Coca Colas Operations in Relation to its Marketing Strategies - Case Study Example

MARKETING STRATEGY DEVELOPMENT Student’s Name: Code + Course name Professor’s name University City, State Date Introduction Ever since its establishment, Coca cola has focused its efforts on maintaining a competitive advantage over its competitors in the soft drink industry. The last century has seen the multinational company maintain its position as one of the most valuable companies across the globe. From the first marketing slogan, “Delicious and Refreshing”, Coca cola has implemented other strategic marketing decisions that have made it an iconic brand in the USA and worldwide. In its marketing strategy, the company does not participate directly in the distribution of products from its outlets to the customers. It has entered into partnerships with bottlers worldwide to reach its customer base. The paper analyses Coca cola’s operations in relation to its marketing strategies. Issue 1 a. Coca Cola-Company Overview The Coca Cola Company has been in existence for more than 127 years. The Company produces, distributes, and markets nonalcoholic syrups and beverages. The Company boasts of more than 3500 products that it serves in its different markets across the globe. The brands of the Company include Sprite, Coca Cola, Diet Coke, Minute Maid, Dasani, Power Ride, Vitamin Water, Fresca, and Simply Orange (Coca Cola 2017). The segments of the Company include Africa, Eurasia, Latin America, Corporate, Bottling Investments, Pacific, and North America. Customers of the company include caning and bottling operators, fountain wholesalers, distributors, and fountain retailers. The primary competitors of the company include PepsiCo Inc., the Dr. Pepper Snapple Group Inc., and Nestle. b. Vision and Mission In 2009, Coca cola and its bottling partners developed a mission that aimed at doubling the global revenues generated by the company in its global market segments before 2020. In the quest to attain the objective, the company and its bottlers resorted to specific areas that require bolstering. The areas include profit, portfolio, people, productivity, planet, and partners. The company’s mission statement states: “To refresh the world in mind, body, and spirit. To inspire moments of optimism through our brands and actions. To create value and make a difference everywhere we engage. (The Coca Cola Company 2017)” c. Strategic Marketing Approach The Coca cola brand itself serves a key role in marketing the company’s products. Over the years, it is also evident that the company has amassed substantial marketing expertise that has enabled it to develop great marketing campaigns in launching new products. The company has expended significant efforts in creating its brand. In order to create the widely known brand, Coca cola has also utilized a proper strategy. In its marketing and branding strategy, the company operates under the principle that good branding assures quality, reinforces reputation, and generates quality (Coca Cola 2017). Coca cola also uses its glocal strategy that entails the integration of local and central marketing functions in order to enhance the effectiveness of its marketing and distribution functions. In developing new products, the company aims at developing products that meet the needs of its customers. Issue 2: The 5C’s of the Company a. Coca cola SWOT Analysis Strengths The Brand of the company is its greatest strength. It is clear that Coca cola has a strong brand (De Franco 2015). Besides Coca cola, the other well-known brands of the company include Diet Coke, Sprite, and Fanta. The company also enjoys economies of scale as the other strength. In the segment of non-alcoholic beverages, it is clear that Coca cola is the largest manufacturer and marketer of the beverages across the globe. The company also considers its entire marketing and bottling system as a strength that contributes to its competitive advantage. Weaknesses Recent criticisms concerning environmental and health issues is the main weakness of the company (De Franco 2015). The emergence of health groups that market healthier products as opposed to carbonated drinks has influenced negatively on the profitability of the company thereby compelling it to adjust to the requirements of the specific market segment. Health concerns have also resulted in the second weakness of the company: declining sales and zero profitability. The trend has been evident even in the firm’s major market segments such as North America. Opportunities Acquisitions and inorganic growth has turned out to be one of the company’s key opportunities (De Franco 2015). Coca cola has embarked on the aggressive acquisition of smaller firms over the recent years in the quest to increase its market share. The increase in the demand for bottled water and healthy drinks has also provided another window of opportunity for the company bearing in mind the saturation of the market for carbonated soft drinks. Threats Changing trends is a significant threat to the company. Even though Pepsi Co is the main competitor in carbonated drinks, Coca cola’s products face many substitutes in the healthy drinks segment such as juices, energy drinks, milk, tea, and coffee (De Franco 2015). The