How to win battle in this soft-drinks market–Coca-Cola

111Introduction

Last year’s sales increase, buoyed by some much-needed warm, sunny weather should serve as a reminder that this sector continues to provide opportunities for growth.Water and energy drinks stand out as the winners from 2013 and despite some of the claims by campaigners, the soft drinks industry continues to lead the way in providing choices for health-conscious consumers. Specialist food and drink consultancy, Zenith International, has been commissioned to produce the 2014 BSDA UK Soft Drinks Report. All data and insights contained in this report were produced using Zenith’s internal market databases and primary research.In compiling its research, Zenith relies on the goodwill and co-operation of companies active in the marketplace. During Zenith’s annual research into the UK soft drinks industry, over 100 soft drinks producers are contacted. This includes larger branded operators, retailer own label specialists, contract packers and a significant number of smaller independent companies.Based on individual producer volumes for the year, market sector and segment totals are calculated from the ‘bottom up’. At a sector and segment level, adjustments are then made for any double counting of contract and licensed bottling. Estimates for unauthorised soft drink imports sold through the ‘grey market’ are also included. This is more pronounced in categories such as carbonates rather than dilute-to-taste drinks, for example. The market figures presented therefore encompass all aspects of the market including: take home, impulse and on premise; water cooler volumes for the office; home dispensed carbonated soft drinks; and draught dispensed carbonates.Following a detailed review of all data files received, certain adjustments have been made to historic volumes. There is a soft drink for every occasion and consumers are entitled to choose from an ever increasing wide range of drinks. However, the industry recognises the role it can play in encouraging consumers to make healthier choices.Companies are investing heavily in sugar-free alternatives and the evidence from the first few months of 2014 suggests this is the direction consumers continue to head in.Investment in innovation and skills underpins the contribution the soft drinks industry makes to Britain’s economy. Analysis shows the wider supply chain has a value added impact of £7.7 billion and supports a total of 135,000 jobs.

Method–How to expend market share

Coca-Cola company use 5 to 6 methods for expending market share.

  1. Focus on the best lines – Coca-Cola concentrates on its most profitable lines. In 1984 77of Coca-Cola’s operating income came from soft drinks. Today the figure is 97 By selling off businesses not sharing the same attractive financial fundamentals as the soft drink business Coca-Cola now operates only in the area of high-return business.
  2. Reinvestment – Re-investing profits is the key to ongoing business development. If profits are made today it is important to make sure of a base from which profits may be made tomorrow. In the 199Os Coca-Cola has concentrated its profits on re-investment. In 1983 the company’s dividend payout ratio was 65i.e. most of its profits were paid out as dividends to shareholders. Since then Coca-Cola has been increasing dividends at a slower rate than earnings growth, so that today, 6Oof profits ($66O million in 1994) was available for reinvestment.
  3. Focus on the consumer – All successful businesses today are based on focusing on the consumer. If a company meets the requirements of its consumers (and indeed exceeds these requirements), then you have a sure-fire recipe for success.
    An important measure of success is the volume and value of sales that you make.
    The world-wide success of Coca-Cola is illustrated in the chart below:
    Coca-Cola has set out to become the world’s number one consumer marketing company by taking clear actions to differentiate their products.
  4. Differentiation with customers – The direct customers of Coca-Cola are outlets such as service stations, newsagents, leisure centres, cinemas, clubs, supermarkets and many other retailers selling soft drinks. In this area the emphasis in marketing has therefore been on providing superior delivery, promotional services and sales support. All of these elements clearly differentiate Coca-Cola as being the beverage supplier most likely to generate profits for retailers.
  5. Differentiation with consumers – The end consumers of Coke are the millions of people who consume soft drinks world-wide. Over many years Coca-Cola has expanded its markets horizontally in country after country, until there is virtually no place on earth where people do not drink Coca-Cola. Today this horizontal growth is almost total, with fewer than 20 countries not taking the product. Coca-Cola is therefore now trying to develop the brands vertically.

