Market Customization: Market Segmentation, Targeting, and Positioning “Coca-Cola has never disclosed how much it lost in the new Coke fiasco, though bottlers told Mr. Meyers of Beverage Digest that they took a hit of $30 million on unwanted concentrate for new Coke. The company also spent $4 million on market testing and taste comparisons with 200,000 consumers.” http://www.nytimes.com/1995/04/11/business/company-news-ten-years-later-coca-cola-laughs-at-new-coke.html Question: Can the failure of “New” Coke be attributed to shortcomings of Robert Goizueta’s Market Customization strategy. Answer: The Background: From 60% in 1950, Coca-cola’s market share had dropped to 24% in 1983. The market share was mainly lost to Pepsi-Cola. Coca-cola thus, in 1985, decided to introduce a new formula (unpopularly called New Coke) in-order to drive up sales.
Coke Zero’s communication strategy was taste-led in a category which was already suffering from the stigma of perceived bad taste. Pepsi Max was successfully battling this stigma, surpassing Coke Zero in penetration among young adults. Furthermore, the diet cola category was in -2.3% decline, and 60% of young adults polled had never tried a Coke Zero. With category volume and penetration both in decline, it was obvious that something about Coke Zero needed to change. Brand positioning was seen as its best leverage as Coke Zero competes in a category where factors such as price, costs, competition and distribution are relatively unchanging.
At the end of 2011, PepsiCo’s working capital was ($713) million, while Coca-Cola’s working capital was $1,214 million. This indicates that Coca-Cola had enough short-term assets to cover its short-term debt, while PepsiCo did not. PepsiCo is not working as efficiently as Coca-Cola is, causing slower collection. (c) What is the most significant difference in the asset structure of the two companies? What causes this difference?
However, in the late 80s, one of the most serious Coca-Cola competitors, Pepsi, implemented a new marketing strategy and caught up with its market share. The competition of the two companies was primarily based on taste. Pepsi introduced a series of commercials called “The Pepsi Challenge.” Surprisingly, consumers preferred Pepsi over Coca-Cola. Pepsi’s market share skyrocketed. Concerned with Pepsi’s success, Coca-Cola decided to replace its old formula with a sweeter variation and introduced a new product named “New Coke.” The author provided a detailed report about the $4 million budget that Coca-Cola spent on market research.
It was invented in the late 19th century by John Pemberton, but was bought out by businessman Asa Griggs Candler, and at the beginning it was originally intended as a patent medicine. They sell nearly 400 different products and 70% of its sales are generated outside of North America- which is their home base. Coca- cola has gone from selling a modest 9 drinks a day in 1886 to 1.8 billion a day. The company has expanded from one city in one country to availability in more than 200 countries around the world. GROWTH OF COCA COLA The Coca-Cola recipe was made at the Eagle Drug and Chemical Company, a drugstore in Columbus, Georgia by John Pemberton, originally as a coca wine called Pemberton's French Wine Coca.
just behind Coors Light Defying the Traditional Product Life Cycle Theory - Going by standard marketing practices one would say that Budweiser finds itself in a decline phase due to its continued drop in sales over the last 25 years - But some would argue that brands like Budweiser and Coca-Cola defy standard theory due to brand identity and customer equity ,12derived from a loyal customer base - Anheuser-Busch is a master at identifying Budweiser as a true national beer, with a great American legacy, and a commitment to American values - The Budweiser brand also maintains a huge customer equity – they fell to Number 3 in the U.S. market in 2012 yet still sold over 108 million cases13 - A profitable market position allows for more precise sales forecasting - The merger of Anheuser-Busch and InBev in 2008 benefited the Budweiser brand in that it is now available in over 80 markets worldwide14 ,4,5,6 http://anheuser-busch.com/index.php/our-heritage/history/ ,3
Anh Nguyen Prof. Galassi Eng. 099 Asst # 5 17 July, 2014 Healthy solution: Taxing sugary drinks What are sugary drinks? Sugary drinks include non-diet sodas, sports drinks, energy drinks and sweetened fruit drinks. They contain little to no nutritional value and are one of the leading causes of obesity. With the recent increase of overweight and obese Americans, a debate has surfaced over whether the government should tax sugary drinks.
Diet Coke Parent Company Coca Cola Category Beverage Sector Food Products Tagline/ Slogan Live it Light USP World's 3rd largest selling soft drink STP Segment For all people seeking a soft drink for regular occasions, parties Target Group All age groups Lower, middle and upper class health conscious people Positioning Tasty no calorie soft drink SWOT Analysis Strength 1.Excellent branding and advertising 2.No Sugar so safe for health conscious and diabetic people. 3.Excellent distribution and availability Weakness 1.Aerated drinks not popular with health conscious people Opportunity 1.Leverage successful brand Coca Cola 2.Advertise more 3.Buy out competition 4.More Brand recognition Threats 1.Threat from other aerated drinks competitors 2.Threat from substitutes like fruit juices 3.Boycott from health conscious people Competition Competitors 1. Diet Pepsi 2. Pepsi Max Diet Coke Parent Company Coca Cola Category Beverage Sector Food Products Tagline/ Slogan Live it Light USP World's 3rd largest selling soft drink STP Segment For all people seeking a soft drink for regular occasions, parties Target Group All age groups Lower, middle and upper class health conscious people Positioning Tasty no calorie soft drink SWOT Analysis Strength 1.Excellent branding and advertising 2.No Sugar so safe for health conscious and diabetic people. 3.Excellent distribution and availability Weakness 1.Aerated drinks not popular with health conscious people Opportunity 1.Leverage successful brand Coca Cola 2.Advertise more 3.Buy out competition 4.More Brand recognition Threats 1.Threat from other aerated drinks competitors 2.Threat from substitutes like fruit juices 3.Boycott from
As far as past performance is concerned Coca Cola is experiencing a decline in its EVA. The cost of debt and the cost of equity for both companies are almost the same. There is only a small difference in their capital structures. The future outlook suggests that Coca Cola should surpass PepsiCo in value creation taking into consideration EVA as its measure. Excel Sheet EVA Analysis Historical EVATM Estimation and Return Comparisons Cost of Debt Cost of Debt for Coca Cola Cost of Debt for Pepsi Cost of Equity Cost of Equity for Pepsi Cost of Equity for Coca-Cola WACC Weights Coca Cola Pepsi EVA EVA for Coca Cola EVA for Pepsi Questions Covered 1.
The first stage is the introduction stage; this stage is the most expensive to businesses because it is the launch of the new product. The product is new to the market, therefore the sales are low. Coca-cola expects this to happen as it does with all new products. Coca-cola is a family, well trusted brand that has been around for many generations. Merging the coca-cola product with an alcoholic beverage is brand new to the company and will require many different advertisements and promotions to get this product in the public eye.