Coca-Cola Marketing Strategies - Essay Example

Coca Cola Table of Contents Introduction 3 Overview of Company 3 PESTLE Analysis 5 Political 5 Economic 5 Socio-cultural 5 Technological 6 Environmental 6 Legal 7 SWOT Analysis 7 Strength 7 Weakness 8 Opportunities 8 Threats 9 Customer Targeting 10 Existing Market Strategies of Coca Cola 11 Strategic Position over Next Five Years 12 Recommendations 13 Conclusion 14 References 16 Introduction In the current competitive environment, the growing phenomenon of globalisation and its effect on the business organisations has significantly led various organisations to undertake their business operations beyond their domestic territories with minimal amount of barriers. Correspondingly, the increase in the international business in order to maintain the competitive advantage in market, organisations have started thinking globally. In this context, organisations have to undertake different strategic actions that assisted them to transfer goods and services, investment, logistics, technology or transportation among others in the international context (Vaghefi & et. al., 1991). In this regard, the aim of the essay is to analyse the strategic business model of Coca cola Company. Additionally, an assessment is conducted by the Chief Marketing Officer (CMO) with the aim of having a better understanding of the important factors that company undertake while formulating the key strategies in the international market. In this respect, an in-depth internal and external analysis combined with the assessment of Coca cola current strategies as well as industry analysis will be conducted. Additionally, based on the assessment, appropriate recommended strategies will be provided to the company in order to enhance its competitive advantage in the international market. Overview of Company Coca Cola, founded in the year 1886 by Dr. John Stith Pemberton in Georgi. During the year 1889, the brand was owned by Asa Candler. Coca Cola is a US based soft drink brand, which has been operating large chain of products lines in the international market. Additionally, the important aim of the brand is to maintain higher level of sustainability and held their competitive advantage through prioritising the changing demands of the customers. The company products are been sold in international market to the licensed bottlers with the assistance of large chain of distribution channel and stores. Since the inspection of the company, it is holding its leading position in the beverage industry by providing superior soft drink in around 200 different countries in the world. In terms of the financial aspect of the company, Coca Cola generates its 75% of the revenue through their branded soft drinks section. On the other hand, the rest 25% revenue has been earned through the other soft drinks including Fanta, Sprite, Mello Yello, Fresca, Surge and Barqs Root Beer among others. Moreover, the company undertakes its business operation in different locations including North America, Africa, Latin America and Europe (Cooper, 2014). Besides, in order to have the competitive advantages, the company constantly embarks on incorporating various strategic policies and measures in a regular interval to ensure sustainability (Puravankara, 2007). During product development, Coca cola focuses towards customers’ changing needs and demand for high level of profitability and operations. Likewise, the company has also considered monitoring the healthcare related aspects for high acceptability in order to establish a better future (3The Coca-Cola Company, 2014). Moreover, to ensure its consistency and leading position, the company upheld quality as a prime factor in its offerings. The concept of having the share values of the company integrating the concept of leadership, accountability, integrity, collaboration, passion, and quality and continuous planning towards expansion of its global operations by ensuring the changing demand of customers in the international markets (2The Coca-Cola Company, 2010). During the year 2013, the company markets total revenue of around US$ 46 billion with market capitalisation of around US$168.7 billion and marked as 4th most valuable brand in the international market (Forbes, 2014). PESTLE Analysis Political The political analysis in alignment with this company will specifically comprise evaluation of the regulatory and quality administrative measures as established by the government with the prime intention of maintaining a balance within its functional aspects. This portion of the analysis also encompasses understanding of potential trade barriers that the government within specific geographic locations may impose on international brands such as Coca Cola with the intention of safeguarding and developing its domestic business sector (Coca-Cola HBC AG, 2014). Economic Unlike political analysis, the economic analysis encompasses the evaluation of an economy related to aspects such as GDP, per capita income, raw material pricing and FDI among others that in a direct or indirect manner encapsulates the potency of laying tremendous impact on the functionality rate of global beverage manufacturers such as Coca Cola. For instance, higher amount of economic inflation rate and lower subsidy support from the government may hamper the overall sales and thus, the profitability of the entire brand. Likewise, lower percentage of GDP growth rates may also pose minimal growth and establishment opportunities of this brand within a specific geographic location (Coca-Cola HBC AG, 2014). Socio-cultural The socio cultural