Evaluating Customer Retention Methods used by Coca Cola

Evaluating Customer Retention Methods used by Coca Cola A consumer is a person who spots a need or desire, and then looks for the best way to satisfy his or her need either by purchase or acquisition (Solomon et al, 2010). Consumer behaviour as defined by Solomon et al (2006) is the processes 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 days and organisations are looking for the best way to please and satisfy the interest of their consumers. According to Fill (2009), the understanding of the buyers behaviour makes marketing strategies and plan come out successful. The Coca-Cola Company is soft drink industry that has been able to build its brand loyalty with its consumers over its years of operation, despite the highly competitive market (Euromonitor, 2010). But this success would not have been realistic without understanding who the consumer is, what the consumer needs and how the consumer behaves. The Econo mic recession was a trying time for companies which led to the closures of some and loss for majority, the soft drink industry is not an exception and Coca- cola which falls under the soft drink industry will 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 operations The Coca-Cola Company (TCCC) is the largest manufacturer, distributor and marketer of non alcoholic beverage, concentrates and syrups in the world. Coca-cola has a portfolio of more than 3,300 beverages, from diet and regular sparkling beverages to still beverages such as 100 percent fruit juices and fruit drinks, waters, sports and energy drinks, teas and coffees, and milk-and soy-based beverages, which are now sold in more than 200 countries in the world. (Coca-cola, 2010). Coca- cola first got to Britain in the year 1900, after Charles Candler brought a jug of syrup along on a visit to England. Soon after, in the early 1920s, it went on sale at the London Coliseum and in Selfridges. Since then coca-cola Britain has come up with innovative soft drinks namely: Coca-cola; Diet Coke; Coca-cola zero; Sprite; Sprite zero; Fanta;Fanta Zero; 5 Alive; Schweppes; Schweppes zero; Powerade; Powerade zero; Kia ora; Kia ora(no added sugar); Dr. Pepper; Dr. Pepper zero; Lilt; Lilt Zero; Oasis; Oasis extra 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 brands Available on this link- http://www.coca-cola.co.uk/brands/ 1.2 An overview of the soft drink industry in Great Britain Mintel (2010) stated 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, Nestle UK etc to mention but a few. The British Soft Drinks Associations 2010 UK Soft Drinks Report found that the overall market grew by 1.7% in 2009, with total consumption reaching 14,140 million litres, at a retail value of  £13.224 billion (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 business through taking tactical places in niche soft drinks producers, by purchasing a stake in UK smoothie produce r, Innocent Drinks (Euromonitor, 2010). 1.3 The recession in United Kingdom Recessions occur during the down or contraction 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 significant declines in resources available to the firm because customers spend less, lenders lend less, and competitive rivalry increases. Initially, the behaviour of consumers changes during recessions. They have less money to spend and cut back personal spending in response to the overall decline in economic activity. Industrial and business customers may become disloyal, demand renegotiated contract terms, and alter purchase patterns. Also by Pride and Ferrell (1995), recession is a stage in the business cycle during which unemployment rises and total buying power declines, stifling both consumers and business peopless propensity to spend. The UK economy was growing faster than the average for the Euro zone throughout most 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, making this the UKs longest post-war recession. The UK has been harder hit than many countries because of its large financial sector. The fiscal position has deteriorated over the past several years. The deficit was pushed even higher as a result of the bailout of large banks. The number of unemployed also rose by 50% during the recession with 800,000 jobs being lost (Euromonitor, 2010). The recession led to business closures, job losses and a lack of employment opportunities in the UK (Athey, 2009). This first global recession in the new era of globalization, started in the US, spread to Europe, and eventually became global; its the worst economic crisis since the great depression. (Stiglitz and Joseph, 2 009). 1.4 The Coca-Cola Company and the recession TCCCs gross profit margin decreased to 64.2 percent in 2009 from 64.4 percent in 2008, primarily due to foreign currency fluctuations, adverse geographic mix as a result of expansion in their up and coming markets, current focus to steer better reasonable initiatives across different major markets and unfavourable channel and marketing mix in some certain markets. (Coca-Cola, 2010). Even though there was a slight decrease (0.2%) in their profit margin compared to the previous year, TCCC arguably performed 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 helps to measure progress at their consumer level. In Europe, the sales volume of year ended 2009 versus year ended 2008 shows that the unit case volume in Europe decreased 1 percent, caused mainly by the ongoing hard macroeconomic situations in most part of Europe. These hard macroeconomic conditions influenced major markets and caused a decline in the unit case volume of 8 percent in 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 Company Year Ended December 31, 2009 2008 2007 2006 2005 (In millions except per share data) SUMMARY OF OPERATIONS Net operating revenues $ 30,990 $ 31,944 $ 28,857 $ 24,088 $ 23,104 Net income attributable to shareholders 6,824 5,807 5, 981 5, 080 5, 872 GROSS PROFIT 19,902 20,570 18,451 GROSS PROFIT MARGIN 