The Evolution of Coca-Cola
Many people recognize Coca-Cola, also known as Coke, as one of the most popular brands of soda pop available world-wide, but they are not just all about soda. They also offer a variety of drinks such as tea, juice, sports drinks, water, coffee and even milk. In fact, Coca-Cola offers over 800 beverages in the United States alone. There is truly something to fit anyone’s taste and occasion. They are proudly in more than 200 countries and territories and have over 500 brands within their total beverage company. Coca-Cola is constantly trying to reduce sugar in their drinks and expand their portfolio with new, exciting products. Not only are they working hard to bring new beverages to the market, they are also working to reduce their environmental impact by replenishing water and promoting recycling. With the Coca-Cola Polar Bear as their mascot, the popular beverage brand opened the World of Coca-Cola attraction in May 2007 in Atlanta, Georgia. Here guests can explore the story of Coca-Cola, from bottling to The Vault where they keep the secret formula for its most popular beverages. This really sets Coke apart from its competition and gives its consumers another reason to love the brand. These are just a few of the many things Coca-Cola is made of and what makes them such a reputable organization.
The Coca-Cola Journey
The Coca-Cola company first got its start in 1886. Atlanta pharmacist, Dr. John Pemberton created a unique soft drink out of curiosity and thought it could be used in soda fountains. It was an instant hit. His partner and bookkeeper, Frank Robinson, named the famous beverage “Coca-Cola” and also designed the trademarked script that is still used today. After just two short years, prior to his death, Dr. Pemberton sold part of his new-found business to Atlanta businessman, Asa Candler. Candler was able to distribute Coke to soda fountains everywhere. In 1894, Joseph Biedenharn was so impressed with this growing demand for Coca-Cola, he installed bottling machinery and became the first person to make this beverage portable by putting it in glass bottles. In 1899, larger scale bottling was made possible when Benjamin Thomas, Joseph Whitehead and John Lupton purchased the bottling rights from Candler for one dollar and developed the Coca-Cola worldwide bottling system. In 1916, after years of inconsistent packaging and frustrations with imitations, Coke developed their own unique bottle that was then trademarked it 1977. The World of Coca-Cola still has many of these bottles on display in Atlanta. The company used simple marketing techniques at first such as coupons for free beverages. Newspaper advertising and giving away promotional items followed closely behind. In the 1970s, Coca-Cola’s advertising really started to take off with celebrities and other famous icons participated in advertising campaigns. Fast forward to 2009, the “Open Happiness” campaign was unveiled. The message was everywhere you could look. This theme continued on as a highlight in the 2010 Winter Olympic Games. Without a doubt, Coca-Cola continues to be a cultivating success. They have now grown to over 500 brands including popular ones such as Vitamin Water, Minute Maid, Gold Peak Tea, Powerade, Smart Water and Fanta. Now in more than 200 different countries, Coke continues to be a leader in their category and strives to be a better business every day.
Supply and Demand Conditions
Over the past several years, 2007-2018, Coca-Cola has seen spectacular growth in the majority of their regions. They have noticed a gradual shift in emphasis when it comes to global product mix in response to consumer trends. Most of their products, including tea, coffee, water and sports drinks received good results at year end.
According to the law of demand, as the higher the price of a good and service, the lower the quantity demanded. More directly when the price of a goods falls, the quantity demanded increases. Therefore, when the price of Coca-Cola decreases, the quantity demanded will rise. There are numerous of reason stated why there is an inverse relationship between the price and quantity demanded. Firstly, there is a direct relationship between income of consumer and demand. The income effects of a price change will affect the demand of Coca-Cola. A price increase in Coca Cola will decrease the quantity demanded of it. The buyers simply cannot buy as many cans or bottles of Coca-Cola at higher prices. Secondly, taste and preferences of the consumers also influence the demand to greater extent. In the case of Coca-Cola, if there are hard core consumers who prefer the taste of Coca-Cola, even if the price of increases, the demand will remain the same. There are many types of Coca-Cola for instance, Coca Cola Zero or Diet Coke. Coca-Cola Zero is sweetened with a blend of low-calorie sweeteners, while Diet Coke is sweetened with aspartame. Besides that, an increase in the potential consumer population will increase the demand for a good or service. As the potential consumer population increases, the demand for Coca-Cola will increase. Suppliers can consider advertising to promote Coca-Cola through social media, newspaper, internet and magazines that will increase the demand of Coca Cola.
