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Coca-Cola Projects Future Consumers’ Choices With System Dynamics

Nov 4, 2020 | Cases

EXECUTIVE Summary

The Coca-Cola Company faced the challenge of gaining forward-looking insights into consumer behavior to inform strategic marketing decisions. While the company’s Brand Beverage Barometer provided valuable information on brand health and marketing program performance, it lacked predictive power. To address this, Coca-Cola used a combination of behavioral and attitudinal segmentation, along with system dynamics modeling, to project current understanding of consumer choices into future changes to brand preferences.

This approach enabled Coca-Cola to develop a strategic planning tool that could identify high return-on-investment marketing initiatives, which could be replicated across regions and product categories. This tool provided a common language for marketing professionals to share their insights and helped Coca-Cola make data-driven decisions to optimize their marketing strategies and improve their supply chain by optimizing inventory level, reducing costs, and improving overall performance.

#Marketing #Consumer Behavior #Supply Chain #Coca-Cola #Business

Case summary

Marketers behind major brands look into consumer data to spot trends and craft possible futures. Their vision and strategy relies on a balance of art and science, based on raw marketing talent and supported by extensive data on consumer behavior.

Virtually all available brand tracking data is grounded in the past.

Although social media give vast amounts of real-time information, much of this is qualitative, incomplete and unreliable. But the historic information is critically valuable for two reasons.

First, that data explains how interactions between consumers, retailers and competitors actually operate and how the entire system responds to marketing and pricing changes. Secondly, historic actions and choices are already strong determinants of what will happen in the near- to mid-term future.

The Coca-Cola Company’s Brand Beverage Barometer is a massive global brand tracker that informs decision-makers about their brand’s health, and gives clues on how well marketing programs perform. But, powerful as it is, this solution alone cannot give good forward-looking consumer insights.

The solution developed was achieved through a behavioral and attitudinal segmentation, plus system dynamics modeling that allows Coca-Cola to project current understanding of consumers’ choices into future changes to brand preferences. The approach is analogous to taking a series of snapshots of consumer behavior, turning them into a movie, and running the movie forward in time.

The result is a strategic planning tool that can identify high return-on-investment marketing initiatives, which can be replicated across regions and numerous product categories. This also provides a common language for marketing professionals to share their insights.

Client Coca-Cola Inc.
Authors/Consultant Foresight Associates

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Links to articles, presentations or models:

Link to the Paper
Click to view “Pushing the boundaries of the research brief”.

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