Research Korner: Product Innovation

MARKETING - PRODUCT POLICY

Product Policy             The product of a company is its most important asset. As reported, it is the soul of the company; the maximum vector of the characterization of the services that are associated with it (“, 2006). The product is characterized not only by its physical features but also by the image that it conveys (“, 2006). Thus, three factors must be associated with it, namely, product features, packaging and range policies.             As to the features, the factors that make the clients or participants to consider the product or the project good are essential. The quality and the real advantage offered by the project must be in terms of performance or design. The Virtuous Woman Pageant is different from other pageants for it does not only exemplify the beauty and the talents of a woman but her inner beauty, character and spirituality as a whole. In addition, this pageant is not particular with a woman’s physical characteristics, such as the height and vital statistics, therefore, many women from ages 13 to 45 years old, can be qualified. The features of the project will help in its promotion, as many women would like to display and show their talents, skills, abilities and character in different ways. The Virtuous Woman Pageant is unique in its features, in its intentions to share the Word of God in a perspective of a real woman.             Another aspect of product policy is packaging, and it is one of the product’s components oriented to images. The package of the product is the first contact that the client has with the product, and therefore, may be a decisive factor not only for the purchase or support of the project, but also for the image that will be associated with the service of the company (“”, 2006). This must be effective and communicative since it has a strong communication component, and must convey visual impact, acknowledgement, identification, and information of the product or service. The use of advertising and publicity serves as the packaging for The Virtuous Woman Pageant, so these aspects will be given effort on to effectively draw in the attention of the Christian women. Virtue and Valor Ministries will use an effective advertising plan, providing the critical information regarding the pageant, to the Christian women aged 13-45. Information technology, print ads, television, radio and other medium of communication will be used, to successfully enlighten the public regarding its launching and also to entertain questions and suggestions from the interested participants. In this way, more ideas will be conveyed and the interaction with the public will be accomplished.             A range is considered to be a set of products that use the same technology, business, market or market segment, and must be evaluated according to the market addressed (“”, 2006). The Virtue and Valor Ministries has only one set of product and that is the pageant. Its target market is the Christian women aged 13-45, who exemplify the characteristics of a Godly woman, and has a sound biblical foundation.   Channels of Distribution             (2004) stresses the importance of channels of distribution in the marketing mix (p. 258). According to him, customers must have access to a product or service to be able to purchase it. The purpose of this system of distribution channels is to provide an efficient means of getting a company’s products to customers and customers to the products. All companies use channels of distribution, whether they sell directly to and customers using a sales force or use a multilevel system made up of many different entities ( 2004, p. 258). Furthermore, the author categorized the channels into two: the direct and the indirect channels. A direct channel is one where the product or service remains under the control of the company from production to customer; it implies a sales force, which is dedicated to the company’s products, but is expensive to train and maintain. While the indirect channels are independent parties paid by the company to distribute the product; these can reach more customers but are not necessarily working for the company (, 2004, p.269).               (2004) explains that a useful way to think of channels of distribution is as a value-added chain, where the beginning of the chain consists of suppliers that provide raw materials: labor, technology, or other factors of production; the firm then uses the channels or intermediaries that enable customers to gain access to the product or service (p. 259). The author also added that the intermediaries are used only if they add value to the system and are compensated for the added value. Moreover, in using indirect channels, they must be convinced to carry the products of the company, just as and consumers must be convinced to buy them (as cited in 2004, p. 259). Another point made by the author is that channel members are an extension of the firm, but not a substitute, particular in the case of independent, indirect channel members, customers may associate problems in the channel with the company even if they are not your fault. Thus, it is in the best interests of the company to motivate the channels to act in both of their interests.             