Marketing Orientated Organisation
The Coca-Cola Company – a Marketing Orientated Organisation
Organization Profile
The Coca-Cola Company was founded in 1886 in Atlanta, Georgia by Asa Griggs Candle and it is publicly traded on the New York Stock Exchange under the signature KO, for a value of $50.34 a share (July 16, 2008). The organization activates in the non-cyclical consumer goods and services sector, in the non-alcoholic beverages industry. In 2007, the company had registered revenues of $28,857 million and net profits of $5,981 million, both revealing growth as compared to fiscal year ended in December 2006. Their current market capitalization is of $116.93 billion (Reuters, 2008).
The organization is present in more than 200 countries across the globe and they strive to make a difference in all communities. A primary aim is to satisfy the customers’ and consumers’ needs and wants, but all operations are conducted with the ultimate goal of registering profits. The business profile of the Coca-Cola Company is presented in the picture below:
Source: The Coca-Cola Company 2007 Annual Report
The Coca-Cola Company operates in more than 200 countries and markets more than 2,800 beverage products. These products include sparkling and still beverages, such as waters, juices and juice drinks, teas, coffees, sports and energy drinks. Four of the world’s top five non-alcoholic sparkling beverage brands are ours: Coca-Cola, Diet Coke, Sprite and Fanta. Our mission (is) to refresh the world in body, mind and spirit; to inspire moments of optimism through our brands and our actions (and) to create value and make a difference everywhere we engage” (the Coca-Cola Company 2007 Annual Report).
The organization activates in a highly dynamic industry and their primary competitors are Dr. Pepper Snapple Group, Nestle and the long standing rival, PepsiCo.
Marketing Orientation at the Company
The full satisfaction of the customers’ needs sits at the core of Coca-Cola’s marketing strategies. To make sure that each customer and potential customer has easy access to the company’s products, the corporation has signed extended contracts with their bottlers. These, aside from their daily operations, also work closely together with the independent vendors, such as grocery stores, restaurants, street kiosks, amusement parks or theatres and cinemas to make sure that the Coca-Cola beverages reach the customer at a rate of 1.5 billion servings a day (the Coca-Cola Company 2007 Annual Report).
Another means of satisfying customers, this time the vendors, is that of implementing the customer-relationship strategic approaches. These approaches increase the value of each independent client and ensure the full support from the multinational beverage corporation. “A key area of innovation is actually what we are doing with the customer. We have a whole new model of revenue growth management — ensuring we maximize revenue using various packages — which is a significant part of us achieving margin enhancement” (E. Neville Isdell, Coca-Cola Company Chairman of the Board and Chief Executive Officer, quoted in the company’s 2007 annual report). The top management at the Coca-Cola Company understood the importance of satisfied and capable customers for the ultimate success, and in this line of thoughts, they collaborate to create mutual benefits. “Helping them to grow their businesses helps to grow ours, too. Together with our bottling partners, we serve our customers through account management teams, providing services and support tailored to their needs. For example, the Coca-Cola Retailing Research Councils in Africa, Europe, Latin America and North America provide research into issues affecting the food retail industry” (Official Website of the Coca-Cola Company, 2008). The company also offers training programs to their customers as to help them increase the efficiency and profitability of their operations, but they also help them better cope with the marketing requirements in dealing with their own consumers. Another area of collaborative work is that of enlarging and diversifying the product offering. “We also work with customers to broaden the range of beverages they offer, provide nutritional information and ensure our beverages are marketed responsibly” (Official Website of the Coca-Cola Company, 2008).
Relative to their marketing efforts to support the communities where it activates, the Coca-Cola Company has strived to offer sponsorships to various social events, including educational scholarships or sports Olympics. The most relevant examples in this sense was the year 1996, when the Summer Olympics were organized in Georgia, Coca-Cola’s home state. The organization offered numerous contributions and donations. Then, the beverage giant was the first multinational to make, introduce and reuse plastic recycled bottles (Hays, 2004). The strategy was extremely successful as it revealed the corporate interest towards a better planet and a strong desire to preserve the health of the environment and the populations.
The benefits of the marketing orientation implemented by the management at the Coca-Cola Company are numerous, for all of the parties involved. For instance, the organization has been able to create a strong and favourable reputation and brand name, which help boos sales. Then, the vendors are able to work and learn from an ultimate epitome of corporate success, which supports them in developing their businesses.
Another benefit, this time to the final consumer, is that the company has come to terms with the incurred changes and is trying to cope with them. To the client, this basically means that they will constantly have access to wide product palettes, offering the latest and most fashionable items, with the highest standards of quality. But this was not always true, as the Coca-Cola Company has generically been reluctant to change, emphasising a great deal on their already existent products and neglecting to adapt to the newer market and industry requirements. And the most relevant example in this sense is given by the fact that the recipe for Coke has not been changed for nearly a century; the change only occurred when Pepsi became increasingly successful and the Coke sales dropped. The strategy was beneficial, but not in the sense it had initially been intended. As such, the new recipe for Coke was disliked by the consumers, who rushed to the stores and bought large quantities of the old Coke – therefore sales still significantly increased. Today, the organization is extremely responsive to the changes in customers’ demands and the competitors’ strategies. They constantly research the market to identify new trends and cope with them. The marketing specialists at the beverage company also strive to identify and satisfy needs that the customers’ are not even aware of. The Coke Zero, a cola-based beverage with no sugar added, is the most representative example in this sense and its tremendous success has materialized is record high sales in the first year since launch. Coca-Cola Zero is now present in 55 countries and it is “our most successful beverage launch in 25 years” (the Coca-Cola Company 2007 Annual Report).
