How can Coca Cola further increase their customer base in reference to marketing strategies - Case Study Example

College: Commentary on: How Coca-Cola can Increase its Base in Consideration of Marketing Strategies Introduction Coca Cola is undoubtedly the world’s largest producer, marketer and distributor of nonalcoholic or soft drinks, syrups and concentrates. Since its inception in the year 1886, the Company has grown tremendously extending its reach beyond its domain country, America. Coca Cola also formulates its goals as promises to the customer, clearly indicating its commitment towards refreshing and benefiting each person that it influences. However, the Company has to uphold its performance to retain competitive advantage over rival companies like Pepsi and keep operating profitably. This paper, therefore, seeks to not only analyze the reasons for Coca Cola’s impressive performance, but also identify potential opportunities for consumer base expansion and retention of competitive advantage over Pepsi, Co. (Kotler 33-35). Findings One of the principal factors that make Coca Cola stand out from other soft drinks manufacturers, like its principal rival Pepsi, is its capacity to elevate products to brand status. However, brand recognition, is also a principal consideration for Pepsi, accentuating the rivalry between the two giants in the carbonated soft drink (CSD) industry. This constant brand competition is highly beneficial for consumers as it fosters product diversification and improvement. For instance, while Coca-Cola’s most distinctive brand is Coke, Pepsi Co.’s unique brand is the Pepsi Soda. Both of these carbonated soft drinks successfully represent their Companies’ image by depicting distinctiveness, excitement and reliability, through brilliant adverts. Creating a distinguishing element and maintaining the competitive advantage, is therefore a significant challenge. The difficult task is accentuated by the fact that, it is virtually impossible for a company to have complete control over a brand, owing to external influences. Therefore, proper use of promotion methods, and corporate culture, among other aspects, is crucial to foster Coca Cola’s brand association among customers and widen the gap between it and Pepsi (Baron 229-231). As mentioned, Coca-Cola is ranked first among the world’s most renowned brand names, since it has approximately 94% recognition (Baron 233-235). This implies that the Company has a multi-million consumer base all around the globe. Customers for Coca-Cola products comprise of retail outlets, restaurants, and local distributors, among others, who purchase the products and later sell or serve them to actual consumers. However, unlike Pepsi, Coca Cola does not refresh its brand image. For instance, the Company has been using a single slogan for decades, without incorporating new sounds and faces. This is an aspect that makes the Company get affiliated to older generations, while Pepsi is seen as the hype face of the younger people (Baron 237-241). Coca-Cola’s distribution network is also one of its strong points. The Company has the largest bottling system, in the liquid soft drinks category. This is due to the fact that Coca-Cola sells its products to bottlers and canning companies, fountain wholesalers or retailers, as well as, distributors. This means that Coca Cola mandates the bottlers to produce and package its products, formulated from syrups and concentrates, into recognized finished drinks. However, as has been clear on analyzing the CSD industry, Pepsi follows a similar distribution network, where all producers are incorporated into the parent company’s operation framework. This gives the implication that, to avoid being overtaken by Pepsi, Coca Cola must devise additional distribution strategies (Thompson and John 36-42). In consideration of the nature of competition in the market, the soft drinks industry has numerous players, hence relatively high rivalry. Principal competitors, therefore, include manufacturers, distributors and bottlers of locally, nationally or globally marketed beverages. Coca-Cola primarily utilizes competitive factors like advertising, pricing, product innovation, packaging and high production efficiency, to gain advantage over rival companies. Even though these strategies often work effectively, it is imperative for the Company to adopt more aggressive and up to date advertising methods to counter the youngsters’ oriented marketing campaign launched by Pepsi Co, Inc. Analysis of the Findings There are numerous approaches that Coca Cola can utilize to further increase its customer base in reference to their marketing strategies, and general customer considerations. Of particular interest, in this effort to grow, are four principal areas that the Company should evaluate, as discussed herein. Customer Analysis Based on the findings above, Coca Cola’s focus on diverse consumers, mostly represented by all the age groups is a success. The Company should uphold the same strategy in unexplored markets. This will enable them to reach an equally vast customer base in the new markets thus increasing their revenues further. This can be achieved by making sure that the company is not only advertising their products immensely, but also making sure that they intensify societal marketing. Societal marketing focuses on sponsorships, as well as, other Corporate Social Responsibility (CSR) activities. However, the Company should also attempt to concentrate more on young people, to counter the misconception that its main brand “Coke” is a cola drink associated with old people. This would involve increasing investment in youth oriented marketing campaigns, and adoption of platforms like social media. This way, Coca Cola will be able to reach more customers, especially the young people who constantly use