The Coca Cola Company Company Recommendations

Coca-Cola was formulated in 1886 by John Pemberton, a pharmacist in Atlanta, Georgia, who sold it at drug store soda fountains as a “potion for mental and physical disorders.” In 1891, Asa Candler purchased the formula, established a sales force, and began brand advertising of Coca-Cola. [1] Candler granted Coca-Cola’s first bottling franchise in 1899 for a nominal one dollar. Just 11 years, the company’s bottling network reaching 370 franchisees. [2] 

Candler sold the company to a group of investors in 1919, and Coca-Cola went public that year. Four years later, Robert Woodruff as leader of the company. During the 1920s and 1930s, Coke pioneered open-top cooler for use in grocery stores and other channels, developed automatic fountain dispensers, and introduced vending machines. Woodruff established “lifestyle” advertising for Coca-Cola. He emphasized the role that Coke played in a consumer’s life.

During World War II, Coke won exemptions from wartime sugar rationing for production of beverage. Coke developed its business map followed the movement of American troops. During the wartime, Coke built 64 plants overseas, that development made Coke gain dominant postwar market shares in most European and Asian countries. [3] 

From the early beginnings when just nine drinks a day were served, Coca-Cola has grown to the world’s most ubiquitous brand, with more than 1.4 billion beverage servings sold each day. [4] Till 2010, there are 92,800 employees around the world and the total revenues reached $31 billion. [5] 

Organizational Change Effects

1905 – 1918 Brand Safeguarding

Counterfeit manufactures jealous of the fast growth of Coca-Cola and tried to imitate it. In 1916 alone, courts barred 153 imitations of Coca-Cola, including the brands Coca-Kala, Koca-Nola, and Cold-Cola. [6] To against the counterfeits, Coca-Cola provided a series of advertisements which focus on the authenticity of Coca-Cola, urging customers to purchase the genuine and avoid the counterfeit products.

Coca-Cola also decided to create a distinctive bottle shape to make sure customers are actually getting the real Coca-Cola. In 1916, Coca-Cola introduced and patented a 6.5-oz contour bottle. The counter bottle became Coca-Cola’s most recognizable package and became an American icon.

Coca-Cola spent lots of energy in brand safeguarding not only concreted its positioning on customers’ mind but also enhanced the bottlers’ confidence of Coca-Cola. In 1900, there are only two bottlers of Coca-Cola; by 1920, there would be about 1,000. [7] 

1923 – 1940 The Robert Woodruff’s Legend

Robert Woodruff became the president in 1923. Perhaps no person had more impact on The Coca-Cola Company than Robert Woodruff. If Candler was the person introduced Coca-Cola to the U.S., Woodruff would be the man who introduced Coca-Cola to the world. Woodruff built Coca-Cola into an international company, establishing a foreign department in 1926 and introducing Coca-Cola into the Amsterdam Olympic Game in 1928. [8] 

Woodruff also pushed development and distribution of the six-pack, the open top cooler, and other innovations which mentioned in the “Company Overview” that made it easier for people to drink Coca-Cola at home or away. Based on the portable and bottled innovation, Coca-Cola not just grabs a huge success, but changes people’s lives.

1941-1959 The war and its legacy

In 1941, American entered World War II. Followed the movement of U.S. troops, Coca-Cola built its beverage kingdom around the world. To solve the shortage of sugar beverage rationing for U.S. Army, in 1943, General Dwight D. Eisenhower sent an urgent cablegram to Coca-Cola, requesting shipment of materials for 10 bottling plants. [9] From the mid-1940s until 1960, the countries with bottling factories nearly doubled.

