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Marketing Management AIB MBA (2016)
1. Title : Coca-Cola bottled water in Sri Lanka
Assignment Question :
Prepare a report about one product or service containing information that could be used for a
marketing plan.
You can choose a product/ service from your own business or from another business which you
are familiar
Word Count : 2358
Student Name : Dimithri Sadeepa Jayamali Wellage
Student number : A001646577
Subject name : Marketing Management
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Executive summary
Water is the fundamental fact for life in planet earth and we all anticipate of getting safety and
quality water for the daily consumption. In that manner the business world has introduced
water as a trend of money maker which has caused the pop up of hundreds of bottled water
manufacturers all around. Most of them are producing the less quality products in unsafe
manner which can be hazardous for human body.
As a major company in bottling sector Coca-cola is stepping to the establishment of the
bottled water production in Sri Lanka where water is a gifted natural resource from Mother
Nature. Its main target is to provide high quality and safety products to Sri Lankans to fill up
their thirst with best healthiest beverage.
Entering in to the existing market with a new product is more challenging but considering the
current situation in the bottled water market, as a world renowned brand name including the
certification of quality standards, and best marketing strategies to spread the value of the
output to the community, it won’t be a miracle anymore. Coca-cola will initiate the production
targeting the local market segments but with the long term objective to expand it to the
international level by exporting. Having the high technology and sufficient raw materials
within the plant is helpful to merge with massive production level and to fill up the shelves of
shops with Coca-cola bottled water all around the country with the use of huge distribution
network. Constant performance measures will be helpful to evaluate the revenue and achieve
the objectives in years’ time.
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1.0 Background
Worldwide bottled water consumption now-a-days seems so high and it has become an
enormously growing business which derives under the categories including spring, mineral,
purified, artesian, and sparkling (Hogan, 2016). According to the data of Beverage Marketers,
the annual water consumption of the world in 2014 is 74.7 billion gallons (Rodwan, 2014).
From the regional perception Asia holds the second place of bottled water usage (Perera,
2011). When considering the domestic market for bottled water, consumer demand for
bottled water airs likely to remain strong in the years ahead.
Today Coca-Cola is one of the major American companies with a local presence in every
country that they operate and it is a key competitor of bottled water industry in global level.
Coca-Cola Beverage Sri Lanka (CCCBSL) Ltd is the most popular soft drink manufacturing
company in Sri Lanka and the company supplies about 45% of the requirement of soft drinks in
the local market. It is owned by the BIG (Bottling Investment Group) company which is the
largest bottling company group in the world and the bottling arm of Coca-Cola. The Coca-Cola
Biyagama site has 21 acres and its build up area consists of 66% of the total area. Currently the
turnover of the company is US $ 16,388 M and it employs about 500 direct employees (CCBSL,
2015).
Being the largest non-alcoholic beverage company in the world, Coca-cola is going to start its
operation as water bottle manufacturer in Sri Lanka. Also the objective of new pathway is to
refresh all the Sri Lankans with best healthiest beverage by providing 100% purified water and
increase the beverage market share.
2.0 Current situation analysis
3.1 Market
As the market leader of CSD industry, over the past five decades, the Coca-Cola company has
created a special place for its range of beverages, in the hearts of the people of Sri Lanka with
their products including Coca-Cola, Coca-Cola Light, Sprite, Fanta Orange, Fanta Portello, Fanta
Cream Soda, Lion Soda and Lion Ginger Beer producing a volume of over 12 million unit cases
at over 90,000 outlets island-wide (FT, 2016). Compared to the main competitor Pepsi, Coca
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cola always tries to win peoples heart. Where Pepsi’s target is continuously changing, and is
targeted towards youngsters, Coca cola targets people of all ages (Basin, 2016).
