Marketing is the process by which groups and individuals create and exchange goods and services with an aim of attaining what they need with an aspiring to find satisfaction. Consumer needs and wants are the main reason behind why companies design, manufacture and distribute products into the market.
On one hand consumers demand for satisfaction and companies therefore sell to make a profit and meet their other objectives such as growth, and survival. Product and services created by companies such as Coca-Cola are considered of value and therefore create satisfaction when exchange takes place (Kotler 2003).
Therefore the creation value and satisfaction which consumers demand end up pushing companies create strategies that govern their marketing mix and go a step further to create overall corporate strategies that will govern their whole business processes to ensure success in today’s volatile business environment (Lancaster & Withey 2006). The Coca-Cola Company is one company that has been able to create a perfect business model that has pushed its products such as Coca-Cola across the world with much efficiency.
History of company and product
Coca-cola is a carbonated soft drink that is sold in restaurants, supermarkets, vending machines in approximately over 195 nations. It is a product of the coca-cola company which is located in Atlanta Georgia USA. The coca-cola company is a company with many product lines which include carbonated soft drinks, water, and juices.
Coca-cola was originally invented by Doctor John Permberton by a drug company in Georgia and was sold as medicine because people back then believed carbonated water had medicinal values being assumed to be a headache remedy, stimulant and stomach ache remedy. Coca-cola as it is known was a proposal that was put forward by Frank Robinson, who was a book keeper.
Initially Coca-Cola was sold in pharmacies by John Permberton. By the 1950’s the drink had a huge consumer market U.S.A. Bottled soda was sold first by coca-cola in 1894 and cans of coca-cola appeared first in stores in 1955.Later in 1985 when coca-cola tried to change its formula hoping to follow up with tastes but a public outcry ensued forcing the company to revert back to classic Coca-Cola.
The introduction of diet coke back in 1982 was a huge success back in the in the 1980’s. It is between 1923 and 1991 during Woodruff’s tenure as C.E.O that Coca-Cola grew from a national company to a global company with an explosive growth of the carbonated bottled soft drinks.
Today Coca-cola is the world’s number one soft-drink company with top five soft drink brands (Coca-Cola, Fanta, Diet Coke, and Sprite).Other brands includes Minutemaid, Powerade, Dasani water and Schweppes which generate an income of over $3 billion annually.
The Coca-Cola Company has a number of product lines in its product mix these are carbonated soft-drinks, energy drinks, juices, and water. In each product line there is a particular product depth (Bell 2004). The coca-cola company carbonated soft drink product line has a product depth consisting of Coca-Cola, Fanta, Sprite and Krest.
Within the product line of Coca-Cola itself there consists’ a further product variety of different types of Coke that are sold in various geographical regions of the world. It is clear that The Coca-Cola Company has invested a lot in the process of research and design of its products, there is a high level of differentiation upon its Coca-Cola product depth.
Coca- Cola’s packaging strategy involves the use of beautifully designed cans, hobble skirt bottles which range from 300ml-2000ml, and disposable plastic cups. The Coca-Cola Company has gone forward to patent the various dimensions of its famous Hobble skirt bottle meaning that no other soft drink manufacturer can use the same type of bottle.
The classic Coca-Cola symbol is written and surrounded by the colour red making it a unique brand that is easily identifiable and memorable to the consumers. Currently Coca-Cola has a high rand value and equity and commands a lot of loyalty among consumers, its name, awareness, perceived quality, and strong association with excellence add great advantage to its product mix this serves as powerful assets to the product itself.
A distinct and unique product design is necessary for the success of a product (Kotler 1999). Coca- Cola has ensured that its product is unique as far its attributes, and branding are concerned. The secret Coca-Cola formula is well hidden in a volt in a bank located Georgia with very few people whom have who have access and therefore is a trade secret.
According to porters generic competitive strategies a company can either choose to serve a broad market or a narrow target market. If a company chooses either it must then choose to either follow a low cost strategy that is good for a wider market due to the existence of economies of scale and efficiencies or either choose to differentiate its products in order to charge a premium (Porter 1990).
Coca-Cola is a profit masking company that aims to remain as the market leader and meet shareholder targets. Pricing can be determined by many things this include target profit, competition, costs associated with production, quality, demand and company objectives (Kotler 2003).
Coca-Cola’s main objective is to capture a larger market share by selling a large volume of soft drinks at an affordable price with an aim of maximizing profits. It therefore targets the mass market and sells its products at very afford prices but at the same time for its highly differentiated products such as diet coke a much higher price is set.
Therefore coca-cola practices price discrimination among various regions of the world. The price of a Coca-Cola in Kenya, India, and New -York are not the same. This is because every consumer in these countries has different purchasing power (per capita income) and this is factored in the final pricing.
