The Organizational Orientation Of Loreal Marketing Essay

The Organizational Orientation Of Loreal Marketing Essay In technique progress era, development of technology, science, education, economy and society offer people to have better quality of living. One part of this, it is high demands and possibility to satisfy them in terms of the external beauty and health. In our days, most of people would like to be attractive, fit and nice-looking. The global world we are living in sets stereotypes that become models. Models are represented extensive all around us in everyday life such as on the TV, in the commercials, in the magazines, on the billboard, in the fashion shows, in the streets and even at school or at workplace. Consequently, a lot of people want to look like models. Men and women would like to have a smooth and clear skin with a perfect body shape for a magnificent life. These desires and trends are rising and seen as a gold mine for the beauty care market. Concerning to the growth of purchasing power in customers and market trend that community turn out to be more conscious of hygiene and beauty, it affects to the quick growth in beauty care industry, particularly in this decade. Due to the characteristic of the market is quite high by value, thus it attracts many companies to enter to this market frequently. Huge number of domestic and multinational companies tries to take as much advantages as possible on the beauty market. Because of the attractiveness, rapid growth and high potential the beauty products market could be characterized like highly competitive and customer market. For achieve success on this field, company should have high level of technology and innovations, for be able to satisfy customers needs in high quality innovative beauty products. But staking only on technology will not bring victory. Nowadays, the most important capabilit ies for the company it is talent to market their product effectively by correctly using marketing mix, choosing right marketing strategy and determine strength, weaknesses, opportunities and treats of company. Correct applying marketing mix, which is a combination of main marketing elements (4 Ps): product, price, place and promotion, is a key element of companys success. In this coursework we are trying to explore and evaluate the Marketing activities of LOreal. LOreal is one most famous and largest and successful world player on cosmetic market, one of the biggest in the world due to the size, total revenue, profitability, and growth rate. We have analyzed the marketing strategies of LOreal throughout detection of the Organization Orientation, realizing the impact of the Marketing Mix and an internal and external (SWOT) analysis of the company will also be given in this paper. Companys History LOreal is one of the biggest companies in France, in the worlds largest manufacturing of high quality cosmetics and perfumes. LOreal registered office in Paris and head office in the Paris suburb of Clichy, Hauts-de-seine, France. The LOreal Company has 68900 employees worldwide. The lead the cosmetics worldwide and distributed the product 130 countries with 27 global brands. These brands annual sales are superior à ¢Ã¢â‚¬Å¡Ã‚ ¬50 million. They produced 5 key expertises for the customer they are hair care, hair color, skin care, make-up and Fragrances. It boasts a world-wide distribution network as well as the industrys highest research and development budget and the largest cosmetological laboratory in the world.(LOreal, 2012) LOreal is a listed company, but the founders daughter Liliane Bettencourt, her name is Eugne Schueller. On July 30, 1909, Schuller registered his company, the Socià ©tà © Franà §aise de Teintures Inoffensives pour Cheveux (Safe Hair Dye Company of France literally French Society of Inoffensive Tinctures for Hair), the original LOrà ©al. The guiding principles of the company, which eventually became LOreal, were research and innovation in the field of beauty. The key people of this company are Jean-Paul Agon(Chairman and CEO), Lilliane Bettencourt(Non-executive director and major shareholder).LOreals story begins in turn-off century paris, at the time when women of the demi-monde dyed their hair, their choice restricted to fiery red or coal black. In 1907, Eugene Schueller, a young chemist, began to concoct the first synthetic hair salons in the morning under the brand name Aureole. His strategy was successful: within two years he established the societe Francaise des teintures in offensive Pour chevex, which soon afterward became LOreal.(LOreal,2012) In 1912, the company extended its sales to Austra, Holland and Italy and by 1920. LOreal products were available in a total of 17 countries, including the United States, Brazil, Chile, Peru, Equador, Bolivia, and the Soviet Union and in the Far East. The end of the world war LOreal was celebrated by the Jazz age, when short hairstyles became fashionable, with a new emphasis on shape and color. In 1920, the small company employed three chemists. By 1950, the research teams were 100 strong; that number reached 1,000 by 1984 and is nearly 2,000 today. By the end of the 1920, there were 40,000 hair salons in France alone and LOreals new product ocap, imedia Liquide and coloral captured the its first move toward diversification, purchasing the soal company Monsavon. LOreal has five worldwide research and development centers: two in France: Aulnay and Chevilly; one in the U.S.: Clark, New Jersey; one in Japan: Kawasaki, Kanagawa Prefecture; and in 2005. one was established in Shanghai, chi na. A future facility in the US will be in Berkeley Heights, New Jersey. (LOreal, 2012) In the 1930s and 1940s, platinum-haired screen idols such as Jean Harlow and Mae West made blond hair especially popular and bleaches such as LOrà ©al Blanc sold well. LOrà ©al was quick to make use of both old and new media to promote its products. In 1933, Schueller commissioned famous artists of the time to design posters and launched his own womens magazine, Votre Beautà ©. Dop, the first mass-market shampoo, was promoted through childrens hair-lathering competitions at the highly popular French circuses and by 1938 LOreal was advertising its hair products with radio jingles.