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Segmentation

Describe about the Report for Market Strategy and STP Analysis for Coke Zero.

Consumption of healthy product is the top priority for every person in the world. The aspect is making a huge mark in Australia, as it is now standing at 26th position in the World’s Obesity Index, with 29% obese population (WorldAtlas, 2016). The consumption of Cola drinks is also huge in this geography. So it turns out to be a huge opportunity for Coca Cola to launch a zero calorie drink in this region as it will ensure that the calorie intake of the people is also very less and they can still enjoy the taste of cola. Here in this report a marketing plan is set for Coke Zero that is how they can be enter in the Australian market.

Segmentation:

Segmentation theory states that there is a need to create groups of the customers to be targeted, that is they are divided at a broad level market in to smaller groups which are positioned to have similar preferences, opinions and tastes. For the purpose of healthy offering, it first has to identify the segment of people who are actually looking for healthy food, the segment which are shifting towards healthy food and those set of population which are contributing the most towards the healthy food segment. Considering those aspects (AIHW, 2014). The following segments of the population is identified and the analysis will revolve around these identified segments only, these are mainly categorized by age:

Under 15 years of age: These are mostly students and in Australia, the eating habits of this group is mainly controlled by teachers and parents. They are non – earning group and hence they don’t have much say in their choices of food. They contribute a good proportion towards healthy food intake, precisely 25%, but since cola drinks are not something that is not going to penetrate in this segment(Daube, 2008).

16 – 30 years Non – Working: This is the group which takes a lot of unhealthy food and hence they could be potential target market. The issues that are seen here is that since they are not working, hence they have sufficient time to exercise and since they are non – earning, they may not be able to afford an expensive cola drink (discussed in pricing strategy), hence introspection is needed to see if they can be chosen as the potent target segment.

Targeting

16 – 30 years working: This is the group whose intake of the unhealthy food is highest and they maintain a stressfully unhealthy lifestyle. Due to busy work schedules, they don’t have much time to hit the gym and the minimum they can do for their body is intake healthy food. 46% is their contribution towards the healthy food sales globally. They could the potential target segment(Osborne, 2010).

Above 30 population: They may be working or non – working, but they maintain a healthy food habit, mainly due to medical requirements. The liquor consumption is huge in this segment (57%) and hence cola may not be a suitable offering for them. Also, Cola is to be perceived as youthful and that cannot be linked to it.

Targeting Theory states that a thorough introspection when the correct segmentation of the population is identified then the target segment has to be identified out of them, which will be the main segment which will consume the product mainly. The thing that is to be noticed here is that there is no demographical analysis in defining the segments. The reason is that since Coca Cola is a consumer goods products and hence they are assumed to be consumed equally by people of various age groups, income level or gender (Hayes, 2012). The interesting thing here is that the offering is pretty different now and that is in the healthy segment and hence introspection must be carried out more towards a focus group. The niche product must be made a hit in the smaller group and then they will become the proponent of the products and hence the sail through journey will begin.

The target audience identified here is the “16 – 30 years working” segment and here the convincing reasons for it (Cruickshank M, 2008):

They are extremely busy and career focus population and they don’t have much time for work outs and gym exercises.

They have money to spend, since they are earning and they will like to do so, as in this case as they will be replacing a daily consumption item with a similar tasting less sinful item.

Their contribution towards the healthy food purchases globally is highest and it will be mapped in the similar manner for Australia, as they have similar demographics as that of USA or other developed countries.

The reason, why the other identified segments are not considered (Scally G, 2010):

Positioning

Here there is a need to identify a segment to whom it is easy to explain and realize the importance and benefits of healthy cola drink.

The product is going to be priced at a premium and hence people must have willingness and money to invest in such item and only the identified segment falls in that definition.

The target segment has to act as the proponent of the product and hence the identified segment are probably going to consume it for a longer duration of time. This making them the most deserving proposition for being the proponents of the product(R, 2005).

The positioning is the most critical part in defining the marketing strategy, since a lot of factors depends on how the product is positioned in the market. It cannot be possible that a product is positioned as a generic product but is priced at a premium or the place of sale is some high end store (OEHD, 2015). The positioning is the gateway for the more critical marketing mix analysis. The positioning is also the carrier of the value proposition of the product. The high end positioned product must also be able to produce that level of outcome for the customer in term of the value it is delivering.

The positioning of Coke Zero will have three distinct characteristics, which are mentioned below (Kramer, 2014):

  • Premium Segment
  • Premium Costing
  • Healthy Product

With these offerings in place, the value delivered is well communicated in the market. The premium segment produce which is coming at a premium price as well, must bring along some high level benefits and Coke Zero is doing that by reducing the sugar consumption to almost Zero and still maintaining the older cola habits. This is the positioning of Coke Zero and this way it is tagged as a Coke Offering for health and low calorie intake.

