Analysis of MOJO & Coca-Cola
Term Paper of MKT 201 Analysis of MOJO & Coca-Cola Prepared for Ms. Kashfia Ahmed Lecturer Department of Business Administration East West University
Prepared by G.M. Wali Ullah # 2008-1-10-096 Ahmed Asif-Ur-Rahman Mallick # 2008-1-10-059 Syeda Samira Tamanna Haider # 2008-1-10-095 Mosfiqur Rahman # 2008-1-10-123 Eva Farzana # 2008-1-10-120 Department of Business Administration
16 August 2009
Letter of Authorization 28 June 2009 Student of Marketing Management Summer 2009 Department of Business Administration East West University 43, Mohakhali C/A, Dhaka-1212 Dear Student, As a part of your Marketing Management course, you are hereby assigned a group report based on analysis of established brands covered in your MKT201 course from the perspective of either Bangladesh or global. In your case the brand covered by your group was analysis of “MOJO” and “Coca-cola” in Bangladeshi market perspective. Assigned report must follow the standard system and methodology and should contain accurate data. This is a group task. You should form a group consisting of at least 4 but no more than 6 people. The university will appreciate any additional benefit that can be obtained from your report. You are required to submit the report on or before August 16, 2009.
I wish you best of luck.
Sincerely ………………….. Ms. Kashfia Ahmed
Letter of Transmittal 16 August 2009 Ms. Kashfia Ahmed Lecturer Department of Business Administration East West University 43, Mohakhali C/A, Dhaka-1212 Subject: Submission of term paper for analysis of established products for MKT-201. Dear Madam: We are the students of MKT-201 of your section 03. You permitted us to conduct a group term paper based on established brands covered in your MKT-201 course from the perspective of Bangladesh. You instructed us to submit it on or before August 16, 2008. We would like to inform you that we have incorporated our own srcinal ideas, collected data from various individuals, internet websites, newspapers etc. & have prepared a report based on the products; “MOJO” and “ Coca-Cola”; and in some cases; their parent companies AFBL and Coca-Cola Ltd.. We are presenting the established brand report to you for your consideration. We have tried our best to make the report as accurate as possible. We have given our best efforts in preparing this report. We hope that you will consider it and oblige thereby. Thanking you. …………………….. G.M. Wali Ullah # 2008-1-10-096
…………………….. Eva Farzana # 2008-1-10-120
……………………………..…. Ahmed Asif-Ur-Rahman Mallick #2008-1-10-059
………………. Mosfiqur Rahman # 2008-1-10-123
……………………………….. Syeda Samira Tamanna Haider #2008-1-10-095
Acknowledgement It really was a great challenge for us to prepare the group assignment. First of all, we thank the Almighty, who has provided us the brilliant opportunity to build and complete this assignment successfully with good health & sound mind. We are grateful & thankful to our family members, our parentswithout the support of whom this product could never exist.
Our course instructor, Ms. Kashfia Ahmed, Lecturer, Department of Business Administration, East West University helped us all the way through. She gave us proper guidelines & directions about this group assignment. We really want to express our gratitude to her for giving valuable advice and time, which helped immensely in preparing this report.
Last but not the least; we would like to specially thank G. M. Refayet Ullah, former General Manager (Sales) of Akij Food & Beverage Ltd. (MOJO) and Abdul Monem Ltd. (Coca-Cola) He is the main resource person behi nd the success of MOJO, and also had experience in the operation of Coca-Cola in Bangladesh. He had been a great mentor to us with his vast experience and knowledge in his related work place.
Table of Contents TOPIC
PAN GO E
Executive Summary
VII
Introduction
01
Current market situation
02
Company Profile •
AkijFood&BeverageLtd.(AFBL)
•
Coca-Cola Ltd.
03 04
Analysis relating theories from MKT 201
05
with real market situations •
Defining Marketing for the 21 st Century
•
Developing Marketing Strategies and Plans
•
Creating Customer Value, Satisfaction and Loyalty
•
CraftingtheBrandPositioning
19
•
DealingwithCompetition
22
•
SettingProductStrategy
30
•
DesigningandManagingServices
33
•
Developing Pricing Strategies and Programs
•
Designing and Managing Value Networks and Channels
05 12 18
34 37
•
DesigningandManagingIMC
•
Conclusion
47 52
Executive Summary MOJO is one of the most well known and recognized soft drink brands of Bangladesh. It is manufactured by Akij Food & Beverage Ltd (AFBL), a sister concern of Akij group. Launche d in the Bangladeshi market on April 2006, it has quickly captured the number 1 spot in the cola market of Bangladesh. Its success story is mainly due to an excellent marketing strategy employed by the management. Coca Cola is the flagship brand of one of the oldest organization of the world, The Coca-Cola Company; dating back to 1885. In Bangladesh; operated and produced by 2 Bangladeshi bottlers, Abdul Monem Ltd. (AML) and Tabani Beverage Ltd. (TBL) under direct supervision of CocaCola India Ltd. Although they were the global leader in cola market, they are past their prime in this region of Asia, therefore loosing their 1 st position to MOJO. Here we’ve worked on studying basically every theory we have learned on our MKT 201 course and applied them on reality with current cola market leader of Bangladesh; “MOJO” and their closest competitor “Coca-Cola”. We have analyzed the current and past situations of both these products. Also we have discussed and argued over each possible theory that is applicable in their business operations. Therefore we have included and
presented all our findings in this report. Details of all these findings are given for your kind consideration.
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Introduction
The Coca-Cola Company is one of the pioneers in the soft drink industry. Globally they are always fighting with PepsiCo head to head for the leading position in soft drink industry. Coca-Cola, their flagship product was srcinally intended as a patent medicine when it was invented in the late 19th century by John Pemberton, Later it was bought out by businessman Asa Griggs Candler, whose marketin g tactics led Coke to its dominance of the world soft-drink market throughout the 20th century. Although globally they are in constant competition with Pepsi in cola market, several inefficiency in tactics for both these companies has lead them to lose market leading positions in Bangladesh. MOJO, a product of Akij Food & Beverage Limited (AFBL), is one of the most popular brands in the soft drink industry of Bangladesh. After being launched in April 2006, they have come a long way in a very short time. As of the year 2008, they have captured an amazing 38% market share in the cola market of Bangladesh; making them the current market leader in this segment. This is an exceptional success keeping on mind that they achieved all these only in about two and a half years of launching. Their effective implementation of marketing strategy is the main reason of this success. Around the year 2005 various disturbing incidents regarding cola products
led them to lose popularity; MOJO with their innovative, colorful and vibrant marketing campaigns has once again made them popular and effectively grab the leading position.
1
Current Market Situation
Coca-Cola is one of the pioneers in the cola market globally. The first CocaCola recipe was invented in a drugstore in Columbus, Georgia in 1885. After years of successful business, their business strategies created several controversies; thus hurting the whole cola industry. Some controversies mentionable are: •
Coca-Cola adopting an apparent policy of ignoring the practice of eugenics and anti-Semitism by Nazi Germany before and during World War II.
•
Opening business in much controversial state, Israel; causing severe outrages and boycotting of their products in the Arab League.
•
Coca-Cola was criticized for causing various harmful health effects i.e. Acidity and tooth decay, bone development issues and obesity of today’s teens.
•
Several incidents occurring in neighboring country India including findings of pesticide residues in Coca-Cola bottles and socially unethical location of bottling plants in drought-stricken areas.
Incidents on Indian market posses a larger effect on the whole subcontinent. Therefore this disturbing issues ultimately shrink the whole cola market; making way for phenomenal growth of clear drink market in the soft drinks industry. 2
Despite all these controversies, MOJO started their bold marketing campaign in Bangladeshi market with vibrant and colorful offerings that connected very well with their initial target segment. Only in 2 and half years, they have got hold of an impressive 37% share of the cola market of Bangladesh. Previously this market was dominated by Coca-Cola and RC Cola. Now their market share has shrunk down to 34% and 18 %, respectively. MOJO has successfully faced the above mentioned competitive forces and still managed to achieve further growth. Unfortunately CocaCola, once the market leader is now having trouble facing the tremendous competition in this segment; as a result losing market share.
