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Marketing mix strategy of Coca-Cola & line stretching strategies adoption

MASTER IN BUSINESS ADMINISTRATION (MBA)

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DOI: 10.13140/RG.2.2.27113.44644

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 Master in Business
Administration (MBA)
Module: MBA 61
Marketing
Marketing mix strategy of Coca-Cola
& line stretching strategies adoption

Panagiotopoulou Vasiliki
vasiliki.panagiotopoulou@st.ouc.ac.cy
University ID: 000100001411
Coordinator: Nektarios Tzempelikos
Academic Director: Christina Christou
Words: 2319
 MASTER IN BUSINESS ADMINISTRATION (MBA)
MODULE: MBA 61 MARKETING

Table of Contents
Introduction .................................................................................................................. 2
Coca-Cola’s marketing mix strategy (product, price, place, promotion - 4Ps) 2
Product ...................................................................................................................... 3
Individual product decisions .................................................................................. 4
Product quality ..................................................................................................... 4
Branding ................................................................................................................ 4
Packaging and Labeling .................................................................................... 5
Product line and product mix decisions ............................................................... 5
Price ........................................................................................................................... 6
Place .......................................................................................................................... 7
Promotion .................................................................................................................. 8
Line stretching strategies ............................................................................................ 8
Conclusion .................................................................................................................. 10
References ................................................................................................................. 11

Table of Figures
Figure 1 - The 4Ps of the Marketing Mix (Kotler and Armstrong, 2014) .............................. 3
Figure 2 - Sample of Coca-Cola's product mix (Google, 2017) ........................................ 6
Figure 3 - FMCG sample (Flat World, 2017) .......................................................................... 7

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MODULE: MBA 61 MARKETING

Introduction
Marketing is considered one of the most long-life and significant element
in the success of an organization within the business world. Marketing
could be clarified as the process that the companies come through in
order to define consumers’ needs and demands, satisfy them in the most
efficient way and ultimately acquire the profit. At the core of each
business strategy is the marketing strategy, holding an essential position.
Marketing strategy consists of several interrelated elements, which are
called the marketing mix. Marketing mix is composed of sequential steps
that assist the organizations to obtain advantages in highly competitive
environment by establishing and engaging consumers’ relationships.
Considering the factors related to this topic, the question of what
specific consequences arise when addressing this theme must be
elaborated. This research is particularly outstanding for the reader
because it will describe the marketing mix of a well-known company,
which is Coca-Cola, not to mention it will evaluate and explain based
on marketing mix, if and which line stretching strategies should be
adopted by the firm. The aim of this specific report is to demonstrate the
significance of marketing mix in business environment that companies
could apply in the most effective way in order to further improve
targeted marketing strategies and broaden selling capabilities.

Coca-Cola’s marketing mix strategy (product, price,

place, promotion - 4Ps)
Determining a proper marketing strategy plays a crucial role in the
global implementation of a marketing plan that effectively generates
customer value and establishes a profitable relationship. So, how did
Coca Cola succeed in achieving its goals? According to Business Insider
(2017), Coca-Cola spends more money on advertising than Microsoft
and Apple combined, in order to promote its products as well as the
brand in the marketplace. Therefore, to have only successful
promotional campaigns, Coca-Cola uses a model that optimizes

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MODULE: MBA 61 MARKETING

marketing mix components, helping the company to determine

marketing options in terms of price, product, place and promotion
meeting consumers’ demands. In other words, the given model that is
also referred as the 4Ps, provides the company with the way to
communicate its products to the audience, specifically, to place the
appropriate product, at the right price, in the right place at the right
time.

Figure 1 - The 4Ps of the Marketing Mix (Kotler and Armstrong, 2014)

Product
Kotler and Armstrong (2014) suggest that the product is the key element
in marketing mix while they insist that it is “anything that can be offered
to a market for attention, acquisition, use, or consumption that might
satisfy a want or need”. Coca-Cola has embraced the given theory and
applied the three levels in products decision-making, which are
individual product decisions, product line as well as product mix
decisions.

