Marketing mix of Coca-cola in the United Kingdom and the United States - Essay Example

?Marketing Mix of Coca-Cola in the United Kingdom and the United s Contents Marketing Mix of Coca-Cola in the United Kingdom and the United s 1 Contents 2 Introduction 3 Company Overview 3 History 3 Micro Environment 5 Bargaining Power of Customers (medium) 5 Threat of New Entrants (low) 5 Treat of Substitute Products (medium) 6 Bargaining Power of Suppliers (low) 6 Competitive Rivalry within an Industry (medium) 6 Macro Environment 6 Political 6 Economic 7 Social 7 Technological 7 Environmental 8 Legal 8 SWOT Analysis 9 Strategy Analysis 9 Customer Service 9 Advertising techniques 10 Recommendations 12 Conclusion 12 References 13 Introduction Company Overview Coca-Cola is a multinational corporation that recently celebrated 125 years in business. From its humble beginnings, the company is now one of the most recognised brands worldwide. It has a highly successful marketing strategy, although this has occasionally resulted in the image of it being a ruthless corporation that cares for nothing but its own interests. Two sets of factors influence the marketing mix of a corporation: the micro- and the macro- environments. These factors differ between the United States and United Kingdom despite the similarities between the two countries. This report examines the differences between Coca-Cola in these two countries and the way that this affects the corporations marketing mix. Marketing at the global level has become increasingly popular as economies become more turbulent and international markets open up. However, as companies enter into the global market there are many factors to take into account that differ between the country where the product was initially marketed. This essay will examine the marketing mix employed by Coca-Cola in two countries, the United States, where the brand was first developed and the United Kingdom. This consists of four key components, known as the 4Ps: product, price, promotion and placement History In 1886, Coca-Cola was first developed as syrup by pharmacist Dr. John S. Pemberton. It was developed as a form of ‘patent medicine’ and was touted to relieve headaches. However, the true success of Coca-Cola came as a soft drink. The product was sold mixed with soda at fountain machines in Jacob’s Pharmacy a short distance from where Pemberton was working. The Coca-Cola brand name was developed because of the ascetic value of the two Cs and the thought that this would make the company name stand out. In 1887 the extract and syrup for Coca-Cola was copyrighted. At this point, Asa Chandler became involved in the company, and attained personal control of both the formula and patents. He finally purchases the company in 1892 and continues to advertise the product and grow the company. In 1899, Chandler contracts a Chattanooga company to bottle Coca-Cola, a distribution technique that the company continues today. By 1913, the company was spending more than $1 million annually in advertising, had began expansion into Asia and was distributed through upwards of 415,000 retailers. In 1916, the contour bottle was developed, a distinctive advertising tool that was used to ensure recognisability of Coca-Cola. A substantial change came about for the Coca-Cola Company in 1919 when it was purchased by a group of investors, head of which was Earnest Woodruff. Throughout the following decades, the company continued to develop, including the use of movie stars in advertising for the product, overseas bottling and the presence of Coca-Cola in South Africa, Australia and Austria. As the company continues to develop, additional beverages are added, and the distribution of the products expands throughout the world . Coca-Cola is now the most recognizable brand of soft drink worldwide, and may be the most recognizable brand of any industry. Currently, Coca-Cola products are present in more than 200 countries and it is estimated that 1.7 billion servings of products are consumed each day. Worldwide, the company employs 139,600 staff members . The company is the largest beverage company anywhere in the world . The brand currently encompasses a wide range of different beverages including soft drink products such as Coca-Cola, Sprite and Fanta, as well as other types of drink such as Minute Maid, Powerade, Snapple and Dasani Water. In total there are more than 3,500 beverages that fall under the Coca-Cola brand . As of 2010, the company has experienced 49 consecutive years of increased shareholder dividends. It has its headquarters in Atlanta, but also has local operations across the world. A large aspect of the success of Coca-Cola on the global scale comes from its strong distribution and bottling network. This allows the global company to maintain a local perspective. Bottling companies are owned domestically and these companies work with Coca-Cola to ensure that the product is delivered effectively. As a consequence of this, Coca-Cola primarily earns its revenue from sales of the concentrate to bottlers, rather than the sales of bottles themselves. Micro Environment Porters Five Forces framework is one way that is commonly used to examine the micro-environment. All of the aspects of the micro environment are similar if not identical between the US and UK. Thus, for the analysis below, each aspect applies to both countries unless otherwise stated. Bargaining Power of Customers (medium) Coca-Cola is distributed through retail chains, sales through fountain drink machines, convenience stores and vending machines. These are effectively the customers for Coca-Cola, as they sell the concentrate directly to these distributers or to the bottling companies. Because there is only a limited number of these companies, the customers do have significant buying power. Threat of New Entrants (low) The beverage industry is dominated by two large multinational corporations (Coca-Cola and Pepsi). Both of these companies put a large amount of money into advertising and have established strong customer loyalty. In addition, bottlers for both Coca-Cola and Pepsi enter into contracts with prevent them from bottling other similar products. Consequently, it would be very difficult for any new brand to enter the market and gain visibility. In addition, the size of Coca-Cola and Pepsi means that they are quickly able