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The Coca-Cola Company’s Marketing Communication

Background

Since its establishment, The Coca-Cola Company has been successful in producing and marketing soft drinks. Currently, the firm is the market leader and has managed to attain global recognition. One of the factors which have contributed to its success is the adoption of the internationalization strategy. As a result, the firm has managed to generate a high level of revenue. For example, approximately 70% of its total sales revenue is derived outside North America where its headquarters are located in Atlanta.

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Additionally, the firm’s success is also associated with its efficiency and effectiveness in new product development. The firm’s management team appreciates the fact that the world is undergoing a rampant change. To remain in business, the firm appreciates the importance of evaluating the market to understand the market trends which are likely to affect its future operation. The firm’s long term survival is depicted in its mission statement which entails refreshing, inspiring, creating happiness, value and making a difference in the world.

In its operation, The Coca-Cola Company has diversified its product offering. This has enabled the firm to address the diverse needs of the customers. Currently, the firm has managed to develop more than 3,300 brands of beverages. The decision to incorporate product diversification arose from the firm’s need to meet the changing needs and preferences of the customers. Its core soft drink brands include Coca-Cola, Sprite, Diet Coke, Fanta, Powerade, Dasani water, and Minute Maid. The firm is also very innovative in its marketing. This is evident in the firm has ventured into new market segments such as bottled water and production of energy drinks.

Context analysis

According to industry analysts, it is estimated the soft drink industry will undergo a growth of 4% during the next 5 years (Harkonen, 2010, para. 1). The growth will result in changes in the environment. The following is an environmental analysis using the PESTLE model.

Political and the legal environment

The soft drink industry operates within the non-alcoholic beverages product category. In their operation, firms in this industry are influenced by the government through the set regulations. For example, the US government has set laws within which firms in this industry are required to operate. Failure to adhere to these laws and regulations may lead to a firm incurring legal and financial costs.

The political environment in the US has necessitated the success of The Coca-Cola Company in several ways. For example, the government supports new product development through institution intellectual property rights such as patents and trademarks. As a result, a particular firm’s innovation is protected from being exploited. Institution of property rights has played a significant role in the firm’s commitment to innovation.

Additionally, the US has developed a strong political relationship with most countries. One of the ways through which this has been attained is by the formulation of economic integration policies which has culminated into the formation of trading blocs. A firm’s ability to penetrate the international market is depended on the existing political conditions. Through the environment created, The Coca-Cola Company has been able to implement its internationalization strategy through various forms such as exporting and foreign direct investment (FDI). The firm has been able to enter into strategic business alliances with other firms within the same industry in the host country, for example, local bottlers. The resultant effect is that the firm has greatly benefited in several ways such as an already established distribution network, sales equipment and production facilities.

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Economic environment

According to a report produced by Datamonitor, the US had a very strong economy before the 2007 economic recession. Almost every economic sector was experiencing growth. This was necessitated by an increment in the individual’s disposable income and hence their purchasing power. The resultant effect was an increment in the rate of consumption amongst the consumers. Market consumption increased with a CAGR of 2.7% [CAGR (Compound Annual Growth Rte)] during the period ranging from 2003 to 2007. Harkonen (2010, para. 5) further asserts that the soft drink industry underwent a slow but steady growth during the period ranging from 2003 to 2007. By 2007, carbonated drinks were amongst the most lucrative products in the United States by 2007.

However, the 2007 economic recession led to a decline in the rate of economic growth. Additionally, there was an increment in the rate of unemployment. However, the industry is expected to regain the growth during the next five years. This arises from the government’s commitment to ensuring that the economy recovers from the economic recession. Some of the ways through which the government is attaining this are by reducing the interest rate. As a result, the firm will be able to undertake its production more cost-effectively. Additionally, low rates of interest will enable firms to adopt credit finance to meet their financial needs. For example, through the low borrowing rate, the Coca-Cola Company can be able to expand its operations by investing in the development of new products.

