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Operation Management In Coca Cola

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Question:

Discuss about case study of the Operation Management in Coca Cola.
 
 

Answer:

Introduction

This report provides understanding of Coca Cola Company’s marketing process which is a critical aspect of the overall operation and success of the company. It focuses on quality characteristics and performance indicators of selected marketing process which has lead to success of coca cola. This report also reveals information about the weak point of marketing process of coca cola and provides ways of overcoming these weak points. The report also discussed various quality control techniques like Pareto chart, Fish bone diagram, 5 whys technique, PDCA Cycle and check list technique to find out the root cause of ineffective marketing strategies, so that proper steps could be taken to remove the problem (Kracklauer et al., 2012).

Observation, discussion and diagrams

Selection of company and activity that are linked to strategic goals:

For this report Coca Cola Company is selected. A part from this, marketing activity or process of company is selected because; this activity is helpful in achieving strategic goals to company.

Significance of marketing process in achieving organizational goals:

Marketing process is helpful in achieving the organizational goals. Through the use of marketing strategy, an organization can create an image in the mind of customers. It influences customers for the purchasing the products. This increase the sales of the company and company achieve its short and long term goals (Ferrell, 2013). A part from this, coca cola has significantly focused on improving four Ps of its marketing mix such as price, product, place, and promotion (Anders, 2013).

Importance of Marketing Activity in Creation of Customer Value:

The customer value is the satisfaction of a customer needs after purchasing goods and its consumption. It is related to what amount customer pay for the receiving goods and services. According to Nijssen, (2013), “customer value is the difference between what values customer gain from the use of goods and services and what is the cost of product purchasing.” Marketing strategy of Coca Cola is effective to create value for customers (Pride, 2015). Through marketing efforts, Coca Cola informs customers about availability of low calorie beverage. This way, company creates value for health conscious customers. Company provides a symbol of recycle of bottles. This way, it creates value for environment.

Quality Characteristics or Performance Indicators of Marketing Strategy:

Segmentation, Targeting, Positioning:

Segmentation helps the brand to divide the product in homogenous sub segments according to various demographic factors like age, occupation, lifestyle etc. Coca Cola has a marketing strategy, which doesn’t target a specific segment. But, it adapts marketing strategy by developing new variants of product according to customer lifestyle. Coca cola has a product diet cola for calorie conscious people. Coca Cola also uses niche targeting strategies in order to capture the market, which is not covered by competitors. Its product Cola is a most acceptable product among people and is famous worldwide. Diet cola is a product, which was launched to capitalize the niche market of people, who are diet conscious. Coca Cola uses competitive positioning strategy to be a first mover in comparison to its competitors (Ferrell and Hartline, 2013).

 

4 P’s OF Marketing:

Product:

The coca cola company has a wide range of beverage products in the world. These products are produced according to customer needs and wants. The main aim of this strategy is to provide high quality products to its customers and to create positive brand image. The products of coca cola have the high quality, so most of the customers purchase the coca cola products (Richter, 2012). A part from this, coca cola offers a contact and helpline number on its bottles for any complaint and any suggestion. This way, company creates value for the customer through the care of customer’s problems. Along with this, the company has taken decision to make renewable and recyclable bottles. This indicates that company is highly dedicated towards customer value. Company also offers value to customers through increasing its product portfolio. The product portfolio of Coca Cola involves range of products including diet coke, 100% fruit juices, fruit drinks, water, energy drinks, tea and coffee etc (LaPlaca and Frank, 2011).

Price:

On the basis of available range of products, the company decides the price of product according to geographic and market segment. Coca Cola also decides the products price on the basis of the competitor’s products price. Mainly the company’s focus is on availability of products at low price. Low pricing policy of the company influences customers for the purchasing products and thus it creates the customer value in market (Gbadamosi, et al. 2013). Coca Cola has a different pricing strategy for every sub brands and pricing strategy is based upon the competitor’s pricing policies.