The use of penetration pricing which is low and mass market oriented is advantageous in gaining a large market share for Coca-Cola and that is why Coca-Cola estimated to sell over half a million bottles of carbonated soft drinks in one day. Coca-Cola also gives incentives such as trade incentives to its middlemen and largest distributors for the volume of concentrates they order and sell. (Charles et al, 2009)
Coca-Cola itself does not manufacture and sell already manufactured carbonated soft drinks. They mainly do their distribution by using independent co owned distributers/franchises which have specially trained people. It is these people who are considered investors who approach Coca-Cola for business deals and are given training on the various production techniques.
After setting up this franchises and setting up partnerships that The Coca-Cola Company goes ahead to ship consignments of concentrates and syrup that will be used to make the final consumable Coca-Cola to its distribution partners who in turn dilute and carbon dioxide to the product, After which local channels such as depots go ahead to sell Coca-Cola to hotels, supermarkets and retailers in their area of operations.
This model of operation reduces amount of risk and uncertainty that the Coca-Cola Company would have faced if it were to manufacture and distribute its own product Coca-Cola it also reduces the time used reduce the lead time that Coca-cola would have otherwise had to face in case it used other distribution models( Lancaster & Withey 2006 ). The Coca-Cola in turn helps in its independent distribution partners assemble of factories, organizes staff training, and supplies packaging materials and procedures of operations.
Promotion is the process of choosing a market and coming up with a comprehensive plan of how to pass across messages that are related to the product to this target market. Therefore a promotion mix is a sum total of all methods that are used to pass message about a product to a given target market with an aim of informing, reminding, educating and persuading (Campbell et al, 2002).
Coca-Cola promotional activities revolve around getting enough shelve spaces in departmental stores to display their products, they also conduct sale promotions for both end consumers retailers and distributors, apart from the above seasonal UTC campaigns ( i.e. under the crown schemes) that involve handing out gifts that can be won under the bottle tops of their carbonated drinks such as Coca-Cola , advertising in television commercial, billboards, and print media, Coca-Cola also use point of sale materials such as posters and stickers Coca-Cola also use sports arenas and teams ranging from soccer, cricket and basketball to promote their product.
The Coca-Cola Company collects an advertising fee from franchisers/partners/distributers and then goes ahead to formulate an overall promotional mix that all its distributers will use to promote Coca-Cola in each and every country in which Coca-Cola is sold. (Kourdi, 2009)
The environment that Coca-Cola exists in hasn’t been that smooth stiff competition from PepsiCo has led to a massive battle for market share in various parts of the world, the existence of various substitutes, to Coca-Cola has also affected the sales of Coca-Cola leading to an increased product mix by the Coca-Cola company to make more profits.
With the recent recession in the economic environment the sales of Coca-cola was also affected. Coca-Cola has not had a simple time with the legal and political environment its exclusion from the Indian market for 18 years due to differences in political stands gave PepsiCo an advantage. The spirit of Anti-Americanism Coca-Cola has found it hard t penetrate the Asian market but it is now coming up with special arrangements and alliances to have Coca-Cola accepted in this regions (Frey 2008).
The Coca-Cola Company has also been accused of channel surfing and making exclusive sale agreements with retailers in Europe leading the European Union to set specific legal action to stop them from doing this again. There are multiple legal suits of racism and mistreatment of black employees by denying them career advancement opportunities.
In 2003 Coca-Cola India was accused of containing pesticide compounds which were above normal and dangerous to the health threatening in it but this claim was refuted by the company. Apart from this The Coca-Cola has been accused of unfair competition in Mexico and intimidation of union officials in Bolivia and Columbia. This goes ahead to clearly show that there are many challenges in its environment which is very usual in global companies dealing with vast diversified markets (Sinkovics & Ghauri 2009).
The Coca-Cola’s product, pricing, distributing and promotion strategy are almost perfect, but Coca-Cola should go ahead and formulate more flexible corporate citizenship strategies that will help to promote more ethical business operations and reduce the negative image and publicity that is faced by Coca-Cola in certain parts of the world.
Coca-Cola should create a more aggressive competitive strategy to counter PepsiCo. Since PepsiCo’s strategy of creating multiple product lines that includes Salty snacks has enable PepsiCo increase its sales by a large percentage and have profits margins which are almost at par with The Coca-Cola Company.
The Coca-Cola Company should therefore go ahead and introduce a new product line like PepsiCo and put them side to side in retailer stores. As far as pricing and promotion is concerned Coca-Cola should exploit its efficiencies and economies of scale and if able try to maintain or even reduce its prices to increase volume of purchase.
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