History and description of Coca Cola
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Coca Cola's history can be traced back to a man called Asa Candler, who bought a specific formula from a pharmacist named Smith Pemberton. Two years later, Asa founded his business and started production of soft drinks based on the formula he had bought. From then, the company grew to become the biggest producers of soft drinks with more than five hundred brands sold and consumed in more than two hundred nations worldwide.
Although the company is said to be the biggest bottler of soft drinks, they do not bottle much. Instead, Coca Cola Company manufactures a syrup concentrate, which is bought by bottlers all over the world. This distribution system ensures the soft drink is bottled by these smaller firms according to the company's standards and guidelines. Although this franchised method of distribution is the primary method of distribution, the mother company has a key bottler in America, Coca Cola Refreshments.
In addition to soft drinks, which are Coca Cola's main products, the company also produces diet soft drinks. These are variations of the original soft drinks with improvements in nutritional value, and reductions in sugar content. Saccharin replaced industrial sugar in 1963 so that the drinks could appeal to health-conscious consumers. A major cause for concern was the inter product competition which saw some sales dwindle in some products in favor of others.
Coca Cola started diversifying its products during the First World War when 'Fanta' was introduced. During World War 1, the heads of Coca Cola in Nazi Germany decided to establish a new soft drink into the market. During the ongoing war, America's promotion in Germany was not acceptable. Therefore, he decided to use a new name and 'Fanta' was born. The creation was successful and production continued even after the war. 'Sprite' followed soon after.
In the 1990's, health concerns among consumers of soft drinks forced their manufactures to consider altering the energy content of these products. 'Minute Maid' Juices, 'PowerAde' sports drinks, and a few flavored teas variants were Coca Cola's initial reactions to this new interest. Although most of these new products were well received, some did not perform as well. An example of such was Coca Cola classic, dubbed C2.
Coca Cola Company has been a successful company for more than a century. This can be attributed partly to the nature of its products since soft drinks will always appeal to people. In addition to this, Coca Cola has one of the best commercial and public relations programs in the world. The company's products can be found on adverts in virtually every corner of the globe. This success has led to its support for a wide range of sporting activities. Soccer, baseball, ice hockey, athletics and basketball are some of these sports, where Coca Cola is involved (Bell, 2004).
The company is listed in the New York Stock Exchange, the S&P 500 index and the Russell 1000 Growth Stock Index. As of 2010, company had an operating income of more than 8 billion US dollars with an asset base worth more than 72 billion US dollars. The current chair and chief executive is Muhtar Kent. This is particularly impressive for a company, which spends millions annually on lobbying and related expenses.
Competition between Coca Cola and its rival, PepsiCo has always been an exciting affair. In 2008, PepsiCo acquired the majority share of a leading Russian juice company called Lebedyansky, securing a firm foothold in the vast region. A year later, Coca Cola responded by purchasing Russia's largest juice maker, Nidan Soki, a move which reduced PepsiCo's influence in the region.
While some saw Coca Cola's action as retaliation, analysts viewed it as "a way to compete" (Ilya Plakhinas). Russia being a vast country with many people, presents a potentially lucrative market to anyone who secures the firmest foothold, which is essentially what both companies attempt to do. President of the region, Ahmet Bozer, summarized his company's actions as "a commitment to direct more investment in Russia."
Bozer's comments are reflected by the fact that Coca Cola's investment in Russia exceeds 2 billion US dollars, distributed over two decades of commitment to this lucrative market. One billion US dollars was earmarked for the same market as Coca Cola strives to introduce more investment in Russia and the Eurasian market.
Before the transaction was finalized, Nidan's projected earnings before taxation and amortization was about 45 million US dollars. For a company as large as Coca Cola to invest in a company this size, the net benefits must have been identified as essential. This is the case since the small business represents Coca Cola's entry into the Russian market. So faithful was Coca Cola in the potential of Russia that, they even to choose to pay off Nidan's debts.
1.2 Problems facing Coca Cola
It being a producer of soft brinks and associated beverages, Coca Cola has always had the issue of environmental pollution and sustainability through recycling as areas of concern. This prompted it to take the unusual initiative of requesting retailers to return the unique recyclable racks provided along with stocks. Earlier on, the company had started a program where retailers were provided with unique cardboard racks for use exclusively with Coca Cola products. The company identified the need to create such a program in order to establish synergy between Coca Cola and its distributors.
