PM Full Assignment

8/12/2019 PM Full Assignment

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Table of Content

Details Page

1. Introduction 1

2. Competitor Analysis 2-4

3. Customer Analysis 5-6

4. Marketing Strategy :

4.1. Product Decision Strategy 7-8

4.2. Pricing Decision Strategy 9-10

4.3. Advertising Decision Strategy 11-12

4.4. Promotion Strategy 13-15

4.5. Distribution Channel Decision Strategy 16-18

5. Sales Forecast and Potential Budget 19-24

6. Conclusion 25-26

7. References 27-28


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1. Introduction

Coca-Cola is a type of carbonated soft drink that sold world-widely at most of the

restaurant, stores and vending machines. Coca-Cola also known as Coke is a common

drinks that being served at any party, dinner or even gathering. It is a must have itemfor parties except for alcoholic drinks. Coca-Cola is originally invented as a type of

medicine, with filtered water and sweetener, in the late 19th

century by John Pemberton.

When a businessman by the name Asa Griggs Candler find out that Coca-Cola can be a

good potential product to be selling as soft drink, he bought over Coca-Cola. With his

marketing tactics, Coca-Cola has now dominant the world as the best-selling soft drink

throughout the 20th

century.

Coca-Cola Company then come out with few products such as Diet Coke,Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero,

Vanilla Coke and special versions with lemon and lime flavour. On top of all the

subsidiary products, the original Coca-Cola stills the best seller among them. In this

assessment, we will focus more on Coca-Cola Zero as this product is not available in

most of the countries.

The launch of Caffeine Free Coke Zero is part of a broader strategy designed to

make the fast-growing brand even more ubiquitous and available to consumers at any

time throughout the day. Coke Zero has become increasingly visible in recent years

through a variety of high-profile marketing initiatives.

Problem Statement

We found that there are 3 problems that we need to put under consideration as this

product is facing difficulties in generating substantial profits to the company. We need to

identify the problems so that we can improve and make modifications on the product to

change the consumers perception on it. The 3 problems that occurred are from the

ingredients used, advertising activities and through the distribution channel.


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2. Competitor Analysis

How do we identify Coca-Cola Companys competitor? There are two methods

which we can use to identify the competitor. The two methods consist of primary sources

and secondary sources of information collection. These two analyses are dependent to

each other especially for secondary sources. Most of the secondary data collected were

originated from primary sources.

There are six ways of collecting primary sources which are through investment

bankers, sales force, suppliers, customers, employees and consultants but we only focus

on a few of them. Customers are the most important entity in an organization as they are

the sources of profit to an organization. Their valuable comments are important for an

organization to keep track of their preferences and because of that we will know who is

catching up right behind us. Furthermore, employees also play a heavy role in measuring

the closest competitor to our product. This is because the employees know very well

about their own product and with that, they could observe the changes in price, packaging

and shelf display of the competitors products in the market.

On the other side, secondary sources consist of fifteen ways to collect data, which

are internal sources, local newspaper, annual reports, patent filings, 10Ks, business press,

government, electronic databases, news release, trade associations, promotional literature,

internet, trade press, consultants and customer communications. From local newspaper

data collection, we can see how the other organizations advertise their products and are

they similar to what we advertise on our products. If they are the same, how about the

price they can offer? By collecting brochures from the competitor, we can trace the

competitor of the same product on their promotional strategies. With such information,

we can have the details about how the product is being positioned. Most common use of

way is through the electronic data services or websites. This is a convenient way tosearch on the latest updates on the competitors product and promotional activities as

nowadays, anyone could online at anywhere and anytime.


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Through these two ways, we can know that the highest potential competitor to

Coca-Cola Company is the PepsiCo. This is because their product, Pepsi, is almost the

same product that Coca-Cola Company is selling only with a different brand name. By

using secondary data collection, we can see that PepsiCo has come out with a product

with the name Pepsi Max to compete with Coca-Colas product, Coke Zero. Here is a

part of article retrieved from NBC News:

Coke Zero sales grew by 11 percent in 2011, the fifth year in a row the product

pulled down double-digit growth figures. Pepsi Max debuted in 2007 as Diet Pepsi Max.

Two years later, PepsiCo dropped the word "diet" from the name and the drink hit a

billion dollars in annual sales.

Both companies are targeting men in an effort to keep this momentum going, with

ads like the Pepsi Max Super Bowl commercial, and Coke Zero's tongue-in-cheek

campaign to make the day after the Super Bowl a national holiday. (C.W. Martha, 2012)

Besides that, we also found that, under PepsiCo, there is another product by the

name Diet Mountain Dew that also competing with Coca-Cola Zero. With this addition

product, Coca-Cola Zero now faces another competitor from the same company but

another product to compete in the diet drinks industries.