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MODULE: MBA 61 MARKETING

Individual product decisions

Product quality
The concept of product quality is twofold, including the high level and
the consistency, highlighting the uniqueness. Coca-Cola has chosen the
proper quality level to meet the needs of the target market and the
quality standards of competing products. Specifically, the company has
the most unique and qualitative flavor delivered for decades accurately
and consistently without any alteration, satisfying its consumers, who
developed a deep emotional bond with the authentic Coca Cola.
Nevertheless, the company is constantly evolving and aims to meet the
targeted needs with exceptional quality of even more segmented
audience. Coca-Cola maintains the widest range of soft drinks in
beverage industry, which consists of 3.900 different products. It must be
stressed that these soft drinks are classified on different various
categories such as diet, fruit juice, tea, energy drinks and more in order
to satisfy as more needs as possible (Coca-Cola, 2017).

Branding
Coca-Cola maintains the most recognizable brand all over the world.
This happens because the company preserves the typical
characteristics that based on Perreault and McCarthy (2002) can launch
a brand name soaring. Particularly, Coca-Cola as brand name is simple
and short, adaptable to packaging, labeling needs as well as to all the
advertising means not to mention easy to spell, read and pronounce
with the same meaning in all languages. It is a fact that branding
facilitates both consumers and the company. From consumer’s point of
view, Coca Cola’s brand name is easily identified and from company’s
perspective, copyright law protects Coca Cola’s trademark legally,
avoiding copying from competitors. Coca-Cola is the most successful
carbonated drink with global existence and awareness and the most
impressive is that some cultures adopted the brand as their meal
complement (Sicilia & Palazón, 2008).

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MODULE: MBA 61 MARKETING

Packaging and Labeling

Coca-Cola has invested heavily in the packaging and labeling of its
products obtaining their presence in different packaging material and
sizing. The company is not only confined to storing and protecting the
content but also utilizes the packaging as the medium of targeting and
attracting customers. For instance, Coca-Cola prints QR codes for
upcoming competitions, concerts, etc. Clearly, Coca-Cola uses the
packaging and labeling for additional information that are beneficial to
consumers, upgrading its corporate responsibility (Hassan, et al, 2014). In
particular, the company provides specific information concerning the
origin of each product, the manufacturer, the packaging material and
the expiry date. It is for granted that Coca Cola’s products are
competitively advantageous in comparison to the competitors, due to
fact that company’s goods are always designed with innovative
packaging and labeling not to mention that they are adapted in green
marketing concept that dominates in packaging decisions. While all
firm’s products participate in the green marketing concept, only Coca-
Cola classic maintains the same unique shape for decades – the portray
of the female body- reminding always the brand.

Product line and product mix decisions

Coca-Cola all these years measures and segments successfully the
market in order to achieve sustainability. For this accomplishment, the
company does not only target and segment its market but also
produces lines of products that are closely related. For instance, the
company produces a line of carbonated beverages that have a similar
customer target, marketed by the same means and placed in a similar
price range to each other. This product mix, or else product portfolio,
raises the company's profitability and gives multiple but similar choices
to consumer targets for greater variety and more commitment to the
brand (Hassan, et al, 2014).

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MODULE: MBA 61 MARKETING

Figure 2 - Sample of Coca-Cola's product mix (Google, 2017)

Price
Price is considered the heart of each business because it secures its
profits. Apart from this, within the marketing mix, price is the only factor
that generates revenues while the other 3Ps depict company’s costs.
Research shows that Coca-Cola adopts the theory of Kotler and
Armstrong (2014) by combining two of the three major methods that
they suggested for setting the price of a product, which are the
customer value-based and the competition-based pricing. For Coca-
Cola all pricing decisions start with the customer value, where the
consumer must perceive that the value he/she received from the
product worth with the amount he/she paid. Subsequently, before
applying the pricing strategy, the company concentrates on its
competitors by setting its final price based on competitors' costs, prices
and offers, mainly on Pepsi. Finally yet importantly, the firm takes into
consideration parameters such as geographic segmentation, growth
rates and market opportunities, prior to the release of the final price.
Nevertheless, while the beverage industry is considered an oligopoly
(few sellers and large buyers), the dominants, Coca-Cola and Pepsi,
have formed a cartel agreement to ensure a pricing balance. It should

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MODULE: MBA 61 MARKETING

be noted that the company applies different pricing policy to each

product item, because the firm has different levels of competition
despite the fact that it has related demands and production costs
(Coca-Cola, 2017).

