Coca-Cola Market Analysis - Report Example

Coca Cola Enterprises 07/03 Coca Cola Enterprises Introduction Coca Cola is the biggest beverage producer around the globe which is listed in the New York Exchange market and links itself in producing and providing a number of different branded beverages. The huge distribution services of this company have the power to cater two hundred countries at a time. Coca Cola behaves as a worldwide employer and comes among the top ten organizations around the globe. In an attempt to increase its space on global shelves, it also procures social responsibilities (Coca-Cola, 2013). Coca Cola offers about five hundred brands to its consumers and serves about 1.6 billion servings per day. Coca Cola was acknowledged as the most valuable brand in the world in 2011 according to a report by Interbrand’s best worldwide brand. The product line of Coca Cola includes Coca Cola Vanilla, Diet Coke Caffeine Free, Diet Coke, Caffeine Free Coca Cola, Coca Cola Cherry and many different flavors of lemon, coffee, or lime. The advertising campaign of Coca Cola is very extensive and effective and is a representation of United States culture. Coca Cola also participates in various films and television programs by sponsoring many teams and games (Coca-Cola, 2013). Coca Cola enterprises continuously integrate international expansion through its specially customized strategies. Whenever Coca Cola enterprises enter a new market or explore a new niche, they usually focus on volume of their business. The broad promotional strategies are the backbone of Coca Cola enterprises as they make use of print and visual advertisements extensively to help promote a better image of the company. Some promotional activities also assist the firm on distribution and development of the enterprise. Network of distribution is an extensive one supplying beverages all around the globe in different regions of the world. European countries focus on recycling activities for Coca Cola enterprises and also their packaging transactions (Coca-Cola, 2013). The traditional Coca Cola is a carbonated beverage which is a composition of added flavors and sugar with a pinch of carbonated water. Coca Cola is in fact very high in calories. It has a huge content of caffeine and is nutrient deficient. The amount of caffeine is half the amount present in coffee. The years 1970-77 were the booming years of carbonated beverages in United States as consumption of Coca Cola increased from twenty two to forty one gallons per person annually. Early to mid 90s was the time when children ranging from two to seventeen of age increased the amount they consume of carbonated beverages from seven ounces to ten ounces. This was the growing period of Coca Cola regime which is in maturity stage today (Morrison, 2006). Competitors Since the very beginning, Coca Cola has faced immense competition from PepsiCo. It is the main rival of Coca Cola enterprises in beverage industry and is a constant threat to Coca Cola enterprises. Furthermore, there are some local brands as well who pertain to be Coca Cola competitors for some time. Competition is always healthy for any company and market as in the end it’s the consumers who are at advantage. Despite that, Coca Cola owns a major chunk of market to itself but is not the monopoly who can exploit customers. Substitutability power is still a huge one with other competitors such as Kola Real, RC Cola, and Inca Cola (Louis, 1980). PEST Analysis Coca Cola resides in non-alcoholic soft drinks company arena and is monitored by Food and Drug management. Coca Cola Enterprises takes into consideration all the mandatory steps in an attempt to figure out that the new ingredients introduction will be capable of meeting the obligations and standards set by the FDA. The company also follows all the rules and regulations by FDA on account of the plastic bottled things. The different accounting policies and audits are also regularly followed by the company. As the command of many countries say, the company does follow the income tax policies. The import taxes and excise duty taxes are also paid by the company in different regions of the world (Coca-Cola Enterprises). When the company enters into a novel market, the company also takes into account the economic factors of that region or country. Any country having economic growth augments the buying power of its residents and thus the company gains opportunity to market its products. Coca Cola Company plays in sixty three different currencies other than the United States dollars. The disparity and fluctuation in foreign currency also affects revenue generation to a huge extent. Exchange rate fluctuation also poses threat to the company from time to time. Derivative financial instruction is used by Coca Cola enterprises to accommodate fluctuations in exchange rates and interest rates. The additional cost is posed by inflation as the final product price increases with time (Coca-Cola Enterprises). Coca Cola Enterprises is a consumer company. Therefore, social factors are immensely important for its success. Before marketing of any product in any region, Coca Cola has to make sure that the culture of the region is studied in detail where Coca Cola wishes to enter and exploit the niche in the market. Obesity is a social factor which has dwindle the purchasing power of people in different countries. The government officials of numerous countries are responsible for such social factors and place a keen eye on the operations of the