Company Profile Akij Food & Beverage Ltd. (AFBL):
AFBL started business operations in Bangladesh with initial offering of MOJO, LEMU and SPEED. They had a vast amount of resources available to them due to being a part of a successful group of Bangladesh, Akij Group. They have implemented state of the art machineries and purchases raw materials mostly from Switzerland. MOJO was officially launched as a flagship product of AFBL in the year 2006. Their initial promotional
campaigns as well as product designing caught the eye of their target segment very efficiently. The initial market leader in the cola market was Coca-Cola when they were launched. There was also tough competition from RC Cola, Pepsi and Euro Cola. Despite the tough competition they managed to fight hard; thus grabbing a respectable 23% share within their 3
first year of launching. Not only did they manage to grab a large market share, they also managed to revive the cola market that was struggling due to the overwhelming negative idea peop le had about cola produ cts.
Their
popularity continued to rise through the preceding year, managing to grab a towering 37% market share. As we have worked on data dated on the end of the year 2008, MOJO was the market leader followed closely by Coca-Cola.
Coca-Cola:
In Bangladesh, Coca Cola is marketed and operated by two separate licensed bottlers; Abdul Monem Ltd. (AML) and Tabani Beverage Ltd. They are responsible to Coca-Cola India Ltd. for promotion, sales and other activities along with other bottlers from India, Sri Lanka and Nepal. There have been several long standing problems between Coca-Cola India and bottlers of Bangladesh in respect to marketing activities resulting in severe lack of promotional activities present in Bangladesh. The brand equity of Coca-Cola is above any other product in the cola market of this subcontinent. Although globally Pepsi is the closest competitor of Coca-Cola; situation on Bangladeshi market is completely different. Here Pepsi’s market share is tremendously low comparing to its competitors. So the sub continental think
tanks believe consumers will follow and be convinced easily to purchase their products through promotions aired and undertaken in the Indian market and TV channels. Perspective of Bangladeshi buyers is completely neglected. As a result sales of Coca-Cola are mostly due to brand equity in consumer minds. But now the competition in soft drinks industry is 4
intensifying. Several products have managed to promote their cola products in terms of Bangladeshi culture; effectively gaining more sales. As there are no local promotions existing for Coca-Cola, potential new customers are getting more attracted to these new cola products.
Analysis relating theories from MKT 201 with real market situations Defining Marketing for the 21 st Century What Is Marketed Through MOJO And Coca-Cola?
AFBL and Coca-Cola Company market MOJO and Coca-Cola as good, service, events and ideas to their consumers: Goods: Coca-Cola and MOJO are marketed as soft drink product to the consumers. Service: The need for quenching thirst is an intangible need. It is satisfied through tangible good MOJO or Coca-Cola. Therefore MOJO and CocaCola are also marketed as services. Events: AFBL organizes and sponsors various events like Concerts, Pitha Utsab, and Cox’s Bazaar Beach Festival to closely relate their products with the mass people as well as for promotion purpose. Coca-Cola also sponsors
events; mostly in international platforms i.e. FIFA WORLD CUP. Unfortunately due to the lackluster market activities from Coca-Cola India Ltd. they are not active as much as AFBL in Bangladesh market. Ideas: MOJO encourages the idea of feeling and enjoying every bit of life 5
itself. It promotes the idea of MOJO accompanying and helping to make every moments more precious and more colorful. “MOJO, it’s inside you!!” incorporates a fantasy to its consumers to have the drink as part of their life. Also Coca-Cola does the same with their internationally popular slogans i.e. “Open Happiness” to deliver similar message. Demand State:
MOJO and Coca-Cola both face some potential demand states. Companies seek to influence the level, timing and compositions of demands to meet the company’s objectives. Both companies face these following demand states to plan for actions to shift the demands to a more desired state:
Demand state of MOJO:
1. Nonexistent Demand State: While MOJO was launched for the first time AFBL faced non existent demand among its target markets in Bangladesh as no one knew about the new product. 2. Irregular Demand State: Except hot days lik e summer season MOJO faces irregular demand among its potential consumers. People consume less cold soft drinks in winter and rainy seasons.
3. Full Demand: MOJO faces full demand state during hot summer season and during festivals i.e. Eid. People buys whatever product companies make available during this time.
Demand State of Coca-Cola: As Coca-Cola Ltd. has been marketing their products for a long time, now they face irregular and full demand in Bangladesh. 6
1. Irregular Demand State: Coca-Cola faces irregular demand during winter and rainy seasons like every other soft drink. 2. Full Demand: Company enjoys full demand state during the summer season and festivals. Key Customer Markets:
Both AFBL and Coca-Cola are functioning in two key consumer markets: Consumer market: Soft drinks like MOJO (product leader) and Coca-Cola (Challenger) are considered as consumer goods in Bangladesh because of their massive sale and superior brand image accomplished by huge promotional push directed towards the consumers. Global market: AFBL is currently exporting MOJO in Malaysia, Middle East and South Africa. So they are facing additional challenges by competing in global market. Coca-Cola does its business all around the world. In this subcontinent, Coca-Cola India Ltd. markets in India, Nepal, Bhutan, Sri-Lanka and Bangladesh. Coca-Cola has its market nearly
everywhere in the world. They have been doing global business for a long period and recognized as the no. 1 brand all around the world. Satisfying Customers Needs:
As both Coca-Cola and MOJO are cola drinks, they satisfy their target markets needs through following ways: 1. Stated Need: To get a tasty drink. 2. Real Need: The need for quenching thirst 3. Unstated Need: Need for a cold and healthy drink. It is marked 7
on the label that the cola products are best served chilled. Also companies try to put as much healthy ingredients possible in their beverage. 4. Delight Needs: Consumers will be very delighted if they get a 10% extra drink on every purchase.
5. Secret Need: The secret desire for conveying consumers chosen soft drinks superior brand image. Both Coca-Cola and MOJO have a loyal fan base. Loyal consumers always prefer over brand equity, and tries to use their brand preference as a way to improve his/her status among peers. Company Orientations Towards the Marketplace:
Among various competing concepts under which organizations conduct marketing activities; both AFBL and Coca-Cola follows the Holistic Marketing Concept. It is explained below:
Holistic Marketing Concept:
The holistic marketing concept is based on the development, design and implementation of marketing programs, processes and activities that recognizes their breadth and interdependencies. It has the following four broad themes: 1. Relationship marketing: It refers to developing enduring mutually satisfying long term relationships with the following key parties in order to build a marketing network:
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•
•
Customers Marketing partners
(channels,
suppliers,
distributors,
dealers,
agencies) •
Stake holders
•
Investors
AFBL: In case for MOJO AFBL tries at its level best to reach its customer as closely possible. To know more about its consumers, it keeps launching various types of campaigns through out the whole year. It provides ample chance to the consumers to express their opinions about improving the product though these campaigns. However, as people of this country are not comfortable with the “toll free calling” system, AFBL doesn’t provides this facility to the consumers. As leading company in the industry, AFBL has established a healthy chain of intermediaries and other stake holders. Coca-Cola: Although Coca-Cola follows the holistic marketing concept, as a convenient product it doesn’t have to satisfy all the aspects of relationship
marketing i.e. collecting the information of all of its customers would be an impossible task. As it has a great number of loyal customers, it practices basic marketing in Bangladesh. However, Coca-Cola doesn’t provide toll free number in its bottles label in Bangladesh unlike many other countries it operates its business on. Coca cola has a strong chain of distributor all over the country. They have in total 197 distributors working closely under the two licensed bottlers here and successfully doing business all over the country with the help of these firms. 2. Integrated marketing : It refers to many different marketing activities that are employed to 9
communicate and deliver value. All marketing activities undertaken by the company should be coordinated to maximize their joint effects. Here it is classified into four broad groups; as to 4Ps of marketing; Product, Price, Place and Promotion. Product: It refers to various aspects of the product both AFBL and CocaCola is selling. It may include: •
Product variety: Coca-Cola and AFBL provide several flanker products i.e. Sprite, Fanta, Lemu, Clemon, Frutika, Spa other than their flagship products Coca-Cola and MOJO.
