BUS499 Business Administration Capstone

Introduction

Founded in 1886, Coca Cola has emerged to be one of the most successful organizations in the world that operates in more than 200 countries. The company enjoys massive brand recognition, thus widely accepted by the masses, and this has led to unprecedented success in the world of non-alcoholic beverages and syrups. Coca Cola has significantly been focused on creating unalloyed joy and happiness in the lives of individuals by engaging in various Corporate Social Responsibility Acts to instill a sense of positivity in communities. Despite owning multiple successful brands such as Diet Coke, Fanta, and many more, Coca Cola also faces fierce competition from rival brands such as Monster Beverage and Pepsi Company. It has been rolling out initiatives such as effective promotional programs, new market campaigns as well as innovative strategies to counter this growing competition. Despite these cut-throats, it is critical to evaluate and analyze the strategic objectives that have led to the unmatched success of this company over the years.

Business-Level Strategies

Differentiation

Differentiation is a marketing strategy and a process used by companies to distinguish their products and services from others in the market to make it more appealing to the target audience. The primary goal of this strategy is to create a competitive advantage through the identification and communication of the unique qualities of the product while highlighting its differences from those available in the market. Successful product differentiation is known to translate the attributes of the products into benefits while ensuring ultimate product awareness. Considering this, Coca Cola has been able to utilize this strategy in the market to ensure uniqueness and value perception from their customers. Because of his, the company enjoys an outstanding full acceptance among the masses.

Through numerous advertisements, the company has created a universal appeal among masses as a global symbol for shared moments of refreshments and joy. Coca Cola has done it all in coming up with an unforgettable visual identity and design perspectives from the logotypes and packaging to the iconic, contoured glass bottle. People have no doubt unhesitatingly found themselves returning to those bottles that have, for many years, represented the principal concept to Coca Cola Customers. Research has it that people feel better about themselves and skinnier if the bottle is curved-shaped but with the slimy body. In one of the most famous portrayals of the company, a book by Andy Warhol in 1975, he describes Coca Cola’s brand resonance as represented through that perfect piece of glass.

Other than the famous contour bottle with its fluted cascading lines and the organic shape, Coca Cola has also been able to differentiate itself from its competitors using its taste. Although there exist various brands, Coca Cola has vanilla raisin taste with a lot of sodium nutritional content. The company has different brand segments to choose from, such as Lemon coke and the vanilla coke. These brands are specifically customized to meet the needs and want of various target markets. For instance, the flavored Cherry Coke has been made explicitly for young adults while it has Vitamin products and Odwalla products for the old health-conscious customers.

Additionally, Coca Cola has introduced new beverages in a bid to maintain brand loyalty by the use of alcoholic drinking culture to their advantage. For instance, many of the company’s drinks are ordered as ‘Captain and Coke,’ rum and coke’ and whiskey and coke.’ By collaborating with various alcoholic companies, Coca Cola has been able to capture the already established customer base of this alcoholic companies.

The company has also been able to utilize packaging as a strategy to lure and maintain its customers. Their products are adaptable in diverse market segments with the use of functional packaging, making it available in various sizes and forms. These appearances include aluminum cans, glass, and plastic bottles, as well as fountain drink dispensers. These diverse shapes and sizes make it easier for the operation of vending machines. Additionally, the cans and packages are recyclable materials in an aim to promote Coca Cola’s commitment to keeping the environment sustainable. These packaging materials are well labeled for ease in identification. Other than product differentiation, Coca Cola also uses image differentiation as part of its business-level strategy. The company has been able to embrace this strategy to establish and emphasize the name of the products in consumer minds.

Coca Cola, therefore, needs to keep inventing new ways per the fluctuating customer needs. This is vital in ensuring that it differentiates itself from its customers in the market. The energetic brand image and recognition that the company has already established has been crucial in providing brand loyalty that is critical in transforming buyer decisions in favor of the company’s products.

