Success of any enterprise depends entirely on how well it plays its cards in the market in relation to making its products known to consumers, either through advertisements or personal marketing. According to Campbell and Craig, advertisement of company products has several objectives. Some of the objectives include communication with potential customers and persuading them to consume particular products and develop a penchant to the products in question, for continuous purchases. This brings in the advertisement theories, which explain how and give reasons why advertising is important and effective, in influencing consumer behavior and consequently helping companies to accomplish their objectives (Farbey, 2002). This essay looks at The Coca Cola Company basing on its successful advertisement programs.
The Coca Cola Company Overview
The Coca ?ola is currently the world’s biggest soft drink company, operating in more than 200 countries. The company has close to 500 types of beverages, ranging from diet coke and products like fanta and sprite to other carbonated and non-carbonated drinks, like bottled water, iced tea and coffee. According to Foster (2008), The Coca Cola Company recorded an advertisement expenditure of $2.44 billion in 2009, which boosted its market share and performance. It has employed amazing, lively, wholesome and memory provoking advertisements over the years.
Macro Environment Analysis of The Coca Cola Company
The Coca Cola Company’s managers make decisions based on numerous macro-environmental factors. These include changes in taxes, new production laws, trade barriers, and changes in demography and government policies (Miles and Scott, 2005). Managers categorize the factors using PESTEL model of analysis, which distinguishes them as political, economic, social, technological, environmental and legal factors.
Political factors revolve around government policies in countries where the company operates. The degree of intervention in the economy of the country is the main factor where The Coca Cola Company is capable to fund other sectors of the economy while considering the company’s macro-environment and considering that there are different priorities in different countries in which the company operates in terms of business support. Political decisions determine investment patterns of the company depending on vital areas like the health impact of the company’s products, educational needs of workers and the quality of the countries’ economic infrastructure (Miles and Scott, 2005).
Environmental factors determine the company’s investment criteria. Most of the environmental factors are directly linked to products, by-products and raw materials that the company uses. Climatic and weather conditions change impact on consumption patterns of Coca Cola products. The company considers possible weather changes in its marketing and advertisement strategies. This approach helps to sustain the market and production as the company leans towards production of environmentally friendly products (Campbell and Craig, 2005).
The company considers stable legal operational environment. Most of their products are usable by all ages. It produces in a variety, making their products available in all tastes. It also retains ownership of some of their packaging materials like Coca Cola bottles. This comes as a recycling measure (Ledgerwood and Broadhurst, 2000). Business by-laws enacted in some countries have not affected demand for their products. The company’s management is attentive to legal changes like age and disability discrimination laws in countries like Britain. The company’s managers consider all possible legal changes that could affect running costs and demand for their products.
Economic factors include interest rates in investment countries, taxation changes, and prospective economic growth, inflation rates and international exchange rates (Sloman, 2005). In countries with higher interest rates, Coca Cola’s investment is low because of high borrowing cost. Meanwhile, greater national income growth in some countries has boosted demand for Coca Cola products; as a result Coca Cola is increasing investment in the particular countries as in Britain.
New technologies in the market enhance production of new products. The Coca Cola Company has taken this as a chance to enhance its product advertisement through use of new media technologies. The company has used technologies in social media such as twitter, Facebook, World Wide Web among others to enlighten the public about their improving products and their new products in the market. The company has also used technology to facilitate services like online shopping and facilitating computer aided designs for their branding and advertisements. It has reduced marketing costs besides improving production quality and enhanced innovation.
In situation analysis of any company, it is imperative to look at the level of competition and market structure of any given firm. In marketing, the porter’s five forces come into consideration since they determine the likelihood of a firm being profitable. Currently, PepsiCo stands as Coca Cola’s main competitor. One advantage the company has over emerging entities is that it has been operating in various countries and has an upper hand in understanding the market operations. This makes it less prone to market competition and besides, there is too much brand loyalty to help the company retain its market and suppliers.
Market analysis is therefore very important for managers in determining the market ventures they undertake. A company should always look at the various ways in which they can change the five factors to work in their favor.
Strengths:the first strength of the company is that it is an internationally known company offering the most popular soft drink. The clear branding, use of unique and well recognized logos, promotions on hats, t-shirts and umbrellas, make it popular worldwide. This makes it supersede all other beverage companies in social popularity status (Foster, 2008). Consequently, different people around the globe buy coke because of different reasons, some just to feel part of greatness associated with it. Another strength that the company has is its liquidity. The company has huge financial muscle with earnings that put them well above all other beverage companies around the globe. With their colossal reserves, the company has sufficient resources to invest in future prospects of improving the Coca Cola brand. Customer loyalty, which is passed from generation to generation, is another strength the company rides on.
Weaknesses: the major weakness of the company is the inability to popularize most of the brands in the world markets. The company produces approximately 400 types of soft drinks, while the most popular brands are Coke and Sprite. Most of the other products are seldom seen on the shelves. This might be because of lack of adequate advertisements.
