Business Level Strategy of Coca Cola
Business Level Strategy of Coca Cola Introduction In today’s business environment, business strategy plays a crucial role to the organizations in order to achieve the competitive advantage over the other competitors. Coca Cola Company is one of the business organisations facing a fierce competition in the global market with Pepsi, its major competitor, in addition, the company has to deal with the significant threats such as a health concerns, apparently an increasing trend among society nowadays. This trend has posed a tough task for beverage manufacturers, especially the Coca Cola Company.
Yet, this soft drink company still gains profits with a growing number of customers in over 200 countries (Taylor,2000). Over the past few years, a great many strong and innovative strategies has been launched so as to maintain its long term sustainability amongst the fast changing trend. Four important strategies of Coke Company will be analysed in either Western or Chinese markets. Differentiation strategy Differentiation has considerably assisted Coca Cola in achieving the competitive advantage in China. Coke has differentiated its products on the two dimensions.
The first dimension is related to its products. Coca Cola diversifies its products on the basis of taste, brand and quality. In 2009, Coke Zero was launched and advertised as “zero calorie” to the global market in order to target a group of customers concerned about the excessive amount of sugar contained in classic coke. As a result, Coca-Cola commanded 17% of the U. S. soft drink market in 2009 while Pepsi held only 9. 9% (Mok, 2010). Another differentiation strategy is related to images of the products. It is used by logo which establishes a brand name in the consumers’ mind.
Since Coke zero is specifically marketed to men, the design of logo has to be masculinity unique. The design of coke zero has a black background which stands for men, original red Coca Cola logo with white color of word ZERO underneath Coca Cola brand. The white word implies light and free from calorie of Coke Zero. As we can see, the differentiation strategy has an important part to Coke Company in order to gain more profits than the other beverages in the competitive market. Promotional and Advertising Strategies
The major objective of promotional and advertising strategies is to attract the attention of customers and subsequently persuade them to purchase from the business. Since being a large company with huge financial capability and resources, Coca-Cola can have access to various ways of advertising and capable of reaching almost every type of customers. Two great examples are Price Strategy Trade Promotion and Sale Promotion. Price Strategy Trade Promotion Coca Cola Company offers free samples and free empty bottles to middle men or retailers so as to create an incentive.
Therefore, free product receivers will push it in the market. So Coke products will be seen more by the other customers and have a good sale because the more products are displayed in the market, the better chance they are sold out, according to the marketing strategists (Golan, 2012). Sale Promotion Coca Cola Company provides sponsorships to a variety of colleges and schools’ cafes and also supports extra curriculum activities and sport events with an aim to obtaining the market share by displaying the advertising signboards on their freezers near the store entrances.
Moreover, Coke Company also creates a partnership with the online stores such as Amazon and iTunes, by allowing customers to buy various goods through the Points from purchasing Coke (Taylor, 2000). With regard to advertising strategy, Coca Cola Company has launched so many creative advertisements toward the audience through social media and television that it managed to acquire advantages from its major competitors like Pepsi. While Pepsi tends to attract the young audience by focusing on pop stars as a brand representative, Coke is using its long history to present the reliability of the company.
From above analysis, it is undoubted that the promotional and advertising strategy has played an essential role in Coca cola’s strategy to attain long term sustainability in the global market. Localisation Strategy Coca Cola Company originally comes from a Western Culture. As such, it is a difficult task for marketing professionals to adapt its own strategy to the Asian markets with its uniquely oriental way of life. However, the company finally found a cross-cultural brand marketing mode and positions it on “Chinese red” successfully.
There is two sub strategies adapted to Chinese culture. Firstly, “Ke Kou Ke Le” is the Chinese name of “Co Ca Co La” which has the direct Chinese meaning as “delicious and happy” (Weisert, 2001). Furthermore, the design of Coca Cola Chinese logo adopts a white word on the red background; the color of background also coincides with Chinese festival color that reflects prosperity, happiness, celebration, luck and the spiritual and material pursuits of Chinese people. Packaging is also an important part of localisation strategy to attract all customers’ eyes.
There are three things that market strategists design to make it appear on products, namely famous Chinese stars, Chinese traditional culture and significant events for Chinese society such as Beijing Olympics 2008. By the integration of those three significant aspects of Chinese culture with Coke packaging, consumers will be able to identify and feel the brand affinity subconsciously. Nowadays, the Chinese variations of the Coca-Cola logo apply the same theme to achieve the brand values of infinite possibilities, dynamism and vitality.
In spite of being completely different to the English variation, the Coke products are still recognised through similar appearance and integration. Price-based Strategy (Route 1, no frills strategy) For this strategy, Coca Cola has to adapt the plan which fits the lifestyle of local people. Chinese market will be examined as a case study. Coke Company has been in the Chinese market since 1979 and used to suffer from profit loss for more than ten years while China was in the period of centrally planned economy (Weisert, 2001).
At that period, the incomes of local people were at a very low level as 12 Yuan per month for an ordinary worker and as such, it was difficult for them to afford to buy 1. 5 Yuan per bottle of beverage. Yet, the Coke Company took the higher income segment of population into consideration in that period. Facing the difficulty, Coca Cola Company chose not to reduce the price of Cola, but remained the same price until the income of local people raised about 1200 Yuan monthly. With that strategy, Coke Company can gain the customer loyalty especially from local customers.
This can be shown that the adaptability of the strategy to suit the localisation has an essential role to the success of organization even though it may take a longer period of time. Conclusion Over the years, Coca-Cola brand is still very remarkable in the world. One crucial thing that brings the prosperity to this corporation is a good business strategy which has four major aspects related to this content. First, differentiation strategy is the main one that allows Coca Cola to provide products distinctively from its main competitor, Pepsi.
Second, promotional and advertising strategies is the approach to convince customers to pay an attention to the products through various way, either by direct advertising on media or indirect method such as sponsoring sport event. Another smart strategy is localisation which suggests that the cross-cultural communication and the adaptability to the local society are essential to conquer the foreign markets. Last but not least, price-based strategy is the idea that combines a low price and low perceived product benefits and focus on a price sensitive market sector which Chinese market is a case study for this purpose.
Overall, the business level strategy of Coca Cola is a great example for other organisations to learn from. However, the business level strategy itself is not enough to create long term sustainability. High complex systems and the other aspect of management are essentially required for the company. References Weisert, D. (2001). Coca-Cola in China: Quenching the thirst of a billion. China Business Review, 28(4), 52-55. Deboonme, A. (2012, July 22). Coca-Cola committed to saving environment. Retrieved March 23, 2013, from nationmultinedia: http://www. nationmultimedia. com/business/Coca-Cola-committed-to-saving-enviro