COMPARISON BETWEEN TRADITIONAL MARKETING & SOCIAL MEDIA MARKETING CASE STUDY: THE COCA-COLA COMPANY

SAHEEM SALEEMB12090003BACHELOR OF BUSINESS ADMINISTRATION (HONS)SEPTEMBER 2012 INTAKE

1.INTRODUCTION

RESEARCH QUESTION“What are the differences between traditional marketing and social media marketing?”The study will focus on Coca-Cola Company.

RESEARCH OBJECTIVES

1. How does traditional marketing and social media marketing differ in terms of communications?

2. How does traditional marketing and social media marketing differ in terms of frequency?

3. What is the effectiveness of traditional marketing and social media marketing?

Communication

Frequency

Traditional Marketing

Social Media Marketing

Effectiveness of marketing tool

Marketing Communications Elements

THEORETICAL FRAMEWORK

CONSTRAINTS OF STUDY• Lack of direct contact

with the case company.• Geographical constraint.

SIGNIFICANCEOF STUDY

• Limited understanding of the effects of the penetration of social media on traditional marketing and how it changed firms’ marketing strategies.

• Primary purpose of thesis – to explore exponential opportunities in commercial marketing.

2.BACKGROUND OF STUDY

“COMMUNICATION• Existing firm-to-customers and

customers-to-firm relationships.• Helps to achieve ease of contact, speed,

volume and reach of marketing message.

MARKETING COMMUNICATIONS ELEMENTS(Derived from McGraw’s Marketing Communications Framework)

Marketing

Communication

Framework

Communication

ControlCredibility

Frequency

FREQUENCY• The number of times and duration in

which an individual is exposed to a message during a specific period – correlates with “reach”.

• Crucial to measure brand awareness.• Creates traffic for the web site and generate

more online sales - firms can reach out to larger audience.

EFFECTIVENESS OF MARKETING TOOLS• Measured by brand awareness and brand engagement - indirectly

affects the brand’s ROI. • In traditional marketing - “more is better” - word-of-mouth among

consumers.• In social media marketing – “marketplace impact, brand value, brand loyalty and

consumer engagement” - the number of comments, wallposts and retweets.• No statistically significant relationship between marketing and short-term

sales - ROI has to be measured in terms of business performance over a longer period of time which will be the real mark of marketing success.

TRADITIONAL MARKETING• Advertisements conducted through

• Other techniques/names: direct and brand marketing, one-way, push-based, and interrupt-driven.

SOCIAL MEDIA MARKETING• Uses social networks such as

• A process that gives organisations the availability to present their own services and products to the new or existing customers through online social channels.

3.RESEARCH METHODOLOGY

Comparative analysis approach – a deterministic, theory-driven and non-probabilistic method.

Divided into two stages: 1. Exploratory analysis of the existing literature

• data gathered from the knowledge base of marketing communication practitioners/scholars due to the relatively early stage of development.

2. Comparatively exploring the tools and strategies of social media marketing and traditional marketing in the case company Coca-Cola from both qualitative and quantitative perspectives. • for data collection, annual reports (from Coca-Cola’s website) were

collected and analysed in intervals of decades despite using a qualitative research methodology due to the secondary research nature of the thesis.

• Also used quantitative information, figures and statistics from various credible online sources to establish calculative elements of thesis.

4.RESULTS & ANALYSIS

COMPANY PROFILE• Founded and invented in 1886 by John

Pemberton. • After Pemberton's sudden death, Asa

Griggs Candler became the sole owner of Coca-Cola in 1891 bringing real vision into the business brand.

• Produces four of the world's five best-selling soft drinks - the world’s most valuable brand.

• More than 500 beverage brands that includes diet, regular and still beverages.

• Supports global sports such as FIFA World Cup and Olympics amongst others.

COKE’S TRADITIONAL MARKETING

• Past strategic objective: Coca-Cola connected it’s brand to fun, carefree American lifestyle, and applied an imagery of advertising that connected with the spirit of post-war America.

