The beverage industry has several players that strive to out do each other in order to gain competitive advantage. This report will discuss both the business level strategy and the corporate level strategy of The Coca-Cola Company. This company has over 500 brands and has branches in over 200 countries.
Some of the brands include coke zero, diet coke, sprite, powerade, coca-cola among others (Coca-Cola Journey, n.d.). It has remained operational for the last 126 years and controlled the beverage industry amidst competition from their competitors.
Business-level strategies encompass the initiatives that organizations take towards giving quality products to their customers. Giving value to customers raises the level of customers’ satisfaction thus enabling a company to gain competitive advantage over its competitors in the dynamic and global market. Firms must identify their customers, understand their needs, and set how they intend to meet or satisfy these needs (Finlay, 2000).
The Coca-Cola Company on its part has employed differentiation strategy that distinct them from other firms in the industry. This strategy involves using unique features on products instead of lowering the overall products prices. Their unique products have created value in themselves. Moreover, their products have non-price attributes hence do not attract a premium payment from customers.
In ensuring that the consumers remain loyal and committed to continuing using their brands, the company applies distinctive marketing and sales promotion concepts. For instance, their dominance on the Digital Satellite Television (DStv) can attest to this unique style of marketing as they involve various consumers in the advertisements. Those who rely on modern technology will meet the advertisements on Facebook and Twitter.
In addition, Coca Cola uses light bottles for packing their products. Customers tend to like unique and different shapes; light bottles enable consumers to purchase products at any time even when travelling. The launch of plastic bottles reveals this desire to meet the customers’ needs at all events. This innovative idea has made it difficult for competitors like the Pepsi Company to match the levels of this company.
Additionally, the company has enticed consumers by introducing the Coca Cola Free Style machine that helps consumers to mix and produce their own beverage of different flavors (Coca-Cola Journey, n.d.).
The Coca-Cola Company has also employed cost leadership strategy in its operations. The large size of the company has enabled it to offer numerous brands at relatively low prices as compared to their competitors. The company can practice this strategy since it has a large volume of production thus lowering their costs of production.
In the end, they will still make profit and sustain competitions from other firms that enter the market. Moreover, if suppliers increase their prices, the company will be at an advantaged position to adjust to the new prices by effecting the changes on consumers with ease. In case of economic instabilities, Coca Cola can remain operational given the internal efficiency and capability to lower the cost of their products and still make profit.
The differentiation strategy is the best option for the long-term success of Coca Cola as it has enabled the company to be distinctive from its competitors. However, the company should continue introducing unique products that will maintain their public identity over their competitors.
The introduction of new beverage brands is essential since the differentiation strategy is prone to imitation by the competing companies within the industry. This brand loyalty remains undisturbed even if the company increases their prices. Further, the company has the assurance of continued profitability even if another beverage company enters the industry.
This will occur if Coca Cola does not alter the nature of their products since loyalty and trust among the consumers will be difficult to overcome (Coca-Cola Journey, n.d.). Naturally, customers are always skeptical of the products of a new company that enters the market; therefore, it is almost impossible to withdraw the Coca Cola’s customers within a short time.
Customers tend to value quality that satisfies their needs; as a result, the company will be able to raise their prices and maintain or improve the quality of their brands. Customers brand loyalty will make them lowly sensitive to price changes provided the company meets their needs.
From this perspective, Coca Cola will record high sales thereby continuing to gain competitive advantage over their competitors in the beverage industry (Coca-Cola Journey, n.d.).
Corporate level strategy offer guidance to companies in totality. All strategic decisions that firms make are incorporated in the corporate strategic plans. This level of strategy discusses factors that can affect the performance of a company and its competitors at present and in the future (Finlay, 2000). After a thorough forecasting, firms design strategies that may enable them go over these challenges.
Corporate level strategy has some subdivisions. A stability strategy or value-neutral strategy exists where a firm decides to maintain its situation signifying that it is satisfied with its present situation. A growth strategy embarks on business expansion. There is also the typical growth strategy or value-creating strategy that encompasses concentration strategy and vertical integration strategy.
Under concentration strategy, a firm enters the market by offering efficient services for a limited brand while vertical integration involves additional responsibilities like distribution and supply of products. From the analysis of the company’s annual report of 2011-2012, it is evident that the best corporate-level strategy that Coca Cola should continue using is the value-creating strategy.
