Abstract
Coca-Cola Company is a giant corporation that specialises in manufacturing, retailing and marketing of about 500 brands of non-alcoholic beverages.
The firm is present in about 200 countries across the world. It adopts a franchised system of distributing its syrup concentrate, which is sold to several bottlers globally. Strategic marketing approaches used by the Coca-Cola Company are aimed to increase consumer awareness and preference for the Company’s non-alcoholic beverages (Silverman, Sprott & Pascal, 1999; Jain, Haley, Voola & Wickham, 2012).
In the light of increased global competition from its competitors, the Company has strategically positioned itself to maintain and increase its market share. In order to make strategic marketing decisions, the Coca-Cola’s marketing team conducts product research aimed to understand customer behaviour towards the company’s brand. This paper defines and analyses the following components that would have an impact on the Company’s marketing strategy: organisation’s capabilities, competition, markets and environments.
The Coca-Cola Company’s organisational capabilities
Organisational or corporate capabilities refer to the abilities of an organisation to achieve specific goals through a set of processes. First, consumer marketing is a core capability of the Coca-Cola Company that is crucial in shaping the Company’s marketing strategy. Companies make huge marketing investments so as to increase consumer awareness for their brand (Jain et al., 2012).
The marketing investments made by the Coca-Cola Company have enabled the Company to achieve sustained market share growth, case volumes, and per capita consumption of its non-alcoholic beverages. The Company develops and implements both local and global marketing initiatives using market data obtained through the Company’s interactions with its bottling partners across the world.
Research shows that organisations thrive in competitive markets by understanding market trends through consumer communications (Jain et al., 2012). Consumer communications developed by the Company could be vital in understanding the current brand positioning.
Second, the Coca-Cola Company has a strong commercial leadership capability across the world. Research demonstrates that business organisations that have sound commercial leadership styles have better chances of thriving in markets characterised by perfect competition. The Coca-Cola Company is keen on understanding the customers’ needs because customers are crucial in distributing its products around the world.
The Company ensures that its customers have beverage products and promotional materials all the time. Through this, the Company enhances its value and that of its customers. Through an effective commercial leadership capability, the Company is able to develop unique consumer experiences through unique beverage products and unrivalled delivery systems (Jain et al., 2012).
Product merchandising and displays are also used by the Company to develop innovative consumer experiences across the world. To produce the right brands for consumers, the Company jointly implements brand-building initiatives with its customers. The Company further develops and executes marketing strategies at the point of sale by engaging with its customers to understand market needs that vary based on consumer tastes and business environments.
Third, the Coca-Cola Company concentrates on its franchise leadership capabilities by ensuring that it gives its bottling partners the opportunity to attain and maintain growth. It has been shown that business organisations could achieve huge growth trends by empowering their partners.
The Coca-Cola Company gives its partners a chance to grow and expand by supporting initiatives that are geared towards fulfilling dynamic customer needs and tastes. By working with its bottling partners, the Company identifies needs that are crucial in achieving business efficiencies. In fact, it has been shown that the Coca-Cola Company has one of the best business franchising practices across the world.
Its partners are crucial in producing differentiated products and product packages that are aligned with product channels and consumers. The company also designs unique models for different beverages in certain markets to maintain the value created by its partners. The Coca-Cola Company should strive to establish a distribution network that correlates with its size and business systems in order to gain and maintain a competitive advantage (Werther Jr & Chandler, 2005).
Competition
Business organisations perform uniquely in the business world and gain competitive advantage by analysing competition within markets. The Coca-Cola Company is the leading beverage company in the world, and it faces stiff competition from both emerging and established business organisations specialising in beverages. The business organisations are both local and multinational firms. Companies in the beverage industry deal with the following competitive products:
- Sparkling beverages,
- Ready-to-drink juices
- Dilutables.
- Performance enhancing drinks
- Functional drinks
- Waters (packaged and flavoured drinks)
- Dairy-based drinks
The beverages are purchased by consumers in ready-to-drink and other forms. The three major competitors of the Coca-Cola Company are PepsiCo, Inc., Nestle S.A. and Dr Pepper Snapple Group, Inc. PepsiCo, Inc. is the major competitor of the Coca-Cola Company (Johnson & Peppas, 2003).
Beer firms are the major competitors of the Company in some markets. The Company also faces stiff competition from local retail businesses that have established local markets. For the Company to thrive in such markets, it adopts strategic marketing approaches to gain competitive advantage. Such marketing approaches are geared towards outshining the local retailers that have established local beverage brands.
For any company to thrive in a market that is characterised by local established businesses, it has to develop strategic marketing and advertising initiatives that would be superior to those used by the local firms (Johnson & Peppas, 2003). The initiatives would involve developing excellent product displays that would attract consumers of the existing products in the local market. A firm would also offer products of similar quality to those marketed by its rivals at lower prices.
