Coca-Cola markrting mix

Introduction

Coca-Cola was invented in 1886 by pharmacist John Styth Pemberton in Atlanta, Georgia and is now the most recognised trademark in the world, with 94% recognition. The mission statement of the company is “The Coca-Cola Company exists to benefit and refresh everyone who is touched by our business”.

In 1923 Robert Woodruff, former chairman of the Coca-Cola Company stated that Coca-Cola should always be “within an arms reach of desire”. This mission has continued to drive the company’s marketing strategy, enabling Coca-Cola to build a strong global presence in a world in which citizens on all continents are seeking to purchase leading brands.

Marketing involves getting the right product to the right place, at the right time, at the right price and with the most suitable promotional activity.

The key to Coca-Cola’s success is it’s marketing strategy. The company uses three main principles in its marketing strategy. These are acceptability, affordability and availability.

Marketing Mix

“The marketing mix is a marketing tool. It is a checklist. It focuses attention on the various elements of marketing needed to carry out the marketing strategy.” (Marcouse, 1999, p65). It consists of four main factors. These are price, product, promotion and place cemented together by effective market research. However tourism writers argue the case for more P’s. Boom and Bitner (1981), Cowell (1984) and Middleton add people, physical evidence and process and service interaction. Morrison adds people, packaging, programming and partnership. The most common addition to the marketing mix is people. The additional P’s derive from differences between manufacturing and services.

Since the beginning Coca-Cola has built its business using a strategy based on three principles – acceptability, affordability and availability. These principles are achieved by using the techniques of the marketing mix e.g. sponsorship, on-pack promotions and public relations. Coca-Cola has always been able to create the most appropriate marketing mix.

The three principles are:

Acceptability – “Through effective marketing, ensuring

Coca-Cola brands are an integral part of consumers daily

Lives, making Coca-Cola the preferred beverage

Everywhere.” (Times 100)

Affordability – “Coca-Cola guarantees it offers the best

price in terms of value for money.” (Times 100)

Availability – “Making sure that Coca-Cola brands are

available anywhere people want refreshment, a pervasive

penetration of the market place.” (Times 100)

Product

Coca-Cola offers a very large product mix. This is the set of all products and items that a particular seller offers for sale.

The Coca-Cola product mix includes many brands these are: Coca-Cola, Diet Coke, Cherry Coke, Diet Coke with Lemon, Vanilla Coke, Fanta, Lilt, Dr Pepper, Powerade, Sprite, Schweppes. Malvern, Rose’s and Burn. All of their brands are to ensure that all tastes are met and that the Coca-Cola Company remains the first refreshment choice for every generation.

The unique shape of the bottle is a big seller for Coca-Cola. Benjamin F. Thomas recognised the requirement for a completely unique and easily recognisable bottle, and in 1915 wrote a short brief which landed in the hands of Alexander Samuelsson, a Swedish innovator whose passion was working with glass. The original Coca-Cola glass bottle was given a patent in 1915 and went into production the following year and consequently became one of the most ironic pieces of packaging design of the 20th century. The original Coca-Cola glass bottle has attracted the attention of some of the worlds most influential icons including US Presidents, Eisenhower and Kennedy and also The Beatles and Elvis Presley. These popular icons helped sell Coca-Cola because of the perceived image of being seen with the unique glass bottles in you’re hand.

The consistently high quality of Coca-Cola’s products is one of the businesses primary responsibilities and they take great pride in offering their customers products of the highest quality.

In everything that Coca-Cola do, from the selection of the ingredients to the manufacture of their products and their delivery to the market place, they use their specialised quality management system, The Coca-Cola Quality System (TCCQS).

Promotion

Promotion is used to create awareness and stimulate demand, it is the most visible of the four P’s. Promotion can provide information and incentives to purchase the product. Promotion is often talked about as being above or below the line. “Above the line is direct advertising through consumer media such as press, TV, cinema and radio. All other forms of promotion are considered below the line activity. This would include direct selling and promotional activities such as incentives.” (Marcouse, 1999, p68). A range of techniques can be employed and these are known as the promotional mix.

