Coca Cola Company
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History of the Coca-Cola Company
The company was started in the year 1886 in New York Harbor in the United States. A great American called John Pemberton, an Atlanta pharmacist was inspired by simple curiosity. He mixed up a fragrant, caramel-colored liquid and carbonated water; and tried the sample with customers who all agreed that the drink was special. Pemberton’s bookkeeper Frank Robinson named the mixture Coca-cola and wrote it in a distinct script. To date Coca-Cola became the name of the company.
Marketing Philosophy of the company
A century later after the introduction of the syrup; the Coca-cola company produced more than 10 billion gallons of syrup. Later in 1888 Pemberton died, and a businessman Asa Griggs Candler became the company’s first person to expose factual vision to the brand and the business and during his presidency. And in 1894, a Mississippi businessman named Joseph biedenharn put Coca-cola syrup into bottles. Due to proliferation of copycat beverages taking of the company success, the company created a distinctive bottle shape to assure people that they were getting the real genuine Coca-Cola. The contour bottle, which has been the signature shape of Coca-Cola today, was chosen for its original design, attractive appearance, and the fact that, even in the dark, it could be recognized as the genuine article.
The company expanded overseas, and 1928 it was introduced to the Olympic Games in Amsterdam Olympics, the Coco-cola travelled with the U.S team. The company pushed for the development and distribution of the six-pack, the open top cooler and many other innovations that made it easier for people to drink Coca-Cola at home or away; this made Coca-Cola a part of people’s lives. After 70 years of success with one brand Coca-Cola®, the Company decided to introduce other products and this lead to the introduction of new flavors such as; Fanta® introduced in 1950s, Sprite® in 1961, Tab® in 1963 and Fresca® in 1966. The company consumer loyalty was growing rapidly and year after year the company had established markets in more places; Cambodia, Paraguay, Turkey, Montserrat and more. From the early century when just nine drinks were served a day, the company has grown to the world’s most ubiquitous brand serving more than 1.7 billion beverage a day. (Goizueta, 125)
Coca-cola was committed to local markets, also paying attention to what people from different cultures and backgrounds opinion about the drink, and how where and they want to drink it. With the company collaboration or partnering with other bottling companies, it has made is possible to reach out to the local communities they serve, believing that Coca-Cola mission is to benefit and refresh everyone it touches. The marketing environment influencing the growth and the development of the Company, can be classified into two divisions; internal and external environment. The external environment can further be classified into two categories; macro and micro marketing environment.
Internal marketing environment is the internal influence. That is the staff and the management opinions in the running of the business. If the leadership or the management of the company is favorable for the staff this will encourage their working abilities. In Coca-Cola Company, the management had provided a favorable working environment for their employees, through the provision of incentives, good payment, also provision of equal and no discriminatory employment opportunities. Due to all this, the employees have dedicated themselves in the company production which has lead to the company successfully penetrating the markets.
External marketing environment; these are the factors that will influence the performance of the business from outside. They can be categorized into two; macro marketing environment, which is the external factor that affect the company planning and performance and can be controlled by the company which include completion, need for new brand into the market. Coca-cola Company started with one brand of the product, but due to the increased demand in the market and the completion, they started facing competition from other companies, which lead to the introduction of other productions to make them to continue enjoying the consumer loyalty.
Macro marketing environment are the external factors which affects a company’s planning and performance, and are beyond the companies control. They include social-economics, legal and technological changes. Coca-cola Company paid attention to different cultures and backgrounds of people; this resulted into the expansion of the company to other parts of the world. And in 1978 the Coca-Cola Company was selected as the only company allowed to sell packaged cold drinks in the people’s Republic of china, this was due to respecting and upholding of the Chinese culture. The Coca-Cola Company also respected the rules of the land whenever they ventured. Some government policies from some regions have also made it impossible for the company to penetrate other markets. For example in Zimbabwe, Africa, the government decided that they were to own more than fifty percent of the share in the company, meaning they were to own the company; this affected the company planning and performance. (Changezdrai, 215).