This simply means creating a deeper consumer desire for that brand than existed the day before. It involves giving people additional reasons to buy Coca-Cola brands instead of reasons to buy competing ones. That is the essence of differentiation. It is not an easy task, because already 5.6 billion people have a well established understanding of what Coca-Cola means to them. However, there are considerable strengths which support Coca-Cola in this task namely:

  • The trademark which is so widely known and part of the public imagination.
  • Coca-Cola is continually building on its existing expertise in marketing and consumer understanding, and is supported by access to a wealth of financial and creative resources.
  • Coca-Cola has an ‘action orientation’. Instead of waiting for change to happen it is at the leading edge, driving action forward.
  1. Win the largest market share – Being the major player in a business market is the key to business success. A company only becomes the major player in a market by being the best, and being the best means having a detailed understanding of its consumers’ requirements and then exceeding these requirements.

Once a company is a major player then it has considerable advantages to draw upon. These advantages are based on having a higher return on capital than its rivals and the opportunity to plough this return into fresh investment. Such areas for investment are marketing, product research and development, and other aspects of sound business growth.feat_coke32__01__970-630x420

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19 thoughts on “How to win battle in this soft-drinks market–Coca-Cola

  1. Nice article. Interesting one,to me the most interest part is How to expend market share. These are effective measures for coca-cola success. Many people believes that coca cola is a reliable trademark and they prefer to purchase it.

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  2. Here is good article about how coke needs to change it’s strategy.
    http://www.smh.com.au/business/message-about-sugarpacked-soft-drinks-gets-through-at-last-says-nutritionist-20150217-13he27.html
    There is also a link to an article by Elizabeth Knight, interesting stats on percentages of teenagers drinking coke. I have mentioned this on another blog, but the smaller cans has been a very good move, I dont like to drink a lot of coke, but always preffered the smaller glass bottles so liking the slim line cans. Not a fan of coke life, if I am going to have coke, I will have the real thing.

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  3. If coca-cola are aiming to expand their market share by going vertically to encourage existing customers to purchase more frequently, they may well have reached their limit or maximum potential in their product life cycle. I agree all those strategies you list above will generally assist with market expansion. There is a significant health effort targeting the growing (pardon the pun) obesity problem in the western world, although there are many of us who know we “shouldn’t” eat or drink certain foods on a regular basis – doesn’t stop us does it? 🙂 True – coca-cola have an answer with their low calorie options, however not everyone likes these options. Coca-cola may need to look at other alternatives perhaps to maintain their current market share in this range of soft drinks, but look to grow their market share through a new product? They have used their well known brand to experimented before (eg. Lemon Coke, Vanilla Coke) – while these experiments may not have lasted they still keep the brand overall alive and keep the brand in the forefront of everyone’s mind when they do go for a soft drink.

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  4. I would agree with you that Coke as a brand is starting to reach a saturation point – already being nearly ubiquitous around the world, it now has to develop its range to reach consumers that have previously rejected it. This is clear not just in the Coca-Cola-branded products, but also in its foray into other segments, such as with Vitamin Water and Mother.

    I am surprised I haven’t seen any particularly innovative responses from their competitors like Pepsi – although they have some impressive distribution networks of their own, even once owning the Yum! Brands conglomerate (including KFC and Pizza Hut). Perhaps the market is ripe for some disruption outside the main two?

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  5. Good post
    The Coca-Cola Company as the world’s largest beverage company and a global soft drinks, why they are so successful, I think it’s base on Coca-Cola emphasis on distribution channels.
    Coca-Cola Company’s distribution strategy mainly in the following four aspects: the first one is Coca-Cola is more concerned with improving the quality of service to end customers, not just focus on improving the quality of already trading clients. The second one is Coca-Cola more attention to process management. Thirdly, Coca-Cola is extremely concerned at the information flow management. The last one is Coca-Cola at the same time attaches great importance to training for customers and brokers, trying to influence their views and opinions.

