Evaluating Coca Colas understanding of its Consumers Behaviour

Evaluating Coca Colas intellectual of its Consumers Behaviour1.0 IntroductionA consumer is a person who spots a make or desire, and in that locationfore looks for the best way to action his or her need either by secure or acquisition (Solomon et al, 2010). Consumer behaviour as defined by Solomon et al (2006) is the dish upes involved when individuals or groups select, purchase, use or dispose of products, services, ideas, or experiences to satisfy needs or desires. Customer retention is vital these age and organisations atomic subjugate 18 looking for the best way to please and satisfy the disport of their consumers. According to take (2009), the understanding of the buyers behaviour makes securities industrying strategies and plan exercise out favored. The Coca-Cola society is finespun draw assiduity that has been able to progress to its brand loyalty with its consumers over its divisions of operation, despite the highly agonistic securities industry (Euromo nitor, 2010). But this success would non move over been echtistic without understanding who the consumer is, what the consumer needs and how the consumer behaves. The Economic recession was a trying clipping for companies which guide to the closures of some and loss for majority, the soft drink industry is non an exception and Coca- cola which falls under the soft drink industry bequeath be analysed on how effective the management of their consumers was to in ensuring their survival in the recession.1.1 A brief summary of The Coca- Cola operationsThe Coca-Cola Company (TCCC) is the largest manufacturer, allocator and marketer of non alcoholic beverage, c erstwhilentrates and syrups in the world. Coca-cola has a portfolio of more(prenominal) than 3,300 beverages, from viands and secureness sparkling beverages to still beverages such as 100 percent proceeds juices and fruit drinks, waters, sports and energy drinks, teas and coffees, and milk-and soy-establish beverages, whi ch ar now sold in more than 200 countries in the world. (Coca-cola, 2010).Coca- cola first got to Britain in the year 1900, subsequently Charles Candler brought a jug of syrup along on a shoot the breeze to England. Soon after, in the early 1920s, it went on sale at the capital of the get together Kingdom Coliseum and in Selfridges. Since then coca-cola Britain has come up with innovative soft drinks namely Coca-cola Diet light speed Coca-cola nada Sprite Sprite zero FantaFanta correct 5 Alive Schweppes Schweppes zero Powerade Powerade zero Kia ora Kia ora(no added sugar) Dr. rain cats and dogs Dr. Pepper zero Lilt Lilt Zero Oasis Oasis special light Glaceau vitamin water and Relentless. (Coca-cola, 2010) With about 4,650 employees, Coca-cola GB claims to have sold 228million cases in 2008.Pic. 1.1 The Coca-Cola Company Great Britain brandsAvailable on this link- http//www.coca-cola.co.uk/brands/1.2 An overview of the soft drink industry in Great BritainMintel (2010) stat ed that close to one-quarter of companies in the UK soft drinks market is growing at more than 10% per year. Some of the main players in the UK soft drink industry include Coca-cola, Pepsi cola UK, Tropical UK, nuzzle UK etc to mention but a few. The British Soft Drinks Associations 2010 UK Soft Drinks narration found that the overall market grew by 1.7% in 2009, with total pulmonary tuberculosis reaching 14,140 million litres, at a retail value of 13.224 one million million (Mintel, 2010). The British Soft Drinks Assocaition (2010) stated that it was encouraging to see that the soft drinks market was holding up during the economic downturn. According to M intel (2010), for the second year running, Coca-cola topped interbrands best global brands table, placing it above its competitors in the soft drink industry. The coca-cola company has continued to focus on expanding its line of products through with(predicate) taking tactical places in niche soft drinks producers, by purch asing a stake in UK smoothie producer, Innocent Drinks (Euromonitor, 2010).1.3 The recession in United KingdomRecessions occur during the down or occupyion phase of the business cycle. The term business cycle refers to the familiar ups and downs of economic activity. (Pearce and Michael 2006). Furthermore, Pearce and Micheal (2006) opined that recessions cause world-shattering declines in resources available to the firm because customers spend less, lenders lend less, and competitive disceptation increases. Initially, the behaviour of consumers transplants during recessions. They have less money to spend and cut linchpin personal spending in response to the overall decline in economic activity. Industrial and business customers whitethorn become disloyal, demand renegotiated contract terms, and falsify purchase patterns. as well by Pride and Ferrell (1995), recession is a stage in the business cycle during which unemployment rises and total