The Company'S History and Birth of Coca-Cola
The Company'S History and Birth of Coca-Cola
The Company'S History and Birth of Coca-Cola
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The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta on
May 8, 1886. About nine servings of the soft drink were sold each day. Sales for that first year
added up to a total of about $50.
Until 1905, the soft drink, marketed as a tonic, contained extracts of cocaine as well as the
caffeine-rich kola nut.
In 1887, another Atlanta pharmacist and businessman, Asa Candler bought the formula for Coca
Cola from inventor John Pemberton for $2,300. By the late 1890s, Coca Cola was one of
America's most popular fountain drinks, mainly due to Candler's aggressive marketing of the
product. With Asa Candler, now at the helm, the Coca Cola Company increased syrup sales by
over 4000% between 1890 and 1900.
Advertising was an important factor in John Pemberton and Asa Candler's success and by the
turn of the century, the drink was sold across the United States and Canada. Around the same
time, the company began selling syrup to independent bottling companies licensed to sell the
drink. Even today, the US soft drink industry is organized on this principle.
Today, products of the Coca Cola Company are consumed at the rate of more than one billion
drinks per day.[1]
“Coca-Cola’s mission is to
[The company’s] vision serves as the framework for our Roadmap and guides every aspect of
our business by describing what we need to accomplish in order to continue achieving
sustainable, quality growth.
- People: Be a great place to work where people are inspired to be the best they can be.
- Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy
people's desires and needs.
- Partners: Nurture a winning network of customers and suppliers, together we create mutual,
enduring value.
- Planet: Be a responsible citizen that makes a difference by helping build and support
sustainable communities.
- Profit: Maximize long-term return to shareowners while being mindful of our overall
responsibilities.
- Productivity: Be a highly effective, lean and fast-moving organization.”[
A Marketing Strategy consists of many elements, which are connected and correlate with each other and
integrate a company’s marketing goals. Coca-Cola is a prime example for successful Marketing building
up a brand that is known and liked all over the world. The basis of a strong Marketing Strategy consists of
a proper analysis researching all relevant factors
TECHNOLOGY
Some advances in technology have pushed Coca-Cola’s sales volume tremendously, for example
the introduction of cans and plastic bottles in the past. Now, people could carry and bin them.
Advancement in communication technologies like television or the Internet had a significant
influence on Coca-Cola’s communication policy and Marketing strategy.
Advances in media help the company make their product attractive to the customer continuously
supporting Coca-Cola’s promotion activities.
However, it is important always to be aware of changes: what worked out a few years ago, may
be wrong in the present. For example: Coca-Cola had a tremendous success with its TV
commercials in the 90s. Now, the Internet is displacing it more and more. That requires a new
strategy in its communication and Marketing.
The improvement in production machineries increased the sales volume of Coca-Cola. Also
R&D activity always plays a crucial role in the effectiveness of production.
CCE (Coca Cola Enterprises) has six modem factories in Britain using the latest technology in
order to ensure the best possible quality standard and quick delivery. “High-tech machinery at
Wakefield enables cans to be produced faster than the eye can see [and] CCE Wakefield boasts
the fastest 2l bottle production line in the world.”
SWOT-ANALYSIS
The SWOT-analysis is a framework of a company’s strengths, weaknesses, opportunities and
threats. The strengths and weakness deal with internal issues, whereas the opportunities and
threats are applied to external factors.
STRENGTHS
One of the most important strengths of Coca-Cola is definitely its brand name as a draft horse.
The company has existed for a long time continuously developing and improving its relationship
to the customer and became the best known brand name in the world.
Coca-Cola’s outstanding Marketing strategy brought the company to its success and created a
very strong brand awareness. Using famous singers or actors as their producers they influenced
people through the whole country and in the world. Also, the songs, slogans, advertisement and
TV spots became very popular throughout the population. Moreover, Coca-Cola influenced the
modern image of Santa Claus making Christmas commercials every year, bonding even more to
the customer.
With its secret formula Coca-Cola has created a unique taste McDonald’s which so far couldn’t
be copied. The company uses this also as a Marketing tool by communicating to their customers
that only they have the real Coke.
As a big player Coca-Cola has many exclusive contracts with big restaurants like McDonalds; so
it’s connected with it and even more people buy the product. www. popsop. com
Also, they often cooperate with McDonalds regarding their promotion activities, as for example
the typical Coca Cola glasses that you could get ordering a special meal.
Moreover, with their high number of different products they have the ability to attract many
different customers in the 200 countries they operate in meeting their diverse tastes.
Being such a big company, Coca-Cola has the possibility to operate in large scale.
