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.
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 order. This ordering process was completely undocumented by the Interdrinks sales force because the customers would call a switch board to make their orders as opposed to calling the sales team. This process entailed that there was no control over the products the bottling company wanted or needed to move. The sales team was working on an outdated pay scale system and needed some type of incentive restructuring to help re-motivate the sales force or at least begin the process of bringing in new blood that could revamp Interdrinks’ sales efforts.
The case study provide a very good breakdown of what the local and overall Swiss market offered in terms of other bottling company sales and market demand figures. The company currently bottles Schweppes, Pepsi, mineral water and fruit drinks. There is a market niche for the bottled water and this product could be re-marketed considering that bottled water today costs more than gasoline. The fruit drinks had a market of mother for child and could be reevaluated for accurate sales figures to either justify or cancel this line of products.
Pepsi has its own advertising associated to the bottling contract so that product is basically self maintained and self selling. Schweppes has its own niche market and should only be studied for sales accuracy. One opportunity that the company has is private line bottling where Interdrinks bottles supermarket and small chain store’s name recognized products as opposed to some other national brand. The key to understanding the advantages or disadvantages for all of these products including the end customer’s needs seem to be irrelevant to Interdrinks as a company. In other words, the existing marketing strategy is that there is no existing marketing strategy. The company knows that small chains like their products but not to the point that they can make viable business decisions on profitability of selling to those small Swiss stores.
The fact that the sales force is small, unmotivated and not well prepared for the twenty first century sales and marketing techniques, it should be a priority of Interdrinks to revamp the sales and marketing approaches. The industry trends require that Interdrinks sales force must be highly motivated, well educated and even better trained than the competition. “The consolidation in the soft drink industry, however, differs from other industries. While ownership, financing and administration may become centralized in some acquisitions, large bottlers must maintain and even expand their local sales, marketing and distribution forces.”(Unger, 1999) Through technology and training, the Interdrinks sales force could save the company in the future.
Today, the bottling industry is a highly competitive industry and the methodologies currently being implemented by Interdrinks amount to not having a strategy at all. Bottling companies like Interdrinks are in a do or die position where they have to turn themselves into a customer-driven enterprise that is in the process of understanding their customers. “Previously self-contained local, regional, and national economies are being transformed into interdependent parts of an integrated world economy. As a result, global economic competition is combining with vast improvements in global communication, transportation, and finance to accelerate the pace, intensity, and scope of economic change, even in the smallest and most-remote places.” (Kotler, Haider, & Rein, 1993)
Currently, Interdrinks is in a position where they cannot clearly define their customers because their customer information base is a fragmented pile of unsubstantiated information that is not making its way across organizational communication channels. Interdrinks current lack of unique, complete, and correct customer or competitor data will create irreversible situations where they will continue to have increased operating costs, missed revenue opportunities, low customer satisfaction scales and potential public relations debacles.
Advance Suggestions as to How the Company Can Improve the Performance of Its Sales Force.
Interdrinks Company as an organization has a very basic problem that stems from a lack of planning. They do not plan so they are literally planning to fail. The company can not increase sales with out a viable plan of where they want to be and how they want to get there. These organizational plans need to be concise and measurable so that all other organizational functions and objectives are focused to meet the company sales and profitability goals based on existing and projected market trends.
The next very important productivity strategy for Interdrinks Company for increasing sales would be to fire the current national sales manager, Antoine Jeanneau. The twenty first century global industry process needs aggressive and technologically advanced leadership that can address the productivity of a sales force and understand how to produce more and measurable results in regard to sales productivity.
Even a simple integrated laptop system and company sponsored cell phone could improve productivity dramatically. The point here is not that Interdrinks should immediately institute a cell phone laptop system, the point is that the national sales manager is privy to what the best opportunity is to increase sales whether the increase comes through new application of resources or the introduction to new sales force technology tools. If a sales manager is unprepared to assess the needs of the company and his sales team, then that sales manger should be looking for employment in another capacity. Sales are a culmination of knowing oneself, the customer, the competition and finally the product. Antoine Jeanneau has done none of these basic tenets.
The new national sales manager or a drastically changed Antoine Jeanneau should establish two critical areas for the Interdrinks sales team so they can make obviously needed adjustments for improved productivity and effectiveness. The sales manger needs to clearly identify and revamp the existing sales territory design to incorporate the now missing pieces of successful sales. The territories should be assigned to the most capable sales representatives whether they are new or retrained current members.
Gone should be the days of a sales representative being completely oblivious of his customers’ product orders or needs. The new national sales manager must develop the sales region through proven methods and techniques that are geared to first evaluate the existing sales territories and then redesign these territories as needed to meet the organization’s sales and profitability projections.
The next improvement the new national sales manger should implement would be a new sales force automation solutions process. The company should invest in comprehensive sales follow-up process software that would allow the entire sales and management teams to have pertinent data about all sales calls made, with whom those calls were made and by who, and information pertaining to calls not being made.
