The Coca-Cola Company: An Analysis of Fundamental Marketing Techniques - Case Study Example

The Coca-Cola Company: An Analysis of Fundamental Marketing Techniques Introduction In today’s world wherein the line of communication has been blurred by technology, it can be said that one cannot live in the 21st century without knowing what Coca-Cola, Nike, McDonald’s, Microsoft, and Sony are. How so? It is because these famous brands have been impressive in their application and modification of marketing strategies and in maximizing the advantages that technology has brought them; hence, they have maintained their top market positions throughout the decades. They have adapted, not only their products, but the way their products are introduced into the market to specifically seek out their target markets. They have made it their business to know what the consumer wants and have created and sustained brand names that consumers can trust. It can be said then that “marketing is changing to meet the changing world” (Kotler 1999, p. xv). Indeed it is—as it should be. Although fundamental marketing techniques are still being applied, the way that they are being used must take into consideration the “now.” Their various applications may have been modified to keep up with the changing times, but the basic marketing principles that allow for a product to be successfully launched, reinvented and re-launched will always be the same. Hence, a mastery of these marketing strategies is necessary for companies to stay on top of the market. The Coca-Cola Company, famous for its trademark soft drink Coke, is the epitome, not only of the process of the successful launch of a product, but more importantly, of the lasting success a corporation can have by efficiently employing fundamental marketing strategies. This paper will examine how the Coca-Cola Company has continued to effectively employ essential marketing techniques that have given them the ability to overcome marketing challenges since the birth of the famous soft drink better known as Coke© and up until the present. The Marketing Concept Although many associate marketing with advertising due to the countless ubiquitous television, print and radio ads, it is but one of the functions and strategies that is associated with marketing. Kotler et al. (1999, p. 10) defines marketing as “a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” In this sense, marketing is all about the comprehensive process of fulfilling human needs, which denote an individual’s “state of felt deprivation” (pp. 1-2). This means that fundamental to applying marketing strategies is the complete knowledge of the consumers’ wants, needs and demands (p. 10). Each and every product in the market is geared towards the wants, needs and demands of specific groups of consumers. For instance, when the first line of animal-cruelty-free cosmetics and toiletries were produced by The Body Shop, the company was satisfying the demands of animal rights supporters for stopping animal testing (p. 9). This is what made the brand stand out from other cosmetics companies. In order to be able to successfully market a product, it is crucial to establish first what it can offer consumers. Value, satisfaction and quality are three important concepts that need to be highlighted when marketing a product or a service (Kotler et al. 1999, p. 11). This is because the end goal of all marketing strategies is to satisfy human needs—to provide customer satisfaction so that the consumers keep going back for more despite the many competitors in the market, establishing a brand that is reliable and trustworthy in the process (p. 19). This is the most basic of marketing concepts: the ability to win against competitors in one’s target market. And in order to accomplish this, a company must design a comprehensive marketing mix, which involves creating the right marketing stimulus in terms of product, price, place and promotion (the 4 P’s of marketing) to elicit a precise consumer reaction that will maximise market share and establish a product’s position (p. 229). Although there is a lot more to marketing, this is what fundamental marketing strategy entails and what Coca-Cola has utilized in order to stay on the top of their target market. Fundamental Marketing Techniques as Employed by Coca-Cola Coca-Cola was first marketed as a tonic for soothing nerves and relieving headaches (Hayes 1996, p. 120). Frank Robinson, Pemberton’s bookkeeper, is the one who named it Coca-Cola and who inadvertently created the trademark script for the brand (The Coca-Cola Company, 2010a). Several years after the tonic was re-introduced as a refreshing drink, Asa Candler secured the rights to the brand, making him the company’s first president (The Coca-Cola Company, 2010a). The marketing strategies employed by Coca-Cola in its various campaigns for the product that would later become nicknamed Coke© and its successful introduction of various other products in the beverage industry epitomise the fundamental marketing techniques required to