The marketing team of the Coca-Cola Company should use the SWOT analysis to come up with an effective marketing strategy (Jain et al., 2012). One of the strengths of the Coca-Cola Company is its incomparable popularity. The Company’s brand is printed on billboards, T-shirts, among other advertising materials. It has an easily recognisable branding that has gone a long way in attracting consumers across the world.
Coca-Cola Company has an advantage of customer loyalty that has enabled the company to make huge profits over the years. In fact, the Company has been able to achieve the 80/20 rule. In this scenario, the company achieves 80% of its profit from 20% of its consumers who are loyal to its beverage products.
One of the weaknesses of the Coca-Cola Company is the unpopularity of some of its beverage products. Beverage products like Coke and Sprite are very popular across the world. However, the Company should be concerned about the limited popularity of the over 400 beverage products it markets.
In developing the marketing strategy for the Company, the marketing team should focus on increasing popularity of the other drinks so that the Company’s turnover could increase tremendously. Another weakness of the Company is the issue of health that is associated with some its drinks. For example, Coke has been linked, although not supported through scientific research, with cancer cases.
The Coca-Cola Company has some opportunities that it should exploit in order to increase its presence in the market. The Company could increase its turnover by advertising its less popular beverage products. The Company has enough capital to invest in advertising the less popular products. If the less popular drinks could achieve the same sales levels with the popular products, then the company would have excellent performance. Although it could be costly, the firm could plan to buy its competition.
This is an opportunity that is always available in the business world. By buying its competitors drinks, the Company could aim to gain competitive advantage and achieve excellent performance (Balmer, 2009). The marketing strategy could also take note of the threats that face the Coca-Cola Company. One of the threats that could have negative impacts on the Coca-Cola Company is health-consciousness among consumers.
People across the world are attempting to change their eating and drinking habits in the light of the increasing number of disease conditions associated with various types of food and drinks. Competition is a major threat that could decrease the sales of the Coca-Cola Company. PepsiCo, Inc. is the major competitor of the Coca-Cola Company, and it sells Pepsi drink that is almost similar to the Coke product. Therefore, the Coca-Cola Company needs to view PepsiCo, Inc. as a major threat in the commercial beverage industry.
The markets to investigate
The Coca-Cola Company should try to investigate emerging markets because they present excellent opportunities for recording impressive sales (Jain et al., 2012). Emerging markets are characterised by rapid growth and industrial activities. Another feature of an emerging market is a high human population that presents ready market for various good and services (Cavusgil, 1997; De Mooij, 2009). On the other hand, established markets have minimal growth rates.
However, established markets would have more loyal customers to a product than customers in emerging markets. Emerging global markets are found in China and India.
The other emerging markets are found in Sub-Sahara Africa, Russia and Brazil. In 2013, the Coca-Cola Company recorded an impressive jump of 2% in sales, a performance that was mainly attributed to starling performance in the new markets of Sub-Sahara Africa, China, Russia and Brazil. In the second quarter of 2013, sales stagnated in the established markets of North America.
The impressive results from the new markets imply that the markets present great potential for growth of the Company. The marketing strategy of the Coca-Cola Company should be redesigned to focus more on the global emerging markets. Some of the emerging markets like the Sub-Sahara Africa have poor infrastructure that is not conducive for viable business operations (Cavusgil, 1997).
Thus, entering new markets requires huge capital that is required to start operations from the scratch. However, the Coca-Cola Company is characterised by sound financial strength that could be used to invest heavily in the emerging markets.
For the Company to successfully venture into the new markets, it needs to conduct extensive research that would give crucial findings on business issues related to short-term and long-term gains. For example, a company might be the first firm to enter a new market, but other firms would also penetrate the market and present a major threat in the form of competition to the first company. If a company does not find long-term financial gains in a new market, then it should not venture into it because it would incur losses.
On the other hand, a firm could enter a new market and strategically position itself. This would be achieved through sound marketing and advertising strategies that would increase brand awareness among consumers. A firm would also have low prices for its products so that most customers would afford.
Particularly, emerging markets in Sub-Sahara Africa require low prices of products because the majority consumers are poor (Cavusgil, 1997). In addition, a firm would gain a competitive advantage in a new market by producing and marketing quality products. Consumers in both new and established markets always like the idea of purchasing quality products.
The Coca-Cola Company should investigate and enter the global emerging markets by positioning its popular drinks in the markets. Furthermore, the new markets present wonderful opportunities for marketing the company’s less popular beverage drinks. The less popular drinks would be marketed using low-pricing strategies.
