Coca-Cola Company is a publicly-traded corporation founded and headquartered in America but selling its products across the globe. It was created after pharmacist John Pemberton’s invented a tonic product and sold it to Asa Griggs Candler, who founded the company in 1892 (Suay-Pérez et al., 2021). Coca-Cola Company specializes in producing and selling nonalcoholic beverages distributed in syrup and concentrate forms worldwide. The products include sports drinks, soft drinks, water, plant-based beverages, dairy, coffee, tea, and juices. The Coca-Cola Company has several segmented regions, including Latin America, Europe, North America, the Middle East, and the Asia Pacific, as an international organization. Non-geographical segments recognized at the company are Bottling Investments, Global Ventures, and Corporate (Suay-Pérez et al., 2021). The Coca-Cola products and brands such as Sprite, Coke, Fanta, and Diet Coke are available in over 200 nations and territories (Sharma et al., 2019). The wide distribution network includes bottlers, wholesalers, distributors, and retailers.
Competitive Analysis
The Coca-Cola Company is a highly competitive force in the nonalcoholic beverages industry. Through strong advertising messages and distribution networks, Coca-Cola has remained in the top position in the beverage sector. While there are several competitors, Pepsi is the closest in market share. Others include Rauch or Red Bull, Gatorade, Dr. Pepper, and indirect competitors such as Nescafe and Lipton (Guo & Wen, 2021). Each competitor is differentiated from Coca-Cola Company in one way or another. Pepsi is a close competitor due to its strength in distribution and marketing, making it the second-largest beverage company in market share. Red Bull, manufactured by Rauch, is fast-growing energy and sports drink with a strong brand valuation against Coca-Cola brands. It presents a stronger taste than Coca-Cola’s energy drinks while adopting a unique pub culture for mixing well with other drinks.
Gatorade differentiates itself by using scientific methods and research to manufacture a nutritional sports drink for calorie-conscious people. Dr. Pepper is famous for its unique taste and variations of flavors. Its market penetration is highest in the US due to smart marketing strategies and appealing slogans. Nescafe and Lipton are indirect competitors in the coffee and tea categories, respectively. Lipton is differentiated by its green tea and unique flavors served in its cafes (Guo & Wen, 2021). Nescafe presents as a competitor through its loved taste and a great distribution strategy. Each of these competitors uses a differentiating factor to win their consumers.
The Coca-Cola Company Strengths
The company is strong in distribution, diversification, and marketing against most of its competitors. The distribution strategy includes a franchised model, direct and indirect selling, and a hub and spoke approach. In the franchised distribution method, the Coca-Cola Company sells its concentrates and syrup products to bottlers, who in turn sell to distributors. Bottling partners are strengthening by having marked exclusive geographical territories (Suay-Pérez et al., 2021). Wholesalers and retailers who acquire their products from the distributors do indirect selling. Although Pepsi has a strong distribution network, they have limited resources to reach worldwide sales such as Coca-Cola, while Dr. Pepper sells to independent bottlers who have no link to the company.
The Coca-Cola Company boasts of a wide portfolio of products in the beverage sector when compared to Pepsi and Dr. Pepper. The business offers its customers sparkling soft drinks, various water drinks, iso-tonics, juices, energy drinks, tea, milk, coffee, and orangeades. It is known for adapting to local market needs, such as offering beer to Brazilian consumers (Suay-Pérez et al., 2021). Pepsi, on the other hand, earns over half of its revenue from sales, which reduces its beverages portfolio. Dr. Pepper has slightly over 50 brands in its beverage portfolio (Suay-Pérez et al., 2021). Therefore, Coca-Cola has the widest beverages product portfolio than its largest competitors.
Coca-Cola has an aggressive marketing strategy that outperforms all the competitors discussed earlier. It has the strongest brand awareness and recognition in the world as a soft drink manufacturer, with over 90% of the world population being aware of the company’s white and red logo (Deshpande et al., 2020). Although Pepsi has also gained worldwide recognition, it is only close to Coca-Cola in the US market, while Dr. Pepper is yet to become a globally known rand. Coca-Cola uses positioning, segmentation, and targeting strategies to reach every class of consumers.
The Coca-Cola Company Weaknesses
The two weaknesses that Coca-Cola presents against its competing businesses are the perception that its drinks are unhealthy and less market penetration in some product lines. As customers are shifting from high sugar foods and drinks, the effect is felt directly by soft drinks companies. Coca-Cola’s most known brands are in the group of carbonated soft drinks such as Coca-Cola, Fanta, and Sprite. Specialized healthier brands have gained higher brand valuation in areas such as sports, energy, low calorie, and diet drinks (Sharma et al., 2019). For example, Diet Pepsi ranks better than Coca-Cola in brand valuation and market penetration. Indirect competitors are gaining traction in the market due to specialization in products that consumers perceive to be healthier, including Nescafe, Lipton, Tropicana, a fresh juices business. Therefore, as a company, Coca-Cola enjoys dominance in the soft drinks sector. However, it lags behind some healthier brands in market penetration and valuation, as consumers seek to adopt better lifestyles.
Marketing Strategies
Coca-Cola has a sophisticated marketing strategy that utilizes position, segmentation, and targeting to personalize messages and deliver them to the right groups. The company develops new products to suit every consumer segment not covered by the existing products; or when there are changes in preferences and tastes of existing customers. It also employs niche, mass, and undifferentiated advertising approaches for all the products. The company uses a positioning marketing approach to remain competitive in the industry (Deshpande et al., 2020). It also benefits from the marketing mix, using products, place, price, and promotion to improve sales.