COKE’S CURRENT MARKETING

• Current strategic objective: Coca-Cola’s main objective is maintaining a trust worthy local presence in every community its serving.

COMPARISON 1: COMMUNICATION

Awareness Knowledge/Understanding

Interest/Consideration Support Preference

Action

TARGET AUDIENCE

EFFECTORGANISATION

RESULTS

ANALYSIS(the Communication Matrix Model)

COKE’S TRADITIONAL MARKETING“PAUSE THAT REFRESHES” CAMPAIGN (1929)• Awareness: The campaign first appeared in

national magazines in 1929; ran through the 1950s reaching out to entire America. The message was appealing and uplifting to a country that was at war.

• Knowledge: “Pause" became synonymous with Coke’s brand image.

• Consideration: People would consider Coke in making purchase decisions because the advertisements made Coke familiar to Americans.

• Preference: 84% of consumers continued drinking Coke - no longer having trouble in selling during the winter season.

• Action: People continued to associate and drink Coca-Cola into the Great Depression.

• Business Result: Advertising Age ranked it No. 2 on its list of the top ad campaigns of the 20th century in 1999.

COKE’S SOCIAL MEDIA MARKETING“SHARE A COKE” CAMPAIGN (2011)• Awareness: 17,000 virtual name bottles were

shared online across Europe. • Knowledge: 998 million impressions on twitter;

Coke’s Facebook traffic increased by 870%, with page ‘likes’ growing by 39%.

• Consideration: More than 230,000 tweets from more than 110,000 fans using the #shareacoke hashtag.

• Preference: More than 150 million personalized bottles were sold.

• Action: People loved to see their names on branded products. People would scour retail locations and even resort to eBay in the hopes of finding their name or a friend’s name on a Coke bottle.

• Business Result: 7% increase in Coke consumption; 2.5% increase in total sales and soft-drink volume went up by 0.4%.

The success of communication with target audience in social media marketing is more successful than in Coca-Cola’s traditional marketing.• Traditional approach relays on creative excellence that links the

brand image to fun and lifestyle (entertainment) has traditionally guided the brand’s communication success; while social media relays on communication excellence that connects the brand image to customers.

• Although the humorous ads and unique slogans were authentic to the brand’s goal, the sensation of entertainment message is short-lived because it entertains consumers rather than communicating with them. With social media, Coca-Cola gains better communication grounds with the consumers to build brand loyalty and maintain brand preference beyond traditional methods.

KEY FINDINGS

COMPARISON 2: FREQUENCY

ANALYSISCOKE’S TRADITIONAL MARKETING• Coke persistently created advertising campaigns from the 70s till the 90s

- forced people not to forget them as the leaders who brought ‘happiness’ to their consumers.

• The frequency of advertising is most crucial for increasing sales and maintaining Coke’s superiority in the market.

• With a budget of $180 mil, the Company decided to use pulsing strategy not only for more reach, but also to maintain and increase the levels of frequency for their advertising; and use reminder advertising from time to time.

• Pulsing strategy differed in the traditional marketing and social media marketing of Coke. Traditionally, Coke was consistently using advert prints, TV commercials and radio by talking to (or at) the customer. Television - the dominating media mix occupying 97% of advertising and producing the highest frequency rate among consumers compared to other traditional tools.

• The frequency level was limited to the exposure of TV commercials and the word-of-mouth resulting from the brand awareness – helped Coke to maintain the desired level of frequency.

COKE’S SOCIAL MEDIA MARKETING• Coke launched the Christmas truck tour campaign

online (for the first time) in 2014 - encouraged followers to share tweets on the Coke’s Twitter page.

• Coke transmits its advert online mainly through Twitter, YouTube and Facebook - much faster and has a much wider reach – viral advertising.