When considering about the current bottled water market in Sri Lanka, is filled with hundreds
of manufactures, but majority are without quality products. Most of the bottles in the shelves
of shops are with either expired registration numbers or made-up registration numbers
although all must carry a registration number provided by the Health Ministry, which
guarantees that the product meets health standards. Some are filled with tap water or the
water collected from deep wells in town areas (Panagoda, 2013).
3.2 Consumers
Bottled water can be considered as an ideal consumer product which is healthy, non-addictive,
hypoallergenic, caffeine-free, calorie free, and contains no artificial colors, flavors, fats, etc
(Fager, 2009). Versatility of the bottled water influences the consumers for consumption at
any time in any situation. Also the ready availability, affordable price and less worries about
the safety and health matters makes them to buy bottled water rather than spending money
on carbonized high calorie drinks. More over the reasons such as healthfulness, convenience,
no need to be iced or warmed up have become the reasons for customers to increase the
usage of bottled water. For example, in USA it has been increased the annual bottled water
consumption by 11 gallons within a decade as from 23.2 gallons per person in 2004 to 34
gallons per person in 2014 (Rodwan, 2014).
3.3 Behavior patterns
Considering the safety of drinking water people are always influenced to buy bottled water
rather than depending on tap water. Mostly the frequent travelers, tourists, hotels,
restaurants and offices are using bottled water. According to International Journal of
Environmental Research and Public Health, younger people and females are more likely to
purchase bottled water. Also the gender and education differences are some main reasons on
preference of bottled water over tap water due to their identified differences in awareness of
environmental risk (Zhihua Hu, 2011).
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3.0 SWOT analysis
3.1 Strengths
World recognized and well established brand name
Consumer trust for more than past five decades
Huge market share for existing products in CSD category
Standard Water purification plant maintained within company premises
High technological PET bottle production line in the plant (Line 01)
High quality raw materials in use after several quality checks
3.2 Weaknesses
Managerial and environment protection issues occurred during past few
months
Complex maintenance of bore wells
3.3 Opportunities
Consumers are looking for purified standard bottled water
Enormous growth in bottled water industry
Less number of international bottled water manufacturers in local market
Huge network of island wide distributors belongs to company name
3.4 Threats
High competition among local bottled water manufacturers
International brands of bottled water like PepsiCo entering into the market
4.0 Competition
Bottled water industry nature of competition is a fierce competitive rivalry (Kaiani, 2016).
Considering the international bottled water market, there are major competitors as Nestle,
PepsiCo, Groupe Danone…etc. In the local market there are more than 168 players but few like
American Premium, Access natural waters, Water Mart and Frosty who are major rivals have
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gained SLS certification which ensures the quality of the production process. Some companies
are supplying glass water bottles exclusively to hotels and restaurants while some supplies to
hospitals as per industry requirements. Some are influenced to produce enhanced bottled
water including vitamins, carbohydrates, electrolytes and other supplements (Suresh, 2003).
5.0 Overall strategy
Coca-Cola is trying to grow the business by stepping in to the bottled water industry which has
become an easy money maker today. According to the Ansoff matrix Coca-Cola is entering in
to an existing market with a new product yet with a reputed brand name which can easily
replace all the competitors. Therefore, it has to use the product development strategy. In
order to gain the advantage of a new product it has to be introduced in handy sizes available
at any place any time. Also it has to promote the product through social marketing at level
best same as the CSD products in Coca-Cola. By winning the hearts of people and catching the
eyes with glowing red and white colour it’s able to build up good awareness of the product.
Another strategy is to price reduction since the production cost is very low with the in- built
water purification plant within the company premises.
Since the brand name is well known people who would like to choose the quality product, will
always select Coca-Cola rather than grabbing an unknown product to their hands. Therefore,
most importantly the shelves of all the super markets, retail shops…etc at any area around the
country have to be filled with our product using the huge network of distributors. After
establishing considerable growth in the business it is able to step in to exporting level which
can distribute the products to the countries which don’t have Coca-Cola bottled water plants.