Place:

Coca cola has marked its presence worldwide. The distribution followed by Coca cola is FMCG distribution network. Coca Cola has good business relations with local FMCG retailers as well as big hotels, restaurants and super markets. The effective products distribution systems of Coca cola provide the products to customer easily. For the purchasing the beverage products customer don’t want to pay extra money in terms of transportation cost. Availability of product easily attracts the customers for the purchase and to give priority Coca Cola rather than other beverage brands (Anders, 2013). Thus, distribution strategy plays a significance role in creating customer value for the organization.

Promotion:

Coca cola company use the various marketing and promotional strategy for the reaching target audience for achieving strategic goals. Marketing strategy of company includes marketing tools as sales promotion, public relations, corporate social responsibility and customer direct marketing. These strategies are effective to create the positive brand image (Pride, 2015). A part from this, company increases its sales by the giving free samples and discounts coupon on the products. These tools attract the customer towards the brand. Furthermore, Coca cola use CSR strategy (Richter, 2012). This is also effective in creation of value in market (Gbadamosi et al., 2013). The Company adopts different kinds of advertising and promotional technique in order to capture the market. Coca cola mainly keeps it focus on value based advertising. Coca cola also uses CSR in its marketing strategy to directly relate with the emotional sentiments of the customer. It uses both pull and push strategy. It has various celebrities as its brand ambassador (West and Ibrahim, 2010).

Sponsorship of Global Sports Events:

The company has sponsored various events and this is a part of marketing strategy of Coca cola. Olympic Games, NASCAR are some of the main events, where the sponsorship is done by Coca cola. Due to sponsorship of such events, the brand catches the eye of various people in shorter time span (Bidgoli, 2010).

One Brand Strategy:

Coca cola implements ‘One Brand’ strategy at a global level. This strategy places its different variants including Coca-Cola, Diet Coke, Coke Zero and Coke Life within single ‘master brand’. All the marketing strategies keep its focus on ‘Coca Cola’ brand, and it does not create different personalities for different variants. One brand strategy helps to make choice easier and simpler (Boone and Kurtz, 2013).

 

Causes of Variation in Result:

Marketing Research Flaws:

Coca cola may face variation or poor results in its marketing strategy, if the research is not conducted properly. Such type of incident has happened earlier with coca cola. It launched a new product and the original product was not marketed by company. Production of original product also stopped and this proved to be fatal. This new product was not liked by customers as taste. It is because marketing research of company for designing product was not effective. Branding also had symbolic significance to buyers. This all happened because of marketing research flaws (Kumar, 2013).

Ineffective Distribution System:

The company may also face variations in results due to ineffective distribution system. If the company does not have effective distribution system, then competitor take advantage of it and acquire its market segment. For effective distribution system, Coca Cola should considerably acquire more vending machines and vendors than its competitors. Proper channel of distribution should be followed by coca cola, if it wants to get positive results from its marketing strategy (Desbordes and Richelieu, 2012).

Global Issues:

While going global, the company should also consider factors like social, ethical, political, economical etc. One of the recent global issues faced by company is challenge to sale products in Iraq when it decided to expand in Iraq. People in Iraq do not buy the company’s product because of the war against Iraq by USA. This resulted into huge losses to company. So, global issues also affect effectiveness of marketing strategy (West and Ibrahim, 2010).

Ethical Issues:

Company should also consider ethical issues while promoting the product. The ingredients used in manufacturing should be mentioned on the packaging. Recently some pesticides found in Coca cola, which was unethical. Because of this, company faced a huge downfall in its sale. So, ethical issues should be considered for effective marketing strategy (Schlegelmilch, 2016).

Pareto Chart:

A Pareto chart includes a column chart and line graph. It analyzes the problems and provide information about which problem have need to firstly focus. The outcomes of the Pareto chart is as below:

Pareto Chart

Ranking of  Cause

The above Pareto chart shows that, 80% effect of problems comes from the 20% causes. It indicates that ineffective marketing research flaws and weakness of marketing elements are the major causes of the ineffective marketing outcomes. From analysis of Pareto chart, the effectiveness of marketing strategy can be done through focus on resolving two major causes (Duffuaa, 2015).

