Background

Fomento Economico Mexicano S.A.B. de C.V., better known as FEMSA is a multinational company that deals in the drinks industry, commercial sector and restaurant industry. The company dates back to 1890 when it was constituted in Monterrey, Mexico. FEMSA started their operations with the commercial chain of OXXO. It operates primarily in Mexico and other Latin American countries such as Brazil, Argentina, Colombia, Central America, Venezuela and Uruguay. It started its association with The Coca Cola Company in 1993 with the sole purpose of distributing their drinks in Mexico. It was until 1998 that FEMSA started to go public on the New York stock exchange. It was a decade after that in 2003, FEMSA closed a deal that made Coca Cola FEMSA the biggest Coca Cola bottler in Latin America (this deal was at that moment the biggest one closed by a Mexican company). On 2010, in search of a bigger part on the drink industry, FEMSA exchanges its total of its operations on the beer business for a total of 20% stake at the Heineken Company, one of the world leaders on this industry, having business with more than 70 countries all around the world.

Coca Cola Femsa has its headquarters in Mexico City. It employs around 320 thousand people all around the countries that it has business with. Coca Cola FEMSA is the largest Coca Cola distributor in the world by volume. It is managed by Jose Antinio Fernandez (chairman), John Santa Maria Otazua (CEO) and Eduardo Padilla Sliva (CEO of FEMSA). It has a revenue, as of 2019, of $194.2 billion dollars, a net income of $15.8 billion dollars and their total assets are worth over $13.3 billion dollars. Altogether their 2.8 million points of sale attribute FEMSA a total of 360 million consumers.

Problem definition

The "Conglomerado Fomento Econmico Mexicano" (Femsa) posted a net attributable loss of 1.93 billion Mexican pesos (US$92 million) in fiscal 2020, compared to a profit of 20.69 billion pesos (US$990 million) in the previous year, following the impact of the mobility restrictions imposed by the Covid-19 health contingency on the company's retail businesses.

As in all companies, an increase in profits rather than losses was expected in that year, but Covid-19 was not expected and therefore generated large losses, especially in the shopkeepers and grocer's sector. The pandemic provoked the company to accelerate the adoption of digitalization in its processes. Covid-19 has left great lessons for companies, especially when it is about the adoption of digital tools. Given this scenario, Coca-Cola FEMSA could not be left behind, and is now accelerating the rhythm to serve its customers and consumers with digital platforms.

Among the company's initiatives is that it is leveraging its digital capabilities, as is the case of taking multichannel orders via B2B platforms, contact centers and WhatsApp to respond to the demand for its products.

Coca-Cola Femsa, according to the pricing policy followed by the company, considered adjustments above inflation, which is too high, but due to the economic situation facing the country, they decided to be in line with the inflationary index. They wanted to face a stable environment in Mexico in terms of costs. It's also responsible for meeting the needs of its markets as well as satisfying consumer demand by offering more than 100 brands of soft drinks and beverages, being one of the world's public bottlers of branded beverages. Coca-Cola Femsa, according to the pricing policy followed by the company, considered adjustments above inflation, which is too high, but due to the economic situation facing the country, they decided to be in line with the inflationary index. They wanted to face a stable environment in Mexico in terms of costs.

Approaching the problem:

The unit of analysis is Coca-Cola Femsa's attempt to go digital. The result of the success is the increase in sales. 1. The pandemic did not sit well with anyone, sales were quite good before the health contingency, but when it arrived sales went down and also business efficiency. 2. At the beginning, as with everything unknown, it was not very well accepted by some and was difficult for others.3. All the Shopkeepers were driven to have to join the digitalization, as it would be the new strategy due to the pandemic. 4. They had very strict prices above the inflation level but due to the pandemic and the economic situation of the countries they had to catch up with the inflation rate.

Research questions:

1. How did covid-19 affect the shopkeepers?

2. How did it affect Coca-Cola Femsa's strict pricing?

3. Will there be greater consumption in this stage of digitalization?

4. Will they feel more comfortable being able to monitor their products and have instant responses to any inconvenience?

Hypothesis

The digitalization of services will allow Coca-Cola Femsa to increase its sales, as well as speed and attention.

Research design developed. At the time of making the decision to do a research design that helps us to obtain the necessary information to be able to formulate or solve problems of our objective. In this case, FEMSA, due to this global change, had to find a way to digitize itself in order to continue working.

"We are introducing a platform that may sound very simple, but it is really revolutionary, through which a salesperson can notify if he/she cannot attend an order or if the shopkeeper himself/herself will not be able to receive it because he/she had to close, and through a chat they can be in contact and manage orders, suggested sales and others, in a much more effective way and providing follow-up in real time," (Garza, 2021)

Because of COVID-19, FEMSA saw the need and opportunity to digitalize, as Jose Ramon Martinez explains, they took the initiative to take orders through a mobile application or an electronic payment system for their market.

"It is possible to develop an app to take orders and work in a more relevant way in the payment system, such as the Codi app developed by the Bank of Mexico, since it is a sector that is not banked, it will allow small merchants to have a more fluid operation" (Martinez, 2020).

However, it is the case that in some areas, the use of applications is not an everyday occurrence or something that people have easy access to, and many markets in vulnerable localities were affected by the situation, but thanks to good management and the development of process strategies, they were able to achieve their objective. By adapting to virtual administrative processes, FEMSA was able to meet the demand of its market, serve the communities that needed it and have enough production to support its market.

