The Coca-Cola Company

Marketing Management II

Vicent Colomer Conejero

May/2011
INDEX
1. INTRODUCTION

The company I've chosen to work with is The Coca-Cola company for several reasons.
The most important reason is that when looking for information about this company it
will be much easier if I'm dealing with this company that with any other.

Besides, in order to launch a new product, with a company with such a size like Coca-
Cola's it's easier as long as they already have the proper channels and experience to
do it in the better way possible.

To begin with it would be necessary to make a little summary of the history of this
company in order to have a better understanding of how this company usually works
and develops.

The Coca Cola history extends back to 1885, when John Pemberton invented the
original recipe for a new cocawine. He named it Pemberton's French Wine Coca, which
was believed to be inspired by Vin Mariani, a popular cocawine invented by Angelo
Mariani. Pemberton developed Coca-Cola, a non-alcoholic version of his original
cocawine, when Fulton County passed prohibition legislation. Carbonated water was
added later by accident when Pemberton was mixing drinks for a friend and
incidentally included it. His friends loved the new taste, so he altered the original
formula to incorporate it.

Coca-Cola was said to cure many diseases, including headaches, impotence, and the
powerful morphine addiction. Three versions of Coca-Cola were on the market by
1888, sold by three separate companies. One company, Candler, purchased exclusive
rights to the Coca-Cola formula from Woolfolk Walker, John Pemberton, and Margaret
Dozier to cut out the competition.

This made the first big break in Coca Cola history. Candler incorporated The Coca-Cola
Company in 1982, and began marketing the product. The drink achieved the status of
national icon for the USA by its 50th anniversary. Bottles of Coca-Cola were sold
starting in 1894, and cans in 1955. The first bottle was sold in Vicksburg, Mississippi.
In 1899, Chattanooga, Tennessee became the first site of a Coca-Cola bottling
company.

In Pemberton's original formula, he added five ounces of coca leaf (cocaine) per gallon
of syrup. Candler claimed that he altered the formula and only added a tenth of the
amount. Coca Cola once contained an estimate of nine milligrams of cocaine per glass.
It wasn't until 1903 that it was removed from the drink altogether, replacing it with
coca flavoring.

"New Coke" came out in 1985 after Coca-Cola attempted to change the original
formula. Most consumers preferred the taste of the original Coca-Cola, and many
ceased purchasing the product until the company switched back to the original
formula. It was renamed Coca Cola Classic to show consumers that the drink had
reverted back to its original formula.

By the 21st century, Coca Cola history took another leap in the market. In 2005, the
company launched "Diet Coke", sweetened with artificial flavors. Later in 2005, it
announced "Coca Cola Zero", sweetened with aspartame and acesulfame potassium.
Since then, the company has produced other products containing the same Coca-Cola
formula with minor differences.
Coca Cola is now being sold around the world, in more than 200 different countries.
The Coca-Cola company now sponsors an assortment of events, including the
"Olympic Games", and "NASCAR". In England, it is the primary sponsor of "The
Football League".

Coca Cola history has come a long way since Pemberton invented the original recipe,
and continues to grow by leaps and bounds. It is no surprise that it is one of the
leading soft drinks of the market.

2. PORTFOLIO
The Coca-Cola company is the world's leading manufacturer, distributor and marketer
of non-alcoholic beverage concentrates and syrups and, to a lesser degree, finished
beverages which it sells to bottling and canning operations and authorized
wholesalers. Coca-Cola produces more than 230 beverage brands and markets four of
the world's top five soft drink brands, including Coke, diet Coke, Fanta, and Sprite.
The Coca-Cola company portfolio is divided in 6 big categories (Energy Drinks, Juices
and Juice Drinks, Soft Drinks, Sport Drinks, Tea/Coffees and Waters), and within
these categories there are a lot of different products around the world, but I'll only
analyse those which are distributed in Spain.

2.1 Energy Drinks

BURN
Burn is an energy drink with high sugar and high caffeine
content with a citrus flavor that comes in a 250ml can. The
drink is distributed in several countries by The Coca-Cola
Company, being Spain one of them.

2.2 Juices and Juice Drinks

FRUITOPIA
Fruitopia is a noncarbonated fruit beverage for teens and
young adults looking to discover new and unique flavor
experiences. Fruitopia offers distinctively different flavors with
an attitude and personality that gives the brand a style all its
own.
 MINUTE MAID
Minute Maid is the natural juice brand of The Coca Cola
Company. Minute Maid was bought by The Coca Cola
Company being the world's largest juice producer.
Many flavours are distributed in Spain, such as:
Vergelia, Melocotón, Multifruta, Naranja, Piña, AntiOx,
Manzana, Tomate, Mosto, Piña y Pera, Duofrutas
Vegetales and Duofrutas Mediterráneo.

