Market Audit for Coca-Cola Company - Report Example

MARKET AUDIT FOR COCA-COLA COMPANY Brief overview of the company Coca-Cola Company is a beverage company that manufactures retails and markets non-alcoholic beverages and syrups. It was founded in Atlanta around 1886. The company steadily grew to a multinational institution from a local business. The Coca-Cola Company produces syrup concentrate which is afterwards sold to various bottlers across the world. It owns its anchor bottler in North America, Coca-Cola Refreshments. Mr. Muhtar Kent is the current chairman of the company. In 2006, waters, juices and other health and functional beverages represented a third of theirs to cater for changing customer needs. The company has 400brands in estimated 200 nations besides its name (Anders, 2013). The first attempted drink was the diet drink known as Tab, whose sales have decreased since the prologue of Diet Coke. It also manufactures soft drinks such as Fanta and Sprite a drink that was produced by Max Keith during the 2nd world war. Due to the increased demand of their products, Coca-Cola Company introduced some brands like minute maid juices, PowerAde sports beverage and flavored tea Nestea which was joint partnership with Fruitopia fruit drink, Nestle and Dasani waters (Anders, 2013).  Current environment and operations The report focuses on SWOT, PEST, Customer, Competitor and Stakeholder analysis for a clear analysis of the company therefore creating a set of marketing objectives of the company. 1. Pest analysis of Coca-Cola 1a. Political aspects Coke is categorized under FDA, food category as non-alcoholic drink. The Government plays its role by regulating the operations in manufacturing in the company. It sets fines on the companies that do not meet there standard of laws. Some of the factors that would make company’s results to differ materially from the expected results include; Changes in laws and regulations which also includes changes in taxation requirements (tax rate changes, new and revised tax law interpretations) accounting standards and environmental laws in foreign and domestic authority (Lamp, Hair & McDaniels, 2012). Political condition is another factor that can greatly affect the company’s performance. Changes of government, civil wars and unrest, and restrictions on the capability to transfer resources across the border are examples of political conditions (Lamp, Hair & McDaniels, 2012). 1b. Economic aspects After a cross survey by the Standard and Poor’s Industry surveys, the beverage has higher sales in countries outside the U.S. for example Japan, Brazil and Germany have posted a major economic improvement in the soft drinks market (Lamp, Hair & McDaniels, 2012). Therefore these markets will play a major role in the success and higher growth for majority of the soft drink industry. 1c. Social aspects Many U.S citizens are working on a good and balanced healthy lifestyle. Many of them are switching from beer and alcoholic drinks to bottled water and diet colas affecting the non-alcoholic beverage industry (Lamp, Hair & McDaniels, 2012). Consumers aged between 37 and 55 are greatly concerned with their diet and nutrition. They have posted a larger population and since they have become old they are more concerned with increasing their prolonged existence. This will continue affecting the non-alcoholic beverage industry by increasing the demand of healthier drinks. 1d. Technical aspects Advertisements, marketing and promotions are very critical factors in the effective performance of the company. New technology such as television and the internet use special effects to create an attractive nature of a product (Lamp, Hair & McDaniels, 2012). This helps greatly in selling of the products. Introduction of plastic bottles and cans have increased sales tremendously for Coca-Cola as this gives the consumer an easier way to carry and dispose them once they are used. 2. SWOT Analysis 2a. Strengths One of the greatest strength of Coca-Cola is an extremely recognizable branding. Coca-Cola produces and sells four out of five of their products which include Coca-Cola, Fanta, and Sprite and diet coke. Consumers have stayed loyal to the company and its products which are evident from the high market acceptance of Coca-Cola’s newly introduced products (Anders, 2013). To widen its presence, the company has entered into other non-alcoholic drinks and juices that have been successful in the market. For instance, Minute-Maid is available in over 80 nations, which improved its shares citing 11% increase in sales volume in 2005 (The Coca-Cola Company, 2015). 2b. Weakness In 2004 Coca-Cola Company introduced the Dasani, a bottled water brand in the UK. By March 2004, the product was discovered to have excess levels of Bromate in the product which could cause side effects including dangerous diseases such as Cancer in human beings. The result of this was a recall expense of 32 million dollars. In India the company destroyed its reputation when it was accused by the communities there to have ruined their resources. For this reason India has the lowest per capita consumption of Coca-Cola (The Coca-Cola Company, 2015). Rumors and myths about the company and its products have lowered the sales of the company to a certain extend. For instance, sales in the Middle East were affected by rumors that the company is a Jewish company that carries anti-Muslim messages. Coca-Cola Company’s sales in South Asia, mostly in India, were affected by allegations that Coca-Cola’s beverages contained pesticides. This have impaired the company’s image to a certain extend. 