Fieldwork or data collection. FEMSA, with the help of Dynamic Initiative Management and a Customer Relationship Management platform, allows them to identify and communicate every period of time the sales force they generate in order to analyze and implement their administrative strategies. This generates a greater capacity to react to market opportunities. In this way, they generate sales force can maximize the value of their visits and interactions with the customer, improving the execution at the point of sale and we achieve a better allocation of resources to the market.

To analyze our data, we can use several statistical methods such as linear regression to indicate a trend or correlation to see if our variables have an impact on each other e.g., is the success of a course dependent on the quality of the lecture. We will conduct a questionnaire to identify if the target groups are willing to buy products if FEMSA provide the service online. It is very important that the questionnaire is easy to handle and understandable for the sample because otherwise errors might occur such as non-response error because the interviewee doesn't understand the question of the questionnaire, and this will distort our analysis and so our outcomes for the best decision as well. To analyze our outcome, it might be helpful to give the options of answers numbers to better analyze what the sample was answering. We can begin to transcript and analyze our data during the market research process if we obtain the answers of the interviewees. It is a faster way to obtain our results because we must transmit the data of our questionnaire to a statistical program that can analyze our received data. The report preparation and presentation of our results is very important because it is how we present the outcomes to the decision makers so they can see in an easy way what are the results of the market research to derive the best decisions for the company. To make sure our presentation will be good we should document all steps and the key outcomes of our market research. We should present our results in an understanding way so the decision makers can easily understand and are not confused. In addition to the presentation as a document we should present our results verbally as we do in our final presentation.

Situation analysis of the environment of FEMSA under investigation

1.Sector

FEMSA is a Mexican multinational beverage company that operates the biggest bottling of Coca-Cola products, besides is associated with big chain as Oxxo and Heineken. This company is positioned as one of the global leadership organizations in the drinks industry.

2.Market and Segmentation

The corporative structure of FEMSA divides into: FEMSA Coca-Cola which bottle the products and operates in 10 countries, FEMSA commerce (proximity division) which operates Oxxo with more than 19,566 branch offices, FEMSA commerce (health division) which focus on drug pharmacies, FEMSA commerce (fuels division) with the Oxxo gas station and finally a participation in the actions of Heineken. As the chart below demonstrates the proximity division of FEMSA is responsible for 37% of the revenues of the whole company, followed by Coca-Cola FEMSA which has more than one third of the revenues as well. The health division makes 13% of the revenues of FEMSA and the fuel division and others both account for 7% of the turnover.

3.Brands

Between the products that this company produces and commercializes we can find 169 brands of soda, such as Coca-Cola, Sprite, Fanta, Lift, and other kinds of drinks that belong to the Coca-cola group. Also, they handle brands like Del Valle Juices, Powerade, Santa Clara and Andatti coffee.

4.Products

The products that FEMSA offers demonstrate which their competitors in different markets are. For Coca-Cola FEMSA Pepsi and other local soft drink brands are competitors. The proximity division has to compete with companies like 7-Eleven. The fuel division is in a highly competitive market because the division has to compete with Pemex and big petrol companies such as Shell, BP or Exxon Mobile.

Even though consumers are counted as more than 360 million in individual terms, the direct clients are the ones that FEMSA distribute to, mainly supermarkets and local stores. That is why market research must focus primarily on shopkeepers or grocers. If we focus on this market segment the research will have better results since it will be easier to reach the major source of income and in that way increase sales by satisfying the clients' needs.

Definition of the research questions and identification of the research problem.

The objective of this research is to figure out if our marketing strategy based on our market research can be successful. By answering our research questions established on the problem definition, we would like to find out if the digitalization of FEMSA will lead to an increase in their sales and if more companies would like to use the service of FEMSA if the process is digitalized. The first question is to find out if there is a need to adapt because we do not know if the pandemic is affecting shopkeepers so if there is no need our efforts would be clueless. The second question is to find out if one of the biggest divisions of FEMSA is affected by the pandemic because due to the strict pricing we can ensure that the prices FEMSA would like to have been still possible. The next question is to find out if consumption will increase. By asking this question we would like to find out if there will be an increase in sales because of the pandemic there were some issues due to sales. The last question is asked because we would like to figure out if the customers feel more comfortable if they have new opportunities due to digitalization. If we find out that there is higher satisfaction among our customers FEMSA is more able to keep their clients. To answer our questions, we have to collect data to have a fundament on which we can derive our marketing strategy. For us it is necessary to analyze and interpret the obtained data because only with the analysis and interpretation of our data we are able to recommend an appropriate marketing strategy.

Research Objectives

1.Marketing strategy development

-Develop a strategy that allows FEMSA to grow their sales and distribution. To capture the attention of more shopkeepers and new clients.

2.Make an investigation for data collection

-Understand what is affecting the shopkeepers from buying more products or buying from FEMSA.

-Analyze the difference between the experience of the customers with more digital resources and the experience without them.

3.Apply a strategy that works properly

-Implement a more digitalize system for the company so that customers feel more comfortable, and use the collected data to know what approach to use, what social media or what digital resources will work better to reach the objective.

----QUESTION-----

Define the research approach developed and research design