Letter of Transmittal Date 26 August 26, 2014 Board of Directors Coca-Cola, Pakistan Dear Sir(s) Subject: A comprehensive situation analysis for the company Coca-Cola Enclosed in this document is a comprehensive report on the brand “Coca-Cola” which includes a detailed analysis of the internal and external environment. The analysis is done using particular theories and models such as SWOT analysis which aids in good analysis. The information was gathered from your company website, the analyst reports published by experts and other relevant articles which include reports of supporters and critics of your company to provide an unbiased analysis. The report includes good and bad features of the company and it provides conclusions and recommendations at the end. I hope this report would prove to be of immense importance. However, should you require any assistance in understanding or interpretation of this work please feel free to contact me. Best Regards, (Name)
i
EXECUTIVE SUMMARY This project unfolds a detailed integrated situation analysis for Coke, a brand owned by Coca Cola. The Coca-Cola System in Pakistan serves over 2 hundred thousand customers/retail outlets. Coca-Cola employs 2500 people in Pakistan (2010). During the last two years. The company has over the time invested almost $145million and the total service of the company has been over 54 years in Pakistan. The project gives an introduction about the current scenario. The SWOT and marketing situation are discussed in detailed. The report deals with corporate and brand strategies of Coke. It also talks about the industry situation in terms of porter‟s 5 forces. The internal situation of the business is discussed through a detailed SWOT analysis. Competitors have not been ignored; hence, a very comprehensive analysis on competitors of Coke has been done as well. The report is concise yet comprehensive. Many concepts and theories have been covered and the ones not discussed were not the part of the scope of this project.
ii
Table of Contents INTRODUCTION ................................................................................................................................. 4 HISTORY OF COKE .......................................................................................................................................... 4 INTERNAL BUSINESS ENVIRONMENT .................................................................................................. 4 SWOT ANALYSIS ........................................................................................................................................ 4 Strengths ............................................................................................................................................... 4 Weaknesses........................................................................................................................................... 5 Opportunities ........................................................................................................................................ 5 Threats .................................................................................................................................................. 6 EXTERNAL BUSINESS ENVIRONMENT .................................................................................................. 6 CURRENT MARKET SITUATION ........................................................................................................... 6 CORPORATE AND BRAND STRATEGIES ................................................................................................ 7 CORPORATE IMAGE STRATEGY.......................................................................................................................... 7 BRAND DEVELOPMENT STRATEGY ..................................................................................................................... 8 PROMOTION OPPORTUNITY ANALYSIS ............................................................................................... 9 DISTRIBUTION STRATEGY ................................................................................................................................. 9 DIFFERENTIATION STRATEGY ............................................................................................................................ 9 CONCLUSION ................................................................................................................................... 10 REFERENCES .................................................................................................................................... 11
iii
Introduction History of coke The company was setup in Pakistan in 1953 when it started to operate. The brands owned by Coca-Cola in Pakistan are Coke, Sprite and Fanta. There are eight filling companies of CocaCola in Pakistan. The plants of the company are scattered all over the country and are present in all provinces. There are nearly 70000 retail outlets of the company all over the country. The Coca-Cola System in Pakistan has nearly 3,000 people working constantly for the company. The company has invested over $130 million over its 56 years of business in Pakistan.
Internal Business Environment The internal business environment includes the factors which are at least to some extent in the control of any given business. The main aspects in it are the productions processes and its efficiency, skills which the management has and the communication processes in place. For effective management and monitoring of the internal working environment, Coca-Cola should conduct an interim evaluation of business processes and actively work on all the factors that cause inefficiency in any stage of the production and other internal processes.
SWOT Analysis SWOT Analysis is a tool used to analyze the company‟s environment very comprehensively. It stands for Strengths, Weaknesses, Opportunities and Threats. The analysis has been applied to the company in question Coca-Cola and is explained below. Strengths
Established Company:
The biggest strength of the country is that it is a single huge company which is under direct supervision of the Head Office, Coca-Cola International. All of the plants through which the company is run are required to accept the same laws and policies and run under them.
Strong financial backbone:
The turnover and financial input and output of the company are very large and are near to unmatched which are being very efficiently managed by the company
Brand Image:
The company enjoys a very good brand image internationally and people prefer the product of the company over other competitor brands which make the brand “Coca-Cola” the most popular brand globally.
4
Diet Coke:
The company responded to health concerns of its customers has there is a very high volume of sugar in soft drinks, Coke launched its sugar free product and successfully sold it.
