Introduction
The Coca Cola Company is an American multinational beverage corporation incorporated in Atlanta George United States in 1892. It is world largest beverage company. The Company produces different brands of beverages, soft drinks, juices, coffees waters. Company operates in more than 200 countries worldwide and also start operating in Pakistan in 1960. By working in a huge number of countries company holds a distribution system in order to make available their products to the final consumers through company owned bottling and distributors and independent franchises wholesalers and retailers which also accounts for the world`s largest distribution system .
Popular brands of the Company’s are
- Coca Cola
- Diet Coke
- Fanta
- Sprite
Coca Cola Company is the market leader in beverage industry with a market share of round about 48% and company holds a good financial position with global net operating revenue of $33014 million.
As world third most valuable brand and market leader in the beverage industry Coca Cola has a unique and strong marketing and differentiation strategy which is mostly reason behind the success of the company.
Marketing strategy
The Company focuses a lot on the promotional plans of their products through different channels in the world like direct marketing, web based media marketing, social media and sales promotion and marketing campaigns. The marketing campaign “Share a Coke” is the most successful campaign of the company till to date. According to a study Company bears 4 billion dollars on advertising each and every year.
Differentiation strategy
Coca Cola maintains their differentiation from other soft drinks by spending more than 20% of their advertisement budget to only differentiate their product. It has positioned successfully with following standards
- Corporate repute for innovation and quality
- Communication of product strength perceived by users
- Enjoy & fun symbol
SWOT Analysis
Here is the SWOT analysis of Coca-Cola.
Strengths
- Strong Brand Identity: It is highly popular brand with its unique identity. Its soft drinks are the bestselling drinks in history.
- Global Reach: it is sold in more than 200 countries with 9 billion servings per day of its products. It has introduced more than 500 new products worldwide. It touches every taste, lifestyle and demography.
- Brand Equity: it is one of the most renowned brand with highest brand equity.
- Brand association and customer loyalty: Coca-Cola is considered US’s one of the most emotionally connected brand. This valuable brand is associated with ‘happiness’ and has strong customer loyalty. Customers can quickly identify their particular taste. It has huge fan following and thus is difficult to replace.
- Dominant Market Share: Out of Coca-Cola and Pepsi, Coca-Cola has the largest market share. Coke, Sprite, Diet Coke, Fanta, Limca, and Maaza are the highest growth drivers for Coca-Cola.
- Distribution system: Coca-Cola has the most efficient and most extensive distribution network in the world. The company has nearly 250 bottling partners globally.
- Brand Valuation: Coca-Cola is listed as the 3rd Best Global Brand Interbrand annual ranking with an estimated brand value of $79.96 billion.
Weaknesses
- Product diversification: Coca-Cola has low product diversification. Where Pepsi has launched many snacks items like Lays and Kurkure, Coca-Cola is lagging in this segment. It gives Pepsi leverage over Coca-Cola.
- Aggressive competition with Pepsi: Pepsi is the biggest rival of Coca-Cola.
- Health concerns: Carbonated drinks are one of the major sources of sugar intake. It results in two grave health issues – obesity and diabetes. Coca-Cola is the biggest manufacturer of carbonated beverages. Many health experts have prohibited the use of these soft drinks. It is a controversial issue for the company. However, Coca-Cola hasn’t devised any health alternative or solution for this problem yet.
Opportunities
- Diversification: Coca-Cola has the opportunity to introduce new production in health and food segment just like Pepsi. It can contribute to their revenue, and they can branch out from carbonated drinks.
- Reach in developing nations: any regions with hot climate have the highest consumption for cold drinks. Thus, increasing presence in such locations can be excellent – Middle Eastern and African countries are a good example.
- Advanced supply chain system: Coca Cola’s business is entirely dependent upon logistics and supply chain. Transportation costs and fuel prices are always high. So, coming up with some advanced and improved systems for distribution can be an opportunity for it.
- Packaged drinking water: Coca-Cola owns several packaged drinking water brands like Kinley. There is a great potential for expansion in this segment for Coca-Cola. There is an opportunity to expand and bring more healthy drinks in the market to avoid people’s criticism.