Despite the effects of 2007, economic recession, the US soft drink industry experienced growth with a margin of 1.2% in 2010 (New Release, para. 1, 2011). By 2012, the volume of soft drink sales is expected to increase from 113.3 billion litres to 132.8 billion litres. This represents an increment in CAGR from 2.7% to 3.5% (Harkonen, 2010, para. 8).

Social environment

Over the past few decades, a few decades, there has been a significant trend concerning the consumption of soft drinks. A large number of consumers are increasingly consuming soft drinks. According to a report by The National Soft Drink Association (NSDA), consumption of soft drinks especially amongst females has doubled while consumption amongst females has tripled since the 1970s. However, the rate of consumption varies across individuals of different age. The highest rate of consumption is experienced amongst individual consumers aged 12-29 years. The average rate of soft drink consumption amongst these individuals is a half-gallon per day which totals to 160 gallons per year.

The increment in the rate of consumption has also resulted from the increased marketing campaign conducted by soft drink producing firms. Various marketing communication methods have been adopted by these firms. As a result, their marketing campaign has influenced the consumers’ decision-making process. However, the market is experiencing a shift. The shift has resulted from the fact that consumers have become health conscious in their consumption patterns. To remain in the market, firms in this industry are putting more effort towards the production of soft drinks which are in line with the market demand. For example, Coca-Cola has increased its production of Diet Coke.

Technological environment

Over the past few years, the technological environment has undergone significant development. One of these new technologies is the emergence of electronic commerce. As a result, firms have improved their operational efficiency through the incorporation of these new technologies. To survive in the long term, the firm should also make use of emerging technologies. For example, incorporation of information technology can enhance the firm’s efficiency in research and development.

SWOT analysis

Below is the firm’s internal and external analysis using the SWOT model.

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Strengths

  1. Over the years it has been in operation, Coca-Cola company have managed to develop its brand name on a global scale. As a result, a large number of consumers are happy to be associated with Coca-Cola products. This has played a significant role in entrenching brand loyalty. The resultant effect has been an increment in the volume of sales through development of a repetitive purchasing pattern.
  2. The firm has also developed strength in product diversification. One, of the factors which have contributed towards the success of the firm, include its financial strength. The Coca-Cola Company has managed to develop a strong financial base which has contributed towards its ability to undertake capital investments. The broad product base has enabled the firm to meet the divergent customer needs.
  3. The firm has a strong distribution strategy which enables it to cover a wide market. The Coca-Cola Company has adopted both direct and indirect distribution strategy. For example, the firm distributes its products through retail outlets and also its manufacturing plant.

Weaknesses

Despite its strength in innovation, the firm has not been effective in producing soft drinks with a high nutritional value. This limits the firm’s competitiveness in the soft drink industry because a large number of consumers are becoming health conscious.

Opportunities

  1. Over the past few years, carbonated soft drinks have continued to be the fastest-growing liquid refreshment beverage category. However, there are numerous opportunities which the firm can exploit. For example, by broadening its product base, the firm can be able to expand its market share. This arises from the fact that it will be able to appeal to a wide range of customers.
  2. The firm can also expand its operation by expanding its operations in emerging markets such as in Asia and South America.

Threats

  1. The firm is faced by intense threats from other major companies such as PepsiCo. Other soft drinks which the firm expects to experience intense competition include energy drinks such as Redbull and sports drinks.
  2. Considering the increment in health consciousness amongst the consumers, there is a high probability of the company losing its sales in the future.

Marketing communication

According to Kimmel (2005, p.1), marketing communication is one of the ways through which a firm can attain its profit-maximizing objective. This arises from the fact that gaining product awareness is the first step towards a consumer purchasing it. Kimmel (2005, p.1), further asserts that marketing communication is considered to be a critical process which links a firm with its customers. To create substantial market awareness, the firm has formulated several marketing objectives as outlined below.