to respond to any threats, by such methods as targeted advertising campaigns or the production of a new brand. Treat of Substitute Products (medium) Soft drinks are very popular worldwide, but this popularity is decreasing as people become more focused on health. This is resulting in the sales of fruit juice, smoothies and bottled water increasing while soft drink sales decrease. However, Coca-Cola already is working on minimizing the risk of substitute products by the acquisition of other companies and the development of different product lines that are not soft drinks. Bargaining Power of Suppliers (low) The supplies that Coca-Cola needs for the creation of its product are commonly available. For example, one of the major ingredients in their products is high fructose corn syrup or sucrose depending on the geographic location. Both of these are easily available and if suppliers were exerting too much pressure, then it would be easy for Coca-Cola to switch to a different supplier. Competitive Rivalry within an Industry (medium) Within the soft drink industry, the main competitor for Coca-Cola is Pepsi. The two corporations occupy around 80% of the market. The industry is very consolidated and as a consequence there are only a few competitors. Coca-Cola has a strong brand image and wide distribution. In addition, their strong marketing ensures that the brand is widely recognized. Thus, Coca-Cola does not face any major risks at using its market share from competition. Macro Environment Political The two countries differ significant in leadership and political system. The UK system consists of two parts, the Monarch and the government. This is a constitutional monarchy and results in the presence of both a prime minister and a Monarch as the head of the government and the state respectively. In contrast, the US political system is considered a federal constitutional republic where the President is both head of government and state. Coca-Cola has a significant lobbying force within the US. As of 2011, the corporation was represented by 45 lobbyists who work towards favourable legislation for the company and the beverage industry in general . Coca-Cola is often considered to be a symbol of American culture throughout the world and because of this it holds more sway in the with the American government than it does in the UK. Economic In terms of gross domestic profit (GDP), the UK is ranked the eighth strongest economy in the world, while the US is the second strongest . The country has been struggling to recover from the economic crisis, with a high unemployment rate. As of 2009 the debt was more than 12% of the national GDP . The US has also been similarly affected by the economic crisis, with people having less expendable income and an increase in the cost of living. In both environments, Coca-Cola has had to find ways of selling its products despite the recession. Social Coca-Cola marketing targets a wide range of different age groups and social classes. Their marketing campaigns focus on making Coca-Cola desired worldwide. Populations in the UK and the US are similar in that they are both English speaking with more than 80% of the population being white, both being first world countries and technologically advanced . Because of this, similar marketing techniques can be used in both countries. Technological Both the USA and the UK are technologically advanced countries where water and electricity is widely available and most consumers have access to computers, mobile phones and cars. Because of this, both countries are driven by consumerism and Coca-Cola has a large market. Environmental The UK has a much higher focus on the environment and environmental concerns than the USA. For example, in the UK, Coca-Cola has been making significant reductions in the amount of water and energy that is used in production. Since 2007, Coca-Cola has reduced the use of energy from its production by 20%. In 2011 the company announced that the waste from all of the plants within the UK will be zero . The US does not have such a strong interest in the environment. Consequently, Coca-Cola must focus on the environmental effects that its production is having in the UK, but not in the US. Legal Within the UK, Coca-Cola is subject to a code of practice instigated by the British Soft Drink Association (BSA), which requires all soft drinks that have more than 150mg of caffeine to have the warning “High Caffeine Content” and carry the label “Not suitable for children, pregnant women and persons sensitive to caffeine”. Such drinks are also not able to be marketed to people under the age of 16. In addition, the amount of caffeine in the drink (mg/100ml) must be present on the product’s labeling . While most Coca-Cola soft drinks contain substantially less than 150mg, the company does market a number of energy drinks, inducing Mother and Burn that do fall under this policy. Consequently, in the UK Coca-Cola must take considerable care about the way that it markets and labels its products that have high caffeine content, while the same is not required in the US. The micro- and macro- environments can be summarised using a SWOT analysis given below. In general, there is little difference between the marketing mix that the company uses between the two countries. The UK is more focused on the environment and on the health of its citizens, forcing Coca-Cola to place warning labels on its energy drink products. This also means that Coca-Cola is unable to directly advertise energy drinks to young consumers (under 16) in the UK. SWOT Analysis Strengths Recognised world-wide Strong brand equity Many different types of drink Strong growth Strong environmental focus (UK only) Not much chance for new companies to enter the industry Weaknesses Company is often perceived as being ruthless and taking advantage of smaller businesses Opportunities Growing market for bottled water and smoothies The Hispanic population is a potential source of revenue (US only) Lobbying for beneficial legislation (US only) Threats Reliance on bottling companies and partners Strong competition with Pepsi, which sells similar products Soft drinks are beginning to show decreases in growth as their target audience becomes more health conscious Global economic crisis Strategy Analysis Customer Service Coca-Cola’s marketing strategy has developed