Coca-Cola Market Research

 Coca Cola Market Research

Company Background

Coca-Cola is an American multinational company dealing in nonalcoholic beverage, syrup, and concentrate production, marketing, and sale. The company is popular, and its first and main product, Coca-Cola, is a household name all over the world. The company produces syrup concentrate which is then transported to all the parts of the world for dilution and bottling. The company has over the years acquired products, which are becoming popular with time, trying to match up the market base of the Coca-Cola drink. Some of Coca-Cola’s products include Minute Maid, Thums Up, Barq’s, and Fuze beverages, Odwalla fruit juices, smoothies, and bars. Thums Up is a large cola brand in India, with a red thumbs up logo. The brand is Coca-Cola’s ticket to competing with Pepsi, another beverage company in the region. Thums Up is currently the winner of the competition battle for cola sales in India, after holding a 42% market share in 2012.

Industry Analysis

Carrying out an industry analysis is important to gauge the viability of any business product in a market, to find out any challenges that may be encountered during its introduction in the target market, and to identify the adjustments that may be necessary to ensure the product’s success. There are many ways of carrying out a successful industry analysis. PEST analysis is one of the best and most efficient ways. A PEST analysis involves research conducted on a company’s political environment, social-cultural factors affecting it, the economic factors, and technological factors affecting the business or its products (Recklies, 2006).

Political factors: Coca-Cola is classified in the food industry, as it produces non-alcoholic beverages, which is regulated and controlled by the government (e.g. the Occupational Safety and Health Act, and ISO 22000 standards). Changes in taxation and tariffs for the food sector affect the company’s sales and generally, operations. Civil wars, political instability, and regulations in foreign markets also affect the company’s operations. The ability to enter and be successful in new markets depends heavily on the political environment in these markets.

Economic factors: Coca-Cola, is a business with the aim of profit-making. It is affected by economic condition changes in the market. Good economic conditions will result in more sales and profits. Recessions in the economy result in fewer sales and revenues. In 2001, there was a recession in the US economy. Coca-Cola predicted an increase in loan rates after the economic recession and utilized that recession period to take loans to fund expansion after the recession and to carry out research on investing in new regions. This showed preparedness for the changing economic environment (Mantegna, 1999).

Social-cultural factors: the recent trend of the majority of people showing concerns over their health and lifestyle has largely affected Coca-Cola. Many people have switched their preference to bottled water and diet colas. The increasing demand for healthier drinks necessitated the introduction of Coca-Cola Zero and Coca-Cola Light drinks. The two drinks have no sugar and meet health recommendation requirements.

Technological factors: advertising and promotional products are a requirement for a product’s success. Coca-Cola, even with its many years in business, still has to allocate a large sum of money for advertisements on social media platforms and the internet. This affects sales directly. The introduction of metallic cans and plastic bottles in beverage packaging has greatly boosted sales, due to their portability, and easy disposal, compared to the traditional glass bottles. In addition, technological advancement has led to increased volumes of production and ease in bottling. It has also encouraged the setting up of new modern plants for beverage production, especially in Britain. Their facility in Wakefield, Yorkshire produces metallic packaging cans at a ‘bullet-fast’ speed, resulting in increased efficiency (Nellist, 1992).

Situational Analysis

Situational analysis usually involves the study of the interrelation of a company’s internal environment and its external environment, so as to check the business’ capabilities and ways to organize them to avoid business failure. Situational analysis can be carried out via a SWOT analysis model. SWOT analysis identifies the company’ strengths and weakness, opportunities for development of the business, and the threats occurring in its environment (Hill, Westbrook, 1997). For the marketing of the Thums Up product, the data collected in a situational analysis shall be very helpful.

Strengths: the company’s wide global presence and brand uniqueness are Coca-Cola’s main strength. The company enjoys customer loyalty, having a very valuable brand name. Its only competitor is Pepsi, but Coca-Cola is clearly the winner in the nonalcoholic business. The excellent marketing strategies, topnotch distribution network, and personalized brands have continuously proved successful in business all over the world (Tucker, 1964).

Weaknesses: even though Coca-Cola is the largest and most valuable non-alcoholic drinks company in the world, the competition with Pepsi is still a thorn in its flesh. Pepsi is over the years putting in increased efforts in market research, product diversification, and advertising, keeping Coca-Cola on its toes. While Pepsi has been successful at product diversification (introduction of snacks such as Lays), Coca-Cola fails to achieve this. The company only deals in beverages.

Opportunities: perhaps diversification is one of the largest opportunity for Coca-Cola. The company needs to fund research efforts to introduce new products that will be introduced into the world under the Coca-Cola brand, besides the beverages. The company should also seek to boost the sales of its bottled water, Kinley, as many people are shifting their preference to pure drinking water for health concerns. Developing countries offer a good market, especially with high temperatures in the tropical and semi-arid regions of Africa and Asia. Marketing of products that have not done very well in the market should also be focused on.

Threats: with water scarcity on the rise in many parts of the world, it poses a huge threat on the company. The expenses of water treatment are also alarmingly high. Water scarcity and rationing may seriously cut Coca-Cola’s revenues and profits (Lambooy, 2011). The company also suffers from indirect competition, such as the Starbucks coffee chains. Products such as Red Bull are also stealing away a part of Coca-Cola’s market.

With Thums Up being a huge success in the Indian market, the product would be a huge success if introduced in a new market, say the American market. However, promotion and advertising efforts should be fueled, to ensure that the product’s name becomes well known, just like the Coca-Cola drink. The success of Thums Up in the world beverage market would boost the company’s revenues, and ensure sustainable profits rise.

References

Recklies, D. (2006). PEST Analysis.

Mantegna, R. N. (1999). Hierarchical structure in financial markets. The European Physical Journal B-Condensed Matter and Complex Systems, 11(1), 193-197.

Nellist, D. (1992). Quality Teamwork at Wakefield: Coca-Cola & Schweppes Beverages Ltd: Wakefield Factory. Industrial Management & Data Systems, 92(2), 21-23.

Hill, T., & Westbrook, R. (1997). SWOT analysis: it’s time for a product recall. Long range planning, 30(1), 46-52.

Tucker, W. T. (1964). The development of brand loyalty. Journal of Marketing research, 32  35.

Lambooy, T. (2011). Corporate social responsibility: sustainable water use. Journal of Cleaner Production, 19(8), 852-866.