Along with all these flavors Minute Maid is also

distributing another lemon and orange flavored
beverages under the brand of Lemon & Nada.

2.3 Soft Drinks

Soft drinks are non-alcoholic beverages that contain carbonated water, a sweetening
agent and a flavoring agent. In The Coca Cola Company these have been the most
important products since the beginning, being the cola flavored the most important
one. In this division, we can subdivide according to the flavors.
COCA COLA
Coca-Cola is the most popular and biggest-selling soft
drink in history, as well as the best-known product in
the world.

Created in Atlanta, Georgia, by Dr. John S. Pemberton,

Coca-Cola was first offered as a fountain beverage by
mixing Coca-Cola syrup with carbonated water. Coca-
Cola was introduced in 1886, patented in 1887,
registered as a trademark in 1893 and by 1895 it was
being sold in every state and territory in the United
States. In 1899, The Coca-Cola Company began
franchised bottling operations in the United States.
Within this flavor another products can be introduced in
this division according to their properties: Sin Cafeína,
Light, Light Sin Cafeína, Light Limón and Zero.

FANTA
Fanta is the second most famous brand of The Coca
Cola Company. It works under the same basis than
Coca Cola but with other flavors, being Lemon and
Orange the most known. They have tried a lot of other
flavors but they don´t usually are well received by
customers (Green Apple, Pineapple, Grape...). As with
Coca Cola we can find Fanta Zero as well.
NORDIC MIST
 Nordic Mist is an moder line of soft drink mixers. The
Coca-Cola Company started to sell it by 1992. At the
beginning it was sold with only one flavour, Bitter
Water. But nowadays, it's possible to find 5 more
flavours in the market; Soda, Lemon, Ginger Ale,
Orange and Blue.

SPRITE
Introduced in 1961, Sprite is the world's leading lemon-
lime flavored soft drink. Sprite is sold in more than 190
countries and ranks as the No. 4 soft drink worldwide,
with a strong appeal to young people. Millions of people
enjoy Sprite because of its crisp, clean taste that really
quenches thirst. But Sprite also has an honest,
straightforward attitude that sets it apart from other
soft drinks.

2.4 Sports Drinks

AQUARIUS
Aquarius is a mineral sports drinks manufactured by
The Coca-Cola Company. It originated in, and was first
introduced in 1983 in Japan as a grapefruit-flavored
sports drink, as a response to a competitor's brand of
sports drink called Pocari Sweat. It was introduced to
Spain and Portugal in 1991, and it became the official
drink of the 1992 Summer Olympics in Barcelona. Now we
can find 2 different flavors in the market: Lemon and
Orange (both can be found sugar-free).

POWERADE
Powerade is a sports drink first introduced in 1988
whose original competitor was PepsiCo's Gatorade. In
2008 Powerade US market was 21,7% and Gatorade's
was 77,2%. POWERADE combines carbohydrates with
fluids for energy and hydration. It quenches thirst and
replenishes minerals and carbohydrates lost during
sports or other intense activities. Just like with the
other brands of the company, we can find here different
flavors as well: Ice Storm, Citrus Charge, Blood Orange.

2.5 Tea/Coffee
NESTEA
Nestea is a brand of iced tea manufactured by Nestle
and distributed by Beverage Partners Worldwide(BPW),
[a joint venture between The Coca Cola Company and
Nestle. It competes with Pepsi's Lipton Iced Tea. It
 provides a variety of "tea products", in regular and diet
forms, including liquid and powdered tea concentrates,
refrigeratable teas, and ready-to-drink bottles
dispensed by vendor or vending machine. The beverage
comes in several flavors such as; Lemon, Oragne,
Lemon sugar-free, Peach, White Peach, Mango and
Pineapple, Cool.
2.6 Waters
BONAQUA
BonAqua provides the pure taste of crystal water.
Known as BonAqua in some locations, this refreshing
product is available carbonated or noncarbonated,
depending on location. The Coca Cola Company
manufactures this product with a lot of different and
exotic flavors such as; Aloe Vera Peach, Apple Peach,
Lemon Passionfruit...

