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Assignment 2
Marketing Report
No. Last Name First Name Student ID Tutorial Time Tutor Name
1 Ye Ben 831539 Monday 12 PM Andrew Zur
2 Mirpuri Jayraj 752864 Monday 12 PM Andrew Zur
3 Amin Marzuk 824100 Monday 12 PM Andrew Zur
4 Moll Ryan 850461 Monday 12 PM Andrew Zur
Word Count: 3286
ExecutiveSummary
Due to the change in lifestyle of customers, The Coca-Cola Company launched a product,
Coca-Cola Life, in order to satisfy their health-conscious customers. This report analyses the
success of the marketing strategies of Coca-Cola Life. The Coca Cola Company released the
product in 2015 to Australia and New Zealand. Coke Life, hence the name, was an attempt by
Coca Cola to create a more natural product because the key value driver in the industry is
customer’s preferences. The can was made out of 30% plants and the drink had a natural
sweetener called stevia mixed in. The soda was segmented to a more specific demographic and
psychographic market within the soft drink industry: millennials (18-35 year olds) who are
interested in a healthier lifestyle.
Coca Cola Life occupies the position between full calorie sodas and diet sodas, or mid
calorie sodas. It is positioned as a healthier version of Coca Cola, with 30% less calories and a
natural sweetener of stevia. It is also positioned as healthy and environmentally friendly, with its
green packaging signaling these traits. Unfortunately, it is unable to take advantage of Coca
Cola’s already prevalent position as a fun, life loving drink, as none of its advertising suggests
that it is more than a health product, which it isn't.
Ultimately, Coca-Cola’s marketing campaign was a disaster, both on financial and ethical
fronts. Initial sales did not reach the mark of what it could’ve been, and Coca Cola’s latest
attempt at giving life to their classic soft drink fell flat, with sales dropping heavily every quarter
across the globe. Furthermore, accusations of greenwashing consumers and faring up against the
rise in ‘cold-pressed’ juices and juice cleanses proved to also be detrimental to the company,
with research showing that the product was almost just as unhealthy as regular Coke.
A limitation of this study is the report is constrained to Australian market, but it is an
international product, so sales data is pressured by any international demand. Another is the fact
that Coke Life is a relatively new product, and it remains to be seen whether it will have a lasting
impact on consumers, and whether it can inspire any brand loyalty, which is seen as a true
success of marketing.
Introduction
The Coca Cola Company was started in 1886 by Dr. John S. Pemberton when he
stumbled upon the modern day concept of soft-drinks. By combining flavored syrup and
carbonated water the Coca-Cola beverage was created ("Coca-Cola History │ World of Coca-
Cola", 2016). Now, in 2016, TCCC has four main Coke products including: the original Coca
Cola, Diet Coke, Coke Zero and most recently Coke Life. The Soft Drink Industry is
competitive, and Dr. Pepper by Snapple Group and Pepsi Company are two of the mains.
However, Coca Cola is still dominant with a brand value of $80.31 billion U.S. in 2016 ("Coca-
Cola: brand value 2016 | Statista", 2016). The industry is still growing with a projected increase
of $4.4 billion in 2016 ("Soft Drink Manufacturing in Australia Market Research | IBISWorld",
2016). Recent consumer trends are demanding for healthier options than the full calorie sodas.
This paper will go into more depth about Coca Cola’s introduction of Coke Life to Australia and
New Zealand in 2015 ("Coke Life arrives in Australia and New Zealand", 2016).
Consumer Behavior and MarketSegment
For companies in the soft drink industry to succeed it is important for them to assess their
customers because it allows for distribution of products that meets specific needs (McDonald,
258). The industry consists of multiple drinks includes: carbonated soft drinks, sports drinks and
energy drinks—excluding waters and fruit drinks ("Soft Drink Manufacturing in Australia
Market Research | IBISWorld", 2016). Traditionally the soft drink industry segments into three
main variables, or desires in terms of product includes (Pride, W. M., Ferrell, O., Lukas, B. A.,
Schembri, S., & Niininen, O.,2015): geographic, demographic and psychographic. Companies
generally segment geographically by countries, demographically by ages, and psychographically
by lifestyle and level of health awareness ("Soft Drink Manufacturing in Australia Market
Research | IBISWorld", 2016). The key value that drives the market is the consumer’s
preferences. The chief executive officer of the Australian Beverage Council, Geoff Parker was
quoted, “The beverage industry is always looking to respond to Australian consumers and their
needs” ("Coke Life arrives in Australia and New Zealand", 2016).
As an industry the annual growth is slowing down. Though it is bringing in a total of
$4.4 billion a year, the growth is expected to slow from 2.4% (2011-2016) to .9% (2016-2015)
("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). The main factor:
health awareness. The latest national survey of Australians showed that roughly 63% of adults
are considered overweight ("Obesity: Prevalence Trends In Australia", 2014). However, that is
starting to change, mass amounts of articles began flooding the news proclaiming that sodas
were unhealthy. One article summed it up—sugar in soda backed with zero nutritional values
leads to negative effects on bones, weight, tooth decay, diabetes, and more (MacMillan, 2016).