company. Coca Cola zero calories diet coke is not only a hit among young obese adults, but also among various diabetic patients all around the world. It was a socially responsible act by the company to cater all kinds of consumers (Coca-Cola Enterprises). The success of any company depends largely on technology. Coca Cola Enterprises has not lagged behind in this regard anyhow. Technology has played an important role in its success all the time. Manufacturing and distribution both depend on technological advancements and innovation is also linked with making a product a perfect blend of one. Packaging process also makes use of these innovations. The bottling units operate in collaboration with the company to develop good relations with them. Technological advancements lead to new ways introduction so that product is available to all customers. Also, new vending machines were recently introduced by the company all around the globe (Coca-Cola Enterprises). SWOT Analysis The main strength of the company is that it is a worldwide accepted and reputed brand name. Due to this reputed name, there are millions of consumers inclined to only brand name of Coca Cola enterprises. Furthermore, the consumers from each corner of the globe love the taste of Coke. The company’s product line does not halt to Coke only. It offers sparkled drinks to just beverages in all shapes and sizes. This worldwide giant operates in two hundred countries globally and has the ability to capture various markets in many different continents of the world. Coca Cola has extensive marketing campaigns especially designed for the designated countries as it studies the socio-political and economical factors before entering a new market thoroughly. The huge distribution network adds to the advantage of the company as it helps deliver products on time and in different regions of the world. It helps to deliver products both in urban and rural areas on time. Therefore, little or no shortage of supply occurs even in summers when there is huge demand (Coca-Cola Enterprises). The biggest weakness of the company has its emphasis on offering new products continuously. These offerings are however an aftermath of arising global concerns. There are various experiments the company does which have led to both product developments and disruptions in former well known products of Coca Cola Enterprises. The disruptions have caused the company huge losses in 2004. But the company has many opportunities for the growth as well. Coca Cola can go for snacks as its rival Pepsi did and was successful. This diversification will definitely be a success for Coca cola and open new market for its growth and expansion. The growing snack industry will pave the way for growth of beverage industry for Coca Cola in the world especially in Africa and Asia. Thus the market will open up new horizons for Coca Cola to live in (Coca-Cola Enterprises). There are certain threats to the company as well. The largest threat is from its most competitive rival Pepsi Co. Both of these companies function in same market and their target consumers are also same. However, there is a huge fan following for Pepsi Co. which actually Coca Cola Enterprises lack. Thus social media is used by both the companies to create a good effect in the minds of consumers. This augments the sales and also helps improve the brand image of the company. Numerous local startups are also posing a threat to Coca Cola enterprises. The public health awareness programs also pose a threat to Coca Cola enterprises. To abide by FDA norms can be a difficult task at times. The demand from rural areas is also not a stable demand thereby increasing profits sometimes and decreasing them by a huge proportion the other. Also there is a threat posed by imports as company must always be ready to bear this threat without any problem or issue. Local retailers are a consistent threat to the company as well (Coca-Cola Enterprises). Porter’s Five Forces Model Porter’s five forces model is very significant in strategies planning for Coca Cola Enterprises as they figure out the current competition level in the market for any company. Market nature does not pertain to this model. The five factors of the Porter’s model include buyer’s power, entry of their entrants, the power of suppliers, and power of substitutes and also the competition in the industry. Coca Cola does enjoy a huge portion of the market as it also faces huge competition from many competitors such as Pepsi Co. as the biggest one. The brand is valued to deal with this competition (Pendergrast, M., 1993).  The buyers’ power is of immense important as the company operates in fast moving consumer goods section. This segment is mainly prioritized by product involvement and low priced products. Any company’s success is basically relied upon its distribution methods and if the buyer is not dealt with concern and care then the consumer will shift to another choice available in the market. The prices of fast moving consumer goods are also very low which also places a huge emphasis on buyer’s power. The suppliers’ power bore an important aspect too as huge consumer base is catered by the company as it deals with suppliers. That is the reason that suppliers don’t have much power and brand image borne the true responsibility (Pendergrast, M., 1993).  