Coca Cola Marketing Strategy - Case Study Example

Coca Cola Company Executive Summary Coca Cola Company is the world’s leading beverage producer. This task labors to explore the marketing strategy of the Coca Cola Company. It provides a comprehensive description of the company. It offers a brief history of the company and dissects the management structure of the company with inclination to marketing strategies. Dissection of the Coca Cola Company management and organization reveals the in-depth matrix used in its running. It has two operating groups; Cooperate and Bottling Investment. There are operating groups divided into regions; Africa, European Union, North America, Pacific, Latin America and Eurasia. Further divisions are done into smaller regions. Decisions on local level can be done to react to changing market demands as the top management focuses on the long-term plans of the company. Some divisions of the company are positioned in the central cooperate division. The task further looks at the competitors of Coca Cola and draws a strategic map. The task looks at strategic map of the company. It looks at the company’s strategy to diversify its customer services in a strategy map. Among the strategies that the company uses and intends to continue using, there are online strategies, market sizing, event planning, customer segmentation, outlet prioritization, shopper communication, merchandising, pricing, promotions, signage and display, customer relationship and acquisition and equipment placement. It goes further to conduct a survey to determine the level of customer satisfaction with products of Coca Cola Company. From the survey and review of literature on the strengths and weaknesses of Coca Cola Company, it can be conclude that the company has superior marketing, sales, promotional and supply strategies that give it a chance to dominate the market of soft drinks for a long time to come. About Coca Cola Company Coca Cola Company has been in existence since 1889 and deals with extremely wide range of products. It currently operates in over 200 countries and offers over 400 brands to serve 1.6 billion people every day. Due to its size and territory of operation, the company has very effective organizational structure to keep its customers satisfied. It operates on a franchised system that it developed in 1889. The company produces syrup concentrate and sells the syrup to various bottler companies that hold exclusive territories. The company’s gallon sales, according to 2007 reports showed that the company makes 37% of its sales in the United States of America, 43% in India, Japan, Mexico and People’s Republic of China and the other 20% from the rest of the world (Sengupta, 2006). In 2010, Coca Cola Company was named as the first brand to surpass 1 billion pounds in the annual UK grocery sales. Organizational Structure of Coca Cola Company These successes are attributed to the effective organizational structure of the company. Coca Cola Company employs matrix organizational structure. The company uses a ma management technique with dual reporting relationships. Matrix management combines both functional organizational management and product organizational management. The company is simultaneously organized into functional lines and product or project lines so as to get advantage of both department organizations. Managers of products and managers of functional groups exhibit the same powers and authority within the company. Several people report to at least a manager. The company uses this method of management structure in order to enhance communication and coherence of purpose among managers. For the success of management using matrix management structure, managers have to discuss and agree on operational and strategic issues. The structure also allows for flexible use of the company’s working force. In addition, the company has enhanced chances of quick response to changing and unstable business environments (Griffin, 2007). Dissection of the Coca Cola Company management and organization reveals the in-depth matrix used in its running. It has two operating groups; Cooperate and Bottling Investment. There are operating groups divided into regions; Africa, European Union, North America, Pacific, Latin America and Eurasia. Further divisions are done into smaller regions. Decisions on local level can be done to react to changing market demands as the top management focuses on the long-term plans of the company. Some divisions of the company are positioned in the central cooperate division. Even though some of these functions exist in the regional divisions, most of the company’s decisions take effect at the top management of the company. Decisions such as to sponsor the 2010 World Cup took place at the central corporate. In addition to this localized yet controlled management, the company uses complex integrated mechanisms to keep its employees informed and performing. The CEO and Chairmen of the company use teams of top managers to implement solutions to the most pressing issues of the company. Regular face-to-face meetings t the lowest operational levels with employees and use of the internet to stay informed has become the order of the day. Such visitations and information dissemination take place within the company’s divisions; human resources, finance department, marketing, innovation, strategy and planning divisions (Hill & Jones, 2010). Integration of information implemented recently has created flexibility and given the company some predictability. The top management of the company understands that communication is the key to survival of any institution. Without proper communication, the company would fail irrespective of how complex its organizational structure (Hill & Jones, 2010). The company structure I a hybrid of organic and mechanistic models. Focus point of the company is its responsiveness. Its complex integrating mechanism is characteristic of organic structure. The company uses surveys and interviews, allowing information to flow from the bottom to the top management. Internet, on the other hand, allows for lateral exchange of information. Surveys conducted by the company have allowed it to pursue standardization and simplification, which are characteristics of mechanistic structure. Thus functional and product divisions can work together under matrix organization of the company. Matrix structure offers