Then in 2015, shown by figure 1, Coca Cola posted their lowest profit in eight years. Every age
group above the age of 25 has decreased their daily consumption of soda—for example 25-35
year olds were 4% less likely to drink a Coke in 2014 as they were 2013 ("More young
Australians drinking soft drinks", 2015). The large soft drink companies had to respond. Pepsi
and Coke similarly introduces diet sodas, zero calorie sodas and now Pepsi Next and Coke Life.
As the soft drink industry is considered to be in the mature phase, sugarless or low-sugar sodas
are helping to level out the underperforming long-standing products ("Soft Drink Manufacturing
in Australia Market Research | IBISWorld", 2016). Coca Cola Life’s 30% less sugar is tapping
into this market.
Figure 1: Soft Drinks Age Analysis
Coca Cola Life’s name says a lot about what customers Coca Cola is trying to capture. It
was first launched in Argentina and Chile in 2013, and later in the USA, Great Britain and
Mexico (Vavere, 2016). Argentina was an ideal location to start in 2013 because it boasts, in
comparison to Australia, a low obesity rate of 18 percent, and is generally considered health and
environmentally conscious. Coke Life represented both of these attributes as a soft drink product
that is healthy for the customer and the environment because of its natural stevia sweetener and
bottle made up of 30 percent plant. The target market segment for Coca Cola Life is 18 to 35
year olds (the millennials) who are interested in preserving their health and the environment
(Bouckley, 2013). Coke Life is making an effort to market using behavioristic variables with the
“green” bottles being used in production. The millennials are being projected to be some of the
highest spenders on retail goods in many countries; the U.S. expects them to be spending $1.4
trillion in 2020. Millennials have been gravitating towards healthier drinks that also represent
what kind of person they want to be perceived as (Fry & Kim, 2015).
The 1960’s to the 1990’s was great times for soda companies, but they are facing a
daunting future. Millennial consumers are becoming more educated about what they are eating
and drinking. While diet sodas may offer a zero calorie or lower calories, they also offer no to
little nutritional benefits and have been linked to type 2 diabetes (Squillace, 2016). The
awareness of low calorie soda’s negative health associations is rising—however the main
concern is that more and more millennials are reading the nutrition labels not for the calorie
count, but the ingredient information (Fry & Kim, 2015). Ms. Nestle (owner of Dr. Pepper)
notes the soda industry saw the largest decline in consumption by the wealthier population, but is
expecting to see declines by the lower classes due to the spread of education through consumers
(Sanger-Katz, 2015). Coca Cola Life’s green packaging and use of stevia may not be enough to
steer people away from accounting it as another unhealthy soda. Especially since the company is
getting backlash for greenwashing and the high density of 22 grams of sugar still present (Jones,
2014).
Positioning and BrandingAnalysis
Marketing positioning is defined as strategically choosing the market segments that the
company provides to, differentiating themselves from competition, and choosing how they will
compete with its rivals. (Brooksbank, 1998). Positioning is also related to how the customers
perceive the brand, or what it’s associated with. Companies try to have positive brand
positioning as much as possible. Brands can influence their position by informing customers of
the crucial information about the product, and shaping the brand itself. (Pride, 2011). The
positioning and branding of a product can make or break its sales.
There are four major types of Coca Cola. There is the original Coca Cola, Diet Coke, Coke
Zero, and Coke Life. (The Coca-Cola Company, 2016). Coke Life is positioned as a healthier,
lower calorie and lower sugar version of traditional cola drinks. It occupies the space between
traditional, high calorie cola drinks and low to no calorie colas, or a mid-calorie soda. (Arthur,
2015). It has two thirds the calories of a regular Coke, and 45% less sugar, due to the stevia
extract used. (Staff, 2015). However, Coke Life faces plenty of competition, both internal and
external.
For its internal competition, Coke Life has to have its differentiation to the other three
major Coca Cola products. Its main differentiating factor is that it used stevia extract to naturally
sweeten the drink. Coke Life is positioned as a healthier version of the original Coca Cola with
less calories and less sugar, while retaining an almost identical taste. Compared to Diet Coke,
Coke Life is positioned as having a closer taste to the original Coca Cola while having more
calories and more sugar. For Coke Zero, Coke Life is positioned as a healthier and more natural
version, with less added chemicals. However, it has more sugar and more calories. (Coca-Cola,
2016).
In fact, this trend towards health consciousness has prompted Coca Cola’s biggest
competitor, Pepsi, to launch its own naturally flavored mid-calorie soda, Pepsi Next. (Herbison,
2015). It has a similar positioning as Coke Life, having less calories, less sugar, and being more
natural than original Pepsi as it is also sweetened with stevia extract. (May, 2014).
