Strategic Marketing of the Coca - Cola Company

STRATEGIC MARKETING OF THE COCA - COLA COMPANY

INRODUCTION

In this report we would be discussing about the strategic management of The Coca- Cola Company and would be analyzing the strategies of the company. The Coca - Cola Company is an American multinational beverage corporation. The well known product of this company is Coca Cola, which was invented by pharmacist John Stith Pemberton in Columbus, Georgia in 1886. Asa Candler brought the formula of Coca Cola in 1889 and incorporated the company The Coca - Cola Company in 1892. Coca - Cola currently offers more than 500 brands in approximately 200 countries.

The valuation of Food and Beverages industry in the world is estimated to be more than $ 5.7 trillion. This industry is the major contributor to the growth of all the economies. It is expected that the industry will increase at a compounded annual growth rate of 3.5% to $ 7 trillion till 2014. Europe comes in first place in food and beverages industry as it alone generates the revenue of $1.4 trillion and gives employment to more than 4 million workers. Europe is followed by US who contributed $1 trillion to the world food and beverages industry. After that in Asia India and China are the leaders in F&B industry. These countries are the raw material supplier to the F&B industry.

When we talk about the competition in the food and beverages industry we find that the competition is at its peak. The main competitors in this industry are The Coca Cola Company, PepsiCo, and the Dr. Pepper Snapple Group. They produce so many brands in different types of flavors. The Flavors/Types are Coal, Diet Cola, Cherry- flavored cola, "pepper" style, Orange, Lemon lime, other citrus flavors, Ginger ale, Root beer, Cream soda, Juices, Iced tea, Sports drinks, Energy Drinks, Mineral waters etc. And the customer range of these products is very large as these products can be assumed by everyone. Young age and older age people both are the customers of these companies. Because of the large market the scope for the growth becomes very high and consequently the competition increases.

Now if we discuss the challenges faced by Coca Cola, we get that the main problem is of strategic issues. Coca Cola faces several significant strategic issues. When we analyze we find that there are three important strategic issues which need to get solved. The first issue is declining sales of carbonated soft drinks. The second most important issue is of current health and wellness trend. Third problem is increased threat from the PepsiCo. Except these three main problems there are other problems like conflicts with bottlers, lack of innovation, food safety and statutory regulatory compliance etc.

ANALYSIS

For analysis of the strategic marketing of The Coca - Cola Company we have so many tools. Further we would be applying these tools which generally include external analysis and internal analysis of the company and industry. Let us first take external analysis:

EXTERNAL ANALYSIS OF THE COCA - COLA COMPANY

Competition in an industry is the key factor which determines the company's strength in utilizing its potential. How firms develop their strategies to earn revenue over time can be demonstrated by analyzing the company's competitors in the industry. Let us first take the Porter's five forces model to analyze The Coca - Cola Company. Michael Porter gave five forces to analyze a company within an industry which will include: The bargaining power of buyers, bargaining power of suppliers, Threat of new entrant, Threat of substitute, and Rivalry among the industry.

PORTER'S FIVE FORCES ANALYSIS

1. Threat of new entrants:

Threat of new entrant for The Coca - Cola Company is low. Coca - cola and PepsiCo are the two major players in soft drinks industry who dominate the market. The main strengths of these two players are their brand name and excellent distribution channel. New growth is small in the soft drinks industry as it is fully saturated. Other barriers for new entrants are high fixed costs of warehouse, trucks, labor and economies of scale. Because of these barriers entry of new players become difficult in the soft drink industry.

2. Threat of Substitutes:

Threat of substitute for the Coca - Cola Company is very strong. Substitutes available for the coca - cola products are bottled water, sports drink, coffee and tea. Health conscious consumers prefer more bottled water and sports drink rather than drinking coca - cola. Also the number of brands and flavors are increasing in bottled water and sports drink. Coffee and tea become more competitive because they provide caffeine. Soft drinks can be substituted with coffee. Specialty blend coffees are becoming popular with the increasing number of Starbucks store that offer many different flavor of coffees. In all there are so many substitutes available in the market for soft drinks and the companies which are providing these products are also big potential companies.

3. Bargaining power of Suppliers:

Bargaining power of suppliers is high and it becomes a big threat for the coca - cola. Suppliers to coca - cola are bottling equipment manufacturers and secondary packaging suppliers. Coca - cola enterprises is the company which manufactures bottles for The Coca- Cola Company. Although there are no other bottle manufacturer as big as coca - cola enterprises but there are some conflicts in between The Coca - Cola Company and coca - cola enterprises.

4. Bargaining power of Buyers:

Bargaining power of the buyers of The Coca - Cola Company is high. Buyers of these kinds of soft drinks are mainly large grocers, discount stores, and restaurants. Soft drink companies sell their product to these stores to sell to the final consumers. Since large grocers or discount stores are big that is why they are able to buy a large quantity of product at a single time and this allows them to bargain for lower prices.

5. Rivalry among industry:

Rivalry among soft drinks industry is high. Coca - cola, PepsiCo and Cadbury Schweppes are the largest competitors in the industry. Although Coca - cola owns the four brands of top five brands (Coca - cola, Diet coke, Fanta, and Sprite) even then the sales of the company declined in 2006. Brand name loyalty is another competitive pressure. Ranks of Diet Pepsi and Diet Coke were 18th and 47th respectively in The Brand Keys Customer Loyalty Leaders Survey in 2006.

INDUSTRY ANALYSIS

Soft drinks industry is mature industry