•
Quality: Both AFBL and Coca-Cola are now established soft drink providers in the Bangladeshi market and work hard to providing the best quality products.
•
Brand Name: Coca-Cola is the no. 1 brand worldwide; MOJO also has made great progress towards establishing its own brand name so far.
•
Packaging and Size: MOJO and Coca-Cola both are packaged in PET bottles and cans. Coca-Cola is also available in glass bottles. Various packaging size include 250ml, 500ml, 1 liter, 2 liter and 2.25 liter etc.
Pricing: Pricing of soft drink products has very less differentiation. Most of the product manufacturers follow each other in setting price. Place: Coca-Cola and MOJO both are convenient products. Coca-Cola has 197 distributors as AFBL has 227 distributors all over the country. Both products are available in convenient shops and both companies try their best to make their products as widely available possible. Promotion: Promotional activities of Coca-Cola in Bangladesh are limited to 10
some posters and billboards. On the other hand AFBL has promoted MOJO through mass media and print media. In case of mass media the company has used radio and television and in case of print media the company has used newspaper, magazines and billboard to promote their product. They have also organized and launched campaigns and special events to promote. 3. Internal Marketing: It refers to ensuring every one working within the organization embraces appropriate marketing principles. It takes place in two levels: At one level; various marketing functions i.e. sales force, advertising, marketing research all work together with the same broad objective. Problems of the sales force of AFBL and Coca-Cola are addressed to the top management; than they coordinate these problems with the respective marketing departments i.e. marketing research.
At another level, marketing must be embraced by all the other departments. Finance, accounting, HR all work together to support marketing department and vice versa. 4. Social Responsibility Marketing: It deals with understanding broader concerns and ethical, environmental, legal and social context of marketing activities and programs. Both AFBL and Coca-Cola work hard to maintain environmental sustainability within and outside their factories. There was a huge backlash over using pesticides in cola products; particularly in Coca-Cola. They have turned the situation so far; engaging in social responsibility marketing in the process. 11
Developing Marketing Strategies and Plans
The Holistic Marketing Orientation:
Holistic marketing orientation refers to the integration the value exploration, value creation, and value delivery activities with the purpose of building long term mutually satisfying relationships and co-prosperity among key stakeholders. Both Coca-Cola and AFBL try to integrate these three marketing activities to create, maintain and renew customer value.
Value Exploration Value Value Delivery Creation
Collab orative Netwo rk
Custo mer Focus
Core Comp etencie s
Cognitive space Customer
Competency space Business Internal
Resource space Business
relationship management
Domain resource management
partners partner management
Customer benefits
Figure: A Holistic Marketing Framework
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Value Exploration:
Cognitive Space: Coca-Cola was the first company to meet up customer’s latent demand for a carbonated cola flavored soft drink that quenches thirst. MOJO came to meet the existing demand for a good quality Bangladeshi cola drink at an affordable price. It also connected well with the target market with their Bangladeshi culture based promotional campaigns. Competency Space: Both AFBL and Coca-Cola company have spread their breadth of business in a broad scope. Instead of focusing on only one product type they both have focused on producing beverage products such as cola drink, milk, energy drink, snacks items etc. Their depth of business is Physical as their production process is completely equipment based.
Collaborators Resource Space: Here it is inapplicable because neither CocaCola nor AFBL acquired or merged with any of their Bangladeshi competitors Value Creation:
Customer Benefit: Coke and MOJO both the products give customers solutions to the need of a refreshing drink. Business Domain: Both Coca-Cola Company and AFBL have focused their business domain on the consumers need for a drink that refreshes mind). Putting this in the center they have shaped Coca Cola and MOJO. Also to capture more market segment both companies have reshaped their business concept in various ways such as Coca-Cola Company has reshaped its 13
concept by producing SPRITE an uncola drink, POWERADE energy drink etc and AFBL by producing FRUTIKA fruit juice, SPEED energy drink etc. •
Positioning: The Coca-Cola Company, which controls more than half of the global market in non-alcoholic drinks, wants to strengthen its position in the consumer mind by stating that it is the number one cola drink in the cola market. On the other hand AFBL mainly uses Product differentiation (with their innovatively shaped and designed packaging) and Image differentiation to make MOJO different and acceptable to the consumers.
•
De Positioning: In our country most of the Coca-Cola promotions rely on the Indian advertisements. Their traditional rival in India is Pepsi. Pepsi simultaneously released advertisement declaring “Today Pepsi
would like you to try a Coke.” Pepsi argued that the consumer had the right to choose; thus de positioning Coca-Cola. On the other hand MOJO in our country didn’t face any rivalry that did de positioning technique. Business Partners: AFBL and Coca-Cola both purchase their raw materials from outside the country. In Bangladesh, AFBL and Coca-Cola have 227 and 197 distributors respectively. With their cooperation the companies have managed to distribute their products efficiently throughout the country. Value Delivery:
Customer Relationship Management (CRM): It consists of the processes a
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company uses to track and organize its contacts with its current and prospective customers. Both companies undertake survey of point-of-sales data, market research and automated tracking of sales programs to collect information about customers and customer interactions about their products and to make their consumers satisfied. Internal Resource Management: Both companies try to manage their internal resource effectively so that they have the capabilities and tools to be available for the best management of purchasing, production, campaign and more. By doing this they get the ability to respond efficiently in time of huge demand (during RAMADAN and EID-UL-AZHA) and in different customer opportunities.
