Coca Cola and Their Marketing Techniques - Case Study Example

THE COCA COLA COMPANY TABLE OF CONTENTS: INTRODUCTION History of the coca cola company Products produced THE COCA COLA COMPANY REPORT Market share Marketing strategies of the coca cola company Financial report of the company CONCLUSION REFERENCES INTRODUCTION: Company history The Coca-Cola Company is one of the world's largest food and beverage companies. The companies main office is located in Atlanta, Georgia, U.S.A. In 1884 a pharmacist named John Smith Pemberton invented a wine which he named the Pemberton French wine coca, he later developed a non alcoholic drink made from the coca leaves of south America which was flavored with kola nuts, hence the word coca cola, marking the start of the giant company we know today.1 Griggs Candler purchased a stake of the company in 1887 and the company was named the coca cola company. Benjamin Thomas and J. whitehead bought the exclusive rights of the company in 1899 who founded the Coca-Cola bottling company. During the second world war the company sold soft drinks to US soldiers and as a result the company set up bottling plants in other regions, this led to the wide spread popularity of the drink all over the world which was as a result of US soldiers when they returned home from the war. In recent years due to increased competition the company has involved itself in ownership of franchises all over the world. Company products The coca-cola company produces a wide range of products, including: soft drinks (Coke, Fanta, and Sprite), Mineral water (Dasani), non-carbonated beverages (PowerAde sports beverage, flavored tea Nestea). In general the Coca-Cola Company (TCCC) only produces syrup concentrate which is then sold to various bottlers throughout the world who hold a Coca-Cola franchise. Coca-Cola bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants and food service distributors. The Coca-Cola Company offers nearly 400 brands in over 200 countries, besides its namesake Coca-Cola beverage. Diet Coke was introduced in 1982 to offer an alternative to dieters worried about the high number of calories present in Classic Coke.2 The Company also introduced new soft drinks to satisfy a widening spectrum of tastes. Born in Germany, Fanta was introduced in the United States in 1960; today the Fanta family of flavored soft drinks has become one of the best-selling brands in the world. Sprite, a lemon-lime drink, followed in 1961, and in 1963 the Company introduced TAB, its first low-calorie beverage. In 1960 the Minute Maid Corporation merged with the Company, adding frozen citrus juice concentrates and ades under the trademarks Minute Maid and Hi-C to the Company's array of beverages. The Coca-Cola Company offers nearly 400 brands in over 200 countries, besides its namesake Coca-Cola beverage. This includes other varieties of Coca-Cola such as Diet Coke (introduced in 1982 ), which uses aspartame , a synthetic phenylalanine -based sweetener , to eliminate the sugar content of the drink; Caffeine-free Coke ; Cherry Coke (1985); Diet Cherry Coke (1986 ); Coke with Lemon (2001 ); Diet Coke with Lemon (2001); Vanilla Coke (2002 ); Diet Vanilla Coke (2002); Coca-Cola C2 (2004 ); Coke with Lime (2004 ); Diet Coke with Lime (2004 ); Diet Coke with Splenda (2005 ), Coca-Cola Zero (2005), Coca-Cola Black Cherry Vanilla (2006) , Diet Coca-Cola Black Cherry Vanilla (2006), and Coca-Cola Black Tab was Coca-Cola's first attempt to develop a diet soft drink, using saccharin as a sugar substitute. Introduced in 1963, the product is still sold today, however its sales have dwindled since the introduction of Diet Coke. The Coca-Cola Company also produces a number of other soft drinks including Fanta (introduced circa 1942 or 1943) and Sprite. Fanta's origins date back to World War II when Max Keith, who managed Coca-Cola's operations in Germany during the war, ran out of the ingredients for Coke, which could be supplied only from the United States. Keith resorted to producing a different soft drink, Fanta, which proved to be a hit, and when Coke took over again after the war, it adopted the Fanta brand as well. The German /Fanta Klare Zitrone/ ("Clear Lemon Fanta") variety became Sprite, another of the company's bestsellers and its response to 7 Up. During the 1990s the company responded to the growing consumer interest in healthy beverages by introducing several new non-carbonated beverage brands. These included Minute Maid Juices to Go, PowerAde sports beverage, flavored tea Nestea (in a joint venture with Nestle), Fruitopia fruit drink and Dasani water, among others. In 2004, perhaps in response to the burgeoning popularity of low-carbohydrate diets such as the Atkins Diet, Coca-Cola announced its intention to develop and sell a low-carbohydrate alternative to Coke Classic, dubbed C2 Cola. C2 contains a mix of high fructose corn syrup, aspartame, sucralose, and Acesulfame potassium. C2 is designed to more closely emulate the taste of Coca-Cola Classic. Even with less than half of the food energy and carbohydrates of standard soft drinks, C2 is not a replacement for zero-calorie soft drinks such as Diet Coke. C2 went on sale in the U.S. on June 11, 2004, and in Canada in August 2004. C2's future is uncertain due to disappointing sales. Coca-Cola is the best-selling soft drink in most countries. THE COCA COLA COMPANY REPORT Market share: According to a 2005 report the coca cola company sells over 400 brands to over 200 countries where it is estimated that over 50 billion beverages are consumed per day worldwide, the percentage consumption of its products sold in the US is 27%, 27% in Mexico, Japan, Brazil and china while the remaining 46% is sold to the rest of the world. The diagram below shows the percentage market share of the coca cola company across the world:3 The company is the best-selling soft drink maker in many regions of the world. Nevertheless, there are some places like Quebec and Prince Edward Island, Canada, where Pepsi is the market leader. In the Middle East, the only region in the world where Coca-Cola is not the number one soda drink, Coca-Cola nonetheless holds almost 25% market share. In Peru the native Inca Kola has been more popular than Coca-Cola. In Japan the