Coca-Cola Brand Strategic Marketing Analysis Report

Name: Dan-Adrian Berciu-Coman

Class: KMBA-713,170112,3,Market
Perspectives.201740-10

Instructor: Jashim Khan

Title: Coca-Cola Brand Strategic Marketing Analysis

Report
Table of Contents
1.0 Executive Summary (4)

2.0 Situation Analysis (6)

2.1 Market Summary (7)

2.2 SWOT Analysis (9)

2.3 Competition (9)

2.4 Product Offering (10)

2.5 Keys to Success (10)

2.6 Critical Issues. (10)

3.0 Marketing Strategy (12)

3.1 Mission (15)

3.2 Marketing Objectives (16)

3.3 Financial Objectives (17)

3.4 Target Markets (17)

3.5 Positioning (17)

3.6 Strategies (18)

3.7 Marketing Mix (19)

3.8 Marketing Research (20)

3.9 Critical Considerations Related To the Marketing Strategy (20)

4.0 Financials (22)

5.0 Controls (25)

5.1 Implementation (26)

5.2 Market Organisation (26)

5.3 Contingency Planning (27)

Appendix (28)

Reference List (29)

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 1.0. Executive
Summary

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1.1 Executive Summary

In the following report, the author has tried to capture the strategic marketing
aspects of the current marketing environment for the Coca-Cola brand of The Coca-
Cola Company Inc.

The Coca-Cola Company (NYSE: KO/ referred further as CCC) is the world's largest
beverage company, offering consumers more than 500 sparkling and still brands
and more than 3,800 beverage choices. Led by Coca-Cola, one of the world's most
valuable and recognisable brands, the companys portfolio features 20 billion-dollar
brands. The billion-dollar brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite,
Dasani, Vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold
Peak. Through the world's largest beverage distribution system, CCC are the No. 1
provider of both sparkling and still beverages. More than 1.9 billion servings of their
beverages are sold daily in more than 200 countries. (Coca-Cola Company, 2017)

The Coca-Cola brand that we will analyse further is the companys flagship product
and the oldest brand and most valuable in the portfolio. The product dates back to
1886 and was registered with US Patent and Trade Mark Office in 1893. In the early
days of the twentieth century, the product expanded from local to nationwide in US
grace to the bottling partnership business model also used today. In 1920, the
product becomes available outside the US, making the first step in becoming the
todays global brand.

The product has evolved over time and includes a Diet, several specific flavours
brands (Lime, Cherry), no sugar (Zero), and natural sweetener (Stevia) formulas.
The brand value, as communicated by the company (coca-colacompany.com) is USD
78.4 billion dollars.

After a series of poor results, underperforming the market trends in matter of sales
volume growth in 2015 and 2016, a new strategy for the corporate activity and the
brand marketing was introduced. Those new strategies aim to reposition the
company activity on its core competencies and to gather all the Coca-Cola brand
assortments under a single product brand Coca-Cola.

During the analysis, a series of threats were identified for the companys activity
and market position, mainly related to the increased public attention to sugar
consumption and other potentially harmful substances, and the strategic issues in
the marketing and corporate communication policy. While the new management has
taken a swift and sound approach in addressing those threats, given the reshaping

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changes occurring in this moment at the company level, only the time test will
provide the answer if the current strategy was the right one.

As critical consideration, the actual strategy follows the trend in the academic and
professional marketing thinking, focusing on the customer value proposition and
creation of the right environment for the company to succeed by enhancing the
organisational reaction to diverse stimuli from the environment.

