Megan Hammond, Ryan Lutz, Nate Monastra, Tasha Young

Dr. Houghton

MKTG 300 8 AM

5 December 2016

Coca-Cola: An In-Depth Marketing Analysis

Intro

Coca-Cola is one of the most globally recognized brands, known primarily for their presence

in the soft beverage industry. With over 500 products and 3500 product variations in their

product line, Coca-Cola has a strong market presence in a wide variety of beverages. Coca-Cola,

who manufactures all of their products, is the industry leader in the soft beverage industry with

42% of the market share, despite the success of competitors such as Pepsi and Dr. Pepper

Snapple (nasdaq.com). Part of Coca-Cola’s sustained success is their ability to appeal to a mass

audience while specifically targeting segmented markets. Coca-Cola has been able to capitalize

on the growing Hispanic market, making Hispanics, Latinos, and Spanish speakers Coca-Cola’s

largest target market. Additionally, Coca-Cola has the strongest appeal to younger consumers

between the ages of eighteen and twenty-four (University Reporter). Their diverse product line is

appealing to both men and women, though men are 20% more likely to drink original Coke than

women, who are more likely to drink Diet Coke. Coca-Cola’s global presence and market share,

consumer market orientation, association to “happiness” and “refreshing”, and ability to attract

people of all incomes differentiates them in the marketplace. Guided by a global vision, Coca-

Cola strives to “refresh the world, inspire moments of optimism and happiness, and to create

value and make a difference” (coca-colacompany.com).

Marketing Environment Analysis

Social Trends

Coca-Cola, although not yet named, came into existence during the American Civil War and

it didn’t take long to gain popularity. John Pemberton officially declared the name “Coca-Cola.”

The drink gained such a following that, in the early years, there were actually three different

sellers of the same drink under different names. Over the years, Coca-Cola has become such a

popular drink that a portion of America, particularly the South, refers to any soft drink as

“Coke”. By the time of its fiftieth anniversary, the drink was so popular that Coke actually

reached the status of a national icon. When the company attempted to alter the original recipe in

1985, although it scored well in taste tests, the company received backlash from American’s for

the new recipe. Today, Coca-Cola struggles with America’s shift towards a healthier lifestyle.

Coca-Cola takes heat for their highly caloric drinks, as well as the sugars and other ingredients

used (worldofcoca-cola.com).

Social Media

On Twitter, Coke has 2.4 million followers worldwide on Twitter and on average, tweets

60 times a day. The company runs a campaigns to engage its audience and generate content

accordingly. They engage with users to enhance brand experience, creating a collection of

advocates. Coca-Cola does a seamless job of balancing product placement with random images

that are meant to keep things light and fun. On Facebook, Coke has 82 Million likes to their page

and uses their page to promote the brand’s initiative and campaigns, and they typically reach a

slightly older segment of the market in comparison to their Twitter followers

(simplymeasured.com).

Demographic Trends

Although an estimated 60% of Americans are attempting to avoid soda, worldwide

consumption of Coke is actually increasing. Consumption of Coca-Cola has increased by three

percent in Latin America in recent years and is expected to exceed 17% by 2018. Key markets

for Coca-Cola include China, Brazil, Japan, and Mexico. All sales are expected to exceed $70

billion annually through 2018. Over all, middle-class teens are Coke’s core consumers around

the world and their consumption is projected to increase 50% by 2020. The Middle East shows a

massive potential for growth, providing Coca-Cola with the opportunity to expand in this region

of the world (brandongaille.com).

Half of Americans aged 18 to 29 say they drink regular soda. Nonwhites (46%) and low-

income Americans (45%) follow just behind the young in regular soda consumption. Diet soda

consumption increases with age and as income rises, with seniors and those making $75,000 or

more annually being the most likely to consume it. Americans living in the East and those with

high incomes are the most likely to shun soda altogether. Americans in general prefer regular

soda to diet -- 32% vs. 24%. But, the plurality (43%) say they don't drink soda at all. More than

half of Americans drink soda -- and regular soda edges out diet among those who consume these

beverages (gallup.com).

Legal Environment

Over the years, Coca-Cola has faced its fair share of legal problems from issues ranging from

caffeine content, plant explosions, water management, and animal testing. Coca-Cola’s scandal

in 2011 occurred when the Sinaltrainal trade union filed a suit against Coca-Cola in a Miami

district court. The union alleged that Coca-Cola bottling partners, Bebidas y Alimentos

and Panamco, assisted paramilitaries in murdering several union members. The court decided

charges would be considered against the partners but not Coca-Cola itself. On September 4,

2006, Judge Martinez dismissed the remaining claims against the two bottlers (business-

humanrights.org).