3. NEW PRODUCTS
As we've seen The Coca Cola company has a huge amount of different products in
different categories, therefore it's difficult to think in new products Coca Cola hasn't
manufactured already.
Takin into account what the company is offering and what is not, one product that the
company could launch is a mixed alcoholic drink. For example, the tipical Cubalibre, is
an alcoholic mixed drink originated in Cuba after the war with Spain, where the US
soldiers introduced Coca-Cola and mixed it with ron. As Cuba has just set free, it was
called “Cuba libre”.
So, a new product in a strategic alliance with a ron producer company mixing Coca-
cola and ron would compete with another alcoholic mixed drinks such as Bacardí
Mojito, which has been sold for almost three years and has had a very good
acceptance by consumers.
The targeted market for a product like this would be young people from 18-years-old
to those under-40 who still use to go out at nights with a low and medium economic
position. This target market will be loyal to the brand, as long as young people prefer
Coca-cola rather than other brands to mix with alcohol.
An strategic alliance with a ron producer would be needed in order to give to the new
product the powerful background of a brand like Coca-Cola with another powerful ron
producer who would like joining for launching a product like this. For example, we can
find on the internet a poll asking for which the best ron that can be found in a disco is
(http://www.all-rankings.com/food-and-drink-beer-wine-and-spirits/r-
1b1eb54505/mejor-marca-de-ron), and the best placed one is Ron Brugal. Therefore,
a joint-venture with this company in order to launch this new product should be
considered as long this is the best brand for those who usually drink ron.
Another product that The Coca-Cola Company might take into consideration would be
a variation in its energy drink products. For example, a sugar-free variable for its main
product (Burn) only or for the whole range of tastes (Burn, Burn Day and Burn con
Zumo), as long as consumers are increasingly more worried about their health and
welfare.
For this new product/s the target market would be young people (mostly because
these customers are the usual target in energy drinks) that are worried about their
health but do not want to miss the flavor of the product, and need energy drinks to
carry on with the daily tasks of their life.
From the point of view of the juices sector of the company, there's a new whole
product the Coca-Cola Company is not producing and which is already in the market
being sold by other producers.
This product would be juices blended with milk, which are quite famous in Spain and
which principal competitor would be Biofrutas by Pascual.
Juices with milk products appeared almost one decade ago in response to the increase
interest in fruits and vegetables which were recommended by nutritionists in order to
have a balanced alimentation. These type of products are advised to be considered as
a “complete aliment” gathering the benefits of proteins and calcium from milk and the
vitamins from fruit.
Target market for this kind of products are usually young people who want to have a
healthy alimentation and will use this product to obtain the advantages of eating both,
fruit and milk. Beside, these products are often recommended to children who might
have problems with one of the two components, fruit or milk. So it makes it easier for
their parents to get their children have a complete alimentation.
Finally, The Coca-Cola Company has got another option to launch a new product.
Taking into account that Spain is a country where coffee is consumed in a high basis,
a good product to be launched would be prepared fresh coffee sold in cans and with
different flavors.
This could or should be done in collaboration with a company with a good reputation
in the coffee market in order to win the consumer trust based on the supposed quality
of the coffee.
The main competitor (and almost the only one) in Spain in this market sector would
be Kaiku that is already selling its Caffe Latte with different flavors such as; Espresso,
Macchiatto, Cappuccino... This products can be found in many retailers and
wholesalers; El Corte Inglés, Carrefour, Mercadona, Eroski...
This product's target market would be a young dynamic audience (males and females
in their 20s and 30s) who do not have time to go to a bar every time they need a
coffee or going to a vendor machine (if available) to get some coffee and wait a long
time till it's not boiling (but never get as fresh as if we get one of this product right
from the refrigerator).
Therefore, once we have analyse all these prodcut's characteristics and their
competitors the product that the company should start to produce is the fresh
prepared coffee. And some of the reasons for this election are as follows:
 There's only one competitor in the market nowadays and although its quite
present in a lot of retailers and wholesalers it has not positioned very well in the
market and there're a lot of consumers who are not aware that this type of
product is in the market as long as it has not had as much advertisement as it
neeeded. Thus, The Coca-Cola Company in collaboration with a coffee producer
with good reputation has a really good chance to position its product in the
market and become leader in the long-run.
 Collaboration with another well reputated company would create commercial
and market synergies that would help to build a good brand image. Besides,
The Coca-Cola Company would take advantage of its distribution channels
which are already stablished and the production plants won't have many
problems to produce a product like this.
The reasons to disregard the other options are:
 The option of the new ron with coca-cola product is not elegible because it
would mean to get into a new market (alcoholic drinks) where The Coca-Cola
Company has no experience at all, and therefore it would require a lot of effort
both, economically and managerial/time-consuming as long as they should
carry out a huge market research and development.
 Launching sugar-free energy drinks means to increase the production of this
type of products in a highly competitive market where Red Bull is clearly the
leader and where it would take the company to make huge expenses in
advertisement in order to take some customers from Red Bull. Besides, sugar-
free energy drinks would have a very small target market according to the
economic effort that the company would have to do, making this option
unavailable.
 From the point of view of blended juice with milk, it can be said that this
product is at the maturity point in the Product Life Cycle therefore at this point
it is not recommended to invest in this type of product and would be better to
invest in another option.

