Coca-Cola as One of the Largest Beverages Company - Coursework Example

Coca-Cola in UK 0 Executive Summary Coca-Cola is one of the largest beverages company in the world. It has numerous brands in its product portfolio and does business in more than 200 countries. The present paper attempts to carry out a SWOT analysis of the Coca-Cola Company. The company’s position in the UK market has been assessed with the help of PESTEL analysis. The paper puts forth a new product/service proposal for Coca-Cola in the UK market. An attempt has also been made in the paper to chalk out a three year implementation schedule for the new venture. 2.0 Introduction The Coca-Cola Company was founded in 1886 by pharmacist Dr John S Pemberton. Headquartered in Atlanta, USA, Coca-Cola is one of the world’s most well-known companies. Since inception, the company has grown by leaps and bounds and as of today has business operation in more than 200 countries (Coca-Cola, 2013). Coca-Cola Company is the worlds primary manufacturer and marketer of non-alcoholic beverages and other food items. Of the 400 brands that the company has in its repertoire, 16 of them generate revenue of more than $1 billion every year. Its flagship brand Coca-Cola is literally a household name and is liked by millions of people around the globe. 3.0 Mission and Vision The Coca-Cola Company’s mission is to ‘to refresh the world - in mind, body and spirit, to inspire moments of optimism’. The company attempts to create value and make a difference through its products and actions. (Coca-Cola, 2013). While the company relentlessly pursues its mission, it has developed a set of goals so as to cater to the needs of various stakeholders like people (great place to work for employees), partners (taking care of the interest of vendors, suppliers, and bottlers), planet (sustainability measures), profits (maximizing shareholders returns) and portfolio (building brands that satisfy customer needs). Accountability, collaboration, integrity, leadership, passion, innovation and quality are some of the core values that guide the company in its day-to-day business. 4.0 Financial Status Coca-Cola is in sound financial health. The behemoth registered net operating revenues of $ 48,017 million in 2012, up from $ 46,542 million in 2011. The total assets of the company as of December 31, 2012 stood at a mammoth $ 86,174 million. 5.0 Coca-Cola in UK The Coca-Cola Company markets 21 brands (more than 100 products) in the United Kingdom through its subsidiary Coca-Cola Great Britain (CCGB). In addition to the carbonated soft drinks like Coca-Cola, Diet Coke, Coke Zero, Sprite and Fanta, CCGB also manufactures and markets the Oasis still fruit drinks, the Powerade isotonic sports drink and Abbey Well water in Great Britain. CCGB also owns the Schweppes and the Glaceau Vitamin Water brand. With its headquarters in London, CCGB is also responsible for new product development and protection of Coca-Cola trademarks in England, Scotland and Wales. 6.0 SWOT Analysis SWOT analysis refers to the study of a company’s strengths, weaknesses, opportunities and threats. While the strengths and weaknesses are identified by scrutinizing the internal health of the company, the opportunities and threats are identified by examining the external environment. The tool of SWOT analysis is widely used by companies to chalk out a strategic course of action (Helms, 2010). This analysis helps a company derive an ideal ‘fit’ between its internal resources and external situation. The task of the management is to capitalize on the opportunities by utilizing its strengths and at the same time ward off the threats that the company confronts. A SWOT analysis of the Coca-Cola Company has been carried out in the following paragraphs. 6.1 Strengths 6.1.1 Strong Brand Coca-Cola has been in existence for more than a century and is a well recognized brand. The company manufactures and markets beverages of high quality that has enabled it to gain trust of customers across the world. 6.1.2 Global Presence The company has operations in more than 200 countries. The revenues of the company are thus not only dependent of the developed markets where demand has saturated. Coca-Cola has made its presence felt in numerous developing countries that contribute significantly to the company’s sales. 6.1.3 Consumer Marketing The Coco-Cola Company is adept at consumer marketing. It has been able to enhance consumer awareness as well as consumer preference for its brands through well targeted consumer marketing. The company implements integrated marketing programs, including advertising, point-of-sale merchandising and sales promotions, by engaging its bottling partners. 6.1.4 Franchise Leadership Coco-Cola recognizes the fact that its growth is dependent on a strong franchise network. The company therefore strives to strengthen its franchise leadership capabilities. This in turn enables the company and its bottling partners to grow together by quickly achieving scale and efficiencies. 