Environment and Company Analysis of Coca Cola - Case Study Example

Coca – Cola Submitted by: XXXXXXXX Number: XXXXXXX of XXXXXXXX XXXXXXX XXXXXX XXXXXX Submission: XX – XX – 2010 Table of Contents Table of Contents 1 1.Introduction: 2 2.Environment and Company Analysis: 2 3.Segmentation, Targeting and Positioning: 4 4.Coca Cola’s Ad Campaign: 5 5.Conclusions and Recommendations 6 6.Bibliography 7 1. Introduction: Coca Cola is one of the leading companies throughout the world. It has had the highest and biggest selling soft drinks in the history and is one of the best known products in the world. Coca Cola was introduced in 1886 and was produced by mixing ‘Coca Cola’ syrup with carbonated water. This was started in Atlanta. However over the years the company has grown to become the world’s largest and most well known companies across the world. The company has created a trademark value for itself which has become invaluable and the goodwill that the company has been able to create for itself is very high. The company has made a name so strong for itself, that even if the company was faced with complete physical property losses, it could still borrow enough money to rebuild the entire company and still live up to its name (Kaye, 2004). This paper aims at discussing the SWOT of the company along with the main competition that the company faces. Also a detailed discussion of the company segmentation and the marketing mix will also be discussed. The paper will finally also provide a detailed advertising campaign to support celebrity endorsement. 2. Environment and Company Analysis: Coca Cola faces high competition from companies like PepsiCo, Nestle, Groupe Danone, Cadbury Schweppes and Kraft Foods. The competition among these companies is very intense and more competition could directly affect the company’s market share and revenue growth rate. The company has a wide range of products that it deals with and the competition for almost every product is slowly becoming higher each day. The company faces a number of threats from the industry in a number of aspects. The increase in the costs of raw materials has caused a lot of issues for the company as this would directly impact the cost structure of the company’s products. Coca Cola as mentioned earlier on faces a lot of competition both from the regional as well as the global players of the market. It is also to be noted that the consumers are very health conscious. This has directly impacted the company, as with the increase of health consciousness, there has been a drastic decrease in consumption of carbonated drinks and other sweetened beverages. Also Coca Cola has been criticised for increasing the amount of sugar in the carbonate beverages, which has been treated as one of the major factors of childhood obesity. With the amount of increased health concerns and individuals becoming more health conscious, the market for the company is decreasing drastically and this is affecting the company’s revenues adversely (Data Monitor, 2008). Another very important factor that is causing the company a big threat is the increased oil prices. The fuel prices have increased a lot over the past few years and this has impacted the company directly, since Coke has a large distribution network. With continued increase in prices of fuel the company’s operating costs would increase. The company has been given a number of opportunities as well with the increased consumptions of bottled water the company has been given a new source of revenue. The bottled water industry is a fast growing one and is growing by almost $10 million per year. Since the company is moving with fast on the water lines, this could be used as an opportunity to capitalise on the growing bottled water market (Tripod, 2008). The company has had a great foresight and has introduced the low calorie and healthy drinks at a much earlier stage. With the increased health consciousness that has come into the people, the company’s products will be in great demand and will hence help increase the company’s revenues. The company has also provided the markets with baby boomers which are fruit juices and juice drinks fortified with vitamins. The table below provides a brief overview of the SWOT analysis of the company and gives a detailed insight into the company’s strengths. Strengths Wide range of products and brands Large operational scales Good marketing position Good levels of cash flows Weaknesses Liquidity of the company is being affected The volatile markets impacts the company’s assets Opportunities There is a growth in the beverage industry Increased use of bottled water Threats High levels of competition Sluggish US Carbonated soft drinks markets High levels of dependency on the bottling partners. 