Analyse af Coca Cola i Afsætning

Side 1

HHX 2. år

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 1 af 25

1. Introduction ...................................................................................................................................... 2

2. The micro environmental forces of The Coca-Cola Company ........................................................ 3 Macro- and Microenvironment model: Appendix 1 .................................................................... 3

3. Chain of value .................................................................................................................................. 6 Chain of value: Appendix 2 ......................................................................................................... 6

4. SWOT-analysis ................................................................................................................................ 9 SWOT: Appendix 4 ..................................................................................................................... 9

5. Segmentation .................................................................................................................................. 13 Target group model: Appendix 4 ............................................................................................... 13 Segment-criterions for the consumer-market for Coca-Cola. ........................................................ 14 Segment-Criterions for the consumer market: Appendix 5 ....................................................... 14 Minerva model: Appendix 6 ...................................................................................................... 15 Segmentations-criterions for the BtB-market for Coca-Cola ........................................................ 15 Segmentations-criterions for the BtB-market model: Appendix 7 ............................................ 15 Segment-valuation ............................................................................................................................. 16

SMUK-model/SOEC (English)-model: Appendix 8 ................................................................. 16

Target-group strategy ......................................................................................................................... 17 Segment-criterions for the consumer-market for Coca-Cola Zero: Appendix 9 ....................... 17

6. Difference in buying-behaviour ..................................................................................................... 18 BtC and BtC market models: Appendix 10 ............................................................................... 18

7. Competitor analysis........................................................................................................................ 19 Competition-identification by the target model ............................................................................. 19 Target model: Appendix 11 ....................................................................................................... 19 The competition form by the competition-art model ..................................................................... 20 Competition-art model: Appendix 12 ........................................................................................ 20 Pepsi annual report: Appendix 13 .............................................................................................. 20

8. BCG ............................................................................................................................................... 21 Brand Shares (by Global Brand Name) - Off-trade Value RSP - DKr mn: Appendix X2 ........ 21 BCG model: Appendix 14.......................................................................................................... 21

9. Analysis of two Coca-Cola commercials ....................................................................................... 22 Coke commercial 1971: Appendix 15 ....................................................................................... 22 Santa Claus Commercial 1953: Appendix 16 ............................................................................ 23

10. Conclusion ................................................................................................................................... 25

Side 2

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 2 af 25

1. Introduction

The original Coca-Cola was invented in 1885 by John Stifth Pemberton. The product was called

“Pembertons’s French Wine Coca”^{1} and contained alcohol. But the year after the launch, the state

of Georgia implemented a law which prohibited sale of alcoholic drinks. Pembertons solution was to make the product non-alcoholic under the name “Coca-Cola” [2]. It was originally sold as a cure for hangovers at pharmacists. [3] The formula has been kept as a secret since then.

In 1892 was the Coca-Cola Company as we know it today established by Asa Candler, who bought the recipe and the rights to sell Coca-Cola. Asa Candler starts to advertise Coca-Cola as a refreshment beverage instead of medicine, and the strategy quickly became efficient. In the beginning of the 1900’s the Coca-Cola Company sold 36 million bottles a year. But Asa Candler became old and decided to give he’s children the stocks of the company he lived for. That was a bad decision. They sold their stocks to Ernest Woodruff. Four years later were Robert Woodruff elected president of the Coca-Cola Company and the company entered a whole new era regarding marketing, expansions of the company and exporting their product.

Today are there consumed more than one billion Coca-Cola Company products each day, around

600.000 persons are somewhat employed by the Coca-Cola Company and Coca-Cola are the worlds most recognizable brand, which includes the company, logo and their unique bottle.

The purpose of this analysis of the Coca-Cola Company is to explain how the company has become a global market leader at the soft drink market, through detailed analyses of their chain of value, their choose of segmentation, a BCG-matrix and an analysis of their marketing strategies. To explain how they can retain their position as global market leader and how the Coca-Cola Company’s future might look like, we made an analysis of their micro and macro environmental forces, a competitor analysis and a SWOT-analysis.

1

http://www.coca-cola.co.uk/ourbrands/default.aspx?id=9

2

http://memory.loc.gov/ammem/ccmphtml/colainvnt.html

3

http://www.slate.com/id/2165787/

Side 3

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 3 af 25

2. The micro environmental forces of The Coca-Cola Company

Macro- and Microenvironment model: Appendix 1

In this section we will analyze at the internal and external forces affecting The Coca-Cola Company:

Suppliers: Use of energy, raw materials, packaging, and ingredients from suppliers from all over the world, to maximize their profits. Taking care of their business relationships is a very important factor of profit maximizing in the long term. Avoiding child labor, abuse of labor, unhealthy

working environments and/or other law violations are essential due to the Coca-Cola Company’s

reputation and the trust provided by the customers. The customers expect that none of the above mentioned violations of laws and standards are taking place. If one of their suppliers abused the law by using child labor for example, it would be a colossal catastrophe for the Coca-Cola Company – as the negative media would hurt their image. Therefore the Coca-Cola Company has made guiding principles for their suppliers [4], telling them exactly what the Company expects.

Middlemen’s costumers: The Coca-Cola Company uses the franchise concept as their main form of spreading their products across the world. An elaboration of their franchising concept is mentioned in the chain of value.

Customers: The Coca-Cola Company’s products are well-known by almost the entire world.

Through generations they have maintained them selves as market leaders, a Coca-cola consumer is basically everybody who drinks soft-drinks. Of course there are some targeted groups which are more important for the Coca-Cola Company than others, especially the young generations. Further explanation will be found under “segmentation”.

