Positioning and Brand Management of Coca-Cola

Introduction

A brand is a given name or trademark associated with a particular product or a certain producer. There is a prevalent recognition that brands are essential in initiating and supporting the financial achievements of a business. With intense competition and surplus capability in practically every trade segment, strong brands help organizations to differentiate themselves in the industry and provide a means to emphasize how their goods and services are distinctively capable of meeting customer demands. Financial worth has all the time been affixed to brands. However, only during the 1980s brand valuation approaches were instituted that could reasonably facilitate the understanding and appraisal of the explicit value of brands. The scheme of affixing a distinct value on brands is now a commonly recognized practice. Those involved in the field of accounting, transfer valuing and licensing contracts, mergers and acquisitions and value oriented management, regard brand valuation as a key element in contemporary business. (Pressey & Selassie 2007)

In the financial approach of attaching a value to a particular brand, brand value is regarded as the net present value (NPV) of the estimated brand earnings, cut-rate by the brand discount value. The NPV computation involves both the projected period and the phase beyond, implicating the capability of brands to carry on generating future revenues. The rationale underlying the creation of technical valuations of a brand are balance sheet documentation, tax scheduling, legal action, securitization, authorization, mergers and acquisitions and shareholder relations. They concentrate on attaching an instance valuation that symbolizes the value of the patents. Commercial valuations are created with the intention of managing brand architecture, portfolio organization, market plan, budget planning and brand scorecards. Such valuations are rooted in a dynamic framework of the branded business and aspire to compute the part played by the brand in manipulating the key components in the model. In the case of Coca-Cola positioning and brand management is the key point of the company’s sustainability and survival in the open market. (Pierce 2009)

Aim

Despite the commercial significance of brands, the brand management still trails behind their tangible equivalents. There are very few established frameworks and processes to control the brand asset. On the whole, it may be said that there is an escalating necessity for brand valuation from both an organizational and transactional standpoint. (Pettijohn 2001) Thus, it is important for companies to emphasize on the economic value of brands and the aim and purpose of the paper is to evaluate and analyze the marketing strategies of Coca-cola. In this paper, it examines (1) the positioning and brand management strategy of the Coca-Cola Company and showcase how modern marketing techniques can benefit the business; (2) demonstrates how the marketing techniques used by Coca-Cola Company to establish itself as a powerful and successful brand and (3) demonstrates how the branding and positioning strategies are a major force for the company to retain its stronghold throughout the world, especially in a highly competitive environment.

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Body

The Coca-Cola Company is one of the biggest business corporations all over the world today. According to the company sources, it operates in around 200 countries all over the country and products trademarked with the company form a huge sales volume. The company listed as KO in the NYSE has worldwide employee strength of more than 90,000 and recorded massive revenue of $31.9 billion for the fiscal year 2008. The firm has its headquarters located in Atlanta, Georgia. The beverage branded as Coca-Cola, a fizzing non-alcoholic beverage is the frontrunner in the firm’s product line and is sold at shops, eateries, cafes and through soda machines across the globe. Other brands under which the firm operates are Coca-Cola, Sprite, Fanta, Coke Zero, Dasani bottled water, Glaceau Vitamin Water, POWERade sports drinks, Minute Maid To Go juices, Aquarius sports drinks and Nestea. (Mudambi 2008)

Just like other major businesses, the company too faces some major challenges. The firm is a U.S. based company and thus records its earnings in US Dollars. The firm draws 75% of it operational capital from business outside America. (Randers & Göluke 2007) Thus, fluctuations in currency exchange rates impact its performance. In addition, the varying prices of commodities used in production also heavily influences business operations. However, the most important challenge that the company faces at this moment is the gloomy economic situation in America and the rest of the world. (Shervani & Frazier 2007)

For businesses coveting high shareholder value, brands emerge as a key success element. Brands usually create certain demarcations from the competition it faces and draws customer allegiances. Established brands are capable of generating a consistent flow of prospective revenues, thus creating strong shareholder worth. To facilitate allocation of a reasonable value to a certain brand out of the overall value of the possessing organization, four essential standards must be fulfilled relating to that brand. It needs to be separately identifiable, cosseted legally, transferable, and continuing in nature. In this context, separability entails a condition where the brand is a lawfully separable entity, evidently discernible from the additional assets owned by the business. In certain cases, nonetheless, brands can be connected to other resources or company name in an irresolvable manner and separability may thus be complicated to attribute. For example, some commercial brands may not be distinguishable product-wise if they are so employed for other products also. (Kavussanos & Nomikos 2006)

A thriving, established brand undeniably has an economic worth attached to it in the sense that, the owing company is appreciated at a higher value with the brand than without it. Nevertheless, there exist several practical concerns in establishing the brand’s worth. In some cases, separating the value of the brand from the rest of the business is not feasible. Any valid evaluation of a brand’s prospective profitability entails several intrinsic subjective discernments about marketing factors. These subjective discernments lead to a divergence amongst economic validity and accounting objectivity. Therefore, Coca-cola pays lot of importance to it brand and brand management. (Slater & Olson 2001)

