Distribution Strategy of Coca-Cola Company - Case Study Example

? Coca-Cola Company Letter of Transmittal The paper discusses about the strategies taken by Coca-Cola Company in the mature market in order to remaincompetitive. The strategies that are described in this paper will help to understand the reasons behind the continuous growth and success of Coca-Cola in the global business context. The paper will also enable to recognize the differential aspects in the strategies taken by the company to sustain in the mature market. Introduction Mature market can be defined as the market which is at a state of equilibrium. The state of equilibrium can be described as the position where the demand and the supply are equal and the chance of significant growth is less. The mature market can turn out to be a barrier for the companies that desire to operate in such markets as well as to make an entry in the new market (Brown, 2002). It is very tough condition for a new company to introduce its products and services in the market when the chances of growth are less. Mature market creates a tough situation for the companies to expand. With due regard to this context, it can also be observed that the companies in a mature market faces tough times to extend its objective further because of the existence of the equilibrium condition in the market. The major characteristics of a mature market include slow overall growth of the market trends, decreasing industry profit ratio, influencing behavior played by the experienced buyer for the producers and increase in the market research for the products. The characteristics play a significant role in increasing the competition in terms of the market shares which lead to increase in the price of the product (Brown, 2002). In order to understand the scenario of a company’s operations in a mature market, the study intends to analyze the operational strategies taken by Coca-Cola Company, a leading global beverage corporation. Coca-Cola Company is one of the largest producers of non-alcoholic beverages like soft drinks and fruit juices. It has attained a global supremacy among its competitors with the successful utilization of various competitive market strategies. These strategies have certainly facilitated it to maintain its preference among the consumers of nearly all age groups. Overview of the Company The journey of Coca Cola was initiated in Atlanta, United States. It was founded by an Atlanta based pharmacist John Pemberton in 1886. John Pemberton discovered the solution to be used in preparing the drinks. The drink was readily preferred by the people, which initiated the long journey of a successful company. While the business was getting expanded John Pemberton’s bookkeeper named the drink as ‘Coca Cola’, and from then onwards the business was started as Coca Cola Company. Before realizing the growth and the success of the brand developed by him, John Pemberton passed away. Subsequently, Asa Griggs Candler, a businessman from Atlanta captured the rights to the business and became the inaugural President of the company to run the business (The Coca Cola Company, 2011). In the initial phases of commencement, keeping in view the need for expanding the Coca Cola business, it made the President Asa Griggs Candler to think about the safeguarding the brand. The measures taken by the President were primarily advertising the product authenticity so that consumer demand for it increases. Furthermore, the shape of container was also changed with attractive styles in order to differentiate it from other brands and to protect the product from being copied and sold in the market at a cheaper rate (The Coca Cola Company, 2011). During the World War II, in 1943, General Dwight D. Eisenhower asked the Coca Cola Company to take the trade overseas to ten bottling plants to serve the people with drinks during the time of war. Thereafter, when the war came to an end the company was allowed to do business overseas. This initiated the path for expansion for the company in the global shores. In due course of time, with the continued expansion strategies, Coca Cola also introduced few other flavors in the market like Sprite, Fanta, TAB and Fresca (The Coca Cola Company, 2011). From the year 2000 to the present globalised market context, there have been emergences of other companies that also deal with the similar types of beverages in the market. As a result, the market for the beverages has become tough for the companies to explore. This is because the demand and the supply of the beverages in the market have reached to an almost equilibrium state, which has resulted in the market attaining a state of maturity. Key Mature Market Strategies of Coca-Cola The mature state in a number of the global markets of soft drinks has arisen primarily because of the availability of various similar products in the market in sufficient quantity. For this study, the beverages market has been considered to present a view of the mature market. This situation has occurred because of the tough competitive condition between Coca Cola and Pepsi, one of the biggest competitors of Coca Cola. Generally, both the companies produce similar types of products