64.2% 64.4% 63.9% PER SHARE DATA Basic net income $ 2.95 $ 2.51 $ 2.59 $ 2.16 $ 2.04 Diluted net income 2.93 2.49 2.57 2.16 2.04 Cash dividends 1.64 1.52 1.36 1.24 1.12 BALANCE SHEET DATA Total assets $ 48,671 $ 40,519 $ 43,269 $ 29,963 $ 29,427 Long-term debt 5,059 2,781 3,277 1,314 1,154 1.5 Scope of Study The interest of this study lies mainly with The Coca-cola Company, focusing on Coca-cola Great Britain as the scope of study. This study also examines the level at which the recession affected the sales in coca-cola and the consumers attitude towards the purchase of coca-cola. CHAPTER TWO 2.0 Key Consumer Behaviour Aspects Three key consumer aspects have been carefully selected from Jiang (2010) as explained in the Consumer Behaviour Lectures; the following aspect of the consumer behaviour may have influenced the continuous purchase of coca-cola products despite the economic downturn- the buying process, Attitude formation and Motivation. 2.1 The Buying process A buying decision making process is the selection of an option from two or more alternative choices (Jiang, 2010). Coca-colas consumers can be explained in Consumer as a 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 search. Most decisions made by people who consume coca-cola are with little or no conscious effort. Coca-cola consumers purchase Coke for example based 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 accessible 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 conquer thirst. A consumer that has formed a habit overtime to purchase diet Coke for example will always have in mind a diet coke whenever hes thirsty. Branding can also be an influence on the evaluation of alternatives. In a survey of Global Brands, Inter Brand and Business Week identified the significance for companies to create 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) also supported that as a brand becomes established with a buyer, so the psycholo gical benefits of ownership are preferred to competing offerings, and a form of relationship emerges Coke 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 feelings so much that when people see the coke 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 making 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 developed a relationship with the brand, which makes them to choose coca-colas brands amongst all other alternatives even in a recession. The econom ic 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 process Evaluations After purchase behaviour/feeling Involvement Information search Need recognition Need Purchase Decision Identity Alternatives Source- (Jiang, 2010) 2.2 Attitude Formation Attitude is a persons learned predisposition, tendency to respond to an object in a consistently favourable or unfavourable way (Allport, 1935) as cited by (Jiang, 2010). An attitude formed, lasts over a period 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 reward and punishment will be used to explain why TCCC was not entirely affected by recession. Attitudes are formed based 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 positive 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 sharing 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 reducing the intake of one three 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 penetrate their consumers lifestyle to pass a message. In order to promote Coca-Cola Zero (one of Coca-Colas brands),TCCC partnered with the Twentieth Century Fox and director Ja mes Camerons for his epic-adventure and blockbuster film Avatar. This promotional strategy helped to form an attitude towards Coca-Cola Zero and raise its awareness. They also use promotional activities and sponsorship of events such as sponsoring the premiership in England and Scotland to reach a large and well defined audience (football fans) and consumers attitude are formed through these sponsorships in making a purchase decision. Attitudes 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 advertising 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 bra nd) 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 TCCCs consumers did not change, and there was a continual process in consumers purchase pattern. Coca-cola was not so affected by the recession because of the consumers favourable attitudes towards their products Table 2.2 Three Hierarchies of Effects Attitudes based on cognitive information processing Affect Attitudes based on behavioural learning processes Behaviour Behaviour Behaviour Beliefs vvv Beliefs vvv Beliefs vvv Attitudes based on hedonic consumption Affect Affect Source- (Jiang, 2010) 2.3 Motivation Motivation 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). Every 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 consumer 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 would 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 happy. 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. According 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 will ensure it remains resilient despite the tough economic climate. TCCC also motivates its consumers by regularly innovating different products to suit specific needs, e.g. no sugar drink (Coke zero). 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 an d strengthen their consumer relationships. Solomon, (2006) defines involvement as a persons perceived relevance of the object based on his/her inherent needs, values, and interests. Through this Fans page on facebook and twitter, 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 machine, this makes the consumers beverage innovators by giving 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 lif estyle. 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. CONCLUSION 3.1 Conclusion Understanding consumers behaviour is key to having a successful company; marketers need to deepen their research on their consumers because the consumers are becoming 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.