• Due to the exposure of the campaign in social media and the frequency of consumers sharing the campaign tweets and related campaign posts, the Coca-Cola’s Truck Tour website received nearly two million page views, while 50,000 official customer photos were taken across the tour’s 46 stops, higher than the “reach” achieved using the traditional marketing tools.

• The “frequency” of Coca-Cola’s advertising increased in 2012 due to customer-generated advertising and content that went viral through online shares and tweets.

KEY FINDINGSFrequency rate in social media marketing is higher than traditional marketing due to the presence of viral marketing in social media platforms.• Coke have always focused on the frequency of advertising to

boost sales and have shifted into pulse strategy in its maturity stage to increase and maintain the frequency level.

• In the traditional approach, the frequency level and consumer reach was limited to TV commercials, billboards, etc - a result of interrupted marketing, which pushes the marketing message onto consumers - more advertising was needed to maintain the goodwill effect of Coke on consumers.

• Social media marketing that operates in pulsing strategy incorporates less of push marketing and more of viral marketing that allows consumers to share and associate the brand to their peers.

• The frequency level attained at this level is obtained and heightened through consumer generated content and advertising of the brand through viral advertising (moderating variable), which is a much effective and convincing approach.

COMPARISON 3: EFFECTIVENESSConsidering Coke to be one of the biggest sponsors in the past decades, and as it still is today; the author will compare the company’s performance of sponsorship in the past, and sponsorship at the present time with the existence of social media to identify the differences in the effectiveness of these tools.

ANALYSISCOKE’S TRADITIONAL MARKETING• The company first advertised

during the Super Bowl in 1990s. The company's market share still declined in 1999, due to higher selling price - slower global sales growth due to major price adjustment.

• Despite the traditional expense of commercial awareness through sponsorship, the company’s sales growth were still prominently intervened by external variables such as market dynamics.

• Between 2000 and 2001, Coca-Cola advertised in Super Bowl each year with a total ad spending of $61.0 mil. Although the change in share price in 10 years showed a surplus of 51.8 per cent, the market share declined by 2.3 per cent between 2002 and 2010, with a 22% loss in Coca-Cola Classics during the period of decline - another evidence of how higher sponsorship spend may not directly secure the market leadership of brand due to external intervening dynamics.

COKE’S SOCIAL MEDIA MARKETING• Coke’s 2012 Super Bowl sponsorship - used its iconic polar

bears and a social live stream across digital and mobile media - housed on Coke’s website, Twitter account and Facebook page.

• 9 million consumers across various social media platforms engaged. Coca-Cola’s Twitter followers grew by 38% within a four-hour period during Super Bowl.

• The key success to Polar Bowl - initiatives leg work on social media platforms before and after the Super Bowl. Prior to the game, Coca-Cola activated multiple digital networks, TV commercials and encouraged consumers to RSVP for the event on Facebook. More than 30,000 consumers registered for the event, 15 times the expected number. After the Big Game, the company allowed video snippets from the Polar Bowl to be tweeted and shared by consumers - successfully encouraged crowd engagement.

• Due to increased social media engagement – higher traffic that generates higher brand ROI – this can only happen at the condition of identifying the content that really works in Coca-Cola’s social media engagement.

KEY FINDINGSSocial media marketing is more effective than traditional marketing, content excellence being a moderator of success and a competitive advantage to it; but is affected by external factors such as the changing consumer taste.• A notable increase in brand engagement at the presence of social media

marketing in Coke’s sponsorship.• Coke has transitioned from using sponsorship as an instrument of “traditional

media buy” towards using it as a “crowd engagement opportunity”.• Coke has shifted from “creative excellence”

towards “content excellence”. Content excellence (moderating variable) – caused higher effectiveness in its social media marketing.

• Both in traditional and social media marketing, market dynamics (consumers’ rising health awareness) seem to be an intervening variable that affects the marketing tools’ dependent relationship with Coca-Cola’s sales, presenting a gap to this thesis.

