ACTORS OF MICROENVIRONMENT

Company Name: Coca-Cola Bottlers (M) Sdn Bhd

Competitors:

Spritzer Bhd (www.spritzer.com.my) Yeo Hiap Seng (M) Bhd (http://www.yeos.com.my/) Nestle (Malaysia) Bhd (www.nestle.com.my) Malaysia Milk Sdn Bhd (www.mmsb.com.my) Fraser & Neave Holdings Bhd (www.fn.com.my) Permanis Sdn. Bhd (www.permanis.com.my)

Suppliers:

Malayan Sugar Manufacturing Malaysia Holdings Bhd (Sugar) Aluminium Company of Malaysia Bhd (Raw Aluminium) SHS Plastics Industries Sdn. Bhd. (Plastic Bottles) M.S.Asia Enterprise Sdn. Bhd. (Phosphoric Acid) San Soon Seng Food Industries Sdn. Bhd. (Food Colouring)

Intermediaries:

McDonald’s (Retailer) Wendy’s (Retailer) Subway (Retailer) Mercatus Plus (M) Sdn Bhd (Marketing Services Agency)

Deutsche Bank (Malaysia) Berhad (Financial Intermediary)

Customers:

Consumer market consisting of individuals or households that purchases the company’s products for personal consumption.

Reseller markets such as Tesco, Giants and Aeon that buys the product to resell at a profit.

Public:

Credit Suisse Securities (Malaysia) Sdn Bhd (Financial Public) Muslim Consumer Association of Malaysia (Citizen-action public) Pertubuhan IKRAM Malaysia (Citizen-action public) Fitness Malaysia (Media public) Ministry of Health Malaysia (Government public)

MACROENVIROMENT

MACROENVIROMENT IMPACT

Demographic Change

The so called “Westernisation” of the global eating habit has been blamed for the change in the food purchasing and consumption pattern of the Malaysian population. This can be seen through the rising increase in the popularity of fast food chains such as McDonalds, Wendy’s and Subway. More Malaysians are inclined to indulge in an affluent diet consisting of energy-dense food that are rich in fats and sugar.(Gopalan, 1992)

The generational labels for those within this context differs to that of the Western world but has been dubbed as “The Developer” for those born between 1983-2004 and “Generation Z” for those born after 2005.(Tung & Comeau, 2014)

The impact of this sweeping change in demographic is indicated by the yearly increase in the on-trade and off-trade sales of carbonated soft drinks in Malaysia.(Euromonitor, 2015)

Between 2009 and 2014 the total volume growth of soft drinks sales in Malaysia has increased by a staggering 33.1% on both on-trade and off-trade sales. The company targets ads to family seasonally following such occasions as Hari Raya, Chinese New Year and etc., as this demographic falls in line with the “The Developer” and “Generation Z” category.

Political Change

The soft drinks market in Malaysia has always been dominated with international players, and for the better half of the past decade the regulations on the sale of these sugary drinks have been lax. However, due to growing concerns from increasing cases of diabetes and a cultural shift towards a healthy lifestyle, there has been mounting pressure on the government to better regulate the consumption of soft drinks in Malaysia.

Back in 2011, a system was implemented in schools across Malaysia to include the Body Mass Index (BMI) of each students in their report card to alert their parents on the health of the children. As part of the move, school cafeteria was banned from selling sugary soft drinks.(MacKinnon, 2011) cont.

The ban on soft drinks in schools would have been seen as a setback to Coca-Cola but a similar policy in the US has shown how little to no impact such policy have on a child’s intake of soft drinks. Research done by the University of Illinois showed that the same children were still consuming a regular amount of soft drinks at home and some were still able to obtain them in schools as most of them has flouted the ban.(Bates, 2011)

The sales figures from the Euromonitor report also showed an increase in soft drinks sales for that same year indicating that such policy’s lack the comprehensiveness to have any meaningful impact on the advertising and sales of Coca-Cola Bottler (M) Shd Bhd.

However, compared to other countries, such regulations are considered laid-back and the only real opposition comes from the Consumers Association of Penang (CAP). The CAP has been campaigning to impose tax on soft drinks, to remove the subsidies on sugar and to limit the sale of large sized soft drinks.(CAP, 2015)

Natural Change

Sustainability is becoming more and more of a hot topic in Asia, and Malaysia is no exception. Recently, the prime minister of Malaysia has called for sustainability to be the core Asean policy due to issues such as climate change.(Akil Yunus, 2015)

One of the major impact of the soft drink industry on the environment is the use of non-biodegradable plastic in the bottling of their products, most prominently PET. The carbon footprint in both manufacturing and disposing of the plastic is significant enough to leave a lasting effect on the environment and lead to climate change.(Pasqualino, Meneses, & Castells, 2011)

The Coca-Cola company understands that there is a link between a healthy ecology and a healthy economy being as old and long standing as they are. Using their long and well establish wide reach, the company has develop a multitude of international programs to address the growing trouble of not just the world but also of the smaller communities. One such program is the PlantBottle™ Packaging that uses newly developed PET plastic bottle made entirely out of plant materials that are 100% recyclable and has a lower carbon dioxide emission. (Anderson, 2015)