The management strategy during WWII also brings huge impact while peace arrived. Post-war America was alive with optimism and prosperity. Coca-Cola established its image as happy, fun and carefree by advertising. This product positioning also spread around the world, making Coca-Cola as a significant America icon. According to researches, the WWII generation hand an intense loyalty to Coke that make it their soft drink of preference in the 1950s. [10] 

1982-1989 Diet Coke and New Coke

In 1981, Roberto C. Goizueta became chairman of The Board of Directors and CEO of The Coca-Cola Company. Goizueta completely reorganized the company with a strategy called “intelligent risk taking.” [11] 

The 1980s – the era of the fitness craze. In order to catch the fever, Coca-Cola introduced Diet Coke, the first extension of the Coca-Cola and Coke trademarks. Within two years, Diet Coke had become the top diet drink in the world. [12] 

The success of Diet Coke encouraged Goizueta. In 1985, Coca-Cola introduced New Coke, the first change in formulation in 99 years. However, the introducing of New Coke was the biggest marketing blunder of Coca-Cola. Finally, Coca-Cola eliminated New Coke and returned the original coke into the market as Coca-Cola Classic.

1990-1997 New market Strategy

Coca-Cola devoted to connect itself with sports, with ongoing support of the Olympic Games, FIFA World Cup, Rugby World Cup and National Basketball Association. Coca-Cola Classic became the Official Soft Drink of NASCAR racing. [13] 

Coca-Cola also extended its beverage scope through acquisitions. During this period, Coca-Cola acquired beverage brands in more than 120 countries around the world.

Under Goizueta’s 16 years of leadership, Coke’s value spiked from 4 billion to 145 billion. [14] By 1997, the company sold 1 billion services of its products every day. [15] 

Activity Systems of Coca-ColaFirm Resources/Capabilities

Unique Product Features

Coca-Cola tests pretty good, even the formula did not change since it was invented. Once you get tried Coca-Cola, you cannot against its enticing and amazing taste.

Coca-Cola cost s only a fraction of a cent per drink to produce. Besides, Coca-Cola wasn’t capital intensive and its manufacture was neither difficult nor laborious.

Coca-Cola is one of the inexpensive products around the world. Even a Third World citizen can afford Coca-Cola without broke. Coke has always thrived during hard economic times. During both the Great Depression and the recent recession, the soft drink manufacture prospered. [16] Undoubtedly, Coca-Cola is one of the most famous brand names in the world. You almost can see the white and red sign everywhere.

Flexible Advertisement Strategy

The formula’s mystique, the famed “7X” flavoring, has always been an important part of its appeal. Coke built a successful tailing-point to gain consumers’ attention. While other competitors relied on promotion their products with new flavors, Coca-Cola linked the products with happy, energetic, wholesome and friendly images.

Most companies recognize that endorsed by celebrities would promote their products a lot. However, the disadvantage is while the celebrity suffering serious scandals, it might also harm the image of the product. Coke has solved this dilemma by resurrecting dead stars like Louis Armstrong, Groucho Marx, and Humphrey Bogart for cameo appearances. [17] 

Protect Reputation by Law

Coca-Cola hired attorneys around the world in an attempt to stifle imitators and competitors and to defend the company against widespread rumors about its ill effects on health. [18] Although Coca-Cola had indeed resorted to bribery and kick-backs in the past, the company lives up to its clean image. Coca-Cola knows that in order to protect its reputation, company should not involve in illegal activities.

Global-Oriented Sales

Both Cock-Cola and Pepsi managers know that, the “cola wars” indeed enhance the sales, regardless of which company finally wins the war. Since the 1950s, Coke has created “pattern advertising,” which has appeal in almost any culture in the world with little or no modification. [19] Through the success of the policy, Coke message has universal appeal. Besides, Coke signed bottling contracts with local manufactures and encouraged the development of sales strategies by local firms.

Coca-Cola devoted in connection with young consumers. It believes, if you can achieve loyalty among youthful consumers, you’ve possible fostered lifelong consumption.

Gaps and solutions

The largest challenge of soft drink industry is the increase of healthy concerns for carbonated drinks. In 2000, more than one-third of elementary schools, half of middle and junior high schools, and close to three-fourths of senior high schools had contracts giving soft drink companies the rights to sell their product at school. [20] In late 2001, Surgeon General’s report on the obesity epidemic, the debate about junk food marketing has heated up on a number of fronts. That research made medical professionals, children’s advocates and parent began to organize against in-school soft drinks marketing. School districts began to reject exclusive contract with Coke and Pepsi. [21] The U.S. per capita consumption of regular soft drink decreased 11.02% from 1999 to 2005. [22] On the other hand, the U.S. per capita consumption of Diet Soft Drinks increased 17.64% in same period. [23] Coke could invest more in diet-oriented programs, such as associate with schools and design healthy improved curriculums or invest more in developing and promoting diet-oriented soft drinks, which convert the obesity epidemic images of Coke and regain the younger market.

