Running Head: MARKETING RESEARCH PAPER 1

Marketing Research Paper on Coca-Cola's product Coke Zero in

USA region

Author Name

University Name
MARKETING RESEARCH PAPER 2

Marketing Research Paper on Coca-Cola's product Coke Zero in USA region

Executive Summary

The Coca Cola Company is a giant corporation having more than 200 products under its

umbrella. Throughout the course of years it has remained on the top and today is considered one

of the two soft drink sellers in the world. The purpose of this paper is to present to its reader a

thorough analysis of the environmental market conditions both at macro and micro level which

have led to the successful marketing of Coke Zero in the United States. The paper presents an in

depth analysis of how the Coca Cola company operates in the competitive soft drinks market in

the United States.

The product appeal of Coke Zero in the USA region has been researched through various

means of customer insight which study the social, cultural, personal and psychological

influences. These influences greatly affect the customers’ decision to buy product like Coke

Zero. Accordingly it has been studied and assessed as to which market segment is to be targeted

and how much market penetration can be achieved through the 4P’s marketing strategy

mix.Furthermore the market segmentation has also been studied along with the market

positioning of Coke Zero, which has been evaluated through perpetual mapping technique.

The paper aims at increasing the grasp of reader on how effective marketing of Coke

Zero product has been carried out in the USA region.

Environmental Scan

There are certain forces outside the sphere of marketing that affect the ability of

marketing management significantly; so that it can establish and sustain successful relationships

with its target customers. In this context there are two kinds of environments which affect the
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marketing decision and operations significantly. These are namely; macro environment and

micro environment. The factors under both of these are vital for the marketing strategy.

Macro-Environmental Factors

The Coca Cola Company has become a giant business because of its successful penetration in to

the market. In the context of US it has made use of demographic factors in order to provide to its

customers varied flavors and types of packaging as per the needs of the customer and the specific

target market for which it is aiming.

Demographic Factor

Standard Size Returnable Bottle

This packaging is generally aimed for youngsters and adult; students and university

goers, etc. it may also seek out the lower class segment of market.

Large Size Returnable Bottle

These are generally applicable for household consumption and normally available in

economy packs.

Non-returnable/disposable bottle

This bottle is aimed at the fast moving individuals how have not got any time to waste by

opening and drinking. These bottles have penetrated to the greater extent in their respective

target markets.

Plastic Bottle 1.5l, 500ml

This packaging was introduced as an afterthought based upon the findings of survey.

According to the survey the American public prefers to consume two 250 ml bottles in a day.

Cans 330 ml
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This packaging has been introduced as an innovation; a style bearer of the company so as

to attract the customers. Cans have been a success ever since and are popular among children and

adults equally (Jiffynotes.com, n.d.).

Political Factor

The political factor comes into play when we talk of Coca Cola’s sister companies or

other franchises involving in export and import of their products. The Coke Zero and its sister

products are generally not affected by the government regulations primarily because they are

consumer products and environment friendly.

Economic Factor

It is perhaps the most important factor of the macro environment as any changes in the

economy of United States are likely to affect the prices of Coke Zero and other products of the

Coca Cola brand. For instance inflation results in a spike in the prices of Coke as a result of

which competitors like Pepsi Co., Groupe Donone and Mondelez International Inc. take

advantage by lowering their prices form that of Coca Cola beverages. However the impact on

labor wages, equipment and machinery of the manufacturing plant must also be taken into

consideration (Boutzikas, 2000).

Social Factor

The brand Coca Cola has been striving to create a customer friendly image; the Coke

Zero product is a very assessment of this effort. Coca Cola has recognized that people are

cautious of their sugar level and want to be healthy therefore it has launched Coke Zero which

has low caffeine and sugar content. The product has now transformed from a luxury to necessary

product (Bellis, 2006).

Technological Factors
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This factor can also be seen in the light of competitive edge; as the technological

advancement in beverage industry means better manufacturing means, saving of money, newer

products, better tastes and fewer defects. The methods of filling the bottles, keeping them

refrigerated, introducing plastic bottles, with chillers during distribution so and so forth have

revolutionized the beverage industry. Americans have a tendency for eating junk food and so

consuming beverages with them seems the best option accordingly the supply of Coke fully

chilled and ready to serve means more customers for Coke than for its competitors (Kown,

2008).

