Interdrinks Case Study: Sales Force and Marketing Strategy

Introduction

This report attempts to answer some key questions being asked by top management at a small Swiss bottling company called Interdrinks. It 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 have relatively leveled out the playing fields across most 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 reinvented itself from its days as a mule-and-wagon delivery company into 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 need to understand that they will continue to face increased pressure to reinvent themselves in order to survive in the twenty-first century and beyond. The new competitive environment will require significant capital investment, modernized equipment, and a clear understanding of the changing retail climate in the soft drink industry.

Case Review

In February 1998, the Managing Director of Interdrinks met with his national sales manager to discuss the company's sales force performance and other crucial industry trends. The central purpose of the meeting was to determine whether a productivity problem existed within the company's sales force. The Managing Director believed that his field force was not meeting expectations, arguing that the sales force was costing the company too much money relative to the sales it was producing. The national sales manager disagreed, maintaining that the team was performing at or near the upper limits of its potential and that they were among the best-performing sales teams in the local industry.

Neither executive had reliable statistics or data to support his position. Each manager justified his stance with speculation and supposition. The Managing Director was returning to the company after an extended leave during which he had attended an intensive executive education program, making him technically an outsider looking in, even though it was his family's business. The national sales manager took the position that his team was producing adequate sales and that existing policies and procedures should not be altered. The Managing Director was not convinced, as recent changes throughout the industry appeared to be presenting new challenges for the small bottler. He felt that Interdrinks should re-examine its current marketing and business strategies. Concerns such as product line and distribution policies, sales force motivation and capabilities, competition, and other external industry trends led him to reconsider the company's current productivity and its likely future.

Success Factors and Industry Expectations

The soft drink bottling industry is highly competitive, featuring well-known brands such as Pepsi, Schweppes, and Coca-Cola. "Now, Coca-Cola's main rival, PepsiCo, has decided to follow the CCE bottling model. It is 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 for the industry throughout the twenty-first century. Companies like Interdrinks will have to evaluate and upgrade key functions in order to compete, survive, and potentially grow.

Marketing strategies, for example, must enable an organization to align its campaigns with specific target audiences — unlike Interdrinks' current approach, which allows the market to drive the company rather than the other way around. New approaches will incorporate highly personalized advertising campaigns built around products that have been thoroughly market-tested and deemed appropriate through sophisticated marketing research. The marketing information should therefore send the right message, at the right time, to the right customer. Marketing campaigns of the future should be structured to ensure optimal return on investment. "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." (Kotler, Haider, & Rein, 1993)

The trend in the bottling industry begins with a detailed business analysis and planning session. From this foundation, companies can create extensive customer, product, and geographical analyses that empower organizations and help them develop and refine future marketing and sales strategies. The industry also requires detailed customer analysis, including in-depth customer profiles that can be used to understand consumer preferences, buying behaviors, cost, revenue, and profitability. The global economy has created a need to integrate customer information 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 demands that bottlers use measurement and reporting functions efficiently. Next-generation bottlers will need to understand their own position as well as those of the consumer and the competition. This type of data analysis can only be obtained by measuring, monitoring, and tracking various statistical data, including response rates, revenues, return on investment, and quality metrics for both consumers and competitors. Bottlers must therefore fully understand the competition in terms 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 sales efforts. Sales forces today can segment customer and prospect bases and target them directly with personalized, dynamic web- or email-based communications, promotions, newsletters, and live web-based surveys. There should be no excuse for any sales force or industry player to be unaware 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, providing customer profiling, trade promotion analysis, sales effectiveness metrics, retail audits, and other critical data. Industry management will have access to analysis results that enable far more efficient use of accounting, marketing, product development, sales, and service functions.

References

Keegan, W. J. Global Marketing Management (7th ed.). Prentice Hall.

Kotler, P., Haider, D., & Rein, I. (1993). There's no place like our place!: The marketing of cities, regions, and nations. The Futurist, Vol. 27.

Unger, H. (March 23, 1999). Consolidation sweeping Coca-Cola bottlers. The Atlanta Constitution.