Political Environment

Being a global company, Coca-Cola strives to be on a level playing world with their

competition. When asked about corporate taxation and global policies, Coca-Cola said that “We

support tax policies that allow companies like ours to operate on a level playing field in global

competition with non-U.S. based companies” and “we actively oppose discriminatory taxes or

policies that single out certain products – non-alcoholic beverages, in our case” (coca-

colacompany.com).

Physical Environment

Coca-Cola looks to better society, and one way they do so is through their sustainability

and water conservation efforts. Additionally, they attempt to preserve natural resources and

create products that can be recycled. From time to time, legislation has been proposed in

Congress and by certain state and local governments which would prohibit the sale of soft drink

products in non-refillable bottles and cans or require a mandatory deposit as a means of

encouraging the return of such containers in an attempt to reduce solid waste and litter. The

Company is currently not impacted by this type of proposed legislation (coca-

colacompany.com).

Economic Trends

Importing goods has become more expensive, and this is having a significant impact

across the world. In addition, the high inflation rate is causing considerable problems when

adjusting the price of a product and when converting the money back to U.S. currency

(firstpost.com). Coca-Cola’s presence in India is struggling at the moment due to India’s

economy. The United States has been running consistent trade deficits since 1976 due to high

imports of oil and consumer products. In recent years, the biggest trade deficits were recorded

with China, Japan, Germany and Mexico (tradingeconomics.com).

Marketing Mix

Product

Coca-Cola categorizes their products into the following categories: soft beverage, diet

beverages, 100% fruit juice, energy drinks, tea, bottled water, enhanced water, and coffee. Some

of the most popular products include Coke, Diet Coke, Sprite, Fanta, Minute Maid juice,

PowerAde, Vitamin Water, and Dasani. However, Coca-Cola also has other products such as

Frozen Coke and Frozen Fanta, which can be found in convenience stores such as 7 Eleven and

Speedway. Additionally, certain products, like traditional Coke for example, are standardized,

while other products like Diet Coke are customized, as this product is called “Coke Light” in

other countries around the world.

All products in Coca-Cola’s line are defined as convenience products and can be found at

nearly any major retailer. Coca-Cola sells their products in bottles, both glass and plastic, as well

as aluminum cans. Typical cans hold twelve ounces of soda, and bottles are traditionally sold in

twenty ounce bottles or two liter bottles, though Coca-Cola has more recently created a one-liter

bottle too.

Coca-Cola began selling their traditional line of Coke bottles in green glass bottles, and

the caffeine in the product was supposed to help cure a person’s headache. In the past sixty years

or so, Coca-Cola has done a significant amount of market research and has created plastic bottles

to be more environmentally friendly and more convenient. They have also launched Caffeine-

free Coke and Caffeine-free Diet Coke so that consumers can still enjoy the taste of the Coke’s

original product without the effects of caffeine. These two changes, while seemingly simple,

demonstrate Coca-Cola’s market orientation and their attention to customer feedback.

Although Coca-Cola has thousands of products, they are divided into distinct product

lines. Their main line of soft beverages features Coke, Diet Coke, Cherry Coke, Caffeine-free

Coke, Diet Coke with Lime, and an array of other similar products. Minute Maid, PowerAde,

Vitamin Water, Fuze Iced Tea, and Golden Peak Coffee each have their own product lines that

include hundreds of various beverages (coca-colacompany.com).

Price

The price of Coca-Cola’s products fluctuates around the world. The price of a twelve

ounce can of Coke is cheapest in Nigeria at only $0.29 and is most expensive in Sweden, coming

in at $2.15. Other large markets for Coca-Cola include China, India, Brazil, Mexico, and the

United States. Coca-Cola is relatively inexpensive in China and Mexico, costing $0.34 and $0.44

per can respectively. A single can of Coke costs $0.48 in India, $0.65 in Brazil, and $0.89 in the

United States. The United States is a particularly interesting market for Coca-Cola because price

fluctuates in correspondence to geography. For example, Coca-Cola typically retails higher in

San Francisco, CA, compared to Salt Lake City, UT.

These prices also do not give the full picture of Coca-Cola’s market because not all

countries sell Coke in single cans. In Mexico, it is not uncommon for street vendors to sell single

cans of Coke or Coke Light (Mexico’s version of Diet Coke). However, this is much rarer in the

U.S. where Coke sells in a twelve pack, typically found in a grocery or convenience store at an

average price between $4-6 (globalbrandprices.com).

Place

Coca-Cola is sold in over two hundred countries, making it one of the most well-known

brands across the world. The only countries Coca-Cola is either not in or does not have a strong

market share include Cuba, Iran, North Korea, Burma, and Sudan as seen in Image 1(infogr.am).