4. BRANDING, LABELING AND PACKAGING

One a company is about to launch a new product it has to try to build a remarcable
brand value. To achieve this the company has to be aware of some factors that may
influence when building the brand value. Some of this factors are:
(http://tutor2u.net/business/marketing/brands_building_brands.asp )
 Quality: Quality is a vital ingredient of a good brand. Remember the “core
benefits”; the things consumers expect. These must be delivered well,
consistently. Research confirms that, statistically, higher quality brands achieve
a higher market share and higher profitability that their inferior competitors.
 Positioning: Positioning is about the position a brand occupies in a market in
the minds of consumers. Strong brands have a clear, often unique position in
the target market. Positioning can be achieved through several means,
including brand name, image, service standards, product guarantees, packaging
and the way in which it is delivered. In fact, successful positioning usually
requires a combination of these things.
 Communications: Communications also play a key role in building a successful
brand. It is suggested that brand positioning is essentially about customer
perceptions – with the objective to build a clearly defined position in the minds
of the target audience. All elements of the promotional mix need to be used to
develop and sustain customer perceptions. Initially, the challenge is to build
awareness, then to develop the brand personality and reinforce the perception.
 Long-term perspective: This leads onto another important factor in brand-
building: the need to invest in the brand over the long-term. Building customer
awareness, communicating the brand’s message and creating customer loyalty
takes time. This means that management must “invest” in a brand, perhaps at
the expense of short-term profitability.
 Internal Marketing: Finally, management should ensure that the brand is
marketed “internally” as well as externally. By this we mean that the whole
business should understand the brand values and positioning. This is
particularly important in service businesses where a critical part of the brand
value is the type and quality of service that a customer receives.
Therefore the band will have to be representative of the values of The Coca-Cola
Company (quality, trust, reputation...) in order to build a good brand value, also a
large money investment will be required in promotion and advertising in order to
make consumers aware that this new product is in the market, and if the company
wants to become leader of the market and overcome Kaiku a bigger investment will be
required.
I've thought that the name of this new brand might be OLÉ. I've chosen this name
because it's a pun between the french expression “café au lait” and the typical spanish
word “olé” which sound exactly equal to the french expression. Therefore The Coca-
Cola Company would be creating a bond with the spanish culture as long as this a
word tipically used in both most popular events, bullfighting and football.
According to the packaging it's important to realize that packaging always either has a
negative or positive influence on the purchaser. A negative impression can detour a
potential customer, just as a positive reaction can influence a customer to buy. This
becomes even more important when a company is launching a “new” brand.
Since many potential customers first notice a new product after it has arrived on the
shelves of a store, it is vital that the packaging provide consumers with the
information they need and motivate them to make a purchase. But packaging
decisions involve a number of tradeoffs. While making a product visible and distinctive
may be the top priority, for example, businesses must also comply with a variety of
laws regarding product labeling and safety.
Packaging should attract attention on the shelf, instill confidence in the buyer, identify
the product or brand and differentiate it from the competition, communicate benefits
and uses, and entice customers to actually purchase the item. The product must also
be easy for retailers to store and stock on the shelves or the floor, and simple to
process at a check-out counter or other final point of distribution.
In order to make a difference in the packaging to make the product recognizable on
the shelf and useful for the customer, I would chose a little bottle instead of a can
because with a can the product has to be finished up to the end, but with a little bottle
it's possible leave some product left for later on the day. Besides, in order to do the
product even more recognizable to the costumer it will have a characteristic shape,
different from the usual PVC bottles.
I've chosen a dark brown bottle in order to relate with the coffee color using red
letters with a characteristic thypography so it will be easily recognizable and will call
consumer's attention, becoming an impulsive consumption product.
Besides, when labeling food products The Coca-Cola Company should also be aware
that ingredients should be listed in order of greatest to least. Depending upon the
type of food it is, the company may need to include nutritional value information on
the label. To find out the nutritional content of food products, most manufacturers
usually send their products to a specialty lab for testing.
The Company will need to use certain sized fonts on your
packaging--the specific size that will be needed to use is
determined by how large the food package is. No matter what
the size of the food item, the company should list the net weight
of the product on the label.
5. MARKETING CHANNELS

