Company Background
Coca-Cola is a leading brand in the beverages industry. The company has a global presence and is the third strongest brand in the world. It was formed in 1886 in Atlanta by a pharmacist. The products of the company include the soft and carbonated drinks. The company has enjoyed enormous growth over the years of its operations and diversified its product portfolio. The growth of the company is attributed to its vast distribution and the bottlers’ network around the globe. The industrial operations and the B2B selling have contributed a lot in the success of the company.
The business to business operations of the Coca-Cola includes the interaction with the suppliers. The selling of the products to the retailers, distributors, bottlers and the food chains fall in the B2B selling functions of the Coca-Cola. These selling activities are the primary focus of this report. The B2C operations will not be discussed in this paper.
Industrial Objectives
The industrial objectives of the Coca-Cola are centered on the growth of the company using the formidable assets of the company. These assets include the financial strength, distribution network, global presence, committed workforce and the strong brands of the company. The objectives of the company allow the firm to attain a sustainable growth. The key industrial objectives are:
Creating and maintaining loyalty between the partners through the networks
Enhancing the business operations with increased productivity and effectiveness in the business operations
Proving to be a valuable corporate entity for society and the environment
Increasing the wealth of the shareholders by acting responsibly
Segments Targeted by Coca-Cola
It is discussed in the above-given part that Coca-Cola is a multinational organization. It has a vast target audience ranging from business concerns to direct customers. The report is focusing on the target segments that fall into the category of business-to-business (b2b) concerns. The Coca-Cola is supplying other businesses its products. These businesses include hypermarkets and supermarkets (such as Walmart, Sears, etc.), regional wholesale distributors and bottlers (who set up their businesses in different countries) and large food chains and restaurants (such as Hardees, KFC, Burger King, etc.). These business-to-business (b2b) target segments of Coca-Cola have complex and diverse buying behavior. The hypermarkets and supermarkets have been carrying a wide range of products related to each and every product category (Avlonitis, and Karayanni, 2000). The beverage section is enriched with some brands including Coca-Cola. The preferences and decision criteria of this target segment are more about gaining competitive advantage. However, the regional and worldwide retailers are also the important buyers of the company. These retailers and bottlers are independent as well as dependent dealer of the organization. The independent dealers of the Coca-Cola Company are complex and competitive, whereas, some retailers are running the distribution channels based on the partnership or franchising of Coca-Cola Company. In addition to it, Coca-Cola is targeting on the direct supplies to businesses of food industry without the involvement of the dealer. The food industry is enriched with the utility of the products of the organization especially the fast food chains such as Hardees, KFC, Burger King, and many other are the potential target audience of the organization (Anderson, Narus, and Narayandas, 2009).
Forces Influencing the Segments
There are some factors that influence the buying behavior of the segments of the target market of Coca-Cola. The factors include environmental, political, legal, technological, and economic factors. There are some other elements in compliance with the given factors that shape the buying behavior of the target audience of the organization. These elements include the organizational preferences, nature of business of target segment, purchasing orientation, business strategy preferences, and decision-making unit. The details of the given factors can be explained as below:
Environmental & Political Factors: The given target segment of Coca-Cola work in different environmental conditions. The supermarkets and hypermarkets have a very competitive environment. There are some brands options available for these hypermarkets. They prefer those brands with more market demand and customer preferences. In addition to it, the retailers and bottlers are more affected by the political environments of the region (Brennan, 2014). The regions that have more sheer political nature have more benefits for private and independent bottlers. So the buying behavior of the bottlers and retailers are highly shaped by the environment as well. The region with hotter climate consumes more soft drinks and beverages. The demand of such environment is more beverage products and vice versa. The food industry in the hotter regions consumes more beverages and soft drinks. The purchasing of bottlers and retailers of the Coca-Cola products in the Asian region is much more than any other region due to its environment. The other regions with colder environment prefer hot coffee products and tea products (Michel, Naudé, Salle, and Valla, 2002).
Economic, Technology & Legal Factors: The role of the economic factors is crucial for the buying behavior of the segments. The segment such as hypermarkets prefers the products that provide them with more profit margins in the form of after sale cuts. For instance, if Coca-Cola provides with less wholesale cost and the hypermarkets have a high competitive price for its products, then they buy Coca-Cola products over other similar brands and vice versa. Similarly, the retailers and food industry segment of the Coca-Cola prefer the products with more economic benefits. The buying behavior is shaped by the demand of the end customers of these business segments of the organization. The technological advancement paves the way to affect the purchasing power of the end user. The organization is using various tricks to position themselves among the target audiences. It is eventually shaping the purchasing behavior of the bottlers and restaurants. The legal factors are also involved in determining the buying behavior. The legal taxes, customs, tariffs and legal status of the product in a certain region are very important elements. These elements contribute to determining the buying of the products of the organization (Evans, and King, 1999).