Most Coca-Cola products are found in grocery stores, convenience stores, gas stations, vending

machines, and restaurants. Coca-Cola has partnered with a number of restaurants and fast-food

places and is outperforming Pepsi. According to Image 2, Coca-Cola has nearly double the

number of clients that Pepsi has. While Pepsi has well known partners such as Panera Bread,

IHOP, and Buffalo Wild Wings, Coca-Cola has a greater volume of partners, and these partners

tend to have a stronger performance. Coca-Cola has partnerships with fast food joints such as

McDonalds, Wendy’s, Five Guys, Burger King, and Chick-fil-A. However, they also have

partnerships with nicer, more upscale restaurants such as Outback Steakhouse, Cheesecake

Factory, Red Robin, and Red Lobster. This variety of clients allows Coca-Cola to dominate the

market and to attract more consumers of varying demographics (businessinsider.com).

Promotion

Coca-Cola’s industrial marketing allows them to continue to spread globally.

Commercials and advertisements during the Olympic Games allow Coca-Cola to not only reach

more people, but it allows them to reach out to a diverse audience. Besides the Olympic Games,

Coca-Cola also has a strategic partnership with Disney, where Coca-Cola products are served

within Disney parks and hotels. Beyond large partnerships such as the Olympics and Disney,

Coca-Cola’s client portfolio includes major retailers such as Kroger, Walmart, Target, CVS,

Walgreens, Publix, and more. Coca-Cola can virtually be found anywhere, which is one of the

reasons this brand is so well-known across the world.

Additionally, Coca-Cola’s advertising and promotion is known on an international level.

With celebrity endorsements from Taylor Swift, Coca-Cola is able to reach a large audience,

particularly a younger market. Coca-Cola also partners with many sporting and athletic

organizations such as NASCAR, PGA, and the Olympic Games. Commercials during these

events are crucial to Coca-Cola’s success. Many athletes endorse Coca-Cola in these

commercials, and Coca-Cola has realized this opportunity and has capitalized on it.

Coca-Cola has also found its niche by partnering with universities and other institutions.

Partnerships with universities across the United States in particular allow Coca-Cola to foster

brand loyalty. When Coca-Cola products are served in a dining hall 24/7 or athletes have

unlimited access to Powerade during and after their games, these students and athletes will be

more inclined to purchase Coca-Cola products when they graduate.

More recently, Coca-Cola has tapped into the growing Hispanic market. The “Share a

Coke” campaign was created to promote Coke on an international level. Coca-Cola’s mission is

“to refresh the world”, and this campaign aimed to do so by demonstrating the universality of

their products and the ability to share them as well. This campaign was so-well received due to

its personalization of names and phrases on Coke cans and bottles, but it was particularly

successful with the Hispanic market.

In their second and third years of the campaign, Coca-Cola, began to add Spanish phrases

and names to their products, and they also created Spanglish (Spanish and English)

advertisements, which aired in the U.S. Coca-Cola is continuing to look into new ways to target

this market, as this particular group seems to be quite interested in Coca-Cola and its products.

Over the years, Coca-Cola has had numerous slogans. Different slogans have touched on

various parts of Coca-Cola’s mission, and certain slogans are time sensitive. For example, in

1924 Coca-Cola used the slogan “Refresh yourself” to drive home the fact that Coke is a

refreshing product. This idea caught on, and today the phrase “refresh the world” is listed as part

of Coca-Cola’s mission. However, 1948’s slogan “Where There’s Hospitality” emphasized a

drastically different concept, which was Coke’s welcoming and inviting nature. More recently,

Coke used the slogan “Open Happiness” in 2009 to draw the connection between happiness and

Coke. This simple phrase is both memorable and strategic because it taps into a customer’s

emotional needs and desires.

Coca-Cola also has a strong multi-media presence. Whether it be on Twitter, Facebook,

Instagram, or YouTube, Coca-Cola continues to find new ways to connect with customers of all

ages. By utilizing these networks in different ways, Coca-Cola is able to maintain a strong brand

presence with both a younger and older market. During their “Share a Coke Campaign”, the

(hashtag) #ShareACoke was trending on Twitter. Users wanted to see other people from around

the world sharing a Coke, and many were curious to see which rare names were found on the

cans and bottles. This ability to connect to a large audience positions Coca-Cola as the soft-

beverage industry leader (marshall-johnstonmm.com).

SWOT Analysis

Strengths

Coca-Cola’s strengths lie in its global brand recognition, global distribution,

diversification of beverages, large market share, customer loyalty, and strategic partnerships and

co-ops. Coca-Cola’s marketing mix allows them to be positioned as global industry leaders.

Their brand is recognized by billions of people around the world, and part of this is due to their

excellent distribution. Coca-Cola has done extensive research that has allowed them to enter the

markets in developing and developed countries alike.

