In a highly competitive business environment, the choice of business model and marketing strategy is one of the aspects that can significantly affect business performance. When dealing with products, various factors influence purchase decisions, and the ability of the manufacturer to identify the needs of consumers and to market with a focus on the characteristics and preferences of the target market can help to effectively plan and execute successful marketing activities. Marketing has to be conducted in a way that either pushes the products to the customers or pulls the customers to the products. The bets marketing strategy therefore, is one that is flexible enough to change with the changes in times. Social, demographic, economic, and even political factors can affect marketing outcomes, driving the need for strategy changes. When such happens, organizations have to evaluate their activities to find out the areas in which marketing issues exist and to address those issues in way that do not jeopardize the organizational performance. The Coca Cola Company (TCCC) has in the past experience certain circumstances that inspired innovation not only in production but also in marketing activities. These issues can be used as the basis for developing recommendations for marketing practices that are applicable not only to the soft drinks sector but also to other market segments.
Organizational operations are affected extensively by various factors that can be either internal or external. External factors are commonly beyond organizational control and can impact negatively on organizational performance, when they come as a threat to business. On the other hand, such external factors can also be opportunities for companies to grow into one entrepreneurial practice or the other. The ability to identify opportunities in external changes and to take advantage of those opportunities makes the difference between organizations that remain sustainably strong and those that eventually lose out. The case of TCCC is one of such instances where the external environment plays a crucial role in determining organizational progress, and in which the company had to take advantage of an opportunity that could have been guised as a threat to business. The social and political environments played a particularly strong role in driving TCCC towards its manufacturing and marketing directions. According to Koch (2016), the company has to make a fast choice on whether to get into the healthy drinks sector or to remain and gradually turn obsolete. Through the decision to invest in a new process and to develop marketing strategies to match the changes at the organizational level, the company was able to overcome the challenges posed by the social and political changes in its industry.
The soft drinks industry is one of the sectors that extensively affected by social factors. In this regard, consumer preferences are described as the motivations behind product purchase. Beyond product taste and utility, the socio-cultural environment also affects the intention of consumers to purchase products especially in the soft drinks category. The fact that products in that category are in most cases considered optional and with a lot of substitutes, the impacts of socio-cultural factors is inevitable. The most pronounced marketing issue that affected TCCC and which can affect any other company in the sector was the change in consumption patterns of soft drinks in the core markets of the company. The change in consumption patterns can be attributed to increasing public awareness and choice of healthier food choices. Across the world, there has been increasing recognition of the impacts of carbonated drinks on health, particularly on cardiovascular diseases and cholesterol. Additionally, the increasing prevalence of lifestyle diseases such as obesity and high blood pressure has resulted in the increasing intention to consume healthier food choices not only in the soft drinks category but also in other categories. Accordingly, TCCC experienced significant challenge marketing carbonated products that were already being identified as unhealthy within a diminishing and highly competitive market. The company’s challenge was in marketing the existing product to a new market in spite of its limitations or marketing a new product to existing markets with a different value promise. The decision made by the company to market a new product in the name of Coke Life therefore, provided the company with an opportunity to benefit from a new product.
The change in consumption patterns was an issue not only for TCCC but also for all companies across the world. Sanger-Katz (2015), reports that the global reduction in the consumption of carbonated drinks is one of the major changes in the fast moving consumer goods (FMCG) industry in the last decade. Over the last 20 years, there has been a reduction of up to 25% of the carbonated drinks in America alone (Sanger-Katz, 2015). Moreover, there has been increasing campaigns on the impacts of soda drinks on health outcomes such as obesity. This change in market characteristics implies that the choice to consume soda is increasingly being limited by social conventions. Anti-obesity campaigners have contributed to the social inclination towards healthier drink choices due to the emphasis placed on the negative health impacts on soda. Campaigns run by anti-obesity activists have continued to mirror reports shared by healthcare workers and public health researchers on the consumption of sodas, resulting in increasing awareness by the general public and the need for better marketing strategies for TCCC and other companies serving the sector (Tahmassebi & BaniHani, 2020). Decisions made by the company on the best ways to market coke life, therefore, can be attributed to the changes in the consumption patterns.
