The Coca-Cola Company is one of the largest soft drink concentrate and syrup manufacturers which operate in almost all the countries in the world. During the first few months of 2000, Coca-Cola’s market capitalization was almost three times that of its chief competitor, PepsiCo and at the end of the year 2005, PepsiCo was able to surpass Coca-Cola by $. 5 bn. This was the first time in the history of the companies that Coca-Cola was valued less than its rival enemy. Coca-cola’s relegation means that the company should do a thorough study and investigation, i. . a marketing audit and recommending a plan of action to improve the company’s marketing performance. SWOT ANALYSIS Strengths–Brand name reputation-Great variety of products-Bottling-Consistent powerful logo display. Weaknesses–Lack of understanding of cultural differences and consumer behaviour-Packaging-Lack of financial resources by regional bottlers. Opportunities–Increased brand recognisability and global strategy-Bottling system-Increase product line in less developed countries-Increasing product diversification.
Threats–New and viable competitors, PepsiCo-Substitutes-Changing attitudes of consumer towards health consciousness-Consumer buying power-Political and economic instability. INTERNAL ENVIRONMENT: Seven P’s of Marketing- Product: The objectives of the Coca Cola Company are to ensure customer satisfaction. They are in business with products and therefore they need to sell it and consequently, customers are necessary. oCoca Cola has a very good global market. oThe market is growing everyday. The Coca Cola Company is an established product but a few of their other products such as their energy drink and sugar free drinks, juice products, health products and bottled water are fairly new. These products will need a lot of promotion and explanation on its contents. oNew products came later than PepsiCo. oTheir main competitor is PepsiCo and people prefer Coca Cola products although it is more expensive. oIts products are a household name and its commitments to the likes of people from different cultures and backgrounds make its selling capabilities unique. Coca Cola complacent in its ability to spot consumer trends. Price Coca Cola products sell at a premium price but affordable. oNot influenced by the lower prices of its competitor, PepsiCo. PromotionThe absence of brand-building iconic advertising. oCreating credibility as a world class company by sponsoring big events, e. g. : the Olympics, Fifa World Cup, and International Film Festivals. oPlans to introduce new products for France initially and later to other parts of the world. oPlans to offer a new advertising slogan“Welcome To The Coke Side Of Life”. PepsiCo uses television frequently for promotion of its non-carbonated drinks. oCoca Cola not making full use of promotion by television, radio and the internet. PlaceThe emergency of markets such as China and India as new markets needs more vigorous marketing. oCoca Cola’s unique distribution by directly exporting its products to overseas distributors and companies. oCoca Cola markets internationally by licensing and selling of franchise to bottlers around the world. oCoca Cola Company franchising type is manufactures sponsored wholesale system. PepsiCo uses snack foods and its diverse range of products to get an advantage using supermarket chains. -PeopleoCoca Cola’s inability to safe guard good relationships between company and personnel. oDeath of CEO resulting in management upheaval. oNew CEO’s appointment at age 60 created problems as he was seen as being too old for the change that Coca Cola needed. oSales personnel need for further training to handle new products. oKey experienced people from around the world brought in to assist in product innovation. Physical Evidence Case studies conducted by students on the Coca Cola products. Case study on PepsiCo’s ability to spot consumer trends makes the necessary changes. oCoca Cola’s failure to make changes. oCoca Cola’s positive move of updating on plans for new products launching to members of the public and stakeholders. Process Coca Cola has committed more funds to product innovation. oCoca Cola’s poor testing and production procedures resulting in its bottled water pulled off the shelves. oExcellent research in its carbonated products. oResearch on some brands e. g. : the lemon and lime versions of diet coke and coke-vanilla, on market research poorly done.
Mckensie’s 7 S’s-Shared VolumeoEmployees pride and the integrity of the company shattered by the Press discovering that Coca Cola’s bottled water was distilled tap water and then further demise when it was pulled of the shelves in a health scare. oEvery year Coca Cola donates 1% of their profits to charity in Spain and it creates a “friendly” company image. -StructureoThe hiring of the new CEO changed the structure of the company, switching managers, removing the marketing and retail chiefs. oDepartments relate to each other in the company. oCapital and resources available. SkillsoManagement has had to be restructured and personnel for marketing and retail departments were removed. oProblems with training. -SystemsoManagement tuitions. oThe Human Resource System-StyleoCoca Cola has an administrative orientation whose aim is to get the maximum out of the existing organisation. -StaffoAdequate marketing and customer service staffing at Coca Cola. -StrategyoCoca Cola products are easily accessible. They can be found anywhere. They have extensive advertising and affordable pricing. EXTERNAL ENVIRONMENT: PEST Analysis-Political The legal and political issues associated with Coca Cola Company are almost the same as for all the companies and all registered brands mainly related with consumer rights, competition and health and safety measures. Due to the intense competition in the industry, governments are closely monitoring the competition as firms merge and expand in the hope of dominating growing international markets. It is alleged that Coca Cola has been enticing retailers from selling other brands by giving incentives in order to increase market share. This is the reason for several legislations.