Factors that Influence the Marketing Strategy:

Following diagram depicts different factors that affect the marketing strategy of coca cola:

Fish bone diagram analysis:

The fish bone diagram is an effective tool of identifying the causes for a problem. This tool helps coca cola to identify factors that affect its marketing strategy (Shelly, 2011).

Interpretation of diagram:

Interpretation of diagram:

The above diagram is discussed as below:

Demographic factor:

In Coca Cola, the age of customers is a factor that affects the advertising of company. The company advertises their products for the giving information to its customers. But, there are different laws and regulations in Arab countries which prohibit companies to advertise their products for the children. Along with this, company cannot advertise its products on children TV channels, because these products are not good for the health (Anders, 2013). Thus age of the customers influence to marketing strategy of coca cola.

Economic Factors:

The rate of inflation is not stable in country of trade than it affects the cost of production. Coca cola may face impact of inflation problems on demand of its products. High inflation in a country will affect effectiveness of marketing efforts negatively. It affects the purchasing power of customer (De Mooij, 2013).

Natural Factor:

Natural factors also affect the marketing strategy of coca cola. The coca cola company is trying to make environmental friendly packaging. Now companies are using petroleum and fossil fuels for the packaging, but Coca Cola is trying to make petroleum free packaging. This type of innovation will be helpful to improve brand image (Parente, 2014). Moreover, this innovation helps the marketing strategy for influencing to customer for the purchasing products.

Cultural Factor:

In the world there are more companies which are offering the similar products to customers. Through focus on factor values, festive, company may improve its marketing strategy. This will increase acceptance of its products (Lamb, 2012).

Political Factor:

The political factors also influence the marketing strategy of coca cola. The government makes different rules and regulations for the company. Coca cola make its advertisements and promote their product as non-alcoholic beverage product (Anders, 2013). Moreover, the products of the company are monitored by the different health authorities and government. These rules and regulations influence the company operations.

Technological Factor:

Coca Cola Company has a partnership with a music company Spotify that provides music on the customer demand. This music performs large part in marketing strategy. Apart from this, coca cola and spotify provides a music service to its customers for the connecting to others customers around world that love this type of music (Turnbull, 2013). Thus technological factor effectively influence to marketing strategy of coca cola.

 

Whys Technique:

Problem: Common causes of variation or poor quality in marketing strategy result of Coca cola.

  • There are global issues, which are faced by company while going global.
  • There are marketing research flaws in company.
  • The company did not conduct a well defined research.
  • The company does not form proper questionnaires with open ended questions.
  • The company does not have competent research team (Goetsch and Davis, 2013).

Other Tools for the Quality which May be Relevant for the Coca Cola:

There are some other tools that are available for assessing quality of marketing strategy of coca cola such as cause and effect diagram, check sheet, control chart, histogram, Pareto chart, scatter diagram, and stratification technique (Alkhafaji, 2013).

Check sheet technique:

A check sheet is a document containing key requisites of a particular thing. Check list designed for marketing strategy of Coca Cola is as below:

Exhibit1

(Source: Exhibit 1)

Key elements to improve marketing strategy:

Focus on Extensive Distribution System:

Coca cola can adopt an extensive distribution system, as part of its marketing strategy. Due to this distribution system, the product will be available at every retailer. This will result in increase in sales (Merrill, 2015).

Collaborative customer relationship:

Coca Cola should always create value advertisement for its customer so that the emotional sentiments of customer are not harmed. Company can follow concept of CSR in advertisement to create sense towards social responsibility. Coca cola should also create advertisement according to the lifestyle of the customers. This can lead to collaborative customer relationship that is necessary for company growth (Blythe, 2013).

 

PDCA Cycle for Strong Brand Image:

Plan- Under this stage, company should focus on effective planning of different design elements in marketing strategy (Mooij, 2010).

Do- Under this stage, company should advertise its products through right channels. This helps the company to communicate emotional message to customers and this leads to drivers like brand loyalty, customer engagement and repeatedly purchase. Build a strategic brand division that effectively communicates brand (Lamb et al., 2011).

