Final project The Coca-Cola Company

Date:
12/19/2012

Submitted To: Sir Talat Mahmood Submitted By: Bilal Sarwar Abdul Aziz Jhanzeb Nawz Saad Khan Afraiz Tariq Abu Bakar FA11-BEL-016 FA11-BEL-001 FA11-BEL-025 FA11-BELFA11-BELFA11-BEL-

ACKNOWLEDGMENT

We express our sincere thanks to Sir Talat Mahmood, for his constant encouragement and support throughout our course, especially for the useful suggestions given during the course of the project period.

Finally, we take this opportunity to extend our deep appreciation to our family and friends, for all that they meant to us during the crucial times of the completion of our project.

A. Introduction The Coca-Cola Company is the world's largest beverage company, operating in over 200 countries with a product line that includes over 2,800 diverse items. The company's primary responsibility is to develop concentrates, beverage bases and syrups, which are sold to bottling companies that comprise the world's largest beverage distribution system. In addition to product development, the CocaCola Company is responsible for product marketing. Their mission is to refresh the world, inspire moments of optimism, and to create value and make a difference.

B. External Environment Socio-Cultural Factors Coca-Cola is recognized as the world's most valuable brand. The company has been extremely successful in global marketing, and experts indicate that this success is largely based on product variation and adaptation (Lamb, Hair & McDaniels, p. 114). Since the CocaCola Company extends to over 200 countries (with headquarters located in Atlanta, Georgia), they have an immense need to diversify their products and create a marketing plan that meets the sociocultural interests of all their customers (vendors) and consumers (drinkers) around the world. The Coca-Cola trademark is recognized worldwide, no matter what language is printed on the bottle. However, the Coca-Cola Company must continue to tailor their marketing plan and product development to respect each consumer's unique values, beliefs and cultures. An example of the Coca-Cola Company adapting to the external socio-cultural environment is in 2007, the Coca-Cola Company received a silver award at the Iberoamerican Advertising Festival for their "Levate la Mano" (Raise

Your Hand) commercial that was aired in Latin America (2007 Annual Report: Marketing Highlights). Coca-Cola has also created a unique formulation for Sprite sold in Japan to meet the cultural preferences (p. 114). Social factors have been carefully considered in the company's marketing plan. The Coca-Cola Company has successfully developed products to please the 21st century's health-conscious consumer with brands like Coca-Cola Zero (their best selling brand in over 25 years), sports drinks, and bottled water. Coca-Cola must continue to adapt to the external environmental threat of the healthy lifestyle movement through product development and marketing of healthy options available in the product line. Economic Factors The United States is currently experiencing an economic recession. This period of negative growth includes higher unemployment, inflation, and cost of living expenses while consumers are experiencing lower disposable income and purchasing power (p. 641). The Coca-Cola Company contracts with numerous bottling companies around the world to create and distribute their beverages. The weakened economy could have a negative impact on any of the bottling companies, which would threaten the stability of the CocaCola Company due to the dependent relationship. The Coca-Cola Company must be profitable in order to sustain their investment in communities around the world. Furthermore, small communities depend on large businesses like the Coca-Cola Company to strengthen their own economy and help create social and environmental programs. The Coca-Cola Company has been very successful in helping other nations grow and become economically stable by investing millions of dollars back into the countries in which they are operating.

Legal Factors Legal factors that could pose an environmental threat to the CocaCola Company include new legislation or regulation of food and beverage products. Activists are trying to push for more government involvement in product advertising and labeling. While many laws have already been passed in this regard, expanded or new laws could threaten the company by creating more overhead expenses and decreasing the profit margin. Technological Factors In today's marketplace, technology is a key player in helping a business stay profitable. Large businesses, like the Coca-Cola Company, must invest in technological research to find ways to become more efficient, and ultimately better competitors. The CocaCola Company should address external technological threats by investing directly in applied research to improve recording and monitoring of the sales, production and delivery process between the Coca-Cola Company and the bottling companies (p. 90). Competitive Factors Consumer tastes and needs are ever changing. With the new focus on health and nutrition and concerns with obesity, many consumers are changing their behaviors and products choices. Tea products, bottled water and energy drinks have become favored as opposed to the typical soft drink. This is an external threat to the Coca-Cola Company, as these changes in preferences have increased the number of competitors in the industry. The Coca-Cola Company is not only in competition with soft drink companies, like PepsiCo, Inc., but with other unassuming companies like Unilever, Kraft Foods, and Nestle. The Coca-Cola Company must continue aggressive efforts in responsible marketing, community investment and product

development to hold the No. 1 place in sales of juice, ready-to-drink coffees, and teas. Surprisingly, Coca-Cola is ranked No. 3 in soft drinks, but their No. 1 ranking in juices, teas and coffee products indicate that they are in touch with their consumer's interests, and that they understand that soft drinks cannot be their sole products in order to sustain business.