for the global market. To serve the market with more quality product than Pepsi, Coca Cola has taken few strategies to meet the objective of the company. Coca Cola has implemented few strategies for a particular brand to sustain in the mature market. The strategies encompass offering an extra value with its product which is essentially not present in the other competitors’ products. Coca Cola offers certain benefits like prize, and ongoing event passes. Coca Cola has modified its product in various dimensions. Besides, these there are generally two types of strategies which are comparatively effective in strengthening the product status. They are communication and distribution strategies respectively (Timothy, 2012; Moschis, 1994). Discussion Coca Cola’s strategies have been implemented in the mature beverage markets in order to compete with the leading competitors such as Pepsi and to hold on to the market share and position. The strategy of offering an extra value with respect to other products can be observed from the fact that Coca Cola has added few different techniques in its production process to produce the product. The techniques can be measured as ensuring quality and creating an intangible perception. In this context, quality encompasses the facets of taste and the longevity of the ingredient, which can be changed with new flavored components so that it can be liked by the consumers irrespective of their desired flavor. This translates to the aspect of variety and preference in available offerings which is a differentiation aspect. This strategy has been taken by Coca Cola largely because its competitor Pepsi also produces similar kind and variety of product with similar ingredients. As a result, Coca Cola has implemented this strategy to differentiate its product from Pepsi’s product by changing the products flavor (Moschis, 1994). The changes that are brought up by Coca Cola include offering diverse flavored soft drinks such as Fanta orange and Fanta pine among others. This aspect has ensured that it is able to capture a significant market share of the consumer market, which prefers to consume such kind of drinks as compared to traditional carbonated concentrated drink of Coca Cola. Coca Cola has introduced few offers for its customer such as discount offer, passes for the ongoing events, promotions and coupons. Discount offer can be described as lowering the price of the product relative to competitor product prices so that it becomes more attractive for the consumers to consume. Passes for the upcoming and the ongoing events are also offered by Coca Cola for its customers. In case of a number of offers, the ticket or the passes can be availed through processing a specific number at the back of the cap of bottles. This is implemented by the Coca Cola in order to enhance sales of the products in especially mature markets. Promotion facet in marketing refers primarily as the offer given to the consumers by a company such as Coca Cola to draw them towards buying their offerings. The promotional offers of Coca Cola include ‘buy one get one free’. Other offers comprise offering a free gift to customers on purchase of a bottle of the soft drink. These strategies have been introduced owing to make a distinctive appearance for its products in the minds of the consumers (Moschis, 1994). The attractive promotional offers of Coca Cola have also been to provide tickets for the cricket world cup. Every bottle has a certain number and the randomly selected number will get a ticket to watch the game in the specified venue (Moschis, 1994). The other strategic initiatives Coca Cola include changing its product delivery style and the bottle shape. Product style represents the outlook that how it will look or present in the market. It includes new flavor, products, durability, reliability and test respectively. Bottle shape represents container shape. Container is that object in which the products are kept to serve in the market. The shape of the bottle has been changed to look different in the market with an exciting profile. This is done by Coca cola because the bottle shape was similar to the other competitors’ product and to increase the sale of the product in the market and to introduce new level for the products without changing the brand name (Moschis, 1994). Coca Cola has been able to create a niche market for itself through providing distinctly demanded products. This strategy can be described as expanding the market with a matured or sustainable product of the company. The mature product is that product for which the demand is stable in the market. With the help of the mature product, Coca Cola can expand its business and can influence competitors’ products’ consumers’ to switch for its product. A few of the beneficial aspects of the products have been highlighted by Coca Cola to the consumers in relation to the Pepsi’s products. This is done because to create a new base for its mature product so that a new customer can consume it. The mature products of Coca Cola Company are Coca Cola soft drink, Fanta and Maaza (The Coca Cola Company, 2011). The other effective strategies taken by the Coca Cola are pricing, distribution and