Coca Cola Marketing Strategies in Term Paper
- Length: 11 pages
- Subject: Business - Advertising
- Type: Term Paper
- Paper: #5159509
Excerpt from Term Paper :
For nutritionists, who continue to issue dire warnings about the obesity epidemic, a diet soda surge is good news, although the soda industry discounts the link. The shift to diet is being felt across the industry, including the many small regional soda companies. Coca-Cola operates in a highly saturated industry, as there are many, many competitors for cola products. Some companies manufacture highly competitive goods, such as PepsiCo, which manufactures markets and sells a variety of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages, and foods. PepsiCo's North American divisions operate in the United States and Canada, with international divisions operate in over 200 countries, with its largest operations in Mexico and the United Kingdom. Pepsi's customers include franchise bottlers, and independent distributors and retailers (Reuters at (http://www.investor.reuters.com/business/).
Other industry competitors are the less known generic "cola" producers; competitor Cadbury Schweppes Americas Beverages launched a new offering to broaden the choice for dieters wary of sugar but yearning for flavor (Cosgrove, at 1). Cadbury Schweppes also launched a fortified 7 UP Plus, a berry flavored, Splenda and ace-k sweetened line extension to traditional 7 UP that was fortified with calcium, vitamin C and real fruit juice. Other industry trends appear to be limited-edition and seasonal soft drinks. Due to overwhelming demand, Pepsi brought back its seasonal Mountain Dew LiveWire from March through August 2004 (Cosgrove, at 1). The flavor-amped Mountain Dew variety proved popular in 2003, adding a 10% volume swing to the Mountain Dew trademark (Cosgrove, at 1). Similarly, in March of 2004, Coca-Cola also released Sprite ReMix Berryclear, a mixed berry version of the popular Sprite brand that built on the success of 2003's Sprite ReMix Tropical. Packaging graphics for Sprite ReMix Berryclear feature a new purple and silver-accented treatment of the Tropical ReMix logo. Dr. Pepper, another competitor, also announced its plans to rollout Cherry Vanilla Dr. Pepper and Diet Cherry Vanilla Dr. Pepper. As indicated above, an industry analysis of the soft drink industry illustrates how innovative and creative a company must be to remain competitive.
SWOT analysis of the Coca-Cola company focuses on its' strengths and weaknesses, which are internal elements tend to be the areas of business that can usually be controlled. Opportunities and threats are external elements and that in most cases the company will not have control over, but must be kept in mind for a successful business. The Coca-Cola company excels in its products, and the company continually works toward launching new products and joint agreements to further the amount and area of product distribution. The soft drink industry is very large and constantly grows, and Coca-Cola holds a 45% market share of this market worldwide. The remaining 55% of the soft drink market is not held by a single competitor, but by a large number of them. Furthermore, Coca-Cola is thought to be one of the best organized, best financed and most aggressive competitor in the industry (Research Reports at (http://www.ascensio.com/Reports/CokeClassicCC.aspx).Additionally, by investing internationally the company has greatly expanded the potential size of the soft drink market, and management is entirely focused on realizing this potential (Research Reports at (http://www.ascensio.com/Reports/CokeClassicCC.aspx).
Coca-Cola, just as any other company, also has weakness. However, unlike its' competitors, the company has been able to successfully analyze the weaknesses and look for ways to turn them into strengths. For example, the company has continued to introduce new products, even when some products have failed or have not produced very favorable results in the larger markets. Coca-Cola continues to introduce new products such as PowerAde and Nestea, which have higher margins but are still only a small part of the United States market.
It is in this way that the company builds on available opportunities, and when an opportunity arises the company is able to react quickly and capitalize on it. The other main competitor in the soft drink industry, PepsiCo, is Coca-Cola's largest threat. Research indicates that for years, the Coca-Cola had the most recognized package in the world, the six-ounce swirling bottle design. Pepsi decided to attack Cokes strength its package and distribution method, by coming out with the twelve-ounce bottle at the price, and as a result, Coke sales slumped across the country. Faced with twice as much product for the same price people chose Pepsi. Thus, Coca-Cola not only had to enlarge their distinctive bottles and meet Pepsi's price but also retool all their vending machines that were only designed to carry the smaller bottles. Finally, the outcome of the company's SWOT analysis still places the company ahead of any competitors.