For Coke Life to succeed as a brand, its brand identity must be consistent with the
already successful brand identity of Coca Cola, while communicating its own ideas to the
customer. This would increase the depth and breadth of Coca Cola’s brand awareness. (Pride,
2011). Coca Cola already has favorable associations, due to its widespread advertising. It has a
brand identity related to fun, happiness and high energy. Its advertisements contain scenes of
happy people drinking the product and feeling refreshed. (Maandag, 2015; May, 2014). Its
primary color is red, the symbol for love and passion. (Morton, 2016). Coca Cola Life has a quite
different brand identity. It is healthy, natural, and environmentally friendly. It has a jarringly
different color scheme from the classic red, with bright green bottles. Green has different
symbolisms from red, being associated with nature, health, and the earth. (Morton, 2016). While
these are still positive associations, they aren’t consistent with Coca Cola’s, and Coke Life does
break the color scheme, so the visual connection is less. This means that Coke Life is unable to
create a synergic cooperation with Coca Cola’s brand identity, as its identities are fundamentally
different, and therefore their brand image is different from that of Coca Cola. Coke Life will
have to work harder to drive its image into customer’s memories as it can't really take advantage
of Coca Cola’s established brand image.
In addition to the failure of the green bottles to align with Coca Cola’s brand image, it has
also been accused of greenwashing. (Dean, 2015; Han, 2015). Greenwashing is the idea that a
company’s marketing can be deceptive in promoting its product as healthy or good for the
environment. (Leonidou, Palihawadana, & Hultman, 2011; Laufer, 2003). Though Coke Life is
much healthier than Coca Cola, it is still not a healthy product. (Coyle, 2015). Instead of
focusing on driving the health angle forward, Coke Life should focus on ingredient branding and
let the customers decide for themselves. They do emphasize the stevia, but they should also
advertise the lack of artificial sweeteners, and the close to original taste. (May, 2014). Overall
their positioning and branding is decent, but can be improved to align more with Coca Cola’s
brand image.
Value Analysis
Creating value for customers is considered to be vital for success of a product (Doyle, 2000).
To a customer, the product alone does not create value. The criteria for creating value includes
characteristics such as convenience during time of purchase, reliability of the product and the
product itself (Walters, Lancaster, Walters, & Lancaster, 2012).
The initial step to creating sustainable value is to offer value propositions to the
customers (Frow & Payne, 2011; Kaplan, Norton, Kaplan, & Norton, 2004). Value propositions
present the customers with the benefits of the products and also why they are better than their
competitors’ products ("What is value proposition (VP)? - Definition from WhatIs.com", 2016).
An effective value proposition should clearly answer customers’ questions about what benefits
the product will deliver and also why they should buy that company’s product rather than the
next best alternative (Anderson, Narus, & Rossum, 2006).
The healthier lifestyle of consumers led to a fall in the consumption of Coca-Cola
products. In order to counter this changing trend, The Coca-Cola Company, like many others in
the industry, launched products with no or low sugar level (Wu, 2016). For The Coca-Cola
Company, the product was known as Coca-Cola Life. The value proposition for this product was
that it contained 35% less sugar due to the natural sweetener, stevia ("Coca-Cola Life launching
in Australia", 2016). According to the company, what makes Coca-Cola Life better than its next
best alternative, PepsiCo’s Pepsi Next, is the fact that the taste is similar to the original Coca-
Cola even though it contains less sugar ("Coca-Cola Life", 2016). These inventions by Coca-
Cola Company and PepsiCo managed to satisfy the health-conscious consumers and hold on to
the market base as implied by Figure 2.
Figure 2: Soft Drink Segments
The Coca-Cola Company knows that creating customer value leads directly to market shares
and profits (Kotler & Armstrong, 1998). For the Coca-Cola Company, innovation along with the
proper distribution of all its products adds value to the brand (Company et al., 2016). Gaining the
trust of the consumers by delivering quality products helped the company to create further value
("Creating and sharing value", 2016). Coca-Cola Life managed to create customer value for the
company in the same way. Innovating products according to the customer satisfactions led to an
increase of customer value.
The reactions by the consumers on social media site were not what the company expected.
Before the actual launch of the product, the media campaign and other advertisements of Coca-
Cola Life created a buzz through social media which induced curiosity in the consumers.
However, the quality of the product failed to deliver after the launch (Intelligence, 2015). Many
consumers believed that the product was just a hoax and the taste of the natural sweetener, stevia,
was simply overpowering and 76% of the consumers thought the taste was not up to standard
(Han, 2015).
Figure 3: Coca-Cola Life vs Pepsi Next
Marketingtoolbox
Product
A product is a tangible representation of a brand ("Brand Definition | Marketing Toolbox",
2016). Coca-Cola Life represents the brand Coca-Cola Amatil in the market for low sugar-level
carbonated soft drinks in Australia. Coca-Cola Life competes against the likes of Pepsi Next and
also Diet Coke and Coke Zero. It managed to accumulate 1-2 percent of the sales of total brand
Coke sales in Australia which was higher than the company’s expectations ("Coca-Cola say
Coke Life sales above target", 2016).