(LOreal, 2012) In 1953, LOreal won an advertisement Oscar, the first in a long series of awards. In 1994, LOreal buys control of corsair from Nestle, Bettencourt. On 17 marches 2006, LOreal purchased cosmetics company The Body Shop for à ¢Ã¢â‚¬Å¡Ã‚ ¤652 million. In October 2011 , the LOreal started the largest factory in the Jababeka industrial Park, Cikarang, Indonesia with total investment of US 50 million. The production will be absorbed 25 percent by domestic market and the will be exported. In 2010 significant growth occurred at Indonesia with 61 percent increase of unit sales or 28 percent of net sale. LOrà ©als structure remains unchanged, with the group consisting of a federation of competitive companies, including 147 production and distribution facilities worldwide, divided into five divisions. Only research and development facilities and overall management control are centralized.(LOreal, 2012) The current ownership of this company are 27.5pc by the Bettencourt family, 26.4pc by Nestle, 3.9pc by treasury shares and remaining 42.2 are public (LOreal, 2012). The Organizational Orientation of LOreal There are various types of business orientations 3.1 Production Orientation Production orientation is a marketing concept that concentrates on the interior capabilities of the firm rather than on desires and needs of customers. This type orientation means that management assesses its resources and reply on these questions: What is easy to produce using our equipment?, What services are most convenient for the firm to offer and Where do our talents lie (Lamb, Hair, McDaniel, 2011). According to Brassington Pettitt (2006), production orientation emphasizes on affordability and availability of the products and thus production oriented firms focuses on efficient production and distribution techniques. A production orientation short falls because it doesnt consider whether the products that the company produces most efficiently also meet the needs of customer. Sometimes when competition is weak, production oriented-company could survive. 3.2. Product orientation Product oriented company believes that they have a best product, based on the quality and features, and their consumers will like these goods and services. (Learn Marketing, 2010). Adcock et, al. (2001) state that product orientation is concentrated on products rather than needs and customers desires. Quality and design of products are main value categories for the companies which apply product orientation. Brassington Pettitt (2006) say that these companies suppose that the consumers are concerned in the products and that they are interested in the quality. 3.3. Sales Orientation The company with a sales orientation assumes that customers show buying inertia and have to be persuaded into buying more. According to Brassington Pettitt (2006) sales oriented firms thinks that the products are sold, not bought. They emphasize on advertising, direct mail, e-mail blasts and other sales techniques, assuming that the customers are reluctant to purchase. These actions can result in short-term gains in audience. But because of the company is not communicate with the consumers, the sales oriented companys constantly has to recruit a huge number of subscribers who do not renew (Byrnes, 2009). 3.4. Marketing Orientation Market orientation means put customer at the heart of business. Adcock (2001) says that market orientation takes place when the consumers identify the difference in a company and when all the advantages proposed to the consumers are measured. According to Jobber (2001) marketing oriented organizations concentrate on the consumer wants and for them the opportunities arise from the changing wants of the consumers or market. Brassington Pettitt (2006) believe that a company which is concentrated in its marketing and production activities with the understanding of the consumer wants and satisfaction is market oriented. The main benefit of a company being market oriented is that it would have a top consumer value and there would be a coherence in higher performance in the business. The concept of market orientation is laid on three pillars of customer focus, coordinated marketing and profitability. Customer focus: at the middle of creating future corporate strategy lay consumer centricity. To serve the clients rather than sell products is a main philosophy of the company. Realize consumers as a strategic assets companies establish long-term relationships with clients. Coordinated Marketing: marketing has to become a synchronized, cross-disciplinary function of company. Customers are duty of the entire company. These factors have together detained marketing from becoming a coordinated activity that involves supplementary functions such as finance, operations, human resources and strategy within any company. Profitability: profitability includes both financial dimensions (such as ROI, EVA, and market share) and non-financial dimensions (such as behavioral patterns, awareness and attitudes). This set observation would allow companies to make equilibrium between sh ort term and long term profitability with regard to the long term financial health of the company (Venture Republic, 2012). LOreal concentrates on their customers and tries to find out their material and emotional wishes. Company obtains a wide range of products and consumed by all age groups. According to LOreal (2012) mission of company: Beauty for all. LOrà ©al proposes women and men global the best of quality, effectiveness and safeness cosmetics innovation. It pursues this goal by meeting the endless diversity of beauty needs and desires worldwide (LOreal, 2012). Group enables to meet the expectations of