Coke Case
- Describe the specific type of consumer that the Coca-Cola Company is targeting with each of the following products: Diet Coke, Coke Zero, Coke Life, and the new Diet Cokes. What types of benefits sought, usage rates, demographic & lifestyle segmentation is each product’s target consumer most likely to include?
(M:Marketing Chapter 9, pages 178-191)(Harvard Business Review Articles – Cola Wars Continue)
This should be answered with a table. (16 pts)
Diet Coke
Coke Zero
Coke Life
New Flavored Diet Coke
Benefits Sought
The consumers of the product sought fewer carbohydrates, lesser calories, reduced weight gain rates, and reduction in sugar cravings.
The customers consuming the drink seeks to reduce calories’ intake as the drink have zero calories, zero fats, zero proteins, zero sugar, 2% potassium daily value (DV) and 2% sodium DV. Additionally, the users seek the Coca-Cola flavor.
Uplifting refreshment, improved taste, unified use along with food, natural sweeteners (stevia leaf extracts and sugar cane), and 35% reduction in calories.
New flavored coke diet has similar benefits to coke diet. Zero calories, no sugar and reduced chances of weight gains. Additionally, the new beverage has enhanced flavor.
Usage Rates
The introduction of coke diet resulted to the annual growth of coke drinks’ consumption by 3% for 30 years since 1970 (Yoffie and Kim 1).
By 2009, the consumption rates increased to 30% market share from 24% in the 1990s (Yoffie and Kim 10).
By 2014, the market grew by 3% in volume sales which increased sales by 6% in US. The Asia-pacific increased 6.9%. 35% of the beverage market was accounted for by soft drinks consumption (Richard Ivey School of Business Foundation 2).
The company is committed to increase coke diet’s consumption by 50% in 2020 (Richard Ivey School of Business Foundation 5).
Demographics
The drink is targeting adult women between the age of 18 and 35 years.
The product targets women and individuals sensitive to weight gain.
Young adults and environmentally safety conscious intellects
The major consumers are women as they make family dietary decisions. The consumers are 18 years and above with most of them falling under 18-35 years’ age bracket.
Lifestyle
The consumers are interested to keep up with the prevailing body shape trends.
The consumers are committed to health-lifestyles.
The consumers value an eco-friendly lifestyle.
The clientele base is committed to promoting healthy-lifestyle.
- Coke is sold in many restaurants. What type of buyer is the restaurant community as identified in chapter 7 (M:Marketing pages 142-144), business to business marketing? What is the buying situation most likely encountered when purchasing Coke for a chain restaurant? (Page 152).
(4 pts)
The restraint community buys coke drinks in bulks. However, sector’s players also act as resellers in of the coke brands in the business to business marketing model. The restaurants have production units which add value to raw material food products to deliver finished products in the form of ready food for consumptions. However, businesses are termed as resellers as they purchase finished goods (coke drinks) and resell them to the clients at a profit margin. Restaurants purchases finished coke drinks from Coca-Cola and Coke bottling companies. The drinks are supplied while packaged in units for direct resell to clients. The consumption process in a restaurant involves a re-purchase. The consumers do not make a lot of decision-making processes. In most instances, clients place orders that resemble previous ones. Therefore, the restaurants are resellers in the coke drinks’ supply chain as they resell the drinks without value addition or alteration.
According the video “Choice, Happiness and Spaghetti Sauce” with Malcom Gladwell, what was the product strategy error made in the introduction of “New Coke” in 1985? Research the New Coke introduction further, (much has been written about this case) what consumer research process errors were made as well? (15 pts) The 1985 new coke launch was encouraged by the high Coke-Pepsi market rivalry. Pepsi had sought an alternative to reduce its sugar and ingredients content without altering the taste of Pepsi drinks (Gladwell 1:54 min). The launch of the New Coke-Cola insinuated that the original Coke brand’s product was to be stopped. However, the reduced production of the previous drink lowered its supply on retail shelves and hence low supply in the market. The move catalyzed public outrage due to the unwarranted supply cut. Additionally, the company’s sales also declined. The removal of the original product was a great self-induced mistake by the organization. The company should not have looked for the perfect Coke, but the perfect Cokes (Gladwell 3:55min). Moreover, the company’s researchers advised on blinded decisions. Consequently, the company endeavored to enhancing the taste instead of preserving the originality of the drinks. Most individuals were discouraged to maintain their loyalty to a company that breached theirs leading to high market share decline.
