E-commerce Strategy for Coca-Cola Company - Case Study Example

E-COMMERCE STRATEGY FOR COCA COLA (Assignment 3) Student: Student ID: Lecturer: Subject: Course: Due Date: Word Count: 3500 Table of contents Word Count: 3500 1 Table of contents 2 Abstract 4 Introduction 5 Overview of the business 5 Current e-business status 5 Goods and services 7 Customer profile 8 Customer segment 8 Marketing strategies and marketing mix 9 Current e-commerce readiness 9 Web site 10 E-market analysis 11 Economic factor 11 Political/legal Factor 12 Technological factor 12 Social/Cultural Factors 13 Demographic factors 13 Competitors 13 PEPSI 14 CADBURY SCHWEPPES 14 Strategic situational analysis 14 SWOT analysis 14 STRENGHTS 14 WEAKNESSES 15 OPPORTUNITIES 15 THREATS 15 Elements of opportunities and threats in the SWOT analysis 16 Elements of opportunities 16 Elements of Threats 17 The E-Business Strategy 17 Planning period 17 Vision 17 Key objectives/ result areas 18 Critical Success Factors 18 Key activities 18 Resources 18 Conclusion 18 Bibliography 19 Reference 20 Abstract Coca-Cola Company is a leading firm in the production and distribution of non-alcoholic drinks in the beverage industry. The firm has a reasonable market share in the industry because it enjoys a strong brand name. The firm must however develop an appropriate e-business strategic plan to act as a back up to its current e-business strategy. The plan described intends to draw and retain more customers in the firm. It also intends to improve the supply chain of the company’s products. The firm’s current e-business status, customer profile and the products that the company trades in are outlined in brief towards the development of the plan. Key issues towards the implementation of the strategy are the analysis of the firm’s SWOT status in an attempt to assess the factors that affect the firm’s marketing activities. The opportunities and threats are discussed in detail because they greatly determine the success or failure of any firm in the entire industry. E-commerce strategy for Coca-Cola Introduction Overview of the business The Coca-Cola firm is a leading producer, distributor and marketer of non-alcoholic drink concentrates and syrups. The firm owns or licenses over 500 brands of drinks including diet and light drinks, waters, juice and juice drinks, teas, coffees and sports as well as energy drinks. The organization operates in over 200 nations. The firm is headquartered I Atlanta, Georgia and had an employee population of 92,400 by the end of the year 2008. The firm recorded revenues of $31,944 million in the fiscal year that ended in 2008 which was an increase of 10.7% compared to the previous year. The operating profit of the firm during the year 2008 was $8, 446 million which was a rise of 16.5% over the financial year 2007. Its net profit was $5,807 in the financial year 2008, though a decrease of 2.9% when compared to 2007. The Coca-Cola Company is committed towards realization of financial success and at the same time improves the society or the community in which it works. The firm works under the principle ‘performance with purpose’. Its mission is to become the world’s top consumer product firm with a major focus on consumer foods and drinks or beverages. The firm also aims at meeting the financial need s of the investors as well as creating good opportunities for the growth to its employees. Its operations are guided by the virtues of honesty, fairness and integrity (Katie, 2009). Current e-business status At the moment the firm’s e-business is owned and managed by GXS Managed Services. GXS Managed Services partners with Coca-Cola Amatil to improve customer service as well as increase Coca-Cola’s client base. Coca-Cola Amatil which produces more than 1,450 million liters of drinks annually and distributes it to about 114,000customers mainly in large supermarket chains as well as small distributor stores partnered with GXS Managed Services with the aim achieving a complete outsourced e-commerce solution (Kotler & Keller 2005). Electronic commerce is becoming a popular method of carrying out business transactions especially in the grocery and foods stores where many retailers and producers have realized its advantages. It has enhanced the efficiency of supply chain operations and also improved business automations. Due to that many consumer products stores have moved to establish Internet enabled services in their operations to remain competitive in the industry. GXS was hired to own and run Coca-Cola Amatil’s e-business program via its well managed and effective Managed Services B2B outsourcing solutions (Kotler & Keller 2005). Coca-Cola Amatil’s clients send documents and messages of any form and in any format that they desire while GXS executes all the appropriate transactions. GXS has an effective HP Class A sever, Enterprise System which takes care of traditional EDI message management, e-mail and cutting-edge Web service transactions (Giaglis, Klein & O’Keefe, 2002). Finally, Application Integration converts Coca-Cola Amatil’s plain message files to EDI and XML formats which can be used by trading partners. This collaboration or rather outsourcing strategy has significantly benefited the firm and has led to realization of good returns to the firm. A major advantage of the outsourcing program is that Coca-Cola Amitil can gain from the GXS’s widespread investment in infrastructure and also capability of integrated EDI and other forms of messages with the existing back-up applications. Technology transformations in the beverage industry have led to a huge processing requirement for the internal IT department. The firm believes that outsourcing e-commerce will enable it have a focus on competency as opposed to new technology. Other benefits from the outsourcing program are that the firm has been able to minimize implementation time and has also strengthened its financial base. It is also a means of enjoying the benefits of e-commerce expertise without necessarily being experts in e-commerce. Because GXS runs some of the most advanced e-commerce features in the globe, it is in a position to provide a complete Web-enabled, XML and the long-established e-commerce solutions as well. Other benefits that Coca-Cola has gained from the outsourcing program include minimization of manual work in ordering and also in creation of purchase order data. These are updated automatically while saving a lot on company time and resources. These new developments offer an extremely effective relationship with clients and depict the firm’s commitment towards conducting business transactions in an easier and faster way (Giaglis, Klein & O’Keefe, 2002). Goods and services Coca-Cola has been successful in product launching in the recent years. In the year 2007, the firm sold more than 450 million cases all over the world. Some of the products that the firm trades in include: energy drinks which mainly target customers having high-intensity approach to the company’s brands. Energy drinks contain food substrates like ginseng extracts, guarana extracts, caffeine as well as B vitamins. It also produces juices and juice drinks which are nutritious and refreshing to both adults and clients and also soft drinks which offer flavor and refreshments in various choices. The soft drinks manufactured by Coca-Cola are both icons and great innovations to the beverage industry. Other products that the firm trades in include sports drinks which contain carbohydrates, fluids and electrolytes to control dehydration while providing terrific taste to customers, water and tea and coffee. The company produces tea and coffee in form of bottles and can which offer a convenient and efficient packing method for the products (Giaglis, Klein & O’Keefe, 2002). Customer profile Coca-Cola Company is divided into six main areas of operations: North American group, Latin America group, Greater Europe group, Africa Group and Minute Maid group. The distribution of Coca-Cola products has now spread to over 200 countries around the world. The firm’s marketing strategy is to ensure that all its customers get the company’s product because they are vast and widespread all over the globe (Kotler & Keller 2005). Customer segment Coca-Cola’s products are generally meant for all end users. However, there are some brands that target particular consumers with special needs. An example is the Coca-Cola’s diet soft drink that targets customers who are older in age, which is between 25 and 39 years of age. The drink has controlled amounts of some food compliments such as sugars. PowerAde sports water targets consumers who are fit, health and participate in sporting activities. Winnie the Pooh sipper cap Juice Drink meant for children between the ages 5-12. Coca-Cola firm when advertising primarily targets consumers aged between 13-24 years while its secondary target is composed of those aged between 10-39 years of age. Its main objectives in its marketing plan are to supply every consumer with the drinks of their choices and satisfy their needs fully. The firm’s other objective is to meet the investment objectives of its shareholders and raise its share of the market (Kotler & Keller 2005). Marketing strategies and marketing mix The firm produces beverage concentrates and syrups with the main products being the completed beverages. The business has more than 300 brands of drinks all over the globe which include Coke, Fanta, Lift, Sprite, Frutopia 100% fruit Juice and PowerAde. The firm uses marketing strategies to differentiate its commodities from those of its competitors. The firm extended the product of coke and established the new products Coke with lemon and Vanilla Coke. This extension responded to customer demands and also generated additional profits to the company. In 2001, the program, innovation 2001, established the introduction of purchasing the firms commodities from vending machines via SMS messaging. In the following year it innovated