2.0. Situation
Analysis

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2.0. Situation Analysis

The Coca-Cola Company (NYSE: KO/ referred further as CCC) is the world's largest
beverage company, offering consumers more than 500 sparkling and still brands

Figure 2.1. Coca-Cola Worldwide Unit Case Volume Geographic Mix 2015, source:
coca-colacompany.com

and more than 3,800 beverage choices. Led by Coca-Cola, one of the world's most
valuable and recognisable brands, the companys portfolio features 20 billion-dollar
brands. The billion-dollar brands include Diet Coke, Coca-Cola Zero, Fanta, Sprite,
Dasani, Vitaminwater, Powerade, Minute Maid, Simply, Del Valle, Georgia and Gold
Peak. Through the world's largest beverage distribution system, CCC are the No. 1
provider of both sparkling and still beverages. More than 1.9 billion servings of their
beverages are sold daily in more than 200 countries. (Coca-Cola Company, 2017)

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The Coca-Cola brand that we will analyse further is the companys flagship product
and the oldest brand and most valuable in the portfolio. The product dates back to
1886 and was registered with US Patent and Trade Mark Office in 1893. In the early
days of the twentieth century, the product expanded from local to nationwide in US
grace to the bottling partnership business model also used today. In 1920, the
product becomes available outside the US, making the first step in becoming the

Figure 2.3. Global Carbonated soft drinks geographical market

segmentation, source: Marketline

todays global brand.

The product has evolved over time and includes a Diet, several specific flavours
brands (Lime, Cherry), no sugar (Zero), and natural sweetener (Stevia) formulas.
The brand value, as communicated by the company (coca-colacompany.com) is USD
78.4 billion dollars.

2.1. Market Summary

The Coca-Cola brand is part of the

Carbonated Soft Drinks market.

The global market for carbonated soft

drinks for 2011 was 211.5 B dollars and
was estimated to grow to 240 B in 2016.

Out of the entire market value, standard

cola was the largest segment, amounting
to 41% in 2011. As geographical
segmentation, Americas account for 47.8%
of the total consumption. (MarketLine,
2013) Figure 2.2. Global Carbonated soft
drinks market segmentation,
source: Marketline
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The top players in the industry are Pepsico and The Coca-Cola Company, both
American companies, with consolidated revenues from their overall business lines
exceeding 40B dollars each.

2.2.
Figure 2.4. Global Carbonated soft drinks top global players, source:
Dun&Bradstreet, hoovers.com, 2017

SWOT Analysis

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Strengths: Weaknesses:
*Dominant market presence built on strong *Product quality issues and frequent
brand portfolio recalls
*Strong bottling partnerships *Strategic issues in the marketing and
*Strong global footprint emphasising on public relations policy
emerging countries

Opportunities: Threats:
*Changing consumer preferences creating *Regulations that affect sales at certain
opportunities in the health space (sugar-free points of sale (related to sugar added
formulas) drinks sales and consumption)
*Increased environmental concerns *Water scarcity and poor quality could
prompting consumers to buy environment- impact
friendly products production costs and capacity
*Strategic investments to accelerate growth *Rising labour wages
- expanding the bottling partnerships *Low total market increase (under 2%)
*Development of new coke formulas *Changing consumer preferences
incorporating local ethnic taste creating threats in the health space
(sugar-based formulas)
Adapted from Company Profile: The Coca-Cola Company, MarketLine 2015; 'Global
Carbonated Soft Drinks Industry Profile', MarketLine 2013; Walsh and Dowding,
2012;

2.3. Competition

The top competitor for the Coca-Cola brand is Pepsi, a product of Pepsico.

Coca-Cola was the uncontested leader of the market until 1980s when a series of
events have switched the consumers preference to Pepsi. In that period, Pepsi ran a
very popular public campaign, asking clients to test blindly two cola products, one
being Pepsi, the other being Coca-Cola. The study showed that the public preferred
in a higher degree the Pepsi product, sweeter than Coke. Pepsico used the result of
its campaign to advertise the product. Coca-Cola Company reaction was to change
the formula of its Coke product, attracting an even more negative reaction from its
consumers, which preferred the classic taste.

