Coca Cola Case Study

Introduction
The purpose of this paper is to present a strategic marketing plan to identify and evaluate new business
opportunities for Coca Cola Amatil, a leading beverage manufacturer based in Australia. The analysis will
begin with a brief background of the company including company mission statement and business objectives.
It will be followed by a comprehensive market analysis examining the corporation’s market competitiveness
and structure, market size, projected growth trends, competitors, influencing environmental factors and target
market. The paper will then analyze the anticipated new opportunity and would go on to formulate a marketing
strategy which will seek to explore various significant aspects relating to optimum utilization of the new
business prospect. Break-Even analysis will also be presented of the projected product along with an account
of the changes in the business operations that may be made for incorporating the business requirements for the
new product.
Coca Cola Amatil: Background
Coca Cola Amatil is one of Australia’s leading and oldest business corporations, which was established in
1989 as a result of a grand re-organization of Amatil Limited. The multinational business is mainly based on
manufacturing and distributing alcohol-free beverages and snack foods. With its headquarters in Australia, the
company also operates in New Zealand, Indonesia, South Korea, Papua New Guinea, Fiji and is the largest
producer of Coca Cola trademarked products with primary focus on Asia-Pacific region (About Coca Cola,
n.d.). The company besides producing its own products, manufacture, market and sell the trademarked
products of Coca Cola Company across its targeted region.
Mission
 To refresh and revitalize the world in mind, body and spirit.
 To inspire through our activities and brands, moments of Positivity and hopefulness.
 To build value and make a difference wherever we participate (Curd, n.d.).
Objectives
Coca Cola Company seeks to introduce quality in every aspect of the business. The firm aims to:
 Serve as a workplace where individuals are inspired to give in their best.
 Create and introduce a range of beverage brands that satisfies customers’ wishes and needs.
 Develop a strong and efficient network of customers and suppliers to enhance value.
 Optimize enduring returns to shareowners while being attentive of our overall responsibilities as a corporate
citizen.
 Be a highly operative, efficient and fast-growing organization

According to the council of Australian Food Technology association and Institute of Food Science and
Technology (1988, p. 333), the Australian non-alcoholic beverages industry has been growing steadily, with
2.3 percent increase in overall production in the year 2000 which amounts to 2.25 billion liters. However, in
the recent years, sales of customary carbonated soft drinks have dropped as more and more customers become
health conscious and move away from high-calorie sugary drinks. Soft Carbonated drinks and other alcohol
free beverages manufacturers have also sensed the effects of intensifying competition from private-label soft
drink makers. Nevertheless, sales of greater value energy and sports drinks have driven profit generation in the
industry.
The Soft Drink and Beverage manufacturing industry is primarily concentrated in the eastern Australian states,
close to the foremost population centres, according to Soft Drink market research report published in IBIS
World (2012). New South Wales alone has 34.6% of such establishments, while Victoria is home to 11.5% and
Queensland to 20.5%. The report shows that Victoria’s share of total beverage producing firms has declined
over the past few years because of enhanced investment in facilities in other regions of the country.
Meanwhile, South Australia’s market share has been growing, as has N.S.W’s share.
 Market Size
Coca Cola Amatil is the leading and largest provider of alcohol-free beverages and Coca Cola trademark
products as it covers a huge market segment. The annual revenue at present is $3 Billion and according to the
estimates, the yearly profit is expected to increase by 1.8 percent. (See Appendix 1).The market conditions for
soft drink companies in Australia are encouraging and it still has a huge potential to grow more. The market if
considered in the realm of retail sales industry, has reached an estimated value of $239.5 billion in 2011,
representing a rise of 1.3 percent from 2010 (IBIS World, 2011).
Market Growth
Today, Australia is commercially assisted by both outsized multi-plant companies and by persistent dynamic
and robust regional bottlers that are innovative and manufacturing products for both the domestic and foreign
markets. A forceful and ever changing alcohol-free beverages industry is crucial for both our economic and
social well-being as it provides the extensive range of liquid refreshment that meet people’s nutritive needs and
social occasion. At present, the beverage industry produces a remarkable wide collection of beverages, from
the traditional carbonated soft drinks and fruit juices to sports, energy and other formulated beverages, and a
booming bottled water market (Australian beverages, 2004).
On the other hand, the rapid and stable growth of the retail trade is because of the strong position of the
Australian dollar and encouraging employment conditions. This economic stability has reduced the cost of
retail goods that are imported. Hence improved employment and economic conditions has led to better
purchasing power and positive consumer behavior (IBIS World, 2011).
Key Competitors
Since now Coca Cola Amatil manufactures a number of beverages other than cola such as lemon drinks
(sprite), bottled water (Mount Franklin) and Orange drinks (Fanta). The company faces competition from tea
and coffee offerings by Nestea and from smoothies and juices produced by companies like Boost. Other key
competitors include Monster Beverage Corp, Goodman Fielder Ltd and Metcash Ltd.
Environmental Factors
 Internal Rivalry
There is an intense rivalry among the top market players; Coca Cola, Nestle and Pepsi which comprises of a
strong concentration of approximately 43 percent of the market. However, the rest of the market is quite
fragmented. There is a considerable degree of rivalry among these competitors because they operate
internationally with a wide network of bottlers (San Francisco Chronicle, 2012).