Market segmentation refers to the division of a market into alternative groups of consumers with distinctly similar needs and product or services requirements. It can also be defined as the mass market division into distinct and identifiable segments or groups, which have common attributes, needs also display similar responses to marketing actions. Marketing segmentation ensures that the elements of the marketing mix, distribution, production and promotion, prices, are devised to satisfy exacting needs of different groups of customers. There are two main approaches to market segmentation. Adopting the outlook that the market is deemed to comprise of customers who are basically similar, hence the task is only to identify groups which share particular difference, this is called the breakdown. Another approach regards a market to comprise of customers who are all different, hence the task is to find similarities, and this is called the build-up method. The objective of the two methods is in the market identification segments where exclusive disparities exist between segments and similarities also exist between members within each segment. (Griffith, 187).
To segment consumer goods and service market, there is the use of market information that was collected based on certain key products, customers, or variable. These can be classified as segmentation bases which include; behavioral (when, where, and how the market behaves); profile (who are the market and where are they); and psychological criteria (why does the market behave that way). Customer’s name and full contact details (postal address, email, and mobile and home telephone number) should also be considered because they are useful for tactical-level marketing activities which include addressable direct marketing. The chart bellow illustrates the segmentation criteria for consumer markets;
Chart for Segmentation Criteria for Consumer Markets
To a certain the viability of segmentation, all the core customer related method of segmenting consumer goods and services markets such as identifying who the market is and where they are, determining the social class, or income levels, and geographical location that is the company can segment households based on geographical area to help assess brand penetration in different regions. Demographic variables relate to gender, age, lifestyle and family size, income, generation, education, nationality, religion, occupation and social class. These variables are useful in assisting marketing communication and media planning, because media selection criterion has been extended around these variables.
The Coca-Cola Company through the department of marketing and procurement has adopted the use of breakdown method and build-up method of segmentation. To venture into different market regions the company segented the market. Where the consumers had the same taste and preference and they were looking for the differences successful modify the market to open up the market for their products. Another segment is where the customers had a different taste and preference and here their main function was to identify the similarities that might exist among the customers to enable then decide which of their products to be introduced in that market region. The company also practiced the profile segmentation criteria which included; geographical area, this enable the company to identify the regions that their products have not reached and there is a need for the product in the region. Being the leading refreshing product provider the company through the adoption of profile segmentation they have identified different markets across the world making their products available in almost all the regions even in the remote areas.
The company also segmented different income levels by packaging. Like for people with low level of income, it had small returnable glass bottle, for the mediocre class it had non returnable bottle (NRT) and for people with high level income levels had coke tin. Sometimes during the promotion strategies the company introduces prize on the top cover. Here they segmented customers by benefit sought, i.e. by giving them prize. The company always showed activities, where people get together to enjoy moments of togetherness with their brand. Research analysis shows that teenagers love getting together, and it is when they are enjoying themselves, that will consume coke. For Pakistanian youths, friends and family socialization is ‘core’ behavior in their lives. Personality of Coke’s brand is all about togetherness. At times, Coca Cola Companypurposes to promote itself through events sponsoring. For several years, Basanat festival has somewhat become “Coke Festival”.
The local market strategies enable the Coca-Cola Company to listen to all the voices in the region of the world asking for beverages that can cover the entire range of tastes and occasions. What people desire in a beverage is a reflection of how they relax and recharge, who they are, how they work and play, where they reside. A student enjoying a refreshing Coca-Cola in the United States, a child in Peru asking for a juice drink, a woman in Italy taking a tea break, or a couple in Korea buying bottled water after a run together, Coca-Cola Company is there for all. The company has purposed to not only to make great drinks, but also contributing to communities all around the globe through their commitments to health, education, diversity, and wellness.
Company strives to be a good neighbor, consistently shaping business decisions in the prospect of improving quality of life in the communities in which they undertake business. It's a special thing around the world to have billions of friends, and that’s the company vision. The target market for the Coca-Cola Company is very wide as it meets the needs for several different consumers, tha ranges from the healthy diet consciousness through diet coke to the average human through its best selling drink.
Most company products persuade all age groups as it is verified that majority of people from different age groups widely consumes the company products. Due to the comparatively large market it is open to both genders, thereby allowing greater diversification of products. The company based its commercials on the young generation, because they are the target group for the company since the company wants to associate their products with youth and energy, though they also consider the older people as a co-target market.
