HAS COCA-COLA FINALLY MET ITS MATCH?

Self respecting marketers, marketing novices and the public at large know Coca-cola and its secret recipe as a massive marketing success for 'eons', I even dare think- what would we do without good old coke? Remote villages in nameless countries have the familiar shape Coca-cola bottles pregnant with the dark money making liquid perched invitingly on shelves in local village shops and pubs.

Recent activity in the Health sector though seemingly threaten coke's viability in the healthy eating habits persuasion. Will healthy eating habits affect Coca-colas dominance of the fizzy drinks market? Are we witnessing the slow death of a giant as we have known it ? Or will this just lead to healthier Coca-cola spin-offs? the later makes profitable sense.

In the meanwhile Venezuala has gone ahead and banned a version of Coca-cola citing possible health risks (http://uk.news.yahoo.com/5/20090611/twl-venezuela-bans-coke-zero-over-health-3fd0ae9.html). A couple of weeks ago I read a health article in a local london paper that stated that cola drinks deplete the body of some essential mineral if my memory serves me right, and this here now could be termed to be a consequential development ; My steadfast companion through the african heat, Coca-cola, what next?

Export pricing strategy

Pricing strategy is a matter of having as much information as possible about costs and the value of a product to various classes of consumers in different markets. The simplest form of pricing is cost- plus which balances the price and resulting sales against production costs, the second alternative is strategic pricing which involves:

• Skimming the market: to make the largest short-run profit possible and retire from the business.
  
• Sliding down the demand curve: In this strategy the company reduces prices faster and further than it would be forced to do. A company doing this has the objective to become established in foreign markets as an efficient producer at optimum volume before foreign or domestic competitors can get entrenched. Primarily used by companies introducing product innovations.
  
• Penetration pricing: This strategy involves establishing a price sufficiently low to rapidly create a mass market. Emphasis is placed on value rather than cost in setting the price. This involves the assumption that if the price is set to bring in a mass market, the effect of this volume will be to lower costs sufficiently to make the price yield a profit.
  
• Pre-emptive pricing: Setting the prices so low as to discourage competition is the objective of pre-emptive pricing. The price will be close to total unit costs for this reason. As lower costs result from increased volume, still lower prices will be quoted to buyers. The assumption is that profits will be made in the long run through market dominance.
  
• Extinction pricing: The purpose of extinction pricing is to eliminate existing competitors from international markets. It may be adopted by large, low-cost producers as a conscious means of driving weaker, marginal producers out of the industry. Since it can be highly demoralizing especially for small firms, it can slow down economic advancement and thus retard development of otherwise potentially substantial markets.
  

Gerald Albaum, Jesper Stransdskov and Edwin Duerr, 2002, International Marketing and Export Management, 4^th ed., Harlow-London: FT Prentice Hall. International pricing, chapter 10.

Strategic Planning’s unplanned troubles.

"Strategic planning ran into trouble in the early 1980's when the activity was cut back in many companies. Most dramatic was the emasculation at General Electric, the company that 'literally wrote the book on the subject' (Potts, 1984).

Business Week documented the troubles in a cover story of 17 September, 1984. 'After more than a decade of near dictatorial sway over the future of US corporations, the reign of the strategic planner may be at the end,' the magazine exclaimed '....few of the supposedly brilliant strategies concocted by planners were successfully implemented.' To Business Week the upheaval was 'nothing less' than 'a bloody battle between planners and managers' (1984: 62). The General Electric story dominated the article, as it had the lore of strategic planning almost from the very beginning.

As Business Week told this story, in the early 1980's soon after he became Chairman and CEO, Jack Welch dismantled the strategic planning system.....

In the rise and fall of strategic planning, from which this chapter draws, Mintzberg (1994) documented the evidence that piled up against the process, including stories in the popular press and empirical findings from the research, which contained a long string of studies that set out to prove that strategic planning pays but never did." pp. 68-69.

"Most corporate strategic plans have little to do with strategy. They are simply three-year or five-year rolling resources budgets and some sort of market share projection. Calling this strtegic planning creates false expectations that the exercise will somehow produce a coherent strategy.....we conclude that strategic planning has been misnamed. It should be called strategic programming. And it should be promoted as a process to formalize, where necessary, the consequences of strategies already developed by other means. Ultimately, the term 'strategic planning' has proved to be an oxymoron" p.82. "There is however no need to throw out the strategic planner baby with the strategic planning bathwater. Planners have important roles to play around the black box of strategy formation, if not within it." p.83.

Mintzberg, H., Ahlstrand, B., Lampel, J., 2009, Strategy Safari, London: FT Prentice Hall.

INNOVATION

‘An established company which in an age demanding innovation is not capable of innovation is doomed to decline and extinction. And a management which in such a period does not know how to manage innovation is incompetent and unequal to its task. Managing innovation will increasingly become especially top management, and a touchstone of its competence.’ PETER DRUCKER.

'There are costs and risks to a programme of action. But they are far less than the long-range risks and costs of comfortable inaction.’ John F Kennedy.