Term Paper on "Idc"

Term Paper 12 pages (3549 words) Sources: 1+

[EXCERPT] . . . .

IDC Case Study

This report attempts to answer some key questions being asked by the top management for a small Swiss bottling company called Interdrinks. This report therefore focuses on some of the company's key decision areas which include: marketing segmentation, organizational positioning; product and service policies, sales force and sales initiatives, product pricing, distribution opportunities, organizational communications and much more. In our highly competitive and globalized society, corporate self-evaluation and eventual restructuring are the norm if a company wishes to survive.

Advanced technology and new innovation continue to change the way business is done and has relatively leveled out the majority of playing fields in all industries -- the soft drink bottling business is no exception. "Places are now beginning to feel the full impact of the revolution in technology and communication. Fax machines, handheld computers, and teleconferencing allow companies to move to places with lower costs or more-attractive working conditions." (Kotler, Haider, & Rein, 1993) Consider how the number one company in the industry, Coca-Cola, has renewed itself from its days as a 'mule and wagon' delivery company to a highly consolidated bottling franchiser that is consistently altering its core business strategies in order to merge and maximize profits while reducing operating costs. "The number of Coca-Cola bottlers in the United States will drop to fewer than 50 within five years - down from 96 today, some industry analysts predict. Only 19 years ago, the country had 353 Coca-Cola bottlers. A similar trend is occurring around the world, where Coca-Cola is sold in nearly 200 nations." (Unger, 1999)

The bottling industry is at a crossroads where smaller companies like Interdrinks will need to understand that they will continue to facing increased pressures to reinvent them selves in order to survive in the twenty First century and beyond. The new competitive environment will require huge amounts of capital, modernized equipment and equipment, and an understanding the changing retail climate in the soft drink industry.

Case Review

In February of 1998, Helmut Fehring, who was the Managing Director of Interdrinks Company met with his national sales manager, Antoine Jeanneau. The two discussed the company's sales force performance and other crucial industry trends. The main idea of the meeting was to try to comprehend whether or not there was a problem in relation to productivity for the company's sales force. The Managing Director was of the opinion that his field force was not meeting his expectations based on the fact that the sales force was costing the company too much money for the amount of sales they were producing. The national sales manager did not concur and felt that the team was performing at or near the upper limits of their potential and also stressed the fact that he felt they were one of the best performing sales teams in the local industry.

Neither executive had reliable statistics or data for a basis of their positions. Each manager justified their point with speculation and supposition. Fehring was returning to the company after an extended leave where he attended an intensive executive education program. Technically, he was an outsider looking in even though it was his family's business. Jeanneau took the position that his team was producing an adequate amount of sales and that the existing policies and procedures should not be altered because all was as it should be. The Managing Director was not convinced because recent changes throughout the industry seemed to be presented new challenges for the small bottler. He felt that Interdrinks should therefore re-examine its current marketing and business strategies. Concerns such as product line and distribution policies, sales force motivation and abilities, competition and other external industry trends made Fehring reconsider the company's current productivity and its likely future.

Success Factors and Expectations

The soft drink bottling industry is a highly competitive industry with well-known brands such as Pepsi, Schweppes Lemonade and Coca-Cola.. "Now, Coca-Cola's main rival, Pepsico, has decided to follow the CCE bottling model. it's in the process of spinning off a publicly traded bottling company that analysts say will intensify competition and consolidation in the industry." (Unger, 1999) New technology, globalization and global economic factors will continue to create new challenges on the industry throughout the twenty-first century. Companies like Interdrinks will have to evaluate and upgrade key functions in order to compete, survive and possibly even grow. Marketing strategies, for example, must enable an organization to align its marketing campaigns with specific target audiences unlike Interdrinks current process that is letting the market drive it.

The new approaches will incorporate highly personalized add campaigns that revolve around products that have been thoroughly market tested and deemed appropriate by these highly sophisticated marketing research processes. The marketing information should therefore send the right message at the right time to the right customer. Marketing campaigns of the future should be projects that ensure optimal return on investments. "The central tenet of strategic market planning for places is that, in spite of powerful external and internal forces that buffet almost all places, they have within their collective resources and people the capacity to improve their relative competitive position. Competition for place advantages in the new world economy will only increase in scope and sophistication. A strategic market planning perspective provides places with the marketing tools and opportunities to rise to that challenge." (Kotler, Haider, & Rein, 1993)

The trend in the bottling industry begins with a detailed business analysis and planning session. From this, companies can create extensive customer, product, and geographical analyses which empower organizations and help them develop and refine future marketing and sales strategies. The industry also requires a company to have detailed customer analysis that include in-depth customer profiles that can be used to understand customers, consumer preferences, buying behaviors, cost, revenue, and of course profitability. The global economy has created a need to integrate that customer information that has been extracted from multiple external and internal sources so that organizations can identify and capitalize on trends. This helps establish more successful marketing and sales efforts from the highest yielding market segments.

The new economy creates a demand on the industry to use measurement and reporting functions efficiently. Bottlers of the new generation will have to understand their own position as well as the consumer's and the competition. This type of data analysis can only be obtained through measuring, monitoring and tracking the various statistical data in terms of response rate, revenues, return on investment and quality fro consumers and competitors alike. Bottlers must therefore fully understand the competition in the sense of sales trends, product performance, and marketing campaign effectiveness.

With the advent of the internet, bottling organizations must establish Web-based marketing campaigns that can easily create, execute, and assess the merit of the sales efforts. Sales forces today can segment customer and prospect bases and target them directly with personalized and dynamic Web- or email-based communications, promotions, newsletters and live Web-based surveys. There will be no excuse for any sales force or industry player to not be fully aware of what they, the consumer and the competitors are doing.

The new marketing strategies of the industry will be built on data warehouses designed to support a wide range of analyses such as customer orders, trade promotions, sales activities and sales performance. Sales analysis tools will also be incorporated and thus provide customer profiling, trade promotions, sales effectiveness, retail audits and other critical data warehouses information. Industry management will have access to analysis results that will create for more efficient use of the accounting, marketing, product development, sales and service functions.

Interdrinks current marketing strategy

There are many holes in the existing Interdrinks marketing and sales strategies. In the highly technical and globalized economy, Interdrinks management is in a position of guessing at critical bits of information. The meeting between the two mangers should have been based on accurate sales figures, forecasts, and even company expectations. However, it would appear based on the meeting that the company is literally running blind. For example, in regard to competitor sales figures, both Fehring and Jeanneau did not have reliable data at their finger tips. They knew the basic products being sold but they were estimating and even guessing to data such as the precise market share of its competitors.

In addition, the company was completely unaware of the amount of discounts and rebates offered by the competition. Other such marketing blunders included the fact that advertising revenues of the competition was unknown and sales force strategies and methodologies were unknowns. Couple these marketing and business strategy oversights with Interdrinks own inadequate understanding of its own sales force and methodologies and you have the writings on the wall of a company that would soon be out of business.

Interdrinks sales force was apparently unorganized and unmotivated in the sense that they were allowing their customers to make all of the purchasing decisions. Customers used their own calculations of how much of the products they used or sold to determine when to buy or… READ MORE

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