I Eat Mentos, Do You?

How many dilemmas a day do you stumble across, that given a solution would just make life easier? The ad for Mentos featuring Albert Einstein reads, â€Å"I eat Mentos, do you? Mentos. Helping People Get Ideas†, implying Mentos can help increase intelligence to a level comparable to Albert’s. In advertisements from Mentos ordinary individuals find themselves facing various dilemmas; however, if one consumes a Mento they are inspired to solve their problems, while staying fresh and cool. In every case a loser becomes a winner.Mentos’ ad featuring Albert Einstein is an effective advertisement, despite the absence of the appeal to logic, because its appeal to both credibility and emotions are so robust. Even though Logos, the appeal to logic, is unaccounted for, the ad is still very successful. Of the three major ways writers or marketers persuade their audience to purchase their product, it isn’t necessary for Mentos to explain the logic for using a breath m int. Logically we all know what breathe mints do, stating the obvious wouldn’t contribute to the persuasion of the ad.Even considering the appeal to false logic, the notion that Albert Einstein’s brilliant mind is thanks to a breath mint is implausible; therefore, the assumption could be made that Mentos had no intentions to appeal to logic or false logic. An individual seeing this ad would not literally think they’d become as smart as Albert from consuming a breath mint. Although there is a lack of logos in this advisement, it is an effective ad that includes only two of the three appeals.Ethos, the rhetorical element that appeals to credibility is the strongest element used to persuade customers to purchase this product. Albert Einstein is known for being one of the smartest men in history, and if that isn’t obvious enough to a reader, the ad also states that he is a, â€Å"World Famous Scientist†. The reputation and expertise of Albert in conjun ction with the advertisement’s tag lines, â€Å"I eat Mentos do you† and â€Å"Mentos. Helping People Get Ideas†, insinuates that if the consumer eats Mentos, they will be just as smart.The use of Albert’s celebrity endorsement is not only an effective display of using credibility but is also used to support the claim that Mentos will give you great ideas. Mentos’ use of humor was a clever and effective way to approach the appeal to Ethos. Like Ethos, Pathos is captured exceptionally well, and focuses more on the positive emotional appeal. In this ad Mentos uses the promise of gain; the obvious promise of gain is great breath, but Mentos achieves the emotional appeal by using Albert Einstein to suggest the gain will also be great ideas or a solution.Finding a solution to a problem can be extremely gratifying, giving you an overwhelming feeling of pride and satisfaction. The promise of the gain paired with the instantaneous gratification is what mak es the emotional appeal even stronger. The illustration of Albert gives him a softer feel, bringing a sense of friendliness and kindness to the ad. The soft colors, creased lines and folded edges contribute to the authenticity of the vintage illustration. The use of Pathos along with Ethos is what made this ad effective.To conclude, Albert Einstein’s Mentos advertisement makes a customer feel like they can benefit from the product without using the appeal to logic. Anyone who is going to see this ad knows that a breath mint freshens breath; the reason the Mentos ad is successful is because of the use of humor, along with Ethos and Pathos. It relates to something everyone wants, easy solutions and great ideas, and assures that this product is the answer. This all leads us to one question, â€Å"I eat Mentos, do you†?