The Coca-Cola Company has formed excellent franchising networks for the marketing of its beverage products. It would be important for the firm to continue to expand its distribution networks in new markets so that it would continue to grow. The Coca-Cola Company would use business tactics it has used in other emerging markets to gain competitive advantage in new markets in different geographical locations (Harvey, 1995).
For example, the Coca-Cola Company would use similar approaches it used to enter the Brazil market in order to enter and grow in Sub-Sahara African markets. The use of the social media for advertising would also have positive impacts on the Company if it concentrates on advertising on platforms like the Facebook and Twitter (Mangold & Faulds, 2009; Montgomery & Chester, 2009).
Environment
Both internal and external environments have great impacts on the operations of the Coca-Cola Company and its customers. Firms could control internal environmental factors, but they could do little to change dynamics brought about by external business environmental factors (Walsh, 2005). To address the challenges caused by environmental factors, business organisations conduct an environmental analysis so that they could develop proper systems aimed to enable them to thrive in dynamic business environments (Walsh, 2005).
The organisational leadership of the Coca-Cola Company is a vital internal business factor that has helped the firm to be a giant multinational business player. There are many aspects of company leadership that the Coca-Cola Company could use to redefine its marketing strategy. First, communication within a firm is important because it facilitates the speed at which policies and strategic decisions are communicated to all employees.
Second, hiring of personnel is crucial because it ensures that the right people to drive the performance of a firm are recruited by the human resources department. Third, placing value on customers has been cited as one of the best approaches to motivating personnel within a firm. In fact, some companies opine that motivated workers could increase sales of a firm’s products rapidly. It has been shown that motivated employees generally produce better results than unmotivated workers.
Workers could be motivated through several ways. For example, a firm could adopt excellent salaries for its workers without introducing any form of discrimination in the form of gender, race and other personal characteristics.
Fourth, developing clear vision and mission statements of a company goes a long way in helping the firm to thrive in a competitive business environment. The Coca-Cola Company has clear and motivating business statements that the management uses to make effective decisions for the company (Barney, 1995; Kreuter & Bernhardt, 2009).
PEST analysis could be used to identify the political, economical, social and technological factors that have impacted the Coca-Cola Company. These are the external factors that could negatively or positively impact the operation of the Company. Political factors have had great impacts on the profits made by the multinational firm. For instance, the Company was affected by political unrest in some of its international markets.
The ease at which a firm could enter emerging markets is based on the political aspects of the markets (Esty & Winston, 2009). Changes in laws have impacted the Company in the recent past. For example, laws that increase taxes have made the company incur more costs on operations (Barney, 1995). The increase in the cost of operations has a negative impact on its profits.
Economic factors have influenced the Company’s operations in several ways. For example, the economic recession of 2001 made the Company record decreased growth rates in many markets across the world. Global recession trends have negative impacts on most of the business organisations across the world.
However, businesses can borrow capital during a recession to invest heavily in other products. The Coca-Cola Company could achieve this by adopting effective research systems. In addition, the company could adopt lower-pricing of its drinks during a recession to ensure that sales do not decrease rapidly (Cavusgil, 1997).
Social factors have caused changes in the lifestyle that have negatively impacted the Company. Many persons are adopting healthier lifestyles, and this has led to a decrease in the sales of the non-alcoholic drinks manufactured by the Company (Johnson & Peppas, 2003). There is also a social concern that older people are adopting strict lifestyles that are not characterised by consumption of carbonated drinks. In the long run, the lifestyle changes would have many negative impacts on the Company that will culminate in decreased sales.
Technological factors play important roles in the operations of many organisations in the modern world. The Coca-Cola Company has adopted new technologies in advertising and marketing its products.
The company has also purchased new machines in its production units that are characterised by new technologies. This has led to an increase in the volume of drinks that the firm produces in a day. The new technologies have also enabled the firm to adopt cans and plastic bottles that are easier to carry (Besanko, Dranove, Shanley & Schaefer, 2009).
Conclusion
In the light of increased global competition from its competitors, the Coca-Cola Company has strategically positioned itself to maintain and increase its market share. Strategic marketing approaches used by the Coca-Cola Company are aimed to increase consumer awareness and preference for the Company’s non-alcoholic beverages. The Company has the following organisational capabilities: consumer marketing, commercial leadership, and franchise leadership.
The Coca-Cola Company should try to investigate emerging markets because they present excellent opportunities for recording impressive sales. The three major competitors of the Coca-Cola Company are PepsiCo, Inc., Nestle S.A. and Dr Pepper Snapple Group, Inc. The Company performs uniquely in the business world and gains competitive advantage by analysing competition within markets.
The organisational leadership of the Coca-Cola Company is a vital internal business factor that has helped the firm to be a giant multinational business player. External business factors that negatively or positively impact the Company are political, economical, social and technological factors.
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