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Coca-Cola Company Case Study

Introduction

Coca-Cola Company was established in 1886. It is the global leading manufacturer, marketer, and distributor of non-alcoholic drink concentrates and syrups. It operates over 200 nations worldwide; the company is popular because of its innovative soft drink, Coca-Cola. Nonetheless, the company now boasts of over 230 different brands. It has its headquarters in Atlanta, Georgia. Coca Cola’s subsidiaries have over 30,000 employees from different parts of the world. Over 70% of the company value and 80% of the company profits come from subsidiaries outside the United States. Coca-Cola is one of the most visible and conspicuous company and brand in the world (Brownsell, 2011). Coca-Cola, one of its products is now available all over the world making it one of the most favorite soft drink in the world. It has been an image of music and sports making it one of the most talked about brand in the world. However, all these successes, how has it been achieved, and how has the company continued to hold its position in the soft drinks market amidst competitors and different controversial stories about health impacts of the soft drinks and what Coca-Cola can increase its competitive advantage in the market (Mayer, 2008).

Douglas Ivester, a former chair at Coca-Cola stated that being global was the main strength and advantage of the Coca-Cola Company. The company operates a business that provides popular and affordable products that have a strong foothold in numerous countries. The world soft drinks market is controlled by three household brands; Coca-Cola, Cadbury-Schweppes, and Pepsi. Coca-Cola controls 47% of the global market; Pepsi claims 21% whereas Cadbury-Schweppes takes 8%. Other major players in the software market include AmBev and Cott located in Latin America.

Analysis

Coca-Cola Company Life Cycle

Every product undergoes four stages namely introduction, growth, maturity and decline stages (Kumar and Krob, 2005). The introduction is the first stage of the product lifecycle. The stage is identical to the commercialisation of a new product during the development process where the profits are lower and length of time in this state varies from one product to another. The introduction stage of Coca-Cola Company goes back to the spring of 1886 when Dr. John S. Pemberton created it. Its first products were introduced as a soda fountain drink that was sold for 5 cents per glass. Frank M. Robinson, who was a bookkeeper and partner to Dr. Pemberton, suggested that name would be appealing in advertising that led to the name ‘Coca-Cola.’ (Hassan, Amos and Abubakar, 2014)

The second stage is the growth stage that is characterised by increased sales, competitors, and higher profits. In this stage, the competitors the number of distribution outlets starts to increase. In addition, the competitors start to enter the market more rapidly. In the Coca-Cola Company, the growth stage started in 1886 when Pemberton sold Coca-Cola to Asa Chandler, who officially established the Coca-Cola Company in 1892 and by 1895, Coca-Cola soft drink was being drunk in each state across the United States of America (Dhar et al., 2005). As the demand for the soft drink grew, the production was increased, and the company started putting the drinks in bottles instead of just through its soda fountains.

The third stage is the maturity state where the number of new customers declines and the sales revenues of the product states to level off. At this stage, the many competitors in the market reduce the profits until the strongest competitor is left standing in the market. The maturity stage is the longest stage of the product lifecycle. It is at this stage that companies start looking or marketing strategies to appeal to the market. The Coca-Cola Company is currently in the maturity stage. To expand its maturity stage, the company has come up with different marketing strategies, the introduction of new products, product improvements, and the introduction of new business models. The company has also penetrated new market segments and enlarged its distribution network (Hassan, Amos and Abubakar, 2014).The last stage is the decline stage where the sales decrease and continues to reduce to lower levels. In this stage, companies make decisions on whether to harvest the products or divest the product. Coca-Cola as a company has not reached this stage; however, there are some of its products that have been to the decline stage. Among these products, include New Coke in the 1970s and Coca-Cola classic. The company did not salvage these products; instead, it invested in other products that were doing well.

Challenges facing Coca-Cola Company

Despite its success, the company is facing several global challenges that are in one way another affecting its competitive advantage in the market. The first challenge is the issue of obesity. According to the World Health Organization, global obesity has more than doubled since 1980. According to reports by the United States Center for Disease Control, in the United States alone, 17% of the children and adolescents between the age of 2 and 19 are obese whereas a third of adults are obese. Obesity has numerous implications on general health, quality of life, mortality and the cost of healthcare. Most of the soft drinks that Coca-Cola Company produces have been linked with the widespread obesity epidemic. Its products are high in calories content that causes the epidemic of overweight and obesity. Nutritionists are advising the public to restrain from these soft drinks because they lack nutritional content that is right for the human body (de Sá, 2014).

Another challenge is the water stewardship problem. Coca-Cola Company has been criticised about its water stewardship amid increased stress on the global water supplies from increased population growth, climate change, and urbanisation. The company has been said to have poor management and use of water resources available. It has been under pressure to put in place measures that support water conservation in its production process. The company is also facing a challenge in the workplace and human rights. The company has been involved in several court cases that involve the violation of human rights that has left the company in a tight situation in the market. In addition, the company has been questioned on its women empowerment programs. In the modern world where news travels in seconds, such challenges that are equal to problems can affect the position of Coca-Cola Company in the soft drinks market (Arseculeratne and Yazdanifard, 2013).

Conclusion and Recommendations

For Coca-Cola Company to maintain, gain and increase its competitive advantage in the soft drinks market, it must first handle its challenges. First, is the issue of obesity; because its products are based on sugar and have high calories content, it must devise ways of reducing the calories content in its drinks. It should create awareness about the issue of obesity and take part in promoting healthy active living. It should promote high levels of fitness and maybe include such messages in its adverts and promotions (de Sá, 2014). Secondly, the company should be aggressively involved in water stewardship across its systems and many other communities across the world. It must prove to the world that it is using water efficiently by treating and recycling water with the sole objective of replenishing the amount of water used in its finished products. Coca-Cola Company should embrace women empowerment in its operations by creating a platform that allows women to work in the company. As much as these issues are not related to the marketing of its products, customers are looking into these issues when choosing what product to purchases. Particularly, consumers are paying close attention to the issue of environmental conservation and they will not purchase products from companies that are not conserving the environment (Vrontis and Sharp, 2003).

Coca-Cola Company should adopt both cost leadership and differentiation strategies (Mayer, 2008). Differentiation strategy will enable the company to produce superior quality products that surpass their rivals and has result to high brand image and recognition (Brownsell, 2011). The company should also continue to use its promotion and packaging as a way of achieving differentiation, for instance, through the unique Coca-Cola bottle that is a globally recognised symbol of the company. Using the cost leadership strategy, the company will be able to achieve economies of scale through research and development and efficient and effective distribution channels and manufacturing systems (Dhar et al., 2005).

In conclusion, Coca-Cola Company is a popular and successful company in the soft drinks market. The company has been in operations for many years, and its dominance in the market is still felt to this day. Coca-Cola, which is its main brand, has been the face of numerous activities across the world, which has created a strong brand for the company. The company commands a large proportion of the soft drink market. The company has undergone the stages of the product lifecycle, but it has remained at that maturity stage to this day. Coca-Cola Company has occupied a strategic position in the market where it gets its competitive advantage. It has adopted differentiation and cost leadership strategies to maintain its competitive advantage in a very dynamic soft drink market. Nonetheless, the company has faced several challenges over the years that are detrimental to its competitive advantage in the market. These challenges include the problem of obesity, water stewardship, women empowerment and workplace and human rights issues. There are recommendations that Coca-Coal Company can implement to gain its competitive advantage in the market.