After this episode, which consolidated the Pepsi position as a challenger brand,
Pepsico took a strategic decision to distribute its brands through a series of fast-
food chains (KFC, Pizza Hut or Taco Bel), which brought the companys products
even closer to the consumer. This move helped to decrease the Coca-Cola share
even more. (Clouatre, 2016)

Being a generic product, standard cola is also produced by smaller local

competitors. While their power to compete with a global brand is low, the price war
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in local markets for lower-income consumer categories is bitter. There is also the US
case of Royal Crown Cola, a company which seized the opportunity and first
introduced a diet assortment or Zevia, which first introduced a stevia-sweetened
cola drink, both betting on the consumers increasing interest in healthy diet, but
they both failed to capitalize on their strategic impact due to their limited capability
to expand their products globally.

2.4. Product Offering

The product is available in different assortments and bottling size, to fit the diverse
consumption pattern of its consumers.

The most known products are Coca-Cola and Diet Coke, both products having
market shares exceeding 10% of the market in the US.

The assortment includes flavoured cola products, like Coca-Cola Cherry and Coca-
Cola Lime, and low or no sugar products like Coca-Cola Light, Coca-Cola Zero and
Coca-Cola Life.

2.5. Key to Success

The key elements for ensuring the brand success going further are:

- Consolidation of market leader position through local strategic partnerships

with partner bottling companies in emerging markets, where the rhythm of
increase for the product market exceeds the average global increase;
- Leveraging on product history and culture of happiness marketing line,
emphasising the tradition of the product. This element should be doublet with
a higher attention to quality of the product and openness to include specific
ethnic flavours in different regions of the world, to show cultural awareness
and to gain consumers preference vs. the competition products;
- Continuing the initiatives in the Social Responsibility area, including the
programs for water consumption, fair employee treatment in emerging
countries, women inclusion and health responsibility. Being perceived as a
member of the community will help the company to become a brand of
choice for the area consumers.

2.6. Critical Issues

Even though the Coca-Cola brand is a historical, well-established trademark, the

general market evolution (systemic risk) and the companys expansion without
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proper control in place (individual risk) could damage the position of the product in
the market.

From an internal perspective, the lack of attention to product quality is the biggest
threat. This can lead to a negative consumer judgement toward the brand, even
though the preparation of the drink and the distribution is in partner company
responsibility.

From an external perspective, the market saturation signs (low increase, lower than
global population increase), heavy competition and the consumers bias towards a
healthy lifestyle, all of those pose a threat to the brands future. Failure to respond
proactively and innovative to those threats, failure to participate in addressing mass
population health issues (for example in the US, where Coke has the biggest market
share, the percent of obese adults is 1:3 as per WHO, 2014). (Basu et al., 2013)

There is also concerning the delay in action or communication coming from the
corporate communication side in cases where the potential to damage the brand is
high. Leaving aside the reactive reaction to quality issues like product infestation in
UK or Asia, cases like the partnership for Olimpic Games in Russia, in that moment
Russia being banned for its position versus freedom of sexual expression, could
indirectly harm the way the consumer perceives the brand, by association with an
undesirable public person or its actions. (Rovenpor and Klimovich, 2014)

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3.0 Marketing Strategy
3.0. Marketing
The world is Strategy
changing all around
us. To continue to
thrive as a business
over the next ten
years and beyond,
we must look ahead, understand the trends and forces that will shape our
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 business in the future and move swiftly to prepare for what's to come. We
must get ready for tomorrow today. That's what our 2020 Vision is all about. It
creates a long-term destination for our business and provides us with a
"Roadmap" for winning together with our bottling partners. (The Coca-Cola
Company, n/a)

Coca-Colas vision message anchors itself into the reality, recognising the core
context of global business in our times: disruption, forward-thinking orientation, and
the partnership importance.

