Coca+cola+product+life+cycle 536v26

Coca-Cola - The Beginning

Just for the taste of it

The history of Coca-Cola goes back to 1886 when it was invented by Dr John Pemberton, in Atlanta, Georgia, USA. According to legend, Dr Pemberton was trying to develop a revitalising tonic and produced a thick brown syrup that he carried down the street in a jug to Jacob’s pharmacy. It was sampled with carbonated water, pronounced ‘delicious and refreshing’ and placed on sale for five cents a glass as a soda fountain drink. In trying to develop the new product, Dr Pemberton’s partner and bookkeeper, Frank M. Robinson, suggested that two ‘c’s would look good in advertising and penned the now famous trademark ‘Coca-Cola’ in his unique script. The first newspaper ment for Coca-Cola appeared in the Atlanta Journal and invited thirsty citizens to sample the new refreshing soda fountain drink. During the first year sales averaged a modest nine drinks a day!

In 1888, John Pemberton sold his interests to Asa Chandler. Chandler formed The Coca-Cola Company in 1892 and by 1895 Coca-Cola was being drunk in every state across America. As demand for the product grew, production was increased and it was made available in bottles rather than just through the soda fountain. The opening of bottling plants in 1909 meant that all the elements were in place to launch a global brand. Little did Pemberton know the impact his mixture was to have on the soft drinks industry.

Launch of diet Coke Another way to extend a product through its lifecycle is to adapt it as consumers’ needs change. The example below illustrates how computer drives were developed to adapt to more technically advanced equipment. For diet Coke it was quite similar. It began in the 1970s when market research indicated that consumers’ attitudes to their diet and their

A total of 910 people are employed in Coca-Cola businesses in Ireland. The payroll to these employees is in the region of £15m each year. But this is only a fraction of the money that Coca-Cola contributes to the Irish economy. In addition to wages, Coca-Cola spends £50m on Irish raw materials and £25m on Irish services, such as marketing and transport. That represents £90m ploughed back into the economy by Coca-Cola each year. This case study will focus on the second key brand in The Coca-Cola Company, diet Coke. It will examine how diet Coke was developed, positioned in the marketplace and how the advertising for diet Coke has developed as the brand has evolved.

The Coca-Cola formula has always been a well-kept secret and has not changed through the years. In other respects, however, Coca-Cola has been constantly developing. This has been important in maintaining the brand in its number one position. It is quite natural for products to go into decline, at some stage, after being introduced into a market. This is known as the product life cycle. The trick is to delay this decline by constantly developing the product and or the brand, to extend its lifecycle.

When diet Coke was first launched in 1982 no one could have predicted the huge impact it was to have on the marketplace. The initial advertising campaign was carefully planned, with no expense spared – the introductory sixty-second commercial cost $2.5 million to make. By 1986 diet Coke was being sold in 61 countries with 60 million drinks sold everyday. It was a phenomenal success.

Brand Extension Strategy When companies with existing brands introduce new products under those brand names to the marketplace, this is known as a brand extension strategy. A brand extension strategy offers a number of advantages. A popular brand name gives the new product instant recognition and immediate acceptance. However, brand extension is not without risk. If the brand extension does not live up to the existing brand’s reputation then it could damage its image.

Today Coca-Cola is located all over the world. In Ireland they have concentrate factories in Drogheda and Ballina, and bottling plants in Dublin and Belfast. Here the concentrate is mixed with carbonated water, bottled and sold. These businesses work hard to quench the thirst of the Celtic Tiger so much so that Coca-Cola holds a 54% market share of the Carbonated Soft Drinks (CSD) business in Ireland.

Product Life Cycle

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Within an industry sector it is possible to plot the position of several similar products on a product life cycle diagram. For example, the diagram below shows the different types of drives that have been used in computers since the 1970s. You may not have heard of the 5” drive but that is because it is not available in most computers today. At the other end of the scale is a question mark because no one is quite sure what new drives will be launched next.

Diet Coke is an example of a successful brand extension because it has grown and established itself within its own right. Within a year of its launch it was the biggest selling diet soft drink in America and by 1987 it was the third largest selling soft drink of any kind in the world. What is happening here is that new products are created as the technology improves. What about the Coca-Cola brand? It has been around for over 100 years. How has it maintained its leadership position even though the product has not changed in over 100 years? The answer is that Coca-Cola are constantly developing the brand image and reinforcing the core product benefits of taste and refreshment to ensure that the brand grows instead of declining. One way Coca-Cola does this is to make the product more accessible, ensuring that it is always there to meet changing consumer needs. For example, you would probably never have tasted Coca-Cola if it had remained available only over the counter from a soda fountain. Once the decision was made to bottle the drink then it became possible to sell the product outside the main cities and indeed outside America. Years later the 330ml can continued the growth and development of the brand. The 1990s saw the introduction of the 500ml screw cap bottle and the 2 litre contour bottle was launched in February 1999. The lifecycle of the brand has certainly been extended by making Coca-Cola more accessible through new package forms.

health were changing. Coca-Cola conducted careful and extensive research and as a result identified an opportunity to develop a product that would meet these changing consumer needs. The identification by The Coca-Cola Company of this unmet need with consumers and the unique opportunity it represented heralded the launch of diet Coke.