Price
Coca-Cola aims to price their soft drinks according to two factors, the amount of demand
in the market by consumers (according to The Final Project) and value, as according to
Tharakan. All Coca-Cola products tend to be the same price for the same quantity, as shown by
the images below. Coca-Cola Life reflects this, with the product being of the same price as
traditional Coca-Cola, Coca-Cola Zero and Diet Coca-Cola. Generally, when there is a sale for
Coca-Cola, all Coca-Cola trademarked products will also go on sale. (i.e Coke Zero, Coke Life)
Place / Distribution
Coca Cola Life first began distribution to Australia and New Zealand on April 7th, 2015
after being launched in Chile, Argentina, Mexico, Great Britain and USA ("Stevia to take off
globally through Coke Life expansion | Australian Food News", 2016). Coca Cola employs an
intensive distribution method, meaning distribution is convenient and available to customers in
majority of outlets (Boundless, 2016). Coke Life lacked demand in most independent stores, and
thus, was taken off shelves from many of these stores. Coke Life is now only consistently found
in Australian large supermarkets like Coles, Woolworths and 7-Elevens, but was never translated
to restaurants.
Promotion
Coca Cola launched a multimillion dollar promotional campaign to help distribute Coke
Life. This included television ads, online videos, and print materials. (Homewood, 2015). They
also partnered up with British supermodel Rosie Huntington-Whiteley to help promote the
product, further enforcing the health angle. All the promotion helped emphasize the healthy and
environmentally conscious focus of the brand. (Hepburn, 2014)
MarketingStrategyEvaluation
With the increasingly health conscious direction that modern society has taken, Coke has
tried everything to ‘keep the fizz going’ (Reynolds, M, 2016), as it realised that ‘people were
turning on its signature teeth-rotting drink’ (Reynolds, M, 2016). The introduction of Coke Life
was the latest attempt to revitalise the slump in sales, especially in the last 5 due to the
aforementioned change in consumer trend, (Current performance, IBISWorld, 2016) marketing it
as a healthier option of the classic Coca-Cola with the same identical taste. Despite this, Coca
Cola Life has failed to rejuvenate the sales and uphold the expectations of it being the ‘healthy’
soft drink of choice for consumers. Officially launched in Argentina and Chile in 2013 (TCCC,
2014) after 5 years of research, but as of 2016, it is almost nonexistent in those two countries,
with the drink being slowly pulled out from the market due to the poor reception from
consumers. (Wikipedia, 2014) However, the slump in demand and reception was not only
exclusive to consumers in Argentina and Chile. The soft drink did not prove to be a success in
the UK or Australia either, with sales of Coke Life declining in almost all months of 2015 in the
UK (Coke life sales goes flat, 2016), and sales of Life in Australia being only half of Coca Cola
Vanilla during the opening 5 weeks of sales. (Coca Cola Life falling short of sales expectations,
2015) One of the main factors to the failure of Coke Life has been the actual marketing of the
product. Despite being advertised as using stevia as well as sugar with a lower calorie count, it is
hard to justify for consumers why they would purchase it. For most consumers, those who
already frequently drink soft drink don’t care about the health factors involved, and would just
purchase traditional Coke. For the health conscious consumers, Coke Diet or Coke Zero are
already options which contain less calories and less sugar than Coke Life. As Coke Life is mid-
calorie based, consumers would have a difficult time justifying the purchase of it when more
convenient options are already within reach.
From an ethical standpoint, Coca Cola has been largely unethical in the marketing of the
product, being accused of green-washing consumers. (Coca Cola accused of greenwashing,
2015) Greenwashing is ‘when a company or organisation more time and money claiming to be
‘green’ through advertising and marketing rather than actually implementing business practices
that minimise environmental impacts.’ (About greenwashing, 2016) The color green is typically
associated with a healthy and clean lifestyle. With the green packaging coupled with many
‘healthy lifestyle’ ad campaigns, the initial perception of the product was that it was a healthy
alternative to traditional Coca-Cola or even the sugar free version of Coke. However, Coca Cola
Life still contains 22 grams of sugar, which is still 2/3 of the sugar that is contained within
traditional Coke. Furthermore, the production of Stevia is extremely harmful to the environment
and humans, as it is extracted from the stevia plant using methanol, a chemical that is highly
toxic to humans. (One can of Coca Cola Life contains 8 teaspoons of sugar, 2015)
Over recent years, an increase in demand for ‘healthy refreshments - including beverages
that are natural, organic or low in calories… such as...cold-pressed juices, enhanced waters and
fusion beverages’, (Martin, EJ, 2016) as a result of a more health conscious society has seen
sales in soft drinks decline. (Del Buono, A, 2016) This emerging health trend is a serious
competitive threat to not only TCCC, but the soft drink industry as a whole. Due to more and
more healthier options on the market as a substitute, the soft drink industry in the US has seen a
decline in soft drink sales for the 11th year in a row. (Kell, J, 2016) Despite Diet Coke being
considered the healthier Coke option, even that has experienced a heavy drop in sales, down
5.6% in 2015 (Kell, J, 2016)
It is clear that the dismal reception that Coca-Cola Life has had is a testament to why it
should no longer be on the shelves anymore. Despite TCCC’s attempts at marketing it as a
product that retains the same identical taste to traditional Coke, sales of Coke Life clearly
indicates that the market does not need a mid-calorie based soft drink. However, if TCCC were
to continue to market Coke Life, they should stop advertising it as a healthy drink. Despite the
green ‘health’ evoking packaging and TCCC wanting people to perceive it to be healthy, most
people did not view it as this, but more so as just another carbonated, unhealthy soft drink.