6.0 Objectives
By entering in to the new arm of the bottling industry Coca-Cola s’ main objective is to
increase the revenue by Rs. 2.5Bn and also to capture more than 25% market share of bottled
water industry within next two years. Another objective is to reduce the production cost by
5% within the first two quarters of the production year. Increasing the operating income in Rs.
20M is a yet more objective to be achieved by 2020.
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7.0 Segmentation, targeting & positioning
Bottling industry includes two production categories such as RGB (Returnable Glass Bottles)
and PET (Poly Ethylene Terephthalate) which currently Coca-cola is engaged in its production.
But Coca-Cola Bottled water production is based only on PET bottles which include the
categories such as 500ml, 1L, 1.5L and 2L bottles which can serve the Sri Lankans much more
efficiently. From these, the handy 500ml bottle possesses the highest demand. Mostly the
youth is targeted to improve the consumption of the products and when considered about the
service segments, hotels, airlines…etc are frequently targeted to enhance the market. When
compared to the other manufacturers, Coca-cola processes high quality production according
to higher standard levels. For example, around 20 of multiple quality checks carried out within
the production process ensures the safety of the final product. Not only that, the country wide
distribution with participation of 120 distributors, high participation in CSR projects, best use
of environment sources and acting to protect them…etc are the main factors that differentiate
Coca-Cola from other manufacturers.
Another important aspect is Coca-cola is following special Japanese concept named as TPM
(Total Productivity Management) which empowers the workforce to improve their working
environment, productivity and their own performance by targeting
1. Zero stoppages
2. Zero quality defects
3. Zero waste of materials, energy and manpower
4 Zero accidents
Therefore, TPM is used to increase number of quality outputs. As example in coca – cola we
can reduce number of damaging bottles, number of rejected bottles due to low and high filled
and etc.
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8.0 Strategy
8.1 Product
Main product objective is to position figures as a best water bottle manufacturer in Sri Lanka
serving domestic and international market. Using the customer awareness advertising it will
be able to create audience towards Coca-cola bottled water production. The main message to
be highlighted is the quality and safety product which can be purchased from anywhere at
affordable price.
8.2 Price
The price at the initial stage has to be within a low range since it can be leveled up after
generating the basement of customer attraction. For example, it can be advertised as extra
volume for same price level or one bottle will be provided free for 6 bottle pack. Also a
winning price for the special logo placed inside the bottle cap will be another option to grab
the youth attraction.
8.3 Distribution
Using the maximum practice of 120 distributors already established in for CSD products will be
helpful to deliver the total product range throughout the country from north to south and east
to west since the demand for the water bottles comes from all the areas of the country with
the climate conditions. Quality packaging comes to a considerable fact when considering the
long distance travelling since the bottles, bottled caps and labels can be damaged due to road
conditions.
8.4 Marketing mix
Coca-cola bottled water marketing mix comprises the following approaches to pricing,
distribution, advertising /promotion and customer service.
Pricing – Maintaining the Coca-cola pricing standards, compared and justifiable pricing range
as per the market research for existing products and the total production cost divided into no
of units will be used to decide on price for each product category.
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Distribution – Centralized distribution via reliable distributors selected according to the
company system will be used to deliver the products to the retailer as per the request orders.
Specially a calculated ‘truck turnaround time’ of approximately two and half hours from
entering to the exit is maintained to keep up the efficiency of product distribution.
Advertising and Promotion – Several advertising and promotional camps will be carried out to
touch the minds and hearts of customers according to advertisements used in Coca-Cola
companies in other countries.
Customer Service – Established unit of customer service will be used to consider about any
required information of the products or quality defects complains as well as the retailer
feedbacks. Also the customer service hotline numbers will be mentioned in the labels of each
and every product.
9.0 Key controls
The target of marketing plan of the Coca-cola company bottled water is to lead the company
in the correct path of winning hearts towards new production by illustrating customers
regarding the values of the products. Therefore, the below facts will be considered to gauge
the key performance.
