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Group 8 - STP Case Study Coca Cola Introduction Group 8 - STP Case Study Coca Cola Introduction • The Coca-Cola company is the world largest beverage company • The company best known product coca cola was invented by john Stith Pemberton in 1886 • The Coca-Cola formula and brand was bought in 1889 by ASA Candler who incorporated The Coca-Cola company in 1892. • Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1.5 billion servings each day. • The Coca-Cola company headquarter is in Atlanta, Georgia. • Its current President and CEO is Mukhtar Kent. • With the acquisition of major brands in India, it went on to be known as The Hindustan Coca Cola Beverages Pvt. Ltd. Market Scenario • Established in 1886, headquarters in Atlanta, Georgia • Based on Interbrand’s best global brand study of 2015, Coca-Cola was the world's third most valuable brand. • Gained an advantage over pepsi when it took over Parle in 1994 • Coca Cola focuses on a diversified product portfolio, both within the beverage industry and has few products outside of that industry Model of Brand Selection Customer buys on value Value equals quality relative price Quality includes all non-price attributes that count in the purchase decisions Product Quality Value Customer Services Price Market Scenario Headings Value Market Shares in % figures(2012-2013) Revenue US$ 44.294 billion (2015) Operating Income US$ 8.728 billion (2015) Coke + Parle Net Income US$ 7.351 billion (2015) Pepsi Total Assets US$ 90.093 billion Pure Drinks (2015) Others Total Equity US$ 25.554 billion (2015) Number of 123,200 (2015) Employees COMPETITIVE ANALYSIS Coke Vs. Pepsi Quantitative Analysis Market Share The contention is best characterized by the well- Social Index known “Pepsi Challenge”, which asks strangers to 50 sit down blindfolded, try both products, and 45 decide once and for all which is superior. The general consensus from the taste test was that 40 Pepsi was better. 35 But, the difference between the sodas (the reason 30 31% for Pepsi’s superior taste) was so marginal that it 25 warranted a blindfolded taste test, so, it’s the 20 branding that ultimately plays a big role in 49% 15 consumers’ decisions. 10 5 Qualitative Analysis 0 Social Visibility Net Sentiment Reach Growth Social 20% Engagement & Coke Pepsi Content • Brand loyalty of Coke is way better than that of Pepsi • The most recognized word after ok is coca- In addition to the above social index figures Coke Pepsi Others cola • Coca-Cola’s market capitalization is over 30% greater than PepsiCo’s • People associate Pepsi and coke with specific • Coca-Cola spends considerably more on advertising • The Carbonated beverage food like for example Pepsi is preferred over Coke has 120,000 more Twitter followers than Pepsi coke with Pizza while Coke is favoured with • Diet Pepsi has overtaken diet coke in terms of market share industry is almost a ‘Duopoly’ burgers and fries with Coke and Pepsi occupying The raw numbers are clearly indicative of Coca- almost 70% of the market share world-wide Cola’s dominance Consumer Analysis • Customer preference is a core value of Coca Cola’s business • For ensuring ongoing consumer relevance and excellence in the marketplace focuses on five core principles - Availability , Affordability , Acceptability , Activation and Attitude • Coca Cola has drinks that targets different age groups, sexes, lifestyle etc. • Oasis- Juice made for the younger working adults, between the ages of 20-30; Disney Hundred Acre Woods – fruit juice for kids; Odwalla - for adults who want a grown up taste in a healthy fruit beverage; Coca Cola Zero targets teens that don't want calories but want the taste; Diet Coca Cola- targets adults, between 30-50 who are health conscious but want the taste; Powerade - sport drink, targets athletes between 13-27 ages • Targets different income level. For example, by packaging: for low level income the company is selling returnable glass bottle; for high level income, the company is selling coke in tins • Many people make their purchase decisions partially based on a company’s ethics, or social responsibility. By contributing to stop pollution both within and outside their factories, Coca Cola will gain the trust and respect of the potential buyers, who care about saving our environment. Segmentation • Regions Geographic • Climate • Age • Gender Demographics • Family size • Income • Lifestyle Psychographic • Social Class Targeting and Positioning Targeting •Different ads and product for different segments •Primary market consisting of people in the age group 10-25 Positioning •The core idea – “Fun and Happiness” •“Think Global, Act Local” •“One Brand” global marketing approach Marketing Mix Product Price • Widest portfolio in beverage industry comprising of • Due to the availability