Business Partner Management: Both Coca-Cola and AFBL maintain a good relation with their business partners i.e. their distributors, trading partners and so on. They also provide good work environment for the employees and a very effective communication system among the employees and also the business partners. Assessing Growth opportunities
Both companies take the following steps to reach their desired sales and reduce strategic planning gap: Intensive Growth:
The companies can search for opportunities in the existing business. Through studying Product – Market Expansion Grid, we detected several new intensive growth opportunities. 15
Market Penetration: Coca-Cola tries to increase the consumption of their product by stating their product is family drink; each and every family should have at least one family bottle in their refrigerator. They also promote campaign saying that CRICKET WORLD CUP in India is not possible without Coca Cola. On the other hand MOJO expand their product usage by launching a live TV show called “Dhora poro hate nate. “In this program people caught while drinking MOJO were offered gifts on the spot. Market Development Strategy: Coca-Cola is targeting new segment of market to increase their sales globally. They are taking various activities to promote coke for sports and music lovers. MOJO are increasing their sales
by expanding their current target market range. Now they are promoting MOJO for matured people as their initial target market was for teenagers. Product Development Strategy: Coca-Cola can introduce new products such as COKE ZERO (Zero calorie), DIET COKE etc to their current market segment to increase sales. AFBL on the other hand; is planning to introduce diet flavored drinks to their existing product mix. Diversification: As a fully diversified product Coke Company has introduced Sprite an uncola drink in our local market. AFBL has introduced Speed an energy drink to capture new market segment. Integrative Growth:
To reach their desired sales both companies can also have forward and backward integration. In forward integration both company can acquire one
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or more of their suppliers such as. In backward integration they can acquire their largest wholesalers or retailers this way they can increase their sales and also earn huge profit. In case of horizontal integration they can acquire some existing and profitable competitors firm such as the RC cola, URO cola, DOUBLE cola, PRAN cola etc. Diversification Growth:
Concentric strategy: Coke introduced Sprite an uncola drink in the market which has the same technological and marketing synergy with the existing product line. AFBL also following suite with their offerings of LEMU, CLEMON etc
Horizontal strategy: As a totally new product for the current segment CocaCola can introduce green tea in Bangladesh. AFBL has already introduced various snacks items i.e. cheeky monkey and O’POTATO in the market. Conglomerate: Coca Cola Company does not have activities in any other industry than soft drinks. They focus all their resources on producing and developing Coca cola and related beverage products. On the other hand; besides MOJO and related food and beverage products, AKIJ GROUP has many other industries. They already have tobacco products, printing and packaging industry, Jute mill, cement industry, textile industry, partical boards etc. in their business portfolio. Strategic formulation:
Coca Cola become the world’s largest soft drink company by putting all their value on an important customer benefit area. They become leader of 17
this field in the world by providing high quality product using best component, having expert employees to produce it and through effective distribution system thus achieving Differentiation strategy. On the other hand AFBL was able to achieve overall cost leadership as they were able to lower their production and distribution cost and manage to price lower than their competitors
Creating Customer Value, Satisfaction and Loyalty
Customer Equity:
The aim of Customer Relationship Management (CRM) is to produce higher customer equity. More loyal the customers are, higher the customer equity of that product is. Among the three distinguished drivers, Both MOJO and Coca-Cola posses the following customer equity most: Brand equity: It relates to the customers assessment of their favored brand above and beyond its objectively perceived value. It is important when products are less differentiated and have more emotional impact. Cola products i.e. MOJO and Coca-Cola have little difference between themselves; consumers chose the product mostly due to brand preference. AFBL and Coca-Cola try to use advertising, public relations and some other communication tools to affect and increase their brand equity with their customers.
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Building Customer Loyalty:
Coca-Cola: Coca-Cola mostly maintains relationship with their customers through Basic Marketing. Coca-Cola has a huge loyal fan base, so they do not do much additional investment other than just selling the product. AFBL: AFBL was new in the market and they had to create loyal customers of their products. They maintain Reactive Marketing with their customers to build strong customer relationship. They have trained their sales persons and representatives to encourage their customers to suggest any ideas and comments that can help MOJO to be a quality product.
Crafting the Brand Positioning Point of Difference (POD) and Point of Parity (POP): Point of Difference (POD):
POD refers to the attributes and benefits that customers strongly associate with a brand and believe these benefits are unattainable in any other competing brands or company. POD for AFBL and Coca-Cola are: AFBL: A beverage provider who provides the largest assortment of beverage and food products available in the whole Bangladeshi market. They are the only company to provide Cola, Clear Lemon, Cloudy Lemon, Fruit Juice, Milk, Energy Drink and Mineral Water; every category of beverage products provided in Bangladesh all together under the same roof. Also they provided MOJO in 150 ml cans, an innovative and never before 19
used packaging size. Coca-Cola: Coca-Cola is produced by the world famous secret recipe known to only a few top executives of Coca-Cola Ltd. They market the world’s first and no 1 cola flavored soft drink brand Coca-Cola that shows exclusiveness and elegance along with their globally recognizable supplementary brands; namely, Fanta, Sprite and Sunfill. Also in limited scale provided one of the few diet cola solutions in Bangladeshi market. Point of Parity (POP):
POP are attributes that are not necessarily unique to the brand but may be shared with other brands. POP for AFBL and Coca-Cola are: AFBL: Provides their products in generally available soft drink packaging sizes offered by every other competitor in the Bangladeshi market. They also have distribution coverage in each location Coca-Cola and other competitors have covered so far. Coca-Cola: Provides all their soft drink products i.e. Coca-Cola and Sprite in all the generally used packaging sizes i.e. 250 ml, 500 ml, 1 liter etc Positioning According To Ries and Trout:
According to the positioning statements made by Ries and Trout; wellknown products hold a distinctive position in the consumers mind. To overcome them, a competitor can imply any one of the three strategic alternatives. Alternatives for MOJO and Coca-Cola are: MOJO: MOJO is trying to strengthen its current position in the consumers 20
mind as a refreshing, upbeat and lively cola drink. Their tag line “It’s inside you!” states the idea of MOJO accompanying in each part of enjoyment of life of the youth. They promoted this idea from the very beginning of product launching, and they have managed to use this idea so far to strengthen this position in the consumer minds. Coca-Cola: Coca-Cola has little promotional activities in Bangladeshi market. The top management of Coca-Cola India Ltd. wants to convey the promotion of Coca-Cola from Indian market. As we can study from their promotions, they try to strengthen their no. 1 brand positioning worldwide
through their positioning strategies. Also in various cases they de-position or re-position their primary competitor; Pepsi in the mind of Indian consumers. In the most recent examples, they de-positioned Pepsi’s “Youngistan” campaign with their own product Sprite’s “Koborstan” promotions. Positioning According To Treacy and Wiersema:
According to the positioning statements proposed by Treacy and Wiersema; a firm could try to be any one of the three alternatives. AFBL and Coca-Cola both try to achieve operational excellence particularly in the Bangladeshi market, as they try to provide highly reliable products to their customers. AFBL is a sister concern of Akij Group, renowned for their lack of compromising with quality. As to maintain that legacy, AFBL uses state of the art machinery and top quality raw materials from Switzerland, Vietnam and Singapore. On the other hand Coca-Cola is the global leader in the cola market. It is operated in Bangladesh by two licensed bottlers under close supervision by Coca-Cola India Ltd. They use raw materials from Coca-Cola 21
certified suppliers and always try to maintain global standard in production.
Dealing with Competition Porter’s competitive forces model:
Five forces; as identified by Michael Porter poses threat for the soft drink market and in the activities of both Coca-Cola and MOJO accordingly: 1. Threat of Intense Segment Rivalry: The soft drink industry of Bangladesh poses a higher and intense rivalry for any competitor. There are numerous big names actively present in this industry. Coca-
Cola, Pepsi and RC Cola had been dominating the cola market of Bangladesh for a long time. Coca-Cola is one of the earliest pioneers in this industry globally as well in Bangladeshi market. So initial threat of rivalry in this segment was low for Coca-Cola. Afterward this market got bigger and more competitive; therefore making the industry much more competitive. When MOJO was launched back in 2005, all the above mentioned companies were actively fighting for market share. Initial market rivalry for MOJO was very
high. But
AFBL successfully marketed their product, as a result gaining the market leader position in a very short period of time.
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Figure: Porter’s Competitive Forces Model
2. Threat of New Entrants: Soft drink market of Bangladesh can be defined as a segment where both entry and exit barriers are high. Here the market potential is very promising, and it is difficult and
expensive for any new competitor to enter the market. Setting up factories is very costly, and if any firm is performing poorly, they can’t easily sell off and leave the industry. As a result these poor performing firms’ i.e. Double Cola, Uro Cola stay on and fight back that hurt the industry leader i.e. MOJO, Coca-Cola and RC Cola. 3. Threat of Substitute Products: Consumers of Bangladesh are the most hardest to convince for any marketer. As there are so many alternatives of cola products in the market, and they do not significantly differ in taste, consumers switch very swiftly to any competitive brand or product. Mineral water is the most popular and available substitute to any thirsty consumer. As its price is significantly low and it is widely available; the threat of substitutes for cola products are extremely high in the Bangladeshi market.
