Coca-Cola Business and Operations

Coca-Cola leads the world's beverage industry with as many as 400 products and has its presence globally in more than 200 countries. In addition to this, Coca-Cola collaborates with some 320 licenses to produce more than 10000 products in 57 countries. Products range from fashion apparel to holiday decorations and even a Coca-Cola Picnic Barbie doll. Every year, licensees sell 50 million licensed Coca-Cola products.

Internal Business Environment

Core Activities

For over 100 years, Coca Cola still remains the world's largest producer of carbonated soft drinks. The company sells the very famous Coke® with the punch line "Always Coca-Cola" that is still the common man's term for any aerated soft drink.

The company's signature Coke® brand is well recognized by literally billions of consumers, and Coke is sold in almost every country in the world - more than 200 countries worldwide.

Customer Base

The Coca-Cola Company is the world's largest beverage company and is the leading producer and marketer of soft drinks. Consumers in nearly 200 countries enjoy Coca-Cola brands at a rate of more than one billion servings a day. In addition to its core Coke brand, the company also sells Adjani bottled water, Sprite, Minute Maid and a host of other soft drinks. Drinks are sold both directly to consumers in cans and bottles, as well as in syrup form to bars, restaurants and other commercial establishments.

Business Values

The reputation of The Coca-Cola Company is built on trust. One who does business with Coca-Cola around the world know the company as being committed to managing the business with a consistent set of values that represent the highest standards of quality, integrity, excellence, compliance with the law and respect for the unique customs and cultures in communities where it operates. The company seeks to develop relationships with suppliers that share similar values and conduct business in an ethical manner.

Core values include honesty, integrity, diversity, quality, respect, responsibility, and accountability.

Current Business Direction

Coca-Cola has designated 2005 a year of innovation and is launching several new drinks including an energy drink called "Full Throttle" and a version of Diet Coke flavored with the Splenda artificial sweetener.

Analysts say the way forward is to tap the trend away from fizzy, sugary drinks towards low-calorie, healthy drinks, such as low-sugar Orange and bottled water.

There are two major growth drivers for Coke. One is the flavored Colas that the company has been launching over the past several quarters, including Vanilla Coke, as well as Coca-Cola with Lime. These new flavors have proven popular among consumers, and Coke has been able to leverage its core Coke brand to create instant recognition for these Cola flavors. These newer brands should help breathe some life into sales in developed markets.

Current Marketing Performance

The most noteworthy change was the creation of a new position to oversee Coke's its global marketing and advertising strategy, headed by Mary Minnick, president of Coca-Cola Asia for the past four years and a 21-year veteran of the company.

Coca-Cola kicked off 2005 American Idol excitement at 165 Simon Malls in January and February with an Instant-Win Coca-Cola Vending Game. Prizes ranged from American Idol t-shirts to an all-expense-paid trip for two to the taping of the American Idol finale. Coca- cola launched a multi-mall event featuring live performances by 2004-2005 past American Idol finalists exclusively at Simon Malls across the country. The multi-mall event kicks off April 8 in Boston and culminates in Los Angeles on May 14, just prior to the May finale of American Idol's fourth season on FOX. In between, the event will visit Simon Malls in New York, Philadelphia, Atlanta, Chicago, Indianapolis, Dallas, and San Antonio.

External Business Environment

Coke has been very aggressive globally, acquiring brands in markets like Russia, Bulgaria, and Kenya. It has also aggressively marketed and slightly altered the formula of its basic Coke brand to fit local tastes. As nations become wealthier, consumers tend to buy more packaged foods and drinks. This bodes well for Coke. It should come as little surprise that Coke's sales are growing much faster in these foreign markets than in the U.S. In recent quarters developed markets like Germany in the U.S. have seen slow sales growth or, in some cases, outright sales declines. However, internationally case volumes jumped a solid +2 to +4%, led by such markets as Russia, China, and Brazil.

Trends and Developments

Coke is the world's largest soft drinks maker, saw its domestic market share drop by 0.9% to 43.1% last year. Revenue increased to $5.27 billion, up 4% from $5.08 billion in the same period a year earlier, and beating analysts' forecasts of $5.17 billion. Coca-Cola also announced plans to repurchase $2 billion shares of stock during 2005.

Coca-Cola's best sales performance last quarter, as measured by unit case volume growth, was clearly in its international markets, including double-digit percentage growth in both China and Brazil. Unit case volume grew 7% in Argentina and 12% in South Africa.

However, total volume growth was flat in North America, the company's largest and most vital market. According to the company, the decline in carbonated soft drink case volume in the market was offset in part by strong growth in diet, water, and juice offerings.

Experts admit that Coke is very strong in carbonated soft drinks, but the growth is on the non-carbonated side.

Overall, U.S. carbonated soft drink volume grew only 1% in 2004, driven by diet carbonated soft drinks and energy drinks.

Coke's other beverage rollouts this year include a lime-flavored version of the flagship Coca-Cola brand and an energy drink called Full Throttle.

Legal and ethical considerations

A company that is as big as Coca-Cola often finds its way through a no. Of legal and ethical issues. Recently in April 2005, it has settled the Accounting probes for some extra concentrate purchases in Japan.

In September 2004, The Coca-Cola Company struck a deal with the European Union (EU) to end its long-running antitrust case over fizzy drinks, five years after PepsiCo first complained. Same time, Proctor & Gamble sued the company for allegedly infringing patents on preservatives in fruit drinks.

The ethical issues involve the usage of agents like phosphoric acid and propylene glycol as an additive that is 'generally recognized as safe' for use in food. It is used to absorb extra water and maintain moisture in certain medicines, cosmetics, or food products. It is a solvent for food colors and flavors. Soft drinks do not have any nutrition value (in terms of vitamins & minerals). It is high in sugar content, carbonic acid, chemicals i.e. colorings etc.