Competitors: There are many competitors on the global soft-drink market, but only few have a market share which threatens the Coca-Cola Company. These few companies are: The PepsiCo, the Danone Group, and the Nestlé Company. An elaboration of their main competitors is written in the

4

http://www.cokefacts.com/citizenship/cit_aw_supplier.shtml

Side 4

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 4 af 25 competitor analysis while how the Coca-Cola Company should relate to the competition is mentioned under opportunities in the SWOT-analysis.

The macro environmental forces of the Coca-Cola Company:

Politics and legalization: At this moment there are no laws regarding bottle or can deposit in most of the countries or territories where the Company’s products are been sold. Laws regarding bottle or can deposit has only been implemented by several states in the U.S, and in Canada, Germany, Scandinavia and Australia. Due to rising concern by NGOs and consumers regarding the toxic waste which is discharged by avoidance of recycling, politicians in the U.S particularly are now working up bills which would make it statutory to charge temporary fees by selling bottles or cans.

A law-restriction regarding bottles and cans would increase their logistic costs and slice the top of the Coca-Cola Company’s sales. The reason for the small decrease in sales, which might be a reality in the near future, is due to the situation where the customer is standing in a store and has to choose between the Coca-Cola Company’s products or discount alternatives. Due to the bottle or can deposit fee the price of the product will seem radically increased, even though the discount alternatives price likewise has changed. As the price has increased at the moment of the purchase, some consumers will probably try the discount products and even be content with discount products in the long term.

Economy: Due to the worldwide recession and financial crisis which the world is going through right now, is many of the companies’ reaction to sack employees due to downsizing in many companies – which also includes the Coca-Cola Company. Many regular Coca-cola customers will be affected, their income might fall and a result of that will be cutting down on luxury products.

Seeing the Coca-Cola products as luxury products is not unusual in many countries, due to their brand and reputation. Therefore the reaction from costumers could be considering of cheaper alternatives or just reducing the consumption by consuming other products.

Another economical threat is the value of the U.S. dollar compared to other major currencies. Due to the Coca-Coca Company’s financial statements always are presented in U.S dollars they must exchange all revenues – incomes, expenses, assets and liabilities into U.S. dollars. So a weak U.S.

dollar, affects the net operating revenues and the operating income negatively in the end of each reporting period affect.

Side 5

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

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Demographics: Due to improved health care worldwide, innovative medicine researchers and a decrease in the number of births, the world future indicating that the average lifespan will increase and the world population will increase with two billion people in a time period of thirty years. The most significant increase is the amount of elder people (65+). In the year of 2040 there will be 1, 5 billion people that are 65 years or older. This is almost twice as many elder people compared to today. The population of 20-64 year olds will slowly increase, but the number of children and

                                      5
teenagers (0-19 year old) are roughly stagnated .

These changes of the future markets could have an effect on the Company’s marketing strategy.

Culture: Today there are not many markets in the world which the Coca-Cola Company hasn’t affected. They have changed norms and values among different cultures all over the world where coffee, tea or even wine were the most common drink next to regular water. Their next and probably final cultural challenge is China, which is elaborated in the SWOT-analysis.

Technology: Due to the increased dependency on electronically storage devices is the Coca-Cola Company vulnerable to security breaches such as hacker-attacks on electronically storages with confidential information. That information could be new marketing strategies or product development for new products which in a worst case scenario could end in the hands of their competitors. Hackers could also hack their way through the Company’s security systems and cause system failure – just because it is a challenge.

Environment: Global warming may be the next challenge. Global warming actually is a good thing for the Coca-Cola Company due to the consumption of refreshing beverages rises in warm weather.

Many researchers warn about the effects global warming could have for our future and our children’s future. Politicians, researchers, NGOs, the Medias and the general public are therefore very aware of this problem. The global warming is due to the greenhouse effect and the greenhouse effect is due to the rapidly increase of CO² release since the industrialization. The object is now to

5

Megatrends (alderssammensætning) Apendix AA

Side 6

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 6 af 25 reduce our CO² releases and the international community is looking specifically at companies. This subject is also mentioned as an opportunity in the SWOT-analysis.

Medias and NGOs: As a part of having the world’s best brand, there is a lot of attention from Media and NGOs which investigates every right and wrong element they can find in the Coca-Cola Company. Of course there would be a lot more focus on wrong elements if they manage to find elements which are open to criticism. The Coca-Cola has a great power in form of speech and media campaigns – which eventually could affect politicians to make law regulations which could be in favor or against Coca-Cola. An example of a law would be a limit for the amount of sugar in soft drink products.

3. Chain of value

Chain of value: Appendix 2

The Coca-Cola Company has a very strong value chain, due to its size. In the inbound logistics, the Company is able to get the desired raw products to produce the finished Coca-Cola product cheap.

This is due to the big quantities of raw products the Company buys. Collection hub for the raw materials is in Atlanta Georgia, where the production of the syrup also is based [6]. This Coca-Cola only purchases ingredients for production of syrup, as the bottling activities handle purchase of sweetener and water themselves.

The production of the Coca-Cola is one of the worlds best kept secrets, called 7x by Adam Candler when he took over the Company in 1888. The Coca-Cola Company today produces the syrup, which is then sold to the bottlers. Therefore the final production face has been outsourced – using a franchise model. This allows the coke brand to move faster aboard to foreign markets, when someone sees the opportunity to franchise their brand. The bottlers have a contract regarding territorial or geographical borders, as to which areas they can provide with Coca-Cola, and are in these areas responsible for distribution of the products to local BtB markets.

In the USA, the biggest franchiser is Coca-Cola Enterprises. For all big franchisers, Coca-Cola themselves own stocks in the franchisers. In Coca-Cola Enterprises, which is the biggest bottler

6

http://en.wikipedia.org/wiki/Coca-Cola#Production

Side 7

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 7 af 25 worldwide, they own approximately 35%. The franchisers also handle the distribution of the coke products.