Marketing channels refers to the ways in which products move from the manufacturer
to the distributor to the end user. Also called distribution channels, the number and
efficiency of a company's marketing channel can have a strong impact on the
company's success. If a company does not have enough channels through which to
market their goods, or if the channels are inefficient and expensive, it can be difficult
for a company to locate customers for its products and/or to make a profit on sales of
its products.
Some companies, often referred to as direct marketing companies, sell the product
directly from the manufacturer to the end user, or consumer. In such cases, the
companies do not create or establish marketing channels. Instead, the consumer
orders directly and the item is shipped to him, reducing costs for marketing and
distribution. It can be difficult, however, for a manufacturer to locate customers using
this form of marketing, since it may be less convenient if there is no storefront for a
customer to go to or no local retailer a customer can interface with; the Internet,
however has reduced this problem somewhat and given rise to more direct selling.
Most often, however, products do not go directly from the manufacturer to the end
user. Instead, the products are first sent to a distributor or retail outlet. The retail
outlets and distributors that a product is sent to can be referred to marketing
channels. For example, a company that produces clothing may have multiple
marketing channels: it may send its clothing to boutique stores throughout the
country and to large chain stores and department stores as well.
The manner in which the product gets from the manufacturer to the distributor or
store selling its product is a part of the marketing channel. The clothing may move
from the clothing designer to the plant that creates the design to the shipping
company that moves the design to all of the boutiques to the boutiques themselves.
This is one particular marketing channel. A different channel may be used to send the
items to the department stores; for example, perhaps a different shipping company is
used or a different manufacturer to produce the items sold to the larger stores.
First of all the company has to decide how many levels the marketing channel will
have according to the type of product and decide whether to chose an industrial
marketing channel or a consumer one.
Channel levels consist of consumer marketing channels or the industrial marketing
channels. A factor common among both channel levels is that both include the
producer as well as the end customer.

1) Zero Level channel / Direct Marketing Channel – Consists of a manufacturer directly

selling to the end consumer. This might mean door to door sales, direct mails or
telemarketing. Dell online sales is a perfect example of a zero level channel
marketing.

2) One Level channel – As the name suggests, the one level channel has an
intermediary in between the producer and the consumer. An example of this can be
insurance in which there is an insurance agent between the insurance company and
the customer.

3) Two level Channel – A widely used marketing channel especially in the FMCG and
the consumer durables industry which consists of a wholesaler and a retailer.
4) Three level channel – Again observed in both the FMCG and the consumer durables
industry, the three level channel can combine the roles of a distributor on top of a
dealer and a retailer. The distributor stocks the most and spreads it to dealers who in
turn give it to retailers.

Here are perfect representations for channel levels between consumer marketing
channel and an industrial marketing channel.
Furthermore for most of the products companies can choose among various ways to
take the product from the manufactures to the end consumer. There are various sale
channels that may be employed to sell a product. A strategic decision will be to decide
channel or channels that the company will use for a concrete product. To select the
distribution channel companies have to be aware of some fundamental factors:
 The point of sale of the product affects the image of the brand: This concept is
key and should be kept in mind. If the product is sold in exclusive, elite and
expensive shops the product would benefit from that image.
 Exist incompatible distribution channels: Sometimes companies can not employ
different competitive channels at once. One of the channels does not allow
products to be sold in the other one.
 Trade margins may vary very much from one channel to another: For instance
Coca-Cola gets more revenues from vending machines than from supermarkets.
Market tests have determined that sales can be increased more from increasing
the number of vending machines.
 Entry barriers are different: This is, the necessary resources and costs are very
distinct depending on the channel the company had chosen.
When the product has to be delivered to the end consumer companies have different
options to pick, wholesalers or retailers. Wholesalers and retailers are the two
important types of middlemen forming a part of the distribution channels. They act as
an intermediary link between the manufacturers and the consumers of goods. They
reduce the amount of efforts required by the manufacturer in distributing his product
to the final consumers and provide a vast market coverage to his products. They also
provide aftersale services and handle consumer grievances. They also act as a
communication channel by providing information about the products to the
consumers,on one hand, and the consumer feedback to the producers on the other
hand.
Wholesalers
Wholesaler may be defined as the middlemen who operates between the producers
(from whom they purchase goods) and the retailers (to whom they sell goods).
Wholesaler refers to any individual or business firm selling goods in relatively large
quantities to buyers(retailers) other than the ultimate consumers. Thus the
manufacturers who sell their products directly to retailers may also be regarded as
wholesalers. The wholesalers provide important services and solve the problems of
both the manufacturers and the retailers.
Services provided by the wholesalers to the manufacturers:-
 They place orders for the product in advance on the basis of expectations
regarding the demand for the product. This enables the manufacturer to plan
his production and secure the economies of scale.
 They may also provide transportation facility by carrying goods from producers
to godowns and then to retailers.
 They provide financial accommodation to manufacturers in the form of cash
payments for goods purchased from them as well as provide credit to them.
 They keep the manufacturers updated on the changes in customers' habits,
tastes, preferences and fashion.
 They also play an important role in fixation of the final prices of the goods.
Services provided by the wholesalers to the retailers:-
 They act as the retailers 'buying agent' and saves them from the trouble of
searching out and assembling goods from several manufacturers.
  They inform the retailers about the new products, its uses and changes in their
prices. They also assist the retailers in advertising and selling of the products.
 They provide financial assistance to retailers, sell goods on credit to retailers
and thus help them to operate with small working capital.
 A wholesaler being the ware-house keeper of the market, they protect the
retailers from the risk of loss arising from holding large stocks of the product.