It has to be communicated properly that the high end coasting is only due to the premium health reasons the drink is providing, that apparently none of the cola drinks are doing these days (Britt H, 2008). It must be kept in mind that a bad performance at positioning has led to 100% failure of the products, so apparently there is not even a single product that is successful and not delivering the right value for money proposition. Hence, it is an important attribute of the marketing that has to be tracked and implemented properly and without any delay. The delay is an important aspect of positioning as it has to be done much before the official product launch (J, 2006). This is where the brand management comes into play as the memory tolerance of the consumers is very short lived, they can be manipulated easily.

Marketing Mix Analysis

Product strategy:

The product is clearly positioned and offered in the market as an offering that is able to give the same taste and refreshment as the generic coca cola is able to provide, but there is no sinful calories in the form of sugar that is linked to it. On an average the coca cola six hundred milliliter of bottle contains almost sugar equivalent to 6 to 7 tea spoon. In calories terms it is more than 8 times the calories that should have been taken and it takes the form of unwanted fat in the body and hence turns the person obese. This is the biggest health issue related to drinking coca cola. Now when a person who is doing workout in gyms regularly or a person, like small children, who are actively involved in sports or some other activities, burning these calories is not a difficult task (Glasgow N, 2008). But for the target segment that we have chosen the burning of these calories is a difficult task and needs to be managed properly. For them in specific the offering of Coke Zero is created. The people will always like to associate with the product that is able to satiate their daily requirement and Coke Zero has the capability to deliver that.

As per the latest survey conducted on the youth of Australasia, around 84% of youth wants to adopt better and healthier styles of living and for that they are not considering the cost to be any form of deterrent. Out of the focused 84%, around 60% are only focusing on changing life style as the focus area. This puts Coke Zero at a winners spot as drinking cola drink is like a daily ritual for the target audience and if that can be replaced by something almost zero in sugar content then it is a huge benefit for them overall. An average Australian youth consumes 2.4 bottles of 600 ml Coke SKU and that equates to almost 18 tea spoons of sugar and that is a huge consumption. The amount of sugar intake can be easily saved by the youth and hence it is a brilliant product to be positioned in the market. The value proposition is so huge that the premium pricing is not going to be a setback of any form for the marketing and sales people around this substrata. This is the overall understanding of the product and it has huge potential.

Place of Sales and Distribution:

The place is a very important aspect of the offering here as the overall availability and visibility of the product is going to define the success of the product. It is rightly analyzed that around 40% of the heath products are famous but since they are available in only selected channels and that eventually leads to the downfall of the product in the market (Lussier M, 2010). There is a need to define the market place and the availability of the product has to be in all the market places defined around the sales eco system. The place is overall determined by two major factors, one is that the product must be available, wherever the customer is, secondly, the product must be available wherever the customer has a prospect of going. If the product is visible on the shelf at right location while making the choices then it is imperative that the sales will increase. The classic here is of Gillette, their Mach 3 product was a failure in India for the initial few months. They later learned that the place of sale is bad, as they were only selling it in the systematic retail, however, for shaving requirements most of the Indian males rely on local shops and hence the place of sales, if not appropriate can lead to a through downfall of the product.

The place also showcase the value proposition of the product and there is an opportunity to up sell some products as well. The proper product placement in the right product area is the key for a lot of sales upgrades and thus the product placement is the important part and must be understood well along with the product offering and value proposition (OECD, 2010). The pricing strategy is an inherent part of the sales and distribution and hence been undertaken below.

Pricing Strategy:

The pricing strategy that is adopted for this product is premium pricing for premium customers as it gives premium value for the consumer who avails it. The price of the product must be in accordance to the value it is delivering to the final consumer and hence the indicator of the fact that how the product is thought to be positioned by the company overall. The price is chosen to be premium due to various reasons and those basically revolves around the fact that it is about changing the habits of the people towards something more appropriate for them. The reasons are as mentioned defined below (Uslay, 2005):

Targeted offering: This is a product line that is only made currently available for the working youth between 16 to 30 years of age. It is a special product that is there to serve a special need of the customer and that is not a hoax but a thorough reality that is existing today. So, company is making some special efforts to position it well and making it available at the right places to the customer and hence it will demand some premium from the customer and hence the premium pricing is needed. There is a new lot of supply chain structure that has to be developed and a new channel has to be made in order to ensure that it reaches the intended consumer. It is important that the product reaches the right customer and not just high sales.

Earning Opportunity: This is a huge earning opportunity for Coca Cola, as they are few of those early entrants in the market and that they backed by the two important things that is the big brand and the niche offer. These in totality will ensure that the earning opportunity is not lost and that can only come by the premium price bracket of the product. The price system should however be left fluctuating as there will be more companies that will be following their footsteps and hence in order to ensure better results, premium pricing is the way ahead(Manhasdef, 2012).

Value proposition: The value is a huge and strongest pillar that will ensure the pricing strategy that is the most appropriate and correct one. The value here is also hitting the cord at the right spot. Health and calorie intake are the buzz words that are around these days and in order to ensure that the consumers are getting the value that they are expecting then it is win – win game. The important aspect here is that the base that is selected is the right one for this pricing strategy, as they are ready to pay any amount for a good result.