Business strategy: The purchasing behavior of the business is directly linked to the nature of the business and the strategies adopted by the firm. If the business has the profit maximization strategy, then the business purchase decision is inclined towards the brands which offer more profit margins. However, if the firm is a service concern such as restaurants, food chains, and fast food chains, then the strategy follows the quality service with quality products. These kinds of businesses purchase the products which offer more quality than anything else. The nature of business is in compliance with the business strategies and they play a crucial role in purchasing decisions (Hutt, and Speh, 2005).
Purchasing orientation: The purchasing orientation is another factor that contributes to shaping the purchasing behavior of the businesses. The buyers of the organization purchase products with increased quality, and lesser cost. The hypermarkets, restaurants, bottlers, retailers, etc. have collaborative relationships with major suppliers of similar products. The supplier with more savings is preferred for the purchasing purposes (Michel, Naudé, Salle, and Valla, 2002).
Decision-Making Unit: The element of decision-making unit is highly complex in business-to-business (b2b) markets. The complexity and dynamism of the decision-making unit have strong influence and several implications on the purchasing decisions of the organizations. The target segments of the Coca-Cola in b2b concerns are amorphous. These have consisted of many teams and groups with varying interests and levels of motivations. They can have an objective of the good financial deal or high output. Some may prefer low risk, or some may prefer functional achievements. The cultural and psychological approaches of the decision-making groups are crucial, and it shapes the variations in the purchasing powers of the businesses (Evans, and King, 1999).
Type of Task
In business to customer (b2c), the customers are less informed and accountable. However, in business to business (b2b) markets, the buyers are well-informed and more accountable. So the business segment markets are more rational in their decisions. In the given case of the Coca-Cola Company and its highlighted target segment the decision to the type of task is very specific. The hypermarkets and supermarkets prefer need-based market transactions. The demand of their users modifies the purchase of the hypermarkets. Similarly, the retailers and bottlers have modified or straight rebuy. The retailers and bottlers have a developed supply network with a specific demand that does not vary with larger differences. The straight rebuy and modified rebuy is adopted by them to refill the inventory promptly from the Coca-Cola Company. Moreover, the restaurants and food chains have varying demand levels that in return modify their purchasing power to relationship-based transactions. The food chains with healthy relationships with Coca-Cola Company purchase more of its products rather than other organizations and vice versa (Hutt, and Speh, 2005).
Transaction or Relationship Oriented
The purchasing behavior of the businesses is shaped by the element of transaction-oriented or relationship oriented factors. The businesses with transaction oriented purchasing behavior prefer the brands and companies with more economic benefits. For instance, the bottlers and independent retailers are getting more profit margins from the Coca-Cola company purchase its products. If this segment is offered more profit margins from Pepsico, they shift their purchase decisions towards them. Contrary to it, businesses with healthy relationships with Coca-Cola Company purchase more of its products rather than other organizations. The fast food chain of Hardees has relationship oriented purchases. They have Coca-Cola products in their outlets in every region. On the other hand, KFC has good relationships with Pepsi; they purchase their products over Coca-Cola products. It is relationship oriented purchasing strategies (Avlonitis, and Karayanni, 2000).
Networks
There is a direct influence of the relationships for customers on the purchasing decisions of the businesses. The businesses promote the brands to the networks based on their good relationships. The Coca-Cola company products can be promoted by the bottlers and the retailers to their other suppliers. The retailers and bottlers have huge networks of suppliers of various brands. The brands with healthy relationships can be promoted by the retailers to their networks. It is a contributing factor in the purchasing decisions of the businesses (Brennan, 2014).
Response to the Behavior of the Customers
The company can respond to the behavior of the customers by making strategic changes in its marketing mix. The recommendations in the marketing mix of the Coca-Cola in light of the above discussion are given in this section
Product
The product branding for the B2B customers proves a useful tactic in increasing the brand image of the product offerings. Coca-Cola can exploit an opportunity of branding the products for the large customers with the combined efforts of the customers (Van Riel, De Mortanges and Streukens, 2005). For example, Wal-Mart is large volume buyer of the Coca-Cola. The company can customize the packaging for the Wal-Mart. The special packaging designed will be placed on the merchandise of the Wal-Mart only. Moreover, there is another opportunity of co-branding as well. The company can brand its product with another brand. In this scenario, there is a possibility for the Coca-Cola to co-brand with the Wal-Mart. It will help the company to position its products with the products of the Wal-Mart. It will enable the business to maximize the customer base and to capitalize on the brand equity of the buyers (Eggert, Hogreye, Ulaga and Murenkhoff, 2011).
