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Porter’s Five Forces Analysis of the Beverage Industry in Australia

Discuss about the Institutional Theory in Business Marketing.

Marketing management defines the organizational disciplines inside an organization. It focuses on the marketing orientation, technique and other methods, which are highly required for achieving organizational goals (Hutchinson et al. 2015). The study will discuss the marketing and management of Coca Cola Amatil in Australia. In issue 1, the study will provide a brief description of the organization and its industry. In issue 2, the study will analyze the 5Cs of the organization. Apart from that, the issue 3 of the study will describe the ways in which the organization collects information about their 5Cs. Based on the analysis; the study will develop potential target market, value proposition and positioning statement in issue 4. Furthermore, the study will also develop marketing tactics for the organization in terms of 7Ps of Marketing.

Founded on 1904 with headquarter in New South Wales (NSW), Coca Cola Amatil (CCA) has expanded in most of the Asia-Pacific regions including New Zealand, Fiji, Papua New Guinea, Indonesia and Samoa. CCA operates in beverage industry and is a public listed company with products ranging from non-alcoholic drinks to ready-to-eat fruit and vegetable items. A$5.12 billion was its revenue and A$79.9 million was its profit in the year 2014, which made it among the top five listed companies in Australia (Ccamatil.com 2017).

The beverage industry of Australia can be analyzed through Porter’s Five Force:

Factors

Explanation

Bargaining power of Supplier

Ø  Low bargaining power due to plenty of suppliers

Ø  Big market players are the key clients for suppliers

Ø  Suppliers are neither differentiated or concentrated

Bargaining power of Buyer

Ø  High bargaining power from huge availability of soft-drinks

Ø  Bargaining power tends to decreasewith increase of end consumer brand loyalty

Market Competition

Ø  Tremendous market competition with key players such as Coca Cola Amatil,Pepsico, Schweppes, Kirks, Nudie Foods Australia, Nestle Waters and Dr Pepper Snapple Group

Threat from Substitute

Ø  Local firms delivering new flavors of energy drinks such as juice, soda and drinks items

Ø  Price offered by new firms are quite lower then big players

Threat from New Entrants

Ø  High threat from supermarket local brands such as Woolworths and Coles

Ø  Relatively low barriers for new entries due to zero capital requirement and less consumer switching

Table 1: Porter Five Force Analysis

(Source: Externally 2017)

The statement indicates that CCA tries to ensure satisfaction for its stakeholders, which would in turn help in earning happiness.

            CCA value statement is:

  • We are open and straightforward
  • We focus on present and future
  • We create initiative and achieve the outcome
According to Vanharanta, Chakrabarti and Wong (2014), marketing orientation comprises of customer orientation, competition orientation and inter-functional coordination.CCA offers soft-drinks with differentiated carbon and sugar content so that both health conscious and casual market segments are addressed. In this way it has able to create sustainable market position. Considering customer orientation, CCA has targeted age segment from 13 to 75, low to high income range, health conscious and even corporate sector consumers. Both suppliers and investors are its prime internal coordination stakeholders. Long-term relationship is kept with beverage suppliers and strong short-term relationship with Digital advertisement partners.

The diversified product portfolio of CCA includes soft drinks, energy drinks, sports drinks, spring water, flavored milk, fruit juices, tea, coffee and ready-to-eat fruit and vegetable snacks. The Small Business Units (SBUs) of CCA are water, alcoholic beverage, non-alcoholic beverage, hot beverage and food. Most of the products are of high sugar and carbon content in beverage category and its water category is gaining rapid market share (Hingley, Angell and Campelo 2015).

According to Viio and Grönroos (2014), CCA offers wide range of items and most of those are good in quality, however the taste is quite similar to other alcoholic beverage brands. Therefore, CCA needs to classify its brand and increase brand loyalty through enhanced marketing strategy so that customer pool can be retained in future. Therefore, branding will help in customer retention, accelerated sales and earning revenue, which will eventually help in developing other business units.

Mission Statement and Value Statement

Coca Cola Amatil has wide range of non-alcoholic beverage drink products, which meets the various kinds of needs of the customers. Ardjouman and Asma (2015) opined that high quality of the beverage drinks has added to the organizational strength of Coca Cola Amatil. High brand reputation of Coca Cola Amatil attracts huge customers groups. Furthermore, wide distribution network and increasing global presence of Coca Cola Amatil has ultimately increased its overall sales volume. On the other hand, Coombes and Nicholson (2013) opined that Coca Cola Amatil has lack of health beverages, which limits its business success. The organization has huge opportunity towards diversifying its product line towards health beverages and food products. However, Coca Cola Amatil faces tough competition in the marker from the companies like Pepsico, Inc, Nestle, Lion Dairy and Drinks.

Coca Cola Amatil serves the customers, who have high refreshing needs. The organization has targeted highly health conscious people. Moreover, it used low sugar level in their drink categories. While considering the typical behavior of the customers, it can be seen that most of the customers demand highly quality beverage drinks from Coca Cola Amatil. The customers mostly purchase the products of Coca Cola Amatil from either retail stores or grocery shops (Eng and Ozdemir 2014). However, the changing needs and preferences of the customers towards health drinks seem to be threats on the organization.