Assessing Competitors Current Objectives

Assessing competitors objectives is an assessment of current objectives

providing valuable information concerning the intended aggressiveness of the

competitors in the market in the future. What we can see from PepsiCo is that, they are

keeping up the pace to be the closest competitor to Coca-Cola Company in hope that they

can overtake Coca-Cola Company one day. There are 3 product objectives can be

identified:

Growth usually implies to increase the market share of a certain product and

profits are placed on the second place. In which PepsiCo is promoting its name through

sponsorship event and community services to bring up its name rather than just focus in

generating profits. Brand name is important for a product to sustain in the market.


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Hold is also termed a consolidation objective. To prevent any losses of the

product as its market share value is dropping; a company must stop to promote the

product any further. It might cause a reverse effect. For example, Diet Pepsi Max is

losing its market share because of the word Diet. When they drop the word Diet from

the product, its sales increases greatly.

Harvest is also been called milking. It describe a situation in which profits is

paramount relative to market share. Harvesting at the right time boosts the market share

so as the profits. These two elements are relevant to each other, by improving one of this

will also bring up the other.

Assessing Competitors Strategy Employed

Fulfilling this step includes doing research in competitor analysis to determine

how competitors attempting of meeting their objectives. By assessing competitors

strategy, there are 2 components of marketing strategy can be used:

Target market selectionis also meant by segmentation. It is important to know

who your competitor is targeting. Coca-Cola Company needs to know the target market

for PepsiCo in order to have proper positioning for their product. If the target market

selected for PepsiCo is intense, Coca-Cola Company has to come out with better idea to

compete.

Core strategy also involves differential advantage. There are 2 types of

differential advantage, price/cost and product features. Price or cost is discussing about

when to give out a discount price and when to mark up their prices. For example, Coca-

Cola often has such promotion that, Buy 2 bottles for 1 bottle price scheme. Whenever

customers remember of this promotion they will be remind of Coca-Cola. This is a good

way to position its product in customers mind.Product features touches on the quality ofthe product. So, it is important to maintain the quality of the Coke Zero and make sure

every can or bottles taste the same. If the taste is better, in customer opinion, they will

always go back to the same product rather than other products. This is the human nature.


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3. Customer Analysis

Coca-Cola Zero is a low-calorie (0.50 kilocalories per 150ml) variation of Coca-

Cola specifically marketed to young adults and teens. "Real Coke taste, zero calories" is a

message that created by Coca-Cola Zero in order to spread the concept of Coca-Cola

Zero is the taste of Coca Cola but with no calories.

In today's society, people are looking to lead better; healthier lives are gradually

increasing. Therefore, we promote the Coca-Cola Zero, which gives an additional

selection to consumers. In addition, young people today do not want to compromise on

flavor or calories and we think Coca-Cola Zeros taste and personality will attractive to

them. A real Coca-Cola taste, zero calories and a new brand they can call their own is

what young adults wanted today.

Coca-Cola Zero is exactly what young adults told us they wantedreal Coca-

Cola taste, zero calories and a new brand they can call their own, said Dan Dillon, vice -

president, Diet Portfolio, Coca-Cola North America. Young people today do not want to

compromise on flavor or calories and we think Coca-Cola Zeros taste and personality

will appeal to them.

Coca-Cola Zeros personality will be different than any of our other brands,

and our marketing will reflect that with some fresh ideas we havent triedbefore, said

Christine Holland, director of marketing.

Therefore, we focused on a target market, based on specific psycho-graphic

characteristics, consumers that are health conscious and interested in buying products to

support their overall wellness.

For the Coca-Cola Zero, we concentrate on certain demographic characteristics of

the population. The characteristics we consider include age and family. For other

demographic considerations such as, education and ethnicity, we are less concern, since

this does not affect the popularity of Coca-Cola Zero. Coca-Cola Zero is affordable for

most people who want a healthier alternative to carbonated beverages.


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4. Marketing Strategy

4.1. Product Decision Strategy

Successful product decision strategy enables an organization to enhance

coordination among its functional areas, defines how resources will be allocated and

leads to a superior market position.

Product modification will be used as the product decision strategy due to the

product that we had chosen had a low level of sale. Product modification contains three

categories, which are clearly better, different and inferior. We are going to use different

modification in modifying the existing Coca-Cola Zero. Different modification means

styling and or ingredient change that is likely to appeal to some customers and less to

others.

From the research, we found out that Coca-Cola had used one of the most toxic

ingredients in Coca-Cola Zero which was called as Aspartame. Aspartame has been given

the go signal as an artificial sweetener. Studies of aspartame have been linked with birth

defects, anxiety, depression, methanol toxicity, memory loss, headaches, blindness and

death. In order to gain back customers trust in buying Coca-Cola Zero, Coca-Cola

Company has to replace Aspartame with Sucralose. Sucralose (Splenda) is the latest

artificial sweetener. Approved for use in the United States in 1998, sucralose has now

been approved for use in over 80 different countries. According to the Centre of Science

in the Public Interest study, sucralose is classified as safe. None of the study participants

complained of bad side effects, and the rate at which this sweetener has been approved by

other countries appears to suggest the sucralose is safe for human consumption. In

addition, the taste of Aspartame is same with Sucralose. Hence this change of ingredient

does not affect the taste of Coke.