In the event of considering a brand like Coca-cola one can consider what are costs associated with designing, licensing, and marketing the patents, trademarks and other connected rights. On the other hand, one may focus on what they could possibly cost to be substituted. Both these approaches, namely, historic cost method and the replacement cost method, are subjective but are standard conventions. Economic substitution analysis is a different approach towards brand valuation. It looks at questions such as what would be the financial strength of the branded enterprise without the possessions of the trademarks or brands and how are the levels, values and outlays dependent on it. The difficulty with this method is that it counts on subjective conclusions with regard to what another substitute might be. (Katsikeas & Theodosiou 2006)

Research

It is obvious that the brand equity of its products is relatively very high for customers and stakeholders. In regards to a large enterprise like Coca Cola it is easy to state that any large scale change of its product or products could lead to market unrest in a short term. For example, when the company decided to change the taste of its prime product Coke in the 1980’s the result was vigorously unfavorable and the company authorities had to dump the plan. The future success of the company depends on branding strategy. (Eng 2007)

With a past succeed it could be safely stated their impetus on branding strategy for Coca-Cola and remained successful over the decades and there are four core brands: coffee, tea, fruit juice/ fruit drinks and another 500+ different flavors from Coca-Cola’s along with bottled drinking water makes the company as a market leader in the industry. Thus, if we assume that the marketing strategy of Coca-Cola is relatively futuristic in all sense it would be relevant enough and safely stated. (Dobrev 2008)

The elements of the brand marketing campaign must carry the great benefit of being very cost effective. Some of the costs that need to be considered are related to (1) publishing the promotional fliers and the posters, as well as costs associated with putting the posters on buses, (2) creating and promoting the website and (3) hiring and training the staff that will provide additional information. (Stewart 2008)

The evaluation of the promotional campaign is quite important at this point, inducing any perspective changes that may need to be made. In this sense, there are two important things that need to be kept in mind when performing the campaign evaluation: (1) the number of new clients after the launch of the promotional campaign and (2) the number of new clients that were a direct result of the promotional campaign. While the first measure is quantitative and thus easier to evaluate, the second one is qualitative and, hence, more difficult to approach. However, we should be able to determine the effectiveness of the promotional campaign (at least in the first phase) simply by evaluating the number of new clients. In the second phase, a qualitative analysis will also be necessary, as we may believe that the word – of – mouth process will begin to create additional clients. (Collins 2006)

According to several sources, the main goal of international marketing strategy would be to evaluate the effectiveness of the marketing policies that the corporation has been using, determine the means to optimize these processes and improve the results that the marketing department has been producing. (Anderson & Wen-yeh 2006)

At corporate level, we are referring to branding positioning and strategic marketing though brand management. This would mean that the chief executives have defined both the strategic paths that the company will be approaching in the net period of time and the specific ways by which marketing can provide the appropriate help. This would go anywhere from identifying new potential segments of consumers to developing new promotional plans to approach them. In this case, the audit will look at the efficiency with which the corporation has managed to fulfill its proposed strategic market objectives and how these can be improved in the future. At the strategic business unit (SBU) level, we pay more attention at an operational level at which the questions asked are how marketing tools can efficiently help in direct sale of the product. At the product unit level, we are concerned with the product mix, especially in terms of price, distribution, how changes in these variables have influenced the overall sales. (Weaver 2007)

From the point of view of Coca-Cola it would be relevant to mention that strategic brand planning in futuristic context should rely on its current position as market leader, with a close eye on the possible future developments of the market that should be kept in sight in order to be able to develop a coherent long-term strategic plan, apt to bring both an increased market share and the presence in other market areas, with possible economies of scale and increased revenues. In conclusion it should be stated that as such, there are two directions that the organization should approach, closely correlated with each other. The two strategic directions are (1) the adequate exploit of current market position, with a trend towards improving the position on the market and (2) diversification. (Alizadeh & Koekebakker 2007)

The positioning and brand management strategy of the Coca-Cola

The positioning strategy used by Coca-Cola has allowed them to paint a suitable image of themselves in the mind of their customers as the only “Real One”. They have designed their positioning strategy so as to draw an effective picture of their products offered for their customer. Once they had decided the market segment they wanted to target and compete in, they clearly developed a picture of that targeted market segment and properly defined their products as part of their positioning strategy. Through their positions strategy they emphasized on their distinct and unique characteristics with relation to their competitive brands stressing on their individuality. They associated their product with the customer’s values and knowledge highlighting their benefits. Their positioning strategy also included comparison of Coca-Cola’s products with those of their rivals, like Pepsi, so that drive their customers to believe that Coca-Cola’s products had higher quality and standard.

The Coca-Cola brand has turned out to be one of the most recognizable and a popular brand of all times and their beverage company is among the world’s largest beverage companies. They have become a successful brand since they have used a number of different brand management strategies depending on the market situation and target market. The strategies include hybrid, manufacturer, individual, private, family and generic brand management strategies. However, the most utilized brand management strategy she used is the individual brand management strategy since all of their major products have individual brand names, like Sprite and Fanta. Coca-Cola’s world-wide recognition comes from the fact that they have spent billions of dollars to promote and develop their trademark and brand name. Due to this today more than 95% of our global population recognizes Coca-Cola along with their special writing and their prominent red and white color.