Furthermore, it was mentioned that channel structures must adapt to changes in its environment, so constant innovation can be done for better results ( 2004, p. 261). With this, different types of advertising media will be used, such as the television, radio, print ads and the internet or information technology. The communications and promotions strategy of the Virtue and Valor Ministries will be an effective way to connect to the public and promote the intentions of the pageant, which is to promote the Word of God through the Virtuous Woman. As mentioned, a good strategy for the public’s awareness is for the Virtue and Valor Ministries to establish a strong name recall for the pageant and to build a reputation that would convince the Christian women of such characters to join.   Customer Relationship Management (CRM)              (2000) reports that the goal of every company is to satisfy and retain customers; the key to its business performance (p. 1). This is why different companies continue to invest in research and development and in advertising to improve and promote their products or services. This is done essentially to satisfy and increase more customers. It has been reported that Customer Relationship Management includes the methodologies, technology and capabilities that help a company manage customer relationships (“”, 2006).  (2004) emphasized that CRM is a strategic activity where the purpose is to develop and manage long-term relationships on a customer-by-customer basis, where the key is customer satisfaction (p. 406). The author added that completely satisfied customers are produced when companies go beyond customer expectations in the relationship. Outstanding customer service is provided by going beyond the physical product or service attributes to the augmented product, and seeing that what the company is selling is not just the product itself but the product and services the company can offer to differentiate the product from competition. Virtue and Valor Ministries aims to do as such to continually share the Word of God to many. The concept of The Virtuous Woman Pageant will help the company to interact with the public even more and express different views, beliefs and principles of the faith and its members. The pageant will also portray and emphasize the knowledge of the Christian women regarding their faith and spiritually, setting as a good example to other people and reliance on God. Moreover,  (2004) emphasized that the loyalty of a customer through long-term relationships presents economic advantages, and these include increased profits derived from profit margins produced over the term of the relationship, increased revenues from greater purchase volume, lower costs of serving loyal customers, referrals to new customers, and price premiums (p. 406). With Virtue and Valor Ministries, the loyalty of the members depends on how the ministry effectively provides each member with all their needs, and become satisfied with it. The Virtuous Woman Pageant will help the Virtue and Valor Ministries to increase the number of their members and share the Word of God to more Christians.             (2000) states that quality, satisfaction, and loyalty, directly and indirectly affect financial performance, (p. 8). The authors added that there may be a tension between them, as producing a high-quality product or service at an attractive price indirectly affects financial performance through its effect on external customer perceptions of the purchase-consumption experience. However, internal quality may also have a direct effect on costs and revenues, as services are produced and delivered at a time and place that is typically dictated by the customer. Thus improving service quality often requires an increase in personnel and operating or contact hours, which raises operating costs (, 2000, p. 8). This idea will help the project, as more members are involved in the organization of the pageant, the more efficient they will become. This will be beneficial for the ministry as well, as more members can participate and give out the information to others.   Conclusion             More and more people are joining different religious groups to capture the Word of God and discover salvation. The role of Christians, especially the Christian women in America has become increasingly important in the society. Thus, in different religious groups, many women perform important functions and responsibilities in the spread of the good news. The Virtue and Valor Ministries takes part in this mission by interacting with different people to share God’s Word in different ways, and one better way to do this is by carrying out projects, such as The Virtuous Woman Pageant. This is a great chance for Christian women to express their opinions and beliefs regarding their religion and become an Ambassador for Christ. This pageant is a great venue for Christian women to display their “wares” and gain fame for exemplifying the true inner beauty and spirituality worthy of recognition.       References:

MARKETING - PRODUCT POLICY

Product Policy The product of a company is its most important asset. As reported, it is the soul of the company; the maximum...

Research Paper Product Standardization in the International Market

Product Standardization in the International Market   This paper discusses the standardization of products across international boundaries. It presents theories supporting the argument that products can indeed be standardized across international boundaries. Also, it illustrates the advantages and disadvantages of standardization by citing some international firms. Executive Summary The onset of globalization paved the way for more open markets in the global scale. The reduction of trade barriers and tariffs has indeed encouraged firms to compete internationally and enter different market segments. Primarily, the motivation behind the internationalization is rooted from the need to expand and explore different markets. Also, the threat and pressures from local and foreign markets trigger such practice. However, entering the international market is not an easy task. Factors such as language, diversity and culture are to be considered in terms of entering the market.  Consumers from different countries vary in terms of their preference and their needs. However, there proves to be a prospect for product standardization across countries. As evidenced by global brands such as Revlon and Mc Donald’s, it is possible to standardized product successfully. Moreover, the standardization of products allows cosmetic changes on the product itself to fit the preference of the consumers. This means that global products may be subjected to minor adaptations to fit different market segments. The core competence of the product is standardized while alterations can be done to the final product to fit the idiosyncrasies of the consumer. Introduction The opening of markets around the world has resulted to a tough competition on the global level. There has become the relentless effort by firms to pursue international marketing strategies. A great challenge that is faced by international firms is the diversity across countries. Marketing internationally is never an easy task. While it may be challenging and rewarding, this undertaking requires a great deal of commitment and expertise on the part of the firm. In a globally competitive market, a firm must be able to establish a competitive advantage of its resources, competences and be able to build relations in the international markets. Additionally, the competitiveness in the international arena entails continuous adjustments in regards to the target consumers, competitors and the public authorities. Manufacturing standardized products is a strategic requirement for global companies. However, the degree of the standardization of products across markets is a key consideration in the pursuing a global product. The firm must identify whether or not its products are tailored to the specific markets of the country or if one product is produced and targeted at all international markets. Internationalization Fundamentally, internationalization is the means of adapting products for potential use virtually everywhere. Firms are driven to internationalize because of either proactive or reactive motives. That is the attempt to explore market possibilities and or as a result of pressure and threats from home and foreign markets. Based on the Uppsala Internationalization Model (U-M), there are four modes of entering an international market in which the higher degree of international involvement is represented by the successive stages. These stages includes: 1. No regular export activities 2. Export via independent representatives 3. Establishment of an overseas sales subsidiary 4. Overseas production/manufacturing units. The internationalization across the markets of differing countries is characterized by a psychic distance. The concept of psychic distance encompasses the factors that affect the flow of information between the firm and the market. Factors and differences such as language, culture, political systems as well as the levels of education and industrial development are all part of the psychic distance. A dynamic model was developed by Johansen and Vale (1977) to explain the incremental character of internalization. By this, the structure is distinguished between the state and the change aspects of the variable of internalization. The state aspect is the market commitment whereas the change aspect is the decision to committing resources of business activities (Andersen, 1993, p.1). Moreover, the market knowledge and commitment affect the commitment decisions and how decisions are made which in turn result to the change in market knowledge and commitment. Both general knowledge and market specific knowledge are required of in international activities. The knowledge of operations can facilitate lateral growth if it is transferred from one country to another. The stronger commitment to the market results from a better knowledge of the market. Larger internalization steps can be taken by firms with large resource experience. Additionally, the stability and the homogeneity of the market conditions pave the way for relevant market knowledge rather than those learned through experience. The considerable experience of the firm from markets having the same conditions will help generalize the experience in any market (Andersen, 1993, p.1). Change Agent Considerations for internationalization can be triggered by certain factors. One of which is the increasing market demand which pushes the producer to go international. Another is the global competition which is a strong catalyst for internationalization. Over the past two decades, the international marketing underwent fundamental changes. This is brought about by the trends in the global, political as well as the economic liberalization. Business opportunities and challenges are then presented to international marketers (2001, p.457). Exceptional firms that have become household names throughout the world are companies such as Coca Cola, IBM, Mc Donald’s and Microsoft (2004, p.31). With this trend, marketers are becoming more attracted to entering the international market. However, introducing a global brand to different market segment may require a great cost on the part of the producer. Consumers worldwide vary in terms of their culture, characteristics and preferences. With this, being able to adapt to cosmetic changes or minor alterations must be implemented while the core components of the products remain standardized.   