Micro-Environmental Factors

The micro environment includes all the factors which affect the development, distribution

and promotion of Coke Zero at an immediate level. These factors are as follows:

Customer Factor

A number of market surveys have been conducted at the global level which indicates that

Coca Cola is a well-recognized brand among the people of the world. This is because Coca Cola

has always carried out extensive research in order to fins newer ways to retain customers as well

as attract newer customers. This can be understood from the example which indicates that Coca

Cola beverages in general are consumed with 3.2 ice cubes in a glass and that about as much as

one million population of United States consumes Coca Cola in breakfast everyday though not

the same could be said for Coke Zero as it is targeted for a specific customer class. Nonetheless

even with Coke Zero it has a wide penetration in the market with youngster, to adult and to old

seeking out low caffeine coke (coca-cola.com, n.d.).

Competitor Factor
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In the international scenario there is only one notable competitor of Coca Cola Company

i.e. Pepsi Co. however in the context of United States there are some other competitors as well

like Groupe Donone and Mondelez International Inc. All these leading beverage companies are

in a neck to neck struggle so that they can get leverage against the others through pricing,

promoting, packaging and placing. Coke Zero, Cherry Coke and Sweeter Coke are all innovative

means through which the Coca Cola brand is trying to reach to the American population (Clark,

2006). It is because of brand loyalty that people how immediately sought to test these new

flavors; Coke Zero is marking its place admirably amongst the other new arrivers.

Intermediary Factor

This factor is equally important as other factors in the micro environment as it allows for

the producers to come in contact with the consumers. Hence through the intermediaries the Coca

Cola brand ensures swift promotion, distribution and sale of Coke Zero product. The

intermediaries typically include marketing agencies, resellers and distributors. For instance Coca

Cola brand in US works with Wendy for the supply of its Coke Zero and other products, fast

food franchises like MacDonald provide Coke Zero and other Coca Cola beverages with its

products. The role of the retailers and the distributors is also equally important.

Supplier Factor

Suppliers are very important to the operations of Coca Cola Company as they provide it

with materials and resources that are needed to manufacture the end product. In the specific

context of United State Coca Cola holds a large list of suppliers. However it has been only

recently that it has allowed giving some of its distribution networks to independent bottle

suppliers. These are Coca Cola bottling Consolidated, Coca Cola bottling United, Swire Coca
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Cola USA, Corinth Coca Cola Bottling Company and so on. The suppliers are selected after

rigorous scrutiny and have to abide by strict regulations imposed by the Coca Cola Company.

Competitive Industry

The beverage industry is becoming an increasingly competitive trade as more and more

companies are adding to the market and those already in the market are in a tough fight to retain

as well as enhance their market strength. The reason for the boom in the beverage industry and

that of the soft drinks industry is the changing life style of the American people. A large

proportion of the American population prefers fast food, frozen meals and ready to eat meals to

the conventional meal, whereas the soft drinks compliment well with such types of meal. As a

result of which in every fast food restaurant meals are served with soft drinks (Dodd, n.d.). Since

there are too many companies in the market so the competition among them is ever increasing.

As a result of which each company is striving to be innovative; with Coke Zero Coca Cola brand

one the race to innovation. Based upon customer research it was found that many Americans had

raised levels of fats in their body due to excessive fast food consumption; with Coke Zero the

Coca Cola brand was able to provide to its customers a low sugar drink which did not harm their

body (News, 2005). It was only natural that its competitors have come up with similar versions

of Coke Zero. Coca Cola has also maintained its competitive edge through its brand name, bottle

form, symbol, quality and cost etc. the promotional campaigns also play effectively in giving

competitive edge to the company.

Customer Insight

In order to understand the target market for Diet Coke and more specifically Coke Zero;

psychographic data was gathered to understand and define the customers to whom Coke Zero

appeals. Interviews, questionnaires and surveys indicated that consumers were heavy user with at
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least 3 soft drinks per day, moderate consumers who use 1-2 soft drinks in a day and light

consumers who use only 1 soft drink per day. The light consumers generally fall in to the

category of those who either use soft drinks with meal or are presented with one on an occasion,

the moderate consumers on the other hand are those who prefer soft drinks and are found in

greater percentage in the American population, whereas the heavy consumers use soft drinks

during early mornings, mid days and at nights to wake themselves up, endure a boring lecture or

wear off the stress of the day at night. Hence based upon the psychological perceptions of

consumers they tend to use soft drinks and Coke Zero in particular.

