Marketing Management Assignment help on : SWOT analysis of Coca- Cola

 Introduction

The Coca-Cola has emerged as the world’s leading manufacturer, distributor and marketer as well of the non-alcoholic beverage syrups and concentrates. It produces more than 230 beverage brands and does marketing for its topmost five soft-drink brands i.e. Coke, Fanta, Diet-Coke, and Sprite. The finished beverage products of Coca-Cola which bear the company’s trademark are sold in over 200 countries (Company » Strategy and Competitive Advantages, 2011).

 Coca-Cola Enterprises was established as young enterprise in 1986 based upon the standards of Coca-Cola system. It was started in 1886 by an Atlanta pharmacist, Dr. John Pemberton who started selling the Coca-Cola syrup in the fountain drinks. However it started its bottling business in 1899. 72% of Coca-Cola’s operating income was generated from markets outside United States and it maintains ownership interest in many canning and bottling operations…The long term strategy and investment of Coca-Cola is fundamentally governed by its brands, bottling system and marketing expertise (Lagos, Schirf and Smith, 2001). In order to increase the consumer awareness of its products and to support its brands Coke makes very significant investments in sales and marketing to be the global brand leader.

Figure 1: Carbonated Soft Drinks Market Share

Sources of Competitive Advantage

Coke has 50% share of the global carbonated soft drinks industry and more than 80 % in many markets. It has sustainable scale advantage over its competitors. The biggest competitive advantage of Coke is its scale of global bottling system.

Competitor Analysis

 Its main Competitor is PepsiCo (PEP) which internationally makes its presence felt through its manufactured concentrates like Mountain Dew, Pepsi and other brands for sale to the internal markets and the franchised bottlers in US. It is also engaged in snack food business through Frito Lays. Just like Coca-Cola, it is trying to move faster in the non-carbonated beverages segment through its recent acquisition of South Beach Beverage Co. And it’s much famous range of herb-line spiked fruit, energy and tea drinks. Through joint ventures with Starbucks and Lipton PepsiCo manufactures and markets the best selling ready-to-drink teas and coffees brand of North America (Lagos, Schirf and Smith, 2001). It has also acquired well-known energy drink brand of Quaker Oats Co, i.e. Gatorade which might prove a stiff competition for Coke.

Other competitors of Coca-Cola are:

• National Beverage Co. (FIZ)
• Cadbury Schweppes
• Cott Corporation

A snapshot about competitors can be seen from the Appendix A attached with report.

SWOT Analysis

• Long and successful history of being leading brand
• Excellent promotional strategy using pop singers and movie stars for promotional campaign
• Creates lots of Souvenirs for customers like caps, bats etc.
• Appealing advertisements
• Unique and widely accepted taste of Coca-Cola, competitors are unable to reach the secret formula taste of Coke.
• Contracts with big restaurants like McDonalds etc.
• Broad coverage with  new range of brands which are developed and globalised
• Diversified production line like famous carbonated drinks e.g. Fanta, Sprite, Coca-cola etc and famous non-carbonate drinks like Fruitopia, Banqua etc.
• Meaningful partnerships like with UNAIDS appreciated by public.
•  Reasonable pricing which is, liked by middle and lower class.

WEAKNRESSES

• Sluggish performance in North America
• Most of the drinks manufactured are not healthy.
•  Soft drinks lead to weight gain.
• Obesity is rising amongst the kids which will affect the sales of Coca-cola
•  Target groups are mainly young generation and thus it overlooks the elderly markets.

EXTERNALOPPORTUNITIES

• More potential elderly markets can be tapped by Coke.
•  Try to create and provide much healthier range of drinks as people are becoming health conscious.
• Healthy drinks have higher potential in the coming years
• It can also venture into the food markets too because it already has good presence in the drinks markets
• Growing bottled water markets for Coca-Cola
•  Growing Hispanic Population in US will increase its target markets
• Acquisitions of some food companies and associations with restaurants will give great opportunity to Coke.

THREATS

•  It has to face intense competition because of new competitors
•  It has huge dependence upon the bottling partners
•  The growth of carbonated drinks has become sluggish
• Sales might get affected if it stays focussed on tasty soft drinks only.
•  Poor economy can also affect the sales. (Assar, 2009)

Porter’s Five Forces

The track record of Coca-Cola world over is quite enviable with its countless billions of customers across the globe which has been acquired through its competitive Five Force’s Strategy. This strategy has led to successful differentiation of its product range (Singh, 2010).

Bargaining Power of Buyers

The bargaining power of buyers is high in the soft drinks industry because the main source of revenue and market share is the fast food fountains, convenient stores and vending machines.

 Threat of New Entrants

•  Due to big brand loyalty and huge brand image Coca-Cola has to face less threat of new entrants
• Very huge and effectual advertising expenditure reduces the threat
•  Live and exclusive contracts with bottling networks give them competitive edge.
•  Substantial margin being given to retail distributors which makes tough for new entrants to convince retailers to carry their products
•  Fear of retaliation amongst the new entrants which could lead to price war reduces their entry.
•  Significant and extensive global supply chain for Coke which encourages and develops sustainable practices to benefit customers, suppliers and consumers.

Threat of Substitute Products

 Innovative marketing and massive advertising helps Coca-Cola to counter the numerous substitutes available in the market. To protect themselves from competition in global markets it offer diversified range of products like Coca-Cola Vanilla, Coca-Cola Cherry, Diet Coke, and Caffeine-free Coca-Cola.

Competitive rivalry within Industry

Low business rivalry because the market is essentially shared by PESICO and Coca-Cola, they have over 80% market share. This shows the beverage industry competition is more of Duopoly with PepsiCo and Coca-Cola. Through premium pricing and well-known global trademarks Coke has a competitive advantage over small competitors (Bobby, 2012)

Conclusion

Thus from the above report it is quite evident that Coca-cola has sustainable competitive advantage in the beverage industry and the only major competitor which it has to face is PepsiCo which is growing by and large. So it needs to stay innovative and diversify at large by entering the food or snacks market too to handle the competitive advantage in future too. Cost Leadership and Product Differentiation will definitely help it to stay at the top of the charts.

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