The marketing strategy for Coca-Cola brand follows the global vision of the
company. Latest brand image and promotional campaign, One Brand and Taste
the Feeling looks to leverage the strengths of the brand (history, recognition,
awareness), and to be more receptive to the status of a truly global brand: global
image, global reach, global message, eliminate discrimination.

In January 2015, the company appointed a new CMO, Marcus De Quinto who has
already introduced a number of strategic changes out of which: realigning its
marketing, reviewing its media roster and appointing three WPP agencies to create
a new global brand. (Roderick, L., 2016) The globalisation of the brand comes as a
part of a wider company repositioning strategy
which focuses on leveraging its core strengths:
manufacturing the product concentrates and
driving the marketing and sales of its product
portfolio. The production of drinks and the
distribution chain is looked to be externalised
in the hands of former and new bottling
partners, which possess the know-how and
experience necessary to avoid product quality
setbacks (see Dasani case in the UK, The
Money Programme, 2004). All those changes
have in mind to enforce the value delivery to
the customers, both by creating a trusted,
globally visible brand and to focus on the
Figure 3.1. Coca-Cola add 1889
quality of the product, the companys long-
where we can observe the Coca-
lasting strong points in the fight with the
Cola logo, source: feedough.com
substitutes.

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 a. Historical consistency

One of the pillars of Coca-Cola brand marketing

is the historical heritage. The product shape and
logo has a history of more than one hundred
years, making the product recognisable for
consumers of all ages.

By expanding the brand offering with new

products with different quality variables
(quantity of sugar, quantity of caffeine), the
company managed to split the base of the core
Coca-Cola product, by creating individual Figure 3.2. Coca-Cola bottle add,
identities for its new Coca-Cola products, but 1916, Source: feedough.com
also to attract consumers more interested in the
health influence aspects of the product.
Together with the One Brand strategy, the company is looking to monetize once
again its long-lasting brand and to consolidate the different assortments under a
single umbrella. (Roderick, L., 2016 citing Coca-Cola UK Brand CMO Bobby Brittain).

What is also a point looked at by the Coca-Cola Inc. marketers is the companys
brand history of an innovator. Aside of image, quality drive and expanded
availability
characteristics of the
brand, maybe few know
that the 6 pack was
an innovation promoted
by Coca-Cola in 1923,
now a standard of the
beverage industry, and
that the image we have
about Santa Claus today
is in part due to early
Coca-Cola adds.
Figure 3.3. Coca-Cola adds Figure 3.4. Coca-Cola adds
The companys
promoting Santa Claus promoting the 6-pack
marketing strategy
image, Source: offering, Source:
states that it will
feedough.com feedough.com
continue to drive
innovation in order to
offer its consumers the best quality products for that little moment of happiness.

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 a. Global Addressability the new Taste the Feeling Marketing Image

As an important element of the marketing strategy, the global addressability comes

as a natural evolution of the brand in the globalisation context.

The statement builds up also on a long-lasting historical strategy: the connection of

the brand with happy, joyful moments. While in the past decade the marketing
communication focus was on the intrinsic values of the brand, as the orientation to
promote the low-sugar level drinks distinctively, together with the new One Brand
strategy the companys product message returns to its bias towards pleasant
moments experience. The brand assumes this way to create a distinctive consumer

Figures 3.5 and 3.6: New Taste the Feeling campaign add. While we can
observe for example two white women inside the add, is to be observed that the
respective image was promoted in an Arab country. Image source: coca-cola.com

experience, creating value for the individual through its different assortments,
designed to respond to different tastes and needs, easy reach and quantity offering
customization to fit the consumption pattern of all clients (from 250 ml glass bottle
to 2l value PET).

Also, the image associated globally with the new campaign promotes global
diversity instead of local, typical social patterns and demographic individualization.

3.1 Mission

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 Our Roadmap starts with our mission, which is enduring. It declares our
purpose as a company and serves as the standard against which we weigh
our actions and decisions.

To refresh the world...

To inspire moments of optimism and happiness...