buying index number declines, stif ling both consumers and business statess propensity to spend.The UK economy was growing speedy than the average for the Euro zone throughout al intimately of this decade. However, an abrupt slowdown began in 2008 and the economy entered a recession in the third quarter. According to Euromonitor (2010), real gross domestic profit fell by 4.9% in 2009, reservation this the UKs longest post-war recession. The UK has been harder hit than many countries because of its large financial sector. The fiscal postal service has deteriorated over the past several years. The deficit was pushed even higher as a essence of the bailout of large banks. The number of unemployed withal roseate by 50% during the recession with 800,000 jobs being lost (Euromonitor, 2010). The recession guide to business closures, job losses and a lack of employment opportunities in the UK (Athey, 2009). This first global recession in the sensitive era of globalization, started in the US, spread to Europe, and e ventually became global its the worst economic crisis since the great depression. (Stiglitz and Joseph, 2009).1.4 The Coca-Cola Company and the recessionTCCCs gross profit margin decreased to 64.2 percent in 2009 from 64.4 percent in 2008, primarily due to foreign currency fluctuations, untoward geographic ripple as a result of expansion in their up and coming markets, current focus to steer better fair initiatives across different major markets and uncomplimentary channel and marketing mix in some certain markets. (Coca-Cola, 2010).Even though there was a slight decrease (0.2%) in their profit margin comp ard to the previous year, TCCC arguably per miscellaneaed well despite the economic downturn.The unit case volume in TCCC is one of the measures of the fundamental strength of the company because it processs to measure progress at their consumer level. In Europe, the gross revenue volume of year stop 2009 versus year ended 2008 shows that the unit case volume in Europe decrea sed 1 percent, ca utilize mainly by the ongoing hard macroeconomic situations in most part of Europe. These hard macroeconomic conditions determined major markets and caused a decline in the unit case volume of 8 percent in due south and Eastern Europe, 4 percent in Iberia and 2 percent in Germany. The volume declines in these markets were partially made up for by 6 percent unit case volume growth in France and 4 percent growth in Great Britain.(Coca-cola, 2010).Table 1.1- Financial result of The Coca-Cola CompanyYear Ended December 31, 2009 2008 2007 2006 2005(In millions except per share data) analysis OF OPERATIONSNet operating revenues $ 30,990 $ 31,944 $ 28,857 $ 24,088 $ 23,104Net income attributable to shareholders 6,824 5,807 5, 981 5, 080 5, 872GROSS benefit 19,902 20,570 18,451GROSS PROFIT MARGIN 64.2% 64.4% 63.9%PER SHARE DATABasic pay income $ 2.95 $ 2.51 $ 2.59 $ 2.16 $ 2.04Diluted net income 2.93 2.49 2.57 2.16 2.04Cash dividends 1.64 1.52 1.36 1.24 1.12BALANCE SHE ET DATA natural assets $ 48,671 $ 40,519 $ 43,269 $ 29,963 $ 29,427Long-term debt 5,059 2,781 3,277 1,314 1,1541.5 Scope of StudyThe interest of this study lies mainly with The Coca-cola Company, concentrate on Coca-cola Great Britain as the scope of study. This study likewise examines the level at which the recession affected the sales in coca-cola and the consumers attitude towards the purchase of coca-cola.CHAPTER TWO2.0 Key Consumer Behaviour AspectsAccording to British Soft Drinks Association, (2010), Consumers are loyal to the drinks they know and trust but remain open to innovative products and brand extensions which meet their ever-evolving needs. The industrys ability to provide the public with a wide range of enjoyable and affordable drinks give ensure it remains spirited despite the tough economic climate.Three key consumer aspects have been cautiously selected from Jiang (2010) as explained in the Consumer Behaviour Lectures the following aspect of the consumer beha viour may have influenced the continuous purchase of coca-cola products despite the economic downturn- the buying process, status formation and motivation.2.1 The Buying processA buying decision qualification process is the selection of an option from two or more election excerpts (Jiang, 2010). Coca-colas consumers kindle be explained in Consumer as a Problem problem solver (Habitual Decision Maker). A habitual decision maker makes choices that are characterised by an impulse made with little effort and without conscious control (Solomon et al, 2006). Coca-colas brands are low involvement products and so require little information assay. almost decisions made by deal who consume coca-cola are with little or no conscious effort. Coca-cola consumers purchase Coke for example found on a habit that has been formed over time.Also the Evaluation of alternatives can be used to explain the brands resistance to the recession, much of the consumers effort