Essay Sample on the Power of Target Market Segmentation in Coca-Cola

Introduction

Philip Kotler once said, "There is only one winning strategy. It is to carefully define the target market and direct a superior offering to that target market" (Kourdi, 2015) Kotler meant that for any business to succeed, it needs to have a target audience and offer a unique product to the market to meet its needs. The approach to offer unique products in the market is one that Coca-Cola has used over the years to be one of the best beverage brands across the globe (Coca-Cola, 2018). Coca-Cola uses a business-to-business approach and business market segmentation bases with its bottling partners to meet the demands of its clients.

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Coca-Cola Products and Services

Coca-Cola is a firm that has implemented different marketing tactics to make its brand have a diversified geographic presence. The firm earns its revenue from selling beverages such as juice, soft drinks, water, and energy drinks. Some of its products include Minute Maid, Dasani, Fanta, and Diet Coke (Coca-Cola, 2018). The firm manufactures and sells its syrups, beverage bases and concentrates on bottling partners. The bottling partners later manufacture, pack, separate goods into merchandise, and distribute the final products of Coca-Cola to the vending partners and consumers.

It is the role of the bottling partners to work closely with clients such as street vendors, grocery stores, restaurants, convenience stores, and amusement parks (Yadav, Stapleton & Van Wassenhove, 2013). These clients later resell the products to the final consumers. The sale of products from Coca-Cola to the bottling partners is a business-to-business model as both businesses are sellers of products to different buyers. The cooperation of the Coca-Cola, the bottling partners, and the customers has led to 1.9 billion servings of the firm's products every day (Coca-Cola, 2018).

Bases of Segmenting Business Markets

There are several market segmentation bases that a firm can use to construct market segments. In a business market, the segmentation bases include demographics, purchasing approaches, operating variables, situational factors, and personal characteristics. Below are descriptions of the different segmentation bases in the business markets.

Demographic segmentation focuses on the size of the firm that the business can serve, the industries that the firm can approach for business as well as the geographical location of the potential business partners (Panda, 2008). The operating variables segmentation refers to the types of technologies that a firm should focus on the type of users, whether heavy, medium, light, or non-users, and the demands of the customers in terms of needing the products in large quantities or small ranges (Panda, 2008). The purchasing approach segmentation focuses on the purchasing policies that are to be used in the business, such as sealed bidding or service contract (Panda, 2008). It also focuses on the nature of the prevalent relationships such as working with a firm that is most desirable, serving firms that are decentralized or centralized, and the purchasing criteria that are based on whether the potential clients seek products that are good prices, quality, or service.

Situational factors segmentation focuses on the urgency of delivery of services, size of orders, whether large or small, and any applications that can be considered for the product (Panda, 2008). The personal characteristics segmentation focuses on the type of loyalty that the potential customers need to have, their attitude towards risk hence either risk-averse or risk-takers and whether the buyers should have similar values as the business (Panda, 2008).

Segmentation Bases in Coca-Cola

There are some of the segmentation bases discussed above that are considered within Coca-Cola in its business with bottling partners. Coca-Cola considered demographic segmentation. It considers the industry it will partner with as the business partners have to bottlers who purchase their raw materials and manufacture them, package and resell them. They should be firms with capacities to manufacture large quantities of products each day as the sales of Coca-Cola are very high and the bottlers have to meet the high demand. On the other hand, the bottlers have to be located in the 200 countries where Coca-Cola operates to support the easy distribution of products to the consumers (Coca-Cola, 2018). It shows that Coca-Cola also considers the location of the businesses that work with it.

Coca-Cola looks into the operating variables segmentation. It works with people with adequate machinery and technology to manufacture and distribute the products. It also considers customer capabilities by serving consumers who need few services as the bottlers only require the raw materials, and they do the rest of the processes.

On the situational factors segmentation, Coca-Cola works with firms that have large orders of products to increase sales and revenue. The firm also focuses on a particular application as it only makes the raw materials to mix its products and later dispatches them to the bottling partners to carry on with the other processes.

Coca-Cola uses the purchasing approaches segmentation to determine the nature of existing associations where it considers the bottling partners to work with have strong relationships with it. It also works with centralized organizations, as most bottling partners have well-structured management systems.

Personal characteristics segmentation is also considered in Coca-Cola. The firm deals with loyal customers who are long-term buyers of the firm's syrups, bases, and concentrates. The firm also works with people who have values similar to the firm as the operations within the bottling partners' firms as the products produced and their branding represent Coca-Cola's brand. Therefore, the business partners have to have similarities with Coca-Cola to partner in business.

Influence of Promotional Strategies in Coca-Cola

There are no promotions done to acquire the bottling partners in Coca-Cola as the bottlers are acquired within formal settings, and some of them have to receive funds from Coca-Cola to build up the facilities to handle bottling operations for the firm. The independent bottling partners and Coca-Cola all work towards producing the products that are known as Coca-Cola beverages. Therefore, the bottlers and Coca-Cola have to work hand in hand to ensure the products produced meet the demands of consumers and also represent the brand of Coca-Cola. The promotional services offered by Coca-Cola are consumer brand marketing initiatives to enhance the image of the brand in the market and make it easy for the bottlers to have high sales when they distribute the products to resellers.

While Coca-Cola focuses on things such as advertisements and other marketing strategies that capture the attention of the final consumers, the bottling partners are expected to promote the sale of Coca-Cola products in the retail outlets where the final consumers find the products (Banutu-Gomez, 2012). They are responsible for brand activations in grocery stores among other retail stores as well as offering retailers the posters or signage with Coca-Cola's branding as a way of marketing the products. Therefore, the promotional strategies within Coca-Cola and the bottling partners are conducted by both businesses to ensure the final consumers and the retailers have information on different products from Coca-Cola.

Conclusion

Coca-Cola is a firm that uses a business-to-business approach with its bottling partners as it sells its syrups, concentrates, and bases to the bottling partners, and the bottling partners manufacture them to beverages and sell the beverages to retailers who later sell the products to final consumers. The segmentation bases used within Coca-Cola in the business market are demographic, purchasing approaches, operating variables, situational factors, and personal characteristics. Coca-Cola uses all the segmentation bases in its operations with the bottling partners. Both business partners also collaborate on the promotion of products in the market.

References

Banutu-Gomez, M. B. (2012). Coca-Cola: International business strategy for globalization. The Business & Management Review, 3(1), 155. Retrieved fromhttps://pdfs.semanticscholar.org/6e16/e847831833ae83f483df808db4eb74041d06.pdf

Coca-Cola. (2018). The Coca-Cola System. Retrieved from https://www.coca-colacompany.com/our-company/the-coca-cola-system

Kourdi, J. (2015). Business strategy: A guide to effective decision-making. London: Profile Books.

Panda, T. K. (2008). Marketing management: Text and cases Indian context. Excel Books India.

Yadav, P., Stapleton, O., & Van Wassenhove, L. (2013). Learning from coca-cola. Stanf Soc Innov Rev, 11(1), 51-55. Retrieved from http://iaphl.org/wp-content/uploads/2016/05/SSIR-Winter_2013_Learning_From_Coca_Cola-1.pdf