The below essay is about Coca-Cola company which is a beverage manufacturer established in the year 1892.The company's primary product is Coca cola which was invented in the year 1886 and was first bottled in 1894.The focus of this essay will be on developing a marketing strategy for Classic Coca-Cola or Coke for first half of 2012.This will also discuss about the market segmentation ,pricing strategy and target market using micro and macroeconomics concepts.
The economic forecast report 2012 from different sources clearly communicates high economic growth , less unemployment and inflation rates.
http://businomics.typepad.com/businomics_blog/2010/11/economic-forecast-2011-2012.html Coca cola can use alternative scenarios to reduce the production cost * In countries were labors are very expensive, installing automated manufacturing machines and reducing the labor numbers in the production line will help to reduce its cost. * Coco cola base syrup which is the raw material is imported from regional units to several bottling plants which incurs transport cost, if it is manufactured at the same bottling plant some cost can be saved. * The use of LED lighting and automatic shut-down technology during rest periods in all plants will help to reduce cost on Energy. * Production of own energy from renewable sources like solar ,wind in the bottling plant will help to reduce energy costs. * Coca cola can effectively introduce bio degradable plant bottle which can be recycled. PET bottles have 25% recycled plastic and glass bottles have 40% recycled glass.this will reduce its bottle manufacturing and disposal costs.
Coca cola, a carbonated soft drink is a FMCG brand .Price elasticity -The opportunity cost of coca cola is very low, in which if the price of the product increases the demand decreased and vice versa responsively. For instance if the price of coke is decreased by 10% , the sales demand will increase by 20%.Therefore coca cola is said to be elastic as the demand is responsive to change in price. PED = %ΔQd /%ΔP (PED=20/-10)
Income elasticity of Coca cola is the response of demand in quantity to change of consumers income .During the period of decline in consumers income ,the demand of coca cola also declines,as Coca cola is not considered to be a basic necessity for consumers , instead the demand for Milk and bread increases .On the other hand when the consumers income rises the demand of coca cola increases termed as 'Normal Good'. Cross price elasticity of demand:
The substitute product of coca cola is considered to be Pepsi, in that way if the price of Coke decreases by 10%then Pepsi will have increase in its demand by10%. XED = %ΔQd Good A /%ΔP Good B (+10/+10= +1)
The complimentary product of coke will be fast foods like McDonald's burgers etc. If the price fast food increases the demand for coke will decrease.
The market structure of coca cola is considered to be Duopoly which is also a type of oligopoly. Coca cola and its rival competitor Pepsi is having this type of market structure. There is a high barrier for new competitors to enter as the sector is dominated by these two firms.Also, there is chances of indirect rivalry for price decisions. The target market of Pepsi and Coke are focused more on Teen and youngsters. Pepsi came up with a strategy to sponsor an music event by which teens are more attracted. Thus they decided to become the official sponsor for 'The X Factor' 1 .In response Coca cola planned to sponsor 'American Idol' 2 . Also Coca cola has started a competition called 'Discover with Taio Cruz' 3 which is a challenge for upcoming artist to collaborate with Taio Cruz. By the above example it is clearly understood that Both Coca cola and Pepsi are targeting the same market i.e. Music loving Youngsters and...