Group 8 - STP Case Study Coca Cola

Introduction

• The Coca-Cola company is the world largest beverage company

• The company best known product coca cola was invented by john Stith Pemberton in 1886

• The Coca-Cola formula and brand was bought in 1889 by ASA Candler who incorporated The Coca-Cola company in 1892.

• Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1.5 billion servings each day.

• The Coca-Cola company headquarter is in Atlanta, Georgia.

• Its current President and CEO is Mukhtar Kent.

• With the acquisition of major brands in India, it went on to be known as The Hindustan Coca Cola Beverages Pvt. Ltd.

Market Scenario

• Established in 1886, headquarters in Atlanta, Georgia

• Based on Interbrand’s best global brand study of 2015, Coca-Cola was the world's third most valuable brand.

• Gained an advantage over pepsi when it took over Parle in 1994

• Coca Cola focuses on a diversified product portfolio, both within the beverage industry and has few products outside of that industry

Model of Brand Selection

Customer buys on value

Value equals quality relative price

Quality includes all non-price attributes that count in the purchase decisions

PriceValue

Quality Product

Customer Services

Market Shares in % figures(2012-2013)

Coke + Parle

Pepsi

Pure Drinks

Others

Headings Value

Revenue US$ 44.294 billion (2015)

Operating Income US$ 8.728 billion (2015)

Net Income US$ 7.351 billion (2015)

Total Assets US$ 90.093 billion (2015)

Total Equity US$ 25.554 billion (2015)

Number of Employees

123,200 (2015)

Market Scenario

49%

20%

31%

Market Share

Coke Pepsi Others

The Carbonated beverage industry is almost a ‘Duopoly’

with Coke and Pepsi occupying almost 70% of the market share

world-wide

COMPETITIVE ANALYSISCoke Vs. Pepsi

The contention is best characterized by the well-known “Pepsi Challenge”, which asks strangers to sit down blindfolded, try both products, and decide once and for all which is superior.

The general consensus from the taste test was that Pepsi was better.

But, the difference between the sodas (the reason for Pepsi’s superior taste) was so marginal that it warranted a blindfolded taste test, so, it’s the branding that ultimately plays a big role in consumers’ decisions.

Quantitative Analysis

0

5

10

15

20

25

30

35

40

45

50

Social Visibility Net Sentiment Reach Growth SocialEngagement &

Content

Social Index

Coke Pepsi

Qualitative Analysis

• Brand loyalty of Coke is way better than that of Pepsi

• The most recognized word after ok is coca-cola

• People associate Pepsi and coke with specific food like for example Pepsi is preferred over coke with Pizza while Coke is favoured with burgers and fries

In addition to the above social index figures• Coca-Cola’s market capitalization is over 30% greater than PepsiCo’s• Coca-Cola spends considerably more on advertising• Coke has 120,000 more Twitter followers than Pepsi• Diet Pepsi has overtaken diet coke in terms of market share

The raw numbers are clearly indicative of Coca-Cola’s dominance

Consumer Analysis• Customer preference is a core value of Coca Cola’s business

• For ensuring ongoing consumer relevance and excellence in the marketplace focuses on five coreprinciples - Availability , Affordability , Acceptability , Activation and Attitude

• Coca Cola has drinks that targets different age groups, sexes, lifestyle etc.

• Oasis- Juice made for the younger working adults, between the ages of 20-30; Disney Hundred AcreWoods – fruit juice for kids; Odwalla - for adults who want a grown up taste in a healthy fruitbeverage; Coca Cola Zero targets teens that don't want calories but want the taste; Diet Coca Cola-targets adults, between 30-50 who are health conscious but want the taste; Powerade - sport drink,targets athletes between 13-27 ages

• Targets different income level. For example, by packaging: for low level income the company isselling returnable glass bottle; for high level income, the company is selling coke in tins

• Many people make their purchase decisions partially based on a company’s ethics, or socialresponsibility. By contributing to stop pollution both within and outside their factories, Coca Colawill gain the trust and respect of the potential buyers, who care about saving our environment.