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Soft Drink Manufacturing in Australia About this Industry, (September).

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MarketingGroupAssignment finishhhh

  • 1. Assignment 2 Marketing Report No. Last Name First Name Student ID Tutorial Time Tutor Name 1 Ye Ben 831539 Monday 12 PM Andrew Zur 2 Mirpuri Jayraj 752864 Monday 12 PM Andrew Zur 3 Amin Marzuk 824100 Monday 12 PM Andrew Zur 4 Moll Ryan 850461 Monday 12 PM Andrew Zur Word Count: 3286
  • 2. ExecutiveSummary Due to the change in lifestyle of customers, The Coca-Cola Company launched a product, Coca-Cola Life, in order to satisfy their health-conscious customers. This report analyses the success of the marketing strategies of Coca-Cola Life. The Coca Cola Company released the product in 2015 to Australia and New Zealand. Coke Life, hence the name, was an attempt by Coca Cola to create a more natural product because the key value driver in the industry is customer’s preferences. The can was made out of 30% plants and the drink had a natural sweetener called stevia mixed in. The soda was segmented to a more specific demographic and psychographic market within the soft drink industry: millennials (18-35 year olds) who are interested in a healthier lifestyle. Coca Cola Life occupies the position between full calorie sodas and diet sodas, or mid calorie sodas. It is positioned as a healthier version of Coca Cola, with 30% less calories and a natural sweetener of stevia. It is also positioned as healthy and environmentally friendly, with its green packaging signaling these traits. Unfortunately, it is unable to take advantage of Coca Cola’s already prevalent position as a fun, life loving drink, as none of its advertising suggests that it is more than a health product, which it isn't. Ultimately, Coca-Cola’s marketing campaign was a disaster, both on financial and ethical fronts. Initial sales did not reach the mark of what it could’ve been, and Coca Cola’s latest attempt at giving life to their classic soft drink fell flat, with sales dropping heavily every quarter across the globe. Furthermore, accusations of greenwashing consumers and faring up against the rise in ‘cold-pressed’ juices and juice cleanses proved to also be detrimental to the company, with research showing that the product was almost just as unhealthy as regular Coke. A limitation of this study is the report is constrained to Australian market, but it is an international product, so sales data is pressured by any international demand. Another is the fact that Coke Life is a relatively new product, and it remains to be seen whether it will have a lasting impact on consumers, and whether it can inspire any brand loyalty, which is seen as a true success of marketing.
  • 3. Introduction The Coca Cola Company was started in 1886 by Dr. John S. Pemberton when he stumbled upon the modern day concept of soft-drinks. By combining flavored syrup and carbonated water the Coca-Cola beverage was created ("Coca-Cola History │ World of Coca- Cola", 2016). Now, in 2016, TCCC has four main Coke products including: the original Coca Cola, Diet Coke, Coke Zero and most recently Coke Life. The Soft Drink Industry is competitive, and Dr. Pepper by Snapple Group and Pepsi Company are two of the mains. However, Coca Cola is still dominant with a brand value of $80.31 billion U.S. in 2016 ("Coca- Cola: brand value 2016 | Statista", 2016). The industry is still growing with a projected increase of $4.4 billion in 2016 ("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). Recent consumer trends are demanding for healthier options than the full calorie sodas. This paper will go into more depth about Coca Cola’s introduction of Coke Life to Australia and New Zealand in 2015 ("Coke Life arrives in Australia and New Zealand", 2016). Consumer Behavior and MarketSegment For companies in the soft drink industry to succeed it is important for them to assess their customers because it allows for distribution of products that meets specific needs (McDonald, 258). The industry consists of multiple drinks includes: carbonated soft drinks, sports drinks and energy drinks—excluding waters and fruit drinks ("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). Traditionally the soft drink industry segments into three main variables, or desires in terms of product includes (Pride, W. M., Ferrell, O., Lukas, B. A., Schembri, S., & Niininen, O.,2015): geographic, demographic and psychographic. Companies generally segment geographically by countries, demographically by ages, and psychographically by lifestyle and level of health awareness ("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). The key value that drives the market is the consumer’s preferences. The chief executive officer of the Australian Beverage Council, Geoff Parker was quoted, “The beverage industry is always looking to respond to Australian consumers and their needs” ("Coke Life arrives in Australia and New Zealand", 2016).