Theory of elasticity for Coca-Cola is closely related to the price elasticity of demand and price elasticity of supply. The elasticity of Coca-Cola is measured by how the response of quantity demanded is changed in price and compared to the size of the change in quantity demanded with the size of the change in price. Thus, the degree of price elasticity of demand is closely related to the slope of the demand curve. The coefficient of elasticity is used to quantify the concept of elasticity. The degree of price elasticity of demand has five types; elastic, inelastic, perfectly inelastic, perfectly elastic, and unit elastic. Depending on the availability of close substitutes, whether consuming Coca-Cola is a luxury or a necessity, the proportion of income spent on the good, and the amount of the time people have to adapt to a price change.
There are a number of factors that go into the determination of price elasticity of supply. Substitution possibilities that make it easier to substitute among the resources used to produce a good or service, the greater is its elasticity of supply. Next, the timeframe for the supply to make decision, time is usually critical in supply elasticity because of the additional costs to the producers to bring forth and release resources in shorter periods of the time. The supply will become elastic in the long run. The total revenue and elasticity effect to Coca-Cola products require that the business set a price that will maximize the company’s profit. The total revenue from the sales of good or service equals the price of the goods multiplied by the quantity sold when the price is changes, the total revenue also will change but the price would not increase the total revenue. The elasticity responsive as the firm control it has over using the price to raises up the profit.
Marketing Structure and the Future
Implementation is the process of turning plans into actions, and involves all the activities that put the marketing plan to work. Successful implementation depends on how well the business blends its people, organizational structure and company culture into a cohesive program that supports the marketing plan. For its further success, Coca Cola must impose several key changes. Production needs to be on time and meet the quota demanded from wholesalers. It must also be efficient so as not to build inventory stocks and inventory prices. The marketing needs to be motivated and knowledgeable about the product. The forms of promotion such as advertising must be attracting and enticing to the target market to get the greatest amount of exposure possible for the product. This will ensure the success of the product in the stores. Distribution of the product must be efficient. This problem has already been taken care of with convenient transport routes to commercial areas and transport already being arranged. Some firms have high degrees of brand loyalty. It means that a new firm would have to spend a lot of money on advertising to create its own brand loyalty. For example, Coca-Cola has a marketing budget of $4bn a year (2016). Coca-Cola has been very successful in creating very strong brand loyalty. Market share analysis compares Coca-Cola’s business sales performance with that of its competitors. Coca-Cola looks to increase its market share by over 60%. Target market various age groups and lifestyles from high school students to universities, and male or female.
The factors that make up the duopoly soft drink market and that make it very difficult for the competition to enter include network bottling, advertising spending, brand loyalty and retail distribution. Coca-Cola has franchisee agreements with their existing bottlers who have
rights in a certain geographic area. These agreements prohibit bottlers from taking
on new competing brands for similar products. Also, with the recent consolidation among the
bottlers and the backward integration with both Coke buying a significant percentage of
bottling companies, it is very difficult for a firm entering to find bottlers willing to distribute their product. The advertising and marketing spent in the industry is very high by Coca-Cola and its bottlers. Coca-Cola has a long history of heavy advertising and this has earned them a huge amount of brand equity and loyal customers all over the world. This makes it virtually impossible for a new entrant to match this scale in this market place. Retailers enjoy margins on these soft drinks for the shelf space they offer. These margins are quite significant for their bottom-line. This makes it tough for the new entrants to convince retailers to carry or substitute their new products for Coca-Cola.
Recommendations
When applying the Porter’s Five Forces Model on Coca-Cola, it shows several
indicators that can be reflected in the recommendations. Beginning with changing consumer
trend to more healthy choices Coca-Cola need to focus on a variety of healthy options. In
addition to the presence of various options and renewed continuously satisfy all tastes and slides
and resist the risk of new alternatives on the market. Introduced creative management to Coca-
Cola in order to maintain the position of the brand in the soft drink market.
Conclusion
Nowadays, any business planning must contain the industry analysis. The industry
analysis provides the organization with indicators for the competition within industry. The soft
drink industry is one of the profitable industries. The industry also is witnessing a fierce
competition between several companies, including the giant Coca-Cola Company. There are
several benefits to conduct industry analysis such as setting the expansion methodology for
organization.
References