The strongest link in the chain of value is marketing and sales. The Coca-Cola Company used a

staggering $2.2bn in 2007 [7] – making the Coca-Colas advertising campaign the 9^{th} biggest in the

world. The marketing plans are made worldwide, yet there is a lot of work with the local bottlers to

make campaigns for local markets^{8}.

The original marketing concept was a nostalgic point of view, which it still is today. All the commercials feature young happy people. Right from the start, Coca-Cola has advertised in very visible places, like mirrors and trays – which people hardly could avoid to see or use. This makes coke acceptable, as it is a part of the consumer’s lifestyle. The marketing and distribution also

                                            9
secures that a coke is “within an arm's reach of desire”

, that a coke always is available. This was the main concept of Robert Woodruff, who was the former CEO of coke. This has been achieved today though a large outbound logistics distribution network, sending syrup to all their markets.

“You know, in the final analysis, Coca-Cola really doesn't belong to us. It belongs to you, to anyone and to everyone who has ever shared a moment with a Coke." – said by Donald R. Keough, chairman of the Coca-Cola Company Board. This proves that Coca-Cola has been made a part of the people whom consume the product. The product has been consumed though generations, making it almost tradition to consume the product. We believe that is actually the strongest part of Coca-Colas marketing.

There were surveys in the start of the 80’s showing that people actually liked Pepsi more than coke, and coke were also loosing a small part of their market share. So therefore Coca-Cola lunched a new coke, changing the original formula [10]. This only resulted in people demonstrating, and protest.

The Coca-Cola Company realized that it was not the taste people wanted – but that people shared a bond between coke and their lives. We believe that this shows the link between coke and consumer most clearly, and that coke is not just the liquid, but has been added with a lot of extra values and image related feelings.

7

http://www.adbrands.net/us/cocacola_us.htm

8

http://www.thecoca-colaCompany.com/ourCompany/the_cocacola_system.html

9

Robert Woodruff, former chairman

10

http://www.thecoca-colaCompany.com/heritage/cokelore_newcoke.html

Side 8

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 8 af 25

The service part of the value chain is primarily to the BTB costumers. Here many clients are provided with the extra services at no expense for the costumer. That includes employees from the Coca-Cola Company or their franchises coming out to the stores, restocking with products and supplying marketing merchandise. This includes vending machines and other options [11].

The infrastructure of the Coca-Cola is complicated. The mother Company, Coca-Cola Company is responsible for supplying the syrup – and marketing on a global basis. The rest of the infrastructure has been franchised to over 300 bottlers worldwide [12]. This is why the Human Resource department is very big for the Company, considering the total associates of over 90500 [13] worldwide; this includes the bottlers that have been franchised. The Human Resource department of the Coca-Cola Company also has a big education program – learning franchise takers and own employees,

                  14
management strategies .

The technological sector in the Company has a lot of dimensions, like Coca-Cola buying new refrigeration equipment [15]. They have also ventured into 120 water projects in 50 countries [16], and have achieved 2% improvement in usage of water from 2006 to 2007 in cooperation with their

             17
bottling partners .

Procurement is getting the right items at the right time, which is also one of cokes strong sides.

They import all raw materials from around the world to their production, to produce the syrup in Atlanta, Georgia [18]. The source of caffeine is the Kola Nut, which is imported from Africa [19]. For the production, the Coca leaf is a main ingredient, which is imported from Peru. The Coca leaf is also used for cocaine production; this is a problem for the syrup production. Therefore Stephan Company in New Jersey imports the leaves to produce the coca flavoring agent. They are the only Company in the USA that can legally import the coca leaf. They extract the cocaine – so the myth that Coca-Cola contains cocaine today is false [20]. The cocaine is sold for medical production, to another medical Company.

11

http://www.coca-cola.dk/contentstore/da_DK/pages/Company/salesanddistribution.html

12

http://www.thecoca-colaCompany.com/careers/how_we_operate.html

13

Est. For 2007 - http://www.thecoca-colaCompany.com/ourCompany/pdf/Company_Fact_Sheet.pdf

14

http://www.thecoca-colaCompany.com/citizenship/education_training.html

15

http://www.thecoca-colaCompany.com/citizenship/refrigeration_equipment.html

16

http://www.thecoca-colaCompany.com/citizenship/community_initiatives.html

17

http://www.thecoca-colaCompany.com/ourCompany/pdf/Company_Fact_Sheet.pdf

18

http://en.wikipedia.org/wiki/Coca-Cola#Production

19

Coke documentary.

20

http://query.nytimes.com/gst/fullpage.html?res=940DE6D7123BF932A35754C0A96E948260

Side 9

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 9 af 25

4. SWOT-analysis

SWOT: Appendix 4

The Coca-Cola Company strengths

According to Interbrands [21] 2008 yearly summary [22] of the best brand, the Coca-Cola Company is the top brand by far. Interbrand has based their conclusions on financial strength and brand strength.

Coca-Colas main competitor PepsiCo is placed 25^{th} on the chart, which shows that the Coca-Cola

Company maintains their position as the most recognizable brand in the world compared to their main competitor.

The Coca-Cola Company is a market leader on the global soft drink market, with an impressive

market share in 2008 of 22, 6 % worldwide. The PepsiCo has a worldwide share of 10, 9 %^{23}. Even

though the Coca-Cola Company has lost a market share of 2, 2 % since the year of 2000, the Coca- Cola Company has fought back on the increased competition on the global soft drink market.

Competitors such as Nestlé and Danone have shown up to 80 % growth in market share in the same period, so Coca-Colas position is threatened. The Coca-Cola Company market shares are now stagnated and might even increase, due to factors which will be mentioned later on in this analysis.

