Coca Cola Company's Positioning Today - Case Study Example

The Coca Cola Company Reasons for Choosing Coca Cola Company The Coca Cola Company has been operational for many years and has the experience of international market (Dost 18). The company also boasts of both the top notch skills in management and the best infrastructure which have always given the corporation some competitive advantage in the market. The other thing is that the company has been able to launch new products which have equally performed well in both local and international market. For instance, its bottled water product is the proof of this. In terms of revenue collection, the bottled water market in the U.S. alone recorded more than US$15 billion in 2006 (Kent, para 2-3). In the same year, market consumption volumes for the same product were more than thirty billion liters. This is usually not the same story with many multinationals. Company Overview Coca-Cola Company headquartered in Atlanta Georgia and specializes in soft beverage drinks. The company has operations in more than 200 countries. The plant in Atlanta produces the concentrate and sells it to certified Coca-Cola bottlers worldwide. Bottlers hold agreements with the Coca Cola Corporation, which permit them to produce the finished products. After which bottlers distribute and sell Coca-Cola products to retail stores and vending machines, who in turn sell the products to consumers. Advantages of Coca Cola Differentiated marketing method The most noticeable positional strategy of the Coca Cola Company is differentiated marketing method. This method has enabled the organization to satisfy the needs of a wide range of markets. For instance, it has bottled water products for any of its target segments. It also has Diet Coke which is specifically targeted for the aged or elderly people and those people who are drifting towards a healthier feeding lifestyle. Product levels One of the main advantages of Coca Cola Company over its rivals is that it offers products on three distinctive levels: the core product, the actual product, and the augmented product. In general, features and even materials used make the actual products which in the end avails the core product (Petretti 2-17). Consumers are attracted by Coca Cola products because of their high quality coupled with unsurpassed company standards. As consumers take the products they also end up getting the augmented product which is the extra or additional benefits the consumer derive from the product or the company. However, given that soft beverages are consumables, there is a tendency to pose limits on the augmented level. To counter this, Coca Cola Company not only provides its products in various quantities, it also provides its products in different tastes and coloration to enable the consumer to switch products without crossing over to competitor products. A good example is Diet Coke which is offered in various quantities like the Lagasse Diet Coke, Caffeine-Free Diet Coke, and Chaser Diet Coke basing on the consumer preferences. Global brand Unlike many of its competitors, Coca Cola Company is the leading manufacturer, marketer and even distributor of nonalcoholic drinks worldwide. Presently, the organization has operations in more than 200 countries. The company is a marketplace innovation driver and a solidified investor in local economies. At present, Coca Cola Company commands the beverage industry globally with over 500 beverage brands including about four brands out of the top-five sparkling brands on the planet (Kent, para. 4-6). Coca-Cola Company market share versus other soft drink companies worldwide in 2011, based on sales value Source: Globalization and Health, Statistica. Disadvantages of Coca Cola Positioned as a monopoly The company has established itself as a monopoly in many countries. As a monopoly, there are many things that are attributed to the company are not encouraging. For instance, the company is likely to produce products that are substance. A case in point, in 2006, in Canada and India, the company was accused on producing products enriched with pesticides. Also, a monopoly, the company has kept varying the prices of its products without any fear that consumers are likely to switch to alternative products offered by competitors. Leadership Style The company employs Transactional style of leadership where the top management and team members have responsibilities to undertake (Kent, para. 1). In addition, the company applies an incentive-based rewards system which recognizes high performing employees through rewards. Their rewards range from monetary to non-monetary forms like paid leave, and even reserved parking. There are others like organized transport for workers and medical insurance. All these incentives are known to everybody and most employees have confirmed to enjoy them. In addition, their distributors and local vendors are motivated either by painting their shops or providing them with fridges and umbrellas at a reduced price. The logic behind this incentive system is that when the employee efforts are noticed and rewarded thereof, they are motivated to the point of surpassing the set organizational goals. Theories of motivation Under situational recognition, many theories of motivation have been advanced depending on what the organization subscribes to, the implications to the organization and the leadership as their advice for recognition and engagement strategies may vary. Of the six major theories of motivation namely The Equity Theory, Two Factor Theory, Hierarchy of Needs Theory, The Needs Theory, Goal Setting Theory and the Expectancy Theory, the Goal Setting Theory hold in the business situation of Coca Cola Company (Kent, para 7-8). The Goal Setting Theory was advanced by George Odiorne and according to this theory, people are highly motivated when they take part in setting clear and challenging goals for themselves, comprehend and appreciate their responsibility in attaining those goals, and are able to measure their progress (Petretti 27-33). In the context of Coca Cola Company, this theory simply restates what happens in the company. This is because the company has many independent operational centers worldwide with countless retailers who determine what happens with their own business. In other words, Coca Cola Company has adopted a socialized power motive where its people are given the power to utilize it to their advantage or to also be in the position that would benefit other people. Their motives have earned them great recognition a company that leads by example, and a leadership that espouses empowerment to enable people to work independently towards achieving general organizational goals. The Ownership of Coca Cola Company The Coca Cola Corporation is a public limited company. As a public limited Company, Coca Cola has limited liability. In other words, the company is wholly owned by shareholders. In the United States, under the limited liability clause, there are only two forms of ownership: Private Limited Company and the Public Limited Company. Between these two forms of ownership, the essential difference is that while public limited companies can freely and legally offer their share to the general public through the stock market, Private Limited Company cannot. As public Limited Company (plc), the owners of Coca Cola Company are referred to as its