To create value and make a difference. (Coca-Cola Inc, n/a)

The brands communicated mission is in line with its history, objective and actual
trends in marketing strategy. It individualises the product offering, refreshing drinks,
the marketing core principle, to connect with moments of happiness and optimism,
and to create customer value. The mission also serves as a starting point for the
company overall strategy.

The mission statement sets the background for the companys vision, where the
marketing has a privileged place. Through the companys declared set of values
(the Coca-Colas 6Ps) we can find:

Portfolio: Bring to the world a portfolio of quality beverage brands that

anticipate and satisfy people's desires and needs.

Partners: Nurture a winning network of customers and suppliers, together we

create mutual, enduring value.

Planet: Be a responsible citizen that makes a difference by helping build and

support sustainable communities. (Coca-Cola Inc, n/a)

Through its vision, associated with the brands in its portfolio, the company
emphasizes the importance to paradigm level of the Portfolio and its orientation to
the customer, Partnership as a main driver for excellence in its supply chain and key
element to bring the product closer to the client, while its Corporate Social
Responsible attitude is communicated under one umbrella: Planet.

3.2 Marketing Objectives

By transposing its Mission and Vision in practice, the company sets the ground for
the strategic actions related to the brand.

The company identifies as Strategic Objectives which can be associated with the
Marketing activity the Focus on the Market and Brand Identity actions, as described
in the companys statement:

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 Focus on the Market:

- Focus on needs of our consumers, customers and franchise partners

- Get out into the market and listen, observe and learn
- Possess a world view
- Focus on execution in the marketplace every day
- Be insatiably curious

Be the Brand:

- Inspire creativity, passion, optimism and fun (Coca-Cola Inc, n/a)

Bottom-line, all those strategies point to a single marketing objective: to maintain

the Coca-Cola brand as the undisputed leader of the Standard Cola Carbonated Soft

Drinks market.

3.3 Financial Objectives

The brand strategy in the context of the overall organisational change looks to
improve the financial efficiency through focusing on the companys core knowledge:
producing the drink concentrates and driving the marketing activities associated
with the brand.

By putting in practice this philosophy, the company looks to externalise through

franchising all its bottling and delivery operations to its state of the art supply chain
and production partners, for them to focus on their core competencies: product
quality and swift logistic processes, both upstream and downstream.
Fig. 3.7.
Illustrative
Through those actions, the company will improve its operating margins and overall
financial results
value creation.
exemplifying the
strategy change
Dan Berciu impact (FY2015).
Coca-Cola Brand Strategic Marketing Analysis Report Source: Coca-Cola
Page | 18 Investors
Report2015
3.4 Target Markets

The Coca-Cola brand offering is not differentiated for any target market, or better
saying is intended for general use.

The company is measuring its performance by geographical segments, only for

performance reporting.

3.5 Positioning

The Coca-Cola brand is positioned as a quality brand, in the upper band of the price
for the same products.

3.6 Strategies

Transposing the mission, vision and objectives in fundamental strategic actions

actions, the CMO of The Coca-Cola Company, Marcos de Quinto, speaking at an
event in Paris on 19 January 2016 (as cited by Roderick, L., 2016), reflects on the
necessity and importance of several shifts in brands marketing objectives which are
shaping also the brand strategy:

A. The One Brand Strategy:

[] So far our strategy has been if we had an ingredient [caffeine or
sugar] that we wanted to limit we launched a new brand, with different
values. We created a completely different personality. This strategy of
creating subbrands and not variants has created some distortions as to
what the main brand is.
Secondly, creating brands for different people undermines completely
what is the fundamental CocaCola brand promise: that its for
everybody. If we are saying Diet
Coke is more for sophisticated females then were saying the real
CocaCola is not for everyone because females have a different one. It
undermines the brand proposition that has made CocaCola big.
This is the biggest change ever in the story of CocaCola going from
having multiple brands to having one brand with multiple variants.

