How does Coca Cola continue to be the global market leader in its category…through clever STP of course!

Coke logoBy Sam Rupasinghe & Pina Di Iorio

First brewed in 1886, Coca Cola (Coke) has become the world’s best-selling soft drink. Did you know that the word “Coke” is the second most recognised word after “hello”? This successful company uses intelligent marketing to overcome most of its competitors through clever segmentation, targeting and positioning strategies. Whilst most consumers drink Coke because they enjoy the taste, Coke is also known as an unhealthy drink with many other different uses for which it was not designed for, such as a household cleaner, insect repellent and paint stripper just to name a few!

Market share

So how does it continue to have such a strong presence in the global market?

Segmentation allows brands to define the most suitable product for a different variety of customers. Coca Cola does not target a specific segment however it modifies its marketing strategy by developing new products such as Sprite, Diet Coke, Iced Tea, and Coke Zero etc. It targets numerous segments and designs separate offers for each of them in order to reach as many consumers as possible. It develops a marketing combination for each of the segments which is shown by the 400 different products in its line with a total of 3,500 products in their product mix.

different productsCoca Cola does not target specific age groups or gender but focuses on the whole population, and has drinks that target different age groups, ethnic groups, gender and lifestyles. It is interesting to note that even though they do not directly target children under 12, they successfully reach this age group through partnerships with entities such as McDonald’s.

bottling

“We are a global business that operates on a local scale, in every community where we do business. We are able to create global reach with local focus because of the strength of the Coca-Cola system” http://www.coca-colacompany.com/our-company/the-coca-cola-system

Making Coca Cola available and accessible to everyone

Coke believes that every person is a target and potential consumer. They do not target a particular lifestyle or occupation, however those who live a busy lifestyle, youth, students and family oriented people are thought to be the most important part of Coke’s consumers. Remember the Coke “Share a Coke” campaign, where they came up with personalised names on Coke cans and bottles? This was one of Coke’s most successful marketing campaigns and once again demonstrates how they do not target any demographic specifically, but anyone with a name!

sharing

This commercial is another example of how Coke targets the general market.

 

How does it position itself?

The Company faces an important question….does it have to keep the same positioning or adapt according to the 200 countries where the brand sells its products? The company has kept its core product Coke, however it adapts the offering to local needs. They use strategic positioning in order to have the same image all around the world. This perception of the brand makes the purchasing decision more automatic. Coca Cola has been successful by using marketing campaigns which are related to having fun and being happy so consumers associate this brand with these emotions.

An example of how Coke play on these emotions to fuel the desire to partner, associate or consume Coke.

The below video highlights a clever campaign targeting workers stationed away from home in Dubai where it costs a lot of money to make calls to their families. Coke has given the impression that they are allowing people to make free calls to their families using Coke bottle caps. But what they have actually done is encouraged people to spend money buying Coke under the guise of being able to make a free phone call with the lid. This demonstrates how Coke has cleverly targeted this specific segment and tried to achieve their objective by targeting the sensitive emotional state of these people.

Of course having a great tasting drink that lots of people enjoy worldwide doesn’t hurt either! They tried changing the flavour of Coke, however switched back to the original formula because of the poor response to the “new” Coke.

Without a doubt, Coca Cola is a very successful brand. But has Coke achieved its highest level of success yet? Can we think of any improvements around Coke’s STP? Has Coke been successful in all their strategies? We open this discussion with the intention of finding some answers to these questions…..what are your thoughts?

 

Additional Reference Links

http://www.omgfacts.com/lists/16496/17-Facts-About-Coca-Cola-The-Company-Does-NOT-Want-You-To-Know?

http://www.businessteacher.org.uk/essays/marketing/coca-cola-market-segmentation.php#ixzz3WCLHuRcq

http://elbaz-coca-cola.blogspot.com.au/2011/11/ch-8-segmenting-and-targeting-markets.html

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/4364.0.55.007~2011-12~Main%20Features~Non-alcoholic%20beverages~701

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20 thoughts on “How does Coca Cola continue to be the global market leader in its category…through clever STP of course!

  1. Coca Cola certainly have a successful brand, the marketing of which has undoubtedly been refined over the many years it has been around, countering a number of potential competitors – Pepsi being one. Apparently if you do a blind fold test people can’t taste the difference between Coke and Pepsi – I’d been keen to try this out on my two to see if there is any truth. But consider if there is no difference in taste, then market share has everything to do with the way in which they appeal to their customers. I would tend to agree that Coca Cola hasn’t a particular market segment – people of all ages reach for a Coke from the young who just drink it as Coke and the older generations who might use it as a mixer – it’s always a rum and Coke (not Pepsi).

