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Market Focus and Growth Strategy of Coca Cola

Info: 4083 words (16 pages) Essay
Published: 30th Jul 2021 in Business

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Introduction

Established in 1886, the Coca Cola Company operates in more than 200 countries & markets more than 500 brands & 3,300 beverage products. The Coca Cola Company explains its operations system this way. “We are a global business that operates on a local scale in every community we do business” The company believes its strengths lie in their ability to have a global reach & at the same time have a local focus. The company has more than 300 bottling partners worldwide. The Coca Cola Company manufacturers & sells concentrates, beverage bases & syrups to bottling operations; owns the brands; & is responsible for consumer brand marketing initiatives. The bottling partners manufacture, package, merchandise & distribute the finished branded beverages to their customers & vending partners, who then sell the Coca Cola products to consumers.

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Organizational Strategy

Product/Market Focus

Coca cola is a company that knows that their main priority is to reach their products to the customers. Coca cola focuses on improving the product itself either by design, taste, ingredients, size, convenience, and many other factors. Coca-Cola’s target market satisfies a wide variety of cultural consumers around the world. Moreover, their products target people who are health conscious and people who are on a diet. Their products do fit all age groups from the young to the old. There are Coca-Cola products for the athletes who train for a sport, such as Powerade (Coca-Cola Product). Also, this company has focused on people who need coffee in the morning before they go to work. Coca- Cola owns a joint venture with Illycaffe, Italy coffee brand which is primarily for the people who are coffee-lovers. The focus of this market, Coca Cola, is applicable to both male and females. Coca- Cola does engage in product diversification throughout the world. Coke a product is mainly directed to the young children. Their advertisements are mostly directed to the young. Coke wants to target the young because they know their product will give youth’s power and energy. Brand extension strategy has played a key role on Coke. Coke introduces new products under their trademark Coca-Cola. Brand extension strategy is quite effective under the Coke trademark. There will be this recognition and realization from consumers, that they will be drinking a Coca Cola product. Brand extension strategy puts a new product into an existing market. Diet Coke is an example of brand extension strategy which became successful. For instance, Diet Coke has been recognized gradually by consumers worldwide, it has low calories and has been sold over 100 countries. It promotes liveliness and energy to consumers similar to Coke. Many consumers who do enjoy coke as a soft drink, there would be a higher probability for a consumer to try a can of diet-coke due to brand awareness.

Rationale: Coca Cola Company wants to continue focusing their needs for consumers with regards to delivering innovative food products which includes energy drinks, vitamins, and antioxidant drinks. Furthermore, Coca Cola is focusing on creating a healthy and active lifestyle that is more adaptive to consumer behavior. Coca cola is working with their bottling partners to enhance customer relationships and make their products widely known and distributed everywhere.

Growth Strategy/Goals

Hard goals

In terms of its growth strategy, which is their market position in the beverage industry, Coca Cola Company is concentrating in opening more opportunities in developing markets by leveraging the scale & reach of the Coca Cola system to shape & capture value. The company intends to accomplish it by sharpening their execution at the point of sale and expanding the brand portfolio. The company has projected that these developing markets are expected to contribute approximately 20 percent of incremental population growth over the next 10 years. Personal expenditure per capita in these markets is expected to increase by 65% over the next decade. Furthermore, Coca Cola company anticipates that developing markets will contribute approximately ¼ of the incremental unit case volume by 2020.

Rationale

The coca cola company’s long term growth strategy of investing in emerging markets, is related to the Coca Cola Company projections in these markets. The CCC attributes this to a positive correlation between wealth and the increase in consumption of Nonalcoholic ready-to-drink(NARTD) beverages. From now to 2020, more than 1 billion people will join the middle class, and the per capita wealth for individuals will increase by nearly 30 percent. They have the ability to invest in new plants in places like china & India. Over the next 3 years Coca Cola company plans to invest $2 billion, 3 new plants are expected to be finished in that time period. The company clearly understands in order for intended strategy to be attained, consumer access and system alignment is key to their growth in these emerging markets. This means placing more coolers throughout these countries, in order to drive on-the-go consumption.

Soft goals

The Coca Cola company is also encouraging their partners in the value chain, to enhance their soft skills within these developing markets. The company is focused on growing annual consumption of beverage products. The company intends to work with its bottling partners to establish new customer relationships & grow existing ones, from street vendors & restaurants, to large-scale grocers.