Besides removing the toxic ingredient, Coca-Cola Company should add some

values to its Coca-Cola Zero, due to the competition for diet drinks become condense.

For example, add some supplements that could increase energy supply into Coca-Cola

Zero, such as sodium bicarbonate. Sodium bicarbonate can reduce the pain caused by the

lactic acid accumulation after hard exercise.


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Furthermore, Coca-Cola Company can also redesign the packaging of Coca-Cola

Zero. By changing the design of the bottle to a smaller size, it would be easier to be

carrying around. In addition, this small size of Coca-cola Zero will reduce the cost and be

perceived as cute and attractive. By removing the toxic ingredient, add in supplement that

able to increase energy level, and redesign of packaging, Coca-Cola Zero will become a

newly modified diet and isotonic drink. Hence, during the introduction phase, we need to

position a new image of Coca-Cola Zero as a safer diet and isotonic drink. Advertising

and promotion are necessary for creating awareness of customers towards modified

Coca-Cola Zero. Hence, Coca-Cola Company should give the new samples of Coca-Cola

Zero for customers to taste and advertise it through different media channels.

Besides, there are two well-known options: skimming and penetration. A

skimming strategy is useful when the cost structure of the product is largely variable

costs. However, the penetration strategy is more appropriate when fixed costs are high.

Coca-Cola Company could use skimming strategy since the entry barrier is high.

Skimming strategy also means charging a high and reasonable initial price for Coca-Cola

Zero to the customers. Since this modified Coca-Cola Zero is seen as a first-mover

product for Coca-Cola Company in the soft drinks market. For example, a tin of 330ml

Coke Zero can be charged 5% higher to RM4.10. Hence, the high margins can then be

used to fund investment in research and development.

Early growth is the phase just following the introductory phase. Late growth is the

phase in which the rapid increase in sales begins to flatten out. The options relate to the

products position in the market are to be a leader or a follower. The follower could

choose to exit quickly or content to be a strong number two or three by fortifying its

position. As a leader in the market of soft drinks, Coca-Cola Company could choose to

fight and keep enhancing the value of Coca-Cola Zero such as improve its ingredients.

During the maturity phase, the sales flatten out and relatively few new buyers

enter the market. The general strategies are similar with those in growth markets. Another

alternative is to harvest the product. For example, Coca-Cola Company can harvest

Coca-Cola Zero by setting an objective of gradual share decline with minimal investment

to maximize short-run profits.


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4.2. Pricing Decision Strategy

The decision about how much of the customer value minus cost gap to keep or

give away is manifested first in the general pricing policy the product manager pursues.

Customers (e.g., their value for the product and your brand), competitors (e.g., cost, theirpricing action) and category conditions (e.g., stage of the product life cycle) all impact

the product mangersselection of what price to charge.

Like brand or product objectives, a price objective is a guide for more precise

decision making. Skimming is appropriate to be used for Coca-Cola Zero. In other words,

Coca-Cola Zero could be charged at the highest initial price that customers will pay since

Coca-Cola Zero is a newly modified diet and isotonic drink. For example, a tin of 330ml

Coke Zero can be charged 5% higher to RM4.10. As the demand of the first customers issatisfied, Coca-Cola Company can lower the price to attract another, more price-sensitive

segment. This is because Coca-Cola Zero as a newly modified diet and isotonic drink,

there is a little chance of competition in the near future. In addition, the cost is not related

to volume and managers thus are less concerned about building significant market share.

However, the higher the price is set, the higher the margins, thus the greater chance that

competition will occur.

Since Coca-Cola Zero is a newly modified diet and isotonic drink, during theintroduction phase, there are three pricing tactics that could be used to increase the sales

of Coca-Cola Zero. First approach is price bundling, which takes a set of products, offers

them to customers. This usually prices the package lower than the sum of the individual

components. An alternative approach takes the opposite view such as sometimes the

bundle can be priced higher than the sum of the components. For example, customers

who computed the sum of Coca-Cola Zero with gym towel could find that he or she is

paying a reasonable sum for the package. Clearly, such a bundle provides extra value to

customers and can be priced accordingly.


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Second tactic will be the periodic discounting. In short, this pricing strategy varies

price over time. Periodic pricing is appropriate when some customers are willing to pay a

higher price to have a product during a specific time period. Coca-Cola Company can

change Coca-Cola Zeros price at different period of time. If there is a festival coming, a

special discount of Coca-Cola Zero could be given to the consumers. This is because

customer will tend to purchase no-calorie drinks, even better choice for a diet and

isotonic drink like Coca-Cola Zero, since they will consume a lots of calories food during

the festival. This pricing strategy can stimulate the sales at that particular period of time

and earn a large amount of revenue in return.

Third tactic that we applied is the hidden price increases. Whether due to the

increase of competition which keeping the lid on prices or restricted customer budgets,

during periods of recession, it is often hard for a product manager to raise the price of the

product. In order to maintain the profit earned, a manager often look for ways to raise

prices without explicitly increasing the posted price. For example, Coca-Cola Zero can be

designed to a smaller size. Its image can be enhanced by perceiving as cute and reduce

cost.


