Coca Cola and Drinks

Marketing Planning for Coca-Cola

Coca Cola is the global companies operating in more than 200 countries. Headquartered in the United States, the company uses different brands to market their products across the globe. While Coca-Cola has recorded an increase in sales in the last few years, the company has faced a stiff competition with several beverages companies globally. The study develops marketing planning for Coca-Cola, and examines the internal and external environments that the company operates. The report also develops the SWOT analysis for the company, and outcome of the analysis reveals that the company is facing stiff competitions with different soft drink companies. The report recommends that the management of Coca-Cola should focus in the production of energy boost drinks because these categories of drinks have gained increased market attention among consumers. Moreover, few companies are still operating in this line of business.

Introduction

Coca-Cola is an American multinational company and a leader in the production of soft drinks. Headquartered in Georgia Atlanta, Coca-Cola produces over 3,500 beverages, and 500 brands across 200 countries. Thus, Coca-Cola has been recognized internationally for the production of beverages with the ambition to grow brands. Some of the major company brands include Coca-Cola, Fanta, Sprite, Powerade and Oasis. The brand Coca- Cola was accorded a patent status in 1887 and a trademark in 1893. By 1895, the company sold their soft drink in every state in the United States. In 1889, the Coca-Cola started the franchised bottling operations, and launched its international operations in 1906. However, Coca-Cola makes their brand available to the consumer through a network of distribution and bottling operations, independent bottling wholesalers, partners, distributors, and retailers, and serves all its brand to 58 billion consumers daily. The success of the company rests on their ability to connect successfully with consumers and provide them with a variety of product options that match their tastes and lifestyles. Meanwhile, the goal of the company is to become more competitive and accelerate the growth rate to create value for the shareholders. (Eric, Siegel, Ford, et al. 1993),

Despite the market success of Coca-Cola over the years, the company has recorded a decline in the revenue and net income in the last few years. For example, the company revenue was $46.9 billion in 2013, declined to $44.3 billion at the end of the 2015 fiscal year. Similarly, net income declined from $8.6 billion in 2013 to $7.4 billion at the end of 2015 fiscal. (Morning Star, 2016). The intense competition in the last few years has made Coca-Cola facing market challenges in the competitive business environment. Thus, the company needs to develop an effective marketing planning to assist in achieving competitive market advantages.

Situation Analysis

The situation analysis is a collection of the issues that management employs to analyze the organizational capabilities, business environment and customer preference. The SWOT analysis, 5C's analysis and Porter 5 Forces are the marketing tools for the situation analysis. Thus, the study provides the situation analysis of the company internal and external environments. The internal environment consists of the situations that the company can control, however external environmental factors are the issues that are out of control of management. The outcome of the situation analysis assists the firm to establish a long-term relationship with customers.

Internal Environment Analysis

The study identifies workforce skills, financial performances, production system and business technology application as the internal environmental factors affecting Coca Coal company. (Armstrong, & Kotler, 2011).

Financial performance: Coca-Cola is 62 largest company in the world in term of revenue with more than $44.2 Billion at the end of 2015 fiscal year. In the same year, Coca has an asset of $90 billion with annual profits of $7.35 Billion. The superior assets and profitability have assisted the company to increase its net profit margin. For example, the company net margin increased from 15.43% to 16.60% from 2014 to 2015 assisting the organization to finance its business operations.

Workforce: Coca-Cola workforce and their skills are critical for business efficiencies. Moreover, the high qualified workforce is essential to design products that will match the customer preference and tastes. By 2015, Coca-Cola has a total number of 123,200, employees, which are formidable assets for the company because they assist in promoting the Coca-Cola brand, and enhance a global distribution. The strong commitment of employees also assists the company to achieve market competitive market advantages. (Westwood, 2002).

Technology Application: A business application technology determines the efficiencies of production and services of a business organization. Typically, Coca-Cola applies a unique production formula to respond to market competition and consumer demands. Moreover, the company uses a fledgling innovation to develop the customer-oriented product as well cultivating direct consumer relationships. The company also uses technology to develop the digital marketing to reach the customer globally.