best selling soft drink is not cola, but canned tea and coffee.4 According to the company's 2005 report the coca cola company sells over 400 brands to over 200 countries where it is estimated that over 50 billion beverages are consumed per day worldwide. This means that the company's products are not limited to the U.S but are global. Marketing strategies In many types of businesses the selling costs are usually higher than production costs. Due to this fact the marketing strategies of each respective company are paramount. On its part the coca-cola company uses many strategies including Advertisements & campaigns ("The Zero Movement"). The Zero Movement is a campaign by Coke to sell a new sugar-free drink called "coca cola zero" in Australia. The campaign has involved marketing strategies like buying billboards and the backs of magazines for adverts apparently by "The Zero Movement", as well as putting up posters in public places. The Company's advertising changed along with the world, reaching new groups of consumers through new channels, most notably television. On Thanksgiving Day 1950, Edgar Bergen and his sidekick, Charlie McCarthy, appeared on the first live television network show sponsored by The Coca-Cola Company. As the medium evolved from program sponsorship to commercials that ran during different shows, many famous celebrities advertised Coca-Cola. 5 Through the years, advertising for Coca-Cola has changed in many ways, but the message, like the trademark, has remained the same. The company also uses sponsorships as a way of marketing itself in various activities in America and all over the world. These sponsors range from the fields of sports, education, institutional and many other fields. The company also enters into mergers and joint ventures to market itself especially where it is not the market leader or there is stiff competition, e.g. in Peru, where the native Inca Kola has been more popular than Coca-Cola, which prompted Coca-Cola to enter in negotiations with the soft drink's company and buy 50% of its stakes. In many places the company owns a stake in a local franchise just to have their brand name printed on the products. Concerning this year's Super bowl In this year's super bowl the company was returning after more than six years. This was the reason why it changed its marketing strategy compounded by the fact it was returning to the super bowl after a lengthy lawsuit, where it had been accused of treating some of its workers unfairly. After an eight-year absence, Coca-Cola will return to the Super Bowl, not by advertising during the game itself, but by sponsoring the kickoff show, the final pre-game segment. Coke will promote its energy drink Full Throttle in two 15-second commercials and a 60-second commercial costing an estimated $13 million. Coke is also moving ahead full throttle when it comes to treating its employees more fairly: in contrast to the Super Bowl advertisers mentioned in this report thus far, Coca-Cola is an employer whose treatment of its employees has made it a true industry leader. It took a big-league lawsuit, however, to force Coke's turnaround. Those watching this year's Super Bowl can have a Coke and smile knowing that Coca-Cola has made significant strides in improving how its minority employees are treated: Coke's efforts are the real thing. Coke's progress demonstrates how lawsuits can play a significant role in motivating a real turnaround in corporate culture, as the company has now come from behind to take a large lead over some of its advertising competitors in treating its workers fairly.6 Financial report In the first year of sales Pemberton sold drinks and earned 50 dollars, however the production cost of these drinks for that year was 70 dollars, however after Candler purchased the companies rights he aggressively marketed the products and the sales increased by over 4000% and therefore the drink become the most popular drink in America. The company's current financial folio has a net income in the range of U.S$ 5.080B7 It also has an operating income of around U.S$ 6.308B according to 2006 Statistics8 The company's 3 year income rate (financial Plan) Revenue projections for the years2004-2006 were9 Annual income report: All amounts in millions of US Dollars Year Revenue Gross Profit Operating Income Total Net Income Diluted EPS (Net Income) Dec 06 24,088.0 15,924.0 6,308.0 5,080.0 2.16 Dec 05 23,104.0 14,909.0 6,085.0 4,872.0 2.04 Dec 04 21,962.0 14,324.0 5,698.0 4,847.0 2.00 The coca-cola company is also boosted by the fact that it's listed on both the New York stock exchange and the Dow Jones Industrial Average10 Projections for the next 3 years will be released on17th April 2007. CONCLUSION: Although the company has been voted among the most successful companies in the world, the company has been criticized on many fronts including its perceived relationship with human rights violations and other perceived unethical practices11. In regards to its business practices, a number of law suits have issued in relation to its allegedly monopolistic and discriminatory practices, some of which have been dismissed, some of which The Coca-Cola Company agreed to change its business practices and some of which settled out of court. It has also been involved in a discrimination case. There have been continuing criticisms regarding the Coca-Cola Company's relation to the Middle East and U.S. foreign policy12 In regards to environmental issues in India, there has been a controversy over pesticides possibly showing up in the product, as well as the company's over-use of local water supplies in some locations. Packagings used in Coca-Cola's products have a significant environmental impact but the company strongly opposes attempts to introduce mechanisms such as container deposit legislation13 REFERENCES: David Mercer (1998), Marketing Strategy, Sage Publishers, U.S The source watch (2007) the coca cola company, retrieved on 11th April available at www.sourcewatch.org The official coca cola company website (2007) retrieved on 11th April available at www.thecocacolacompany.com Wikipedia the free encyclopedia (2007) the coca cola company's marketing strategies, retrieved on 11th April, available at www.wikipedia.com Read More