  • 4. As an industry the annual growth is slowing down. Though it is bringing in a total of $4.4 billion a year, the growth is expected to slow from 2.4% (2011-2016) to .9% (2016-2015) ("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). The main factor: health awareness. The latest national survey of Australians showed that roughly 63% of adults are considered overweight ("Obesity: Prevalence Trends In Australia", 2014). However, that is starting to change, mass amounts of articles began flooding the news proclaiming that sodas were unhealthy. One article summed it up—sugar in soda backed with zero nutritional values leads to negative effects on bones, weight, tooth decay, diabetes, and more (MacMillan, 2016). Then in 2015, shown by figure 1, Coca Cola posted their lowest profit in eight years. Every age group above the age of 25 has decreased their daily consumption of soda—for example 25-35 year olds were 4% less likely to drink a Coke in 2014 as they were 2013 ("More young Australians drinking soft drinks", 2015). The large soft drink companies had to respond. Pepsi and Coke similarly introduces diet sodas, zero calorie sodas and now Pepsi Next and Coke Life. As the soft drink industry is considered to be in the mature phase, sugarless or low-sugar sodas are helping to level out the underperforming long-standing products ("Soft Drink Manufacturing in Australia Market Research | IBISWorld", 2016). Coca Cola Life’s 30% less sugar is tapping into this market. Figure 1: Soft Drinks Age Analysis
  • 5. Coca Cola Life’s name says a lot about what customers Coca Cola is trying to capture. It was first launched in Argentina and Chile in 2013, and later in the USA, Great Britain and Mexico (Vavere, 2016). Argentina was an ideal location to start in 2013 because it boasts, in comparison to Australia, a low obesity rate of 18 percent, and is generally considered health and environmentally conscious. Coke Life represented both of these attributes as a soft drink product that is healthy for the customer and the environment because of its natural stevia sweetener and bottle made up of 30 percent plant. The target market segment for Coca Cola Life is 18 to 35 year olds (the millennials) who are interested in preserving their health and the environment (Bouckley, 2013). Coke Life is making an effort to market using behavioristic variables with the “green” bottles being used in production. The millennials are being projected to be some of the highest spenders on retail goods in many countries; the U.S. expects them to be spending $1.4 trillion in 2020. Millennials have been gravitating towards healthier drinks that also represent what kind of person they want to be perceived as (Fry & Kim, 2015). The 1960’s to the 1990’s was great times for soda companies, but they are facing a daunting future. Millennial consumers are becoming more educated about what they are eating and drinking. While diet sodas may offer a zero calorie or lower calories, they also offer no to little nutritional benefits and have been linked to type 2 diabetes (Squillace, 2016). The awareness of low calorie soda’s negative health associations is rising—however the main concern is that more and more millennials are reading the nutrition labels not for the calorie count, but the ingredient information (Fry & Kim, 2015). Ms. Nestle (owner of Dr. Pepper) notes the soda industry saw the largest decline in consumption by the wealthier population, but is expecting to see declines by the lower classes due to the spread of education through consumers (Sanger-Katz, 2015). Coca Cola Life’s green packaging and use of stevia may not be enough to steer people away from accounting it as another unhealthy soda. Especially since the company is getting backlash for greenwashing and the high density of 22 grams of sugar still present (Jones, 2014).
  • 6. Positioning and BrandingAnalysis Marketing positioning is defined as strategically choosing the market segments that the company provides to, differentiating themselves from competition, and choosing how they will compete with its rivals. (Brooksbank, 1998). Positioning is also related to how the customers perceive the brand, or what it’s associated with. Companies try to have positive brand positioning as much as possible. Brands can influence their position by informing customers of the crucial information about the product, and shaping the brand itself. (Pride, 2011). The positioning and branding of a product can make or break its sales. There are four major types of Coca Cola. There is the original Coca Cola, Diet Coke, Coke Zero, and Coke Life. (The Coca-Cola Company, 2016). Coke Life is positioned as a healthier, lower calorie and lower sugar version of traditional cola drinks. It occupies the space between traditional, high calorie cola drinks and low to no calorie colas, or a mid-calorie soda. (Arthur, 2015). It has two thirds the calories of a regular Coke, and 45% less sugar, due to the stevia extract used. (Staff, 2015). However, Coke Life faces plenty of competition, both internal and external. For its internal competition, Coke Life has to have its differentiation to the other three major Coca Cola products. Its main differentiating factor is that it used stevia extract to naturally sweeten the drink. Coke Life is positioned as a healthier version of the original Coca Cola with less calories and less sugar, while retaining an almost identical taste. Compared to Diet Coke, Coke Life is positioned as having a closer taste to the original Coca Cola while having more calories and more sugar. For Coke Zero, Coke Life is positioned as a healthier and more natural version, with less added chemicals. However, it has more sugar and more calories. (Coca-Cola, 2016). In fact, this trend towards health consciousness has prompted Coca Cola’s biggest competitor, Pepsi, to launch its own naturally flavored mid-calorie soda, Pepsi Next. (Herbison, 2015). It has a similar positioning as Coke Life, having less calories, less sugar, and being more natural than original Pepsi as it is also sweetened with stevia extract. (May, 2014). For Coke Life to succeed as a brand, its brand identity must be consistent with the already successful brand identity of Coca Cola, while communicating its own ideas to the