The product development is another technique that businesses are using in B2B selling for maintaining long-term relationships with the customers. Coca-Cola should use the technique of product development to capitalize on the market research insights of the large customers and then to come up with customized product solutions for those particular customers. The Key Account Management approach of the Coca-Cola trade marketing presents the synergistic opportunities when working with the large businesses. These synergies and combined resources can be used to come up with new flavors of the drink for the individual retailers and the food chains (Eggert, Hogreye, Ulaga and Murenkhoff, 2011).
Price
The pricing factor in the business to a business transaction is complex, and no straightforward technique is followed for all the buyers. The pricing decisions are based mostly on the volume of the sales and the terms of the payments. Those customers that pay in advance or in a short time are offered discounted prices. It is the most effective pricing technique so far. Coca-Cola should follow this pricing technique and should associate the discounts with the credit terms. The price discounts for short credit time should be offered. It will help the organization to achieve the organizational objective of the maximization of the profit. The short credit terms will decrease the working capital requirement, and the profits will automatically be increased (Hutt and Speh, 2010).
Furthermore, the competitive pricing strategy can never be ignored in the B2B transactions. It is important to consider the prices of the competitors and the cost breakup of the product development before reaching the pricing decisions. However, the corporate branding and the customized branding for the particular customers as discussed in the product section can help in the premium pricing of the product. Similar is the case for the product development. If a particular product is developed for a unique customer or the product package is designed for the customer, it helps in justifying the higher prices and the value created for the product. Therefore, the customization helps in justifying the premium pricing, and this approach should be used by the Coca-Cola (Hutt and Speh, 2010)
Marketing Communication
The marketing communication process for the B2B sales is entirely different from the marketing activities carried in B2C selling. The choice of the medium in B2B is determined by the nature of the target market. The target markets of Coca-Cola are the large retailers, supermarkets, and the food chains. Therefore, the most effective communication channel, in this case, is the direct marketing efforts of the company (Van Riel, De Mortanges and Streukens, 2005).
The digital revolution has changed the face of the marketing communication for the B2B operations of the firm. The companies are using the internet and digital content to reach out the potential customers. Therefore, the Coca-Cola should use this technique to advertise to the businesses. The corporate website is the most efficient and cost-effective method of distributing the information to the retailers and the distributors. The company already has a corporate website and using for the information dissemination to the dealers and the distributors. However, it is simply not enough. The digital content strategy should be adopted having a close relationship with the industrial objectives of the firm. Coca-Cola should use the story-telling technique highlighting its values and the value it intends to create for its customers and should deliver this digital content through the internet. In B2B selling the company can advertise along with the customers. It will reduce the cost of the advertising of the supplier as well as the customer. For example, the advertising of the Coca-Cola along with the ads of the Burger King is a perfect manifestation of combined advertising efforts.
Relationships
The relationships management approach is very vital in the B2B transactions. Unlike B2C, the relationships with the customers extend to the larger period in B2B selling. Therefore, the Key Account Management approach is recommended for managing the relationships with the large volume corporate buyers. This technique enhances the information flow and the contact points between the both businesses ensuring the streamlined operations (Sidow, 2014). The contact point in traditional selling is only the sales person and the procurement team of the buyer. However, through KAM, the marketing teams interact with the marketing teams of the buyers, the finance teams with the finance teams of the buyer and the production teams with the production teams of the buyer. The business operations are streamlined, and the problems are addressed rapidly (Fill and Fill, 2005).
Networks
The introduction of the technology for streamlining the supply chain functions will prove a success to the Coca-Cola. It will create value in the business operations by reducing the costs associated with the inventory. The supplier network will share the information of the required supplies with the suppliers enabling them to re-fill the supplies when a set low level is reached. It will eliminate the formalities of the purchase acquisitions and the other formalities in the purchase of the supplies (Ebers, 1999).
Likewise, the intra-network of the buyers can help in achieving the similar benefits in dealing with the distributors and the retailers of the company. This approach of value creation is currently used by the Dell in its supply chain and can be replicated by the Coca-Cola. The cost reduction by efficiently maintaining the inventory and eliminating the communication barriers will increase the profitability of the buyers as well the suppliers (Ebers, 1999).
References
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Evans, J.R. and King, V.E., 1999. Business-to-business marketing and the world wide web: Planning, managing, and assessing web sites. Industrial Marketing Management, 28(4), pp.343-358.
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Hutt, M.D. and Speh, T.W., 2005. & Edition: Business Marketing Management. South-Western Publishing Company.
Michel, D., Naudé, P., Salle, R. and Valla, J.P., 2002. Business-to-business marketing. Palgrave Macmillan.
Sidow, H., 2014. Key account management. In Key Account Marketing & Key Account Selling (pp. 1-10). Springer Fachmedien Wiesbaden.
Van Riel, A.C., De Mortanges, C.P. and Streukens, S., 2005. Marketing antecedents of industrial brand equity: An empirical investigation in specialty chemicals. Industrial Marketing Management, 34(8), pp.841-847.