every customer while adapting to local distribution conditions worldwide their organizations of groups divisions. LOreal has five main Business Divisions: LOreal Luxe, Consumer Products, Professional Products, Active Cosmetics and The Body Shop (LOreal, 2012). According to LOreal 2012 Beauty for all also means beauty for each individual. LOreal is influenced that there is no sole and unique model of beauty, but a limitless variety forms of beauty, tied to periods, cultures, history and individualities. LOreal try to realize strategy of universalizing beauty. Company wants to build a new respectful and more attentive globalization universalizing beauty model. Universalizing beauty is adapting beauty and make it accessible for everyone, without making it global or uniform. This aim means that they try to change the market wants and implement new beauty concepts. To achieve this goal, company has considerably reinforced Research and Innovation panelsl in all the main markets of tomorrow, whereas extending their industrial cover age. LOreal observes local beauty needs and customs. The centricity of the project of targeting new customers is a companys research, and is creating itself to take up the challenge: to produce cosmetics products modif ied to the enormous variety of the world, LOreal has set up research hubs in each region (LOreal, 2012). Company facilitates access to cosmetics products. To make the best in beauty availablae for everyone, LOrà ©al takes steps forward each year. Company are able to reach every customer with a portfolio of 27 international brands and an organizational structure, at the same time let be for the specifics of distribution in every country. In this terms LOrà ©al pushes back boundaries and takes up the challenge of more and more available innovation (LOreal, 2012). Thus its crystal clear that LOreal is a Market Oriented company whereas they attempt to understand the customer or market needs and manufacture products respectively to accomplish the companys goals. And they highlight that people are the major strength of the firm. Internal / External audit of LOreal 4.1. Brands and Products LOreal produces and distributes five main groups of products. Professional Products. The Professional Products Division sells its products via hair salons worldwide. The portfolio of professional products is able to satisfy the needs of all types of salons. Being a privilege partner of hairdressers, LOreal offers best technologies and high-level of education what allow provide customers with professional services. In this group include brands: Redken, Kerastase, Matrix, PureOlogy, Shu Uemura art of Hair, Mizani, Kerskin Esthetics. Total sales of these products in 2011 were 2 813.8 millions euro and growth 2011/2010 posted +3.6%. The biggest sales are in geographic zone North America 1 018.6 millions euro, but more quick growth of sales 2011/2010 was estimated by geographic zone New Market +6.3% and its sales 2011 accounted for 817.6 million euro (LOreal, 2012). Consumer Products. According to LOreal (2012): The Consumer Products Divisions mission is universal: to offer the best in beauty innovation to the greatest number of people on every continent at accessible price. Its brands are available in all mass-market channels (hypermarkets, supermarkets, drugstores and traditional stores). The division is the spearhead of the groups quest to win over a further billion consumers. This division includes the most famous brands of the group: LOreal Paris (premium brand with Elseve, Elnett, Studio Line, Perfection, Plenitude, Body Expertise, Dermo-Expertise, Solar Expertise, Kids, Progress Homme, Men Expert and Ombrelle), Garniere (includes brands like Ambre Solaire, Fructis, Nutrisse, Ultra Doux, Skin Naturals, Neutralia and Obao), Maybelline, Softsheen-Carson, Club des Createurs de Beaute and essie (LOreal, 2012). Total sales of division in 2011 were 9 835.2 million euro and were shown growth 2011/2010 approximately +3.2%. In geographic zone New Market was estimated highest sales (3 957.1 million euro), most successful business segment was Make-up (2 882.3 million euro sales 2011, +6.2% sales growth) (LOreal, 2012). LOreal Luxe. The Products Division the Luxury products division combines together a exclusive set of brands, concentrating particularly on three key business segments: skincare, make-up and fragrances. Products of this division are delivering throughout department stores, perfumeries and travel retail outlets, free standing stores and through e-commerce websites. Brands are: Lancome, Yves Saint Laurent, Giorgio Armani, Biotherm, Cacharel, Diesel, Maison Martin Margiela, ViktorRolf, Ralph Lauren, Kiehls, Shu Uemura, Stella Mc Cartney. Based on reported figures sales 2011 this division amounted to 4 506.6 millions euro and increase of 6.5%. Like-for-like, i.e. based on the comparable structure and identical exchange rate, the sales growth was +8.2%. Dynamic New Market achieved sales growth of +12.3% based on reported figures and +14.0% on like-for-like. The most successful was Skincare business segment, it delivered sales growth of 14.6% like-for-like and 13.6% based on report figures (LOreal, 2012). Active Cosmetics. The active Cosmetics division sells its products worldwide in all types of health channel (pharmacies, drugstores, medi-spas and dermatologists). Its unique portfolio of six admiring brands (Vichy, La Roshe-Posay, Skinceuticals, Inneov, RogerGallet, Sanoflore). These products satisfy the need for beauty through the skins health and active cosmetics divisions works in close partnership with health professionals, dermatologists, paediatricians and doctors practicing aesthetic medicine. It is have made the division world number one in dermocosmetics. The Active Cosmetic Division delivered in 2011 growth of +3.2% like-for-like and +2.6% based on the reported figures, driven by its successes in New Markets and North America (LOreal, 2012). The Body Shop. The body Shop