The issue of environmental degradation has been one of considerable concern for the Coca Cola Company for a long time. This is due to nature of its main products, which require attractive yet disposable packaging. While the company deviated from using glass as its original packaging material in favor of aluminum and plastics, these present the problem of pollution.
The concern for preserving our environment has become a significant factor even among potential customers considering buying or not. The Hartman Group in the United States researched on this and concluded 70 percent of potential buyers consider sustainability. With this in mind, companies like Coca Cola have come up with initiatives to ensure they portray this concern for our environment as they go about their business activities" (Foust 2006).
While Coca Cola works with retailers in United States, consumers have not been left out. The company started a recycling program for their soda can which saw the companies recycle over 700million kilograms of aluminum cans in 2010. In addition to the tremendous savings incurred, the company is recognized for its concern for the environment. This boosts a company's image since concerns about pollution are wide spread among consumers of these products manufactured by companies like Coca Cola.
While companies like Coca Cola are always associated with positive results and things, sometimes they face scandals and libels, which undermine their name and alter their representation in society. Coca Cola has had its fair share of these, and although most have been fought off and settled amicably, it is difficult to pin point the culprit in any of them. It is however worth noting that Coca Cola Company is a large multinational, and will usually do anything possible to survive as has been demonstrated many a times.
In 2006 and 2007, Coca Cola faced harsh action in the form of demonstrations in some university campuses due to allegations that it had facilitated the murder of eight employees in Colombia, and the unjust jailing of scores more on nonexistent charges. Trade union legend Ray Rogers started this wave of campus boycotts with a view to calling for justice. His actions led to the banning of Coca Cola products in some universities and demonstrations in others. While these actions seem to have noble intentions, the company suffered unfavorable publicity, and a tarnished reputation, which though negligible in fiscal terms, have a long-lasting effect on image.
1.3 Coca Cola's PR Strategy
In terms of public relations, Coca Cola has several opportunities. The first, and perhaps most notable, is global warming and environmental degradation. Bottled products account for a big portion of the effects of pollution since they are products, which require heavy industrial involvement in production. The recent moves by this great company to reduce its contribution to global warming have been received with admiration. This is because one cannot help but appreciate the concern for our environment from a company that operates more than two hundred thousand diesel vehicles in America alone.
Rapid response to inquiries and public concern are an opportunity for Coca Cola to improve its public relations strategy. Since the company will always face scandalous investigations and accusations, handling these issues in a timely fashion, and prudently will assist in their amicable settlement. Two such cases in which the company handled things in this fashion are that of 'poison Coke' in Belgium', and the Indian bottling plant that polluted water in Plachimada, Kerali.
Sustainability presents another avenue in which Coca Cola can improve its public relations strategy. Since most consumers have been found to consider the sustainability of a product's manufacturer in their production processes, Coca Cola has taken advantage of this and started numerous programs aimed at increasing recycling. The fact that most of these organizations derive their raw materials from our planet is a cause for concern. With this in mind, Coca Cola should adopt even more measures to reduce their reliance on natural resources.
Coca Cola Company's overall public strategy is based on creating a source of enjoyable yet safe, distinct and pleasant tasting drinks which appeal to all people regardless of age, gender, locality and affiliation. They have been successful in some respects at achieving this, but more needs to be done to address the issues of consumer perception of Coca Cola products and their impact on health. This has somewhat remained a gray area in its strife to remain significant to the health conscious who make up most of today's consumer market.
Coca Cola's strategy in news media relations is geared towards the adoption of more friendly relations so that in times of crisis, these media houses take time to assess the credibility of any information they might come across before announcement. Since this is a successful company, many are the times that scandals will be presented to news media organizations for announcement and dissemination. It would be in the company's best interest to create a favorable rapport with media houses. In addition, they are the same people Coca Cola uses in advertisement. The target audiences are all potential consumers and existing ones with the channels used being television, videos, pictures and the Internet.
Coca Cola Company's strategy for community relations is directed at creating a lasting relationship with the people who also form the consumer base of the company. The company aspires to ensure these communities feel cared for in all relevant aspects in this relationship, starting from quality of products, their integrity and safety and their overall impact on the nature as outlined in its mission to conserve the environment. In doing this, media has been used since there is no specific target in matters concerning our environment.
Concerning the company's public relation's strategy on government relations, Coca Cola strives to work more closely with the existing authorities of all markets and their governments in order to ensure there is beneficial coexistence. The implementation of such entails advertisements tailor made to lubricate relations between Coca Cola and the governments of these specific areas.