These techniques consist of:

Advertising
Sales promotion
Sales force
Personal relations
Other promotional activities

The mix will need to be balanced to be as effective as possible. The mix of promotional activities will depend on:

The size of the market
The type of product
The cost

The Cocoa-Cola Company’s overall advertising strategy is summed up by the phrase “Think Global, Act Local”. Some campaigns are designed for worldwide use and others developed for individual markets. In some cases a product is developed for local consumption, such as Lilt in Great Britain and Ireland

The “Always Coca-Cola” campaign theme has been used worldwide to reinforce the universality of the brand which is ‘always’ there. However, different advertisements for its consumers are also made for each market. This enables Coca-Cola to choose the most relevant advertisements for its consumers and to choose how and when they should appear. In Great Britain, for example, where football is a national passion, “Eat Football, Sleep Football, Drink Coca-Cola” is a massively successful advertising campaign reinforcing the link between Coca-Cola and football while continuing the brand’s support of the game and fans.

Place

When Robert Woodruff stated that Coca-Cola should always be “within arm’s reach of desire” he meant that he always wanted the product to be readily available. This would mean that whenever anybody wanted Coca-Cola they never had to go far to get it.

Coca-Cola was first sold regularly in soda fountain outlets, which included Selfridges and The London Coliseum in the early 1920’s. The company then began bottling in 1932, where the bottles began to be distributed all over the country.

As part of their operations Coca-Cola Enterprises Limited distribute their products to a ...

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Place

As part of their operations Coca-Cola Enterprises Limited distribute their products to a wide range of outlets across Great Britain, taking thousands of orders a year.

Retailers – ranging from large multiple supermarkets to corner shops, newsagents and petrol forecourts

Secondary schools, colleges, hospitals, workplaces, pubs, clubs, restaurants, cafes and cinemas

Wholesalers

Price

Price plays a critical part in marketing activity. Incorrect pricing could lose customers and lose revenue. Revenue can also be lost if the price is too low. There needs to be a balance between sales and revenue. Pricing involves a balance between being competitive and being profitable.

“Prices are the easiest marketing mix element to adjust, product features, channels and even promotion take more time. Price also communicates to the market the company’s intended value positioning of its product or brand.” (Kotler DATE p470)

Because Coca-Cola is a worldwide brand it is extremely hard to keep prices constant throughout the world. Because of the brand and the demand for the beverage Coca-Cola know that pricing is not too much of an issue, as they will still receive economies of scale.

Segmentation

Coca-Cola manufactures different products for different market segments. This is because of the many brands they produce. From Coca-Cola to Diet Coke and also Fanta and Lilt.

The advantages of a segmented approach means that Coca-Cola can identify and cater for the needs of a segment and they are able to achieve a greater degree of dominance than they could with respect to the whole market. Segmentation enables Coca-Cola to achieve a closer match between its product and customer needs. Segmentation strategy, applied to a knowledge of company strengths and weaknesses allows Coca-Cola to concentrate their resources where it has greatest advantages (e.g. image, quality, technical or pride).

Segmentation involves categorising consumers. This can be done by geographic segmentation “dividing a market into different geographical units such as nations, states, regions, counties, cities, or neighbourhoods” (Kotler & Armstrong, 2001, p239). By demographic segmentation “dividing the market into groups based on demographic variables such as age, gender, family size, family life cycle and income” (Kotler & Armstrong, 2001,p240). You can also segment by the consumer’s response to products, asking the consumer why they buy the product and whether they are price and health conscious.

Marketing Communications

Advertising has different purposes therefore it utilises different media. ‘Advertising is an integral part of the marketing effort and must never be seen as an isolated activity’ (Christopher & McDonald, 1995). You need to get both the message and the targeted group of customers right to make the advertising effective. An advertising campaign is used to develop brand recognition and acceptance, to obtain trial purchases, to stimulate action at point-of-purchase, to pave the way for personal selling, to stimulate wholesalers and retailers to handle the product and to convince buyers that they chose the best product to solve their problems (Harry A. Lipson &John R. Darling, 1974). Coca-Cola emphasises a lot on their advertising. They are known for spending a large amount on their advertising budget and producing quality advertisements.