was established in 1976 in the United Kingdom by Dame Anita Roddick. The Body Shop has strong ethical commitment and well-known by its sensorial products stimulated by nature. More than 65% of the products contain Community Fair Trade ingredients. At the end of 2011, the Body Shop sales recorded like-for-like growth at +3.8% and 3.9% based on reported figures. The brand is delivering strong growth in the New Markets. (LOreal, 2012) 4.2. Marketing Strategy LOreal company is present in 130 countries in the world. It sells 130 products every second. The group have more than 50,000 outlets throughout the world. Now days, LOreal is the biggest international brand in Cosmetics. The marketing strategy of LOreal mainly depends upon customer needs. They had done in-depth research of all the cultures and people of different countries. According to the company, tomorrows beauty will be global and universal and will respect the unique nature of each region. LOreal Researchs mission will, therefore, be to understand and adapt to all women and men in order to offer the best of cosmetics in terms of quality, efficacy and safety. The ability to innovate for new markets must therefore rely on in-depth knowledge of the culture, needs and preferences of Chinese, Indian and Brazilian consumers. By placing the consumer at the heart of research and innovation, LOreal has decided to create the Consumer Insights International division as well as regional res earch and innovation hubs innovation will take place by knowing customers habits. For example in India from ancient days Indian women uses eye color by themselves. As we know innovation takes place on customer base. They took inspiration of this and planned new innovation of the product far Indian women in order to reach their expectation of the customers. By this we can know how LOreal company plans the innovation of product by having deep research of skin of different cultural people and also having knowledge about hair of different cultural people and reaches the customers expectations. So this is the LOreal intelligent business plan. The RD department of LOreal will release new formulas based on to enhance customers product experience because if they can know that it would be useful far them to innovate better product far customers (LOreal, 2012). Advertisement is the main strategy used by the LOreal company .It is one of the worlds biggest advertising spenders. The cosmetics giant adverts far Maybelline make up, Elseve shampoos, Lancà ´me perfumes, and other products. These will fill television mostly and magazine pages around the world. they spend 75% on television and 20% on the print magazine and others on billboards et LOreal shows low interest spending on internet (Marketing Planet, 2011). The LOreals new product development strategy. The way they have successfully managed and achieved the considerable market shares through RD efforts . LOreal innovations has been success in the diverse segments of global market Moreover, the company follows a three tier strategy for producing commercially viable products. The three structured strategy includes LOreals advanced research, applied research and product development, each stage having its own unique functions to perform in order to create successful innovations. LOreal is a Paris-based cosmetics company with having sales $ 26.96 billion in the year 2011. LOreal entered mainland of china in the year 1996 after that LOreal started growing successful market in china now it holds second highest percentage of market share and established three factories in china and they had released 17 brands within two local Chinese cosmetics brands created a successful market. LOreal targeted Chinese young women, but LOreal company have focus ed on male customers of china here they played a strategy. The Chinese younger generation was interested in tennis. So LOreal became the sponsor of the 2011 Shaanghai Rolex masters to attract the male viewers and company was cooperated with the most popular p2p steaming media site in China it is also called as pptv with the help this media LOreal launched a new product named hydra energetic anti-dullness moisturizing gel cream the choice of successful tennis masters after that the LOreal got tremendous viewers responses with the help of pptv from this they learn preferences and needs to innovate new products to target the market (LOreal, 2012). The global beauty company LOreal is looking for Africa to increase the market. The continent provides potentially huge market. The company was present since from 100 years Africa became strategically market of the LOreal group as the population of Africa is about a 1 billion people where LOreal product have good demand far products in the market LOreal will continue to launch technologically advanced products, backed by strategic marketing campaigns, into the African market. This will continue to give us a major competitive advantage that will ensure that LOreal maintains its leadership for the next 100 years. (LOreal, 2012). LOreal presently offers the following products in the Netherlands: Plenitude and Recital under the LOreal brand name, and Ambre Solaire under the Garnier Institute brand name. LOreal Nederland has been considering whether to introduce the Synergie skin care line and Belle Couleur hair colorants line into the Netherlands.synergie and Bele Couleur are marketed under the Garnier Institute name in France. The Netherlands market has several challenges new product launches are difficult (especially from a relatively unknown company like Garnier) and the distributor channel is becoming more powerful. Also, retailers have been offering their own private-label products and can develop them at lower prices within 6 months. We had first considered adding Synergie and Belle Couleur under the Garnier name and positioning them towards the lower end of the market price-wise. However, we feel this is inherently too risky. LOreal, even under the Garnier Company name, does not want to wage war in the commodity market of cosmetics. There may not be enough product differentiation to disallow the Garnier products from cannibalizing the LOreal products. People would eventually find out the Garnier and LOreal was the same Company, and that could cheapen the whole product line. LOreal is a premier supplier of quality cosmetics (LOreal, 2012). 