Stakeholders: Stakeholders are very critical in determining the investment decision. Coca Cola's internal stakeholder is the company employee who makes important investment decisions. Over the years, Coca-Cola uses the top management to make a decision about the marketing investment.

External Environment Analysis

An analysis of the external environment is very critical in analyzing the environment that an organization operates. Coca-Cola operates in the global environment that includes advanced countries, emerging market and developing countries. Since the United States is the largest economy in the world, the economic and political situations of the United States will affect the economy of other countries.

Economic Environment: Coca-Cola operates in the global economic environment, however, largest percentages of the company operations are outside the United States. According to a report from the Economic Intelligent Unit (2016), the United States is the largest economy in the world with the growth rate of 1.6% in 2016. However, it is forecasted that the U.S. economic growth rate will rise to 2.3% in 2017 and 2018. Moreover, the private consumption growth rate will be 2.8% in 2017 and 2.3% in 2018. As being revealed in Table 1, the global economic growth rate is 2.1% in 2016, and will increase to 2.4% in 2017 and 2.5% in 2018. Since the United States represents is one of the major markets that the company operates, Coca-Cola will continue to achieve a growth rate in sales in the United States, and globally.

Table 1: Economic growth

2016

2017

2018

US GDP

1.6

2.3

2.3

OECD GDP

1.5

1.6

1.9

World GDP

2.1

2.4

2.5

World Trade

1.8

2.8

3.1

Source: Economic Intelligent Unit (2016),

Political Environment: The United States has one of the peaceful and stable political environments in the world along with an effective rule of law. The country also has a great influence on the politics of another country. However, the United States is facing a global criticism of fueling crisis in some countries, and a rise in global terrorism can affect Coca Cola's business operations.

Legal Environment: Coca-Cola operates in the legal environment that is likely to affect its business operations. For example, the government makes law on taxation, and high consumer tax is likely to affect the purchasing power of the consumer, and businesses are likely to prosper in a country with low consumer taxation. The advertising regulations also affect the marketability of soft drink market. For example, the United States FDA (Food and Drug Administration) mandates the soft drink companies to warn consumers that sugary drinks cause weight gain and obesity. Moreover, Coca-Cola is being affected by other types of laws that include consumer protection laws, and OSHA (Occupational Safety and Health Act). (Coca Cola 2015 p 18). Outside the United States, different rules and regulations affect the company operations. For example, more than 200 countries rigorously regulate the manufacturing and ingredients used for the production of soft drinks where United Arab Emirate are the major countries that regulate the ingredients in the soft drinks.

Technological: Recent advances in technology has affected the marketing strategy of soft drink company. For example, Coca-Cola uses the new technologies to launch the digital marketing campaigns and design the stylish product with new technologies.

Cultural: The health awareness of people across the globe has enhanced a greater understanding of people about the health consequence of sugary soft drinks. Moreover, lifestyle changes have promoted the development of an innovative product such as zero calories or zero-sugary brands.

The findings of the analysis reveal that Coca-Cola can control the internal environments that the company operates. For example, the company can increase the training programs for employees to improve their skills and competency to design products that are acceptable to consumers. Nevertheless, the external environment factors are out of the scope of the company's control.

Objectives

The current objective of Coca-Cola is to refresh the world, make a difference, create values and increase profits for shareholders. The company also aims to use its formidable assets to "achieve long-term sustainable growth." (Coca Cola 2015 p 33). The company objective is to develop the portfolio of brands to satisfy people's needs and desires.

Other objectives of Coca-Cola are:

• To maintain a leadership position in the soft drinks market.

• To increase the company profitability and competitive market advantages.

• To increase the market shares of Diet Coke by 25% with one year and increase sales of regular Coca-Cola by15%.

• Boost sales by overtaking carbonated drinks by 2017.