The strategy for the future of the Coca-Cola Company has been very clear. The company marketing team focuses not only on the results but also on the task assigned. They firmly understand and believe that for a company to establish a clear image in the minds of consumers; first and foremost they need a clear image in the mind of the producers. The marketing strategies for the coming years can be summarized as follows; selectively widen the beverage brands family of to drive profitability growth to the company, grow system profitability in collaboration with other bottling partners, and participate in direct investments in highest potential areas across the world market, service to consumers with a lot of creativity, genuine and consistency to generate growth across all channels of markets, drive efficiency and cost-effectiveness everywhere around the globe, to inspire moments of optimism through brand and action, create market value and make a difference everywhere they engage, maximize long-term cash flow in the market, also to create an economic value added by improving economic profit. (Company, 134)
Threats and Competition
The main threat is the price fluctuation in different regions. An increase in price will only see people moving to the next available substitute i.e. Pepsi price will be a major factor in affecting sales of the coca-cola company products and marginal profit. The main coca-cola company competitor is the Pepsi Company which produces refreshing beverages. Some analysts assume that new competitors in the market can also affect the Coke Sales. But in reality new comers have low contributio as Soft Drink industry is in it a very strong and vast industry. New competitors can never make their way up to Coke’s level due to the broader market the company has captured (Company, 134). The increased rivalry between the coke and other companies has infact changed perceived value customer and now both competitors have to respond to an ever increasing demand and attributes of consumers. The Coca-Cola company team has learnt that even if the customers say no, they focused on why did customers say no and then come up with a way out on how to solve such issues. This has enabled the company to maintain the market stability.
Marketing mix is regarded as the most crucial stage of the marketing planning process. Marketing mix involves the combination of four major factors that constitute the core of a business’s market strategy (Ozimek, 89). These four factors include the following; product, place, price, and promotion.
Any organization or company in business must think of the product they are producing in three different levels; which are the actual products, the core products and the augmented products. The core products can be defined as the product the consumer is actually buying and the benefits it gives to the producer. For instance the Coca-Cola Company customers are buying a wide range of soft drinks which include; coca-cola, Fanta, sprite etc. on buying the products the company gains profit and for that they are able to maintain the market stability. The actual products constitute the parts and features, which delivers the core products. Core products are products that are integrated into a variety of end products which are then sold to end users.
The core products produced by the Coca-Cola Company are bought by the consumers, because of the high quality and the high standards of the products that Coca-Cola offers. The augmented product is the extra consumer benefits and services provided to customers, for the coke company they include; after sales services such as transportation cost also providing discounts on sale. Since soft drinks are consumable goods, the augmented level is very limited to the coca-cola customers. But despite the limitations the Coca-Cola Company does offer complaint phone service and help lines for customers who are not satisfied with the product or would wish to give feedback on the products and help line for customers who may wish to suggest on how they fill the product produced should be improved to meet their preferences. Awareness of the product diversity by the Coke Company has brought about a great improvement and increase on sales.
Promotion helps to open up new avenues for the product of accompany in the market. It helps in penetrating new markets where the product had never existed before also to bust up the products fame in the existing market. Product promotion can be done in different ways, such as; advertisements using different mediums like newspapers, television, and even bill-boards. Over time the Coca-Cola Companny has spent millions of dollars in developing and promoting their brand name, which has resulted in a worldwide recognition. Coca-Cola® is the most recognized trademark, which is recognized by 94% of the world population (Company, 121). Coca-Cola’s red and white colors, special writing and the unique bottle shape are all examples of global trademarks. The Coke Company has also associated with sports in promoting their products and building their image. For example in 1928 it introduces its products in the Olympic Games in Amsterdam Olympics, when the Coco-cola travelled with the U.S team. There are a number of branding strategies that have been employed by the Coca-Cola Company such as; generic brand strategies, private brand strategies, manufacturer’s brand strategy, family brand strategy and hybrid brand strategy. The company has utilized the individual brand strategy. The company major products are given their own brand names for example Fanta, Sprite, Coca cola etc although these products are presented as different lines they operate under the name of the Coca-Cola Company.
The Coca-Cola Company being the world largest refreshment provider they have covered almost all the global market. The company has always focused on a wide scale distribution of their products. This has been the reason why the 94% of the world population have knowledge about the Coke. Coca cola has also been the most recognized word after Ok. The company normally sets its own distributions directly to stores. These stores include a wide variety of Marts, Supermarkets, Retail stores, Convenience stores and Departmental stores. Due to availing of their products to customers reach they have tremendously increased their sales also improved the company’s image. Through that they have also met the customer’s demand hence achieving the customer’s satisfaction. The channel of distribution used by the Coca-Cola Company is extremely large because of the capacity of their products. For a period time the Company have increased the number of warehouses for specific products and have produced many products. They have also bettered services through setting up of nation service network.
