Coca Cola: New Product Development Strategies

Of the Four P's of marketing, product is often thought to be the linchpin, the element that holds all other elements together. It is an extremely important element in the marketing mix.

Furthermore, today's marketing thinking focuses not only on the product but on the customer's experience with the product. It is now thought that the customer's interaction with the product is what marketers must address, not just product design.

Read the article and respond to the following questions. Please provide guidelines on creating a 3 page paper:
The PTSTP process is a method used to focus on what a product means to potential consumers of that product. In this case, you will argue in favor of or against using PTSTP to develop new products.

In trying to obtain a sustainable competitive advantage, should a soft drink manufacturer (for example: Coke or Pepsi) use PTSTP to develop new products?

Coke Buys Fuze to Light Up Its Lineup
Betsy McKay. Wall Street Journal. (Eastern edition). New York, N.Y.: Feb 2, 2007. pg. B.3

Coca-Cola Co.'s acquisition of Fuze Beverage LLC could help the beverage giant appease bottlers and investors who have criticized its lineup of drinks in the industry's fastest-growing categories. But Coke will have to show it can preserve the upstart's innovative culture.

Terms of the purchase weren't disclosed, but the deal is valued at $225 million to $250 million, said John Sicher, editor and publisher of Beverage Digest, an industry newsletter. U.S. acquisitions by Coke are relatively rare, and analysts will be watching closely to see if Fuze, a maker of energy, tea and vitamin-enhanced drinks based in Englewood Cliffs, N.J., can provide a much-needed boost to Coke's domestic sales.

Launched in 2001, Fuze is known for its fruit-flavored drinks in colorful, clunky glass bottles that promise to "refresh your soul" or deliver "a shield of protection against the rigors of an active lifestyle." It also makes a line of water products called WaterPlus.

The deal is significant for Coke because the Atlanta company has lagged behind rival PepsiCo Inc. in the race to capture market share in non-carbonated beverages. Pepsi, of Purchase, N.Y., got leading sports drink Gatorade in its 2001 acquisition of Quaker Oats Co. and bought Izze Beverage Co. -- a maker of all-natural sparkling fruit juices -- last September.

Some Coke bottlers have grown so worried about the company's noncarbonated offerings that they distribute brands from other beverage concerns. Twenty Coke bottlers already handle deliveries of Fuze. John F. Brock, president and chief executive officer of Coca- Cola Enterprises Inc., Coke's largest bottler, said the acquisition "will significantly enhance our product portfolio."

Coke has had mixed success with niche acquisitions in the U.S. After buying Barq's in 1995, Coke turned the root beer with a small but loyal following into a nationwide brand that now is a staple on supermarket shelves. Sales of juice maker Odwalla Inc. have grown since its 2001 purchase. Planet Java, a maker of coffee drinks, and tea and juice producer Mad River Traders Inc., both bought in 2001, suffered as Coke revved up a joint venture to market coffees and teas with Nestle SA.

Coke said Fuze will operate as a standalone unit, which is similar to the structure used for Odwalla, based in Half Moon Bay, Calif. The Fuze purchase is subject to regulatory clearance and expected to close in the first quarter.
Fuze said its sales were $95 million last year, up from $65 million in 2005. Its volume rose about 45% last year, to 11 million to 12 million unit cases, according to Beverage Digest. (A unit case contains the equivalent of 24 eight-ounce drinks. ) Coke sold about 5.5 billion unit cases of beverages in North America in 2005, and its North American volume rose 1% in the first nine months of last year. Coke reports fourth-quarter and full-year results Feb. 14.

References:
http://www.thecoca-colacompany.com/brands/index.html
http://www.pepsi.com/pepsi_brands/index.php