The company also addresses the issue of reduced supply of water that shall become a problem by 2025. A lot of other work has been done by the company like rainwater harvesting in India, micro-enterprise development for women in Vietnam and schoolyard roundabout pumps in S. Africa.

Research evidence

In 1957, a researcher announced that he had flashed the phrases "Eat popcorn" and "Drink Coca-Cola" on a screen in a New Jersey movie theatre every 5 seconds for 1/300th of a second. He reported that although viewers did not consciously recognize these messages, they absorbed them subconsciously and bought 58% more popcorn and 18% more Coke.

Primary research

Coca-Cola GB's research process has five stages:

1. Identify opportunity

Does it fit into an existing or new product category?

Who are the target consumers? What do they want?

Method: Desk research.

2. Explore solution

What is the best solution? A new product? A product extension?

A new packaging concept? A new design?

Method: Qualitative research using focus groups and in-depth interviews one-to-one.

3. Measure suitability/effectiveness

Evaluate the relative appeal of alternative solutions in terms of meeting consumer requirements.

Method: Quantitative research through face-to-face, telephone/internet interviews

4. Test Market

As it is very expensive for a company to launch a new product, before going for a full market launch it often pays to try out new product ideas in a 'test' market. This may be launching the product in just one region of Great Britain, with just one retailer or conducting a 'Simulated Test Market'. Method: Quantitative research from participants in a test sample of consumers who physically live with the test product for a period of days. There are three stages:

1. Concept research - to determine whether consumers like the 'concept' of the new product

2. Product attributes - to determine whether the actual 'product' offering matches the 'concept'

3. Volume assessment - to determine whether consumers will actually buy the new product and what, if any, existing products it will replace.

5. Track market performance

This involves tracking the product's success once it has been launched e.g. By recording sales figures, numbers of people familiar with the product, etc. Method: Quantified continuous rolling study with consumers and/or analysis of Electronic Point of Sale data (sales information gathered via retailers' tills).

Secondary data

It is the information that already exists, having been collected by someone else. Some of the developing nations with growing economies and exploding incomes represent prime potential for Coca-Cola. China's 1.2 billion consumers had an average of only five servings of soda per year, compared with 343 in the United States, creating a great potential market. Indonesia, with 200 million people, nearly all Muslims who are forbidden to consume alcohol, is what was called as a "soft drink paradise."

Evidence of primary research execution

Before Coca-Cola launched 'New Coke' they had invested U.S.$4,000,000 in market research and undertook 200,000 blind taste tests. In all these blind (unbranded) taste tests the New Coke outperformed both Pepsi (52% over Pepsi) and existing Coke (60% over old Coke).

These blind taste tests were the basis of the launch of 'New Coke' in 1985.

The launch created a public outcry, with Coke receiving over 40,000 letters of complaint and over 6,000 calls a day to the company's '0800' phone number. After only 87 days the Coke's symbolic meaning turned out to be more important to many consumers than its taste.

PART B

Identify Market segment

Coca-Cola and its products spread across as many as 200 countries and the licensed product range exceeds 10,000 products. Coke and other soft drinks have a strong market in all developed and developing countries.

Identify Target market

For Coke, the target market is basically the Youth of a nation. They go out daily, eat out, and take beverages. However, there has been a growing demand on more healthy drinks that also add some nutrition to daily diet.

Coca-Cola plans to launch a cholesterol reducing drink in May 2005. Coca-Cola calls it the most revolutionary drink since the addition of vitamins to milk. This is a new healthier version of its Minute Maid brand and will be called Minute Maid Premium Heart.

Consumer profile

For Coke, consumers range from the Young lot to the adult market. While kids prefer the flavored version of Coke, the young people enjoy their old classic Coke. For the adult market, the brand is Diet Coke and now the new Coca-Cola Zero. Practically, there is one Coke to suit all age groups.

Detailed Product feature description

The latest drink to be released in the much-awaited market is the Coca-Cola Zero, a new zero-calorie cola. This shall be introduced in the U.S. market in June 2005. "Coca-Cola Zero is exactly what young adults told us they wanted -- real Coca-Cola taste, zero calories and a new brand they can call their own," said Dan Dillon, vice president, Diet Portfolio, Coca-Cola North America.

Coca-Cola Zero will be supported by an extensive marketing campaign including television, radio, print, and out-of-home advertising, online activation, and sampling programs. "Coca-Cola Zero's personality will be different than any of our other brands, and our marketing will reflect that with some fresh ideas we haven't tried before," said Christine Holland, director of marketing, Coca-Cola Zero.

Full Throttle energy drink, Coca-Cola with Lime, and Dasani Lemon and Dasani Raspberry flavored waters have already been launched, with Diet Coke sweetened with Splenda as well as Coca-Cola Zero slated for later this year, as well as new packaging for POWERade.

Coca-Cola brands create a positive impact among consumers -- and that satisfaction influences their entire purchase and consumption experience. As the world's leading soft drink marketer, the Coca-Cola Company invests heavily in brands to build consumer preference and demand -- in effect "pre-selling" the brands before your customers even arrive.

Consumer Behavior influences

For example, market research analysis of the demographics of consumers in Great Britain revealed a growth in smaller households. The appropriate product response was to produce 1.25 liter share-size bottles. A study of occasions when people drink sports drinks showed the importance of making it available in leisure centers. Other research showed that the famous original Coca-Cola glass bottle is best targeted at restaurants and special party occasions.

Market research into where specific products are consumed influences the design of pack types e.g. A 2 liter bottle for family consumption at home and a smaller 500ml bottle for consumption 'on the move'.