3. Marketing Planning Process at the Company
The operations at the Coca-Cola Company are primarily based on three corporate objectives:
making a profit to increase the corporate value and repay the shareholders completely satisfying the customers’ needs and wants, and finally supporting the development of the communities where the company is present (the Coca-Cola Company 2007 Annual Report)
The strategy implemented by the multinational to reaching these desiderates is quite complex and has been developed on numerous fields. First of all, the management strongly emphasizes that the above goals will not be achieved simply through growth, but through sustainable growth. Then, they place increased emphasis on achieving both short-term and long-term success. This basically means that even if the organization desires to retrieve short-term gains, they will develop and implement only those actions which are beneficial on the long run.
The management at the Coca-Cola Company bases their operations on the corporate strengths, one of the most important such strengths being the marketing innovation. They also strive to increase the operational efficiency and effectiveness, this not implying necessarily that the amounts of work will be increased, but that the ultimate quality of the delivered products and services will be significantly superior. Also, another successful strategic approach was that of promoting the health and wellness of both individuals and the planet (Official Website of the Coca-Cola Company, 2008).
The Coca-Cola Company has a wide series of marketing strategies to meet, some of the most relevant ones being an increase in customer satisfaction, an increased volume of sales through an increased market share by 5% throughout 12 months, to significantly improve the customer relationship during the following 12 months, or to increase the exports to foreign countries and penetrate the unserved markets.
Increase market share
The underlying premise that to win a sale, the customer has to perceive your offering as a greater value than any alternative” (QDI). This basically means that the Coca-Cola organization will have to change the way they penetrate markets. In this order of ideas, they could develop strategies to reshape the product placement in a way that will attract more customers. The current strategic approach emphasizes on the taste and the refreshing capabilities of a Coca-Cola beverage, but a new strategy could reveal the brand, the long standing tradition of Coca-Cola consumption or the fashionable feature in drinking Coca-Cola beverages.
Another way to increase the market share could materialize in product developments. This would ensure that the number of customers increases as the product offering becomes more diversified and is able to suit more tastes. Sales would immediately boost up, in part due to the promotional strategies, but the growth must be sustained even after the promotions are over. The reason for this specification is that several companies registered record sales during promotional periods, but the revenues were unsustainable in normal periods.
Constant communications with the final consumers and the retail customers would also help in identifying newer needs and trends. The satisfaction of these demands would eventually lead to more buyers and a significantly higher market share.
Improve customer relations good relationship with the customers, both end consumers as well as retail customers, is the key to a successful corporate outcome. In order to improve it, the company could delegate manages to talk with independent vendors and identify any shortages or dissatisfactions they might encounter. For instance, the vendor of a street kiosk might not like it when he has to pay the fee before having sold the products; he is as such forced to invest and risk his own money. The company could allow his payment only after he has sold the beverages. The list of examples could go on for pages, as the complaints are numerous, even more when the operations are conducted at global scale; but whichever problem encountered can be resolved through communication.
And communication also implies ensuring the means. In other words, the multinational organization could offer the retail customers mobile phones through which they could more easily contact a Coca-Cola representative and request assistance.
Finally, however the third method is already present, that of offering specialized business consultancy, the company could further expand these operations and ensure that their vendors are able to understand the market, the industry and they are accordingly trained to satisfy the needs of the final consumers.
Increase exports and serve unserved customers
In order to be able to enter new markets and attract the unserved customers, the Coca-Cola Company could develop a growth strategy based on Igor Ansoff’s matrix:
Source: 2008, Ansoff Matrix, Strategy Vector Model
The author of the matrix identified four different strategic approaches: market penetration, market development, product development and the fourth, diversification. The first sees that the company is trying to increase its market share in the existing markets with increased sales of the already existent products. The second strategy sees that the company aims to grow by selling its current products onto new markets. The third one foresees that the economic agent operates on the existent markets, onto which it launches new products. Finally, the diversification strategy sees that the company will launch new products onto new markets (Strategy Vector Model, 2008).
The Coca-Cola Company could implement the second strategic approach to further expand its current products onto new markets, in order to reach the unserved customers, but also to export their items into new countries. The means to successfully achieve this could revolve around the following:
The Coca-Cola Company could address new potential customers within the United States; the company generally addresses the youth, but they could develop a promotional strategy to place their beverages to the mature population, who could easily become consumers of the natural still drinks
The organization could use different sales channels (Mind Tools, 2008). They could for instance consider delivering directly to offices or construction sites, where the number of potential buyers is quite high, but the access to the beverages is limited
The company could identify new international markets onto which to export their products; they must however consider the cultural and socio-economic beverages; they will not, for instance, export more products to the poor countries in Africa, where the buying power is reduced
Regardless off the strategy chosen, its implementation must be based on actual and clear market analysis and the identification of the unique features, characteristics and demands of each new environment.