Apart from the psychology of consumers certain occasions also boost up the consumption

of soft drinks; for instance Christmas, people use more Coke Zero during this time of the year.

There are meals like the American Food like pizza, hamburgers, hot dogs etc. and fast food like

chips, fries etc. with which soft drinks like Coke Zero are used extensively (USDA, 2006).

Women in particular prefer diet cokes and Coke Zero because they are conscious about their

body and want to remain healthy and in shape. It must also be kept in mind that majority of the

people would still like to consume soft drinks knowing that they are unhealthy. When consumers

are viewed on the basis of gender it was found that male in the age group of 17-24 years prefer

Coke Zero to Diet Coke because according to them it does sound like they are on a diet when

consuming a Coke Zero. Lastly the brand image, loyalty, bottle form of Coke Zero and other

Coca Cola soft drinks is all very trendy and is associated with professional minded individuals,

whereas the black and silver colors give it a mysterious edge which makes the customer wanting

to try it at least once (Sullivan, Disalle and McDevitt, 2009).

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Market Segmentation

Market segmentation is very important for carrying out market analysis. It is actually the

division of a market into a number of groups based upon distinct needs, behavior and other

characteristics so that each group requires a separate product or marketing mix as per its needs,

behaviors and other characteristics. When a company divides a market into various segments it

must look into the profile of each market segment. This profile includes the size of the market

segment, it growth and the structural attractiveness of the segment in fulfilling the objectives of

the company. Market segmentation is a complex process; a company has to make use of effective

segmentation variables; often in combination so that a reasonable structural attractiveness for a

given market segment can be achieved (Lamb, Hair &McDaniels, 2004).

Target Markets

The first step towards market segmentation is the analysis of each market segment so as

to assess the feasibility of all segment and identify one in which a company is interested to enter.

This process of identifying a potential market segment is referred to as targeting market. Each

consumer is unique for he or she has a particular set of behavior, needs and characteristics which

make him stand out from the rest of the group; based upon these unique features each consumer

then becomes the basic unit of a market segment. Therefore the company will then have to

design its marketing program according to the basic unit of its market segment. In order to better

understand this one can imagine the division of market into segments based upon age, gender

and usage. Coca Cola brand with its products like Coke Zero generally follow undifferentiated

marketing; this implies that they go for mass marketing of their product. However there are tiny

factors which give the hint of market segmentation as well. The first level of segmentation is

geographic in which the taste and quality of drink is varied as per region; US is given the top
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quality of taste of Coca Cola brand. The second level of segmentation is climate barrier, the

southern US enjoys more sales of Coca Cola soft drinks than the north (Brooksbank, 1990). The

segmentation of the market then breaks down into metropolitan and suburban bounds; focus is

laid more on metropolitan areas. The Coca Cola brand also goes for demographic transition and

the marketing of Coke Zero precisely falls into this category. The Coke Zero and Coke regular

taste are targeted for the age group of 16-24 in particular and older than 24 years of age in

general. Coke Zero is similar in taste to Coke Diet but it is making more sales because of the

change in its name; as the changed name has increased its appeal to males as well (Aisle, 2009).

Furthermore the marketing focuses on a family image in its promotional campaigns; one will

find activities and occasional festivities involving family and friends in these campaigns. Coca

Cola makes huge investments both in its human and monetary resources in order to grasp the

psyche of the people in a specific market segment. Therefore people are assessed on variables

like social status, life styles, income level, occupation, education level and so on.

There is some behavioral segmentation as well; for instance some people will consume

Coke Zero and other soft drinks on certain occasions only but not on a regular basis. Thereby

during Christmas and Ester holidays the sale of soft drinks increases. The segmentation of

market can also be judged from the fact that Coca Cola uses different packaging for different

categories of customers (News Center, 2001).

Positioning in the Market

The positioning of the Coke Zero is more oriented towards the young men who want to

take care of their body but also do not wish to deprive themselves of the taste of real coke.