In spite of the effects of the changing consumption patterns as marketing issues, the political environment has also affected marketing in the sector, resulting in additional issues. Particularly, following changes in awareness of the impacts of the consumption of carbonated drinks, there has been an increase in the number of policies that attempt to increase awareness about the negative impacts of such drinks (Tahmassebi & BaniHani, 2020). In particular, the United States has over the past few years, come up with policies such as the taxation on carbonated drinks, which make the business environment challenging for organizations selling such drinks. The cost of operations for companies such as TCCC has therefore increased, resulting in the need for new marketing strategies that would lead to sustainable business operations. For the company, this becomes a marketing challenge in that the government controls even the marketing communication that is to be shared regarding those particular drinks. Koch (2016) reports that at some point, TCCC and other manufacturers were expected to include a warning on the drinks packaging and on all marketing messages, indicating that the carbonated drinks sold increased the risk of obesity and other diseases. This is definitely challenging as such a message would imply that the manufacturer also discourages the consumption of their products, which should not be the objective of any marketing activity.
The second marketing challenge that companies such as TCCC and others that produce healthier alternatives to soda drinks have to contend with is that of marketing potentially unhealthy products convincingly (Koch, 2016). The actions of the company towards attaining stronger market presence even for other products can be linked to the desperation caused by the combination of social and political changes that resulted in low product sales. The introduction of coke life was a response to the marketing challenges for other soft drinks products. The product exhibited sugar-free characteristics and was aimed at occupying the market segment targeting individuals that do not consume the other sugar laden products (Koch, 2016). However, these new products used aspartame and/or acesulfame potassium as a substitute to the sugars used in the manufacture of the other products. These substitutes have however been reported to not be 100% effective in preventing the negative health outcomes associated with carbonated drinks (Tahmassebi & BaniHani, 2020). The impact is that TCCC and any other company marketing such products have to deal with the challenge of marketing potentially unhealthy products convincingly. The effectiveness of the marketing process is dependent on how negatively the potential consumers perceive other products and the extent to which they belief the promise of a healthier choice in the marketed product. The success of coke life therefore, can be attributed more to the company’s ability to show the consumers the intention to give healthier alternatives than by the conviction that coke life is already the healthy alternative, particularly since some consumers’ metabolism cannot break the aspartic acid that is a component of the diet soda.
Operating in a highly competitive environment implies that TCCC is always in competition with others. The evidence of this is seen even in the development of coke life as a healthier alternative to the conventional soda products, whereby competition was immediately brought up by Pepsi. The implication of such competitiveness is that the company has to be consistently innovating to be innovative to attract, retain and grow its customers. The challenge has been that the innovation has to be not only in the manufacturing practices but also in the marketing practices implemented by the company. This need for innovation in marketing is observable in TCCC’s efforts to reach the global population through culturally aligned advertisements such as the 60 s advert that connects coke life with parenting in Argentina (Koch, 2016). The adverts have to be extremely creative in order to attract larger consumer populations and to create stronger consumer connections. Compared to Pepsi, the marketing activities of TCCC have been more expansive; inevitably resulting in higher costs of marketing and subsequently lower cumulative profit margins for the sale of equal volumes of product as Pepsi. In order to sustain growth therefore, the company has to work towards moving higher product volumes than all its competitors.
Recommended Action Plans
The challenges faced by the different companies in marketing provide evidence of the need for organizations to engage in strategic marketing planning and to effectively understand their product characteristics and customer value propositions. One of the ways through companies such as TCCC can manage their marketing challenges is by building a ‘better mouse-trap’, which is basically a more superior product in the same category compared to the products produced by the competitors. This comes with a lot of research and development efforts. There has to be a strong inclination to conducting customer empathy, in a bid to understand the customer needs and what they would compromise on in that category. The customers should have a need and desire for a particular type of product and the company has to be in a position to satisfy that need or desire. Accordingly, customer focus groups and reviews of industry growth and changes can help in customizing products to customer needs (Oyza & Edwin, 2015). In addition to the customer needs, there ought to be an evaluation of the competition to establish their strengths and weaknesses. Understanding these aspects of product development can help any organization to come up with products that not only satisfy the customer needs, but those that also beat the competition. The empathy stage leads to the product development stage, during which the objective would be for the marketer to come up with products that possess characteristics that satisfy consumer needs while also overcoming the competition challenges. This recommendation does not target the soft drinks industry alone, instead, it is applicable to almost all products within a competitive industry. The FMCG sector would particularly find this path effective towards addressing customer needs and attaining larger market shares. However, while working towards satisfying customer needs, it is advisable that companies focus on innovative products that can be sustainably produced such as those in which the raw material resources are easily available.
While understanding customer needs and competitor evaluation could be instrumental in business execution, it should be noted that the business itself should be viable. Viability in a business is considered from various perspectives including the financial viability, sustainability and operational sustainability. This is particularly important for start-up operations that are introducing a product into the market, or even for a company such as TCCC, which is coming up with a new product in addition to its already existing products. In ensuring that the business is viable, the company answers questions related to the particular needs that potential consumers want addressed and the offers that competitors are giving. From this empathy stage, the next step is to evaluate the multiple options that the company has towards satisfying the customer needs. A product may be capable of satisfying customer needs but because of resource constraints, its production costs may be too high for the company to sustain, and hence the production becomes unfeasible. Such factors ought to be considered before incurring additional costs in marketing for a product that would not be sustainably produced.