The Company’s globalization strength, has been gained by their franchising concept, which means that coke is available on all world marketed. In many of the countries where the Company is well-integrated, the Coca-Cola Company has reached their goal “Coca-Cola should always be within an arms reach of desire”. This was said in 1923 by Robert Woodruff, who was former chairman of the Coca-Cola Company. Taking advantage of the World War II particularly helped move to export markets, the Coca-Cola Company sent their technicians out behind the frontlines to provide the American troops with Coca-cola. As a result of this, Coca-Cola created factories all across Europe.

That is why Coca-cola in many years forward had an advantage on the worldwide market, not only by selling the ‘original’ Cola product, but had experience with export markets and outsourcing before any of their competitors.

21

An analysis Company, which publishes a yearly list over the top 100 worldwide best brands.

22 www.interbrand.com 🡪 Best global brands 2008

23

Appendix X1 – Euromonitor, global market shares in carbonated soda drinks

Side 10

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 10 af 25

Weaknesses

A large, well-integrated product with the most valuable brand in the world does not have a lot of weak links in their Company chain. We have managed to find a few.

The regular Coca-cola is not the drink which contains most sugar compared to other soft drinks, but it does develop more tooth decay compared to other soft drinks. The nutrition major who made this survey in his own lab, is still trying to find the reason and a conclusion for that claim against the regular coca-cola [24]. There is even an ‘urban myth’ which claims; that if you put a tooth in a glass of coke it will dissolve overnight – that claim is false. Eventually it will dissolve, because Coca-cola contains a small concentration of acids. The Acids that Coca-cola contains are also used in other common consumed products, for example orange juice – which actually contain a bit larger concentration of these acids [25]. Urban myths such as this one and many other [26] has existed for many years, and gives the Coca-cola a negative image – even though they are proven false.

Another weak link in the Coca-Cola Company is their non-existent ability to use advertising campaigns for multiple products at the same time. The Company has an enormous marketing budget of 2.2 billion dollars in 2007. With such a big budget, they should be able to advertise for other products than their cash cows (regular Coca-cola, diet Coca-cola, Fanta, Sprite and others).

With the more than 2.800 beverages the Coca-Cola Company offers, we believe that some of their

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products may find them selves at the late majority face at Ansoff’s PLC-matrix , and might even

be withdrawn from the market – unless they choose to reintroduce the product. An example from the Danish market could be the Coca-cola Lemon, which quickly came through the four PLC-faces and was discontinued in 2002, but was reintroduced again in 2004 as a light product.

The last weakness we managed to find is the Coca-Cola Company’s reliability on their franchises and business partners. The only product the Company produces by themselves is the syrup. The mixture with water and distribution are taken care of by the franchise. That creates an imaginary situation where a distributor in a country for the Coca-Cola Company would stop the corporation with the Coca-Cola Company - due to a launch of own similar products on the their own market.

This would probably never happen, but they rely on other companies to take care of their products,

24 www.worldental.org 🡪 Q&A – What effect does Coca-cola have on teeth

25

http://www.snopes.com/cokelore/tooth.asp

26

Cola myths does actually have their own website: www.colamyths.com

27

Annex 16, PLC

Side 11

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 11 af 25 so the Coca-Cola Company isn’t necessarily in charge of the future in those areas where business partners are taking care of the distribution.

Opportunities

Due to enormous growth, China now the second largest economy in the world, with an annual growth rate above ten percent within the last quarter of a century [28] is. Therefore the Coca-Cola Company has a giant market to take advantage of. Especially because the average Chinese person consumes 7 bottles of soft drink [29] a year, compared to 840 bottles in the United States! Research made by analyzers show that Coca-Colas largest competitor on the Chinese market is water and tea.

Tea-drinking has been an integrated part of the Chinese culture for thousands of years, and is consumed on a daily basis. The challenge for the Coca-Cola Company is to change the way the Chinese think about American products today and the change of traditions.

The Coca-Cola Company has made a cultural impact on every country they have expanded to, and they will have to use the same tactics in China which they have always used. They will have to find the right target group and which we believe is the youth of China. The young people are about to deviate from old Chinese norms and traditions. Due to world globalization, the boundaries between countries, civilizations and cultures are getting smaller. Medias such as MTV and the Internet gather young people from different cultures all over the world. If it is possible for the Coca-Cola Company to become a significant market leader on the Chinese market, by making the Chinese consume Coca-cola on a regular or daily basis, the Coca-Cola Company will sky rocket their profits within a reasonable matter of time.

The good Coca-cola taste is mainly due to the amount of syrup and sugar it contains. The world is threaded by obesity; health organizations are calling it a global disease. Statistics show that around

400 million adults worldwide are obese and more than one billion adults are overweight [30]. This is a threat to the original Coca-cola products, which contain large amounts of sugar. The Coca-Cola Company could take advantage of the situation, of their strong brand, and create an all-healthy line of products. The line extension of products doesn’t have to be carbonated soft drinks, but has to be healthy. By effective marketing and a launch of a line while the competition on the market still is spread out, would instantly become a great success. An attempt of integrating into a healthy market

28

Measured in GDP (Gross Domestic Product)

29

0, 25 litres.

30 www.world-heart-federation.com 🡪 Obesity

Side 12

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 12 af 25 has already been done recently. The Coca-Cola Company purchased Glacéau, a manufacturer and distributor of flavored water. The product the Company produces “Vitamin Water”, and has been sued by CSPI [31]. CSPI claim that the Coca-Cola Company advertises the product as a healthful alternative to their unhealthy products [32]. CSPI’s nutritionists claim that the 33 gram of sugar each bottle contains promotes obesity more, than the vitamins should prohibit obesity. We believe that they should work on alternative that consumers and nutritionists can support.