6.2 Weaknesses 6.2.1 Many Unpopular Brands The company has, in its product repertoire, a vast array of brands. While Coco-Cola, Sprite, Diet Coke have done exceedingly well in most markets, some of the other brands have failed to deliver the expected results. These unpopular brands thus eat up valuable time and money without significantly contributing to the company’s revenues 6.2.2 Few Brands for the Health Conscious Coca-Cola is being increasingly viewed as a company that has products meant for people who are not health conscious. The image of the company has taken a beating in recent times since certain reports emerged that carbonated drinks have ingredients that are detrimental for human health (Wilmore, 2012) 6.2.3 Water Quantity and Quality The availability of water is an issue that requires immediate attention of the company. In addition to the scarcity, water quality is also becoming a cause of concern. Coca-Cola’s business is heavily dependent on water which is the main ingredient in most of its products. Additionally water is required in substantial quantities for the production of certain agricultural products on which the business of the company depends. 6.3 Opportunities 6.3.1 Growing Bottled Water Market Given the scarcity of the portable drinking water, the demand for bottled water has increased tremendously. Many fast moving consumer goods (FMCG) companies have jumped in the fray to cash in on the opportunity. There exists an opportunity for Coca-Cola to take its bottled water brand in each of the countries in which it is has a distribution channel (Clark, 2006). 6.3.2 Products for Health Conscious People Coca-Cola could make a concerted effort from changing its image from a company that sells carbonated drinks to a company that sells healthful beverages and food stuff. The company can expand further in the juice market. Many other markets like cold coffee sports drink, yogurt etc present a mouth watering opportunity which the company should grab. 6.4 Threats 6.4.1 Obesity Concerns World over, there is a growing concern over obesity issues. The problem of being overweight is associated with numerous other medical conditions. The menace of obesity has assumed alarming proportions in many developed countries including the UK and US. Rising awareness about obesity can seriously hinder the growth objectives of Coca-Cola. The company would have to proactively offer a variety of choices to consumers to meet their evolving needs arising out of new lifestyle choices. 6.4.2 Dependence on Bottlers The beverage behemoth is highly dependent on the bottlers for the production and widespread distribution of its products. While the company owns some bottling plants in certain countries, the rest are with franchisees. Any rift with these bottlers can jeopardize the growth of the company. 6.4.3 Increased Competition in the Marketplace Coca-Cola is facing stiff competition not only from big, well-established global companies but also from many small, regional players. The company will have to continuously strengthen its production and marketing capabilities to maintain its market share. 7.0 PESTEL Analysis (United Kingdom) PESTLE analysis, acronym for political, economic, social, technological, environmental and legal analysis, helps a company understand the big picture of the environment in which it is operating. This analysis enables the company appreciate all the macro environmental forces that impact the business. The ensuing discussion carries out the PESTEL analysis of UK 7.1 Political Analysis The general elections held in UK in May 2010 resulted in a hung parliament. Since no party gained an absolute majority those elections, the country is being governed by the Conservative-Liberal Democrat governing coalition. The political stability in the country is being tested to the hilt given the tough fiscal austerity and protracted Euro zone crisis. 7.2 Economic Analysis The real GDP in UK grew by 2.1 percent in 2010 and merely by and 0.9 percent in 2011. Inflation is above expectations and budget deficit continues to hog the limelight. The banks in UK managed to absorb the losses arising out of Greek debt restructuring, however there are under enormous pressure due to the Euro zone crisis. 7.3 Social Analysis Traditionally UK has been a class-conscious society. There is a large portion of the society that is considered as the underclass. The middle class, in comparison, is pretty small in UK. The other societal indicators appear good especially the NHS, the state-supported healthcare system which has improved tremendously over the years. The region is home to the Oxford University and Cambridge University, two of the top ten universities in the world. 7.4 Technological Environment UK, as a region, is open to innovation and technological advancements. UK based companies spend heavily on R&D and consumers embrace new products with open arms. The policy of the government also encourages entrepreneurs. 