Some social issues with the Coca Cola Company are mainly related with promotional, environmental and friendly company aspects. -Economic oForeign environmental factors have influenced the Coca Cola’s strategies in international marketing. Coca Cola introduced many initiatives to attract the consumer. Consumers have become more attracted to the sport energy drink. Diet coke is the best innovation of the Coca Cola Company and has achieved the largest proportion of beverages market share. The company has consumers in over 200 countries. -Social
Language is one of the aspects of culture where Coca Cola’s carbonated drinks that did not find favour with the eastern countries like China and Taiwan had to be replaced by products such as Asian Tea and fermented milk drinks. This needed a lot of research and development. -Technological Coca Cola introduced ways by which the consumer can obtain their product quite easily, by the introduction of dispensing machines and vending machines. -Suppliers Company has a good reputation and develops a supplier guiding principles program to substantiate its motto: “strong and close”. Over 55000 suppliers of their productsoSuppliers are customer friendlyoDelivery to the consumer prompt and prices are not increased without direction. oMore women gradually owning enterprises creating a positive image for themselvesoSelling items in bulk. -PublicsoConsumers, wholesalers and retailers are the publics. oCoca Cola’s production will go up if products are in good quality, however, the public will stop buying their product if they cannot deliver a good product. oPublics influence buying the product. -Intermediaries (Distributors/ Dealers)oCoca Cola moves straight from the company to the supplier. Prompt service to consumers without the input of any middle man to create problemsoThe link between the company and the small shop needs attention. oWarehousing and transportation is very expensive, for cost of warehousing and transportation for this product alone will undermine the profit margin of the intermediaries/ distributors. -Customers/ MarketsoCustomers are individuals or organizations which purchase goods or servicesoCoca Cola has introduced Powerade into areas where it would suit local conditions and taste, areas of poor sanitization and hot weather, where it can be marketed as a product of rehydration. The possible basis of segmentation are age, income, household size, usage rate, brand loyalty and perceived risk, e. g. a diet line of drinks for the weight consciousoCoca Cola’s markets are increasing very fast because everyone is of the opinion that Coca Cola is very profitableoGeographical distributions of the markets are in areas which will be easier for the consumers to get or near remote villages. o10 – 20 years age group is drinking more Coca Cola than any other age segmentation. CompetitorsoCoca Cola’s direct competitor is PepsiCo and GatoraidoPepsi’s strengths- low carbonated drinksGatorade’s strengths- energy drink and its expandingPepsi’s weakness- snack foodsoTheir objectives- consumer satisfactionoPepsi uses celebrities to attract consumerso60% of Pepsi’s profits come from snack foods, 40% comes from drinks. oGatoraid uses a number of flavor and bright coloured labels. Its profits are growing by 15% per annumoWith Coca Cola’s strength being in fizzy drinks, competitors would try to capitalize on its weaker products. Pepsi has diversified into snack foods. Coca Cola has recently acquired Subway soft drink business, which was previously served by Pepsi. Coca Cola is the most popular beverage in the world, while Pepsi enjoys it only at home. oAmerican market which enjoys of less than 1% of both Pepsi and Coca Cola. oBottling operation costs which are contracted to mainly major players and limited to other producers. The Marketing strategy-The strength of Coca cola’s bottling system allows for infinite growth in the global market.
Therefore, they have the resources available for this opportunity but they must develop marketing strategies that have local appeal as this is essential to their success. Through their strong brand reputation and their vast marketing experience, Coca Cola have the ability to extend the recognition of their brand and logo. However it would be best to leverage brand equity and their financial resources, to accelerate global market penetration with a view to long term profits.
With the threat of political and economic instability in many less developed countries, and many of these markets not performing to expectations. Coca Cola must consider each countries unique cultural, political, legal and economic environment in order to maintain and extend their market share. With the threat of changing attitudes in consumer health consciousness, it may be advisable for Coca Cola to further resource their fruit drink product lines as this market sector is growing rapidly.
In laying out an appropriate marketing mix, the organisation has to consider the product, distribution, promotion and price. Therefore developing a marketing mix for each customer group. In a fairly saturated slow moving beverage industry if Coca Cola can diversify and then expand on these products globally while at the same time, having great local focus and strategies to increase the number of consumers buying their products, they would gain a huge market share and a great competitive advantage, that would allow for greater long- term profits and increase dominations into the next century.
BIBLIOGRAPHYHannagan T. Management Concepts and Practices. (2002). Third edition. London. Prentice Hall. Dibbs S. , Simkin L. The Marketing Casebook. (2002). 2nd Edition. Thomson Learning. London. Philip Kotler, Gary Armstrong- Principles of Marketing (2006) 11th Edition. Prentice Hall. http://. www. open2. net/money/brief_coca_cola. htmlwww. businessballs. com.