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4.3. Advertising Decision Strategy

One of the products under The Coca-Cola Company, Coca-Cola Zero is a sugar-

free beverage and its target audience is targeted for those young adults and teens that

want to have a taste of the Coca-Cola but do not want to get the calories that come with

the normal Coca-Cola. They can only get sugar free from the drink which is sweetened

with Sucralose and the Coke taste. There are several types of objectives but the objective

for the Coca-Cola Zero is customer-focused objectives which are used to increase sales

and profits since the product is facing difficulty in generating profits to the company.

Therefore, we plan to spend a large amount of money on advertising segment. Besides

that, we also expect that we able to get a return of increased customer demand for our

product through advertising. We believe that this action able to gain attraction from the

target audience and makes them aware of the particular product among various products

that available in the market. As a result, the customer demand will be increase as the

increase in awareness of customer. This may lead them to purchase the Coca-Cola Zero

for their own after approached to those advertisements which will cause an increase in

sales and profits for the company.

. In media selection, we recommend that we should advertise in many forms of

vehicle like television, radio, internet, and print media. This is because not every form of

vehicle can fully deliver the messages to the desirable audience. We found out that

advertising through radio cannot let our desirable audience to see the people how they

enjoy the drink or more details about the modified drink due to the limited time for the

radio broadcasting. Therefore, we need to advertise in other forms such as run a

commercial on TV channels commercial break and advertise on those print media that

most read by desirable audience to fulfill these deficiencies. Besides that, we also get

some information that nowadays young generation spends a lot of time on surfing the

internet. We also can approach to our target audience by using this way.

Young generation watch to television programs during their free time. So, we can

give some relative information to the target audience about what we have modified to our

product by using this form of vehicles. We have selected 8TV and Astro as television

channels for advertising our modified Coca-Cola Zero. As we observed, these two


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television channels are kind of popular among young generation in Malaysia. Therefore,

we have higher chance to approach to our target audience if we promote our modified

Coca- Cola Zero in these two television channels. We may able to create awareness from

them. We realized that our target audience is likely to listen to the radio channel during

on the way to school, campus, or even work. Therefore, we have selected My FM and

Hitz FM which are one of the popular radio channels in Malaysia to promote our newly

modified Coca-Cola Zero to the target audience. By using radio channels, we can create

an imagination of opening sound of Coca-Cola Zero glass bottle and the people who

drink will release a satisfied sound after drank it for the audience. They may interest to it

after listened to the radio broadcasting and lead them to make a purchase to try.

Besides that, our modified product will be promoting on Facebook, Twitter,

Youtube, and also Instagram these popular social network websites through create an

interaction with target audience by using internet since we knew our target audience also

use this media. Therefore, we will create official fans page or official account on these

social network websites. We can promote our product on these websites without a single

charge on it which means it is free. We also can build relationship with our target

audience and gain some feedback about this modified product from them directly. The

audience can get to know of our lately promotion or events for this product if they had

liked or followed our fans page or account on these websites.

Lastly, we also promote our product on print media which include local

newspaper and magazines. Through the print media, we can put images along with words

inside our advertisement to advertise our product. This can increase the attractiveness of

advertisement from the audience and create awareness from them. We can highlight our

modified product with change from Aspartame to Sucralose in advertisement in order to

make audience to be aware of this change. Audience can go through more detailed

information that related our product, it could be included promotion or even contests

information. In the advertisement, we will show a group of young people drink Coca-

Cola Zero with a satisfied look and joyful facial expression which may attract to our

target audience to purchase our modified product. We are selected to advertise in TheStar

and China Press of local newspaper, and Mens Health magazine and Female magazine.


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4.4. Promotion Strategy

Under promotion objectives, there are two different categories which are

objective of final customer promotion and objective of trade promotion. For final

customer promotion, our objective is to generate awareness from our target audience. We

need to change and improve the customers attitudes in order to make them try and

purchase our modified Coca-Cola Zero. While for trade promotion, the objective is to

increase the stocking levels and the sales efforts of the Coca-Cola Zero from the retailers.

Besides that, we also hope that we can build a good relationship with the retailers.

In final customer promotion, we plan to include the customer promotion like

product-based promotion, price-based promotion, premiums, sponsorships, and games.

For product-based promotion, we plan to put additional volume of 20% in 325ml and 25%

in 1.5L of Coca-Cola Zero to attract and stimulate existing Coca-Cola customers and

target audience to purchase and have a try for this product. As we know, many customers

are tend to purchase a certain product if they know there are some extra for that product.

Besides that, we also plan to give Coca-Cola Zero sample at the supermarkets, drug

stores, discount stores, convenience stores, and variety stores to let the customers to have

a taste on it. It may help to stimulate some intermediate sales if they found out that they

actually like the product after having the first taste of it.

