Comparison of Coca Colas response to the changing marketing environment

Published:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Marketing environment are the actors and forces that affect a company's capability to operate effectively in providing products and services to its customers. The marketing environment consists of microenvironment (customer, competitors, distributors, and suppliers) and the macroenvironment (economic, social, political, legal, physical and technological forces). These shape the character of the opportunities and the threats facing a company and yet are largely uncontrollable.

The major microenvironment that Coca-Cola is facing is its competitor, PepsiCo. Competitors have a major bearing on the performance of a company. It affects a company's capabilities to operate effectively in its chosen markets. For example, Coca-Cola was once successful and was the Wall Street favourite. It created a global brand and outperformed its arch-rival PepsiCo. However, by December 2005, its competitor, PepsiCo, for the first time in the history of the two companies, was valued more highly with a market capitalization of $98.4 billion against Coca-Cola's $97.9 billion. Coca-cola's number one status was starting to look vulnerable. It was losing market share to PepsiCo.

The major macroenvironment that Coca-Cola is facing is Social/cultural forces. Social/cultural forces can have an impact on marketing decisions by changing demand patterns and creating new opportunities and threats. With the increasing numbers of health-conscious consumers, attitudes towards the demand for beverages are changing. The changes need to be monitored and understood so that marketing management is aware of the changing tastes and behaviour of consumers. Such changes can create demand shifts that can act as either opportunities or threats. In contrast to Coca-cola, PepsiCo considered the change an opportunity for business expansion. For example, PepsiCo diversified away from sugary fizzy drinks into a powerful portfolio of non-carbonated products. It bought the fruit juice business Tropicana and Quaker Oats. With these new businesses, the company has experienced double-digit growth, where as Coca-cola cherish the status quo and resist change.

There are various ways companies can respond to the change in marketing environment, which are: ignorance, delay, retrenchment, gradual strategic repositioning and radical strategic repositioning.

The first response of Coca-Cola to the changing marketing environment before the arrival of Mr Isdell to that of PepsiCo, is where Coca-Cola made no change to its strategy at the beginning after the death of Roberto Goizueta. It continued as normal, ignore its competitor, PepsiCo, which was threatening their existence. During that time, Coca-Cola was facing bungled takeovers, disastrous product launches, contamination scares, and constant feuding between factions within the management and boardroom. It still stayed put to Goizueta's philosophy, that is, it was that nothing could beat the low cost, high-profit -margin business of producing syrupy concentrate for bottlers, under licence. Between the competitions of the two companies, it had made consumers more cola-conscious. However, Coca-Cola rarely saw it like that due to the poor environment scanning. Coca-Cola appears to be internally orientated business, as it did not monitor and seek to understand customers, research competitor and their brands to understand theirs strengths, weaknesses, strategies and response patterns. Coca-Cola did not realize that salient forces are affecting their future prospects.

Apart from the ignorant, Coca-Cola has delayed in their response to the marketing environment change. This can be caused by bureaucratic nature of their decision-making. Marketing myopia can slow response through management being product rather than customer focused. For example, despite the change in consumer tastes, lifestyle and expectations, Coca-cola is still focused on soft drinks where PepsiCo has already well diversified and even enter into snack food business. The result is that PepsiCo generates about 23 per cent of its worldwide profits from the stagnant carbonated drinks sector, while Coca-Cola relies on fizzy drinks for 80 per cent of profits. PepsiCo's diversification programme and its branding-building expertise have made it the world's fourth largest food and beverage company, ranking behind Nestle, Kraft and Unilever. Its sales were more than $43 billion compared with Coca-cola's $32 billion in 2008.

Slowly, Coca-cola has looked into gradual strategic repositioning. This involves a gradual, planned and continuous adaptation to the changing marketing environment. Coca-Cola has slowly and continually repositioned itself in response to its strong competition and the changing marketing environment. It has in fact gradually challenge its competitor by having launched Minute Maid fruit juice to challenge Tropicana, Dasani to take on Aquafina and so on, even though it seems to be playing catch-up.

Compare to Coca-Cola, PepsiCo has adopted the radical strategic repositioning where it took part and involved by changing the direction of the business according to the change in marketing environment. For example, PepsiCo developed and marketed better alternative, more varieties and healthier beverages.

Writing Services

Essay Writing
Service

Find out how the very best essay writing service can help you accomplish more and achieve higher marks today.

Assignment Writing Service

From complicated assignments to tricky tasks, our experts can tackle virtually any question thrown at them.

Dissertation Writing Service

A dissertation (also known as a thesis or research project) is probably the most important piece of work for any student! From full dissertations to individual chapters, we’re on hand to support you.

Coursework Writing Service

Our expert qualified writers can help you get your coursework right first time, every time.

Dissertation Proposal Service

The first step to completing a dissertation is to create a proposal that talks about what you wish to do. Our experts can design suitable methodologies - perfect to help you get started with a dissertation.

Report Writing
Service

Reports for any audience. Perfectly structured, professionally written, and tailored to suit your exact requirements.

Essay Skeleton Answer Service

If you’re just looking for some help to get started on an essay, our outline service provides you with a perfect essay plan.

Marking & Proofreading Service

Not sure if your work is hitting the mark? Struggling to get feedback from your lecturer? Our premium marking service was created just for you - get the feedback you deserve now.

Exam Revision
Service

Exams can be one of the most stressful experiences you’ll ever have! Revision is key, and we’re here to help. With custom created revision notes and exam answers, you’ll never feel underprepared again.