Coca-Cola’s target market is generally formed from the younger population, coming from various socio-economic backgrounds. In order to appeal to them, the organization implements various promotional strategies. The most important such approach, however not a marketing strategy at its core, is that of developing a strong brand, representing a strong organization. “If Coca-Cola were the name of a person, how would you describe that person? How does that person make you feel? Consumers often prefer products that have a strong, positive image. An important ingredient of this image will be the associations that are evoked in the mind of the consumer. The ‘brand personality’ is what people think and feel, consciously and subconsciously, about a company identity or product and is described the same way as you would a person” (Business 2000).
Aside from brand recognition, the approach of the target market is also realized through sponsorships. This basically means that the organization would sponsor events where the audience would participate (most commonly sports and music events) and attract their attention. “In return, the company receives a public opportunity to be seen to support and be associated with an event, activity or person. Sponsorship is a crucial part of a public relations strategy because it is possible to reach a target audience with a specific message” (Business 2000).
4. Marketing Activity Recommendations
As a general recommendation, the Coca-Cola Company should continue to strengthen and consolidate their position within the national and international context. They should remain alert to all changes affecting the micro and macro environments and should develop wide sets of strategies to best cope with the latest demands. They should continue their operations by keeping the customer and the shareholder satisfaction at the core of all operations.
In terms of the previously discussed and more specific marketing objectives, namely the increase in market share, the improvement of the customer relationship and the market development, the company should base any approaches on their existent strengths, but they should also take some risks to succeed.
Increase market share
Conduct market research to identify the customers’ response to the product as well as any complaints or additional requirements
If the demand from mature consumers is for more organic and healthy products, the company should diversify their product offering to present the customers with natural juices
If the demand from the youth is for more fashionable products, the company should hire specialized designers to create and test a new concept onto a well defined focus group
The results to the newly implemented strategies should be clearly quantified and if successful, they should be repeated, and not in the same exact way, but in a slightly different manner, to address new needs and constantly introduce elements of novelty
Improve customer relations
Conduct a focus group among retail customers and identify their needs and expectations towards the Coca-Cola Company
Delegate various managers to investigate and propose solutions to resolve the various problems vendors might encounter
Purchase communication technologies for the vendors and allow them to directly communicate with the persons in charge of their contracts with the beverage manufacturer
Increase exports and serve unserved customers
First of all, they need to identify the unserved customers; these can easily be formed from the mature population within the U.S., which could be lured through the promotion of healthier products
For the underserved population in foreign countries, extensive studies should be conducted on the market characteristics, but also the social and economic status of the country
The countries found suitable after the environmental analysis should become Coca-Cola importers
The Coca-Cola Company is the ultimate embodiment of corporate success and their tremendous achievements are based on a history of business struggle longer than a decade. Today however, the industry is fiercer than it has ever been and sustainable growth is only possible through a continuous process of development and adaptation to the new requirements.
References
Hays, C.L., 2004, the Real Thing: Truth and Power at the Coca-Cola Company, Random House, ISBN 037550628
Lloyd, M.E., 2008, Coca-Cola CEO: 2nd Half ’08 to Remain Challenging in North America, CNN Money, last accessed on July 18, 2008
2008, Official Website of the Coca-Cola Company, http://www.thecoca-colacompany.com, last accessed on July 18, 2008
2008, Ansoff Matrix, Strategy Vector Model, http://www.strategyvectormodel.com/index.php?option=com_content&view=article&id=56&Itemid=62last accessed on July 18, 2008
2008, Coca-Cola Co (New York Stock Exchange), Reuters, http://www.reuters.com/finance/stocks/ratios?symbol=KO.N&rpc=66clast accessed on July 18, 2008
2008, Coca-Cola – the Coca-Cola Brand and Sponsorship, Business 2000, Business 2000 last accessed on July 18, 2008
2008, the Ansoff Matrix – Understanding the Risks of Different Options, Mind Tools, http://www.mindtools.com/pages/article/newTMC_90.html. Ast accessed on July 18, 2008
2008, the Coca-Cola Company, News Articles from the New York Times, http://topics.nytimes.com/top/news/business/companies/coca_cola_company/index.htmllast accessed on July 18, 2008
2008, the Story of Coca-Cola, Study World, http://www.studyworld.com/basementpapers/papers/stack16_16.htmllast accessed on July 18, 2008
Coca-Cola Company 2007 Annual Report, Retrieved at http://www.thecoca-colacompany.com/investors/annual_other_reports.html. On July 18, 2008
Market Share Growth Strategy, QDI, http://qdistrategies.com/qthework/marketshare.html. Ast accessed on July 18, 2008
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