 Consumer Buying Power

Because of the absence of influential supermarket chains in CCA’s markets like Fiji, Papua New Guinea and
Indonesia, the buying power is considerably low. Meanwhile, in markets like Australia and New Zealand that
has sturdy supermarket chains like Coles, Woolworths, Progressive and Foodstuff, the buying power of
consumers is comparatively high.
 Supplier Power
Apparently, the supplier power seems to be absent because almost all of the inputs are supplies and are readily
available. Yet, a vital issue that needs to be monitored and evaluated in the mounting commodity prices of
necessary production inputs such as sugar and packaging supplies like aluminum. CCA possesses the essential
evading strategies well in place to combat increasing commodity prices. This stabilizes the supplier power that
input suppliers and packaging manufacturers might have in the industry.
 Effect of Climate Events
The recent floods in the Queensland and Victoria had significant negative effects on the food prices and
agriculture supply system. Further destruction caused by Cyclone Yasi led to inflation and rise in interest rates
had a strong impact on retail spending (IBIS World, 2011). After experiencing harsh economic circumstances,
the Confectionary and Soft drink industry regained strength owing mainly to better employment and currency
condition.
Target Markets
As a manufacturer and distributor of a diverse range of non-alcoholic beverages, Coca Cola Amatil operates in
different markets. The company functions in consumer market as such beverages are purchased and sold there.
Additionally, the corporation also operates in intermediate markets as its offerings are distributed by means of
retailers such as supermarkets. Being the producer of mass market products such as fruit juices, smoothies and
soft drinks, CCA also engages in mass-market, and at the same time, in niche markets because it also
manufactures niches products like energy drinks (Rees, 2004, p.1).
Evaluating New Marketing Opportunities
Coca Cola Amatil has experienced years of consistent growth and profit since its inception. At present, the
company sells over one billion servings every day (See Appendix 2), however, CCA is also aware of 47 billion
servings that are sold by other competitors and it seeks to make optimum use of potential opportunities in the
market.
Introducing New Brand
The prospect of introducing a new flavored cola brand is highly appealing and with right marketing strategy,
such an innovation will create value and will bring fruitful results in terms of revenue growth. The new product
will offer a unique drinking experience to consumers and is expected to enhance brand loyalty. The new drink
will be a bottled flavored bubble tea, a creative blend that would give the fizz of Cola and taste of flavored tea.
Such an innovative offering will present itself as a healthy, funky and unusual substitute for other soft drinks
and would appeal to the health-conscious population segment, which previously proved to be a tough market
segment to target.
Marketing Strategy for the New Product
Product Development
The new bottled beverage will have a playful, modern and funky branding and its brand personality will be
characterized by healthy, unique and energizing drink. The new drink will have a strong brand equity and
consumer base owing to the existing widespread brand power of Coca Cola and other popular CCA’s products.
Product Positioning
Since this innovative drink will be one of its kinds in the market, a strong and well-designed marketing
campaign is expected to result in big sales. The positioning strategy will be based on quick and wide-scale
distribution activities since the product is prone to imitation. CCA will be marketing an existing brand with
modified taste and features. The brand will be positioned as a functional, revitalizing and healthy soft drink so
that it can attract health conscious consumers.
Market Penetration and Development
The introduction of new product would be a source of market pull because it would give a competitive
advantage to the company as CCA will be able to target new markets (diet conscious population segment) and
will serve the corporation’s need for doing green business. Innovative and attractive non-alcoholic flavored
drink will give the company a significant control over its prices.
Promotion Strategy
The product will be promoted on the grounds of three factors; the demand for the product, potential substitutes
and product lifecycle. The promotional activities will fundamentally be based on creating awareness and desire
among the targeted consumers through employing different means of advertising and marketing such as
electronic media, online advertising, newspapers, billboards, sponsoring matches and events, and direct selling.
The focus will be on launching the product as a healthy, energizing and refreshing drink that will offer a
unique drinking experience.
Industry Codes of Practice
The company will take into account the following codes of practices while formulating its marketing strategy
for the new product.
ADMA Direct Marketing Code of Practice
According to the ADMA code, the member company must not indulge in any deceptive or false claims
while carrying out its marketing functions and every piece of information regarding the product must be
validated with given evidences. Therefore CCA will have to validate its health and nutrition claims by making
public its green tea base and other dietary aspects. Also the marketing campaign which will include various
modes of mass communication should be free from stereotypical messages and false claims (ADMA, 2005).
Free TV Australia – Commercial Television Industry Code of Practice
CCA will have to carefully consider and abide by the provisions in the Commercial television industry code of
practice while making use of Television advertising. The advertisements will have to be made keeping in view
the standards of broadcasting as set by the code. The marketing messages displayed on television should not
offend any culture, race of gender, should not provoke negative feelings against any other person, group,
nationality or ethnicity. Besides this, CCA will need to follow the commercial time buying procedures as
provided in the clauses 1.16, 1.17 and 1.18 of the code (Free TV, 2010).
Australian E-Commerce Best Practices Model
The model provides that the marketing content should be original and distinguishable from other
material and businesses should be able to support their marketing claims with authentic evidences. In case of
personal selling and email advertising, company has to comply to the regulations presented in Spam Act 2003
(Australian govt. treasury dept., 2006). It will be the focus of CCA’s marketing efforts that the advertising
material disseminated and the message is appealing, original and free from any illegal or deceptive element.
Trade Practices Act
Coca Cola Amatil would need to establish relationships with suppliers, competitors, retailers,
wholesalers and customers in light of the provisions made in the Act. The Trade Practices Act requires
adequate steps to ensure consumer protection and promote fair trading.
Break Even Analysis
Below given is the break-even analysis of a single unit of the proposed product.
Selling Price of one unit= $8.5
Fixed Cost = $3.5
Variable Cost = $1.5
Total Cost = $ 5
Sales revenue per unit = $3.5
Break-Even Point = Fixed Cost / Contribution margin
Contribution Margin = Sales revenue – Variable Cost
= 3.5 – 1.5
= 2$
Break Even Price = 3.5 / 2
= 1.75 $ per unit.

Appendix: 1
Revenue generation from 2006 to expected profit in 2013 and 2014.
Appendix: 2