successfully establish a product in a target market. The Target Market In order to successfully market a product, a company must first determine its target market. The concept of a target market is grounded on segmentation, which entails “dividing a market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes” (Kotler at al. 1999, p. 379). As opposed to mass marketing, target marketing focuses the marketing design on a specific market segment that is believed to be the set of consumers that wants and needs the product the most. Over the years, Coca-Cola has targeted all consumers as a beverage caters to one of man’s basic needs, which is to satisfy thirst. However, the recent decades have seen how Coca-Cola’s marketing design targets certain age groups with specific characteristics. The reason for this may be attributed to the changing needs, wants and demands of consumers. For instance, consumers are becoming more and more health conscious due to the many diseases that can be acquired and exacerbated by unhealthy food and drink consumption. Because soft drinks are high in sugar content, which can lead to the development and aggravation of obesity and diabetes, Coca-Cola has introduced Coke Zero© , a sugar-free formula of Classic Coca-Cola (Alarcon 2008). Coca-Cola introduced Coke Zero© in the UK June 2006, specifically targeting Englishmen who are becoming more and more scared of being obese (Alarcon 2008). Nicknamed as “the bloke coke,” Coca-Cola successfully penetrated and became the market leader of this segment, selling more than 58 million litres worth an estimated £57 million by capitalizing on sports and social media marketing (Alarcon 2008; Young 2010). The Marketing Mix Once the target market has been identified, the marketing design is then developed. The marketing design is based on the marketing mix, which is composed of the four Ps: product, price, place and promotion. The marketing mix manipulates these four Ps in order to not only provide customer satisfaction, but to gain a competitive edge against rival companies and establish a top position in the target market (Kotler et al. 1999, p. 109). Currently, Coca-Cola still holds the top position in the beverage industry, showing that it still wins over their main rival, Pepsi-Cola in the beverage industry (See Appendix A) (Muris, Scheffman and Spiller 1993, p. 55; Protalinski 2010). Product. A product includes “anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need” (Kotler et al. 1999, p. 110). With the purpose of creating a product that offers something different, the concept of product differentiation plays an important role in product development. A product is differentiated from its rivals “when it provides something unique that is valuable to buyers beyond simply offering a low price” (Grant 2005, p. 272). Because the carbonated drinks industry has become increasingly competitive over the years, which instigated the Cola Wars, Coca-Cola has had to create product differentiation through the promotion of ideas that distinguish it from other cola brands such as Pepsi (Muris, Scheffman and Spiller 1993, p. 1). For instance, in the UK alone, Coca-Cola has managed to take hold of 56% of the market by establishing it as “the real thing” (Pearson Education Limited 2001). What Coca-Cola did was to capitalize on consumers’ desires for the original, focusing on the concept of identity and lifestyle, which made Pepsi and Virgin Cola seem like copycats (Grant 2005, p. 289). Coca-Cola has also placed nutrition labels on their products in line with their advocacy of promoting ‘Active Healthy Living’ that markets, not only the products, but the company itself, as healthy (See Appendix B) (The Coca-Cola Company 2010d). Price. Pricing strategies are based on the concept that “the right product offered at the right price” is crucial to customer satisfaction and market positioning (Ehmke, Fulton and Lusk 2005, p. 1). “Long before a sale was ever made Coca Cola had developed a forecast of consumer demand at different prices which inevitably determined whether or not the product came on the market, as well as the allocation of adequate money and resources to produce, promote and distribute the product’ (Daprot 2006, p.6). In fact, many Coca-Cola from different countries bottlers use recycled bottles in order to keep the price low (Pride and Ferrell 2007, p. 101). Although Coca-Cola product prices are a little bit higher than Pepsi products, they still maintain the edge as the slightly higher price denotes quality and branding. Place. This refers to the distribution strategies that a company employs in order to maximise a product’s availability to its target consumers (Kotler et al. 1999, p. 110). Because Coca-Cola is a global company, it has developed an effective distribution system that passes through localised channels that allows for its beverages to be available even in the most remote convenient stores (The Coca-Cola Company 2010b). Promotion. Promotion refers to “activities that communicate the merits of the product and persuade