Rationale

The reason why the CCC emphasizes the development of soft skills, the Coca Cola Company has a vast distribution network to contend with. To remain a leader in the beverage industry, communicating with its partners along the value chain is an important aspect of their continued success in the beverage industry. As I have said, Coca Cola Company has a huge distribution network and it is one of the best distribution network in the world, nobody in the beverage industry can match this tremendous asset. Another reason why the Coca Cola company is successful in its core activities, stems from its mission, vision & values. This is the source where the CCC can attribute its success, & its long-term strategy to become the most widely available & consumed soft drink in the world. Perhaps the following statement which comes from the CCC’s mission, vision & values strategic outlook can be deemed a poignant assertion. “The world is changing all around us, to continue to thrive as a business over the next ten years, & beyond, we must look ahead, understand the trends & forces that will shape our business in the future & move swiftly to prepare for what’s to come. We must get ready for tomorrow, today”.

Mission

This is Coca Cola’s mission statement “To refresh the world…To inspire moments of optimism and happiness…To create value and make a difference.” Coca Cola company mission statement clearly defines the purpose for which and reason why they exist as an organization. The employees must be feel they are a part of an organization that knows where it is heading, in terms of the language it uses with their mission statement. “to create value & make a difference” resonates with belonging to an organization, that wants to create a culture of empowerment and continuous improvement.

Vision (6P's)

Coca Cola Company’s vision statement is a guide to what the company needs to accomplish so it can achieve sustainable and quality growth. The CCC vision statement is based on what we will call the six P’s (people, portfolio, partners, planet, profit, productivity)

  1. People: Be a great place to work, where people are inspired to the best they can be
  2. Portfolio: Bring the world a portfolio of quality beverage brands that anticipate & satisfy people’s desires & needs.
  3. Partners: Nurture a winning network of customers & suppliers, together we create mutual enduring value.
  4. Planet: Be a responsible citizen that makes a difference by helping build & support sustainable communities.
  5. Profit: Maximize long-term to shareowners while being mindful of our overall responsibilities.
  6. Productivity: Be a highly effective, lean & fast-moving organization.

Culture of CCC

This quote epitomizes their culture: “Our Winning Culture: Our winning culture defines the attitudes and behaviours that will be required of us to make our 2020 vision a reality”

Such is the importance of the Mission & Vision of the CCC, I believe it is important to include the culture of this company. Because the culture shapes the attitudes & behaviours of the everyone that works for the organization. The Coca Cola Company is identified with having a strong culture The CCC has incorporated the culture with their 2020 Vision, which is a long-term strategy aimed to be a “RoadMap” for understanding the trends and forces that will shape their business of the future. The CCC say’s it is a preparation of what’s to come & designed to seize on opportunities once they have been identified. This roadmap is based on winning together with their bottling partners.

Values of The CCC

Live Our Values: Our values serve as a compass for our actions and describe how we behave in the world.

Leadership: The courage to shape a better future

Collaboration: Leverage collective genius

Integrity: Be real

Accountability: If it is to be, it is up to me

Passion: Committed to heart & mind

Diversity: As inclusive as our brands

Quality: What we do, we do well

Values as we understand, act as a guide for our individual actions and group behaviour. They are the moral compass in our every day interactions with the internal & external environment, customers, associates, public, family, friends, and institutions,

Rationale

The Coca Cola Company’s mission, vision, culture, and values, defines and shapes the company’s objectives into measurable expressions of what the organization intends to achieve. They include a mixture of hard and soft goals, the hierarchy or top management at Coca Cola Company understands they have to develop a blueprint that employees and the bottling partners can follow and identify with being successful in their business. One striking example comes from their vision statement one of the six P’s, which states, “People: be a great place to work, where people are inspired to the best they can be” Another vision statement say’s “Partners: nurture a winning network of customers & suppliers, together we create a mutual enduring value” The CCC’s vision, culture and values create an atmosphere of individual attainment and group accomplishment. Where the essence of individual talent is nurtured and encouraged, and group effort is identified as an important contributor to the goals of the CCC.

