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Market for Coca cola company and its competitors Paper

Essay Topic:

Coca cola is one of the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. This summary provides the overview of the content involved. Pepsi is the major competitor to Coca cola Company in the global market and we are all aware about the global ‘cola’ wars between coca cola and PepsiCo which has become decidedly one sided. Coca cola outsells Pepsi 3:1 around over the world market. Pepsi was crushed many a times in the international market due to the Coca cola’s in-depth knowledge of marketing strategies and local community. The company spends nearly around 60% of its budget on the advertising projects. The popularity of coca cola can be summarized from the following facts:

(1) During the year 1944-45 people addressed ‘coke’ instead of coca cola, this revolution forced the company to introduce coca cola in the coke version and eventually it was a great success.

(2) If all the ‘coca cola’ ever produced were flowing over Niagara Falls at its normal rate of 1.5 million gallons per second instead of water, the falls would flow for 38 hours and 46 minutes.

(3) Coca cola’s trademark was recognized by 94% of the world’s population and that is the word after “OK”.

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Coca cola’s better understanding of the local communities and the market makes the company to remain in the top position in the global market for soft drinks. Coca cola’s readiness to spend heavily on the marketing effort also helps the company compete and win over the market of soft drinks world wide. Coca cola boasts four of the world’s five leading soft drink brand’s coca cola, diet coke, sprite and fanta. Besides this coca cola participate and sponsors different types of events as a part of its strategies. As a part of greening of management it takes care of people’s health by having non-alcoholic soft drinks for example caffeine free coke and diet coke.

Introduction:

Coca cola was invented as a soft drink way back in 1886 by Dr. John Styth Pemberton, a pharmacist, in Atlanta, Georgia, USA. It was registered as a trademark in the year 1887. Since its commencement coca cola is being written in a Spenserians script on all of its products. Since then it produces more than 400 branded soft beverages and operates in over 200 countries around the world with it’s headquarter in Atlanta. Apart from branded beverages coca cola used its world famous brand name ‘coca cola’ for 800 registered items such as toys, electronic games etc. These types of marketing strategies were by the company and eventually helped in the increase of the company’s revenue.

Coca cola believes that the heart and soul of their enterprise has always been the people or customers. It used excellent marketing strategies worldwide and became top in soft drink and beverages industry, sharing mostly half out of one in soft drink consumption around the global thirsty market. It properly understood the needs, wants and demands of the global people and framed its product to satisfy them and is almost a successful runner till date too. It is said that if the coca cola’s entire produced products were poured in to the famous contour bottles and placed end to end they would stretch to the moon and back 1045 times. The following are the other famous brand of coca cola other than its main brand.

* Coke Diet coke

* Fanta Diet fanta

* Sprite Diet sprite

* Caffeine Caffeine coke and diet coke

* Lift Diet lift

* Sprite ice (mint flavored soft drink)

Coca cola’s focus on brand management, worldwide coverage and intense distribution and advertising makes it the worlds most leading and profitable soft drink company. (www.cocacola.com).

The Needs, Wants and Demands:

In order to understand the above topic it is very necessary to know and understand what is marketing?

“Marketing is a social and managerial process by which individual and groups obtain what they need and want through creating and exchanging product and value with others”. (Kotler, Brown, Adam and Armstrong 2001).

In short marketing is the delivering of customer value and satisfaction at a profit. It doesn’t come into count that whether it is a profit or non profit organization marketing used everywhere. Coca Cola Company has got one of the largest, best-managed and exclusive marketing research operation units in USA, which really makes it the best marketer in beverages industry.

* Definition of needs:

According to Kotler and Armstrong (2001) 9th edition “The most basic concept underlying marketing is that of human needs. They are very much complex in nature. These human needs are states of deprivation which include physical needs, social needs and individual needs. These needs were not invented by the marketers but are the basic part of human makeup.”

* Definition of wants:

“Wants are the form human needs take as they are shaped by the culture and individual personality” Kotler-Armstrong 2001.

These are shaped by one’s society and are described in terms of objects that satisfy needs. For example a hungry person in Australia, Hong Kong or Singapore might want a hamburger, chips or coca cola. Where as a person in India might want mangoes, veg.burger and water. As people are getting exposed to more objects that arouse their interest and desire, the producers try to provide more want-satisfying products and services. For example with success of coca cola the producer expanded its brand and at present coca cola got more than 400 beverages product in the market. (Philip Kotler, 2001).

* Definition of demand:

The people have almost unlimited want but limited resources. The wants when backed by buying power, wants become demands. Consumer view product as bundles of benefits and choose product that give them the best bundle for their money. Given their wants and resources, people demand products with the benefits that add up to the most satisfaction. The demand depends on people to people with their affordability and desire or status.

(Philip Kotler, 2001).

Definition of Product:

‘Product is a bundle of tangible and intangible attributes that a seller offers to the potential buyer and that satisfies they buyer’s needs or wants’. (McColl-Kennedy, 1994).

“Any thing that can be offered to a market for attention, acquisition, use or consumption to satisfy a want or need is a product. It includes physical objects services, persons, places organization and ideas”. (Philip Kotler, 2001).