Advertisements

Coca-Cola has created some of the most memorable, timeless and innovative advertising in the world. The first ever Coca-Cola advertisement was an oil cloth sign, bearing the phrase ‘Delicious and Refreshing ’. Over the decades, Coca-Cola has used advertising slogans which are well remembered and are still relevant to the brand today. ()

1886 – Delicious and Refreshing
1929 – The Pause that Refreshes
1949 – It’s The Real Thing
1963 – Things go better with Coke
1971 – I’d like to teach the world to sing
1976 – Coke adds life
1979 – Have a Coke and a smile
1982 – Coke is it!
1989 – Can’t beat the Feeling
1993 – Always Coca-Cola
1996 – Eat Football, Sleep Football, Drink Coca-Cola
2000 – Coca-Cola Enjoy
2001 – Life Tastes Good

To celebrate the unique iconic shape and sensual form of the Original Coca-Cola glass bottle as the ultimate brand experience, Coca-Cola Great Britain launched a number of initiatives in 2002. A summertime television advertisement ‘Mowerman’ showed the thirst quenching appeal of drinking from a refreshing ice cold glass bottle. A national outdoor advertising campaign, with four stylish executions, celebrated the unique shape and form of the Original Glass bottle in contrast to the curves and silhouette of the human form, with the strap line ‘Get your Hands on a Contour’. The exhibition of the ‘Contour’ lifestyle collection was supported by a strong PR campaign. ()

In the 1970s and 1980s, the Company created hit songs from its advertising. “I’d like to Teach the World to Sing”. ()

1886 Delicious and Refreshing

Although a campaign theme may be worldwide, advertisements should be created for individual countries to ensure they are relevant to the consumers in that region.

In Great Britain for example, where football is a passion, the ‘Eat Football, Sleep Football, Drink Coca-Cola’ advertising campaign was very successful in reinforcing the link between Coca-Cola and football. ()

Back in the 1930`s Father Christmas, as we know him with red suit, Long beard and jolly face, was first illustrated with those characteristics for a coca cola advertisement.

Coca-Cola also unveiled the record breaking world’s biggest advent calendar on the side of Birmingham’s town hall in 2001 (Christmas)themed event brought the community together as each window came to life everyday with music and fireworks. This advertising strategy was good in terms of public relations as well.

Sponsorship & Public Relations

Another method of advertising is through sponsorship and public relations. Many companies are moving away from the traditional forms of advertising such as press releases and are beginning to market their message through to their customers to means of sponsorships.

Coca-Cola believes in supporting the organizations that their customers care about. All around the world, their consumers are passionate about sports. That's why they have been involved with the Olympic Games since 1928, FIFA World Cup and also support hundreds of sports activities in local markets around the world. Sports and Coca-Cola is a great match. The sponsorships extend beyond the playing fields into other areas that captivate their consumers. ()

Hundreds and thousands have learned their first skills through the foot ball development program which Coca-Cola sponsored from 1978-2002. In 2202 Coca-Cola joined with the English schools football association (ESFA) to launch the biggest under 13 Coca-Cola national schools tournament in Great Britain.

Coca-Cola has been associated with the lawn tennis championships since 1975. In 1996 diet coke announced an exciting five year partnership as the official carbonated soft drink for the championships supported by advertising, PR and promotional campaigns. Since 2001 Coca-Cola continues to be the official supplier to the championships. ()

The Coca-Cola Foundation

Coca-Cola has a foundation, the mission of the Foundation is to improve the quality of life in the community and enhance individual opportunity through education. They support educational programs primarily within three main areas: higher education, classroom teaching and learning, and international education. Their programs support scholarships for aspiring students; encourage and motivate young people to stay in school; and foster cultural understanding. Over the last ten years, the Foundation has contributed more than $124 million in support of education. (www.cocacola.com)

Another project Coca-Cola is working on is one which the Company is supporting local HIV/AIDS prevention, education and treatment programs across all of Africa.

Coca-Cola & Education

The Coca-Cola Company has always believed that education is a powerful force in improving the quality of life and creating opportunity for people and their families around the world. The Coca-Cola Company is committed to helping people make their dreams come true. All over the world, they are involved in innovative programs that give hard-working, knowledge-hungry students books, supplies, places to study and scholarships. From youth in Brazil to first generation scholars, educational programs in local communities are their priority. (www.cocacola.com)

Sales promotions

Sales promotions are also an important and effective method of increasing sales. There are many different sales promotions carried out by Coca-Cola, giving premium items, contests, special offer deals, samples, special sales events, mail order promotions, trade shows, exhibitions, educational activities, trading stamp plans and games are some of traditional ones carried out by most companies including Coca-Cola. Among these simple but effect sales promotions Coke carries out more innovative promotions such as...

