FACULTY OF BUSINESS

Course: BA Business Studies

Unit: Marketing Management And Strategy

Coursework: The Situation Analysis

Student: Daniel Gyamfi Tutor: Charles Graham

Student ID: 2726711 Word Count: 1500 EXCLUDING TABLES

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 Table of Content
Introduction ………………………………………………………….………...…… 3

Background information ………………………………………………...….…….. 3

Mission Statement ………………………………………….……………...……… 3

Market Trend ………………………………………………………………………. 3 & 4

Competitors Analysis ……………………………………………………………... 4

TOWS MATRIX …………………………………………………………..…….…. 4 & 5

Core Competence …………………………………………………….………..…. 5 &6

Conclusion ……………………………………………………………….……….... 6

References ………………………………………………………………….…..…. 6 & 7

Appendix …………………………………………………….………..……………. 7-9

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Introduction

This report will analyse the marketing environment of Coca-Cola brand. In the report I will
look at the external and internal strategy of the brand both in global and in the UK market.
The report was to be submitted to Charles Graham by 18th February 2010.

Background information

Coca-Cola is one of the world famous and largest brands in beverages industry. The
company was established Doctor John Pemberton who was a pharmacist in 1886 in Atlanta,
Georgia USA. The brand has since become household drink in over 200 countries across
the globe. Carbonate drinks are the single largest component in Coca-Cola Company which
account for about 78% of the total volume sold in the 2008. The company has over 3000
beverages products and has about 500 brands in its portfolio these includes Coca-Cola/Diet
Coke family, Coca-cola enterprise (CCE) wide range of carbonates includes Fanta, Lilt,
Sprite and Powerade, plus the Schweppes brand in the UK according to keynote report.

The company’s operations in the UK are divided between CCE and Coca-Cola Great Britain
(CCGB). CCE is the manufacturer and distributor, whereas CCGB owns the brands and is
responsible for marketing. The company's beverages are generally for all consumers.
However, there are some brands, which target specific consumers. For example, Coca-
Cola's diet soft drinks are targeted at consumers who are older in age, between the years of
25 and 39. PowerAde sports water target those who are fit, healthy and do sport. Winnie the
Pooh sipper cap Juice Drink target children between the ages 5-12.

Mission statement of Coca-Cola Company.

In order for the company, to achieve its objectives and maximising stakeholder’s value, the
company is creating value by executing comprehensive business strategy guided by key
actions and decisions. These include:

• To refresh the world...

• To inspire moments of optimism and happiness...
• To create value and make a difference. (www.thecoca-colacompany.com)

Market trends

Technology- With the growing use of the internet and other electronic technologies, global
communication is rapidly increasing. This is allowing firms to collaborate within the country
and international market. It has driven competition greatly as companies strive to be first-
movers. Specifically, the global soft drink market’s compound annual growth rate (CAGR) is
expected to expand to 3.6% from 2004 to 2009 (Datamonitor, 2005).

Socio-Cultural – the growing trends societal concerns, attitudes, and lifestyles are important
to consumers. For instance, in the United States and Europe, people are becoming more
concerned with a healthy lifestyle. “Consumers awareness of health issues such as obesity
and inactive lifestyles represent a serious risk to the carbonated drinks sector” (Datamonitor,
2005, p.15). The trend is causing the industry’s business environment to change, as firms
are differentiating their products in order to increase sales in a stagnant market.
The low growth rates are of concern for soft drink companies, and several are creating new
strategies to combat the low rates. Buyers want innovation with the products they buy. In
today’s globalizing society, being plain is not good enough. According to Barbara Murray

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(2006c), Firms are already differentiating by taste, e.g. Coca-Cola company product line
includes regular Coca-Cola, Diet Coke, Diet cherry Coke, cherry Coke, Vanilla Coke, Coca-
Cola with Lime, Coca-Cola with lemon and many more (Murray, 2006a).(www.thecoca-
colacompany.com)