DISCUSSION ON KEY FINDINGS

Attract users

Customer engagement

Customer retention

Learn about preferences

Relate and customize solution

• Coke doesn’t have problem in attracting users - maturity stage in product cycle.

• Coke consistently works in its communications and frequency to maintain brand awareness and customer engagement; to ensure customer retention (the focus area of Coke in all strategies).

• Coca-Cola also fulfils the learning about customer preferences.

• This cycle is repetitively undergone by most corporations regardless of the product type and industry.

• A gap (intervening variable) - between Coca-Cola’s effectiveness of marketing tools and its effect on the brand’s sales - the rising health awareness among consumers about the health hazards of soft-drinks.

CHANGE IN MARKETING SEGMENTATION• Coke needed the cultural relevance

and modern appeal to younger generation (a different market segmentation) while retaining brand relationship with older consumers – shift from mass communications (traditional) to one-to-one customised marketing (social media).

• Objective of market segmentation: changed from traditionally classifying similar needs of customers towards identifying the potential lifetime value of the customer to the organisation.

THE RISE OF VIRAL ADVERTISING• Viral marketing (moderating

variable) affected the overall media scheduling strategy and advertising frequency of Coke.

• Generates brand awareness, not by pushing the brand messages (traditional advertising).

• Enables co-creation of unique content by consumers.

• Brings the highest impact in the frequency rate when the content is focused on engaging the customer.

SIGNIFICANCE OF CONTENT CREATION• Moderating variable for communication, frequency and the

effectiveness of marketing tool.• Coca-Cola’s shift from “creativity” towards “content

excellence”.• Coke have decided to stop talking or selling “at” consumers, and

instead market with them = “relationship marketing”• Active interaction, communication, dialogue and value -

contributes towards customer engagement followed by customer retention.

• Co-creating contents are essential to encourage users to become actively involved with a brand - enables consumers to exercise their own voice, not as passive respondents in traditional brand-consumer relationship, but as active members of brand communities who have the confidence to approach and work within the brand’s space.

EFFECTIVENESS OF SOCIAL MEDIA MARKETING

• Social media infrastructure has reached maturity to satisfy value proposition to the brand – consolidates efficiency and effectiveness of social media marketing.

• However, the efficiency and effectiveness of marketing success depends on brand objectives more than sales and ROI.

• Web is a place where the customer who decides whether to interact and who to interact with – opportunity for organisations to grasp new possibilities to customise products to the needs of individual consumers (customer engagement) and so form enduring relationships (customer retention).

• The right marketing content will reach a diverse range of people compared to mass media.

5.CONCLUSION & FUTURE SUGGESTIONS

FUTURE RECOMMENDATIONS• Thesis could have incorporated more

quantitative data - focus on the most used and most effective social media to consumers.

• Metrics of measurement for financial ratio could be incorporated for future study.

• The researcher could have conduct the same research at different cultural/national settings.

CONCLUSION The emergence of information age:

• Radically changed marketing communications mix - shifts in marketing strategies from traditional to social media marketing.

• Indicates an existing gap (intervening variable) – rising health awareness among consumers.

R I S E O F I N F O R M A T I O N A G E

Direct engagement with users via social media infrastructure precedes the one-way communication that traditional marketing was previously using.

Success rates for traditional marketing tools have been failing, shifting towards social media marketing that promotes higher brand awareness and brand engagement.

Traditional marketing is highly effective to reach broad consumer base, but social media marketing is a great way to reach out and build relationships with a specific audience.

Traditional marketing must be integrated with newer models rich with engagement, conversation, analytics and content.

The significance of relationship marketing. Viral marketing as a moderating variable - improved frequency rate of audience and consumer reach -

beyond “old-school” approaches. Content creation as anther moderating variable - an authentic content is more successful than well-

executed polished content in traditional marketing – facilitates customer retention. The company’s intended marketing strategies must align with corporate objectives.

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