The Coca-Cola Company has enjoyed the market stability for over a long period of time. But they have also been facing some challenges which have greatly influence the pricing of products in the market. The major threat of the company has been its competitor Pepsi Company; this has naturally influenced how the pricing is done by keeping in view the increased rivalry that exists between the Coca Cola Company and the Pepsi Company. Prices of the Coca-Cola Company products are basically standardized all over the world. The price varies with the currencies of different regions but in overall there is standardize price for their products using dollar as the measure of value.
Prices fluctuations or changes occur rarely after a long period of time say, a year or after some years. Most prices are devoid of governmental, regulation and political laws of different regions where the Coca-Cola Company have ventured in. But the increase in the rate of inflation in different regions has also resulted to increase of the price commodity, because increase rate of inflation will result in the increase of raw materials required for production. For example in Pakistan the prices have increased over a short period of time due to the increased rate of inflation. Price fluctuations can be a major factor that can affect the sales of a product. In a competitive market where the companies provide similar product in the market, each company may decide on the price of their product. If one company decides for lower price it can affect the sale of the opponent’s products. Coca-cola has been in price problem with Pepsi Company but they have managed the market due to the market stability they have created over time.
Coca-cola Company is very strong financially. It is as a result of the strong finance stability that enables the company to survive the ups and downs of the business world. The company wealth has been a cumulated over years back from 1886 when it was stated. Financial stability has made the company overcome the market threats poses on them by the competitor.
The financial reports of the Coca-Cola Company over the years have produced an increasing graph. For example the financial report of the company for the year 2008 and 2009 along with the percentage change is as follows; $.19 per share after income taxes related to the Company's portion of charges that investors have recorded of the company, $.16 per share after income taxes related to the impairment of certain bottling, manufacturing and intangible assets, $.05 per share after income taxes related to the settlement terms of a discrimination lawsuit and $.24 per share after income taxes related to an organizational Realignment.
After completing our project we have come up with following recommendations for the Coca- Cola Company, which will help the company in widening the market for their products further. The recommendations if implemented will also enable the company to create market stability that will see the company resisting all forms of threat in the market. The recommendations are as follows;
According to the survey conducted by an international firm, Pakistani people like less sweet cola drinks. So the Coca-Cola Company should come up with products of new diet flavors or even juices so as to bridge the gap that exist in the local market.
Marketing team should widen the channel of distribution so as to increase the availability of Coca-cola products in rural areas.
The Company should also consider producing coke cans locally to make it available to all people not only to the rich. Because currently these cans are only abroad and sold at high prices hence only targeting the high income earners.
Currently there are only two flavor drinks of the Coca-Cola Company available in Pakistan among other regions, company should think of extending their portfolio by introducing new flavors in these regions to widen the market and increase the sale for the maximization of the profit.
Coke Company should also consider capitalizing on the promotion of their products through advertisements also sports and other cultural activities to increase the company awareness among people.
A reflective report
This report was a combined effort of the group work. To come up with a well detailed and critically analyzed report the group members agreed that each member was to take part in collecting information from different sources and we then relate them to what we learnt in class and come up with a comprehensive audit report of the company. We chose to deal with Coca-Cola Company being the company that is well known in every region and the work was distributed to members as follows;
The group met for discussion after each member had carried out their research in the areas assigned to them. The group met for four consecutive days to discuss their findings and come up with a comprehensive report.
Concepts in marketing learnt.
I. Production concepts
II. Sales concepts
III. How to create market stability and widen the market for the product
IV. How to win the customers loyalty towards a certain product
V. How to convey marketing principles in today’s market
VI. We also learnt on to develop and maintain the company image.
The group faced a number of challenges and difficulties; they include.
I. Limited time in carrying out research
II. Limited source, source that can provide comprehensive information needed during our exercise.
III. Different opinion and understanding of members made, it is also difficult to come up with one answer during discussion time.
IV. A positive challenge was also experience among the members; each member commented those groups works can make one understand many concepts rather than personal studies. Since one can get different ideas from different people.