Competitors Analysis

Coca-Cola Enterprise is the UK subsidiary for the Coca-Cola Company. In 2008 UK

carbonate was valued about £6billin; with which Coca-Cola (GB) hold about 60% value in
both retail and on-trade. Britvic soft drink which is UK subsidiaries of PepsiCo and is the
main competitor was second place in terms of market shares of 15% retail sales according
to mintel. PepsiCo's flagship brands in soft drinks are Pepsi, Pepsi Max, Diet Pepsi,
Gatorade and Mountain Dew, and the company also owns Tropicana and Dole, the world's
leaders in fruit juice. GlaxoSmithKline PLC, a giant in healthcare products, is the UK third
largest carbonate drink and is also on a different scale from most drinks companies. The
company specialised in medicines and oral care, as well as three famous drinks brands:
Lucozade, Ribena and Horlicks.
CCE, had a turnover of £1.43bn in the year ending 31st December 2006, up 2.4%
on the previous year whereas For the year ending 30th September 2007, Britvic
PLC recorded total branded revenues of £716.3m, up by 5.7% on 2006.
According to John Sicher of Beverage Digest (2009), Coca-Cola was the number one brand
with around 42.7% in 2008. PepsiCo was second, with 30.8%, however these market shares
for both Coca-Cola and PepsiCo have slightly decreased from 2007 to 2008. Coca-Cola’s
volume has also decreased 1.0% since 2007, whereas PepsiCo’s volume has increased
0.3%. Strong growth of Coke range in the UK is probably due to the introduction of coke
zero and Diet coke product. Coke Zero is the most significant of KO's new innovations. This
beverage is marketed as a "calorie-free" version of Coca-Cola Classic, omitting the diet label
in an attempt to appeal to new demographics. This brand alone accounted for nearly one
third of all 2006 growth for beverages bearing the Coca-Cola trademark.

TOWS Matrix analysis of Coca-Cola

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Core competence
Opportunities
• Global growth in non-
alcoholic ready-to-
drink beverage
industry- this trend is
set to generate retail
sale in the industry to
more than $1trillion by
2020.
• Growing global bottle water
market.
• Intense competition
• Booming global functional
drinks market e.g. energy
drink.
• Target the ageing customers
and the young and more
environmental concern
people.
Threat
• Economic climate - countries
from all over the world have felt
the impacts of the current
recession. This may be a
problem for Coke, which derives
approximately 75% of its sales
from outside North America.
• Health and wellness has created
concern for carbonated product
especially in the USA and
Europe.
5|
•P a Overdependence
ge on bottling
partners
• Intense competition – either
local or global market.
Strength Weakness
• Strong leading brands with • Financial market volatility impacting
high level of consumer pension assets and in turn the
acceptance – this allow the liquidity position of the company.
company to extend it product • Big slow decision making can give
to attract new customers. competitive advantage to the
• Large scale of operations – competitor such as PepsiCo by
Coca-Cola product already being the first to introduce a product
sold in 200 countries. In for example.
addition it recorded revenue
of $31million making the
largest manufacturer in the
industry.
• Leading market position – the
brand large market about 5%
ahead of its main competitor
PepsiCo.
• Strong cash flows from
operations- the brand is able
to create over $ 50million a
day.
SO WO
• Good global market image • With their experience staff they
can help to take should be able to make an
advantage of the growing instead market decision explore
non-alcoholic ready-to- the new market.
drink beverage. • Failing to conduct further market
• Growing market for bottle research into new market can
water market, Coca-Cola give an advantage to
can be a leader in this competitors by extend to the
market by extends its new market.
product line and campaign
for healthy drink in the
industry.
• Coca-Cola has the largest
sponsorship in games
such as football, Olympic
etc, by launching energy
of their own brand. It could
be the fastest selling
product if use some of the
famous stars in the game
to advertise for the
product.
• Can renewed focus on
ageing and affluent
consumers globally.
ST WT
• A number of people have • The company slow in making
limited disposable income; decision can cost them in terms
the company can still take of their market if the key
advantage through their competitor takes the lead in
economy of scale by providing what the consumers
reducing the price of their want it will be difficult for Coca-
product at the current Cola to win back the customers.
economic climate. • If for instance the Coca-Cola
• Do research and know sugar level exceed the
what the consumers want requirement of the Health
by this they will be able to authorities this could lead to fall
extend their product line to in sales hence the company will
include sugar free product lose market share to the Pepsi.
and by this they will be
able to attract new
customers.
  The large customer base of the company gives them competitive advantage. The
company’s distributors have the ability to negotiate with stadiums, universities and
school systems, making them the exclusive supplier for a specified period of time.
Additionally, they have the ability to purchases in bulky that significantly lower their
costs. Furthermore, established brand loyalty is a large aspect of the soft drink
industry. Many consumers of carbonated beverages are extremely dedicated to a
particular product, and rarely purchase other varieties. This stresses the importance
of developing and maintaining a superior brand image.
 Price, however, is also a key factor because consumers without a strong brand
preference will select the product with the most competitive price. Because of their
economy of scale Coca-Cola can afford to match up the competitor’s price or can
undercut prices whiles they can still maximise profit. Thus, the brand global
acceptance is vital factor in the success of being market leaders in the industry
(Datamonitor, 2005).