2c. Opportunities Coca-Cola Company’s products are being consumed at the rate of only 1.3 billion times in a day. Nevertheless, despite reaching 200 nations owing to its comprehensive distribution, there are countries where the average per capita consumption of their products remains below 50 servings per day (The Coca-Cola Company, 2015).. Countries such as China and India provide tremendous growth opportunities for the company. Therefore the company has identified strategic areas for its expansion which could highly boast its business of manufacturing carbonated soft-drinks. The company in this regard, has integrated its innovation strategy and marketing efforts and pumped in extra financial capital of 400 million dollars in 2005 (The Coca-Cola Company, 2015). It is quite important for Coca-Cola Company to maintain strong relationships with resellers for example Tesco, to make sure that their products are significant within their stores. It is also expected that the company will enter into the business of freshly brewed coffee and tea, on a trial basis under the banner, Far coast. 2d. Threats Youngsters have posted an increase in obesity disorders due the increase consumption of non-diet carbonated soft beverages. This is expected to pull down the demand for their beverages amongst the young segment in the future. In many countries water is a scarce resource due to factors such as pollution, insufficient water management and overexploitation of water resources. This has affected the production rate of Coca-Cola Company taking into account that this is the main ingredient in the production of their products. Consumers have found alternative substitutes to the soft drinks such as tea, coffee, juices and milk which post threats and pressure on Coke. The company faces stiff competition from other global and local manufactures such as PepsiCo, Cadbury Schweppes and Nestle. Customer Analysis The company’s survey conducted recently stated that consumers purchased their products by the view of Taste, packaging, price, brand name, availability and advertisement. The key drivers behind consumer acceptance of the drinks are the intensity of the color and flavor, a new study that involved DANONE. Coca Cola is mainly consumed by the age segmentation of between 10 to 20 years. Coke price is slightly higher compared to other competitors like Pepsi but this has not triggered consumer’s loyalty which is always consistent. Due to high preference for low calorie products by consumers, Coca-Cola launched Coke zero, Diet Coke and other health drinks whose sales are posted worldly. Competitor Analysis The main threat competitor to Coca Cola Company is PepsiCo. 60% of the company’s profits come from snack foods and 40% from beverages. It has grown its profits by 15% per year (The Coca-Cola Company, 2015). The strength of Coca-Cola is posted in fizzy drinks; therefore competitors would try to take advantage of on its weaker products. In reaction to this competition, Coca-Cola has acquired a subway soft beverage business which was previously served by Pepsi Stakeholder Analysis Coca-Cola identified its stakeholders as civil organizations, governments, NGO’s, consumers, investors, shareholders, employees and analysts. Understanding the concepts and perceptions is crucial to operating a successful business. These positive long-term relationships built on the basis of trust and common goals help them create a sustainable business growth. In 2006, the Coca-Cola Company engaged with stakeholders and mainly addressed strategic issues like obesity, tackling climate change and water resource. It also worked with NGO’s to increase recycling and to protect water bodies (The Coca-Cola Company, 2015). The company has set up consumer response and information centers to address consumer issues and enquiries. Web-casts, road-shows and briefings are some of the regular communications used by the company. Strategy Assessment Coca-Cola Company mainly gets its revenues outside the United States. It is widely spread across the world including countries such as Zimbabwe, Colombia, Liberia and Cambodia. The brands of Coca-Cola have increased gradually from 68.95 billion dollars in August 2001 to 70.45 billion dollars in 2003. According to BusinessWeek’s Global Brand Scorecard, Coca-Cola remains to be the top global brand and therefore achieving the top rank (The Coca-Cola Company, 2015). Recommendations and conclusions Coca-Cola Company operations are extended across 28 countries including developing, emerging and establishing emerging markets according to business economic development, business infrastructure and growth prosperity. It owns and operates 81 bottling plants, 3 juice plants, 14 mineral water plants and 64 soft drinks. The strength of the company’s system allows endless growth in the worldwide market. They have resources available for the opportunity to develop marketing strategies that are essential for their success. Through their vast marketing experience and brand reputation, Coca-Cola has the ability to expand the recognition of their logo and brand. The effectiveness of TV advertisements is decreasing due to media breakup and use of devices like TIVO which let viewers zap for profits. It is therefore advisable for Coke Company to divert money spent on television advertisement to more experimental activities for example setting up of lounges in teen malls and offer video games, music videos and sell coke beverages using Coke machines. Coke must consider each country’s unique political and economic instability a threat that affects the marketing of their products to extend their market share. Moreover, they should consider health awareness posted by their consumers by furthering resource for their fruit drink product lines due to the rapid growing market in this sector. In laying out an appropriate marketing mix, the company must consider product promotion, price and distribution to develop a marketing mix for each customer group. Coca-Cola would gain a huge market share and a great competitive advantage that would allow for greater long-term profits and therefore increase dominations into the next century. References Anders, J. (2013). Coca-Colas Marketing Strategy: An Analysis of Price, Product and Communication. Munich: GRIN Verlag GmbH. Lamb, C. W., Hair, J. F., & McDaniel, C. D. (2012). Essentials of marketing. Mason, Ohio: South-Western Cengage Learning. The Coca-Cola Company. (2015). Retrieved from http://www.coca-colacompany.com/our-company/ Read More