Opportunities: the opportunities that The Coca Cola Company has to exploit are advertisement of its less popular drinks and continuous exploration and pursuance of its successful brands it has on the market currently. This is because the company has a large amount of income that it can use to reestablish the market for the less popular of its products. Another opportunity is to buy out their competitors to increase its market power and success as well as boosting its competitive position, if not eliminating competition in the market
Threats: market dominance does not squarely eliminate threats to The Coca Cola Company. The main threat the company faces is the changing health consciousness and awareness among the global population. This has seriously influenced the attitude of the people towards the products in the market bearing in mind that some of them have negative effects to the health and body. The changing eating and drinking habits in the world is a major threat to The Coca Cola’s global market which will directly and indirectly affect sales of the products. The global economic meltdown also offers substantial threat to the performance of the firm since many customers suspend purchasing products they consider to be for leisure, but concentrate on the necessities (Sloman, 2005).
Satisfaction of the consumer needs is embedded in The Coca Cola Company’s mission. With this in mind, the company has diversified its products to over 400 brands of soft drinks in order to satisfy the wide range of consumers (Witzel and Witzel, 2002). The success of the sales in the diverse worldwide population remains unmatched. The company has also monitored the feeding trends of the world population towards better and healthier live. As a result of this, it has begun production of greater tasting diet drinks with same tastes like their classic ones. The company equally targets the health conscious population by producing low calorie drinks like the Coke Zero, Disney Hundred Acre woods for kids and Odwalla for adults. Based on the fact that Coca Cola products are mainly luxury, they have an extensive market among the middle and high class citizens although they find market among all the different classes of people.
The main aim of investing in a company is to gain market share and profit. This can only happen if the company has a strong customer base. There are many factors that will determine the size of the customer base of a company and advertisement of the company’s products is one of them. By creating brand awareness, advertisements help fight competition (Farbey, 2002: Duncan, 2005). Over the years, the coca cola company has had numerous advertisements that have significantly affected consumer cultures in the whole world. Previously, the company used images of well dressed women; it later changed to use of a Santa Claus image. The use of Santa Claus was effective as it gave the consumers an impression of refreshing winters only if accompanied with coke (Foster, 2008).The effective use of the particular images for advertising products depends mostly on the seasons and the consumer analysis. Another advertisement strategy that the company uses for advertisements is the holiday campaign. The colorful trucks used in the advertisements causes everyone to stop and at least take notice (Foster, 2008).
To further promote the awareness of the products and consequently their consumption, the company has employed creative advertisement methods like sponsoring different sports including Olympic Games. Ever since, the company has been in the Olympic Games sponsorship, it has acquired huge worldwide popularity and promoted its product consumption. This advertisement strategy is opportunistic and favorable for competition as it targets the largest layer of population within a short period of time. Another of this kind is the company’s continuous sponsorship of the FIFA world cup and other competitions since the year 1978. Such strategy helps companies to create a large market by boosting the popularity of the brand name (Jewler and Drewniany, 2001). Considering situational analysis, the company has effectively gained a lot of strength using the advertisements by sponsoring sports around the globe. Soccer, basketball, Olympic Games, motor racing and others are sports which are widely watched around the globe. Through their sponsorship, the company’s product popularity has made a lot of gains.
Through mass media advertisements, the company has featured in many films like the Columbia pictures’ films which it co-sponsored. Some of the prominent films include ‘The Gods must be Crazy and ‘The Coca Cola Kid’. It has also provided settings in novels like Syrup, a novel by Maxx Barry (Witzel &Witzel 2002). It has other numerous adverts in radios and televisions around the globe. These have earned it a very large market share worldwide.
The Coca Cola Company mostly uses in advertising their products its branded colorful illustrations mainly in white and red. Some are entertaining commercials that attract a wide range of viewers around the globe (Parente, 2004). A perfect example is in the question one may ask: what is the main benefit in the company sponsoring the Olympic Games, hence spending a lot of money? The answer to this question gives all the benefits that the company gets as an advertisement and awareness strategy. The company gets free advertisement rights that help it to reach a very large number consumers, and ends up using less amount of money it could have used to reach the population without social events like sports. The messages that advertisements relay on increase the curiosity of the viewers and provoke their tastes towards purchasing the company’s products (Parente, 2004). This in turn expands the market share of the products that the Coca Cola sells.
The Coca Cola Company should exploit all the opportunities it has by utilizing its existing strengths in the market. The company, having numerous strengths, can use most if not all of them to eliminate or protect itself from possible threats. To change the weaknesses into strength, the company can use its income to popularize less known products and use other strengths to neutralize the negative feedbacks through intensive advertisements (Jewler, & Drewniany, 2001).
Proper advertisement of company’s products is very important in marketing, regarding winning new markets, and the overall product sales performance in any company and business industry (Duncan, 2005). The Coca Cola Company has used different advertisement programs that have propelled it to be the number one global beverage and soft drink company. It has a prosperous market around the globe with a prospect of getting better. Business environment analysis that includes customer analysis, competition analysis and the company situation analysis by using SWOT model, are key to the overall performance of a company.