B. Being a locally relevant global brand

This is a more effective and efficient branding strategy. One brand
idea and one brand identity. They share common values positivity,
authenticity, inclusiveness and also share the same brand
iconography.
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 The success of CocaCola is dependent on multiple local countries. If
you want to be globally relevant you need to be locally relevant in each
and every market.

C. Tapping into the sugar debate

With this new strategy, we want to show that people dont hate the
brand if they try to cut down on CocaCola consumption. The only
reason people will cut down on drinking
CocaCola is to try and control their intake of sugar. []Im not going to
pull consumers over there, Im just going to place new products under
the umbrella Coca-Cola brand and give customers a choice [to mix
things up as they please].

D. Rational vs. Emotive marketing

Rational is characterised with the marketing that we used to do. It is
like detergent and based on driving purchasing through rational means
so I wash whiter than the others. [] We will focus focus on the
emotion of the brand, focus on the values, the differentiation. However
it is still very critical for us to talk about the benefits. We need to both
use emotions and also talk about the benefits.

3.7 Marketing Mix

The Marketing Mix of Coca-Cola follows the companys overall philosophy that
marketing sells the product. The four pillars of 4P are managed to the level of
state of the art in some cases. I will debrief further on them.

A. Product

The Coca-Cola brand is a legend in itself. Has a long history and is one of the most
known brands worldwide. The consumer awareness and loyalty for the brand are
appreciated in monetary value to 73B USD in value by Interbrands (as per Coca-
Cola Company, 2016) or 58.5B USD by Forbes (forbes.com, 2017). What is to be
observed in the Forbes Best Brands list is that Coca-Cola is the only brand of
beverages in the top twenty, a top heavily dominated by Technology brands.

The new Coca-Cola One Brand strategy has the power to leverage on this
elevated brand position and also to add even more to it.

Aside from the brand, the product itself is trying to accommodate different
consumer perspectives on getting refreshed, sugar consumption or price sensitivity
consumption pattern. The product is offered in different serving forms to correspond
to all those needs: glass 250 ml, 1L, al-can 200, 330 ml, pet bottle 330, 500, 750 ml,
1, 1.25, 1.5, 1.75, 2, 2.5 L. For the same reasons, the brand is offered in different
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sugar and caffeine concentration assortments: Coca-Cola, Diet Coke, Coca-Cola
Light, Coca-Cola Zero, Coca-Cola Life.

B. Pricing

The pricing strategy for Coca-Cola brand follows the market price for competition
products in all the markets where the brand is presented. The Cola Carbonated
Drinks market can be seen as an oligopoly market, with relatively few global present
sellers and a large number of consumers. In this context, mechanisms specifics to
this market, including price war elimination, can be observed. The competition
appears though in the promotional activity, which indirectly affects the monetary
value per serving unit perceived by the client.

Inside the brand offerings, the high quantity SKUs tend to have a lower price per
serving, to the level where it can sensible compete for the low-price niche of the
market.

C. Promotion

Coca-Cola is present everywhere: from newspapers shops to large hypermarkets,

from sports events to charity, from on-line to classical media channels. This is Coca-
Cola promotion policy to bring the brand closer to the client by any mean, to be
there and offer its value proposition at any step, when any consumer needs
refreshing.

Part of the promotion policy is to offer promotional prices for brands products, to
challenge the consumer to try the brand through direct (lottery kind of games) and
indirect (creating a cool, young, distinctive image) incentives.

As part of its overall visibility, the company also promotes CSR activities related to
communities where it actions, by informing the clients on the dangers of sugar and
caffeine overconsumption or by participating in community sustainability projects.

D. Positioning

The Positioning element of the Marketing Mix comes to support the entire policy and
vision of the company. Coca-Cola Company operates through the largest worldwide
network of bottling partners and distributors, aimed to bring the product close to
the consumer in very short time and to optimise the companys production cycle.