fact that the company depends on third party bottlers is also a threat to the company since the firm does not have control over the operations of the companies. Instead, the Coca cola only sells syrups to its bottlers. Fierce competition from Pepsi Co, its main competitor is the other threat that the company faces. b. Customers The customers of the company include individuals of almost all age groups. However, the company views teenagers and young adults as its main target as evidenced by the fact that middle-aged adults and teenagers form the greatest portion of its market. Since 57.4% of the global population comprises of individuals aged between 15 and 54 years, it is clear that Coca cola targets the largest demographic for potential customers. The company considers the strategy as key to its growth and sustainability in the sector. Coca cola targets the market demographic because it comprises of customers that exhibit the highest demand for carbonated soft drinks. c. Collaborators Distributors suffice to be the most significant group of collaborators of the company. Coca cola employs both direct and indirect selling in distributing its products to customers. In the former approach, the company avails its products directly to retailers such as cinema halls, restaurants, and retail stores. However, the company uses distributor agencies to sell majority of its products to customers. Through its partnerships with distributors, the company avails the products to the distributors that avail the products to customers. The company also has a supplier network that includes manufacturers of bottling equipment and the suppliers of raw materials such as water and sugar. d. Competitors In its competitor environment, PepsiCo is the main competitor to Coca cola. The competitor stands out as the second largest company in the sector of foods and beverages. PepsiCo also boasts of its wide coverage as evidenced by its presence in over 200 countries worldwide. The acquisition of NutritionCo by PepsiCo presents a significant challenge in the sector of healthy drinks. Besides expanding its products to include healthy products, PepsiCo also boasts of well-known global brands such as Gatorade and Pepsi. The diversification into the market of healthy drinks has also subjected Coca cola to other competitors such as cafes and restaurants that offer coffee and tea as well as small firms that produce bottled water. Since Coca cola and PepsiCo have dominated the market for carbonated soft drinks and bearing in mind the saturation of the market, it is less likely for new entrants to venture into the market. e. Context Political and Legal Segment The existence of the company in more than 200 countries across the globe implies that the company has to abide by the regulations and rules of the different political and legal systems of its global market segments. In Cuba and North Korea, trade embargos have prevented the company from reaching customers in the markets (BBC 2012). In Canada, Coca cola has to ensure that the caffeine content of its products does not exceed 200 ppm as required by the market regulators. Socio-Cultural Segment The adoption of healthy drinks because of the recent health awareness campaigns associating carbonated drinks with Type-2 diabetes has resulted in declining sales and revenue from specific market segments. The decline in the revenues has emanated from the decision of customers to shift from carbonated drinks to healthier products (Walter 2012). In response to the trend, Coca cola has developed healthier products such as Coca Cola Life, Diet Coke, and Coke Zero to meet the needs of health-conscious customers and sustain its share of the market. Economic Segment The United States recorded a higher than average inflation of the prices of beverages and foods between 2006 and 2012 (Volpe 2013). The inflation translated into reduced disposable income on the part of consumers. The inflation of oil prices has also increased transportation costs thereby compelling the increase in the price of Coca cola’s products. Combining the declining disposable income with high prices of its products has reduced the revenue generated by the company from the sales of its products. Technological Segment Just like the other global companies, Coca cola has also capitalized on the marketing opportunities presented by social sites such as Facebook and Twitter to create the awareness of its products to consumers. The fact that such platforms guarantee the instant access to large groups of customers implies that Coca cola is able to access many customers across the globe at an instant when it uses the social media to advertise its products. Issue 3: Market Research The marketing research conducted by Coca cola entails the systematic process of gathering, recording, and analyzing data in the market. Coca cola conducts both primary and secondary research in order to acquire market intelligence required to develop products that meet customer specifications. Under primary research, Coca cola uses its research agents that literally venture into the field to collect the required information. Probable options include street or house-to-house surveys. Under secondary research, Coca cola uses published articles or reports to