Key Issues of Coca-Cola in B2B Marketing Operations
Business to business is form of business under which a firm purchases certain products for producing or manufacturing finished products. Raw material supplier and the company involved in the procedure of making finished goods will be known as business to business form of organizations. Under this form of organizations, lot of marketing challenges is faced due to which their sales, working performances, etc. get affected. Certain kinds of business to business marketing challenges are organizational buying behavior under which companies decide the products of other companies on various bases to use them for producing finished good. For instance for producing biscuits, company purchase flour from other companies. Other challenges a B2B organization needs to face are managing marketing channels, business marketing communications, etc. Coca-Cola Company is a part of B2B process of business as they purchase water, other supporting materials for manufacturing a bottle of cold drink as finished product (Austin, 2010).
Coca-Cola Company is an American multinational beverage producing and distributing company mainly across every part of the globe. It’s headquarter is based is in the Atlanta, Georgia and it is mainly famous for its flagship product i.e. Coca-Cola. The secret formula for producing this non-alcoholic beverage was invented by Mr. John Stith Pemberton in 1886 in Columbus, Georgia. After that period it was sold in the market in the year 1889 and after this Coca-Cola was incorporated as Coca-Cola Company in 1892. Today this company is listed in stock exchanges of almost all countries of the world. Its primary products are Coca-Cola, Thumbs-Up, etc. According to a research conducted in 2005, Coca-Cola Company’s beverages were sold in almost 200 countries of the globe. Mr. Muhtar Kent is the head person of the organization today as he is handling the position of Chairman of the Board (Archer, et. al., 2013).
The primary and most important issues through which every organization involved in this category needs to face is supplier chain management. It is the most important and harmful factor because if supplier stops supplying the raw materials, Coca-Cola Company cannot produce its beverages by its secret formulas. For producing finished products, all the required intermediate products should be available. Additionally, if company is in the conditions of monopoly market then there would be only one supplier or say there will be two. Single supplier and producers are performing their functions in perfect competition. It could be harmful situation for whole organization because a small issue with the supplier could result in stoppage of supply of raw materials such as water, sugar, etc. (Porter, et. al., 2011).
Maintaining supplier relationship management is being necessary to avoid these kinds of glitches in the performance of the organization. Coca-Cola Company has appointed a separate team of certain marketing environmental condition’s experts. They maintain the good relations with the suppliers because changing supplier could result in changing taste of the products and this also helps to obtain the qualitative raw materials every time. This team analyzes the time to time demands of the suppliers and along with their requirements, after every certain period of time, certain percentage of rates is increased for the raw materials to maintain the constant profitability (Nelson, et. al., 2013).Customer Relationship management strategies
Types of Challenges Coca-Cola Needs to Face
This term defines the customer’s relations with the organization, result under this term would be positive or negative and the effect of the relation of the organization with the customer directly affects the organization’s performance and goodwill in the market. Coca-Cola Company produces cold drinks and other fast food products and they also require raw materials and supportive materials to produce them. For conducting the same procedure they buy these things from the market i.e. from other organizations, hence it beings a part of the B2B process (Grönroos & Ravald, 2011). Using qualitative goods, adequate machinery, etc. are the basic things Coca-Cola needs to adopt while building good customer relationship. Coca-Cola has adopted a number of strategies in the form of offers. For instance, after some time when Coca-Cola Company builds adequate reputation amongst the different markets of the world, their suppliers started pressures the firm by not delivering raw materials on time, etc. And to stop this, Coca-Cola Company adopts the contract strategy under which, supplier bounds to provide the raw materials on the same prices for a certain period of time. For building trust and confidence level in the customer’s mind, organization needs to keep the prices of the products constant for a period of time (Reimann, et. al., 2010).
For building customer relationship better, Coca-Cola adopts following techniques:
- Promotion: Adaptation of advertisement and promotional campaigns are the best ways for setting up a positive image in the customer’s minds. Public generally opts products and services that has been promoted by their favorite celebrities, through attractive advertisements and by own experiences. Appropriate strategies should be taken to improvise the supplier’s relation because maintaining customer relationship requires adequate relations with the suppliers because till the time product will not be manufactured on time, it cannot be delivered on time.
- Qualitative products: Delivering qualitative and adequate products against the customer spending is another great technique for setting good customer relations. Coca-Cola believes in adequate quality products which are also certified from the various laboratories and this is the main reason for their survival in the competitive and dynamic environment of various countries. For delivering qualitative products to the customers, purchasing qualitative raw materials is required from suppliers.
- Feedback:This is again a smart method for building good customer relations because certain customers wants some kinds of changes in the product or in the policies of the organization and for the same they suggest the organization through suggestion boxes, feedback forms, etc. Resolving their issues by notifying them within a certain period helps the organization to build a strong positive image in the customer’s mind (Brinckmann, et. al., 2011). Appropriate feedbacks should also be given to the suppliers because customer’s could be suffered from quality of the product or with the delivery speed of the organization so if it related to the quality of the product then feedbacks should also be provided to the suppliers so that they could rectify the error.
To avoid this challenge, Coca-Cola Company needs to adopt strategies through which customer’s issues could be removed as soon as possible. Because issues of the customers could not be stopped but providing them the required solution in relevance to their issue could result in developing adequate customer relationship. Customer service team has been appointed by the Coca-Cola Company across the different countries to provide adequate responses on time in return to customer’s issues.
Business marketing channels are the sources through which organizations advertise/promote their products and services. And it is a medium for the consumers to get adequate information regarding the new products launched in the market. Apparently both parties require marketing channels mediums for their better growth and survival. Business marketing channels include modern techniques as well the traditional techniques i.e. print medium and the digital medium of advertising (Chude & Chude, 2013).