Standardization in the International Marketing The degree of customization or standardization has become the primary issue in the international marketing. In the international setting, two of the most prevalent structures are the Multinational Corporation (MNC) and the Global Corporation (GC). A decentralized strategy is adapted among MNC in which the decision making is entrusted to subsidiaries. They in turn, respond to the needs and the idiosyncrasies of the countries they are assigned to. Custom tailored products that are offered to countries reflect this kind of strategy. On the other hand, subsidiaries of Global Corporations are guided by a pervasive strategy. By this, standardized products are offered around the world enabling the exploitation of savings derived from economies of scale. Among the approaches adopted by the GC is to customize the price of the standardized product to specific economic factors of the country. Another is the adaptation of a uniform pricing policy for the product. Lastly, a ‘core product approach’ in which a core product is centrally produced by the GC and becomes the basis for the production of the customized products (1994) The concept of ‘core components standardization’ states that cosmetic changes are required of universal products to cater to the different needs across countries or among the market segments. This concept has become more meaningful because of the growing trend by multinational corporations to outsource components in order to gain economies of scale (2003, p. 248). By having standardized components, economies of scale are achieved by the firm while products are adapted to offer a wide range of models in accordance to the needs of various country segments. Moreover, constraints are also present in the global marketing standardization as outlined by (1968) and Douglas and Wind (1987). The major constraints on product standardization include the consumer preferences and the governmental and trade restrictions. The specification that products must contain a specified proportion of the locally manufactured components is one of the major government constraints. Another is the heterogeneous preferences of the consumers as well as government policies which compels the repackaging of the product offered (Jain, 2003, p. 248). With global branding, the same brand name and image is promoted in all the countries in which the company does business. Coca Cola is one of the multinational corporations that adhere to this. However, there also exists the practice of having a separate identity in each national market for the same product. Nescafe Gold Blend for one sells Oro in Denmark and Tasters Choice in the United States (Bennett & Blythe, 2002, p. 277). Having a global brand with a different name is possible in order to accommodate the requirement of the national market. Thus, global products are subjected to minor adaptations in different market segments. As such, the core components of the products are standardized although the final product may be altered to cater to idiosyncratic conditions. Primarily, the advantage of standardization across countries is the lower manufacturing costs. Moreover, by emphasizing on the core product standardization rather than that of the final product, lower manufacturing costs can be realized without having to sacrifice the versatility of pother elements of the marketing mix (Jain, 2003, p. 248) Standardization Vs Adaptation Marketing strategies in a country-by-country basis are tailored with the peculiarities of the local market. By this, product adaptations are considered as necessary strategy in order to cater to the different needs of customers in various countries. However, the product standardization was called for by the recognized global coordination in the world markets (Kotare, 1992, p.99). Porter (1986) argued that a competitive advantage can be attained through coordination among the network of activities that are dispersed worldwide. Product adaptation tends to become a reactive response to the market. With this, a high level of adaptation is likely to become difficult to coordinate the network of activities by the multinational in a global scale. Moreover, production standardization or a narrow line of product is not implied by product standardization. Japanese automobile manufacturers for one were able to stretch their product line with little adaptations. Thus, the strategy requires flexibility or a form of innovation process (Kotare, 1992, p.100).             By product standardization, a product that is designed locally is exported to other countries without any virtual change.  Hence, the products are marketed with perhaps changes in translation and other cosmetic changes. One example of a successful standardized product is Revlon. It has been able to ship products abroad without changes in the formulation, packaging and the advertising of the product (On visit & Shaw, 2004, p. 285). Primarily, simplicity and costs are the strengths of standardization in terms of production and distribution of products and services. In terms of cost effectiveness, standardization is a logical choice since economies of scale can operate to reduce the costs of production. The decrease in the production costs though does not mean an increase in the profit. With the control of production costs through standardization, the product is likely to become unsuitable for the alternative markets. In turn, the demand abroad will decline leading to the reduction of profit. However, standardization is a good approach if appropriately used. For example, Mc Donald’s worldwide success is based on consistent product quality and services. Standardized products exist when certain products can be associated with cultural universals. This is possible when consumers from different countries share the same needs and characteristics and thus want the same identical product. Additionally, product standardization depends on the type of product to be marketed (2004, p.286)             In terms of modification, the firms must practice cautiousness when a product is to be modified to suit the market. To illustrate, American firms have proved to become successful in Japan after the need for modification was understood. Sprite has become a best selling drink in Japan after the lime taste was taken out since Japanese prefer a purer flavor. Chips Ahoy which is another American product also appears less sweet than nits versions sold in other countries. The product adaptation may become necessary under several conditions as it may be mandatory or optional. The characteristics of the firm and the environment significantly affect the overall performance of the firm and its marketing mix strategy (On visit & Shaw, 2004, p.286) Conclusion   The trend of liberalization over the past few years had led to the fundamental changes in the international marketing. Firms all over the world are driven by the desire to explore market segments through competing in the global arena. However, entry to the international market entails overcoming factors and differences such as language, culture, political systems as well as the levels of education and industrial development. While there is the need for global brands to adapt on the preferences and idiosyncrasies of consumers, there proved to be successful firms that are able to standardize their products. For one, product standardization allows the cosmetic changes in the product and minor alterations. International firms such as Revlon, Mc Donald’s and Coca Cola were among exceptional firms who are able to enter diverse market segments. By standardization, the producers are able to reduce their costs and satisfy consumers by implementing minor changes on the final product while the core components of the product remain standardized. Clearly, standardization of products across countries is possible though the product standardization still depends on the kind of product that to be marketed.