collect market intelligence. The process of gathering market intelligence employed by the Coca cola GB provides an insight into the approach employed by Coca cola in conducting market research. In one research aimed at gauging the appeal of its brand to customers, Coca cola GB employed a five-stage process in conducting the quantitative market intelligence (Business Case Studies 2017). Identifying the opportunity was the first phase of the information gathering process. Under the phase, the researchers of the company intend to determine whether the opportunity fits into an already existing product or requires the introduction of a new product category. In the phase, the researchers also identify the specific customers that require the product. The researchers also collect data on what the customers need. In the identification of the opportunity, Coca cola uses desk research. The second phase is the exploration of the solution. In the phase, the researchers conduct an in-depth exploration of the solution to respond to several issues. The first issue concerns whether the solution requires the launch of a new product or not (Business Case Studies 2017). The researchers also consider the possibility of using a product extension to solve the underlying product. The researchers also determine whether the solution requires a new packaging concept or a new design. In gathering such data, the company conducts a qualitative research that entails the use of in-depth interviews on focus groups. The third phase entails measuring the effectiveness or suitability of the solution (Business Case Studies 2017). In the phase, the research team evaluates the comparative appeal of alternatives to the solution in relation to the ability of the solution to meet customer needs. In order to collect such information, the researchers perform quantitative research with the use of internet, telephone, and face-to-face interviews. Market testing is the fourth phase. The company understands the expensiveness of launching a new product in the market. Consequently, it resorts to testing the new product in the market to assess customer reaction. Coca cola achieves this by testing the new product in one market segment such as Great Britain, or using the simulated testing method. The company carries out quantitative research on the selected participants through three sub-phases: concept research, product attributes, and volume assessment. After testing the new product, the company tracks the performance of the product in the market. The phase entails monitoring the success of the product following its launch into the market by recording the number of individuals that show familiarity with the product and the total sales realized. The research team performs a quantified continuous rolling study to collect such information from consumers with the help of retailers and distributor agencies. Issue 4: Developing the Marketing Strategy Coca cola segments its market in order to evaluate and understand the market, identify opportunities and attain competitive advantage (Puravankara 2007). The company segments its market based on four criteria. a. Place of Consumption Under the criterion, Coca cola segments its market in relation to the place of beverage consumption. The company understands that most consumptions occur on premises such as restaurants, railway stations, and cinemas (Puravankara 2007). However, other people prefer to consume their beverages from home. b. Geographical Segmentation The company has also divided its global markets based on their geographies (Puravankara 2007). Consequently, the company has created several divisions to cover its geographical markets and appointed heads of the divisions that report to its headquarters. The company grants autonomy on each of the divisions to conduct their operations. c. Demographics It is also evident that Coca cola uses demographics to segment its market (Puravankara 2007). The company uses age and income as the reference factors in segmenting its market by reference to the demographics. d. Product Type Coca cola also segments its market based on the specific type of products purchased by customers in the market. The company divides the market into both Coca cola and non-cola products (Puravankara 2007). Even though Cola products account for the highest proportion of the revenues generated by the company, it is evident that the market share of non-cola products is also increasing. Targeting is the other important aspect of the marketing strategy. Coca cola considers young individuals aged between 10 and 25 years as the primary market for its products. The company regards individuals aged from 25 to 40 years as the secondary market for its products. The company develops cola products for customers that have the taste for the strong flavor. On the other hand, Coca cola produces diet products for health-conscious customers that exhibit concern with their calorie-intake levels. In order to target health-conscious customers, the company uses non-cola products. Coca cola also develops Sprite and Limca to target teens, college youths, and the young working population. Besides targeting, Coca cola also understands the role played by effective product positioning in the market. As a