Coca Cola Amatil has unique source of suppliers both from domestic as well as international market. Moreover, the organization always searches for qualified suppliers, who meet the highest quality standard. Therefore, such unique source of suppliers helps the organization in providing high quality beverage drinks in the market. Apart from that, the organization maintains effective relationship with the distributors for reaching the drinks into several retail, grocery, supermarkets, educational institutes, hotels, bars, corporate houses and others (Möller 2013).

The current major competitors of Coca Cola Amatil are Pepsico, Inc, Nestle, Lion Dairy and Drinks. These organizations are also providing almost same quality drinks even in affordable price. However, there is moderate threat of new entrants in the beverage industry. New entrants face tough challenges in beating the competitive force of reputed organizations like Coca Cola Amatil, Nestle and others (Yang and Su 2014).

According to Viio and Grönroos (2016), stable political condition of Australia and favorable government support facilitated Coca Cola Amatil in its business success. Reduced tariff rate and free trade agreement of Australia impose less legal constraints on the organization. On the other hand, Zhou et al. (2015) opined that increasing income of the people has increased their spending power, which enhances their ability to spend on beverage products. However, the customers are more likely to shift in health drink products, which can impose threat for the organization. Advanced digitalization and popularity of social media have actually enhanced the product promotion of Coca Cola Amatil.

Role of Brand in Marketing Strategy

Coca Cola Amatil gathers huge information about the customers through effective market research. The organization use customer survey for gathering valuable information about the customers. Apart from that, Karjaluoto, Mustonen and Ulkuniemi (2015) opined that Coca Cola Amatil effectively uses social media for gathering information regarding the needs and preferences of the customers. On the other hand, the organization also uses product recommendation tool for understanding the current preferences of customers.

Coca Cola Amatil effectively collect information about its competitors though applying market intelligence. The organization often visits and monitors the outlets of the competitors for gathering information about them. According to La Rocca and Snehota (2014), Coca Cola Amatil often collects information about the competitors from social media sites. From social media sites, the organization gets to know about various offerings, discounts and other valuable information about the competitors. On the other hand, Homburg, Jozi? and Kuehnl (2017) opined that the marketing managers of Coca Cola Amatil frequently attend business conferences. From such conferences, the organization receives varieties of valuable information about the competitors.

Coca Cola Amatil always assesses the changing context of the business through observing the trends in the market. Zhou et al. (2015) pointed out that the organization uses social media and customer survey for assessing changing preferences of the customers. Apart from that, the organization also has market intelligence software towards assessing the market trends in the changing business context. Furthermore, the organization also uses business conferences for identifying the changing business process and trends of competitor organizations.

Coca Cola Amatil try to search for effective wholesalers in the market over the internet. Coca Cola research on the B2B supplier directory for getting efficient and unique source of suppliers. From such directory, the organization also gets effective information about the role of these suppliers in business process (La Rocca and Snehota 2014).

Potential STP of Coca Cola Amatil

Segmentation

Geographical: Both domestic as well as international customers

Demographic

·       Age: Mostly adult, teenage and old people will be the potential customers

·       Gender: Both male as well as female customers

·       Income: Customer mostly having secure source of income will be the potential customers

·       Education: Mostly educated persons will be chosen as customers

·       Household: The organization will choose customers beyond

·       Occupation: College students, business person, corporate officials, athletics

Psychographic

·       Attitude: People having positive attitude towards their life

·       Lifestyle: People having sophisticated lifestyle

·       Personality: People having positive personality

·       Brand Preference: People having high level of brand preference

·       Price Sensitivity: People having moderate price sensitivity

·       Conservative/Liberal: People having liberal mind to taste new beverage drinks

Behavioral

·       Purchase History: People having long history of purchasing beverage drinks

·       Store Preferences: People, who are more likely to purchase from retail stores and departmental stores

·       Information Source: People seeking information over internet

·       Benefit sought: People seeking some extra benefits from the products

Target

·       The organization will target all teenagers, adults and old people

·       The targeted customers will have secure source of income

·       College students, business person, corporate officials, athletics will the target for the organization

·       People mostly having positive personality and positive attitude towards the life will be the target for the organization

·       The organization will also target the people having high brand preferences

Positioning

·       High quality of the products

·       Real Cola Taste

·       Revitalizing Ingredients

·       Extremely Refreshing

·       Thirst Quenching

·       Best Soft Drink

·       Affordable Price

Table: Segmentation, Targeting and Positioning of Coca Cola Amatil

(Source:)

The quality of the products of Coca Cola Amatil will always be having high standard for meeting the needs of customers having high brand preferences. The beverage drinks of the organization will have real cola taste, refreshing quality and revitalizing ingredients, which will meet the refreshing needs of the athletics and other hard working people. The soft drinks of the organization will also will also meet the thirst quenching needs of the customers.  Apart from that, Coca Cola Amatil will provide its beverage drinks to the customers at affordable prices. It will actually satisfy the price sensitive customers. Moreover, all these qualities of Coca Cola Amatil will make it able to stand out unique in the market over its rival organizations.