Therefore it ensures to its customers real taste of coke without any sugar or calorie. Accordingly

after the segmentation and market targeting the next step is the positioning of the product i.e.
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Coke Zero in the Market. This positioning refers to the unique place occupied in the mind of the

consumer which makes him or her decide in favor of the product. Therefore positioning is all

about creating a favorable perception of the product in the mind of the user. There are five

elements of positioning which must always be addressed to while designing the positioning

strategy. These are as follows; the limited mind space of the consumer, aversion to confusion,

hesitant because of emotions and irrationality, the consumer does not favor change, and the

consumer is susceptible to lose focus. The human brain only processes those things which it can

easily understand and with which it can associate; accordingly the Coke Zero product should

appeal to the association of the brain. Secondly the consumers hate products which confuse

them; Coke Zero has to be so designed that it is simple and there is no confusion about its use,

calorie and sugar content. Thirdly the human brain decides in the light of emotions, therefore the

decisions made at times seem irrational. Therefore Coke Zero must also appeal to the emotions

of its consumers. Fourthly consumers take up decisions on things, about which they know and

not something that is entirely new. Fifthly Coke Zero should be designed as such that it does not

loses the focus of the customer; it must hold the favorable perception (Hooley and Saunders,

1993).

Developing favorable positioning is a multi-prong strategy; it involves a number of

stages. It demands the behavioral and psychological study of the consumers as prerequisite to

positioning. Positioning may also be done in relation to the competitive strength and brand image

of the Coca Cola Company. Sometimes positioning can also be done by focusing on the

competitors; studying their strength and weaknesses, and manipulating them accordingly for the

positioning of Coke Zero. Finally it must also be understood that positioning of Coke Zero is a

continuous process and must be able to absorb the environmental changes in the business. There
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are different modes of positioning as per the requirement of a company. Positioning based upon

differences in competing products, positioning in relation to the benefits received from the

product, positioning based upon the use of product by the consumers, positioning done in

relation to the category of products, positioning in relation to competitors, and positioning in

relation to problems. Each mode of positioning is feasible for specific product type, however

sometimes combination of the above modes can used to achieve an integrated positioning

(Vrontis and Sharp, 2003).

Integrated Positioning for Coke Zero

The first step is about identifying the appropriate target in the market segment, so that the

positioning is done as per the consumer perception. The next step is the determination of the

consumer frame of reference; for Coke Zero it is the male frame of reference. The next step

focuses upon the point of differentiation; which involves marking the differences with the

competing product and lastly Coca Cola has to provide competitive advantage to its customers.

This competitive advantage is communicated through the punch line the real taste and zero

calories.

Perpetual Maps

The perpetual map for Coke Zero given below indicates its positioning based upon

differences with competitive products and the product specification of Coke Zero as well.
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Marketing Mix; 4P’s Analysis

The marketing mix for Coca Cola’s Coke Zero, has been successfully implemented. It is

of primary importance, as it is an old product with a new image, new packaging and new name

as earlier under the name of Coke Diet the product was only selling amongst the females, but

now as Coke Zero the product successfully launched itself amongst the male gender too (Bilaris,

n.d.). Following is the 4P’s analysis of Coke Zero.

Product

Coca Cola has maintained its top leadership in North America as it is the most sought

beverage in the United States. Coca Cola Company focuses on business products; as its products

are sold to grocery and departmental stores, convenience stores, filling stations, vending
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machines, restaurants and food areas etc. Coke has transformed itself from a luxury to almost a

basic necessity product. The product can be located anywhere; in schools, airports, bus stations,

subways, parks, places of business and so on. Over the course of time Coca Cola has made use of

numerous bottlersand packaging means, but its packaging colors have remained the same. It is

because of these colors that Coke products by Coca Cola are recognized globally (Anderson,

2008). Packaging is therefore very important in the marketing mix; as it is the wrapper in which

the product is presented to the end consumers. The packaging of Coke Zero fancies an edgy and

trendy look, with use of black, silver and white and red colors; this packaging not only contains

the content of the product, but is safe and is recyclable as well (Howard, 2007). This aspect of

recyclable packaging, adds value to the overall consumer perception about Coke Zero; because

the consumer will use a product which is not only good for him but is also good for the

environment. It also speaks volumes about the company’s priorities apart from excellent taste

and quality; the company is making its contributions towards creating a healthy and sustainable

environment.