AFBL has done a really thoughtful job of putting mineral water brand SPA in their portfolio as a flanker product. This ultimately boosts 23
revenue for AFBL; and Coca-Cola should do the same with the implementation of putting their mineral water brand KINLEY in the Bangladeshi market. 4. Threats Of Buyers Growing Bargaining Power: In Bangladesh most of the leading soft drink marketer firms follow each other in case of setting price. Buyers are mostly unorganized and spread around; therefore has very little bargaining power. 5. Threat Of Suppliers Growing Bargaining Power: Both AFBL and Coca-Cola Ltd. are highly dependent on oil, electricity, labor and other bare industrial necessities to run their factories. Also they’re largely dependent on the raw material providers for manufacturing.
AFBL revolves around various suppliers for their raw material providers. Still if there is a scarce in the supply of materials, this may easily set the cost up. As a result, the threat of suppliers bargaining power is really high for this industry.
Industry Concept of Competition:
In terms of number of sellers and to the degree of differentiation, soft drink market of Bangladesh can be classified as Monopolistic Competition. Here competitors mostly focus on selected market segments and command a price premium by meeting customer’s needs in a superior way. 150 ml cans were an innovative styling for MOJO. They differentiated their cola offering with that sized cans; thus differentiated their offerings in part in contrast with its many competitors in the cola soft drink market.
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Competitive Strategies for Market Leader:
As currently MOJO is the market leader in the cola market of Bangladesh; here we will discuss possible strategies that can be undertaken: Expanding the Total Market:
As cola products has less usage rather than other ordinary products, no such new usage for cola products exist. So they can undertake the following strategies to expand the total cola market; mostly applicable for market leader MOJO:
•
New Customers: As mentioned earlier, various disturbing issues relating to cola products ultimately shrink the global cola market; making way for phenomenal growth of clear drink market in the soft drinks industry. MOJO did a phenomenon job to again revive the cola market in Bangladeshi perspective. They followed these strategies: 1. Market Penetration Strategy: AFBL attracted consumer groups who might use it but didn’t due to the controversies surrounding cola products. Successful marketing of MOJO again restored confidence on cola products. Coca-Cola promoted their products as soft drink with no pesticide for the same reason. 2. New-Market Segment Strategy: AFBL; with MOJO’s colorful and vibrant promotions, easily grabbed the market of new and 1st time cola users in the form of school going children. Their target market was teenagers who would try out cola products for the 1st time of their life. Effective approaches to grab this 25
market would mean expanding the total market in the long run. 3. Geographical-Expansion Strategy: Currently AFBL is exporting their products to Middle East, Malaysia and South Africa. Not only are they trying to grab consumers living elsewhere, they’re trying to grab market of NRB’s who are missing out the opportunity to consume Bangladeshi drinks. •
More Usage: Total market of cola products can be increased by increasing the frequency or quantity of consumption. Larger containers are supposed to increase the consumption. Also soft drinks are impulse products; as such usage can be increased by making the
product more available to the consumers. MOJO’s early success was due to making the product easily available to consumers all around Bangladesh; something uncommon for any new product. Also CocaCola Ltd. follows the motto “Arms Length Desire”, emphasizing on the fact that the company is trying to make their products available in the closest to their consumers. Making soft drinks available in restaurants and fast food joints with co-branding with the vendor is also a good way to increase the total market size. PEPSI generates most of their sales based on their availability in public gathering places and fast food joints i.e. KFC, Bashundhara Cineplex, and Fantasy Kingdom. Defending Market Share:
Currently MOJO is dominating the cola market of Bangladesh. As AFBL is trying to expand total market share, they are also continuously defending their current business. AFBL are using the following strategies to defend 26
their market share: •
Position Defense: Currently MOJO has a very desirable market space in the minds of their target market. As their no. 1 competitor, CocaCola has little promotional activities in Bangladesh; MOJO is easily becoming a staple name in the consumers mind in case of quality cola drink.
•
Flank Defense: AFBL hasn’t stopped just because MOJO is the cola market leader; they are also trying to erect outposts to protect their weak fronts which could serve as an invasion base for counter attack.
As a result, AFBL offers various flanking products in their portfolio. Offering i.e. LEMU, SPEED, CLEMON, O’POTATO, SPA are in such manner that a MOJO consumer; if decides to consumer anything other than MOJO can choose products between AFBL’s offerings. •
Preemptive Defense: AFBL also pulls a more aggressive maneuver to attack before any of their competitors starts offending them. CocaCola had the biggest distribution coverage of Bangladesh. While MOJO has already uprooted them in case of distribution coverage, they are always attempting to cover more areas to be prepared for any upcoming competition.
•
Counteroffensive Defense: Market leader; when attacked may respond with a counter attack. So far no such attack has been seen on MOJO in terms of promotions. But sometimes MOJO responds to price cuts, special offers and discounts offered to distributors and retailers against competitors. Once Coca-Cola started offered refrigerators to many retailers with the clause of displaying only their products 27
in that cooler. In response MOJO offered and put refrigerators in several key strategic retailer outposts with the similar clause intact. •
Mobile Defense: Akij Group is one of the largest and oldest group of industries operating in Bangladesh. As their primary business consisted of tobacco based products, they tried to diversify in to channels that will not have negative reactions from consumers. Now their diversified SBU’s consists of Particle boards, Jute based products, Cement, Textile products, Printing & Packaging solutions and Food & Beverage products. Akij group has stretched its domain
by diversifying over territories that can serve as future centers for defense and offense. •
Contraction Defense: AFBL and Akij group has been really successful in their business activities so far; therefore they have not taken planned contraction or given out weaker territories. They are doing business with success so far and hope to do so for the years to come.
Market-Challenger Strategies:
As currently Coca-Cola is in the 2
nd
position in cola market of Bangladesh,
they can take following aggressive market challenger strategies to overtake MOJO to regain the leader position: Defining the Strategic Objective and Opponents(S):
Out of the three options available in this phase, Coca-Cola is attacking the market leader directly. Although this is a high risk strategy, it has the
potential of high-payoff. As Coca-Cola was the previous market leader, they 28
already have high distribution coverage and brand equity. It is very much possible to overtake MOJO with the efficient use of promotional campaigns that really connects with the Bangladeshi consumers and culture. Due to the negligence from Coca-Cola India Ltd. Bangladeshi themed promotions are non-existent, making way for MOJO to meet phenomenon growth. Choosing an Attack Strategy:
Due to weak marketing activities generated by the figureheads of Coca-Cola India Ltd. in response to the aggressive activities of AFBL, there has been a lack of attack strategies generated. Distinguishable strategies include: •
Frontal Attack: Coca-Cola is generating a pure frontal attack on MOJO as they have the capacity to effectively match their product, price and distribution. Coca-Cola still is the no. 1 recognizable brand of the whole world, and still has somewhat higher brand equity. There are no questions in consumers mind about the product quality of Coca-Cola. Also Coca-Cola still has large distribution coverage all over Bangladesh; as a result it directly matches with AFBL in terms of distribution.
•
Flank Attack: Although AFBL has so many flanking products available in its portfolio, the leaders in the uncola market are still 7UP and Sprite; later of the two being the product of Coca-Cola. CLEMON, flanking product for AFBL in this segment still does not have the brand equity and the magnitude of marketing campaigns these two competitors posses. As a result these segment posses a flanking hole in the portfolio of AFBL, and Coca-Cola should do their 29
best to take grip of this situation and this promising market.