WEAKNESSES
Coca-Cola’s products aren’t healthy. As a result people may be alienated by that and avoid to
buy the product, especially for their kids. That is why many products have already been banned
from the campuses. People’s desire for healthy food consumption will rise even more, so Coca-
Cola has to adapt to this new development even faster.
Being an iconic American company it may cause problems in some countries as people refuse to
purchase the products due to America’s image in the world.
Coca-Cola had to face some negative publicity in the past. The center of science and
environment (CSE) of India accused the company for using pesticide residue in the products that
they sell in India. It can cause cancer, damage nervous system and reduce bone minerals.
OPPORTUNITIES
There is high potential for the company to introduce more healthy drinks since people pay more
attention to that. Being the biggest producer in the Soft Drinks Industry people like the brand and
would probably purchase the product.
In the last few years the company has grown even more through Acquisitions. The company
acquired the controlling shares of Kerry Beverages (KBL), one of its joint venture with Kerry
group during 2006 in Hong Kong. This strategy strengthens the company’s operations
internationally.
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One can find different point of sale from where the company sells its products. The
company maintains world’s largest distribution system that includes independent bottling
partners and distributors, company-owned bottling and distribution operations, wholesalers
and retailers. The company continues to expand its market in emerging, developing and
developed regions through the strong distribution system. It has adopted two types of
product distribution strategy, namely direct selling and indirect selling. The company
supplies several products directly to retailers which include restaurants, cinema halls, retail
stores, etc. In addition, the Coca-Cola has also adopted the indirect method of selling; it
gets into partnership with distributor agencies, wholesalers and independent bottling
partners, who then make the products available to retailers and consumers. In the indirect
method, the company transfers its products to distributors, who then transport to smaller
distributors and retailers. Smaller distributors are supplied in case when products are to be
distributed in areas with less population or rural areas. Most of independent bottlers are
under contract with the company. Apart from that, the company uses several other
distribution models to reach customers from different geographical locations. One of them is
a pre-sale system, which separate the sales and product delivery functions, allowing trucks
to load a variety of products and thereby enhancing sales. Second model that company has
adopted is the conventional route system, under this system the person in charge of
delivering the products makes direct sales from stock available in the truck. Third is a
telemarketing system that can be combined with pre-sales visits. Additionally, there is a
hybrid distribution system, under which the same truck carries products previously ordered
through pre-sale system as well as products available for immediate sales.
The brand has established a strong and a unique distribution system in certain nations with
a view to help economies develop. Its innovative distribution mechanism allows the
company to build sustainable relationships with distributors and small scale business firms.
These small scale organizations are collectively named as MDCs i.e. Manual Distribution
Centers, who hire local workforce to make the products available to local consumers. These
micro distributors are able to reach customers in remote areas also where traditional truck
delivery is not possible. All business partners work closely with restaurants, grocery stores,
convenience stores, supermarkets, street vendors, amusement parks, movie theatres and
other customers.
In concentrate operations, the Coca-Cola company typically sells syrups and concentrates
to its independent bottling partners, which include Coca-Cola FEMSA, Coca-Cola HBC AG,
New CCE, Arca Continental and Swire Beverage, who then use the concentrates to
produce finished products which they sell to distributors, who then sell to consumers. While
the finished beverages are directly sold to retailers or to distributors, wholesalers who
further distribute to retailers.
The company has separate divisions for managing its bottling operations around the world,
which is commonly known as Bottling Investment Group. This unit is committed to grow in
every market and strives to work in collaboration with other bottlers and distributors. As well,
the brand heavily relies on information technology, including third-party hosted services, as
well as internet and social media tools, to support various business activities and
processes, such as procurement and supply chain, manufacturing and distribution,
marketing etc.
In addition to carrying out independent marketing and promotional activities, the company
has provided advertising and marketing services or funds to its bottlers. It has used every
possible medium for carrying out promotional and advertisement activities such as
television, internet and social media, radio, etc. It works in collaboration with independent
consultancy firms to monitor television advertisement at regular interval. Moreover, it has
also implemented online marketing tools to reach customers of diverse regions quickly.
Marketing through the Internet and social networking sites enables the company to enhance
its sales to a great extent. The company has also used attractive billboards that are seen by
a large audience, to market its products.
CONCLUSION:
The Coca-Cola has adopted a more dynamic and well-structured marketing strategy for its
products. The company has classified its market and developed planned initiatives for every
distribution channel or customer segment. Its principal channel partners are on-premise
consumption, such as bars and restaurants, supermarkets, distributors and small retailers.
