Marketing Audit For Coca Cola Enterprises

This report provides a complete & comprehensive analysis of The Coca-Cola Company which includes an overview of the industry the company operates in, a PEST Framework analysis of the industry & then moves on to analyzing the company itself. Company analysis includes a history of The Coca-Cola Company, a SWOT analysis of the segments The Coca-Cola Company operates through, a look at the customer, competitor & stakeholder analysis of the company, & to derive a strategic assessment of the same to finalize a conclusion & a set of recommendations which can be implemented by Coke for a better market share.

The Coca Cola is licensed to produce, sell & distribute a range of beverages. The company owns the trade marks for most of these, supplies the concentrates & is largely responsible for consumer marketing. The most popular product of the Coca-Cola Company is the Coca-Cola invented by pharmacist John Pemberton in 1886. Asa Candler brought the brand & formula in 1889 that incorporated the Coca-Cola Company in 1892. Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500 brands in over 200 countries & serves 1.6billion servings each day.

Corporate social responsibility Council (CSR) makes Coke a more competitive company, responsibly manage the social, economic & environmental impacts, manage risks, capture opportunities, innovate, reduce costs & improve reputation with all groups of stakeholders.

The results of Coke’s latest marketing shift is still under evaluation but arguably the strongest & most pervasive marketing & distribution system in the world & with Coke being the first soda drunk in outer space, even the sky may not be the limit.

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TABLE OF CONTENTS PAGE NO

Executive Summary

1 Introduction 4

1.1 Looking at the Industry 4

1.2 Brief Profile of the Industry 4

1.3 Products & Brands 4

2 Current Environment and Operations 5

2.1 PEST Analysis 5

2.1a Political aspects 5

2.1b Economic aspects 6

2.1c Social aspects 7

2.1d Technological aspects 7

2.2 SWOT Analysis 8

2.2a Strengths to bulid upon 8

2.2b Weaknesses to overcome 9

2.2c Opportunities to exploit 10

2.2d Threats to overcome 11

2.3 Customer Analysis 11

2.4 Competitor Analysis 12

2.5 Stakeholder Analysis 12

3. Strategy Assessment 13

4. Recommendations and Conclusions 13

LIST OF REFERENCES 15

1. INTRODUCTION

1.1 Looking at the Industry:

The Coca-Cola Company is a beverage retailer, manufacturer & marketer of non-alcoholic beverage concentrates & syrups. Founded in Atlanta in 1886, Coca-Cola grew steadily from a local business to a multinational institution. In the last century, Coke became the ubiquitous symbol of American business in virtually every country around the world. (www.coca-cola.com/index.jsp, 2010)

1.2 Brief Profile of the Industry:

Coca-Cola, started in 1883, has successfully kept its brand relevant for over 100 years. Revenues in 2003 topped $21billion. The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The company operates a franchised distribution system dating from 1889.

The Coca-Cola Company owns its anchor bottler in North America, Coca-Cola Refreshments. The current chairman of Coca-Cola is Muhtar Kent. The Coca-Cola headquarters are in Atlanta, Georgia. Its stock is listed on the NYSE & is part of DJIA, S&P 500 Index, the Russell 1000 Index & the Russell 1000 Growth Stock Index.

By the end of 2006, juices, waters & other health & functional beverages represented almost 1/3rd of their sales to meet changing consumer needs. Coca Cola aims to be a preferred supplier to its customers, to deliver superior financial results to its stake holders & to provide its employees with a safe, healthy & inclusive workplace. (Coca-Cola HBC, 2006)

1.3 Products and Brands:

The Coca-Cola has 400 brands in about 200 countries besides its namesake Coca-Cola beverage. The first diet soft drink attempted by Coca-Cola was Tab, whose sales have dwindled since the introduction of Diet Coke. It also produces Fanta & Sprite this drink was produced by Max Keith during World War II. The German Fanta Klare Zitrone (“Clear Lemon Fanta”) variety became Sprite, another of the company’s bestsellers & its response to 7Up soft drink. Valpre Bottled water was also released in South Africa. Due to the growing demand of healthy beverages from the consumers Coca-Cola introduced some more brands like Minute Maid Juices, Powerade sports beverage, flavoured tea Nestea which was a joint venture with Nestle, Fruitopia fruit drink & Dasani waters. ()

The rest of the report is organized in the following way:

Section 2: Current Environment & Operations.

Section 3: Strategy Assessment.

Section 4: Recommendations & Conclusion.

