Cola is a multinational soft drinks company and its the largest soft drinks company in the world both regarding sales volumes and revenue. The company was founded in the year 1886 by a man named Asa Griggs Candler. The company is headquartered in Atlanta, Georgia and incorporated in Wilmington, Delaware. The company is more famous for its flagship product Coca-Cola invented by John Stitch Pemberton and was initially intended to be patented as a medicine (Smith, 2011). The company’s exceptional marketing techniques have helped the company to maintain its market dominance for more than one century. The company uses franchised distribution system where the company produces the concentrate and then contracts companies to mix the concentrate according to their prescription and then bottle the drinks.
The environment analysis for coca cola helps in identifying the strengths and weaknesses of the organization. The environmental analysis of Coca Cola in this report is done using the PESTEL method. This method will discuss and analyze the external environmental factors facing the company.
The political environment of Coca Cola consists of factors such as peace and stability in countries in which it operates, regulations that are enforced affecting the company and any interference from the political class on matters concerning the company. Coca cola operates in almost all the countries in the world and many of the countries are peaceful and therefore the political environment of the company is favorable.
These are either micro economic or macro-economic factors that affect the operations of the business. The economic factors affecting Coca Cola include inflation rate, economic growth rate, and availability of factors of production(Burrow & Bosiljevac,2012.)
The social factors that affect Coca cola company include the traditions, beliefs and customs of the people living in the region in which the company is operating. The beliefs of the people concerning the products of the company for instance the belief among some people that coca cola products causes cancer affect the operations of the company(Gertner& Rifkin,2017). The other social factors affecting the company is decrease in demand of carbonated drinks.
These factors include the new bottling technology adopted by Coca cola bottlers, adoption of modern product promotion and advertising technologies such as use of social media advertising. Another technological factor affecting the company is the new technologies used in production of concentrate which make production more efficient.
The environmental factors affecting Coca cola include pollution through plastic containers and lack of enough water in many countries in which the company operates and therefore, this affects the production of the final products.
The legal factors affecting Coca Cola involves legislation that may directly or indirectly affect the operations of the company. Since coca cola is a multinational company, it operates in many countries and this factors ,may vary from country to country. These factors include, labor laws, tax laws, corporate governance laws and laws governing movement of capital across boarders.
Illustration of PESTEL analysis of Coca Cola.
l Increasing conflicts in some countries
l Speculations regarding the safety of the companies` products
l High levels of inflation
l Slow economic growth in operating environment
l Deals with local, regional and international economic issues
l Decreasing demand for carbonated drinks
l Increasing health and safety concerns among consumers
l New advertising and product promotion technologies
l New production methods and equipment that have increased efficiency in production
l Pollution through plastic containers
l Scarcity of water
l Tax laws
l Patents and copyright rights
l Continuous adjustment to changing legal environment
The behavior of customers is paramount for every marketer to enable the company put in place the right strategies that will help in meeting the needs of the consumers(Lamb & McDaniel, 2012). A study of the buyer behavior for coca cola`s users reveals that the consumers are not very sensitive to prices. There is also a significant amount of customer loyalty with most of the consumers of the coca cola products admitting that they never consume the products of the competitor and they are loyal to the products they consume with many of them not willing to substitute.
There is very stiff competition between coca cola and its main competitor, Pepsi. Even though coca cola maintains the market leadership position and by a huge margin, the company has seen off very intense competition both in the US and globally (ALVES & VA?ZQUEZ2013). There are very few players in this industry, and therefore, the nature of marketing and advertising for each of these companies is very crucial in determining their success in the market. The trends in the soft carbonated drinks industry are the increased focus on healthy products among consumers. Most of the consumers of soft drinks are cautious on the health effects of what they consume, and therefore companies are struggling to design products that are more responsive to the needs of the consumers. Coca-Cola company has responded in a very impressive manner to this trend by launching products that cater to the health needs of different customers such as Cola Zero which is sugar-free (Gillespie& Hennessey,2011).
A SWOT analysis of Coca Cola company will help in identifying the underlying strengths and weaknesses of the business. This will help the company to take the right steps to improve on strengths and correct the weaknesses.
The strengths of coca cola includes its global presence which enables the company to enjoy many income streams and therefore making it more efficient. The company has a strong brand name which helps it to attract and maintain existing customers(Lamb & McDaniel, 2012). The company has one of the most robust marketing and advertising department which helps in maintaining the market leadership position of the company.
The major weakness for the company is the increasing health concerns among consumers. Another weakness for the company is that its products are not well diversified and over-reliance on carbonated drinks.
The opportunities available for the company include product diversification to produce other products such as bottled water and other non-carbonated drinks. The company also has an opportunity to increase their investments in countries that are not fully developed and have huge market potential.
Threat from competitors such as Pepsi poses the biggest risk for Coca cola. Another threat for the business is the increased safety and health concerns which may hurt sales of the company.