Retailers
Retailing refers to all the transactions which involve sale of goods or services to the
ultimate consumers. A retailer is a middleman who procures goods from the
wholesalers and sell it to the final consumers. They form a vital link in the channel of
distribution of products because without him, neither the products would sell to
distant places nor would it be possible for consumers to buy goods of their choice in
shops located nearby. They have a much stronger personal relationship with the
consumers and deal directly with the people of varied tastes and temperaments. They
form the last link in the chain of distribution and give the final selling price to the
product.
Services provided by the retailers to the wholesalers and manufacturers:-
 They provide selling outlets to wholesalers and manufacturers.
 They save the manufacturers from the inconvenience and expenses of selling
the goods in small lots to a large number of consumers.
 They communicate the needs and desires of consumers to the manufacturers.
 They may also arrange for transportation of goods from the wholesalers'
godowns to the ultimate consumers.

Services provided by the retailers to the consumers:-

 They anticipate the needs of consumers and accordingly assemble goods of
different varieties. Thus they satisfy their demands and provide them a wide
choice of goods.
 They sort out goods supplied by the wholesalers and keep them in convenient
packages for the benefit of the consumers.
 They even act as an advisor and guide to the consumers by bringing new
products to their notice and educating them about its diverse uses.
 They keep the consumers informed about the changing trends in the market
about the different varieties of products.

Retailers are of different types depending upon their scale of operation and location.
They are broadly classified into two categories:-
 Small-scale retailers: are those retailers whose scale of operation is restricted
to a small segment of the market and to a narrow range of products. They
generally hold small stocks of the products of regular use. Such retailers are
very large in number but account for a small portion of the total retail business.
But,small-scale retailing is a very common, simple and flexible way of
distributing the products to the final consumers.
The two prevalent forms of small scale retailing are :-
 Itinerants or Mobile traders: are those retailers who carry on their
business by moving from place to place for selling the products and have
no fixed business premises. They change their place of business
according to their convenience and sales prospects. They serve either at
the consumer's doorsteps or on busy places frequently visited by the
 customers. They do not have any particular line of business and carry
very little stock of those goods. They save time and efforts of customers
in buying articles of ordinary use.
 Fixed Shop Retailers: are those retailers which have fixed business
premises and operate through unit stores or small shops located in
residential areas or markets. They mainly include: (i) street stalls:- are
the small shops on the roadside,street-crossing,bus stops, etc. They sell
a limited variety of products of regular use like stationery, grocery, etc;
(ii) dealers of second hand goods:- are engaged in purchase and sale of
used goods like books,clothes, etc; (iii) general stores or variety stores:-
are the shops which deal in all types of general consumer goods of
regular use like bread, butter, paper and pencils,etc. They provide
services like goods on credit and home delivery to their customers; (iv)
speciality shops: are the shops which deal in only one or two special
types of goods. They are generally located in shopping centres.