2. CURRENT ENVIRONMENT & OPERATIONS:

For a clear analysis of Coca cola’s environment the report focuses on PEST, SWOT, Customer, Competitor & Stakeholder analysis of the company, thus to develop a set of marketing objectives of the company.

2.1 PEST analysis of Coca Cola:

2.1a Political aspects: Coke comes under FDA, food category, as being a non-alcoholic beverage. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws. The following are some of the factors that could cause company’s actual results to differ materially from the expected results described in their underlying company’s forward statement:-

Changes in laws & regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new & revised tax law interpretations) & environmental laws in domestic or foreign jurisdictions.

Political conditions, especially in international markets, including civil unrest, government changes & restrictions on the ability to transfer capital across borders.

Their ability to penetrate developing & emerging markets, which also depends on economic & political conditions, & how well they are able to acquire or form strategic business alliances with local bottlers & make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.

(, 2010)

2.1b. Economic aspects: The U.S. economy was strong & nearly every part of it was growing & doing well, however things changed. Most economists loosely define a recession as 2 consecutive quarters of contraction, or negative GDP growth.

The non-alcoholic beverage industry has high sales in countries outside the U.S. According to the Standard and Poor’s Industry surveys, “For major soft drink companies, there has been economic improvement in many major international markets, such as Japan, Brazil, & Germany.” These markets will continue to play a major role in the success & stable growth for a majority of the non-alcoholic beverage industry.

2.1c. Social aspects: Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that many are switching to bottled water & diet colas instead of beer & other alcoholic beverages. Also, time management has increased & is at approximately 43% of households. The need for bottled water & more convenient & healthy products are important in the average day-to-day life. http://www.cdf-mn.org

Consumers from the ages of 37-55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Since many are reaching an older age in life they are becoming more concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by increasing the demand overall & in the healthier beverages.

2.1d Technical aspects: The effectiveness of company’s advertising, marketing & promotional programs is crucial task. The new technology of internet & television is the use special effects for advertising through media. They make some products look attractive. This helps in selling of the products. This advertising makes the product attractive. This technology is being used in media to sell their products.

Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry & can bin them once they are used. CCE has instituted an internal carbon tax on air travel and encouraged the use of video conferencing & internet document sharing. As the technology is getting advanced there has been introduction of new machineries. Due to introduction of these machineries the production of the CCE has increased tremendously than it was few years ago. (, 2007)

CCE has 6 factories in Britain which use the most stat-of-the-art drinks technology to ensure top product quality & speedy delivery. Europe’s largest soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990. The Wakefield factory has the technology to produce cans of Coca-Cola faster than bullets from a machine gun.

2.2 SWOT of Coca Cola:

2.2a Strengths to build upon: An extremely recognizable branding is one of the greatest strength of Coca-Cola. Out of the 5 leading soft-drink brands being sold worldwide, the company produces & sells 4 of them, Coca-Cola, Sprite, Fanta & Diet Coke. Consumer loyalty to the company & its products remains high, which is evident from the high market acceptance of Coca-Cola’s introduced products newly. Coca-Cola Zero, which was introduced in the North American market in 2005, garnered a 1% market share in supermarkets in the year of its launch. “Enjoyed more than 685m times a day around the world Coca-Cola stands as a simple, yet powerful symbol of quality and enjoyment” was stated by Allen in 1995.

The company has been entering other non-alcoholic beverages segments to widen its presence in the beverages market like sports drinks & juices which has been successful. Minute-Maid is presently available across 80 nations, its share in several juice markets in the world improved with 11% increase in sales volume of Minute-Maid products in 2005.

The annual per-capita consumption of the company’s products is increasing & worldwide stood at about 32 servings (1 serving = 8 US fluid ounces of finished beverage) in 1985, increasing to 55 servings in 1995. In 2005, the average consumption per-capita was 77 servings. In North America, company’s products stood at about 413 servings in 2005.

(, 2010)

2.2b Weakness to overcome: In January 2004, CCE has introduced the Dasani brand of bottled water in the UK. By March 2004, Coca-Cola recalled the product owing to the discovery of excess levels of bromate in the product, which could cause side effects including cancer in human beings. This resulted in recall expenses of $32m for the company.