Another customer promotion which is price-based promotion, we try to distribute

coupons to our target audience, existing customers, and also other potential customers by

attaching the coupons at the products which under The Coca-Cola Company. With the

coupons, they can claim a free can with 325ml of Coca-Cola Zero at the nearby

supermarkets, drug stores, discount stores, convenience stores, and variety stores. So,

when they go again to these stores, they can claim the drink conveniently from the

counters after they done purchasing and made payment at checkout point. So, they can

purchase the Coca-Cola Zero next time at the stores if they like the drink after tried that

can of drink.


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Premiums are another type of customer promotion. We plan to launch some

special and limited edition of glass bottle of Coca-Cola Zero. This action may attract the

attention and create awareness not only from target audience but also the public. They

may stimulate to purchase the drinks and some of them might collect this special glass

bottle in his or her collection. We also can promote our beverage via word-of-mouth of

public because of this special and limited edition of glass bottle of the drink.

We also plan to doing some sponsorships to some sport events which able to

reach to our target audience effectively. The sport events that we plan to sponsor are

StarWalk and International Run and these two sport events have many young adults and

teens to participate in. We provide our drinks to those participants and it can be reach to

them directly. Besides that, we also plan to provide some cash prizes in order to attractmore young adults and teens to join the events. Games, contests, and sweepstakes are

also other types of promotion. Customers can join these activities after purchase the

drinks and showed the proofs to the relative parties. If we can create some creativity and

innovation games and contests for the customers, we may earn some extra publicity and

exposures which is related to our products with free of charge on magazines, newspapers

or even TV news because of this.

In trade promotion, we plan to provide our retailers the promotions like product-

based promotion, price-based promotion, advertising and promotion-based promotion,

and sales-based promotion. For product-based promotion, we provide free goods to the

retailers. If they take every 100 boxes of Coca-Cola Zero as their stocks, we will free

another 3 boxes of drinks as free goods for them. This promotion able to encourage them

to take more stocks and this is lead to increase our sales. Besides that, we also provide

generous return policies to the retailers to attract them to take large amount of Coca-Cola

Zero to sell in their stores. They are promised to fully refund for their unsold drinks. The

return policies help them in reducing the risks and costs of carrying the stocks.


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Another promotion which is price-based promotion, we are give discounts of 8%

to the retailers if they buy every 50 boxes of Coca-Cola Zero in one time. We also

provide them a longer time period to clear the payment which extends to 1 month. This

will help them to reduce financial burdens and we also able to attract them to sell our

products in their stores.

Under advertising and promotion-based promotion, there is includes the providing

of selling aids to the retailers. We will provide the beverage display refrigerators with the

Coca-Cola Zero logo for the retailers to let them sell our drinks in their stores. With the

beverage display refrigerators, the retailers are able to reduce the costs of buying the

refrigerators to store the drinks and they can easily to sell them to ultimate customers.

Lastly, we also plan to have sales-based promotions to our retailers which are

bonuses and incentives are provided to the retailers. If retailers able to meet or exceed the

sales quota of Coca-Cola Zero with every 200 boxes, then we will give them RM 150 as

rewards. Through this reward system, we can motivate the retailers to put efforts in

promoting and selling our drinks to the ultimate customers. We also can build a good

relationship with retailers through these trade promotions.


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4.5. Distribution Channel Decision Strategy

The Coca-Cola Companys major strength aside from its product features and

benefits is the large-scale operation it possesses that is widely distributed across 200

countries worldwide. Because Coca-Cola aims to be the number one when it comes

through product choice around the world, the company is very keen in developing its

system of distribution to keep satisfying customers. As Coca-Cola Zero being a part of

the Coca-Cola Company, this makes it easily reach to all marketers worldwide. A

channel of distribution is the path or route along which goods move from producers to

ultimate consumers or industrial users. In other words, it is the distribution network

through which Coca-Cola puts their product in the hands of actual users. Their channel of

distribution includes the original producer, the final buyer and any middlemen-either

wholesaler or retailer.

The availability of Coca Cola's products is second to none. Coca Cola's brands

can be found almost everywhere where consumers need a drink such as in fast food

companies found all over the world (e.g. McDonalds), in all supermarkets, convenience

stores, public houses, restaurants, bars and night clubs, sports stadiums, airlines and many

more. But as for our product which is the Coca-Cola Zero had been missing in their

normal product line in Malaysia. Product availability is an important objective for all

distribution channels. The appropriate degree of availability varies with the

characteristics of the product and the target customers, particularly the products

importance to those customers and the amount of time and effort they will expend to

obtain it. For example, consumer convenience goods, such as Coca-Cola Zeros demand

immediate availability since most customers are unwilling to devote much effort to

obtaining a particular brand.


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Furthermore, given its vast size and poor infrastructure for this product, the

Malaysian market does not support conventional distribution and retail networks used in

the more advanced economies for Coca-Cola Zero. The retail vending outlets tend to be

small and are decentralized, and Coco-Cola has had to evolve a more innovative

approach to support its operations. For instance, as we know Coca-Cola is packaged in

plastic bottles and can but as for the least vending of Coca-Cola Zero are packaged in

glass bottle which is prone to break during distribution, thus we should synchronize the

packaging method.