Research Paper Product Standardization in the International Market

Product Standardization in the International Market This paper discusses the standardization of products across international bound...

Product Innovation of Coca-Cola

Background of the Organization             The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and syrups in the world. Coca Cola products bearing the company’s trademark are now being sold in 200 countries around the world. The business of Coca Cola is nonalcoholic beverages – principally sparking beverages, but also a variety of still beverages. The company owns or license more than 450 brands, including diet and light beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks.   Innovation Focus – Product Innovation             Product innovation is an important business process. It aids in sustaining growth and is a possible source of competitive advantage. According to  (1999) new products and services are the lifeblood of an enterprise that fuels business growth. Product innovation is a critical business process that drives growth in both revenues and profits             Product innovation is an essential strategic approach for creating competitive advantages in the dynamic, global business environment. Globalization and the changes in social, political, economic, and technological arenas topped with turbulent market conditions have resulted in shorter product life cycles. These changes also created demands for better, cheaper, cleaner, safer and more effective products. The process of product innovation is about the development of new solutions that provide positive benefits to customers and stakeholders. Product innovation according to  (2005) is the fundamental management practice used for creating new products, reinvigorating existing products and solving product-related difficulties with customers and stakeholders.               Product innovation is a core process within an organization associated with renewal – with refreshing what it offers and how it creates and delivers that offering. Innovation is essential in sustaining the prosperity of most organizations. Innovation is the prescription for reinvigorating the organization to compete more successfully in a demanding world. Product Innovation concentrates on improving the strategic position and product delivery capabilities of the organization through creativity and leadership. Product innovation includes several essential aspects: 1. Examining the needs for new products, processes, and services 2. Determining the appropriate direction and for new products 3. Establishing the appropriate game plan of the entire management system for developing and commercializing new products 4. Selecting new-product opportunities for investment 5. Enhancing the organizational capabilities to create successful new products 6. Creating the new product and executing the new-product development program   The primary objectives of product innovation are to create value, to obtain a competitive advantage, and to achieve long-term success through the development and commercialization of new products and services. Coca Cola is a company with rich history and tradition that has build an iconic brand. The company prides itself with being a leading innovator in the soft drinks industry and being able to turn customer demands to products. Being in step with customer trends and being able to anticipate what lies ahead as well as marketing innovation has always been a hallmark of The Coca Cola Company, helping the brand evolve with time and keep in step with consumers’ changing lifestyles.             In 2006, Coca Cola introduced another innovative product – the Coca Cola Zero (Coke Zero). Cokes zero is now a part of the Coca Cola core family with Classic Coke and Diet Coke. Complementing these, and meeting consumers’ desire for new ways to enjoy the great taste of Coke, the company also introduced brand extensions such as Coke with Citrus Zest and Diet Coke with Cherry.   Selected Product Innovations             In this section, I will discuss some product innovations that Coca Cola introduced. 1. No-Calorie Drink (Coke Zero) – the introduction of Coke Zero was motivated by the increasing consumer demands for healthier products. Consumers are increasingly seeking more choices and order to keep up with the demands of the consumers and their lifestyles, Coca Cola launched Coke Zero. Coke Zero offers the same taste as Coca-Cola with no calories. 2. Calorie Burning Tea (Enviga) – as part of the company’s commitment to keep up with the changing lifestyles of the consumers, Coca Cola introduced a calorie-burning tea named Enviga in 2006. This product is intended to complement healthy lifestyles. By drinking three cans of Enviga each day, consumers can burn an extra 60-100 calories daily. This innovative product is added with a powerful antioxidant EGCG that speeds up metabolism and increase energy use, especially when combined with caffeine.   Reasons behind the Innovation 1. Changes in Customer Demands and Requirements (Lifestyles)             Changing consumer concerns, attitudes, and lifestyles have tremendous impacts in Coca-Cola. In the United States and in Europe, consumers are becoming more concerned with a healthy lifestyle. The soft drinks sector is threatened by the increase in consumer awareness of health problems arising from obesity and inactivity. In order to satisfy the new consumer demands and requirements, Coca Cola is introducing new products that compliments healthy lifestyles. 