that goes into a purchase decision develops at the stage in which a choice must be made from the entranceible alternatives (Solomon et al, 2006). In many cases, there are a number of alternatives (such as water, soft drink or alcohol) a consumer could consider in satisfying a biogenic need, i.e. to seize thirst. A consumer that has formed a habit overtime to purchase viands Coke for example will always have in principal a diet black eye whenever hes thirsty. Branding can as well as be an influence on the evaluation of alternatives. In a survey of world(prenominal) Brands, Inter Brand and Business Week identified the significance for companies to compose communities around their products and services, which gives the customers the opportunity to feel as if they own the brand (Solomon et al, 2006). Fill (2009) in like manner supported that as a brand becomes established with a buyer, so the psychological benefits of ownership are preferred to competing offerings, and a form of relationship emerges C oke is not only seen as a drink by its consumers, but seen in the light of its heritage and relationship with them( Payne,2007). Brands also create impressions and strong livelinesss so much that when people see the bump bottle with its red label, and the content, people suddenly feel thirsty and the need to have a drink (Riesenbeck and Perrey, 2007) According to Mintel, (2010), the Interbrand ranked Coca-cola as the number one global brand in the year 2009 and 2010 respectively. Brands can influence a consumers choice in a decision do process, in a study conducted, 51percent of consumers preferred Pepsi over Coke , while in an open test, only 23percent preferred Pepsi over coke(Jenkinson, 1995). In my opinion, Coca-cola consumers have authentic a relationship with the brand, which makes them to choose coca-colas brands amongst all other alternatives even in a recession. The economic downturn did not affect consumers choices, habits did not change despite the recession coca-cola consumers did not change their product preferences because a habit has been formed over time.Table 2.1 Buying Decision making processEvaluationsAfter purchase behaviour/feelingInvolvementInformation searchNeed recognitionNeedPurchaseDecisionIdentity AlternativesSource- (Jiang, 2010)2.2 perspective Formation and change post is a persons learned predisposition, tendency to act to an object in a consistently favourable or unfavourable way (Allport, 1935) as cited by (Jiang, 2010). An attitude formed, lasts over a current of time, an attitude towards what a person eats or drink or developing an attitude towards different brands (such as drinking diet Coke rather than drinking diet Pepsi) or also having an attitude towards a general consumption pattern(such as eating twice to eating once in a day) (Solomon et al, 2006).The Utilitarian Function which is related to the basic principles of compensate and punishment will be used to explain why TCCC was not entirely affected by recessi on. Attitudes are formed establish on the presumed product qualities (either pleasure or pain) (Solomon et al, 2006). Attitudes influence a consumers decision making and the goal of a marketer is always to create a peremptory attitude towards a product or change existing attitudes (Fill, 2009).In a recent research conducted by TCCC to evaluate consumers attitudes towards its brands, it revealed that coca-cola is the brand most associated with happiness (Coca-cola, 2010). The result of the survey revealed that over a half of the people that participated in the research said its the taste that makes them smile others said share-out a bottle of coca-cola with family and friends can provide an opportunity to spend time together (Coca-cola, 2010). Coca-cola consumers have developed an attitude overtime, so the recession would not change their product preference but might just alter their consumption pattern (such as cut the intake of one trinity bottles per day to two bottles per day) . The theme of the TCCC also stresses straight forward benefits (Coca-cola.Open Happiness). TCCC develops strategies to soak their consumers lifestyle to pass a sum. In order to promote Coca-Cola Zero (one of Coca-Colas brands),TCCC partnered with the Twentieth Century Fox and director James Camerons for his epic-adventure and blockbuster flash Avatar. This promotional strategy helped to form an attitude towards Coca-Cola Zero and raise its cognizance. They also use promotional activities and sponsorship of events such as the Olympic Torch relay in 11 countries, and the Vancouver 2010 Olympic Winter Games(Coca-Cola 2010) and alsoAttitudes towards coca-cola could also be formed by the yearly coca-cola adverts, as supported by Pearce and Micheal (2006) aggressive marketing campaigns may be more effective during recessions, as competitors feeling the pinch might attempt to forestall losses by reducing their advertising. During the recession, TCCC, engaged