Coca Cola Zero is suggested to be used in two distribution channels that are direct

and indirect selling method. Direct marketing allows consumers to buy products by

interacting with various advertising media without a face-to-face meeting with a

salesperson. They provide the products to shops by using their own distributing means.

They have many vehicles for transport. In Malaysia they have almost 450 vehicles to

supply their bottles and cans, but they target more on the other type of product which is

Vanilla Coke and Diet Coke. Retailers here include grocery stores, hotels, universities,

and other large institutions .In this type of selling company have more profit margin.

They should give Coca-Cola Zero an equal target to obtain successful marketing

outbreak.

On the other hand, the indirect selling, the company has distributors. This happens

when intermediaries are inserted between the producer and consumers and perform

numerous channel functions. The fact that we have distributors is because it is hard to

cover the entire world by their own. Coca Cola Zeros distribution channels should

include in vending machines, retail outlets, fountain retailers and wholesalers, and other

distribution channels that supplies home and immediate consumptions. As per vending

machine, we should increase the number of vending machine into various locations, such

as healthcare center, gym and sport complex and all other public interest places. This will

not only create awareness about our product but will also boost the sales.


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Coca-Cola Zero should distribute their schemes according to area. Coca-Cola

uses full range of distribution methods depending on the sub-market requirements. Coca-

Cola Zero should use small retailers spread across the Malaysian landscape to generate its

sales volumes. It has substantial reach in the urban areas, however does not have the

same reach towards rural and this once again establishes the potential for Coca-Cola

Zeros expansion into a vastly untapped market.

In the remaining urban and Semi-urban areas, where the large proportion of retail

outlets are small neighborhood restaurants or bars, corner stores, one-person kiosks,

Coca-Cola Zero have to adopt a manual delivery approach working with small-scale

distributors to deliver products to small-scale retailers. This approach is called the Micro

Distribution Center (MDC) model. This model is largely used in Africa and it should be

brought to Malaysia and particularly for Coca-Cola Zero. Area or place where soft drinks

sold in a large manner, on those place company gives good schemes to shopkeeper and

retailer. Place like railway station bus stand are consider in this category and place which

have low selling where company gives small schemes to shopkeepers. All the soda

brands are marketed in the common channels of distribution except in the exclusive retail

venues that companies bid to have.

In supermarkets, Coca-Cola Zero should be sold side by side in the display shelf

not giving a single brand any edge relative to the buyer. The rivalry over the channels of

distribution was elevated to obtain exclusive selling contracts in restaurants, places for

vending machines, recreation areas, and popular events. This will boost up the sales of

Coca-Cola Zero.

For logistics support, delivery trucks numbering around large cities should be

increase in the sales centers to cater to retail orders. This will create efficiency in dealing

with the large amount of Coca-Coca Zero stock needed in stores. Apart from its owndistribution centers, Coca-Cola Zero could make partnership deals with large wholesalers

with valuable experience in the area of retailing and independent wholesalers able to

reach out to local communities.


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5. Sales Forecast and Potential Budget

Potential Budget

No. Types of budget Budget amount (RM in

thousand)

1. Production budget

-Research cost (15%)

-Direct materials cost (35%)

-Direct labor cost (30%)

-Manufacturing overhead (20%)

1100

2. Advertising budget

-Radio advertisement (RM27,800)

-TV advertisement (RM850,000)

-Newspaper advertisement (RM5,000)

-Magazine advertisement (RM21,000)

903.8

3. Promotion budget

-Final customer promotion (48%)

-Trade promotion (48%)

- Sponsorship (4%)

920

4. Distribution budget

-Transportation cost (35%)

-Storage cost (20%)

-Delivery cost (30%)

-Tracking distribution cost (15%)

850

5. Operation budget

-Fixed cost (60%)

-Variable cost (40%)

1250

Total 5023.8


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The table above shows the potential budgets we estimated for the cost of

implementing the strategies which we mentioned before. There are five types of budget

we have formed, which are production budget, advertising budget, promotion budget,

distribution budget, and operation budget. As what we mentioned in the product strategy,

we are going to replace the toxic ingredient of the existing Coca-Cola Zero, Aspartame to

Sucralose, which is the latest artificial sweetener. We estimated that the production

budget for this strategy to be RM1.1 million, the total expenses include 15% of product

research cost, 35% of direct material cost, 30% of direct labor cost, and 20% of

manufacturing overhead. We increased the budget of product research cost by 10%

because we need to pay the research team from Coca-Cola Company in UK to conduct

the research to improve the product quality so that we can produce a better product that

will attract Malaysian consumer.

The second type of budgets is advertising budget. We planned to promote our new

version of Coca-Cola Zero through radio advertisement, television advertisement,

newspaper advertisement, magazine advertisement, and sponsorship. The radio

advertisement cost can be divided into two parts, which are advertising strategy and

creative development, and media planning and media buying. Our budget for radio

advertisement development is RM800 while the budget for media planning and media

buying is RM27,000 as the market rate for radio advertisement is RM6000 per week for

first week and the charges for following weeks will be half of the first week price. We

decided to make the duration for radio advertisement in 2 months. The total budget for

radio advertisement is RM27,800. The budget we made for television advertisement is

RM350,000 for cost of advertisement production and RM500,000 for cost of airing it.