Coca Cola Company produced consumer-oriented products. Coca Cola Company got the ‘coca cola’ or ‘coke’ soft drink, which is recognized worldwide. It got various beverages product ranging around 400 units. Its four products rank top among five viz coca cola, coke, diet coke, fanta and sprite. The four marketing P’s viz product, price, promotion and place have been utilized by the company for its branded products.

There are three level of product, which can be best described from the following diagram given below:

* Core product: Here the core product is coca cola and its other brand is which quenches thirst of human being. At present Coca Cola Company has got around 800 branded products other than beverages which are also satisfying different type of customer viz toys for children, trendy clothes for young generation etc.

* Actual product: The Company got its brand name which is recognized world wide viz coca cola brand name is being recognized by 94% of the world’s population and that is word after “OK”. The qualities of the products are unmatchable and unquestionable. It maintains its matchless quality since its inception and the result is that it is the best in soft drink industries.

* Augmented product: It includes giving dealership in local area, providing with fridge to the dealer and following up the after sales service and value added services. (Philip Kotler, 2001).

* Operations review of the company

For the 6 months ended 30/06/03, revenues increased 8% to $10.19 billion. Net income before accounting change increased 12% to $2.20 billion. Revenues reflect an increase in gallon shipments. Net income also reflects the inclusion of a $52 million litigation settlement (Coca Cola Company, 2003).

The market of the Coca-Cola Company is virtually almost all over the world. The Company market can be divided into continents because that’s where the company operates (The market is analysed on the basis of worldwide unit case volume by operating segment). Out of its 100% market, the highest market is in ‘North America’ which 30%. The second highest market is in ‘Latin America’ which is 24%. Third is ‘Europe’, ‘Eurasia’ and ‘Middle East’ which stands on 22%. Fourth is ‘Asia’ which occupies 18% and last but not least ‘Africa’ %.

Market for Coca Cola Company:

Coca Cola Company manufactures and sells/promote soft drinks and beverages so it has wide variety of market available to it. The following three markets can be best applied to the Coca Cola Company.

* Mass market: In mass market the seller mass-produces, mass distributes and mass promotes one product to all buyers. At one time coca cola produced only one drink for the whole market, hoping it would appeal to everyone. Lowest costs, lowest price and large potential market are the main characteristic of mass market.

* Product variety market: In product variety market seller produces more than one product that have different features, styles, quality, sizes and so on. In this case coca cola produced several soft drink packaged in different sizes and containers. They were designed for variety of buyers as the taste of buyer’s changes over time.

* Target market: Here the company identifies market segments and selects one or more of them and develops products and marketing mixes tailored to each for example coca cola produced soft drinks for the sugared-cola segment, the diet segment (diet coke and coke light) the no caffeine segment and the non coke segment (sprite and lift).

Market competition/ competitors of coca cola:

Coca Cola Company uses Market Leaders Strategies to meet with its competitors and succeeded so far in it. As we all know that in the world of soft drinks and beverages coca cola enjoys the top position around the world, but like other companies it also faces stiff competition in the market. Its major competitors are PepsiCo, seven up, Dr. Pepper and new entrants are general foods and Nestle. But there is a major competition between coca cola and PepsiCo. This war is often known as ‘cola’ war.

 

Threat of substitutes.

* The nature and level of competition:

It would seem to be a simple task for a company to identify its competitors but coca cola knows that PepsiCo is its major competitor but the range of a company’s actual and potential competitors is actually much broader. There is a cutthroat competition between the two. This competition is spread over regional, national and international level. But coca cola’s focus on brand management, worldwide coverage and intensive distribution and advertising its product nationally and internationally makes it the leading and most profitable soft drink company in the world. The coca cola company enjoys 3:1 ratio in the world market in soft drink industry. Other way round PepsiCo having recognized the potential soft drink market round the world started deadly marketing and gaining bit of popularity in country like India and Indonesia. The completion has reached to its culmination. For example if coca cola hire famous Indian cricketer Sachin tendulkar for its advertisement, the Pepsi will do the same by hiring Steve Waugh, the great Australian cricketer.

In the early eighties Pepsi differentiated itself purely on price by giving slogan “Twice as much for a nickel too” and the resulting strategy was “The Pepsi challenge”. Along this Pepsi developed a more market-oriented perspective. It was the first to offer new sizes and packages. At that time coca cola was bit distributed and with its excellent marketing strategies strike back with full force and there emerged a diet coke from coca cola.

* Competition on the basis of promotion:

Both the companies are spending more and more in advertising their product. It is estimated that they spent nearly 60% of their budget on advertising. The annual spending on advertisements by the two companies is equal to one-day bread meal for the population of country like India. Both the company sponsors different events for example coca cola is with Olympic, Pepsi is official sponsor of Indian cricket team, coca cola participate in sprite street act in Australia, Pepsi participate in aids day and the list is end less. Both of them officially hire top players from different games. As a part of competition coca cola and Pepsi both gives wide variety schemes to their distributor’s world wide for example: refrigerators are being given to their distributors, tickets of different events and many more.

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