and created a new packaging idea, the Fridge Pack. The Fridge pack is composed of cans packed 2-by-6. This innovation raised the customer awareness and preference and also the rate of consumption and profitability (Barlon, 2006). Current e-commerce readiness Coca-cola Company is well prepared in terms of e-commerce. It has a well organized business website which assists in its e-business program. The web site is used as a means of enlightening the world of the existence of the firm as well as the benefits of the products that it produces. Coca-Cola’s website is well organized in a professional way creating a good impression of the firm in people’s minds. It creates to the company a large client base by introducing the firm to some clients whom it would otherwise have not known. It also assists in retain the customers acquired. The website educates the customers about the company as well as the products that it produces. It assists in familiarizing potential clients as well as existing customers with the firm by making them feel safe and comfortable while conducting business transactions with them. It also increases the customers’ confidence with the company since the website is well organized and professional. In addition to the above mentioned advantages the website provides a cheaper way of advertising the firm as opposed to television and magazines or other forms of advertisement which are relatively expensive (Barlon, 2006). Web site In particular, the website has the following main components that keeps the firm well prepared for e-commerce include links describing the firm’s history, objectives and its name and other links outlining its sustainability, products, heritage, investors, press center, careers and contact information. The company link outlines the brands that the company produces in brief, its management structure which includes it Board of directors. It also states the mission as well as the vision of the firm. Sustainability describes the means in which the firm has been able to live positively and through collaboration and partnership across all the borders. This describes the means in which the firm has been able to live positively in its commitment towards creating a positive difference in the globe by redesigning the methods of executing its objectives. The products tab outlines the various products that the firm offers its customers. By visiting the products link, customers can be able to view all the products that the firm produces and order the products of their desire. Each of the product’s description is available to the customers are thus placed in the best position possible to make the correct choices and orders (Ridderstrale & Nordstrom, 2002). The heritage link outlines the firm’s history including the major achievements and also the lowest points that it has undergone. This assists in creating an interest of the company in people’s mind which not only helps in drawing new customers but also retaining the clients it has acquired. The investors’ link outlines the financial status of the firm and any other useful information to existing as well as potential investors. The information in this link confirms the firm’s solid financial status which further increases the confidence that customers and potential investors hold about the company (Kotler & Keller 2005). The press center link outlines the current developments in the company which is important in updating the customers on potential developments in the company. The career link shows the opportunities that the firm has established for career development. This creates a positive impression of the company in people and this draws more customers due the interest that it generates for the company. Finally, the contact link outlines the various in which interested parties can reach the company. It gives the addresses of the various branches in which it operates. Clearly, this website equips the firm with all the requirements of running an effecting-business (Ridderstrale & Nordstrom, 2002). E-market analysis All business organizations operate under two major environments, that is, external environment in which the entrepreneurs have little or no control over and the direct industry and competitive environment. Coca-Cola’s e-business is adversely affected by the two factors (Borden, 2000). Effects of External Environmental factors The external environmental factors are present in every section of the Coca-Cola’s global business as far as e-marketing is concerned. These exert pressure on the firm’s strategy and also in its business transactions. Just like other firms, Coca-Cola too can not avoid these factors. Economic factor Stagnating economic growth, especially in the U.S has affected the e-business of the company considering that the firm operates in 46 of the country’s 50 states. The slow economic growth has really affected the sales and consumption of the firm’s products. Its share of the market reduced by 0.7% and 0.9% in the years 2003 and 