Therefore, the total budget for television advertisement is RM850,000. We planned to put

our product advertisement on newspaper as well, such as The Star newspaper. The budget

for this newspaper advertisement is RM5000 in full page. Besides, another advertisementwe will use is magazine advertisement. We will advertise our product at Mens Health

magazine and Female magazine which are the magazines that most of our target customer

read. The budget for this advertisement is RM1000 for designing cost and RM20000 for

the fees of advertising in these two magazines. Therefore, the total budget for

advertisement strategy of Coca-Cola Zero is RM903,800.


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The third type of budget we set is promotion budget. We planned to offer many

types of promotion to our customers and retailers in order to increase the sales of Coca-

Cola Zero. There are two types of promotion we are going to provide, which are final

customer promotion and trade promotion. The total budget for promotion strategy is

RM920,000. The budget of final customer promotion is the 48% of the total promotion

budget, which includes the budgets for product-based promotion, price-based promotion,

premium and games. The 48% of the total promotion budget is the budget for trade

promotion. It is also including the budget for product-based promotion, price-based

promotion, advertising and promotion based promotion, and sales based promotion.

Lastly, the sponsorship for events like StarWalk and International Run we estimated the

budget to be the 4% of the total promotion budget.

The forth type of budget we formed is distribution budget. Our distribution budget

includes transportation cost, storage cost, delivery cost, and tracking distribution cost.

Our total distribution budget is RM850,000 which contains 35% of transportation cost, 20%

of storage cost, 30% of delivery cost and 15% of tracking distribution cost. We increased

the transportation cost by 8% and delivery cost by 10% because we decided to increase

the number of trucks and distribute our product to more places so that we can reach more

customers in different places.

The last budget of our strategies is operation budget. The operation budget is set

at RM1250,000 which consists of 60% of fixed cost and 40% of variable cost. The fixed

cost includes the rent, bills, utilities, staffs salaries, office equipment and suppliers,

insurance and cleaning suppliers. While the variable cost includes indirect overhead cost

such as uniforms, cell phone services, express mail and hiring temporary worker.


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Sales Forecast

According to Tim (2005), sales forecast is the backbone of a business plan.

People use sales to measure a business and its growth, and the sales forecast sets the

standard for expenses, profits and growth. There is no perfect way to forecast sales, what

we need is common sense, research of the factors, and motivation to make an educated

guess. Our forecast will show sales for the next 12 months in Malaysia.

Table 1.0 Sales forecast of Coca-Cola Zero in 2014

Months Unit sales forecast Price forecast (RM) Sales Forecast (RM)

January 2000 2.50 5000

February 3500 2.50 8750

March 5000 2.50 12500

April 6800 2.50 17000

May 7500 2.50 18750

June 9000 2.50 22500

July 10000 2.50 25000

August 12000 2.50 30000

September 12000 2.50 30000

October 11000 2.50 27500

November 10500 2.50 26250

December 12500 2.50 31250

Total 101800 254,500


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Table 1.0 shows the sales forecast of Coca-Cola Zero in year 2014 in Malaysia.

As you can see, the sales forecast for January is gradually increasing from RM5000 until

RM25000 in July. This is because the first two months is the period of new launching of

our product and also the new release period of our advertisement. During this

introductory stage, there is a type of customer who would most likely buy the new

product, they are innovators, who willing to try and purchase the product early in the life

cycle. The advertisements are only able to raise awareness among consumer, they still not

able encourage people to take action to buy it. Therefore, the sales at the first two months

are expected to be lower. After the advertisement has launched for two months, they start

to influence the consumers to think of Coca-Cola Zero when they are looking for a drink,

and consumers would rely on word of mouth from other purchaser and are more willing

to give a try on this new product. Hence, the sales start to increase until July and reach

the peak sales in August and September. This is called growth stage. However, the sales

after September were forecasted to drop because there are many customers have tried the

Coca-Cola Zero, some of them may repeat purchase but some of them will not repeatpurchase. We forecasted that the sales on December will reach another peak level due to

seasonal factor which is Christmas. Many people will purchase drinks to celebrate this

special day with friends and family and there are many parties will be organized during

this season. Therefore, the sales of Coca-Cola Zero will increase on December.

0

5000

10000

15000

20000

25000

30000

35000

January

February

March

April

May

June

July

August

September

October

November

December

Sales Forecast (RM)

Sales Forecast (RM)


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Market potential estimates are also a very important part in business planning

because it can help company to improve sales performance better in future. In fact,

market potential estimates have many different uses. The first major use of doing market

potential estimates is to make resource level decisions. Company can make proper

allocation decision and prepare enough resources to cope with future customer demand.