Considering the broad network of distribution channel, the brand has implemented channel
marketing strategy. These channels help the company to analyze purchasing patterns as
well as taste and preferences of varied type of customers, in response of which company
customizes its product, marketing and promotional strategy, price, and packaging and
distribution. This in turn helps in meeting different needs of customers and exploit potential
of every channel partners. The strategy also focuses on implementing different product,
price and packaging for different market segment. These segments are defined on the basis
of socio-economic levels, competitive intensity and consumption occasions, rather than
considering just types of channel of distribution. This further aids the company to localize its
marketing strategy and hence allow the firm to attain strong presence in the local market.
From the beginning of its business, The Coca-Cola has maintained a consistent brand
image and identity through effective marketing, sales and distribution, and other business
functions. The brand has not only focused on maximizing its sales, but has laid adequate
emphasis on engaging with customers and meeting their needs and preferences efficiently.
This has helped the company to acquire the largest market share and competitive edge
over rivals.
6.CONCLUSION
After thorough research, I have come to the conclusion that the marketing strategy of Coca Cola
is working for them and the product is gaining popularity among youth day by day. Also they are
increasing their product range as per increasing awareness and providing a large number of
Health drinks and related products to the youth.
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e. Threats and Substitutes and Rivalry
Substitutes: Large numbers of substitutes like water, beer, coffee, juices etc are
available to the end consumers but this countered by concentrate providers by huge
advertising, brand equity, and making their product easily available for consumers, which
most substitutes cannot match. Also soft drink companies diversify business by offering
substitutes themselves to shield themselves from competition.
Rivalry: The Concentrate Producer industry can be classified as a Duopoly with Pepsi
and Coke as the firms competing. The market share of the rest of the competition is too
small to cause any upheaval of pricing or industry structure. Pepsi and Coke mainly over
the years competed on differentiation and advertising rather than on pricing except for a
period in the 1990’s. This prevented a huge dent in profits. Pricing wars are however a
feature in their international expansion strategies
The several factors that make it very difficult for the competition to enter the soft drink market
are:
Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing
bottler’s that have rights in a certain geographic area in perpetuity. These agreements
prohibit bottler’s from taking on new competing brands for similar products. Also with the
recent consolidation among the bottler’s and the backward integration with both Coke and
Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to
find bottler’s willing to distribute their product.
Advertising Spend: The companies in the industry spend huge amounts of money for
advertising and hence have built a big brand name and market presence over the period of
years. This makes it extremely difficult for an entrant to compete with the incumbents and
gain any visibility.
o Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising and
this has earned them huge amount of brand equity and loyal customer’s all over the
world. This makes it virtually impossible for a new entrant to match this scale in this
market place.
Huge Margins and Retailer Shelf Space (Retail Distribution): Retailers enjoy significant
margins of 15-20% on these soft drinks for the shelf space they offer. These margins are
quite significant for their bottom-line. This makes it tough for the new entrants to convince
retailers to carry/substitute their new products for Coke and Pepsi.
Fear of Retaliation: To enter into a market with entrenched rival behemoths like Pepsi and
Coke is not easy as it could lead to price wars which affect the new comer.
Rivalry Intensity: Earlier Coke was more dominant in the international market compared to
Pepsi. This can be attributed to the fact that it took advantage of Pepsi entering the markets
late and has set up its bottler’s and distribution networks especially in developed markets.
This has put Pepsi at a significant disadvantage compared to the US Market. But Pepsi has
covered the major difference to emerge as a huge player and even reach the number 1 slot.
Hence Coke will have to use more innovative products and product line to maintain the
number 1 position, with the growth in emerging markets significantly expected to exceed the
developed markets the rivalry internationally is going to be more pronounced.
New and Emerging Markets: Barriers to entry are not as strong in emerging markets and it
will be more challenging to Coke and Pepsi, where they would have to deal with regulatory
challenges, cultural and any existing competition that have their distribution networks
already setup. The will lack the clout that have with the bottler’s in the US.
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Weakness:
Opportunities –
Threats –
1. Environment damage by its plastic — Maintaining a healthy
environment is the crucial to having a quality of life for us as well
as the future generations to come. (Lucas, A. ,2019) Coca-Cola
uses one-time plastic for the product packaging, and these are
non-reusable. Usage of plastics are indirectly creating ecological
imbalance.
Conclusion
Although Coca-Cola is a superpower in terms of Brand and
customer Loyalty as well as sustainability, the company has many
drawbacks that can be reshaped and solved for its better future.
Regaining the Customers interest by cashing on the power of their
huge brand and fan-following is much needed by introducing
healthier drinks and snacks. This move will boost the company’s
strong competitive advantage along with a higher sustainability.
The company must also re-model their packaging process so that
their items are packed in eco-friendly packages and consume less
water as well.