2004 respectively. It also experienced a negative growth rate of 2% and 3% between the years 2002 and 2004. As a result the firm has been struggling to strengthen its e-business in Asian countries such as China, India and Middle East nations (Borden, 2000). Political/legal Factor Coca-Cola has faced hardships in accessing wide market share in Asian countries such as India. This is because the customers in these countries are worried of the health effects that Coca-Cola products have on them. This devastates its e-marketing strategy as the firm has been unable to establish a solid customer base in those countries. The firm has also been affected by the US government’s policy of restricting the firm from operating in Israel. The firm has however been presented with a chance to operate in China market which has now been made possible through e-commerce. The firm is struggling to control the effects of the country’s political, currency and cultural factor and forces on the company (Borden, 2000). Technological factor The expansion of technology particularly in the area of soft drink raw material, manufacturing, information and communication technology and logistics have had huge advantages to the operations of the firm. Advancement in technology implies that many people can now access the Internet and shop for products online. This has assisted in promoting the e-business of Coca-Cola Company because many people including potential customers as well as existing ones can research for products of their need through the online means and order for them. The accessibility of new soft drink components allows Coca-Cola to introduce new modifications in the type of products that it offers to its customers. The firm has applied the latest development in information technology to keep customers glued to their products. The existence of the firm’s website allows any interested parties to get updates concerning the firm at any time that they desire (Borden, 2000). Social/Cultural Factors There have been rumors of anti-Coca-Cola voices in the globe market place in the recent past. The most significant of them is the case of advocating of Coca-Cola to end the promotion of Live 8 in India. Such negative opinions are due to extreme water shortages and underground pollution of water. These have affected the perception people have towards the company and this has negatively affected the e-business of the company. This has scared away potential customers while drawing some from the firm’s clientele base (Kotler & Keller 2005). Demographic factors The increasing concentration to health and the focus on health lifestyles in developed nations as well as developing nations has slowed the sale of Coca-Cola’s carbonated soft drinks. To curb this, the firm introduced the Diet coke in 1982. Such changes of the end user’s lifestyle have also resulted to launching of the firm’s bottled purified water known as Dasani in 1999 (Kotler & Keller 2005). Competitors There are a number of key players in the beverage industry who offer a significant competition to Coca-Cola’s products. Some of the key players in the industry’s e-market include PEPSI and Cadbury Schweppes (Kotler & Keller 2005). PEPSI Caleb Brandhum applied for a trade mark and issued about 96% share of stock and started selling Pepsi syrup in earnest. In its first year of operation the firm spent $1900 on advertisement and yielded to a sale of 8000 gallons of syrup. In 1905 Bradhum created Pepsi’s bottling plant. By 1907, the firm was selling 10,000 gallons a year and contracted New York advertising agency to market its products (Kotler & Keller 2005). CADBURY SCHWEPPES Cadbury Schweppes is a collaboration of Cadbury which was founded in 1824 of UK and Schweppes of Ireland which founded in 1783. Cadbury Schweppes is joined bussing which runs the relations between the firm and other franchised bottling transactions in Zambia and Zimbabwe (Kotler & Keller 2005). Strategic situational analysis SWOT analysis SWOT Analysis is a useful tool used in management that accesses the Strengths, Weaknesses, Opportunities and Threats within the firm, a project or a business venture. SWOT analysis consists of identifying the internal and external factors that are constructive or unfavorable for business to succeed (Kotler & Keller 2005). SWOT ANALYSIS FOR COCA COLA COMPANY STRENGHTS Brand equity/icon & recognition Commodity distribution and global network Firm financial performance One of the top recognized brands Commodity diversification (water, juices, soft drinks and sport drinks) Co-operate identity Innovation WEAKNESSES Credit rating Consumer concentration, especially in the US (Wal-Mart accounts for over 10% of Coca-Cola’s business in the US A lot of loyal Pepsi consumers are not adequate loyal Coca Cola customers Is not the leading firm in beverage industry in India and Pakistan OPPORTUNITIES Possible growing demand Expansion-accessing all segments Globalization Takes care of the health concerns of its