and expanded since the company first began. The company has been extremely successful in making its product well known and dominant in the market place, despite the presence of similar products. Marketing can only be effective if the company is aware of what the customer’s desire and then act to provide them with solutions. There are two aspects to customer service within Coca-Cola, the first is how the company responds to individual consumers and the second is how they respond to businesses. If a business that sells bottles or cans of Coca-Cola wants to contact the business directly, they must go through the nearest bottler and get in contact with their Coca-Cola account manager. This can make it difficult for individual businesses to resolve any problems that they are having. However, if the business is working with soda fountains rather than bottles, Coca-Cola does have a direct hotline within the United States. If the company is exterior to the US, they need to email the Coca-Cola office to obtain the necessary contact information. Because of the structure of the Coca-Cola Company, it is difficult to get in contact with customer service representatives. Consequently, Coca-Colas customer service tends to alienate the individual consumer, and is not an effective marketing or management technique. Advertising techniques The marketing mix strategy for Coca-Cola is to entice customers through advertisements of a ‘genuine’ product, the idea of a connection between Coca-Cola and happiness (with the use of a happiness machine in some advertisements and the slogan ‘Open Happiness) and brand hype. The use of trendy images, innovation and excitement mean that the Coca-Cola brand is memorable and highly desired globally. An example of the strength of marketing by the Coca-Cola Company is the use of the formula, developed by John S. Pemberton in his original creation of the drink, as an advertising tool. Since its development, the formula has been a closely guarded secret, and one that the company makes every effort to inform the customer about. Currently, the formula is ‘on display’ at the World of Coca-Cola Museum, but is displayed in such a way that the details of the document cannot be seen . Despite the large amount of focus and media attention that is placed on the formula the truth is that it represents the details for only one of Coca-Cola’s many products. In addition, it is highly unlikely that the soft drink is being made in the same way now that it was when the formula was developed, for example, fructose corn syrup is currently used instead of sugar in many soft drinks, including Coca-Cola. Consequently, the formula represents no useful information, but rather is a piece of history. Another example of the wide success of Coca-Cola in advertising comes from that of Santa Claus. In the 1930’s the company began to use an image of Santa, dressed in red with a white beard and jolly, in order to increase sales for the company in the winter months. Prior to this, there was no consensus opinion as to what Santa looked like or what he wore. However, nowadays almost all images of Santa, whether they are in Christmas advertisements, television shows, stories to children, in malls or other media, are of the version of Santa that Coca-Cola developed . Although this image is not strongly associated with Coca-Cola anymore, this example shows how much of an effect that advertising from the company has had. One problem with Coca-Cola’s marketing mix, is that because of the size of the company, it often gives the image of using ruthless tactics and not caring about smaller businesses or the consumer. An example of this is the bottle ban debate occurring over the Grand Canyon National Park. More than a year ago, a proposal was put forward that the sales of plastic water bottles within the park be banned. However, the plan was put on hold, as it appeared that Coca-Cola was exerting pressure to prevent the ban. While the role of Coca-Cola was officially deigned, the company is one of the major sponsors of recycling efforts in National Parks . It is easy to see why Coca-Cola may have had a problem with the proposal, as it the prevention of sales would significantly decrease their revenue from that region. In addition, it is hoped that the proposed ban would eventually expand to all national parks. Whether Coca-Cola did exert pressure is mostly irrelevant. Regardless of what actually happened, the events have had a negative effect on the image of the company. Recommendations While Coca-Cola’s marketing mix is extremely effective, its image could use significant improvement especially if the corporation hopes to maintain brand loyalty. A strong example of the negative image that has been generated by Coca-Cola is the website Killer Coke, which accuses the Coca-Cola of using violence against organisers of unions and exploitation of workers in many countries worldwide including Turkey, Mexico, India and China . Working to reduce this exploitation (if it is occurring) or to improve Coca-Cola’s image within these countries would have a significantly positive influence on Coca-Cola’s brand loyalty, image and prevent boycotts of the brand. Conclusion Coca-Cola has become a household name worldwide since its humble beginnings 125 years ago. Much of this growth comes from Coca-Colas innovative marketing methods and the way that the company quickly responds to changes in demand and public opinion. This can be seen in the use of Santa Claus as an icon to increase winter sales and the recent marketing work to associate Coca-Cola with happiness. Coca-Cola has a large product line, which differs depending on the country. The USA and UK are different markets with different market environments, although they do have many similarities. For the most part, Coca-Cola has continued with its global strategy of using a general advertising approach, rather than one that is specific to country. The main differences in marketing mix between the UK and the USA is the focus that the UK has on the environment and the need for additional information on packaging for the UK market that is not required in the US market. This trend may continue within the UK, creating significant differentiation between the two markets but currently Coca-Cola effectively in both countries uses most of the same marketing mix. References Read More