Another opportunity for the Coca-Cola Company is to take advantage of their strong brand and do some product development. It is hard to be a market leader; competition is tough and creates a demand for new products constantly. The Coca-Cola Company has to be one step in front of their competitors at any given time or they eventually will loose market shares. Development of a new taste from the original products has been done successfully before. One example is The Coca-cola cherry which was introduced in 1985 and today has a total market share of 0, 7 % on the American

market of carbonated drinks^{33}.

The last opportunity we found, is to create an image as a green Company, which cares about the environment. The objective is not to become ecological or a Max Havelaar product, which would have an enormous impact on production costs. The objective is to reduce their CO2 release significantly at the production and distribution chains. By taking advantage of their in future green image in their marketing departments could their move give Coca-cola a new trendy image, which could extend the lifespan of the product and increase the gap to market challengers. This is already in process, as coke are trying to reduce their CO2 – though new coolers and new delivery trucks.

Threats

Regular products from the Coca-Cola Company in the near future become outdated due to health issues. According to an article from Science Daily [34], soda and sweet drinks are the main source of calories in an American diet. Eventually the obese consumers will realize that the sugar the regular Coca-cola products contain will have a major contribution to their obesity and might even be life threatening. But in many cases is it too late. The physical or psychological addiction to Coca-cola

31

The Center for Science in the Public Interest

32

http://news.yahoo.com/s/nm//hl_nm/us_cocacola_vitaminwater

33

http://www.thecoca-colacompany.com/presscenter/products_cherry.html

34

http://www.sciencedaily.com/releases/2005/05/1920.htm

Side 13

Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

Page 13 af 25 products has taken over. The politicians are also aware of the situation and if the trend continues, the politicians could consider restrictions to products containing a high level of sugar.

Another high-level threat is America’s status in the middle-east countries. Due to the fact that the United States of America is the only superpower nation left in the world, many middle-east nations find them selves threatened and curses America and the western world. The wars going on in Iraq and Afghanistan does not make the conflict between the western world (America is usually the symbol) and the middle-east better. The daily symbol of America is typically Coca-cola and Muslim businessmen have seen an opportunity to take advantage of that. Mecca Cola is a very interesting competitor because of the similarity with the Coca-Cola Company logo. But they are also a very dangerous competitor on the middle-east market. One of Mecca Colas philosophies is to donate 10% of their profits to charity and support the Palestine in the conflict of Gaza. If their anti- American campaigns succeed, is the Coca-Cola Company about to loose a big percentage of their market shares in the middle-east.

The last threat mentioned in this SWOT-analysis might only be temporary, but as of this moment is the world are facing a long durational recession. Business-partners may become financial insolvent so there might appear an expensive situation in the logistics. The financial crises could also cause, that consumers may find cheaper alternatives to the Coca-Cola Company.

5. Segmentation

Target group model: Appendix 4

The segment process undertakes because you want to classify a market in homogeneous consumer groups with homogeneous preferences in relation to the Company’s product. The homogeneous groups are called segments.

The consumer unit is a person or a group of persons or an organization, which have a demand for and is able to use a particular product. They have furthermore the economic, technical and physically opportunities to use it.

The consumer market: Coca-Colas have a very large consumer market because they offer soft drinks to everybody. All generations and all social classes know what a Coca-Cola is and have the economic, technical and physically opportunities to buy one.

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Group: Nicklas Jørgensen, Nicolai Hansen, Christian Graversen

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The business market (BtB): Coca-Cola focuses on soft drinks suppliers. It is restaurants, kiosks, supermarkets etc.

Coca-Cola needs to separate the consumer-units into segments. The separation is made through segments-criterions.

A segment-criterion is a factor, which can be use to separate the consumer-units into segments.

Coca-Cola needs to be aware of two things.

• A limited number of segment-criterions.

• Relevant segment-criterions,

Segment-criterions for the consumer-market for Coca-Cola.

Segment-Criterions for the consumer market: Appendix 5

Psychographics

Lifestyle: If a Company what to focus on a particular lifestyle they need to use the Minerva model.

The Minerva model shows the five main lifestyles.

The blue segment focuses on consumption, career and status. The green segment focuses on environmental consciousness and dedicated activity. The pink segment focuses on tradition and safety. The violet segment focuses on self-made, consumption and tradition. The grey segment is a mix of the other segments.

The question is then what segment does The Coca-Cola Company appeals to? Coca-Cola does not appeal to a particular lifestyle segment. They appeals to all the segments. However some of the segments are more impressionable in relation to other segment. The pink, violent and grey segments are more impressionable for Coca-Cola than the blue and green segments. People in the blue segment will sometimes see Coca-Cola as a low life drink because nearly everybody can afford to drink Coca-Cola. People in the green segment will sometimes see Coca-Cola as a brand, which not can be compared with their environmental consciousness.

However many people in both lifestyle segments will still use Coca-Cola products. Coca-Cola is therefore a product, which appeals to all lifestyle segments.

The Coca-Cola Company has through many generations now appealed to the young generation through advertising. The young generations have and will always be more willing to experience and try new things. The former young generations are now old generations. They have adopted Coca- Cola and introduced Coca-Cola together with advertising for the young generation.

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Minerva model: Appendix 6

User-status: The costumers have different kinds of consumption, which can be defined as heavy-users, medium-users, light-users and non-users. The users have a very different relation to Coca- Cola. The average family in Georgia, USA, averagely drinks 3200 bottles per year. In relation to this people in China drink only 7 bottles of Coca-Cola per year.

We can conclude that Coca-Cola has heavy users and light users, very dependent on which market we are looking at. Coca-Cola main goal is to get all people to become heavy users.

Loyalty: The market for soft drinks is split up in costumers with preference and no preference.

Coca-Cola has a lot of loyal customers – however their chief competitor Pepsi has also has many loyal customers. In addition there also is a large costumer group, which like both products and drink what soft drink is available.