2. Expansion of Noncarbonated Category and Bottled Water             Noncarbonated drinks is a dynamic, fast-growing category. The growing demands for noncarbonated drinks is pushing soft drinks companies such as Coca-Cola to introduce noncarbonated drinks. The bottled water market is also expanding. The expansion and developments of these segments presents an opportunity for Coca-Cola. The company started its exploration of these segments and have been successful in creating new products. 3. First Mover Advantage             One of the reasons why Coca-Cola engages in product innovation is to gain first mover advantage. By being the first to introduce a product category, Coca-Cola is able to define competitive rules, to gain reputation advantage, to gain superior access to channels and inputs, to influence industry standard and to develop skills advantage. 4. Fill the Gaps between the Markets and Coca Cola’s Products             As customer demands and requirements change and as customers become more health conscious, a gap between the markets and Coca Cola’s products begin to surface. A new market has emerged composed of consumers who are health conscious and have a high demand for healthy products. Health reports emphasizing the possible negative health effects of Coca-Cola’s and other similar company’s products abound. 5. Growth in Emerging Markets             Coca-Cola is attracted with new emerging markets such as China, Russia and Brazil. In order to successfully penetrate these markets, Coca Cola needs to have a first mover advantage and to introduce differentiated products. 6. To Strengthen Brand Image             By introducing new products, Coca-Cola aims to strengthen its brand image as the home of quality beverages. Internal Analysis Current Growth Strategy         To compete in the global beverage market, Coca-Cola employs a differentiation strategy to create value for its consumers. The mission statement of Coca Cola reflects its growth strategy “To refresh the world. To inspire moments of optimism”. 1. Grow Core Global Carbonated Soft Drink Brands – Coca-Cola is seeking to expand its core brands in each market through immediate consumption opportunities. 2. Grow Other Core Brands – Coca-Cola is seeking to expand its profitable noncarbonated products such as coffee, energy drinks and sports drinks. 3. Create Customer Value – Coca-Cola employs different strategies for it to understand the customers’ needs and wants. Understanding its customers can help Coca-Cola in focusing different products to different markets. Product Strategy             Coca-Cola practices a high degree of product adaptation and modification across every market it serves. Rapid product testing, and adaptation are the foundation of Coca-Cola’s product strategy. Coca-Cola performs product testing and development in each individual market. This is primarily because of the different market trends in every country. In order to compensate with the stagnating sales in the carbonated drinks category, Coca-Cola embarked on product development to widen its product offerings. With increase consumer interest in healthier drinks such as bottled water, fruit juice, energy drinks, ready-to-drink teas and coffees, the company has embarked on an ambitious program of product launches. Some of the recent popular product launches are: 1. Coke Zero – In 2005, Coke Zero was launched in North America. Coke Zero is a zero-calorie cola. 2. Coca-Cola with Lime – This was introduced in 2005 as a brand extension for Coca-Cola. Following the introduction of Coca-Cola with Lime is the launch of Diet Coke with Lime. 3. Enviga – In 2006, a delicious sparkling green tea containing green tea extracts, calcium and caffeine, Enviga was launched. 4. Gold Peak – In 2006, Gold Peak was launched in North America. Gold Peak is a premium ready-to-drink iced tea. With its fresh homemade taste, Gold Peak revives the timeless flavour of classic, authentic iced tea. 5. DASANI – This was launched in 2007. DASANI is a vitamin-enhanced  flavored water. The line, with zero calories per serving, comes in three varieties namely Refresh+Revive, Cleanse+Restore and Defend+Protect.   Internal Processes Research and Development             The company invests a lot of money on research and development in order to come up with innovative products. The continual improvement initiatives of the company aim to provide the company with competitive advantage. Product innovation is important in order to answer consumer’s search and desire for a variety of beverage varieties. Coca-Cola is pursuing a differentiation strategy by introducing innovative products that are sure to attract a wide variety of consumers. Recent additions to the company’s product range include Coke Zero, C2, Cherry Coke, Diet Cherry Coke, Vanilla Coke, Coca-Cola with Lime and Coca-Cola with Lemon.             The research and development activities at Coca-Cola principally involve development of new products, increasing the quality of current product portfolio, improvement and modernization of production process and implementation of the latest technology. Coca-Cola is committed to maintaining its leadership position in research and development for the beverage industry. Market Research             Product innovation is imperative for a company such as Coca-Cola. New product ideas are generated through marketing research. Through marketing research consumer wants, needs, and requirements are identified and the trends in the industry are determined. The information that are gathered in the market research are then turned into new product ideas. Production             Coca-Cola’s core operations consist of company-owned concentrate and syrup production. The company basically produces syrups and concentrates and then sells them to authorized bottling and canning operations that package and distribute the final product. Separate contracts, or bottler’s agreements exist between Coca-Cola and each of its bottlers regarding the manufacture and sale of Coca-Cola products.   