 Large-scale Retailers: are those retailers whose scale of operation extends to a

large segment of the market and to a wide range of products. They have a fixed
line of business in which they have invested huge capital. Such retailers are not
very large in number. This form of retailing involves high operating costs and
lacks personal contact with the customers. The various forms of large scale
retailers are:
 Departmental stores: are large scale retail establishments comprising
of a number of departments in the same building. All its departments are
centrally controlled but each forms a complete sales unit in itself and
specialises in a particular line of product. They offer a wide choice of
products to the customers under one roof. They also provide many
amenities for customer's convenience such as restaurants, car parking,
recreation rooms, post and telegraph offices and so on.
 Supermarkets: are large scale retail shops operating at lower costs.
They sell a wide variety of consumer goods of regular use such as food
items, groceries,etc at one place. They sell goods at lower prices than the
departmental stores. Customers select the goods themselves without
salesman's assistance.
 Multiple Shops or chain stores: are a group of retail stores of the
same type under one common ownership and centralised management
but are located at various locations. All of them deal in similar range of
products and sell the same standardised products at the same terms and
conditions. The goods dealt are generally meant for everyday use and are
readily acceptable to all kinds of customers. They offer goods at lower
prices as they enjoy economies of bulk buying.
 Mail order houses: are those retail trading establishments which
receive their orders by mail and deliver the goods by parcel or post
express. The post office is their main channel of distribution. Orders from
customers may be secured by advertising in newspapers or journals or
through telephone contacts.
 Consumer cooperative stores: are the cooperative stores which are
owned and operated by the consumers themselves. They are
incorporated as an association under the Cooperative societies Act. The
membership of such stores is voluntary and capital is subscribed by the
members themselves by purchasing shares of a small denomination.
They purchase their requirements of goods in bulk from manufacturers
 and wholesalers and sell them to its members at lower prices. The aim of
such cooperative stores is to render service to its members and not to
maximize profits.
 Hire purchase traders: is a form of retail trade in which credit is
granted to the customers on the security of a lien on the goods. They
supply consumer durable goods to the customers who agree to pay the
price by installment (also called hire charges)at regular intervals. In this
form of retailing, consumers get the advantage of deferred payment as
they can purchase goods on credit and make easy payments in
installments while using the products at the same time. The buyer
acquires the ownership of goods only after the total price has been paid.
 Automatic vending machines: are a new and complementary form of
retailing operated by inserting coins or tokens into the machine by the
buyers. In return, buyers receive a specified quantity of the product from
the machine. These are used to sell prepacked and low cost products of
mass consumptions like beverages,tickets,etc. This form of retailing can
sell goods at places and at times where other types of retailing are not
convenient or economical. For example, mother dairy sells milk through
such vending machines.
Thus, when a company is designing the distribution channel it has to follow 4 different
steps in order to make the right decission. This four steps are:
 Analyzing customer needs: Here the marketer must understand the service
output levels its target customers want. There are 5 different service otuputs:
 Establishing Channel Objectives: Marketer should state their channel objectives
in terms of targeted services output levels. Under competitive conditions, they
arrange their functional tasks to minimize total channel costs. Channel
objectives vary with product characteristics.
 Identifying major channel alternatives: marketers can choose from a wide
variety of reaching customers from sales forces to agents, distributors, dealers,
direct mail, telermarketing and the internet. The problem is further complicated
by the fact that most companies now use a mix of channels, and each channel
reaches a different segment of buyers and delivers.
 Evaluating major channel alternatives: each channel alternative needs to be
evaluated against economic, control, and adaptive criteria.
Once the company has already chosen a channel alternative they have to:
 Select intermediaries: Producers have to evaluate the number of years in
business, other lines carried, growth and profit record, financial strength
cooperativeness, and service reputation.
 Training intermediaries: The company has to be able to stimulate channel
members with understanding their needs and wants. The compoany should
implement careful training programs and market research programs.
 Motivating intermediaries: Channel power is the ability to alter channel
member's behavior so that they take actions they would not have taken
otherwise.
 Evaluating intermediaries: Producers must periodically evaluate intermediaries'
performance against such standards as sales-quota attainment, average
invetory levels, customer delivery time, treatment of damaged and lost goods,
and cooperation in promotional and training programs.
Thus, once The Coca-Cola Company evaluates and assesses all this aspects of the
distribution channel it will be possible to stablish a channel system based on
customers needs and company resources.
Therefore, as long as The Coca-Cola Company already has an important and well-
developed distribution channel with its own bottlers (others are dealerships with local
companies) with the largest world truck fleet, allowing the company to distribute its
products in each and every country of the world and in locations where other
companies can't even dream to deliver theirs, the company should use these
resources to distribute this new product, as long as it has been working for almost the
last whole century.
So, this product will be available for customer in every retailer where other cold
beverages can be found. Almost in every one in order to have a major presence and
make consumers aware of the existence of the new product.
Also, since as I've exposed earlier, vending machines and restaurants are more
profitable than for The Coca-Cola Company than retailers. Therefore the company will
have to increase the number of products in its vending machines and introduce this
new one, and place them in strategic locations securing the awareness of consumers
and making it more available.
Also a good distribution among local restaurants will be required as long as
restaurants, just as vending machines, are the most profitable sources for The Coca-
Cola Company.
A technique that The Coca-Cola Company is using nowadays with its products is
distributing its products for restaurants with different shapes from those distributed in
retailers and vending machines.
They are doing this because this way restaurants won't be able to take advantage of
promotion and discount in retailers, therefore they won't be allowed to buy in retailers
products for restaurants. This, is a technique that can be used for this new product as
well, since this will help The Coca-Cola Company to increase its revenues.

