Principles and practice of marketing

Principle & Practice of Marketing
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Question One
Over the past years, various companies have started making fundamental shifts from transactional marketing to relationship marketing despite various challenges to engage in relationship marketing (Carr, 2013, N.p). (First paragraph of the file named capture 4). Transactional marketing worked quite well many years back. However, with technological advancements and the current stiff competition in the market, various firms have made changes in their marketing strategies since a company needs to be on the top of the game in order to succeed in the highly competitive market (Sheth and Parvatiyar, 1995, 398). (Paragraph two, page 398 of file named article 1) Certain companies such as Coca-Cola have actualized this strategy by not only producing high-quality products but also handling customer relationships effectively. Relationship marketing puts emphasis on building long-term customer relationships and customer satisfaction. Transactional Marketing is considered a traditional marketing strategy that mainly concentrates on individual transactions by focusing on the single sale formula. The strategy pushes sales through promotions and mass marketing of the product. The approach is based on the short period with little emphasis on customer service. The approach includes return on investment, low-price competition, promotion and cost cutting among others. The price is one of the main factors of gaining the market share.

Today, various companies are making numerous efforts of building long-term relationships with their customers that will minimize the cost of attracting new customers. Companies have shifted to offering valued products to their customers rather than promotions and advertisements. Companies have started aiming at long-term relationships as well as customer’s contribution towards the business. Firms have realized that the best way of gaining a competitive edge over its rivals is to retain the existing customer for the company’s long-term benefits. Customer loyalty has been the key target as far as relationship marketing is concerned. As a result of stiff competition, companies face the biggest threat of losing their customers to their competitors. Various companies have therefore shifted to relationship marketing strategy because in the event an organization follows an effective relationship marketing approach, its customers are less likely to shift or switch to its competitors. Over the past years, companies have been focusing on customer loyalty having realized that it is one of the key factors that contribute to the survival of the company. Traditionally, customer relationship only involved few most powerful supplies but technology continues to transform the balance of power in the supplier-customer relationship (Bollen and Emes, 2008, p.17). (Paragraph five, page 17 of the file named article 3).
Companies have initiated a long action plan and highly targeted interactions to create a personal and customized connection with their audience. They have begun managing their customer relationships by empowering their management team to engage deeply in customer relationship initiatives. Various firms nowadays strive for long-term survival hence they develop business strategies such as relationship-based marketing to attain long-term success. They are determined to retain customers and not to overlook them. (Nwakanma, Jackson, and Burkhalter, 2011 p. 56). (Paragraph two, page 56 of file named article 2). They have adopted a culture of engagement which has changed how they interact holistically with every single customer.
Coca-Cola is a company that has been performing very well for over 120 years despite selling just a simple product. What the company sells is simply fizzy sugar water. How can that simple product be consistent in the market where there are other products? The answer is quite simple. The company has constantly invested in relationship marketing that has enabled it to achieve customer loyalty. The marketing campaigns of Coca-Cola Company have always revolved around attaching its brand to certain things that are dear to its customers and finding a special place for their brand at the core of who their customers are. The company’s relationship with its customers is one that is based on the principle of self-expansion. Therefore, the brand is not just a brand for many, but a dear friend. For instance, in America, the brand has been a patriotic symbol ever since the company began to support American Soldiers since World War two. The company was helping the military in times of adversity and soon became dear to the soldiers in the battlefield who missed their homes and children. To them, Coke was more than just a consumer product. The brand created great emotional value since it gave comfort to the soldiers while they were in a very unstable situation. Coke, also represented their nation as well as what they stood for. Such campaigns gave the brand a positive image in its home market hence creating a great sense of customer loyalty.
Coca-Cola touches its customers and also becomes part and parcel of consumers’ selves either through ad campaigns, or even sponsoring events like the FIFA World Cup, summer music festivals and other events. The company has consistently managed to associate itself with certain things that greatly matters to its consumers. For instance, this year (2016), the brand launched a certain marketing campaign in Colombia where the first-year students on their first day received bottles of coke. The caps of the bottles could only be opened by clicking together with another cap, encouraging students to collaborate when opening their bottles. The video of the campaign made great image associating the brand with positive emotions. The bond could even be much stronger for students who participated. The brand could be associated directly with the beginning of important friendships hence creating long-lasting memories. The success of the company can also be attributed to the marketing strategies that yield long-term success through customer loyalty. Coca-Cola is a brand that has grown to emerge one of the successful companies. The company has managed to achieve its success through strong as well as outstanding marketing management. The company connects with customers in a manner that other competitors don’t to achieve long-term success.
Question Two
Various business brands or companies have been left uncertain of how marketing budgets and sales will be affected following the UK’s choice to exit EU. However, a survey conducted after the referendum stated that the consumer confidence had fallen significantly (Gee, 2016, N.p). (Paragraph one of the file named Capture 5). It is an indication that the sales of various brands including that of Coca-Cola may fall which will call for various marketing strategies to restore the level of sales. One of the potential impacts of that exit on the marketing strategy of Coca-Cola Company is the increase in the company’s budgets towards digital channels of marketing. The company may begin considering altering their budgets for marketing for digital marketing such that bigger percentage is channeled towards digital marketing as well as premium publishers. Marketing experts anticipate that the market continue expanding by the end of 2016, and the long-term signs indicate that there will be more prospects for the growth of the digital sector, but the competition may continue to be tougher.