Corporate-Level Strategies

Diversification is a strategy used by organizations to expand and increase the market share or make an entrance into make entrance into new markets by acquiring or launching new products through methods such as acquisition, licensing, or merger. This strategy is vital in enhancing company growth by expanding market share by developing a market presence or in an existing market. Mainly, this move involves market disruption and innovation. In respect to this strategy, Coca Cola’s current corporate-level strategies include strengthening alliances with anchor bottles, acquisition of non-carbonate drinks as well as tackling the weakening purchasing power. The company is keen on meeting these objectives and realizes that acquiring other beverage companies is critical in achieving these objectives.

Unlike its biggest rival, Pepsi that produces soft drinks alongside snacks, Coca Cola is only limited to non-alcoholic beverages. To respond to the fluctuating customer tastes and market trends, Coca Cola has laid down a diversification strategy through acquisition by expanding the scope of its product offerings and the addition of bottled water and juice to its product portfolio. This move by Coca Cola in merely concentrated and low niche products from a high-volume concentrated market on the inherent basis of carbonated drinks has led to the company adopting a much more comprehensive distribution system. Comparatively, the company has changed its distribution tactic to a more centralized distribution system through the use of warehouses from an initial Direct store Delivery, where the bottlers are responsible for managing the shelf space as well as delivering to the stores directly.

Additionally, the acquisition of brands has been a critical drive in Coca Cola’s growth. The company has, in the past, acquired as Honest Tea, Odwalla, Innocent, and Minute Maid as well as engaging in partnerships with existing brands. In 2015, for instance, Coca Cola 16.7% shares of the Monster Beverage energy drink. Furthermore, the company has been able to get into organic growth strategy through organic growth strategy by extending brands through introducing Stevia-based products and low sugar drinks.

Competitive Environment

In the over 200 countries that Coca Cola operates, Pepsi Co. is the primary competitor of this multi-geographical company as a non-alcoholic beverage. Other leading companies in this competitive environment are Unilever, Nestle, and Groupe Danone. In an annual report conducted by the Coca Cola alongside the Securities Exchange Commission EDGAR, it was reported that the commercial beverage industry is highly competitive, consisting of multiple companies.

In this beverage industry, Pepsi’s strategy is a low-cost differentiation strategy and engages the mass production of its products through the use of economies of scale. An instance of its low-cost differentiation strategy is the pricing strategy, where products are offered at a meager price, which has led to high market share and demand. At the corporate level strategy, Pepsi has been able to roll out a global expansion strategy into 190 countries. It is slowly emerging in new markets as well as gearing expansion into more developed countries.

Comparatively, both Coca Cola and Pepsi have an unlimited potential for sustainability and growth, although statistics show that Coca Cola is at a better position globally compared to Pepsi. Despite the differing business-level strategies with different approaches, Coca Cola has a better competitive edge owing to its establishment in multiple countries globally. While Pepsi has a corporate policy that aims at international expansion, Coca-cola emphasizes more on the shareholder interests at the corporate level. Coca Cola has been more influential in the market for a much longer time and has been able to develop strong customer loyalty and advocacy. In this respect, Coca Cola emerges as a more robust brand compared to Pepsi.

Market Cycles

Campbell states that both the corporate level and business level strategy differ according to the marketing environments for many companies. Market cycles show how varied the 21st-century business environments have changed, and as such, segmentation’s plans are vital to diverse groups that differ by performance and characteristics. This segmentation for Pepsi and Coca Cola is essential in promoting their different products to specific and various markets, and this is key in ensuring that the corporation meets their needs as well as boosting their purchases.

Various stakeholders of a company must devise different appropriate policies that serve the best interest of the company to ensure the long-term success of the company. Both Coca Cola and Pepsi have gained enormous admiration in the world. They have become a great example to learn about on strategic management of companies in an ever-changing and dynamic market. As such, the formulation of an effective strategy is crucial to an organization meeting its objectives.

Sources

1. Hitt, Ireland, & Hoskisson. 2020. Strategic management: Concepts and cases: Competitiveness and globalization (13th ed.). Mason, OH: South-Western Cengage Learning
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