The Coca-Cola Company's business policy provides an object lesson in many

important principles of business. For example:

1. Focus on the best lines - Coca-Cola concentrates on its most profitable lines.
In 1!" ##of Coca-Cola's operatin$ income came from soft drin%s. Today the
fi$ure is # &y sellin$ off businesses not sharin$ the same attractive financial
fundamentals as the soft drin% business Coca-Cola no' operates only in the area
of hi$h-return business.
(. Reinvestment - )e-investin$ profits is the %ey to on$oin$ business
development. If profits are made today it is important to ma%e sure of a base
from 'hich profits may be made tomorro'. In the 1*s Coca-Cola has
concentrated its profits on re-investment. In 1!+ the company's dividend payout
ratio 'as ,-i.e. most of its profits 'ere paid out as dividends to shareholders.
.ince then Coca-Cola has been increasin$ dividends at a slo'er rate than
earnin$s $ro'th/ so that today/ ,*of profits 01,,* million in 1"2 'as available
for reinvestment.
+. Focus on the consumer - 3ll successful businesses today are based on
focusin$ on the consumer. If a company meets the re4uirements of its
consumers 0and indeed exceeds these re4uirements2/ then you have a sure-fire
recipe for success.
3n important measure of success is the volume and value of sales that you
ma%e.
The 'orld-'ide success of Coca-Cola is illustrated in the chart belo':
Coca-Cola has set out to become the 'orld's number one consumer mar%etin$
company by ta%in$ clear actions to differentiate their products.
". Differentiation with customers - The direct customers of Coca-Cola are
outlets such as service stations/ ne'sa$ents/ leisure centres/ cinemas/ clubs/
supermar%ets and many other retailers sellin$ soft drin%s. In this area the
emphasis in mar%etin$ has therefore been on providin$ superior delivery/
promotional services and sales support. 3ll of these elements clearly differentiate
Coca-Cola as bein$ the bevera$e supplier most li%ely to $enerate profits for
retailers.
-. Differentiation with consumers - The end consumers of Co%e are the
millions of people 'ho consume soft drin%s 'orld-'ide. *ver many years Coca-
Cola has expanded its mar%ets hori5ontally in country after country/ until there is
virtually no place on earth 'here people do not drin% Coca-Cola. Today this
hori5ontal $ro'th is almost total/ 'ith fe'er than (6 countries not ta%in$ the
product. Coca-Cola is therefore no' tryin$ to develop the brands vertically.
This simply means creatin$ a deeper consumer desire for that brand than existed
the day before. It involves $ivin$ people additional reasons to buy Coca-Cola
brands instead of reasons to buy competin$ ones. That is the essence of
differentiation. It is not an easy tas%/ because already -., billion people have a
'ell established understandin$ of 'hat Coca-Cola means to them. 7o'ever/
there are considerable stren$ths 'hich support Coca-Cola in this tas% namely:
The trademar% 'hich is so 'idely %no'n and part of the public
ima$ination.
Coca-Cola is continually buildin$ on its existin$ expertise in mar%etin$ and
consumer understandin$/ and is supported by access to a 'ealth of financial and
creative resources.
Coca-Cola has an 'action orientation'. Instead of 'aitin$ for chan$e to
happen it is at the leadin$ ed$e/ drivin$ action for'ard.
,. Win the largest market share - &ein$ the major player in a business mar%et
is the %ey to business success. 3 company only becomes the major player in a
mar%et by bein$ the best/ and bein$ the best means havin$ a detailed
understandin$ of its consumers' re4uirements and then exceedin$ these
re4uirements.