However, the current market environment offers strong branding opportunities for Coca-Cola Company that will enable it to take advantage of that and have a strong presence of the international brand in non-EU markets. For instance, during every recession, Coca-Cola has always made sure that are running their branding campaign by providing a great level of trust building and consumer engagement exercises (Tauqeer, 2016, n.p). (Paragraph two of the file named capture 3).
After the referendum, Coca-Cola Company may resort to franchising approach through definitive agreements. The brand may also adopt frantic efforts in order to become the strongest foothold in Europe. The outcome of the referendum is likely to influence renegotiation of terms of international trade hence policies involving tariffs as well as import duties are likely to change. Changes in terms of trade may result in the establishment of chain stores as well as distribution centers in various parts of Europe. The franchise system will enable the company to concentrate its bottling operations. The company may also adopt a corporate strategy to come up with a definite strategy through resource configuration. The company may seek to improve its corporate brand image by extensive engagement corporate social responsibilities. Coca-Cola may also take advantage of festival marketing as a result of decreased consumer confidence to build on its brand (Roderick, 2016, N.p). (Paragraph two of the file named Capture 6).
The other impact of that exit is the adoption of long-term marketing strategies. Coca-Cola is a company that has always aimed for long term success. The UK’s decision to exit EU may influence the company’s decision to employ the Ansoff approach of a strategic marketing tool. The approach links the marketing strategy of a business to its generic strategic course. The approach gives four growth strategies that the company may utilize to attain business growth especially in the event of uncertainty. The growth strategies include market penetration, development of new markets, development of new products that target the new market and finally diversification. The company gets credit for having penetrated various markets. The brand has also pushed itself to various existing markets segments. However, Coca-Cola has to deal with uncertainties that may unfold as a result of various political events. It, therefore, calls for diversification to improve or maintain the current market share in the region. Coca-Cola Company may use the approach as an important ingredient for the decision-making process. Ansoff approach is very critical in enabling the brand to get the right place at the right time and with the right product. Creating the right marketing mix will enable the brand to get acceptability in the market in order to make it the most preferred drink in Europe due to its affordability and availability.
UK’s decision to leave EU may lead to increased promotions, price changes, brand building and loyalty schemes for Coca-Cola Company. The increased promotions may be coupled with strong marketing and advertising besides extensive distribution strategies. The company may seek to improve its corporate brand image by extensive engagement corporate social responsibilities. The company may also consider market segmentation with regard to age groups, social class, and economic class among other ways of market segmentation. For instance, the age groups above 35 years prefer nutrition and in order to serve their interests, the company needs to provide food and bottled water to meet their demand. Coca-Cola Company gets the credit for ample knowledge and understanding of market needs as well as consumer behavior. The company has been able to achieve this through extensive market research. In the case of uncertainty created by UK’s decision to leave EU, the company is likely to embark on market research to deal with uncertainties and stiff competition in the market.
Considering the fact that UK has made a decision to leave EU, Coca-Cola Company is likely to relook their marketing strategies to stay relevant and gain market share. It may call for increased level of innovation besides adoption of emerging technologies aimed at bolstering its products. The company has benefited from innovations in the past and has helped it reap innumerable profits. Besides the diversification strategy, the company may also achieve growth via acquisitions in order to expand more. In a nutshell, Coca-Cola Company is likely to revise their marketing strategies as a result of UK’s choice to exit EU.
Question Three.
Coca-Cola Company has always had stiff competition with Pepsi hence its pricing cannot surpass too much or decrease too much compared to the prices charged by Pepsi Cola. In the event price of the Coca-Cola Company exceeds too much that of Pepsi then customers are likely to shift to the Pepsi. Just like any other company, Coca-Cola also has various pricing policies that the company relies on to come up with different prices for their different prices. The following are some of the pricing policies used by Coca-Cola Company.
Promotional Pricing Policy
The company also offers promotional prices more often. The brand is known to reduce its rates in certain occasions. For instance, during Ramadan, the company has a history of reducing the prices as a promotional tool. The company may aim at increasing sales and gaining customer loyalty during certain events by reducing its prices. In doing that, Coca-Cola Company normally ensures that prices are neither too low nor too high compared to prices charged by competitors. Charging very high prices will discourage customers from buying from the company and the customers are likely to shift to the company’s competitors. Tool low prices, on the contrary, may not help the company to generate enough revenue that will ensure the survival of the company. Charging too low prices may also prompt the customers to question the quality of the products and create a perception that the products are inferior. Consumers may get an impression that the quality of the product is low. Regular on-pack promotions at various retail outlets are normally available to attract customers to buy more and also to meet the objectives of the company.