Place
Coca-Cola preserves an extensive distribution network through indirect
marketing channels, balancing the services outputs and consumers’
needs. Since delivering customer value is the cornerstone in marketing,
the company follows the fast-moving consumer goods (FMCG) pattern
where the distribution begins with the producer and ends with the
consumer, providing its products available in almost all the retails and
big chain markets all over the world (Golder & Tellis, 1993). Even though
there are many sales models in the market landscape, Coca-Cola
combines all intermediaries, brokers, retailers and wholesalers, in order
to build and maintain the most efficient marketing channel all over the
world covering consumers’ needs such as product variety, waiting and
delivery time, spatial convenience and service backup. It is important to
be noted that the company’s distribution system is so effective that has
eroded smaller production units of similar products (Coca Cola, 2013).

Figure 3 - FMCG sample (Flat World, 2017)

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MODULE: MBA 61 MARKETING

Promotion
Coca-Cola adopts various promotional strategies focusing on
consumer's demand increment in terms of products, steering to sales
boost not to mention creating brand loyalty. Specifically, the company
blends promotional tools such as advertising, public relations, sales
promotion and direct marketing. The benchmark for this aggressive
marketing is the significant amount investment on advertising
campaigns such as TV, radio, print and online media, transport,
billboards etc. Moreover, Coca-Cola utilizes corporate social
responsibility (CSR) in order to acquire sentimental benefit on customers'
minds, while driving alteration towards sustainability such as social issues
improvement as well as planet rescue. Despite the fact that the
company pays celebrities with the ultimate goal the consumers to
integrate the products as required in their everyday life, provides also
sponsorship to huge events. The given way of advertising is interactive
as the consumer could win one of the company's products keeping
indelible in mind the brand. Finally yet important, is the fact that Coca-
Cola applies push and pull strategy by offering exceptional incentives to
both distributors and retailers in order to promote the brand. Specifically,
the company allows promotional sales to retailers as well as price
discounts and allowances to distributors (Hassan, et al, 2014).

Coca-Cola has developed the most effective communication

marketing because the firm constantly knows the nature of the market
target and the product, the stage in the product life cycle, the price,
and the available funds for promotion.

Line stretching strategies

All companies that set the goal of evolution proceed in product line
expansion beyond the current product range. Thus, over times,
companies introduce new products that add in the existing product line
under the same brand name such as new flavors, additional ingredients,
sizes, colors and packages. This tactic is called line stretching and is

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MODULE: MBA 61 MARKETING

divided in the down-market stretch, the up-market stretch and the two-
way stretch strategy which differentiates from brand extension that
introduces a new product in a completely opposite product category
(The Marketing Study Guide, 2017).

Coca-Cola has already adopted the down-market stretch strategy as

shown in Figure 2, where the company includes lower quality products
in the same product line that are interrelated. For instance, in the
aerated beverages product line where Coca-Cola is the master, the
company has also introduced Fanta, Sprite etc. that are lower quality
but share the same characteristics such as the carbonation, the bottle,
the size and the package. The company implemented this strategy in
order to block its competitors' offers in the marketplace and expand its
brand visibility to be considered from the consumer as the affordable
choice, by eliminating the lower antagonism. However, in my personal
opinion, this tactic could downgrade brands image. The degradation of
the brand could happen if an item from the production line did not have
the same success as the leader, such as the taste. This could directly
create the impression to the consumer that the company prioritizes first
the revenue against consumer’s satisfaction, resulting in brand
defamation.