    Have they reached their peak? Hard to say – they would have to continually reinforce their position in the market place or others will take over. I expect it would be a very highly competitive industry and one worth too much to rest on their laurels, so to speak. Rewarding the workers who are away from home with a “free” phone call home is an interesting strategy – perhaps they could come up with more of those strategies to set them further apart from their competitors? Or even supporting disaster relief efforts such as those in Fiji – provided it was done with care so as not to be seen as purely a marketing exercise by those who might be more cynical in their view of the world.

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  2. Coca Cola would have to be one of the most successful brands internationally and despite attempts by others to discredit the product, i.e.: highlighting the sugar content and the effects that large consumption of Coke can have on people’s health, or other companies like Pepsi trying to create some competition in the market, their brand is so strong that they are easily able to overcome any attempts the competition makes to harm them. The fact that they’ve now branched out into many other products and can therefore target so widely across many consumer groups also makes them a very strong leader in their industry.

    In regards to their strategies all being successful, clearly trying to change their flavour was not met with consumer enthusiasm. When people buy Coke they know what they’re buying and they expect that product, including that taste. Coca Cola need to, and most likely do, realise that this is not up for negotiation in the views of the consumers. In regards to whether they’ve reached their highest achievement yet, a company with that big a marketing budget has the resources to be constantly evaluating the market and will be looking at ways to attract the next generation of consumers to use their product. This group is most likely the Gen Z group who are just starting to become more independent in making choices about their purchases. You can guarantee that Coca Cola are already thinking about how best to market to these consumers.

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  3. Crazy to think that behind hello, Coke is the most recognised word! Coca-Cola is such a successful brand as it is able to cater for everyone with not only its variations on its main product Coke, but with its other soft drinks like Fanta, Lift and Sprite as well as its sports drinks (Powerade), flavoured water (Vitamin Water) and for really healthy people…. water! (Mt Franklin, Pump). When I was in high school, I loved Coke, and would drink it at any chance I could, however, as I got older and became more concerned for my health I stopped drinking it entirely! The recent trend and boom of health and fitness has I imagine a significant effect on the Coca-Cola brand with more people interested in working out and eating and drinking healthy. Despite this, I think Coca-Cola has handled this new trend quite well with its introduction of “healthy” drinks such as Vitamin Water and its many variations of Powerade. For reasons such as this, Coca-Cola remains and will remain such a strong brand through clever segmenting, targeting and positioning.

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  4. Ah yes, Coke and Coca-Cola are certainly the ‘holy grail’ of marketing. As you mentioned, one of the interesting and successful elements of Coca-Cola’s approach is how they have very effectively used a tailored strategy to target different products to different market segments.
    Coca-Cola have named and branded many of these other products in such a way that unless you read the fine print you would not know that it is made by Coca Cola. Thus, the company has not ‘diluted’ the Coke branding which is clearly and consistently targeted to young people/early adulthood.

    Understanding the psycho-social needs/drivers of this age-group1 (which revolves around self-identity, independence, and at which time ‘peer relationships’ are of great importance) Coca-Cola has largely kept a ‘pure’ message with images of happy, independent and self assured young people enjoying themselves in the context of successful social relationships.

    Putting the same ‘Coke’ brand on other products targeting other segments such as those of their parents age would quickly diminish the power of the Coke brand and the ‘feelings’ it conjures for young people.

    1. Erikson, Erik H. (1968) Identity, Youth and Crisis. New York: Norton.)

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  5. Great article. Do you think however, that targeting everyone is actually targeting at all? However successful they are, i fail to see how they have really segmented and targeted at all? They definitely have a strong and well defined position – but I wonder if the world wide success was luck or genius?

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  6. I am really amazed with how Coca Cola market their products. The “hello happiness” and “share a coke” campaign are amazing. Who will think of this way to market their products? Coca Cola does not specifically target their customers, but they just think continuously on how they increase their sales with no changes with the products. This is an example how to be innovative – change on how you market your products.
    I think Coca Cola is very successful brand in the market, they have broaden their market and have more specific products to target specific customers to follow the market trend. They have an excellent STP. For example, if you are a coke lover and concerned with your health because of the sugar content in the drink, you have the option to enjoy Coke zero or Diet Coke that offer zero sugar drink even though the taste is not the same as the normal Coke. Not forget to mention they also have Powerade, Vitamin waters, Mothers, Barista, Nestea, etc who attracts different customer STP. They also join many charitable communities to increase their brand awareness. One of the example is their involvement in Ronald McDonalds House
    http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

    I would say Coca Cola has been successful with their strategies and they have reached every aspects in the community. I can’t think any other areas they have to improve. Their marketing team is excellent.

