Running head: CASE STUDY: COCA COLA ADVERTISING

Case study on Coca-Cola Company Advertising & Sales Management

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Brief Study of the Case Study

Coca Cola is a leading company in the beverage sector. It provides its esteemed

customers globally over 500 brands with over 1.6 billion drinks per day. The Company was

founded in Atlanta USA by Doctor John Pemberton in 1886. Coca Cola would then initiate a

long term partnership with the Olympic Games that runs to date for advertisements. Coca Cola

has since been promoted as a brand that is linked to fun and even good time offering not just

refreshments but also life enjoyment. This brand has thus gone beyond a drink it is instead

considered by many as a lifestyle (Bennett, 1998).

Coca Cola as a brand has differentiated itself in the world markets through cost

leadership. By doing so the company has managed to extremely lower its cost of production in

the industry. Most market segments tend to have an emphasis on the minimization of costs.

Once the attained selling price equals the market average the lowest cost producer is likely to

enjoy greater profits. Coca Cola has employed branding as well as cost leadership in its US and

global expansion strategies; In the US it successfully differentiated itself when it positioned itself

as an American icon. Combined with its advertising slogan Always Coca Cola these patriotic

images that are reinforced with the perception that it has been existing for long has assisted it

sustain its brand loyalty from the year 1886 (Bell, 2004).
As a matter of fact Coca Cola has been so perfect in its differentiation that people today

do collect Coca Cola brands. These include; gracious novelties like bookmarks and toys,

merchant products such as coolers and bottles, point purchase items such as calendars and trays

as well as print advertisements and signs (Doole and Lowe, 2008).

In spite of the successes that Coca Cola has had in marketing in the last six decades it is

not the dominating brand in the US; however, it is amongst the most powerful brands in the

world today. . It has been rated third on Forbes magazine following Apple and Microsoft. In the

US people contrastingly prefer Pepsi over Coke. Coca Cola management has been aware of this
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fact for quite some time and are now considering growing this brand domestically in order to

meet the standards it has globally. They can only do this through defensive strategies where they

retain their current consumer segments as well as their purchasing frequency (Kotler, 1991).
Coca Cola’s Selling Strategy
Coca Cola should start considering adopting another brand image. This is because most

specialties in the industry perceive its brand as outdated. This Rockwell branding has as a matter

of fact segregated youthful consumers. On the other hand its main rivals Pepsi have been

employing young people in their adverts. Forinstance they have used Britney Spears who has

great appeal amongst youthful Americans (Wall and Rees, 2010).

The company also employs the marketing mix strategy to sell its products globally.

Through the 4Ps of marketing mix place, promotion, price and product the company has

managed to ensure that their products appeal to different consumer segments. The company

makes heavy investments not just in its brands but also in their quality. Apart from that it

sponsors charities to ensure the sustainability of its products. The company has been employing

cost leadership and branding strategies in most of its new markets (Bell, 2004).
However, branding has been a challenge to western firms that have chosen to invest in

China. This is because the meaning and sound of the branding can be deeply affected by Chinese

linguistics and this is likely to in the end impact consumer perceptions and brand identity. In

Belarus the company’s branding strategy concentrated on the quality of its products. In Peru the

company’s brand as well as quality was acknowledged through its employment excellence an

additional feature to its long history and products (Bennett, 1998).

The Company succeeded in Peru when it presented itself as a Peruvian company with

headquarters in the US rather than an American multinational. This is what endeared it to

Peruvians and earned it their trust for they believed that it was an international company. In

addition the company decided to increase its penetration to all avenues whether they were retail

stores or sporting events (Doole, 2008).

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In addition to that it attached its soft drink to all kinds of meals that were being

advertisedthrough the co branding strategy. The company’s key strategy in the US was also to

market its soft drink with food products; today the soft drink can be found in all restaurants.

Social responsibility activities in Peru endeared it to more consumers for it not only created

employment for the jobless masses but also started relief programs to fund the less fortunate in

society as well as those who were economically disadvantaged. As part of the company’s

marketing strategy it provided market development of its soft drinks throughout the country. It

gave most of its partnering retailers and wholesalers free product supply services, promotional

materials, trade equipment, booths and refrigerators as well as general marketing and

promotional support (Bell, 2004).

Problems faced by Coca Cola
The company has experienced a lot of challenges in its attempt to brand its various

products. In the 80s it attempted to come up with a new recipe for its numerous products. This

flavorcompletely transformed the taste that consumers were used to. However, the

companymanaged to make the best of the situation. In the recent past the company reported

declines in its Thailand and Indonesia markets unit case volumes as a result of decreased

purchasing power of its consumers. Japan, Latin America and South East Asia produce 36% of

the company’s volumes yet none of them are performing well. Japan’s case was scary because it

contributes 5% of the company’s global volume and 15% of its profits yet it also reported a fall

in unit case sales (Kotler, 1991).

In the last decade in spite of the fact that the company has an invaluable brand name and

is most visible globally it has encountered numerous ethical crises which has made it unable to

obtain its financial objectives. Warren Buffet a key investor in the company resigned from the

board in 2006 after many social responsibility issues were unresolved. Doug Invester who took

over as CEO in 1997 was heralded for effectively handing the company’s financial flows. He
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was groomed to this position by Roberto Goizueta a former CEO. However, after Roberto’s

death things started nose diving (Doole et al., 2008).

