What that one of its main secret ingrediants was

What are the opportunities and challenges for
Coca-Cola?

 

            Coca-Cola was formed in 1886 by Dr.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

John S. Pemberton in Atlanta, whom with Frank M. Robinson named, designed the
trademark, and distinct script (“The Pause That Refreshes”) 1which
is still seen to this very day. The brand has expanded from an average of nine
servings sold per day in Atlanta 1886, to over 1.9 billion servings sold per
day world-wide today. In 1891 Asa Griggs Candler bought the company for $2,300,
and incorporated the Coca-Cola company in 1892, with the trademark “Coca-Cola”
registered the following year in the U.S. Patent Office. With Candler in charge
sales increased from 9,000 gallons of syrup in 1890 to 370,000 gallons in 1900,
a huge increase over a short period of time. Coca-Cola was capitalized in 1892
at $100,000, by 1919 the company was sold for $25 million to investors led by
Atlanta businessman Ernest Woodruff. One of the main reasons many people
believe that Coca-Cola had such an immediate following and attraction, was that
one of its main secret ingrediants was cocaine, causing the drink to be
extremely addictive. Coca-Cola separated its syrup and bottling operations just
before its IPO, with its first international arm in 1926 selling syrup to
bottlers in Belgium, Bermuda, China, Colombia, Germany, Haiti, Italy, Mexico,
Holland, and Spain. Additionally, by the late 50’s, Coca-Cola was being sold in
over 100 countries world-wide. Coke’s main business model involves producing
syrups for many beverages, and then heavily marketing these other beverages to
consumers. Coke’s operating margins and return on equity is consistently above
20%.

However, with the constant decline of soda consumption, mainly due to
the increased awareness of our health, Coca-Cola must address ways to continue
to stay positive and make profits, with the soda consumption being at a 30-year
low in the United States.  2

             

 

–      
Questions:

o  
What is
innovative about Coca-Cola?

o  
How has
Coca-Cola innovated during the healthy lifestyle revival?

o  
How does
Coca-Cola target specific age and gender groups? (Diet-coke, Coke-zero,
Flavoured Cokes)

o  
What other
markets has Coca-Cola invested in to help it sustain long-term growth in the
coming years?

 

 

 

 

 

What is innovative about Coca-Cola?

 

One of the main ways in which Coca-Cola innovates is by investing in
smaller companies, aiding them to grow through strong marketing and
advertisement. Coca-Cola states on its webpage. “We drive innovation by building
on our strong family of brands and introducing new flavours and packages in
specific markets.”3
This strategy of investing in lots of smaller companies is known as ‘The
Coca-Cola System.’ This system was first seen when Candler decided to hand over
the bottling rights for just one dollar, and solely kept the rights to the
syrup. By having less responsibility Coca-Cola was and still is able to scale
new products, communications, and equipment extremely fast! There are now
around 275 independent bottlers of Coca-Cola around the world. 4
Furthermore, one key factor that allows a company to be innovative is to be
flexible and nimble, and by having this ‘Coca-Cola System,’ the company is able
to change very quickly to the current situations and fads.

Furthermore, it is not just the drinks themselves that Coca-Cola is
innovative with. According to Forbes Coke is focusing on 5 specific areas to be
innovative in: Packaging, Partnerships, Products & Equipment, Consumer
Provocations, and Cultural Leadership. What is incredibly impressive is Coke’s
2020 Vision goal, in which they are aiming to double their business by the end
of the decade. Furthermore, in 2015, Coke found itself struggling with sales in
Australia, so it targeted Millennials, and changed its packaging. It changed
its packaging by replacing the “Coke” branding in Australia and gave bottles
the most popular first names, so people could now order and buy Cokes with
their own name on it, or a name of their loved ones. By attracting Millennials
Cokes sales spiked due to their increased attention on social media, with
Millennials the predominant force on social media. 5

 

 

How has Coca-Cola innovated during the healthy
lifestyle revival?