- Revenue achieved: Monthly quarterly and annually
- Expenses or the losses caused during production: Weekly, Monthly, and Quarterly
- Customer Satisfaction rates
10.0 Risk and contingency plan
An entry in to existing market with a new product is full of risk and therefore it has to be a
contingency plan to cover up the capital.
- Providing the production line and the raw materials for CSD production
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- As one PET bottle line is already used for CSD production, it’s able to add the new
line into the same operation with very little changes such as bottle formation
structure, pressure levels …etc
- Since the volume of water demand for production processes get decreased, the
new water lines of bore wells can be sent to the storage tank directly and use to
water only at necessary time.
- The employee team can be used to enhance the production efficiency of CSD lines.
Conclusion
As per the above marketing plan, Coca-cola beverages Sri Lanka is able to introduce the new
product with the correct strategy used to carry out the value of the product in the correct
way to our customers. With the use of product development strategy, it’s able to enhance
the quality of the product and provide a standard level output to them. As in all the
businesses there are weaknesses and threats as well as strengths and opportunities to
identify and get the correct use of. When considering about the strategies, in order to reach
the higher market share we are able to lower the production cost and provide the bottled
water to a lower price. Also we are able to deliver the products efficiently and effectively
using the established distributor network. Using the effective communication channels such
as TV, Radio, Internet and paper advertisements, it would be easier to get the attraction
towards the new product easily. The performance gauges has to be used in order to evaluate
the performance in a timely manner. Also as mentioned in the above plan, if the whole
process got failed, it would be able to follow up the contingency plan in a correct way and
grab the business capital back and carry on the existing business at a higher level.
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Reference list
Basin, H. (2016, 08 06). swot-coca-cola. Retrieved 10 04, 2016, from /www.marketing91.com:
http://www.marketing91.com/swot-coca-cola/
CCBSL. (2015). CCBSL Annual Report. Biyagama.
Fager, C. (2009, 07 01). bottled-water. Retrieved 10 04, 2016, from www.friendsjournal.org:
http://www.friendsjournal.org/bottled-water/
FT, D. (2016, 04 08). 9-years-and-counting--Coca-Cola-continues-to-win-hearts-of-Sri-Lankan-youth.
Retrieved 10 04, 2016, from http://www.ft.lk: http://www.ft.lk/article/535691/9-years-and-
counting--Coca-Cola-continues-to-win-hearts-of-Sri-Lankan-youth
Hogan, C. (2016). nation’s-healthiest-beverage. Retrieved 10 4, 2016, from International Bottled
Water Association: http://www.bottledwater.org/bottled-water-%E2%80%93-nation%E2%80%99s-
healthiest-beverage-%E2%80%93-sees-accelerated-growth-and-consumption
Kaiani, G. (2016). Competition in the bottled water industry.
Panagoda, C. (2013, 03 17). do-you-know-whats-in-that-bottled-water-37307.html. Retrieved 10 04,
2016, from www.sundaytimes.lk: http://www.sundaytimes.lk/130317/news/do-you-know-whats-
in-that-bottled-water-37307.html
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Perera. (2011, November 18). Booming-bottled-water-industry:-Current-trends-and-future-
prospects. Retrieved 10 4, 2016, from http://www.ft.lk: http://www.ft.lk/article/56782/Booming-
bottled-water-industry:-Current-trends-and-future-prospects
Rodwan, J. (2014). Retrieved 10 4, 2016, from BWR JulyAug 2015 Issue_BMC_2014 Bottled Water
Statistics Article:
http://www.bottledwater.org/public/BWR%20JulyAug%202015%20Issue_BMC_2014%20Bottled%
20Water%20Statistics%20Article.pdf#overlay-context=economics/industry-statistics
Suresh, P. (2003). Proper laws needed for bottled water industry. island.lk.
Zhihua Hu, L. W. (2011). Bottled Water: United States Consumers and Their Perceptions of Water
Quality. Int J Environ Res Public Health , 565–578.
