coca cola product life cycle by alvinbowen

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									                                                              In 1888, John Pemberton sold his interests to     Within an industry sector it is possible to                                                        When diet Coke was first launched in 1982
                 Coca-Cola - The Beginning                    Asa Chandler. Chandler formed The Coca-Cola       plot the position of several similar                   Launch of diet Coke                         no one could have predicted the huge impact it
                                                              Company in 1892 and by 1895 Coca-Cola             products on a product life cycle diagram.                                                          was to have on the marketplace. The initial
                The history of Coca-Cola goes back to         was being drunk in every state across             For example, the diagram below shows the         Another way to extend a product through its       advertising campaign was carefully planned,
                1886 when it was invented by Dr John          America. As demand for the product grew,          different types of drives that have been         lifecycle is to adapt it as consumers’ needs      with no expense spared – the introductory
                Pemberton, in Atlanta, Georgia, USA.                                                                                                             change. The example below illustrates how         sixty-second commercial cost $2.5 million to
                                                              production was increased and it was made          used in computers since the 1970s. You
                According to legend, Dr Pemberton was                                                                                                            computer drives were developed to adapt to        make. By 1986 diet Coke was being sold in 61
                                                              available in bottles rather than just through     may not have heard of the 5” drive but that                                                        countries with 60 million drinks sold everyday.
                trying to develop a revitalising tonic and    the soda fountain. The opening of bottling        is because it is not available in most           more technically advanced equipment. For
                produced a thick brown syrup that he                                                                                                                                                               It was a phenomenal success.
                                                              plants in 1909 meant that all the elements        computers today. At the other end of the scale   diet Coke it was quite similar. It began in the
                carried down the street in a jug to
                                                              were in place to launch a global brand. Little    is a question mark because no one is quite       1970s when market research indicated that
                Jacob’s pharmacy. It was sampled with
                                                              did Pemberton know the impact his mixture         sure what new drives will be launched next.      consumers’ attitudes to their diet and their
                                                                                                                                                                                                                     Brand Extension Strategy
                carbonated water, pronounced ‘delicious
                                                              was to have on the soft drinks industry.
                and refreshing’ and placed on sale for                                                                                                                                                             When companies with existing brands
                five cents a glass as a soda fountain                                                                                                                                                              introduce new products under those brand
                drink. In trying to develop the new           Today Coca-Cola is located all over the                                                                                                              names to the marketplace, this is known as a
                product, Dr Pemberton’s partner and           world. In Ireland they have concentrate                                                                                                              brand extension strategy. A brand extension
                bookkeeper, Frank M. Robinson, suggested      factories in Drogheda and Ballina, and                                                                                                               strategy offers a number of advantages. A
                that two ‘c’s would look good in              bottling plants in Dublin and Belfast. Here                                                                                                          popular brand name gives the new product
                advertising and penned the now famous         the concentrate is mixed with carbonated                                                                                                             instant recognition and immediate acceptance.
                trademark ‘Coca-Cola’ in his unique           water, bottled and sold. These businesses                                                                                                            However, brand extension is not without risk. If
                script. The first newspaper advertisement     work hard to quench the thirst of the Celtic                                                                                                         the brand extension does not live up to the
                for Coca-Cola appeared in the Atlanta         Tiger so much so that Coca-Cola holds a                                                                                                              existing brand’s reputation then it could
                Journal and invited thirsty citizens to       54% market share of the Carbonated Soft                                                                                                              damage its image.
                sample the new refreshing soda fountain       Drinks (CSD) business in Ireland.                                                                                                                    Diet Coke is an example of a successful brand
                drink. During the first year sales averaged                                                                                                                                                        extension because it has grown and established

  Just          a modest nine drinks a day!                   A total of 910 people are employed in
                                                              Coca-Cola businesses in Ireland. The
                                                              payroll to these employees is in the region
                                                                                                                                                                                                                   itself within its own right. Within a year of its
                                                                                                                                                                                                                   launch it was the biggest selling diet soft drink
                                                                                                                                                                                                                   in America and by 1987 it was the third largest
                                                              of £15m each year. But this is only a                                                                                                                selling soft drink of any kind in the world.
                                                              fraction of the money that Coca-Cola
                                                                                                                What is happening here is that new products      health were changing. Coca-Cola conducted         Diet Coke is now the world’s leading low-

for the                                                       contributes to the Irish economy. In
                                                              addition to wages, Coca-Cola spends
                                                              £50m on Irish raw materials and £25m on
                                                              Irish services, such as marketing and
                                                                                                                are created as the technology improves.

