Coca Cola

Coca-Cola

Executive Summary

In this paper, we perform a comprehensive audit of Coca-Cola's marketing program and recommendations developed for future marketing plans. We provide recommendations for Coca-Cola's marketing efforts as well as product line enhancements, as Coca-Cola faces stiff competition and changing consumer tastes. These recommendations include:

* Pursuing a multi-pronged marketing strategy, including growth into geographic regions like Russia, China, and Turkey.

* Leverage the Company assets by brand extension into water-based, slightly sweetened refreshment drinks to meet more health-conscious consumers.

* Diversify offerings outside the non-alcoholic beverage market, leveraging the vast distribution network.

Introduction

Coca-Cola was born in Atlanta, Georgia, on May 8, 1886 by Dr. John Stith Pemberton, a local pharmacist. Dr. Pemberton produced the syrup for Coca-Cola®, and carried a jug of the new product down the street to Jacobs' Pharmacy, where it was sampled, pronounced "excellent" and placed on sale for five cents a glass as a soda fountain drink. Carbonated water was teamed with the new syrup to produce a drink that was at once "Delicious and Refreshing," a theme that continues to echo today wherever Coca-Cola is enjoyed. During the first year, sales averaged a modest nine drinks per day.

Today, over 6 trillion servings of Coca-Cola have been enjoyed worldwide and Coca-Cola has over 400 brands.

Coca-Cola's Key Success Factors

Coca-Cola has several key success factors including:

* Financial measures with growth in both revenue and gross profit. Revenue for the period ended September 29, 2006 is $6.454 million (USD) ; compared to $6.037 million (USD) for the same period in 2005, representing a 6.9% increase for the same period. Gross profit in 2006 for the period ended September 29, 2006 is $4.189 million (USD) compared with $3.802 million (USD) for the same period in 2005 ; representing a 10% increase.

* Strategic relationships with sporting events and a long-term sponsor of the Olympics. Coca-Cola has been a regular Olympic sponsor for 74 years and was the first soft-drink Olympic sponsor in 1928 . Coca-Cola also formed an early relationship with the United States military in World War II, offering every American soldier a bottle of Coca-Cola for 5 cents per bottle wherever that soldier was geographically located.

* Strong social responsibility. Coca-Cola is listed number 2 on the list for top-rated companies for social responsibility . In addition, Coca-Cola is looking to differentiate itself and become the recognized global leader in corporate social responsibility and has recently launched an audit of labour practices throughout the Coke supply chain .

* Brand itself. Over the years, Coca-Cola has built a huge portfolio of products, many customized to the local market. Coca-Cola has also built the brand by innovating: the contour Coke bottle premiered in 1915 and is still available today. Coca-Cola introduced new flavors in the 1960's including Sprite, TAB, and Fresca. And, in 1978, Coca-Cola was the only company selected to sell packaged cold drinks in People's Republic of China .

Coca-Cola Potential Vulnerabilities and Competition

Coca-Cola's major competition comes from two different sources: tap water and Pepsi although Coca-Cola has at least 27 major competitors. Pepsi, the closest major competitor is also known as PepsiCo Inc and provides a broad product line including Gatorade sports drinks, Aquafina bottled water, Tropicana orange juice, Frito-Lay and Doritos snacks (traditionally prepared and baked), Quaker Oats, Propel flavored fitness waters, and Lipton's ice teas. Pepsi's snack food empire and entrance into the "healthy" junk food markets capitalize on Pepsi's recent ability to be trend savvy as well as foreign expansion. Pepsi is also looking to acquire Naked Juice to compete with Coca-Cola's line of Odwalla juices. Pepsi's also been able to attack Coca-Cola in places like the grocery store, vending machines, and fast food , where Coca-Cola previously enjoyed limited competition.

Regardless of how one looks at the competition, the main concern is that 60% or more of Coca-Cola's business is in soft-drinks. And, consumer demand is shifting from soft-drinks to healthier drinks and snack foods.

In addition to PepsiCo, Unilever, Cadbury, and a host of other competitors work diligently every day to exploit Coca-Cola's vulnerabilities . As with every company, Coca-Cola faces new and ever changing challenges and vulnerabilities on a constant basis. To summarize Coca-Cola's vulnerabilities:

1. A declining popularity of carbonated beverages in the US (Coca-Cola's second largest market representing 28.9% of its revenue). For the first time in twenty years, the number of cases of soda sold in the US dropped to 10.2 billion cases, a .7% decrease. The company's flagship brand Coca-Cola was down 2% in 2005. This is a significant trend. US consumers have started to become more health-conscious and are looking for a greater variety in their drink selection, further realizing that consuming a can of Coke provides no nutritional value with 140 calories per can. There are currently many studies linking Coke consumption as a contributor to childhood obesity. This is no surprise as the product is primarily sugar water (high fructose corn syrup and carbonated water)! The company has worked to mitigate the high calorie issue through its offering of diet drinks, using synthetic sweeteners. However, in addition to being fattening and an empty food, one could argue that Coke is actually not good for you. A recent article discusses the results of a study about the relation of drinking cola products with osteoporosis. It was found that drinking cola products might contribute to lower bone mineral density in older women . This condition increases the risk for osteoporosis. Cola also has a history of being used as an industrial cleaner . There are websites devoted to sharing all the varied uses for Coke. One website "About.com" runs this headline "Coke: A Household Cleaner? According to this email flier, the acidity of Coke and Pepsi makes both soft drinks a health hazard, not to mention darned good household cleaners. " Whether this is just hyperbole or not, sales in the US have slowed 3.9% over their prior fiscal year. Sales