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  6. I like the Zeweny´s article,

    When we talk about companies’ leader in distribution and logistics for its products, Coca-Cola Company is in the top of mind being always among the business’s names that come to almost everyone´s head. Coca-Cola still one of the companies worldwide with the biggest presence in nearly every market, although today is easier for businesses to have a presence in different geographies with digital products or services that can be distributed electronically. It would be easier if you can compete with products that can be download from a computer or a mobile device, but still they do an excellent job distributing their merchandises. Just to have an idea, since 2012 Coca-Cola products have been circulated in every country around the world, except for 2 countries (Cuba and North Korea); since that year, they started to do business in Myanmar (Australian Business Insider 2012). It is amazing how a company with such a commoditised product such as soft-drinks but with a super secret formula, can be that successful when talking about place and distribution. I completely agree with Zeweny and all the blogs about Coca-Cola Company is a reference when talking about place (distribution and logistics). It is probably the only reliable drink that you can find for sure anywhere you go and if you don´t agree with that, try to get a Pepsi at 2:00 am. for your pregnant wife´s whim.

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  7. Coca-Cola Company is one of the best examples of successful distribution channels, and this is the main reason why they win the battle against Pepsi Co. Amazing facts such as Coca-Cola has almost 2,8 million vending machines give us an idea of why this is one of the most powerful brands around the world. Moreover, when we think that Coca Cola is reaching its saturation point, they surprise us with a great new idea that increase sells. The marketing mix that Coca-Cola use is always bringing something new, attracting the consumer to buy the product. New products such as Coca-Cola life or advertising campaigns like when they put people’s names in the bottles, keep the brand in the consumers minds.

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  8. Thanks for the post. Global company, such as Coca-Cola will always be a good example of having good distribution channels. Coca-Colas has created a well-known global network for its products. Coca-Cola has always been able to create the most appropriate marketing mix to get the product in the right place, right time and right price.

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  9. Nowadays, there are many people start to concern about their health problems; there are many industry tried to launch some drinks with lower content of sugar. It is no doubt that Coca-Cola pay a lot concentrate to the customers; they differentiate their products carefully, such as normal Coca-Cola, Coke zero, Diet Coke and Life Coke; the purpose is to fulfill different needs of the consumers.
    Coca-Cola allow many place to sell their products; such as petrol stations, retail stores and restaurants. This brand has already become the drinks which you can get easily everywhere; this can directly benefit Coca-Cola to diversify their business.
    Sometimes they create some limited edition; such as lemon coke. This is one of the reasons why they can become the leader of soft drinks market. Their price is not expensive as well.
    This is a nice blog; thank you for your sharing.

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  10. Great article. Coke’s strategy sounds extremely sound to me. Not only are they improving continuously by reinvesting in the products and providing new options to consumer. They are also listening to their customers and staying Ontop of their competition by doing this.

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  11. it is a good example for pull strategy,Coca-Cola has built a good word of mouth among consumers. Moreover, Coke’s position on consumer’s mind makes it essential to retailer, wholesalers. As a result, distributors are willing to sell and distribute the products which come from Coca-Cola Company

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  12. I like your blog, interesting! There is no problem that Coca-Cola is one of the best soft-drink company around the world. The efficiency marketing strategy is the key why they so successful. I remember Australia in 2011, Coca-Cola began the “share a Coke” campaign, where the Coca-Cola logo was replaced on the bottles and replaced with first names. Coca-Cola used the 150 most popular names in Australia to print on the bottles. The campaign was paired with a website page, Facebook page and an online “share a virtual Coke”. What a great promotion method! I think Coca Cola company really do great job, they know how to using Pull strategy appropriate to make Incentives for customer.