better management results than traditional and divisional management structures. The traditional structures are characterized by definite authority lines for all stages of management. Examples of these traditional structures include the line structure, functional structure and the line and staff structure (Gaspar, 2006). Line structure has specific line of command, and information runs from the top management down. It is effective for small offices such as law firms. Line and staff structure combines the line structure and incorporates departments and staff for specialization. Functional structure classifies people according to their professions and the functions they perform in the organization. Divisional structure, on the other hand, is based on the various divisions in an organization. The structure is further divided into product structure, market structure and Geographic Structure. Product based categorizes employees based on the line of product produced (Hill & Jones, 2010). Market structure divides in accordance with the market served while geographic structure bases its classification upon the zone or region where a branch is situated. Hybrid structure adopted by Coca Cola is a cocktail of divisional and traditional structures, and provides effective way to manage the large corporation. As mentioned earlier, the Coca Cola Company has marketing, finance, human resource, strategy and planning divisions in the highest organ of management. However, these divisions exist in the regional offices with restricted operations. The finance department in the regional offices monitor financial flows of the company in his area of jurisdiction, but does not have the authority to make major investment decisions. He may only authorize the withdrawal and use of petty cash for urgent regional needs. Human resource manager at the regional divisions carry out personnel supervision and hiring at his region of duty (Sengupta, 2006). He may only recommend the promotion of another manager of the region but cannot solely affect the promotion without authority from the head office. Similarly, managers of the remaining units at the regional level do not affect major changes to the company without authentication from the top hierarchy. Inclusion of both divisional and traditional organization structures by Coca Cola Company has yielded several advantages despite the challenges associated with the hybrid system. Other companies have experienced difficult moments dealing with the confusion hybrid system causes around accountability and authority. The company has managed power struggles and bewilderment of reporting to two bosses reasonably well. The company has gone around incoherence of decisions made at the top failing to fulfill the needs of some regions (tribulations of Matrix Organizational Model) with utmost success (Sengupta, 2006). Products, services and marketing channels suit the regions of jurisdiction as the top management still keeps an eye on regional operations. Hybrid system, thus, best suits the operations of Coca Cola Company. The company needs its divisions as well as specialization on the different brands it manufactures. Strategic Map of the Company Fig: Strategic Map of Coca Cola Company concerning customer satisfaction The company has a strategy to diversify its customer services as shown in the figure above. Among the strategies that the company uses and intends to continue using, there are online strategies, market sizing, event planning, customer segmentation, outlet prioritization, shopper communication, merchandising, pricing, promotions, signage and display, customer relationship and acquisition and equipment placement. In addition, Coca Cola Company uses other strategies including stocking policies, brand strategies, new product launches, digital channel enablement, territory planning, route to market and local activation (Hill, 2012). Competitors of the Company The main competitor of Coca Cola Company is PepsiCo, the manufacturer of Pepsi. PepsiCo is usually the number two competitor of Coca Cola Company and has often outdone the company in a few markets. In addition, there is RC Cola, a soft drink owned by Dr Pepper Snapple Group. Dr Pepper Snapple Group is the third largest manufacturer of soft drinks, and its products are widely available to provide competition to Coca Cola Products. In Central and South America, Kola Real is the main competitor of Coca Cola Products. The same product is known as Big Cola in Mexico. A domestic drink known as Tropicola is served in Cuba instead of Coca Cola products due to US embargo. The following graph gives the level of competition that Coca Cola Company has received from other beverage manufacturers. Fig: Competition between Coca Cola and close Competitors Questionnaire Name (OPTIONAL): __________________________________ Age: ____ Sex: _____ Tick against the option that best describes your opinion 1) How often do you use Coca Cola Products? A) Never B) At Least Once a Year C) At least Once a Month D) At Least Once a Week E) At Least Once a Day F) More than Once a Day 2) Which Coca Cola Product do you consume most frequently? A) Coca Cola B) Fanta C) Sprite D) Minute Maid E) Bacardi F) Beverly G) Other Brands 3) Why do you Prefer Coca Cola Brands to other soft drinks? A) Affordable Price B) Great Taste C) Fashionable and Prestigious D) Readily Available E) No health risks and Healthy F) Other (Comment) 4) What is your take on Coca Cola products’ pricing? A) Extremely high B) Too high C) Affordable D) Low E) Too Cheap 5) Which other brands of beverage do you consume other than Coca Cola beverages? List them in order of frequency of consumption A) ____________________________ B) ____________________________ C) ____________________________ D) ____________________________ E) ____________________________ 6) How often do you fail to get your most preferred brand in your favorite outlet or joint? A) Never B) At least Once a Year C) At least Once a Month D) At Least Once a Week E) At Least Once a Day F) More than Once a Day Analysis of Survey The above questionnaire was distributed to consumers of Coca Cola products in my locality. The results of the survey revealed a fascinating fact about the level of consumer satisfaction of the products. Whereas the people who responded negatively on the products of Coca Cola had strong objection on its products, its loyal consumers expressed astounding