Factors Influencing the Success of the Coca Cola Company - Essay Example

Background information The Coca cola is one of the most successful multinational companies. Invented in 1886, the companyrecorded a total asset of about $ 86.17 billion in 2012 (August, 2012, p. 12). In the same year, the company’s profits stood at about $48 billion, one of the highest due to increased consumption and aggressive marketing strategies. The company has the highest number of employees standing at about 147,000. This highest number of employees is imperative in enabling the company to successfully provide services in about 200 countries. The company has been facing increased competition from other rival groups dealing with soft drinks. The main competitor has however been Pepsi Company. The latter for instance has a market share of about 75% in the Asian market. This is compared to 25% of the coca cola company in the same market. One of the main concerns in the company has been the sharp drop in the consumption of the sugary soft drinks. The drop has been witnessed in the United States, which offers the largest market, and the United Kingdom. The major cause of drop has been health concerns. For instance, majority of people with diabetes cannot drink the normal soft drinks. In addition to that, the increased lifestyle diseases have prompted majority of people to seek more healthy drinks. To achieve this, most consumers have shifted to sugarless drinks and fresh juices. This has put the coca cola company in an awkward situation with no option than begin production of sugar free products to maintain its growth and market control. Despite this, there have been allegations that some of the chemicals used as ingredients in the manufacture of coke may cause people to get cancer. It is this fear that has led to a sharp drop in consumptions. In India for instance, there was a sharp drop of about 11% in 2003 after the ministry of health raised health concern issues (Crowley 2000, p.98). To overcome the above challenges, there is need for the company to produce a new product will address the gap in the market. The main challenge has been the need to produce healthy drinks. Although the Diet Coke has been produced to address the problem, it is only found in few markets such as the United States and United Kingdom (Elcock 2000, p.90). The drink contains fewer calories compared with the normal drinks. However, the introduction of the new product does not mean that the company should stop the production of the present products. It is important to note that different consumers have different tastes and preferences. For that reason, the new product is aimed at addressing the gap and the new demand in the market. This is imperative for gaining a competitive edge, in a market that is dominated by other companies such as Pepsi. The latter company has attracted a large pool of clients because it produces some of the most health drinks. In order to facilitate the production of a new product, the coca cola company needs to have an objective strategy. Apart from carrying out a marketing research to collect important information, the 7Ps of marketing mix and new product development process will be considered. This will assist the company make informed decision before making any decision. Task 1 Marketing is a wide concept that involves a number of processes. Firstly, the business communicates to the customers directly through an avenue. The customers get the knowledge of what is being produced in a market. Secondly, marketing is also a strategy employed by a company to gain a competitive edge over its clients. The Coca Cola Company has been using the marking strategy to attract more clients and retain the current ones. The process involves advertisement and different forms of communications meant to reach the clients. Marketing concepts refer to the process through which the management seeks to fulfil both the identified and unidentified needs of the society. To achieve this though, different marketing orientations such as branding, business and industrial marketing and society marketing facilitate this identification of goods and services. There is cost incurred in fulfilment of a marketing orientation. For instance, the identification of a certain goal involves the process of marketing research. Task 2 The success of the coca cola company has been influenced by both the macro and microenvironments. The former are costly the external factors that may affect the operation of a given business. The company for instance has experienced challenges due to factors such as increased inflation because of economic down turn. In 2007/2008 for instance, the company was experiencing increased cost of production and slow business due to economic depression. Other factors, which may affect a given business, may include the political, legal and social issues. In the latter category for instance, the coca cola company has suffered due to the impression held by the society that some of the products pose threat to people’s health. This has led to fall in the sales of the company in countries such as India. On the other hand, the, microeconomic forces have also played a big role in the company’s operations. This includes factors such as the employees, customers, competitors and distribution channels. As indicated above, the company has a large number of employees to facilitate the sales in the operations of the company. With a large number of qualified, experienced and motivated employees, the company has maintained a good customer relations leading to success. However, there has been an increased competition within the company, mostly coming from Pepsi Company. 2b Marketing segmentation This is a strategy used by a given company for targeting its main customers. Marketing segmentation has been used to market Diet Coke and Fanta brands of the coca cola company. Various factors are considered to determine the target customers. Age, gender, location and customers’ attitude towards the product are some of the main factors that have influenced the coca cola’s need to target specific customers. In terms of age for instance, the young people have offered a large market compared to the old generation. On the other hand, women are more likely to consume the Diet Coke (sugarless) than the rest of the population. The attitude of the customers towards a product also plays an important role in market segmentation. As indicated above, the company has been performing dismally in Asian countries compared to the United States and United Kingdom. For that reason, the company has decided to increase its presence in the countries where it has more customers who have an attachment with the Company’s products. 