Coca Cola Brand Loyalty Case Study

Consumer loyalty is a broad category, which requires a detailed study, particularly with a company like Coca Cola.  Coca Cola belongs to the packaged consumer goods market and is the largest company with regard to marketing, branding, distribution, manufacturing, etc.  (Cisco Systems, 2007).  When attempting to understand the concept of brand loyalty, it is important to carefully analyze the areas that apply to brand loyalty.  The manner with which promotions are handled creates a major impact on the study, which gives the implication of strong branding.  This process could results in the devaluing of the brand as a whole and the marketed product.  To the dismay of management, research also indicates that loyalty to the Coca Cola brand is decreasing (Vault, 2008, F-5).

Introduction

Brand loyalty is a force that persuades the consumer to buy Coca Cola repeatedly whenever they desire to purchase soda.  This is due to the consumer’s level of satisfaction with the product and is directly linked to marketing of the product.  The brand name of Coca Cola has been used as a defining characteristic to their consumers; it helps to define them as a people.  However, too much advertising created an awareness of the newer variations in the product’s quality, which created unrest among the bottlers and Coca Cola sales fell off after the formula change.  This created an emotional response from consumers who had been dependent on the Coca Cola product for their soda needs (Allen, F, 1995, 113).

This proposal will carry out research on the aspects that the company should address the issue of brand loyalty.  Tests will be conducted including taste tests, interviews, and questionnaires, which will indicate whether the formula change implemented by Coca Cola will reverse the private motivations of consumers buying their product.  New Coke did destroy the brand loyalty consumers had for Coca Cola; it could not inspire the deep emotional bond that consumers had with the original.  For marketing managers, this enforced the concept of the difference between perceived brand loyalty and what the shoppers actually buy.  Minor changes could offer solutions, but this still needs to be handled carefully throughout the process (Hayes,  2005, 44).

The different groups that will be studies for the Coca Cola market survey are:

• Coke manufacturers and the trading associations
• The Coca Cola suppliers
• Consumers of Coca Cola

Methodology will be based on informal interview communication mode directly with the consumers of coke who are participants in terms of suppliers, traders, and manufacturers in the market across the world.  Sources will also include statistical data, conference papers, and interviews with the main players of the industry (Maupin, 1999, 28).

When considering Coca Cola changing its formula, market research has shown that the loyalty dropped below expectations due to the modification and was far below expectation.  Due to the fact that a number of variations have been made to the sugar and caffeine make up since 1886, there has been a gap in the continuity of the loyalty of consumers to the Coca Cola brand.  This is significant because the Coca Cola company is known for success in their industry throughout the world.  The implementation of “new Coke” was aimed at younger consumers.  Coca cola believed that the aging crowd was more concerned about their health and weight and would opt for drinks that did not contain sugar.  Teenagers, however, would favor the sweeter taste of cola.  The fault with this logic is that the company opted for alternatives to the product’s formula rather than changing their marketing campaign to appeal to the youth segment (Hayes, 2005, 229).

As brand loyalty is the top concern for company executives, marketers need to understand that the majority of consumers purchase a particular product because of convenience and specific situational constraints directly linked to their satisfaction levels.  This loyalty concept needs to be more focused to address the company’s needs.  Brand loyalty is paramount for Coca Cola as drawing in a new customer is sixteen times costlier that retaining an old customer.

Therefore, the goal and strategic objective of the research presented is to assist Coca Cola in understanding their current position in brand loyalty and to advise them on how to increase it (Kotler, 2005, 198). Market researchers studied the consumers’ behavior with regard to the new taste of Coca Cola wherein the consumers were asked a series of questions relating to their opinion of the change, how they were adapting to the “new Coke” variation, and whether or not they would be loyal to Coca Cola or try a new brand.

The research proved that Coke drinkers were not satisfied with the modifications made to their choice of brand.  Coca Cola executives worried about their baseline brand of Coca Cola diving into trouble with the consumer market if the “new Coke” failed to maintain their consumer base.  This would open up the field to Pepsi Co., giving them complete market advantage.  The studies’ results indicate that tests, including taste tests, blind tests, opinion polls, interviews, and other market research, is not clearly definitive in the process of measurement (Davis, 1993, 189).

Research also indicated that the best study method for understanding brand loyalty is to examine consumer behavior in the purchase decision process.  Studies also proved that it is not taste alone that is the basis for purchasing decisions.  It has been revealed that the ventrolateral prefrontal cortex, an area of the brain, which literally lights up when the consumer is making a decision based on brand awareness and loyalty.  Research also delved into a concept known as neuromarketing wherein neuroscientists are employed to actually study and explore consumers’ reactions in an environment which allows scientists to see the changes in the brain which affect the buying process.  Researchers have more to say about brand loyalty, which is directly linked to the way messages are sent to the brain while conducting tests (Gould, 1994, 243).

Research has shown that consumers who participated in blind taste tests demonstrated a lower level of acceptance to the Coca Cola brand when compared to those who were told the name of the drink when tasting.  This shows a clear emotional preference by consumers.  Studies also reviewed the cultural messages that are sent to the brain.  These help in identifying the downturn in personal preference.  The challenge has been to differentiate between the power of brain science and commercials, which the advertisers promote.  Hence, marketers need to understand the link of the human brain and the advances in brain science when making effective commercials (Blakeslee, 2004, F13).

