefits, such as Hapiness and fun, Refreshing, Just for taste etc..
And then, we suggest which external and internal attributes of the Coca-Cola drink can led to this values.
We believe that the our product as quality and taste, and can led to this values: Hapiness; refreshing, Just for taste; social gathering.
However, if the package and labelling look attractive to a customer, can make them believe that the product has quality and is tastefull
Ingredients are linked to refreshing and just for sure. Perhaps, some customers care what they are drinking exactly.
Promotions, we are talking about on trade promotions
About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
In order to achieve the mission, it is essential to create value to:
* Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
* Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
* Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.
Before we start to talk about the perceptual map, we decided to identify who are our customers, having in mind the differences the 2 motivators factor: health awareness and the percepetion of Coca-Cola brand
Futher this we wanted to specify
About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
In order to achieve the mission, it is essential to create value to:
* Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
* Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
* Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.
About the mission statement our goal was to answer the three characteristics that we considered fundamental. We are talking about: the purpose, the business and the values of Coca-Cola in China. We believe that the mission of Coca-Cola is:….
In order to achieve the mission, it is essential to create value to:
* Consumers/Consumers » By offering a broad range of nonalcoholic ready-to–drink “drinks”.
* Partners » For instance cultivate a healthy relationship with bottlers, governments, suppliers
* Community » Communicate the brand values (hapiness, enjoyment and refreshing) that in suitable to the Chinese culture and life style.
- Coca-Cola and Pepsi have dominated the Cola Industry...
- Low which indicate low profit margin (incentive) to the outsider (new entrants)
Hello everybody, we are the learning team 2 and we are going to present our perspective about Coca-Cola in China; The product that we chose is Coca-Cola Regular