in massive paid advertis ing to reinforce their brands in the minds of the consumers. Also towards the end of each year, coca-cola does an advert, using the Christmas theme to convey its message to its viewers. The viewers feelings about the context in which an advertisement appears can also influence brand attitudes (Solomon et al, 2006). Liking this Christmas themed adverts would naturally link us to Attitude Formation (three hierarchies of effects), Affect, Behaviour and Beliefs. Affect (like the brand), behaviour (buy the brand), belief (feel satisfied with the brand) or belief (create awareness of the brand), behaviour (buy the brand), affect (like the brand) or belief (create awareness of the brand), affect (like the brand), behaviour (buy the brand).Attitude formed over time influences a consumers purchase behaviour, in spite of the recession, it can be argued that the attitude of the coca-colas consumers did not change, and there was a continual process in consumers purchase pattern. Coca-cola was n ot so affected by the recession because of the consumers attitudes towards their productsTable 2.2 Three Hierarchies of personal effectsAttitudes based on cognitive information processingAffectAttitudes based on behavioural learning processesBehaviourBehaviourBehaviourBeliefsvvvBeliefsvvvBeliefsvvvAttitudes based on hedonic consumptionAffectAffectSource- (Jiang, 2010)2.3 MotivationMotivation is the driving force within individuals that impels them to action, this driving force is produced by a state of tension which exists as the result of an unfilled need (Jaing 2010). either action is done for a reason. Motivation refers to the process that cause people to behave as they do, motivation occurs when a need (Utilitarian-consumers practical benefits or Hedonic-consumers emotional benefits) is aroused that the consumers wishes to satisfy. The desired end- state is the consumers goal. The degree of arousal is called a drive (Solomon et al, 2006). The purpose of purchasing a drink woul d be to satisfy a biogenic need, i.e. to conquer thirst. For a consumer to now choose a diet coke because hes thirsty is called psychogenic. Coca-cola motivates its consumers through its themed message (Open Happiness), and this can be explained in the hedonic needs (Consumers emotional benefits) The survey TCCC conducted for their consumers shows that the taste of coca-cola makes them golden. What motivates a consumer might be different compared to the other consumer. A regular coke consumer willing to reduce his sugar consumption will be happy to switch to coke zero which has no sugar and less calories. Also viewing it from the Consumer involvement angle, TCCC also motivates its consumers by connecting with millions of them every day through their brands Facebook pages, Twitter and influential blogs, creating a dialogue that allows TCCC to build their brand assets and fortify their consumer relationships. Solomon, (2006) defines involvement as a persons perceived relevance of th e object based on his/her inherent needs, values, and interests. Through this Fans page on facebook, consumers can access their advertisements, Coca-Cola applications and downloads, and get live updates from the Company. Also TCCC involves their consumers through the Coca-Cola Freestyle, this makes the consumers beverage innovators by bighearted them choices and variety to make more than 100 different branded beverages at the touch of a button, this provides fun, and a relationship that connects the company with its consumers. (Coca-cola, 2010). TCCC motivates their consumers by associating with things that will be of interest to the consumers, for example on their website is a calculator used for checking amount of calories and quantity of drinks consumed every week so as to help consumers monitor their calorie intake in having a healthy diet and lifestyle. This can help motivate a consumer to purchase TCCCs product because they have shown the consumer the consumer that in as much as they want to make profit, they also care about them and their health. The recession did not really affect TCCCs sales because of the motivation TCCC tries to create and the relationship they have been able to build overtime with their consumers.CONCLUSION3.1 ConclusionUnderstanding consumers behaviour is key to having a successful company marketers need to deepen their research on their consumers because the consumers are bonny aware of the important role they play in their consumption pattern. Competitors are always also looking for tactics to grow and influence new consumers, and any organisation that does not meet up with consumers expectations would be losing a consumer. Companies should look for ways to retain their current customers and also focus on getting new ones attracting new customers should be a priority in a recession (Pearce and Michael 2006). Organisations should actively engage their customers more than before.