3. Segmentation, Targeting and Positioning: The market segmentation for the company will be based on the target market. The main focus of the company will be specifically on the sports lovers, people attending the Olympic Games, children and almost all the visitors to the UK for the Olympic Games as well as the locals of the country as well. The main focus of the company will be to sell the product at the stadium and to build stalls to reach out to as many customers as possible. In terms of positioning within the markets, it is important that the company focuses on a few aspects like the brand image, and perceived brands. Perceived Quality has been defined as, “Consumers opinion of a products (or a brands) ability to fulfill his or her expectations. It may have little or nothing to do with the actual excellence of the product, and is based on the firms (or brands) current public image, consumers experience with the firms other products, and the influence of the opinion leaders, consumers peer group, and others” (Business Dictionary - Perceived Quality, 2009). The perceived quality of a brand extension is a variable and there is a myth that the original brand image will be directly transferred to the subsidiary brands and will lead to a higher level of acceptance among the customers. The familiarity of a brand among the customers also has a major impact on the quality perception. When promoting to this international audience, the company or retail facility would likely position the fashion merchandise in terms of quality and would not focus on building strong connection with brands through celebrity promotion. In the UK, however, celebrity endorsements greatly impact the buying behaviours of consumers (Child, 2008). 4. Coca Cola’s Ad Campaign: Understanding the theoretical impact of celebrity presence in brand promotions is of utmost importance to marketing professionals. It has been established that many well known brands have utilised a conglomerate of celebrity endorsements in order to build consumer connection and improve the brand image to gain consumer support and alter buying behaviours. The increased customer loyalty is the base of the better customer satisfaction and it helps the company increase its revenues. It is interesting to understand that the customer satisfaction and customer loyalty are directly linked to one another and they affect one another directly (Reichheld, 1993). A customer who is satisfied with the service and the product tend to remain more loyal to the company and the good relationship between the company and the customer will allow the trust to grow to a greater extent and can also lead to better marketing to a great extent via word – of – mouth. It has been noted that the celebrity endorsements are required to help the company create an awareness and to help develop the interest of the customers in the company (Binkley, 2007). Also the aim is to help company’s brand show its true personality to the potential customers so as to win them over. In the case of Coca Cola, the company can choose a celebrity that has made a major impact not only on the UK audiences but the overall international audience. Some of the best celebrities that can be chosen for the advertising campaigns include sports hero like David Beckham, Paula Radcliffe or movie stars like Matt Damon, Denis Craig. Coca Cola can use a combination of different media for the adverts. The company can put up a huge billboard at the venue of the Olympic Games with the celebrity picture. Also pamphlets and discount coupons can be used. The discount coupons can be attached with the pamphlets and be distributed at the various food stores. Also the use of smaller billboards cross the entire premises will help gain attention of the target market and the segments of population that are being focused. 5. Conclusions and Recommendations The use of the right kind of advertising with the celebrities can prove to be very helpful for the company and can help in building a brand image. The celebrities that have been chosen are healthy and sporty, and this will also help build a brand image where the customers can relate to the celebrities (Jobber, 2004). Recommendations to Coca Cola would mainly be to use the celebrity endorsement in an effective manner by putting up a number of billboards and banners with the celebrity images. Also use some excellent quality videos on the electronic boards around the Olympic Games location. Also, the company can use this opportunity to put up billboards across the city and to make good use of the opportunity to reach out to international customers and locals likewise. 6. Bibliography Binkley, Christina. (2007). On Style: Tracking the Trouser Cycle. Wall Street Journal, New York, NY. 16 Aug, p.D1. ABI/INFORM Global Database. Accessed 8 May 2010. Child, Katy. (2008). Kellogg on Marketing: Analyst Comment. Marketing, London. 13 Feb, p.29. Data Monitor, 2008, ‘Coca Cola Enterprise, Inc.’, 23 June 2008, Data monitor Europe, London Jobber, D., 2004, Principles and Practice of Marketing, 4th Edition, McGraw – Hill, Berkshire Kaye, J., 2004, ‘Coca – Cola India’, Tuck School of Business at Dartmouth, Accessed on 2nd May 2010, Retrieved from http://mba.tuck.dartmouth.edu/pdf/2004-1-0085.pdf Tripod, 2008, ‘Coca Cola SWOT Analysis’, accessed on 7 May 2010, retrieved from http://coca-cola-remodel.tripod.com/id21.html Read More