 

Obesity within the United States adult population has hit an all time
high at over one-third of adults, this has led to soft-drink companies like
Coca-Cola becoming targets of criticism from public-health experts. Also,
Coca-Cola recognises this, and stated in its annual report, “obesity concerns
may reduce demand for some of our products.” What’s more, Coca-Cola is working
very hard in implementing a plan that will let it thrive in a health-conscious
world. Coca-Cola does not believe that there is one solution to this issue, but
multiple smaller solutions. In 2007, Coca-Cola created its “venturing and
emerging brands” group, which invests in smaller, healthier brands, for example
Honest Tea and Zico coconut water. Additionally, Coca-Cola has initiated a $1
billion marketing program, which aims to “reintroduce Coke into today’s more
health conscious marketplace.”6
Furthermore, Coca-Cola has also focused on lowering the calorie levels in its
full-fat drinks, with Fanta, Sprite and Nestea all containing up to 30% less
calories in 2017 than in 2010.7
Also, Coca-Cola has been innovating in their use of ‘natural sweetener stevia,’
which is a plant-based extract that contains zero calories, this new Coca-Cola
that they are innovating will be called “Coca-Cola Life,” and will contain less
calories and will be sweetened with a blend of sugar and stevia extract,
therefore making it healthier and more attractive for the stereotypical health
obsessed Millennial. In 2003, Coca-Cola launched a new advert known as ‘Grandpa,’
which compared two lifestyles, one of our grandparent’s generation in the 50’s
and the other of our generation now in the 2000’s. What this advert focused on
was that our grandparent’s were more active than us, and at the end of their
day they drank a refreshing ‘well deserved’ Coke. Therefore, their message
focused on Coke having to be ‘earned,’ through exercise and having an active
lifestyle, allowing them to not have to radically change their ingrediants or
taste of Coke, but to turn in into more of a treat/sweet that you have as a
reward, thus Coke was seen as a promoter of healthy lifestyles. 8
Another way in which Coke linked itself to the healthy lifestyle was through an
ad called “Happiness is Movement” in 2015. The ad focused on answering the
question. “Do you move because you’re happy or are you happy because you move?”
The ad recognises the importance of an active lifestyle and suggests that Coca-Cola
makes you happy and therefore will lead to you moving more, thus happiness and
movement are linked, suggesting that Coca-Cola will lead to you living a
healthier lifestyle and being happier at the same time. 9

 

 

How does Coca-Cola target specific age and
gender groups? (Diet-coke, Coke-zero, Flavoured Cokes)

 

Coca-Cola is known as being a drink for everyone, no matter what your
age is or what gender you are. However, there are a couple of ways in which
Coca-Cola has strategically invested in new product lines to specifically
increase purchases within a specific demographic. For example, Diet Coke was
specifically targeted at women who were self-conscious of their weight,
therefore they were not buying and drinking regular coke. However, men wanted
to be able to drink a Coke that had less calories and was better for them, but
they did not want to be seen buying a “girls drink.” So, Coca-Cola developed
Coke Zero, essentially a drink that was no different than Diet-Coke, but was
just marketed different and given a more masculine design. The advertisement
for Coke-Zero focused on “guys-being-guys,” and therefore they had an excuse to
drink Coke-Zero and do what they do, as the drink was also advertised as being
the “defender and celebrator of guy enjoyment,” during NCAA’s March Madness
basketball tournament.10 Coke-Zero
has been such a huge success that over the first 17 quarters it had
double-digit increases in sales, and has become the most successful new soft
drink of the decade. In the United States, Coke-Zero’s sales are six times
larger than their biggest rivals, Pepsi Max. 11

 

 

What other markets has Coca-Cola invested in to
help it sustain long-term growth in the coming years?

 

Coca-Cola has been heavily investing in lower economically developed
countries, as it aims to complete its 2020 Vision. In 2012, Coca-Cola invested
$3 billion in Coca-Cola India to capture massive growth opportunities in India’s
non-alcoholic ready-to-drink (NARTD) beverage market. The Chairman and CEO
Muhtar Kent of the Coca-Cola Company stated that. “Our ongoing investment in
India is focused on delivering innovation, partnerships and a portfolio that
enhances the consumer experience, ensures product affordability and builds
brand loyalty to deliver long-term growth.”12 Coca-Cola
in India has over 15 different beverages on sale, ranging from Sprite to Minute
Maid Orange Juice, of which reach through a network of more than 1.5 million
outlets.