customers Bottled water growth Acquisitions of smaller THREATS Health Drinks –Fruits Juice firms Key competitors (Pepsi etc) Commodity prices growth Image perception in particular in parts of the world. Smaller, little players in the industry Elements of opportunities and threats in the SWOT analysis In order to respond to the opportunities and threats that Coca-Cola Company faces in its operations, the firm has to analyze each of the elements in them. This is a major step in the entire strategic planning as it assists the firm in capitalizing on the opportunities to promote its growth and expansion while reducing the negative effects posed by the threats (Kotler & Keller 2005). Elements of opportunities The Coca-Cola firm is top in the beverage industry and it is an icon in America. Brand recognition is one of the important factors affecting the firm’s competitive position. The firm produces, distributes and markets non-alcoholic drinks and syrups in markets all over the globe. It also produces and sells water products such as Dasani. Finished products which have its trade mark are traded in more than 200 nations of the world (Gasmi, 2000). New products launching The firm launched several new brands and commodities in 2003 and 2004. Some of the new products that it launched include Vanilla coke, Diet Vanilla Coke in over 50 nations and sprite remix and Brag’s Floatz in chosen US markets (Gasmi, 2000). Brand is attractive to world wide partners Due to its firm portfolio, client base and strong marketing strategies, Coca Cola has been able to draw other firms to its products. For example, the firm at the moment offers Burger king and McDonald with soft drinks. This has offered the firm a strong opportunity to boost customer awareness and the movement of its commodities internationally (Gasmi, 2000). Focus upon core products Although the firm has not realized reasonable success in expanding its offering into new markets, there exist other markets which pose a risk to the strategy. This indicates that the firm has the potential to penetrate various markets. Elements of Threats At the moment, the threat of new strong competitors in the carbonated soft drink sector. The threat of substitutes is a serious threat. Examples of substitutes that are to the Coke products include tea, coffee, juices, milk and hot chocolate (Gasmi, 2000). The E-Business Strategy Planning period The e-business strategy plan is set to run for the next 3 years, that is, up to 2012. Vision The e-business marketing strategy plan aims at enhancing the customer base of Coca-Cola Company. Its objective is to draw more customers to the firm to increase its revenue and command a large share of the market in the beverage industry (Hammer & Champy, 2003). Key objectives/ result areas E-commerce is expected to raise the sales of the firm which in turn will raise the revenue of the company. Many customers will be drawn to the company through e-commerce. This will increase the clientele base of the firm and consequently increasing the sales. Critical Success Factors The e-commerce strategy must create awareness of Coke products to the customers and create a positive impression of the company to the populations of the world (Hammer & Champy, 2003). Key activities The e-commerce strategy must capitalize on the advancement of information and technology to realize its objectives. It must utilize the Internet as a useful resource to reach more customers which is the core objective of the plan (Hammer & Champy, 2003). Resources The e-commerce strategy will utilize the Internet to realize its objectives the business website will be the core resource that will be used to market the company online. The strategy will also collaborate with the already established outsourced e-marketing program of the company (Hammer & Champy, 2003). Conclusion The Coca-Cola Company is a firm that leads in the beverage industry in terms of its scale of operation as well as the customer base. The firm which operates in over 200 nations of the world has a huge customer base as compared to its strong competitors such as Pepsi. E-business of the company has not been very successful in the company giving the competitors a loop hole to gain a competitive edge over the firm. The e-business strategic plan discussed above is intended to keep the organization up to date in terms of the current trends in the beverage industry. There has also emerged a need to expand its e-business to increase the share of the market and maintain its leading status in the industry (Hughes, 2005). Bibliography Barlon, K. 2006. "The concept of the marketing mix" Presentation on marketing management, John Wiley, New York. Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, 1, 277-311. Bitner, J. & Booms, B., 2001. Marketing strategies and organizational structures for service firms, in Donnelly, J. and George, W. Marketing, Chicago: American Marketing Association Borden, N. 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