Bottling system:
The bottling companies are locally owned and operated by independent business people who are authorized to sell products of the Coca-Cola Company.
First movers:
The company enjoys the first mover advantage in that it was the first one to introduce the soft drinks in Pakistani markets. Weaknesses:
Limitation of resources:
The biggest weakness of the company is that financial function is centralized and heavily dependent upon Coca-Cola International USA.
Non –Availability:
The distribution system is not large enough to make sure the availability of the products in small town and rural areas.
Advertising mistakes:
Coke has been accused of airing international copy of ads in Pakistan. Many a times they have failed to customize TVCs according to the local environment. Opportunities:
Line extension:
Apart from that another opportunity that Coke has is that of diversifying further into snacks category. Pepsi has introduced Lays, Cheetos and Kurkure; similarly Coke can explore this segment as well.
Buy out competition:
Another opportunity that we have seen being put to use before is the ability for Coca Cola to buy out their competition. Coke currently holds about 36% market share in Pakistan.
5
Threats:
Major Threat:
Pepsi is the market leader in Pakistan which has always been a competitive threat to the company in the country.
Potential Threats: o New Entrants:
There have been new entrants in the market which advertise their products as belonging to the Muslims thus taking advantage of the anti-Jewish group of people. o Similar Products: Beverages like Milo, coffee, fruit juices, etc are also a source of threat for Coke and its products. o Taxes (Government Laws and Policies): The Coca-Cola management is not happy with the Government tax laws and policies. o Purchasing power: Consumer buying power also represents a key threat in the industry. With the ever-increasing inflation rate and deteriorating economical saturation, consumers have started spending wisely.
External Business Environment The factors which come under the external business environment include those which apply to the country as a whole or at least apply at the industry level: they are not company specific. The changes in the external environment create opportunities and threats for companies so they should be carefully monitored by Coca-Cola and should be dealt through a proactive strategy. The factors include changing economic situation in Pakistan such as fluctuating interest rates and inflation rates which play a great role in overall strategy of a company, the demographical patterns such as urbanization is increasing in Pakistan which could be an opportunity for the company to stress in its premium products and customer preferences and what they value should be considered and acted upon then. Political instability is a big issue in Pakistan so the company should keep an eye on new governments expected and their expected style of policy making.
Current Marketing Situation In order to understand the current marketing situation of Coke, the 4 Ps (Price, Placement, Product and Promotion) were analyzed. The analysis is as follows:
6
Product: The basic need that Coke fulfills is that of quenching thirst. The most widely available variants are classic coke and diet coke. It is available in variable sizes i.e. 300ml, 500ml, 1.5ltrs and cans. Price: Coke follows competitive pricing strategy. Since Pepsi is its direct competitor, so it sets the prices keeping in mind the prices set by Pepsi. Placement: Coke has been very strategically efficient in terms of its placement. Coke freezers are not only seen in big super stores, departmental and medical stores, but also at tuck shops, cafes at universities and school. Moreover, coke has signed contracts with various restaurants and cafes to ensure that the only cola served is Coca Cola. Promotion: Coke has been very active in terms of promotion. It has executed several activities in order to engage the customers and create awareness.
Corporate and branding strategies Corporate Image strategy Coca Cola has been here for more than a century, and that experience has enabled it to develop the best practices a corporation could have. Managing such a diverse range of beverages takes considerable centralization in following some principal methods that are shared among the different brands. Those methods are derived from the vision of coke which focuses on six aspects;
People
Portfolio
Partners
Planet
Profit
Productivity
The core values that the corporation follows to maintain and promote the corporate image of Coca Cola are as follows;
7
Leadership
Collaboration
Integrity
Accountability
Passion
Diversity
Quality
An organization so well established like Coca Cola needs to utilize its strong brand name, therefore in developing worlds and the developed, Coca cola‟s logo and company colors are evident across every village, town and city, globally. An employee force of 139,600 serves to be representative of how this corporate giant is managed in over 200 countries (Schawbel, 2008).