7.5 Environmental Factors UK is committed to maintain and preserve a clean and green environment. The government and the industry alike are wary of the adverse consequences of the greenhouse gas emissions and therefore strive to cut down on primary carbon footprint in every possible way. 7.6 Legal Environment The legal environment in the country is somewhat shaky. Corruption is widespread and the government has shown its inclination to back away from jury trials. There is a growing demand in recent times to tax bad food. Certain health groups are demanding that a tax be imposed on unhealthful food items like carbonated drinks and fried items so that the general public is discouraged to consume these. 8.0 Coffee Business in UK Coffee houses are ubiquitous on UK streets. Be it Starbucks, Costa Coffee or the Italian-styled Caffe Nero, the people of UK throng these houses and have displayed their penchant for high quality coffee. The popularity of the beverage in this part of the world can be gauged from the fact that Starbucks has more than 500 stores and Caffe Nero has 250 stores across the UK (Fuller, 2006). Starbucks, Costa Coffee and Caffe Nero account for 84 percent of the market share amongst branded coffee chains. The other players include Taylors Street Baristas, Lotus Bakeries, La Marzocco, Lavazza, Solo Cup, Ozone Coffee Roasters, and Nude Espresso. From a marketing perspective, it can be said that in addition to consumer taste, the customer experience generates demand for a particular brand of coffee house. It is for this reason that such coffee shops strive to secure prime locations where they can hope to have a large foot-fall. High quality beverage is a sine-qua-non to attract and retain a loyal customer base. Convenience stores, quick service restaurants (QSRs), fast food joints and gourmet food shops pose as, in varying degree, competitors to these coffee houses. Normally the product items sold by these outlets include tea, coffee, espresso drinks (cappuccinos), cold blended beverages and juices. It is pertinent to mention here that these products are sold for ‘in-premises’ consumption as well as take-away items. 9.0 New Product/Service for Coca-Cola The number of coffee outlets in UK reportedly doubled from 2005 to 2011. A mind boggling 600 new coffee shops opened in UK in 2011. It is therefore suggested that Coca-Cola should expand in the coffee business and grab a pie of this lucrative market which is estimated to be £5.3 billion in 2011. It is estimated that the UK coffee market will grow to £7 billion by 2015 (Casa Espresso, 2013). Various findings suggest that the target market for coffee shops is youngsters and adults in the age group of 25-45. In this context, UK should be the preferred destination for any coffee marketer as 41 percent of the population is in the age group of 25-54 years in the country. 80 percent of the population lives in urban areas which again is a mouth watering proposition. On the face of it, Coca-Cola has no experience in managing coffee shops. A two-pronged strategy is therefore advised for the company. Coca-Cola boasts of a robust distribution channel in the country through with it makes its products available to the customers at numerous customer touch points. The company should capitalize on this existing infrastructure and start manufacturing and marketing cold coffee in tetra packs. The proposed name for Coca-Cola’s coffee brand is Cafefresh. The product will be available at various supermarkets, departmental stores, kiosks, groceries etc. Cafefresh fits into the existing product line of Coca-Cola. The product will enable the company attain synergies in the production and distribution function. As stated earlier, consumer marketing is one of the strengths of Coca-Cola. The company can thus appeal to a large section of the society through its Cafefresh brand. The really ambitious plan proposed for the company is the setting up and managing coffee houses where customers come and savor their cup of coffee. It is proposed that Coca-Cola opens coffee shops under the name ‘Zing Café’ in each of the major towns of UK, London, Birmingham, Leeds, Glasgow and Sheffield by mid of 2014. By that time, Coca-Cola should identify an existing chain of coffee house which it can acquire. This form of inorganic growth will catapult Coca-Cola in the top league immediately. The company will also benefit from the marketing expertise and immediate availability of trained manpower. 10.0 Marketing Mix 10.1 Product The coffee business proposed in the current paper for the Coca-Cola company comprises of two distinct parts; one, manufacturing and marketing cold coffee in tetrapacks and two, setting up of coffee shops where customers visit and spend some time while sipping high quality coffee. While the tetrapacks represent a tangible product, the latter proposal falls under the gamut of services. Therefore the three additional elements of the marketing mix namely physical evidence, processes and people would also apply to the coffee shops named Zing Café. Cafefresh would be available in a standard size of 250 ml and would have a ‘best before use’ period of three months. 