In my personal opinion, it would be wise for the firm to adopt both

upward and downward stretching strategies at the same time, otherwise
two-way, in order to expand its product lines upwards and downwards.
Through this tactic, the company could decrease the motivation for
existing as well as new competitors in the market place. While Coca-
Cola already dominates in low and medium level market, could
produce super high quality gourmet carbonated soft drinks in high price.
In combination with the down-market stretching strategy, the firm could
cover the whole range of the low, medium as well as the premium
market of product offerings, dominating the product category, without

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MODULE: MBA 61 MARKETING

giving any room for competitors to expand. On the one hand, the firm
will be benefited by the premium products, which add good margins,
and help the company evolve and on the other hand, the massive
production will keep the stability of the organization. Moreover, the tow-
way stretch strategy will provide to the company further awareness and
as result will increase firm’s profitability. This strategy is safe for companies
that want to conquer the product category and monopolize the market
but is only proposed for huge companies, such as Coca-Cola, with
financial robustness in order to be able to support multiple productions
in such a wide range for only one product line.

Conclusion
To sum up, it would be wise for business world to consider these factors
when addressing this issue. In my opinion, the marketing mix concept has
dominated the organizations’ marketing strategies in terms of efficiency
into the commercial landscape. Coca-Cola is the most representative
example concerning the implementation of the given strategy with the
greatest achievements. In my personal opinion, for any business to be
successful, must be able to maintain its product line contemporary and
competitive, to adapt in changing market requirements as well as to
create customer value in order to gain consumers’ loyalty and defeat
competitors. To achieve this, each organization should listen carefully
consumers’ voice and based on their needs implement the marketing
mix and then carefully decide the line stretching strategy. Nevertheless,
the marketing mix concept and the line stretching strategies will
continue to be with us for a long time because it has become an integral
part of business world. I feel very strongly that this topic will be discussed
and researched further in order to help marketing and business
strategies be more productive as well as innovative and boost profit and
brand reputation.

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References
Business Insider. 2011. 15 Facts About Coca-Cola That Will Blow Your
Mind. [ONLINE] Available at: http://www.businessinsider.com/facts-
about-coca-cola-2011-6. [Accessed 5 November 2017].
Kotler, P., Armstrong, G. 2014. Principles of Marketing: global edition.
15th ed. Pearson Education Limited.
Coca-Cola. 2017. Coca-Cola At A Glance: Infographic. [ONLINE]
Available at: http://www.coca-colacompany.com/our-
company/infographic-coca-cola-at-a-glance. [Accessed 4 November
2017].
Perreault, W. D. and McCarthy, E. J. 2002. Basic marketing: a global-
managerial approach. 14th ed. McGraw-Hill/Irwin.
Sicilia, M., Palazón, M. 2008. Brand communities on the internet: A case
study of Coca‐Cola's Spanish virtual community. Corporate
Communications: An International Journal, Vol. 13(3), pp. 255-270.
Hassan, D., N., et al, 2014. An evaluation of marketing strategies
undertaken by Coca Cola Company as a multinational corporation in
Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), Vol. 3(2),
pp. 05-10.
Golder, P., N., Tellis, T., G. 1993. Pioneer Advantage: Marketing Logic or
Marketing Legend? Journal of Marketing Research, Vol. 30(2), pp. 158-
170.
Coca Cola. 2013. Supplier and Customer Partnerships. [ONLINE]
Available at: http://www.coca-colacompany.com/our-
company/suppliers/supplier-and-customer-partnerships
The Marketing Study Guide. 2017. Stretching the product line. [ONLINE]
Available at: http://www.marketingstudyguide.com/stretching-the-
product-line/
Google. 2017. Coca Cola Product Line and Product Mix [ONLINE]
Available at: http://bit.ly/2oP7l87
Flat World. 2017. Principles of Marketing, v. 1.0.1 Typical Channels in
Business-to-Consumer (B2C) Markets. [ONLINE] Available at:
https://goo.gl/dvZEqv

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