Income: Coca-Cola has costumers from every income group. Coca-Cola has costumers in high and low income groups. However some families, in particularly from developing countries, will not have the economic opportunities to buy Coca-Cola. Another tendency is that the very rich people might not drink Coca-Cola. They might not find it fancy enough to drink. You get therefore a very large segment in two different income segments – The very rich and the poor.

Countries: Coca-Cola has the whole world as their market. Coca-Colas goal is to get all people around the world to drink Coca-Cola. Some countries have a very large consumption of Coca-Cola, especially the USA.

Segmentations-criterions for the BtB-market for Coca-Cola

Segmentations-criterions for the BtB-market model: Appendix 7

Purchaser working-form: Coca-Cola wants their customers on the BtB market to be loyal to Coca- Cola. This is why you see a lot of fast-food or restaurant chains serving Coca-Cola or Pepsi. Coca- Cola would like every restaurant to serve Coca-Cola instead of Pepsi.

Economic meaning: Many companies want their product to be the main product, as Coca-Cola is never the main-product at any retailer. Coca-Cola is a by-product. They choose their middlemen

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Niche market: The Coca-Cola Company sells primarily to the middleman-market. The Middleman market, one example is McDonalds etc. This way Coca-Colas product can reach more final customers because they have the opportunity to sell it to any retailers.

The geographic placement: The Coca-Cola Company wants to have middlemen all over the world so they can sell more products to the final customers.

Segment-valuation

SMUK-model/SOEC (English)-model: Appendix 8

The companies can use the SMUK/SOEC (English)-model to make their target-group choice. Four
factors are a part of the SMUK-model/SOEC (English)-model.

Size: Here must The Coca-Cola estimate if the segment seems to be interesting in relation to spending power and the expected increase in the future.

Opportunities: What are the opportunities for work on the segment? Can the Company reach the segment through particularly media or distributions-canals?

Expenses: The expenses in connection with the work on the segment must be estimated. A particular media or a special distributions-canal can maybe reach the segment, however the expenses are perhaps too big so the work on the segment can not be worthwhile.

Competition: What is the competition-situation in every segment?

Size: The Coca-Cola Company has chosen the whole world as their market. You cannot find a more interesting market than that. When you have the whole market you will have a great chance to experience an increase because there are still places where they can not get Coca-Cola.

Opportunities: The Coca-Cola Company needs to split the whole market up in pieces. They need to use different commercials specified to each country.

Expenses: The expenses are huge. They use 2, 2 billion dollars each year on marketing. However it is worthwhile while they are the most known brand in the world and have a huge sale.

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Competition: The Coca-Cola Company has one chief competitor. It is the Pepsi Company. Coca- Cola is still the market-leader and the market-challenger is Pepsi. Apart from that are there a lot of smaller bottlers. We will focus more on the competitor situation later in the competitor-analysis.

Target-group strategy

There are four target-group strategies. They are called undifferentiated marketing, differentiated marketing, concentrated marketing and one-to-one marketing.

The Coca-Cola Company uses undifferentiated marketing and differentiated marking. The explanation for the use of the undifferentiated marketing is that The Coca-Cola Company wants to appeal to the whole world.

The Coca-Cola Company uses also the differentiated marketing because they want to focus on the young generation. They need furthermore to specify their commercials compared to which countries they are in.

Segment-criterions for the consumer-market for Coca-Cola Zero.

Segment-criterions for the consumer-market for Coca-Cola Zero: Appendix 9

The Coca-Cola Company introduced in 2005 Coca-Cola Zero, a classic coke with zero sugar which reminds of Coca-Cola light another sugar free version of the classic coke. It seems obviously that they both must appeal to people with focus on “health”. However why have The Coca-Cola Company introduced a new sugar free coke when they already had a sugar free soft drink? Who does Coca-Cola Zero appeals to?

Psychographics: Coca-Cola Zero appeals to people living in the blue and the green segment in the Minerva model. People in the blue segment will be willing to adopt Coca-Cola Zero because they would buy the brand Coca-Cola and with that the quality of coke. It gives furthermore the coke a more sophisticated image, which will attract the blue segment while the pink and violent segment will focus on traditions and habits and therefore stay with Coca-Cola Classic.

The green segment will be open for the new Coca-Cola Zero because it appeals to a healthier way of living.

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Behavior: Coca-Cola Zero is not bringing anything new to the soft drink market. Some experts think that the new Coca-Cola Zero will not give The Coca-Cola Company more market shares. The new Coca-Cola Zero will on the other hand take market shares from the classic Coca-Cola and Coca-Cola Light. The Coca-Cola Company has off course not introduced the Coca-Cola Zero so it just will take replace their market shares. No they have introduced the Coca-Cola Zero so it will take market shares from Pepsi. What does this have to do with Coca-Cola Zeros target group? The Coca-Cola Zero is trying to get customers which already are heavy, medium or light users of soft drinks products.

Demographical: The demographical stats are very important in relation to Coca-Cola Zeros target group. Their target group is primarily young men from 16-40. Men, which habits, they still can affect or more importantly change. Men over 40 will not be very willing to give up buying habits and adopt new ones. Coca-Cola Zero appeals to men, which want to drink sugar free soft drinks but do not like Coca-Cola Light because it is to “girly”.

The Coca-Cola Company pictures the new Coca-Cola Zero as a masculine and dynamic sugar free soft drink. This is illustrated with the black look and the masculine commercials as “The perfect breakup”. The perfect breakup shows how a guy breaks up with his girlfriend and the girlfriend understands. She even says that it is okay that he wants to be with other girls and he shall just call her if he wants something.

The Coca Company says that Coca-Cola Zero is for men, Coca light is for the women and the classic Coca-Cola is for everyone.