Setting Product Strategy Product Level of Cola Drinks:
MOJO and Coca-Cola are both cola flavored soft drink products. As such product level for both will be same. These are explained below:
1. Core Benefit: Refers to the service or benefit consumer buys. Consumers want variations in satisfying thirst while buying either MOJO or Coca-Cola. 2. Basic Product: Here the core benefits are turned into a basic product. Basic product for cola products are drinks with a sweet and strong taste. 3. Expected Product: Refers to a set of attributes and conditions buyers normally expect while purchasing the product. Consumers may expect disposable and durable packaging, top quality ingredients in the cola product, glass or free gifts with every bottle or extra amount given with MOJO or Coca-Cola. 4. Augmented Product: Here benefits are given that exceeds customer expectations. Home delivery service with large amount of purchase of MOJO and Coca-Cola could act as augmented offering for consumers. 5. Potential Product: Here all the possible augmentations and transformations the product might undergo in the future are stated. With ever expanding Research and Development (R&D); in future cola drinks may be combined with substances that will transform their existing use to a substitute of water. 30
Product Mix:
Product mixes of both AFBL and Coca-Cola Ltd are given below: AFBL:
Cola
Cloudy Lemon
Clear Lemon
Energy Drink
Mineral Water
Fruit Juice
MOJO:
LEMU:
CLEMON:
SPEED:
SPA:
FRUTICA:
offered
offered
offered in
offered
offered
offered in
in 250ml, 500ml, 1 and 2 liter PET packages
in 250ml, 500ml, 1 and 2 liter PET packages
250ml, 500ml, 1 and 2 liter PET packages
in 250ml, PET and CAN
in 500ml, 1 and 2 liter PET packages
250ml and 1 liter PET packages (available in Mango, Orange and Grape Flavor)
Milk
Firm Fresh: offered in Pasteurized and UHT form in 500 ml packages
Snacks
1.O’Potato
2. Cheeky Monkey
Coca-Cola Ltd. COLA
CLEARLEMON
Coca-Cola: offered in 500ml, 1 and 2.25 liter PET packages; also offered in 250 ml and 1 liter glass bottles
Sprite: offered in 500ml, 1 and 2.25 liter PET packages; also offered in 250 ml and 1 liter glass bottles
ORANGEDRINK
FRUITJUICE
Fanta: offered in 500ml, 1 and 2 liter PET packages; also offered in 250 ml and 1 liter glass bottles
Sunfill: offered only in 250 ml glass bottles (available in Mango flavor)
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Product Mix Pricing:
In general situations both AFBL and Coca-Cola India Ltd. follow the mentioned pricing strategies for marketing in Bangladesh:
Product Line Pricing: Both companies market their products in different sizes; thus introducing price steps. Prices are different for each individual sized drink, and they are not charged proportionally. Instead the larger amount consumer buys; the more he/she gains as price starts to decrease for larger bottles. Product Bundling Pricing: In limited cases, mostly on some selected retail outlets soft drinks are offered as mixed bundling. Here products are charged less for the bundle than if they are purchased individually. Some posh retail outlets i.e. Agora, Mina Bazar offers in bundles i.e. 2 bottles of 2liter MOJO for tk. 115 whereas individually they would have cost a customer about Tk. 130. Labeling:
Labels of the soft drink products do its functions in the following ways: 1. Identifying: Brand names of MOJO and COCA-COLA appears on the bottles. 2. Describing: The materials, particular health benefits, factory address, how to dispose properly etc. information’s are posted on the bottle labels. 3. Promoting: Attractive graphics and brand logos over the bottle attract consumers; particularly in big retail stores where so many similar 32
products are stuffed together in large numbers. Packaging:
Packaging of both MOJO and Coca-Cola can be classified in the following ways: •
Primary Package: Cola soft drinks coming in a bottle; either PET and glass containers. AFBL PET bottles are labeled in full sleeved.
•
Secondary Package: Does not appear in soft drink products.
•
Shipping Package: Shrink packed that typically holds 24 bottles of 250ml and 500ml PET, 12 bottles of 1 liter PET and 6 bottles of 2liter PET bottles.
Designing and Managing Services Service mix:
The offering of soft drinks can be classified as pure tangible good based on the fact that it consists of only a tangible good. Coca-Cola Ltd. and AFBL don’t offer any service that accompanies the product. But it is also offered as part of hybrid service mix in case of food and service at restaurants. Here both food and beverage accompanying with the service from the restaurant people makes up for the whole service mix. Therefore both Coca-Cola and MOJO act as a tool in the hybrid service mix.
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Developing Pricing Strategies and Programs How Pricing Is Set:
Pricing is a very important issue for any company, as it determines the level of profits earned and covers up the cost of operating. In AFBL, pricing is set by the marketing department. They manage a close relationship with the factory managers about production cost, and sets different pricing strategies according to their reports. In case of Coca-Cola, the pricing is generally done by the local bottlers, AML and TBL in close supervision of Coca-Cola India Ltd. Consumer Psychology and Pricing:
Both AFBL and Coca-Cola have to think about how their consumers perceive of prices and has to deal with the following important issues: •
Reference Prices: In most situations consumers have a vague idea about the products estimated price rather than recalling specific price. Most soft drinks are priced very similarly and close to each other. So consumers often compare soft drink prices in terms of internal reference price (pricing information from memory/ recollecting old prices) or in terms of external reference frame (posted regular retail price/price range of soft drinks).
•
Price Quality Inference: In most food items, the belief of price as an indicator of quality applies. As a result soft drink products are priced either in a close range or according to the brand image. Pran Cola was sold at a relatively low price compared to other competitors (BDT 8 for a 250ml glass bottle comparing to most competitors price 34
of BDT 10). To most of the consumers this resulted in the belief that Pran Cola had inferior quality. Most soft drink marketers of
Bangladesh, especially Coca-Cola and AFBL looks at this phenomena carefully and prices their products accordingly.
Price Discounts and Allowances:
Both AFBL and Coca-Cola offer the following discounts and allowances to their respective customers and marketing intermediaries: •
Quantity Discount: Both companies allow price reduction for traders who buy in large volumes. AFBL encourages their sales persons to engage in finding sponsorship opportunities in various cultural and local events. AFBL offers substantially lower price per unit for large
•
volume of sales there. Functional Discount: Both companies’ offers discounts for their trade channel members upon performing certain functions i.e. selling and storing.
•
Allowance: Both companies engage their dealers in promotional allowances by rewarding them for activities i.e. participating in
outstanding advertising and sales support programs. AFBL hosted national sales conference for all their distributors at their factory premise at Dhamrai where they offered gifts and entertained them.
35
Promotional Pricing:
In many cases, both AFBL and Coca-Cola used the following pricing technique to stimulate purchases of their products: •
Loss-Leader Pricing: In order to sell off the increasing store traffic in many superstores; prices of products from both companies are dropped. As seen in various offers from leading superstores i.e. AGORA, MINA BAZAR; MOJO, Coca-Cola, Sprite, LEMU are offered at comparatively lower prices in bundles to attract consumers in to their stores as well as clearing out old unsold items.
•
Special-Event Pricing: Not just AFBL and Coca-Cola but all other soft drink manufacturers establish special prices in certain seasons i.e. Eid-ul-fitre, Eid-ul-ajha. During these seasons consumption jumps sky high and sales increase in a towering basis.
Differentiated Pricing:
Soft drink industry charges third-degree price discrimination with its customers. Price discrimination happens with the following buyer classes: •
Product-Form Pricing: Different forms of soft drink products are priced differently and not proportionately to their respective costs. While a 1 liter PET bottle of both Coca-Cola and MOJO is priced at BDT 45, price of a 2 liter PET bottle is BDT 65. This pricing is not proportional to their sizes, and consumers gain on the purchase of higher sized products.
36
•
Channel Pricing: Different fast food eateries and restaurants especially posh ones price soft drinks higher than the average market price. A 250 ml Coca-Cola glass bottle is priced BDT 12 at Sumi Confectionary at Mohakhali; but the price is BDT 16 for the same package at the nearby Hotel Jakaria.
