Coca-Cola Company - Advertising and Media in the Marketing Environment - Report Example

Advertising and Media in the Marketing Environment

Introduction

One of the highly competitive markets in the world is the beverage market. Although broad, this market is narrowly segmented with the products ranging from plain water and alcoholic beverages to chilly and hot drinks. However, among the promoters of these products, the Coca Cola Company is one of the fiercest competitors for carbonated soft-drink brands in the refreshments market (Coca-cola company, 2007). The company was established in 1886, and has its operations in over 200 countries where it markets its diverse beverage products. The fact that Coca-Cola is a well known brand around the globe is not surprising. This achievement is as a result of cautious and effective branding and communications strategies.

The aim of this paper is to evaluate the effectiveness of the advertising strategies employed by the Coca-Cola Company, particularly in reference to the coca cola brand. Through advertising theories, this paper will critically evaluate the effectiveness of these strategies, focusing on the beverage market in relation to some of the trends observed in soft drinks. Moreover, this hypothesis will focus on the manner in which the advertising campaigns used by Coca-Cola have developed since the inception of the company to date.

By describing and analysing different types of media that have been used over the years to promote the Coca-Cola, this paper will further identify the objectives of the campaign, so as to guarantee a greater scope of the existing research. Additionally, the paper will analyse the appeal of the messages used by Coca-Cola when advertising, in order to understand whether these marketing campaigns enable the company to achieve its objectives.

Campaign Strategy

Environmental Analysis

By using the Porters Five Forces, this section will observe some of the environmental factors that affect the operations of Coca-Cola. Porter’s five forces analyses some of the competitive forces that determine the competitiveness of companies within its industry, and they include the threat of entrants, the power of suppliers, the power of customer, threat of substitutes and competitive rivalry (FME, 2013). All these factors may directly or indirectly influence the competitive edge of any company. As a matter of fact, if the forces are weaker, then a firm may have a greater opportunity to perform better within the industry. Moreover, these forces are capable of affecting the profitability of any company within an industry. By evaluating these forces, a company may be in a position to use the outcome to establish effective and efficient ways to react so as to continue being profitable.

Threat of New Entrants

Coca-Cola is a key player in the soft drink industry and therefore not affected by the threat of new entrants. In order to penetrate the industry, companies must allocate adequate resources that will facilitate in production, labour, and marketing activities just to mention a few. Due to the low representation in the bottling sector, there is a need for new entrants to build more bottling plants. However, this is not an easy task as it requires huge amounts of capital. According to Passport (2013), it is extremely difficult for new entrants to effectively compete with the already established companies and achieve recognition. For the Coca-Cola Company, the threat of new entrants is low. As a result of customer loyalty to specific brands, new entrants may find it difficult to establish their significance and gain from the market share.

Threats from Buyers

Due to the low margins expected in this sector, consumers tend to buy in bulks hence increasing their bargaining power. The fact that most of the products in this sector are similar, customers will procure whichever brand that offers low priced products but with the highest quality. In places where the brand is exclusively offered, for instance, in restaurants or at stores, the buyer threat is rather low because these customers are deficient of other alternatives. Moreover, by decreasing consumer demand for unhealthy soft drinks, buyers may increase their bargaining power, particularly in the price of the products.

Competitive Rivalry

As stated by Wheelen & Hunger (2000), most corporations are mutually dependent, and therefore companies must be in a position to compete globally so as to become successful. Once a company progresses in a competitive shift, it might have a visible effect on its competitors, hence causing retribution.

Threats from Suppliers

The main raw materials used in the production of soft drink comprise of carbonated water, sugar, sweetener, and caffeine, and its suppliers are not concentrated. This leaves the suppliers with low bargaining power, as Coca-Cola remains the largest purchaser of these suppliers. Since the manufacturing soft drink requires huge capital investments, the suppliers’ forward integration threat is low. In general, the threat from suppliers within the industry remains relatively low.

Threat of Substitutes

The threat of substitutes in the soft drinks industry ranges from medium to high since there are many varieties of soft drink products in the market such as water, tea, coffee in addition to other energy drinks. Moreover, the threat remains steadily high due to the ‘uniformity’ of the prices attached to these products. On the other hand, consumers may experience significant impact, such as low switching costs. However, Coca-Cola can handle such threats by using rigorous advertising campaigns, and consequently differentiating its brands from other substitute products.

SWOT Analysis

Strength

The Coca-Cola Company has considerable strengths when it comes to size and financial capabilities. Not only does the company have strong acquisition capabilities, its marketing and advertising strategies are effective and vital in ensuring that the company retains customer loyalty at times when the market conditions seem to be difficult. Moreover, the company has a very sturdy global geographic mix and outsized sales volumes that improve the company’s resilience to economic depressions.

Weaknesses

Although the Coca-Cola Company expanded the portfolio of its soft drinks, it is more susceptible to a downturn, as it heavily relies on carbonates. Furthermore, market volatility may impact the company’s pension assets, hence affecting its liquidity position. Competitors may have a competitive advantage in introducing new products, due to the company’s slow decision-making process. Consumers are now more than ever aware of the risks involved in consuming high sugar diet, particularly in some products. As a result, the consumer agenda progressively shifts to other options considered to be healthier.

