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COCA-COLA (USA) A The Coca-Cola was the largest manufacturer of soft drinks in the world and had prospered

d since its founding in 1886. Its major brand of Coca-Cola (also known as Coke) was made and marketed in the United States by a division titled Coca-Cola USA. Although its sales volume continuously outstripped rival firms in its Industry. The Coca-Cola Company was constantly appraising its market situation and its proposed marketing programs. Its marketing organization had conducted some form of marketing studies since the early 1920s - a time of infancy for marketing research. Subsequently, marketing research had become one of the larger departments at the companys Atlanta headquarters in number of personnel. As the company became diversified and divisionalized, decentralized marketing research units were established and marketing research was a vital operation within Coca-Cola USA in1975. Organization Structure Figure 1 describes the departmental arrangement of Coca-Cola USAs marketing research function as it existed in March, 1975. As this is the usual type of chart that depicts lines of authority and responsibility. It should be largely self-explanatory. Senior Vice-President Marketing

Vice-President Marketing Research Administration (2)

Market Analysis (12)

Market Data Bank (14)

Customer Research (7)

Advertising Research (1)

Management Science (10)

Fig. !: Marketing Research Organization Structure

The Marketing Research Department embraced five sub-departments. Which included all functions specialized in the analysis of business problems and served decision makers both inside and outside the marketing realm. This was particularly true

of the Management Science group. The department was headed by a vice-president, who reported to the Senior Vice-President Marketing. The latter had responsibility, in addition to Marketing Research, for the Marketing Service. Marketing Planning, and Bottler Sales departments. This arrangement was appropriate for coordinating the marketing research departments plans and projects with those three functions. Departmental Functions Each of the sub-departments in Marketing Research was assigned a fairly distinct area of research and analysis. We are going to summarize them for each of these units, as their titles may not be indicative to the reader of their work. Marketing Analysis. This staff gathered and analyzed data on the standing and potentials for coke in every market area. This means dealings with more than a thousand local bottlers of Coca-Cola around the nation who bought the syrup exclusively from The Coca-Cola Company. Bottler, fountain, and vending machine sales data were obtained in addition to data obtained from an outside service on competitive brand sales, enabling determination of market shares for Coke by area. Special analyses of sales, distribution and competitive activities for market tests or when unusual conditions occurred also were made. Market data bases. It was this group that consolidated and maintained all the market data on Coke. This included the local bottler audits mentioned above and also audits of the fountain and vending-machines channels, with which it performed liaison. It also obtained and analyzed data from the consumer level regarding brand preferences and consumption, thereby doing consumer tracking studies. With its wealth of historical data, it performed analyses and trend studies for various administrative functions. Custom research. In contrast with the two previously described units that concentrated on repetitive analyses of markets, this group conducted ad hoc studies of various natures. The subjects researched included: consumer behaviour, segmentation of markets, acceptance of proposed products and packages, and consumer brand images and attitudes. These projects were planned by this department and then farmed out to agencies that gathered the data under its general supervision. Advertising research. The creation and execution of Coca-Cola advertising programs rested primarily with its advertising agency. McCann-Erickson. That agency also was responsible for the creative advertising research. This section in the company, in addition to that liaison, was responsible for testing of advertising results after publication or broadcasting. Management Science. This group was considerably different from the others. Its work largely was divided into two types, one of which was operations research. This was done by a technically specialized group of management scientists with strong mathematical orientation. They constructed computerized models of complex decisions, with which solutions were run for the advice of higher management. Some, like models of distribution systems, were in the marketing area, while others were on the non-marketing problems, such as plant locations. Earlier this group had been located in a corporate planning area of the parent company, but it was found advantageous for them to be under a research-oriented management and to have greater potential utilization and cross-fertilization when in proximity with other business research personnel.

Its other work was forecasting. Periodic forecasts of sales and related data were prepared and reported to management, throughout the top level. Outside business economists were retained to furnish basic inputs of independent forecasts. Also, executives of the Coca-Cola company who had unusual vantage points to examine future portents were polled for other inputs to the final forecasts. Outside Services The bulk of data utilized in marketing research was obtained from outside research services. The company alone could hardly have afforded the field staff and services maintained by those organizations. Its policy was to employ as few outside research firms as could conduct its work competently and to retain them rather permanently. Continuing series of measurements were considered to be more fruitful than unique studies that would not be repeated at intervals. Therefore, consulting firms were not engaged by this department, although occasionally they were retained by higher management and the sales department. Two outside services constituted most of the data purchases : 1. A.C. Nielsen Company of Chicago. The retail sales audit of this syndicated service was the main source of facts on product sales. The Coca-Cola Company had subscribed to the Nielsen index since the 1930s and had been a pioneer Nielsen Client. The character of the data provided by Nielsen was similar to its standardized service for hundreds of other subscriber, but the Coca-Cola Company paid for special breakdowns in accordance with its sales branch districts and for special monthly frequency. 2. Audits and Surveys, Inc., of New York. The A & S field staff conducted the regular consumer surveys for the company. The Coca-Cola company advised A & S on what was desired and approved questionnaire before they went to the field, and A & S handled the rest of the work and its supervision. Two other research service vendors that were heavily utilized were the Majors agency, which monitored price promotions, and the Winona Interviewing Service, which conducted in-store sales tracking. Earlier the conduct of advertising research outside the company, through the McCann-Erickson advertising agency, was mentioned. That firm was a member company of the inter-public Group, which had a subsidiary specializing in research and consulting, to which advertising research was largely delegated. Also outside were business economists who aided in forecasting.
Discussion Questions 1. 2. 3. Did you find any research activities among the above-described departments that you had not expected? Were any missing that you consider important to marketing management? Suppose that, as Vice-President Marketing Research, you were recommending annual budgets for the five research groups. Which would you want to support most generously? Why? Would you recommend any changes in the organization, either for the sake of efficiency or for the ability to cope with change?

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