Market Penetration Pricing Policy
In some area where the brand hasn’t dominated, the company may use this pricing policy to be able to penetrate areas new markets. For instance, in a certain economy like Pakistan, consumers tend to prefer products that are relatively low priced. One of the objectives of Coca-Cola Company is to target every single consumer. In such markets, the company sets prices at a certain level that no company can offer to its consumers. It is the reason why in some markets, Coca-Cola charges the same prices that are charged by its competitors. The company approaches a new market by lowering its prices in order to face competition and also to create brand awareness to the new market.
Competition Pricing Policy
Prices of Coca-Cola Company are set in line with the Target market. The prices of Coca-Cola are often set almost the same to that of its main competitors despite being a market leader. The brand often strives to be affordable and also to be perceived differently. The company has been consistent in their pricing strategy just like any other company that has been operating in more than one country. The company has had serious competitors that have made them to be sharper when it comes to pricing. For many years, Coca-Cola Company has made several pricing decisions, some which are made to respond to their competitor’s pricing decisions. For instance, Pensi started dropping their prices and shortly after that, Coca-Cola also decided to slightly lower their prices for some of their products in response to their competitor. In the event the brand has been strongly implemented and penetrated a certain market, it repositions itself as “premium brand” compared to various competitors. It creates an image or a perception of bringing intangible benefits to people’s lifestyle, happiness, moments of joy, and group affiliation.
Prices are set according to public demand of the product. The company operates in a free market where the law of demand and supply is allowed to influence the price charged. In the event there is high demand, the forces of demand will pull up the prices, and the opposite is true. It implies the prices of Coca-Cola Company are largely influenced by the market condition. The company sets the price that gives maximum revenue to the company. The company acknowledges the concept of shareholders wealth maximization. The company, therefore, sets prices that aim at maximizing the revenue of the company in order to maximize the wealth of shareholders.
Market Segmentation Pricing Policy
One of the main reasons why Coca-Cola exist in most parts of the world is the fact that the company considers every customer as a target. The company, therefore, uses pricing for market segmentation. The company acknowledges that various groups of people have different levels of income. The company, therefore, offers its products in various packages and sizes at different price levels that are affordable for middle-class, students and families among other groups of people. The company also carries out proper research on various target market to understand their attitude towards different price levels. It is because some groups of people prefer products that are low-priced. On the contrary, certain groups of people perceive low-priced products as inferior products. It gives the reason why the company sets its prices relatively lower in countries like Pakistan compared to other countries like Canada. Coca-Cola Company operates in more 200 countries worldwide (Anders, 2013, n.p). (Paragraph 6 of the file named capture 2) However, the company pursues different strategies with regard to prices. It acknowledges that potential customers differ from each other depending on different cultures and attitudes.
Geographical Pricing Policy
It involves varying prices based on the geographical location where is being sold (Paul, 2016, p.19). (Paragraph one in the file named Capture 1). Considering the case of Coca-Cola, the company also considers the geographical location when setting their prices. For instance, in Asia, people are fond of taking tea compared to soft drinks. In such geographical locations, the company has to come up with various pricing strategies in order to attract the customers to consume the product. Considering Coca Cola’s presence in China and the United States, the brand has almost reached maturity level in America, the country of origin while in China, the country has a great growth potential. However, the needs and habits of people from China differ hence that company employs different pricing policies in the event there is a need to gain significant market share.
Bibliography
Anders, J. (2013). Coca-Cola’s Marketing Strategy: An Analysis of Prices, Products and Communication. 1st ed. Munich: GRIN Verlag GmbH.
Bollen, A. and Emes, C. (2008). Understanding Customer Relationships. IPSOS, [online] 1(1), p.17. Available at: https://www.ipsos-mori.com/DownloadPublication/1216_loyalty_customer_loyalty_understanding_customer_relationships_052008.pdf [Accessed 24 Dec. 2016].
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Gee, R. (2016). 5 things which mattered this week – Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2016/07/08/5-things-that-mattered-this-week-12/ [Accessed 24 Dec. 2016].
Nwakanma, H., Jackson, A. and Burkhalter, J. (2011). Relationship Marketing: An Important Tool For Success In The Marketplace. Journal of Business & Economics Research (JBER), 5(2), p.56.
Paul, P. (2016). Marketing Strategies of Coca Cola. Mnav Rachna International University, [online] 1, p.19. Available at: http://www.slideshare.net/paulpinakk/marketing-strategies-of-coca-cola-1 [Accessed 24 Dec. 2016].
Roderick, L. (2016). Marketers must focus on ‘great work that brings business results’ following interest rates cut – Marketing Week. [online] Marketing Week. Available at: https://www.marketingweek.com/2016/08/04/marketers-must-focus-on-great-work-that-brings-business-results-following-interest-rates-cut/ [Accessed 24 Dec. 2016].
Sheth, J. and Parvatiyar, A. (1995). The Evolution of Relationship Marketing. [online] 4(4), p.398. Available at: https://pdfs.semanticscholar.org/e87d/4b120d11234ff2b4caba00bf7429138be384.pdf [Accessed 24 Dec. 2016].
Tauqeer, S. (2016). BREXIT’s impacts on digital marketing world | Audience Store. [online] Audience Store. Available at: http://www.audiencestore.co.uk/2016/10/06/brexits-impact-digital-marketing-world-programmatic-marketing/ [Accessed 24 Dec. 2016].