Coca-Cola is a global manufacturer, distributor, and marketer of non-alcoholic beverages. Coca-Cola sells syrups and concentrates to authorized bottling and canning operators. Coca-Cola has equity stakes in 20 percent of these operators. In addition, Coca-Cola sells fountain syrups directly to restaurants. The company also sells bottled and canned products directly to retailers. The company’s products include sparkling beverages, juices, and bottled water. Roughly 75 percent of the company’s revenue is international, and 53 percent comes from concentrate and syrup sales of Coke. Fundamental to Coke’s investment and long-term growth strategy are its marketing expertise, brands and bottling system. To support its brands and increase consumer awareness of its products, Coke makes significant investments in sales and marketing. To develop its brand strategy Coke’s global marketing force heavily invests in product and packaging research, developing targeted consumer advertisements and promotions and soliciting customer feedback. Coca-Cola also leverages its relationships with bottlers and local vendors, to create and implement local marketing campaigns.
A strong force behind Coke’s global success is its ownership interest in and partnering with bottling and canning operations worldwide. The company maintains business relationships with three types of bottlers:
· Independently owned bottlers, in which the company has no ownership interest
· Anchor bottlers, in which the company has invested and has a non-controlling ownership interest
· Bottlers in which the company has invested and has a controlling ownership interest
Coke’s bottling companies /partners are large, geographically diverse, with strong financial resources for long-term investment – providing Coke with strong strategic business partners and local access on every major continent. Coca-cola in combination with its bottling partners has an extraordinary global distribution network that through economies of scale creates a formidable barrier to competition. Coca-Cola also has a large economy of scale in advertising expense, and the company’s strong brands provide a barrier to competition. The industry is very concentrated, with Coca-Cola being one of the largest companies. The barriers to entry are lower for generic products sold in grocery stores under private labels. Here the stores will be willing to allocate some shelf space to its private label products, and it is possible that if these are sold at a low profit margin and are well-received by consumers, then Coca-Cola’s bottlers may need to price its products cheaper, with the eventual result that Coca-Cola will need to drop its concentrate prices so that the bottlers can stay in business. On the other hand, even if consumer develops a taste for the private label product, it will likely only be available at that particular grocery chain, and the consumer will stick with Coke elsewhere.
Another source of competitive advantage for Coca-Cola is its brand image. The Coca-Cola brand is known as authentic, optimistic, and part of the American lifestyle.
The Coca-Cola company has long been recognized as an organization with significant brand equity with over four hundred brands available in virtually every nook and cranny of the world. The flagship brand Coca-Cola soft drink has stood the test of time – over 120 years. In fact, Coca-Cola alone is recognized as the most valuable brand in the world by respected Inter-brand Corporation. Valued at over US $67 billion, the Coca-Cola brand has effectively become a part of modern world culture. Though its advertising campaigns have changed over the years, Coca-Cola has always stood for a “real” cola drink with authenticity. This identity has been built over the decades with consistent values and differentiated elements. Many competitors have taken aim at Coke, but the brand continues to command number-one position globally in ranking of brand equity. Benefiting from the pioneer advantage, throughout more than a century the Coca-Cola brand has pursued one single objective, now on a worldwide scale: to continue to grow the cola category. It was in the competition first with sodas in America, then with other soft drinks, and now with virtually all other types of drink, including water in Europe or tea in Asia. Coke’s brand essence is the refreshing bond between people everywhere. IN making its brand the number one drink in the world, it benefited from being made from a syrup that is easy to transport at low cost, with high efficiency. To grow the business through the expansion of the category, the strategy rests on three facets, which are always the same: availability, accessibility, attractiveness.
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