4.3. Relationship Management LOreal, the worlds largest skin care and cosmetics company. This is wanted to enlarge the span of marketing for its extra products distribution. The customer relationship management is mainly targeting the customers for evaluating their products.CRM solution has to improve the customer reliability and decrease the agitate. Overall view is very important then, by standardizing on one database solution, there will be a need to develop our stiffness to react rapidly with new marketing campaigns and promotions. After that, the next part is to make new valuable use of marketing budgets through new accurate target. Escalating customer knowledge means increasing the efficiency of marketing investments. (LOreal, 2012) Circumstances: There are 18 global brands which include Ralph Lauren, Lancà ´me, and Garnier -LOreal is the worlds leading cosmetics, skin care, and luxury products producer. The company distribute their products to 130countries on five continents, moreover its also a essential business at Asia and also in the South Korea. LOreal frequently innovates to continue the marketplace share and, as a effect, required to extend its high performance in the industry by sharpening its knowledge of customers by rolling out a company-wide customer relationship management (CRM) system. The Paris-based company decided to focus on its luxury product division, which had an ideal customer basis and the most probable to enhance its marketing campaigns. Marketing experts were persuaded that the greater knowledge of the customer would increase the opportunity for cross selling. For example, a data-mining study on customer behaviours for Lancà ´me France showed strong cross-selling prospective to market beauty products for lips with other products such as nails. To cross sell effectively, LOrà ©al needed to create a single in-house database with all its customer data, which previously had been hosted by a number of different agencies. Example, it is useful to know which 20 per cent of customers are responsible for 50 per cent of the total revenue-this knowledge helps us target promotions and service dollars on our most valuable customers, says Giacchetti. Key factors: LOrà ©al previously worked with Microsoft for IT services worldwide, but the company turned first to Accenture for consultancy on implement a CRM solution.In adding to Siebel Business Analytics. The company is also using HP StorageWorks for its storage area network, as well as other HP hardware. Customer Manager says that the major benefit of Siebel Consumer Goods 7.7 is that advertising sales, and customer service are fully incorporated. This helps companies develop their product management, increase deal and customer marketing return on investment, decrease their customer service costs, and build customer loyalty and demand. The industrial planning was defined by Microsoft Services, aid by Avanade a joint venture between Microsoft and Accenture that specialize in solutions implemented in a Microsoft environment. Together, the team designed and implemented a pilot CRM solution in South Korea, which was chosen because of its complicated multi-channel marketing including point of sal e, Web, e-mail, and wireless messaging.mInitially, Siebel Consumer Goods and Siebel Analytics were implemented on top of a Microsoft SQL Serverà ¢Ã¢â‚¬Å¾Ã‚ ¢ 2000 database. Through the volume licensing Enterprise Agreement LOrà ©al has with Microsoft, SQL Server 2000 was later upgraded to Microsoft SQL Server 2005. LOreal also chose the Microsoft environment for the development of its Web sites. In December 2005, following the success of the pilot in South Korea, LOrà ©al extended the solution to support the mass-market domain in France, which is already increasing the customer knowledge segment of the database for direct-mail promotions. Giacchetti says: Were looking at a global rollout of the solution over three to five years. Change management in CRM takes time, especially when 99 per cent of promotions are targeted on the product rather than the customer. However, were working on introducing the CRM solution in the United States and China in 2006 and are starting several projects in Europe. Were seeking to cover half of the total number of country operations in three years and 70 per cent in five years. In some of the smaller centres, CRM will not be applicable. (LOreal, 2012) Benefits LOrà ©al has improved customer brand loyalty, benefited from a significantly improved response rate and lower cost of direct mail. It now has a consistent 360-degree view of its customers across multiple marketing channels. Customer Satisfaction Strengthens Loyalty LOrà ©al operates in a highly competitive market for luxury beauty products, where customer retention is a key performance indicator. Giacchetti believes the most significant benefit has been improved brand loyalty. We can now classify value customers more easily and aggressively retain them, she says. There is less risk of customers switching to other brands because of their disappointment at random treatment. Previously, we targeted customers based on their age, but now we consider past purchasing history and other benchmarks, which makes targeting much more effective. Higher Response Rate, Lower Costs Siebel Business Analytics is helping LOreal mount cost-efficient direct-mail campaigns and increase revenue per sale. Giacchetti says: With the Siebel solution running on Windows Server, we achieved a 57 per cent decrease in the volume of direct mail on one promotion. Through more accurate