analysis encompasses multiple forms of demographic aspects that in a direct or indirect manner hamper the overall performance of global beverage manufacturers such as Coca Cola. For instance, the business sector along with its products may attain high level of preference within the lower and middle age groups. However, the upper age groups may oppose such producers due to its high calorific values and other health related issues. Specific other aspects such as governmental restrictions over social media advertisement that forms a base promotional technique of this industrial sector are also considered within the socio cultural analysis (Coca-Cola HBC AG, 2014). Technological Technology development is accounted as the core functional base of global beverage manufacturers such as Coca Cola. Justification regarding such necessities can be provided based on the fact that without the presence of appropriate technological functions, the production rate of global beverage manufacturers such as Coca Cola will drop down by drastic levels and in an indirect manner will hamper its productivity to an intensive level. The sales and advertisement aspects also forms a crucial prospect under the technological analysis section (Coca-Cola HBC AG, 2014). Environmental Large-scale beverage manufacturing organizations such as Coca Cola will also have to take consideration of the environmental regulatory measures as established by government with the prime intention of safeguarding its functional interests in the long run. Specific areas of consideration include the waste management techniques undertaken by Coca Cola. The analysis also encompasses active involvement of the brand within multiple other CSR related activities that are specifically meant to project its concern towards the environmental wellbeing (Coca-Cola HBC AG, 2014). Legal In alignment with the functional aspects of large-scale beverage manufacturing brands such as Coca Cola, the legal analysis specifically encompasses business regulatory parameters that are established by the government in order to keep multiple brands such as Coca Cola under their control. It also encloses the structured taxation policies that are imposed on brands such as Coca Cola for revenue attainment (Coca-Cola HBC AG, 2014). SWOT Analysis Strength The major strength of Coca Cola is having the higher level of recognition and its various family brand products in the international market. Additionally, well-known recognition across the world has widely assisted the company to have high level of sales and profitability. Besides, the logo of the company and high level of acceptability within customers in terms of quality and price are the key strengths of the company. Overwhelming constant increase in market share and profitability since incorporation has assisted in performing operations with better competitiveness. Moreover, by recognising the changing trend and preferences of the customer, Coca Cola has made adequate investment year on year using high amount of market capitalisation. Likewise, silent feature of the strength of the company is its internal business environment, which comprises efficient management and communication between the different stakeholders. Similarly, the management of the company is highly aware regarding the changing business environment for implementing the various strategies to optimise the opportunities and minimise the treats (Euro Monitor, 2013; McKelvey, 2006). Weakness Coca Cola is among the world fourth most valuable brand in the international market and successfully undertaking its business operation in the international environment with minimal weaknesses. The key weakness of the company is lacunas of awareness and popularity of various Coca Cola’s soft drinks products. Additionally, Coke and Sprite are among the key renowned selling drinks of company in global market along with 500 different drinks. Thus, decrease and non-acceptability due to lower amount of popularity were the significant reason regarded as the weakness for the company. Moreover, another key weakness of the company is publicized health issues in many nations, which have an influence on the sales of the products. In this regard, frequent changes in the senior management board structure also were the major threat for the company (Euro Monitor, 2013; McKelvey, 2006). Opportunities Correspondingly, with having high amount of recognition and acceptability amid customers, Coca Cola is having the significant opportunity to promote its lower selling soft drinks through mass advertisement. Additionally, larger market share provides the opportunity to diversify its products in different segments and expand its business in various untapped regions. Likewise, through utilising high skilled workforce teams, the company is able to change its packaging styles and designs, which probably increases and provides opportunity to expand its market. Moreover, with the strategic alliance, the company is having the opportunity to concentrate on less popular products rather than sticking or focusing on its core products. Nevertheless, having amount of market capitalisation, the company is facilitated with the opportunity of entering different market for renowned and quality products (Euro Monitor, 2013; McKelvey, 2006). Threats Despite of being a leader in international business and high market share, the company is having many threats. The increase in the globalisation activities and establishment of new companies with minimum barrier in undertaking operation in the international market will possess significant