Coca-Cola’s sales have been hampered to a certain extent by rumours & myths about the company & its products. The company’s sales in the Middle East were affected by rumours alleging that Coca-Cola is a Jewish company & its trademark carries anti-Muslim messages. The company’s sales in South Asia, particularly in India, were affected in recent years due to allegations of Coca-Cola’s drinks containing pesticides. These rumours & myths have impaired the company’s image to some extent. (< www.killercoke.org>, 2010)

The company’s bottling activities are predominantly carried out by 3rd parties or bottling partners. The company’s 2nd largest contributor to revenues (close to 19% in the 1st quarter of 2006) was its Bottling Investments segment.  Coca-Cola does not have any control over its bottling partners’ financial positions, which could be affected by market trends, competition & their accessibility to capital resources. Though Coke has the right to unilaterally change prices of its syrups & concentrates, the changes could be enforced only if its bottling partners have the ability to pass on the price increases to their consumers. In light of the bottlers’ high contribution to Coca-Cola’s revenues, the company is more vulnerable to the threat of revenue impairment than its peers with more direct distribution activities. (, ND)

2.2c Opportunities to exploit: Coca-Cola’s products are being consumed, only 1.3b times a day. Furthermore, though Coke’s products reach over 200 nations owing to its comprehensive distribution network, there are countries where the average per-capita consumption remains below 50 servings per day. Countries that fall in this category include the world’s 2 most populated nations, India and China. These markets provide tremendous growth opportunities for Coca-Cola.

The company has identified strategic areas for its expansion, which would complement its core business of manufacturing carbonated soft-drinks. In this regard, the company integrated its strategy, innovation and marketing efforts & pumped in additional financial resources of $400m in 2005. It is also expected to enter the freshly brewed coffee and tea businesses, on a trial basis, under the banner, Far Coast. (AsiaPulse News, 13 February 2004)

The company modified its revenue growth strategy by adopting the best practices that were followed in its systems in Brazil & Argentina. The company is also working with the bottling partners for better implementation of its revenue growth strategy, to increase profitability from case volume sales & improving efficiency in worldwide operations.

The company also foresees greater potential for growth in the immediate-consumption channel & drafted an immediate-consumption strategy for its worldwide operations. The company worked with its suppliers & bottling partners to develop advanced equipment, which would offer a new beverage experience to the immediate-consumption channel. Coca-Cola is also benchmarking best practices in its top immediate-consumption markets to be implemented in other worldwide markets.

2.2d Threats to avoid: The increasing awareness about obesity among consumers, particularly youngsters, triggered by the consumption of non-diet carbonated soft drinks, is expected to dampen demand for the company’s beverages from the youth segment in the future. In the recent past, consumer forums in the US threatened to file lawsuits against Coca-Cola & other carbonated soft-drink producers, for pursuing deceptive practices associated with contracts for selling carbonated soft drinks in schools.

The main ingredient in most of Coca-Cola’s products is water, a scarce resource in many countries due to a host of factors including pollution of water bodies, inefficient water management and overexploitation of water resources. (Klebukov P, 22 December 2003)

The soft drink industry is very strong, but consumers are not necessarily married to it. Tea, coffee, juices, milk & hot chocolate are possible substitutes that continuously put pressure on Coke. It faces tough competition not only from global players such as PepsiCo, but also from local players. Competitors for Coca-Cola include Cadbury Schweppes, Nestlé, Kraft Foods & Groupe-Danone. The company’s efforts towards consolidating its market position could be restrained by the increased competition from these players.

2.3 Customer analysis:

In a survey conducted recently by Coca Cola, a sequence of consumer’s purchasing preference is recorded which is Taste, Brand name, Packaging, Price, Easy availability and advertisement. The intensity of colour & the flavour are the key drivers behind consumer acceptance of beverages & then the packaging & labelling, says a new study involving DANONE. 10 to 20 year age groups are consuming more Coca Cola than any other age segmentation. The customer’s loyalty for Coca-Cola has always been consistent though coke’s price is slightly higher to that of Pepsi & other brands. In response to the growing consumer preference for low calorie products, Coke launched Coke Zero, Diet Coke & other health drinks whose sales are on top throughout the world. (Khermouch G & Brandy D, August 4, 2003)

2.4 Competitor analysis:

Coca-Cola’s direct competitor is PepsiCo whose strength is low carbonated & energy drinks, weakness is snack foods. PepsiCo uses celebrities to attract customers. 60% of its profits come from snack foods & 40% from drinks, PepsiCo has growing profits by 15% per annum. With Coca-Cola’s strength being in fizzy drinks, competitors would try to capitalize on its weaker products. Coca-Cola has recently acquired Subway soft drink business, which was previously served by Pepsi. Coke is the most popular beverage in the world, while Pepsi enjoys it only at home. By comparison, rival Pepsi-Cola’s brand value is a mere $11.78b. (Marketing, December 18 2003)