Economic Change

Due to a sustained economic growth over the last few decades, Malaysia has experienced a rapid urbanization leading to a sizeable increase in the middle class and a rapidly rising income. This in turn has impacted the lifestyle, occupational pattern and dietary habits of the population. (Noor, 2002)

Recently however, due to implementation of new taxes, reduction of subsidies and the weakening value of the ringgit the Malaysian consumer are either buying less or looking for greater value in their purchases as cost of living rises.(Bernama, 2015)

Soft drinks in general has always targeted itself to those in the middle to poor income family and less to those of affluent nature. This has worked well for Coca-Cola in markets such as India where the large majority of the public lives well below the poverty line. That is to say even with the increase in cost of living in Malaysia, the impact it has on the local sales of Coca-Cola’s product is small or at best not visible as the company continues to introduce new products (i.e. Coke Zero) into the market in light of recent events.

MARKET RESEARCH PLAN

RESEARCH QUESTIONS

How to associate the brand with a healthy lifestyle?

RESEARCH OBJECTIVES

To improve sales in health conscious market (Exploratory Research) To understand the image perception of the company (Descriptive Research) To determine whether the introduction of a no sugar or calorie variant of the product

has improved sales. (Causal Research)

SOURCES OF DATA

Sales information on competitors that have healthy alternatives. (Secondary data can be obtained from Dun & Bradstreet (http://dnb.com))

Information on the current consumer perception of the brand and its image. (Secondary data can be obtained from Radian6)

Information on what consumers want as a healthy option. Sales figures of before and after the introduction of the new no sugar or calorie drink.

RESEARCH APPROACH

Observational research (ethnographic) into the purchasing habit of shoppers in a super market would help determine how the consumer ends up making their choice in purchasing soft drinks. Understanding the demographic whether they be male, female, single, married, have children, are young or old and what conversation they’re having before making the purchase is vital in understanding ways the brand can be marketed. This would give the marketers an idea of how the consumer truly perceive the company’s brand and whether they make their choices based on health conscious decisions or not.

Survey research would be well suited in obtaining the second objective, that is determining the image that consumer associated the company’s brand with. This can then be broken down into age groups and also single or married with family. This would give us a better target for marketing.

CONTACT METHOD

For the observational research, the best contact method would be via personal interviewing or rather in the case of ethnography personal observation. The researcher is required to observe and record on the conversations and behaviour of the consumer during purchase. The sampling plan would be probability sample of a simple random sample.

The survey research in determining the perception of the consumer on the company’s image should be done online to maximize the reach of the research to the public. The sample plan should be probability sample of a simple random sample to better determine the perception of varying demographic.

RESEARCH INSTRUMENT

Mechanical instruments such as cameras and microphones can be used in obtained data for the observational research. The ethnographer would be equipped inconspicuously with such devices as they venture around the supermarket.

Questionnaires will be used in determining the customer’s perception of the brand. The online survey development site SurveyMonkey would provide the best platform for such a task. The following are a few sample questions;

o Gender, Age

o How often do consume soft drinks?

o Favourite soft drinks?

o Common location of to purchase soft drinks?

o How health conscious are you?

o How satisfied are you with Coke?

Word count: 1506

REFERENCES

Akil Yunus, R. A. (2015, 04 August). Future Asean policies must be based on inclusiveness and sustainability, says Najib. The Star Online. Retrieved from http://www.thestar.com.my

Anderson, M. (2015, 03 Jun). Great Things Come in Innovative Packaging: An Introduction to PlantBottle™ Packaging. Coca-Cola Journey. Retrieved from http://www.coca-colacompany.com/

Bates, C. (2011, 8 November). Banning fizzy drinks in schools 'does not reduce children's intake'. Mail Online. Retrieved from http://www.dailymail.co.uk

Bernama. (2015, 21 December). Consumers grappling with rising cost of living, GST. The Malaysian Insider. Retrieved from http://www.themalaysianinsider.com

CAP. (2015). Tax soft drinks to control diabetes. Consumer Association of Penang. Retrieved from http://www.consumer.org.my

Euromonitor. (2015). Carbonates in Malaysia: Euromonitor International.

Gopalan, C. (1992). Nutrition in developmental transition in South-East Asia.

MacKinnon, I. (2011, 18 April). Malaysian school pupils to be scored on weight The Telegraph. Retrieved from http://www.telegraph.co.uk

Noor, M. I. (2002). The nutrition and health transition in Malaysia. Public Health Nutrition, 5(1a), 191-195. doi:doi:10.1079/PHN2001293

Pasqualino, J., Meneses, M., & Castells, F. (2011). The carbon footprint and energy consumption of beverage packaging selection and disposal. Journal of Food Engineering, 103(4), 357-365. doi:http://dx.doi.org/10.1016/j.jfoodeng.2010.11.005

Tung, L. C., & Comeau, J. D. (2014). Demographic Transformation in Defining Malaysian Generations: The Seekers (Pencari), The Buiders (Pembina), The Developers (Pemaju), and Generation Z (Generasi Z). International Journal of Academic Research in Business and Social Sciences, 4(4), 383-403.