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  7. Hi,Great post.Thank you for sharing.

    Coca Cola is a very successful brand.I strongly believe that one of the most successful and important marketing strategies is to make Coca Cola available and accessible to everyone,which is about positioning.Coca Cola is setting its marketing strategy to apply in every store for every customer.Coca Cola does not target a specific segment,age groups,ethnic groups,gender and lifestyles but develop a lots of new products to try to target as many potential customers as possible.As the company’s marketing strategy is to make its products available and accessible to everyone and also the company believes that every person is a potential customer,the business development strategy works well for the company,however,since mass market tends to have low customer satisfaction which is not beneficial for business long-term development and the cost is also very high.

    Even though Coca Cola is trying to cover every client in the market,those who live a busy lifestyle,youth,students and family oriented people are thought to be the most important part of its customers.In the future,Coca Cola may put more effect on how to manage its most important customers’ groups as well as increasing resource on return and also do more work at marketing segmentation for its business consolidation.

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  8. Hi,

    Some great points in the post and well illustrated.

    It’s no wonder Warren Buffett still has Coke as a major constituent in his Berkshire Hathaway portfolio. I read somewhere that he drinks about 5 Coke’s a day! What about the Mentos-Coke reaction that went viral on Youtube years ago. It’s not even a component of Coke’s marketing strategy but has indirectly increased the company’s revenue by reinforcing the brand in the eye of the consumer through social media association. This is testament to the power and success of the brand, all achieved through clever STP as you say.

    It is such a far reaching, well positioned brand and one that cements its dominance through mass marketing. Like Tabasco sauce and other successful condiments, Coke has become a staple at almost any retail outlet offering food and beverages and I’d definitely be scratching my head if it was not offered as a menu item at a restaurant or bar. That is serious brand recognition.
    The commercials you’ve shown are also excellent examples of how Coke breaks down boundaries between culture, class, age, etc. and demonstrates the positive emotional connection it has with a global audience.

    While Coke hasn’t been successful in all of its strategies (e.g. New Coke), its current marketing strategy, budget and presence within the soft drink industry enable the brand to adapt and position itself instantaneously and more effectively than other competitors within the ever changing beverage market.

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  9. Coca Cola is unquestionably an extremely successful brand- can you imagine people not asking for a ‘scotch and coke’ anytime in the future? So whilst the longevity of the brand seems inevitable it is worth considering whether their dominance may be waining slightly. If anyone is as unfortuante as myself to own CCL shares (actually all of us with managed super funds probalby do!) you will have noticed that they aren’t exactly performing well. Sales in the Asia-Pac region are down and much of the blame is being levelled at increased competition- suggesting that when the price is right consumers are actually happy with a scotch and pepsi. On the back of these lagging results CCL have initiated a large scale restructure of the business and are seeking to elimiate $100 million in costs over the next 3 years. Based on their recent full year result release, it would seem they intend to up the ante in respect to makrketing: “we are materially up-weighting marketing investment and developing more targetted recruitment strategies”

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  10. Great post! I just thought I would share one of my favourite Coke campaigns from Vietnam, and another example at how they tailor their strategies in different parts of the world…

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  11. Nice piece.

    I think one reason coke is as successful as you mention they appeal to not just one segment they cater for many.
    Before reading your piece I honestly did not even realise that Coca Cola makes fanta and sprite etc, but as you mention this is just one example of catering for those segments.
    When I think of coke i immediately think of their television adverts. Growing up in Australia for instance every summer coke comes up with a different advert for that summer, as I’m sure they do elsewhere.
    One that sticks to mind for me is the 2009/2010 campaign. https://www.youtube.com/watch?v=nlpZRK2Yfd0
    A summer spent with friends having fun, in great weather would appeal to most in this country as they can relate with the emotions the ad is giving.
    Whereas as you show in your piece they have a different way of advertising coke in the Philippines, as people there would have different emotions to certain things than that of an Australian.
    For example Laura’s post with the advert in Vietnam is yet again a different way of advertising.
    But at the same time helping promote potentially being environmental friendly, and recycling.
    In terms of reaching the peak of advertising I don’t think you could say this about any one organisation. Once you stop thinking of new ways to advertise and market you will fall behind. Coke hasn’t stopped thinking. For instance one majorly successful campaign was the ‘Share a Coke’ campaign.
    They believed they’re brand was becoming stale in Australia, with younger people not becoming involved, or even tasting their core product. So they came up with a new strategy targeting not just younger people, but a whole nation. It was so simple but effective, putting names on bottles and cans.
    Personally I remember this campaign it sticks in my mind. You would try to find your own name, then your friend’s names so you could send them a picture, or buy the coke for them.
    Also as the video here shows they were dynamic by getting their consumers involved by allowing them to come up with new names.
    They’re campaign was a success through many platforms including social media with cans being shared there also.
    I can’t recall any occasions when I have found their campaigns to be poor. Like my summer example, and the Share a Coke campaign example, they are usually just simple, but effective and create good vibes for consumers.