Target markets

Coca-Cola will achieve customer satisfaction by targeting different market segments, which will be carried out on a demographic basis. The income and age will be used for the segmentation, and Coca-Cola will target people below 30 years of age, who have the intention to shape their tastes for Diet Coke. The target segment will be:

• People between 15 years to 30 years of age.

• Coca Diet targeting will be people between 25 and 39.

• Juicy drinks targeting will be children between 5 and 12 years of age.

Competition

Coca-Cola operates in a highly competitive market environment and Pepsico is the top competitor of Coca Cola. Other competitors of Coca-Cola are Dr. Pepper/Seven Up, Cadbury Schweppes, National Beverage Corp, Kraft Foods Group, Mondele-z, and Nestle. Coca-Cola operates in the non-alcoholic beverage segment, which is highly competitive in the United States and outside the United States. Moreover, Coca-Cola competes with companies operating locally and internationally. The company also competes with companies that produce enhanced water drink, relaxation beverages, vitamin-based drinks, fruit drinks, powdered and syrups drinks, sports and energy drinks, and other non-alcoholic beverages. The competitive factors that affect business operations of Coca-Cola are pricing, product innovation, packaging, and promotion programs.

SWOT Analysis

The SWOT analysis identifies the business strengths, and weakness of Coca-Cola. It also analyzes the opportunities and threats the company faces in the competitive business environment.

Strengths: Coca-Cola is a multinational company that has established a strong brand for products. Moreover, the company uses the economic of scale to produce its products assisting in cutting the costs. Its major strength is its immense financial and non-financial assets that assist in designing products that are widely acceptable by customers. Moreover, Coca-Cola uses an extensive marketing campaign to have an edge in the market. Coca-Cola financial performances along with its level of profitability have assisted the company to develop new market strategies to achieve competitive market advantages. (Pinson, 2004).

Weaknesses: In the last few years, Coca-Cola has recorded a loss of market shares with increased competitions with other soft drinks producing companies. The company has also been accused of promoting obesity by producing the sugary soft drink brand.

Opportunities: The company has taken advantages of recent advances in technology to design products that are more acceptable to customers. The increase in the standard of living of the emerging markets and their growing population have assisted the company in increasing sales in the emerging markets. (Baker, 2008).

Threats: Coca-Cola faces a stiff competition from different beverages producing companies in the United States and outside the United States. Moreover, availability of substitute drinks such as tea, chocolate drinks, coffee, and other juices pose a significant threat to Coca-Cola business operations.

The Positioning Strategy

The positioning is the process of creating the lasting image of products in the mind of consumers relative to competing products. Thus, Coca-Cola uses the competitive positioning to be ahead of its competitors in the non-alcoholic brands.

Marketing Mix Strategies

The marketing mix strategies include product, people and pricing, and promotion techniques that a company employs in marketing their products.

Product strategies: Coca-Cola uses the product strategy to position its brands to serve different category of customer. Moreover, Coca-Cola develops different product contents, features and packaging to meet the needs of the consumer. For example, the company increases the volume of the regular Coca Cola to suit a number of people who needs the energy drinks.

Pricing Strategies: The pricing strategy is one of the effective marketing tools. Since Coca-Cola has many competitors, the issue has made consumers be price sensitive. Thus, penetrating pricing is the strategy of setting the price lower than the competitors to achieve market shares in a market where people are price sensitive. The penetrating pricing will assist Coca-Cola to promote their complimentary products. While the penetrating pricing can assist Coca-Cola to gain market shares, the shortcoming of this method is that the competitors might follow suit by slashing their product prices to compete in the same markets. Thus, Coca-Cola should use the psychological and value-based pricing techniques to react to the actions of competitors. The value-based pricing is by marketing the premium product at the market where consumers are ready to pay the higher prices for the products. However, the psychological pricing is by making consumer believing that the pricing of the product is commensurate with the product purchased. By selling a pack of Coca Cola of 375ml x 18 cans for $9.89 instead of $10, the consumer will perceive the products being cheap.