2c factors influencing customer’ buying behaviour Product This refers to what the company is providing in the market. A product must be able to offer value to customers otherwise; it will lose its relevance in the market (Gabbott 2005, p.98). To increase the value, there is need for a new product to be produced. However, a company may also decide to improve an existing product. In the case of Coke, differentiation and production of new products to meet the market gap will be imperative. For instance, the company needs to repackage its existing products. It may change the design of the bottles, which gives the customers an impression that value has been added. This is likely to increase the sales of the company. On the other hand, it was stated that the company has been faced with the threat of increased need for sugarless products. This has contributed to the reduction in the consumption of the coca cola products. There is therefore need to increase the number of sugarless products to address the needs of the people with different health problems. Price Customers are very sensitive to price and therefore, the company has to take advantage of this. With this in mind, there is need for the company to consider the issue of prising as a major strategy to gain a competitive advantage. With the company dealing with mass production of the two products, it will be possible for the company to consider lowering the price. This will enable the company to attract more customers and compete favourably with rival groups such as Pepsi. Promotion A company markets its products to the target customers through this process. Aggressive promotion strategies have been known to attract new customers while retaining the new ones. The company has spent millions of dollars for marketing due to the increased competition in the market. The products have a strong brand explaining the reason why coca cola has a large market share in many countries. Consistent promotion of products has a psychological effect on the customers. In many adverts concerning the Fanta brand for instance, the message sent to the clients is that ‘Fanta brings happiness and integration’ within a group of people. The promotion of the Diet Coke on the other hand sends the message of the need to take healthy drinks. This explains why the consumption of this product has been on the increased in various countries. Promotion has therefore an effect of increasing the consumption rate and the customer is purchasing behaviour. Communication This is an integral part of marketing. A company interacts with the customers with the target customers through the process. The company has some of the most qualified and experienced employees who have increased the customer satisfaction. Communication is imperative in a business for understanding the attitudes of customers towards the products. In addition to that, communication allows the coca coal company to know the tastes and preferences of the customers. It is through communication that the company was able to realize the needs of the customers, and went ahead to produce the Diet coke. However, the company has not been able to take advantage of the social media as a channel for communication. In the recent times for instance, most companies have taken advantage of the social media such as the twitter and Facebook for communication as well as marketing company’s products. This owes to the fact that millions of consumers are found on these sites. In twitter for instance, the company is able to keep the customers informed about any new developments. To increase the customer’s purchasing behaviour, it will also be imperative for the company to begin direct communication with the customers. Currently, most of the communication has been through some intermediaries, which is not very effective in retaining customers. Direct contact of customers may include introducing a live chart, which facilitates immediate feedback. This will ensure that the company and the customers establish a strong relationship. Communication ensures trust between the customers and the company and this fosters customers buying behaviour. As indicated above, there is need for the development of a new product. This is for addressing the current market gap. With the number of customers seeking to have healthy soft drinks, the company will need to develop more of these products. However, the development of a new product involves a long process, which is discussed below. Idea generation The idea to make a new product is generated from the market from the current market demand and gap. Through marketing research and analysis, a company may decide to develop a new product. The SWOT analysis provides more information on how viable the new idea will be (Gummesson 2003, p.98). In the case of coca cola, the idea to develop new product comes from the new changes within the society. With the issues of health dominating in the society, there has been the need to produce more healthy products. This will ensure that the company retains its customers. Idea screening The generation of ideas to develop new products is good but it needs to be screened to make sure that it adds significant value to the business (Johnson 2008, p.87). The main aim of this stage is to measure the amount of revenue that the company is likely to make if a new idea is put into action. The company should also look into the number of target customers who demand the new products. In the case of Coca cola for instance, the demand for development of new products is a genuine one that has attracted millions of potential customers. For that reason, the company should go ahead and make more of such products to ensure that the needs of such customers have been addressed. Business analysis This imperative stage gives the company an idea of the price of the new products. If the demand of the product is high, the company may decide to set higher prices (Kotler 2003, p.87). However, this decision will also be determined by many other factors. Firstly, the availability of other competing and substitute goods will force a company to lower the price of its products. The coca cola company for instance faces stiff competition from Pepsi. This is a company with a reputation of producing quality sugarless products. As indicated before, this company has been able to compete favourably against coca cola in some countries. For that reason, it