Coke auction - Coca cola in great Britain launched in 2000 its first internet based interactive promotion which was ‘coke auction’ which allowed consumers the opportunity to bid with coke credits for thousands of unique items and ‘money cant buy’ experiences. The groundbreaking activity which received a number of awards was the first ever online auction using virtual currency making it both original and innovative. ()
Music4You - In 2001 the music promotion ran in conjunction with the sun and news of the world newspapers. It offered consumers the chance to bid online for great music experiences and collect tokens for a massive range of music items. ()
2002 FIFA world cup - The 2002 FIFA world cup saw Coca-Cola encouraging fans to ‘Eat football, Sleep football , Drink Coca-Cola’ through a multi-faceted program of innovative marketing activity including bringing the FIFA world cup trophy to England. Also in a first for the FIFA World Cup Coca-Cola invited consumers to design a perimeter board ad to support the football teams out in Japan and Korea. ()

Coca Cola’s Marketing Strategies

If marketing is all about telling customers of a product, then selling is trying to get them to buy it. Marketing is an ongoing investment in reinforcing brand equity; selling cashes in on that investment.

While marketing a product, the primary task is to introduce it into new markets by removing the barriers of unfamiliarity that the consumers face. There is a natural human tendency to be uncomfortable with a new product. Marketing can build on that foundation to try to make people develop a liking for the product, or at least promote whatever positive emotional associations it can manage.

Sales efforts ride on the back of the work done by marketing personnel, trying to turn any positive feelings that potential customers may have for the product into actual purchases.

The Coca-Cola Enterprise’s marketing strategies include reinforcing a belief that anyone who comes into contact with the company’s products should receive some benefit. () For retailers, this means attracting more consumers and earning a profit in the process. By implementing a strategy called Community Marketing, Coca Cola employees play a major role in customer success, by increasing the presence of Coca-Cola at the neighbourhood level.

Coca Cola takes great care to ensure that the highest standards are met in everything they do. Whether it is packaging, marketing or advertising, they strive for excellence. The strategy is mounted on the belief that their customers deserve high quality products. There is a constant endeavour to work towards improvements in all areas of their operations.

Another strategy that the company has adopted is focussing on the consumer. Coca Cola believes that if a company meets with the expectations of its consumer, and in case does better on that, success will automatically follow.

Coca Cola has established a ‘Value-based management’ programme to help them improve their performance. () Value-based management is a way of thinking, a process for planning and playing with a set of tools to understand what creates value and what destroys it. It provides a set of fundamental principles that enable the company to understand how to increase the value of their products. With Value-based management, they are able to determine how best to maximize the worth of their products in all areas of their business. The organisation’s belief is that Value-based management does not replace the economic value added concept; rather, it is a tool to manage economic profit. It requires the company to think about creating value in everything they do, all 365 days a year. By focussing on value, they perceive to develop better strategies that help them create more value for not only their shareholders, but also for their customers.

Coca Cola, also known as Coke, has always looked towards a future in marketing and not in sales. The company does not think of the short-term benefits; they are more interested in creating long-term value. They are not bothered much about their sales in a particular period; they are concerned about sales in the next 10 years and beyond. Douglas Daft, CEO of Coke, feels that Coke should stop telling the people why they should buy the product and advise them to drink it instead. (). This is one of their key strategies that have resulted in ‘The Coca-Cola trademark’ being recognised by 94% of the world population and being the second most universally understood phrase after ‘OK’. (). It is not only instantly recognisable but it can be found almost anywhere from petrol stations and shops in Central Africa, to small villages in the remote areas of all the five continents.

Coke is a shining example of a globally successful brand.

The company, which figures prominently in Fortune 500, believes in ‘daring to risk success’. Risk involves failure, but if the value system places too much emphasis on penalising failure rather than rewarding success, people will avoid taking risk and business will fail to flourish. Coca-Cola believes in taking risk. An example of the disposition to taking risk was their decision to re-launch ‘New Coke’ by recognising its earlier mistakes, a decision which later proved to be highly rewarding. Coca-Cola has been bold enough to face new challenges allowing it to seize market opportunities. There is confidence in the core business. The organisation is driven by the belief that people like Coca-Cola and want to have the drink made available to them.

Coke’s products have been successful, providing them with cash-flow impetus and net growth. Through 'pre-search' Coca-Cola is able to offer the products that consumers want, and if they do not prove to be successful they are bold enough to acknowledge the market verdict and make amends. According to Coke, the secret of success is to be flexible in your response to the ongoing changes in the market. The company considers that the importance of intelligent risk taking is not how you take a risk, or even what the risk is- it is learning through the experience of taking risk that makes one triumphant.