Geographic: The new Coca-Cola Zero has been introduced in the whole world like The Coca Company’s other products. It is therefore naturally that Coca-Cola Zero is going to have all men from 16-40 in the world as its target group.

6. Difference in buying-behaviour

BtC and BtC market models: Appendix 10

There are large differences in circumstances between the BtC and BtB markets. The consumers have to relate to other conditions than an operator on the BtB market has. The models, we chose to

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The consumer’s background conditions are out of reach for a company such as the Coca-Cola Company. The Coca Cola Company has to identify the different conditions and has to be aware of them in marketing.

The most basic different between the two buying behaviours is that the consumer what to fulfil a demand for in this case soft drinks with Coca Cola. An operator on the business market will on the other hand focus on the possible turnover and profit by selling The Coca Cola Company’s products.

We can conclude that a consumer has different motives of buying than an operator on the BtB market. The motives of buying are: Functional or social. Social motives of buying include the Bandwagon -, Snob-, Veblen – and Thrifty effect.

The motive of buying at the BtB-market is on the other hand always focusing on business which means that the company buys so it can realize its goal – which probably is to increase turnover, which then increases revenue.

7. Competitor analysis

A competitor-analysis contains five elements:

Competitor-identification: Who are the competitors? What is the competitor-form: How many competitors are on the market? How large are they? Which grade of preference is there?

The competitors idea and goal: For example profit, market share and profile

The competitors strategy and marketing: Which parameter do they use and how do they use the four P´s?

The competitor’s strong and weak points: An analysis of the competitor’s strong and weak points.

Competitor-reaction: How do the competitors react on The Coca-Cola Company’s initiative?

Competition-identification by the target model

Target model: Appendix 11

All products (wide competition): Here it is understood the competition between all products. In this case with Coca-Cola it includes soft drinks and all other products – for example snacks or a car.

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Same basic needs: The products must have something in common. Other soft drinks and drinks like mineral water, Fun fruit syrup and juice will meet the same basic needs as Coca-Cola.

Same product category: A product which fulfills the same need and have some of the same qualities. An example of this is other soft drinks without alcohol like Harboe.

Same product: It is the most important and interesting category. In this case Coca-Cola is in a narrow competition with PepsiCo. They have products which full fill the same needs and they are in the same price class – and even have a similar type of taste.

The importance of the target model is to recognize the main competitors. The Coca-Cola Company’s main competitor is without any doubt PepsiCo. On the Danish market there are small discount products as for example Harboe.

The competition form by the competition-art model

Competition-art model: Appendix 12

Pepsi annual report: Appendix 13

After the recognizing of the main competitor Coca-Cola need to focus on, which markets Coca- Cola is operating on. The Coca-Cola Company is operating on a difference duopoly market. The reason is that we have two large companies at the market – The Coca-Cola Company and PepsiCo.

There is also another factor in the model. Do the customers at the soft-drink market have preference for a Company or not? The customers on the market normally have preference for either Coca-Cola or Pepsi. They prefer one of the soft drinks over the other.

The competitor’s idée and goal: Before we focus on Pepsi goals and idea for the future we need to make sure that we know where they are today. We need therefore to look at the stats about Pepsi Market-share: 10, 9 %

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8. BCG

Brand Shares (by Global Brand Name) - Off-trade Value RSP - DKr mn: Appendix X2

BCG model: Appendix 14

In the model we have used letters, referring to the Appendix with the total turnover on the Danish market. As it is clearly shown in the BCG-Analysis, coke is the biggest by far with a total turnover of 712 million DKR. The nearest competitor is Pepsi with only 192, 6 million DKR, which is not

even 1/3 of Coca-Cola. This is why Coca-Cola coke is a Cash Cow – according to market growth

and market share. Coca-Cola Zero has the fourth biggest turnover, yet we believe that it will even surpass Pepsi on the Danish market very soon, considering the growth over just two years. This makes Zero the star product, with the biggest growth and the best looking future. It sounds very promising, yet we have to remember that Coca-Cola Cola still has the highest turnover. This BCG model contains the six biggest carbonates, where the growth is not negative. This is why our model does not contain Jolly cola, as they have a negative growth.

There are potentially two submarkets to look at on this BCG model, the light and non-light market.

Coca-Cola diet, Coca-cola Zero and Pepsi Max are all light products. Here coke is the biggest, having two brands that are almost the same size. Diet was lunched first in 1982 [35] and Coca-Cola Zero in 2007. The reason for the explosive growth for Zero is that Zero has been the biggest lunch in 22 years – targeting young men [36]. This is because many men believed that Diet coke was a girl’s drink. Pepsi max, has been out marketed by Zero. This is why we see this product as the one with the biggest potential market base and growth within the next years.

On the non-light market Coca-Cola are the biggest too – with the original coke. The nearest

competitor is again Pepsi, as mentioned they do not even have 1/3 of the total turnover that Coke

does. It shows just how big the cola giant is on the market, that they are able to have four out of six of the biggest carbonates in Denmark and that one product is so much bigger than the others. This shows that The Coca-Cola Company are by far market leaders in Denmark proves that Coca-Cola know how to market their products. Out from these findings we can conclude that Coca-Cola is market leader on a partly monopole market, with a lot of smaller competitors.

35

http://en.wikipedia.org/wiki/Diet_Coke

36

http://en.wikipedia.org/wiki/Coca-Cola_Zero

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9. Analysis of two Coca-Cola commercials

To start this section of the report, we would to start by mentioning a TV commercial. The reason for this is that the commercial shows all Coca-Colas core marketing values and is a commercial

evergreen - “I’d like to buy the world a coke”^{37}. It is an almost heavenly connection between Coca-

Cola and the young people, singing about peace and love. This commercial features a lot of young people standing in rows singing. They are all of different nationalities, showing that the product is not isolated to certain ethnic groups. This shows that coke is a multination brand.