Print medium of advertising includes advertising through newspapers, magazines, distributing pamphlets across the selected area and through board hoarding at the railway stations, bus stands or at the signals stop on the roads. This technique is bit old but effective too because most of the people read newspaper for getting adequate information regarding the current affairs of the country, state, city and for getting adequate information in relevance to the new product’s launching , market trends, etc. print medium of advertising and promotion is also expensive in comparison to the electronic medium (Romaniuk, 2012).
Electronic or digital medium of promotion is a modern technique of promotion and it is very useful for the promotion of the new goods or for the promotion of the new company in the competitive world. This medium covers the large area in comparison to the print medium of advertising and most importantly it also reduce the human efforts and as it is done through the social media platforms, through emails, promotion through the television and radio because it is most preferred medium of entertainment for most of the people. Electronic medium of promotion is cheaper than the print medium and it is used by almost all big and small companies for their product’s promotion (Reich & Benbasat, 2000).
Managing Business Marketing Channels
The most important channels are direct and indirect channels and in direct channel of managing-business marketing channels are direct sale, telemarketing and online marketing while indirect channel includes industrial distributors (Etro, 2010).
Direct sales determine process of distributing products or making available the products for the consumers. This includes procedures of one channel two channels and three channel of distribution. One channel of distribution is mostly used by the online firms such as Amazon, E-bay, etc. Two channels and three channels of distribution includes two parties along with the manufacturer i.e. wholesaler and retailer for reaching the products to the customers. In the three channel of distribution process three parties are involved along with the manufacturer i.e. Wholesalers, distributors and retailers. This process increases the prices of the products hence, organization’s products demands declines continuously.
Coca-Cola Company is situated at a vast level amongst the various parts of the world hence, they uses all the three mediums of advertisement. As the company is multinational brand and they have a number of financial resources and their products are consumed by huge number of public. Still they continuously post advertisements on the televisions, radios and through print medium too, they promote their products. For continuous promotion and advertisement, company needs to deal with the advertisement agencies and for the same they also need to finalize the price of the same. With the increase in the demand of the company’s products, advertisement agencies increase the prices of the advertisements to add some more in their profits (Chung & Van Oorschot, 2011).
Every product requires innovation or amendments in it features, ingredients, etc. to make the things attractive and for maintaining the consumer’s regular interest in the same product. Coca-Cola Company has adopted this technique for number of times, infect they have appointed a separate team for market research and for making their products more attractive. It includes the packaging of the product, launching new variants of the product, offering in various quantities, etc. Coca-Cola Company has worked on their packaging of the product as they were used to provide their cold drinks in the glass bottle and now they have adopted plastic bottles which are more convenient to handle and for carrying (Brown & Swartz, 1989).
New companies from the same industry also tries to bring some products which could give the strong competition to the Cola’s products and for the same various organizations including PepsiCo has tried many techniques but large part of the world ruled by the Coca-Cola whereas PepsiCo has taken over the states of America.
This is great challenge for every organization in every field because every company changes the features of their products in some manner and with these changes they also work on the packaging and design of the products. This helps the most to attract the number of consumers because it is the first thing consumer saw. Coca-Cola needs to develop some techniques to bring some unique ideas for making their products’ packaging more attractive and unique so that it can attract the consumers as well it can also beat its competitor’s strategies (Chen & Uysal, 2002).
Threat of producing substitute is also a great challenge for the organization which is dealing in the production of unique products. Coca-Cola is one of the organizations which develop the cold drinks by the unique formula created by the founder of the organization and since then, that formula is not revealed yet. This is the main reason for their success from so long period and with that formula they have also made various improvements in their working and production procedure. Coca-Cola Company has the great threat of production of the substitute products it could reduce their product’s demand as the producer will sell the same product at the lesser price to gain more number of customers. Coca-Cola needs to develop some effective and strict policies regarding procurement of the secret formula for the production of the cold drinks. So that formula could not be revealed and only authorized person get the entry for entering in the room in which that formula is kept. In regards to this, PepsiCo has developed a formula for manufacturing the same types of cold drinks but till the time they are not able to match the same taste as of the Coca-Cola’s products (Buckley & Casson, 1998).
Every customer wants some changes in his/her favorites products whether it is related to packaging of the product, quantity of the product, etc. This could be improved by the appointment of expertise faculty with innovative techniques. Under this point, company does not need to advertise or promote their products time to time because unique changes will attract the customers directly or indirectly.
This report concludes the importance of challenges faced by the organizations who all are involved in the business to business situation. Marketing challenges are setting price, organizational behaviors changes, relationship strategies adopted by the companies, etc. Coca-Cola has adopted various promotional and advertisement techniques for the maintaining and building the good image in the customer’s mind. Suppliers and distributors of the organization also get affected when new company purchases raw materials in the same quantity in comparison to the existing organizations. To avoid these situations, companies need to set up good relations with the suppliers to get the products at the effective prices. Coca-Cola requires water, sugar, etc. things for manufacturing of their cold drinks and for manufacturing of other fast food products, relevant raw materials are required. Customer relationship is also gets affected by the price strategy of the company because people get affected by the prices set up by the companies. Coca-Cola is the brand which has set the prices of its products through studying all the types of strategies such as reviewing competitor’s strategies, and other competitor’s strategies. Company has also adopted various strategies to deal with these business to business marketing challenges. These are necessary for making necessary changes in the business environment and these also help the organization to set up an effective place in the dynamic environment of the business (Cavico, 2006).
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