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Tuesday, 12 January 2016

Research Paper: Coca-Cola Company


Coca-Cola Company
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Coca-Cola
Coca-Cola is one of the strongest global brands in the world. Their products are sold in over 100 countries in all continents in the world. It is the leading soft drinking provider in the world marketing to different market segments in the world. The company that was established in the 1900s has taken different measures to improve its brand name since it globalized its operations from the USA. The company has had to develop different forms of marketing to compete favorably in both the USA market and in the international markets against local companies producing soft drinks. With the aim of satisfying their markets across the globe, the company has adopted various market mix strategies to appeal to their markets (Hartline & Ferrell, 2012). Coca-Cola has not used a standardized form in its marketing. This is based on how it markets itself and distributes its operations. Coca-Cola has a decentralized system of operations. The local managers in different countries are allowed to do their market research and to market the brand in the way they think will appeal to a specific market. The headquarters monitors and supervises these activities. The local managers have the free will to adopted different strategies, but this is closely monitored. The brand has been able to grow and introduce new commodities in the market as a result of such corporation.
The market strategy for Coca-Cola focuses on handling each market different from another. The local companies act as independent service producers, conducting their market campaigns and research. They produce the goods they consider necessary and ensure that the company benefits. The company uses its brand for global appeal but focuses its service on market segmentation based on countries. In this way, the company can tackle the market on two fronts (Hartline & Ferrell, 2012). This has resulted in other soft drinks companies being disadvantaged when competing against Coke. International companies such as Pepsi are not able to match the global appeal of Coke’s products while local companies cannot match the strength of Coke franchise.
The Coca-Cola brand is majorly based on its products. Coca-Cola produces soft drinks that are popular across many countries. It has diversified its products to target specific customers. Even though the brand center on the soft drink this only servers as an identity for the global brand. The Coca-Cola products revolve around different concepts. Among the soft drink brand, it has several drinks such as Sprite, Fanta and Krest. This serves the different tastes and preferences. The type of product sold is adopted to the local market of any given country. For instance, in America and Europe, the company has focused on producing diet coke that the market enjoys because of its various benefits (Kotler, et al., 2013). It is a heathy drink that conforms to the new campaigns of living healthier lives. In the Asian market canned coke is most popular among the people. As a result, the brand can produce the specific need for a given community. This adaptation to given markets helps the brand to compete favorably with local competitors. In the global sales, the direct competitor to Coke is Pepsi. However, different countries have their soft drink brands that compete with Coke at a local level. It is important for Coke to do research to cater to this market. Making assumptions in regards to local market and focusing on the global scene may result in losses for the enterprise (Payne & Frow, 2005). The local Coke companies provide a means of coke to connect with the local brand and build a good customer relationship. This is seen by their launch of new products in specific markets such as fruity drinks and mineral water.
Coca-Cola has adopted two modes of promotions that aim at strengthening the brand name and increase its sales. Coke has given power and resources to local companies to advertise the products in the way they see suitable. As a result, the local companies can position their product and compete favorably. Specific market advertising helps it in targeting certain market segments and increase its appeal. Coco-Cola has also employed a global approach to advertising using one big unifying advertisement to market its brand worldwide (Schultz, et al., 2015). It has used the power of the franchise to negotiate deals that allow Coke products to market in global events. This is evidenced by the contracts it has with world bodies such as Fifa and with other global franchise such as MacDonald’s. Coca-Cola is the number sponsor of FIFA, and it is marketed in their events such as world cup and, this gives them their global appeal and improves it brand image. People are able to associate it with games and fun. Coke has also corporates with global brands such as MacDonald’s to include its products on their menu. As such brands have high markets it helps coke increase its appeal (Anon., 2013). The pricing system of coke is varied across the globe. It does not use the same pricing system for its products. The prices vary in different countries and depend on the market targeted. Coke has segmented its market based on the countries and defined its prices. The local companies play a major role in this. Coke prices are however, low as compared to other companies. This is because they employ a low cost leadership mode in their pricing structure. The company has a global market and experiences economies of scale in its operations. Such positive economies of scale is transferred to the low prices and makes the brad more attractive. Even though their prices are low the experience more profit than their competitors.
The product has well been received all over the world. Each market can relate to the product. This is evident by how their advertisement is received. When Coca-Cola branches in Africa decided to brand their drinks with the name of the locals. The sales of their drinks multiplied. This showed that the company was able to reach out to the market. The names helped the consumers’ to relate to coke products, and this created a good customer-producer relationship.
The strategy adopted by Coke is effective because it has combined a number of mix market policies. As a global brand, it has been able to adopt to the local needs of each market through service segmentation and to focus on specific markets. The company has been able to use its global strength to provide funds for aggressive advertisement at a local level. It has made it difficult for local soft drink producers to compete against it (Schultz, et al., 2015). It has also adopted to the needs of the different markets and produced products that are demanded in each country. By adopting two strategies, they reduce the disadvantages of only using one strategy in the market. They can assess the market better and produce the goods that are demanded across different markets (Hoffmann, 2008). The two strategies have enabled the brand to eliminate any competition and not only make it one of the biggest brands in soft drink industry but the second biggest brand in the world. The company has diversified its operations and set up in different locations making it easy to carry out its activities. It sets prices based on the people of given areas. As seen the price of coke in the USA is different from the price of coke in Africa. This enables Coke to satisfy the economy imbalance in the different countries.
Internationalization Process Theory (IPT) that ‘best’ describes the internationalization process that Coca-Cola has undertaken.
Internationalism involves a company increasing its operations across the global market. Coca-Cola started its operations in America but has since ventured into international market making it the most known brand. Global success varies from local success. Many companies that have been successful in local markets have failed to succeed in the international market due to the approach they make on the international market. Approaching the global countries using the strategies that have worked locally may result to unsuccessful marketing because it ignores basic international marketing concepts. Different beliefs, different competition, different market culture all play a role I the international market. It is crucial for the business to adopt the most efficient way of dealing with the market to register success. Coca-Cola has been able to achieve this through innovation of its products. The company has been able to understand the cultures of different markets in the countries that it operates in. It has produced goods that satisfy the markets and it has marketed its brand through local products. Coca-Cola global development and expansion can best be described by the born global theory (Cavusgil & Knight, 2009). The theory states that firms develop in their home country while aware of their opportunity to venture into outside markets to increase their market share.
Coca-Cola developed its American market ensuring that it is the number one soft drink provider in the USA. It produced superior drinks based on the Coca-Cola formula which gave it an edge over its competitors. Having possessed the necessary knowledge in the field in expanded into like markets in Canada and Europe. In the beginning stages the, the brand did not rely on profits from their international companies. 70% of their profits originated from local sales in the USA. As the company took more risks they concurred the nearby market and continued to expand. Coca-Cola globalized in two successions (Cavusgil & Knight, 2009). They ventured into new countries set up factories but allowed local managers to develop strategies for marketing their products. The local managers had a free hand in doing whatever they considered necessary to build their brand. This worked because the company was able to research on different markets and their culture and produces goods that they required. The local companies built the brands name and competed directly with other local soft drinks providers. The company was able to expand its services to many countries due to this free control policy that they employed on their local managers. Having set up in many markets the company adopted a centralized system this required that the local companies directly report to the Coca-Cola main company in Florida USA. This aimed at strengthening the brand by returning the power to one body. The market research and advertising were carried out by the company as one entity (Enis & Murphy, 2011). The company controlled the activities of the local managers and transferred the company’s expertise to the local markets. In this way the, company was able to standardize its operations and products creating a global outlook. The theory of born global is seen in how the company makes its decisions and adopts policies that favor it at particular times. The company focuses on securing the USA market and then ventures out to maximize the global market. The company incorporated both policies giving managers the free will to operate and introduce new ventures while the main company controls and monitors the aspects. The company centralized its operation while creating avenues to expand and create it global brand. Availability of funds to venture in the market contributes to how influential the company is. Thus, it began its globalization on nearby nations such as Canada and Cuba. Increased to further countries in Europe. As success continued it ventured into the Asian, African and other available markets.
Coca-Cola began as a local USA company but developed into the country’s primary soft drink provider. They predicted the need to increase their market the USA market was saturated in the future.  They built the finance and the resources to globalize its operations. With the strong local profits and market the company ventured into nearby countries but did not focus on getting high profits but rather creating new markets for their products key to their success has been their understanding of different markets. Adopting different strategies to tackle issues relating to product type, product marketing and product packaging has helped the company achieve success in different countries. People are able to relate to the Coca-Cola brand in different ways across the global and, this has played a major role it its success. In order for any brand to be successful it is important that the company understands the different environments that it is setting up. As a result they will be able to predict the outcome of their products. Understanding the culture of foreign countries helps in determining the perfect market mix that can assist the company to succeed.