Brand development strategy It is a daunting task for the products in the aisle and shelves to get noticed amid the crowd of competitors. Hence it‟s essential that the brand understudy has a strategy that is dynamic and well versed in understanding the customer, this shall lead to effective ways to create brand awareness and most importantly create brand loyalty. Coke has been fairly dynamic in keeping up with vibrant market needs and trends. The brand has been able to evolve to keep in-line with the demands of the market. Coca Cola used to focus on the three A‟s:
Availability
Acceptability
Affordability
Now the brand orbits its brand strategy around the three P‟s2, which are as under:
Preference
Pervasive Penetration
Price Related Value
The company always tries to maintain the brand identity and does so by testing much of the attributes every month on a sample of almost 4000 customers. The strategy of the company
8
relating to the development of its brand is quite effective and the company has very successfully retained the image. In Pakistani market the company adopts a very good strategy by promoting the musical talent of the country in the platform provided by the company named “Coke Studio” where best musicians are combined with best singers and so many masterpieces have been produced from there. It is perceived and preservation of the cultural norms by the company which is widely appreciated. Moving along, according to cokes website, the second most recognized expression in the world after “ok” is “Coca Cola”. This fact leads to the interpretation that Coke has become a part of its target sets everyday life. Over the course of time, Coca Cola has managed to create a portfolio, unmatched by any other player in the beverage market. According to the coke website “10,450 soft drinks from Coca Cola are consumed every second of every day” (Daye, 2007). The colors red and white have become the trade dress for coke.
Promotion Opportunity Analysis Distribution Strategy Distribution offers a numerous opportunities for the marketer that may normally be associated with other elements of the marketing mix. Another opportunity for promotion lies in placement, e.g., the airline companies can be contracted to offer drinks of the company on-board which could be a very good advertising and earning strategy. The company can give free or at low cost its cups or shirts with its logo on them to the distributors which would create more brand awareness of the company. An effective strategy can be adopted considering the factors such as the time given in choosing any particular product or category of products; soft drinks. Comparison is made of which products; Coke vs. Pepsi. The category and types of products which are being compared such as slushes, soft drinks and juices. Are there any complementing products such as Lays which is a brand of chips introduced by Pepsi.
Differentiation Strategy A differentiation strategy is a way to develop the services or products such that the customers value the uniqueness in their attributes and they think of it to be different and superior to other such products.
9
The company reserves a huge chunk of its advertising expense (20%) to retain and enhance its differentiation strategy. The company has adopted some mechanisms such as soft sell approach to support these strategies. Due to these strategies the company has been very successful in creating a good image in the following aspects:
A symbol of innovation and quality.
Communicating its customers about its significant strengths successfully.
A sign of enjoyment and fun for families and friends
Conclusion Coca-Cola is no different, hence it has been far reaching and been able to successfully manage to remain in the limelight ever since its election as the favorite non-drink in the world. Coke been able to recognize the importance of brand loyalty, it realizes that it is the integral factor in not only reaching the top slot in beverages but it is also instrumental in staying there. The company has been very much successful in all aspects since it was formed. It has some incredible strengths as discussed in the report above and it should use those to exploit all the opportunities available and reduce its weaknesses. The directors and management should look forward to reduce and minimize the weaknesses of the company which would result in company and brand becoming more optimistic.
10
REFERENCES Clow, Kenneth E. Baack, Donald, (2007). „Integrated Advertising, Promotion, and Marketing Communications 3rd edition’. Pearson Education. pp. 9–10. Coca Cola Inc. ‘ The Company’ . Retrieved from http://coca-cola.com (viewed 18 Aug 2014) Coca Cola Inc., (2009-2010), „Beverage Benefits‟, Sustainability Review. Retrieved from http://www.thecoca-colacompany.com/citizenship/pdf/SR09/SR09_BevBen_6_9.pdf (viewed 17 Aug 2014) Coca Cola Inc., Coca Cola fun fact. Retrieved from http://www.coca-cola.co.uk/125/coca-cola-fun-facts-infographic.html (viewed 14 Aug 2014) Coca Cola Inc. About Us. Retrieved from http://www.thecoca-colacompany.com/ourcompany/hal_nutritional_labeling.html (viewed 20 Aug 2014) Daye, D, (2007), „Brand Spotlight: Coca Cola’, The Blake Project, Retrieved from http://www.brandingstrategyinsider.com/2007/04/brand_spotlight.html (viewed 17 Aug 2014) Schawbel,D, (2008),„Interview With a Coca-Cola Executive About Personal Branding’, Personal Branding Blog. Retrieved from http://personalbrandingblog.wordpress.com/2008/10/13/interview-with-a-coca-cola-executiveabout-personal-branding/ (viewed 16 Aug 2014)
11