brand loyalty. Of the 339 people served with the questionnaire, 320 filled the forms and returned their responses. The target group was not defined on age, gender or race. All those who responded were picked arbitrarily from the public and there was, therefore no record of race. However, there was a provision in the form to keep track of ages and sex of the correspondents. Of the 220 collected and analyzed forms, 1 person responded that he never consumes Coca Cola Products. The reason cited was health reasons. In the part provided for further comment, the respondent stated that Coca Cola Products are preserved with chemicals, and he preferred fresh fruit drinks to the preserved. The same reason was cited by 3 other respondents who claimed to use Coca Cola Products once a year. They commented that the occasions had to be very special and consumed the products under influence of other people to fit. A majority of respondents indicated that they favored Coca Cola products to other beverage brands. Reasons for having the brand as their favorite drinks varied, but a majority attested to the fact that Coca Cola products were prestigious. There were no complaints over prices of the company’s products. In the same light, there were no records of people who confirmed that their choice not to use the company’s products was high prices. A significant number of consumers registered complaints that they have often failed to get their preferred brands in their favorite outlets. Most consumers claimed that their Coca Cola Brand was Coca Cola. The problem found to be arising from the market survey is partly a side effect of the company’s chief strength. However, some people choose not to consume Coca Cola products for the mere reason of rebelling from the world’s idea that Coca Cola is something of great power. The following tables represent the results of the survey: Tabulated Data Frequency Percent Valid Percent Cumulative Percent Brand ambassador 88 8.0 8.0 53.0 Brand name 160 20.0 20.0 20.0 Easy availability 66 16.0 16.0 79.0 packaging 158 10.0 10.0 63.0 Taste 204 25.0 25.0 45.0 Price 124 20.0 20.0 99.0 Any other 8 1.0 1.0 100.0 Total 800 100.0 100.0 Table: Reason why people buy Coca Cola Products Frequency Percent Valid Percent Cumulative Percent Valid COKE 151 18.8 18.8 18.8 PEPSI 56 17.75 17.75 36.55 7 UP 46 12 12 48.55 SPRITE 29 11.12 11.12 59.67 FANTA 19 8.6 8.6 68.27 MAZZA 07 8.3 8.3 76.57 Total 308 100.0 100.0 Table: The brands of beverage people buy most Strengths and Weaknesses of Coca Cola Company The company has been in existence for over 125 years and is extremely recognizable. Popularity of the company is one of its superior strengths and is virtually incomparable to other competitors. The company is well known worldwide and its branding is obvious. Things like promos and logos shown on t-shirts, collectible memorabilia and hats give the company a competitive advantage over its competitors. No other beverage company compares to the corporation’s social popularity status. Some consumers of the company’s brands buy and cherish the company’s products not because they like the products’ tastes, but because the products are unifying and become part of something big. However, some people choose not to consume Coca Cola products for the mere reason of rebelling from the world’s idea that Coca Cola is something of great power. Other than the overwhelming popularity of the company, Coca Cola Corporation has financial advantage over its competitors. The corporation deals with a huge amount of money yearly. The company has had its financial bad times, but has emerged successful. The corporation’s concentrate is a cash flow. In the year 1997, Coca Cola generated a sum of $4 billion in operating cash flow. It invests this in three ways: paying dividends to share owners, repurchases their shares and invests in concentrate and bottling plants. The money the company earns is substantially better than most other beverage companies. In addition, the company enjoys superior customer loyalty. 80% of the company’s income comes from 20% of its loyal customers (Gaspar, 2006). Many people and families are extremely loyal to Coca Cola Corporation. Some people religiously drink Coca Cola drinks like they drink milk or water. So far, the company has an excellent marketing team. Coca Cola has one of the best promotion and advertisement strategies in the world. It has optimum numbers and some of the best selections of sales representatives. Being an international corporation that has branches in almost all corners of the world, the company spends millions of dollars in sales and promotions. It is worth the efforts and the spending since Coca Cola enhances its brand image and customer loyalty through events such as FIFA World Cup. Up to the moment, Coca Cola Company has done a recommendable job in creating a superb public image. No other company in the world has managed to sponsor so many events and gain popularity of the company’s caliber. There is no need to change the sales and marketing strategies. On the other hand, competitors such as Pepsi should emulate Coca Cola’s marketing and sales structure. In the management structure of Coca Cola Company covered earlier, it is evident that the company has a superior and well-organized supply system. The use of the bottler companies in all parts of the world to manufacture customized products is one of the most thoughtful distribution methods of the Coke Formula. It is a genius supply chain that there would be no better way of distributing the beverage. If the company continues with its management structure and strategies, it is set to continue dominating the beverage market for the next several years. There is bound to be little change in its status as the market leader in the next five to 10 years. The changing environment may just shape the competition of other beverage companies below Coca Cola Corporation. References Griffin, R. W. (2007). Fundamentals of management: Core concepts and applications. Boston, Mass: Houghton Mifflin. Gaspar, J. E. (2006). Introduction to business. Boston: Houghton Mifflin Company. Hill, C. W. L., & Jones, G. R. (2012). Strategic Management. Cengage Learning. Hill, C. W. L., & Jones, G. R. (2010). Strategic management theory: An integrated approach. Boston, MA: Houghton Mifflin. Sengupta, N. (2006). Managing change in organizations. S.l.: Prentice-Hall Of India. Read More