Coca Cola Before 1970, Coca

Coca Cola

Before 1970, Coca Cola was the only major player in the carbonated beverage industry. There were other players, popular in some markets, but Coke dominated the global market. Then, in the 1980s an interesting marketing phenomenon began -- the so-called "Cola Wars." This was the term for the manner in which Coca Cola now had to go on the defensive and vie to remain a leader in the soft-drink market. The war is fought in the trenches of product endorsements, the world of advertising, motion pictures, modern social networks, and even events like the space shuttle launch. Although Coca Cola continues to rest on its laurels as the "real soft drink," Pepsi continues to challenge the organization as the drink "for a new generation." Both companies have launched new products, cancelled products, and tried desperately to gain control over a huge and fickle global market (lemon, lime, cherry flavors, new delivery mechanisms, new tries at diet drinks, etc.). What is most interesting from a business standpoint, though, is that a clear winner never really emerges. Instead, we see peaks and valleys for both companies' balance sheets, and a clear increase in carbonated soft drink niche on a global basis.

SWOT for Coca Cola

Strengths

Weaknesses

Opportunities

Threats

Extremely strong global brand name.

Name recognition makes Coke a target

New niche markets

Costs and competitive marketplace

Patented taste, generational branding

May be too sweet for newer palates

Many more successful brands to pursue

Some consider Coca Cola arrogant and out of touch

Fiscal strength, lots of financing available

Some of last 10 years of branding have been dismal failures

Advertise less popular brands; don't rely on laurels

Health issues and consumer taste changes

International brand even before globalism

Advertising has diminished

Buy out competition, be aggressive again

Pepsi might decide to up the stakes in the war

Competitive Advantages

Coke (NAICS 312111) is the largest manufacturer, distributor, and marketer of non-alcoholic beverages globally. They have over 100,000 employees, and post revenues approaching $40 billion. The company was the pioneer of the carbonated soft-drink industry -- invented in 1886, incorporated in 1892. The brand "Coke" has become iconic as part of Americana. but, in addition to the namesake brand, the company produces over 400 brands in 250 countries -- serving at a minimum, 1.5 billion servings per day. Despite its largeness, the company takes criticism for its lack of environmental sensitivity, union busting, and even the occasional class action suit (Warner, 2005; Muris, 1993; Cocacola.com, 2012).

From the 1980s on, the so-called "Cola Wars" between Coke and Pepsi heated up immeasurably. Without the expected growth and with more and more dollars being funneled into marketing campaigns and new product development -- the Cola Wars went international. China, India and Eastern Europe became battlegrounds for market share. The business of carbonated beverages has evolved, but, like the fickle tastes of the market, will likely need to remain poised to that next step in global dominance. A Coke executive commented when asked about the market, "the cola wars are going to be played now across a lot of different battlefields" (McKay, 2000). This different battlefield, of course, was the Internet

Effectiveness of Strategy

In the 21st century, much of the soft drink market was either stable, or simply a war between Coke and Pepsi. Coke changed this with a new office of digital communications and focus on social media. Vice President of Corporate affairs Clyde Tuggle commented, "Mass media is declining in importance. Our future success depends on our continued ability to connect people to our brands and our company all around the world, one person at a time. Our new office of digital communications and social media will help us become even more comfortable and effective in these new spaces" ("How Coca-Cola," 2009). This is a huge change for a company who typically spent over $1 billion per annum on traditional advertising. However, the change in the marketplace and consumer means that no matter how wonderful the slogan is, or how fantastic the television commercials are -- to remain viable and competitive a company must keep up with the youth market.

Threats and Missed Opportunities

Over the next several decades, these wars continue. New combinations of flavors are introduced, sponsorships of movie icons and sporting events; and even with labor and equipment costs, remain poised for growth. The wars have no clear winner, and likely they were never intended to. Instead, the Cola Wars helped the industry grow. In 2000, for example, 41% of total non-alcoholic beverages sold were CSDs. In the late 1990s and into the 21st century, the drinks with high growth (and media hype) were non-carbonated juices, sports drinks, tea drinks, dairy drinks, and bottled water. Pepsi dominated this market with Gatorade, Lipton and Aquafina. The bottlers were also required to reinvest in more complex equipment to keep up with the market, since they were poised for CSDs which were growing at a far slower pace. Labor costs, equipment costs, and higher retail prices also changed the landscape (Yoffie, 13). Pepsi was more innovative in flavor, acquisition, and most particularly, remarketing its product to a newer generation of consumers (energy drinks, combo drinks, etc.).

Building on SWOT

In July 2006, Coke built a website called "The Coke Show," attempting to get people to build their own profile (mycokerewards.com). This was the first time the company used precision marketing -- collecting data and then giving particular content they've either asked for or visited -- provable by lifting pack size by 15 points over the average customer. This, combined with other sites like designtheworldincoke.com, catches the market in events like the Olympic games, etc. -- the lean and mean Coke marketing machine can now react and interact with the touch of a button -- no month or quarter long tests and print processes -- a simple change and focus (Barone, 2008).

Thus, for Coca-Cola, the Internet has offered several marketing solutions -- enhanced visibility and credibility, providing consumers with an experience they not only desire but become habituated towards, accelerate brand community and finally, provide greater fiscal and measurable efficiency in their marketing model.