Promotional Strategy:

Promotional Strategy is the theme of steps that are to be followed so that the visibility of the product is seen in the market and is always there in the mind of the people or consumers. There is no hard and fast theory or rule to define the promotional strategy. The promotion strategy defined here will comprise of three major pillars, these are the initial phase of introduction of the product, followed by the market flooding of the product through the analyzed and investigated channels and finally it’s about reviewing the performance and then redefining the strategy if needed and if the strategy is working, what are forces that are working in the favor of the product. This is a thoroughly devised strategy and will be useful to ensure that the market always have product available in the kitty for the consumer to procure it.

Introductory Phase:

This is the first phase of promotion in which the value proposition of the product is displayed and spread in the world. This is to ensure that the product is recognized by the people at large, the communication is all made keeping in mind the target customer base. For coke zero the introduction must keep in mind the working youth people who are not getting the needed time to burn the extra calorie and how Coke Zero will help them to intake lesser amount of calorie overall and hence ensure that their life is better and healthier.

Market Flooding:

This the phase of ensuring the product availability in the all the critical product marketing and distribution channel. The product must always be available in the market and it is to be ensured that the overall product is getting placed in the right sport and this way the trade promotion can be managed in a better manner and the effectiveness will also increase as required. The idea is to keep the memory active in the mind of the people and to ensure that people are linking it as a healthy drink and not as a soft drink at all (Schmalensee, 2010).

All the channels have to be reviewed properly and thorough statics must run to see the effectiveness of the promotional activities that is being carried out. If one channel is not working then other channels must be explored. But overall, the thing that has to be kept in mind that the overall offering is good and the product is in the right manner presented to the prospective consumers so that the sales are always up and running and it can be ensured that the outcome and benefits are recognized properly and effectively by the people at large. They will hence turn into proponents of the brand (Pelton, 2010).

Strategic Fit:

There are three major ways that the product shall be a strategically fir product and is there to serve the dire need of the people at large and in a way that it is representing the correctness of the process quality of the company. From sustainability perspective, the water consumption is reduced primarily by reducing the quality of sugar and hence lesser number of sugarcanes are needed to be harvested and secondly that there is a huge dependency that is maintained on the rain water. The sustainability is the need of the hour and hence need to be tackled properly and effectively (Bridger, 2011).

The Ethical quotient is pretty large here since it is an ethical product that tells the customer about the exact issues and hence how is Coke Zero eliminating the issues properly. The product is solving a budding problem and is hence regarded as a good product to be launched in the market to serve a designated need. The CSR aspect is fulfilled as it is operating on completely sustainable manner and ensuring that all the procurement is directly by the farmers and the products used are also organic in nature. Through this the overall presentation of the things is managed properly and in sustainable manner (Chorn, 2012).

References:

(2014). Australia’s health system. Canberra: Australian Institute of Health and Welfare.

Bridger, E. T. (2011). The Importance of Strategic Fit. Sydney: Citeseerx Publications.

Britt H, M. G. (2008). General practice activity in Australia 2007–08. Canberra: General practice series no. 22.

Chorn, N. H. (2012). Creating Strategic Fir - The Alignment Theory. London: Management Decisions White Papers.

Cruickshank M, F. J. (2008). Reducing Harm to Patients from Health Care Associated Infection: The Role of Surveillance. Sydney: Australian Commission on Safety and Quality in Health Care.

Daube, R. M. (2008). Australia: the healthiest country by 2020. Sydney: National Preventative Health Taskforce.

Glasgow N, J. Y.-B. (2008). Chronic disease self-management support: the way forward for Australia. Melbourne: Medical Journal of Australia.

Hayes, M. (2012). National Safety and Quality Health Service Standards. Canberra: Government of Australia.

J, B. J. (2006). Self-management support: A win-win solution for the 21st century. Aukland: New Zealand Family Physician.

Kramer, C. (2014). Primary Health Care Reform in Australia. Queensland: Department of Health and Aging.

Lussier M, R. C. (2010). Time to talk, Canadian Family Physician. Gabba: Journal of Internal Health & Safety.

Manhasdef, T. (2012). PRICING POLICIES AND STRATEGIES. Beijing: Journal of Pricing Policies .

(2010). The looming crisis of the health workforce: How can OECD countries respond? London: OECD.

(2015). Focus on health Spendings. New York: OECD.

Osborne, R. (2010). The Australian Healthcare System. Deakin : Deakin University.

Pelton, L. E. (2010). Marketing Channels. New South Whales: Heriot - Watt University.

R, P. (2005). The Review Team for the Review of Future Governance Arrangements for Safety and Quality in Health Care. National arrangements for safety & quality of health care in Australia: the report of the review of future governance arrangements for safety. Canberra: Australian Health Ministers’ Conference.

Scally G, D. L. (2010). Clinical governance and the drive for quality improvement in the new NHS in England. London: British Medical Journal.

Schmalensee, R. (2010). "Do Markets Differ Much? Paris: American Economic Review.

Uslay, C. (2005). THE ROLE OF PRICING STRATEGY IN MARKET DEFENSE . Georgia: Georgia Institute of Technology.

(2016). 29 Most Obese Countries In The World. New York: WorldAtlas Publications.

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