10.2 Place Cafefresh would be sold through the existing distribution channel of the company. Zing Café coffeee shops would initially to set up in the major towns of the country. After testing the waters, the company would expand to all parts of the country through the inorganic route (mergers and acquisitions) as well as through the organic route (setting up new coffee shops). 10.3 Price The cafefresh tetrapacks as well as the coffee sold in Zing Café would be competitively priced. Since Starbucks, Costa Coffee, and Coffee Nero are alsready present in the UK market, Coca-Cola would compete on the price plank with these existing players. 10.4 Promotion The new brand of cold coffee as well as Zing Café would be supported with a judicious blend of advertising and sales promotion tools. In the initial phase, the company would resort to awareness advertising and would be free samples of tetra packs at all major shopping malls, departmental stores and supermarkets. The initial free trials are likely to induce repurchases from the customers. Various other schemes like scratch cards, loyalty points would be introduced to develop and maintain a loyal set of customers for Zing Café. The detailed strategy for Coca-Cola with respect to the coffee business is depicted in Table 1. As depicted in table 1, the production of Cafefresh will start with immediate effect. At the same time, work will start on the Zing Café project with the lookout for the ideal location. A launch party will announce the opening of the first store in London. This party will host some of the biggest names in UK and would sound as a danger bell for the existing players in the Coffee market. The company would continue to expand through the organic and inorganic route till December 2013. Throughout this 3 year period, customer feedback would be taken and the necessary changes would be incorporated in the new product/service. 11.0 Towards Sustainable Marketing It is proposed that Coca-Cola accords highest priority to the environment when it comes to the new venture. The company should use fully bio-degradable material for the packaging of the tetra packs. The company can contribute meaningfully to the preservation of the environment by building ‘green’ Zing Café stores. Among others, these stores can have small rain water harvesting mechanism so as to preserve valuable natural resources. The company should also connive with coffee growers from whom it will procure the raw material and assist them in adopting sustainable production practices. 12.0 Forecast and Budget The forecast and the budget for the new venture are depicted in Table 2 below: Coca-Cola will have to spend huge amount of money on purchase of land and the acquisition of another coffee chain. Therefore the new business, per se, will not break even in the first three years, i.e. it will continue to run into losses at least till 2015. However there is nothing alarming in the situation as this holds true for most new products and services. In absolute terms, Coca-Cola will have to shell out £ 468 million from 2013 through 2015. The inflows in the same period are likely to be £ 255 million. 13.0 Conclusion Coca-Cola, given its financial prowess and marketing capabilities, is well equipped to venture into unchartered waters in UK. The company already has business operations in the country and therefore is well aware of the market dynamics. Entering into the growing coffee market in the country will prove to be a money-spinning venture for Coca-Cola in the long run. References Casa Espresso. 2013 [online] Available from: http://www.casaespresso.co.uk/ [Accessed 10 March, 2013]. Clark, N. 2006, Coca-Cola eyes second stab at UK water sector, Haymarket Business Publications Ltd, London, United Kingdom, London Coca-Cola. 2013 [online] Available from: http://us.coca-cola.com/ [Accessed 09 March, 2013]. Coca-Cola. Great Britain 2013 [online] Available from: http://www.coca-cola.co.uk/ [Accessed 08 March, 2013]. Coffee Shops - Quarterly Update 2/18/20132013, , Hoovers Inc, Austin, United States, Austin. Fuller, G. 2006, "Coffee beings", Personnel Today, , pp. 20-22. Helms, M.M. & Nixon, J. 2010, "Exploring SWOT analysis - where are we now?", Journal of Strategy and Management, vol. 3, no. 3, pp. 215-251. "Research and Markets Offers Report: Coca-Cola Enterprises Inc. - SWOT Analysis", 2012, Manufacturing Close - Up, . "Research and Markets; 2010 Plimsoll Analysis - Pest Control - a Comprehensive Profile of 193 Companies Operating in the UK Market", 2010, Real Estate Weekly News, , pp. 139. 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