Invester did not have the leadership skills to handle a number of ethical issues. Doug Daft

who replaced Invester in 2000 had a rocky tenure includingallegations that the company was

involved in the disruption of long term contract plans with distributors, racial discrimination, the

manipulation of earnings and the misrepresentation of market tests (Wall et al., 2010).
The worst crisis faced by the company was in 1999 when 30 children fell ill after

consuming its soft drink. This problem escalated even after the recall of the product. The

Belgium govern issued an order for allCoca Cola products to be recalled and this resolution was

also passed in other neighboring countries including France, the Netherlands and Luxembourg.

The company’s reputation was destroyed by its failure to provide a quick response and recognize

the seriousness of the crisis (Kotler, 1991).

The company’s market dominance has worked against it in various countries where its

marketing techniques have been questioned. The French government declined to approve its

acquisition of its leading beveragecompany Orangina. It was also not allowed to acquire

Cadbury.
Possible Solutions to Coca Cola’s Problems
The company should come up with a new marketing plan. All aspects of this marketing

plan should be seriously evaluated and researched. This should entail assessing the current

situation, analyzing market research and auditing its business. In addition the company should

cautiously scrutinize the soft drink industry and its market possibilities. Upon analyzing its

domestic and global business environment and critically assessed the industry it should then

select the most appropriate marketing strategies which should be executed through efficiently

and incessantly supervising external threats and opportunities while modifying its internal

procedures (Wall et al., 2010).

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It is important for Coca Cola to cautiously monitor its external and internal business

environments since their influences are critical to the company’s success as well as survival in

the beverage industry. To successfully manage and supervise its internal business environment it

should conduct progressive assessments of its business operations and act upon emerging issues

that are the causes of inefficiencies in the manufacturing and consumer phases (Bennett, 1998).
The company must also monitor changes in the external environment since they are likely

to create either opportunities or setbacks. Demographic patterns, economic fluctuations and

dynamic customer tastes and preferences will impact the success of the company’s products on

the market as well as their reception (Bell, 2004).

The company’s brand is known to 95% of the world the only way out is to get ways of

making it better known. The company should diversify into other substitute markets such as

milk, tea, hot chocolate, coffee and juices. This is because the threat of substitutes in this

industry is real. The fact that consumers are becoming health conscious would adversely affect

the company if it does not start doing other types of beverages on a large scale basis. The

competition between Coke and its perennial rivalry Pepsi has realized a very slow moving sector

where the management must progressively respond to the consumers’ dynamic tastes and

preferences or lose theirmarket share to the rivals (Bennett, 1998).

The company should move into market segments that have the utmost potential. Coca

Cola should package its products with incentives and labeling endorsements for this would work

well as a promotional strategy in order to increase its sales volumes and revenues. The company

should employ the penetration pricing strategy in order to grab a foot hold in new markets and

win huge market shares. Upon establishing customer loyalty it shouldthen start increasing the

prices gradually. The company should also ensure it effectively communicates with targeted

market segments in order to guarantee the success of its products. This can be done through

informed advertisements (Bell, 2004).

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Conclusion
Coca Cola is a leading company in the beverage sector. It provides its esteemed

customers globally over 500 brands with over 1.6 billion drinks per day. Coca Cola as a brand

has differentiated itself in the world markets through cost leadership. By doing so the company

has managed to extremely lower its cost of production in the industry. In spite of the successes

that Coca Cola has had in marketing in the last six decades it is not the dominating brand in the

US; however, it is amongst the most powerful brands in the world today. . It has been rated third

on Forbes magazine following Apple and Microsoft.

Coca Cola should start considering adopting another brand image. This is because most

specialties in the industry perceive its brand as outdated. This Rockwell branding has as a matter

of fact segregated youthful consumers.The Company succeeded in certain countries like Peru

when it presented itself as a Peruvian company with headquarters in the US rather than an

American multinational.The company’s key strategy in the US was also to market its soft drink

with food products; today the soft drink can be found in all restaurants.
In the last decade in spite of the fact that the company has an invaluable brand name and

is most visible globally it has encountered numerous ethical crises which has made it unable to

obtain its financial objectives. The worst crisis faced by the company was in 1999 when 30

children fell ill after consuming its soft drink. This problem escalated even after the recall of the

product. The Belgium govern issued an order for all Coca Cola products to be recalled and this

resolution was also passed in other neighboring countries including France, the Netherlands and

Luxembourg.
To solve these problems the company should come up with a new marketing plan. All

aspects of this marketing plan should be seriously evaluated and researched. This should entail

assessing the current situation, analyzing market research and auditing its business. In addition

the company should cautiously scrutinize the soft drink industry and its market possibilities. It is
 CASE STUDY: COCA COLA ADVERTISING8

also important for Coca Cola to cautiously monitor its external and internal business

environments since their influences are critical to the company’s success as well as survival in

the beverage industry.The company must also monitor changes in the external environment since

they are likely to create either opportunities or setbacks.The company’s brand is known to 95%

of the world the only way out is to get ways of making it better known. The company should

diversify into other substitute markets such as milk, tea, hot chocolate, coffee and juices.

References

Bennett, R (1998). International Marketing Strategy; Planning, Market entry and

Implementation. Second edition

Bell, L., (2004). The Story of Coca Cola. Mankato: Smart Apple Media

Doole, I. & Lowe, R. (2008) international marketing strategy; analysis,development and

implementation. Fifth edition

Kotler, P., (1991). Marketing Management. 7th edition. Englewood Cliffs: Prentice-Hall
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Wall S. Minocha S. & Rees B.(2010). International Business. Third edition