C. Target Market The primary target market of the Coca-Cola Company is all consumers of all nations that have a thirst for a high-quality beverage from a reputable brand that cares about small communities and saving the environment. The Coca-Cola Company is well known for advertising to persons of all ages, genders, incomes, ethnicity and lifestyles. Nevertheless, more specifically, over the last decade the Coca-Cola Company has focused on a secondary target market, based on specific psycho-graphic characteristics, of consumers that are health conscious and interested in buying products to support their overall wellness. The Coca-Cola Company has reached this market through many product lines, and has customized their website to provide healthy resources and marketing of products that are considered smart choices.

D. Product Coca-Cola is the number one selling sparkling beverage in Pakistan. Coca-Cola is primarily a business product. As a business product, Coke is sold to grocery stores, convenience stores, gas stations,

vending companies and restaurants. Coke could also be considered a convenience product as it is a relatively inexpensive item that merits little shopping (Lamb, Hair, McDaniel, pg. 308). It is can found almost everywhere, from schools, hotel, theme parks, airports, places of business and even rest stops on the highways. Coca-cola was packaged solely as soda fountain drink when it was introduced in 1886. In 1894, a candy storeowner started placing the drink in bottles and approached the owner of the Coca-Cola Company, Asa Griggs Candler, about bottling the drink. Candler declined. Then in 1899, Candler sold the rights to bottle the drink and over the next 10 years, 400 bottling plants would be born. The packaging of red and white Coca-Cola products is a world recognized. There are three main functions of packaging (Lamb, Hair and McDaniel, pg. 320): 1. Contain and protect the product 2. Promote the product 3. Facilitate storage, use and convenience The Coca-Cola bottling plants have continued to develop new packaging to meet these three functions, while also adding the ability to recycle and produce a product that is no longer seen as waste, but as a valuable resource for the future (www.coca-cola.com). This recycling initiative adds to Coca-Colas position in the consumer market. The products that Coca-Cola offers have many strong competitors and it is important for the brand to be recognized everywhere as a leader in all aspects, from taste and price to contributions and recycling.

E. Price

The Coca-Cola Company uses status quo pricing. It is important for Coca-Cola to stay competitive in price with its leading competitors. This type of pricing is also known as meeting the competition. Most prices are set by the retailers of the product, but in general, these prices are based on the growing rate. It almost seems as if Coca-Cola and its competitors have a cooperative agreement when pricing one week Coca-Cola is on sale and the next it is Pepsi. However, this is not set by the cola companies, but that of the grocery stores to maximize sales.

F. Place Coca-Cola is distributed to more than 200 countries, with more than 450 brands consisting of 2800 beverage products. Each of these products is packaged and formulated to meet the consumer needs and preferences of its region or country. Coca-cola produces the product, but relies on its distribution channel to get the product to the consumer, by working with bottling companies and retailers. Cocacola does not have control over the entire distribution channel, but has strong governing principles for all of its suppliers to ensure they adhere to Coca-Colas guidelines.

G. Promotion How does Coke use marketing communication to reach customers?

By making relationships with not only consumers but also everyone who comes in contact with Coke products, Coca Cola is able to market to a diverse amount of people. According to Muhtar Kent, President and Chief Operating Officer of The Coca-Cola Company, Building cross-cultural relationships, in particular, is why we are the largest beverage company in the worldand why nearly 80 percent of our revenue and profits come from outside North America. (Kent 2007) Overall, good business ethics play a major role in how Coca Cola handles the business. What does their promotional mix include? Coca Colas promotional mix includes product, price, place, and promotion. Cokes product, all 2800 of them, varies from soft drinks all the way to just water and, depending on the product, the price can vary quite much. Just Coca-Cola alone is found all over the world. How is that for placement? Cokes promotional efforts, of course, span worldwide. According to the Coca Cola website, the per capita consumption of Coke products as increased from 1987 to 2007 in Africa, Eurasia, European Union, Latin America, North America, and the Pacific. (www.thecoca-colacompany.com) What promotional strategies do they use? One of the promotional strategies that Coke advertises comes right from the website. It uses phrases like, Satisfying your needs and The choice is yours to let consumers know that they are being taken care of and have control over what they consume. (www.thecoca-colacompany.com) In addition, Coke also offers links on their website to help the consumer learn about hydration, sweeteners and taste.