of wide range products the pricing is 3300 products. done according to the market and geographic segment. • Beverages are divided into diet category, 100% fruit • Each sub-brand of coca cola has different pricing strategy. juices, fruit drinks, water, energy drinks, tea and coffee. • Their pricing strategy is based on the competitors pricing, • Market presence in around 200 countries. • Beverage market is said to be a oligopoly market (few sellers • Brands in India are Fanta, Maaza, Limca, sprite, Thums and large buyers), hence they form into cartel contract to up, Minute Maid, Nimbu fresh, Nested iced tea ensure a mutual balance in pricing between the sellers Place Promotion • Coca cola is the world’s most favorite brand and is • Coca cola adopts various advertising and promotional available all over the world. strategies to create an increased demand in the market by • The distribution system of coca cola follows the FMCG associating with life style and behaviour and mainly targeting distribution pattern. value based advertising. • The effective distribution network of coke has almost • Coca cola uses CSR as its marketing tool to gain emotional eroded the small and middle level players in the benefits in consumers mind. market. • It allows price discounts and allowances to distributors and • In India they have captured even the rural market by retailers in order to push more products into the market. extensive distribution and have eroded the market • It employs both push strategy through promotions and pull share of Bovonto, Kalimark etc strategy through advertisements and campaigns. How Coke is perceived by its Customers(compared to its biggest rival Pepsi) • Perception is commonly called “positioning” or “hitting an angle.” • If we took Coca Cola and added up all of their hard assets (factories, trucks, real estate, etc.) it would add up to about $14B as of 2010, and yet their name alone is worth over $28B? That means you could buy up everything that Coca Cola owns and still only own 1/3 of the company’s value to shareholders. • Let’s identify how Cocaola is perceived against its biggest rival Pepsi around 4 main topics: 1. The brand as a product 2. The brand as a person 3. The brand as an organization 4. The brand as a symbol The brand as a product What do people prefer about the taste and which of the 2 is the most qualitative one, the most reliable one? Coke is much more tasty than Pepsi, or at least people clearly prefer the taste of Coke vs Pepsi’s. The brand as a person what do people prefer regarding the value and identity of both brands? Which of the 2 brands makes people dream the most? What are the best perceived values and which one of the 2 brands make people feel passion? Both brands’ culture are not really clear in people’s mind. The brand as an Organization what is the culture of the brand, the universe of the brand, its engagement through other topics. Coke is perceived to be a better brand in term of engagement through social or environmental concerns for example, with a strong brand universe, whereas Pepsi doesn’t seem to have a specific universe that make people dream. The brand as a symbol What brand is a myth and a symbol in people’s mind? Which logo do they remind first? Once again, Coke’s logo is much more known than Pepsi’s, as well as regarding the fact that the brand is quite a myth in people’s mind! Differentiation • Why Differentiation? • A differentiation strategy is the development of a product or service that offers unique and differentiating attributes which are valued by customers and perceive to be better than or different from the products of the competition. • Differentiation in Coca Cola • Coca Cola Company spends round about 20% of their total advertisement budget for maintaining and communicating on its differentiation strategy. • Coca cola has created its differentiation by utilizing soft sell approach. Company has successfully positioned itself on the following standards: • Corporate reputation for quality and innovation: one of the best place to work • Successful communication of perceived strengths of the product: Integrated marketin strategy • Symbol of joy and fun • ‘The Secret Formula‘ References • http://80.251.40.59/politics.ankara.edu.tr/ozer/Dersler/Introduction_to_marketing/Articles/The_ Strategic_Positioning_of_Coca_Cola_in_Their_Marketing_Operation.pdf • http://www.marketing91.com/psychographic-segmentation/ • http://www.coca-colacompany.com/press-center/press-releases/coca-cola-announces-one- brand-global-marketing-approach • https://en.wikipedia.org/wiki/Coca-Cola • http://softdrinkcolawar.blogspot.com/2012/12/coca-cola-product-strategy.html • http://kninn.blogspot.com/2010/06/differentiation-strategy-coca-cola.html • https://cokevspepsibm2013.wordpress.com/ Thank You.
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