Product availability at literally consumers hand comes to support the value

proposition. The brand positioning in retailers shelves is always distinctive so that
the brand can be easily identified. This is done either by providing logo ant theme
specifically marked refrigerators (to small shops, convenience stores, and gas
stations) or by acquiring large and well-positioned shelve space in medium or large
sized retailer shops.
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3.8 Marketing Research

Given the importance of the Marketing activity at the organisational level, staying in
contact with the brand perception, the consumer needs evolution, and the
consumer sentiment towards the companys offering is paramount. As part of their
marketing policy, the company invests a high portion of its revenue to measure the
market trends and dynamics (The Coca-Cola Company, n/a) and puts at its clients
disposal a multiple channel communication and feedback tools (internet: facebook,
twitter, company site, brand site, tool-free telephone number) from where it can
gather sensitive information for the business success.

3.9. Critical Considerations Related To the Marketing Strategy

The marketing strategy of the Coca-Cola brand aligns with the actual trends in
academic thinking.

The overall principle identifies with Proctors(2000) definition of Marketing:

Marketing is about satisfying customer wants and needs and in the course of doing
so facilitating the achievement of an organisations objectives. This affirmation is
especially true in Coca-Cola specific case. The marketing expenses reported by the
company have the largest ratio when reported to revenues, as per Forbes Best
Brands (forbes.com, 2017).

When analysing the way the company work through his objectives, we should bear
in minds the Kotler and Keller (2011) definition of marketing management: the art
and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer
value. Again, this is particularly true in Coca-Colas case, as its superior results are
dependent on maintaining and delivering its value proposition to a large customer
base worldwide. Another quote which can define the marketing activity at Coca-Cola
is the Druckers conception that a good marketing strategy can make the selling
process superfluous:

The aim of marketing is to know and understand the customer so well that
the product or service fits him and sells itself. Ideally, marketing should result
in a customer who is ready to buy. All that should be needed then is to make
the product or service available. (Drucker, P., as quoted by Kotler and Keller,
2012)

This is particularly represented in Coca-Cola marketing strategy, at the companys

efforts are primarily concentrated on product quality, promotional activities directly
connected to the brand awareness and sound delivery to the products at the clients
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reach. The latest developments on the strategic side on renouncing at the bottling
operations in favour of highly knowledgeable and skilled partners and to focus on
the companys core competencies comes to support this statement.

Despite those actions, Coca-Cola still has work to do on mitigating the issues related
to its brands. The apparent lack of compliance or opposition, when required to
disclose information about potential harmful ingredients, creates a bad image and a
doubtful attitude in the client perception. Is to be mentioned here the threat
identified by the company in the California State proposed action that any
ingredient demonstrated to have a harmful effect on consumer life should be
specifically marked on the product presentation. The company position states that
the quantity of such substances inside the companys products is low and is a
natural consequence of processes like roasting or filtering, and there is no life
threatening effect on consumers, without citing or mentioning any performed study
about the long-term consumption of such substances on the customers health.
(Coca Cola Annual Report, 2016)

Failure to transparently address the critical issues related to its brands will lead in
the long term to lose of confidence, and consequently to a loss of brand value. In an
emotion-driven strategy, (Berry et al., 2015) the emotional feedback can be a
double-edged sword: the negative feelings generated by the companys attitude
towards sensitive issues can lead to amplification in the customer perception of any
negative effects (if any).

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 4.0. Financial
Analysis
4.0. Financial Analysis

The marketing analysis of

Coca-Cola strategy
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encumbers two aspects very important for the financial health of the organization:
(1) reorganizing the companys strategy around its core competencies in order to
optimize the value generated for its shareholders and (2) building strong
partnerships with local bottling companies which are focused on their production
and logistic capabilities.