will be vital that the coca cola company seek to use low price to attract more customers. Concept development Under this stage, the main issue addressing is how the customers will respond to the new products and the value the product will add in the market. The other main factor considered in the launch of a new product is the cost of production. There is need for the company to ensure that the cost of production is as low as possible. This will ensure that the company gains more revenue out of the sales. For the Coca-Cola company to cut down the cost of production of new products, the cost of labour of to reduce. As indicated before, the company employees thousands of employees who increase the cost of production. However, reducing the number of employees will not be the good idea bearing in mind that the company operates in many companies. Outsourcing will therefore be an imperative for reducing the cost of labour. Test marketing Before a company can engage in mass production of goods, it is imperative to do some market testing. A company may decide to target a small group of people who are required to test the product and provide their views. Apart from just tasting the product for quality purposes, it is equally important that the target group provide view on the packaging and the brand name. Using the information gathered, a company makes necessary changes to ensure that it meets the customers’ expectations. For this reason, it will also require that the coca cola company produces a prototype and select a particular group of specialized people to make recommendations. Any recommendations made should be guided by the information gathered by the market researchers. Commercialization A company launches the product in the market through this final stage. It also a stage though which the company is involved in aggressive marketing strategies to make the product more appealing to the customers. The company also chooses the most appropriate channel of distribution to ensure that products reach the customers at the right time. One of the main strategies that have been used by the coca cola company is to have subsidiaries in different countries. This has made it easy to transport products from one place to another easily. 3a product development and competitive advantage As the products develops in the market, it is vital for the management team to consider taking certain measures to gain competitive edge (Kim 2002, p.87). Various strategies can be used to ensure that the product has a competitive advantage on the market. They include the cost of goods, customer relations, and promotion. As indicated before, the customers are very sensitive on issues of prices. For a product to gain a competitive edge, it will be vital for a company to lower the cost of its goods. Becoming a price leader gives the company competitive edge over other companies. For instance, it is imperative that the coca cola company consider lowering the cost of its products. This is especially the cost of the new products. With the current competition, it will be vital for the coca cola company to consider mass production so that it can also gain by selling products at relatively lower prices. B distribution method To ensure that the products reach the customers at the right time, the coca cola company has been using one of the most effective distribution channels. One of the main strategies has been to increase the number of subsidiary firms in its 200 countries of operation (Lamb 2007, p.98). In addition to that, there are many warehouses, which ensure that products are closest to the customers as possible. This has enabled the company to cut down the cost of operation. With the increased number of warehouses and subsidiary firms, the company has been able to reduce the cost of transportation. In addition to that, the company has been able to eliminate the cost of operation through elimination of intermediaries. A standard distribution channel has been wholesaler –retailers-customers. With this type of distribution channel, the company has been able to ensure that goods reach the clients at the right time. C. prising methods The company has decided to use the price discrimination as one of the main strategies for prising. This is the process through which a company uses different prices in different markets, depending on some factors (Mike et al 2009). For instance, in high-income populations, a company may decide to use high prices. However, the cost may be lowered when the target customers have low income. This ensures that the needs of all the customers in the market are addressed. This is one of the main strategy through which the coca cola company has been able to decide the price of the products. On the other hand, the company has used the issue of lifestyle as a basis to determine the price to use. Some customers are not sensitive to the issues of price because of their social status. D integrated marketing communication Communication is imperative as far as attracting and retaining customers is concerned. However, for this success to be achieved there is need to integrate all the aspects of communication. This includes promotion, personal selling and public relations. This is done with the view of ensuring that there is coordination on how other business activities are run. All these marketing procedures are imperative in ensuring that the goals of the company are achieved. 4a nature of extended marketing mix The marketing mix includes the issues of price, product, place and promotion. The four are imperative in ensuring that the product gains favour in the market. The four processes are vital. The product refers to what the companies provide in the market. Place is also important in the sense that it determines whether the company will make any profits. The urban locations for instance offer a better market for the coca cola products c) Local and international markets There are differences in local and international markets. In the local ones, the company have vital information about the market. This is unlike in the international market where the company has to rely on other sources of information. Bibliography August W. Giebelhau 2012. "Coca-Cola Company". The New Georgia Encyclopedia. Georgia Humanities Council Crowley, Laura 2008. "Sodium benzoate removed from Diet Coke". Retrieved 2010-05-28. Elcock, Howard 2000. "Strategic Management," in Farnham, D. and S. Horton (eds.), Managing the New Public Services, 2nd Edition, New York: Macmillan, p. 56. 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