Designing and Managing Value Networks and Channels
Breakdown of Marketing Intermediaries:
As AFBL and Coca-Cola are in the soft drink business, their marketing channel classification has lots of similarities. These channels can be broken down in to following pieces:
Supplier s
Factory/ Produce rs
Merchant
Marketing Intermediary
Agents
Customer s
Facilitator s
Suppliers: Provides raw materials for soft drinks to the manufacturers. Bottlers of Coca-Cola purchases materials from selected suppliers. AFBL revolves around various suppliers and mostly purchases from Switzerland and Singapore. 37
Factory/Producer: AFBL has their factory in Dhamrai, Dhaka. Coca-Cola has two separate bottlers in Bangladesh and they have their own factories. One of the bottlers, AML has their factory in Alekhar Chor, Comilla while TBL’s factory is on Mirpur, Dhaka. Marketing Intermediary: They can be classified in the following three categories: 1. Merchant: Distributors and retailers who sells the product. AFBL has 227 distributors for MOJO while Coca-Cola has 197 all over Bangladesh. 2. Agents: Sales agents and manufacturers repre sentatives who helps the retailers and distributors in marketing the product. 3. Facilitators: Generally AFBL and Coca-Cola provide transportation for goods from factory to distributors. Also AFBL partners with AD COM and Grey etc. as advertising agencies to promote and market the product. Coca-Cola works through their local office CCFEL (Coca-Cola Far East Ltd.) to promote their products in Bangladesh.
Push Vs. Pull Marketing:
AFBL and Coca-Cola use both Push and pull marketing strategies very skillfully. There activities are listed below: MOJO: At the very introduction stage of MOJO, AFBL mostly applied push strategy as there was little brand equity for their product. People
hardly knew about the product at that stage. Although soft drinks are 38
regarded to many consumers as impulse items, due to the presence of CocaCola and Pepsi in the market there are always a certain degree of brand equity present for the soft drink consumers. Before formally introducing the product in the market, AFBL spent large sum to induce intermediaries to carry, promote and sell. During formal launching, AFBL spent resources in both push and pull marketing ; using advertising to make consumers interested to ask retailers for the product. This strategy really paid off well for the companies; as MOJO got along with their target consumers from the beginning and continued to achieve positive feedbacks. Coca-Cola: Coca-Cola has a huge loyal fan base present from the time it
was offered in Bangladeshi market. Coca-Cola is the no. 1 brand of the whole world. As a result Coca-Cola India Ltd. spends very little for the advertising and to the purpose of persuading in the Bangladeshi market. As a result marketing strategy of Coca-Cola in Bangladeshi market can be remarked as push strategy. The little amount allocated for promotional purpose are spent to encourage intermediaries i.e. distributors, retailers to promote and sell the product to the end users. They give incentives i.e. quantity discounts and promotional allowances to increase sales through the intermediaries using creative processes i.e. DISPLAY PROGRAM AT RETAILERS SHELVES. Types of Buyers:
Soft drink buyer can be classified as Habitual shoppers; they pretend to buy from the same places in the same manner over time. As a result most soft drink marketers try to use push strategy to encourage retailers to sell and 39
promote only their products. Also for the same reason marketers try to reach out to every little retail outlets possible in order to grab these habitual shoppers.
Role of Marketing Channels:
Both AFBL and Coca-Cola gain several advantages in operating by using intermediaries: •
Producers of soft drinks lack the financial resources to carry out direct marketing. AFBL has 227 distributors all around Bangladesh for marketing MOJO while Coca-Cola has 197. It is very hard pressed for both these companies to get the asset to buy out their dealers and do business on their own all around Bangladesh.
•
In FMCG business, producers gain more return on manufacturing rather than retailing on their own. It seems unreasonable to make investment on field other than their core competencies.
•
Finally it is unreasonable and completely not feasible to market soft drinks directly to the consumers. If AFBL and Coca-Cola want to directly market their products, they have to establish soft drinks stores all around the localities of Bangladesh. It is completely unrealistic.
For these reasons it is utterly necessary for FMCG companies such as AFBL and Coca-Cola to establish marketing channels to operate in Bangladesh.
40
Channel Levels:
As soft drinks are FMCG (Fast Moving Consumer Goods) both AFBL and Coca-Cola do consumer marketing in a
two-level channel. Here
manufacturer sells products to wholesalers who in turns sell it to retailers. Product than finally are sold to final consumers by the retailers.
Manufacturer
Wholesaler
Retailer
Consumer
Channel Design:
Designing channel contains the following processes: Analyzing Customer’s Desired Service Output Levels: Channels of both
AFBL and Coca-Cola produce the following five service outputs: 1. Lot Size: Typical consumers buy one unit of soft drink at a time for 41
himself/herself in public gatherings. Basic purposes of use and the resulting lot sizes purchased by the consumers of both products are as follows: Bottle/LotSize
Purposeofuse
250ml
for a single consumer; accompanying food
500 ml
gives mobility to drink for a longer period of time or sharing drinks with 2-3 persons
1-2liter
for parties and gathering of people
large
2. Waiting and Deliv ery Time: Soft drink s are gener ally not much of a precious item. Although they are best tasted chilled, consumers do not expect too much waiting time for these products. The longest amount of waiting time tolerated is the time necessary to bring the cold soft drinks from the refrigerator to the hands of consumers. 3. Spatial Convenience: Soft drinks can be classified as convenience or shopping goods according to the consumer’s preference. As such they should be made as much available as possible. Most purchases are made in local grocery stores. So both AFBL and Coca-Cola try to reach the most distant corners of locality possible. Coca-Cola’s motto, “Arms length desire” reflects this objective. Channels of both AFBL and Coca-Cola should be as much decentralized and disbursed
42
possible to reach out to every potential customer. Although this process results in a higher cost of operation, effectively these activities makes their products more convenient. 4. Product Variety: Both AFBL and Coca-Cola try to minimize retailer’s assortment and fill up their shelves with their own products to increase sales. Although mixed assortment results in giving consumers more choice over products, in those cases the brand equity and promotional campaigns comes to play because soft drinks products otherwise has less differentiation. 5. Service Backup: Both AFBL and Coca-Cola provides a lot of add-on services for their channel members. Retailers get various facilities i.e. payment on credit, delivery and call backs on faulty products. AFBL and Coca-Cola try to have less payment made on credit. Still large retail outlets i.e. Agora, Mina Bazaar makes most of their transactions in credit; therefore there are always some credit sales made. Also both companies provide delivery services to retailers through their own delivery transports.
Establishing Objectives and Constraints:
Generally companies does effective planning on determining which market segments to serve and which channels to use for each segment. The objectives of channels get affected by the following factors: 1. Product Characteristics: Soft drinks are mostly sold by using as much direct marketing possible as they are perishable items. As a result 43
manufacturers of soft drinks of Bangladesh mostly use less marketing intermediaries and try to get their products to the consumers as fast as possible upon producing. 2. Company Characteristics: Both AFBL and Coca-Cola have huge financial backing in terms of operating. Although their products are impossible to sell through direct marketing to each consumer individually, they try to expand their channel as much as possible all through the country. This way they try to reach to each of their potential customers. 3. Middlemen Characteristics: AFBL and Coca-Cola takes account both the strength and weakness of their intermediaries. Here company sales reps have to deal with retailers to put their products in to the retailer’s shelves. Also as both companies employ a mixture of push and pull marketing; the importance of sales reps is lot higher than common thoughts. Although more sales rep means increasing the cost, this effectively means reaching out to a broader consumers and retailers; which increases the sales as well. 4. Competitor’s Channel: Designing any new company’s channel always gets influenced by their competitor’s channels. As MOJO was a new product and Coca-Cola was in the market from the beginning; AFBL followed Coca-Cola’s channel design and modified them to their own needs wherever necessary. 5. Environmental Factors: Although global economy faced recession for last few years, activities of AFBL did not suffer much as they are mostly Bangladeshi market based company. But Coca-Cola is a US 44
based company; therefore their whole array of activities got affected. This in turns was one of the main reasons of their lack of market share grabbing initiatives as they had a lack of inflow of investment. AFBL grabbed this situation effectively; gaining the cola market leader position.