For companies operating within industries whose operations and objectives contradict social and political trends of the time, marketing needs to take a different approach from that in conventional industries. An example of such companies is BP Shell, which operates in the fossil fuels industry. The industry operations mostly degrade the environment and result in the production of fossil fuels, while the world, through various approaches to activism, is moving towards clean energy adoption and the shift from fossil fuels (Oyza & Edwin, 2015). For such companies, the marketing strategy is mostly through third tier activities that may or may not be directly linked to their day-to-day operations. Most of such companies use corporate social responsibility (CSR) as the tool through which they get into contact with potential consumers, and inform them of the organizational intention to protect the environment and the health of consumers. One step towards effectively marketing using this approach is to identify practices that can be adopted at the organizational level to indicate commitment to the environment or to health. For TCCC for instance, such an activity would be research on soft drinks that would be manufactured using natural sugars, and those with health benefits. The second stage would be to identify a CSR activity in which the organization can participate, and which is aligned to the targeted objective. For instance, a company such as BP Shell could engage in the reclamation of wastelands and forestation activities. On the other hand, a company such as TCCC could implement community cohort training activities through which the public is educated on lifestyle diseases and vulnerabilities to them. This can be done without necessarily mentioning the negative impacts of the company’s products on the consumers. In this way, consumers get to have greater visibility of the company, and are bound to purchase the company’s products in spite of the potential negative impacts of those products.
Another marketing approach that could be taken by companies is to use technology intensively. Emerging trends in technology have made it easier to conduct research and development practices towards creating more effective products. Moreover, while televised adverts may be effective in creating significant visual impacts on potential consumers, other marketing channels could also be used to expand the reach of marketing activities. Creative marketing attempts to link consumer problems to the solution provided by a company products. Channels such as social media, search engine optimization, and the use of influencers can go a long way in creating a positive impact on the potential consumers (Oyza & Edwin, 2015). According to Adams (2017), influencers help organizations in getting a wider reach in marketing. While channels such as social media and televised adverts reach the population in general, the right influencer would link the manufacturer/marketer to their specific target market. By reaching the ‘right target’, an organization can benefit significantly without spending huge amounts of money in marketing. Additionally, influencers could be combined with the use of a ‘lead magnet’ which is mainly a pain point whose solution the product is intending to provide. For instance, a product that facilitates weight loss could use obesity and weight related challenges as the lead magnet, with influencers who are renowned fitness gurus. In this way, marketing effectiveness is assured.
Marketing is an essential and inevitable activity in every organization. Identifying the needs of potential consumers is the first step towards establishing an effective marketing strategy that would result in business growth. TCCC has experienced various marketing challenges in the past including: changes in consumer trends (social and political shifts); the need to convincingly advertise a product that may be potentially unhealthy; and innovation in a competitive marketing environment. Each of these challenges has to be handled and is not limited to the case of TCCC. On the contrary, these are challenges faced by companies across all sectors, and which require the application of marketing effectiveness to be overcome. Various proposals have been made for application in a variety of industries and sectors. These recommendations include focusing on customer needs and customer satisfaction, running viable businesses, shifting from conventional marketing practices to more innovative approaches, and using a variety of marketing channels, particularly identifying influencers and lead magnets in the business
Adams, R.I. (2017, September 17). 10 marketing strategies to fuel your business growth. Entrepreneur. Retrieved from www.entrepreneur.com/article/299335
Koch, M. (2016). Coca Cola goes green: The launch of coke life. Richard Ivey School of Business Foundation.
Oyza, I., & Edwin, A. (2015). Effectiveness of social media networks as a strategic tool for organizational marketing management. Journal of Internet Banking and Commerce. Retrieved from www.icommercecentral.com/open-access/effectiveness-of-social-media-networks-as-a-strategic-tool-for-organizational-marketing-management.php?aid=66382
Sanger-Katz, M. (2015, October 2). The decline of ‘big soda’. The New York Times. Retrieved from www.nytimes.com/2015/10/04/upshot/soda-industry-struggles-as-consumer-tastes-change.html
Tahmassebi, J.F., BaniHani, A. (2020). Impacts of soft drinks to health and economy: A critical review. European Archives of Paediatric Dentistry, 21, 109-117. Retrieved from link.springer.com/article/10.1007/s40368-019-00458-0