  • The firm intends to become the leader concerning effectiveness and efficiency in creating market awareness.
  • The firm intends to create a continuous awareness regarding its products in the global market.
  • It is the firm’s objective to increase its sales revenue with a margin of 15% within one year upon launching its marketing communication campaign. This will result from an increment in the size of its customer base.
  • Coca-Cola Company intends to increase its profit margin with a margin of 20%.

Marketing communication strategies

According to Masterman and Wood( 2006,p.54), the success of every business is directly affected by the efficiency with which it has implemented its marketing communication strategies. Considering the intense competition within the soft drink market, firms within this industry need to adopt an effective communication strategy. One of the ways through which firms can achieve this is by incorporating innovative marketing communication strategies such as the adoption of Integrated Marketing Communication (IMC). IMC refers to the incorporation of both traditional and emerging marketing communication methods( Pickton & Broderick, 2005, p.76). To achieve the above marketing communication objectives, Coca-Cola’s management team should incorporate the concept of integrated marketing communication.

Traditional marketing

Coca-Cola’s Company management team should incorporate various market communication methods. Some of the traditional marketing communication which the firm should consider includes advertising, public relations, sales promotion and personal selling( Shah,2009, p.65).

To be efficient in its advertising campaign, the firm should advertise through various mediums. Some of the mediums which the firm should consider include outdoor advertising such as billboards, radio, television and print media such as magazines and newspapers. To reach a large number of potential customers, the firm should ensure that the mediums selected for advertisement reaches a large number of customers. This will increase the probability of the firm increasing its customer base( Varey, 2002, p.54). Additionally, the firm should ensure that it formulates catchy slogans to influence the consumers.

In its outdoor advertising campaign, the firm should conduct comprehensive market research to identify advertising agencies which own billboards located in strategic points. After identification, the firm should enter into a contract with these firms on the duration upon which the firm should post its advertisement on the billboard.

In their public relation campaigns, the firm’s management team should consider incorporating sports sponsoring (Fill, 2009, p.6). To cover a wide market, the firm should sponsor different sports. The resultant effect is that it will be able to appeal to diverse sports enthusiasts’ hence increasing awareness of its products(Cashmore, 2010,p.45).

On the other hand, the firm should adopt personal selling when it is marketing to organizational customers such as clubs. Through personal selling, the firm will be able to understand the consumers need for refreshment. By advising the client on the best refreshments, there is a high probability of the firm making a sale.

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The firm should also consider issuing free samples in its sales promotion.

Incorporation of emerging technologies

Considering the high rate of technological innovation, the Coca-Cola Company should make use of emerging Information Communication Technologies. One of the ways through which the firm can make use of these technologies is through the incorporation of online marketing such as internet marketing. The firm can implement internet marketing by posting information regarding the various products which the firm produces on its website. Through internet marketing, there is a high probability of the firm reaching a large number of potential customers. Because the firm operates on a global scale, the use of the Internet in its marketing campaign will be more cost-effective.

To enhance its internet marketing, the firm should also consider entering into a contract with various search engines such as Google and Yahoo through which it can post its adverts. Additionally, the firm should also make use of emerging social communication networks such as Facebook, a blog, YouTube and wikis. Incorporation of tools such as wikis, blogs, tweeter, and Facebook will contribute towards enhancement of customer relationship and hence customer loyalty. This arises from the fact that these sites will not only act as informative but also as interactive tools. For example, by incorporating blogs, Facebook and wikis, consumers can be able to post their opinions, complaints and compliments regarding the firm’s products to the management team. As a result, the management team will be able to make the necessary adjustments.

Through YouTube, the firm can be able to post an advertisement similar to those on other mediums such as the television( Kodish & Pettegrew, 2008, p.35). Use of social networks will also be cost-effective for the firm. This arises from the fact that no expertise is required to design some of these tools such as blogs and wikis.