Substitutes’ power is also vital as local brands are increasingly taking over the market in many parts of the continent. That is why this substitutes’ power is immensely high for company. The substitute power is an optimistic aspect as it deals with advertising and distribution methods. Coca Cola has already figured out the ways to empower the minds of consumers with its products and therefore substitutes have a huge role to play in the market. The biggest competitor is Pepsi Co which offers same products as Coca Cola does and also has a much bigger diversified range of products. The local brands also offer products with more distribution methods and lower prices to pose a threat to Coca Cola- thus the competitor’s power (Friedman, 1993). Recommendations The recommendation for Coca Cola enterprises is to explore and integrate new markets and new niches. It should follow the footsteps of its rival Pepsi Co in extending the market to snacks and fruit juices industry. It can work on diversification to cater different consumers in various markets all around the globe. This will definitely increase its consumer base all around the globe. This increment in various different businesses will allow Coca Cola enterprises to develop an edge in market and it can then exploit new markets. The company can empower research and development and work on its technological advancements to recognize market’s potential in market with long range outlook in mind. The company also needs to participate in various social responsible projects to increase its consumer base because there is a growing concern among consumers towards companies who are working on corporate social responsible projects. Suppliers and investors both will value this social collaboration with different environmental friendly organizations and end result will be an increase in profits (Coca-Cola, 2013). Also, as Coca Cola is in the maturity stage of its product’s life cycle. That is why it needs to penetrate into new markets. Coca Cola first needs to establish its brand name in the respective markets it wishes to penetrate in. With it, Coca Cola needs to work with uniform quality in every corner of the globe. It should be able to counter all the costs incurred in this penetration process. Able to take I mean that it should want to and take in all the costs. The cost of selling might be high in remote areas but Coca Cola should make sure to provide quality products in all regions of the world and eschew the practices of fake products in developing nations. The trademark or symbol of Coca Cola must always differentiate its products from fake products. This can also be accomplished by brand recognition, which is not possible without promotion (Johnson, G., & Scholes, K., 1993) Furthermore, Coca Cola should continue on sponsoring local, national, regional, and international events because it is the best form of advertisement which enhances Coca Cola’s name all around the globe. Likewise, sponsorship of the sports team is also an efficient form of advertising. Product endorsement by famous athletes is also a great way to strengthen the link between consumer and product to earn revenues. Coca Cola should also look for competition and stop producing products that are not as profitable and concentrate on profitable products. Promotion is the arena where Coca Cola should focus its attention on mostly (Johnson, G., & Scholes, K., 1993) Conclusion To conclude, it can be said that company is focusing on the right track right now for further success and development. In spite of a huge consumer base, the company consistently participates in innovation and technology which also makes the way for growth of this company. Diversification of products will envisage new opportunities and boundaries for the company to prosper and look upon to. There is a lucid knowledge on account of the company as to its strengths, weaknesses, opportunities and threats. Therefore, it should cash its strengths, work on its opportunities, avoid weaknesses, and kill down threats. Company should focus on expansion plans and become socially responsible with time. The competition is always healthy and that is how the company should consider it and expand vigorously into African and Asian markets. The zero calorie products are an advantage to the company which it should cash to get new customers. The present and future marketing opportunities should collaborate together to make the company a success in future. Thus an audit of company should follow each year with different financial and marketing analysis to make sure it is operating on the right path and amendments must be made likewise. Coca Cola has been a huge success since a very long time and thus having a big name has its consequences (Altemeier, 2006). Bibliography Altemeier, I., Hornung, R., & Video Education Australasia. (2006). Always Coca Cola. Bendigo, Vic.: Video Education Australasia [distributor. Coca-Cola Enterprises, Inc. SWOT Analysis. (n.d.). (Business Source Complete.) London: Datamonitor Plc. Coca-Cola, . (2013). Coca cola. S.l.: Spruce Books. Friedman, K. (1993). Elvis, Jesus & coca cola. New York: Simon & Schuster. Johnson, G., & Scholes, K. (1993). Exploring corporate strategy: Text and cases. New York: Prentice Hall. Louis, J. C., & Yazijian, H. (1980). The cola wars. New York: Everest House. Morrison, J. (2006). Theglobal business environment: Meeting the challenges. Retrieved from http://www.palgrave.com/business/morrisongbe3/students/casestudies/3 A bright future for Coca Cola.pdf Pendergrast, M. (1993). For God, country, and Coca-Cola: The unauthorized history of the great American soft drink and the company that makes it. New York: Scribners. Read More