There are viable and affordable software solutions that could interpret and produce reports that could then be used to monitor the progress of each sales rep and every new and potential customer. Sales force automation technology would instantly increase the potential of each sales representative as well as drive the marketing and sales processes. The same way the company has maximized productivity I the bottling functions, technology would increase the marketing and selling potential of the entire organization. Interdrinks must understand that the real issues regarding sales force productivity can be resolved by simply implementing a process that corresponds with the overall organizational objectives. Technology in the form of hardware, software and connectivity networks would first support the current selling process and then eventually help redesign it in the future.
The national sales manger would also need to work with the Human Resource function to revamp the sales and bonus compensation structure within the company. Sales force compensation pay systems must be built around a solid organizational objective foundation. In other words, the company must clearly articulate its business strategy and objectives so that the sales team actually knows the company expects of it.
This clear understanding by the sales force’s role in implementing the company’s strategy identifies what Interdrinks needs them to do in order to meet organizational objectives. The compensation package can then be created to reward those individuals that best meet the needs and expectations of the organization’s goals. In this type of a system, poor performers will naturally eliminate themselves from consideration for advancement and bonus.
Recommended Brand Management Strategy the Company Should Pursue
Like the compensation of its sales team, a brand management strategy that Interdrinks should pursue can only be established by the organizational objectives that would be clarified in the organizational objectives fro profitability and growth. It would be easy to state that any of the products Interdrinks currently bottles and sells could be a winner in the industry through proper information management, promotion, pricing, and detailed market knowledge. For example, Schweppes can be considered a solid competitor against both Coca-Cola and Pepsi in the right market setting.
However, the opposite could be said in the wrong market setting. In other words, Interdrinks should first address the company issues revolving around expectations for profitability and growth. The results of the organizational objectives would then dictate the product plan of attack which for example could say to focus on Schweppes with a specific marketing approach but drop the juice and water products in certain segments. The point is that the company’s objectives may present a situation where they should pull completely out to the bottling process completely and sell empty bottles instead.
What can be established in regard to the brand management strategy for Interdrinks is a shell of the strategy. Interdrinks should establish their sales team across the entire geography of their consumer and customer market. These field professionals can therefore plan and forecast by individual account the customized presentations and proposals that are the foundation of brand management. This face-to-face approach can be thus shared and account-specific promotions will then help create additional customer account plans, plan sales and monitor volume targets. This in turn will help manage brands through outstanding service and support.
In addition, Interdrinks could become significantly more effective in brand management by utilizing both business to business and business to consumer internet marketing and brand publicizing. Web-based brand management complements the marketing efforts of the organization. Specific functionality for brand name promotions planning allows the organization to gather customer information at the same time they are establishing brand recognition.
If a recommendation were needed the answer from industry statistics would push for a well conceived marketing mix of the products. Even though the HORECA accounted for seventy four percent of the company’s business, the past result seem unfounded and based on insignificant or even totally incorrect data and marketing strategies. Thus, a new and well founded marketing strategy may or may not continue the trend of selling to the HORECA and the same can be true for the mineral water and juice functions.
Make specific recommendations on IDC’s licensed business.
In regard to Interdrinks licensed business, their understanding of the advertising possibilities is completely irresponsible. The licensed products like Pepsi could provide a comprehensive sales promotion that ties either successful or unsuccessful products to the better selling Pepsi name and therefore creating an intensive piggy back sales effort. The assumption that since Pepsi is not their own product and is therefore not as important as their local brands is ridiculous. Pepsi enables the sales representatives to execute strategies that are measurable and efficient. The licensed products are premium priced and therefore offer an opportunity to undersell with Interdrinks lower priced products.
In conclusion, this report attempted to answer key questions asked by the top management of the small Swiss bottling company called Interdrinks. This report focused on some of the company’s key decision areas like: marketing segmentation, organizational positioning; product and service policies, sales force and sales initiatives, product pricing, distribution opportunities, organizational communications and much more. The bottling industry has become highly competitive in this globalized society, so corporate self-evaluation and eventual restructuring should be the norm. Advanced technology and new innovation will continue to change the way business is done. The bottling industry is at a crossroads where smaller companies like Interdrinks need to recognize that they are facing increased pressure to reinvent them selves in order to survive in the twenty First century and beyond.
Keegan, W.J. (Add Year). Global Marketing Management (7th ed.). Add City: Prentice Hall.
Kotler, Phillip, Haider, Donald, & Rein, Irving (1993). There’s No Place like Our Place!: The Marketing of Cities, Regions, and Nations. The Futurist, Vol 27,.
Unger, Henry (3/23/1999). Consolidation sweeping Coca-Cola bottlers. The Atlanta Constitution.
Soft Drink Industry Marketing
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