Check- Company also needs to evaluate presence of different elements of an effective marketing strategy in its marketing plan (Holt and Cameron, 2010).

Act- Once the quality check procedure has done, company should start initiation on it (Anders, 2013).

Conclusion:

Multinational companies need to maintain high levels of profit in order to build competitive advantage and strong brand image. Coca-Cola needs to continuously work on building its brand image through effective advertising, and effective promotion (Proctor, 2014). The Company requires improving their marketing research flaws and adopting effective distribution system for consistent expansion and development of its brand name.  

Recommendation:

On the basis of report conclusion, following recommendation can be offered to coca cola

  • Company needs to promote its brand through the use of creative slogans and music services worldwide.
  • Company needs to use word of mouth marketing strategy for influence to customers.
  • For the crating customer value, company should to focus on promotion of corporate social responsibility and public relations.
  • Top management of the company should design marketing plan in ethical manner
  • Coca cola’s distribution channel is mostly through retailers, rather it should focus on distribution through pubs, restaurant like its competitors do.
 

Reference:

Alkhafaji, A. and  Nelson, R.A. (2013) Strategic Management.  Routledge, 2013

Anders, J. (2013) Coca-Cola’s Marketing Strategy: An Analysis of Price, Product and Communication. Germany: GRIN Verlag.

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Blythe, J. (2013) Principles and Practice of Marketing. USA:  SAGE.

Boone, L. E. and Kurtz, D. L. (2013) Contemporary Marketing. USA: Cengage Learning.

De Mooij, M. (2013) Global marketing and advertising. USA: Sage Publications.

Desbordes, M. and Richelieu, A. (2012) Global Sport Marketing: Contemporary Issues and Practice. UK: Routledge.

Dibb, S. and Simkin, L. (2013) Market Segmentation Success: Making It Happen!. UK: Routledge.

Duffuaa, S. and Raouf, A. (2015) Planning and Control of Maintenance Systems. Germany: Springer.

Ferrell, O. C. and Hartline, M. (2013) Marketing Strategy, Text and Cases. USA: Cengage Learning.

Ferrell, O.C. and Hartline, M. (2013) Marketing Strategy. US: Cengage Learning.

Fjermestad, J. and Robertson, N. C. (2015) Electronic Customer Relationship Management. UK: Routledge.

Gbadamosi, A., Bathgate, I. and Nwankwo, S. (2013) Principles of Marketing: A Value-Based Approach. UK: Palgrave Macmillan.

Gbadamosi, A., Bathgate, L. and Nwankwo, S. (2013) Principles of Marketing. UK: Palgrave Macmillan.

Goetsch, D. L. and Davis, S. (2013) Quality Management for Organizational Excellence: Introduction to Total Quality. UK: Pearson.

Holt, D. and Cameron, D. (2010) Cultural Strategy: Using Innovative Ideologies to Build Breakthrough Brands. UK: OUP Oxford.

Kracklauer, A. H., Mills, D. Q. and Seifert, D. (2012) Collaborative Customer Relationship Management: Taking CRM to the Next Level. Germany: Springer Science & Business Media.

Kumar, N. (2013) Marketing As Strategy: Understanding the CEO's Agenda for Driving Growth and Innovation. USA: Harvard Business Press.

Lamb, C. W. (2012) Marketing. US: Cengage Learning.

Lamb, C. W., Hair, J. F. and McDaniel, C. (2010) MKTG 2010. USA: Cengage Learning.

Lamb, C. W., Hair, J. F. and McDaniel, C. (2011) Essentials of Marketing. USA: Cengage Learning.

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LaPlaca, P. J. and Frank, N. (2011) Marketing Strategies for A Tough Environment. USA: Marketing Classics Press.

Merrill, R. M. (2015) Introduction to Epidemiology. USA: Jones & Bartlett Publishers.

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Nijssen, E. J. and Frambach, R. T. (2013) Creating Customer Value Through Strategic Marketing Planning. Germany:  Springer Science & Business Media.

Parente, D. and Hutchinson, k. S. (2014) Advertising Campaign Strategy. US: Cengage Learning.

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