As a matter of fact, Coca-Cola Company came into being in 1986 and within the past 2 decades, it has been able to establish itself as one of the leading beverage companies in the world. At the beginning, Coca-Cola has used modern marketing techniques and she is even viewed as the “founding father of our present day marketing model”. The brand used a number of modern marketing techniques which has immensely benefited the business. This includes aiming their marketing concept totally towards their customers and allowing the focus of their customers to percolate trough almost every department whether human resource, production or finance. Another beneficial modern marketing technique includes taking of all of their important decisions with relevance to the existing market considerations, position and segmentation. Apart from placing importance on market implications, there are 3 techniques of modern marketing which the company can highly benefit from – focusing on customers, coordination and profit orientation. The company’s focus should always be on the consumer’s viewpoint so that they can totally understand which product or service the buyer needs. Since the marketing mix is an interconnected system, the entire marketing program needs to be considered and designed as a whole.

In addition, the marketing techniques used by Coca-Cola allow them to listen to the needs and demands of the people all over the world who want beverages that extend over a wide variety of occasions and tastes. Their marketing strategy has allowed them to produce great beverages which contribute towards each and every community of our world. Their marketing techniques display their commitment towards diversity, health, education and wellness, thus establishing them as one of the most successful and powerful brands of all time. Coca-Cola’s marketing techniques consists of an extremely efficient marketing mix strategy combining product, price, promotion and place. They not only provide the customers with their products, soft drinks, but also several services, like movies and holidays, allowing the consumers to be completely satisfied. Their main pricing strategy includes penetration pricing which has allowed them to grab a footing in their target market by winning a major part of the market share. After establishing customer loyalty, Coca-Cola then slowly raised their product prices. Coca-Cola has always been among the fore-runners in gimmicks and advertising styles and techniques which fall under promotion of marketing techniques. They have effectively use their promotional strategies for persuading their customers into buying their original products and trying the new ones. They have used a combination of public relations, advertising, personal selling and sales promotion as a part of their marketing techniques. Coca-Cola have also carefully chosen the place or distribution techniques for their company. Their techniques include direct, selective, intensive and exclusive distribution. It is completely apparent from their widespread popularity and reputation that these marketing strategies used by Coca-Cola has helped them establish themselves as among the most powerful and successful brand of modern times, one which will fortunately be a complex yet vital part of our modern world culture.

In a highly competitive world such as ours effective branding and positioning strategies are extremely essential since it plays as a major force for the company and allows it to retain its stronghold all over the world. The branding strategies of a company accurately define the individuality of the company, its products and services. Every company, whether small or large, consider their branding strategies to be an important part of the entire business. Through their branding strategies they establish themselves as a brand name which represents quality and standard to their customers. A brand name helps the differentiation among customers based on their unique qualities from other similar products.

Additionally, the positioning strategy of a company helps it to establish the profitability of their various products and services. In order for a company to be successful simply having a quality product is not enough in our capitalistic world economy. The products and services must have a distinct and clear image and should be offered to the target customers at competitive prices. This is what a positioning strategy creates. Therefore, positioning strategies helps companies create a useful and desired image of the product for the customers, producing a direct contact between them and the company.

Conclusion

The argument that the brands or brand names along with its brand position and brand management of a business like Coca-Cola, under which its goods or services are marketed, embodies as much an asset as their tangible counterparts, is increasingly gaining momentum. Realizing the requirement of implicating the value of brands in the accounts, some large corporations in the UK have initiated the capitalization of the value of their brands in their documented financial declarations. The issue logically crops up with regards to whether the implication of this entity as an asset in the financial documents serves any real significant function or is merely another effort by the brand accountants to create more opportunities for themselves.

Recommendations

This report also provides a number of recommendations for Coca-Cola, which may help the company, come out of the economic recession. It strongly advices the management to adopt a broader perspective and develop a long-term strategy instead of focusing on short term plans. The declining nature of sales curves, profit margins and decreased rate of growth can be attributed to the recession and may be consider being quite natural in the present instable economic conditions. However, this should not be a reason to panic and make hasty decisions, which may bring about adverse effects and outcomes and may ruin the company. On the contrary, it should be seen as an opportunity to strengthen and stabilize the company right from its roots. Indeed, recession can be considered an opportunity to innovate, utilize, and take advantages of the openings created by the economic slump. (Dobrev 2008) Investing in emerging markets like India and China, which demonstrate significant growth opportunities, is surely a viable option for the company. It increases the customer reach and enhances the brand diversity. Capitalizing on the openings, which these emerging markets offer, can be a boost to the company, particularly when domestic markets in the United States are not performing so well. As a result, the company must pay more importance to its brand position and brand management and redeem the low revenue due to the recession from these emerging markets.