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  12. Awesome post, since i am Coca Cola lover 😀

    Modifying marketing strategy by developing new products such as Sprite, Diet Coke, Iced Tea, and Coke Zero although Coca Cola does not target a specific segment, is such a great idea that has been successfully executed so far.
    As an Indonesian, i tell this :
    In Indonesia, Coca Cola chooses one or more segments, producing goods and develop all marketing mix designed specifically for each – each segment. To be specific, as it happens now is Coca – Cola produce brand “orange & melon Fanta” to meet the tastes of Indonesian consumers are very pleased with orange flavor. What a lovely brand !

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  13. It was really interesting to hear about ‘Coke Life’ today in the news, with it’s environmentally responsible ‘Green Labelling’. The product has 35% less sugar, which is good, and the focus is on Stevia, a natural sweetener from Paraguay. My fitness buddies, who refer to sugar as “white poison”, all use Stevia. This is clever product positioning, for a product that still has high sugar levels?

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    • I also noticed this new product and considered who the target market would be – health conscious people who still want a hit of fizzy drink every now and again. What I am unsure about is why Coca-Cola are not finding their existing products for the more health conscious people (Diet Coke and Coke Zero) successful. My understanding is that Diet Coke is to attract the female segment and Coke Zero is design to appeal to the male segment. So why is there a need for a third similar product?

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  14. Coca-Cola definitely have a success story! The fact that they have been so successful over the years is not only because their products are popular, but because they do come up with some very interesting and catching advertisements. For example, the adverts where they put people’s names on the coke bottles really got people to buy coke because most wanted to collect as many bottles as possible which had their names. Not only was that like a game for some, the name bottles were a success because they targeted and attracted different age groups and genders.

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  15. Hi

    Coca-Cola is a great company, its market position is very clear. And it’s very innovative prominent advertising. Cooperation is worth learning, it will select a number of international sports events go as a partner or a strategic partner. 3P principles of Coca-Cola: Pervasive (everywhere) – Coca-Cola products readily available.
    Price Relative To Value (value for money) – Coca-Cola products have value for money. Preferred (soft spot) – Coca-Cola products into the hearts of choice for consumers. Coca-Cola 3A principle: buy / Availability; affordable / Affordability; happy to buy / Acceptability.

    cheers

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  16. Coke definitely have some smart and “happy” media guys. Their ads are always so positive and full of energy. This does leave a lasting impact on impressionable young adults. As for older generation, they are already addicted to the zing/taste of coke.
    It has been seen time and again that inspite of everyone knowing that these cola products are unhealthy, even when the same company launched healthier products e.g. minute maid, they were far less successful. So perhaps when it comes to cola products Coke is here to stay at top for quite some time, unless they try to relaunnch the “new coke”.

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  17. Nice Blog!
    Thanks to educate me regarding this concept. I didn’t thought that Coca Cola Co. has become global king by the STP strategy. Its great that they are implementing this technique very well. I personally like that they just don’t only concentrate on particular group. They have targeted all types of people and they so the brand loyality has been increased in all types of people. Smart work by the company.

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  18. Great post for this topic. Segmentation enables Brands to define the appropriate products for different kind of customers. Coca Cola doesn’t target a specific segment but adapt its marketing strategy by developing new products.

    Age: Generally, Coke does not have a specific target and is addressed to everyone. But the main consumers are 12-30 years old people.

    Life style: no life style targeted but more and more busy life style and mobile generation are considered to be the most important part of Coke’s consumers.

    Occupation: no occupation targeted but consumers are mainly students and family oriented people.
    Coca Cola has strategically positioned itself within the world soft drink market. They use strategic positioning in order to have the same image all around the world, which is a success because it is perceived today as a part of daily life everywhere. This perception of the brand by the consumer leads to a high degree of loyalty and makes the purchasing decision more automatic.

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