target customers to buy it” (Kotler et al. 1999, p. 110). This is where branding and advertising strategies and promotional packages and events come in. While Pepsi is more renowned for banking on the height of popularity of celebrities worldwide for endorsements, like Britney Spears for the US and the F4 in Taiwan and China, Coca-Cola has always adopted more emotional advertising campaigns. For instance, one of the most effective advertising strategies of Coca-Cola, which is still being used today, is its ‘partnership’ with none other than Santa Claus during the Christmas Holidays. Starting in 1931, magazine ads for Coca-Cola featured St. Nick as a kind, jolly man in a red suit. Because magazines were so widely viewed, and because this image of Santa appeared for more than three decades, the image of Santa most people have today is largely based on our advertising. (The Coca-Cola Company 2010c) Conclusion Although Coca-Cola has employed numerous marketing techniques throughout its more than a century of market leadership, it can be seen here how the company has stuck to the basics of marketing. It has maintained its branding, with the script of the word ‘Coca-Cola’ penned by Frank Robinson still being used as its logo, and has continued to introduce variations and new products to keep up with consumer wants, needs and demands (i.e. Diet Coke and Coke Zero©). From mass marketing, Coca-Cola has successfully evolved to targeting specific market segments for greater positioning. It has also productively adjusted its operations for its global expansion with its own distinct distribution system that allows for the product to be made available in virtually every part of the world. Coca-Cola has successfully kept its edge among its competitors, more specifically its main rival Pepsi Cola, by effectively employing basic marketing strategies such as product differentiation. All in all, the result of being the number one global brand speaks for itself. Bibliography Alarcon, C. 2008, ‘From Zero to hero’, Marketing Week, [Online] Available at: http://www.marketingweek.co.uk/trends/from-zero-to-hero/2061917.article [Accessed November 8, 2010] Daprot, J. 2006, Marketing Plan: Coca-Cola, [Online] Available at: http://www.scribd.com/doc/16945054/marketing-plan-of-coca-cola [Accessed November 8, 2010] Ehmke, C., Fulton, J. and Lusk, J. 2005, ‘Marketing’s Four P’s: First Steps for New Entrepreneurs’, Purdue Extension, [Online] Available at: http://www.ces.purdue.edu/extmedia/ec/ec-730.pdf [Accessed November 8, 2010] Grant, R. M. 2005, Contemporary Strategy Analysis, Fifth Edition, Oxford, UK: Blackwell Publishing Ltd. Hayes, J. 1996, ‘Dr. John S. Pemberton (inventor of Coca-Cola)’, Nations Restaurant News, Volume 30, February Issue: pp. 120-121. Jain, A. 2010, Principles of Marketing, New Delhi, India: V.K. Enterprises. Kotler, P., Armstrong, G., Saunders, J. And Wong, V. 1999, The Principles of Marketing: Second European Edition, London, UK: Prentice Hall Europe. Muris, T. J., Scheffman, D. T., and Spiller, P. T. 1993, Strategy, Structure and Antitrust in the Carbonated Soft-Drink Industry, Westport, CT: Quorum Books. Pearson Education Limited. 2001, Brand Names and Marketing Strategies, [Online] Available at: http://www.pearsoned.co.uk/bookshop/minds/rexpress/questions/business-studies/3-marketing-answers.pdf [Accessed November 8, 2010] Pride, W. M. And Ferrell, O. C. 2007, Foundations of Marketing, Second Edition, Boston, MA: Houghton Mifflin Company. Protalinski, E. 2010, Coca-Cola, IBM, Microsoft top 2010 Best Global Brands, [Online] Available at: http://www.techspot.com/news/40319-cocacola-ibm-microsoft-top-2010- best-global-brands.html [Accessed November 8, 2010] The Coca-Cola Company. 2010a, The History of Coca-Cola, [Online] Available at: http://www.coca-cola.co.uk/about-us/history-of-coca-cola-1886-1892.html [Accessed November 8, 2010] The Coca-Cola Company. 2010b, The Coca-Cola System, [Online] Available at: http://www.thecoca-colacompany.com/citizenship/the_coca-cola_system.html [Accessed November 8, 2010] The Coca-Cola Company. 2010c, Coke Lore: Coca-Cola® and Santa Claus, [Online] Available at: http://www.thecoca-colacompany.com/heritage/cokelore_santa.html [Accessed November 8, 2010] The Coca-Cola Company. 2010d, Active Healthy Living, [Online] Available at: http://www.thecoca-colacompany.com/citizenship/fitness_active_lifestyles.html [Accessed November 8, 2010] Young, A. 2010, ‘Coke Zero vs. Pepsi Max: Which Media Plan Had More Fizz?’, Advertising Age, [Online] Available at: http://adage.com/mediaworks/article?article_id=146884 [Accessed November 8, 2010] Appendix A 2010 Best Global Brands Rank Brand Sector Value (millions) 1 Coca-Cola Beverages $70,452 2 IBM Business Services $64,727 3 Microsoft Computer Software $60,895 4 Google Internet Services $43,557 5 GE Diversified $42,808 6 McDonald’s Restaurants $33,578 7 Intel Electronics $32,015 8 Nokia Electronics $29,495 9 Disney Media $28,731 10 HP Electronics $26,867 (Protalinski 2010) Appendix B (The Coca-Cola Company 2010d) Read More