Lecture #3 - Coca-cola is everything: SCM, CRM, ERP, Social Media, You Name It
Question 1: Why is standardization so
important in supply chain management ? Coke is developing its own set of
software services for bottlers to use. Do you think Coke charges the bottles
for these software services ? Why or Why not ?
Standardization is important in
supply chain management because it creates a standardized business and
technology platform across all bottlers, thus facilitate a more efficient and
streamlined application, saving money by reducing expenses associated with
supply chain activities.
It serves as
kind of information partnership, that integrate their IT system with bottlers,
to provide customer with the best of what each can offer.
It helps to
optimize
- Fulfillment
- Logistic
- Production
- Revenue and Profit
- Cost and Price
We believe that Coke does not charge
the bottlers for the software services. This is because getting all bottlers
involve in their software service is an integrated supply chain management
strategy, that worth to invest on as the return is far more than the money they
invested for all the bottlers.
Question
2: How is My Coke Rewards an example of a switching cost ? How can a switching
cost not have a monetary penalty associated with it ?
My Coke Reward used membership card
and points to dissuade customers from switching to a competitors’ product. By
using these types of reward, it attract customer to continue buy their product
in order to get more points, which entitle them to get more offers and
promotions.
Instead of
monetary penalty, switching cost can also be psychological, effort
and time-based switching cost. For instance:
(i)
Psychological:
·
People are
sensitive to relative advantages and disadvantages of any change from the
status quo. Therefore, a new, improved product, no matter how great it is on
its own merit, is one way to ensure customer not easily switch to other brand.
Moreover, people exhibit loss aversion, meaning the pain of giving up a benefit
is much more significant than the pleasure of gaining that benefit. Therefore,
a product that portrays the perceived sacrifice of unlimited benefits, is a
type of psychological switching cost to the consumer.
(ii)
Effort
·
The more
users of a communication service such as Skype, the more valuable the service
to each users and the higher is the switching cost because it is a real
headache for people to switch to another communication services, and notify
everyone that your communication tools have changed.
(iii)
Time-based
·
The
switching cost varies over time. For example, if you sell a computer storage
device, the value of the device depreciates over time and customer might choose
another brand when it is time to replace it. On the other hand, if you sell
online storage, the service will become increasingly valuable to customer over
time as it gets dependent on the increased amount of stored data.
Question
3: What sort of business intelligence could Coke gather from its My Coke
Rewards Website ? How would it use this information for customer relationship
activities ?
From My Coke
Reward, they can collect information about personal information of customers,
customer's preferences, who are their potential competitors, business partners,
competitive environment, and own internal operation.
- Sales force automation
·
Since
customers need to collect the Coca-Cola beverage caps in order to redeem for
the My Coke Rewards codes, this means that Coca-Cola able to track the sales,
to identify which beverage is selling well. And from here, they would be able
to understand the customer buying pattern, and taste preference. By
understanding customer needs, Coca-Cola would be able to forecast their future
sales, ensuring the right amount of products is available to customer in the
right location at the right time.
- Customer service and support
·
My Coke
Reward enable Coca-cola to provide immediate after sales service to its
partners, such as Nike, Disney Parks, United Ailines, Magisto, Royal Caribbean,
Live Nation, etc., by advertising the offers given by their partners.
The Coca-cola Facebook page does not allow the consumers to purchase any
products through the page. However, it displays all the history of foundation
of the Coca-cola as well as the recent activities held by Coca-cola. The
Facebook page of Coca-Cola serves as a platform to communicate with the public
or customers. It does not directly serves the purpose to sell the Coke
products.
Their social media tools include Facebook, Twitter, YouTube videos.
Question 5: Now, visit Pepsi's Facebook page. Compare
and contrast it to Coca-Cola's Facebook page. Which has more eye appeal ? Which
seems to have more activity ? Why do you think this is true ?
Pepsi is
more eye-appealing and has more activities. The design of the page has really
attracts the attention of the visitors. There is also status update from Pepsi
and a good interaction between Pepsi and the visitors of the page. From the
page, there are Pepsi VIP Party, The Pepsi Weekend, Pepsi Paint Your Face,
Discover Essential New Young Artists on our final Pepsi Chart and a lot of
photos on their activities which has been updated frequently.
Unlike
Pepsi, Coca-cola Facebook page appears to be a boring web page. There are
rarely updates can be seen in the page and the design is not as attractive as
Pepsi. The visitors have posted some comments on the page but surprisingly
there is rarely interactions and reply from Cola-Cola web administrator.
Coca-Cola is
having such a big business model worldwide and maintaining a Facebook
page is just a very easy task and non-costly activities. It is surprising that
Coca-Cola does not make full use of the social media to communicate and promote
their products to the public or potential customers despite spending a
significant investment in software and management system.
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