members, or shareholders. This is because the company raises its capital from the general public through stock markets. The marketing Strategy of Coca Cola The company employs a mix of marketing strategies depending on the business environment, but at the moment, it is following a differentiated localized/ decentralized marketing strategy. In simple terms, what the company is doing is offering many products that meet the demand and preferences of different markets. Under this strategy, the company has set various objectives both for the long term and short term and they include: Directly investing in potential sectors across different markets via shaping their business approaches and operations to fit the needs of individual marketplace based on developmental stages Selectively broaden their beverage brands in order to drive profitable growth particularly in categories like juice drinks, tea and coffee, bottled water, and energy drinks. Enhance system capability and profitability with bottling partners Serving clients with consistency and creativity in order to stimulate growth across all business lines To successfully execute the differentiated localized strategy and achieve their objectives as planned, the company organizes its operations into different departments. However, it must be understood that being a multinational company, each department is replicated in each country where they also have their own Head Office. Under the strategy, the operations of the company are geographically split into about six operating zones or segments which include North American segment, Middle East and Eurasian segment, African segment, Asian segment, European segment, and lastly Latin American segment. To further decentralize or localize, in every operational country office, there are about six functional departments: Finance, Marketing, Packaging, Research and development, Sales, and Administration (Hutterer 1-10). All these departments collaborate to ensure the success of the marketing strategy. Effectiveness of the differentiated localized/decentralized strategy This strategy has been effective in positing the Coca Cola brand in the mind of the end user and also generating products that are saleable in target markets. It is public knowledge that the company through this strategy has been able to launch and also position existing products in newly established markets. As of now, the company has more that three thousand products, over five hundred brands and serves more than one billion clients globally. However, the efficiency of this strategy was best shown with the launch of Diet Coke products. The success of its launch depicted the greatness of the whole Coca-Cola system. Barely, seven months after launching the product, Diet Coke was already the number one diet soft drink in the United States and the best or top soft drink brand amongst women. After being in the market for a period of one year, Diet Coke completely displaced 7UP and Pepsi from the top slot– a position it has continued to hold to this day. In short, the marketing used by Coca Cola does not just position the product but also explores what customers want in order to deliver it on time. Source: Coca-Cola Company SWOT Analysis Strengths Coca-Cola brand is the most popular brand across the world, which gives it an advantage over its market rivals. The company has a strong financial background, which enables it to execute its programs without any difficulty. The company has a wide base of loyal customers. Coca-Cola has the largest market share in the global beverage industry. Weaknesses The main focus of Coca-Cola is production of non-alcoholic beverages and hence inadequate product diversification. Coca-Cola’s carbonated drinks are likely to be shunned by many consumers because of health issues. Negative publicity by some consumers taints the image of the company to a considerable extent. Opportunities The company has the opportunity to expand its market by reaching out to untapped markets around the world. Coca-Cola can diversify its product portfolio for instance dealing in snacks as well as other products besides beverages. The company can acquire competing companies to guard its market share. Coca-Cola can also utilize social media and advertise its less popular brands to enhance brand recognition. Threats There has been declining consumption of carbonated drinks globally over health concerns, which is likely to reduce market share and hence revenue for the company. Coca-Cola also faces stiff competition from other market players such as Pepsi Company. Being a multinational corporation, Coca-Cola also faces challenges in copying with different government regulations and business practices in different markets across the world. The company is also exposed to the impact of global financial crisis. PEST Analysis Political Coca-Cola Company has to take into consideration different policies of host countries before venturing into new markets. The company has to consider issues of taxation policies of various countries a well as import and excise duties. The company has to assess stability of governments before entering into new markets. Economic The economic condition of a country determines whether a company will operate profitably or not. High inflation rate in a country will compel Coca-Cola to lower its product prices, for example, the company had to lower prices of its products in China during recession. Social Being a multinational firm, Coca-Cola has to consider difference in cultural background of every country it operates. It has to consider local human resource practices in order to success. Further, consumers have become aware of health concerns surrounding carbonated drinks. Coca-Cola must thus exhibit strong corporate social responsibility to win over consumers. Technical In the contemporary world, cost leadership considerably determines the success of a company. In order to achieve low cost strategy, Coca-Cola must employ the use of modern production technology. Coca-Cola can also employ new marketing platforms including social networking sites such as Twitter, Facebook, and what’s up among others. Recommendations The company should also enhance its presence through increased alliances or acquisitions. These acquisitions will give the company an added opportunity for developing new products or enhance access to existing markets. What is more, stronger operations in international markets enhance the ability of the organization to infiltrate unexploited international markets. Conclusion As it has been established, there are many forces that play out to position Coca Cola Company where it is today. Some of these forces include: the ready market for its products, tailored products that meet the consumer demand, the global brand and the highly differentiated localized marketing strategy. Ideally, the Coca Cola Company has great advantages in that its brands are distributed by retailers and vendors who are close to the clients. Works Cited Dost, Christina. International Marketing Strategies, Example: Coca Cola. New York: GRIN Verlag. , 2006. Hutterer, Regine. Marketing Across Cultures - Qoo an international success story? London: GRIN Verlag. , 2006. Kent, Muhtar. "Coca-Cola Leaders." 2011. 8 December 2013 . Petretti, Allen. Warman's Coca-Cola Collectibles: Identification and Price Guide. New york: Krause Publication, 2006. Read More