 Coca-Cola effective communication with the local people gives them knowledge of
the entire spectrum of taste and occasions. What people want in beverages is a
reflection of who they are, where they live, what kind of work they do and how they
relax and recharge. Therefore Coca-Cola is able to change flavour of its soft drink to
conform to local taste. For instance Coke in the US taste different from Coke in the
UK, which in turns tastes different from Coke in India. The brand is determined not
only to make great drinks but also to contribute to the communities around the world
through their commitment to education, health, wellness and diversity. Coke strive for
the best by being a good neighbour and constantly shaping everyday business
decisions to improve the quality of life in the community in which we do business. For
example Coca-Cola is involved in number of sponsorship in many activities UK
League One championship, FIFA World Cup etc.

Conclusion

In my opinion, health concerns drive product innovation. The increase in consumer health
and wellbeing awareness have seen the bottled water, sports and energy drink segments
enjoy strong demand, at the expense of carbonated, sugary, soft drinks. This mature
industry is characterized by increasing competition and consolidation, which have
moderated revenue growth. In order to prevent this industry from going flat, continued
innovation of non-carbonated drinks, coupled with heavy and effectively targeted
promotion is needed. Coco-Cola has all the resource to actively exploring new ingredients
new functionality and new occasion. Coca-Cola is very well-established globally, and is the
global soft-drinks leader. This is very important to sustain because it is the source of the
majority of their profits. If they lose global market share, their profits will decrease
dramatically.

References

http://0-web.ebscohost.com.lispac.lsbu.ac.uk/ehost/pdf?vid=3&hid=107&sid=a0ccf11f-fcb3-
4f14-881a-e2b7a2fb9905%40sessionmgr111 (Accessed 5/02/2009)

http://0-www.marketlineinfo.com.lispac.lsbu.ac.uk/library/DisplayContent.aspx?
R=45C0AF28-BCDC-435B-AB8A-
3F87FBC251E1&N=4294840655&selectedChapter=IDA1EMH#IDA1EMH (Accessed
5/02/2010)

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http://www.docshare.com/doc/8487/An-Analysis-of-The-Coca-Cola-Companys-Markets
(Accessed 7/02/2009)

http://www1.csbsju.edu/liBRary/local/5thYear/zeigler_paper.pdf (Accessed 9/02/2009)

http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html (Accessed
9/02/2009)

http://0-www.keynote.co.uk.lispac.lsbu.ac.uk/market-intelligence/view/product/2097/soft-
drinks--carbonated-%26-concentrated/chapter/6/competitor-analysis?highlight= (Accessed
15/02/2009)

http://www.beverage-digest.com/pdf/top-10_2009.pdf (Accessed 15/02/2009)

http://www.thecoca-
colacompany.com/investors/pdfs/2008_annual_review/2008_annual_review.pdf (Accessed
17/02/2009)

http://www.thecoca-colacompany.com/ourcompany/index.html (Accessed 17/02/2009)

Datamonitor
Mintel
Market week

Appendices

Swot Analysis of Coca-Cola. This is a simple module use to evaluate organisation Strength,
Weakness, Opportunities and Threats.

Strength Weakness

• Strong leading brands with high level • Financial market volatility impacting
of consumer acceptance – this allow the pension assets and in turn the liquidity
company to extend it product to attract position of the company.
new customers. • Big slow decision making can give
• Large scale of operations – Coca-Cola competitive advantage to the competitor
product already sold in 200 countries. In such as PepsiCo by being the first to
addition it recorded revenue of introduce a product for example.
$31million making the largest
manufacturer in the industry.
• Leading market position – the brand
large market about 5% ahead of its
main competitor PepsiCo.

• Strong cash flows from operations- the

brand is able to create over $ 50million
a day.

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Opportunities Threat

• Global growth in non-alcoholic ready-to-
drink beverage industry- this trend is set
to generate retail sale in the industry to
more than $1trillion by 2020.
• Growing global bottle water market
Intense competition
• Booming global functional drinks market
e.g. energy drink.
• Target the ageing customers and the
young and more environmental concern
people
• Economic climate - countries from all over
the world have felt the impacts of the current
recession. This may be a problem for Coke,
which derives approximately 75% of its sales
from outside North America.
• Health and wellness has created
concern for carbonated product
especially in the USA and Europe.
• Overdependence on bottling partners
• Intense competition – either local or
global market.