Figure 4.1. Coca-Cola Key Financial Facts, source: coca-colacompany.com

From the financial risk point of view, the company faces two major threats:

1. The company dependency of the American market, where the company

obtains approx. 50% of its revenues, and
2. The company strategy failure to dominate China market, a high potential,
high growth market.

The first aspect can influence the companys sells in a negative way if the consumer
perceptions in countries like US, Canada or Argentina change. The second point was
the reason why the company underperformed the market lately, reporting growth
rates under the average growth of the industry for 2015 and 2016. (FT.com, 2016;
Nasdaq.com, 2016)

The new corporate strategy presents several key advantages from the financial
point of view:

1. By concentrating on the core activities (concentrate production and

marketing activities), the company will free-up cash flow from stocks,
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 production and distribution activities which can be used to develop new
products and to respond to the market requests better. This can help the
company to perform better than the market in the medium and long term.
2. By building a strong network of bottling and logistic partners, the company
anchors its strategy in the stakeholder value creation theory, recognising this
way that stronger partners can help the company to deliver the value
proposition to its clients better. On the long run, this strategy will help to
consolidate the value offering to its clients, by using partners motivated in
focusing on product quality and the fast delivery of its products to the clients.

(Note: due to business model change it was impossible to determine the revenues
and associated costs for this project purpose, to perform break-even analysis and to
perform financial contingency planning, as the previous financial data become
obsolete and cannot be used as future indicators of historical modus operandi)

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 5.0. Controls

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5.1 Implementation

While is too early to observe the benefits of the strategic shift in Coca-Cola
operations, the company is assessing that this new way is the long term way,
appropriated to the realities of todays markets.

The company is estimating in its official documents (The Coca-Cola Company,

Figure 5.1. Coca-Cola

Growth Rates per
region, Source: BMI
Research A Fitch Group
Company(2016)

Annual Report 2016) that the transition to the new model is to be delivered by the
end of the FY2017 so that the company can fully assess the benefits generated by
the new operation model starting 2018.

As for the promotional activity itself, the company has rolled the One Brand
strategy starting 2015, with encouraging results in most of its markets (see figure
5.1).

5.2 Market Organisation

The company will maintain for the future the current approach when segmenting
the market. While not focusing to any demographic segment bracket, the company
will run operations and performance reporting at wide geographic levels:

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North America: Including US, Canada

Latin America: Including South American continent and Central American continent

Europe excluding European part of Russia

Eurasia and Africa: includes Asia excepting China and adding European part of
Russia and African Continent

Asia-Pacific: Includes Mainland China, Oceania and Australia continents.

5.3 Contingency Planning (include specific observations on difficulties and

risks and worst-case scenario risks)

The main factors which can negatively affect the companys marketing strategy
come from the factors affecting the product perception in the customer's view. In
this case, threats related to:

- Obesity concerns and regulations related

- Shifts in consumer preference
- Innovation promoted by competition in new direction/areas of product
development
- Quality issues
- Public debate on other potentially dangerous ingredients
- Increased dependency on bottling and distribution partners

Whilst the market-related factors are manageable through close attention to the
consumer markets and adopting a 360 degrees view on the evolution of their daily
life and the changes that occur during their lifetime (Kotler and Keller, 2012), the
competition-related factors or the out-of-control elements related to partners are
harder to proactively identify and address, leaving the company with the only option
to function with a reactive mode strategy. In this context, the company should
increase its ability to react to threatening or negative outcomes, first by putting in
place a strong set of controls, and second, by increasing the organisational
adaptability to the changes or potentially dangerous situations. Having in place a
dynamic, responsive organisation on a global scale is the key answer to the
companys marketing strategy threats.

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Berry, L, Davis, S, Wilmet, J, & Broden, F (2015), 'WHEN THE CUSTOMER IS
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NASDAQ.com, (2017), Coca-Cola Company (The) Stock Research - Analyst
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Whipp, L., (2016), Coca-Cola cuts sales forecast as China slows, Financial Times,
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