                                                                                                                What about the Coca-Cola brand? It has
                                                                                                                                                                 careful and extensive research and as a
                                                                                                                                                                 result identified an opportunity to develop a
                                                                                                                                                                 product that would meet these changing
                                                                                                                                                                                                                   calorie soft drink, sold in a total of 149
                                                                                                                                                                                                                   countries with most of the sales being in the
                                                                                                                                                                                                                   USA, Britain, Germany, Canada and Australia.
                                                                                                                                                                                                                   Northern Ireland has the second highest per
                                                              transport. That represents £90m ploughed          been around for over 100 years. How has it       consumer needs. The identification by The         capita consumption of diet Coke in the world.
                                                              back into the economy by Coca-Cola each           maintained its leadership position even          Coca-Cola Company of this unmet need with         This is second only to the Cayman Island

  taste                                                       year.

                                                              This case study will focus on the second key
                                                              brand in The Coca-Cola Company, diet Coke.
                                                                                                                though the product has not changed in over
                                                                                                                100 years? The answer is that Coca-Cola
                                                                                                                are constantly developing the brand image
                                                                                                                and reinforcing the core product benefits
                                                                                                                                                                 consumers and the unique opportunity it
                                                                                                                                                                 represented heralded the launch of diet Coke.
                                                                                                                                                                                                                   where the consumption of diet Coke is driven
                                                                                                                                                                                                                   by the high tourist industry.

                                                              It will examine how diet Coke was developed,      of taste and refreshment to ensure that the
                                                              positioned in the marketplace and how the         brand grows instead of declining.