Opportunities

By focusing on health and wellness, the Coca-Cola Company can take advantage of the growing trend in the soft drinks industry. The company can as well target both ageing and young customers who are more concerned with environmental matters. By diversifying their products, Coca-Cola can draw more customers, especially those that are enthusiastically looking for healthier alternatives. Moreover, the company should explore other markets that have good volume opportunities such as China and India.

Threats

Changes in the economic climate and currency exchange rates are a threat to Coca-Cola. The current recession has been felt far and wide by countries all over the world. The fact that Coca-Cola derives most of its sales from outside North America could be a possible threat to the company. Other threats include negative publicity caused by the water-usage patterns, and overdependence on bottling partners. Due to the rationalization of the soft drink segment in North America, many private brand products have penetrated the market share of the major brands, hence creating rigorous price competition as these companies expanded their sales numbers.

Market Segmentation

As stated by Baker & Hart (2007), all markets are heterogeneous. For instance, the Coca-Cola Company has diversified the sweetness levels of its products, in addition to their package sizes so as to match the local conditions and tastes. Consequently, successful marketing strategy necessitates the segmentation of the marketplace into standardized segments, so as to reach the target segments effectively.

According to Oxford Fajar (2012), marketers can choose one of the four segmentation alternatives to boost their marketing capabilities. These alternatives comprise direct marketing, mass marketing, position marketing, and market segmentation. However, being the world’s leading manufacturer and distributor of soft drinks, the Coca-Cola Company has well-defined market segments. Moreover, positioning enables customers to understand the uniqueness of specific products, in comparison to those offered by competitors. Given this scenario, the Coca-Cola Company is positioned on the basis of direct comparison. However, an organization may use several alternatives on one occasion, depending on its and the availability of resources. Although Coca Cola adapts its marketing strategy by increasing diversity of its products, it does not have a specific target segment.

Advertising Objectives

The advertising objective of any company is to introduce a brand that is widely accepted in the targeted market. This can be done through various media, including radio, internet, newspapers, television, as well as event sponsorship among others. All advertising objectives should be aligned with both the marketing and promotional objectives (Boundless, 2016). Companies in the soft drinks sector must differentiate between product publicity and advertising exposure, in relation to the editorial content presented to the media, simply because not all viewers will find the commercials appealing. According to Abernethy (1991), less than 70 percent of television audience finds advertisement commercials ‘fun’ to watch.

An effective communication strategy must have specific characteristics such as source credibility and the credibility of the message content, which involves an acknowledgment of the statements. Moreover, message content credibility is partly connected to the similarity between the audience’s and communicators positions. Another aspect of advertisement’s credibility is the argument or the message passed to the receiver. Many people assume that the audience will most likely accept the communication, if the source and message content are more credible.

In order to be competitive in the market, companies must develop effective advertising that will influence the audience to construe the conveyed message in the intended manner. However, such understanding greatly depends on the viewers’ knowledge resources.

Evaluation of the campaign

The Coca-Cola company uses various types of media advertise its brand, particularly Coca-Cola drink. In Nigeria for instance, the Coca-Cola Company uses the marketing strategy to market its products on the global platform (Hassan, Amos, & Abubakar, 2014). The company employs the use of the marketing mix to gain the support of its consumers. The most popular advertising media used by Coca-Cola is newspapers. Correspondingly, the company advertises through magazines to market its products at the global level. According to D'Astous & Chartier, (2000), branding is crucial for organizations that are interested in promoting their identity. The main aim is to enhance the audience’s familiarity with the brand.

The major role of advertisements in any organization is to change both the perception and utilization pattern of the broader society (Indu & Jagathy, 2012). Many scholars have established the connection between an advertisement’s perception and the mindset towards a product. It is therefore important for companies such as Coca-Cola to come up with effective advertisements, so that the society can share information, and make wise decisions as well. However, credibility is among the most important components entailed in a persuasive message, and more often than not influences its outcome. In general, every organization must incorporate credibility in all its advertisements.

Recommendations/Conclusion

Although Coca-Cola has an incomparable distribution system, it must implement its strategy to re-franchise its bottling territories as part of its endeavor to optimize its worldwide supply chain. In so doing, the company will be able to reduce costs. Moreover, the company has made substantial efforts in ensuring that its products reach every group globally. However, this cannot be achieved without focusing on competitive advantage. It is therefore important for the company to focus on corporate social responsibility, and tap ‘rural’ markets where the highest populace of developing countries is found. The goal of every organization in today’s vastly competitive environment is to overcome rivalry from competitors and win new clientele.

Secondly, the Coca-Cola Company continues to streamline its global supply chain, particularly by enhancing its manufacturing footprints in some of its bottling outlets including North America. Furthermore, the company has immense investments in technologies that will efficiently downsize its operations across the world, while at the same time reducing its operating cost eventually. However, successful differentiation will enable the company lower the buyer’s cost, raise the buyer performance, while at the same time boosting the psychological satisfaction of every customer. Once a company positions itself in the marketplace in a manner that facilitates competitive forces and buyer attraction, then it can attain competitive advantage.

Thirdly, the Coca-Cola Company should issue of food regulatory and safety more seriously so as to maintain a good rapport for its brand. By addressing this issue, the company will also continue being the promoters of food safety, particularly in the soft drinks industry. By focusing on future trends, the company should enhance its product innovation, in addition to expanding its product line.