Research Methodology

The goal of research is to better analyze the problems facing research and practically streamline the strategic issues of brand loyalty for Coca Cola.  It is necessary to understand the target market segment, the limitations, the methods adopted, and collection of measures of data that were undertaken in the course of the study.  The limitations will be structured to study the brand loyalty across the United States and Indian markets to gain a clear comparison of the reasoning that affect brand loyalty.  Coca Cola will need to address the issues of demand in order to study the changing patters of both foreign and local markets.  The company will be arranging specific representatives across the American and Indian markets in strategic locations in order to speed up the process and get a better market population study.

Over the course of the study, Coca Cola will be considering social factors, demographic trends, past sales records, health measurements undertaken, consumption patterns of the target segment, price shifts and the relation of price to the purchase, competition, and the product development phenomenon.  In order to accurately analyze brand loyalty, the company will also have to evaluate cultural dynamisms, consumer buying behavior, governmental policies affecting major decisions in the domestic and foreign markets, which will clearly indicate the specifics required of the study.

 As Coca Cola is a universal drink enjoyed by all age groups, the target market will be both youthful consumers and older ones.  Demographic trends will be ascertained among the different segments of consumers, which will be used to understand past studies as necessary.  Though the study will include the older consumer segment, more emphasis will be given to the youth evaluated as that is the group that contains the future, long time users of the product.  The next step would be to conduct primary research considering the estimated market potential and the market share  of Coca Cola and competitors (Greising, 1999, 121).

In order to understand brand loyalty among teenager, several tests can be initiated.  These include surveys designed to establish the effectiveness of an ad, package, or new product innovation or design.  Focus groups are another way to conduct a more intense research survey.  An interview that includes blind taste tests will also prove beneficial.  The cultural differences technique wherein users of the product do not give correct responses to statement and experiments due to their culture must also be considered.  Brain imaging is not adopted very often but it does show profound results when it comes to verbalizing the emotions (Blakeslee, S., 2004).

Coca Cola will indirectly adopt pilot tests, test-marketing concept to aspects where the consumers’ idea of choosing a particular brand stems from.  Considering the target segment of teenagers, adopting the process of sampling can increase brand loyalty toward Coca Cola.  The company can initially launch a discount of Coca Cola whenever the study needs to be carried out and implemented wherein the selection of the states could be based on a random selection process.  Promotion of this discount promotion campaign will include online web mode, which regulates participation by means of creating a database of customers’ email ID and age to ensure that only a certain demographic segment, most often teens, will receive a discount coupon for Coca Cola (PhD- dissertations, 1999).

For consumers which fall between a defined age group, a structured questionnaire will be made available which takes into consideration the uniformity of the consumers’ selection from each state in order to have a proportionate representation of the sample selected.  The questionnaire will consist of questions which are answered compulsorily and in the form of judgmental statements.  These evaluative statements include responses consisting of Strongly Agree, Agree, Neutral, Disagree, and Strongly Disagree.  This questionnaire will help Coca Cola in identifying the attitude of the consumers’ response to Coca Cola.  After the evaluation, positive and negative responses will be analyzed.  This will indicate whether consumers who have a positive attitude have a higher level of commitment and trust with Coca Cola and will purchase the product over the competition.  This will indicate strong brand loyalty toward Coca Cola (Pendergrast, 2000, 89).

Results

In order to make rational and sound observations, it is required that analysts use proper methods, tools, and techniques so that analyzing the required data set becomes easier.  Generalizations are often used in conjunction with this method.  Analysts will need to use certain instruments in order to generate and conduct an analysis.  These instruments will identify the results of customer loyalty of the different target segments.

A Likert scale will be used to observe the pattern of consumer attitudes toward specified statements that have positive and negative answers that create a behavioral pattern.  The scale used has been previously identified as a range between Strongly Agree to Strongly Disagree.  From the resulting scores, the researcher will carry out standard deviation, median, and mode to determine the level of agreement on a particular statement.  In turn, this will help develop a proper questionnaire analysis, prompting an understanding of the relationship between various variables used in the study.

The method that will assist with the understanding of the research include three main factors that will be adopted to study customer attitude towards their cola purchase and to ascertain to concept of brand loyalty  (Kotler, P., 2005, 34).  This technique is known as Factor Analysis, which is used to obtain deeper insights on the strong variables, which in turn lead to a particular judgment and follow-up action (Ramaswamy, 2002, 67).

In addition to these tests, Coca Cola believes in conducting blind taste test which help in knowing what is actually in the minds of the consumers.  This will help researchers in understand consumer perception and ideas which could be addressed by company executives to create more focus on the delivery of strategic implementation of goals and objectives.

Summary, Recommendations, Conclusion

After having thoroughly reviewed the entire pattern of research with reference to understanding brand loyalty and consumer attitudes, the possible alternatives and solutions need to be developed by Coca Cola.  Brand loyalty, which is closely tied to brand equity and promotions are one way to look at this consideration.  Some brand managers may not know that promotional campaigns related to the brand create an impact in aligning the consumers’ thinking when considering a certain product or service.  This may in turn, mislead the purpose of the strategies utilized.

Price sensitivity and usage dominance are directly related to the way brand promotions are addressed.  If a company allows their advertising campaign to include price cuts, the consumer will consider this aspect for every product in the industry and will routinely switch to a product that is priced lower.  Usage dominance is the edge a company possesses for having acquitted the maximum number of local buyers.  This indicates that the brand managers have to understand that if usage dominance exists then price sensitivity increases for every other competitor in the industry.  This contrasts when considering the view of ideology of brand equity or the loyalty consumers hold for the specific products (Warren, J., 2001)

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