Justification and actions required to achieve the marketing objectives

To increase the probability of attaining its market communication objectives, the Coca-Cola Company should conduct comprehensive market research. The research should focus on two main variables which include the consumers and the competitors. The need for market research is increased by the fact that the firm operates on an international scale. Before launching its market communication campaign, it is paramount for the firm to appreciate the existence of cross-border differences. Some of these differences arise due to the diversity of culture and language.

According to Muhlbacher, Leihs and Dahringer (2009, p. 345), communication problem arising from the difference in the meaning of words and language barriers may hinder a firm’s efficiency in marketing its product in the foreign market. This arises from the fact that the customers may not gain sufficient information regarding the product to enable them to make a purchase decision. Marketing communication should be aimed at influencing the consumers purchasing pattern through the effective creation of information (Belch & Belch, 2008, p.33).

To eliminate this challenge, a firm should conduct research to determine the most appropriate language and words to use in its marketing communication campaign. This arises from the fact that there is a high probability of the firm violating the cultural norms of the foreign country in which it has ventured if it does not have a comprehensive understanding of the existing norms(Belch & Belch, 2008, p.34). In addition to market research, the firm will also conduct comprehensive training on its employees to ensure that they understand the culture of the foreign market in which they are to work. Through training, there is a high probability of the firm improving interpersonal relationship. The resultant effect is that it will be efficient and effective in creating market awareness.

Competitor market research should enable the firm to identify the most common method of market communication being used by the firm. As a result, it will be possible for the firm to determine how to make a difference in its market communication.

Control and evaluation

According to Duncan (2009, p.34), the success of every strategy is determined by the effectiveness with which the management controls it. Control is necessary to avoid deviation from the intended objective thus enhancing the achievement of its profit maximization objective. Also, a firm’s management team should continuously evaluate the effectiveness of the strategy. Through evaluation, the firm will be able to determine the effectiveness of its marketing campaign.

Concerning its communication strategy, Coca-Cola company should evaluate its effectiveness by researching the extent of market awareness created through its marketing campaign. One of the ways through which the firm can achieve this is by evaluating the customer’s perception regarding the various market communication strategies used.

Concerning control, the firm should develop a timeline within which its marketing campaign should be conducted. One of the ways through which the firm can achieve this is by incorporation of a Gnatt Chart. The chart will ensure that every method of market communication covers the set time.

Also, the firm should ensure that the medium used covers a wide region, this will aid in determining whether the communication strategy covers the intended market. It is also paramount for the firm to conduct market research on the perception of the consumers regarding its market campaign. This will aid the firm in identifying areas which require improvement.

Reference List

Belch, G. & Belch, M.,2008. Advertising and promotion: An integrated marketing communications perspective.New York: McGraw Hill.

Cashmore, E., 2010. Making sense of sports. New York: Taylor and Francis.

Duncan, C., 2009. Marketing its problems and methods. New York: Biblio Bazaar.

Fill, C., 2009. Marketing communications: interactivity, communities and content. Washington: Pearson Education.

Harkonen, D., 2010. Industry analysis: PepsiCo. Web.

Kodish, S.& Pettegrew, L, 2008. Enlightened communication is the key to building relationships. Journal of Relationship Marketing. 7( 2), 34-45. New York: The Haworth Press.

Kimmel, A., 2005. Marketing communication: new approaches, technologies and styles. Oxford: Oxford University Press.

Masterman, G. & Wood, E, 2006. Innovative marketing communications: strategies for the events industry. New York: Butterworth.

Muhlbacher, H., Leihs D. & Dahringer,L.,2009. International marketing. A global perspective. New York: Butterworth.

Pickton, D. & Broderick, A., 2005. Integrated marketing communications. New York: FT Prentice Hall.

Shah, N., 2009. Advertising and promotion. Ottawa: Tata McGraw-Hill.

Varey, R., 2002.Marketing communication: principles and practices. New York: Rout ledge.

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