For example, UTAR president has forecasted there will be a large amount of students

studies in UTAR in future, therefore he decided to build more buildings in campus so that

UTAR can cope with the large number of students in future. This can prevent company

from losing sales due to insufficient resources. The second use of doing market potential

estimates is to set objective and evaluate performance. Market potential estimates

provide a standard to try to achieve. When the actual sales fall below the forecast sales,

company can try to find out the reasons and seek ways to fix the problems like change in

market strategy and programs. For example, sales managers use market potential in two

ways. First, sales territories are often designed to have equal market potential so that

different salespersons can be better judged on the basis of actual sales. Second, sales

quotas are often set based on the potential sales in a territory.


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6. Conclusion

As the conclusion, we can conclude that Coca-Cola Zero or also known as Coke

Zero is facing difficulty in generating profits for its company. The problem that occurred

is the ingredients used in the drink, which is the toxic artificial sweetener with the

scientific name, Aspartame. The solution to this problem is by changing this toxic

ingredient to a substance called Sucralose. With this change, healthier drinks can be

created and more customers will be attracted to this selling point.

Besides that, the second problem is the advertising activities. There are

insufficient exposures to many developing countries and only certain countries get to

enjoy this product. Although how good is this product, we still doesnt have the chance to

taste or even try theproduct because we cant access to it.

The third and the last problem will be the distribution channel. Coca-Cola Zero

should be available in not just superstores but also in most of the urban area. This is to

increase the exposure to those who dont know the existence of this product. Well, Coca-

Cola is already a famous brand world-widely but not Coke Zero. Coke Zero can be

distributed to gym and health centres to increase the consumers quantity as now this

product is concern about health.

On the other hand, we found that the closest competitor to Coca-Cola Company is

the PepsiCo through competitor analysis with first and secondary data collection method.

PepsiCo also have diet drinks which are Pepsi Max and Diet Mountain Dew but with

those changes of Coke Zero, we believe we can overcome the sales of the competitor as

Coca-Cola is always the number one best seller in that industry.

Overall, through customer analysis, we have research and set on our target market

for Coke Zero. Coke Zero is a low-calorie and caffeine free product best sell for dietpurposes. Especially for men, this product is designed with the combination of black and

red colour makes it to look elegant suiting the preference of young men. This is the best

drinks to whom who pursue healthy lifestyle such as those who prefer working out. Coke

Zero also targeted to older generation and this drink is absolutely diabetes-free.


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In that case, on the advertising side, Coca-Cola Company has to increase their

advertising budget on the advertising activities for Coke Zero. Their total budget has to

divide more on this product rather than continuously advertising the other Coca-Cola

drinks. Moreover, they can add on sponsorships, commercials and funds to advertise the

product so that more customers will get to know about the benefits of having Coke Zero.

From this assignment, after all the researching and understanding, we all learnt

that Coca-Cola Zero is a very good product from Coca-Cola Company. It only needs

some touch up to enhance the product and it will be the top seller in the carbonated drinks

industry and health concerned industry. Moving on through 21st century, many

consumers are more concerned about healthy lifestyle and they are chasing after health

and safety products. Nothing is worth more than health, not even wealth. As the elder

said, although you gain all the wealth in the world but if you dont have the health, you

wont be able to enjoy the rest of your wealth.

Coca-Cola Zeros designation and packaging is beautiful. Its combination of

colours on its packaging is a love-on-first-sight product which is really magnificent and

elegant. Not only young men will be attracted to this product but young women as well.

Not to mention, it is a healthcare product, people will be rushing and queuing to grab a

can of it. With such development, we learnt that first sight impression is very important

to leave a good image of the product.

Furthermore, distribution channel is also one of the important issues that we learnt

about Coca-Cola Zero. The access the buyers or customers, we need a suitable strategy. If

Coke Zero is failed to distribute to these under-developed regions, they will not know

about this product maybe forever. These black areas, are not accessible through internet,

televisions advertising and rarely to see a radio as well. To increase the sales, it is

important that this product is distributed evenly to all the countries in the world. Bychanging the channel of distribution is one of the ways we can promote Coke Zero. We

must stay efficient and alert all the time to unable the competitor to forecast our

movement in the market.


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7. References

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Coca-Cola Atlanta. (n.d.). Coca-Cola History. Retrieved February 21, 2014, from

http://www.worldofcoca-cola.com/coca-cola-facts/coca-cola-history/

Coca-Cola Enterprises. Inc. (2012). Annual Report.Retrieved February 26, 2014, from

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well_case01.pdf

Coke Zero. (2010).Ingredients: Nutrition GDA-Coca-Cola GB. Retrieved February 23,

2014, from http://www.coca-cola.co.uk/brands/coke-zero.html

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tech_and_gadgets/t/teens-tune-out-tv-log-instead/#.UyQzA84_CAQ

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Mayo Clinic. (2012).Artificial Sweeteners and Other Sugar Substitutes. Retrieved March

1, 2014, from http://www.mayoclinic.org/healthy-living/nutrition-and-healthy-

eating/in-depth/artificial-sweeteners/art-20046936?footprints=mine

PepsiCo. (2013, October 21). Inside PepsiCos One For All, All For One SponsorshipStrategy. Retrieved February 28, 2014, from

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