Coca-Cola Marketing Strategy: Segmentation and Analysis

Introduction: Coca-Cola's Global Presence

Coca-Cola leads the world's beverage industry with as many as 400 products and maintains a presence in more than 200 countries globally. In addition, Coca-Cola collaborates with approximately 320 licensees to produce more than 10,000 products in 57 countries. These products range from fashion apparel to holiday decorations and even a Coca-Cola Picnic Barbie doll. Every year, licensees sell 50 million licensed Coca-Cola products.

For over 100 years, Coca-Cola has remained the world's largest producer of carbonated soft drinks. The company sells the iconic Coke® brand with the tagline "Always Coca-Cola," which remains the common consumer term for any carbonated soft drink. The company's signature Coke® brand is recognized by billions of consumers, and Coke is sold in almost every country in the world — more than 200 countries worldwide.

Internal Business Environment

The Coca-Cola Company is the world's largest beverage company and the leading producer and marketer of soft drinks. Consumers in nearly 200 countries enjoy Coca-Cola brands at a rate of more than one billion servings a day. In addition to its core Coke brand, the company also sells Dasani bottled water, Sprite, Minute Maid, and a range of other soft drinks. Drinks are sold both directly to consumers in cans and bottles, as well as in syrup form to bars, restaurants, and other commercial establishments.

The reputation of The Coca-Cola Company is built on trust. Those who do business with Coca-Cola around the world recognize the company as being committed to managing its operations with a consistent set of values representing the highest standards of quality, integrity, excellence, compliance with the law, and respect for the unique customs and cultures of the communities in which it operates. The company seeks to develop relationships with suppliers that share similar values and conduct business in an ethical manner.

Core values include honesty, integrity, diversity, quality, respect, responsibility, and accountability.

Coca-Cola designated 2005 a year of innovation and launched several new drinks, including an energy drink called "Full Throttle" and a version of Diet Coke flavored with the Splenda artificial sweetener. Analysts noted that the way forward was to tap the growing trend away from fizzy, sugary drinks toward low-calorie, healthier options such as low-sugar orange drinks and bottled water.

Two major growth drivers were identified for Coke. The first was flavored colas, which the company had been launching over several consecutive quarters — including Vanilla Coke and Coca-Cola with Lime. These new flavors proved popular among consumers, and Coke leveraged its core brand to create instant recognition for these variants. These newer offerings were expected to help revitalize sales in developed markets.

The most noteworthy organizational change was the creation of a new position to oversee Coke's global marketing and advertising strategy, headed by Mary Minnick, who had served as president of Coca-Cola Asia for four years and was a 21-year veteran of the company.

Coca-Cola launched its 2005 American Idol campaign at 165 Simon Malls during January and February, featuring an Instant-Win Coca-Cola Vending Game. Prizes ranged from American Idol t-shirts to an all-expenses-paid trip for two to the taping of the American Idol finale. Coca-Cola also staged a multi-mall live performance event featuring past American Idol finalists exclusively at Simon Malls across the country. The event began on April 8 in Boston and concluded in Los Angeles on May 14, just prior to the May finale of American Idol's fourth season on FOX. In between, the event visited Simon Malls in New York, Philadelphia, Atlanta, Chicago, Indianapolis, Dallas, and San Antonio.

Coke has been very aggressive globally, acquiring brands in markets such as Russia, Bulgaria, and Kenya. It has also aggressively marketed its flagship Coke brand internationally, making slight formula adjustments to suit local tastes. As nations become wealthier, consumers tend to buy more packaged foods and beverages — a trend that bodes well for Coke. Accordingly, Coke's sales have been growing much faster in foreign markets than in the United States. In recent quarters, developed markets such as Germany and the U.S. experienced slow sales growth or, in some cases, outright declines. By contrast, internationally, case volumes grew a solid 2–4%, led by markets such as Russia, China, and Brazil.

External Business Environment

Coke, the world's largest soft drinks maker, saw its domestic market share drop by 0.9% to 43.1%. Revenue increased to $5.27 billion, up 4% from $5.08 billion in the same period a year earlier, beating analysts' forecasts of $5.17 billion. Coca-Cola also announced plans to repurchase $2 billion in shares of stock during 2005.

Coca-Cola's best sales performance last quarter, as measured by unit case volume growth, was clearly in its international markets, including double-digit percentage growth in both China and Brazil. Unit case volume grew 7% in Argentina and 12% in South Africa. However, total volume growth was flat in North America, the company's largest and most vital market. According to the company, the decline in carbonated soft drink case volume in that market was offset in part by strong growth in diet, water, and juice offerings. Experts acknowledged that Coke is very strong in carbonated soft drinks, but that growth was shifting to the non-carbonated side. Overall, U.S. carbonated soft drink volume grew only 1% in 2004, driven by diet carbonated soft drinks and energy drinks.

Other beverage rollouts that year included a lime-flavored version of the flagship Coca-Cola brand and the Full Throttle energy drink.

A company as large as Coca-Cola frequently encounters legal and ethical issues. In April 2005, it settled accounting probes related to extra concentrate purchases in Japan. In September 2004, The Coca-Cola Company struck a deal with the European Union (EU) to end its long-running antitrust case over carbonated drinks, five years after PepsiCo first filed a complaint. Around the same time, Procter & Gamble sued the company for allegedly infringing patents on preservatives used in fruit drinks.

Ethical issues also center on the use of additives such as phosphoric acid and propylene glycol, both of which are classified as "generally recognized as safe" for use in food. Propylene glycol is used to absorb excess water and maintain moisture in certain medicines, cosmetics, and food products, and serves as a solvent for food colors and flavors. More broadly, soft drinks carry no significant nutritional value in terms of vitamins or minerals, and are high in sugar, carbonic acid, and chemical colorings.

The company has also addressed the issue of reduced water supply, which is projected to become a significant global problem by 2025. Initiatives undertaken include rainwater harvesting in India, micro-enterprise development for women in Vietnam, and schoolyard roundabout water pumps in South Africa.