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Core activities

The value of change plays an important part in the core activities of the Coca Cola Company because the company relies a lot in its suppliers, the bottles companies and the people selling the product. The suppliers are from people they get there ingredients like sugar, coffee, citrus around the world, the water they use in the process of making the beverage to the people in charge of the packaging.. Then come in role the Coca Cola system which is basically where first the company produces the beverages and then comes in play the bottling partners. They are independent bottling partners in charge manufacture, package and distribute the final product. Finally there is the selling the beverages process where the final products are taken to the warehouse for being distributed to retail outlets. The products are then distributed to the customers that are supermarket, convenience stores, restaurants, etc. And also to the vending machines and coolers that are place in strategic locations to reach all customers. And that way the product finally reach the consumers, around 1.6 billion time a day are the products consume

Coca Cola Company depends a lot in other part to take the products to the consumers. They treat them with respect and importance and make them realize the importance of their work to the coca cola system. They have been using this system for years and so far had work perfectly. They are focus in the need of the consumers, the customers and the franchise partners; they think in terms of globalization, they are always aware of change. They also use an aggressive marketing strategy. Almost everywhere and in the most important events you can see a Coca Cola logo, they have billboards, commercials, products that will be associated with Coca Cola.

Rationale

The core activities are an important play for the company because if what makes them different from the rest of the company. They depends a lot in the suppliers the bottling companies and the customers. They play in an important role in making the product as the suppliers give them the prime materials. Then there are the bottling companies that are play an equal significant part, they are the package where the product is deliver and if you can see the bottle of the products of the company are immediately associated with the company. For example Coca Cola has a unique bottle design that everyone in the world with associate or recognized.

Value Proposition

Coca -Cola Company is an organization which provides value for their consumers and customers. Customers are their energy source for this organization. Creating the value starts with their coca cola products. Hence, this can greatly be achieved by greater variety of brands, pricing, packaging, and affordability. In addition, Coca-Cola products do focus on the customer lifestyle in terms of satisfaction. For example, if a person were to be on a diet, well there is diet coke. Hence, Coca Cola does engage in the customer needs in terms of the product. Coca- Cola has over nearly 400 brands (including water, juice, teas, coffees, energy drinks, and especially sodas) and wants to engage consumers to try something refreshing and new. It really comes down to choices for consumer in terms of coca cola products. Coca-cola brands include Fruitopia, Fanta, Sprite, Dasani, Nestea, Powerade, and many more brands. One of Coca-Cola’s slogans was “Open Happiness.” This slogan was represented to the consumers and was meant to letting the consumers enjoy their products. Coca Cola is able to meet today’s non-alcoholic beverage needs of consumers. Coca Cola’s current value proposition is “The Coke Side of Life” which represents happiness when you open up a can of coke or any other Coca-Cola product. “The Coke Side of Life” explains that it is an enjoyable, comfortable, and sociable environment when one actually consumes a Coca-Cola product.

Rationale

Coca Cola Company continues to work on research/development and focus on making new products. For instance, a can of coke has a secret formula that will be difficult to imitate. Coca Cola products are significant because they make each product unique.

Porter 5 Forces Analysis

1. Threat of Entrants

Coca-Cola does have a lot of competitors in the soft drink industry. The threat of entrants is low for the soft drink industry. There are very few entrants who can compete with Coke. In addition, a barrier to entry when entering the soft drink industry would be a high capital investment. If you don’t have that high capital investment it would be hard to enter the industry. Coke nearly earns 48% of the soft drink industry and there are no competitors that are nowhere near coca cola’s distribution. Coca-Cola has over 500 brands of products which are potentially substitutes. To get the point, the buyer can switch from one product to another at no cost under the Coca Cola brand. Nowadays, consumers are really being health-conscious about their health. So they may not be interested in soft drinks but look at tea, juices, milk and even water. Certainly, Coke does have these products on hand. If Coca Cola decides to increase most of their product by a $0.50 increase, it would be very likely, consumers would buy Pepsi products. Coke can lose its profits margin and can have a major impact on the trademark itself if they increase prices. Price is a huge factor to take into consideration with regards to other entrants. The challenge for this organization today and the future is to focus private companies because they can imitate the products and put cheaper prices. Private companies currently earn 14.4% of the soft drink industry. Having strong barriers prevents from this rising situation to happen. One strong barrier to entrant that prevents from coming would be distribution channels. Coca cola has their products everywhere on their store shelves which make it accessible to consumers while new private companies will have a hard time selling their products to wholesalers, retailers, and distributors.

Rationale: Entrants are slowly rising to the carbonated soft drink industry and as organization must find new barriers. Coca-Cola should continue to develop their brand loyalty worldwide and convince consumers to have reliability in their products.