social media to communicate with each other. The strategy would also help Coca Cola to not only be at par with its key rival Pepsi, but surpass it as well. Additionally, the company should create marketing schemes that will enable them reach more customers. This implies designing adverts not oriented extensively towards attracting the international market, but those with which local customers can identify (Thompson and John 42-49). Market Analysis It is imperative for Coca Cola to improve on their market targeting, positioning and segmentation strategies. This is because; the soft drink industry is becoming increasingly competitive, as shown by increased non-alcoholic drinks in the market. For instance, the Company should target individuals with special dietetic needs in society. The best illustration of this strategy is the recent Coca Cola introduction of Coke zero to the market. Coca Cola should embark on producing diet versions of the rest of its renowned beverage brands. It is also notable that people prefer portable drinks like cans and plastic bottled sodas, over the traditional glass bottle. Therefore, Coca Cola should increase its plastic bottled sodas, not only in specific markets, but everywhere. This way, they will be able to cater for the large customer base comprising of travelling individuals or working persons’ with tight schedules. In addition, in order to outdo Pepsi, Co. in regard to the size of customer base, Coca Cola should focus more on foreign markets. This is because the customers in the domain country seem to be loyal to either of the two CSD giants, implying that the statistics weigh in favor of both. Venturing more into foreign markets would, therefore, place Coca Cola at an advantage of widening its customer base thus staying ahead of Pepsi. Distribution analysis As indicated in the findings section, Coca Cola has not been able to distribute their products effectively in the rural areas, particularly in developing countries. Therefore, the Company should ensure that it distributes its products to the rural areas by involving merchants and other retailers for distribution purposes. Competitor Analysis In order for Coca Cola to reach a vast client base, the Company must ensure that they manufacture and distribute fairly priced products. The fair pricing would enable Coca Cola to gain additional popularity over Pepsi. Slightly lower prices for Coca Cola products in comparison with those of Pepsi would not only attract additional customers, but also increase sales, thus compensating for the price deduction. Sales promotion is another method that the company can utilize, in order reach a larger customer base. Holding road shows and organizing concerts to create awareness of Coca Cola products, in diverse locations would also go a long way towards enabling the Company to reach more customers (Graham, John and Nigel 56-60). It is clear that most companies suffered a setback owing to the recent recession, with most like Pepsi, Co. opting to lower their production. This is a customer confidence-breaching undertaking, especially considering the fact that Pepsi, Co has gone bankrupt twice in the past. Coca Cola should take the opposite route, by making sure that strategies to sustain production and distribution are in place. This is a key strategy of widening the Company’s customer base, because it affirms the Company’s reliability even during harsh economic times, an aspect likely to attract additional consumers. All the same, Coca Cola should lower their prices in such times. This serves as an assurance to customers that the Company acknowledges their financial strain, hence luring more buyers. Conclusion In conclusion, the most imperative aspect that Coca Cola should adopt, to broaden its customer base, is adherence to customer needs in regard to products and prices. This fosters consumer loyalty for the Company ensuring that Coca Cola maintains its competitive advantage over other soft drink companies. Nevertheless, intensifying its participation in CSR activities, extensively utilizing social media, and modifying advertisement strategies to cater for changing times would foster the Company’s ability to reach a broader customer base, in comparison to its chief rival Pepsi. Works Cited Baron, S. Commentary: Statistics in Marketing and Consumer Research. Journal of Customer Behaviour, 9.3 (2010): 229-242. Graham Hooley, John Saunders and Nigel Piercy. Marketing Strategy and Competitive Positioning. Upper Saddle River, NJ: Prentice Hall. 2004 Kotler, Philip. Marketing Management. Upper Saddle River, NJ: Prentice Hall. 2003. Thompson, Arthur and Gamble, John. Crafting and Executing Strategy: The Quest for Competitive Advantage, Concepts and Cases. New York, NY: McGraw-Hill Irwin. 2005. SWOT Analysis   Strengths Weaknesses Internal -Reputation -Famous -The brand is obvious as well as easily recognized - Finance Stability -Consumer loyalty -Global Trade -Limited number of popular brands -Partially ineffective distribution mechanism -Inadequacy of marketing strategies -Health concerns     Threats Opportunities External - Health consciousness attitude change -Legal problems -Competition (Pepsi Co. Inc) -Several successful brands -Opportunity to popularize less popular products -Buying out competitors -Building brand recognition further Supporting documents 1. Evaluation of Coca Cola brand http://www.investopedia.com/financial-edge/1012/the-evolution-of-the-coca-cola-brand.aspx#axzz2NcXpPLJe 2. Coca Cola’s Vision, Mission and Values http://www.coca-colacompany.com/our-company/mission-vision-values 3. Social Media Marketing Strategy and the different industry players. Retrieved from http://blog.monty.de/category/facebook/ 4. Coca Cola in comparison to its competitor Pepsi. Retrieved from http://business.outlookindia.com/printarticle.aspx?101045 Read More