targeting, we achieved a remarkable 62 per cent response rate. In another campaign for skincare, we cut the volume of direct mail by half and achieved a 78 per cent response rate. 360-Degree View of the Customer LOreal is building a CRM system that provides a complete view of the customer, spanning all available brands across multiple channels, including the companys 200 Web sites and thousands of offline point-of-sale terminals and call centers. Giacchetti says: In the past, campaigns were product based, and we did not retain a history for each customer. With our knowledge about the customer, we can now integrate data from different channels and segment customers according to value and behavior. Georges-Edouard Dias, Strategic Business Development Division, LOrà ©al, says: Siebel is the best solution we have found to manage an end-to-end process from consumer analysis and segmentation to creation, execution, and measurement of the success of marketing campaigns. Product Campaigns Generated Faster By implementing a single CRM system and a powerful in-house database solution, LOrà ©al has improved time to market for its product campaigns. It is now easier to share best practice and make use of sophisticated data-mining scoring for targeting. Giacchetti says: We are now more agile as a business. We can accurately quantify the effectiveness of marketing investments and customer/segment profitability. 4.4. Corporate Structure Chairman and CEO. Jean-Paul Agon is energetic, constructive and unwavering always strives for tangible results. With a spanning background of challenges, environments and responsibilities, he has displayed his leadership skills by key expertise of in-depth knowledge of how the company works, an international approach and a global vision of major challenges ahead. He was born in France in 1956 and joined LOreal in 1978

Cola Wars Continue: Coke and Pepsi in 2006

Spenser Garrison Strategic Management 3/17/10 Case 1: Cola Wars Continue: Coke and Pepsi in 2006 The soft drink industry is very competitive for all companies involved. Recently the competition between established firms has only increased with the market nearing its saturation point. All companies in the industry, especially those thinking about entering, have to think about Porter’s 5-Forces model and the pressures it outlines; rivalry among establish firms, risk of entry by potential competitors, substitute products, suppliers, and buyers. When talking about market share, PepsiCo and Coca-Cola have the lions share. They have dominated the industry over the past 40 years with Coca-Cola leading in the category in 2004 (C256). With little resistance from Cadbury Schweppes, the distant third largest company in the industry, the two companies’ main focus was to increase market demand by outdoing each other in promotions, advertisements, and corporate acquisitions. Rivalry and power struggle have defined the existence of PepsiCo and Coca-Cola, looking for a competitive advantage to gain an edge on the competition. This rivalry has been to the benefit to the companies, the industry, and its consumers as a whole. Both have learned to not only stay afloat, but flourish in an industry that has constantly grown since Coca-Cola began advertising in 1891 (C258). They did this by increasing the demand in their products, and gaining brand loyalty by their consumers. In some instances, they were selling cases of Dasani (Coca-Cola) and Aquafina (PepsiCo) for less than the cost of bottling it (C267). The risk of entry by potential competitors isn’t a strong competitive pressure in the industry. PepsiCo and Coca-Cola dominate the industry with their brand name and distribution channels, which makes it difficult for new entrants to compete with these existing firms. High fixed costs of production facilities, logistics, and economies of scale also deter entry. It’s difficult for a new firm with a small production capacity, and a high cost structure to compete when, as soon as their product is introduced to the market, the two leading firms drop prices below your cost structure. Pepsi and Coke’s economies of scale allows them to do this since it costs so much less for them to produce their products than it would a new company. Substitute products come from competitors outside of the soft drink industry. These include: coffee, sports drinks, bottled water, tea, and juices. This is an increasingly growing force since consumers are becoming more health conscious in society. Most people are thinking about what carbonated soft drinks do to their bodies and replace them with sports drinks which appear to be healthier. These drinks also allow for a larger variety of flavors the appeal to different consumers (C263). Coffee and tea may also be substitutes for the consumer who drinks soda for the caffeine they contain. Consumers can switch to coffee to decrease the amount of sugar and carbonation. These also come in a larger variety of flavors provided companies, such as Starbucks, that have become extremely popular over the past 20 years. These substitutes are a large and powerful force in the industry, especially since the switching costs (the cost to switch from one product to the next) are essentially zero. Supplies to the industry don’t hold much competitive pressure. Bottling and packaging of the product don’t hold much of a bargaining position in the industry. Coca-Cola’s CEO Roberto Goizueta looked to consolidate a large number of bottlers in 1986, creating an independent bottling subsidiary called Coca-Cola Enterprises (CCE), went public and sold 51% of its shares while retaining the remaining which enables Coke to have separate financial statements from CCE (C261). This vertical integration essentially made Coke its own bottler, which almost cut out suppliers entirely. PepsiCo soon followed suit in the late 1980s with the Pepsi Bottling Group (PBG) and went public in 1999, retaining 35% of its shares (C261). By 2004 Coca-Cola had CCE bottling 