Table 3:SWOT analysis table for Coca cola company
l Strong brand valued at$77,839 billion
l Good marketing strategies
l Strong market presence
l Absence of product diversification
l Over reliance on carbonated drinks
l Poor public image regarding health and safety issue
l Market growth in developing countries
l Increasing demand for bottled water
l Competition from Pepsi
l Substitute products such as coffee are threatening coca cola
l Competition from local product brands
The mission of the company helps to guide stakeholders towards achieving the long term vision of the organization as they undertake daily activities of the company. The mission of Coca Cola Company is;
To refresh the world in mind, body and spirit while inspiring moments of optimism and happiness through our brands and actions so as to create value and make a difference.
The company has incorporated all stakeholders to help in delivering the goals and objectives of the organization.
The marketing objective for coca cola is to become the best brand in the world and increase its market share further while at the same time offering customers best value for their money and high quality products(Treadway &Smith, 2013).
Coca-Cola has mainly segmented its market geographically. The company has operations that are managed at the country level and the regional scale. The company has bottlers and distribution networks in each country, and there are regional management offices. An example is an African subsidiary which is managed in South Africa.
Coca-Cola Company positions itself as the market leader and the best regarding a quality of the products they offer their customers. Despite the fact that the firm has many market segments, it uses strategic positioning to maintain its global outlook (Fisk, 2013). This helps consumers to view coca cola as part of their daily lives. The perception of the brand has contributed to the great customer loyalty the company has enjoyed over the years. The selling philosophy of the company has always been attractive and eye catching. The company markets and advertises itself as bringing joy, happiness, and entertainment to the lives of consumers.
The substitute products that pose a threat to coca cola include soft drinks like bottled water, tea and coffee(Wang, 2015). The companies products have close substitutes and therefore making competition in this industry more intense.
This is how fast new firms are able to join the industry. Its quite difficult for new firms to join the industry since the original investment requirement is quite high. The patent and copyrights also restrict entrance into this market(Yuvaraju, Subramanyam& Rao, 2014).
The bargaining power of suppliers is determined by several factors such as the number of suppliers, their ability to form unions, and the scarcity of the commodity they are supplying. Coca cola suppliers have high bargaining power since they are very few(Gupta, 2011). The suppliers in this case are producers of raw materials used to make concentrate.
Coca cola buyers have little bargaining power. This is because they are many and distributed in various areas making it difficult for them to form consumer associations.Few consumers cannot therefore influence demand or prices.
There is a lot of rivalry in the global soft drinks industry with Coca cola and Pepsi being the biggest rivals. The intense rivalry between coca cola and Pepsi has influenced the cost patterns of the two organization especially on advertising(Gertner,& Rifkin, 2017).
The coca cola company manufactures and distributes soft drinks. The main products for the company are the Coke soda which is the flagship product for the enterprise. The other products in the company’s portfolio include Sprite, Fanta, Coke diet, coke zero, and the bottled drinking water.
The price for coca cola products is determined based on the cost of production incurred by the bottlers in specific countries. The price is low and affordable to customers of all social class and income levels (Armstrong& Kotler, 2014)
The coca cola company uses the franchised distribution system where it licenses bottlers to whom it sells the concentrate used to make the cola products(Gertner& Rifkin,2017).
Coca-Cola uses a combination of advertising techniques.The company has also been using the social media advertising such as Facebook to reach more consumers Other promotional techniques used by the firm include sponsoring of events such as the FIFA world cup and the Olympics which offers the company a lot of publicity(Mubayi, 2012).
There are many future challenges that coca cola is expected to face. One of the challenges is increased competition from Pepsi. Pepsi has been very innovative in its products development and diversification. The company has also been very aggressive in marketing, and this, therefore, means the threat of competition is increasing every other day (Baines & Fill, 2014).
Another challenge that coca cola is expected to face is reduced the popularity of its products due to the consumers becoming more health conscious and increased concern about the safety standards(Hooley & Piercy, 2012).
The challenge of losing market share due to competition from substitute products.
The company should also carry out regular market research to help understand the consumers better hence respond to their needs appropriately.
The company should develop products that address the health concerns of customers better.
Coca-Cola should do more aggressive marketing apart from advertising to keep the customers rooted to its products.
Continuous development of new products that will help in meeting the market needs of the organization.
The market success of the coca cola brand has been majorly due to its exemplary marketing strategies. The company has been consistent in its advertising and has often used very aggressive marketing techniques to remain competitive in the market. The competition between Pepsi and Coca-cola has led to both companies becoming highly innovative, and this has resulted in the companies introducing new products in the market(Gillespie &Hennessey, 2011). The marketing mix of coca cola is also perfect, and this has been very crucial in defining its position in the soft drinks industry.
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Yuvaraju, D., Subramanyam, D., & Rao, P. (2014). Advertising Strategy of Coca-Cola at Coca-Cola Beverages Pvt.Ltd. IOSR Journal Of Business And Management, 16(6), 122-131. https://dx.doi.org/10.9790/487x-1662122131
Gupta, S. (2011). MIR talks to Stan Sthanunathan, Vice President of Marketing Strategy and Insights, Coca-Cola Company. Gfk Marketing Intelligence Review, 3(1). https://dx.doi.org/10.2478/gfkmir-2014-0056
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