H. Overall Marketing Mix How do the 4 Ps work together to bring a cohesive package to the consumer? Because Coca Cola has an enormous amount of diverse consumers from diverse locations around the world, Coca Cola can easily adjust just one thing like price or all four components to cater to the diverse needs of Cokes consumers, and still make a profit. How does one marketing mix strategy affect another? Depending on the market segmentation, the proximity of other segments and the current marketing mixes being implemented will make the difference on how well the marketing mix does in each of those areas. After the market segmentation is selected, a more exact description of consumer needs and wants can be determined. Next, marketing objectives that are more accurate, followed by improved resource allocation, can be planned. Putting all the elements together will lead to better marketing results. According to Charles W. Lamb, Jr., Joseph F. Hair, Jr., and Carl McDaniel, authors of Marketing, Before 1960, for example, the Coca-Cola Company produced only one beverage and aimed it at the entire soft drink market. Today, Coca-Cola offers over a dozen different products to market segments based on diverse consumer preferences for flavors and calorie and caffeine content. Coca-Cola offers traditional soft drinks, energy drinks (such as Powerade), flavored teas, fruit drinks (Fruitopia), and water Dasani). (Lamb, Hair, and McDaniel 2006) One can see the many dimensions of Coca Colas product line and how specific the marketing mixes have to be to stay competitive among other businesses. Are there limitations to the marketing mix?

Yes. For example, if a can of Coke sold for a penny in America and there was advertising everywhere about Coca-Cola products, people might question the quality of the soda; the coke might not sell very well. On the other hand, a Coke machine out on the top of a mountain or a $25 can of Fresca probably will not appeal to many people; also will not profit. The main point of marketing mix is the mix; it has to be just right to provide the desired results. What are the disadvantages or pitfalls to the strategies used by this company? Because Coca-Cola uses advertising props such as billboards, painted buildings and sings, this could affect the buying habits of an evergrowing group of people, environmentalists. The kind of paint used on the building could be toxic, the signs could end up littering land, and depending on how well the billboards are maintained, they could be a possible pollutant as well. (www.aidg.org)

I. SWOT ANALYSIS

STRENGTHS:

Coke Company has a good market reputation and a strong distribution network. Coke is having a multi brand strategy ad is looking for a great volume opportunity in Pakistan. Coke is presently no. 2 player in Pakistan Carbonated soft drinks market. Coke was born 11 year before Pepsi (in 1987) ad a century later still maintains that pioneering least.

 Pepsi and coke both have good brand image.

WEAKNESS:

Coke has less no. of retailers Less force - it has less no. Have owned bottling plant. It has not planned for setting up of any new plants where their competitor has planned to set up several new plants.

OPPORTUNITY: A rapidly growing market, which is expanding @ 205 every year. It can take the market very well with the new investment of Rs. 2400 corers. It can give a big jerk to its major competitor Pepsi it can increase its number of fountain to a sizeable amount. Increasing trend of cold drink of different brands.

THREATS:

It has a continuous threat from Pepsi as well as various other local soft drinks. Coke has a major market than Pepsi between the teenager as well as the student due to advertisement of world cup cricket.

 A large amount of expenses on the advertisement. There is no proper policy of distributing the merchandising assets of the company to the retailers.

J. CRM

How does this company keep momentum? Coca-Cola keeps their momentum by following changes in the consumer environment and responding with new products. According to Erich Joachimsthaler, author of Is Coke Zero a Tonic for What Ails Coca-Cola?, Coke Zero gives the Coca-Cola company much needed momentum. (Joachimsthaler 2007) Coke Zero is an attempt at luring men to diet drinks because it sounds less feminine. How do they maintain a relationship with their customers? In order to maintain a relationship with their customers, Coca-Cola offers Coke Solutions on their website to appeal to the retailers that sell Coke products. There are links such as better beverage marketing, crew programs and innovations and insights. Have they lost touch? Will they lose touch in the future? Coca-Cola has not lost touch because they have been able to change with the times after evaluating feedback and listening to their customers. Coke knows that people and trends change and they should be able to adjust to future demands.

K. Conclusion

We conclude that despite the fact Coca-cola currently occupies the market leadership position overall but it does not guarantee that the company will sustain its position in the future as well. In Pakistan as compared to Pepsi, Coca-Cola has less number of consumers as Pepsis market share in Pakistan is approximately 58% where as coke market share is hovering about 32%, hence the conclusion is that Coca-Cola must enhance factors such as relationship marketing, innovation and technology specially in Pakistan to attain market leader position in this region as well.

Bibliography
o Lamb, Hair & McDaniels. Marketing. 8th ed. Thomson Southwestern Publishing, Mason: Ohio The Coca-Cola Company. Home page. 07 Oct 2012. www.thecoca-colacompany.com

o "Product List." The Coca Cola Company. 2012. The Coca Cola Company. 8 Oct 2012 <http://www.thecocacolacompany.com/brands/brandlist.html>.

o "Per Capita Consumption." The Coca Cola Company. 2012. The Coca Cola Company. 8 Oct 2012 <http://www.thecocacolacompany.com/ourcompany/ar/percapitaconsumption.html>.

o "Satisfying Your Needs." The Coca Cola Company. 2012. The Coca Cola Company. 8 Oct 2012 <http://www.thecocacolacompany.com/brands/index.html>.

o Fuchs, Miriam. "Coca Cola Marketing in Developing Countries." AIDG. 11 Jul 2007. Appropriate Infrastructure Development Group. 8 Oct 2012 <http://www.aidg.org/component/option,com_jdwp/Itemid,34/p,535/>.