2.5 Stakeholder analysis:

Most businesses have to consider the impact of their activities on stakeholders & Coca-Cola is no exception. Coca-Cola identified its stakeholders as its employees, civil organizations, governments, regulatory authorities, non-governmental organizations, suppliers, consumers, investors, shareowners & analysts. Understanding stakeholder concerns & perceptions is essential to operating a successful business like Coke & these positive long-term relationships built on the basis of trust & common goals help them create a sustainable business growth. In 2006, engagement with stakeholders focused on key strategic issues like addressing obesity, water resource, packaging waste management, tackling climate change. In response to the employee engagement survey the company implemented action plans & developed engagement & internal communications. The company also worked with government agencies, NGO’s & industry peers to increase recycling & protect water bodies. Coke has set up CRIS-consumer response & information centres in every country to address consumer enquiries. Regular communications with shareholders include road-shows, web-casts & briefings. (, ND)

3. STRATEGY ASSESSMENT:

Coca-Cola now gets 2/3rds of its revenues from outside the United States. It’s easier to name the countries where coke is not available. Everywhere else including such tricky markets as Pakistan, Cambodia, Liberia, Zimbabwe, Liberia & Colombia – Coke is a beloved consumer staple. The brand is so strong & entrenched that even the anti-American sentiments of 9/11 & after have not hurt the sales. Coca-Cola’s brand valuation increased from $68.95b in August 2001 to $70.45b in 2003. Coca-Cola remains the top global brand, achieving the top ranking in BusinessWeek’s Global Brand Scorecard once again in 2003. A small set of recommendations would help achieve Coke attain greater heights as discussed below. (Wamer F, April 2003)

4. RECOMMENDATIONS AND CONCLUSIONS:

With the help of PEST, SWOT & other analysis, the internal & external environment of CCE has been analysed. Coca-Cola operations extend across 28 countries establishing, developing & emerging markets according to business infrastructure, economic development & growth prospectus. Through innovation & acquisition, Coca-Cola owns & operates 81 bottling plants, 64 soft drink plants, 3 juice plants & 14 mineral water plants.

The strength of Coca-Cola’s system allows infinite growth in the global market. They have the resources available for this opportunity but they must develop marketing strategies that have local appeal as this is essential for their success. Through their brand reputation & vast marketing experience, Coca-Cola has the ability to extend the recognition of their brand & logo. However it would be best to leverage brand equity & their financial resources, to accelerate global market penetration with a view to long term profits. Coke must continue to evolve its market share. The effectiveness of TV ads is declining due to media fragmentation & use of devices like TIVO that let viewers zap commercials. So it is advisable for Coke should divert money previously spent on TV towards more experimental activities like setting up of lounges in teen malls & offer exclusive music videos, video games & sell coke drinks from Coke machines. (Faust D, p.77, March 1, 2004)

With the threat of political & economical instability, Coke must consider each country’s unique cultural, political, legal & economic environment to extend its market share.

With the threat of increasing health consciousness among consumers, it is advisable for Coke to further resource their fruit drink product lines as this market sector is growing rapidly. In laying out an appropriate marketing mix, Coke must consider product, distribution, promotion & price, therefore developing a marketing mix for each customer group.

In a fairly saturated slow moving beverage industry if Coca-Cola can diversify & expand on these products globally they would gain a huge market share & a great competitive advantage that would allow for greater long-term profits & increase dominations into the next century.

LIST OF REFERENCES

www.coca-cola.com.

Coca-Cola HBC 2006, Social Responsibility report 2006, www.coca-cocahbc.com, Greece.

Viewed 5 December 2010,

Viewed 5 December 2010,

Viewed 5 December 2010,

Viewed 6 December 2010,

Viewed 6 December 2010,

Dean Faust, “Coke:Wooing the TiVo Generation,” BusinessWeek, March 1, 2004, p.77.

Paul Klebukov, “Coke’s Sinful World,” Forbes, December 22, 2003, p.86.

“Coca-Cola Japan to Debut Beer-flavoured Soda Next Month,” AsiaPulse News, February 13, 2004.

“How Coke Moulded our view of Santa Claus to Fuel Winter Sales,” Marketing, December 18, 2003.

Gerry Khermouch and Diane Brandy, “The Top 100 Brands,” BusinessWeek, August 4, 2003.

Fara Wamer, “Chris Lowe Time To Get Real,” Fast Company, April 2003.