threat to Coca cola of having reduction in the selling and profitability. Moreover, advancement in the technology that reduces dependability is regarded to be a major threat, as competitors can utilise technological advancement to earn competitive advantage. Besides, in the current market context, threat of having new competitors in the soft drink section will be the major threat for Coca-Cola. Apart from this, other section of beverage sector including fruit juices, chocolate, milk products, growing use of tea and coffee is considered as the key threat for Coca cola. Likewise, continuous turnover of key personals and changing taste and preferences of the customers especially within youngsters is also identified as a major threat for the company (Euro Monitor, 2013; McKelvey, 2006). Based on the assessment of the key strengths, weakness, opportunity and threats, the possible factors that significantly with having the high priority of occurrence are as follows: D Customer Targeting Coca Cola has been specifically involved within the areas of manufacturing calorific carbonated drinks. As a matter of fact, it aims towards targeting all the three segments of customers through high level of diversification within its product base (Vrontis & Sharp, 2003). For instance, products such as ‘diet coke’ and ‘coke zero’ are specifically meant for attracting higher age customers who project higher levels of consent towards health related issues and calorie intake. However, the brand through its normal coke products specifically aims towards targeting the lower and middle age customers who prefer consumption of soft drinks as a sign of social status (Business Case Studies LLP, 2014). In general terms, it can be stated that brands such as Coca Cola specifically targets the life style of the customers, based upon which it brings in suitable modifications within its product base. Collaborating with other food retailers such as KFC and McDonald’s also forms an appropriate strategy of this brand in context to attracting customers from all three segments. Apart from all these, the brand also aims towards modifying its products based on the ethnic aspects associated with its target population, which in turn forms a credential aspect of attracting customers from all three segments namely niche, middle and lower (Business Case Studies LLP, 2014). Existing Market Strategies of Coca Cola The brand over the past few decades has projected intensive level of business strategy implementation that eventually supported its goal of becoming one of the marketing leaders within the beverage-manufacturing sector (LinkedIn Corporation, 2014). For instance, Coca Cola over multiple decades have relied on its unique brand and product endorsement strategies for retaining its market share against other major competitors such as PepsiCo. Moreover, implementation of multi segment customer targeting strategy has been a beneficiary aspect for this brand in context to moving forward in the path of being a market leader. Coca Cola has also succeeded in building up a strong brand portfolio through its continued effort of acquiring multiple other sub brands that projected appreciable growth capabilities (Vrontis & Sharp, 2003). Improvisation within its managerial framework and situational adaptability has also proved out to be a form of credential strategy implementation of Coca Cola that has eventually supported it in building up a strong customer base within multiple geographical locations (LinkedIn Corporation, 2014). Attainment of flexibility within its corporate culture, sales and product distribution channels has also been a major strategic implementation of Coca Cola with the prime intention of attaining higher percentage of market share. Apart from all these, the brand has also projected appreciable amount of involvement within the CSR and other social development campaigns that have eventually benefitted Coke’s societal reputation and made it a popular icon within all three segments of customers. Implementation of appropriate product positioning and pricing strategies has also been an effective strategic implementation of Coke that has supported its business interests within the competitive global market (Coca-Cola FEMSA, 2014). Strategic Position over Next Five Years On the basis of analysis of the strategic position of Coca Cola, it can be ascertained that in order the sustain a better position in the international environment, the company needs to adopt various strategic action and measure to mitigate the identified weaknesses and threats through utilising its strength and opportunities in the next five years. Thus, in this regard, the company needs to implement key marketing strategy to raise its brand image in the sector of lower profitability and less popular products. It is important for the company to address identified weaknesses and threat by segmenting and removing unproductive products from its product lines. Moreover, based on the understanding of the changing needs and demands of the customer, Coca Cola needs to design its products and adopt effective distribution and marketing strategies to build an effective image and recognition of less popular products. Correspondingly, the theory of comparative advantage will be beneficial for Coca Cola in distributing the products in the international market. Furthermore, based on the approach of the theory, the company can take key decisions regarding product acquisition from market and the type of goods demanded by different segments (Gandolfo, 1998). Additionally, to form a highly valued brand