Product
Product refers to the services or goods that a business sells to meet customer demands or to create new demand. An organization must understand its product life cycle for pricing and promotional purposes. Coca-Cola’s products include sparkling soft drinks, various water drinks, iso-tonics, juices, energy drinks, tea, milk, coffee, and orangeades (Okoye-Chine, 2021). Each of these drinks has different packaging, sizes, brands, flavors, and tastes. For some major brands, such as Fanta and Sprite, Coca-Cola has specialized advertising messages. Fanta is portrayed as creating freshness and bringing fun whenever it is drunk. The Sprite brand targets youths and teenagers, offering over 20 variations in flavor (Okoye-Chine, 2021). Coca-Cola develops a new product targeting a certain segment of the market or a new need among its customers. For example, Sprite was made to compete against 7 UP, while Diet Coke was created for the customers who chose not to buy high sugar content drinks such as Coca-Cola (Okoye-Chine, 2021). Therefore, each new product changes Coca-Cola’s marketing strategy, especially the message it sends across to the customer.
Place
Place describes the aspect of the geographical or virtual location where the product is to be sold and delivered to buyers. Placement involves getting the product or service to areas where potential customers will see it, including on TV, certain stores and outlets, and web pages. Coca-Cola’s distribution system places its products in more than 200 regions and countries of the world (Suay-Pérez et al., 2021). Every day, the company sells its drinks to almost two billion consumers. The distribution begins with sales of concentrates and syrups to bottlers who do branding and packaging of the final products. They then sell to wholesalers while working closely with other players, including restaurants, convenience and supermarket stores, amusement parks, street vendors, and other retailers in the chain.
Price
Price is the payment consumers make for a product or service on sale. Pricing strategies consider many factors, including seasonal discounts, production costs, competitor pricing, product value, and intended message. Coca-Cola uses its pricing model to drive consumer and brand loyalty while considering competitor prices. As the size of the product increases, the prices are fall to counter competition from Pepsi (Suay-Pérez et al., 2021). This strategy also encourages bulk buying as customers get lower prices for larger product sizes. Nevertheless, the prices do not go too low to cause consumers to label the drinks as of poor quality.
Promotion
Promotion refers to the processes and activities involved in creating product awareness by showing consumers they need a product and convincing them to pay a certain price for it. It includes public relations, marketing strategy, and advertising of services and goods. Coca-Cola spends billions of dollars in marketing and advertising to outweigh its competitors. For example, expenditure increased from $4 to $4.1 billion from 2016 to 2018, with 20% of this figure spent in the US (Deshpande et al., 2020). The company uses both traditional and digital marketing and promotion methods to reach its customers.
Print media, broadcasting, and branded products are some of the traditional methods used to market Coca-Cola products. The print media includes magazines, newspapers, posters, and billboards, while broadcasting involves airing advertising messages on radio and TV. Branded products carry marketing and promotional messages to the final consumer. In 2013, Coca-Cola began the ‘Share a Coke’ campaign based on branded drinks that carried people’s names and a message to visit the company website to add more names (Okoye-Chine, 2021). The advert was released on both traditional and digital media, resulting in increased sales and brand strengthening.
Some of the digital marketing methods used at Coca-Cola include website, social media, and pay-per-click strategies. The company uses both digital and traditional methods collaboratively to reach both online and offline customers. For example, the branded products campaign described above encouraged offline customers to visit the website, turning them into digital platforms too. Coca-Cola has a wide reach and followership on social networks, posting content every day and engaging with customers.
Competitive Advantage
Coca-Cola has competitive advantages in all the four Ps, including brand and customer loyalty, marketing and pricing strategy, and product portfolio. The products portfolio includes very popular brands that rake revenues in the billions every year. A wide product portfolio has the advantage of meeting the needs of a large customer segment. The competitive advantage in promotion is Coca-Cola’s vast resources that allow it to spend billions in advertising per year (Guo & Wen, 2021). When Pepsi withdrew from the traditional media promotion, it made an error that gave Coca-Cola mileage, as the former is the main competitor.
References
Deshpande, A., Kee, D. M. H., Shankar, D., Segi, S., Charles, E. A., Parameswaran, K., & Vellmurugan, M. (2020). Influence of strategic branding in soft drink market in Indian and Malaysian context: Study on Coca-Cola to remain Top of the Mind Brand (TOMB). Asia Pacific Journal of Management and Education (APJME), 3(1), 82-93.
Guo, X., & Wen, M. (2021, December). Research on competitive strategy of Coca-Cola Company. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 2879-2885). Atlantis Press.
Okoye-Chine, M. (2021). The effect of sales promotion on the marketing of Coca-Cola drinks in Anambra State. International Journal of Innovative Social Sciences & Humanities Research, 9(1).
Sharma, A., Larkin, J., Fernandez, I., & Esteves, G. (2019). The diversification of Coca-Cola: Globalization & strategic fit. Journal for Global Business and Community, 10(1).
Suay-Pérez, F., Penagos-Londoño, G. I., Porcu, L., & Ruiz-Moreno, F. (2021). Customer perceived integrated marketing communications: A segmentation of the soda market. Journal of Marketing Communications, 1-17. Web.