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  13. I have to say that Coca-cola’s distribution is really huge. They are monopolist in some place such as: restaurant, shop and retailer where customer only found their product instead of Pepsi or other brand’s products. They are using both campaign which are Pull and Push strategies to archive their goals. In fact, when they launch new product, it is easy for them to get customer’s awareness, which help decrease product introducing failure. The flexible distribution network helps Coca-cola can actively implement marketing strategies and distribute their sale promotion efficiency when facing competition from rivals. You can have a look about Coca-cola’s distribution in detail in link below

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  14. Amazing article. Coke’s system sounds to a great degree sound to me. Not just are they enhancing constantly by reinvesting in the items and giving new choices to buyer. They are likewise listening to their clients and staying Ontop of their rival by doing this.it is a decent case for force strategy,Coca-Cola has assembled a decent informal exchange among purchasers. Besides, Coke’s position at the forefront of shopper’s thoughts makes it vital to retailer, wholesalers. Subsequently, wholesalers are willing to offer and appropriate the items which originate from Coca-Cola Company.

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  15. Thank you for sharing.

    Coca-Cola company is a great successful sample for doing well in distribution. As mentioned in the case, The company has used five of six approach to expending market share: focusing on the best lines reinvestment, focusing on the consumer, differentiation with customers and differentiation with consumers. I do agree these five business strategies play important roles in Coca-Cola’s distribution and sales development. However, In my views, to make Coca-Cola access to the customers everywhere is the most critical factor, which creates success to the company. Specifically, the company tries to display its products in the most attractive and convenient places. Through effective product display, when underlying customers have desire for drinks, they can find Coca-Cola in front of them. Also Coca-Cola can be purchased everywhere based on high market share, meanwhile, products’ market share is increasing as well.

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  16. I enjoyed reading this article as Coca Cola was one of the company’s my group focused on too. It seems like a case of the rich getting richer where those companies who earn more of a profit can afford to invest more in their product and thus meet the consumers demands more adequately. It really is a tough and competitive market out there you wonder how if ever a brand is going to be able to catch Coca Cola.

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  17. Coca cola as a brand might have done fairly better than its competitors in the initial stages but, somehow over the years its position and the growth seems stagnated . No doubt, it has the major expanse of the countries it caters to, but in this process somewhere it could not hold onto their loyal customers. They have been in press owing to controversies surrounding the sugar content in their product, but one of the firsts to come up with wider range of products, ( diet, life, flavoured cokes to say a few ). They definitely mastered the art of keeping the customers glued to them every now and then with their innovations. They truly exemplified “Failures are the stepping stones of success” . Their graph might not have been a strictly increasing one, but they learnt and developed new strategies to stay atop and be at the position where it is now.

    Truly, experience makes a man perfect !

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  18. Good post
    Coca-Cola is a long-established company, which uses consumer mentality and good taste to give consumers a new experience. Coca-Cola focus on advertising to promote the series suitable for teenagers flavors to psychological adventure, youth, ideals, passion, tension as the theme, won the favorite of young people. While Coca-Cola to promote cooperation with different sectors and many strategic partners on the market, to win the initiative for the future of the market.

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  19. This is a very interesting blog. Coca Cola is push procedure, I saw such a large number of new Coca Cola bottles at Coles when I simply stroll into front entryway, in spite of the fact that this strategy can’t use in long haul offering, it is truly helpful for Coca Cola let all individuals know their new item. I think great promoting method pick is the motivation behind why Coca Cola is so successful.I have always been considerably more intrigued by Coca Cola showcasing procedures than their real item. Coca-Cola is the greatest savor association the worldwide business, it is extremely mainstream and well known in a large portion of the nations. The majority of the clients realize that soda pops are not a solid decision but rather Coca-Cola offers in a low cost yet with extraordinary nature of taste.What an incredible advancement strategy! I think Coca Cola organization truly do awesome employment, they know how to utilizing Pull system fitting to make Incentives for client.
    Thanks for the blog !!

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