position and brand image, the needs of the key stakeholders of the company are to be offered with utmost importance (Manhas, 2010). Nevertheless, based on the analysis of the position of Coca Cola, the company needs to apply various innovative ideas relating to effective marketing strategies by providing wider range of products and pricing mix, which will be helpful for future growth and sustainability. Furthermore, continued development in the specifications and qualities of the product through in-depth observation of the current needs, tastes and demands along with aspects of healthcare of the customers, the company can ensure better position in the next five years (Kotler & Keller, 2011). Similarly, based on the assessment of SWOT, PESTLE analysis and different marketing mix strategies that include pricing, product, promotional and positioning strategy, the following measures will be beneficial for the company for increasing its revenue, operational profits, market share and image over the next five years: Coca Cola may expand its product line with wider promotional investments Diversify in new segment and location by using previous funds Divestment or reengineering in the low profit products Retain key personal of the business Utilise Research and Development (R&D) to emphasis the changing trend of the business and customers Improve innovativeness in products for maximum competitive performance (Kotler & Keller, 2011) Recommendations By taking consideration of the current growth rate of this brand, multiple recommendations can be made with the prime intention of intensifying its growth dimensions to greater extents. In this regard, the increasing competitiveness within the beverage industry endeavours towards the necessity of implementing sustainability concepts within the functional structure of global beverage manufacturers such as Coca Cola (Coca-Cola FEMSA, 2014). Thus, rather than just focussing on the expansion of its product base, Coke should also lay considerable amount of emphasis intensifying its public relation procedures. Through such initiative, the brand will succeed in attaining higher percentage of social reputation within the specific geographic location of its functionality (Ki & et. al., 2011). Based on the analysis of SWOT and PESTLE, certain recommendations are offered by the CMO with the aim of formulating appropriate strategic decisions for the enhancement of business operations of the company in order to face the brunt of the future market competiveness. Additional recommendations regarding the diversification of the sub-brand base can also be provided with the motive of increasing the market share of the overall beverage sector (Ki & et. al., 2011). The brand must also lay considerable amount of focus upon minimizing its product diversification rate that poses a potential risk of product cannibalization. In addition, establishment of business merger with multiple FMCG brands would also turn out to be a beneficial proposal for Coke through which it can attain considerable percentage of hike within its product sales rate. Specific recommendation related to minimization of operational cost can also be provided through which the available financial retaining capabilities of Coke will eventually increase. This initiative will also minimize the fixed and current asset liquefaction risk in case Coke is subjected to high percentage of financial losses (Ki & et. al., 2011). Conclusion The above discussion has been highly beneficial in context to understanding the external business environment that surrounds Coca Cola. Throughout the discussion, multiple facts have been mentioned that elaborates about the types of functional and managerial strategies implemented by this global beverage manufacturer with the prime intention of fortifying its market existence. From these provided facts, a clear understanding can be attained regarding the fact based on which the company has integrated itself within the lifestyle of customers, irrespective of their demographic orientation. The discussion also encompasses credential facts related to the possible growth opportunities that Coke may have an access through continued development within its functional structure. In this context, multiple facts have projected on the ways in which Coca Cola takes consideration of the societal and ethnic factors within its product development procedures. Considering all these aspects, it is worth mentioning that Coke has undertaken appreciable amount of efforts for transforming and positioning the company as a market leader. References Business Case Studies LLP, 2014. Creating an Effective Organisational Structure. A Global and Local Strategy. [Online] Available from: http://businesscasestudies.co.uk/coca-cola-great-britain/creating-an-effective-organisational-structure/a-global-and-local-strategy.html#axzz3NB2cPNCv [Accessed December 28, 2014]. Coca-Cola FEMSA, 2014. Strategy. Company » Strategy and Competitive Advantages. [Online] Available from: http://www.coca-colafemsa.com/femsa/web/conteudo_en.asp?idioma=1&conta=44&tipo=27617 [Accessed December 28, 2014]. Cooper, T., 2014. Coca-Cola Doubles Down on Soda. Investing Commentary. [Online] Available at: http://www.fool.com/investing/general/2014/04/23/coca-cola-doubles-down-on-soda.aspx [Accessed December 28, 2014]. Coca-Cola HBC AG, 2014. Play to Win Strategic Framework. Home. 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Vrontis, D. & Sharp, L., 2003. The Strategic Positioning of Coca-Cola in their Global Marketing Operation. The Marketing Review, pp. 289-309. Read More