80% of its North American bottle and can volume, while PepsiCo had PBG bottling 57% of their beverages in the region (C261). These consolidations took away much of suppliers’ bargaining power. The buyers of soft drinks range from Supermarkets, to mass retailers and supercenters, to gas stations. Soft drinks are sold to these stores which are, in turn, resold to customers. Buyer power in the industry is very strong. Larger stores purchase soft drink in large volumes allowing them to buy at low prices. Gas stations have less bargaining power since they buy smaller quantities. Although soft drink demand is beginning to plateau which could cause a shift in bargaining power to the buyer because of decreasing demands in both Pepsi and Coke. Porter’s 5-Forces model completely encompasses all factors of the soft drink industry. It has shown that industry has been very profitable in earlier years, especially to Pepsi and Coke. Demand for soft drinks is beginning to level off because of a new health conscious trend by the consumer which will inevitably affect profits. The industry has also been defined by intense rivalry by the two largest firms which leave little room for new entrants. The soft drink industry has reached its peak in society and will soon begin to decline soon because of the consumers decrease in demand for the product and increased demand in other healthier products. For both companies to stay profitable, they will have to curtail their products to the new health conscious trend of the consumer. The value created by the soft drink industry is apparent and distributed across the industry in a variety of ways. Pepsi and Coke at first only produced their cola products, two companies each with one product line. The success of both companies led them to diversify their production capabilities and produce different flavors of soda; Fanta, Sprite, and Tab (1960-63) from Coke, and Teem, Mountain Dew, and Diet Pepsi (1960-64) from Pepsi (C259). These expanded product lines proved to be highly profitable and were continued and expanded on in the years to come. By the late 1980s Coke and Pepsi each offered more than 10 major brands of soda in 17 or more sizes (C261). This product proliferationincreased profitability, rivalry, and barriers to entry. Soon both companies would break into markets other than carbonated soft drinks. Sports drinks such as Gatorade and Powerade, juices and juice drinks, energy drinks, tea based drinks, and bottled water. These new product lines all had substitute products from the other company to battle with. Pepsi and Coke had a vast understanding on game theory and demonstrated it with their sequential and simultaneous move games. This led to an enormous selection for the consumer, whose only problem was choosing a flavor. Both Pepsi and Coke both have secret recipes to their flagship cola. Coke was the first to be imitated in its early years. The company constantly fought trademark infringements in court. There were as many as 153 barred imitation of Coca-Cola in 1916 alone (C259). When Pepsi proved to be a viable competitor to Coke, the company filed a suit against Pepsi claiming it was an infringement on the Coca-Cola Trademark. From that point on the two companies engaged in competitive marketing campaigns to gain market share. In 1950, Coke controlled 47% of the US market, while Pepsi’s was only 10%. Coke and Pepsi are two gigantic companies that have flourished throughout their existence. They can be described as the definition of rivalry and competition in the modern business world. They are exact substitutes of each other and have battled to control the carbonated soft drink industry for over a century. From the 1950s-present, the carbonated soft drink industry has steadily increased in terms of consumption by person in the US (C251). Both companies have spent billions in marketing, research, acquisitions, and promotions to meticulously exchange percentage points in the $66 billion a year industry that they have created (C250). Unfortunately times are changing, and the superiority that the carbonated soft drink industry once held among beverages is slowly fading. Schools are banning sodas from being sold in them, claiming they are unhealthy for children (C263). People in today’s society are more health conscious than they were in prior years. This is why you see a health clubs left and right, and â€Å"0g Trans Fat† labeled on snack foods. A majority of the US population is very health conscious, which leaves little room for the sugary carbonated soft drinks that used to dominated beverage consumption. The stability of the Soft drink Industry as a whole is in jeopardy. Coke and Pepsi will have to find alternatives to increase market share, or break into new markets, if they want sales to keep increasing like they have in the past. Non-carbonated beverages, such as juices, sports drinks, and energy drinks, are beginning to grow more rapidly than when they first were introduced, while carbonated beverages are leveling off. This health conscious shift will lead Coca-Cola and Pepsi executives to focus in these once thought auxiliary components of their business to pick up the slack that the carbonated industry is leaving behind. Coke and Pepsi will not be able to repeat their success with carbonated beverages in the water segment. Water can’t differ like soft drinks can. There are simply too many similar substitutes for customers to turn to, and the brand loyalty diminishes. A mere 10% of consumers say they choose a brand of water because â€Å"it’s my favorite brand† when compared to the 37% of carbonated beverage consumers (C267). To compete in this new market, Coke and Pepsi will need a new competitive dynamic to stay profitable, one that won’t end in price wars. Fortunately for the market it is much cheaper to bottle and sell water than it is carbonated soft drinks, so competitive advantage will need to inevitably be realized in other parts of the business.