Positioning Statement of Coca Cola Amatil

To

Health conscious people having needs of refreshing beverage drinks and energy drinks

Coca Cola Amatil is the

Highly refreshing beverage drink company

That

Can give customers a refreshing feelings through their thirst quenching soft drinks and energy drinks

That is because

·       High refreshing quality

·       Revitalizing ingredients

·       Thirst Quenching Quality

Collection of Information of Customers

Table 2: Positioning Statement of Coca Cola Amatil for Target Market

(Source: Created by Author)

Coca Cola Amatil will provide non-alcoholic beverages like Coca Cola, diet coke, Coca Cola Vanilla, Fanta, Deep Spring. Apart from that, the organization will also incorporate health drinks for meeting the specific needs of athletic customers. Furthermore, the organization will also offer pure water for meeting the thirst quenching needs of the customers. Moreover, the drinks of the organization will be produced by standard quality water. Apart from that, the hot beverages like coffee and tea will meet the refreshing needs of the customers.

The organization will always use affordable price for satisfying the price sensitive customers. Moreover, initially, the organization will use price penetration strategy by keeping the price low towards gaining high market share. However, gradually, it will use competitive pricing strategy towards for gaining increasing profit.

The beverage drinks of Coca Cola Amatil will be available in retail stores, departmental stores and grocery shops. The products will also be available in the supermarkets. It will enhance the convenience of the customers towards accessing the products.

Coca Cola Amatil will use various advertising and promotional strategies towards increasing the customer demands. Moreover, the organization will use print media and digital media towards reaching large volume of customers. Apart from that, the organization will also use social media channels for encouraging the new generation customers for purchasing the soft drinks.

Coca Cola Amatil will high talented and skilled employees, who can add their unique ideas towards creating differentiation in the product lines. Apart from that, the organization will also hire talented sales person towards increasing sales volume of the products.

The organization will use advanced technology in the production of non-alcoholic beverage drinks. Moreover, the advanced technology of the organization will help in effectively processing the beverage drinks. Apart from that, the organization will use social media channels in their marketing process towards enhancing the customer demand in the market.

The well trained employees of Coca Cola Amatil will ensure production of high quality beverage drinking water. Apart from that, great website of the organization provides adequate product information to the organization. Furthermore, the different sizes of bottles of beverage drinks serve different types of needs of the customers.

Conclusion

While concluding the study, it can be said that Coca Cola Amatil is highly popular for its high quality beverage drinks. The brand reputation of the organization attracts huge customer volume. The organization serves the customers, who have the needs of soft drinks and energy drinks. Coca Cola Amatil collects customer information through customer survey and social media channels. On the other hand, the organization collects competitor information from business conferences and the outlets of the competitors. The organization should target people, who have highly refreshing needs. Moreover, the revitalizing and refreshing ingredients of the beverage drink products will satisfy the needs and preferences of the customers. Coca Cola Amatil should provide non-alcoholic beverage, water and hot beverage to the customers at affordable prices.

Reference List

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Ccamatil.com. 2017. Coca-Cola Amatil – Australia, New Zealand & South Pacific. [online] Available at: https://www.ccamatil.com/ [Accessed 12 Oct. 2017].

Coombes, P.H. and Nicholson, J.D., 2013. Business models and their relationship with marketing: A systematic literature review. Industrial Marketing Management, 42(5), pp.656-664.

Eng, T.Y. and Ozdemir, S., 2014. International R&D partnerships and intrafirm R&D–marketing–production integration of manufacturing firms in emerging economies. Industrial Marketing Management, 43(1), pp.32-44.

Externally, S. 2017. Acapmag.com.au. [online] ACAPMAg - The voice of downstream petroleum. Available at: https://acapmag.com.au/home/2015/05/coca-cola-amatil-ltd-an-in-depth-analysis/ [Accessed 12 Oct. 2017].

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Karjaluoto, H., Mustonen, N. and Ulkuniemi, P., 2015. The role of digital channels in industrial marketing communications. Journal of Business & Industrial Marketing, 30(6), pp.703-710.

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Mialon, M., Swinburn, B., Allender, S. and Sacks, G., 2016. Systematic examination of publicly-available information reveals the diverse and extensive corporate political activity of the food industry in Australia. BMC public health, 16(1), p.283.

Möller, K., 2013. Theory map of business marketing: Relationships and networks perspectives. Industrial Marketing Management, 42(3), pp.324-335.

Vanharanta, M., Chakrabarti, R. and Wong, P., 2014. Institutional life of intuitive insights: Legitimacy of virtuoso intuitive marketing management. Industrial Marketing Management, 43(5), pp.760-768.

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Viio, P. and Grönroos, C., 2016. How buyer–seller relationship orientation affects adaptation of sales processes to the buying process. Industrial Marketing Management, 52, pp.37-46.

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Zhou, Y., Zhang, X., Zhuang, G. and Zhou, N., 2015. Relational norms and collaborative activities: roles in reducing opportunism in marketing channels. Industrial Marketing Management, 46, pp.147-159.

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