Probability of Going to Jail in Monopoly

In the game Monopoly there are a lot of features that involve some aspect of probability. Of course, since the method of moving around the board involves rolling two dice, it is clear that there is some element of chance in the game. One of the places where this is evident is the portion of the game known as Jail. We will calculate two probabilities regarding Jail in the game of Monopoly. Description of Jail Jail in Monopoly is a space in which players can â€Å"Just Visit† on their way around the board, or where they must go if a few conditions are met. While in Jail, a player can still collect rents and develop properties, but is not able to move around the board. This is a significant disadvantage early in the game when properties are not owned, as the game progresses there are times where it is more advantageous to stay in Jail, as it reduces the risk of landing on your opponents’ developed properties. There are three ways that a player can end up in Jail. One can simply land on the â€Å"Go to Jail† space of the board.One can draw a Chance or Community Chest card marked â€Å"Go to Jail.†One can roll doubles (both numbers on the dice are the same) three times in a row. There are also three ways that a player can get out of Jail Use a â€Å"Get out of Jail Free† cardPay $50Roll doubles on any of the three turns after a player goes to Jail. We will examine the probabilities of the third item on each of the above lists. Probability of Going to Jail We will first look at the probability of going to Jail by rolling three doubles in a row. There are six different rolls that are doubles (double 1, double 2, double 3, double 4, double 5, and double 6) out of a total of 36 possible outcomes when rolling two dice. So on any turn, the probability of rolling a double is 6/36 1/6. Now each roll of the dice is independent. So the probability that any given turn will result in the rolling of doubles three times in a row is (1/6) x (1/6) x (1/6) 1/216. This is approximately 0.46%. While this may seem like a small percentage, given the length of most Monopoly games, it is likely that this will happen at some point to someone during the game. Probability of Leaving Jail We now turn to the probability of leaving Jail by rolling doubles. This probability is slightly more difficult to calculate because there are different cases to consider: The probability that we roll doubles on the first roll is 1/6.The probability that we roll doubles on the second turn but not the first is (5/6) x (1/6) 5/36.The probability that we roll doubles on the third turn but not the first or second is (5/6) x (5/6) x (1/6) 25/216. So the probability of rolling doubles to get out of Jail is 1/6 5/36 25/216 91/216, or about 42%. We could calculate this probability in a different way. The complement of the event â€Å"roll doubles at least once over the next three turns† is â€Å"We don’t roll doubles at all over the next three turns.† Thus the probability of not rolling any doubles is (5/6) x (5/6) x (5/6) 125/216. Since we have calculated the probability of the complement of the event that we want to find, we subtract this probability from 100%. We get the same probability of 1 - 125/216 91/216 that we obtained from the other method. Probabilities of the Other Methods Probabilities for the other methods are difficult to calculate. They all involve the probability of landing on a particular space (or landing on a particular space and drawing a particular card). Finding the probability of landing on a certain space in Monopoly is actually quite difficult. This sort of problem can be dealt with by the use of Monte Carlo simulation methods.

Huck Finn the Racist Essay - 1336 Words

When taking a look at Mark Twains Huckleberry Finn, racism is a large theme that seems to be reoccurring. What some may think to be racism in Twains words, can also be explained as, good story telling appropriate to the era the story takes place in. Twain himself has been suggested as a racist based on the fact that he uses the word nigger in his book. However, Twain was an avid abolitionist. For those who claim that Twain was a racist must have only been looking out for themselves and not those who are willing to learn about the past whether it be ugly or perfect. Racism was and forever will be a dark part of the American past, and no one can change that, no matter how many books one may alter. In this book a number of dialects†¦show more content†¦The main focus is to replace the 219 times the word nigger is used with slave. One would doubt that Twain would input the N-word into his book without having a good reason to do so. At the time of writing this book, the Civil War was over and the general thought was that slavery and racism was over. The thought then leads to the fact that Twain wanted to make a point of letting readers know that, just because you have abolished slavery does not mean that the racism and bigotry has gone with it. The repel of slavery made no difference to the racism card, and he wanted his Northern readers to know it. When the argument of replacing the word nigger with slave one sees the issue with that. The issue being that nigger in that time meant African-American, not necessarily a slave. So looking at a high school or college student in the future reading Huckleberry Finn for the first time and reading is with the word slave the story loses its effect on the reader. It does not give a sense of the time, it would only give a vibe that something is not right in the story. When reading this story for the first time, one must have an open mind and not pay attention to little things like racism in this book. The main plot is not, lets raft down a river and see how racist we can be. As one reads the story flows, and part of that flow is to allow discrepancy in racial slurs. It is okay to have theShow MoreRelatedHuck Finn: Racist or Not Racist?760 Words   |  4 Pagesin his novel The Adventures of Huckleberry Finn. The character of Jim is demeaning to African-Americans as he is portrayed as a foolish, uneducated, black slave. The â€Å"n† word is also used in the book describing him and many other African-American characters in the story. However, some see this book as anti-racist and believe that the use of racist’s comments is not racist at all. Those who think that are mistaken becaus e Huck Finn in clearly a racist novel. 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