In crisis management, Coca Cola needs to do a lot more since there are many instances where the company has handled these badly. The manner in which you handle a crisis determines its outcome. In India's case of contaminated drinks, the company acted in a terribly ignorant manner from the very start. Instead, they should have reassured the government, stakeholders and especially consumers by carrying out an open inquiry and investigating the matter openly. India's perception of Coca Cola and its products would have been different had the management chosen to use the media to reassure all stakeholders.
Coca Cola's employee communication strategy is aimed at ensuring the company's most valuable assets are well catered for. This is being done by clearing all communication lines between them and management so they do not feel left out or ignored. To achieve this, company has adopted social media and other similar communication avenues. They come in the form of company forums and websites.
Coca Cola can benefit immensely from forming another crisis management strategy since the current one is not working. Its effectiveness has not been identified in any of the crisis Coca Cola has found itself facing. Using an example of the incident in India, where contaminated products were discovered, the company's image would have suffered less damage had those responsible for that crisis handled it better. Instead of implementing damage control measures, they cultivated doubt in the findings and its evidence.
Concerning its strategy on government relations, Coca Cola should strengthen, existing ties by avoiding the embarrassment of denial incase of any scandal. The company's relationship with the Belgian government suffered slightly as compared to that with the Indians since, in the former case, no denial was done, as was the case in the later. Instead, Coca Cola focused with reassuring its stakeholder while carrying out independent investigations and liaising with local authorities. This led to contempt between those involved and Coca Cola's loss of the Indian market.
In respect of what happened in Colombia, this company needs to address the issue of employee communication. When an organization has poor communication lines, external influence from extremists and rogue trade unions becomes a real threat. Although the country was undergoing civil wars, had the company invested more in ensuring proper communication, maybe no employee would have died.
1.4 PR Strategy vs. Advertising
In advertising, Coca Cola uses a range of methods all designed to ensure potential customers are informed of the existence of this great product. The most widely used of these is television adverts. Since this is one of the most widely available forms of leisure, the company has invested a lot of resources to ensure that any country with a television network runs its advertisement. This is consistent with its public relations policy of educating as many of the masses as possible about its products.
Print media follows television as the second most popular means of accessing information for potential consumers. With this in mind, Coca Cola has dedicated a lot of resources in ensuring its full range of products is advertised in news papers, magazines and books. This is in line with its public relations policies of availing information to as many as possible and obtaining feedback in the form of complaints and complements.
The Internet is penetrating society extremely fast. This is why Coca Cola has recently resulted to using adverts within websites so that as people navigate through them, they should across these adverts. Although the Internet is yet to reach many parts of Africa, this does not mean people cannot see these advertisements. Many cell phone service providers have incorporated Internet services into their package. While this works well for the company, it can be used maliciously against the same. Here, anti-Coca Cola propagandists use this resource to spread their myths.
Billboards and other forms of signage play a vital role in Coca Cola's advertisement campaigns. They are a principal form of advertisement especially within towns, meaning that their message reaches many people since they are usually large and are placed at strategic positions. Their use is consistent with the company's public relations policy of reaching out to as many of its consumers using the most effective means (Kotler, 2006).
Point of sale advertisements in the form of stickers and stamps are another means through which the company seeks to advertise itself. Within most stores, supermarkets and shops, Coca Cola products are visible in the distinct red color that has come to be synonymous with the drink. Other Coca Cola products are also represented in their respective colors, such as green standing for Sprite and Orange for Fanta.
Promotions are another method the company utilizes to advertise itself. The most common of these is in restaurants where Coca Cola drinks are offered 'free' with other food products the eatery serves. McDonald's offer of a 'free' coke for every burger is an excellent example of this. In addition, it should be noted that in choosing which product to partner with, compatibility of the products involved is crucial. This is the reason why such promotions are only carried out with products of a similar nature.
1.5 Effectiveness of Coca Cola's PR compared to PepsiCo.
A comparison between Coca Cola Company and its greatest rival PepsiCo reveals fascinating facts about how both treat marketing. From a web-marketing standpoint, both companies obviously have decent websites but they are different in their content. While competitors copy their rivals, the two choose to do this differently. Coca Cola Company's website directs one straight to other informative links and websites. PepsiCo's websites on the other hand, opens with an animation of a glass being filled with the drink.