Place/Distribution

Coca Cola is an internationally recognized company, which sells its products in more

than 200 countries with more than 400 brand names and about 2800 beverages under its

umbrella. In the United States region the company makes use of distribution channels to ensure

that the product reaches the end users. These distribution channels are closely knitted with

bottling and packaging companies which act as vendors for Coca Cola Cokes. However it does

not fully control its suppliers and vendors but it does monitor then through strict policy

guidelines (Astley, 2013).

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Promotion

Despite its popularity Coca Cola has always been on the forefront of criticism by health

critics; how argue that Coke products cause obesity problems and are not good for health. With

Coke Zero product Coca Cola has also sent a point to the health critics that it also wants what is

in the best interest of the public and therefore its Coke Diet and Coke Zero are aimed at reducing

possibilities of obesity. Coke Zero is a drink which gives to the customers the real taste of coke

but without any sugar or caffeine, implying that it is essentially good for the health of the public

and also helps them to remain fit and healthy (Haywood, 2006). Hence making use of the appeal

of Coke diet and Coke Zero to health conscious women and men is the best means for the

promotional campaign of these very products. The promotional strategy for Coke Zero also has

to analyze the impact of soft drinks on the economy level for the overall Coca Cola products; as

the end goal of a product is to add to the economy of the company. Recently it has been observed

that there has been an awareness regarding health and hazards of obesity as a result of which the

consumer have become more conscious of what the eat, how many calories are in it, and so on.

The life styles are also shifting towards a healthy and well balanced diet as a result of which

products like Coke Zero and Coke Diet are enjoying increased demands (McWilliams, 2010).

One thing because of which Coca Cola is always known for is to never compromise on its

pricing rates even for the sake of competition. Its pricing rates are appropriate of not less as

compared to its competitors like Pepsi Co.

For the promotional campaign of Coke Zero; the target segment market comprises of

young and adults likely to be within the age group of 16-38 years. The promotional

advertisements for Coke Zero also feature young men and attract the male machismo. Since

America is large country and has more stable economy when it comes to food consumption so
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there is a cooperative relationship between coke and its complimentary products (Ravens, 2005).

The identification of a market segment goes a great deal in deciding the promotional expenses

and strategies. This is because the market segment gives customer insight which in turn helps to

create a favorable image of the product i.e. Coke Zero in the minds of the customers. All this

creates an environment within which the sales of the product Coke Zero can flourish.

The marketing media mix is equally important in the success of promotional campaigns

for Coke Zero. After the customers, their beliefs and perceptions have been thoroughly analyzed

Coca Cola using all forms of media channels to promote its products. There is TV, radio and

Newspaper mix, direct promotion through retailers, on the internet through social media,

incentives to consumers like prizes won in lucky draws, free tries and sponsoring of mega events

in sports, entertainment and other means. All these multi-pronged media mix is utilized both

locally and internationally to promote Coke Zero. Generally the customers prefer mainstream

media like TVs, radio, and newspaper. Since the major target customers are young and adults

who use social media regularly so promotions on social media are also very effective (Wilbert,

2006).

Pricing

The Coca Cola Company has never compromised on the quality and taste of its beverages

and other products. In similar fashion it has also never compromised on the prices of its products

no matter if the competitors lower it during holiday seasons. Yet still its price is within

competitive range with its rivals; such a pricing is also known as competitive pricing, but then

again the overall prices are being set by the retailers but these are based upon the growing rate

(Curd, n.d.). In terms of the marketing mix it can be said that price is not a key player in making

the consumer chose Coke Zero and other Coca Cola products instead of their competition.
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Conclusion

Coca Cola is global giant and its latest soft drink Coke Zero has proved itself to be much

more successful than the diet Coke. Seeing the success of Coke Zero amongst the men, it has

become imperative that Coca Cola should make efforts to include women also in the target

market for Coke Zero. Customer insights have given evidence that women are just as inclined to

consume Coke Zero as men are, so by targeting a diverse market this product by the Coca Cola

Company can increase its market penetration. The marketing mix must also take into account the

factor that Coke Zero is competing with its own product Coke Diet in the market, so the

marketing strategy should be such which does not cause harm to the market share of Coke Diet.

The macro and micro environments in the business industry for Coke Zero as per the

analysis given in this paper seem promising. However competition always keeps Coca Cola and

its competitors in the run, therefore the positioning of Coke Zero in the marketing mix must be

carried out on a continual basis.

MARKETING RESEARCH PAPER 18

Plagiarism Report

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MARKETING RESEARCH PAPER 19

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