Coca-Cola also started a program which invests in small start-ups all
around the globe, known as ‘The Bridge.’ This program selects 10 start-ups
every year and gives them Coca-Cola’s marketing expertise, and in return
Coca-Cola receives exclusive early access to the new consumer technologies that
these start-ups are providing. Results from this program are currently very
promising, within the first three years of creating it has been involved with “68
pilot programs, 15 license agreements and four global license agreements.”13
Alan Boehme, CIO, emphasized the importance of these connections to other
brands and companies leading to innovation. “You can’t innovate in a vacuum,
you need to reach out to partners and customer…. We scan the broad spectrum of
trends, and get inspiration from – not trying to solve specific business
problems because that is incremental – but where we have to go.” 14

This year Coca-Cola is re-launching its most successful no-calorie
beverage in North America, Diet-Coke. This re-launch includes the following: “Sleek
new look, modern design, new campaign and the debut of four bold, new flavours.”15
Coca-Cola is re-launching this beverage to keep up with the modernizing new
generation of drinkers, with a younger generation preferring sleeker, smaller
cans, in which they can put in their pockets and have on the go more accessibly.

However, Coca-Cola is not re-developing its proven tried and tested flavour, as
with most of its previous marketing strategies it is simply changing the
design, and adding a couple of new variants, whilst keeping the classic taste
that attracts so many long term customers. Furthermore, just in case consumers
do not like the new style can and design they are maintaining the standard cans
in the 12-packs that they offer, therefore lowering the risk taken by the
company. Additionally, the reason that Coke is having to offer new flavours is
because it has completed research on ‘Millennials,’ and found that their
adventurous lifestyle requires constant new experiences, and therefore new
flavours to keep them attracted to the product.16

Furthermore, Coca-Cola has pivoted and changed focus to a couple of its
smaller brands, Smartwater, flavoured water Vitaminwater, and diary brand
Fairlife. By focusing on these brands Coca-Cola does not have to re-develop
itself to please the health sector, but simply use the attraction of these ‘Fit-Drinks’
to boost revenue, which saw the companies net revenue grow 4% in North America
last year.17
Wells Fargo analyst Bonnie Herzog wrote in an analyst report that Coca-Cola
seems poised to transform its portfolio to place bigger bets on juices, waters,
energy drinks, and plant-based/dairy offerings.

1 http://iml.jou.ufl.edu/projects/spring08/Cantwell/invention.html

2 https://www.fool.com/investing/2016/09/30/coca-cola-stock-history-what-you-need-to-know.aspx

3 https://coca-colahellenic.com/en/brands/innovation/

4 http://uk.businessinsider.com/strategies-coca-cola-used-to-become-an-iconic-brand-2016-2/#7-it-adopted-a-franchise-model-7

5 https://www.forbes.com/sites/avidan/2013/10/07/just-how-does-coca-cola-reinvent-itself-in-a-changed-world/#4809d495a6bb

6 https://www.fool.com/investing/2016/09/30/coca-cola-stock-history-what-you-need-to-know.aspx

7 https://coca-colahellenic.com/en/brands/innovation/

8 https://www.fastcompany.com/3015878/cokes-new-ads-claim-its-part-of-a-healthy-lifestyle

9 https://www.dandad.org/awards/professional/2015/film-advertising-crafts/24786/happiness-is-movement/

10 http://www.nydailynews.com/life-style/eats/new-coke-zero-ads-target-men-article-1.1294950

11 http://www.ajc.com/business/coke-zero-becomes-hero-for-coca-cola/K9fdvFfsyjUK32TUgek17M/

12 http://www.coca-colacompany.com/press-center/press-releases/coca-cola-targeting-additional-3-billion-investment-to-support-long-term-sustainable-growth-in-india

13 https://www.cio.com/article/3196474/startups/coca-colas-investments-in-startups-is-the-real-thing-for-innovation.html

14 https://www.cio.com/article/3196474/startups/coca-colas-investments-in-startups-is-the-real-thing-for-innovation.html

15 http://www.coca-colacompany.com/stories/diet-coke-faq

16 http://www.coca-colacompany.com/stories/diet-coke-faq

17 http://fortune.com/2017/03/23/coke-new-ceo-leadership/

x

Hi!
I'm Mack!

Would you like to get a custom essay? How about receiving a customized one?

Check it out