In addition to their global brand recognition and distribution, Coca-Cola offers a wide

array of beverages. This diversity has opened new markets for Coca-Cola such as the coffee and

tea industry. Due to this diversity, Coca-Cola has gained and maintained a significant market

share. Part of this success is related to strategic partnerships and co-ops with retailers such as

Kroger, Walmart, and Disney. All of these factors combined augment brand loyalty and

recognition (valueline.com).

Weaknesses

On the other hand, Coca-Cola has distinct weaknesses such as declining sales in North

America, weak foreign currency exchange rate, water management, and reaching a lower income

population. Despite the fact that sales are increasing in South America, they appear to be steadily

declining, which is a growing concern for Coca-Cola. Due to their global nature, Coca-Cola must

exchange foreign currency for the annual report. However, some countries have a currency

weaker than the dollar, and this has a negative impact as a result. Recently, Coca-Cola has been

under fire for problems of water management, particularly in developing countries. Although

Coca-Cola has infiltrated the market of developing countries, they continue to struggle to appeal

to those of lower income in America (valueline.com).

Opportunities

With the growing Hispanic market, Coca-Cola should capitalize on this unparalleled

opportunity. Other opportunities include expanding and promoting niche items, increase market

presence in the coffee and tea industry, and improve distribution in developing countries. Coca-

Cola has several products that are not well known, such as Raspberry Diet Coke. Coca-Cola has

the opportunity to craft a marketing campaign to promote these under-advertised products. Coca-

Cola has tea and coffee items in their product line, but they have the opportunity to increase

market share in these industries. Additionally, Coca-Cola has the ability to improve their global

distribution to rural areas to ultimately increase sales and brand recognition.

Threats

Despite Coca-Cola’s success, they are not immune to threats. One of Coca-Cola’s

greatest sources of competition is an indirect source—Starbucks. The popularity of Starbucks

and the rise of the coffee industry has pulled soda drinkers away from Coca-Cola’s products or

limited their intake in some way. Another dangerous threat is America’s growing concern about

health and nutrition. New studies and data seem to suggest that soda could potentially be harmful

for one’s health in the long-run, and this has some consumers changing their shopping patterns.

Besides America’s concern with the nutritional value, Coca-Cola’s market share in Monster

energy drinks is a cause for concern. Energy drinks are being scrutinized for their side effects,

and Coca-Cola’s 17% share in Monster may not be the wisest investment. As always, Coca-Cola

continues to reposition themselves in order to out-perform their competition. Pepsi is currently

appealing to more people of a low income and black/American Americans. Pepsi also has a more

diverse product line full of complimentary products. Their products such as Fritos or Lays chips

perfectly match Pepsi drinks (University Reporter).

Corporate Social Responsibility

Coca-Cola consistently engages in corporate social responsibility, and their efforts

through recyclable bottles, sustainability, and charity work demonstrate this. Their Code of

Ethics includes the following: Act with integrity, follow the law, comply with the Code, and be

accountable (coca-colacompany.com). The Code of Ethics describes and defines these five

points in greater detail. For example, Coca-Cola defines “Acting with Integrity” in a broad sense

and a specific sense. They want all of their employees across the world to act with integrity

within the company, but they also want the company as a whole to act with integrity with regards

to tax restrictions, trade restrictions, and controversial political activity. Additionally, Coca-Cola

expects their employees to demonstrate integrity through their time management, company

equipment, and other assets. Coca-Cola asks that their employees be mindful of conflicts of

interest which may include gifts, entertainment, political and economic controversies, and family

and friends. Lastly, Coca-Cola includes an addendum to investigate code violations and their

according consequences. In terms of charity work, Coca-Cola partners with various charities and

organizations around the world, but they continual support the US Military through donations.

VI. Critical Assessment and Recommendations

Based on the research, Coca-Cola should increase market share in the Middle East and

Latin America. Both of these markets present with substantial opportunities to grow, and Coca-

Cola should capitalize on this opportunity. Coca-Cola has several products that are not well

known, and they should create campaigns to cycle these niche products. Coca-Cola has the

opportunity to create demand for their products and drive sales for products like Vanilla Coke or

Diet Coke with Raspberry. Additionally, Coca-Cola should attempt to reposition themselves as a

thought leader in all beverage industries, not just the soda industry. If Coca-Cola can position

themselves as a thought leader in the water, coffee, or tea industry they will be ahead of the

curve in terms of America’s nutrition concerns. Going off of this idea, Coca-Cola should create,

acquire, and promote healthier, more nutritious options to remain an industry leader. While

Coca-Cola has maintained global success, these recommendations identify areas that Coca-Cola

can improve.

Images

Image 1

Image 2

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