Existing Competencies             The existing resources and competencies of Coca-Cola plays an important role in product innovation. First, financial resources are important in financing the new product innovation projects of the company. Human resources are also important in turning the new product plan into reality. 1. Size – Coca-Cola is a large company with an excellent distribution channels. These distribution channels are important in making sure that new products reach the consumers. 2. Brand Image – Established brand loyalty is important in making sure that the new products that Coca-Cola introduces will be supported by the consumers. Many consumers of carbonated beverages are extremely dedicated to a particular product, and rarely purchase other varieties. This stresses the importance of developing and maintaining a superior brand image. 3. Global Presence – Global presence is an important factor in the success of Coca-Cola’s product innovation. 4. Distribution – Superior distribution channel is a key success factor in product innovation as it enabled the company pt move the products from the manufacturer to the consumer efficiently. 5. Product Differentiation – Coca-Cola’s products are diverse in order to cater to different consumers. Healthy choices will be a source of competitive advantage for Coca-Cola. Being able to produce beverage that has unique and valuable characteristics for certain market segment like health conscious consumers is a potential source of competitive advantage for Coca-Cola.   Broader Context surrounding the Innovation 1. Industry             The state of the industry is one of the important factors in determining the strategies that a company will employ. Threat of New Entrants             New entrants do not pose as serious threats to Coca-Cola. The soft-drink industry is primarily dominated by Coca-Cola and PepsiCo which have string brands and superior distribution channels. New entrants cannot compete directly with Coca-Cola. Threat of Substitutes             Coca-Cola products can be substituted by bottled water, sports drinks, coffee, and tea. The increasing emphasis on health and healthy living makes bottled water and sports drinks a desirable substitute to Coca-Cola’s products. Consumers are becoming more health conscious and they are looking for healthier substitutes. There are a growing number and varieties of water and sports drinks that appeal to different consumers’ tastes. These products are marketed and heavily advertised as healthier than soft drinks. Bargaining Power of Suppliers             Coca-Cola works with bottling equipment manufacturers and secondary packaging suppliers. Because Coca-Cola introduces new products frequently, tension between the company and its suppliers is building. Some bottlers are refusing to bottle new Coca-Cola products. Bargaining Power of Buyers             The significant buyers of Coca-Cola and other soft drinks are mainly large grocers, discount stores and restaurants. The soft drinks company distributes the beverages to these stores for resale to the consumer. The bargaining power of the buyers is high. Large grocers and discount stores buy large volumes of soft drinks allowing them to buy at lower prices. Competitive Rivalry             The competition that Coca-Cola faces from its rivals is the greatest challenge to the company. Coca-Cola, PepsiCo, and Cadbury Schweppes are the largest competitors in the soft drinks industry with global presence. PepsiCo is the main competitors for Coca-Cola and the rivalry between these two brands is more than a century-old. 2. Industry Life Cycle             Industries according to  (2000) have life cycles. Industries, like products progress through their life cycles and as they do so the nature of competition and consumer demand changes. The soft drink industry is a mature industry that is experiencing change. 3. Competition             Perhaps a big reason why Coca Cola continues to implement product innovation is because of the intense competition in the non-alcoholic beverage industry. In order to remain competitive and to maintain its leadership position, Coca Cola introduces innovative products that create value for the customers and shareholders.             The nonalcoholic beverages segment of the commercial beverage industry is highly competitive. Coca Cola competes with major international beverage companies that, like Coca Cola operate in multiple geographic locations, as well as numerous firms that are primarily local in operation. In order to withstand competition form numerous rivals, Coca Cola uses its resources in creating new products. 4. Role of National and International Institutions             As a company that operates in more than 200 locations around the world, national and international institutions such as government bodies have significant impact on Coca-Cola’s product innovation. Changes in laws and regulations relating to beverage and packaging could increase costs and reduce demand for the company’s products. Another area where national and international institutions influence the company is through health issues. Over the years, there have been a growing concern over health and the possible health risks that Coca Cola’s products carry. One main concern is the impact of Coke and similar products on Obesity particularly in Children. In order to address health issues, the company has developed products which complements healthy lifestyle. Innovative products such as Coca-Cola Zero and Enviga have been introduced.

Product Innovation of Coca-Cola

Background of the Organization The Coca-Cola Company is the largest manufacturer, distributor and marketer of nonalcoholic b...

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