In the company’s website, it has indicated that it has been steering towards maintaining their customers in all their branches worldwide. It is also clear that the company has been attempting to increase its market share by introducing other brands in the market. Moreover, the company has been diversifying its products by offering varieties such that consumers can have the power to choose their preferred product.
Value creation remains the best option for long-term success since the current global market has dynamic consumers who experience drastic changes in tastes and preferences.
The strategy will enable Coca Cola to remain up to date in the market hence maintaining a competitive edge over its perennial competitors like Pepsi. This strategy coupled with the differentiation strategy will continue making the company profitable even if several beverage companies enter the market.
Competitive environment is the external system in which a business operates. For competition to exist, different businesses must share the same market in selling their products (Finlay, 2000). For instance, in the beverage industry, Coca Cola is facing competition from the Pepsi Company. Pepsi is also committed to achieving financial and even leaving a positive mark on the society.
Some of its 22 brands include Tropicana, walkers, Doritos, Fritolay among others (PepsiCo Americas Beverage, n.d.). Pepsi also has its presence in over 200 nations in the world. Given the diverse brands that Coca Cola produce, its nature of differentiation has made its numerous products overshadow the Pepsi’s brands.
In addition, the ability of Coca Cola product consumers to mix and obtain over 100 different choices of drinks has made it difficult for Pepsi to match their strength on differentiation strategy. On cost leadership strategy, Pepsi has also initiated this approach in order to attract and retain customers.
It has taken advantage of the large economies of scale to practice the low-cost and differentiation program (PepsiCo Americas Beverage, n.d.). Since all organizations ought to be in touch with their marketing environment, Pepsi has taken this step so that it does not lose touch with its customers.
The crowded beverage market had also posed pressure to Coca Cola when Pepsi launched their plastic brands of Pepsi, aquafina water and mist natural. This prompted Coca Cola to move swiftly to introduce plastic bottles for their brands like coca-cola and coke zero.
On the corporate level strategy, Pepsi focuses on expansive model; for instance, it restructured its beverage and food business in the US to include regions like Canada and Mexico. It went ahead to create PepsiCo sectors in Europe and Asia. These initiatives created new gates of innovation and brand development.
In 2001, Pepsi recorded a growth of 13.9%, which was after it had acquired Quaker Oats in 2000 (PepsiCo Americas Beverage, n.d.). These two companies have almost the same strategies in both the business and corporate levels. After a close comparison of the initiatives by the two companies, I think that the Pepsi Company has an upper hand in experiencing success in the long-term.
Pepsi’s actions of acquiring other beverage-related companies will enable consumers to link the relationships between the products. Coca Cola should also move to cooperate with other beverage companies that produce alcoholic drinks like whiskey since most consumers order for coca-cola and whiskey.
Coca Cola has not addressed this weakness while its competitor is continuing to collaborate with these alcoholic companies. Moreover, the few brands that Pepsi produce cannot confuse consumers on their preferred brands. At the same time, new customers will take the shortest time possible to choose a brand they want to consume.
Slow cycle markets are markets where resources are protected against external competition. It is a form of monopoly where one company can produce unique products thus dominating the market (Finlay, 2000). Pepsi’s approaches will not fit in the slow cycle type of market since lack of competition may not impel them to work in order to gain competitive advantage over their competitors within the industry.
In this market, I would prefer Coca Cola over Pepsi as the former has well-established historical brands and orchestrated plans on how to maintain the loyalty of their consumers. The market dominance will not create competition for the Pepsi Company that expects to realize its long-term success. On the other hand, in fast cycle markets, competition is eminent among companies in attempting to control the market.
This scenario will force Pepsi to continue strategizing on how to gain competitive advantage over its competitors. In this market, competitive advantage takes several steps and requires strict management that can sustain the firm in order to achieve its long-term goals. Even though there may be exploitation in the process, Pepsi will realize high returns over time as it will continue moving to the next advantage level.
Coca-Cola Journey. (n.d.). The Coca-Cola Company. Web.
Finlay, P. N. (2000). An Introduction to Business and Corporate Strategy. Toronto: Pearson Education Limited.
PepsiCo Americas Beverage. (n.d.). Pepsico.com. Web.