result, the company associates its products with joy, friendship, and happiness as evidenced by its latest adverts such as “Share a Coke”, “Taste the Feeling”, and “Little drops of joy.” Issue 5: The Marketing Mix It is of no doubt that, the Coca cola brand presents the highest brand equity. Coca cola’s marketing mix has undergone significant changes both positive and negative that have contributed to its current position. The 4P’s of the company’s marketing mix include: a. Price Currently, Coca cola boasts of approximately 3300 products. The wide variety of its products coupled with the global presence of the company has compelled it to use the geographical segment and the market as the basis for pricing its products. The company employs a different pricing strategy for each of its sub-brands. Mostly, the company refers to competitor pricing to set the price of its individual products. The price set by Pepsi acts as a benchmark for the price that the company allocates for its products (Bhasin 2017). The oligopoly nature of the beverage market has seen the development of cartels that ascertain a mutual balance in setting prices for the products of both companies. b. Product With the existence of 3300 products, it is apparent that Coca cola presents the widest portfolio of products in the beverage market. The different categories of the beverage market include diet, 100% fruit juices, water, fruit drinks, energy drinks, coffee, and tea, among others. Coca cola stands out as the leading brand in juice, beverages, and retail packaged water (Bhasin 2017). As mentioned before, the company operates in 200 countries across the globe. The brands of the company include Fanta, Coke, Sprite, Minute Maid, Dasani, among others. c. Place Despite the fact that Coca cola’s products are readily available all over the world, it is evident that Coca cola is the most favorite brand in the world. The company adopts the fast moving consumer goods (FMCG) distribution pattern in vailing its products to customers. Because of the effective distribution patter, small and middle-sized firms in the sector have found it difficult to continue thriving (Bhasin 2017). The fact that Coca cola’s products are available even in the remotest of all kiosks across the globe implies that the company’s distribution pattern is effective. d. Promotion In order to create awareness of its new products and increase the demand of its existing products, Coca cola utilizes several promotional and advertising strategies. The promotional strategy integrates behavior and lifestyle thereby enhancing the value of the company’s products (Bhasin 2017). The individualized coke adverts tailored for a specific season catch the attention of potential customers thereby implying the success of their intended action. Conclusion The Coca cola Company is a global firm in the food and beverage sector that produces, distributes, and markets non-alcoholic syrups and beverages. The company has been in existence for more than 127 years; a period that has seen it develop approximately 3300 products. Coca cola operates in 200 countries across the globe. The strategic marketing approach employed by the company is in accordance with its mission statement that intends to develop products that refresh the spirit, body, and mind. Consequently, Coca cola uses promotional strategies that focus on attaining a perfect blend of behavior and lifestyle. The company boasts of its brand name as its main strength. Even though declining sales from the carbonated soft drinks segment poses a significant threat to the company, Coca cola has delved into the market for healthy products to restore its market share. Reference List BBC., 2012. ‘Who, What, Why: In Which Countries is Coca cola not sold?’ BBC News. Available from: http://www.bbc.com/news/magazine-19550067 Bhasin, H., 2017. ‘Marketing mix of Coca Cola-Coca Cola marketing mix.’ Marketing 91. Available from: http://www.marketing91.com/marketing-mix-coca-cola/ Business Case Studies., 2017. ‘Using market research to develop a product range: A Coca-Cola Great Britain case study.’ Available from: http://businesscasestudies.co.uk/coca-cola-great-britain/using-market-research-to-develop-a-product-range/market-research.html Coca Cola., 2017. ‘Our Company: The Coca Cola System’. Available from: http://www.coca-colacompany.com/our-company/the-coca-cola-system Coca Cola., 2017. ‘Product Description’. Available from: http://www.coca-colacompany.com/brands/product-description DeFranco, J.K., 2015. ‘The Coca-Cola Company: A Short SWOT Analysis’. Available from: http://www.valueline.com/Stocks/Highlights/The_Coca-Cola_Company__A_Short_SWOT_Analysis.aspx#.WS1f41ElHIU Puravankara, D., 2007. Strategic analysis of the coca-cola company (Doctoral dissertation, Faculty of Business Administration-Simon Fraser University). The Coca Cola Company., 2017. ‘Our Company: Mission, Vision & Values’. Available from: http://www.coca-colacompany.com/our-company/mission-vision-values Volpe, R., 2013. ‘Price inflation for food outpacing many other spending categories.’ Amber Waves, p.30. Walter, B., 2012. ‘Soft Drinks and Disease’. The Nutrition Source. Available from: https://www.hsph.harvard.edu/nutritionsource/healthy-drinks/soft-drinks-and-disease/ Read More