Segmentation

• Regions

• ClimateGeographic

• Age

• Gender

• Family size

• Income

Demographics

• Lifestyle

• Social ClassPsychographic

Targeting and Positioning

Targeting

•Different ads and product for different segments

•Primary market consisting of people in the age group 10-25

Positioning

•The core idea – “Fun and Happiness”

•“Think Global, Act Local”

•“One Brand” global marketing approach

Product• Widest portfolio in beverage industry comprising of

3300 products.• Beverages are divided into diet category, 100% fruit

juices, fruit drinks, water, energy drinks, tea and coffee.• Market presence in around 200 countries.• Brands in India are Fanta, Maaza, Limca, sprite, Thums

up, Minute Maid, Nimbu fresh, Nested iced tea

Price• Due to the availability of wide range products the pricing is

done according to the market and geographic segment.• Each sub-brand of coca cola has different pricing strategy.• Their pricing strategy is based on the competitors pricing,• Beverage market is said to be a oligopoly market (few sellers

and large buyers), hence they form into cartel contract toensure a mutual balance in pricing between the sellers

Place• Coca cola is the world’s most favorite brand and is

available all over the world.• The distribution system of coca cola follows the FMCG

distribution pattern.• The effective distribution network of coke has almost

eroded the small and middle level players in themarket.

• In India they have captured even the rural market byextensive distribution and have eroded the marketshare of Bovonto, Kalimark etc

Promotion• Coca cola adopts various advertising and promotional

strategies to create an increased demand in the market byassociating with life style and behaviour and mainly targetingvalue based advertising.

• Coca cola uses CSR as its marketing tool to gain emotionalbenefits in consumers mind.

• It allows price discounts and allowances to distributors andretailers in order to push more products into the market.

• It employs both push strategy through promotions and pullstrategy through advertisements and campaigns.

Marketing Mix

How Coke is perceived by its Customers(compared to its biggest rival Pepsi)

• Perception is commonly called “positioning” or “hitting an angle.”

• If we took Coca Cola and added up all of their hard assets (factories, trucks, real estate, etc.) it would add up to about $14B as of 2010, and yet their name alone is worth over $28B? That means you could buy up everything that Coca Cola owns and still only own 1/3 of the company’s value to shareholders.

• Let’s identify how Cocaola is perceived against its biggest rival Pepsi around 4 main topics:

1. The brand as a product2. The brand as a person3. The brand as an organization4. The brand as a symbol

The brand as a product

What do people prefer about the taste and which of the 2 is the most qualitative one, the most reliable one?

Coke is much more tasty than Pepsi, or at least people clearly prefer the taste of Coke vs Pepsi’s.

The brand as a person

what do people prefer regarding the value and identity of both brands? Which of the 2 brands makes people dream the most? What are the best perceived values and which one of the 2 brands make people feel passion?

Both brands’ culture are not really clear in people’s mind.

The brand as an Organization

what is the culture of the brand, the universe of the brand, its engagement through other topics.

Coke is perceived to be a better brand in term of engagement through social or environmental concerns for example, with a strong brand universe, whereas Pepsi doesn’t seem to have a specific universe that make people dream.

The brand as a symbol

What brand is a myth and a symbol in people’s mind? Which logo do they remind first?

Once again, Coke’s logo is much more known than Pepsi’s, as well as regarding the fact that the brand is quite a myth in people’s mind!

Differentiation

• Why Differentiation?• A differentiation strategy is the development of a product or service that offers

unique and differentiating attributes which are valued by customers and perceiveto be better than or different from the products of the competition.

• Differentiation in Coca Cola• Coca Cola Company spends round about 20% of their total advertisement budget

for maintaining and communicating on its differentiation strategy.

• Coca cola has created its differentiation by utilizing soft sell approach. Companyhas successfully positioned itself on the following standards:

• Corporate reputation for quality and innovation: one of the best place to work

• Successful communication of perceived strengths of the product: Integratedmarketin strategy

• Symbol of joy and fun

• ‘The Secret Formula‘

References

• http://80.251.40.59/politics.ankara.edu.tr/ozer/Dersler/Introduction_to_marketing/Articles/The_Strategic_Positioning_of_Coca_Cola_in_Their_Marketing_Operation.pdf

• http://www.marketing91.com/psychographic-segmentation/

• http://www.coca-colacompany.com/press-center/press-releases/coca-cola-announces-one-brand-global-marketing-approach

• https://en.wikipedia.org/wiki/Coca-Cola

• http://softdrinkcolawar.blogspot.com/2012/12/coca-cola-product-strategy.html

• http://kninn.blogspot.com/2010/06/differentiation-strategy-coca-cola.html

• https://cokevspepsibm2013.wordpress.com/

Thank You