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Economics of the the Coca-Cola Company - Essay Example

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In the essay “Economics of the Coca-Cola Company,” the author discusses some of the major tactics that Coca-Cola uses to better its product positioning. They are through packaging innovation, intense advertising, brand differentiation and flavor variety…
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Economics of the the Coca-Cola Company
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Download file to see previous pages Within each category there are several product lines for example under Juices there are concentrate, not-from-concentrate, frozen concentrate, pulp-free, fortified and flavored juice blends. The flagship product bears the same name as the company. Coca-Cola is not only the most popular and biggest-selling soft drink in history but also the best-known brand in the world (“Coca-Cola - Brands - Brand Fact Sheets,” 2011). Coca-Cola has got products all across the beverage products’ life cycle. The company has at its disposal immense resources – finance, human capital, distribution channel, and brand – to support research and development to continuously come up with new products and to see them through the resource-draining phases of the product lifecycle (the introduction and growth stages). Whereas on the other end of the product lifecycle, Coca-Cola has also been able to sustain its flagship brand as a cash cow at the maturity stage. Coca-Cola has one of the most effective, if not the best, marketing mix strategies that include: merchandising, product-placement, public relations, endorsements, sponsorships, exhibitions and most of all advertising. However, due to its continuous innovation Coca-Cola has had challenges when it comes to market cannibalization. This is manifested in different ways such as between two Coca-Cola brands or between the old retail distribution channels (shops, supermarkets) and vending machine. Even though the presence of numerous brands has stifled the growth of some of its products, the marginal benefits have been greater than the marginal loss for Coca-Cola in its multi-brand strategy. This strategy is referred to as a single-position strategy and it has worked for Coca-Cola because it is often easier and cheaper to introduce a new brand rather than change the positioning of an existing brand in the eyes of the consumer (Ries & Trout, 1986). 2.0. Market trends In a five-year forecast that uses 2009 as the base year, it is estimated that the global soft drinks market will experience a growth of 16.2% (Datamonitor, 2010). A large part of this growth will be as a result of the rapidly growing functional soft drinks (FSD) market that consists of sports drinks, energy drinks, enriched drinks, smoothies, ready-to-drink (RTD), iced tea and dairy drinks. Not to be left behind, Coca-Cola has actively been engaged in expanding its product offerings in this market. Sports and energy drinks are the two most recognizable and successfully established sub-categories within the overall FSD market. According to Lewis (2009) health, convenience and premiumization are the three leading megatrends driving the global soft drink market forward. This implies that the soft drink market still has a lot of potentials to innovate with truly unique products that offer genuine and proven health benefits across demographics and consumption occasions despite the global economic downturn. Consumer behavior is a function of the product, the consumer, his social environment, the competing products and the brand marketing strategy. Coca-Cola’s strength has been how it communicates its brands and how consumers perceive those brands relative to other competing brands in the marketplace. ...Download file to see next pages Read More
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