Diet Coke is now the world’s leading lowcalorie soft drink, sold in a total of 149 countries with most of the sales being in the USA, Britain, , Canada and Australia. Northern Ireland has the second highest per capita consumption of diet Coke in the world. This is second only to the Cayman Island where the consumption of diet Coke is driven by the high tourist industry.

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Positioning diet Coke During a product’s life, a company will reformulate its marketing strategy many times in order to retain and drive consumer interest. Not only do economic conditions change but there are also new products being introduced by competitors. The product will also through different stages of buyer and consumer interest and rs must respond to this.

the key elements to be included in the ment that will appeal to potential consumers eg, music, humour, etc. ■

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Target Audience

Between 1990 and 1992 celebrities were used to endorse the brand. Demi Moore, Whitney Houston and Rod Stewart all appeared in diet Coke commercials during this time.

Diet Coke ments target both men and women. In the years immediately after the launch women in their twenties were targeted but once the brand was well established the age range was extended to females between 18 and 35 years of age. The male audiences for the campaigns are usually over 25 years of age.

A new product like diet Coke presents a particular challenge to the advertising department of Coca-Cola: How is it possible to position diet Coke so that existing sales of Coca-Cola are not affected and new growth is achieved?

Diet Coke Brand Personality

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1994 saw the launch of the first “Break” style commercial. Both men and women feature prominently in the commercial enjoying a break from their routine with a great tasting, low calorie refreshment.

The answer was to position diet Coke as the only soft drink that can give you great Cola taste with just one calorie. Previous diet and low calorie drinks were only aimed at women but diet Coke emphasised the unique and refreshing taste benefits of diet Coke right from the beginning and this appealed to both men and women. The catchy theme song proclaimed that “you’re gonna drink it just for the taste of it.”

In addition diet Coke commercials focus on contemporary lifestyle and feature adults who are full of energy and vitality and are living their life to the full. The ment illustrates the good feeling one gets from drinking diet Coke.

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Advertising Campaigns The main objective of advertising is to project and communicate the brand image, drive awareness of the availability of the product and in turn target and appeal to potential customers. Advertising should also create consumer interest in the brand and persuade the potential customer to purchase. Market Research is an essential part of product development but also plays an essential role in the development of advertising in order to identify what are

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Advertising Aim The main aim of diet Coke advertising is to communicate the unique product benefits of refreshing Cola taste with just one calorie. However, the ment must also communicate and portray other elements such as the brand image, brand name, people who drink the product, etc.

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Market Research Coca-Cola uses both qualitative and quantitative research to judge and measure lots of different things from market share to consumers’ reactions to different advertising campaigns. Qualitative research involves getting a focus group of 2 – 8 people to discuss,

Researchers are able to imagine what diet Coke would be like if diet Coke was a person. This type of character and personality definition is important when making an ment and helps determine lots of things from the type of actors used, the music, the setting and the whole focus of the ment.

a few hours. Quantitative research is on a much larger scale and uses a questionnaire to ask specific questions and in this way keep track of trends. Sometimes the researchers can get a surprise.

If diet Coke were a person, that person would be: ■ fun ■ independent ■ sociable ■ confident ■ lively ■ unafraid to show emotions.

Summary In 1897 The Coca-Cola Company’s main drink was Coca-Cola and it was not until 1982 that the company extended the brand with the launch of diet Coke. Other brands in the Coca-Cola portfolio include Lilt, Fanta, Sprite and their diet counterparts. Worldwide diet Coke has grown to be the third largest brand in The Coca-Cola Company. The introduction of diet Coke strengthened the position of Coca-Cola as the leading supplier of soft drinks in Ireland. Over two-thirds of people who want a non-alcoholic drink choose a carbonated soft drink (CSD) and over half of those that choose a CSD select a Coca-Cola brand. Quite often they choose diet Coke – just for the taste of it.

TASKS AND ACTIVITIES

1

Describe the importance of the The Coca-Cola Company to the Irish economy.

2

Draw a product life cycle diagram and show where you would place each of the following electrical goods: (a) black and white television (b) colour television (c) digital television (d) computer monitor (e) digital camera.

3

Outline the brand extension strategy for any other brand you know.

Positioning a product in the marketplace is very important. Describe how Coca-Cola met the challenge of introducing diet Coke onto the world market.

4

From your reading of this study, demonstrate how Coca-Cola uses both qualitative and quantitative market research.

5

Look at a recent diet Coke or Coca-Cola ment and write a short note about the character and personality of the brands.

6

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ments As a result of continuously using market research and understanding how consumers attitudes towards products change this information has helped diet Coke ments to evolve and develop over the years. Prior to 1990 the diet Coke commercials focused on adults enjoying the unique and refreshing taste of diet Coke as part of their lifestyle.

Character and Personality Companies very often give their products brand personalities in order to identify and personify the personality of the consumer. Over the years, diet Coke ments have ensured that the brand has established its own unique character and personality.

While every effort has been made to ensure the accuracy of information contained in this case study, no liability shall attach to either The Irish Times Ltd or Woodgrange Consultants Ltd for any errors or omissions in this case study.