Work Cited

 

Anon., 2013. Handbook of Market Segmentation: Strategic targetting of Business. 3 ed. New York: Routledge.
Cavusgil, T. & Knight, G., 2009. Born Global Firms: A New International Enterprise. 2 ed. Boston: Business Expert Press.
Enis, B. M. & Murphy, P. E., 2011. Marketing Strategy Implementation. 1 ed. Chicago: Marketing Classics Press.
Hartline, M. & Ferrell, C., 2012. Marketing Strategy, Boston: Cengage Learning Publishers.
Hoffmann, S., 2008. Are the 4 P's of International Marketing of Equal Importance to All Firms? What Factors Might Cause Some to More Or Less Important Than Others?. 3 ed. New York: GRIN Verlag.
Kotler, P. et al., 2013. Marketing. 9th edition ed. Australia: Pearson Education.
Patel, R., 2012. Marketing environment. Economy & Finance, 5 December, pp. 17-26.
Payne, A. & Frow, P., 2005. A strategic framework for customer relationship management. Journal of Marketing, 69(4), pp. 167-176.
Schultz, D. E., Barnes, B. E., Schultz, H. F. & Azzaro, M., 2015. Building Customer-brand Relationships. 3 ed. Boston: Routledge.
Wedel, M. & Kamakura, W., 2012. Market Segmentation: Conceptual and Methodological Foundations. 2 ed. Boston: Springer Science Business.



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