  of it                                                       advertising for diet Coke has developed as the
                                                              brand has evolved.                                One way Coca-Cola does this is to make the
                                                                                                                product more accessible, ensuring that it is
                                                                                                                always there to meet changing consumer
                                                                     Product Life Cycle                         needs. For example, you would probably
                                                                                                                never have tasted Coca-Cola if it had
                                                              The Coca-Cola formula has always been a           remained available only over the counter from
                                                              well-kept secret and has not changed              a soda fountain. Once the decision was made
                                                              through the years. In other respects, however,    to bottle the drink then it became possible to
                                                              Coca-Cola has been constantly developing. This    sell the product outside the main cities and
                                                              has been important in maintaining the brand       indeed outside America. Years later the 330ml
                                                              in its number one position. It is quite natural   can continued the growth and development of
                                                              for products to go into decline, at some stage,   the brand. The 1990s saw the introduction of
                                                              after being introduced into a market. This is     the 500ml screw cap bottle and the 2 litre
                                                              known as the product life cycle. The trick is     contour bottle was launched in February
                                                              to delay this decline by constantly developing    1999. The lifecycle of the brand has certainly
                                                              the product and or the brand, to extend its       been extended by making Coca-Cola more
Business 2000                                                 lifecycle.                                        accessible through new package forms.
                                                                                                                                                                                                                                                       Archive Image
                                                  the key elements to be included in the                for example, the new advertisement for           Between 1990 and 1992 celebrities            Researchers are able to imagine what diet
      Positioning diet Coke                       advertisement that will appeal to potential
                                                                                                                                    Archive Image
                                                                                                                                                         were used to endorse the brand. Demi         Coke would be like if diet Coke was a            TASKS AND ACTIVITIES
                                                  consumers eg, music, humour, etc.                                                                      Moore, Whitney Houston and Rod               person. This type of character and
During a product’s life, a company will re-
                                                                                                                                                         Stewart all appeared in diet Coke            personality definition is important when
formulate its marketing strategy many             s   Target Audience                                                                                                                                                                                        Describe the importance of the The
times in order to retain and drive
                                                                                                                                                         commercials during this time.                making an advertisement and helps                1     Coca-Cola Company to the Irish
                                                                                                                                                                                                      determine lots of things from the type of
consumer interest. Not only do economic               Diet Coke advertisements target both men                                                                                                                                                               economy.
                                                                                                                                                                                                      actors used, the music, the setting and the
conditions change but there are also new              and women. In the years immediately after                                                                                                       whole focus of the advertisement.
products being introduced by competitors.             the launch women in their twenties were
The product will also pass through                                                                                                                                                                                                                          Draw a product life cycle diagram and
different stages of buyer and consumer
                                                      targeted but once the brand was well
                                                                                                                                                                                                                   Diet Coke                           2    show where you would place each of
                                                      established the age range was extended to
interest and advertisers must respond to              females between 18 and 35 years of age.                                                                                                                   Brand Personality                           the following electrical goods:
this.                                                 The male audiences for the campaigns are                                                                                                                                                              (a) black and white television
                                                      usually over 25 years of age.                                                                                                                   If diet Coke were a person, that person               (b) colour television
A new product like diet Coke presents a                                                                                                                                                                                                                     (c) digital television
                                                                                                                                                                                                      would be:
particular challenge to the advertising                                                                                                                                                               s fun                                                 (d) computer monitor
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department of Coca-Cola: How is it possible                                                                                                                                                           s independent                                         (e) digital camera.
to position diet Coke so that existing sales of                                                                                                                                                       s sociable
Coca-Cola are not affected and new growth                                                                                                                                             Archive Image
                                                                                                                                                                                                      s confident
is achieved?                                                                                                                                                                                                                                                 Outline the brand extension strategy
                                                                                                                                                                                                      s lively                                         3     for any other brand you know.
                                                                                                                                                         1994 saw the launch of the first “Break”     s unafraid to show emotions.
The answer was to position diet Coke as the
                                                                                                                                                         style commercial. Both men and women
only soft drink that can give you great Cola
                                                                                                                                                         feature prominently in the commercial
taste with just one calorie. Previous diet and                                                                                                           enjoying a break from their routine                                                                Positioning a product in the marketplace
low calorie drinks were only aimed at                                                                                                                                                                                  Summary                         4    is very important. Describe how Coca-Cola
                                                                                                                                                         with a great tasting, low calorie
women but diet Coke emphasised the unique                                                                                                                refreshment.                                                                                 met the challenge of introducing diet Coke
and refreshing taste benefits of diet Coke                                                                                                                                                            In 1897 The Coca-Cola Company’s main            onto the world market.
right from the beginning and this appealed to                                                                                                            In addition diet Coke commercials            drink was Coca-Cola and it was not until
both men and women. The catchy theme                                                                                                                     focus on contemporary lifestyle and          1982 that the company extended the brand
song proclaimed that “you’re gonna drink it                                                                                                              feature adults who are full of energy        with the launch of diet Coke. Other brands           From your reading of this study,
just for the taste of it.”                                                                                                                               and vitality and are living their life to    in the Coca-Cola portfolio include Lilt,
                                                                                                                                                                                                                                                       5   demonstrate how Coca-Cola uses
                                                                                                                                                         the full. The advertisement illustrates      Fanta, Sprite and their diet counterparts.      both qualitative and quantitative market
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                                                                                                                                                         the good feeling one gets from                                                               research.
                                                                                                                                                         drinking diet Coke.                          Worldwide diet Coke has grown to be the
                                                                                                                                                                                                      third largest brand in The Coca-Cola
                                                                                                                                                     Archive Image
                                                                                                                                                                                                      Company. The introduction of diet Coke              Look at a recent diet Coke or Coca-Cola
                                                                                                                                                                                                      strengthened the position of Coca-Cola as
                                                                                                                                                                                                                                                       6  advertisement and write a short note
                                                                                                                                                                                                      the leading supplier of soft drinks in          about the character and personality of the
                                                                                                                                                                                                      Ireland. Over two-thirds of people who          brands.
                                                                                                                                                                                                      want a non-alcoholic drink choose a
                                                  s   Advertising Aim                                   a few hours. Quantitative research is
                                                                                                                                                                                                      carbonated soft drink (CSD) and over half
                                                                                                        on a much larger scale and uses a
                                                                                                        questionnaire to ask specific questions                                                       of those that choose a CSD select a Coca-Cola
                                                      The main aim of diet Coke advertising is
                                                                                                        and in this way keep track of trends.                                                         brand. Quite often they choose diet Coke –
                                                      to communicate the unique product
                                                                                                        Sometimes the researchers can get a                                                           just for the taste of it.
                                                      benefits of refreshing Cola taste with just
                                                      one calorie. However, the advertisement           surprise.
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    Advertising Campaigns                             must also communicate and portray other
                                                      elements such as the brand image, brand
                                                                                                    s   Advertisements
The main objective of advertising is to               name, people who drink the product, etc.          As a result of continuously using market
project and communicate the brand image,                                                                research and understanding how consumers
drive awareness of the availability of the        s   Market Research                                   attitudes towards products change this
product and in turn target and appeal to                                                                                                              Character and Personality
                                                                                                        information has helped diet Coke
potential customers. Advertising should               Coca-Cola uses both qualitative and               advertisements to evolve and develop
also create consumer interest in the brand            quantitative research to judge and                                                             Companies very often give their products
                                                                                                        over the years.
and persuade the potential customer to                measure lots of different things from                                                          brand personalities in order to identify and
purchase. Market Research is an essential             market share to consumers’ reactions              Prior to 1990 the diet Coke commercials      personify the personality of the consumer.
part of product development but also plays            to different advertising campaigns.               focused on adults enjoying the unique        Over the years, diet Coke advertisements                                                             While every effort has been made to ensure the accuracy of
an essential role in the development of               Qualitative research involves getting a           and refreshing taste of diet Coke as         have ensured that the brand has established                                                        information contained in this case study, no liability shall attach
                                                                                                                                                                                                                                                       to either The Irish Times Ltd or Woodgrange Consultants Ltd for
advertising in order to identify what are             focus group of 2 – 8 people to discuss,           part of their lifestyle.                     its own unique character and personality.                                                                     any errors or omissions in this case study.

         Business 2000

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