Threats
- Water usage controversy: Coca-Cola has faced many criticisms over its water management issue. Many social and environmental groups have claimed that the company has a vast consumption of water in water-scarce regions. It was also alleged that Coca-Cola is polluting water and mixing pesticides in water to clear contaminants.
- Packaging controversy: Coca-Cola was alleged for its use of single-use plastic bottles. It has also been criticized over its recycling and renewable sources.
- Direct and indirect competition: Although direct competition from Pepsi is clear in the market, however, there are many other companies which are indirectly competing with Coca-Cola, Costa Coffee, Starbucks, Tropicana, Lipton juices, and Nescafe, are the indirect competitors of Coca-Cola which can threaten its market position.
Porters Five Forces Model
Here is the porter’s five forces model application on Coca-Cola.
Bargaining power of suppliers:
The bargaining power of suppliers for Coca-Cola is low. Because the number of suppliers is high while switching cost for coca Cola is low. While Coca Cola can easily switch from one suppliers to another but it’s not possible for suppliers to switch from Coca Cola to another company. So suppliers may face losses. The result is:
- Large number of suppliers
- Small to moderately large size of individual suppliers.
- Forward integration difficult for the suppliers.
- Switching costs for Coca Cola not so high
Bargaining Power of Customers:
The bargaining power of individual customers in case of Coca Cola is low. Individual customers generally buy small volumes and they are not concentrated in specific markets either. However, the level of differentiation between Pepsi and Coca cola is low. Mostly they sell similar flavors. Switching costs are not high for customers and still the two brands enjoy high brand loyalty. The customers of coca cola are not price sensitive. Overall the customers’ bargaining power is weak.
Threats of new entrant:
In the beverages industry there are several factors that discourage new brands from entering. Growing a brand overnight is impossible. There are significant investments to be made. From operations to marketing every part requires a large investment. Some local brands may start it at smaller scale and still marketing and hiring qualified staff requires generous investment. The level of customer loyalty in the industry is moderate and for any brand to build customer loyalty it will take some time. So, while new entrants can compete with brands like Coca Cola at a smaller or local level, to build a brand as big is the toughest task as hiring both capital and skilled human resources.
Threats of substitutes:
Main substitutes of Coca Cola products are the beverages made by Pepsi, fruit juices, and other hot and cold beverages. The number of substitutes of Coca Cola products is high. There are several juices and other kinds of hot and cold beverages in the market. The switching costs are low for the customers. Apart from it, the quality of the substitute products is also generally good. So, based on these factors the threat from substitutes is strong.
Rivalry:
There are two major players in the soda industry and they are Coca Cola and Pepsi. There is intense rivalry between the two major players. There are a few smaller players too but they do not pose a major competitive threat. The two main players are nearly of the same size and they have similar products and strategies. The level of differentiation between the two brands is also low and therefore the price competition is intense
Suggestions
Health concerns
To improve its competitive advantage and achieve long term profitability coca cola company must decrease the amount of calories as people are becoming more health conscious so it may affect sooner or later by decreasing the calories will also be beneficial to compete with its competitors such as water and sport drinks.
Environmental friendly and price changing
Coca cola must work on green affect as environmental friendly products for that it has to change its packaging by not using plastics. If it changed its paging and design this will differentiate it from competitors and also it can change its prices as now no as such differentiation in its prices. Changing prices may lead to achieve its mission to reaches every consumer in the market.
Use of advance technology
Coca cola produces four hundred types of products other than coke and sprite but mostly people are unaware of those products so it needs to work its technology so that every product produces by the company must be available to its target customer it can use artificial intelligence that as the customer think of the product that must be on touch screen and must avail it on the spot this will increase the customer loyalty.
Culture of coca cola
As now its culture is also good where people go and change their passion into action but still there is need of flexibility in the work environment so that employees feel free to express their ideas like more use of organic products change the formula and process of the products which are not healthy this can be done in a creative environment and in a decentralized structure.
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