communication strategies respectively. Pricing strategy can be defined as the process of implementing or setting price for the product. The price of the product should be affordable and suitable in comparison to other products because the price facilities to enlarge the market for the product. This is because in case of Coca Cola, if the price of the product is high then the existing customers of Coca Cola will switch to other products. In order to maintain the market equilibrium, Coca Cola had selected a competitive product pricing strategy for its soft drinks based on the market demand. The prices of the products also vary in terms of offered quantity of the soft drinks such as lower cost soft drinks also available for single usage i.e. around 200 ml bottle. However, big sized bottles are also prevalent which are priced quite competitively and affordably (Moschis, 1994) Distribution can be defined as the process of distributing products and services by the company. The distribution strategy involves channel selection, distribution intensity and channel integration. The channel selection can be defined as the process of selecting the factors for the distribution such as market, competitive, producer and product factor respectively. Distribution intensity can be defined as the process of capturing the market through intensive, selective and exclusive distribution. Channel integration can include the methods of controlling the market behavior such as franchising, conventional marketing channel and channel ownership. This strategy has helped Coca Cola to stabilize its position in the mature market. As being a vast experienced company, Coca Cola took it as a measured step to make a distinctive nature of its products from other competitor company like Pepsi (Angele, Szczepanski, & Reissinger, n.d.). Coca Cola has taken a very effective measure of sponsoring various events as a part of creating its place in the global markets. Sponsoring any events or social affair for a new community or market helps the company to gain loyalty from the consumer (Scribd Inc., 2012). Communication strategy is a vital aspect in strategic planning. As a result, every company assumes it as a fundamental aspect of marketing strategies. Therefore, Coca Cola also has considered the communicational strategy to sustain in the mature market. Communication strategy can be defined as the process of interacting with people in different modes with the information related to a specific topic. In respect of the company, it can be stated as the process of interacting with consumers with the information related to the company and its product (Argenti, Howell, & Beck, 2005). This has helped Coca Cola to introduce its mature products to new markets by communicating effectively to the consumer. This process made Coca Cola to build a distinctive nature within the market from other competitors’ perspective. In this strategy Coca Cola segmented its consumers by their age and behavior in order to recognize about their tastes and preferences and make product based communication as per the requirement. Another effective mode of communicating to the consumer is advertisement. In recent times, television advertisement, by focusing on a distinctive nature of the brand i.e. creating happiness has been a major aspect of global dominance of the company. In this mode, Coca Cola plays an attractive role by which it gains more loyalty and support from the consumer (Scribd Inc., 2012). Conclusion Coca Cola has been over the years placed itself as a leading beverage brand. Despite the increasing competitiveness in the global markets, it has been able to place its products as among the most preferred ones. In this endeavor, the distinctive strategies of the company such as promotional strategy, distribution and pricing strategies among others have been a path bearer. It has always intended to provide cost effective and quality offerings to the consumers in varied tastes so that any age group of consumer may prefer them. These initiatives of the company have enabled it to maintain its eminence in the mature markets. References Angele, P., Szczepanski, I., & Reissinger, N. (n.d.). Distribution strategy. Retrieved from http://www.unet.univie.ac.at/~a0025537/php/ABWLs/FK-Marketing/store3/Theory10.pdf Argenti, P. A., Howell, R. A., & Beck, K. A. (2005). The strategic communication imperative. Retrieved from https://www.dartmouth.edu/~opa/communicators/fall08/reading/Sloan_MIT_Strat_Comm_Imp.pdf Brown, M. D. (2002). Achieving growth in a mature market and defining “barriers to entry”. Retrieved from http://www.chemquest.com/PDF-files/Growth%20in%20a%20Mature%20Market%20and%20Barriers%20to%20Entry.pdf Moschis, G. P. (1994). Marketing strategies for the mature market. United States: Greenwood Publishing Group. Scribd Inc. (2012). Coca Cola global marketing strategy. Retrieved from http://www.scribd.com/Mzmanglani/d/45864323-Coca-Cola-Global-Marketing-Strategy The Coca Cola Company. (2011). Heritage timeline. Retrieved from http://heritage.coca-cola.com/ Timothy, A. T. (2012). Product life cycle and brand management strategies. International Journal of Business and Management Tomorrow 2 (2), pp. 2. Read More