For this part of the assignment we will use The AIDA model. This is a model to analyze the marketing effect of a printed commercial. Attention shows what commercials we see and can connect to. The first part is Interest, which analyses who is affected by the commercial, who is interested and gets a need fulfilled by the commercial. Desire, does the commercial creates a desire or need for a certain product. Therefore the product has to create a reason for why the costumers have to buy their product compared to other products that can offer the same. Action is the decision from the consumer to buy or not to buy. The company behind the commercial has to make sure that the product is available, or else the commercial will have failed to work.

Coke commercial 1971: Appendix 15

The first print commercial that we will analyze is a commercial from 1971 which is in the appendix section. It features a lot of young people, and has the Coca-Cola in the centre. It is a poster, divided into 7 pictures and the slogan is placed in the bottom. Referring to the golden ratio, the frame is created around the Coca-Cola. This also makes a connection between coke and the rest of the pictures.

The attention is created by featuring a lot of young people, in romantic and peaceful environments at the beach. Four of the pictures feature a man and woman – so we believe that it is indeed referring to romance. The commercial also has Coca-Colas slogan at the time It’s the real thing-which also is an eye catcher.

The people interested in this commercial must be young people, because it gives them a hope of romance with coke. The slogan, “the good things in life go better with coke” adds the older

37

http://www.youtube.com/watch?v=Q8H5263jCGg

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Page 23 af 25 audience, as it is nostalgic, which makes them think back on the time where they sat on the beach with a coke, or just when they were young.

The desire is created by linking coke to the events and happy people on the picture. In this commercial Coca-Coke is linked to summer, the beach and love. So what people can achieve by buying a Coca-Cola, is the image of being young and in love on the beach. Action, this commercial will probably make people buy Coca-Coke – and due to Coca-Colas good distribution there is always one of their products within an arms reach of desire.

The attention is created by featuring a lot of young people, in romantic and peaceful environments at the beach. Four of the pictures feature a man and woman – so we believe that it is indeed referring to romance. The commercial also has Coca-Colas slogan at the time It’s the real thing-which also is an eye catcher.

The people who are interested in this commercial are mainly young people, because the commercial gives young people a hope of romance with Coca-Cola. The slogan, “the good things in life go better with coke” adds the older audience, as it is nostalgic, which makes them look back in time, at the time where it was them who sat on the beach with a Coca-Cola, or simply just memorizing them selves as young and full of life.

The desire is created by linking coke to the events and happy people on the picture. In this commercial Coca-Coke is linked to summer, the beach and love. So what people can achieve by buying a Coca-Cola, is the image of being young and in love on the beach. Action, this commercial probably made people buy Coca-Cola – and due to Coca-Colas good distribution there is always one of their products within an arms reach of desire.

Santa Claus Commercial 1953: Appendix 16

For the second print, we have chosen a classic Coca-Cola Christmas commercial from 1953. This commercial features Santa Claus, sitting in his workshop drinking a Coca-Cola with elves working around him. This is a true Christmas picture displaying all of Coca-colas trademarks, Santa being red and sitting jolly with a coke in his hand. Coca-cola introduced the red Santa in 1931 and because of the campaign launched back then - Santa is still red now [38]. This is why we believe that this commercial is so important, as it shows how much Coca-Cola has affected modern culture.

38

http://www.thecoca-colacompany.com/presscenter/presskit_santa2006_press_release.html

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Attention is achieved by Santa sitting as a central figure in the image. The red color is an eye catcher, and the Coca-Cola logo also has a brighter red color than the rest of the picture. Referring to the golden incretion, the bottom of the logo is in one for the intersections. This means that the logo is seen, as it is placed in a location that your eye focuses on automatically.

This is a season commercial, as it would only be used at Christmas time. Therefore the interest is also created by featuring one of the most well-known holiday figures, Santa Claus. He is sitting enjoying a Coca-Cola, with a jolly smile – anyone in the Christmas spirit would see this poster and directly connect it with Christmas. Any consumer would wish that they had the same glow and happiness inside as Santa. This is also how the desire for the product is created, by letting people come just a bit closer to Santa Claus by buying a Coca-Cola. The action for many consumers would be that they would prefer a Coca-Cola compared to other brands during Christmas, as Santa and Coca-Cola are shown together. Since the original commercial is from 1931, the commercial also relies on some nostalgic marketing value.

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10. Conclusion

When John Pemperton invented Coca-Cola in 1885, he probably had no imagination of what the Coca-Cola Company would become. Robert Woodruff was the man who had a vision, when he said: “Coca-Cola should always be within an arms reach of desire”. He knew he could make it happen, and this is truly the fundamental idea of the Coca-Cola Company today. If they have a vision, they can make it happen – either with brand extension or line extension.

The Coca-Cola Company has become an American symbol today. They have achieved a position as market leader on almost all markets, and have the best and most recognizable brand by basically following the American dream. “The American Dream is a belief in the freedom that allows all citizens and residents of the United States to achieve their goals in life through hard work and free choice”.

The Coca-Cola Company's main principles of doing business which is very successful – selling an image. Selling an image, that gives the consumer a certain image of being young and active. They sell their products through an aggressive marketing strategy which rely on nostalgic marketing, and also apply to the youth generations – a strategy which has worked through generations. This is why marketing is the strongest link in the companies chain of value.

The future of the Coca-Cola Company contains more threats than expanding opportunities. They have integrated their products in almost every part of the part of the worldwide market. The problem with their products is that it is not innovative any longer. If Coca-Cola introduce a new

product to the market, then the PepsiCo or/and another competitor will launch a similar product.

This is because of competitors constant pursue after the Coca-Cola Company market shares. The challenge for the company today is to maintain their market share, and to take advantage of every opportunity; seeing every threat as an opportunity for diversity.