The Coca Cola website does not offer a prospective customer chances to win gifts like the PepsiCo one where one has the chance to win tickets to an American football game or a car. The two websites treat one differently since one assumes a person is looking for information while the other assumes you would be seeking information and the chance to win a gift. These differences might assist the respective companies boost their images.
If one was looking for information about PepsiCo products, their search would be a bit problematic since it is biased to displaying promotional information. This is however not the case in the Coca Cola one where emphasis is given to product information as opposed to promotional services and opportunities. This clearly demonstrates a difference in the opinion between the two soft drink giants concerning information-seeking habits of consumers.
While the above are differences in the two companies marketing policies focused on web marketing, similarities are also present. One is quick to notice how both have chosen bright colors in their websites. Seemingly, both companies know the importance of using catchy color schemes on websites adverts in order to attract attention and effectively advertise ones products. PepsiCo uses blue while Coca Cola chooses to stick with red.
Websites can be used as information-gathering tools, and both websites exhibit knowledge of this due to the information they have on their footers relating to the total number of visitors to their websites. This also means that feedback is collected in both websites since there are contact boxes where this is collected. In addition, the companies might use these figures to plan marketing strategies.
Customer relations and their management is a vital aspect to consider when advertising or marketing your products. Both PepsiCo and Coca Cola Company exhibit knowledge of this since contact aids such as email address, physical address and telephone contacts are provided. The presence of these details means both companies value their consumers and would like to hear from them, or assist in case it is necessary. Forging lasting relations is crucial in boosting corporate image and boosting profitability.
According to Kotler, "consumers categorize products and internalize them in their minds". This is what both companies have used to their advantage by clarifying them and terming them as superiorities. When a consumer notices a company which puts their 'categories' into consideration, they opt for that. These differences might be a small as size or coloring but they can be the deciding factor for a consumer.
Physically, Coca Cola has remained the same for a long time. The company chose to stick with the original style in styling the logo since they believe change might not work for them. PepsiCo on the other hand are a dynamic lot with their product having undergone many changes over the years. This shows a belief in the changes that society itself undergoes and the dynamic nature associated with such goods.
Another distinct difference between the two is the choice of icon in marketing. Coca Cola Company uses a bottle, which has been the icon of the company for a long time. This dates back from the late 1800's, when the first symbols were forwarded for use as the company icon. PepsiCo has no distinct icon that can be termed as its marketing symbol.
Coca Cola Company bought Columbia pictures, a motion picture company, to bolster its advertising campaigns making them more personalized and cheaper to produce. This advertising strategy worked quite well until Columbia pictures stated incurring losses prompting its parent company to sell it off. PepsiCo never bought a film Company to better its marketing efforts but still went on to become a stiff competitor to Coca Cola.
In their advertising activities and public relations, PepsiCo have found themselves in positions where under hand activities were the only solution. They used such in the form of ridiculing advertisements and tasting competitions. Coca Cola on the other hand have always relied on the full name their brand enjoys and popularity of their soft drinks, never on shadow tactics. This ensures their continued success in this industry.
In running their 'Coke side of life" advertisement campaign, Coca Cola came across as an original as was reported in a survey that followed its launch. PepsiCo failed in their use of an attractive woman, which came across as being a bit common. Had they chosen another plot in their 'Max your life' campaign, maybe revenues would have soared over Coca Cola's. This strategy of Coca Cola, where they use catchy yet original advertisements, has seen them surpass their rival often.
During occasions where significant sports are taking place, both countries usually choose different strategies to market themselves. During the 2006 soccer world cup, for example, PepsiCo chose to use a soccer star in their campaign. On the other hand, Coca Cola, decided to utilize a new bottle design in order to boost consumption of their soft drinks during this important affair.
While both companies have a strong presence in sponsoring sports and games, PepsiCo exhibits some sought of bias in their sponsorship deals. Coca Cola on the other hand have thoroughly diversified their deals to incorporate both genders in many parts of the world participating in various disciplines. A few notable examples that come to mind with respect to Coca Cola are the 2002 and 2006 FIFA World Cups, the FIFA Women's World Cups in 1993 and 2003 and the FIFA U-17 Championships in 2005.
In conclusion, Coca Cola has identified China as the focus of its future expansion and growth plans. With a population exceeding 1 billion, and the fact that it is one of the fastest rising economies in the world, mean that many international companies have intentions of permeating this potentially lucrative market. Coca Cola already has three plants and has earmarked additional 2billion US dollars for investment in China.
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