Recommendations for Improvements in Marketing Operations and Strategy
Although a powerful competitor, the Coca-Cola company has faced low points and has been in prior need of recommendations for improvements in marketing operations and strategy. A study of the past soft drink industry trends and the new eating and drinking habits indicates that previously consumers were not as "health" conscious as they now are. Trends in consumer behavior clearly indicate that over half of all consumers are on diets, and soft drinks are impacted severely by this trend. For example, research indicates that 2004 was one of the most challenging years the carbonated beverage segment has had to endure in the past decade. This was due largely to negative press linked that soft drink consumption to obesity and carbohydrate-conscious dieters shunned carbonated beverages in favor of sugar-free alternatives (Cosgrove, at 1). As a result, soft drink sales decreased, and carbonated beverage manufacturers needed to find other ways to regain disappearing consumers and revive sales. That effort resulted in the debut of a slew of original new flavor offerings and new formulation varieties crafted to oblige the demands of health-conscious consumers, no matter which diet they followed (Cosgrove, at 1).
Furthermore, research indicates that one of the biggest trends in 2004 was the effort to deal with carb-shunning dieters. For example, in March, Pepsi announced the pending debut of Pepsi Edge, the first full-flavored cola with 50% less sugar, carbohydrates and calories than regular colas. According to the company, Pepsi Edge's full-flavored cola taste was maintained through the use of a blend of nutritive and nonnutritive sweeteners. Less than a month later, Coke announced the launch of its own carb-conscious soda, C2, which contained half the sugar, carbohydrates and calories of regular colas (Cosgrove, at 1). The packaging graphics also were designed to provide a distinctive visual difference between Coca-Cola C2 and the flagship brand. A core idea for improvement for the Coca-Cola company is to offer new "diet" drinks that the consumers are demanding.
The popular class of beverages known as diet soft drinks are made possible by the sweeteners are approved for use in soft drinks today and sweeteners remains an active area of food research. This provides a positive outlook for Coca-Cola and the soft drink industry in general. Aspartame, a sweetner, has been reviewed and approved by the governments of more than 60 countries. Its sweetening power is so great that the tiny amount needed to sweeten a soft drink adds less than one calorie per can. Saccharin, is extremely sweet, about 300 times sweeter than sugar, and contributes no calories. It is stable in foods and is metabolically inert, which means that it goes through the body without changing and it is relatively inexpensive. Additionally, it is now generally accepted by scientists that there is no risk in consuming saccharin. Research such as this indicates that by choosing from a variety of different sweeteners, manufacturers can blend sweeteners to match beverage formulations and better appeal to all consumer tastes and preferences. Thus, the main suggestion for an improved marketing operation strategy is to market new drinks that correlate with the trend of consumer preferences, which are bound to change over time.
Finally, it appears that Coca-Cola has built a sustainable competitive advantage in the soft drink industry, however, successful actions by competitors such as Pepsi have resulted in its weakening of revenues. There are several steps that Coca-Cola could take to strengthen its competitive position and business prospects, given the competitive actions of Pepsi. For example, Coca-Cola could cater a line of soft drinks specifically to children. This line could be both tasty and nutritional, to satisfy the concerns of parents but at the same time be enjoyed by the sweet tooth of youngsters. Unfortunately, given that soft drinks in general are not very nutritional, this may be difficult to implement. Coca-Cola could launch a line of carbonated juice drinks in order to satisfy both of these elements. The packaging would have to be child-specific to make it more attractive to children.
Soft drinks have been part of the American and now international landscape for more than 100 years, with no indication of disappearing in popularity or desire. They are a simple refreshment beverage that make no nutritional claims, but…