- Why did TCCC (The Coca-Cola Company) make the decision to develop and launch Coke Life? What external and internal factors led to that decision? Do additional research into the success of this product. How would you evaluate this attempt at offering a “green” soft drink (15 pts)
The desire for eco-friendly production procedures inspired coke Life. The company was motivated to create and introduce to the market a new Coke drink to fill a sizeable untapped market base. A high number of adult clients were seeking options for carbonated beverages that could provide natural flavors and sweeteners. Consequently, the company turned to sugar cane and stevia leaves extracts to enhance the sweetness of the beverages. Additionally, the inspiration to launch Coke Life was also enhanced by worldwide legislatures and scientists’ external pressures, which linked soft drink consumption to health issues such as tooth decay, diabetes, and overweight. Moreover, internal issues such as reduced net profits and sales revenues also encouraged innovation of the product to tap more market base.
Coke Life was launched to target a specific market base. The brand targeted individuals who highly valued sweetness and personal health. Additionally, the product was driven to attract environmentally sensitive consumers. The stevia leaf extracts were healthy alternatives to sugar and artificially made sweeteners hence lower a consumer’s carbon footprints.
I would evaluate the attempt to offer green soft drinks as a highly innovative move. The product designer had done a lot of market research and realized the high desire of people to minimize carbon footprints. Additionally, the researchers were aware of the trending news associating soft drinks to health issues such as obesity. As a result, the company endeavored to solve the environmental and health challenges by offering an alternative product. Hence, the move was innovative, driven to help serve the emerging consumer base.
- The Honest Tea Case speaks of the early days of rapid organic product segment growth and corporate acquisitions into that category. RTD beverage trends have continued with “non-soft drinks” providing the bulk of the growth – such as RTD teas, nutrient and antioxidant infused waters, energy drinks, and alternative milks leading the category.
Honest Tea is a young start-up company seeking to benefit from a gap in the ready to drink beverage market. The company aims to introduce outstanding organic and quality packed tea drinks. The brand also seeks to offer whole-leaf teabags in the American consumer market. However, the project requires high investment for sustainable operations and financial growth of finances in the attempt to earn a significant market share.
Seth Goldman said Honest Tea aspired to be a “change agent” in the industry. What did he mean by that? Is this a realistic goal?
The founder, Goldman Seth, desired to become the industrial change agent. The founder implied that he would turn the beverage sector from artificial and unhealthy drinks to healthy options (Goldman 4:40 min). The sector’s players offering tea have always been providing the products at the outlets. However, the company is seeking to encourage portable tea beverages. Hence, the founder aspired of gaining a considerable consumer base from soft drink player’s clientele base.
Was he on the way to achieving that goal before the sale to Coca-Cola, and has the sale impeded or helped further progress? What did Honest Tea need from Coca-Cola to be realize his dream?
Honest tea posed a significant threat to the local market for Coca Cola. Although the growth process would be slower, the business was in the process of achieving the desired. However, the brand was facing financial constraints needed for market extensions. The company needed a financial support from major financiers or organizations such as Coca-Cola. On the other hand, the Coca-Cola brand saw the threat before the company had realized the desired. Hence, Coca-Cola took advantage of financial demands for new entrants and offered to buy the company. The founder was attracted to selling the company by the capital gains.
When smaller organic companies are bought by large firms like Coca-Cola, are they “selling out”? What is your opinion of these acquisitions? (Coke-Honest Tea; Unilever-Ben & Jerry’s; Clorox-Burt’s Bees) (20 pts)
Nevertheless, the purchase of Honest Tea by Coca-Cola was driven to helping the company control the market share in the sector. The company’s Coke Life brand did not do well. Hence, the company has not been able to tap the environmentally sensitive segment. The tremendous growth of Honest Tea could have hindered Coca-Cola’s opportunity to penetrate the market. Hence, acquiring the company could help the company control a broader beverage market.
Works Cited
Gladwell, Malcolm. “Choice, Happiness and Spaghetti Sauce.” TED, uploaded by TEDx Talks, February, 2004, www.ted.com/talks/malcolm_gladwell_choice_happiness_and_spaghetti_sauce?language=en.
Goldman, Seth. “How Entrepreneurs Can Change Society-The Story of Honest tea: Seth Goldman at tEDcMidAtlantic.” YoutTube, uploaded by TEDx Talks, 22 November 2013, www.youtube.com/watch?v=21d7sOyVGKg.
Richard Ivey School of Business Foundation. Coca-Cola Goes Green: The Launch of Coke Life. Ivey Publishing, 2020, pp. 1-10.
Yoffie, David B. and Renee Kim. Cola Wars Continue: Coke and Pepsi in 2010. Harvard Business School, 2011, pp. 1-22.