2. Barriers to entry

One of the 5 forces that shape the soft drink industry is barriers to entry. The Coca Cola company says on its website it is facing strong competition from well-established global companies and many local participants. For this particular industry, the competitive forces are benign, (favourable). Most of the companies in the soft drink industry are profitable. The Coca Cola company’s main competitors are Dr.Pepper, Nestle and Pepsico. These companies definitely have the advantage over there competitors. In porters 5 forces, Porter refers to supply-side economies of scale, where firms such as the CCC and Pepsico can produce at large volumes enjoy lower costs per unit because they can spread fixed costs over more units, employ more efficient technology, or command better terms from suppliers. According to Porter’s article, supply-side scale economies deter entry by forcing the aspiring entrant either to come in the industry on a large scale, which requires dislodging entrenched competitors. How does a newcomer circumvent the barriers to soft drink industry? Perhaps create new distribution channels of their own. Creating a niche market for their drink in the form of marketing to a certain segment in the soft drink industry.

3. Competitive Rivalry

Competitive rivalry is between two main competitors the Coca Cola Company and Pepsico to satisfy the taste of consumers in this industry. Last month Beverage Digest reported that Pepsi-Cola’s market share fell 0.5 percentage point while Diet Coke slipped just 0.1 percentage point in the U.S. supermarkets, convenience stores and other retail outlets. The two companies have fought over the past decade to win market share from one another as overall sales dropped. This relates to Porter’s article on the 5 competitive forces that shape strategy. There is an intense rivalry between these two companies. According to porter “high rivalry, limits the profitability of the industry.” The Coca Cola Company and Pepsico are competing based on brand image.

4. Power of the buyers

One of the 5 forces of porter is buyers the power of the, for Coca Cola Company the power of the buyers is high. They play an important role in the Company process because they are part of the distribution process of the company. They play an important role in distributing the system so it can reach the consumers. They are part of the company and the process. They are part of the strategy used by the company.

5. Power of the suppliers

Another of the 5 forces of porter is the suppliers. As well they play an important role in the company process so they have a high power. They have a high power because they also play an important part of the process of the soft drinks. If they decided to boycott the company it will caused them serious damages. There will be a cost to switch suppliers because they will have to build a relationship since 0 and might lost incomes for doing that.

External Fit(Diamond E. Model)

Management Preferences

The senior management team wants to increase the efficiency and effectiveness in the production and bottling sector. With regards to economies of scale, Coke continues to increase production at a low cost. As production of Coca Cola products increase, the cost of producing each unit falls. Moreover, the senior management continues to think about new products (in addition to their 500 products), develop beverages, make new programs and promotions, and meet the needs of customers.

The senior management continues to strive for sustainability in their organization. Coca cola recently launched their plant bottle packaging, which basically means they have created their PET bottles from plant based materials. Hence, makes their product 100% recyclable. Muhtar Kent, chief operating officer continues his obligation with sustainability. In 10 years, he plans to reduce coca cola’s emission by a half.

To continue improving performance, Coca-Cola continues to update their technology with regards to quality control. As well continue using better material for their products. In addition, this organization is starting to develop their products in rural areas of the world. The senior management team wants to let consumers know that they are the most trusted carbonated soft drink company and strive to achieve leadership in corporate sustainability.

Rationale: The main preferences for Muhtar Kent, CEO, wants to develop and raise their brands, enhance revenue growth and increase productivity within their products.

Resources

The resources on the Coca Cola Company according to the Diamond E. Model are first the all the resources that the company have to keep on growing and innovating. From the shareholders to the investors, etc. The company has used many of these resources to create healthy products or bio friendly products. They are aware that many of their ingredients comes from the environment and the nature so they are trying to created a friendly environment where the environment is being look after. They have different programs that are meant to help the environments to maintain the natural resources of the land. This is very important because if one of the products they use is gone they won’t be able to produce the product anymore.

Organization

What is the structure, leadership and unique features of the Coca Cola Company in relation to Fry/Killing Diamond E Model. It is what is referred to as the Coca Cola system, which comprises 300 bottling partners worldwide. The coca cola system operates through multiple local channels, the company manufactures and sells its concentrate, beverage bases and syrups to bottling operations, owns the brands and responsible for consumer brand marketing initiatives. The bottling partners manufacture, package, merchandise and distribute the final branded beverages to customers and vending partners, who then sell the products to consumers. It is no wonder the coca cola company has one of the best distribution systems in the world and the ability to penetrate in markets where no company can duplicate is attribute to the structure and leadership at the Coca Cola company. The other unique aspect is the relationship it has with its bottling partners, who in turn works closely with customers, like grocery stores, restaurants, street vendors, convenience stores, movie theatres, and amusement parks to execute localized strategies developed in partnership with the company.

 

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