Five Competitive Forces for Coca-Cola Company

The soft drink industry is very competitive. The companies involve have think about the
pressures; that from rival sellers within the industry, new entrants to the industry, substitute
products, suppliers, and buyers.
Competition

Coca-Cola largest competitors in this soft drink industry comes from Pepsi Co., and Cadbury
Schweppes and they are also globally established which creates a great amount of
competition. Though Coca-Cola owns four of the top five soft drink brands (Coca-Cola, Diet
Coke, Fanta, and Sprite), it had lower sales in 2005 than did PepsiCo (Murray, 2006c).
However, Coca-Cola has higher sales in the global market than PepsiCo. In 2004, PepsiCo
dominated North America with sales of $22 billion, whereas Coca-Cola only had about
$6.6billion, with more of their sales coming from overseas. PepsiCo is the main competitor
for Coca-Cola and these two brands have been in a power struggle for years (Murray,
2006c).

Brand name loyalty is another competitive pressure. The Brand Keys’ Customer Loyalty
Leaders Survey (2004) shows the brands with the greatest customer loyalty in all industries.
Diet Pepsi ranked 17th and Diet Coke ranked 36th as having the most loyal customers to
their brands.
The new competition between rival sellers is to create new varieties of soft drinks, such as
vanilla and cherry, in order to keep increasing sales and enticing new customers (Murray,
2006c).

New Entrants

New entrants are not a strong competitive pressure for the soft drink industry. Coca-Cola
and Pepsi Co dominate the industry with their strong brand name and large distribution
channels. Furthermore, the soft-drink industry is fully saturated and growth is small. This
makes it very difficult for new, unknown entrants to start competing against the existing
firms. Another barrier to entry is the high fixed costs for warehouses, trucks, and labour, and
economies of scale. New entrants cannot compete in price without economies of scale.
These high capital requirements and market saturation make it extremely difficult for
companies to enter the soft drink industry; therefore new entrants are not a strong
competitive force (Murray, 2006c).

Substitute Products

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Substitute products are those competitors that are not in the soft drink industry. Such
substitutes for Coca-Cola products are bottled water, sports drinks, coffee, and tea. Bottled
water and sports drinks are increasingly popular with the trend to be a more health
conscious consumer. There are progressively more varieties in the water and sports drinks
that appeal to different consumers’ tastes, but also appear healthier than soft drinks. In
addition, coffee and tea are competitive substitutes because they provide caffeine. For
consumers to switch for substitute product, Coca-Cola also has it own bottled water, Diet
coke, Coke zero counters for such products.
It is also very cheap for consumers to switch to these substitutes making the threat of
substitute products very strong (Datamonitor, 2005).

Suppliers

Suppliers for the soft drink industry do not hold much competitive pressure. Suppliers to
Coca-Cola is bottling equipment manufacturers and secondary packaging suppliers.
Although Coca-Cola does not do any bottling, the company owns about 36% of Coca-Cola
Enterprises which is the largest Coke bottler in the world (Murray, 2006a). Since Coca-Cola
owns the majority of the bottler, that particular supplier does not hold much bargaining
power. In terms of equipment manufacturers, the suppliers are generally providing the same
products. The number of equipment suppliers is not in short supply, so it is fairly easy for a
company to switch suppliers. This takes away much of suppliers’ bargaining power.
The buyers of the Coca-Cola and other soft drinks are mainly large grocers, discount stores,
and restaurants. The soft drink companies distribute the beverages to these stores, for
resale to the consumer.

Bargaining Power

The bargaining power of the buyers is very evident and strong. Large grocers and discount
stores buy large volumes of the soft drinks, allowing them to buy at lower prices.
Restaurants have less bargaining power because they do not order a large volume.
However, with the number of people are drinking less soft drinks, the bargaining power of
buyers could start increasing due to decreasing buyer demand (Murray, 2006a).
Porter’s Five Forces Model identifies the five forces of competition for any company.
The recognition of the strength of these forces helps to see where Coca-Cola stands in the
industry. Of the five forces, rivalry within the soft drink industry, especially from PepsiCo, is
the greatest source of competition for Coca-Cola.

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