Business Strategy and Performance

The proposition for Coca-Cola is providing refreshment, value, joy and fun to customers, then successfully nurture and protect Coca-Cola. That is the key to fulfilling the ultimate obligation to provide consistently attractive returns to the stakeholders.

Target Market

The main market that Coca-Cola focuses is young generations. Coca-Cola establishes its image as energetic, healthy, and friendly to reach the young generation markets. From sumo to car racing, Coke devoted to sponsor sport activities. The main purpose is to reach young and exercise market.

Price and Marketing Strategy

In order to increase the profit margin and market share, Coke focus on beverage acquisitions and partnerships particular outside the U.S. Through acquisitions and partnerships particular, Coke keeps its cost advantage and extend business map out of U.S. For instance, in September 2008, Coca-Cola purchased China Huiyuan Juice Group for $2.4 billion. While market view the purchases price as high, that purchase doubling Coca-Cola’s share in the Chinese juice market. [24] 

Main competitors

PepsiCo Inc.: Incorporated in Delaware on Sept. 18, 1919 as Loft, Inc. Name changed to Pepsi-Cola Co. on Jun. 30, 1941. Present name changed on Jun. 10, 1965. Total revenue: $52 billion. (2009) Total employees: 203,000. (2009) [25] 

Dr Pepper Snapple Group Inc.: Incorporated in Delaware on Oct. 24, 2007 as a result of a spinoff of CSAB, Inc. from Cadbury Schweppes plc. Total revenue: $5.5 billion. (2009) Total employees: 19,000. (2009) [26] 

Sales Cases (Million) [27] 

Profit Margin

Market Share [28] 

2009

2008

2007

2009

2008

2007

2009

2008

2007

Coca-Cola Co (The)

3,947.0

4,107.6

4,241.1

22.28%

18.18%

20.73%

41.90%

42.70%

42.80%

PepsiCo Inc.

2,815.3

2,960.4

3,082.8

13.83%

11.89%

14.33%

29.90%

30.80%

31.10%

Dr Pepper Snapple Group Inc.

1,541.5

1,471.2

1,491.3

10.03%

-5.46%

8.65%

16.40%

15.30%

15.00%

Sales Cases: Impacted by crisis and healthy concern, the overall CSD sales decreased from 2007 to 2009. During 08 to 09, Dr Pepper was up 4.8%. The two giants – Coke and Pepsi – continued to deteriorate, with Coke down – 4% and Pepsi down 5.5%.

Profit Margin: Benefited from acquisitions, Coca-Cola gets a leader position in Profit Margin. Coca-Cola speed up its acquisitions plans in May 2007. In the end of 2008, Coca-Cola expanded distribution to Australia, Great Britain, Canada, Mexico and China. From 08 to 09 the profit margin increased 4.1%.

Market Share: Coca-Cola dominates in CSD industry. Through wisely and broadly advertisement campaigns, the market share of Coke didn’t suffer serious impacts. Dr Pepper gained a big increase from 2008 to 2009 and that increase occupied the market share from Coke and Pepsi.

Conclusion

Coca-Cola is a very strong brand in the world. Flexible market strategies and amazing innovation capacity make Coca-Cola keep leader position in soft drink field. However, the labels of “Junk Food” and “cause obesity epidemic” are the original sins of soft drinks. To get rid of this image, Coke not only window dressing its brand image but also make profits from other non-soft drink fields. The Coca-Cola Company is the exclusive distributor of Evian bottled water and Rockstar energy drinks in most of the U.S. and Canada, in addition to selling its own Dasani brand water, Minute Main juices, and Powerade sport drinks. [29] The company through diversify to decrease the risk of just focus in specific product – Coke.