New product development

‘The multiplicity of product styles, models and formulas available to buyers is the result of product development activities’ (Harry A. Lipson &John R. Darling, 1974:359). Variety is an extremely important aspect that needs to be considered by all manufacturing companies. This is because different groups of customers may demand different criteria or specifications to full fill their wants and needs. For example a growing concern is health and fitness, majority of the people want to avoid sweets etc as they would prefer something with less calories. To meet these needs the Coca-Cola Company has introduced their diet range of drinks.

New product development is important as sometime consumers want a change but they are also are not willing to move onto a new product altogether. ‘Any change in the specifications of any element of a product creates, in effect, a new product component’ (Harry A. Lipson &John R. Darling, 1974:359). This is known as continuous innovation. This is necessary as it helps the company keep ahead of the competitors therefore we can say that the new product development can be looked upon as one which helps the company survive in the dynamic and competitive marketing environment. Coca cola uses this strategy as we can see that they have introduced additional flavours to the existing well known drink Coca-Cola such as Cherry Cola, Vanilla Cola, Coca-Cola with lemon etc. ‘It is the interplay between existing products or services and the search for improvement and innovation that provides the dynamism for the growth-orientated company’(Christopher & McDonald, 1995:151). This has been achieved by the Coca-Cola Company as they are an world wide organisation and are still expanding.

Screening for the new product development

The screening procedure for ideas for new products or services is extremely important. ‘Research has indicated that in some product areas, up to eighty percent of all new product launches fail, in the sense that they do not meet marketing targets and are withdrawn soon after their introduction’ (Christopher & McDonald, 1995:154). The diagram below shows how the screening process should take place.

Analyzing consumer behaviour

The task of marketing is to identify consumer needs accurately and then develop products and services that will satisfy these. For marketing efforts to be successful, it is not enough to discover what customers want, but to find out why it is required. Only by gaining a deep and comprehensive understanding of consumer behaviour can marketing goals be realised. Such an understanding of consumer behaviour proves to be an advantage for both, the consumer and the marketeer. It allows the marketeer to become better equipped to satisfy the consumer needs efficiently and create a loyal group of customers with a positive attitude towards the company’s products.

Consumer behaviour can be defined as “the acts of individuals directly involved in obtaining and using economic goods and services, including the decision processes that precede and determine these acts.” ().

As mentioned earlier, Coca-Cola believes in focussing on the consumer. The direct customers of Coca-Cola are outlets such as service stations, newsagents, leisure centres, cinemas, clubs, supermarkets and many other retailers selling soft drinks. In this area the emphasis has, therefore, been on providing superior delivery, promotional services and sales support. All of these elements clearly differentiate Coca-Cola as being the beverage supplier most likely to generate profits for retailers.

The end consumers of Coke are the millions of people who consume soft drinks worldwide. Over many years, Coca-Cola has expanded its market horizontally in many countries, until there was virtually no place on earth where people could find a bottle or a can of Coke. Today this horizontal growth is almost total, with fewer than 20 countries still not using this product.

What would make a thirsty customer leave a convenience store without buying a beverage? Coca-Cola believes that often it’s because shoppers can't easily find what they are looking for. This is a finding from one of Coca Cola’s recent studies.

Researchers of the company studied consumers as well as their buying patterns. They found that teenagers were responsible for only 9.5 per cent of the total spending-a finding that surprised them. The heaviest users fell into a small segment of only 16 per cent of shoppers. () They are those who visit convenience stores every day, including males and females. By introducing reward programmes they helped keep these shoppers loyal to their products. Medium users comprised mainly of females. They were the ones inclined to make impulsive purchases.

Coke has been a success as it has been the first to introduce a bouquet of innovations. The company has achieved incredible momentum in a short time. By advertising, point-of-sale merchandising and product sampling, Coca-Cola has created a global awareness and product appeal for their trademarks. They have maximised the impact of advertising expenditure by assigning specific brands to individual advertising agencies. This has enabled the enhancement of each brand’s position in the global market. In addition, it has increased the accountability and the efficient use of the company’s marketing expenditure.

After several years of turmoil, the company has ignited a strong brand and connected with its customers. It is indeed an organisation that is unique and one that has shaken the advertising industry by enabling consumers with the thrill of drinking Coke.