Impact Of The 5 P S Mareting Essay - 2685 Words

THE IMPACT OF THE 5 P’S MARETING MIX IN ATTAINING COMPETITVE ADVANTAGE IN THE HOSPITALITY INDUSTRY IN KENYA CHAPTER ONE 1.0 INTRODUCTION The hospitality sector is one of the fastest growing sectors globally. With the rising demand in the sector, the competition amongst players has increased. It is a global market as tourists can choose to go to any destination from the desert to the arctic to the tropical environments. With the decline in the Kenya’s hospitality industry market in the past two years, , Kenyan hospitality needs to have aggressive advertising as the economy stabilizes so as to get the share of the tourists that shall be looking to visit Africa. There has been a growth in the global industry signified by the growth in upcoming international hotels, restaurants as well as lodges in the tourist attracting regions. This therefore signifies an increase in competition for the Kenyan hospitality industry. With the ever increasing competition, since the supply of the hospitality industry has increased, the players in this industry require to have strong competitive marketing strategies to attract the tou rists to their business. Also as stated by the SA Commercial Prop News, there is potential growth for the Kenyan market in the next four years. This research shall be carried out to study how the marketing mix shall help the hospitality industry gain competitive advantage to attract the global tourists and at large grow the hospitality industry in Kenya. (HospitalityShow MoreRelatedAn Analysis of the Events Industry in Brazil: How Government Policies Coupled with Exponential Growth Influence Competition.5186 Words   |  21 PagesTheme Identified 1.3 Literature Review 3 3 3 4 TASK 2 - DISCUSSION PAPER (2362 words) Abstract Introduction Aims Objectives Methodology Discussion Conclusion Impact of the Macro Theme in the events industry Impact of Government Policies in the Events Market Competition Recommendations Requirements and Adaptations 5 5 5 5 6 6 7 8 9 TASK 3 – LETTER (483 words) BIBLIOGRAPHY 11 13 APPENDIX 15 2 INTRODUCTION There are many factors in the macro-environment that will affectRead MoreMarketing Objectives Of The Suzuki Auto Gear Shift Essay2375 Words   |  10 Pagesoccurrence. ïÆ'Ëœ Engage 20-25 Online Marketing affiliates all across the globe to achieve success in e-marketing ïÆ'Ëœ Achieve cars sales volumes of 3000 (thousand units) in 2015 (5% increase from FY 2015 forecast) ïÆ'Ëœ To accomplish sales of Yen 3,500 billion for the Financial Year 2015/16 ïÆ'Ëœ Globally, Suzuki has to grab a market share of 5% in automobile manufacturing segment by the year-end 2015/16. ïÆ'Ëœ Suzuki can use e-marketing initiative for its newly launched cars such as SUV VITARA launched in Paris, SEDIANRead MoreUse of Celebrities in Endorsements5625 Words   |  23 Pagesfull use of this opportunity. Most of the countries have adopted this strategy as an effective marketing tool and even India is carving out space for itself in this arena. The present study attempts to meet three objectives: †¢ to identify the mode/s in which a celebrity is depicted in Indian television commercials †¢ to ascertain relationship (if any) between the category of product endorsed and the type of celebrity used †¢ to identify the correspondence between product categories and mode of

Islam and Western Media - 1930 Words

Komail Haider Due Date: 11-14-2009 and Presentation on 11-21-2009 Hafiz M. K. Siddiqui Introduction to Islam Islam amp; Muslims in Western Media In July 12, 2008 publication of the New York Times, it was reported that the President of Sri Lanka was killed in a suicide attack. The religion of the suicide bomber was never reported. The very same newspaper (on November 5, 2009), reported that how a Muslim attacker attacked the US Base and killed US army soldiers. This discrimination against the Muslims and Islam is nothing but the fruit of Western Media’s propaganda against the Muslims and Islam. In Western countries, Islam is often looked upon as an extremist, terrorist, or fundamental religion. In many cases, the media’s†¦show more content†¦The part that the reporters omitted or failed to state was that the Muslim soldiers were praying on a battlefield in Afghanistan. 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