Identifying Major Channel Alternatives:
AFBL and Coca-Cola choose their channels from an array of alternatives in order to reach their customers at a lower cost. Their channel alternatives can be described by the following elements: •
Types of Intermediaries: As both AFBL and Coca-Cola are in the same soft drink industry, they imply the similar alternative. Both companies hire their agents known as distributors throughout the country in different regions to sell only their products.
•
Number of Intermediaries: Soft drinks are mostly considered as convenience goods; therefore the more locations product made available is, the better. As such both companies impose
intensive
distribution to place their products in as many outlets possible. Here
soft drinks need a have a great deal of location convenience. So retailers compete aggressively for greater consumer coverage. •
Terms Of Responsibility Of Channel Members: In order to fulfill a healthy “trade-relations mix”, both companies perform the following services for their channel members:
45
o
Price Policy: AFBL and Coca-cola sets a price list and announces a schedule of discounts and allowances for their channel members which is seen as equitable and sufficient.
o
Condition of Sales: AFBL and Coca-Cola provides guaranty against defective products but don’t in case of price declines.
o
Distributor’s
Territorial
Rights:
Companies
define
their
distributor’s territorial rights and terms under which the distributors operate. According to these rights, distributors are expected credit for sales on their territory and no one else has the right to enter their territory with the same product. o
Mutual Services and Responsibilities: This mostly takes action in case of the two licensed bottlers of Coca-Cola. They have to abide by the decisions set by their supervising Coca-Cola India Ltd. These bottlers have to satisfy company’s global standard s in case of manufacturing, cooperating with new promotional programs and buy supplies from specified vendors.
46
Designing and Managing Integrated Marketing Communications (IMC)
Marketing Communication and Brand Equity:
Various marketing communication activities contribute to developing brand equity. The following figure shows how the marketing mix tools create brand equity:
Advertisi ng
Brand Awarenes s
Sales Promotion Events & Experience
Brand Image Marketing Communicati on Program
PR & Publicity
Personal Selling
Brand Equity Brand Responses
Brand Relationship
Direct Marketing
Marketing Communication Mix:
Both AFBL and Coca-Cola use the following tools of communication: 1. Advertising: MOJO promotes through advertising in all the TV channels of Bangladesh. Although Coca-Cola’s promotions are 47
noticeably absent; during occasions i.e. Ramadan advertisements are shown to promote limited time special price offerings. Coca-Cola advertisements are largely present in the Indian TV channels; which are also watched by Bangladeshi consumers. 2. Sales Promotion: Both AFBL and Coca-Cola provides short term incentives to encourage both their distributors and consumers. Distributors and retailers are given short term incentives i.e. free products with larger quantity of purchase to sale more products during off-peak seasons and special occasions. Consumers are given the offer of lower price in bundle in order to sale and clear off inventory during much consumed occasions i.e. Eid. 3. Events and Experience: Various events are sponsored to promote own products. MOJO sponsors Valentines Day Concert and World Cyber Games (WCG) Bangladesh Qualifying Round 2009 to name a few. They also organize events i.e. Boishaki Mela and Pitha Utsab to get closer to their target consumers mind. Coca-Cola occasionally holds events i.e. “Coke Khao Pataiya Jao” for Bangladeshi consumers. Also they sponsor various international events i.e. WORLD CUP FOOTBALL and AMRICAN IDOL. 4. Public Relations and Publicity: Coca-Cola promo tes their brand in various public places i.e. NANDAN PARK. Also MOJO does the same in places i.e. WONDERLAND PARKS and SPORTS ZONE. 5. Direct Marketing: It is impossible to market soft drinks through direct marketing; therefore neither companies does direct marketing in Bangladesh. 48
6. Personal Selling: This marketing communication tool is not applicable in the soft drink industry and on the business of both AFBL and CocaCola.
Brand Equity:
It refers to the subjective and intangible assessment of a brand by the consumers. Both MOJO and Coca-Cola have high brand equity due to their close attachment with their target market. Brand equity consists of the following tools; and strengthening them in turn increases the overall brand equity of the brand:
1. Brand Awareness: It is created by the combination of brand recognition and brand recall. •
Brand recognition: Refers to the extent at which a brand is recognized for stated brand attributes or communications. CocaCola is instantly recognized with their slogan “Always CocaCola”, “The Coke Side of Life”, “Open Happiness” and "Thanda matlab Coca-Cola!"(Indian). MOJO is also recognized with their own slogans, “It’ s inside YOU !” and
“Asmane Pakha Melo
Ontore Ontore” •
Brand Recall: Refers to the ability to retrieve the brand from memory of the consumer with a given product category. Coca-Cola had long been in the top of consumer’s product category ladder according to Jack Trout positioning statement. But due to their campaigns in Bangladesh and with the exciting and refreshing 49
promotions; MOJO grabbed the top of the ladder of many consumers. Still Coca-Cola is recalled with their slogans and Indian TV commercials while MOJO is recalled with their advertisements and billboards at roadside with their tag line “It’s inside you!” all around Bangladesh. 2. Brand Image: Refers to the perception of the brand by their consumers. A positive brand image is created by a successful marketing program that link a strong unique and favorable association to the brand in their memory. So far MOJO has been very much successful with their creative and innovative marketing that closely links with the Bangladeshi youth culture. Their product design, artwork over their cans and PET bottles closely link with Bangladeshi people as a whole. On the other hand, Coca-Cola has done little to achieve a superior brand image in the Bangladeshi context. They are the no. 1 brand of the whole world, as a result they do little customization of their brand with Bangladeshi context. Consumers are attracted to Coca-Cola only due to their worldwide popularity and with the marketing programs centered on Indian culture. 3. Brand Response: Refers to what consumers think and feel about a particular brand. Consumer’s personal opinion and evaluation about both MOJO and Coca-Cola revolves around the following factors: •
Quality: Coca-Cola is world renowned for their superior quality and their secret recipe in manufacturing. There is always trust and 50
belief about good quality in Coca-Cola by the consumers. MOJO, at first had consumers doubts as they were a Bangladeshi cola provider. Afterwards that doubt got cleared with their satisfactory quality as they use state of the art machinery for production. •
Credibility: After drinking MOJO; consumers got the trust about the product. As a result they spread good words about MOJO, resulting in establishing credibility on the new product. Coca-Cola is the no. 1 soft drink brand worldwide and their quality control while manufacturing already ensured credibility among their loyal consumers.
•
Consideration: Both MOJO and Coca-Cola; with their superior quality product solves the problem of clinching thrust of soft drink customers adequately.
•
Superiority: Although MOJO and Coca-Cola are the two largest share holders in the cola market of Bangladesh; they are always working on to ensure superiority over each other. They already are far ahead of their closest competitors. They are always increasing their business activities and trying to get closer to their consumers to achieve supremacy in the cola market.
4. Brand Relationship: Refers to the rel ationship established between the buyer and the product. It is done on the basis of trust. To maintain trust among their consumers neither AFBL nor CocaCola did their brand extensio ns with their own brand. As a result; AFBL’s milk brand is FIRM FRESH; Coca-Cola’s mango juice
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brand is SUNFILL. This is important in maintaining the brand’s quality and trust issues with their consumers in case of brand extension in unrelated products and categories.
Conclusion In the end, we want to say that it was a challenging experience. Working on established and hugely popular products like MOJO and Coca-Cola was a big learning experience for us. One of the hurdles was to analyze Coca-Cola, as they have little activity in the Bangladeshi market. As we have put all the necessary theories taught in our designated course into the analysis of MOJO and Coca-Cola, we believe that our analysis is a success. Exercising and enforcing the right marketing strategies will ensure their existence and improvement of current standings. It was our pleasure in practicing all the theories of this course in real life marketing examples.
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