6. PRICING

How much should The Coca-Cola Company charge for a new product? If the company
charges too much it won't sell — a problem that can be fixed relatively easily by
reducing the price. Charging too little is far more dangerous: a company not only
forgoes significant revenues and profits but also fixes the product's market value
position at a low level. And as companies have found time and again, once prices hit
the market it is difficult, even impossible, to raise them. Some studies say that 80 to
90 percent of all poorly chosen prices are too low.
When a company is to settle a price for its products there are some determinant
factors afecting this decission:
 Demand: sets a ceiling on the price the company can change for its product.
 Costs: sets the floor on the prices the company can charge for its product.
Here, there are different type of costs:
 Fixed costs: do not vary with production or sales (salaries, rents...)
 Variable costs: vary directly with the level of production.
 Total costs: the sum of fixed costs and variable costs.
  Competition's prices: provide an orienting point. The firm must also take into
account the competitor's costs, prices, and possible price reactions.

Once the company has considered these determinant factors, it can start the pricing
process which is made up of 6 steps:
1. Selecting the pricing objective. The clearer the firm's objective the easier it is to
set price. There are 5 major objectives:
 Survival: Price covers fixed and variable costs. It's a short-run objective.
 Maximum current profit: Price that produces maximum profit or ROI
 Maximum market share: Higher sale volume will lead to lower unit costs and
higher long run profit. Lowest price assuming market is price sensitive.
 Maximum market skimming: Initial high price lowering it overtime.
 Product quality leadership: Price set to be the product quality leader in the
market.
2. Determining demand. The higher the price, the lower the demand. Some
consumers take the higher price to signify a better product.
Price sensitivity: Customers are less price sensitive to low-cost or items they
buy infrequently.
Estimating demand curves: Surveys, price experiments and statistical
analysis are tool available for companies in order to get a better
understanding on consumer behavior.
Price elasticity of demand: marketers need to know how responsive or
elastic demand would be to change in price.
3. Estimating costs. Demand sets the ceiling price and costs set the floor.
4. Analyzing competitor's costs, prices and offers. The firm should consider the
neaarest competitor's price.
5. Selecting a price method. This price method will be chosen according to three
factors; demand, cost and competitor's prices. These methods are:
Markup pricing: To add a standard markup to production cost. This method
doesn't make any logical sense as long as it ignores current demand and
competition. Firms use this method when prices tend to be similar and price
competition minimum.
Targe-return pricing: Price will yield its target rate of ROI
Perceived-value pricing
Value pricieng: They win customer by charging a fairly low price for a high-
quality offering.
Going-rate pricing: The firm baes its price largely on competitor's prices.
Auction-type pricing: More popular on the internet.
6. Selecting the final price. The final price must take into account the brand's
quality and advertising relative to the competition. The price must be consistent
with company pricing policies. Management must also consider the reaction of
other parties to the contemplated price.
Taking into account all these previous points I think that as long as there will be only
one direct competitor in the market selling the same product, the price that The Coca-
Cola Company should establish for this new product should be quite similar to Kaiku's
one (Going-rate pricing method).
But The Coca-Cola Company has to be aware of the costs of producing this product so
they do not lose money if this price is too low.
Furthermore the company would be able to set a higher price than its competition
because as we have seen previously a higher price usually indicates better quality.
Therefore as The Coca-Cola Company is already a leader in the beverage market they
might aim to be the product quality leader in the market, so they might become an
“affordable luxury”.
Besides the company has the economic background in order to support an initial big
promotion campaign in so they can position the product and make consumers aware
of this new product.

7.