  • 7. customer. This would increase the depth and breadth of Coca Cola’s brand awareness. (Pride, 2011). Coca Cola already has favorable associations, due to its widespread advertising. It has a brand identity related to fun, happiness and high energy. Its advertisements contain scenes of happy people drinking the product and feeling refreshed. (Maandag, 2015; May, 2014). Its primary color is red, the symbol for love and passion. (Morton, 2016). Coca Cola Life has a quite different brand identity. It is healthy, natural, and environmentally friendly. It has a jarringly different color scheme from the classic red, with bright green bottles. Green has different symbolisms from red, being associated with nature, health, and the earth. (Morton, 2016). While these are still positive associations, they aren’t consistent with Coca Cola’s, and Coke Life does break the color scheme, so the visual connection is less. This means that Coke Life is unable to create a synergic cooperation with Coca Cola’s brand identity, as its identities are fundamentally different, and therefore their brand image is different from that of Coca Cola. Coke Life will have to work harder to drive its image into customer’s memories as it can't really take advantage of Coca Cola’s established brand image. In addition to the failure of the green bottles to align with Coca Cola’s brand image, it has also been accused of greenwashing. (Dean, 2015; Han, 2015). Greenwashing is the idea that a company’s marketing can be deceptive in promoting its product as healthy or good for the environment. (Leonidou, Palihawadana, & Hultman, 2011; Laufer, 2003). Though Coke Life is much healthier than Coca Cola, it is still not a healthy product. (Coyle, 2015). Instead of focusing on driving the health angle forward, Coke Life should focus on ingredient branding and let the customers decide for themselves. They do emphasize the stevia, but they should also advertise the lack of artificial sweeteners, and the close to original taste. (May, 2014). Overall their positioning and branding is decent, but can be improved to align more with Coca Cola’s brand image. Value Analysis Creating value for customers is considered to be vital for success of a product (Doyle, 2000). To a customer, the product alone does not create value. The criteria for creating value includes
  • 8. characteristics such as convenience during time of purchase, reliability of the product and the product itself (Walters, Lancaster, Walters, & Lancaster, 2012). The initial step to creating sustainable value is to offer value propositions to the customers (Frow & Payne, 2011; Kaplan, Norton, Kaplan, & Norton, 2004). Value propositions present the customers with the benefits of the products and also why they are better than their competitors’ products ("What is value proposition (VP)? - Definition from WhatIs.com", 2016). An effective value proposition should clearly answer customers’ questions about what benefits the product will deliver and also why they should buy that company’s product rather than the next best alternative (Anderson, Narus, & Rossum, 2006). The healthier lifestyle of consumers led to a fall in the consumption of Coca-Cola products. In order to counter this changing trend, The Coca-Cola Company, like many others in the industry, launched products with no or low sugar level (Wu, 2016). For The Coca-Cola Company, the product was known as Coca-Cola Life. The value proposition for this product was that it contained 35% less sugar due to the natural sweetener, stevia ("Coca-Cola Life launching in Australia", 2016). According to the company, what makes Coca-Cola Life better than its next best alternative, PepsiCo’s Pepsi Next, is the fact that the taste is similar to the original Coca- Cola even though it contains less sugar ("Coca-Cola Life", 2016). These inventions by Coca- Cola Company and PepsiCo managed to satisfy the health-conscious consumers and hold on to the market base as implied by Figure 2. Figure 2: Soft Drink Segments
  • 9. The Coca-Cola Company knows that creating customer value leads directly to market shares and profits (Kotler & Armstrong, 1998). For the Coca-Cola Company, innovation along with the proper distribution of all its products adds value to the brand (Company et al., 2016). Gaining the trust of the consumers by delivering quality products helped the company to create further value ("Creating and sharing value", 2016). Coca-Cola Life managed to create customer value for the company in the same way. Innovating products according to the customer satisfactions led to an increase of customer value. The reactions by the consumers on social media site were not what the company expected. Before the actual launch of the product, the media campaign and other advertisements of Coca- Cola Life created a buzz through social media which induced curiosity in the consumers. However, the quality of the product failed to deliver after the launch (Intelligence, 2015). Many consumers believed that the product was just a hoax and the taste of the natural sweetener, stevia, was simply overpowering and 76% of the consumers thought the taste was not up to standard (Han, 2015). Figure 3: Coca-Cola Life vs Pepsi Next
  • 10. Marketingtoolbox Product A product is a tangible representation of a brand ("Brand Definition | Marketing Toolbox", 2016). Coca-Cola Life represents the brand Coca-Cola Amatil in the market for low sugar-level carbonated soft drinks in Australia. Coca-Cola Life competes against the likes of Pepsi Next and also Diet Coke and Coke Zero. It managed to accumulate 1-2 percent of the sales of total brand Coke sales in Australia which was higher than the company’s expectations ("Coca-Cola say Coke Life sales above target", 2016). Price Coca-Cola aims to price their soft drinks according to two factors, the amount of demand in the market by consumers (according to The Final Project) and value, as according to Tharakan. All Coca-Cola products tend to be the same price for the same quantity, as shown by the images below. Coca-Cola Life reflects this, with the product being of the same price as traditional Coca-Cola, Coca-Cola Zero and Diet Coca-Cola. Generally, when there is a sale for Coca-Cola, all Coca-Cola trademarked products will also go on sale. (i.e Coke Zero, Coke Life)
  • 11.
  • 12. Place / Distribution Coca Cola Life first began distribution to Australia and New Zealand on April 7th, 2015 after being launched in Chile, Argentina, Mexico, Great Britain and USA ("Stevia to take off globally through Coke Life expansion | Australian Food News", 2016). Coca Cola employs an intensive distribution method, meaning distribution is convenient and available to customers in majority of outlets (Boundless, 2016). Coke Life lacked demand in most independent stores, and thus, was taken off shelves from many of these stores. Coke Life is now only consistently found in Australian large supermarkets like Coles, Woolworths and 7-Elevens, but was never translated to restaurants. Promotion Coca Cola launched a multimillion dollar promotional campaign to help distribute Coke Life. This included television ads, online videos, and print materials. (Homewood, 2015). They also partnered up with British supermodel Rosie Huntington-Whiteley to help promote the product, further enforcing the health angle. All the promotion helped emphasize the healthy and environmentally conscious focus of the brand. (Hepburn, 2014) MarketingStrategyEvaluation With the increasingly health conscious direction that modern society has taken, Coke has tried everything to ‘keep the fizz going’ (Reynolds, M, 2016), as it realised that ‘people were turning on its signature teeth-rotting drink’ (Reynolds, M, 2016). The introduction of Coke Life was the latest attempt to revitalise the slump in sales, especially in the last 5 due to the aforementioned change in consumer trend, (Current performance, IBISWorld, 2016) marketing it as a healthier option of the classic Coca-Cola with the same identical taste. Despite this, Coca Cola Life has failed to rejuvenate the sales and uphold the expectations of it being the ‘healthy’ soft drink of choice for consumers. Officially launched in Argentina and Chile in 2013 (TCCC, 2014) after 5 years of research, but as of 2016, it is almost nonexistent in those two countries, with the drink being slowly pulled out from the market due to the poor reception from consumers. (Wikipedia, 2014) However, the slump in demand and reception was not only
  • 13. exclusive to consumers in Argentina and Chile. The soft drink did not prove to be a success in the UK or Australia either, with sales of Coke Life declining in almost all months of 2015 in the UK (Coke life sales goes flat, 2016), and sales of Life in Australia being only half of Coca Cola Vanilla during the opening 5 weeks of sales. (Coca Cola Life falling short of sales expectations, 2015) One of the main factors to the failure of Coke Life has been the actual marketing of the product. Despite being advertised as using stevia as well as sugar with a lower calorie count, it is hard to justify for consumers why they would purchase it. For most consumers, those who already frequently drink soft drink don’t care about the health factors involved, and would just purchase traditional Coke. For the health conscious consumers, Coke Diet or Coke Zero are already options which contain less calories and less sugar than Coke Life. As Coke Life is mid- calorie based, consumers would have a difficult time justifying the purchase of it when more convenient options are already within reach. From an ethical standpoint, Coca Cola has been largely unethical in the marketing of the product, being accused of green-washing consumers. (Coca Cola accused of greenwashing, 2015) Greenwashing is ‘when a company or organisation more time and money claiming to be ‘green’ through advertising and marketing rather than actually implementing business practices that minimise environmental impacts.’ (About greenwashing, 2016) The color green is typically associated with a healthy and clean lifestyle. With the green packaging coupled with many ‘healthy lifestyle’ ad campaigns, the initial perception of the product was that it was a healthy alternative to traditional Coca-Cola or even the sugar free version of Coke. However, Coca Cola Life still contains 22 grams of sugar, which is still 2/3 of the sugar that is contained within traditional Coke. Furthermore, the production of Stevia is extremely harmful to the environment and humans, as it is extracted from the stevia plant using methanol, a chemical that is highly toxic to humans. (One can of Coca Cola Life contains 8 teaspoons of sugar, 2015) Over recent years, an increase in demand for ‘healthy refreshments - including beverages that are natural, organic or low in calories… such as...cold-pressed juices, enhanced waters and fusion beverages’, (Martin, EJ, 2016) as a result of a more health conscious society has seen sales in soft drinks decline. (Del Buono, A, 2016) This emerging health trend is a serious competitive threat to not only TCCC, but the soft drink industry as a whole. Due to more and more healthier options on the market as a substitute, the soft drink industry in the US has seen a
  • 14. decline in soft drink sales for the 11th year in a row. (Kell, J, 2016) Despite Diet Coke being considered the healthier Coke option, even that has experienced a heavy drop in sales, down 5.6% in 2015 (Kell, J, 2016) It is clear that the dismal reception that Coca-Cola Life has had is a testament to why it should no longer be on the shelves anymore. Despite TCCC’s attempts at marketing it as a product that retains the same identical taste to traditional Coke, sales of Coke Life clearly indicates that the market does not need a mid-calorie based soft drink. However, if TCCC were to continue to market Coke Life, they should stop advertising it as a healthy drink. Despite the green ‘health’ evoking packaging and TCCC wanting people to perceive it to be healthy, most people did not view it as this, but more so as just another carbonated, unhealthy soft drink.
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